1
“STRUCTURAL BARRIERS, CONSTRAINTS, AND URBAN YOUTH
UNEMPLOYMENT: THE CASE OF ILALA MUNICIPALITY, DAR-ES-SALAAM ”
19th ANNUAL RESEARCH WORKSHOP
Ledger Plaza Bahari Beach Hotel Dar es Salaam, Tanzania
April 09-10, 2014
By Dr. Christopher Awinia
PRAXIS, Tanzania
1. Introduction2. Background to the problem3. Specific objectives4. Research Findings
Main elements constraining young traders enterprises to transform
Illegitimisation of Youth Enterprises Fines and penalties Informal payment and bribes
5. Effect on urban youth enterprises Factors causing some youth not to acquire productive
capabilities The state of multiple deprivations to urban youth self-
employment
6. Way forward and recommendations for further research
Outline
Urban youth unemployment in Tanzania (Dar-es-Salaam and other urban areas) is increasing (ILFS, 2006)
Proportion of youth, unemployed and in rural-urban migration is increasing (Census 2002, 2012)
Urban poverty concentrated among urban youth characterised by low capabilities to transform and lack of employment (ILFS, 2006; Kweka and Fox, 2011; Awinia 2013, 2014)
Background to the Problem
1. To assess main constraints faced by young urban people’s UHUEs [to transform] … in the wake of business formalisation and regulation of informal markets
2. Suggest ways and strategies to eliminate the constraints and have urban youth employment enhanced through [transformation of] their UHUEs
Objectives of the Study
Main elements constraining young traders
Presentation of Research Findings
Type of Constraint FacedDegree of Constraint
Highly ExtremelyFreq. % Freq. %
Lack of Business Premises 48 24.6 125 64.1
Prohibitive procedures for obtaining licenses 28 25.2 39 35.1
Cost of obtaining a license 22 20.8 20 37.7
Fines and penalties 59 35.3 49 29.3
Loss of stock and assets during eviction 53 31.5 81 48.2
Informal payments and bribes 71 41.3 43 25
Failure of the enterprise (due to the above) 57 31.8 84 46.9
010203040506070
24.6 25.220.8
35.3 31.541.3
31.8
64.1
35.1 37.729.3
48.2
25
46.9
HighExtreme
Type of Constraint
%
Constraints Faced by Youth Enterprises
Lack of Business Premises
Prohibitive procedures for obtaining licenses
Cost of obtaining a license
Fines and penalties
Loss of stock and assets during eviction
Informal payments and bribes
Failure of the enterprise (due to the above)
0 20 40 60 80100
HighExtreme
Proportion of those who were Extremely Constrained
Lack of business premises presents itself as a leading constraint (64.1% said were extremely constrained in this dimension)
This leads to lack of access to other opportunities for enterprise transformation
This sub-sector is important to urban youth poverty 98.8% of youth who lacked premises said the UHUEs they
have was their main source of employment
Key Findings
Business Location of Main Activity %
Within own or business partner’s home-with special business space 18.6
Within own or business partner’s home-without special business space 9.2
Structure attached to/outside own or business partner’s house 1.3
Permanent building other than home 13.3
Fixed stall/kiosk-at market 11.0
Vehicle cart, temporary stall-at market 6.1
Other temporary structure 6.4
Fixed stall/kiosk-in street 4.3
Vehicle cart, temporary stall-in street 9.6
Construction site 1.9Customer’s/Employer’s house 0.6
No fixed location/mobile 17.7
Total 100
Source: NBS (2007)
Municipal regulations illegitimises UHUEs of urban youth without business premises
This put young urban traders at constant conflict with municipal law enforcers
Causes loss or damage of stocks/assets 48.2% (extremely) and 31.5% (highly) constrained by resulting
from uncertainty over their legal entitlements and city aux. police ‘cleansing’ operations
The Concept of Illegitimisation
Uncertainty causes low investment and therefore affects transformative development of urban youth enterprises
Combined, 95.2% of urban youth interviewed said their enterprises were negatively affected by the prevailing state of illegitimisation
The state of Illegitimacy is created by municipal business regulations, works against transformation of youth enterprises for inclusive growth
The Concept of Illegitimisation-2
The state of illegitimacy is responsible for other hidden-costs which constrain transformation of urban youth enterprises
The degree of constraint to urban youth self-employment enterprises were high (35.3%) and extreme (29.3%) due to forced payments of fines, penalties and various forms of punishment for trading in places without a valid business license
Fines and Penalties
Lack of business premises contributes to constraints against transformation as above
Other constraints proceeding from lack of premises include a penalty for ‘loitering’ (meaning conducting business in a restricted area), also called (“polluting the environment”) was TShs 50,000
The ‘psychological effects’ from lacking legitimacy prevent long-term investment and innovation
Fines and Penalties -2
38.6% urban youth were forced to pay informal payments and bribes
28.6% (10,000 p.m), 19% (5,000 p.m) and 15.9% (20,000 p.m)
Rate of informal payments and bribes depended most on location
Informal Payment and Bribes
Correlation between lack of business premises, severely affected by informal payments and bribes and those severely affected by pymt of fines, penalties and other punishments
60.5% of those who said their UHUEs were severely constrained by informal payments and bribes also said they were severely constrained by fines, penalties and other punishments
Youth enterprises that lacked business premises were multiple
deprived – thus constrained
This creates shocks, risks and vulnerabilities, thus constraining UHUE youth self-employment enterprises to transform
Poorest urban youths affected most Among the lowest income quintile (earning 50,000/- p.m
and less) 91.2% among them said their UHUEs were affected in one way or another by solicitation of informal pymts and bribes
55% among the bottom-most quintile said they were highly constrained and 26.5% severely
Youth enterprises that lacked business premises were multiple deprived – thus constrained-2
Lack of Business Premises
Prohibitive procedures for obtaining licenses
Cost of obtaining a license
Fines and penaltiesLoss of stock and assets during eviction
Informal payments and bribes
Failure of the enterprise (due to the above)
0
50
100
Highly Constrained
Severely Constrained
Not constrained at all
Youth enterprises that lacked business premises were multiple deprived – thus constrained-3
Main Factors Causing Multiple Deprivations to transformation of urban youth enterprises for self-employment and more inclusive growth
Youth enterprises that lacked business premises were multiple deprived – thus constrained-4
The triangle of multiple deprivations to transformation and enterprise development
3. Deprivations in access to micro-credit and productive assets
Deprivations in ownership of bank account
1. Deprivations in access to business license
2. Deprivations in ownership of bank account (barrier to pax in financial sector services)
Youth enterprises that lacked business premises were multiple deprived – thus constrained-5
88.3% of youth said they did not have business premises Importance: 66.7% of those who did not own business
premises said their UHUEs were their main source of employment
56.5% failed to transform their enterprises because they were severely constrained by (a) long, (b) bureaucratic, (c) complicated procedure for obtaining business license
Licenses were inaccessible to them – mainly because they did not own a business premises
35.1% said difficult conditions in acquiring a business license served as a severe barrier to transformation of their UHUEs. 25.2% (a big barrier). 73.9% (overall)
Youth enterprises that lacked business premises were multiple deprived – thus constrained-6
94.6% said they were unable to obtain business premises. As a result they could also not obtain a business license
Lack of business license constrained urban youth to participate in the financial sector thus being excluded from the opportunity to transform their enterprises
45.3% (severely) and 49.2% (highly) urban youth enterprises constrained to transform by lack of banking and financial services
As a result of the foregoing, 94.4% said all the various constraining factors made them unable, in one way or the other, to conduct their enterprise (total collapse)
46.9% (contributed severely), 31.8% (to a big extent) and 15.6% (to a small extent)
Youth enterprises that lacked business premises were multiple deprived – thus constrained-7
CONCLUSIONS
Municipal authorities should create more business premises for young people
35% said nothing is currently being done by municipal officials to obtain more premises
48.5% said the area where they are currently work is restricted - putting them in conflict with the law
Options to reduce youth unemployment through transformative
productive capabilities
Build-on the Open Air Market (Gulio) Model 94.5% said open air markets on pavements contributed to increasing
access of premises 47.5% (to a big extent) and 26.5% (very significantly) 95.2% (contributed positively to creation of urban youth employment),
35.4% (very significantly) 64.9% favour municipal auth. to enact by-laws that would allow urban
