Examining the Ability of Tanzanian Small and Medium Enterprises (SMEs) to Increase their Penetration into Export Markets

Abstract

Tanzanian Small and Medium Enterprises (SMEs) face a number of hurdles that constrain their ability to increase their penetration into export markets. This finding emanates from analysing a sample of Tanzanian exporting SMEs from the World Bank’s Enterprise Survey Data for 2013. The analysis shows that only a few among the sampled exporting SMEs had internationally recognized quality certificates, used technology licensed from a foreign-owned company, spent on research and development (R&D) in the previous three years; and many were unable to enter export markets within three years of being established, that is, they are not born-global firms. The paper argues that the SMEs’ ability to penetrate into export markets faces three main constraints, namely, access to finance, electricity outages and numerous taxes. Thus, to enhance the SMEs’ ability to increase their penetration into export markets, policies should focus on easing the examined constraints. Firstly, there is a need to have policies for assisting exporting SMEs to access credit for expanding their activities and increasing productivity. Secondly, is to ensure that exporting SMEs get the required electricity through industrial parks that get preferential treatment in terms of general infrastructure. Lastly, the government should consider streamlining the taxes levied on these enterprises that hamper their operations. The implementation of these policies as a package would enable the SMEs to contribute more to generating export revenues and creating employment.