What is an Informal Sector?

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indicates that the people who are engaged in informal sector activities have a certain level of ability. This could be a kind of informal (educational) qualifications or capital acquisition involving accessibility to the sources of capital.

In the World Bank definition there is an implicit notion of class position of those who are involved in the business and the household institution itself. The definition was not only based on the social status of the people or groups involved in the business, but also on the basis of the function or role the informal sector plays in the society. Thus, there was a clear demarcation between “service” oriented informal sector activities and “manufacturing” oriented informal sector activities. Because of this demarcation the discussion centered on the “linkage”, with the “manufacturing” aspect (Leys 1974, Gerry 1974; Hirchman 1958). In Tanzania, the Small Industries Development Organization (SIDO) is trying to combine the two.

The “service” orientation of the informal sector was purposely left out because service oriented businesses which are predominately women owned/managed are considered to be of marginal significance to the national economy. In this sense, one may argue that the World Bank’s definition of the informal sector has an inbuilt gender bias. Indeed, some people devalue the informal sector because they negatively associate it with prostitution which is categorized as a type of informal business in some literature (Bromley 1978, Bujra 1975). But such conclusions, as we shall see, are based on an inadequate understanding of the causal factors which lead people to participate in informal business activities.

The multiplicity of the economic activities that are carried out by the people, either as individuals or groups, have also contributed to the multiplicity of the definitions and terminologies. But as Alessandrin and B. Dallango (1987:9) in their study on the informal sector have cautioned us, we should not look at informal economic activities as “unofficial” since they exist in both capitalist and socialist economies - although the degree and scope may differ between the two types of economies. Clearly then, the term used to describe and explain informal businesses tell us much about the social experiences as lived by the people who deal or are involved in this sector.