EVALUATION OF EXTENT OF INFORMALITY IN THE

FORMAL CONSTRUCTION SETTINGS IN TANZANIA

(The case of Mbezi Beach and Tegeta Formal Areas)







Prepared by;
MALLEWO, ANITHA




Department of Building Economics
School of Construction Economics and Management
Ardhi University
DAR ES SALAAM JULY 2012

EVALUATION OF EXTENT OF INFORMALITY IN THE
FORMAL CONSTRUCTION SETTINGS IN TANZANIA
(The case of Mbezi Beach and Tegeta Formal Areas)





MALLEWO, Anitha



Dissertation submitted in partial fulfilment of the requirement for the award of
the B.Sc. Degree in Building Economics of Ardhi University



Department of Building Economics
School of Construction Economics and Management
Ardhi University
Dar es Salaam .
JULY 2012


i

DECLARATION
[I, (MALLEWO ANITHA)] hereby declare that the contents of this report are the results
of my own study and findings and, to the best of my knowledge, they have not been
presented elsewhere for a Diploma, Degree or any professional award in any institution of
Higher Learning.

-------------------------------------------------
MALLEWO, ANITHA

SUPERVISORS DECLARATION
This report has been presented as a semester Dissertation in partial fulfillment of the
requirements for the award of the B.Sc.Degree in Building Economics of Ardhi University.


Dr. MUSHUMBUSI, M.Z.
DISSERTATION SUPERVISOR


Dr. MAKOBA, N.D.
HEAD DEPARTMENT OF BE,
SCHOOL OF CONSTRUCTION
ECONOMICS
AND MANAGEMENT
DAR ES SALAAM


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ACKNOWLEDGEMENTS
I appreciate the love of almighty God and his care and protection during my dissertation as
his grace enabled me to accomplish my research healthily.
I would like to express my gratitude to my supervisor, Dr. Mushumbusi and all members of
Building Economics Department of Ardhi University (ARU) for their continued support,
guidance and constructive criticism given throughout my research work.
My deepest thanks also go to the Ministry of Science and Higher Learning Institutions who
provided the funds for the research. The same gratitude is extended to my fellow students for
their supportive advices and critisms toward this dissertation.
My special thanks also to all informal building trades contractors, building contractors,
consultancies and individual clients who provided information through interviews and
questionnaires.
Finally I am very indebted to all whose names are not mentioned here, but who had assisted
me in one way or another to complete this work.

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DEDICATION
This dissertation is dedicated to my savior, LORD JESUS CHRIST; I have seen his presence
during preparation of this work also to my beloved father and mother, Aman and Kanaeli
Mallewo, my brothers Victor and Nestory Mallewo and my sisters Haika, Rither and
Devotha Mallewo. They have given me a great support in my education life.

















iv

ABSTRACT
Construction activity plays a vital role in the process of economic growth and development,
both through its products (infrastructure, buildings) and through the employment created in
the process of construction itself. The development of an efficient construction industry is an
objective of policy in most countries. The study provides a basis from which to assess the
nature and extent of construction activities in the formal settings that are conducted
informally. It is hoped that it will stimulate further research on construction sectors in other
countries and towns, so that informal construction issue takes centre stage in research into the
construction industry and the requirements for its development.
The study employed the use of questionnaires and personal interviews which were conducted
on Kinondoni Municipality, Informal building trades contractors, Formal building trades
contractors and consultancies and Building clients whom were obtained through purposive
sampling from the study area. The information obtained provided a complete picture of the
current situation of informal construction in Dar es Salaam.
The report is divided into five chapters, chapter one gives the introduction of the study by
highlighting the statement of the problem, objectives, research questions, significance and
limitation. Chapter two deals with literature review and this is about both formal and
informal construction industries in Tanzania. Chapter three is about research methodology.
Data collection and analysis are dealt with in chapter four while the last chapter is for
conclusion and recommendations.
The findings revealed the reasons for the clients to build without following the formal
procedures that it is because they tend to escape from paying charges associated with the
services offered by the consultants, lack of education particularly the importance of engaging
professionals. Skipping some steps or not following the formal construction procedures will
determine the extent of informality in construction industry. Although informality creates
jobs and generates income, people under informality lack access to certain kind of protection
that the government might provide, such as social security.
This report recommends the statutory bodies to make regulations that will encourage these
individuals to get registrations. There is need to expose construction workers to the benefits of
belonging to associations. Also the recommendation for further studies should be done so as to
improve and promote informal construction sectors.

v

Table of Contents
DECLARATION .................................................................................................................... i
ACKNOWLEDGEMENTS ................................................................................................... ii
DEDICATION ...................................................................................................................... iii
ABSTRACT .......................................................................................................................... iv
Table of Contents ................................................................................................................... v
LIST OF ABBREVIATIONS ............................................................................................... ix
CHAPTER ONE .................................................................................................................... 1
INTRODUCTION .................................................................................................................. 1
1.1 Background of the study .......................................................................................... 1
1.2 Statement of the problem ......................................................................................... 2
1.3 Main objectives: ....................................................................................................... 2
1.4 Specific objectives: .................................................................................................. 2
1.5 Research questions ................................................................................................... 3
1.6 Significance of study ................................................................................................ 3
1.7 Scope of the study .................................................................................................... 3
CHAPTER TWO .................................................................................................................... 4
LITERATURE REVIEW ....................................................................................................... 4
2.1 Construction industry generally ..................................................................................... 4
2.2 Objectives of construction industry development.......................................................... 5
2.3 Building procedures ....................................................................................................... 5
2.4 Formal construction process .......................................................................................... 7
2.4.1 Design team .................................................................................................................... 8
2.4.2 Legal consideration and aspects ..................................................................................... 9

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2.4.3 Interaction of expertise ................................................................................................. 10
2.5 Registration of contractors by the CRB ....................................................................... 10
2.6 Tanzania policies towards construction sector ............................................................ 11
2.7 The contribution of the construction industry to the economy .................................... 12
2.8 Overview of the informal economy ............................................................................. 13
2.9 Informal construction sector ........................................................................................ 14
2.9.1 Involvement of various actors in the informal building construction
process .................................................................................................................................. 15
2.9.2 Informal contractors ..................................................................................................... 16
2.9.3 Informal construction workers in Tanzania ................................................................. 16
2.9.4 Characteristics of informal construction sectors .......................................................... 17
2.9.5 Informal contractors and urban housing ...................................................................... 18
2.9.6 Markets for informal contractors ................................................................................. 19
2.9.7 Interaction between formal and informal sector .......................................................... 20
2.9.8 The role of state in the informal construction sector ................................................... 20
2.9.9 Labour legislation and informal construction worker .................................................. 21
2.10 Summary ...................................................................................................................... 21
CHAPTER THREE .............................................................................................................. 22
RESEARCH METHODOLOGY ......................................................................................... 22
3.1. Introduction ............................................................................................................ 22
3.2. Description of the study area ................................................................................. 22
3.3. Research design ...................................................................................................... 22
3.4. Sampling techniques .............................................................................................. 23
3.5. Sampling procedures .............................................................................................. 23

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3.6. Source of data ......................................................................................................... 23
3.7. Research instruments ............................................................................................. 24
CHAPTER FOUR ................................................................................................................ 25
DATA COLLECTION AND ANALYSIS .......................................................................... 25
4.1 Introduction ............................................................................................................ 25
4.2 Response from Questionnaires .............................................................................. 25
4.3 Summary of results collected ................................................................................. 26
4.3.1 Nature and Extent of Construction activities in the formal settings that
are conducted informal ..................................................................................................... 26
4.3.1.1 Findings from municipal ................................................................................... 26
4.3.1.2 Findings from informal construction workers................................................... 27
4.3.2 Drivers of informal engagement in the formal settings ......................................... 31
4.3.2.1 Findings from informal construction workers................................................... 31
4.3.2.2 Findings from formal construction workers ...................................................... 32
4.4 Summary ................................................................................................................ 34
CHAPTER 5 ......................................................................................................................... 35
CONCLUSIONS AND RECOMMENDATIONS .............................................................. 35
5.1 Conclusions ............................................................................................................ 35
5.2 Recommendations .................................................................................................. 36
5.2.1 Recognazation of informal construction sectors .................................................... 36
5.2.2 Organization ........................................................................................................... 36
5.2.3 Legal and Policy Issues .......................................................................................... 36
5.2.4 Health and Safety ................................................................................................... 37
5.2.5 Information and Linkages ...................................................................................... 37

