SMEs Must Take Up Value Addition

Published on 13th June 2006

There are about 40 registered enterprises of food processing in Dar es Salaam, but currently 50% of them have the capacity to produce continually. The remarkable characteristic of the food processing industry is that is mostly composed by women. About 80% of the labor force related to agriculture in Tanzania are women. The SMEs researched are characterized by a capital investment of no more than 30 000 USD. The labor force of the enterprises is composed in the majority by family members. Usually, there are no more than 10 employees per average.

Tanzania’s economy lies on agriculture. It accounts for about half of the national income, three quarters of merchandise exports and is source of food and provides employment opportunities to about 80 percent of Tanzanians. It has linkages with the non-farm sector through forward linkages to agro-processing, consumption and export; provides raw materials to industries and a market for manufactured goods. Agricultural GDP has grown at 3.3 percent per year since 1985, the main food crops at 3.5 percent and export crops at 5.4 percent per year. The Government recognizes the pivotal role of the agricultural sector both in terms of economic growth and poverty reduction.

Small and Medium Enterprises (SMEs) can play an important role in enhancing sustainable food security as a key strategy towards poverty eradication in Africa. However, this can only be possible if they not only embrace the concept of technological thinking in their operations but also endeavour to utilize the resulting findings of the technological thinking processes.

Technological thinking refers to a mindset of skills, knowledge, cultural attitudes and social values as an interface between input and output processes.It results in innovativeness, management of change and above all efficiency in the management of resources.

A case study on technological thinking of SMEs was carried out in Dar es Salaam Tanzania, with the main objective of understanding the technological thinking of SMEs in the food processing industry and its impact on infrastructure. Infrastructure was viewed in this case as being the long-term capital facility which provides services that are central to all economic activities. The specific areas on technological thinking under investigation were; the extent to which SMEs understand the role of skills and knowledge in generation of ideas and products; importance of local customs, traditions or values in creation of new ideas and products; understanding how ideas and products affect the organization of enterprises; sources of these ideas and the role of employees in the generation of ideas and improvement of organisational product culture.

The study which was supported by the food processing association of Tanzania (TAFOPA) and involved 40 of its registered members employed Critical Incidence Technique (CIT) and structured questionnaires as the principal methods of data collection.

The entrepreneurs agreed that new ideas for new products could emerge from interactions with other enterprises and competitors (benchmarking). These ideas could be adopted from such interactions and then made to adapt to the needs of the specific enterprises through involvement of its members. They acknowledged that some traditions, customs and beliefs are impediments to the development of new ideas for new products.

The entrepreneurs further noted that careful consideration of the location has an impact as regards to; sourcing for raw materials cheaply, reaching markets and better facilities to augment production and trade. Proximity to respective homes could reduce accommodation expenses.

It was further identified that continuous acquisition of modern skills in the area of food production is useful in improving quality, reducing costs, enhancing innovativeness, change management and also enhancing quantity production. This is in recognition of the fact that the business world is extremely competitive and failure to continuously improve on the existing knowledge, skills and competencies renders the enterprise obsolete in the ever changing market.

The enterprises further expressed their awareness of the fact that the quality of facilities and equipments used in production needs to be considered since they to a larger extent determine the quality and quantity of the products. They noted that though it is possible for them to be obtained through the acquisition of loans, there still lay a danger of defaulting in loan repayment as a result of an unstable market. It was agreed that for them to reduce chances of shrinking business after acquiring loans, a serious market research for their products has to be conducted prior to investing using the loan.

They also concurred that the future of their enterprises was dependent on their present performance and that decisions regarding the future of the enterprises can only be made basing on the present as a foundation. Finally, they agreed that improvement in the organisation of their enterprises was determined by a set of factors that altogether conform into an organisational culture.

In conclusion, the above findings shade a lot of light on what technological thinking is all about with the aim of eliciting interest in other SMEs. If this objective is indeed achieved, it will then be possible for them to contribute positively towards sustainable food security in a variety of ways. Food security for the owners due to improved receipts, food security for the suppliers of the raw materials and above all food security and nutrition for the final consumers of SMEs products.

Adequate strategies of the food processing industries and others, in general, in Africa could imply the consideration of the reproduction and diffusion of identities and entrepreneurial values when acquiring local and foreign technology. It is required that integration, persistence and correspondence must act as catalyzing forces of economic competitiveness. Integration of technology transfer and local technology in adequate productive strategies; persistence through the establishment of planning schemes that help entrepreneurs to promote their activities, and correspondence between the different components local or foreign, internal or external, tangible or intangible. These would articulate a technological mastery strategy that could help entrepreneurs promote their economic activities. Through technological mastery enterprises might have a chance to pay attention to and develop a free relationship to the essence of modern technology. Essence that lies on the continuous revelation of human being capabilities articulated in an organizational culture.


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