Tanzania Inclusive National Entrepreneurship Strategy

1. OVERVIEW Entrepreneurship – the process of pioneering change including starting and growing businesses1 - is a key driver of competitiveness, growth and progress of nations. The UN Sustainable Development Goals, Tanzania National Vision 2025 and policies relating to MSMEs, education, empowerment, youth development and employment recognize the central role of entrepreneurship in development. However, effective implementation has been constrained by a lack of a coherent vision and framework. The Inclusive National Entrepreneurship Strategy provided a coherent vision and framework for implementation, coordination, monitoring and evaluation of entrepreneurship development efforts. The strategy has been developed through a participatory process involving public and private sector actors as well as the beneficiaries. It is inclusive in the sense that (i) it aims to impact all segments – from the marginalized poor youth, women and people with disabilities to innovative, high tech and growth oriented start-ups and (ii) it addresses all six key pillars for development of entrepreneurial ecosystem, namely the strategy, regulatory environment, education and skills, technology exchange and innovation, access to finance and awareness and networking.

2. VISION, MISSION AND OBJECTIVES The Vision of the Strategy is that “By 2025 Tanzania will have thriving entrepreneurial spirit and accelerated economic growth, resulting in increased quality and decent jobs and improved social and economic conditions for men, women, youth and disadvantaged groups” The Mission is to build the national entrepreneurship ecosystem, for enhanced entrepreneurial spirit and performance of economic activities, the creation of new start-ups and the formalization and growth of domestic MSMEs, upgraded productive capacities as well as innovative and sustainable solutions to environmental and social challenges. This is to be achieved through addressing the critical gaps

1. When we talk about promoting business entrepreneurship, we refer to supporting growth oriented, formal, high tech enterprises and not only start-ups, informal or survivalist activities 1 and barriers in the entrepreneurship ecosystem. The objective is to implement an inclusive entrepreneurship strategy, considering the social and environmental challenges to address the economic, social and regulatory barriers to equal, effective economic participation by youth, men, and women, the disadvantaged and other groups. The specific objectives for each pillar are as follows: Table 1: Specific Objectives by Pillar Pillar Objective Optimizing Reduce regulatory and administrative the Regulatory hurdles for start-ups by streamlining Framework procedures, expanding access to information, reducing costs, increasing the benefits of formalization, facilitating entrepreneurs to formalize and improve the predictability and enforcement of contracts. E n h a n c i n g Recognize entrepreneurship as a subject and Entrepreneurship integrate its effective teaching across other Education and disciplines at all levels of formal education, Skills Development whilst strengthening non-formal training and skill development systems by promoting learning-by-doing methodologies. Facilitating Support Public Private Partnerships (PPPs) Technology to diffuse knowledge, develop research- Exchange and industry collaboration and trigger innovation Innovation for sustainable and inclusive development with a strong focus on the use of ICT to develop and deliver new products, services and processes. Improving Access Develop targeted financial solutions for to Finance entrepreneurs, whilst strengthening the capacity of the financial sector to serve and empowering the private sector in general by promoting increased diversity of financial products and services available at affordable cost to all levels of society. 2 P r o m o t i n g To instil the entrepreneurship mind set, whilst Awareness and addressing cultural biases in society, paying Networking specific attention to the status of women entrepreneurs and disadvantaged groups. To introduce initiatives in partnership with the private sector to strengthen networking, trust and cooperation among the diverse private sector players in Tanzania.

