Informal economy and development. The case of the dairy sector in Mwanza, Tanzania: Present status and possible pro-poor interventions.

Abstract

Since the liberalisation reforms in the decade of 1980s-1990s, the expansion and the "hidden" potential of the so-called “informal” economy has been constantly under examination by development researchers and policy makers.This has led to a shift in focus from banning “informal" businesses to integrating them in the formal economy. In parallel, over the last years the agriculture and the livestock sector have regained their central position in the development studies as well as the attention of the governments, since the vast majority of the population in the developing countries remains engaged in farming and livestock keeping. Specifically, the dairy sub sector has been increasingly contributed to economic growth and poverty alleviation and has brought up a significant opportunity to decrease malnutrition and hunger. The present study focuses on the case of the informal dairy sector in the context of Mwanza, Tanzania, where informal milk covers over 90% of the milk market and the government currently attempts to activate a formalisation process. The present study presents the main views on informality debate, depicts the dairy sector in the given context, evaluates the formalisation initiative and makes recommendations on possible interventions aiming at sector improvement and pro-poor development. Both qualitative and participatory methods are used and more than 100 stakeholders are interviewed for the collection of the data. The findings indicate that the formal dairy sector and the informal one are interdependent; the dairy sector demonstrates a higly untapped potential; the leading chain actors are possible entry-points for development; the enforcement of the existing regulation is low and a large part of the planned interventions have partially implemented. The re-involvement of the state in the provision of the required infrastructure, the collectivization of the operators, the promotion of microfinance and skill development programmes and the coordination of all levels of the authorities and supporting institutions are the main suggested interventions.