Micro, small, and medium manufacturing enterprises (MSMEs) offer good examples of firm clustering
and incipient entry points for industrial development in Tanzania. This study analyses the growth of
cluster-based, micro and small furniture-manufacturing firms located in the Keko, Buguruni-Malapa,
and Mbezi Beach kwa Komba industrial clusters. The results of quantitative growth indicators show
that on average the furniture manufacturing firms in the studied clusters grew, and real payments to
the firm owners and workers grew as well.
The analysis shows that real values of payments to the firm owners and workers have positive
implications for poverty reduction since the values placed the firm owners and workers above the
basic and food poverty lines for Tanzania in general and for Dar es Salaam in particular. Firm owners
as well as workers believe that the income earned as a result of firm growth helped to reduce poverty.
They note that the income generated from firm growth helps to reduce poverty by increasing their
spending power, thereby increasing their demand for other goods and services in the economy
through the multiplier effect.
Consistent with the literature on agglomeration economics, which describes the costs and benefits
of firm clustering, the current study reveals that firms benefit from clustering, and firm owners are
aware of the importance of being in clusters. Moreover, firm owners feel that they are better off in
clusters when compared to the quality of those scattered array of firms that operate alone. Interfirm
sales, purchases of raw materials and inputs, subcontracting, lending machinery, marketing
of furniture products, and training workers through apprenticeships were all found to be the major
methods by which firms interact with one another. The firm owners acknowledge the clusters
as being catalysts for firm growth because the arrangements allow firms to cooperate with each
other.
This finding suggests that the degree of cooperation among entrepreneurs in industrial clusters
is critical for the development of these industrial clusters. While there is huge growth potential
for those furniture manufacturing firms that are organised in clusters, insufficient business skills,
poor infrastructure within the industrial clusters, technological backwardness, and other challenges
constrain the current growth of furniture manufacturing firms. These obstacles to growth need to be
addressed strategically.