3. INITIATIVES TO BE TAKEN UNDER EACH PILLAR 3.1 - Implementing a national entrepreneurship strategy Policies relating to employment, youth development and empowerment recognize the need to develop a strong entrepreneurship ecosystem. For the desired impact of these frameworks and policies to be realized, broad national ambitions and plans ought to be translated into integrated and coherent implementation programmes to ensure effectiveness and synergies in implementation. The following table summarizes the main impediments and priority actions to implement the National Entrepreneurship Strategy. Table 2: Measures to implement a coherent national strategy Gaps Priority Actions • Conduct and disseminate assessment studies of the entrepreneurship Lack of a common ecosystem. Diffuse findings of understanding of the UNCTAD/NEEC Mapping Study meaning and vision on the Entrepreneurship Ecosystem of entrepreneurship in Tanzania (2016) and run the development.as well as EPF survey periodically to record absence of regular and improvements in the ecosystem systematic assessment • Introduce an annual “State of of the entrepreneurial Entrepreneurship and SMEs Report” environment showing the key indicators of the health of SMEs. 3 Gaps Priority Actions • Undertake Global Entrepreneurship Monitor (GEM) Survey through partnership with GEM • Conduct sensitization campaigns among public and private sector stakeholders on the Inclusive National Entrepreneurship Strategy and Action Plan. There is no • Enact a law to promote Entrepreneurship or Entrepreneurship and MSME Small Enterprises Act development • Support the National Steering Committee on Inclusive Entrepreneurship Development to coordinate and monitor implementation of the Strategy and Action Plan Absence of effective • Establish private sector led Working m e c h a n i s m s Groups to support implementation of to coordinate the INESs. entrepreneurship • Review dialogue platforms such as development TNBC and create better functioning framework based on lessons learnt. Lack of systemic • Establish indicators and data evaluation of measures collection systems of entrepreneurship intended to support policies, and undertake systematic entrepreneurs. impact assessment studies and document and use lessons learnt from initiatives 2.2 - Optimizing the regulatory environment The unleashing of entrepreneurship requires an environment that enables the entrepreneur to easily start, operate and close a business while complying with the law and where his/her property is protected. There have been positive developments in simplification of regulations. Despite these positive developments, the business 4 regulatory environment is still considered unfriendly. The remaining critical impediments and priority actions are as follows: Table 3: Measures to enhance regulatory framework Constraint Priority Actions Lack of systematic • Benchmark the time and cost of starting assessment of the process and doing business at sector and Local and cost of starting a Government Authority) level. business. • Introduce Regulatory Impact Assessment (RIA) - to assess implications of new policies and regulations before they are enacted. • Advocate for public sector actors to respect the existing PPD (Public- Private Dialogue) platforms at national, regional, district and sector/sub-sector level Cumbersome and costly • Harmonize, optimize and streamline procedures on business registration, licensing and taxation registration and licensing procedures, also through improving existing ICT-based platforms and decentralized services throughout the country. • Implement Blueprint on business regulatory licensing reforms • Introduce one-stop-shops to bundle administrative procedures to set up a business at LGA level. Start-ups deal with • Abolish pre-operational income tax inconsistency and payments and explore tax breaks for ambiguity in taxation start-ups. and inadequate support • Develop alternative dispute resolution mechanisms. mechanisms accessible/affordable to MSMEs • Carry out awareness campaigns on intellectual property and arbitration mechanisms 5 Lack of an appropriate • Introduce simplified regulatory and policy and regulatory institutional frameworks specific framework for micro to micro enterprises and carry out enterprises (over 90%) awareness campaigns on the benefits of which are too small to formalization. comply with existing • Establish on-line mechanisms for formalisation legal awareness creation for business framework. registration, advice and compliance. • Enhance Regulatory (Empowerment) Desks at Local Government Offices (District) level. • Introduce specific policies to encourage the transition of micro and small enterprises to the formal business sector. 2.3 - Enhancing entrepreneurship education and skills Vision 2025 Vision, the National Economic Empowerment Policy (2004), Youth Development Policy (2007), Education and Training Policy (2014), National Employment Policy (2008) as well as the Small and Medium Enterprises Development Policy (2003) underline the need to integrate entrepreneurship in the educational system. The key gaps in provision of entrepreneurship education and skills and the proposed initiatives are as follows: Table 4: Measures to enhance entrepreneurship education and skills Gaps Priority Actions Unclear role of the • Analyse formal and informal formal education entrepreneurship training curricula identify ecosystem in and address gaps and monitor impacts entrepreneurship, lack • Encourage academic institutions to of focus on practical transition to third generation Universities learning objectives by embracing entrepreneurship and innovation including developing learning by doing programs. • Encourage family, communities, employers and learning institutions to reward practical problem-solving • Develop training materials on entrepreneurship tailored to different target groups, including sub-sectors and social entrepreneurship. 