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5.2.6 Labour legislation and the informal construction worker ...................................... 37
5.2.7 Formulation of trade union .................................................................................... 38
5.2.8 Provision of education ........................................................................................... 38
5.2.9 Government in implementing its responsibilities .................................................. 38
5.3 Recommendation for Future Research................................................................... 39
REFFERENCES ................................................................................................................... 40
APPENDICES ...................................................................................................................... 43






ix

LIST OF ABBREVIATIONS
Abbreviations
CIB

CIP
Meaning
The International Council for Building
Research and Innovation.
Construction Industry Policy.
CRB Contractors Registration Board.
DISS Dar-es-Salaam Informal Sector Survey
GOT Government of Tanzania
ICE
ILO
NCC
NGOs

Informal Construction Enterprises
International Labour Organization
National Construction Council
Non-Government Organizations

NISS National Informal Sector Survey
STIC Study of Tanzanian Informal Contractors
Tshs Tanzanian Shillings

.

x






















xi






xii







1

CHAPTER ONE
INTRODUCTION
1.1 Background of the study
The construction industry is very important because it makes significance
contributions to the socio- economic development process of the country and it
offers a number of employment opportunities and thus enables the majority to
earn their income for basic needs in their life.
Construction in developing countries is not immune to global factors affecting
industries in developed countries yet it is more fragmented; comprising a
regulated formal part where government regulation such as registration are
adhered to and unregulated informal part where some or all of the rules are not
complied with.(Mlinga and Wells 2002).
The definition adopted at the first meeting of the CIB Task Group 29 for the
informal construction sector is reproduced as: The informal construction sector
comprises unregistered and unprotected individuals and small enterprises that
supply labor and contribute in various other ways to the output of the
construction sector (Wells, 1998).
Using the above definition, and within the Tanzanian context, informal
contractors would mean those enterprises or individuals carrying out, and
supplying labour for, construction work without business licenses and/or
registration with the Contractors Registration Board (CRB).
Development in the urban setting should be formal where the procedures in that
land are formally processed and acquired. Then the owner goes through a set of
procedures to develop its drawings, consent, permits and approvals by Local
Authorities.
Using a classification system and framework for contractors development
proposed by Milne, (1994), attempted to classify Tanzanian contractors on the
basis of their size and their informality. At the interface of informal and formal
contractors, there are established informal contractors and small emerging

2

contractors. Established informal contractors here are taken to mean those
informal contractors who possess minimum requirements to register a company
at entry level. Emerging small contractors are those that have just started
business as registered contractors. Mlinga (1999).
What is to be observed in this classification is the overlap between informal and
formal boundaries. Some established informal contractors sometimes undertake
jobs big enough to be carried out by contractors registered in formal Classes VI
and VII. Actually, the established informal contractors should be the targets of
the penalties imposed by the CRB Act on unregistered contractors. This group
of informal contractors has the resources and the capability to establish formal
construction companies, but for one reason or another decide to operate
informally Mlinga (1999).
1.2 Statement of the problem
In Dar es Salaam there are big numbers of planned areas whose development
activities are supposed to be formal but in some cases the procedures are not
followed. Instead the informal approach is being adopted and it is taking place
despite the presence of clear procedures.
1.3 Main objectives:
The main objective of this study is to assess the nature and extent of
construction activities in the formal settings that are conducted
informally.
1.4 Specific objectives:
To access the nature of construction activities performed
informally in the formal settings.
To analyze the drivers of informal engagements in the formal
setting.
To propose the remedial measures based on the findings from
objectives mentioned above.

3

1.5 Research questions
a) What are the nature and extent of construction activities
performed informally?
b) What are drivers of informal engagements?
c) What should be done to improve informal construction
activities?
1.6 Significance of study
The significance of this study is to provide the information and baseline
concerning informal construction activities conducted in Tanzania and
investigates the nature and extent of informality in formal construction setting
including the ways of improving the system.
As a result from the research, it will bring benefit to informal contractors
whereby they will be in a position to work in a good condition. Also employees
in informal sector will benefit through getting aware on the general condition of
contract.
1.7 Scope of the study
Due to the fact that the informal construction sector is large and dynamic, a
small survey covering a single area within one planned area setting in Dar es
Salaam was considered. Consequently, this study should be viewed as a pilot
study of the nature and extent of informality in formal construction setting and
the ways of improving the system.



4

CHAPTER TWO
LITERATURE REVIEW
2.1 Construction industry generally
The construction industry is a fundamental economic sector which permeates
most of the other sectors as it transforms various resources into constructed
physical economic and social infrastructure necessary for socio-economic
development. It embraces the process by which the physical infrastructure are
planned, designed, procured, constructed or produced, altered, repaired,
maintained, and demolished. Thus, the realization of Vision 2025 partly
depends on the existence of a reliable and competitive local construction
industry that is capable of delivering quality services and value for money in the
development and maintenance of the physical infrastructure (Mlinga 1998).
The industry comprises of organizations and persons who include companies,
firms and individuals working as consultants, main contractors and sub-
contractors, material and component producers, plant and equipment suppliers,
builders and merchants. The industry has a close relationship with clients and
financiers. The government is involved in the industry as purchaser (client),
financier, regulator and operator.
The goal of the construction industry development is to develop an
internationally competitive industry that will be able to undertake most of the
construction projects in Tanzania and export its services and products and
ensure value for money to industry clients as well as environmental
responsibility in the implementation of Construction projects. (Wells,1998).
The construction industry plays an important role in the economy of developing
countries .Given that it generates a substantial number of jobs this industry is
also of major social importance. However the existent labour informality
impacts in a negative way this construction sector because it is considered as
one of the main obstacles of the improvement of its quality, the increase of its
productivity and the introduction of technological innovations. (ILO, 2001).

5

2.2 Objectives of construction industry development
Construction industry development is a deliberate and managed process to
improve the capacity and effectiveness of the construction industry to meet the
national economic demand for buildings and other physical infrastructure
facilities, and to support sustainable national economic and social development
objectives, while ensuring
Increased value for money to industry clients as well as environmental
responsibility in the delivery process.
The viability and competitiveness of domestic construction enterprises.
Optimization of the role of all participants and stakeholders through
process, technological, Institutional enhancement and through
appropriate human resource development. (GOT, 1977).
2.3 Building procedures
Below is a detailed summary of the procedures to build a house in this
economy. This includes obtaining necessary licenses and permits, completing
required notifications and inspections and obtaining utility connections;
Obtain location plan from City Council Ministry of Lands
.The Requesting Agent/Person has to write a letter to the
municipality and the Land Ministry requesting for block Plan,
indicating location of the land, street, ward, city, region. Where
the plots are on unplanned area it may take more than ninety days
since it will be need to re-survey the plot and produce the location
Plan.
Obtain certified copy of the land rent receipts from the
Internal Revenue Authority. The Ministry of Lands, Housing
and Urban Development is responsible for the overall payment of
land rent and property tax, the Municipalities and Cities in
different regions have this same role.

6

Due to insufficient Technical Staff in the Ministry dealing with
Lands they have requested Tanzania Revenue Authority to assist
in the collection of property tax.
Obtain geological survey. If the requested area has a geo-survey
map it can be obtained instantly but if the area has no geo-map
done earlier, then the process can be costly but usually within 20
days this can be done using GPS systems. The cost would depend
on who would issue the geological survey.

Obtain building permit. The documents required to obtain work
permit include the following,
Architectural/engineering drawings and calculations
which include site layout and location plans, elevations,
storm water drainage, fire protection, driveways and
parking sections. All drawings should be signed by a
registered professional architect and all the detailed
structural, electrical, plumbing and engineering
installations by a registered professional engineer
Title deed document showing ownership.
Receipts of payments of land rents, statutory fees and
changes of land use if any.
Four copies of the documents must be submitted to the
City Council for planning approval for obtaining the
building permit.
The City Council distributes three of the copies of the
files to the Health Department, Fire Department, and
Planning Department, and retains a copy for itself.
Portion.
Each of these entities must approve the project. To speed the
approval, Build Company should follow up with each of these
departments directly. After these departments grant their
approval, the city engineer approves the plans, and then the City
Council must approve the application.

7

Request and receive pre-construction inspection from the City
Council officers.
Build Company must notify the City Council 7 days before
beginning construction, and within those 7 days City Council
officers should perform the inspection.
Then the construction beginning with frequently inspections
from the city Council in each stage until the end, then after
accomplishments the owner should obtain certificate of
occupation from City Council, Ministry of Land. (GOT, 1977).
2.4 Formal construction process
The formal construction process goes through various stages; that are idea stage,
initiation, design, tender/contract documentation, tendering, and evaluation of
tenders, award of tender, contract designing, construction/contract
administration, commissioning, and use of the structure/building.
At the stage when any individual start to invest, need to look on which
alternatives are there. These alternatives can go on through investigating or
construction. As the client comes up with Idea on what he wants to invest,
feasibility study should be made. Therefore, client had to select an
individual/consultant firm who is going to bring the requirements according to
the client.
The consultant has to prepare the tender document showing the requirements
and what should be done. On completing the tender preparation, the consultant
invites people interested in that project apply for tender. The consultants
evaluate the tenders and recommend the contractor to be given the job.
Normally the tender is awarded to the one with a successful tender in terms of
cost, time and quality of work. The contractor can be obtained through open
tendering, selective competitive tendering (pre-qualification or selection by
client/consultant), and negotiation. Other tendering methods include
nomination; serial tendering and design build and operate. (Mlinga and Wells
,2002).

