Studying the Nutrition-Sensitive SMEs Ecosystem in Zanzibar.
This article is part of series of articles capturing information about Nutrition-Sensitive businesses in Tanzania. The program is a part of the work Global Alliance For Improved Nutrition (GAIN) Tanzania is doing in partnership with Sahara Ventures.
The Zanzibar SMEs Policy of 2006 recognizes the role played by SMEs in contributing to the national economy. The policy recommends the establishment of incubation centers that provide technical support in a hands-on approach through relevant training on techniques of value addition of agro products and entrepreneurship. The Zanzibar SMEs ecosystem is composed of different players; state and non-state actors who are working together to support SMEs at different stages of their growth.
Some of the main actors include; Zanzibar Small, Micro, and Medium Industrial Development agency (SMIDA), Zanzibar Food and Drugs Agency (ZFDA), Zanzibar Technology Business Incubator (ZTBI), Zanzibar Bureau of Standards (ZBS), Milele Foundation, USAID Feed The Future Program, Cube Zanzibar, VSO International, etc. Some of these players have been working together to support SMEs in Zanzibar. For example, Milele Foundation is working closely with SMIDA and ZTBI to finance early-stage businesses (startups and SMEs) in Zanzibar.
Access to Finance
Like SMEs in other regions, we have engaged with. Access to finance to Zanzibar SMEs is still a challenge. Some players such as Milele Foundation are playing a very key role in working with public and private organizations to design funds to support SMEs. For example, some of the Nutrition-Sensitive SMEs incubated at ZTBI are beneficiaries of the fund offered by the Milele Foundation in partnership with the incubator. Two SMEs operating at the incubator Swafaa Bakery and Imaa Dairy are beneficiaries of the 100 million TZS revolving fund supporting early-stage businesses at the incubator.
Another player who is actively involved in financing youths and SMEs in the ecosystem is the USAID Feed The Future Program in Zanzibar. The Enabling Growth through Investment and Enterprise Program (ENGINE) is a four-year, USAID Tanzania-funded Feed the Future activity implemented by the International Executive Service Corps (IESC). The program facilitates the review and reform of regulatory, informational, and financial channels that support business growth and investment in the southern agricultural regions of Mbeya, Morogoro, and Iringa, as well as Zanzibar. Tanzania Growth Trust (TGT) is another player actively involved in Zanzibar. The Trust initially registered in 1992 as Tanzania Gatsby Trust is a charitable trust that works with partners to transform young entrepreneurs, women-led SMEs, and smallholder farmers into globally competitive enterprises. The trust has been working with players in the Zanzibar SMEs ecosystem to support nutrition-sensitive SMEs in the region.
One of the most pressing challenges in Zanzibar right now on funding is the fact that the ticket sizes of the funds do not match the needs of the entrepreneurs. Most of the fund offers seed-stage financing bellow 10 million TZS (less than 5000 USD) to businesses. Some of the early-stage businesses consider this amount to be very low for it to have any significant impact on their businesses especially if they are involved in the production. The call from the businesses we engaged with was for the government to design syndicate funds with these organizations. This will help in addressing the challenges for nutrition-sensitive SMEs that are involved in the production that requires machinery. SMIDA is also actively engaged in financing small businesses but they also face the same challenge since they can’t write bigger cheques because of their financial muscle.
Regulatory Environment
The main regulators of the Zanzibar nutrition-sensitive ecosystem include; Zanzibar Bureau of Standards (ZBS), Zanzibar Foods and Drugs Agency (ZFDA), and Zanzibar Business and Property Registration Agency (BPRA). Other regulators include; Zanzibar Social Security Fund (ZSSF), Zanzibar Revenue Board (ZRB), and Zanzibar National Chamber of Commerce (ZNCC). The regulatory environment is one of the factors hindering the growth of nutrition-sensitive businesses in Zanzibar. The SMEs we engaged felt the industry is over-regulated and it is expensive to comply with. They complained about the cost of registering with the Zanzibar Bureau of Standards (ZBS) being high and the Process being very cumbersome for small businesses primarily because of the const of inspection.
