Tanzania: Lessons in Building Linkages for Competitive and Responsible Entrepreneurship

Abstract

Increasing economic opportunity, productivity, and growth offers one of our best hopes for reducing poverty. As the Organisation for Economic Co-operation and Development's Development Assistance Committee (OECD DAC) has commented, however, 'Increasing economic growth rates is essential - but it is not enough. The quality of growth - its sustainability, composition and equity - is equally important.' Crucial elements of reducing poverty are creating jobs, income-generating opportunities, and livelihoods for the poor. In particular, growth must encompass improving the access of small enterprises to finance, skills, technology, information, sound business practices, legal rights, and markets. In Tanzania, as in many developing countries, achieving the goal of reducing poverty requires effective partnerships and intermediaries that are able to address the market failures, governance gaps, and institutional constraints that currently exclude or disadvantage most small entrepreneurs from accessing these public goods and business opportunities. Such partnerships are also essential in helping small enterprises upgrade and integrate into broader production networks and value chains, a growth that in turn is crucial for raising productivity and employment levels. These partnerships include brokerage mechanisms, business linkage initiatives, hybrid commercial and social business models, innovative financing instruments, enhanced enterprise support services, and new types of alliances among companies, trade associations, governments, donors, academic institutions, and non-governmental organisations. They offer great potential for promoting enterprise development, reducing poverty, and helping to spread more competitive and responsible business practices along the value chain between large- and small-scale firms. Yet such partnerships are relatively new and untested. They are currently few in number and disconnected from each other at the global and national levels. Because of this, they are limited in scale and effectiveness.