A case for improving regulatory framework for small and medium enterprises in Tanzania

There is a growing interest in the role of SMEs in economic development in the world today. The interest stems from the fact that SMEs have a number of acknowledged characteristics that arguably make them more, rather than less, important to modem economies. SMEs form, by far, the largest number of enterprises; they employ more workers per unit of capital than large enterprises; they contribute towards achieving a more equal income distribution in society; they have a favourable impact on regional development; they serve as a "training platform" for upgrading and developing skills of entrepreneurs; they contribute significantly to establishing forward and backward linkages; and they play a vital-complementary role to large and giant firms in the economy. This work examines SMEs in the Tanzanian context by looking at the regulatory framework within which they operate, paying particular attention to the establishment and registration of SMEs. It then draws comparative lessons with respect to the potential and future development of SMEs in selected countries before making recommendations on how the SMEs legal environment in Tanzania can be improved so that SMEs play the role they are expected to in relation to economic development of the country.