6 Gaps Priority Actions Inadequate supply • Map BDS providers to identify capabilities, of quality BDS, and distribution and gaps, and establish a low unwillingness of system for BDS quality assurance entrepreneurs to pay • Promote ICT mediated and online learning for quality training. programmes including Massive Open Online Course – MOOC approach to scale up entrepreneurship training to youth and the underserved at low cost. • Develop customized training materials and best practices in designing and delivering entrepreneurship training in Tanzania. Few teachers • Implement capacity-building programmes have training in for entrepreneurship teachers, including entrepreneurship and scaling up existing programs (e.g. by ILO there are no incentives and UNCTAD’s Empretec, Kaizen, etc.). for them to engage • Provide incentives for teachers to engage in extracurricular students in extracurricular activities by activities linking class training with the industry and successful entrepreneurs. • Establish networks of entrepreneurship educators to exchange experiences, teaching tools and methodologies. Limited collaboration • Encourage academic institutions to use between SMEs and of successful entrepreneurs to share training institutions experience with students • Establish MSMEs mentorship and internship programmes. Develop schemes for students to undertake internships in MSMEs. 2.4 –Facilitating technology exchange and innovation It is essential MSMEs in Tanzania adopt technology and leverage on innovation to effectively use resources; access services and learn best practice; connect to the global market place, compete regionally and globally as well as start and scale up their businesses. In Tanzania, platforms and agencies such as Commission for Science and Technology (COSTECH) have provided constructive support through the development and implementation policy and national interventions by hosting ICT centric incubators and living labs... The main impediments and priority actions in this areas are as follows: 7 Table 5: Measures to enhance technology exchange and innovation Gaps Priory Actions Limited human and • Mobilize resources and cooperation to institutional capacity on support innovation centres. technology development • Introduce regular ICT training and training programmes. programmes for government officials. • Initiate programmes to support capacity-building of technology development and transfer centres. A distinct agenda for R&D • Consolidate and expand existing is not formulated, therefore business linkages programmes to innovation is not prioritized. engage MSMEs with larger companies. Programmes to link • Promote awareness on innovation, MSMEs into value chains including talent development through are not fully developed. exhibitions, innovation forums, social media, workshops, and publications. • Promote establishment of entrepreneurial ecosystems (science parks, incubators, innovation labs, living labs, hackathons) in learning institutions and communities though provision of land, guidelines, guidelines and other resources • Promote smart clusters that collaborate with research and training institutions or private sector entities to improve practice, products, and services and solve local problems Lack of strategies, • Assess and identify specific joint initiatives and incentives research activities with clearly for government, academia designated participants and and private sector to beneficiaries. collaborate. • Introduce Innovation forums between national and local government, academia & private sector. • Review the mandate, structure, staffing, funding and incentives of R&DI from the lens of innovation and technology exchange through triple helix. 8 Gaps Priory Actions • Introduce incentives for academia, private sector and government to collaborate in problem solving. Lack of targeted support • Establish performance tracking for applied research and mechanisms to monitor business entrepreneurial spin-offs, progression after support has been including cross-border provided. innovation and technology • Incentivise and support cross border exchange innovation, technology exchange and investments in supporting innovations by successful companies. • Increase visibility of innovation and innovators that impact girls, boys and women through media and other channels 2.5 Improving access to finance An effective entrepreneurial ecosystem should have a supportive financial system providing financial services on appropriate terms, promoting innovation, continuously building capacity to serve start- ups and encourage responsible borrowing and lending. The main gaps and priority actions are shown below. Table 6: Measures to improve access to finance Gaps Priority Actions Lack of suitable financing • Encourage financial institutions to options for MSMEs, and develop specific risk products for start-ups or youth-owned start-ups, youth- and women-owned enterprises in particular MSMEs, as part of their Corporate Social Responsibility. • Adopt ICTs and mobile platforms to promote digital and financial inclusion of MSMEs and rural communities. • Require banks to report lending by firm size and to document and share barriers in serving start-ups, micro and youth led enterprises. 