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This paper explores the application and the impact of Open Source Software (OSS) to small and micro enterprises. OSS has been identified as a facilitator for small enterprises in emerging markets to implement an Information and Communication Technology (ICT) infrastructure at reduced cost. However, its diffusion in Tanzania has been rather slow. This research aims to highlight OSS adoption model applicable to small enterprises. The desk survey and personal interaction was used to guide the data analysis. This research also attempts to analyse Tanzanian OSS state of the art which can be used to build an OSS community environment in Tanzania. Although there are many factors influencing the application decision by smaller enterprises, the lack of knowledge and exposure were fundamental to the slow diffusion of OSS. Factors contributing to this lack of product knowledge were the lack of OSS marketing and easily accessible OSS vendors.