The Informal Sector
CHAPTER ONE
INTRODUCTION
1.1 Background context of the study
In developing countries, the term ‘informal sector’ is broadly associated with unregistered and unregulated small-scale activities (enterprises) that generate income and employment for the poor (Bernabè, 2002). Until the mid-1970’s most developing countries tended to assume that the Informal Sector (IS) would sooner or later disappear as development took root. These hopes were shattered as the sector continued to expand. The Informal Sector has been an important component of various economies, particularly in developing countries. Its importance has been emphasized especially because of its ability to respond directly to the needs of the poor, who compromise the majority of the Informal
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A major development challenges facing development countries like Tanzania, particularly urban authorities, is the rapid growth of the urban population as a result of migration and natural growth as well as its consequences in terms of pollution and deteriorating urban environment. Apart from rapid population growth and poverty, Informal Sector can be attributed to unemployment and slow growth of wage employment. As the economy’s capacity to absorb labour continues to trail behind the growth of the labour force, an increasing number of workers, mainly the urban poor, find jobs and incomes in the “urban Informal Sector”. In other words, its roots lie in the weak capabilities of formal institutions (government and modern private sectors) to provide employment, productive resources and sufficient infrastructure for a dynamic and growing …show more content…
However, Tanzania has undertaken various initiatives to enable the implementation of policies to support informal sector development such as establishment of the Property and Business Formalization Programme (PBFP) and the Business Environment Strengthening for Tanzania Programme (BEST) (URT, undated). These initiatives are normally implemented by Local Government Authorities at the local level. However this study aims to analyse the existing policies, legislation and programs affecting the Informal sector in
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