8

An agreement between a client and the one who has been successful, that is the
main contractor is made. Based on traditional building procurement method,
there are two areas of contract. The client and the main contractor are the two
parties to the contract; other parties such as consultant, sub-contractor etc
participate in the contract as third parties. Depending on the nature of the work
the main contractor may not have all the necessary skills to undertake the whole
project. The main contractor employs either nominated or domestic sub-
contractors to execute some of the works, which are in line with their
specialization.
2.4.1 Design team
In the modern industrialized world, construction usually involves the translation
of designs into reality. A formal design team may be assembled to plan the
physical proceedings, and to integrate those proceedings with the other parts.
The design usually consists of drawings and specifications, usually prepared by
a design team including surveyors, civil engineers, cost engineers (or quantity
surveyors), mechanical engineers, electrical engineers, structural engineers, fire
protection engineers, planning consultants, architectural consultants, and
archaeological consultants. The design team is most commonly employed by
(i.e. in contract with) the property owner. Under this system, once the design is
completed by the design team, a number of construction companies or
construction management companies may then be asked to make a bid for the
work, either based directly on the design.
On the Basis of drawings and a bill of quantities provided by a quantity
surveyor. Following evaluation of bids, the owner will typically award a
contract to the most cost efficient bidder. Wells,(1998).
The modern trend in design is toward integration of previously separated
specialties, especially among large firms. In the past, architects, interior
designers, engineers, developers, construction managers, and general
contractors were more likely to be entirely separate companies, even in the
larger firms. Presently, a firm that is nominally architecture" or "construction
management" firm may have experts from all related fields as employees, or to

9

have an associated company that provides each necessary skill. Thus, each such
firm may offer itself as "one-stop shopping" for a construction project, from
beginning to end. This is designated as a "design Build" contract where the
contractor is given a performance specification and must undertake the project
from design to construction, while adhering to the performance specifications.
Several project structures can assist the owner in this integration, including
design-build, partnering and construction management. In general, each of these
project structures allows the owner to integrate the services of architects,
interior designers, engineers and constructors throughout design and
construction. In response, many companies are growing beyond traditional
offerings of design or construction services alone and are placing more
emphasis on establishing relationships with other necessary participants through
the design-build process.
The increasing complexity of construction projects creates the need for design
professionals trained in all phases of the project's life-cycle and develop an
appreciation of the building as an advanced technological system requiring close
integration of many sub-systems and their individual components, including
sustainability. Building engineering is an emerging discipline that attempts to
meet this new challenge.
2.4.2 Legal consideration and aspects
A construction project must fit into the legal framework governing the property.
These include governmental regulations on the use of property, and obligations
that are created in the process of construction.
A construction project is a complex net of contracts and other legal obligations,
each of which must be carefully considered. A contract is the exchange of a set
of obligations between two or more parties, but it is not so simple a matter as
trying to get the other side to agree to as much as possible in exchange for as
little as possible. The time element in construction means that a delay costs
money, and in cases of bottlenecks, the delay can be extremely expensive. Thus,
the contracts must be designed to ensure that each side is capable of performing
the obligations set out.

10

Contracts that set out clear expectations and clear paths to accomplishing those
expectations are far more likely to result in the project flowing smoothly,
whereas poorly drafted contracts lead to confusion and collapse.
Legal advisors in the beginning of a construction project seek to identify
ambiguities and other potential sources of trouble in the contract structure, and
to present options for preventing problems. Throughout the process of the
project, they work to avoid and resolve conflicts that arise. In each case, the
lawyer facilitates an exchange of obligations that matches the reality of the
project (Wachira, 2001).
2.4.3 Interaction of expertise
Design, finance, and legal aspects overlap and interrelate. The design must be
not only structurally sound and appropriate for the use and location, but must
also be financially possible to build, and legal to use. The financial structure
must accommodate the need for building the design provided, and must pay
amounts that are legally owed. The legal structure must integrate the design into
the surrounding legal framework, and enforce the financial consequences of the
construction process.
2.5 Registration of contractors by the CRB
Any contractor applying for registration or upgrading to a particular class will
be evaluated on the basis of the criteria set by the Board in accordance with
Section 10 of the Contractors Registration Act.
Applicants whose application has been approved by the Board will be notified
immediately by post and asked to pay within sixty days. Registration fees and
Annual Subscription fees commensurate with the Class, Type and Category of
the contractor.
Payments shall be made in Cash or by Bank Draft, Telegraphic Transfer, Postal
Order or Local Bank Cheque. Payment by cheques will only become effective
after it has been cleared by the bank and money credited to the account of the
Board. (Wells,1998).

11

An applicant who fails to pay the prescribed registration fees and annual
subscription within sixty days shall have his/her approval revoked.
Registered Contractor will be issued with a Registration Certificate within two
weeks after making payment.
2.6 Tanzania policies towards construction sector
The Local Construction Industry Study (LCIS) (GOT, 1977) was conducted to
review conditions of the Tanzania construction industry and recommend
appropriate measures that were to be taken to improve the efficiency and
capacity of the industry. The study found that:
There was a shortage of resources including building materials,
equipment, and spare parts, and skilled manpower, causing a high
dependence on the foreign resources.
Private firms controlled most of the building industry, and most of them
were small or medium size family firms with low capacities and were
often owned by non-citizens.
The construction costs were very high in comparison with developed
countries.
There were no Tanzanian standards, resulting in the common use of
British Standards and Codes of Practice, sometimes inappropriately.
There was a lack of communication between research institutions. This
also manifested itself in most institutions in the field of construction that
worked in location, with little information on what other institutions
were doing.
The LCIS concluded among others that:
There is a need to improve planning, coordinating and communication
through the establishment of a construction council.
Strengthening of the planning unit of the ministry of works.

12

The construction council was to be a forum for discussing problems and making
recommendations, and could establish task groups to tackle special problems.
The planning unit was to monitor capacities in the sector, support other
ministries with adequate statistics for planning purposes, co-ordinate long term
and annual planning on construction requirements and form the secretariat of
the construction council and its task groups (GOT, 1977).
2.7 The contribution of the construction industry to the economy
The formation of the fixed capital investment is a vital concern for the state of
the nation as it represents Investment in the future of the economy of the
country. Fixed investment usually consists of houses and infrastructures in
public and private sectors, as well as the business investment in plant and
machinery of all industries.
The concept of the gross capital stock is useful in measuring the productive
capacity of the economy. The underlying idea is that a machine or building
continues to yield the same contribution to output each year regardless of its
age, until it reaches the limit of its useful life, when this contribution falls to
zero and it is Scrapped (Ive and Gruneberg, 2000).
The construction sector constitutes about 40%-60% of Gross Fixed Capital
Formation (GFCF) in most developing countries. The proportion of investment
that goes to entirely new construction is likely to be higher than that which goes
to repair and maintenance (Ganesan, 2000). In developed countries, the
construction industry accounts for approximately one third of the total
investment in physical assets in the economy.
The construction investment can be an important public policy tool that is often
used by central and local government to accelerate development and create
employment. This decision is not the result of consumers expenditure on goods
and services, but as an investment decision, which has an effect on money
injection into the economy.

13

2.8 Overview of the informal economy
The informal sector provides low cost goods and services that are affordable to
both the low and middle-income citizens who cannot afford to pay high prices.
Intense competition keeps prices at low levels. It is an important and growing
part of the overall economy in most developing countries (Ghersi, 1997).
The informal sector in Tanzania has been growing faster than the formal sector,
and consequently providing more opportunities for employment. The informal
sector of the economy is traditionally held to have a number of distinct
characteristics, such as ease of entry, the predominance of self employment,
labour intensive production methods, low levels of organization, low
productivity and income Individuals working within the sector work in an
environment of uncertainty. However, unlike the formal economy, the sector is
highly flexible, and entrepreneurs can quickly change their activities to respond
to particular market needs (Wells, 1998).
The conventional belief that entry into the informal economy is easy is now
being challenged. Research shows that the educational background of those
operating within the sector has improved. In some sub-sectors education is
applied in vetting new entrants, and the assumption that anybody can join the
sector at any time is no longer valid.
The assumption that there are no restrictions, rules, requirements or regulations
to entry into the sector may, to some extent, be due to ignorance of the
dynamics of the sector. Since the beginning of the nineties, studies focusing on
both social capital and institutions have shown that the informal economy has
its own regulations and dynamics, including norms and rules of behavior and
operation.
Non-compliance with official and administrative requirements, such as
registration and payment of taxes, is a further characteristic of the informal
economy. Most businesses operating within the informal economy are not
registered with the government, mainly because their owners find the process of
registration not only cumbersome but also of no significant benefit. By not
registering they aim to escape the manipulation of public officials.

