THE ROLE OF SMEs ON CREATION OF EMPLOYMENT OPPORTUNITIES AMONG TANZANIAN YOUTHS: A STUDY OF DABAGA VEGETABLE and FRUIT CANNING

CO. LTD IN IRINGA MUNICIPARITY

By Ulimboka Nsajigwa

A research paper is submitted in partial fulfillment of the requirements for the Degree of Business Administration of Tumaini University-Iringa University College

August, 2011

COPY RIGHT This paper is a copyrighted material protected by international enactment as an intellectual property. It may not be reproduced by any means except for the short extract In fair dealing for research or private study with acknowledgement of a written permission from the author or Tunaini University-Iringa university College Copyright 2011 Ulimboka nsajigwa

CERTIFICATION The undersigned certifies he has read and hereby recommends for acceptance by the Tumaini university-Iringa university college a dissertation titled an assessment of efficacy of SMEs on creating employment among Tanzanian youth: A case study of Dabaga vegetable and fruit canning co.ltd in partial fulfillment of the requirements For the degree of Bachelor Administration (Economics) of Tumaini university .. Mr: Mlasu Serijo (Supervisor) Date.

Internal (Examiner) Date

ii

DECLARATION I, Ulimboka nsajigwa hereby declare that, this research is a result of my own effort and has never been submitted to any other university or higher learning institution for the similar purpose of a university degree.

. Ulimboka Nsajigwa Date..

iii

ACKNOWLEDGEMENT The completion of this research and report is a result of different individual support, contribution and corporation I thank God for giving me the precious chance of being part of Tumaini Iringa University College and the strength to stand until the end of my studies Great thanks to my supervisor Mr. mlasu who has supervised me to make this research reports possible and helped me to reach the target of quality education at Tumaini university-iringa College. The advice, critics, knowledge, encouragement imparted by my lectures has been valuable source of guidance during the entire time of my studies Also great gratitude should go to Dabaga Vegetable and Fruit canning co.ltd management , who accepted me to give information and collect data to their microfinance institution Also I would like to show my gratitude to my friend for their love and encouragement which has been the source of inner strength for me, their continuous guidance, support, advice, and encouragement have made my three years at tumaini university-iringa University College to well accomplished as targeted Finally I would like to extend my gratitude to my family members Mr. & Mrs. nsajigwa,Mr and Mrs. mwaisaka,neema,ipyana,gwakisa,and Clarence who tolerated my absence and missed my presence during my studies.

iv

DEDICATION I dedicate this work to my parent and all my siblings

ABSTRACT The aim of the study was to assess the role of small business on employment creation among Tanzanian youth a case study of DABAGA VEGETABLE and FRUIT CANNING CO.LTD in iringa municipal. The study used both primary and secondary data to establish the relationship between the presence of small businesses and employment creation .Primary data was collected from a sample of 30 respondents all employees of DABAGA VEGETABLE and FRUIT CANNING CO.LTD using an administered structured questionares.Seciondary data used in the study was obtained from DABAGA VEGETABLE and FRUIT CANNING CO.LTD The Findings of the study revealed that 50% of the respondents indicated that they were involved in employment creation activities in iringa through Dabaga Vegetable and Fruit canning co.ltd all the time ,70% of the respondents stated that their working conditions motivated them to perform their duties effectively and 60% of the respondents agreed that the growth of organization increase the employment opportunities to the youth in iringa.The research results also showed that 80% of the respondents considered increase employment to graduates or school leavers as an important factor that determined the growth of the business.Similarly,the study findings showed that the activities that Dagaga Vegetable and Fruit canning co.ltd performed such as worker and product promotion resulted in an increase of employment, the establishment of social amenities such as ,shops, health services and education.Thus,the study concluded that the presence of SMEs in a given region is likely to lead to some to Employment Creation

vi

LIST OF TABLE Table 4.1: Gender21 Table 4.2: Education status..22 Table 4.3.Age...22 Table 4.4.are there any activities performed by SMEs which have lead to promoting the well-being of the people..23 Table 4.5.Do working conditions within the organization motivate you to perform your duties effectively 24 Table 4.6.Do you think economic growth of your organization increase the employment opportunities to youth in iringa25 Table.4.7.Do you think increase employment to graduates or school leavers is an important For the growth of your Organization...26 Table 4.8.Does the Vision and Mission of the organization support employment creation To the youth in iringa...27

vii

LIST OF ABREVIATIONS SMEs = Small and Medium enterprise

SIDO = Small Industries Development Organization ESRF =East African Social Science Research Review AU =Africa Union

UNIDO =United National Industrial Development Organization ILO =International Labour Organization

viii

TABLE OF CONTENTS COPY RIGHT..........................................................................................................................i CERTIFICATION..................................................................................................................ii DECLARATION...................................................................................................................iii ACKNOWLEDGEMENT.....................................................................................................iv ABSTRACT...........................................................................................................................vi LIST OF TABLE..................................................................................................................vii LIST OF ABREVIATIONS................................................................................................viii CHAPTER ONE...................................................................................................................11 1.0. INTRODUCTION..........................................................................................................11 1.1. Background to the problem............................................................................................11 1.2. STATEMENT OF THE PROBLEM.............................................................................13 1.3. RESEARCH QUESTIONS............................................................................................15 ..............................................................................................................................................16 1.4. Research objectives and Hypothesis.............................................................................16 1. General/Main objective.....................................................................................................16 11. Specific objectives..........................................................................................................16 1.5. SIGNIFICANCE OF THE STUDY...............................................................................17 1.6. SCOPE OF THE STUDY..............................................................................................17 1.7, LIMITATIONS..............................................................................................................17 1.8. DEFINITON OF TERMS..............................................................................................17 CHAPTER TWO..................................................................................................................19 2.0. INTRODUCTION..........................................................................................................19 2.1. Theoretical literature review..........................................................................................19 2.1.1. DEFINITION OF SMALL BUSINESS......................................................................19 2.1.2. SMEs and Employment Creation................................................................................19 2.1.3. SMEs and Income generation.....................................................................................20 2.1.4. SMEs and Poverty alleviation.....................................................................................20 2.2. EMPIRICAL MODEL...................................................................................................21 2.4. CONCLUSION..............................................................................................................23 CHAPTER THREE...............................................................................................................25 RESEARCH METHODOLOGY..........................................................................................25 3.0 INTRODUTION.............................................................................................................25 3.1 TYPE AND RESEARCCH APPROACH.....................................................................25 3.2. AREA OF THE STUDY................................................................................................25 3.3. POPULATION...............................................................................................................25 3.4. SAMPLE TECHNIQUE AND SAMPLE SIZE............................................................25 3.5. SAMPLE FRAME.........................................................................................................26 3.6. SAMPLE UNIT.............................................................................................................26 3.7. SAMPLE SIZE...............................................................................................................26 3.8 METHODS OF DATA COLLECCTION......................................................................26 3.9. Questionnaires................................................................................................................26 3.10 DOCUMENTATION....................................................................................................27 ix

