CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

One among the challenges facing the Developing country specific Zanzibar is slow

economic growth as well as the burden of the poverty special in rural areas.

This study is mainly focus on the analyzing the contribution of Small Scale businesses

Enterprises towards poverty reduction in Paje Village South District of Unguja Zanzibar.

Zanzibar, which is a part of the United Republic of Tanzania, consists of two main islands

namely Unguja and Pemba and about 50 other small islands. The islands are located 40km

off the Mainland coast of East Africa in the Indian Ocean between latitude 5 and 6 degrees

South and longitudes 39.5 and 40 degrees East. The two main islands are 50km apart

separated by the 700 meter deep Pemba channel. The total surface area of the islands of

Zanzibar is 2,654 square kilometers; Unguja is the larger of the two main islands has an

area of 1,666 square kilometers, while Pemba has an area of 988 square kilometers. The

1988 census indicated that the total population of Zanzibar was 640,685. The population

has risen to 984,531 in year 2002. The population growth rate between 1988 and 2002 is

3.1 percent. It assumed population of Zanzibar reached 1.57 million in the year 2011with a

population growth rate of 3.1 percent per annum (ZTA 2011).

Socio-cultural formation in Zanzibar is a reflection of its contacts with foreign

nationalities. Through trade relations Zanzibar has integrated African Culture with those of

Asia and Europe. The socio cultural mix is reflected in the islands architecture, way of life,

language and the racial mix of its people. Kiswahili is a lingua franca for the country,

however other languages like English, Arabic, Italian and French are also in use.

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Table 1: Population of Zanzibar

Population Intercensal Population Average Sex

Region
Ratio
Both sexes Male Female Average Annual Density Household

Growth Rate Size

Tanzania 1,303,569 630,677 672,892 2.8 530 5.1 94

Zanzibar

North 187,455 92,114 95,341 3.2 399 4.8 97

Unguja

South 115,588 57,880 57,708 2.0 135 4.4 100

Unguja

West 593,678 283,590 310,088 4.2 2,581 5.2 91

Urban

South 211,732 103,222 108,510 1.3 369 5.3 95

Pemba

North 195,116 93,871 101,245 1.1 588 5.4 93

Pemba

Source: Zanzibar Population Census 2012

While the importance of the Small Scale businesses Enterprises /SME sector and the

informal sector is acknowledged internationally, defining an SME is a challenging task, as

every country has its own definition. There is no single, uniformly accepted definition of a

small firm (Storey, 1994). Firms differ in their levels of capitalisation, sales and

employment. Hence, definitions which employ measures of size (e.g. number of employees,

turnover, profitability and net worth) when applied to one sector might lead to all firms
2
being classified as small, while the same size definition when applied to a different sector

might lead to a different result.

Small Scale businesses Enterprises definitions can be broadly categorised into two,

“economic” and “statistical” definitions. Under the economic definition, a firm is regarded

as small if it meets the following three criteria: (1) it has a relatively small share of their

market place; (2) it is managed by owners, or part owners, in a personalised way and not

through the medium of a formalised management structure; and (3) it is independent in that

it is not part of a larger enterprise.

The “statistical” definition, on the other hand, is used in three main areas: (1) quantifying

the size of the small firm sector and its contribution to GDP, employment and exports; (2)

comparing the extent to which the small firm sector’s economic contribution has changed

over time; and (3) in a cross-country comparison of the small firms’ economic contribution.

A ‘Small Scale business’ is official defined in amended by the National Small Business

Amendment Acts of 2003 and 2004 (NSB Act) as: “… a separate and distinct business

entity, including co-operative enterprises and nongovernmental organisations, managed by

one owner or more which, including its branches or subsidiaries, if any, is predominantly

carried on in any sector or sub sector of the economy ...”.

This study adopts the definition that Small Scale businesses Enterprises are those with

total asset base (excluding real estate) of range between 1 million Tsh to 50 million Tsh

capital and employing less than 50 people full time workers.

Informal sector and Small and Medium Enterprises (SMEs) contribution to employment

generation and improved livelihood of families has drawn a significant attention of both

researchers and policy makers in most of the developing countries including Zanzibar. It is

3
widely accepted that the micro, small and medium size enterprises (MSME) sector has the

potential to provide livelihood for a considerably large number of people in least

developing countries like Zanzibar and others in the region. In Zanzibar, micro enterprises

are considered the sanctuary and sphere of the many poor in both rural and urban area for

their livelihood. Studies confirm that a larger proportion of the Zanzibar population engage

in a wide variety of economic activities and depends on SMEs as a source of income for

their survival. However, operations of SMEs are constrained by the taxation system, power

supply, skills, regulations and corruption. These are critical investment determining factors

not only in Zanzibar, but also in other countries in the region such as Tanzania Mainland,

Kenya, and Uganda.

The findings show that Unguja is home for most enterprises (70%) compared to Pemba

(30%). There are big variations between regions and between districts in terms of SMEs

distribution. SMEs in Zanzibar are dominated by the micro-enterprises with between 1 and

2 employees (72 percent). However, this study reveals that overtime employment

opportunities in terms of the total number of workers employed by the business firms has

tended to increase. Both the business register and business census indicate that majority of

businesses (SMEs) are owned by families. This is mainly intended to ensure security of

assets as well as a means of minimizing operating costs.

Most areas of Zanzibar have a lot of resources. What is missing is the entrepreneurial drive

and skills to see the opportunities and to have the drive, vision and ability to exploit them

profitably. A great deal of capacity building of rural communities and entrepreneurs is

required to stimulate their drive and imagination and to impart business skills. SMEs in

Zanzibar would also require appropriate financial services and/or credit accessibility, and

market accessibility.

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Table 2: Distribution of Small Businesses by Region and Size of Workers

Region Business by Size of Workers

1-2 3-4 4-9 10+ Total

North U(1,753) 71% 16% 06% 06% 99%

South U(1,2560) 67% 16% 08% 9% 100%

North P(1,581) 78% 12% 05% 05% 100%

South P(2,032) 74% 14% 06% 05% 99%

Urban(8,570) 68% 18% 08% 9% 100%

Source: Zanzibar Human Development Report (2009)

Table 3 : Number of Small Businesses by Region

Region Number of Business

Central Percent Business Percent of

Register of of Total Census Total

Establishment

North Region(U) 1,395 12 1,753 12

South Region (P) 919 8 1,256 8

Urban West(U) 6,103 51 8,570 56

North Region(P) 1,759 15 1,581 10

South Region(P) 1,896 16 2,032 13

Total 12,072 100 15,192 100

Source: Zanzibar Human Development Report (2009)

Poverty has been defined differently by various international agencies. According to the

United Nations, it is the inability of getting choices and opportunities, a violation of human

5
dignity. It means lack of basic capacity to participate effectively in society. It means not

having enough to feed and clothe a family, not having a school or clinic to go, not having

the land on which to grow one’s food or a job to earn one’s living, not having access to

credit. It means insecurity, powerlessness and exclusion of individuals, households and

communities. It means susceptibility to violence, and it often implies living in marginal or

fragile environments, without access to clean water or sanitation. On the other hand, the

World Bank defines poverty as pronounced deprivation in well-being, and comprises many

dimensions. It includes low incomes and the inability to acquire the basic goods and

services necessary for survival with dignity. Poverty also encompasses low levels of health

and education, poor access to clean water and sanitation, inadequate physical security, lack

of voice, and insufficient capacity and opportunity to better one’s life.