14

But this can backfire, as the lack of legality means that they are more liable to
manipulation. A recent study has shown that unregistered firms pay more to
public officers than those that are registered. However the payments are in the
form of bribes that do not end up in the public coffers but in individual officers
pockets (KObonyo, 1998).
2.9 Informal construction sector
The informal construction sector has been defined as comprising unregistered
and unprotected individuals and small enterprises that supply labour and
contribute in other ways to the output of the construction sector. These small
enterprises and individuals are mainly engaged in housing and building
construction activity. But it is now recognized that they also supply labour to
contractors engaged in large projects in other sections of the industry (Mlinga
and Wells, 2002).
The concept of informal employment as conceptualized (ILO, 2001) Informal
employment is defined as employment without secure contracts, worker benefits
or social protection. It comprises two basic components: self-employment in
informal enterprises; and paid employment in informal employment relations.
The self-employed, in turn, are comprised of two basic groups: micro-
entrepreneurs or employers who hire others and own account workers who do
not hire others. This gives priority in defining informality to employment status
rather than, as in earlier definitions, to enterprise characteristics. ILO further
argues that as opposed to the earlier thought, the informal entrepreneurs are not
avoiding formality, specifically registration and taxation; instead, it is the
employer who tries to avoid legal obligations, including payroll taxes and other
employer contributions. Many informal workers would prefer being formalized
if doing so guaranteed secure contracts, worker benefits, social protection, and
the right to organize.
In most developing countries, especially in Africa, it has been noted that the
informal construction sector has been growing rapidly (ILO, 2001).


15

The pace has been fast, especially during depressed economic times when
building owners often start with simple structures to provide basic shelter and
then improve the structure as time and finance permits. The work is done by
individuals and small firms that are able to adapt to the unpredictable needs of
clients, including stopping work whenever funds are not available. A large
proportion of this type of construction is residential, while others are residential
cum commercial developments. Procurement of work is mainly based on
informal, verbal relationships and agreements. (Herbert & Pickering, 1997).
In most developing countries, the informal sector has not been given the
adequate attention it deserved due to the belief that it was a temporary
phenomenon which would gradually disappear over time as the formal sector
grew and absorb more labour (Mutagwaba, 1996). It was also believed that this
sector produced and provided inferior goods and services respectively.
2.9.1 Involvement of various actors in the informal building construction
process
The informal building construction process involves three main actors; the
client, the contractor and material suppliers. The informal building process does
not involve consultants and external financiers. The client pays the costs of
materials and construction from his own savings or borrows from friends and or
family. Depending on clients financial position he/ she can afford to employ
informally one consultant.
Construction professionals like architects and engineers are sometimes involved
in the informal construction process. Their involvement is found mainly in
planned residential areas in which it is necessary to obtain building permits.
After the plans have been approved, the client engage a contractor, usually an
informal one, and a consultant may be paid to supervise the construction
informally, but normally the clients supervise construction themselves.

16

2.9.2 Informal contractors
The informal construction sector comprises unregistered and unprotected
individuals and small enterprises that supply labour and contribute in various
other ways to the output of the construction sector (Wells 1998).
Using the above definition, and within the Tanzanian context, informal
contractors would mean those enterprises or individuals carrying out, and
supplying labour for, construction work without business licences or registration
with the Contractors Registration Board (CRB).
The CRB is a statutory organization established by Act of Parliament No. 17 of
1997 and charged with the responsibility of registering and regulating activities
and conduct of contractors in Tanzania (GOT 1997). Currently the CRB
classifies and registers contractors into seven classes under five categories
namely, Civil Works, Building, Mechanical, Electrical and Specialist
Contractors.
2.9.3 Informal construction workers in Tanzania
The activities of informal construction workers in African cities are not well
understood by either the authorities or scholars, and their interests are seldom
articulated publicly. An action research project was implemented in Dar es
Salaam between 2001 and 2003 to address the issue. Its aim was to strengthen
construction workers as a group by helping them to understand the problems
that they face and enabling them collectively to identify and implement
solutions.
After much debate, the definition of informal construction workers adopted by
the project included all those working in the construction sectors that are not on
the regular payroll of contractors or of other employers. As it is now recognized
that informal construction enterprises and workers in Tanzania supply not only
labor but also materials to contractors engaged in larger projects in other sectors
of the industry, it was decided to also include producers of building materials in
the definition of informal construction workers and hence include them in the
project.

17

40 of The project carried out a broad survey in the city and estimated the total
population of construction workers at around 26,500. In the initial stage of the
research it was found that some were already associated into groups. A total of
forty-three groups of informal workers were identified involving 1400 workers.
Interviews were conducted with leaders of thirty-eight of these groups. These
groups would also be the founding members of the new umbrella organization,
TAICO. The thirty-eight worker groups selected included groups of labor
suppliers as well as construction materials suppliers. Twenty-two of them were
supplying only labor. The majority of the labor groups were comprised of mixed
trades but specialized groups were found in plumbing, carpentry, aluminum and
glass fitting, and in pouring concrete. Of the five groups supplying materials,
three were involved in crushing stones to make aggregates and the others in
selling scrap metal. A further eleven groups were selling both labor and
materials, mostly timber items, concrete blocks, and even food vending. Clearly,
some of the groups supplying construction materials own some capital and
equipment, but all of the members, including the leaders, are still regarded as
workers. Most of the groups are very far from becoming individually-owned
enterprises. The more organized and capitalized groups are organized more like
workers cooperatives (Jason 2005).
2.9.4 Characteristics of informal construction sectors
Informality in general refers to activities outside the formal rules or procedures
determined and occasionally revised by the government (Payne 1997).
The dynamics within the informal construction system differ significantly from
the formal conventional system. The formal construction sector has clients that
have access to capital funds and are able to pay the builder on demand. The
sector also has teams of professionals including Architects, Quantity Surveyors
and Engineers who oversee the design and construction of a project and act as
intermediaries between the clients and the builders. Contractors usually are
responsible for the construction and completion of the projects within a
specified time, cost and quality. There is also a formal contract agreement that
spells out the responsibilities and legal obligations of each of the parties and that
is enforceable by law.

18

The scenario within the informal construction system is quite different.
According to (Wachira, 2001), clients access to capital funds for projects is
highly unpredictable. This implies that construction time is unknown and
projects often experience a lot of stops and restarts depending on the availability
of funds. For example, a project for the construction of a three bedroom house
may take up to five years. In most cases the buildings are designed as work
proceeds and no professionals supervise projects. In some cases the design may
be done by a professional or by a draughtsman, but when it comes to
construction they are not consulted since most clients deem their charges to be
exorbitant.
The majority of such buildings are constructed with no consideration of existing
by-laws, insurance cover, and other legal requirements. Many owners of
developments do not submit their building plans together with their proof of
title to the land to local planning authorities. Since this is the yardstick used for
documenting construction work, it creates a gap between the recorded statistics
and actual construction. Wells (1988) has shown the extent of unplanned
construction in the urban areas of Kenya in the 1990s by comparing trends in
recorded building activity and cement consumption. The very significant gap is
attributed to unrecorded construction activity.
2.9.5 Informal contractors and urban housing
Informal sector provides goods and services to urban poor at affordable
costs/prices. The simple and cheap technology required for construction of
residential houses and high demand of housing in developing countries
increases the potential of the informal construction sector.
Housing in Tanzania is mainly financed from personal and family savings over
a long period, on an average of eight years (Wells, 1998). Firstly, has made
most of those wishing to construct houses look for cheap plots in unplanned
settlements and engage cheap informal contractors to construct the houses.
About 60 per cent of housing stock in Tanzania in year 1999 was found in
unplanned settlements. Secondly, it has led to the non- adherence of building
regulations.