3.11. DATA PROCESSING AND ANALYSIS...................................................................28 3.12 DATA PROCESSING..................................................................................................28 3.13 DATA ANALYSIS.......................................................................................................28 CHAPTER FOUR.................................................................................................................30 DATA PRESENTATION.....................................................................................................30 4.0. INTRODUCTION..........................................................................................................30 4.1. GENERAL FINDINGS OF THE STUDY....................................................................30 4.4. CONCLUSION..............................................................................................................38 CHAPTER FIVE.................................................................39 DISCUSSION...................................................................39 5.0. INTRODUCTION..........................................................................................................39 5.4. CONCLUSION..............................................................................................................41 CHAPTER SIX...........................................................................42 SUMMARY, POLICY IMPLICATIONS AND CONCLUSION........................................42 6, 0. INTRODUCTION........................................................................................................42 6.1. SUMMARY...................................................................................................................42 6.2. POLICY IMPLICATIONS............................................................................................43 6.3. AREAS FOR FURTHER RESEARCH........................................................................43 6.4. CONCLUSION..............................................................................................................43 APPENDIX...........................................................................................................................47

CHAPTER ONE 1.0. INTRODUCTION This chapter includes background to the study, statement of the problem, objective of the study both general and specific objectives, research questions, hypothesis formulation, significance of the study and scope of the study 1.1. Background to the problem The high rate of the youth unemployment is one of the burning issues confronting various parts of the world, including Tanzania; unemployment is a result of the failure of economies and education system of a given country to accommodate its youth Leaders from the 53 AU member states say there is basically a mismatch in the growth of countries `economies and formal jobs as well as in the skills between those demanded by employers and those acquired in school.(AU Report) Statistics show that in Africa alone between 7 and 10 million youth enter the labour market each year but are left out due to lack of capacities to absorb them.(SIDO paper 1999) IT is a known fact that youth bring with them boundless energy, imagination, creativity, ideals and a limitless vision for their future and the societies in which they live. if provided with an enabling environment and opportunities, they can therefore be key agents for social change, economic development and technological innovation..if not utilized they are a wasted resource.(Youth development fund) Youth unemployment has many impact including increased violence, crime and political instability. Desperation can drive many people into living outside the law both to survive and as a means of expressing dissatisfaction at the appraisal neglect of their very existence Studies show that many of the most unstable countries are also those with very high youth unemployment rates.(AU Report) It was out of this understanding that the African union (AU) picked ``Accelerating Youth Employment for sustainable Development as the theme for its 17th Session of the Assembly of the unions Heads of the state and Government which ended in Malambo, Equatorial Guinea early this month

11

One day of the two-days meeting which brought together leaders from the 53 AU member states including President Jakaya kikwete,was dedicated mainly at discussing the challenges associated with empowering the youth and making them forces of development Participating in debate, the leaders acknowledged the huge potential will in accelerating empowerment of the young men and women in the continent. They spoke on the need for Africa governments to security invest in developing the capacities of the youth to enable them effectively participate in the development of them countries ``Youth are the parent and the future of our families, societies and nations. so investing in building their capacities so that they can perform their historic role effectively is both a duty and responsibility we can not shy away from``Said President Kikwete. He said the investment should be directed at addressing the numerous challenges facing the youth including unemployment which he described as the most formidable of them all ``This is a time bomb which if not attended properly will become a major source of instability in all our countries. The Arab spring criss may be just the begginig.Building the best investment for a stable future for us`` He said He said Africa is a very young continent because of its huge proportion of youth in the populationAfrican youth constitute 37 percent of the working population, but 60 per cent of the unemployed.(Daily news,wersday,03 august,2011 online edition) ``And each years about 10 million Africa youth join the labour market in Africa while the new employment opportunities are not keeping pace with a large and growing young labour force, we must therefore take actions that will create jobs for our young men and women``He said President Kikwete said as their parents, leaders and governments have a very special responsibility to the youth which include ensuring that they grow to adulthood in good health, get the best quality education and acquire decent and rewarding jobs ``I know there are no easy answers to these questions for countries like ours with the levels of poverty and development that we are in .but we have to do everything we can to deliver on this historic duty``He said The President shared his experience with the Danish African commission on youth employment in Africa, to which he was a member. He said the commission identified several vital interventions which if implemented can jump start job creation in Africa. The commission for example, underscored the centrality of sound political, social and economic growth through increased investments, improved competitiveness and job creation 12

``It requires us to put in place policies that will enable our youth to get the education and skills that will make them readily employable or will enable them to employ themselves`` He said According to the President, the policies needed are those that will enable the youth acquire entrepreneurial skills which will in turn enable them establish and run successful business. Policies that will promote private section development in Africa which will in turn help create the jobs for the young men and women But President Kikwete said Job creation is very much a function of increased investment and that having appropriate youth policies means also having robust investment policies that will promote and facilitate formation of many small and medium enterprises (SMEs) The SMEs will create jobs that the youth require``But we have to ensure that the SMEs have easy access to finance which one of the critical problems facing all of us Therefore there is need for our governments to expand financial services and other mechanisms that will make it easy for our SMEs to get access to capital that they need for their operation``Mr Kikwete said As part of its work the African commission established the African Guarantee Fund(AGF) which provides guarantees to African financial institutions leading to SMEs``Our government should enourage our financial institution to make use of the fund and lend money to our SMEs ``he said urging African governments to look at ways of establishing similar purposes in their respective countries He gave an example of Tanzanian which has followed the footsteps of the work of the commission by establishing its own SMEs Guarantee Fund. (Daily news, wersday, 03, August, 2011, online edition) 1.2. STATEMENT OF THE PROBLEM A number of the research have been pointed the involvement of various Non Government Organization (NGOs) and the Government in boosting the small and medium enterprises (SMEs).Anderson (1994) argues that the promotion of small and medium enterprises was an essential part of the development strategy of self reliance as promoted by Arusha Declaration that remains until this day most important political statement of intent of the country post colonial periods White.s,(2001) comments that the international labour organization (ILO) member of states have been recognized that small and medium enterprises makes contribution to their economies through the recommendations of the international labour conference,entitled,general conditions to stimulate job creations in SMEs