Poverty in Zanzibar is largely characterised by higher poverty incidence in rural than in

urban areas: About 51 percent of people in the rural areas live below the basic needs

poverty line as compared with about 36 percent in urban areas. Similarly, 16.8 percent of

people live below the food poverty line in the rural areas as compared with about half of

that (8 percent) in the urban areas.

Table 4: Basic Needs and Food Poverty Levels by Districts of Zanzibar

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 District Basic Need Poverty (%) Food Poverty (%)

2004/05 2004/10 2004/05 2009/10

Kaskazini A 53.3 48.4 12.2 7.2

Kaskazini B 48.3 42.2 12.1 8.8

Kati 45.7 39.9 8.3 8.5

Kusini 53.8 30.5 9.7 3.9

Magharibi 38.6 31.2 9.5 7.3

Mjini 37.6 28.2 7.8 4.2

Wete 70.8 61.8 23.8 25.7

Micheweni 74.2 74.6 33.3 27.7

Source: RGOZ
Chakechake 56.8 52.0 18.9 19.1
(2012)
Mkoani 42.1 52.3 7.3 21.5

Urban 40.5 35.9 8.9 8.1 In Zanzibar,

Rural 54.6 50.7 15.9 16.8 poverty is more

Zanzibar 49.1 44.4 13.2 13.0 persistent based

on the Multidimensional Poverty Index (MPI). MPI is a three dimensional assessment that

represents 10 basic indicators in human development (education, health and standard of

living). The 10 indicators in this measurement include: health (nutrition and child

mortality); education (years of schooling and school attendance); living standards (type of

cooking fuel, sanitation, cooking water source, access to electricity, type of floor and

ownership of assets). Table 5 shows MPIs across regions. Using this indicator, 32.6 percent

of people in North Pemba face severe poverty while only 3.9 percent of the population in

South Unguja is in severe poverty.11

Table 5: Multidimensional Poverty across Regions of Zanzibar

Region MPI Incidence % of population % of population

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 of Poverty Vulnerable to in severe poverty

% poverty

Urban West(U) 0.144 34.5 28.8 6.6

South (U) 0.082 19.6 34.8 3.5

North(U) 0.281 57.6 24.2 26.3

South(P) 0.277 57.5 25.8 25.2

North(P) 0.321 61.9 23.9 32.6

Source: Oxford Poverty and Human Development Initiative (2013)

Performance of the private sector is closely tied to how well a country promotes the

development of new business, how much and how fast existing business are able to grow

and become more efficient, and how well enterprises that sell in international markets

compete. Small Scale businesses play crucial roles in employment creation and income

generations that may contribute to the poverty reduction especial in rural areas.

Related to this, the Zanzibar growth strategy places a strong emphasis on strengthening

public private partnership and number of government polices give priority to the

development of micro, small and medium enterprises, these include the Zanzibar Strategy

for growth and Poverty Reduction (ZSGRP) which provides for measures to reduce income

poverty, to increase access to social services, to enhance the survival and well being of the

population and to contain extreme vulnerability.

The absence of appropriate measure to ensure the extent in which the Small Scale

businesses perform the duty to combat the social and economic problem such as poverty

especial in the rural areas, Zanzibar growth strategy will not attain the goal of promote the

Small Scale businesses Enterprises as well as to solve country problem such as poverty.

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 Hence this study is very important for measure the extent in which the Small Scale

businesses operated at different rural areas of Zanzibar, contribute in poverty reduction at

these areas as well as to the whole country.

1.2 Statement of the Problem

In the process of improving social and economic development the Zanzibar Government

has adopted a long term development goal of the eradication of poverty and the attainment

of sustainable human development. Hence SMES are given a vital role in the social

economic development of Zanzibar. SME S and the private sector are described as partners

in combating poverty and to improve the well being of the people to the whole country

especial in the rural areas.

Due to decline of employment opportunities in the rural areas such as Paje Village at the

formal sectors tend a lot of people to engage in Small Scale Business activities day to day in

order to overcome the unemployment problem. However, it remains unknown the extent to

which these initiative business have succeeded in reducing the employment gap and finally

to reduce the poverty of the people. So there was a need for the Small Scale Business

stakeholder to be aware in analysing the big contribution of these enterprises to the

employment generation as well as poverty reduction in Paje Village.

From the table below show the total number of workers employed by the sampled business

firms has increased by 12 percent between 2007 and 2009, while the number of female

workers has also increased by 15 percent, the number of workers below 18 years of age has

dropped by about 70 percent which could be reflecting the Government’s emphasis on

education for all school age children and the fact that child labour is prohibited in Zanzibar.

Table 6: The Profile of Workers

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 Categories 2007 Percent 2008 Percent 2009 Percent Percent

Of Workers of Total of Total of Total Change

Total no of workers 187 100 219 100 210 100 12

Relative of HH members 91 49 116 53 124 59 36

Female Workers 68 36 76 35 78 37 15

Under 18 28 15 27 12 8 4 -71

Source: Computed from Survey data (2012)

1.3 Objectives of the Study

1.3.1 Main objective of the Study

Generally the study aims at if analysing the contribution of Small Scale businesses

Enterprises towards poverty reduction in Paje.

1.3.2 Specific objectives of the Study

The Study based on the following Specific objectives

i. To investigate the extent in which the number of SSBE increasing in Paje Village.

ii. To evaluate the personal income earning of the owners generated by SSBE.

iii. To investigate the extent to which SSBE in Paje Village promote local resource

utilization.

iv. To investigate the employment generation capacities of SSBE in Paje Village.

1.4 Research question

i. What is average monthly profit (net capital income) of the owner of the businesses

in this business?

ii. How many numbers of employees that employed in this business?

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 iii. What is the extent in which business activities intend to promote local resource

utilization?

iv. What is the extent in which the number of small scale businesses enterprises

increasing in Paje Village?

1.5 Scope of the study

This study will be conducted in the Paje village which is located at the South East Cost in

the South District of Unguja Island in Zanzibar. It will be focus on the Small Scale

businesses owner’s and people who are employed in this sector.

This study will cover the analysation of small scale business on that village at the year of

2015.

1.6 Significance of the study

The fundings of this study are expected to be useful to the following stakeholder:-

 For Ministries and NGO’S who are in an implementation on Policy and Strategies of

economic growth and poverty reduction at Zanzibar?

 Those researchers to assess the type and form of business that generate the desired

profit to the rural people of Zanzibar.

 Those researchers to overcome the problems of increasing of unemployment in

Zanzibar.

 Those researchers to increase the efficiency in conducting the business process hence

saving time and cost.

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 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter deals with the assessment of literatures which relate to the topic the small

scale businesses and poverty concept. Several literatures would be selected and relevant

areas would be reviewed and evaluated. This chapter provides information about aspect of

previous works which relate to this study. In view of this, a number of presentations culled

from various sources are under review here.

2.1 Small Scale businesses Enterprises toward Poverty Reduction

The history of small business has been one of the most controversial stories in economic

development in the world. The role of small business in an economy has frequently been

undermined and even misinterpreted. In the past, small businesses were believed to impede

economic growth by attracting scarce resources from their larger counterparts (Audretsch,

etal. 2000).

Pioneer studies in development economics by Lewis, Nurkse and Rosenstein- Rodan

focused on economic development. However, these authors less focused on the impact of

economic development on the poor and were proponents of the ‘trickle-down’ impact of

economic growth to the poor (Lipton and Ravallion, 1995). Some of the development

economists have argued that robust growth and sustained development can be obtained

through development of capital intensive large scale enterprises (Loveman and

Sengenberger, 1991). According to Adelman and Robinson (1989) development more often

12
takes place in urban areas than in rural areas hence the poor are not benefited by the process

of development. The growth of unskilled labour-intensive sectors may be helpful for

poverty reduction and equal distribution of income (Alderman and Robison, 1989). The

growth of labour-intensive industries may ensure greater involvement of the poor and better

utilization of cheaper labour input. The utilization of low-wage workers in the production

process, if low wages are high enough for reducing poverty and low enough for competing

in the market with the rivals, makes the labour-intensive industries compete in international

market and helps in poverty reduction simultaneously. Sen (1960) and Myrdal (1968)

emphasized on the roles of labour-intensive industrialization on poverty reduction. In

recent years the importance of SMEs for the contributions in economic growth and

development of the economies has been recognized. SMEs employ much more labour force

than the huge multinational corporations (Mullineux (1997). Due to dynamic and

evolutionary nature of small scale firms, they serve as agents of change (Audretsch, 2000).

SME sector has been a source of concern for the policy makers for the accelerated growth

in developing nations. SMEs are a major source of potential employment in low income

economies. That is why these enterprises are considered to be the “engine of growth” for

attainment of growth objectives in developing nations (Advani, 1997). The initiatives for

the promotion of SMEs by the governments of the recent times, especially in developing

countries, are underway (Feeny and Riding, 1997). Wider economic and socio-economic

objectives such as poverty alleviation can be achieved by developing the SMEs (Cook and

Nixon, 2000). There is a low cost associated with the job creation in SMEs and these

enterprises are more labour intensive than the larger firms (Leidholm and Mead, (1987) and

Schmitz (1995). Since the SMEs are labour intensive and these type of firm are more likely

to be based in rural areas and smaller urban areas hence the development of SMEs may be

helpful for the economic satiability, growth and employment. The dispersion of these

13
enterprises in these areas and their labour intensity may be very important in equal

distribution of income. The development of SMEs helps the economies to grow in the long

run these enterprises improve domestic market efficiency and uses the scarce resources

productively (Kayanula and Quartey, 2000). Mukras (2003) suggests set of policy

recommendations for poverty alleviation through strengthened SMEs. Strengthened SMEs

generate employment and economic growth in the economy. The proponents of pro-SMEs

argue that entrepreneurial and innovative ventures in SMEs help to improve growth of the

economy and reduce the poverty levels in developing economies (Beck et al., 2004). Small

scale enterprises increase competition and entrepreneurship in the economy and result in

economy wide benefits in efficiency, innovation and growth in productivity. Gebremarian

et al. (2004) analyzing the relationship between development of small scale business,

growth and incidence of poverty in West Virginia found a strong negative relationship

between small scale business and the incidence of poverty.

Beck et al. (2005) exploring the relationship between SMEs, growth and poverty find a

strong and strong relationship between the importance of SMEs and growth in GDP per

capita. The study could not find enough evidence of the poverty alleviating impact of SMEs

in a sample of 45 countries. However, it has been deduced that SMEs are labour intensive

so growth in these enterprises increases employment more than the large scale industries’

growth (Snodgrass and Biggs, 1996). Aina and Amnes (2007) suggest more effective and

fully funded policy program for the development of SMEs in Nigeria, for generating

employment opportunities for economic growth, to empower the poor and deprived. The

adoption of growth strategies that helped to promote labour-intensive industries and SMEs

promoted high levels of growth with low levels on income inequality in Republic of Korea

and Taipei, China during 1950s to 1990s. The absorption of rural surplus labour and

reduction in urban unemployment due to establishments of these small and medium

14
enterprises helped these economies to growth with low inequality. The People’s Republic

of China, though, has shown robust and high levels of growth but income inequality

increased during last three decades. It has been suggested that the unification of labour

market and encouragement of SMEs, more labour-intensive development policy, for better

growth and more equal distribution of income in China (Li and Lou, 2008). Some of the

studies focus SMEs sector’s contribution to the GDP and employment that it generates in

the economy. SME sector has been playing a very important role in development,

employment generation and poverty alleviation in African economies. About 85% of the

manufacturing employment in Ghana is provided by the SME sector. This sector consists of

92% of business and contributes 70% of the GDP in Ghana. Where as in South Africa, this

sector contributes to 52-57% of the GDP and provides 61% of employment. SMEs

constitute 91% of the formal business in South Africa. The authors also suggest appropriate

strategy for the improvement in Ghana and South Africa, (Abor and Quartey, 2010).

Agyapong (2010) discusses the role of micro, small and medium enterprises (SMEs) in

poverty alleviation in Ghana. The author is of the view that town and rural based SMEs

help to create jobs and increase income of the people. This increased income helps the

people to obtain better schooling, health facilities and empowers them to get rid of vicious

circle of poverty. Furthermore, growth in small and medium enterprises (SMEs) also

contributes to human capital through on job training. The author is also of the view that

SMEs also contribute in the increase of tax revenue of the government.

By creating jobs and promoting economic growth, small businesses play a critical role in

poverty alleviation. Understanding the connection between small businesses, economic

growth and the incidence of poverty has been the interest of many researchers and there

have been many attempts to establish statistical relationships between official poverty rates

and overall macroeconomic performance on the basis of aggregate time-series data

15
(Freeman, 2002; Haveman and Schwabish, 2000; Blank, 2000; Cain, 1998; Powers,

1995;Blank and Card, 1993; Cutler and Katz, 1991; Blank and Blinder, 1986; Gottschalk

and Danziger, 1985). The results from these studies show an inverse relationship between

economic growth and poverty rates. Blank and Blinder (1986), for example, found that both

the unemployment rate and the inflation rate were positively related to poverty rate, with a

high quantitative effect of unemployment. Cutler and Katz (1991), Blank (1993) and

Powers (1995) also found similar results apart from the post recession period of the 1980s

where unemployment rate was found to be inversely related to poverty rate. Using GDP

growth rate as explanatory variable, Haveman and Schwabish (2000) tested the differential

effect of macroeconomic performance on the poverty rate for various periods. Their result

shows a strong inverse relationship between economic growth and poverty rate. They also

showed that a one-percentage decrease in unemployment rate was associated with a 0.43

percentage point decrease in poverty rate between 1993 and 1998.

