What SMEs Should Seek in Business Associations

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One can learn a lot from music bands, among which is the importance of unity. In the early 1990s, in the streets of Brazzaville in the Congo Republic, under the leadership of guitarist Roga Roga, born Ibambi Okombi Rogatien, and famous drummer Ramatoulaye, born Ngolali Giscard, Extra Musica band formed the. We Africans danced to its music around 1998. The band started splitting, and the extra piece was never the same; somewhere in the streets of Dublin in Ireland, a boyband was formed that came to be known as Westlife.

The band had a decorated career with numerous accolades, with Seasons in the Sun becoming our Christmas festival anthem in 2012. The group disbanded in 2018 and announced a reunion, but the days of the origin Westlife band were gone. From Temeke, the Yamoto band became our own successful story in Bongo Fleva bands. It was later disbanded, and sad to say, we are no longer dancing with Madoido.

Enterprises or individuals come together in business, forming an organization that supports the member’s business interest, known as a business association. These can be created based on geographical area or sector in a narrow sphere, such as a taxi driver association, or a broad sphere, such as a transport sector association. The two common types of business associations are trade and professional associations. Business associations are formed purposely to help businesses improve the enabling business environment.

Tanzania Context

In the pre-colonial period and early years of independence, most businesses were dominated by foreigners or Tanzanians of Asia origin, mostly Arabs and Indians. 1967, the Arusha Declaration was adopted, shifting the focus to a state-owned economy. Private ownership was discouraged, and most private enterprises were nationalized. The economic upheavals of the 1980s encouraged the presence of the private sector.

Numerous reforms were passed to formalize the private sector. Still, only a few individual who were well-connected and had access to the corridors of power influenced their business interest in the government. The business association filled the void for other enterprises with less influence in the power corridor to lobby and collectively bargain power with regulators and legislators.

The formation of the National Business Council (TNBC) in 2001 became an essential mechanism for dialogue between the business community and the government. The notable business associations in Tanzania are the Tanzania Truck Owners Association (TATOA), Confederation of Tanzania Industries (CTI), Tanzania Horticulture Association, and Tanzania Private Sector Foundation, to name a few.

What SMEs Should Seek from Business Associations?

Enterprises can be of several sizes by the size of operation; there are micro, medium, and large enterprises. Small and medium enterprises are commonly referred to as SMEs. In Tanzania, the SME policy defines small enterprises as enterprises that employ 5 to 49 people with capital from Tanzania, shilling of 5 to 200 million, and medium enterprises as those hiring from 50 to 99 employees with a wealth of Tanzania shillings of 200 to 800 million.

According to the World Bank, more than 95% of global enterprises are SMEs, they account for about 60% of private sector employment. Not only that but also they make up 50% of the GDP. Business associations are essential tools for ensuring sustainable growth and improving the performance of SMEs.


Members of the business association may easily interact with partners and suppliers from the locale or other parts through the business association, and the association members may make referrals or recommendations of services or products of members. This facilitates the increase in trade volume due to a network that brings close suppliers and customers. For instance, BNI, a world business networking and referral organization, annually records around £400 million in trade volume among its members.

Business Development

The business association focuses on providing a stable and predictable business environment. With these services, an entrepreneur is assured with access to various resources that help in structuring business strategies and acquiring skills responsible for the growth of enterprises, regulating industry-standard practices reduce the disputes among industry players and, hence, a healthy competition environment that will favor both small, medium and even large enterprises.

Lobbying & Advocacy

There are more than 8,000 lobbying firms in the United Kingdom. There are very few of these in Africa, especially Tanzania. Hence, business associations fill that gap and the business association lobbies for a conducive and inclusive business ecosystem. SMEs are always in a race to comply with regulations that official regulators set.

Business associations lobby in forming policies and influence members’ interest in that policy. It’s challenging for a small or medium enterprise to do this alone. Accounting for this, the Kariakoo business people community had a strike in May due to various shortcomings, and the strike ended with the restructuring of several levies and administration in some government authorities that they had problems with.

Financing Programs

SMEs have a lot of shortcomings at hand, amongst poor financial report skills, lack of appropriate collateral assets, and managers with less understanding of financial matters as most of the time, founders and owners of the business tend to be the managers; hence, these shortcomings limit the access to finance. Business associations can act as guarantors when accessing finance, such as bank loans or injection of funds from an investor.

Management Skills

Most SMEs don’t make it to the second phase of business growth. They perish after years of commencement, ending up in the start-up phase. Management skills have been a factor in their failure equation; business associations can prepare seminars, workshops, and training for managers without management background and reduce the chances of failure as they will be equipped to take or understand various roles in the enterprises.

Business associations are membership-based organizations, and membership is voluntary; it’s up to an entrepreneur to choose an association that meets their enterprise interest. Business association performance is attributed to factors such as commitment to its institution, freedom of expression, and participation of members. Last, the efficiency in collecting membership fees and other contributions.

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