Informal sector in urban areas in Tanzania: some socio-demographic, economic and legal aspects


  • Mikidadi Muhanga PhD Student- University of Zambia, Lecturer -Sokoine University of Agriculture





Informal Sector, Informal Sector in Tanzania, Socio-Demographic, Urban Economy, Urban Areas in Tanzania.


Urban settings worldwide are homes to the informal sector due to the sector’s vast potentiality in terms of employment and income generation. Very little is found throughout the literature on the socio-demographic attributes of the informal sector in Tanzania despite its contribution to the economy. This paper empirically profiles informal sector in urban setting in Morogoro, Tanzania by analyzing socio-demographic, economic and legal aspects of the sector and those involved. Data was collected from 80 respondents using a questionnaire. Data analysis entailed descriptive statistics and cross tabulation. The results reveal dominance of men in the sector, low levels of education, young (19-26 years) and married people dominating, use of family labour, willing to operate businesses at times and locations convenient to customers. The study further shows that 55 % of the activities obtained capital from owners’ own sources and 82.5 % of the activities operating were not licensed. The results further show that 50% of the activities /businesses surveyed were owned by families. Overall, the study asserts that the IS has a valuable contribution to the well being of the urban dwellers. The study recommends a need for addressing training needs and interventions by Local Government Authorities in the Informal Sector’s operations for better performance and contribution to the livelihood of those involved but also to allow the Local Government Authorities earn income in form of taxes.


[1] Bagachwa MSD & Naho A (1995), Estimating the second economy in Tanzania, Elsevier Science Ltd.

[2] Castells M and A. Portes (1989), “World Underneath: The Origins, Dynamics, and Effects of the Informal Economy.†In A. Portes, M. Castells & Lauren A. Benton, eds. The Informal Economy: Studies in Advanced and Less Advanced Developed Countries. Baltimore, MD, USA: John Hopkins University Press.

[3] Chen MA (2012), the Informal Economy: Definitions, Theories and Policies. Women in Informal Employment: Globalizing and Organizing (WIEGO) Working Papers Series. WIEGO Working Paper No1 August 2012

[4] Coate E (1993), the introduction of total quality management at State University of Oregon. Higher Education 25(4): 303-320.

[5] De Soto H (1989), the Other Path: The Economic Answer to Terrorism. New York: HarperCollins.

[6] De Soto H (2000), The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.

[7] ESRF (The Economic and Social Research Foundation) (2010), Informal Sector Taxation in Tanzania. TAKNET Policy Brief Series No. 012 – 2010.

[8] Feige EL (1989), the Underground Economies: Tax Evasion and Information Distortion (ed.), Cambridge University Press.

[9] Gutmann PM (1977), the Subterranean Economy, Financial Analysts Journal, Vol.34: 24-27.

[10] Hansson I (1989), ‘’the Underground Economy in Sweden’’, in Feige (eds.), the Underground Economy: Tax Evasion and Information Distortion, Cambridge University Press, pp. 219-37.

[11] Harding P & Jenkins R (1989), the Myth of the Hidden Economy: Towards a New Understanding of Informal Economic Activity, Open University Press, Milton Keynes, Philadelphia.

[12] Hart K (1973), Informal Income Opportunities and Urban Employment in Ghana, Journal of Modern African Studies, Vol. 11, No. 1.

[13] Horn, ZE (2009), No Cushion to Fall Back On: The Global Economic Crisis and Informal Workers. Cambridge, MA, USA: WIEGO and Inclusive Cities.

[14] International Labour Office (ILO) (1972), Employment, Income and Equality: A Strategy for Increasing Productivity in Kenya. (A Report of an Inter-Agency Team Financed by the United Nations Development Programme and Organized by the International Labour Office), Geneva 600 pp.

[15] Internal Revenue Service (IRS), (1979), Estimates of Income Unreported on Individual Income Tax Returns, Washington DC: Government Printing Office.

[16] Isachsen AJ & Strom S (1989), the Hidden Economy in Norway with Special Emphasis on the Hidden Labor Market’’, in Feige (eds.), the Underground Economy: Tax Evasion and Information Distortion, Cambridge University Press, pp. 251-67.

[17] Kaale G &Muhanga MI (2017), Sexual health knowledge among secondary school students in Morogoro, Tanzania: half full or full empty? International Journal of Health, Vol.5 (2), 120-125.

[18] Kent DW & Mushi PSD (1995), the education and training of artisans for the Informal Sector in Tanzania - Education Research Paper No. 18, 143 p.