13

The economic reforms which have been taking place in the country since 1990 has downsized employment opportunities in the formal sector of the economy ,due to retrenchment of the public employees and changing of the role the government from conducting business to the supervisory role. The lack of employment has resulted in the majority of people engaging in the informal sector of the economy. The situation is aggravated by an increasing of youth and graduates entering the job market each year. in addition to loach SMEs policy to faster SMEs development .The intention is to create legal regulatory environment to enable the sector to provide decent employment opportunities. This has given room for SMEs to play a greater role in the national economic growth and development. Thus now days there are larger number of SMEs and individuals struggling to establish businesses to create employment, generating income and extend production The high rate of youth unemployment is one of the major problem confronting Tanzania, including various parts of the world. Analysts attribute the situation to failure by countries economies and education system to accommodate these young people. AU heads of state say there is basically a mismatch in the growth of countries economies and formal jobs as well as in skills between those demanded by employers and those acquired in school (AU reports) SMEs from one of the rapidly growing economic sector, that 95 percent of the Tanzanias industrial sector is made up of SMEs, with an estimated 3.2 million entrepreneurs and 1.3 million business entities But still the sector contributes significantly to job creation and stimulates economiec growth and begginig to play a key role in the economic and social development of the country.However,it seems that such SMEs play a small role on employment creation among Tanzanian youth. The reason being that many school leavers and graduates (youth) have entered into SMEs without having requisite skills in business and entrepreneurship education

Despite of all this SMEs contributes significantly to job creation and stimulate economic growth and begging to play a key role in the economic and social development of the country .Therefore this study tends to explore more information on the role of SMEs on employment creation among Tanzanian youth

14

1.3. RESEARCH QUESTIONS The research questions are therefore formulated to describe the objectives and specify the field of the research. Here are the research questions as follows 1. Are there any activities performed by Dabaga Vegeble and Fruit canning co.ltd,that have led or may lead to increase in income generation to youth 2. Are there any activities performed by Dabaga Vegetable and Fruit canning co.ltd.have led or may lead to promoting the well-being youth in a particular environment 3. How many youth are currently employed in iringa municipal by Dabaga Vegetable and Fruit canning co.ltd

15

1.4. Research objectives and Hypothesis

1. General/Main objective The general objective of the study is to asses the role of SMEs on creation of employment opportunities among Tanzanian youth.

11. Specific objectives This research aims at achieves the following specific objectives .To identify activities performed by DABAGA VEGETABLE and FRUIT CANNING CO.LTD that have led or may lead to an increase in income generation to the youth .To assess the activities performed by DABAGA VEGETABLE and FRUIT CANNING CO LTD that have led or may lead to promote the well-being of youth in a particular environment To determines the number of youth employed by DABAGA VEGETABLE and FRUIT CANNING CO.LTD

16

1.5. SIGNIFICANCE OF THE STUDY The study addresses the effectiveness of small business in promoting employment creation among Tanzania youth. The study is significant for several reasons First, the study will help the researcher to obtain the diversified knowledge on how small business can improve effective use of resources. it is also important for the award of degree in Bachelor of Business Administration in Tumaini University-Iringa University College Second. The research will provide a source of literature review that can be used as reference to other researchers Third, through this research, the public will understand how the establishment of small business can promote employment opportunities in any given region. Lastly. The study findings can be used to draw policy implication which can help small business grow and lead to economic development 1.6. SCOPE OF THE STUDY This study represents the situation of iringa municipal while Dabaga Vegetable and Fruit canning co.ltd as a representative sample

1.7, LIMITATIONS Although they do not in any way diminish the significance of the results of this study there were some difficulties experienced in the course of this study namely a. There was little cooperation from some of the respondents because of the time involved in filling in the questionnaires b.During the time that the research was conducted, most of the respondants were on leave c.Due to time and budget constraints the study focused on Dabaga Vegetable and Fruit canning co.ltd in iringa municipal only 1.8. DEFINITON OF TERMS Income generation is a production of earnings of the people; it implies production of wages, better revenue, returns and profiles as well as takings

17

Social amenities are all services or facilities such as education services, health services as well as infrastructure facility that are provided to a given society or community in general Employment is a contract between two partners. One being the employers and other being the employee. An employee may be defined as ``A person in the services of another under any contract of hire, express or implied, oral or written. Where the employer has the power or right to control and direct the employee in the material details of how the work is to be performed ``(Blacks law Dictionary ,5thEd, 1979)

18

CHAPTER TWO 2.0. INTRODUCTION In this chapter literature review is discussed in detail in order of the research objectives of this study. At the end of literature review the knowledge gap is given and that is the Main reasons which pushed me to make a study on the body of context 2.1. Theoretical literature review In theoretical literature review, the researcher defines the concepts and terms according to how different authors have defined them relating to the study to the one done by the researcher

2.1.1. DEFINITION OF SMALL BUSINESS Small business is a business, including its affiliates, that is independently owned and operated and not dominant in producing the products or performing the services being purchased, and one that qualifies as a small business under the Federal Government criteria and standard industrial classification size (fast.faa.gov/archive/v999/ams/app-c.htm) A small business is a separate and distinct business entity, including cooperative enterprise and non-governmental organizations, which is managed by one or more owners and which predominantly carries on business in any sector or sub sector of the economy (www.moneywebtax.co.za/moneywebtax/view/moneywebtax/en/page1030)