According to the SMEs, the cost of inspection of the production place and the cost of inspecting a single product being is high for small businesses especially those with multiple products in the market that requires certifications. SMEs also complained about the process taking too long because some of the samples have to be transferred to the mainland for further assessment. The SMEs suggested the cost of compliance should be reduced and the process of getting the certificates should be revisited to reduce the waiting time. The SMEs also shared their opinions on compliance with Zanzibar Business and Property Registration Agency (BPRA) and some saying the online registration process can be cumbersome especially to those without digital literacy and sometimes the system is down. One of the entrepreneurs commenting “it might take you days to register online, what’s the point”. The SMEs also felt the multiple fees they have to pay to comply hinders them from formalizing their businesses which is makes it difficult to professionally produce their product for local and export markets.
Ecosystem Enablers
The main nutrition-sensitive SMEs ecosystem enablers in Zanzibar are Zanzibar Technology Business Incubator (ZTBI), Zanzibar Micro, Small and Medium Industries Development Agency (SMIDA), and Cube Zanzibar. ZTBI is one of the institutions that is actively working with nutrition-sensitive SMEs. The incubator works with businesses working in the dairy and Orange Fleshed Sweet Potato (OFSP) in Zanzibar. One of their strategic areas of focus is on value addition in agribusiness.
SMIDA is a public agency that acts as an enabler to MSMEs in Zanzibar by offering training and access to markets. SMIDA offers three main supports to SMEs; training of the entrepreneurs, financing including access to markets, and Technology Support. SMIDA is working with UNIDO through UNIDO’s investment portal to support businesses in Zanzibar to access investment from global investors. The way it works is that a business submits a proposal to SMIDA. After a proper due diligence process, a business is listed on the UNIDO investment portal. Cuber Zanzibar is a start-up and business enabler that offers business incubation, financing, and acceleration support to aspiring entrepreneurs, start-ups, and small businesses in Zanzibar.
ZTBI Case Study, Entrepreneurs Struggling to Access Market in Tanzania Mainland.
ZTBI is located on the main campus of the Karume Institute of Science and Technology. The incubator support in-campus and off-campus entrepreneurs in establishing and growing their businesses. During our interview with the managing team of the incubator. They shared their frustration on challenges facing their entrepreneurs looking to access Tanzania mainland markets for their products. The process is very painful, cumbersome, and expensive for nutrition-sensitive SMEs based in Zanzibar since they have to comply with both regulations of the isles and the mainland.
The incubator encouraged the government to harmonize the process by getting ZBS and TBS to strategic work together for the betterment of small-scale entrepreneurs. The incubator also shared the challenge facing nutrition-sensitive businesses in Zanzibar to comply with nutritional standards due to the lack of necessary technologies needed to assess nutritional contents in the manufactured products. This limits the entrepreneurs to access markets beyond Zanzibar grassroots consumers.
SMIDA Case Study, Struggling to Support Entrepreneurs Due to Lack of Shared Production Space.
SMIDA is facing challenges supporting SMEs in Zanzibar due to a lack of shared production space. The experience shared shows it is very difficult to support SMEs working in manufacturing including nutrition-sensitive SMEs remotely for different reasons; maintaining quality and standards of production, proper utilization of resources offered, and lack of technical skills.
Due to the lack of onsight support of SMEs, SMIDA finds themselves in a difficult position to offer financial and technical support to business due to the fear of losing the funds by offering the funds to the wrong entrepreneurs. The team at SMIDA shared an experience of a previous project they were involved in. The project offered machinery to SMEs to improve efficiency in the production process. During the assessment, the project failed to deliver the intended results. The entrepreneurs who have acquired the machines struggled to use them due to a lack of skills and facilities to keep the machines.
CSOs and Non-Profits
In Zanzibar, there are some CSOs and Non-Profit organizations that are actively involved in the ecosystem. The most active one is Milele Foundation which works will all other players in the ecosystem to supports youths and entrepreneurs. The organization works with SMIDA, ZTBI, and Cube Zanzibar to offer financial and other support to youths and SMEs. ZTBI is working with Milele Foundation on a fund to support entreprneurs with interest-free loans worth 5 Million (TZS). This seed fund is offered to qualified businesses working with the Incubator. One of the beneficiaries is Imran, the founder of Imaa Dairy, a dairy SME that is incubated at ZTBI.
