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Potentials of Non-Traditional Sector on Employment and Income Generation in

Tanzania

By Dr Joseph Shitundu

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1.0 Objectives

The main objective of this study: To facilitate the Ministry of Labour, Employment and Youth

Development to play a role in the development of Non Traditional Sector, ensuring its contribution to employment generation and the economic growth of the country.

The specific objectives: To assess the extent to which the current labour laws and

Policies, Occupational Safety and Health issues, Social Security issues, National Youth Development and Employment Policies and other socio-economic factors, facilitates or hinders the growth of the non traditional sector:.

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The specific objectives: -Cont

Identification of Non Traditional Sector activities To identify the characteristics of groups involved in this

sector in terms of gender, age, source of capital, education and skills.

To identify and prioritize potential non traditional sector activities according to projections on the number of enterprises, jobs, income generation and level of organization to be created over a period of time.

To analyze sector activities in (iv) and their likely contribution to pro poor growth

To propose and develop strategic interventions for the development of non traditional sector.

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2.0 Methodology and Scope

(i) Desk Review The information and data was gathered by reviewing

various documents (Policies, Strategies, Studies and others), observations and conducting interviews, administering questionnaires and using various methodologies.

This activity helps to understand the concept, nature and scope of non-traditional sector in Tanzania, the related policy environment, the objectives and challenges of promoting non-traditional employment activities in Tanzania.

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2.0 Methodology and ScopeCont.

(ii) Field Work The fieldwork involving interviews was conducted using three

sets of checklist Involved gathering information from key Ministries; Association

of Tanzania Employers (ATE), Trade Union Confederation of Tanzania (TUCTA), and District and Regional officials of the selected regions.

All these helped to establish the scope and issues of non-traditional employment activities in Tanzania and establishing the related problems, challenges and existing efforts towards promoting non-traditional employment activities in the country.

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(ii) Field Work Cont.

Interview with Producers and Musicians, Sportsmen and sports clubs, sports associations and fans.

Interview with food processors eg fruits packaging and selling

Interview with small miners, brokers Interview with Herbs local sellers, their associations,

Districts Medical Officers and Pharmacists. Interview with handcrafts men, their associations,

Small Industries Development Organization (SIDO) Field visit to identified areas of non traditional sector.

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3.0 Definition and Growth of Non-Traditional Activities in Tanzania

Look at the various policies the way they incorporate and address Non traditional employment.

Definition: Non traditional sector includes all those economic activities which are not part of the customary activities of the local population and they are done primarily due to their high cash value and export potentiality.

Partly, emerged as a response to the fall of export prices of traditional crops. It is a way to improve incomes, export earnings and employment prospects.

Growth trends by sub-sectors

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4.0 Analysis of Field Work Results

4.1 Identified Numbers by Region by Sector Across the five regions, the most practiced non-

traditional sector activity is entertainment (fine and performing arts) with 14.1 percent of the respondents; Sports activities (11.7%); Food processing (7.4%); and Handicraft (7.4%). Other important non-traditional activities are horticulture, flower growing, tie and dye, metal works, timber and woodworks. (Based on Table 3.2a)

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4.1 Identified Numbers by Region by SectorCont.

Table 3.2a: Non-Traditional activities by Region

Table 3.2b: Reasons for Regional Distribution of Non-Traditional Sector Employment

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Job Employment

According to Table 3.3: Total Employment in Survey entities by Gender:

During the period 2007 to 2009, total employment increased by 26.2 percent. Entertainment and sports employs most, but the proportion of males is higher compared to females. Employment in Flower growing grew fast, fivefold between 2007 and 2009. Handicraft also employed close to three times in 2009 the number employed in 2007.

Total non-traditional sector employment increased from 1,913 (38% being females) in 2007 to 2,057 (39% females) in 2008 and 2,415 (43% females) workers in 2009. Most of the workers were permanent employees while some were temporary and casual workers.

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Job EmploymentCont.

Female employment is highest in Tie and dye, flower growing, horticulture, handicraft and food processing (Table 3.4).

