Chapter 2. Informality
Expected event happened a few months later. The Mwanza city council decided to relocate street vendors from the city centre. The event escalated quickly into violent protests after the city’s paramilitaries and police used extra force to dispatch vendors. What do you think Magufuli did? He ‘walked his talk’, defending and standing by the weak as he had popularised himself by doing. His reaction was not an accident, and was well anticipated based on promises made in his speeches.
In addition, the Mwanza region, where he was born, raised, and had served as a constituent member of the Chato constituency for twenty years, had a prodigious influence on his political career. President Magufuli condemned the unnecessary force used in the incident in Mwanza and ordered administrative bodies and municipalities in all regions to issue vitambulisho vya wajasiriamali8 (informal workers identification cards). The President envisioned that legalising the informal economy through vitambulisho vya wajasiriamali was a step towards combating unemployment, poverty alleviation, and a solution to the failures of the government to collect tax from the informal sector.
Ujasiriamali, usually translated as entrepreneurship, is the Swahili word for a vibrant endeavour whereby people with little capital start small businesses. Instead of investors with significant capital or connections to capital markets, and instead of risk-taking, in Tanzania there are different perceptions and understandings of ujasiriamali. In general understanding, ujasiriamali refers to small business owners with little capital doing business. Several government officials I spoke to defined ujasiriamali as conducting business and trade using creativity and innovation through selling and buying products or services, physical or virtual.
Important traits of mjasiriamali are that one must be motivated to change, in particular motivated to change one’s living conditions to something bigger. One must solve their personal
8 Ujasiriamali- the act of doing small business; Mjasiriamali-singular: A person doing small business;
Wajasiriamali-Plural: A group of individuals doing small businesses
problems to solve business problems. One must be ready to change at any time and take risks.
A mjasiriamali is a creative and future-oriented person. They have to reach goals before others using unconventional methods. Typically, ujasiriamali refers to petty dealings operating in informal or semiformal settings, including small and medium enterprises.
Ujasiriamali mainly aims for subsistence rather than further investment in business, although some graduate to become large businesses. The wajasiriamali (informal sector actors) includes innovators, hustlers, imitators, researchers, buyers, and so on. There are wajasiriamali with significant capital but operating in semiformal ways, whose businesses do not fully comply with formal business rules. What shapes or drives wajasiriamali in starting their businesses is having a creative idea by looking at surrounding possibilities for trade. For that matter, ujasiriamali has no specific meaning, it depends on who defines it, and for what purposes. According to legal and policy perspectives, mjasiriamali is defined according to the level of business compliance, capital, and operation model.
The new policy on formalising wajasiriamali through special identity cards was introduced and implemented through the president’s pronouncements. The parliament did not pass any legislation to provide a legal base for the policy. Regional and district commissioners, appointees of the President, headed up the issuing exercise. The commissioners had to identify, register, and locate the people and businesses as well as in which district and street they were allowed to operate and work. The initial plan involved collaborating with the Tanzania Revenue Authority (TRA) to collect taxes. However, by the law, the TRA could not collect tax from unregistered traders. With such a setback, on December 10, 2018, the President decided to design, print, and launch the distribution of the ID cards himself. He issued card number T.0000 to himself as an example (Steiler & Nyirenda, 2021).
The President authorised 670,000 ID cards (The Citizen, 2018). Initially, the target group to be issued the identity cards was street vending wajasiriamali. However, the project
was later extended to any unregistered businesses with an annual turnover of less than 4 million TZS (1734USD). The government collected a fee of 20,000 TZS (9USD) per annum per business or vendor. The regional and district commissioners started implementing the ID distribution to the targeted groups with these orders.
A study commissioned by the International Labour Organisation pointed out that the high costs to enter and remain in the formal sector perpetuate either the exit or resistance of small businesses to join formal arrangements. Projects that tried to formalise the informal sector elsewhere lacked incentives for informal businesses to join. This study found that reforms that reduced costs of formalisation by 50%, as well as the length of formalisation procedures, had significant positive results in the numbers of registered enterprises (Elk et al., 2014). Magufuli’s project seemed to address these setbacks. First, the IDs were affordable to most informal workers. The process was supposed to be easy and quick, tedious monthly and daily fees from the local government were removed, and there was a security incentive to do business anywhere in the registered district without harassment from cities’ parapolice.
However, because there were no guidelines on how to go about it, the process became a source of political capital for politicians in the ruling party and for commissioners. The implementation focused solely on the number of cards distributed rather than the conditions of the targeted groups (George and Olang’ 2020). Cases that caused the efforts to backslide started to emerge. In one case, a regional commissioner came out with a list of 47 target-group categories, including small miners, bartenders, taxi drivers, bus conductors, and even freelancers, journalists, and Tanzania Social Fund Action beneficiaries. The practice stimulated some licensed and tax-paying businesses to join street vending. Some companies secretly entered the street vending business by giving merchandise to street vendors to avoid taxes (George and Olang’ 2020). The resultuing confusion redirected focus to anyone who could get
a hold of an opportunity, while the wanyonge who needed secure business environments were left in limbo.
After President Magufuli’s sudden death while in power on March 17, 2021, his vice president, Samia Hassan Suluhu, assumed power. Immediately, President Samia took a U-turn against Magufuli’s policy. She had a different view on the matter. The new regime came with new recommendations on how the informal sector should operate in Dar es Salaam and throughout the country. Since Magufuli’s initiatives were not based on an act of parliament or other legal reform, they vanished after his demise. The project had reached a dead end.