Milele Foundation and “Jumuiya Ya Watu Wa Mwani Zanzibar” have worked together to support SMEs in the Seaweed value addition by bringing experts from Philipines and Indonesia to train the entrepreneurs. The training was organized by ZTBI. Other Non-Profits initiatives supporting SMEs in Zanzibar include; Tanzania Women’s Media Association (TAMWA) who has been actively training women-led SMEs in the value addition of their products. VSO International who are supporting agribusinesses to tap into the tourism value chain in the project called “Commercial Agriculture for Smallholder Farmers in Horticulture” (CASH) project. Other players in this category is USAID Feed The Future program working to improve the livelihood of Zanzibaris youths through different approach including supporting entrepreneurship programs.
Entrepreneurs; Swafaa Bakery and Island Dairy Partnership.
Historically most of the Zanzibaris are entrepreneurs and are engaged in SMEs formally and informally. The new generation of Zanzibar youths has started to explore ways to establish their own businesses beyond family businesses. During our time at ZTBI, we managed to engage with two young and vibrant entrepreneurs who are working in nutrition-sensitive businesses. Imran Said, the founder of Imaa Dairy and
Island Dairy Partnership Case Study, Establishing a Dairy Business From Ground Up The Story of Imran Said.
Imran Said co-founded Island Dairy Partnership formerly known as Imaa Dairy in 2016. He started the business with four other young Zanzibaris. The company focuses on dairy products including yogurt and ghee. The primary customers are shops, mini supermarkets, and public offices. The company is one of the beneficiaries of ZTBI. He has been operating within ZTBI in order to minimize the production cost because the incubator gave him access to production machinery and the packaging space. Also by working with the incubator he is able to meet the production standards hence complying with the regulatory authorities.
Imran has been facing challenges scaling his business due to a lack of growth-stage capital. He was able to secure a loan from Milele Foundation through ZTBI during the early days of his business. They were not able to generate enough revenue to cover the loan initially since their business model was untested and their product was not ready for the market. He would have preferred a grant instead of a loan at that stage. They are currently paying back the loan and the business is operational. Imran shared his frustrations running his business caused by the lack of packaging materials that need to be imported from the mainland and the freedom and flexibility of operating in the public building at ZTBI. Even though he enjoys the services offered at the incubator. He doesn’t have the access to operate on the weekends and he has to comply with building procedures in which sometimes creates inconveniences for his customers.
Swafaa Bakery Case Study, Addressing NCDs Through Orange Fleshed Sweet Potato (OFSP) Food Products.
Swafaa Bakery was founded by Sabra Ally. She started the business out of her interest in baking. The young lady produces different products from Orange Fleshed Sweet Potato (OFSP). Some of her products include OFSP bread, OFSP Cakes, and OFSP Cookies. Sabra developed an interest in OFSP after being trained at ZTBI on how to create products using OFSP instead of wheat flour. She was also pushed in the business because of the demand that exists in the market for less sugary baked products.
She shared her experience in baking OFSP cakes that are being consumed in a few restaurants in Zanzibar where she supplies them specifically targeting people who are diabetic but still want to enjoy eating cakes. Her clients are mainly aged people who are more conscious of sugary food products. According to her, she is currently seeing more interest from people to consume her product as they become more nutritional literate. Sabra wants to scale her production and reach more restaurants in urban Zanzibar where most middle-class people are becoming health conscious. She is currently, still incubated at ZTBI.
In Conclusion
The Zanzibar nutrition-sensitive ecosystem shows a lot of potentials if the identified challenges and obstacles are to be addressed. A few other areas that need intervention include the area of research around nutrition-sensitive products and SMEs and increasing consumer awareness towards nutrition-sensitive products. Programs such as the UNICEF Nutrition program for schools in Zanzibar are very important for creating awareness and developing community interests towards nutritious food in the region.