2.1.2. SMEs and Employment Creation Grants are awarded to non-profit organization to develop projects that will create new employment and business opportunities for welfare recipients and low income individuals through self employment, micro-enterprise, expansion of existing business and new business ventures (lewis.2002). Since SMEs tend to be labour-intensive, they create employment at relatively low of investment per job created. At present, unemployment is a significant problem that Tanzania has to deal with estimates show that there are 700,000 new entrants into the labour force every year, About 500,000 of these are school leavers with few marketable skills. The public sector employs only about 400,000 of the new entrants into the labour 19

market leaving about 660,000 to join the unemployed or underemployed reserve. Most of the persons end up in the SMEs sector, and especially in the informal sector. Given that situation and fact that Tanzania is characterized by low rate of capital formation,SMEs are the best option to address this problem(SMEs policy,2002) The SMEs sub-sector is contributing most to the job creation especially currently where formal employment is no longer in the position to absorb the job-seekers. Example: the retrenchments in the civil Service and parastatal sectors have eroded the capacity of the public sector as a predominant employer. This led to many retrenches resorting to other income generating opportunities in the SMEs sub-sector. In 1993 for instance, it was estimated that about 12% of the rural labour force was self-employed in the SMEs, while in urban area it was estimated to be 34 %.( Eastern Africa social science research review, volume 18, number 2, June 2002) According to the informal sector survey of 1991,micro enterprise operating in the informal sector alone consisted more than 1.7 million business engaging about 3 million persons, that was about 20% of the Tanzanian labour force(SIDO paper 1999) The most common argument in favour of SMEs is that they create substantial job opportunities as they use relatively labour-intensive technologies.SMEs employ more people per unit of investment as compared with large firms.thus,a given amount of money will create more jobs if it spread over a large number of SMEs than if it is focused on few large companies (Asri and Baker 2000)

2.1.3. SMEs and Income generation It is now well accepted both among academicians and policy makers that small business play a vital role in contributing to overall economic performance of a countries (Dean et al.1996; karlsson et al 1993).Small business play an important role in community development by attractive private investment back into covering areas and spread the benefits of economic growth to people and places to often left behind. Through their capital investment private small business and micro-enterprises create jobs and new opportunities that promote community-building and social activities in the rural and small towns 2.1.4. SMEs and Poverty alleviation According to the United Nations Industrial Development Organization UNIDO, for developing countries integration into the global economy through economic liberalization, deregulation and democratization is seen as the paramount way to trumph over poverty and inequality. Important to this process is the development of an animated private sector, in which small and medium enterprises can play a central role.SMEs have a propensity to 20

employ more labor-intensive production process than large enterprises.consequently,they contribute significantly to the provision of productive employment opportunities, the

2.2. EMPIRICAL MODEL Empirical literature review relies on experience or observation alone often without due regard for system and theories. Its data based on the research done by others, journal, articles and information from new newspapers In 1995 Paul west head and Sue Birley conducts the research on the Employment growth in new independent owner-managed firms in Great Britain on their studies, they explores employment change in 408 independent, owner-managed new firms in great Britain which had received their first order between 1986 and 1990.in order to unravel the factors associated with standardized employment change in new independent firms, exploratory bivariate correlation analysis was used. Eight-eight variables were identified from the literature and they relate to the internal characteristics of the principal owner-manager and the businesses as well as a range of variables which capture various aspects of the external environment.Bivariate correlation analysis results are presented for separate sub-samples of manufacturing and services firms. Moreover in order to identify the combination of factors associated with employment change in surveyed new firms the data were further subjected to multiple correlation and regression analyses employment, the reduction o In 1994 Hannu Terro and Hannu Niitty Kangas conducts a research on the impact of unemployment on New firm formation in Finland on their conclusion they argued that: there is an a priori case that unemployment can either increase or decrease new firm formation. This paper analysis how unemployment has affected entrepreneurship in find where, after a sustained period of increase new firms formation began to fall during the recession. The empirical analysis is based on the application of various statistical methods on regional data on unemployment, new firm formation and other factors, Two hypotheses based on the push-pull model are derived. The decision to start a new firm is treated as a form of human capital investment problem. At regional level, high unemployment is shown to promote firm formation .These relationships are strengthened if the effect of other factor is eliminated. Especially in the case of those regions where both the opportunities for entrepreneurship and the entrepreneurial qualifications of the population are good, a rise in unemployment will promote new firm formation

21

In 1999 Sunday l Owualah conducts a research on tracking youth unemployment through entrepreneurship on his conclusion he argued that promoting entrepreneurship consciously among youth can be an effective way of tracking unemployment within this group. This conclusion is drawn from the analysis of survey data collected from stratified sample of loan beneficiaries of the small scale industries and Graduate Employment programme in Nigeria. This programme is one of four programmes of National Directorate of Employment (NDE) set up in Nigeria in 1987 to encourage and assist unemployed youth to establish and operate their own small-scale firms. The analysis shows that an average of four new jobs were created by each of the programme.it further reveals that the firms achieved on appreciable growth in their assets while previous training, experience and personal indications of their Owners largely influenced the choice of types of small-scale firms that were established In 2004 Gebremeskel H.Gebremariam,Tesfa G.Gebremedhin,and Randall W.Jackson conduct the research on the role of small business in economic growth and poverty alleviation in west Virginia on their conclusion they argued that, the relationship between small business development, economic growth, and poverty alleviation in west Virginia is analysized using time-series data from 1980 to 2001.The main objective of the study is to empirically evaluate the critical roles of small businesses in economic growth and poverty alleviation in west Virginia .in OLS and 2SLS regression analysis a positive relationship exist between the incidence of poverty and small business and economic growth and the incidence of poverety.These are a. There is a robust, positive relationship between the relative size of small business and economic growth, even when controlling both for a number of a many other growth determinant variables and for simultaneity bias b.There is a strong inverse relationship between the relative size of small business and the incidence of poverty c.There is a strong inverse relationship between the per capita Real Gross state product Growth and the incidence of poverty 1. The autonomous impact of the relative size of small business on poverty rate is Mild and insignificant, including that the strong inverse relation given in (b) is Through economic growth rather than a direct one.Thus, the ant-poverty impact Of small business development is mainly through its impact on economic growth Of the economy as given in (a).The empirical results establishes the link Between small business development, economic growth and poverty alleviation 22