However, a number of studies have not only indicated contradictory evidence about the role

of small businesses but also produced results that rejected the view that small business are

the engines of job creation and economic growth (Armington and Odle, 1982; Dunne et al.,

1989; Brown et al., 1990; Acs and Audretch, 1993; Duncan and Handler, 1994; Harrison,

1994). Such studies show that although small firms exhibit higher growth rate in percentage

terms, most new firms don’t grow at all, and large start-ups account for the larger share of

new firm growth. Besides, while the gross rate of job creation and lose of jobs are higher in

small firms; there is no systematic relationship between net job creation and firm size

(Davis et al., 1993). Small businesses provide low quality jobs to their employees compared

to large businesses. Empirical evidence indicates that large firms provide more stable

employment, higher wages, and more non-wage benefits than small businesses

16
(Rosenzweig, 1988; Brown et al., 1990). In addition, average firm size distribution does not

indicate a growing dominance of small firms.

Many small firms are established as last resort rather than as first choice and have limited

growth potential (Liedholm and Mead, 1987). Recent research evidence also shows that

small firms are not more innovative than large firms. Using a sample of European

industries, Pagano and Schivardi (2001), for example, concluded that larger firm size is

associated with faster rates of innovation.

In spite of the numerous empirical studies on the roles of small scale enterprises in poverty

reduction and employment generation in rural areas, including the ones reviewed above, no

empirical study has examined the important enterprise in the Small Scale Business

Enterprises that could create jobs and reduce poverty in rural areas. This study is attempt to

fill this gap in the literature and provide the foundation for evidence-based on the

contribution of Small Scale Business Enterprises to poverty reduction and provide the

conclusion of which type of the business operated be highly solve economic challenges of

unemployment and poverty facing low income people in the rural areas.

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 CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter describes the research methodology used for this study. Research methodology

assists the researcher in deriving clear objectives from the research questions, specifying

the source from which data is to be collected and considering the constraints of the study,

which the researcher will inevitably have.

3.1 Research Design

This study based on the Qualitative and Quantitative approach as include both primary

and secondary data.

Qualitative used for those questions that were need the descriptive information, while

Quantitative for those question that was need the numerical data.

Secondary data based on collecting overall data about Small Scale businesses in Zanzibar at

the various sectors which are already documented. The source of these data was Library,

MKUZA, Zanzibar Office Statistic and other reliable sources such as internet.

Primary data was the most used in analyzation of this research; it collected from different

businesses owners and people who are employed in Small Scale businesses at that rural

area (Paje’s village).

3.2 Description of the Study Area

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 Paje is a village in Zanzibar in Tanzania. It is on the east coast of Zanzibar Island

(Unguja) between the villages of Bwejuu and Jambiani. The village is widespread from

about 1km south (Bwejuu) on 5km strip to the South (Jambiani). You can drive here from

Stone Town in 30-40 minutes by car or motorbike. The whole village can be reached by

foot, or you can make a visit around by bicycle or by taxi.

According to the National Bureau of Statistics Tanzania in the census of 26/8/2012 the

total area of Paje is about 34.89 km 2 with density of 93.1 inh/km2. Paje had a population of

about 3,245 (2012 population census).

Paje village is an amazing coral beach of white sand that slopes gently down on a

turquoise background. The simplicity of the inhabitants and their receptions are touching.

The larger population of Paje derives their livelihood from farming, fishing and engaging in

Small Scale businesses Enterprises. In recent years, the dominant activity in all the villages

in the east coast is the collection of algae.

Due to the higher interaction of the people at Paje from different areas of Zanzibar and the

mainland of Tanzania as well as the better businesses environment, the SMES take a greater

position of economic activities among the citizens. Hence the understanding the

contribution of these SMES to poverty reduction in Paje is very crucial aspect.

3.3 Statement of the Hypothesis

This study used linear regression economic model to test the hypothesis of zero impact on

independent variable to dependent variable. It examine whether the independent variables

has the significance impact to dependent variable or not. In this study Profit Margin is used

as an indicator of poverty reduction and so is a Dependent variable while Small Scale

19
Businesses Enterprises in term of Investment Capital and Number of employees are

Independent variables.

The model of this study:

PMt= ß0 + ß1ICt + ß2Et + €t

Where as:

PM = Dependent variable (Profit Margin/ Capital income)

ß0 = Constant term that indicates the amount of Profit Margin when there is no any impact

of Independent Variables.

ß1 = Slope coefficient that show the % increase in dependent variable when Investment

Capital increase by 1 unit.

ß2 = Slope coefficient that show the % increase in dependent variable when Number of

employees increase by 1 unit.

IC = Investment Capital of the business

E = Number of Employees in the business.

€t = Stochastic error term.

Table 7: Explanatory Variables used in the Empirical Analyses

Name of Variable Description of Variable Expected Sign

IC Investment Capital of the business +

E Number of Employees in the business +

The tests of this model are:

HO: ß1 = 0 and ß2 = 0

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 HA: ß1 ≠ 0 and ß2 ≠ 0

Where as:

HO: ß1 = 0 and ß2 = 0 are our null hypothesis that the coefficient of independent variable

has no significance impact to dependent variable.

HA: ß1 ≠ 0 and ß2 ≠ 0 are our alternative hypothesis that the coefficient of independent

variable has an impact to dependent variable. The impact may be Positive or Negative.

The hypotheses which were tested are as follow:

 HO: Small Scale Businesses Enterprises do not reduce poverty in Paje Village.

 HA: Small Scale Businesses Enterprises reduce poverty in Paje Village.

3.4 Sample Size

This study adopts the definition that Small Scale businesses Enterprises are those with total

asset base (excluding real estate) of range between 1 million Tsh to 50 million Tsh capital

and employing less than 50 people full time workers.

This research has used the random sampling because each members of the population has

equal probability of being selected for inclusion in the sample. The subjects were randomly

drawn from Paje village to the population who are engaged in small scale businesses; at

most of 30 businesses owners or employees in stead of them were selected from that

village.

The table bellow shows the total Samples which are randomly selected from sampling by

figures in different small scale businesses sectors which are operated at Paje Village.

