The Rise of Street Vendors in Tanzania and Its Economic Implications

Tanzania, much like many other countries in sub-Saharan Africa, is witnessing rapid urbanization driven by various factors such as the influx of youth into cities, population growth, and the transformation of rural areas into urban centers

1. However, this urban growth has outpaced economic development, placing a strain on both industrial and urban social services
2. As a result, formal markets failed to grow at a similar rate, prompting an increase in informal sector activities as individuals seek alternative livelihoods
3. In Africa, informal employment is prevalent, with Tanzania experiencing a notable rise from 22% in 2014 to 29.4% in 2020/2021
4. Roving and semi-permanent micro-enterprises – otherwise known as street vendors – have emerged as a prominent source of income due to factors like unemployment. Despite its informality, street vending serves as a crucial source of income for many and helps alleviate urban unemployment and food insecurity
5. However, the informal economy, including street vending, poses economic challenges at both macro and micro levels. These include poor labor conditions, reduced tax revenues and hampered overall economic growth. To address these issues, governments are implementing initiatives to formalize the informal economy. Success would help deliver Sustainable Development Goal 8, which is to “Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all”.

This Focus Note will employ the term street vendors to refer to people who are engaged in operating mobile or semi-permanent businesses. Terms also used to describe street vendors are petty traders, roving enterprises and machinga.

• Tanzania’s urbanization, fueled by youth migration and population growth, has led to an increase in informal sector activities, particularly street vending. The informal sector is among the leading sectors in Tanzania in providing jobs and opportunities to women and youth in the country.
  
• The sector supports many people’s livelihoods, but it also faces economic difficulties. Despite their contributions, street vendors face numerous challenges, including harassment, customer shortages, inadequate infrastructure, adverse weather conditions and limited access to financial services that could help them grow their businesses, including a shortage of capital and stable supply chains. Some traders have, however, succeeded in accumulating capital, accessing formal working spaces, acquiring loans, and engaging in training services.
• Market conditions, such as flooding during rain, make it harder to operate.
  
• Harnessing the economic power of street vendors and enabling them to achieve their full economic potential would bring benefits to vendors, their families, communities, and the national economy.
  
• Access to financial services is essential for street vending businesses to operate and grow, covering needs like capital, savings, credit, banking, mobile money, payment methods, and insurance.