9 Gaps Priority Actions Absence of public-private • Introduce incentives to encourage matching funds for development of angel investor innovation, high tech and networks, equity and venture capital rapidly growing MSMEs funds designed for MSMEs including innovative and high growth enterprises • Introduce government funds and incentives for skills development schemes for the financial sector. • Promote innovative ideas and high- tech projects through entrepreneurship awards for young entrepreneurs. Limited access to • Expedite development and launch of collateral for start-ups regulatory framework for credit-only and lack of oversight on financial institutions financial cooperatives and • Expedite the issuance of national IDs microfinance institutions to be integrated into various electronic databases • Implement large scale land titling programmes in partnership with LGAs and the private sector, and issuance of Customary Certificate of Right of Occupancy (CCROs), to be used as collateral • Bring credit-only financial institutions and mobile network operators under credit bureaux Financial literacy level • Expedite dissemination and awareness among MSMEs is of National Financial Education low and this generates Framework Build (2016 -2020). mistrust between financial • Organize mass-media behavioural institutions and borrowers. change campaigns on ethics and integrity with respect to credit. • Build capacity of non-financial BDS providers to offer financial literacy training and support MSMEs to prepare bankable plans • Enact a law to protect borrowers and lenders in the micro-financing sector. 10 2.6 –Promoting awareness and networking The entrepreneurship ecosystem should promote the value of entrepreneurship in the society, highlight entrepreneurship opportunities – particularly among young people, encourage private sector-led initiatives and strengthen entrepreneurs’ networks. The following have been identified as the main gaps and priority actions to promote awareness and networking. Table 7: Measures to promote awareness and networking Gaps Priority Actions Limited government • Participate in global events to celebrate support and involvement and showcase entrepreneurship, such as in entrepreneurship the Global Entrepreneurship Week and awareness initiatives; National Entrepreneurship Day. i n c o n s i s t e n t communication strategy to highlight the value of entrepreneurship for the whole society • cation strategy on entrepreneurship to suit different segments, using available media and technologies (e.g. television, radio, online platforms, etc.) as well as influential community leaders. • Develop entrepreneurship awards schemes, as incentives to change mind sets and practices, from the family to the national level Lack of information • Map, and make accessible, existing about entrepreneurship- and potential entrepreneurship related initiatives and opportunities at the local, national and opportunities, particularly regional level, that are and accessible for young people for young people and start-ups. completing formal • Strengthen the National education cycles. Entrepreneurship Development Committee (NEDC). 11 Gaps Priority Actions • Analyse transition of students, completing their formal education cycles, to entrepreneurship through tracer studies to inform the government action. The local private sector is • Promote local entrepreneurs’ networks, not sufficiently involved clubs, and associations and BDS in initiatives to promote providers’ associations. entrepreneurship. • Develop and promote local level entrepreneurship clubs (e.g. at the community, school levels), business plan competitions, sensitization forums for students, unemployed, young entrepreneurs. • Develop mechanisms for private sector organizations to play a major role at the national level, through coordination, collaboration and strengthening their advocacy skills. • Support young entrepreneurs’ networks and ensure that their voice is heard at local and national level. • Encourage and support the establishment of Angel Investors Networks. 2.7 – Specific measures on inclusive entrepreneurship The potential of entrepreneurship as a solution to sustainable development challenges has been widely acknowledged. In Tanzania, there is a high potential for entrepreneurship to become a channel for the social and economic integration of most vulnerable groups. In view to achieve the economic empowerment and effective participation in social progress of all citizens, including youth, women, the rural poor and other disadvantaged groups, the following constraints and priority actions have been identified: 12 Table 8: Specific inclusive entrepreneurship development measures Pillar Gaps Priority Actions Entrepreneurship There is no Social Enact a Social Strategy Entrepreneurship or Enterprise Promotion Social Enterprises Act Act, with special focus on women and youth and marginalized/ disadvantaged groups There is absence of Encourage mainstream platforms or PPD business associations to mechanisms on youth establish youth chapters entrepreneurship, and therefore space for the voice of young entrepreneurs Regulatory Lack of mechanisms framework to convey information Empower and make and provide guidance use of Youth Officers in on compliance for business facilitation youth Introduce preferential Lack of incentives measures and special for businesses to incentives to encourage transit from informal business formalization to formal for specific with a focus on women target groups and youth Education and Lack of basic teaching- Initiate programs skills learning facilities, and incentives for tools and support development of training materials on social materials on social entrepreneurship entrepreneurship Develop and implement a Lack of training program for development programs and of training materials (case approached tailored to studies, games, songs, youth exercises, etc.) on youth entrepreneurship 13 Pillar Gaps Priority Actions Promote edutainment to capture the interest of the youth Support community based learning programs Awareness and networking Establish district/ The country does not regional street boys show case innovative and girls (unemployed) or high performing entrepreneurship young entrepreneurs sensitization forum