19

According to the government of Tanzania GOT (2000) most housing in
Tanzania was constructed without reference to planning authorities even in
planned areas, and this has resulted in the construction of substandard
structures. In 1999, only 3 per cent of houses in urban Tanzania complied with
the existing government regulations (Wells,1988).
2.9.6 Markets for informal contractors
The informal contractors entrance in the construction markets has been
characterized by difficulties. Such difficulties include levels of technology,
access to market information, capital requirements, access to raw materials, lack
of track record/experience, scale of economies and customer differentiation. The
organisations controlling most aspects of entry into the market which include
the government through its regulating bodies like CRB and licencing authority,
customers, and those who set the rules of engagement within the construction
industry also provide difficulties for informal contractors entrance in the
market. (GOT, 2000).
Generally, the informal contractors do not participate in the formal markets due
to the existing regulations, which strictly prohibit their employment in the
projects because they lack capacity and they are incapable to execute such
works. (GOT, 2000).
The informal markets relate to markets with no strict adherence of formal
procurement procedures. The informal construction market at the lower end
consists of individual house developers in which no form of documentation may
be required at all, while at upper end it consists of low technology industrial or
commercial buildings commissioned in the private sector. The jobs at the lower
end of the informal markets are unattractive, and therefore a preserve of the
informal contractors. Within Tanzania context, these would consist of projects
that fall below Tshs. One million, which is the limit, set by the CRB for the
informal contractors to operate.

20

2.9.7 Interaction between formal and informal sector
Subcontracting, mainly labour only is recognized as one way in which an
informal construction industry collaborate (UHCHS, 1991), If direct links
between formal and informal sectors were strengthened, the latter would be able
to produce the much needed construction material and components and
undertake sub-contracts for the former.
The formal construction industry in developing countries depends much on the
informal sector to provide labor for activities such as mass concerting, masonry
and carpentry works. This is due to the inability or large firms to employ a
permanent labor force due to the lack of a continuous workload. The fluctuating
workload in the construction industry could be taken as a catalyst for
encouraging the development of an efficient informal construction industry
which would act as a buffer for the labor force to cater for the fluctuating
demand.
Despite the potential this sector has it is plagued by many problems, which set
limits as to what can be achieved. The basic problem is that very little
information is available on its activities; therefore it is difficult to gauge its
significance (Payne 1997).
2.9.8 The role of state in the informal construction sector
The attitude and policy of the government towards the informal construction
worker will significantly affect the magnitude and the quality of employment in
this sector as well as the influence that own-account workers, dependent
workers and microenterprises in the informal Construction Worker exert on
other components of the economy. Government policy on the informal
construction worker varies between countries and has evolved over time in
accordance with changing political ideologies and perspectives on the theory of
economic development. It does neither exist in a vacuum, nor is it related to
broader political and economic thinking among government policy-makers
(Wells, 1998).

21

The role of the state is therefore to be critical to any policy discussing among
trade union concerning the informal construction worker. It is essential that
unions develop and promote a coherent view in the relation to what economic,
legal and administrative policies, governments should adopt in relation to the
informal construction worker.
2.9.9 Labour legislation and informal construction worker
Labour legislation is an essential means of providing workers with necessary
rights and protections and socially acceptable condition of employment. The
ILO and the vast majority of countries consider that a well- governed society
required a substantial and well-conceived body of labour law on these issues
just as it requires systems of legal rules in the commercial and criminal fields.
Such rules are need to provide a framework for stability, order, predictability,
and fair and equal treatment, which are essential for productive between
employers and workers (ILO, 2001).
To most people, it would probably seem equitable and logical; that the rights
and protections provided through labour legislation should apply to all workers
regardless of whether they operate in the formal or informal construction sector.
2.10 Summary
The construction industry provides a very important contribution to the
national/local economy through its job generating ability for unskilled, semi-
skilled and skilled labour. The construction process needs inputs from other
industries and production factors like labour, land and capital.
As it has been explained above means that in most developing countries, the
informal sector has not been given the adequate attention it deserved because
they believed that this sector produced and provided inferior goods and services
respectively. So the concrete steps should be taken so as to remove such believe.


22


CHAPTER THREE
RESEARCH METHODOLOGY
3.1. Introduction
This research investigates the extent and natures of construction activities in the
formal settings that are conducted informally.
The study used both primary and secondary data. The reviewed of relevant
literature using both academic and non-academic sources was done. A search
was undertaken within libraries of academic institutions and documentation
centre of organizations focusing on the informal construction sector.
The first phase of the field research, the scoping exercise, was conducted during
the month of May 2012. During this phase, checklists of questions to be raised
and discussed with lead persons in various construction sites within the city
were developed. Then discussions with foremen, sub-contractors, contractors
and site engineers who were in charge of the various purposively sampled sites,
Municipality workers was held.
In addition, observation of the actual working environment on construction
projects and other features relevant to the study was done.
3.2. Description of the study area
The study was carried in Dar es Salaam especially in Mbezi beach and Tegeta
which are planned areas where informal activities are being held. The selection
of these areas was done so as to represent all areas within the city with the same
characteristics.
3.3. Research design
This study was of quantitative and qualitative in nature and also focus on
evaluation of investigates the extent of construction activities in the formal
settings that are conducted informally.

23

3.4. Sampling techniques
It is not possible to test, interview or observe each unit in a population under
controlled situations. Therefore, the essence of sampling tools was help in
identifying representative units from the population to represent the area which
is planned setting but the informal activities is preferred mostly.
3.5. Sampling procedures
The study limited itself to purposive sampling. Although the scoping exercise
covered a number of sites within the city of Dar es salaam, the main survey focused
on Mbezi beach and Tegeta surrounding areas. This was for a number of reasons.
Among the 10 areas covered during the scoping exercise, Mbezi beach and Tegeta
were found to have the most construction activities. At the same time, the exercise
revealed that there were a number of incomplete construction projects within Mbezi
beach and Tegeta which attracted the interest of study.
3.6. Source of data
Although field exploration was used as the major source of information, the
information was collected from respondents on their opinion regarding to
informal construction engagement in Tanzania Construction Industry. The study
used both primary and secondary data. Where by Secondary data obtained
through interview, books and research paper: Primary data were obtained by
using the following procedures;
Interview
This method involves face to face conversation with general identify clients,
informal trade contractor and formal building contractors and consultancies on
the sites and workers at Kinondoni Municipality.
Personal observation
This was done through surveying directly to the construction sites as the works
proceeded and obtained the information needed. Where by observation of the
actual working environment on construction projects and other features relevant
to the study was done.

24

Questionnaires
These methods used as a means of collecting information, where a number of
questionnaires prepared and sent to general identify clients, informal trade
contractor and formal building contractors and consultancies on the sites and at
Kinondoni Municipality.
3.7. Research instruments
The questions included the following: type of project, materials in use, tools in
use, nature of procurement, cost of project, persons employed, and terms of
employment, health safety and productivity.
The questionnaires were used to obtain specific information about the nature of
informal construction activities, why do informal construction sectors ignore
registration and operate outside of the legal framework? , why the client
preferred to build without following the formal procedures? And described how
clients satisfied on informal work in terms of time and cost?
The research process includes the following main parts to general clients. First
was to find out how building client got contractors, and what was their
contractual arrangement? Second was to analyze how did they rate the work
executed by informal contactors in terms of quality, cost and time on
construction projects; third was to identify problems they faced on construction
administration and finally to identify advantages they got when working with
informal contractors compared to formal ones in terms of labor cost and other
overhead cost, how did they purchase materials? And their mode of payment.



25


CHAPTER FOUR
DATA COLLECTION AND ANALYSIS
4.1 Introduction
The main objective of this study was to assess the nature and extent of
construction activities that are conducted informally. It also aims to analyze the
drivers of informal engagements in the formal setting.
The study used both primary and secondary data. The researchers reviewed
relevant literature using both academic and non-academic sources. A search was
undertaken within libraries of academic institutions and documentation centres
of organizations focusing on the informal construction sector.
The first phase of the field research, the scoping exercise, was conducted during
the month of May 2012. During this phase, checklists of questions to be raised
and discussed with lead persons in various construction sites within the city
were developed. Then discussions with foremen, sub-contractors, contractors
and site engineers who were in charge of the various purposively sampled sites,
Municipality workers was held.
4.2 Response from Questionnaires
A total of 27 Questionnaires were distributed to five (5) clients, ten (10)
informal labour (10) formal building trade contractors and consultancies and
two (2) people from Kinondoni municipal. Lucky enough 23 questionnaires
were brought back which is sufficient for making data analysis and only 4
questionnaires were not returned.
Face to face conversations with three (3) clients and five (5) informal labours
were done on the site. In addition, observation of the actual working
environment on construction projects and other features relevant to the study
were done.

