The impact of business formalisation procedures of the growth of entrepreneurial small business in Tanzania.

Abstract

Despite the fact that the Tanzanian Government is advocating for the private sector to facilitate the development, there is not enabling environment for small business participants to prosper. Some of the entrepreneurs start business and end up closing or shunning away from business that would have provided them earnings; by so doing they loose eagerness to prosper through business operations even before business formalisation or immediately after compliance to the business formalisation procedures. Provoked by this contradictory situation that exists in the society, the researcher has been stimulated to carry out the descriptive and analytical study on the impact of business formalisation requirements and procedures on the growth of the entrepreneurial small business. The study was carried out in Dar es Salaam as a sample representing the whole Tanzania. It has been observed expensive to make the business formal, the impact of which biases the behavior of the entrepreneurs. Lack of transparency of entrepreneurs, mistrust and hatred between tax-assessors and business operators, and non-disclosure of details concern business growth aiming at avoiding untold costs compared to the gains when the business growth is revealed. This situation tune some entrepreneurs consider it pertinent to operate in the informal sector regardless of problems associated with it. They are concerned with survival and economic activities that enable them only to earn a living. Hence, the advantages of business growth factor enjoyed in the formal sector are foregone by this group, as outweighed by the involved costs.