The study supports the ant-poverty impacts of small business development research findings.Besides, the empirical results and analysis show that unemployment rate has A strong counter-cyclical impact on economic growth and cyclical effect on the incidence Of poverty, which may be because they act as disincentive to work or not high enough to Put the recipient above the poverty line. This indicates that strong macroeconomic performance is a key factor for poverty alleviation 2.3. RESEARCH GAP After having reviewed both theoretical and empirical review the researcher found out that it was important to conduct the study too. Other scholars had conducted studies concerning the role of SMEs on employment creation to the youth.Hannu Terro and Hannu Nitty Kangas. (1994) conducted a study on impact of unemployment on new firm formation, Paul west head and Sue Birley (1995) conducted the related study focused on employment growth in new independent owner-managed firms in Great Britain, and Sunday I Owualah (1999) conducted on tracking youth unemployment through entrepreneurship. Still the researcher has unique aspects on conducting the related study since all of the scholars reviewed by the researcher they didnt consider the role of SMEs on employment creation among the youth, also the other researches had been done outside Tanzania context Therefore, it was necessary to conduct a study in Tanzania perspective also with focus on the role of SMEs on employment creation. The gap gave the researcher uniqueness by constructing the research title, on the role of SMEs on employment creation among Tanzanian youth in iringa a case study of DABAGA VEGETABLE and FRUIT CANNING CO.LTD

2.4. CONCLUSION The literature review shows that there is a strong relationship between the growth of small businesses and economic growth and consequently poverty reduction The Empirical review that was conducted focused more on developed countries. The researcher assumes that no significant studies have been conducted in Tanzania to ascertain this relationship.Thus,the aim of this study is to asses the role of small business on employment creation a case study of Dabaga Vegetable and Fruit Canning co.ltd

23

24

CHAPTER THREE RESEARCH METHODOLOGY 3.0 INTRODUTION Methodology describes in as much detail as necessary how you conduct the research, who or what your subject is and what methods are used to achieve the objectves.This chapter presents the Type and research approach, the area of the study,population,sample size and sampling techniques, data collection methods and finally the method of data analysis that 3.1 TYPE AND RESEARCCH APPROACH The study was quantitative in nature. it was quantitative because it measured variables such as impact of small business on creation of employment opportunities. To solve the research problem at hand the researcher found that the data at hand is inadequate hence it became necessary to gather up-to-date comprehensive and appropriate data aiming at verify some facts. The study type was descriptive as it tried to assess the role of small business on creation of employment opportunities the study employed 3.2. AREA OF THE STUDY The study was conducted at Iringa town in Ipogolo district in DABAGA VEGETABLE and FRUIT CANNING CO.LTD a firm dealing in processing and canning fruit, fruit juices,vegetables,sauces and pickles, and packaging into containers of various sizes and engages in selling the product to both wholesale and retailers 3.3. POPULATION The population of this study included all workers from sales and production department respectively. Given the size of population of the study area, time and financial resources constrains, sample of the respondent were taken to represent total population from DABAGA VEGETABLE and FRUIT CO.LTD 3.4. SAMPLE TECHNIQUE AND SAMPLE SIZE The research included in the study all employees who were found in the two departments of sales and production 25

3.5. SAMPLE FRAME The study targeted workers from DABAGA VEGETABLE and FRUIT CANNING CO LTD.From the entire population only a list of all the departments in the organization was obtained from the organization secretary. From this list, two departments as purposively selected namely the sales and production departments. All the employees in these departments were included in the study 3.6. SAMPLE UNIT The research has been conducted at DABAGA VEGETABLE and FRUIT CANNING CO.LTD in the department of sales and production department

3.7. SAMPLE SIZE A sample size of 24 junior and 6 senior staff from these two department were included giving a sample size of 30 respondents 3.8 METHODS OF DATA COLLECCTION The study used both primary and secondary data. Primary data was collected from workers and senior staff through structured questionnaire because the type of the study was essentially and questionnaires were the most appropriate secondary data was collected from DABAGA VEGETABLE and FRUIT CANNING CO.LTD archives 3.9. Questionnaires The research administered questionnaires to a sample size of 30 respondents The questionnaires contained both open ended and closed ended questions. This method was used to collect primary data

26

3.10 DOCUMENTATION This involved collecting documented information from DABAGA VEGETABLE and FRUIT CANNING CO.LTD.The information collected relating to sales and production was used in this study

27

3.11. DATA PROCESSING AND ANALYSIS Primary data were collected and analyzed using simple statistics

3.12 DATA PROCESSING The researcher processed data through editing, classification and tabulation

3.13 DATA ANALYSIS In this study, the researcher used qualitative method of data analysis, which aimed at determining the impact of DABAGA VEGETABLE and FRUIT CANNING CO.LTD on creation of employment opportunities among Tanzanian youth. The method of analysis employed was simple statistics such as percentages 3.14. ETHICAL CONSIDERATION Ethical consideration means respecting the culture and moral aspects of the people involved in researchEthics refers to the moral principles or values that generally govern the conduct of an individual or group(lamb et al 2006).This study involved many different people and the researcher considered all ethical aspects while doing research.confidentiality was observed at all times.Respondents were free to respond to the researchs questions and no force was used with regards to respondents while collecting data.The researcher respected the culture and moral aspects of the people in the study areas and did not disclose any information given except for the academic purposes in chapters four and five 3.14. VARIABLE MEASUREMENT In general the measurement variables were those that researchers could measure,where as categorical variables were measures of differences in type rather than amount .in addition ,these measurement variables were considered qualitative variable because these was some quality that destiguished these objects.In this study,therefore,the researcher adopted a questionare to measure variables which were independent,moderating and dependent.independent variable comprised motivation factors,while moderating variable were management concern and independent variable were employee retention 3.15. RELIABILITY and VALIDITY Validity is defined as the extent to which any measuring instrument measures what it is indented to measure.content of validity depends on the extent to which on empirical measurement reflects a specific domain of content 28

This is a subjective measure of how appropriate the items seem to various reviewers who have some knowledge of the subject matter.Although content validity can not be evaluated numerically,it provides a solid foundation on which a methodologically rigorous assessment of a survey instruments validity can be pefermed (Adcock and collier 2001) To ensure reliability and validity for this study,the researcher consulted the supervisor who made recommendations on the questionaire in order to covers the concept that had to be measured in selected area

