Tanzania Embraces an Entrepreneurial, Capitalist Spirit

(by Jon Ward, March 10, 2008, WashingtonTimes.com) – DAR ES SALAAM, Tanzania - The quest to solve Africa’s crippling cycles of war, disease and poverty has gone on for decades, but some think the secret is contained in the living room of a Tanzanian woman named Flotea Masawe.

“I started my business in my sitting room, in my living room,” said Mrs. Masawe, a 49-year-old resident of the Kinindoni Mkwajuni neighborhood in this country’s capital city.

There is talk of a new entrepreneurial spirit in Tanzania, where a stable political environment has allowed free-market capitalism to grow after a decades-long failed experiment with socialism.

As good governance takes root across Africa, Tanzania could serve as a model for other countries experiencing large inflows of capital. Across the continent, countries such as the United States, China and others are investing in African oil, but are also spending money to help rebuild countries and fight disease.

Jon Halverson, however, is trying to make sure that Africa’s rising economic tide truly lifts all boats.

“Most of sub-Saharan Africans remain very, very poor,” said Mr. Halverson, with the U.S. African Development Foundation. “They must not be left behind on a large scale, or angst leading to instability will be an inevitable result.”

ADF, which was founded under President Reagan in 1984, “is focusing all its business development efforts on the poorest of the poor,” he said.

Mr. Halverson said that signs of a long-absent middle class are beginning to appear.

An established middle class in Tanzania and across Africa would provide the tax base needed for a robust economy and also make good governance more likely, as the ranks of property owners, merchants and an educated intelligentsia grow.

Mrs. Masawe is hoping to join the middle class with ADF’s help. She is using an $85,000 ADF grant to turn her former home into a mini-factory, with room for 26 sewing machines, business offices and a showroom. A married mother of five now-grown children, Mrs. Masawe beamed with pride as she showed a reporter where she started her business in 1992 by hand-sewing pillow cases.

Six years after socialist controls were lifted in Tanzania, Mrs. Masawe decided that her husband’s salary wasn’t enough for their family, and that she could do something about it. Now, “Marvelous Flotea” has 35 employees. Mrs. Masawe talks about diversifying her product line, competing in the global market, and distributing products made by neighbors who don’t have her connections.

“We are expanding to America,” Mrs. Masawe said.

Macy’s Inc. is planning to order 3,000 to 4,000 handmade bags, and Hallmark is planning on an order of 10,000 to 20,000 handmade puppets.

Most of ADF’s $30 million annual budget goes toward grants and loans for small businesses in Africa. Grants are given to help entrepreneurs with good ideas and marketable products get their business off the ground.

No-interest loans of up to $250,000 are doled out to help slightly larger businesses expand. Mrs. Masawe could land such a loan if she meets certain performance targets.

ADF partners with a Tanzanian consulting firm, which helps each small business to improve its operations and bookkeeping.

William Masawe, who runs the consulting firm that partners with ADF, says his small office of five managers and several staff is focused on “the missing middle.”

“In Tanzania, most of the businesses which are operating are informal and at the bottom end of the pyramid,” said Mr. Masawe, a business consultant who is not related to Mrs. Masawe.

“At the top, you find the big corporations involving growing industry: mining, telecommunications, insurance, financial services,” he said. “Now, this middle, which is the area where you find most taxpayers, is not there.”

“This,” he said, pointing with his pen to the middle of the pyramid he has drawn by hand on a legal pad, “is where we are targeting.”

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