5. IMPLEMENTATION MODALITY, MONITORING AND EVALUATION The priority actions identified are part of mandates of different private and public-sector actors, and some are already being implemented. All institutions implementing the Strategy should budget, raise funds and mobilize materials for financing their respective priorities stipulated in the Strategy. Leadership for implementation and coordination of specific pillars will be under Ministries, Departments, and Agencies, as shown in table below. Table 8: Leadership and coordination structure for implementation, by pillar Pillar Lead Institution Support institutions Overall leadership NEEC/ Prime TPSF and coordination Minister’s Office Ministry of Finance MITI, MoFEA SIDO, Entrepreneurship and Economic Affairs TPSF, MCDGC, Strategy (Planning ) TGNP, etc TPSF, TCCIA, TBS, Regulatory Ministry of Industry, TFDA, GS1, TRA, Framework Trade and Investment OSHA,etc 14 Pillar Lead Institution Support institutions MITI, TCCIA, TIE, Entrepreneurship Ministry of Industry, MoEST, VETA, Education and Skills Trade and Investment NEEC Ministry of Finance BOT, TBA, TAMFI, Access to Finance and Economic Affairs COBAT, TIB Dvlp, (Planning ) TFBDSP, etc Technology Commission R&DI, UDIEC, Exchange and for Science and SUGECO, Incubators Innovation Technology and labs, CAWAT, etc Tanzania Trade Awareness and PMOLEY, TAYOA, Development Authority Networking TFBDSP (TANTRADE) The Prime Minister’s Office, through NEEC – will take overall leadership and responsibility for coordination, monitoring and evaluation. The National Inclusive Entrepreneurship Strategy Steering Committee, under NEEC’s coordination, shall meet semi-annually to monitor progress and address any issues. Sub-Committees for each pillar shall be established, and these shall meet quarterly, feeding into the semi-annual meetings of the Steering Committee. The following are the performance indicators of the entrepreneurship strategy by pillar: Table 9: Performance Indicators by pillar Pillar Performance Indicators 1) Steering Committee for coordination of the strategy established and at least Implementing 3 coordination meetings per year entrepreneurship organized to ensure an inclusive, strategy coordinated and dynamic ecosystem for entrepreneurship development by 2020 15 Pillar Performance Indicators 1) 2) Effective monitoring, evaluation of entrepreneurship development (one impact assessment study carried out every two years from 2019 3) Annual State of Entrepreneurship Report produced every year from 2019 4) Global Entrepreneurship Monitor (GEM) Survey is done in Tanzania from 2020 Optimizing 5) Legal framework for social the Regulatory entrepreneurship, micro enterprises Framework and MSMEs in place by 2019 6) The proportion of informal business decrease from 89% to 70% by 2021 7) Successful roll out of a lower tier (simpler) formalization model for the smallest informal enterprises by 2020 8) Reduction in the cost of compliance at national and local level by at least 20% by 2021 Enhancing 1) Entrepreneurship is learnt in all primary Entrepreneurship and secondary schools and in teacher Education education by 2021 and Skills 2) Entrepreneurship is offered to at least Development 50% of tertiary education students by 2021 3) The number of master trainers certified under Kaizen, SIYB, Empretec models increase from less than 10 to at least 50 by 2021 4) Nationally accredited BDS curricula in place and operating sustainably by 2021 16 Pillar Performance Indicators Facilitating 1) At least 20 spin-offs from research Te c h n o l o g y institutions and universities by 2021 Exchange and 2) At least 50 functional hubs, living Innovation labs, incubators and innovation forums established and functioning by 2021 3) At least 50 innovation promotion activities supported by the private sector by 2021 4) At least 20% of University lecturers involved in action research and innovative activities in industry and government by 2021 Improving 1) At least 5 innovation funds established Access to for youth by 2021 Finance 2) At least 5 risk funds established for youth and start-ups by 2021 3) At least 10,000 young female and male entrepreneurs accessing innovation funds by 2021 4) At least three laws and regulations enacted to ease financing of innovative start-ups, SMEs and youth enterprises by 2021 Promoting 1) At least 50% of entrepreneurship Awareness and development actors are aware of and Networking consciously partake in implementation of INES by 2021 2) At least 500 schools, schools, colleges and communities have established entrepreneurship clubs and forums by 2021 3) Language and actions of politicians and civil servants reflect empathy with entrepreneurship and private enterprise by 2021 17 18