29

CHAPTER FOUR DATA PRESENTATION 4.0. INTRODUCTION This chapter presents the data collected from respondents. the data collected were in two type namely general findings and the findings for justifying research questions

4.1. GENERAL FINDINGS OF THE STUDY Thirty (30) respondents filled the questionnaires during the study as presented in Table 4.1 below. The sample included in the study represented 50% females and 50% males. This data is presented in Table 4.1 below

Table 4.1: Gender Category Males 15 Females 15 Total 30 Source:researcher 2011 The 30 respondents shown in the Table above were from Dabaga Vegetable and Fruit canning co.ltd 100 50 50 Frequency Percent (%)

30

The education status of these respondents is presented in the Table below Table 4.2 Education Status Category 18-25 years 26-44 years Above 45 Frequency 9 15 6 Percent (%) 30 50 20

Total 30 100 Source: researcher 2011 The table above shows that secondary education accounted for 50% of all respondents; primary education level accounted for 30% of the respondents. While Graduates accounted for 20% of the total respondents The age of the respondents is shown in the Table 4.3 below Table 4.3: Age Category 18-25 yeas 26-44 years Frequency 6 21 Percent 20 70

Above 45 Total Source: researcher 2011

3 30

10 100

From the above Table 70% of the respondents are aged between 26 and 44 years 31

20% are between 18 and 25 years and 10% are above 45 years

32

The research wanted to determine whether employees of Dabaga Vegetable and Fruit Canning Co ltd were engaged in activities of promoting the well being of the youth in iringa municipal Thus, the research asked a question to the respondents relating to this objective. The response to this question is shown in Table 4.4 below Table 4.4: are there any activities performed by SMEs which lead to promoting the well-being of the people Category All the time Sometimes Never Total Source:researcher 2011 The table above shows tthat, 50% of the respondents indicated that they were involved in Activities of promoting the well being of youth in iringa through Dabaga Vegetable and Fruit canning Co.ltd all the time, 30% indicated that only some time while 20% indicated never The researcher also wanted to find out whether the working environment within Dabaga Vegetable and Fruit canning co.ltd motivated its employees to effectively perform their duties. The researcher made the assumption that high employee productivity leads to increased economic development in a region.Thus, the researcher asked the respondents to indicate whether their working conditions motivated them to perform their duties effectively. The results of this finding are presented in the Table below Table.4.5.Do working conditions within the organization motivating you to perform your duties effectively Category Yes Frequency 21 Percent (%) 70 Frequency 15 9 6 30 Percent (%) 50 30 20 100

33

Occasionally No Total Sources:researcher 2011

6 3 30

20 10 100

Seventhly percent of the respondents stated that their working conditions motivated them to perform their duties effectively .20% indicated occasionally while 10% of the respondents indicated as not at all. The researcher wanted to find out from the employees of Dabaga Vegetable and Fruit canning co.ltd whether the performance of the organization affected the economic performance of the region. According to the research findings .60% of the respondents indicated that the growth of organization increase the employment opportunities to the youth in iringa while 40% indicated otherwise. The findings are presented in Table 4.6 below Table.4.6.Do you think the growth of your organization increase the employment opportunities to youth in iringa Category Yes No Total Frequency 18 12 30 Percent (%) 60 40 100

Source:researcher 2011 The researcher wanted to find out from Dabaga Vegetable and Fruit canning co.ltd whether they considered employment opportunities to the youth as an important factor in In determining the growth of the organization. The researcher results showed that 80% of the respondents considered employment opportunies to the youth as an important factor that determined the growth of the business while only 20% of the respondents indicated otherwise

34

Table.4.7. Do you think increase employment to graduates or school leavers is an important for the growth of your organization? Category Yes No Total Frequency 24 6 30 Percent (%) 80 20 100

Source:researcher 2011 The results indicated that most employees understanding the important of graduates or school leavers on the performance of organization The research wanted to also determine whether the organizational vision and mission reflected commitment to economic development in the region. The findings of the study are presented in the Table below

Table 4.8.Does the vision and mission of the organization support employment creation to the youth in iringa Category No Yes Frequency 2 28 Percent (%) 6.666667 93.33333

Total

30

100

35

Only 6.7% of the respondents indicated that the vision and mission of the organization were not supportive of employment creation in the region. Over 90% of the respondents indicated otherwise.

36

4.2. DATA PRESENTATION ON THE RESEARCH QUESTIONS This section presents the research findings on the research questions of the study 4.2.1. ARE THERE ANY ACTIVITES PERFORMED BY DABAGA VEGETABLE and FRUIT CANNING CO.LTD THAT HAVE LED OR MAY LEAD TO AN INCREASE IN INCOME GENERATION TO THE YOUTH Research findings show that 28 of the respondents argued that: there are two types of promotion prepared by their organization which are; a. product promotion that means supplying goods/products to the main consumers in all places b.Workers promotion This concerning with increase in salary, getting complementary each month (tea),provision of lunch, tea and milk daily,T-shirt,medical facilities, transport during late hours, bonus and overtime 4.2.2. TO ASSESS THE ACTIVITIES PERFORMED BY DABAGA VEGATABLE and FRUIT CANNING CO.LTD HAVE LED OR MAY LEAD TO PROMOTING THE WELL-BEING OF YOUTH IN A PARTICULAR ENVIRONMENT Research findings indicated that there are social amenities such as shops namely mobile shops and health services like mobile shops and health services like mmm dispensary that t are results of presence of DABAGA VEGETABLE and FRUIT CANNING CO.LTD.The findings also showed that DABAGA VEGETABLE AND FRUIT CANNING CO.LTD supports senior workers in paying for school fees in primary and school level

4.2.3. HOW MANY YOUTH ARE CURRENTLY EMPLOYED IN IRINGA MUNICIPAL BY DABAGA VEGETABLE and FRIUT CANNING C0.LTD The findings showed that the organization has 125 workers who accomplish the organization goal through it four departments. There are two types of employees, permanent employee and causal labours.Causal labours are employed on short term contract which normally range from one week to three months. Permanent employees are also divided into two categories namely: management and junior staff. Their difference is in terms of staff benefits and other fringe benefits. Causal labours are employed when there is a high demand of the company products in the markets which requires 100% operating 37

effiency so as to achieve the market demand. Causal labours can be promoted into other high grades, starting from senior grade into management grade 4.3. PROBLEM FACED BY RESPONDENTS IN OPERATING THEIR BUSINESSES The results also indicate that most of the respondents lacked reliable establishment of the markets in where to sell their products. This was due to stiff competition in the business, which makes cash selling difficults and selling more attractive. Although credit is not bad thing to a business because it increases sales but if done in excess it may not be healthy because it leaves an organization in debts which have not been paid. thus the business may become bankrupt