President Suluhu immediately directed regional commissioners to relocate the machinga to more convenient places to ensure fair competition with formal business ventures and to make sure they did not block pedestrian and vehicle flow during their undertakings (Malanga, 2021). In Dar es Salaam, they were told to go back to the previously designated area, the machinga complex. However, because street vendors knew that the area did not attract customers, they continued to do business on the street until the military intervened and evicted everyone from the now-restricted areas. This forced reallocation happened while I was in Dar es Salaam in November 2021. Most machinga did not expect the profound force used to move them, including the military bulldozing business stalls and destroying goods. Despite the emphasis on relocation, the informal businesses still take risks by popping up on the streets when there are no police and running away once they show up.
The attempted policy reform towards the informal sector proved to be a mission impossible. The issuing of IDs and the use of public space cannot be sustained if they depend on a president’s political will, as under the current president’s predecessor. Negotiations continue, but in a hostile environment. As I write this today, January 26th, 2022, President Suluhu has invited leaders of the machinga to the statehouse to discuss the problem, while the process to remove machinga in the city continues.
Informality and its malcontents
Informality and its malcontents in Tanzania can be understood from the perspective of policies enacted by German and British colonial administrations. Recent events are extensively influenced by colonialism and the governments that followed independence. Early contact between the coast of East Africa and traders from the Middle and Far East marked the beginning of urbanisation. Later, colonial policies like taxation, a monetary economy, and resource extraction created blueprints for what would become today’s urban centres. For people with no skills or opportunities to fit in these new urban landscapes, informality started to emerge on the margins of colonial towns. After independence in 1961, the adoption of Africanisation policies and then later economic crises and liberalisation have all contributed to the rise of the informal sector in Tanzania.
Over the years, Tanzania has adopted several frameworks and projects to accommodate the informal economy. None of these initiatives have produced the desired results. In this regard, the informal sector has remained vulnerable. Lack of access to training or credit, exclusion from decision making, and lack of legal and social protection are among the challenges the informal sector in Tanzania faces today (Steiler & Nyirenda, 2021).
Following Keith Hart (1973), the informal economy is defined as those activities that are not captured in national accounts (Bagachwa & Naho, 1995; Hart, 1985; Maliyamkono &
Bagachwa, 1990), operating independently from state monitoring, and involving little or no access to the organised market, credit institutions, formal education, or training (ILO, 2002).
The activities can be legal or illegal, but always operate outside the realm of government taxation and regulatory systems (Maliyamkono & Bagachwa, 1990).
Since Keith Hart (1973) first proposed the formal/informal distinction, the concepts have been pivotal in analysing contemporary African economies. Ray Bromley (1978) analyses the characteristics of informal economies: due to easy entry, anyone can work informally very
easily. Informality relies on indigenous resources, is organised around family ownership, usually operates on a small scale, is labour-intensive, needs to adapt to technological changes, requires skills acquired outside of formal school systems, and is characterized by unregulated and competitive markets. In contrast, the formal economy is based on problematic entry, frequent reliance on overseas resources, corporate ownership, large scale of operations, and is capital-intensive and often depends on imported technology, formally acquired skills, and on expatriate and protected markets (through tariffs, quotas, and trade licenses) (Bromley, 1978;
Hart, 1985).
Even though informality and informal businesses were discouraged beginning in colonial times and the early years of independence, the critical moment was after the adoption of Ujamaa. It is important to remember that the adoption of Ujamaa strictly discouraged the informal sector. Substantial restraints, both legal and moral, were put in place. Uchuuzi (Street vending) was illegal, while the government established Ujamaa shops. The Ujamaa Village Act of 1975 was put in place to discourage exploitation in business (Havnevik, 1993; Tripp, 1990). On top of that, the government conducted Operation Maduka (maduka translates to shops), wherein many unregistered shops in urban and rural areas were closed. Private entrepreneurship was considered evil and, therefore, unwanted. Anyone with a business was regarded as kupe or myonyaji (parasites or ticks) and as standing against the Ujamaa ideology.
At some point, people could only buy from cooperative shops. When the economy was at its knees, the shelves in cooperative shops were empty, and it sometimes took weeks before supplies arrived (Havnevik, 1993).
People responded to the economic crisis by taking up petty trading in the black market, despite it being illegal (Boesen & Koponen, 1986; Maliyamkono & Bagachwa, 1990). By the early 1980s, the black market had almost replaced the ‘real’ market (Bagachwa & Naho, 1995).
Bagachwa and Naho (1995)refer to the black market as a second economy.
In 1983, the government amended the penal code banning people from uzururaji (idleness or disorderliness) in cities (Lugalla, 1997; Tripp, 1990). The Human Resources Deployment Act of April 1983 directed urban dwellers who were not legally employed and made their living through unauthorised petty business operations to have a labour identification card. Otherwise, they would be regarded as wazururaji (idles or loiterers) (Lugalla, 1997; Stein, 1985; Tripp, 1990). On September 24, 1983, the Tanzania workers’ weekly newspaper, Mfanyakazi, published a list of activities identified as illegal and against the Ujamaa ideology, including the following; shoe shining; selling newspapers, buns, roasted cassava, and other foods in the streets; selling locally brewed beer outside of authorised premises; operating small vending stalls; car washing; special festival catering; and any petty trading that involved door-to-door selling (Kiondo, 1990).
Criminalising informality did not start or end with Ujamaa. Below, I review the history of Dar es Salaam, focusing on how informal living and working spaces and places came into being and how both colonial and postcolonial policies were, for different reasons, hostile to these forms of informality.