Top ten sub-sectors in employment are flower growing; Tourism; Mining; Catering; Sports; Food processing; Timber works; livestock/poultry; Handicraft; Entertainment (Table 3.5)

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Income Levels

Most operators are in the 0.5 mil to 5 mil income group. Between 2006 and 2009, the lowest income group grew most, more that 3 times followed by those within the 1 mil to 5 mil income group that grew by 2.2 times. Very few operators are in the 50 mil to 2002 mil and plus income group while the surveyed entities total income almost doubled between 2006 and 2009 (Table 3.6).

In 2006 entertainment was the lead activity, followed by sports, and third is flower growing timber works and handicraft activities were the fourth in income generation (3.6)

In terms of proportional income earned the leading sectors are flower growing; livestock/poultry; Handicraft; Hair dressing; Food Processing; Entertainment (Table 3.7).

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Type of Organization

Most of the respondent operators are organized as cooperative groups (46%) and 22.7% are personal business; 16.5% Family Business. Only 7.4% are registered companies and another 7.4% are joint ventures (Table 3.8)

Cooperative organization is dominant in entertainment and sports activities while hairdressing, ICT, herbal, horticulture and catering are mostly operated as personal businesses.

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Characteristics (Gender, Age, Sources of Capital

Participation by Gender and Age Tables 3.3 and 3.4 and Figure 3.1 show active participation

of females. Overall Youth are 38.7% (Table 3.9a) and leading sectors are Entertainment; Handicraft; Sports; Timber Works; Tie and Die and Flower Growing (Table 3.9b)

Sources of Capital for Investment A total of 132 respondents indicated the sources of capital.

41% depend on own resources; 37.1% re-invest from profits. Donor support (7.4%). Government initiatives and family members are the least important sources of capital (2.2% each). Financial institutions 6.1%. (Table 3.10)The sector that benefited most from financial institutions is Handicraft.

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Characteristics (Gender, Age, Sources of CapitalCont.

4.5.3 Education and Skills This low level of education has implication in

terms of organizing and running the non-traditional activities Table 3.11).

Entertainment; Handicraft; Sports; Tie and Die; Flower Growing and metal works, absorbs most of the youth with primary up to ordinary level education.

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Future Prospects

5.1 Projections of Prioritized Potential Non-Traditional Employment Activities

The survey identified several (more than 17 activities) non-traditional activities which are emerging in Tanzania. However, looking at the trends and their potentials in terms of the number of enterprises; contribution to employment creation and income generation as well as their organizations we prioritized few activities for inclusion in MKUKUTA.

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5.1 Projections of Prioritized Potential Non-Traditional Employment Activities

Using information on number of enterprises, (Table 3.2a); employment (Tables 3.3 and 3.4); income (Tables 3.6 & 3.7) and type of organizations (Table 3.8) we have prioritized 6 sub-sectors (Food Processing; Flower Growing; Entertainment; Sports; Handicraft and Horticulture) and three other important sub-sectors. (Table 4.1)

The sub-sectors also involve products which can add-value and have export potentials. They are also leading in terms of involving people of both sexes.

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5.2. Pro-Poor Growth Potential for Non-Traditional Sector in Tanzania

Pro-poor growth involves ensuring that the four components of ‘Decent work”, namely, employment, social protection, workers’ rights and social dialogue are covered.

Despite the bad picture of decent work in the surveyed enterprises it is possible to have it promoted in the six prioritized non-traditional sub-sectors:

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5.2. Pro-Poor Growth Potential for Non-Traditional Sector in Tanzania

They have big potential for higher earnings including export earnings This may ensure ability to pay higher wages regularly leading to both job and income security.

Workers can manage to join or make arrangement of social security.

Their types of organizations i.e. associations, groups, cooperatives and joint ventures potentially create room for some kind of social dialogue including possibilities of establishing trade unions.

