“STRUCTURAL BARRIERS, CONSTRAINTS, AND URBAN YOUTH UNEMPLOYMENT: THE CASE OF ILALA MUNICIPALITY, DAR-ES-SALAAM ”

1. “STRUCTURAL BARRIERS, CONSTRAINTS, AND URBAN YOUTH UNEMPLOYMENT: THE CASE OF ILALA MUNICIPALITY, DAR-ES-SALAAM ” 19thANNUAL RESEARCH WORKSHOP By  Dr. Christopher Awinia PRAXIS, Tanzania Ledger Plaza Bahari Beach Hotel Dar es Salaam, Tanzania April 09-10, 2014

2. Outline • Introduction • Background to the problem • Specific objectives • Research Findings • Main elements constraining young traders enterprises to transform • Illegitimisation of Youth Enterprises • Fines and penalties • Informal payment and bribes • Effect on urban youth enterprises • Factors causing some youth not to acquire productive capabilities • The state of multiple deprivations to urban youth self-employment • Way forward and recommendations for further research

3. Background to the Problem 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)

4. Objectives of the Study To assess main constraints faced by young urban people’s UHUEs [to transform] … in the wake of business formalisation and regulation of informal markets Suggest ways and strategies to eliminate the constraints and have urban youth employment enhanced through [transformation of] their UHUEs

5. Presentation of Research Findings • Main elements constraining young traders

6. Constraints Faced by Youth Enterprises

7. Proportion of those who were Extremely Constrained

8. Key Findings • 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

9. Source: NBS (2007)

10. The Concept of Illegitimisation • 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

11. The Concept of Illegitimisation-2 • 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

12. Fines and Penalties 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

13. Fines and Penalties -2 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

14. Informal Payment and Bribes 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

15. Youth enterprises that lacked business premises were multiple deprived – thus constrained 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

16. Youth enterprises that lacked business premises were multiple deprived – thus constrained-2 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

17. Youth enterprises that lacked business premises were multiple deprived – thus constrained-3

18. Youth enterprises that lacked business premises were multiple deprived – thus constrained-4 Main Factors Causing Multiple Deprivations to transformation of urban youth enterprises for self-employment and more inclusive growth

19. Youth enterprises that lacked business premises were multiple deprived – thus constrained-5 The triangle of multiple deprivations to transformation and enterprise development Deprivations in ownership of bank account 3. Deprivations in access to micro-credit and productive assets 2. Deprivations in ownership of bank account (barrier to pax in financial sector services) 1. Deprivations in access to business license

20. Youth enterprises that lacked business premises were multiple deprived – thus constrained-6 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)

21. Youth enterprises that lacked business premises were multiple deprived – thus constrained-7 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)

22. CONCLUSIONS

23. Options to reduce youth unemployment through transformative productive capabilities • 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

24. Options to reduce youth unemployment through transformative productive capabilities-2 • 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)

25. 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)

26. Recommendations The space and importance of low capabilities urban enterprises needs to be identified in the ongoing enterprise transformation/formalisation agenda Recogniseprimary motivation of starting UHUEs is not enterprise development – hence formalisation /transformation for enterprise development is not their priority

27. Recommendations-2 Undertake municipal reforms to foster urban youth employment/enterprise development through creation of business premises for informal enterprises Need to liberalise the ‘pavement economy’ Create UHUE forums/assoc to promote self-regulation Future urban road construction should take into account the need to create more space for business premises for urban youth

28. KNOWLEDGE GAP AND AREA FOR FURTHER RESEARCH

29. Knowledge Gap 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

30. Knowledge Gap -2 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?”

31. Area for Further Research 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

32. Area of Further Research-2 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

33. Objectives of the Proposed Study 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 - THE END -

34. Methodological Supplement

35. Methodology Secondary data sources Unstructured key informant interviews Unstructured/semi-structured qualitative interviews (FGDs) Structured quantitative questionnaire

36. Sample-size

37. Sample Selection 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)

38. Data Analysis Techniques Qualitative data through MVIVO software for ethnographic data analysis Structured questionnaire survey through SPSS – drawing comparisons, associations and generalisations of different variables measured

39. THE END