Why some Small and Medium Enterprises are falling behind?

THE country’s startups and the digital side-hustles sprouting have one constant: Ambition. Tanzanian entrepreneurs are building, trading, innovating. And it’s paying off.

According to the Tanzania bureau of statistics (NBS), Small and Medium Enterprises (SMEs) contribute over 27 per cent of the country’s GDP and account for more than 95 per cent of all registered businesses.

These enterprises employ over 5.2 million people and are seen as vital to reducing unemployment and boosting inclusive growth. But beneath this promising headline is a data gap that’s crippling long-term progress.

While large corporations and multinational firms are leveraging real-time dashboards, customer analytics and performance metrics, most Tanzanian SMEs are still relying on guesswork and gut feelings which results into missed profits, poor planning and premature business deaths.

This lack of data means most SME owners don’t know Who their top customers are, Which product lines are actually profitable, How seasonal trends impact cash flow, or even what their break-even point is.

Without this information, decisions become reactive instead of strategic. And in today’s economy, where global inflation, digital disruption and shifting customer behaviour are constant, that’s a dangerous position to be in. Take the example of a small poultry feed manufacturer, they have a strong customer base, but they keep running into cash shortages every quarter.

Why? They haven’t tracked how many clients pay late, or how delayed payments affect inventory restocking. As a result, the business turns away new orders not because of low demand, but because of poor financial visibility. This isn’t about laziness or ignorance.

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Tanzanian entrepreneurs are some of the most resourceful in East Africa. But there are structural reasons why SMEs struggle to use data:

1. Lack of Awareness: Many SMEs simply don’t know that data tools exist, or how accessible they’ve become. Tools like Google Sheets, mobile CRMs, or even Power BI dashboards can now run on a smartphone yet very few SMEs are exposed to these.

2. Digital Illiteracy: According to a 2023 study by REPOA, more than 60 per cent of SME owners have never received formal ICT training. Even those with smartphones often use them just for WhatsApp or mobile money not business intelligence.

3. Cost and Perception: Many small business owners still associate data tools with big corporations. There’s a perception that analytics are expensive, complicated, or irrelevant to a 5-person business.

4. Fragmented Support: Government and NGO programs for SME development often focus on funding or legal compliance not on building internal data capacity.

When SMEs can’t access or use data, they miss out on competitive growth. But Tanzania misses out, too. Consider:

• Missed investment opportunities: Investors avoid businesses that can’t show consistent numbers. Without solid records, even high-potential businesses can’t raise capital.

• Slower innovation: Without customer feedback and performance tracking, SMEs can’t pivot or improve their products in real time.

These are small wins, but when multiplied across the country’s more than 3.0 million SMEs, they represent billions of shillings in untapped efficiency. Tanzania is at an economic crossroads. With the expansion in regional trade and the digital economy growing fast, businesses that move with agility will lead and those that fly blind will fade.

The difference between the two is not location, capital, or even product. It is data. If we want to see our SMEs mature into national brands, if we want to raise the average lifespan of Tanzanian businesses and if we want to build a resilient economy from the bottom up, we must make data usage as normal as rent and stock. Because the future of the country’s growth isn’t just in factories, farms, or fintech it is in how well we measure, understand and act on our own numbers.