[19] Lipsey MW & Wilson DB (2000), Practical Meta –Analysis, Sage Publications, Thousand Oaks, California. 227pp.

[20] Maliyamkono TL and Bagachwa, M.S.D. (1990). The Second Economy in Tanzania. Eastern African Studies. ESAURP, Dsm. 197pp.

[21] McLaughlin S (1990), Skill training in the IS: Analyzing success and limitations of support programs. In: The IS revisited (Edited by Turnham, D, Salomé, B & Schwarz, A.), Development Center of the Organization for Economic Co-operation and Development (OECD), Paris. pp. 202-209.

[22] Moser CN (1978), Informal Sector or Petty Commodity Production: Dualism or Independence in Urban Development. World Development, Vol. 6.

[23] Muhanga MI and Nombo CI (2010) Local Government policy responses to informal sector in Morogoro, Tanzania: seeing problems in an opportunity or seeing an opportunity in problems? African Affairs, Vol. 8, 133-156.

[24] Muhanga MI &Urassa JK (2014), how informal is the Informal Sector? An analysis of the Setting and Characteristics of the Informal Sector in Morogoro, Tanzania. A paper presented at Mwenge Catholic University 1st Annual Conference, October 29TH – 30TH, 2014, At Moshi, Kilimanajro, Tanzania.

[25] Muhanga MI & Malungo JRS (2017), Does Attitude Associate, Correlate, or Cause Behaviour? An Assessment of Attitude towards Health Behaviour under One Health Approach in Morogoro, Tanzania. International Journal of Advanced Research and Publications (IJARP). Volume 1 (3), 82-91.

[26] Munbodh S (2003), Mobile unit for the informal sector.[]. Accessed 7 August 2017.

[27] Murillo G & Cartier W (1988), Urbanization, the informal sector and migration: issues for research and cooperation. Rev Can Etudes Dev., 9(1):7-17.

[28] O’Riordan J (1996), The IS and the Alleviation of Poverty from a Gender Perspective in ESAURP Tanzania’s Tomorrow , Tema Publishers Ltd, Dsm. 388 pp.

[29] Portes A, Castells M & Benton LA (eds.) (1989), the Informal Economy: Studies in Advanced and Less Developed Countries, Baltimore, Johns Hopkins University Press.

[30] Ranis G & Stewart F (1999), V-goods and the role of the urban informal sector in development, Economic Development and Cultural Change, 47 (2), 259-288.

[31] Renooy PH (1990), the Informal Economy: Meaning, Measurement and Social Significance. Netherlands Geographical Studies, Amsterdam.

[32] Sethuraman SV (1976), the Urban Informal Sector: Concept, Measurement and Policy. International Labour Review, Vol. 114, No. 1.

[33] Srinivas H (2009), the Informal Sector “Yes, but …" Attitudes towards the IS. [] site visited on 14.06.2009.

[34] Tanzi V (1982), the Underground Economy in the United States and Abroad, Toronto. Heath and Co. Lexington, Massachusetts, Toronto.

[35] The World Bank (2009). Concept of IS. Informal Labour Markets in Transition Economies. The World Bank Group, New York

[36] Tokman V (1978), an Exploration into the Nature of the Informal-Formal Sector Relationship.†World Development, Vol. 6, No. 9/10

[37] URT (2007), Analytical Report for Integrated Labour Force Survey (ILFS), 2006. National Bureau of Statistics, Ministry of Planning, Economy and Empowerment, Tanzania Gender Networking Programme (TGNP) and Ministry of Labour, Employment and Youth Development (MLEYD). Dar Es Salaam

[38] URT- TRA (2011), Review of Informal Sector for Taxation Purposes. TRA Headquarters, Dar Es Salaam.

[39] URT-NBS (2014), Formal Sector Employment and Earnings Survey. National Bureau of Statistics, Ministry of Finance. Dar es Salaam.

[40] Vanek J, Chen M & Hussmanns R (2012a), Statistics on the Informal Economy: Definitions, Findings, and Challenges. Women in Informal Employment: Globalizing and Organizing (WIEGO) Working Paper No 2. Cambridge, MA, USA: Women in Informal Employment: Globalizing and Organizing (WIEGO).

[41] Vanek J, Chen M, Hussmanns R. Heintz J & Carre F (2012b), Women and Men in the Informal Econo­my: A Statistical Picture. Geneva: International Labour Organization and Women in Informal Employment: Globalizing and Organizing (WIEGO).

[42] Yuki K (2007). Urbanization, informal sector, and development. Journal of Development Economics, 84(1), 76-103.

View Full Article: