The Cost of Doing Business Index has its limitation as it is based on information for limited liability companies operating in the economy’s largest business city. And the indicator does not capture aspects such as the quality of infrastructure services, security of property from theft, whether rules and regulations are applied in an impartial manner, or the underlying strength of institutions. These limitations imply that the realities experienced by the majority of self-employed Tanzanians, who work as smallholder farmers, fishermen or livestock keepers are ignored, just like the experiences of those operating micro and small enterprises.

This is unfortunate as it is in these occupations that the majority of people work. Millions of rural households earn their income in smallholder agriculture, while in towns the majority of people earn an income in small and often informal enterprises that typically have only one employee: the owner (see Figure 2). Because of the high degree of self-employment, the Tanzanian business environment clearly matters for its citizenry. A conducive business environment offers opportunities for income growth, rewards productive activity, fosters innovation, risk taking and the ability to invest, encourages people to specialize and thus to progress in life. A non-conducive business environment puts a high (implicit or explicit) tax on productive activity, imposes high transaction costs, inadvertently encourages households to diversify rather than to specialize, makes people avoid investments in fixed assets and pushes them to remain ‘invisible’.