DAR ES SALAAM, Tanzania – On a typically hot and humid morning at Tandika market in Tanzania’s biggest city, Asha Shabani is busy packing dry sardines into plastic bags and placing them on a wooden stall for her customers.
The 27-year-old trader, who sells various items including tomatoes, grains, onions and vegetables, tracks and balances her stock before the start of each business day. She tallies additions and deductions and jots the figures down on a handwritten ledger.
“I was not keeping my records before,” Shabani said of her previous approach to running her business. “I have now realized that every single cent has to be accounted for.”
Not long ago, Shabani did not have formal premises on which to carry out her business. She simply lay down torn sheets and placed her merchandise on street pavements. She was frequently harassed by city militias, who sometimes seized her produce.
“I simply filled the forms, presented my identity card gave them my business plan. The loan officer was satisfied with my request and the money was paid within a week.”
But when her stall was officially registered in November last year as part of a government policy to recognize informal businesses, her life became much easier. As a licensed trader, Shabani now has a dedicated space in the market, a taxpayer’s identification number and, most importantly, a government identity card.
“I am happy because nobody is bothering me for a permit any more,” she said.
In February this year, Shabani was able to secure a 1.5 million shilling ($660) loan from Tanzania Women’s Bank (TWB) without presenting collateral often required for loan security.
“I simply filled the forms, presented my identity card and gave them my business plan. The loan officer was satisfied with my request and the money was paid within a week.”
She has used the money to grow her capital, and says having the loan helped her realize why it is to important to keep detailed records.
TWB was formed in 2007 to bridge gaps in women’s access to finance, as well as addressing the challenges women entrepreneurs face in accessing loans. While women entrepreneurs are increasingly recognized as key drivers of economic growth, many of them are still trapped in poverty.
Taxing the Informal Sector
In Tanzania, the informal sector is made up of at least 3 million businesses which provide approximately 48 percent of the GDP and 36 percent of total employment, an official from the Ministry of Finance told News Deeply. If properly taxed, informal businesses could have contributed to 18 percent of tax revenue in 2016-17, according to the same internal estimates.
It’s also a sector that is dominated by women. A 2012 study from the International Labor Organization found that 83 percent of women in Tanzania are employed in the informal economy, compared to 71 percent of men.
In the face of declining foreign aid, the Tanzanian government introduced tougher austerity measures in 2016 to curb public spending, improve budgetary oversight and increase tax collection. In line with this cost-cutting policy, the government began to formalize unregistered Small and Medium Enterprises (SMEs), both to empower those involved and also to widen the country’s tax net.
Although the informal sector constitutes a vibrant economic force in Tanzania, officials say most small businesses never scale up, and almost half of new businesses close within one year of operation.
Women entrepreneurs are particularly vulnerable in the informal economy: The majority never attended secondary school, and struggle to grow their businesses as a result. A 2009 study of women entrepreneurs in Dar es Salaam by local charity Equality for Growth found that their work was characterized by instability, insecurity, lack of access to public services and healthcare and poor working conditions.
The actual number of businesses registered under the new program is still not known. Dar es Salaam city authority officials told News Deeply that each district authority has set up its own registration policy and manages it separately.
But some informal traders oppose the reform, saying the process is time-consuming and there is too much red tape to navigate.
“Many traders hate paying taxes, they don’t realize the benefits of registering their businesses to operate formally,” said Honest Ngowi, an economics professor at Mzumbe University in Dar es Salaam.
But Shabani says it was worth her while to go formal. “I wanted to abide by the law, that’s why I registered my business,” she said.
Outside the city, many women are still waiting to see the policy implemented.
“When the president came here, he said we would be given identity cards and business premises. it hasn’t happened yet.”
Susanna Mtenga runs a street kitchen in Morogoro town. The well-being of her whole family depends on how well her business does. But she hasn’t yet been able to register her business despite a recent visit from President John Magufuli to promote the scheme.
“When the president came here, he said we would be given identity cards and business premises. It hasn’t happened yet,” she said.
For the past three months, Mtenga has been trying to contact Morogoro municipal council officials to get details about the registration scheme without any success.
“I don’t want to waste my time any more – after all I have many mouths to feed.”