These are HEs run by households whose primary activity is agriculture, and thus have to adapt to the seasonality of business activity and income (see Box 2.1 in Section 2). However, the proportion of households affected by their HE‟s seasonal operation vary, depending on whether or not it is the main activity of the HE operator or the secondary occupation. For those whose HEs are their secondary activity, 31 percent did not run their business year-round because of their farm work, compared to only 12 percent of those whose main activity is running their HEs (Table 4.3).

43. Perhaps reflecting their different motivations for engaging in HEs, the two groups of HE operators also differ in their other reasons for operating seasonally. Those who‟s HEs are their primary activity contend more with the problem of limited market especially in the rural areas (22.4 percent of them, compared to 15 percent of those engaged in HEs as a secondary activity). They also attribute their seasonality to personal reasons (e.g., illness, sad or happy social events) more than those engaged in HEs as a secondary activity (18.3 percent and 5 percent, respectively). Note that some HEs reported operating less than a full year because they are less than a year-old.

**Table ‎4.3:  Reasons for Not Running Household Enterprise All Year round, by Area, 2006 (percent)**

|||_Main econom_<br>|_ic activity_<br>||_S_<br>|_econdary econ_<br>|_omic activit_<br>|_y_<br>|
|---|---|---|---|---|---|---|---|---|
||Rural|Secondary<br>Urban|Dar es<br>Salaam|Total|Rural|Secondary<br>Urban|Dar es<br>Salaam|Total|
|Business created within 12 months<br>|21.3<br>|25.1|28.7<br>|24.0|17.9|17.3|19.9|17.9<br>|
|Limited market|16.6|27.0|28.5|22.4|13.8|24.1|17.1|15.0|
|Lack of inputs|9.4|8.8|6.5|8.7|11.8|5.5|18.1|11.2|
|Seasonal / temp activity|18.8|9.3|7.7|13.4|20.0|19.4|11.1|19.7|
|Other work (agric.)|18.5|8.2|1.3|11.8|31.5|28.2|28.3|31.1|
|HH demands|1.8|0.7|1.7|1.4|0.4|0.0|1.3|0.4|
|Personal,other reasons|13.7|20.9|25.5|18.3|4.7|5.4|4.0|4.7|
|Total|100|100|100|100|100|100|100|100|

_Source: Calculations based on the ILFS 2006 data._ 44. Regardless of causal factors, it is worth noting that seasonality sometimes affects the earning capacity of HEs (Table 3.4 in Section 3 finds a very small negative effect, but significant for males only). Among rural HE operators, poor agricultural performance was cited as one of the main reasons why they operate their HEs seasonally (see Box 2.1 in Section 2). Not surprisingly, their business turnover is very small, if any, during the agricultural season. When the rains are erratic and they do not produce enough, their cash flow is reduced to a minimum, which in turn adversely affects the operations of their HEs. Conversely, rural HEs thrive during good agriculture season when farm income augments HEs‟ capitalization and local demand for farm goods is high.

# **4.2 Lack of Credit**

45. Although lack of credit is a common problem across all enterprises in Tanzania, HEs are particularly vulnerable,<sup>12</sup> _mainly because they are left out of the financial sector and policy interventions have been less effective_ **_._** Overall, access to finance is stunted in Tanzania. Data

> 12 In many studies, lack of credit is found to be the most stringent constraint binding HEs from growing and being more productive. For instance, during the FGD survey, participants in every session mentioned lack of capital or credit as the most important constraint they face, at times associating the visit by the study team with assistance that is forthcoming.

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