26

4.3 Summary of results collected
4.3.1 Nature and Extent of Construction activities in the formal settings that
are conducted informal
4.3.1.1 Findings from Kinondoni Municipal
Formal construction activities consider the following procedures.
a) Establish and select activities consider the plan of the area.
b) Preparation of proposed title for the construction activities carried on the
site
c) Carry out construction activities in accordance to municipality views;
That no person shall begin the construction of building until he has;
Obtain location plan from City Council Ministry of Lands.
Obtain certified copy of the land rent receipts from the Internal
Revenue Authority.
Obtain geological survey.
Obtain building permit.
Each of these entities must approve the project.
Request and receive pre-construction inspection from the City
Council officers.
Then the construction beginning with frequently inspections from
the city Council.


d) The client should undertake procurement procedure that can be
described as the process that creates, manages and fulfils contracts
Prepare procurement documents
Obtain approval for procurement documents
Confirm that budgets are in place
Invite contractors to submit tender offers or expressions of
interest
Receive tender offers or expressions of interest
Evaluate expressions of interests
Prepare evaluation report on short listing process

27

Confirm shortlist
Invite tender offers from shortlist
Award contract
However all above procedures need to be followed for a formal construction
setting, therefore skipping some steps or not following them will determine the
extent of informality in construction industry.
4.3.1.2 Findings from informal construction workers
The following feedback have been received from the informal workers during
assessment of nature of informality
Skills and Training
Majority of construction workers (6 out of 10) are semi-skilled, while 3 are
skilled and 1 had no skills. The majority groups who are semi skilled are
masons, painters, plumbers or carpenters who gained their skills through
apprenticeship and practice largely trained by people belonging to their own
ethnic group, such individuals are relatives, friends, or people known through
different informal networks.
Therefore by having majority workers who are semi skilled affects the formality
of construction activities. Also through engaging their close relatives, the work
was not seriously taken and by so doing they have been forced to train them in
order to fulfill their family need and also to provide skills heritage to their future
generation.
Tools and Equipment
The technology used in construction is labour intensive with very little use of
plant and equipment. Labour intensive technology is used because construction
plant and equipment is expensive and out of reach for informal constructors who
do not generate adequate incomes. The workforce uses simple basic tools that
are purchased over time as funds become available.

28

The survey found that informal construction workers are exposed to machine
methods only occasionally, when contractors and/or owners of development hire
items such as concrete mixers and poker vibrators. This was further supported
by a response asking respondents to list equipment available in their sites of
work.
A total of 74 per cent out of 10 contractors listed concrete mixers and vibrators
where by 26 listed other type of equipments. Then 8 out of 10 equipment was
mostly hired, with only 2 per cent being owned by the firms. Use of these labor
intensive methods mean that the energy input in any task is relatively high.
For that reason Informal building trades contractors have no easy access to the
technological change on materials, equipment and work procurement. They
never attend Seminars, workshops or courses related to construction activities.
Most of them learn new technologies through on job training either when
working as a sub-contractor to main contractor or the trades contractor contract-
out the portion of work that himself is unfamiliar with the required technology.
Capital is also needed for them to buy equipment and tools, which will speed up
construction process and increase productivity.
Income and Method of Payment
The study found that the method of payment within the informal construction
sector is also informal. Most employees said they were paid on a daily basis (6
out of 10) while another 2 per cent were paid weekly. Only 1 respondent
indicated that he was paid monthly and 1out of 10 indicated that payment was
based on piecework.
Other comments from respondents on pay were: clients do not pay well; delay
with payment, payment does not allow savings to cater for other basic needs.
A few others had positive comments on the payment. A total of 8 respondents
out of 10 indicated that their payment was adequate to meet their immediate
needs, and another 2 respondents merely said the pay was good.

29

A total of 6 respondents noted that their payment varied in regularity and
amount, while 4 others noted that the payment was dependent on agreement
between contractors and employees.
This is quite different from operations within the formal sector, where most
employees are paid on a monthly basis. Also delayed payment caused them to
look for job elsewhere so as to meet their immediate needs.
Employment Benefits
The informal construction workers are also not entitled to any health insurance.
All the respondents interviewed in this study indicated that they do not pay any
statutory deductions such as the National Social Security Fund (NSSF) or the
National Hospital Insurance Fund (NHIF) and therefore do not benefit from
them. This leaves such employees with no form of health insurance or social
security. Consequently, they are exposed to very difficult circumstances when
they fall sick, jobless or when they retire. At the same time, all the employees
noted that they did not get any allowances, even in cases where they worked for
more than eight hours a day.
To some extent, employers exploit the large pool of the unemployed who hang
around construction sites with the hope of being employed. In such a situation,
the employers do not seem to care about employment terms.
Legality of business
As would be expected (6 out of 10) Informal Construction Enterprises had no
business licenses and/or were not registered, hence their qualifications as
informal contractors.
Whereby (4 out of 10) had licenses as building materials suppliers and had
extended their services into construction, without obtaining the appropriate
business licenses as building contractors.



30

Operating location
The researcher found from respondents that, most of the Informal Construction
Enterprises had no fixed location. 8 out of 10 of them operated from
construction sites and only about 2 informal contractors had either an office,
service workshop or storage yard.
Then for the informal construction who do not own office, contact with their
clients through telecommunication and face-to-face. Communicating through
telecommunication enables their flexibility to provide services at different
locations in the city and also serves time.
Health and Safety
The empirical survey found that the safety of employees was not catered for in
most informal construction sites. A total of 9 out of 10 sites did not have safety
measures of any kind in place and only 1 site had protective clothing. The
responses indicate that safety measures on site are not adequate. They are
limited to cautioning workers to be alert and not to come to work while drunk or
under the influence of drugs. The cautionary measures the workers are required
to take include: handling tools with care, avoiding steep and open spaces, using
ladders carefully and ensuring utmost concentration and alertness. Although
these cautions are the major safety measures on site, they are verbal and are
hardly enforced.
Informal building trade contractors do not own safety gears, and they are
negligent on health hazards as it is common to find them working with bear
hands, bear feet and without helmet even when they work at upper level of a
building.





31

Difficulties when establishing and running of business
Only the respondents addressed problems experienced by the Informal
Construction Enterprises when establishing their businesses. These were: lack of
adequate capital, difficulties in getting customers, Lack of capital equipment
,Lack of space, Difficulties in obtaining projects, Lack of financing and Lack of
equipment.
Although informal building trades contractor have been ignored and not assisted
to develop in the same way as the other sector, the study has found that, even
without the support from the government the group is growing and contributes
significantly to the market value and employment opportunities in the country.
4.3.2 Drivers of informal engagement in the formal settings
4.3.2.1 Findings from informal construction workers
Motives for establishing business
Only the respondents tried to establish reasons/motives that led to the
establishment of the businesses. These are:
Unavailability of other works (3 out of 10), provide additional income for the
family (3respondents) released from other work (2), and the business provides
good income (2).
The study reveals that informal building trade contractors are there to work as
they wish in order to have their daily bread, and the clients aim is to have their
works completed to their satisfaction. But no one regulates their business and
conducts them as to see whether they can improve productivity and quality of
finished products or not. It remains the burden to the client if the construction
work is not of good quality i.e. not done properly.


32

4.3.2.2 Findings from formal construction workers
Reasons why informal construction sectors ignore registration and
operate outside of the legal framework
The informal building trades contractors ignore registration and operate outside
legal frame work due to cost of compliance to regulatory and administrative
regime, while other ignore registration due to their ignorance.
Although informality creates jobs and generates income that might not be
sufficient to some, then through operating outside the legal frame work, people
under informality lack access to certain kind of protection that the government
might provide, such as social security. But the most important problem that
informality might face is the impossibility to grow. With lack of access to
finance and technology, the informal business might be condemned to be small
and not competitive. Some might be condemned to be poor.
The clients and contractors said that both written and verbal contracts are being
used. The reason behind from those who adopted written contracts is that the
document helped to bind both parties to the contract i.e. client and contractor on
terms of payments, amount due to contractor after every instalment being paid.
But the document did not protect either of the part from being harassed. Such
harassment is abandonment of work by the contractor and non-payment, late
payment or contractor being forced to do additional work (variation) by the
client, which are out of contract but with no additional payments.
Verbal contracts were adopted only if client and contractor knew each other
before. Again when dispute occurs, this contract information does not protect
any party to obtain his/her rights. What governs to both kinds of contracts is one
party to forgive and withdraw from the dispute after a long process of
demanding payments ends in vain.



33

Reasons for most of clients to prefer to build without following the
formal procedures
Contactors said that, reasons for the clients to build without following the
formal procedures are they tend to escape from paying charges associated with
the services offered by the consultants, lack of education particularly the
important of engaging the professionals. Also they avoid the legal construction
procedures.
Always formal procedures is expensive as you pay much for contractor
unnecessary payment such as overhead profit, government tax or when
delaying to pay you can found yourself at the court and paying penalty for
delayment to pay. Therefore the informal Trades contractors are cheap when
compared to formal contractors, they are cheap from the fact that they do not
pay taxes, and have no substantial overhead costs.
Level of clients satisfactions on informal work inform of time and cost.
For this case 3 out of 5 respondents said that the client is not satisfied on
informal work because the activities are not time framed and may results even
to more cost because the budget allocated will not be archived and the
construction work is of poor quality compared to formal.
While 2 out of 5 respondents confirm that clients are satisfied with informal
construction work because it doesnt need a pre determined time frame to
complete work that gives client a chance to interfere at any convenient time
depending of his income workflow.
Normally materials are supplied by the client in informal building trade so he is
satisfied to his work because he chooses material by considering his textures.