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 Table 8: Randomly Samples Selected

Sectors Population Sample size Percentage

size of Sample

size

Transport(taxi) 40 5 16.7

Tours(Operator & guide) 5 4 13.3

Bungalows 4 3 10.0

Restaurants & bars 6 4 13.3

Sea foods Suppliers 2 2 6.7

Stationary 2 2 6.7

Mini Markets 2 2 6.7

Shops 19 3 10.0

Video Library 3 2 6.7

Mamalishe/Babalishe 8 3 10.0

TOTAL 89 30 100.0

Source: Field data (2015)

These sample ware selected from the total population for provide maximum population’s

representative in order to provide the reliable and accurate data that needed in this study

especial from the businesses owners or the employees instead of them.

3.5 Sample design

Random sampling technique was employed.

22
  Random sampling technique is a process of selecting a sample that allows all

members of the group or population to have an equal and independent chance of

being selected for the sample. Random sampling technique was employed when

selecting the employees at operational level. This was done to avoid bias.

3.6 Data presentation and Analysis

The SPSS was used to analyze the quantitative data so as to measure the relationship

between the dependent and independent variables of the research model. On the other hand

charts and graph also were applied by using SPSS and E-View programs.

3.7 Instruments for data collection

The instruments that were used in conducting this research were questionnaires and

interviews.

An interview was used for those who are seen difficult to use questionnaires as the mode in

collecting data.

3.8 Estimation Technique

Using OLS techniques, the coefficient of the variables in regression model were estimated.

For the study estimates with OLS the function of Profit Margin with respect to percentage

growth of small scale businesses has to be transformed in to model to satisfy the Classical

Linear Regression Model (CLRM). So that comes up with the usual assumption of Best

Linear Unbiased Estimate (BLUE). The model be manipulated by using SPSS from the data

collected and the result be as shown at the appendix b.

23
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.0 Introduction

This chapter presents the findings of the study. The chapter highlights the back ground

information of the respondents of Small Scale Business Enterprises. Discussion and

analysis of the different responses to some key questions is also done in this chapter

following the research objectives given below;

i. To investigate the extent in which the number of SSBE increasing in rural areas

of Zanzibar.

ii. To evaluate the personal income earning of the owners generated by SSBE.

iii. To investigate the extent to which SSBE in Zanzibar promote local resource

utilization.

iv. To investigate the employment generation capacities of SSBE in Zanzibar.

4.1 Back ground information of respondents.

Respondents of the study were sample of the target groups. Due to their importance to the

study it was very necessary to present respondents’ historical background to get a clear

picture of the study population. From this point of view, the key features of the

respondents of the study were biological (sex), age, educational and form of business

ownership.

4.1.1 Gender of respondents

This is important because enable to know the ownership of the business based on gender
from the selected sample and measure the gender bias in SSBE.

24
 Respondents were asked to state their gender and the following data was obtained.

Table 9: Sex and Distribution of the Respondents from Small Scale Businesses

Sex Frequency Percent

Male 25 83.3

Female 5 16.7

Total 30 100.0

Source: Field data (2015)

From the table 9, it can be notes that the Smale Scale business Enterprises are owned by

both the male and female owners though the majority are male being represented by 83.3%

while female are represented by only 16.7%. This implies that majority of Small Scale

Businesses Enterprises owner are males.

4.1.2 Age bracket of respondents.

This enables to analyse the age of the most SSBE owners and identify the age group that
highly operate these businesses.

Respondents were asked to show their age bracket and the following data was obtained.

Table10: Distribution of Age Group of Respondents of the SSBE

Age Frequency Percent

20-25 1 3.3

26-39 23 76.7

40 and above 6 20.0

Total 30 100.0

Source : Field data (2015)

From the table above, it is seen that 76.7 percent of the respondents who owner the Small

Scale Businesses Enterprises in the age group of 26-39 years followed by those in the age

group of 40 years and above at 20.0 percent. Those in the age group of 20-25 years are 3.3

25
 percent. This means that the Small Scale Business Enterprises are more owned by people

with in the age group of 26-39 because these are still have able to afford investment capital

to run the business.

4.1.3 Level of Education of the Respondents

This enables to known the education level of the SSBE owners as important factor for

business skills development.

Respondents were also asked to identify their educational levels and below are the

responses and below are the responses.

Table 11: Level of Education of Respondents of SSBE

Level of Education Frequency Percent

Non 0 0.0

Primary 0 0.0

Secondary 18 60.0

Tertiary 12 40.0

Total 30 100.0

Source: Field data (2015)

Table 11 indicates that 18 respondents equivalent to 60.0% were from secondary level, 12

respondents equivalent to 40.0% were from tertiary level of advance, certificate, diploma

and masters. There were no any respondents to the primary level. This means that Small

Scale Businesses Enterprises are highly owned by the owner attained in the secondary level

of education in order to ensure they find the way of getting their income.

4.1.4 Form of Business ownership of the Respondents

This enables to know the form of business ownership that owners of SSBE decided to use

for running their business.

26
 Respondents were also asked to identify their form of business ownership and below are the

responses.

Table 12: Form of Business ownership of SSBE

Form of business Frequency Percent

Sole proprietorship 28 93.3

Partnership 2 6.7

Limited Liability 0 0.0

Corporations 0 0.0

Total 30 100.0

Source: Field data (2015)

Table 12 indicates that 28 respondents equivalent to 93.3% were use sole proprietorship as

a form of business ownership and only 2 respondent equivalents to 6.7% use partnership,

but there were no any respondent to any other form of business. This means that Small

Scale Business Enterprises are owned by single person due to the need for small capital,

attain the personal interest for success of the business as well as make quick decision.

4.2. Analyses of responses in relation to core objectives

4.2.1 Extent in which SSBE increasing in Paje Village.

The first key objective of the study was to find out the extent in which number of Small

Scale Businesses Enterprises increasing in rural areas. To achieve this objective, the

question was put to the respondents through questionnaire four. The question was

“What is the extent in which the number of small scale businesses enterprises

increasing in Paje Village?” and Why.

27
20 respondent equivalents 66.7% out of 30 said “High,” 10 respondent equivalents 33.3%

said “Medium” while there is no any respondent toward the “None” and “Low”. As shown

in the table below

Table 13: Percentage of respondents of the SSBE

Response No. of respondents Percentage

Non 0 0.0

Low 0 0.0

Medium 10 33.3

High 20 66.7

Total 30 100.0

Source: Field data (2015)

The respondents gave their views to explaining about the reasons of extent of increasing

number of Small Scale Businesses Enterprises in Rural areas as shown in the table bellow

Table 14: Views of responds of SSBE on extent of increasing number of SSBE

On Views No. of responds %

High High increasing business opportunities due to greater 20 66.7

interaction of people especial for tourism activities.

Medium Increasing in demand due to enlarge of economic 10 33.3

activities such as agricultural and tourism.

Total 100.0

Source: Field data (2015)

According to the table 14, show that 66.7% of the respondents said the main reason of high

increasing number of Small Scale Business is higher business opportunities especial to the

higher influence of tourism sector. Following by the reason of 33.3% respondents of

medium increasing due increasing the demand of people.

