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Why ’Mkurabita’ should be removed from central government tasks
2006-04-04 08:26:01
By Nimi Mweta
Recently there was another call for consultation activity in the presumedai registration of small businesses for purposes of enabling them to raise to formal sector business.
It was a little unclear if the consultation was in relation to fundamentally defining what the body set up to do is trying to achieve, that is, amplify on key definitions and field activity relating to such definitions, or relates chiefly to implementation.
Since the plan has up to now taken the better part of two years, it is evident that no prior consultation is expected.
Yet however this seems to be the case, and again there are areas in which it seems to be touching on what is essential, in terms of defining how primary steps leads to secondary steps.
It is one thing to define a small business on the ground, but it is quite another to give it worth, for instance projecting how such business will grow into formal sector type of business, and especially entering into some sort of activity in relation to the projection.
Is ’Mkurabita’ seeking to facilitate small firms or businesses to grow, while technically the more rational expectation is that more than half of such firms are bound to fail soon?
Perhaps this is one area where some kind of consultancy is needed because initial plans set out and a functioning office set up didn’t perhaps quite say what all this is about.
But it doesn’t follow that such consultancy can yield desired results, for there are fundamental problems of idea (or philosophy) and design of the project, in which case this can only be reflected in how it crawls along, if not finally grinding to a halt.
The reason wasn’t the core philosophy but the slanted manner in which it was taken up here, and due to the usual reserve about what host governments feel in a profound way, it was left to remain.
What the overall view by Prof. Hernando de Soto set out to show was that when the place – say one square meter – of land, plot on which a young woman recharges mobile phones is recognised as a business premise and can even be registered, it is as good as capital.
In that sense, when a small credit institution, say a Saccos or microfinance bank is aware of the fact that such space will be available for another tenant if the loan applicant fails, it can be taken as collateral.
But it means that security has been assured in using that space.
Such an outlook can mean either of two things, one is that there is private ownership of land and individuals can rent out small spaces to youths, in which case the latter can be considered secure so long as they have paid their rents.
For such a situation, recognition as collateral relates to the rent period, and payments of loan need also be considered as an extension of that basic definition of a business, say ’mobile phone recharging likely to be there during the next six months,’ and loan accordingly.
The payment module would also relate to this periodicity, recycled, re-started depending on the client business status, later.
When the land on which informal sector trade chiefly occurs isn’t owned by individuals and rented to them in like manner as renting out residential space, which is considered secure within the rental period.
If this situation doesn’t obtain it means there is municipal policy where informal sector business is recognized, accorded public respect as a means of lessening the burden for employment, and everything is done to encourage it.
In that case, only ’sites and services’ would need to be improved, for instance supplying (on a loan basis) vertical shelves of one meter breadth but say two meters in height with several decks and volume, for market hawkers.
This way no one spreads items on the pavement.
Back in 2002 or thereabouts, then Finance Minister Basil Mramba told the press that the government had allocated about Sh10billion for such uplift of informal sector trading, whose executing agency would have been the city council.
Yet as government works by collegiality and collective responsibility, which translates into not caring for the acts that are hostile to public interests, or injurious to a portion of society by one or other branch of government, he let this execution status remain.
The result is that the city council did not claim the cash, didn’t put it to use, and either it went back or recycles for other uses.
It is in this atmosphere that Prof. de Soto was invited to provide his consultancy on the issue, and he explained at length the whole importance of ’security’ and how this can be used as collateral, to deaf ears.
All what his hosts grasped of that lecture was that this informal sector business be ’registered’ so that it can both receive a loan (as it sort of becomes its own collateral by the mere fact of being registered) and also be listed to pay taxes. It is easy to see how much of a ruined image this whole exercise therefore became.
Tanzanians can’t be brought to understand ’security’ as related to informal sector trade whereas they understand nothing of the sort in formal sector economic activity, and in that case, by national consensus, there is no freehold title to land.
Thus Prof. de Soto was planting a seed on a sand patch, where no private owners of major road sidelines exist to provide assurance to informal sector traders on account of having paid a rent for say six months.
Nor are there municipal authorities capable of comprehending ’security’ as an assured title to use of that land subsequent to paying a rent.
What informal sector traders do is to continue with activities until the municipal authority comes to level their kiosks.
That is consequently why ’Mkurabita’ is either a pointless exercise in a sandy patch on which Prof. de Soto has attempted to plant a seed of sympathy for informal sector trade and potential of its vast elevation to formal sector business if only security is assured of the plot of land where the trader works, for the period covered by rent.
Neither municipal nor central government agencies comprehend that a loan can be given to a small trader in a kiosk one meter wide, so that if he fails another person takes that kiosk (or rather space for a kiosk) given that the road would be marketable (say at Morogoro Road, or Congo Street).
Simple socialist attitudes stick to what the city plan says for roadside pavements.
Thus the inability to comprehend the notion of security for small traders’ trading spaces rules out an effective ’Mkurabita,’ and whatever shell remains of Prof. de Soto’s original idea, it at best can be administered at local government level.
It would mean a register of small businesses along each street, road or small zone like ward level where it is easy to an extent to know when the next demolition is due.
When at least a trader knows the time limit of his activity, an informal sector loan agency may still decide to make a loan within that time frame.
The trouble is that such discipline requires a wider awareness of security, otherwise it is a non-starter; they are trespassers on the road and are illegitimate. Period.
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