34

4.4 Summary
The results in findings show that informal building trade contractors are a
marginalized group by the Tanzania government due to the fact that the
government allowed them to operate but no one is aware about how they
operate, despite their good contribution they make to the countries economy.
Informal trades contractors is a group that comprise people of low skills and
income (with economical problems) that they are forced to tolerate for any
circumstance they encounter, since their intention is to earn some money
regardless of the working conditions, yet their business is not protected.


35

CHAPTER 5
CONCLUSIONS AND RECOMMENDATIONS
5.1 Conclusions
Based on the findings obtained during this research it can be concluded that 6
out of 10 sites visited, operate informally where by 4 sites operate formally.
Working in the formal sector exposes the workers to technology, skills and working
relations, which do not exist within the informal sector. Thus, formal sector
employment acts as a fertile training ground for the informal sector workforce. This
exchange should be encouraged as a means of continuous transfer of technology to
the informal construction sector.
The informal nature of work and relations within the sector has both advantages
and disadvantages. The agreements normally give the amount of money and the
completion date, but sometimes completion date is not indicated this could
cause additional cost due to unplanned time spent in one project.
The informality remains appropriate only as long as things go well. In cases of
disagreement over terms of engagement, payment or injury at work, the informal
workers cannot sue the employers. At the same time, employees cannot question
their terms of work, since it is based on verbal contract between a willing worker
and a willing employer.
Also the informal workers are excluded from provision of labour legislation and
formation of union trade and despite of their role in the construction industry
they receive minimal attention from the government.
As explained in the data analysis the drivers for informal construction sectors
are the economic being of the client and in case of workers is due to
unavailability of other works, to provide additional income for the family, and
released from other work.


36

It can be concluded that there is a need of introducing strategies in order to
promote the performance of informal workers to enable them improve the
quality of work and contribute positively towards the growth of the construction
industry in Tanzania because the informal construction workers play a leading
role in the construction of many residential houses.
5.2 Recommendations
5.2.1 Recognazation of informal construction sectors
As found that the most challenges facing the informal construction sector in
construction is their recognition in the system, therefore the researcher
recommends the statutory bodies to make regulations that will encourage these
individual to get registration.
5.2.2 Organization
Most of those working within the informal construction sector either do not belong
to any association, or belong to associations which do not engage in policy
influence. This denies them a voice to pressure their employers and other relevant
bodies for their rights. Consequently, there is need to expose construction workers
to the benefits of belonging to associations. Associations of workers would be able
to lobby and represent the workers interests; for example, in areas relating to
insurance, training, wages, terms and conditions of work. Associations can further
facilitate workers inclusion in annual labor negotiations.
5.2.3 Legal and Policy Issues
Most individuals who operate within the informal economy strive to operate
outside of the legal framework. This is mainly because of the high cost, in terms
of time and information, of complying with regulations. The Study shown that
the costs of compliance are often higher than the potential benefits. Thus, there
is a need to streamline regulatory and administrative regimes in order to
minimize not only the cost of compliance but also the time required to process
papers. This would encourage many of those operating within the informal
construction sector to comply with legal requirements.

37

This will not only generate resources for relevant authorities in terms of service
fees but will also improve the operations of the sector.
5.2.4 Health and Safety
Another key area that needs to be addressed is health and safety. There is need
to devise means of enforcing the occupational health regulations in informal
construction operations in order to reduce the exposure of workers to workplace
hazards. This calls for some education for workers, foremen and clients on ways
of minimizing the risk of accidents on site. They should be encouraged to use
work processes that reduce occupational hazards while improving working
environments and output. Further research may be needed in this area.
5.2.5 Information and Linkages
Information is an important resource which informal workers lack. Generally,
the workers do not have adequate information on market needs. This limits their
opportunities in the job market as well as their ability to bargain for better
terms. Lack of information has partly contributed to workers accepting low
wages and poor working conditions.
5.2.6 Labour legislation and the informal construction worker
Labour legislation is an essential means of proving workers with necessary
rights and protections and socially acceptable conditions of employment.
The recommendation was that our government should observe the labour
legislation; training and knowledge about labour legislation should be taught
and even interpreted in Kiswahili to make all informal construction workers
consider that the labour legislation is irrelevant to their situation and that they
do not and perhaps should not enjoy the protection and benefits provided by the
law.


38

5.2.7 Formulation of trade union
The researcher is recommending that, the informal construction workers should
formulate an organization or union that will help to integrate workers in the
informal construction work, to assist workers in the informal construction sector
so as to develop collective bargaining agreements with their employment and
that, trade union will help them to have access to health insurance.
5.2.8 Provision of education
Informal building trades contractors be given training in construction business
that will enable them prepare form of contracts which will protect them and
their clients in execution of projects.
There is also a need for organizations of informal sector workers to collaborate and
create linkages with relevant institutions such as Micro-finance institutions, Trade
Unions, Training Institutes, Universities, Non Governmental Organizations [NGOs]
and other civil society organizations. In order to devise appropriate training
programmes collaboration will be required with Professional bodies in Tanzania
such as the, The Architects and Quantity Surveyors Registration Board (AQRB)
and Tanzania Institute of Quantity Surveyors (TIQS) should also be encouraged to
support the informal construction sector.
5.2.9 Government in implementing its responsibilities
The government has everything on its hand, the problem raised is from its
officials whom some do not implement their duties as stipulated. This is another
reason why there is a myth growth of the informal construction sectors. For sure
if every organs and authorities implement his duties on the right way and time
respectively things might have gone smoothly with no one to complain.




39

5.3 Recommendation for Future Research
It is recommended that further studies be conducted to establish:
Training programme that will step by step transform these trades contractors
from poor technical background of comprehending formal documentation,
practices and procedures underlying the administration of construction
contracts adopted by most public clients in Tanzania and other developing
countries
The extent of informal relationships that exist between the client and
informal building trade contractors and the effect they have in implementing
construction projects.
The effects of informal building trade contractors on the health and safety of
construction workers in construction sites.
The quality of work executed by informal building trade contractors and
cost comparison between formal sub-contractors and informal building
trades sub-contractors for the given levels of quality



40

REFFERENCES
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Cato Journal Vol. 17 No.1 (spring/summer) 1997, Cato Institute.

Government of Tanzania (1995), Dar es Salaam Informal Sector
Survey, Planning Commission and the Ministry of Labour Youth and
Development, Dar es Salaam, Tanzania.
Government of Tanzania (1977), Local Construction Industry Study,
Ministry of Works, Dar es Salaam, Tanzania.
Government of Tanzania (2000), The National Human Settlements
Development Policy, Ministry of Lands and Human Settlements
Development, Dar es Salaam, Tanzania
Herbert C. E. & Pickering N. J., 1997, The State of Mexico's Housing,
April 1997
International Labor Organization The Construction Industry in the 21st
Century, Its Image, Employment Prospects and Skill Requirements.
Sectoral Activities Program, Geneva: ILO, 2001.

Ive, G and Gruneberg, L (2000). The Economics of The Modern
Construction Sector, Macmillan Press Ltd,UK .

Jason, Arthur ,Informal Construction Workers in Dar es Salaam,
Tanzania, Working Paper 266, Sectoral Activities Program, Geneva:
ILO, 2005.

K`obonyo, P; Ikiara, Complying with Business Regulations in Kenya, A
Benchmark Study of Trade Licensing and Registration of Business
Names Acts, 1997 1998. University of Nairobi, IDS Occasional Paper
No 64.

41


Milne, JC (1994), Guidelines for emerging contractor development,
Development Bank of South Africa, Pretoria.

Mlinga, RS (1998), Significance and development of the informal
construction sector in Tanzania, First meeting of CIB Group 29:
Construction in Developing Countries, 21-23 Sept. 1998, AICC,
Arusha, Tanzania.

Mlinga, RS (1999), Informal contractors: A challenge to Contractors
Registration Board, Paper presented in Contractors Registration Board
Annual Workshop on Registration, Regulation and Development of
Contractors in Tanzania, 18th 19th March 1999, Karimjee Hall, Dar-
es-Salaam.

Mlinga R.S. and Wells J,(2002) ,Collaboration Between Formal and
Informal Enterprises in the Construction Sector in Tanzania, Habitat
International, 26(2002).

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Kenya: Agenda for improving the policy Environment. Nairobi:
International Center for Economic Growth (ICEG).

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Social Sciences. Himalaya.