28
 Interpretations of increasing number of SSBE

From these findings, the researcher was in the opinion that the extent of increasing the

number of Small Scale Businesses Enterprises in Paje is high due to higher business

opportunities caused by higher interaction of the people caused by tourism activities that

face the people to engage in these business activities in order to get the better profit.

4.2.2 Personal income of the owners generated by SSBE.

The second objective of the study was to analyze the personal income earning of the owners

of the business generated by Small Scale Businesses Enterprises. To achieve this objective,

the question was put to the respondents through questionnaire one and purposely to get the

monthly business profit that added to the per capital income of the business owner. The

question was:

“ What is the average monthly profit (net capital income) of the owner of the

businesses in this business?”

Respondents gave their monthly profit generated by the business and these was

summarized by the sectors operated in the business as shown below

Table 15: Average monthly Profit of SSBE

29
 So
Sector Average Monthly Profit(Tsh) Percentage
ur ce:
Transport(taxi) 445,000 1.7

Tours(operator &guide) 1,485,000 5.7

Bungalows 10,711,333 41.4

Restaurants & bar 3,787,500 14.6

Sea food Suppliers 495,000 1.9

Stationary 550,000 0.2

Mini Markets 7,500,000 28.9

Shops 761,667 2.9

Video Library 50,000 0.2

Mamalishe/Babalishe 576,667 2.2

TOTAL 25,871,167 100.0

Field data (2015)

Graph 1: Average monthly Profit of SSBE

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000 Monthly profit(Tsh)

2,000,000

0
ty ur ws b ly ry et op ry ng
spo To alo al r& upp ona ark Sh ibra oki
an ng Loc od s Stai ni M V.
L co
Tr Bu o i
af M
Se

30
 From the table 15 show respondents how they respond on the different sector in Small

Scale Business Enterprises on the average monthly profit from business activities and

shown that bungalows has higher monthly profit of 10,711,333(41.4%)Tsh following by

mini market of 7,500,000(28.9)Tsh among the business selected in this finding. But the

stationary and video library show the smallest average monthly profit of 55,000(0.21%)Tsh

and 50,000(0.2%) Tsh respectively.

Interpretations of the average monthly Profit of SSBE.

From these findings, the researcher was agree with those average monthly profit generated

by sector in Small Scale Businesses Enterprises, it’s better to conclude these business

generate income earning due to the profit owned was a source of personal income but

highly depend on the amount of invested capital as well better business areas such that

shown all business that nearly forward linkage with tourism activities have higher profit

compare to the other as shown to the bungalows mini market.

4.2.3 Extent in which SSBE promote local resource utilization in Paje Village.

The third key objective of the study was to investigate the extent in which Small Scale

Businesses Enterprises in Paje Village promote local resource utilization. To achieve this

objective, the question was put to the respondents through questionnaire three. The question

was

“What is the extent in which small scale businesses enterprises promote local resource

utilization in Paje Village?” and Why.

31
Respondent equivalents 16.7% out of 30 said “None,” 16 respondent equivalents 53.3%

said “Low”, 9 respondent equivalents 30.0% said “Medium”, while there is no any

respondent toward the “High”. As shown in the table below

Table 16: Percentage of respondents of the SSBE

Response No. of respondents Percentage

Non 5 16.7

Low 16 53.3

Medium 9 30.0

High 0 0.0

Total 30 100.0

Source: Field data (2015)

The respondents gave their views to explaining about the reasons of extent in which small

scale businesses enterprises promote local resource utilization in Paje Village as shown in

the table bellow

Table 17: Views of responds of SSBE on extent of promoting local resource utilization

On Views No. of responds %

None They do no the extent in which these business 5 16.7

promote local resources utilization.

Low Many businesses enterprises use material of goods 16 53.3

that already manufactured from industrial as their

input in the business.

32
 Mediu Businesses enterprises use both material of goods 9 30.0

m that manufactured in industrial as well as the

resource located in the village such as agricultural

product, livestock and sea foods product.

Total 100.0

Source: Field data (2015)

According to the data presented in table 17, show that 53.3% of the respondents view said

the main reason of low promoting of local resource utilization due to highly use the

industrial manufactured product as input in the their businesses. Following by the reason of

30.0% respondents of medium increasing due to the both material from industrial as well as

resource located as input in the businesses.

Interpretations of extent in which SSBE promote local resource utilization

From these findings, the researcher was in the opinion that the extent in which Small Scale

Businesses Enterprises promote local resource utilization in Paje is low due to large number

of the businesses use the material of goods that manufactured from the industrial such as

shown at the mini market, stationary, video library as well as in transport (taxi).

4.2.4 Employment generation capacities in SSBE

The fourth objective of the study was to investigate the employment generation capacities

generated by Small Scale Businesses Enterprises. To achieve this objective, the question

was put to the respondents through questionnaire two. The question was:

“How many numbers of employees that employed in this business?”

All respondents as categorised in sample size respond to the number of employees

generated by the business and these was summarized by the sectors operated in the business

as shown below

33
Table 18: Estimated direct employment in SSBE in Paje Village 2015.

Sectors No of Percent

employees (%)

Transport(taxi) 40 17.4

Tours(operator &guide) 25 10.9

Bungalows 36 15.7

Local Restaurants & bar 48 20.9

Sea food Suppliers 04 1.7

Stationary 04 1.7

Mini Markets 06 2.6

Shops 38 16.4

Video Library 04 1.7

Cooking 24 10.4

TOTAL 229 100.00

Source: Field data (2015)

Graph 2: Estimated direct employment in SSBE in Paje Village 2015.

34
 60

50

40

30

20 No of employees

10

0
ty ur ws b ly ry et p ry g
spo To alo al r& upp iona ark Sho bra okin
s i
an ng Loc od St
a iM V.
L co
Tr Bu o in
a f M
Se

From the table 18 show respondents how they respond on the different sector in Small

Scale Business Enterprises on the number of employees to the business activities and

shown that local restaurant &bar generate high employment of 48(20.9%)employers

following by transport(taxi), shops and bungalows of 40(17.4%)employers,

38(16.4%)employers and 36(15.7%)employers respectively. But the stationary, seafood

supplier and video library show the smallest employment generation of 4(1.7%) for each

one.

Interpretations of employment generating capacity in SSBE

From these findings, the researcher was agree with those employment generation capacity

of Small Scale Businesses Enterprises, it’s better to conclude these business provide higher

contribution to combat un employment rate in Paje Village by generate the employment

opportunities as shown from finding that approximately 229 peoples are employed in Small

Scale Businesses Enterprises that may lead to reduce the poverty gap.

4.3 Regression Results of the Variables in the model

The variables are estimated using ordinary least squares (OLS) as specified in the model in

chapter three, this model give the view of the profit margin per month that the Small Scale
35
businesses Enterprises generated that may contribute to the Poverty Reduction in Paje

Village where this research are carried out. The table of the real data of this model is shown

at the part of appendix page.

