Why entrepreneurship is arduous option for Tanzanian youths.

Listening to the parliamentary session two days ago, every political leader was eager to speak about the current situation of tremendous increase of unemployed youths in our communities. The government has been exploring different options to counter the issue but the problem is unsettled, and some may choose to say its worsen.

“More than 10,000 applicants. Only 70 candidates needed, immigration job posts. Unemployment is a time bomb waiting to explode, government should invest in creating conducive ecosystem for self employment in this country. Entrepreneurship is no longer a luxury it is a necessity in Tanzania.”

Youths waiting for the interview at the national stadium

The logical escape route from the problem is to build conducive ecosystem to foster entrepreneurship among youth in Tanzania. Decision makers are preaching about entrepreneurship and a lot of campaigns and initiatives have been taken for the past few years to encourage entrepreneurship culture among Tanzanian youths but why, we are still facing the same challenge. Why Tanzanian youths are reluctant to become entrepreneurs?

“ While the total unemployment rate in Tanzania has dropped from 11.7 percent in 2006 to 10.7 percent in 2011, youth unemployment is still an issue of great concern.  More recently, there has been less foreign investment and development assistance from developed nations. Not only must the current global situation be taken into account, the fact that 800,000 to one million youth enter the Tanzanian labor force each year is not to be underestimated. “ His Excellency Dr. Jakaya Mrisho Kikwete, President of the United Republic of Tanzania, his article on The Center of Global Health and Diplomacy.

If we can understand the roots of the problem, then it will be very easy to adopt the solution to the problem. First of all we need to understand to create society of entrepreneurs is a collective effort, it is not something that can be done by the government alone or a certain international initiative, it is a role of everyone. The two biggest factors hindering Tanzanian youths to become entrepreneurs is the mindset and the ecosystem.

Speaking about the mindsets, entrepreneurs take risks and make tough decisions. Are we prepared to take risks and learn from the mistakes ? What is the family reaction when a family member who has just graduated want to be an entrepreneur ? What does our education say about entrepreneurship ? Who is an entrepreneur in our society ? Do people understand the importance of vocational training ? I remember sitting with someone few weeks back and that person telling me few years back it took some guts for someone to call himself an entrepreneur, you were considered to be a total loss and someone who have lost the direction. What is the situation now ? are we still there and what should be done, to change that mindset, those are the most important questions we should asks ourselves.  

If the class of people who are attending vocational training and hands on skills training are those who have failed to qualify to enter university or higher education system. What does this say about our perception towards entrepreneurship ?

Getting back to the ecosystem, when I was an entrepreneur, the biggest challenge I faced was formalizing my company. Believe me the process looks very clear but the system is very challenging; The taxation system, the registration system, the flow of information, supportive local markets and weak policies to protects interests of start-ups companies, is what makes entrepreneurship a day dream for most of Tanzanian youths.

“When you start to tax a company from its first day of operation you are simply taxing the capital, the question is how will this entrepreneur survive while his business depends on a bank loan. ? “ Senior local entrepreneur

We can learn from the tax exemption scheme for new start-up companies adopted in Singapore. The system was introduced in Year of Assessment (YA) 2005 to support entrepreneurship and help  local enterprises to grow. Under this scheme, a newly incorporated company that meets the qualifying conditions can claim for full tax exemption on the first $100,000 of normal chargeable income for each of its first three consecutive years.

“The information to register companies and formalize them is limited to the local entrepreneurs and the process is complicated. It takes a lot of effort to incorporate your company as a limited company. Entrepreneurs ended up being conned by brokers who pretend to help them to register their companies and charge them extra. What if the information was streamlined ? How many youth are afraid of opening companies due to these complexities ?” Start-up Owner

Every stakeholder entitled with the position and resources to help entrepreneurs in Tanzania should understand. If we really want to encourage Tanzanian youth to get into entrepreneurship then, we need to reform the system, streamline the information, set policies that will push local markets to them and finally the financial system should be supportive.

“While there has been notable progress in education and training, we must ensure that no reversals in development occur. We must bring back hope for the youth of Tanzania and maintain the security of the African continent.” His Excellency Dr. Jakaya Mrisho Kikwete, President of the United Republic of Tanzania, his article on The Center of Global Health and Diplomacy.