Mutagwaba, B. (1996), Private sector conditions in Tanzania Formal
and informal sectors, Paper presented in the Workshop on Income
Generation organized by SDC, Morogoro, Tanzania.

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Countries, 21-23 Sept. 1998, AICC Arusha, Tanzania.


42

Payne, G. 1997. Urban Land Tenure and Property Rights in Developing
Countries, London

Sengenge, R (2000), Increasing the share of local contractors in
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sustainable contracting capacity in Tanzania, Dar es Salaam.

Sengenberger, W. (1994),Labour standards: An institutional framework
for restructuring and development, in Sengenberger, W. and Campbell,
D. (eds.), Creating economic opportunities: The role of labour standards
in industrial restructuring. Geneva, ILO.

The Government of Tanzania (1997), The Contractors Registration Act
17, Government Publishers, Dar-es-Salaam.

UNCHS(habit),(1991) Technology in Human Settlements; Role of
Construction ,Nairobi.

Wachira Njeri Isabella. 2001. The Construction Industry in the 21st
Century: Its image, employment propects and Skill Requirements: Case
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meeting of CIB Group 29: Construction in Developing Countries, 21-23
Sept. 1998, AICC, Arusha, Tanzani




43


APPENDICES
PERSONAL INTERVIEW TO CONSTRUCTION PRACTIONERS AND
CLIENTS.
BRIEF; I am conducting a research with the title; EVALUATION OF
EXTENT OF INFORMALITY IN THE FORMAL CONSTRUCTION
SETTING IN TANZANIA. The main objective of this study is to assess the
nature and extent of construction activities in the formal settings that are
conducted informally.
The purpose of this questionnaire is to obtain information and learn from
construction expertise.
I. Please provide answers to all questions
II. The information given is for education purpose and will be handled in
confidentiality way.

SECTION A
QUESTIONS TO BE ANSWERED BY THE INFORMAL
CONSTRUCTION WORKERS
1.1HISTORY
1. Name -------------------------------------------------------------
-
2. Where do you live ----------------------------------------------
-
3. Approximate distance from site-------------------------------



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1.2 How did you join construction?
1. Through family business ( )
2. Through relatives ( )
3. Through friends ( )
5. Personal search ( )

1.3 How many years have you been working in construction? ----------------------
-----------
2.0 SKILLS
2.1 Specify your skill status
1. Skilled ( )
2. Semi skilled ( )
3. Unskilled ( )
4. Other please specify----------------------------------

2.2 If skilled type of skill
1. Mason ( )
2. Plumber ( )
3. Painter ( )
4. Carpenter ( )
5. Other please specify--------------------

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2.3 How are the employer paid?
1. Piecework ( )
2. Daily ( )
3. Weekly ( )
4. Monthly ( )
5. Other please specify-------------------------------

3.0 MATERIALS, EQUIPMENT AND TOOLS
3.1 Specify the materials in use
1. Concrete ( )
2. Timber ( )
3. Natural stone ( )
4. Iron sheet roofing ( )
5. Tile roof ( )
6. Steel windows ( )
7. Timber doors ( )
8. Other please specify------------------------------------------------------




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3.2 Who supplies the materials to site?
1. Owner ( )
2. Foreman ( )
3. Supplier ( )
4. Other please specify ------------------------------------------------

3.3 Specify the equipment available on site
1. Concrete mixer ( )
2. Vibrator ( )
3. Other please specify ----------------------------------------------------------------
--------------------
3.4 Source of equipment:
1. Owned ( )
2. Hired ( )
3. Other please specify ----------------------------------------------------------------
--------------------













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4.0 EMPLOYMENT DETAILS
4.1 How long have you been on this job? ----------------------------------------------
4.2 Specify your employment status
1. Contractor ( )
2. Subcontractor ( )
3. Self-employed ( )
4. Employee of another ( )
5. Other please specify-------------------------------------------------------
4.3 How did you get the job?
1. Through family business ( )
2. Through relatives ( )
3. Through friends ( )
5. Personal search ( )
4. Other please specify-------------------------------------------------------
4.4 Who hired you?
1. Owner ( )
2. Contractor ( )
3. Subcontractor ( )
4. Other please specify---------------------------------------------------------



48



4.5 Requirements for employment
1. Reputation ( )
2. Work experience ( )
3. Visit to previous job sites ( )
4. Other please specify------------------------------------------

4.6 Work Agreement
1. Standard written ( )
2. Written ( )
3.Verbal ( )
4. Other please specify-------------------------------------------------------

4.7 Specify the nature of payment
1. Piecework ( )
2. Daily ( )
3. Weekly ( )
4. Monthly ( )
5. Other please specify-------------------------------------------------------

4.8 Average earnings (Tshs): per day ------------- per week-------------- per
month ---------------

4.9 Do you know how the wage is determined?
1. Yes ( )

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2. No ( )
4. 10 If yes, specify?
1. Negotiation with owner/foreman ( )
2. Negotiation with labor only employer ( )
3. Negotiation with contractor/subcontractor ( )
4. Other please specify---------------------------------------------

4.11 Do you pay any statutory deduction (e.g. NSSF?)
1. Yes ( ) 2. No ( )

4.12 Do you get any allowances (e.g. medical?)
1. Yes ( )
2. No ( )
5.0 WORKING CONDITIONS
5.1 How many hours do you work per day----------------------------------------------
-
5.2 How would you rate the working conditions?
1. Not good ( )
2. Good ( )
3. Average ( )
4. Poor ( )
5. Very poor ( )


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6.0 HEALTH AND SAFETY
6.1 Who is responsible for safe working condition on site?
1. Employer ( )
2. Contractor ( )
3. Foreman ( )
4. Self ( )

6.2 Are there any safety/health regulations on site?
1. Yes ( )
2. No ( )

6.3 What safety/health measures are taken on site?
1. Education/information of workers ( )
2. Protective clothing ( )
3. Warning signs ( )
4. Other please specify----------------------------------------------------------------
--------------
6.4 Are you aware of any health/safety hazards on site?
1. Yes ( )
2. No ( )


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6.5 Have you ever been out of work because of an accident on site?
1. Yes ( )
2. No ( )

6.6. Would you like to receive training to upgrade you skills?
1. Yes ( )
2. No ( )

6.6 If yes what is your preferred method of training?
1. On the job ( )
2. In a formal institution ( )










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SECTION B
1.0 QUESTIONS TO BE ANSWERED BY FORMAL CONSTRUCTION
WORKERS

1.1 Name of respondent ------------------------------------------------------

1.2 Age of respondent---------------------------------------------------------

1.3 Gender of respondent

(a) Male ( )
(b) Female ( )
1.4 Employment status
(a) Self-employed ( )
(b) Private employee ( )
(c) Government employee ( )
(d) Other(please specify)------------------------------------------------
--------






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1. 5 Do you know about formal procedures of construction?
(a) Very much ( )
(b) Somehow ( )
(c) Not at all ( )

4.5 Why do informal construction sectors ignore registration and operate
outside of the legal framework?
(a) Cost of compliance to regulatory and administrative regime? ( )
(b) Ignorance ( )

1.7 Why do most of client preferred to build without following the formal
procedures?
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------

1.8 Do you think the client satisfied on informal work interms of time and
cost?
Yes---------No---------
. If YES explain how? ---------------------------------------------------

. If NO explain why? ----------------------------------------------------



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SECTION C
1.0 QUESTIONS TO BE ANSWERED BY CLIENTS.
1.1 Which contractor did you employ to execute your construction project?
(a) Formal ( )
(b) Informal ( )

1.2 How did you come to know him/her?
(a) You saw his/her previous work ( )
(b) through your friend/relative ( )
(c) through advertisement ( )

1.3 What kind of contractual arrangement do you adopt?
(a) Oral ( )
(b) written ( )
(c) both oral and written ( )

1.4 How do you rate the works executed by informal contractors in terms of
(a) quality ; Very good ( ) moderate ( ) very expensive ( )
(b) Cost; Very effective ( ) average ( ) poor ( )
(c) Time;; Speedy ( ) average ( ) Sluggish ( )

55


1.5 What problems do you face on construction administration?
(a) Need close supervision ( )
(b) less supervision ( )
(c) supervised themselves ( )
1.6 What advantages do you get when working with informal contractors
compared to formal one in terms of labor cost and other overhead costs?
(a) Expensive ( )
(b) Moderate ( )
(c) less expensive ( )
1.7 Who purchased the materials?
(a) You ( )
(b) Building trades contractor ( )

1.8 If you purchased the materials, how did you come to no materials of good
quality and size/specification? -----------------------------------------------------------
------------------------------------------------------------------------------------------------
1.10 What mode of payment you opt?
(a) Advance payment ( )
(b) Installment ( )
(c) After completion of work ( )



56