This model was

PMt= ß0 + ß1ICt + ß2Et + €t

PMt = −471064.215 + 0.069IC + 353119.424Et + €t

R2 = 0.938

Ṝ2 = 0.933

Where as:

PM = Profit Margin (Capital income)

IC = Investment Capital of the business

E = Number of Employees in the business

R2 = Coefficient of determination

Ṝ2 = Adjusted Coefficient of determination

Interpretation of the model equation:

 Intercept interpretation (ß0)

-471,064.215/= conversional when the Profit of the Small Scale Businesses is zero

give the probability that profit generated from business activities at the Paje village

was decrease at -471,064.215/= where there is no effect of Investment Capital and

Number of employees.

36
 Since the intercept of that equation is negative, so is treated as zero. Therefore the

overall meaning of this intercept is that: When the Profit Margin of the businesses is

zero also the contribution of small scale businesses activities to profit generating is

also will be zero.

 Interpretation of the Slope coefficient (ß1 and ß2)

The slope coefficient (ß1) value of 0.069unit implies that, for a unit change by 1% of

investment capital it leads to increase the profit margin of the business by 0.069unit or

6.9% Tsh when number of employees remain constant.

The slope coefficient (ß2) value of 353,119.424Tsh implies that, for a unit change by

1% of number of employees it leads to increase the profit margin of the business by

353,119.424 Tsh when the investment capital remain constant.

Therefore according to our research hypothesis which shown at the chapter three, this

model show that there is a positive relationship between the Profit Margin of the

business and Investment Capital as well as Number of employees, that is when

Investment Capital and Number of employees increase tend the Profit Margin to

increase and the vice versa is also true.

 Interpretation on of the Coefficient of determination (R2) and Adjusted

Coefficient of determination (Ṝ2).

R2 is measure the goodness of the data; it means that how well the regression of line fit

the research data. When R2 is approach to 1 is well fitted and to 0 is not fitted.

Therefore, the value of R2 is 0.938 it implies that the researches data are highly correct

and fitness to the regression equation.

Ṝ2 is measure the percentage of variation around its mean that is explained equation

adjusted for degree of freedom. It implies that Ṝ 2 tend to be nearly approach to one (1)

for the fitness of the data.

37
 Therefore, the value of R-2 is 0.933 it implies that the data is in fitness because it nearly

to 1 and the model is unbiase.

CHAPTER FIVE

CONCLUSION AND RECOMMENDATIONS

5.1 Introduction

This chapter presents the summary of research so as to highlight research activities up to

getting the findings and made recommendations.

5.2 Conclusion

The research topic was contribution of Small Scale Business Enterprises to poverty

reduction in Paje Village, this place is chosen because there are higher influence of

engagement in these type of business activities this topic is chosen because to know the

contribution of these businesses toward poverty reduction.

The goal of this topic was to analysing the contribution of Small Scale businesses

Enterprises towards poverty reduction in Paje.

The researcher has four specific objectives, that objective ware

- To investigate the extent in which the number of SSBE increasing in Paje

Village.

- To evaluate the personal income earning of the owners generated by SSBE.

- To investigate the extent to which SSBE in Paje Village promote local resource

utilization.

- To investigate the employment generation capacities of SSBE in Paje Village.

38
 The researcher use Random sampling technique whereby all members of the group or

population to have an equal and independent chance of being selected for the sample. This

was done to avoid bias.

Research questions

All research questions got answered from the respondents as summarized below

a) What is average monthly profit (net capital income) of the owner of the

businesses in this business?

The answers of this question were shown that bungalows has higher monthly

profit of 10,711,333(41.4%)Tsh following by mini market of 7,500,000(28.9)Tsh

among the business selected in this finding. But the stationary and video library

show the smallest average monthly profit of 55,000(0.21%)Tsh and

50,000(0.2%)Tsh respectively.

The answers were strong to conclude these business generate income earning due

to the profit owned was a source of personal income but highly depend on the

amount of invested capital as well better business areas such that shown all

business that nearly forward linkage with tourism activities have higher profit

compare to the other as shown to the bungalows mini market.

b) How many numbers of employees that employed in this business?

The answers of this question were shown that local restaurant &bar generate high

employment of 48(20.9%) employers following by transport (taxi), shops and

bungalows of 40(17.4%) employers, 38(16.4%) employers and 36(15.7%)

employers respectively. But the stationary, seafood supplier and video library

show the smallest employment generation of 4(1.7%) for each one.

39
 The answers were strong to conclude these business provide higher contribution

to combat un employment rate in Paje Village by generate the employment

opportunities as shown from finding that approximately 229 peoples are employed

in Small Scale Businesses Enterprises that may lead to reduce the poverty gap.

c) What is the extent in which business activities intend to promote local resource

utilization?

The answers of this question were

- None

- Low

- Medium

The answers were strong toward the low due to large number of the businesses use

the material of goods that manufactured from the industrial such as shown at the

mini market, stationary, video library as well as in transport (taxi).

d) What is the extent in which the number of small scale businesses enterprises

increasing in Paje Village?

The answers of this question were

- Medium

- High

The answers were strong toward the high due to higher business opportunities

caused by higher interaction of the people caused by tourism activities that face

the people to engage in these business activities in order to get the better profit

From the research accepted hypothesis tested model are

The model was:

40
 PMt= ß0 + ß1ICt + ß2Et + €t

HO: ß1 = 0 and ß2 = 0

HA: ß1 ≠ 0 and ß2 ≠ 0

Where as:

HO: ß1 = 0 and ß2 = 0 are our null hypothesis that the coefficient of independent variable

has no significance impact to dependent variable.

HA: ß1 ≠ 0 and ß2 ≠ 0 are our alternative hypothesis that the coefficient of independent

variable has an impact to dependent variable. The impact may be Positive or Negative.

The hypotheses which were tested are as follow:

 HO: Small Scale Businesses Enterprises do not reduce poverty in Paje Village.

 HA: Small Scale businesses Enterprises reduce poverty in Paje Village.

Therefore, it accepted an alternative hypothesis because the coefficient of independent

variable is not equal to zero ( ß1 ≠ 0) and it has positive sign, so small scale businesses

enterprises reduce poverty to the Paje Village due to increase in business profit that lead

the per capital income of the owners and employees be increase to ensure they afford their

basic needs. See regression analysis in chapter four.

The research shows that, positively relation ship between the small scale businesses

enterprises and poverty reduction. This is because when the small scale business enterprises

activities such as the investment capital and number of employees tend the business profit

41
 also to increase hence more per capital income of the owner and employees generated and

ability of afford basic need increase and the poverty problem was reduced.

