Tanzania S Informal Economy

This title is part of UC Press's Voices Revived program, which commemorates University of California Press’s mission to seek out and cultivate the brightest minds and give them voice, reach, and impact. Drawing on a backlist dating to 1893, Voices Revived makes high-quality, peer-reviewed scholarship accessible once again using print-on-demand technology. This title was originally published in 1997.

The market places and street corners of Dar es Salaam are home to a thriving informal economy of street vendors selling secondhand clothing and other goods. These street vendors often live a precarious existence, under pressure from state authorities and international markets. In addition to these external pressures, the experiences of such vendors are also shaped by a complex interplay of internal tensions, rivalries and conflicting communal ties. Such internal dynamics are a common part of informal economies around the world, but have largely gone unrecognised and unexamined by academic scholarship. Based on ethnographic fieldwork and extensive interviews with vendors living and working in Dar es Salaam, Malefakis's book offers a nuanced portrait of those trying to carve out a livelihood in a major African city, one in which ties of kinship and ethnicity are often viewed as a barrier, rather than an aid, to success. In the process, Malefakis provides an invaluable new perspective on the way in which co-operation, or lack thereof, functions in an informal economy, as well as insight into the lived experiences of those who depend on such economies.

A large percentage of workers and firms operate in the informal economy, outside the line of sight of governments in emerging market and developing economies. This may hold back the recovery in these economies from the deep recessions caused by the COVID-19 pandemic--unless governments adopt a broad set of policies to address the challenges of widespread informality. This study is the first comprehensive analysis of the extent of informality and its implications for a durable economic recovery and for long-term development. It finds that pervasive informality is associated with significantly weaker economic outcomes--including lower government resources to combat recessions, lower per capita incomes, greater poverty, less financial development, and weaker investment and productivity.

The market places and street corners of Dar es Salaam are home to a thriving informal economy of street vendors selling secondhand clothing and other goods. These street vendors often live a precarious existence, under pressure from state authorities and international markets. In addition to these external pressures, the experiences of such vendors are also shaped by a complex interplay of internal tensions, rivalries and conflicting communal ties. Such internal dynamics are a common part of informal economies around the world, but have largely gone unrecognised and unexamined by academic scholarship. Based on ethnographic fieldwork and extensive interviews with vendors living and working in Dar es Salaam, Malefakis's book offers a nuanced portrait of those trying to carve out a livelihood in a major African city, one in which ties of kinship and ethnicity are often viewed as a barrier, rather than an aid, to success. In the process, Malefakis provides an invaluable new perspective on the way in which co-operation, or lack thereof, functions in an informal economy, as well as insight into the lived experiences of those who depend on such economies.

The promotion of social protection in Sub-Saharan Africa happens in a context where informal labour markets constitute the norm, and where most workers live uncertain livelihoods with very limited access to official social protection. The dominant social protection agenda and the associated literature come with an almost exclusive focus on donor and state programmes even if their coverage is limited to small parts of the populations – and in no way stands measure to the needs. In these circumstances, people depend on other means of protection and cushioning against risks and vulnerabilities including different forms of collective self-organizing providing alternative forms of social protection. These informal, bottom-up forms of social protection are at a nascent stage of social protection discussions and little is known about the extent or models of these informal mechanisms. This book seeks to fill this gap by focusing on three important sectors of informal work, namely: transport, construction, and micro-trade in Kenya and Tanzania. It explores how the global social protection agenda interacts with informal contexts and how it fits with the actual realities of the informal workers. Consequently, the authors examine and compare the social protection models conceptualized and implemented ‘from above’ by the public authorities in Tanzania and Kenya with social protection mechanisms ‘from below’ by the informal workers own collective associations. The book will be of interest to academics in International Development Studies, Political Economy, and African Studies, as well as development practitioners and policy communities.

The multiple indicator-multiple cause (MIMIC) method is a well-established tool for measuring informal economic activity. However, it has been criticized because GDP is used both as a cause and indicator variable. To address this issue, this paper applies for the first time the light intensity approach (instead of GDP). It also uses the Predictive Mean Matching (PMM) method to estimate the size of the informal economy for Sub-Saharan African countries over 24 years. Results suggest that informal economy in Sub-Saharan Africa remains among the largest in the world, although this share has been very gradually declining. It also finds significant heterogeneity, with informality ranging from a low of 20 to 25 percent in Mauritius, South Africa and Namibia to a high of 50 to 65 percent in Benin, Tanzania and Nigeria.

At roughly 4 percent per year, labor productivity in Tanzania has grown more rapidly over the past 14 years than at any other time in recent history. Employment growth has also been strong, keeping up with population growth at roughly 2.5 percent per year; the bulk of employment growth (90 percent) has been in the nonagricultural sector. However, the vast majority of this nonagricultural employment growth has occurred in informal sector. Using Tanzania’s first nationally representative survey of micro-, small-, and medium-sized enterprises, this paper shows that firms in the informal sector contributed roughly half a percentage point to economywide labor productivity growth in Tanzania between 2002 and 2012. However, virtually all of the labor productivity growth contributed by informal firms came from a small subset of firms called the “in-between firms.” This paper considers attributes of the in-between firms that could be used for targeting financial and business services to firms with the potential to grow. This paper finds two salient characteristics of in-between firms that might lend themselves to targeting—their owners are more likely to keep written accounts and more likely to keep their savings in formal bank accounts.