Milestone in business as Union SMEs grow

DAR ES SALAAM: AS Tanzania marks the 61st Union anniversary between Tanganyika and Zanzibar, this relationship stands out as more than a political arrangement, it is a dynamic engine of economic synergy that is significantly driving the growth of businesses and Small and Medium Enterprises (SMEs) across the nation.

Through enhanced trade relations, financial integration, labour mobility and policy coordination, the interaction between the two regions is fostering entrepreneurship, creating jobs and building a more inclusive economy across the country.

One of the most significant contributors to SME growth in Tanzania is the steady expansion of cross border trade between the mainland and Zanzibar.

Daily ferry and cargo operations connect Dar es Salaam to Zanzibar’s ports, enabling the exchange of a diverse range of goods, including spices, seafood, textiles and household products. SMEs are central to this activity.

Zanzibar’s businesses source a variety of goods from the Mainland, while Mainland SMEs benefit from selling their products to Zanzibar’s tourism-driven and culturally unique market.

According to national statistics, SMEs account for more than 95 per cent of all businesses in Tanzania and contribute around 35 per cent to the country’s GDP.

A growing number of these enterprises are involved in cross-channel commerce, making this interaction vital for the national economy.

Speaking at a recent stakeholder forum held to discuss various Union issues during the 61st anniversary, Zanzibar politician and former cabinet minister Hamad Rashid Mohamed highlighted the significant progress made over the six decades of the Union.

“We are now witnessing a growing number of SMEs not only establishing themselves but also expanding their operations across both Zanzibar and the Mainland,” he said.

He added, “This reflects the tangible benefits of the Union in creating an enabling environment for entrepreneurship and inclusive economic growth.”

He noted that the establishment of better trade networks, access to financial services and the expansion of infrastructure has contributed to the thriving of SMEs in both regions.

With these developments, businesses are increasingly able to reach wider markets, fostering economic resilience and sustainability.

The former cabinet minister also pointed out that the government’s continued efforts in supporting small businesses, including access to capital and business training, have been instrumental in promoting entrepreneurial growth.

He called for further policy alignment and the reduction of bureaucratic hurdles to ensure that SMEs can fully capitalise on the opportunities presented by the Union.

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“It is essential that we continue to foster an environment that supports innovation, collaboration and growth,” he concluded, urging stakeholders to work together for the continued prosperity of both regions.

Access to financial services is another area where this inter-regional collaboration is empowering businesses.

The expansion of mainland banks such as CRDB, NMB and Exim in Zanzibar, coupled with the widespread use of mobile money platforms like M-Pesa and Airtel Money, has simplified and accelerated transactions between the two regions.

These platforms provide critical tools for business owners to manage payments, save and invest.

An Economist-cumInvestment Banker, Dr Hildebrand Shayo said the unification of Tanganyika and Zanzibar in 1964 has been instrumental in shaping the policy and institutional framework that fosters Small and Medium Enterprise (SME) development throughout the United Republic of Tanzania.

While many may overlook it, this union has significantly influenced the environment for the growth of SMEs.

The union has established cohesive policies and legal frameworks that are essential for the growth of SMEs.

The union government has implemented national strategies and acts that create a stable legal and policy framework for SME growth.

This includes the SME Development Policy 2003, which offers guidelines for entrepreneurship, training, access to finance and market access, among other aspects.

He said under the union, there have been significant infrastructure and trade facilitation initiatives that contribute to the development of shared transport corridors, ports and logistics systems like the Dar es Salaam and Zanzibar ports through union-level policies.

These initiatives are crucial for SMEs engaging in trade. Similarly, trade agreements at the Union level facilitate access to wider markets for SMEs from both Zanzibar and the mainland, including the EAC and AfCFTA.

Under the Union, there have also been opportunities and challenges. Although the Union offers a cohesive platform for SME support, there are subtleties to consider, such as Zanzibar having a semi-autonomous government that sometimes creates region-specific incentives and frameworks.

Additionally, aligning the policies of the Union and Zanzibar is essential to prevent redundancy and ensure that SMEs in both regions receive equal benefits from national initiatives.

The Union government plays a crucial role in establishing the groundwork for SME development in Tanganyika and Zanzibar.

Its contributions to ensuring harmonised policy, access to national institution and infrastructure investment have facilitated inclusive growth.

However, ongoing dialogue and cooperation remain essential to align local implementation with national goals.

The governments of both Tanganyika and Zanzibar have recognised the importance of supporting SME growth and inter-regional collaboration.

They have implemented policies and initiatives aimed at simplifying business operations, reducing bureaucratic barriers and incentivising joint ventures.

For instance, the Zanzibar Investment Promotion Authority (ZIPA) and the Tanzania Investment Centre (TIC) offer tax incentives and streamlined procedures for investors operating in both jurisdictions.

Additionally, joint trade expos, such as the Zanzibar–Mainland Business Forum, provide platforms for entrepreneurs from both sides to network, explore partnerships and access new markets.

In recent years, the Zanzibar government allocated over 52bn/- specifically to support SME development, including training programs, startup capital and tools to expand market access.

These initiatives are not only strengthening the isles’ own economy but are also opening doors for collaborative ventures with mainland enterprises.

The increasing financial and institutional integration is turning Tanzania into a model for how semi-autonomous regions can work together to support national development.