22 April 2019

Tanzania: How Local Govt Can Formalise Informal Sector

Dar es Salaam — Over a decade has elapsed since Tanzania embarked on a massive formalisation of informal undertakings, but available data show that much more still needs to be done to reach the intended outcome.

Deliberate efforts to formalise operations of Tanzanians operating in the informal sector started over 12 years ago with the setting up of policy and strategy to integrate the informal property and businesses into legal systems.

That came after a series of studies - conducted some years back during the administration of President Benjamin Mkapa - when a diagnosis study by Peruvian economist, Prof Hernando de Soto suggested that $29 billion of 'dead capital' was at that time being tied up in Tanzania's land, property and businesses of the extralegal sector.

It led to the formation of the business and property formalisation programme for Tanzania, better known in its Kiswahili acronym as Mkurabita.

However, speaking during a recent meeting of researchers in Dar es Salaam, it was evident that the informal sector was still huge and that businesses operating informally were still encountering challenges that needed urgent interventions from local governments. That way, researchers say, those in the informal sector would be transformed into formal operations and thus make them more productive, and help in increasing the country's tax base.

Speaking during the 24th annual research workshop, which was organised by the Policy Research for Development (Repoa) in Dar es Salaam recently, some researchers said local governments can come up with opportunities that seek to boost of the informal sector.

The workshop was themed: Local Economic Development: Unpacking potentials for accelerated transformation of Tanzania".

"Local governments need to understand who these people are, where they are, what they do and what their benefits and challenges are, " said the Repoa executive director, Dr Donald Mmari.

He said it was imperative for local government authorities to be empowered for them to help in building capacity and skills of people in the informal sector to recognise opportunities and tap into them. "They should also be able to connect them to markets as well as have their products undergo value chain... the important thing is to ensure that they are able to tap into opportunities," he said. The country, he said, was endowed with forests in many districts including Mafinga, but the youth still face a big challenge of making quality furniture, which would attract buyers.

"Because of this, our wood is exported and later well finished furniture - which is however not durable - is brought back into the country," he said. Chairman at Daima Associates, Prof Samuel Wangwe, said the country was endowed with vast natural resources that if well planned could create employment in the local areas.

The Denmark Ambassador to Tanzania, Mr Elinar Jensen, said several development partners have been supporting Repoa for many years to enable them come up with solutions for communities through research. For his part, Igunga lawmaker Peter Kafumu said local economic development cannot be attained if little was done to implement the government's decentralisation by devolution policy.

His Hanang counterpart, Dr Mary Nagu said local economic development requires the involvement of people at grass root levels.

The Pangani District Commissioner, Ms Zainab Abdallah said despite being endowed with massive natural resources including Pangani Lake, people in her area needed to be empowered with innovations on how to use the resources to their advantage.

Officiating the event, Vice President Samia Suluhu said through the government, through its second five-year development plan - which runs between financial years 2016/17 to 2020/21 - puts emphasis on industrialization for economic development.

However she noted that a majority of the people were involved in the informal sector, asking researchers to try o find solutions on how some government policies can work for the people.

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