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6.0 What Needs to be Done6.1 Challenges

6.1.1 General Challenges Low level/Lack of ICT skills and knowledge, entrepreneurship

skills and business culture among youth; Challenges arising from impact of globalization on employment; Impact of HIV/AIDS pandemic particularly on youth Workers in the informal sector may be exposed to situations

which make them vulnerable to HIV & AIDS. The challenge is to protect the workers and ensure the potential economic gains from the informal sector.

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6.1 ChallengesCont.

Most informal sector workers are, in practice not protected by labour laws;

Lack of Labour Market Information System for continuous collection, analysis, and reporting on employment creation trends of non-traditional sector;

Child labour persist despite different interventions done by government and stakeholders; and

Limited coverage of the social security schemes particularly informal sector, small scale self employed entrepreneurs, subsistence farmers

Difficulties in accessing decent Working Premises partly because of stringent Municipal authority rules and lack of funds to pay for the rent as a result of low turnover of the business.

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6.1 ChallengesCont.

Lack of capital to Invest on a Better Business Premise: This is the major reason for many to settle in unwanted areas. They can’t establish business in areas allotted to small businesses because the same areas are eyed by rich people who come to those areas, construct businesses premises and they start charging rent.

Law enforcement involving harassment by local government militiamen impedes growth of economic activities or businesses.

The provision and use of Business Development Services (BDS) is too low.

Collateral Requirements and loans with high interests are beyond most business earnings.

Specific

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6.2 Strategic Interventions

6.2.1 Strategic Interventions (Actions to address the challenges)

The following are summarized key areas of focus, issues and actors for promoting non-traditional sector in Tanzania:

(a) Focus: Modernize Non-traditional sector Activities Issues: (i) Lack of Access to Credit (ii) Limited Value Addition and post-harvest losses (iii) Poor packaging (iv) Lack of quality standards (v) Lack of development Strategies eg Strategy for

Handicraft Sub-sector Development

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6.2.1 (5.2) Strategic Interventions (Actions to address those

Strategies: (i) Improve access to credit and ensure gender equality in

the access to credit. (ii) Promote processing, preservation and utilization of

local materials eg fruits and vegetables (iii) Develop and promote the use of standardized

packaging materials (iv) Develop and implement sub-sector specific

development strategies e.g for handicrafts development Actors:(i) Ministry of Trade and Industry, Ministry of

Finance, Ministry of Labour and Youth Development, SIDO

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Focus Area: Marketing

Issues(i) Failure to capture the internal mkt and penetrate

international mkts Strategies(i) Facilitate establishment of small scale food

processing industries for exports(ii) Promote the establishment of storage facilities(iii) Promote the development of sub-sectors export

agencies Actors: MLEYD; MIT; SIDO and PPP

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Focus Area: Employment Vulnerability and Exclusion

Issues(i) Lack of Skills(ii) Inadequate Social Protection(iii) Lack of Income Security Strategies(i) Implement new labour Act & Occupational Safety

and Health Issues(ii) Promote extension of Social Protection and Social

DialogueActors: MLEYD; VETA; SIDO; TUCTA; ATE

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Focus Area: Developing ICT for Urban Areas & Improving Electrification and Transportation in Rural Areas

Issues(i) Low accessibility to ICT(ii) Limited use of ICT to enhance management and efficiency(iii) Lack of electricity in rural areas(iv) Poor Transportation systems in rural areas Strategies(i) Increase coverage of telephone and internet(ii) Create ICT awareness(iii) Fast track the process of rural electrification(iv) Build and improve rural transport system esp. roads Actors: MoST; MoEVT; MoTC; MoE; TANESCO; Local Govt

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Focus Area: The Music & Entertainment Industry for Growth and Job Creation

Issues

(i) Little Benefits to Musicians, film operators and fine and performance art operators from sales of their products and services

(ii) The problem of pirates Strategies

(i) Promote the establishment of public and private professional centres for identifying and training talented people in these areas

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-continued-

Strategies

(ii) Promote the marketing, protection and licensing for creative works in the music and film industry

Actors: MoSC; MLYED; MIT

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END OF SLIDE SHOW

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