Blog 28

SME growth is key to enhancing Tanzania’s supply chains of nutritious foods for ‘Wananchi’ (the general public) during and post- COVID-19

In blog 28 in our series on opportunities for building back better food systems and nutrition, Enock Musinguzi and Charl van der Merwe - both of GAIN, and Rajab Jumanne of Sahara Ventures show us the importance of SMEs in food systems, especially in the midst of a global pandemic. They share an example from Tanzania, making the case for systemic strengthening of SMEs in the medium to long term, to better enable small businesses to withstand shocks such as COVID-19.

Small and Medium Enterprises (SMEs) are the engines firing most Sub Saharan Africa economies, including Tanzania’s. Worldwide, SMEs represent about 90% of businesses and more than 50% of employment (1). SMEs help put healthy and safe food on the table of many low- and medium-income families on the continent – on average, 80-90% of food purchased in Africa is from SMEs (2), including small shops, groceries, street food vendors and hawkers (3).

The arrival of COVID-19 continues to impact on these important actors in supply chains in Sub Saharan Africa, putting at risk livelihoods, jobs and health of the section of the population they support.  In a recent quick survey of challenges during COVID-19 amongst SMEs in Tanzania, Sahara Ventures found that 53% of the SMEs surveyed identified the most significant financial problem for their businesses was to pay staff wages, meaning COVID-19 could lead to lay-offs and lost livelihoods to many, if this persists. According to the World Bank, the COVID-19 pandemic could cost Africa between $37 billion and $79 billion in terms of output losses for 2020 (4). To stem the negative impacts of the pandemic on the economy, food, and nutrition security, SMEs are critical players that we should not neglect. The extent and range of the impact have been discussed by previous bloggers in this series, including strategies to keep SMEs afloat and nutritious supply chains working, especially during the ongoing COVID-19 pandemic. This blog looks at an example in Tanzania, on systemic strengthening of SMEs in the medium to long term, to withstand shocks.

Building resilience for SMEs

In the two previous nutrition SME acceleration programs run by GAIN and Sahara ventures in Tanzania, more than 70% of applicants were looking for funding. Financial and technical-know-how, are major constraints to business survival in Tanzania and to most of Sub Sahara Africa. Restrictions and depressed business environment due to COVID-19 simply compounds the already difficult situation.  Frequently SMEs fail to attract financing not only due to a lack of collateral, but also because their internal structures and systems are not able to absorb it. Technical assistance (TA) on business management and administration, are key to developing sustainable business models. It is therefore important that financing and TA is offered as a package to SMEs.

The Lishe- Accelerator from GAIN Tanzania and Sahara Ventures is an example of an initiative that addresses these issues.  It aims to develop a pipeline of quality ‘nutrition-sensitive investments’ that can link SMEs to investors and TA providers, leveraging local and global strategic partnerships through the Scaling Up Nutrition Business Network (SBN).

 

One SME’s experience

One nutritious foods SME that has been impacted by COVID in Tanzania due to depressed business environment and reduced demand is Afco Investment Company Limited. Afco processes biofortified crops (Provitamin A Maize, Iron beans & Orange Fleshed Sweet potatoes) to help fight against micronutrient deficiencies and hidden hunger in Tanzania. Since 2015, Afco has prioritised getting their products to groups of people who tend to be at higher risk of malnutrition, e.g. infants, children under-five years of age, adolescent girls, pregnant, lactating women, other women of reproductive age (15-49 years of age) and the poor.

As one of the winners of the Lishe Accelerator competition, Ms Fortunatha Mmari, the Managing Director of Afco, participated in the Marketplace for Nutritious Foods and SBN business mentorship programme. As a result of this training, she was able to strengthen her financial security and operational practices which gave her business a chance to withstand external shocks, including the impacts of COVID-19. Here’s what Fortunatha had to say about her experience:

“I received business mentorship from the Marketplace for Nutritious Foods programme, and other opportunities from SBN, and I ended up changing my business approach, prioritising nutrition in addition to profit. I also reviewed my business structures and marketing strategy, and realised I needed to change my staffing structure and reorganise my business. As a result, I was able to attract several opportunities and expand my market with nutrition and biofortified crops as my niche… Although I am struggling during COVID-19, without this previous support and business restructuring building up my business resilience, I would have closed shop long time ago.’’

 

Keeping up the Momentum

SMEs are crucial to providing safe and nutritious foods to the majority of people in Tanzania. They shape the real food systems that millions depend on. If we want nutritious food to be available and affordable, we need to keep these supply chains and markets open.  If we want SMEs who are playing such a crucial role to survive and thrive, we need to find ways to quickly provide them with financial and technical assistance support.  If we lose the smaller players, we risk further concentration of the food system and that is not ideal for promoting resilience, livelihoods, equity or health. Lockdowns and restrictions imposed during COVID-19 have exposed the weaknesses in- and dependency on- long, concentrated supply chains. Moreover, SDGs make a point of leaving no one behind, keeping SMEs in business is one way of moving forward with many people supported by them.

 

About the authors

Enock Musinguzi is Country Director of Tanzania for the Global Alliance for Improved Nutrition (GAIN). 

Charl van der Merwe is Director of GAIN Country Programmes. 

Rajab Jumanne is CEO of Sahara Ventures Ltd, Tanzania. 

About GAIN: The Global Alliance for Improved Nutrition (GAIN) is a Swiss-based foundation launched at the UN in 2002 to tackle the human suffering caused by malnutrition.  Working with both governments and businesses, we aim to transform food systems so that they deliver more nutritious food for all people, especially the most vulnerable

About Sahara Ventures: A group of companies whose mission is to build Africa’s innovation and technology entrepreneurship ecosystem. Sahara Ventures is currently running the campaign #GrowthInTheCrisis to support African start-ups and SMEs navigating the COVID19 crisis.