youth to trade on pavements (in the style of machingas) 22% (strongly favoured) liberalisation of the pavement sector Such measures would contribute to enlargement of capabilities among
youth to create self-employment (access to business premises->participation in financial/banking sector ->dev. of transformative productive capabilities, innovation and efficiency)
Options to reduce youth unemployment through transformative productive capabilities-2
64.9% favour municipal auth. to enact by-laws that would allow urban youth to trade on pavements (in the style of machingas)
22% (strongly favoured) liberalisation of the pavement sector
Such measures would contribute to enlargement of capabilities among youth to create self-employment (access to business premises->participation in financial/banking sector ->dev. of transformative productive capabilitities, innovation and efficiency)
Options to reduce youth unemployment through transformative productive capabilities-2
1. The space and importance of low capabilities urban enterprises needs to be identified in the ongoing enterprise transformation/formalisation agenda
2. Recognise primary motivation of starting UHUEs is not enterprise development – hence formalisation /transformation for enterprise development is not their priority
Recommendations
3. Undertake municipal reforms to foster urban youth employment/enterprise development through creation of business premises for informal enterprises
4. Need to liberalise the ‘pavement economy’
5. Create UHUE forums/assoc to promote self-regulation
6. Future urban road construction should take into account the need to create more space for business premises for urban youth
Recommendations-2
KNOWLEDGE GAP AND AREA FOR FURTHER RESEARCH
It is true that micro-enterprises are constrained to transform
The main area of constraint is capability deprivations to transform and undertake business development for more inclusive growth
The conclusion of the present study show inability of urban youth enterprises to transform is not only in the constraints and lack-of, but in capability deprivations as manifest in inequalities between capabilities of urban youth to transform
Knowledge Gap
There are some enterprises, including youth enterprises which have been able to transform even under present conditions
The knowledge gap is: (1) “what are the key drivers behind the successful transformation of urban enterprises?” (2) “what are the main factors that make some enterprises to transform and develop while others do not?”
Knowledge Gap -2
The present study was undertaken to contribute to knowledge development in the area of enterprise development for more inclusive growth
The study looked at how informal urban enterprises of the youth are constrained to transform
Conversely, it is equally, and even more important to look into “pathways” that have been taken by enterprises that have successfully transformed
Area for Further Research
This approach will generate valuable lessons for policy, identify, codify and enable facilitation and dissemination of common best practices of enterprise transformation for inclusive growth
The findings will be empirical, coming from practitioners themselves, and based on facts and experience
Area of Further Research-2
Title:
Key Drivers behind successful Transformation of Urban Enterprises:
Comparative study of Transformed SMEs
in Carpentry and Agro-processing in Ilala District
Objective: To identify main drivers that contribute to transformation of urban enterprises
Specific objectives: Map-out pathways followed by urban enterprises that managed to transform Identify extent that transformed enterprises contribute to urban employment creation
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Objectives of the Proposed Study
Methodological Supplement
Secondary data sources
Unstructured key informant interviews
Unstructured/semi-structured qualitative interviews (FGDs)
Structured quantitative questionnaire
Methodology
No. AreaNo. of youth in HEs to
be interviewed
1. G/mboto Cluster 1 50
2. G/mboto Cluster 2 50
3. Mchikichini Cluster 1 50
4. Mchikichini Cluster 2 50
5. Total 200
Sample-size
Purpose judgmental for qualitative interviews
Stratified sampling technique for the structured quantitative questionnaire survey
Level 1: Purposive (choice of clusters/groups)
Level 2: Random (listing of total population then choosing through simple random sampling)
Sample Selection
Qualitative data through MVIVO software for ethnographic data analysis
Structured questionnaire survey through SPSS – drawing comparisons, associations and generalisations of different variables measured
Data Analysis Techniques
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