Local Government to Allocate 10 per cent for informal sector soft and free loans

By Nyasigo Kornel

The poor, especially those operating in the formal sector are expected to get free loans from the Local Government Authorities (LGAs).

The LGAs will use the revenue collected for capitalization where by they will be required to set aside 10 per cent of LGAs’ revenue to for soft and interest free loans to the poor.

Speaking during paper presentation that involved nine countries in Africa through video-conference, the Director of Ilala Municipal, Lubuva shared various case studies that Tanzania has encountered since the establishment of Local Economic Development (LED) that emphasizes participation of local private sectors and informal sectors in economic development.

According to Lubuva, the example of LED is privatization of the process of managing solid waste in the city of Dar es Salaam to SMEs and Community Based Organizations (CBOs).

This is because the disposal rates increased from 6 per cent to about 40 per cent of daily generation, he says.

As a result of privatizing the process of managing solid waste in the city of Dar es Salaam several thousands of jobs have been created, and the most beneficiaries are women.

Apart form that, Tanzania has taken a major reform in its history by pouring funds to the community to plan for construction of school facilities where by procurement has been done in favor of local SMEs, the project is popularly known as Primary Education Development Program (PEDP).

Of all primary school reforms in Tanzania, PEDP has been at the top, but it is through application of LED.

Sharing his views on how private business sectors have supported LED, Lubuva mentions Tanzania’s PSI. He says that the PSI is a collective effort by a group of nine companies that was launched in July 2002 to collaborate with development partners, with the aim of fostering sustainable enterprise development and reducing poverty through job creation. Of all, PSI’s major objective is to create market opportunities for SMEs.

The initiatives taken Tanzania in achieving LED has been made possible through involvement of local private sector that Lubuva mentioned as Hanna Nassif, tabata and Kijitonyama Community based Settlement Upgrading, Tujenge Pamoja Project and training institutions such as University of Dar es Salaam, UCLAS and VETA.


Instead of Tanzania Municipals doing all the works alone, Hanna Nassif, tabata and Kijitonyama Community based Settlement Upgrading has been a partner in improving living conditions by increasing access to urban services, creating employment opportunities for the poor residents of the unplanned settlement as well as improvements in internal accessibility.

Another project that has been implementing its objective in the LED’s blanket is Tujenge Pamoja Project that has benefited 8 communities in three cities of Tanzania by addressing challenges of rapid urbanization, urban and poverty and inadequate basic services and infrastructure.

Tujenge Pamoja Project assists in revolving the conflicts between CBOs and government authorities through training and consultative advice to CBOs.

Involving training institutions in implementation of LED was a quite unique approach that the rest of 8 countries were keen to learn about.

Lubuva mentions that a study of Tanzania’s 25 universities, colleges and training institutions showed that they reformed curricula to address local institutional and market needs; including establishing entrepreneurship centers; providing continuing education, research and consultancy services on LED.

University of Dar es Salaam has established Entrepreneurship Centre (UDEC) established to provide demand driven quality training to develop the capacity of Tanzanian citizens and enterprises to create jobs.

In the UDEC initiative about 70 small business operators have benefited from skills development training on basic bookkeeping and business management through its outreach services in training, consultancy and contract research on enterprise development.

UCLAS also undertakes community-based research and consultancy, which strengthens capacity of local communities to solve their own problems and improve their living conditions.

Tanzania Municipals also have been working hand to hand with Vocational Education and Training (VETA). VETA develops a flexible education system to respond to changes in the labour market like impating new skills to retrenched employees and the un-employed.

Nyasigo Kornel
Mobile: +255 745 551 455
Email: emmakornel@yahoo.com