Tanzania - Pilot Rural Investment Climate Assessment : Stimulating Non-Farm Microenterprise Growth

Abstract

Tanzania's Pilot Rural Investment Climate Assessment (RICA) measures the economic environment of non-farm entrepreneurs. The pilot assessment has three key objectives: it aims to better understand the rural non-farm economy in Tanzania, shed light on rural enterprise dynamics and business constraints, and reflect on areas where government policies are readily directed to help promote rural non-farm enterprise activity. The RICA is based on an analysis of a unique survey data set collected by the National Bureau o f Statistics (NBS) during January and March 2005, covering enterprises, households, and communities in all seven geographical zones of the country. Some of the main findings of the study are: 1) Rural non farm enterprises matter; 2) Tanzanian rural non farm enterprises differ from their urban counterparts; 3) Rural trade dominates; 4) Labor productivity is low; 5) Registration is associated with higher labor productivity; 6) The rate of new firm creation appears to be lower than in other African countries; 7) A minority of enterprises propels employment growth; and 8) Due to relatively rapid agricultural growth in recent years, demand exists for more rural non-farm economic activity. However, entrepreneurs are now constrained mainly from the supply-side in their response to this increased demand.