4.4. CONCLUSION The findings indicate that there are activities performed by DABAGA VEGETABLE and FRUIT CANNING CO.LTD that have led to an increase in income generation through the creation of jobs to the youth, the establishment of social amenities such as shops, health services and education, which improve the well-being of the people, including youth. Thus, from the study findings it may be concluded that the presence of SMEs in a given region is likely to lead to employment creation among Tanzanian youth

38

CHAPTER FIVE DISCUSSION 5.0. INTRODUCTION This chapter discusses the results from the analyzed data and the implementations made in the light of the predetermined research objectives and questions 5.1. ARE THERE ANY ACTIVITIES PERFORMED BY DABAGA VEGETABLE and FRUIT CANNING CO.LTD THAT HAVE LED OR MAY LEAD TO AN INCREASE IN INCOME GENERATION TO THE YOUTH The above objective was set by the research to determine the activities performed by the company that have lead to the increase of income generation of youth in the region. The argument that supports the positive relationship between economic development and improved income is closely related to the argument presented in findings chapter four that have revealed that there is a positive relationship between economic development and improved income Most of the activities performed by DABAGA VEGETABLE and FRUIT CANNING CO.LTD have led to the increase in income of the youth living in iringa municipal. This is supported by the fact that there are petty businessmen and women around who get their income through selling their products to the company workers. Also these are the vital consumers of different products by DABAGA VEGETABLE and FRUIT CANNING CO.LTD like tomato, chill sauces which are used in chips Dean et al (1996) and karlsson et al (1993) from the theoretical literature review argued that it is now well accepted both among academicians and policy makers that small businesses play a vital role in contributing to overall economic performance of countries. Small business plays an important role in community development by attracting private investment. Through their capital investments private small businesses and micro-enterprises create jobs and new opportunities that promote community-building and social activities in rural areas and small towns Therefore since the company deals with the above activities it needs people to employ so that they can perform the company activities and by doing so the company pays an income to these people. Doing promotion means positioning the product and company in the minds of customers. Therefore they will be demanding more products while the supply of product is low. Small businessmen can capitalize on this situation. The company Will be paying income to employees but also other businessmen will be earning income from doing business 39

Also since the company sells its product inside and outside the country. it leads to the increase in foreign exchange which results to the increase the income of the workers resulting to the increase of the regions income hence increase in the Gross Domestic Product (GDP) 5.2. ARE THERE ANY ACTIVITIES DABAGA VEGETABLE AND FRUIT CANNING CO.LTD? THAT HAVE LED OR MAY LEAD TO PROMOTE THE WELL-BEING OF THE YOUTH IN A PARTICULAR ENVIRONMENT In setting this objective the researcher wanted to determine if the presence of DABAGA VEGETABLE and FRUIT CANNING CO.LTD led to the establishment of social amenities. Improved social facilities to the society are closely related to the economic development of the people as well as the region The findings show the organization has about four bank accounts. two foreign (USD)account and two local accounts. The foreign account receives money from customers who pay in foreign currency: suppliers who need payments in foreign currency .Local accounts can be used for both local and foreign currency payments As far as these facilities are concerned. There are mobile shops that sell tomato sauces to the retail shops and different local people around iringa municipal and the country as whole. Thus the customers do not waste much of their time thinking about how they can get these sauces as the services are available all over the country The company provides free health services to its employees. Also the top management are getting free house and free education for their children. So this motivated employees to work hard. Hence improvement of living standard of the people 5.3. HOW MANY YOUTH ARE CURRENTLY EMPLOYED IN IRINGA MANICIPAL BY DABAGA VEGETABLE and FRUIT CANNING CO.LTD According to this objective, the researcher wanted to assess the employment rate for DABAGA VEGETABLE and FRUIT CANNING CO.LTD.The data shows that it is the companys policy frequently. Doing this the unemployment rate in the region and the country as well, will reduce thus increase income levels. The organization has 125 workers (some of them are currently employed) who accomplish the organization goal through it four departments. There are two types of employees. Permanent employee and Causal labourers.Causal labourers are employed on short term contract which normally starts from one week to three months. Permanent employees are also divided into two categories. Management staff and servant staff. Their difference is only due to staff benefits and other fringe benefits. Causal labourers are only employed when there is high demand of the company products in the market and the normal 40

production requires 100% operating efficiently so as to achieve the market demand. With the outstanding performance causal labourers can be promoted into other grades. Starting from SG grade into MG grade. Within the satisfaction of the companys senior Management Lewis (2002) argues that grants are awarded to non-profit organization to develop projects that will create new employment and business opportunities for welfare receipts and low income individuals through self-employment,micro-enterprise,expansion of existing businesses, and new business ventures.

5.4. CONCLUSION The study ends the chapter by concluding that in as the SMEs are concerned. There is a positive relationship between small businesses and economic development .The extent to which the researcher has discussed the objectives is however, debatable.For further verification, a similar study needs to be conducted that will more accurate than this one

41

CHAPTER SIX

SUMMARY, POLICY IMPLICATIONS AND CONCLUSION 6, 0. INTRODUCTION In this chapter, the research has put forward the summary which comprises of policy implications, areas for further research and the conclusion 6.1. SUMMARY The aim of the study was to asses the effectiveness of small business on employment creation among Tanzanian youth a case study of DABAGA VEGETABLE and FRUIT CANNING CO.LTD in iringa municipal The study used both primary and secondary data to establish the relationship between the presence of small businesses and employment creation .Primary data was colleted from a sample of 30 respondents all employees DABAGA VEGETABLE and FRUIT CANNING CO.LTD.in iringa, these respondents were from two purposively selected departments structured questionnaires that had both open and closed ended questions. Secondary data that was used in the study was obtained from DABAGA VEGETABLE and FRUIT CANNING CO.LTD. The findings of the study revealed that 50% of the respondents said that they were involved in employment creation activities in iringa region through DABAGA VEGETABLE and FRUIT CANNING CO,LTD all the time.70% of the respondents stated that their working conditions motivated them to perform their duties effectively,60% of the respondents suggested that the growth of the organization increase the employment opportunities to the youth in iringa.The research results also showed that 80% of the respondents considered employment opportunities to the youth as an important factor that determined the growth of the business Similarly, the study findings showed that the activities that DABAGA VEGETABLE and FRUIT CANNING CCO.LTD performed such as worker and product promotion has resulted in an increase in income generation in the region through the creation of jobs, the establishment of social amenities such as, shops, health services and education.Thus,the study included that the presence of SMEs in a given region is likely to lead to some to employment creation