The study shows that, a unit’s change by 1% to the Investment Capital of the Small Scale

Businesses Enterprises leads to increase the profit margin of the business by 0.069 or 6.9%

Tsh when the number of employees remain constant. As well 1% change to the Number of

Employees it leads to increase the profit margin of the business by 353119.424 Tsh when

the investment capital remain constant this situation will reduce the poverty problems to the

Paje Village.

5.3 Recommendations

Based on the findings, the following are the challenges of Small Scale Businesses

Enterprises in Paje Village where as this research are taken and the suggested way that

should be taken to solve that challenges in order to improve the Small Scale Enterprises to

poverty reduction. It assumes that government intervention through the provision of

financial assistance, social infrastructures and favourable taxation policies will go a long in

addressing the major challenges of SSBE. The three major findings of the research are as

flows:

42
  Poor financing constitutes a major challenge in the performance of Small Scale

Businesses Enterprises in Paje Village.

 Inadequate social infrastructures constitute a major challenge in the performance of

Small Scale Businesses Enterprises in Paje Village.

 Lack of managerial skills constitutes a major challenge in the performance of Small

Scale Businesses Enterprises in Paje Village.

Arising from the findings of this study, it is suggested that Zanzibar Government should

take the following steps to address the major challenges of Small Scale Businesses

Enterprises in Paje Village:

43
 Provision of soft loans to SSBE: Zanzibar Government should encourage banks

provide soft loan for Small Scale Businesses Enterprises in Paje Village at a very low

interest rate.

 Government guaranteeing of long-term loans to SSBE: Zanzibar Government should

guarantee long term loans to SSBE in Paje Village since they lack the necessary

collateral to access such funds from financial institutions due to the small scale

businesses they operate.

 Establishment of SMEs funding agency: Zanzibar Government should set up an

agency that will assess the working capital requirement of SSBE in Paje Village and

make such funds available to them at a very low interest rate with long term

repayment period.

 Public/Private sector partnership in infrastructural provision: Zanzibar Government

should partner with the private sector in the provision of efficient public utilities

(power supply, water supply, good transport/communication facilities etc.) in Paje

Village to ensure uninterrupted supply of these public utilities.

 Capacity building for SSBE operators: Zanzibar Government should liaise with the

commerce and other non-governmental agencies in the organization of regular

training programmes/seminars for potential and actual SSBE operators, where they

should be educated on how to plan, organize, direct and control their businesses.

44
REFERENCES

Longenecker, Justin G.; Carlos W. Moore; J. William Petty; Leslie E. Palich (2008). Small
business mBeck, T. et. Al (2009). Bank Financing for SMEs: Evidence across Countries
and Bank Ownership Types. European Banking Centre Discussion Paper No. 2009–20.
Tilburg University. European Banking Centre.

Dalberg (2011). Report on Support to SMEs in Developing Countries Through Financial

Intermediaries.

MKUZA July 2007.

SBP (2009a).Small business development in South Africa: Time to re-assess. SBP

Occasional Paper. [Link].

African Economic Outlook. 2012. African Development Bank, Organisation for Eco- nomic
Co-operation and Development, United Nations Development Pro- gramme, United Nations
Economic Commission for Africa. 239 p + Annexes.

Jalan, J., and Ravallion, M. (2000). “Is Transient Poverty Different? Evidence for Rural
China” Journal of Development Studies (Special Issue) (August).

Carter, M., May, J. (1999) “Poverty, Livelihood and Class in Rural South Africa” World
Development, Vol.27, No. 1.

Baulch, Bob and John Hoddinott (2000) “Economic Mobility and Poverty Dynamics in
Developing Countries” Journal of Development Studies (Special Issue) (August).

A Global Review Handbook on International Poverty Research, Else Oyen, S. M. Miller,

Syed Abdus Samad (Eds), Scandinavian University.
Parviainen, T. (2012). Role of Community Forestry in rural Livelihood and Poverty
Alleviation in Ohangwena and Caprivi regions in Namibia. University of Helsinki, Dep. of
Econ. and Managem., publ Nr. 55. 170 p.

45
APPENDIX A: INTERVIEW QUESTIONNAIRE
Dear respondent, I am a student pursuing a bachelor’s degree in Economics at Zanzibar
University. Following the requirements for finalizing my study, I am required to conduct this
comprehensive research that deal in analysis the contribution of Small Scale Businesses
Enterprises to wards poverty reduction in Paje Village, and for its successful completion, you
are requested to complete this questionnaire, all responses will be held with utmost
confidentiality, and you are at liberty to withdraw from the study if you feel uncomfortable in
any way.

1. Age

18-25 26-39 40+

2. Gender

Male Female

3. Highest level of education attained

None Primary Secondary Tertiary

4. What is the form of business ownership you use?

Sole proprietorship Partnership

Limited liability Corporations

5. How much the investment capital to your business?

…………………………………………………………………………………………..

6. What is average monthly profit (net capital income) of the owner of the
businesses in this business?

…………………………………………………………………………………………..

7. How many employees that are employed in this business?

46
 …………………………………………………………………………………………..

8. What is the extent in which business activities intend to promote local resource
utilization?

None Low Medium High

Why?

…………………………………………………………………………………………

…………………………………………………………………………………………

…………………………………………………………………………………………

…………………………………………………………………………………………

9. What is the extent in which the number of small scale businesses enterprises
increasing in Paje Village?

None Low Medium High

Why?
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………
…………………………………………………………………………………………

Thank you very much for your participation

47
APPENDIX B:

Regression

Descriptive Statistics

Mean Std. Deviation N

PM 2522800.00 3408384.180 30
IC 23698233.33 38091563.151 30
E 3.87 2.886 30

Correlations

PM IC E

PM 1.000 .936 .732

Pearson Correlation IC .936 1.000 .564

E .732 .564 1.000

PM . .000 .000
Sig. (1-tailed) IC .000 . .001
E .000 .001 .
PM 30 30 30

N IC 30 30 30

E 30 30 30

Model Summary

Model R R Adjusted R Std. Error of Change Statistics

Square Square the Estimate R Square F Change df1 df2 Sig. F
Change Change

1 .968a .938 .933 879985.986 .938 204.027 2 27 .000

a. Predictors: (Constant), E, IC

Coefficientsa

Model Unstandardized Coefficients Standardized t Sig. 95.0% Confidence Interval for

Coefficients B

B Std. Error Beta Lower Bound Upper Bound

(Constant) -471064.215 272861.403 -1.726 .096 -1030929.569 88801.140

1 IC .069 .005 .768 13.232 .000 .058 .079

E 353119.424 68555.363 .299 5.151 .000 212455.439 493783.409

a. Dependent Variable: PM

48
 ANOVAa

Model Sum of Squares df Mean Square F Sig.

3159872647278 1579936323639
Regression 2 204.027 .000b
48.440 24.220

2090813407215 774375336005.
1 Residual 27
1.566 614

3368953988000
Total 29
00.000

a. Dependent Variable: PM
b. Predictors: (Constant), E, IC

49
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