42

6.2. POLICY IMPLICATIONS The main purpose of this research was to assess the effectiveness of small business on employment creation .The research observed that in order to maintain employment creation, there is a need to promote the growth of small business through increased operation in effective way. For-instance effectiveness could be achieved by employing youth at management levels that are competent in terms of education and experience In addition, there is need for the creation of a conclusive external environment that will foster the growth of small business.Thus; the government needs to continue to encourage those who invest in small business by providing support such as tax holidays, subsidies and business development services (BDS) Financial institution need to also be encouraged to support small businesses by giving loans on favorable term that will not affect their performance thus in turn leading to employment creation 6.3. AREAS FOR FURTHER RESEARCH This study was about the effectiveness of small business on employment creation among Tanzanian youth. Thus the study focused on the effectiveness of DABAGA VEGETABLE and FRUIT CANNING CO.LTD on the employment creation of iringa municipal. The study was not exchange and there are still areas of further research such as a. The role of financial institutions in enhancing small business to promote employment creation b.The role of entrepreneurship in skills provided to small business so as to promote employment creation c.The support of government policies in promoting small businesses informal sector perspectives

6.4. CONCLUSION Small business growth and development has a very strong and positive relationship in terms of supporting employment creation in a region.For-instance,the presence of small businesses creates jobs for the masses directly or indirectly, thus leading to improved incomes of the people in the region .In addition ,the presence of small businesses means that supportive structures are established such as roads,hospitals,schools,banks and shops. The development of these infrastructures has a positive effect on the livelihood of the people within the given vicinity.Thus,the establishment of small businesses results in a snow ball effect and in this case the researcher considers it to be mostly positive

43

Thus study concludes that there is need to make concerned efforts in ensuring the establishment of small businesses within a given region primarily because of their positive economic impact. All actors and stakeholders in the economy therefore need to play their role in promoting the establishment of small business as an engine towards employment creation and achieving the millennium development goals (MDGs) of 2015

44

REFERENCES Lewis W.A.1955.The theory of Economic Growth. Allen and Unwin: London

Kothari C.R, 2004, Research Methodology-Methods and Techniques-New Age International (p) limited publishers UNIDO, Vide United National Industrial Development Organization.1999, Tanzania Women Entrepreneurs. Vienna United National Industrial Development Organization United Republic of Tanzania (TANZANIA), 1996 and 2006, small and Medium Enterprise Development Policy 1996-2020.Ministry of industries Trade and marketing (MITM) Dar es salaam United Republic of Tanzania (TANZANIA), 1996 and 2006, small and medium Enterprise Development Policy: Ministry of industries and Trade (MIT), Dar es Salaam United Republic of Tanzania, Ministry of industry, Trade and Marketing, 2007 report on industrial sector performance in Tanzania ESRF, 1996, A Study of constraints facing Micro enterprises and published report by the Economic and social Research Foundation (ESRF), Dar es salaam, Tanzania ILO, Vide International labour organization.2003.Tanzania women entrepreneurs going for growth.Geneva: international labour office SMEs Development Policy, 2002, p.i Sustainable Industrial development Policy SIDO-(1996-2020) Pg.33 (3.5.3) International Small Business Journal, April 1995, vol, 13: pp 11-34 Daily news, wersday, 03, August, 2011, online edition White.S, (2001) Asri and Barker 2000 45

46

APPENDIX TUMAINI UNIVERSITY IRINGA UNIVERSITY COLLEGE RESEARCH QUESTIONAIRES My name is ulimboka nsajigwa; a student at the Tumaini university iringa university college pursuing Bachelor of Business Administration majoring in Economics. I am undertaking a research about an assessment of small business on employment creation To youth in your organization .An therefore asking you to fill this questionnaire by answering questions to the best of your knowledge and belief.Confidentiaslity of anything that you will answer is highly guaranteed and the results of this study are only for academic purposes Thanks in advance

PART I: PERSONAL PARTICULARS Office Name Position of the officer Department

47

PART II: QUESTIONS Put a tick for the appropriate answer in the brackets and fill the blanks where appropriate 1. Gender Male Female 2. Age.. ( ( ) )

(year)

3. Your education level .primary school .secondary school .Graduates 1st degree and above ( )

4. Whats is the type of the business? .Small .Medium .Large ( ) ( ) ( )

5. What is the annual income turnover of your business?............................ (Tshs) 6. How many employees currently employed in your organization?...................... 7. How many Employees are involved in activities of promoting the well being of the youth? 1) Number of Male. 11) Number of female

48

8. Do working Conditions within the organization motivate you to perform your duties effectively? Yes, it does ( ) No, it doesnt It, sometimes does ( ( ) )

9. Do you think you are involved in decision making in your organization? Sometimes All the time Not at all 10. Do you think the performance? ( ( ) ( ) )

11. Do you think to increase employment to graduates or school leavers is an important For the growth of your organization? Yes No ( ( ) )

12.Does the Vision and Mission of the organization support employment creation to the youth in iringa municipal? Yes No ( ( ) )

13. How many types of promotion prepared by your organization........................... Mention them . . .. 49

. .. 14. Which activities performed by the company that have promoted to the increase in income to he youth?............................................................................................. . .. .. .. .. 15. Is there any availability of social amenities e.g. banks? Yes No ( ( ) )

If yes Mention them. .. .. .. 16.What are the problems that you are facing in running the business? 1). 2). 3). 4).Other 17.What is your opinion on your business as a tool for Employment creation 50

.. . . THANKS YOU SO MUCH FOR YOUR COOPERATION AND GOD BLESS YOU

51