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1 “STRUCTURAL BARRIERS, CONSTRAINTS, AND URBAN YOUTH UNEMPLOYMENT: THE CASE OF ILALA MUNICIPALITY, DAR-ES-SALAAM ” 19 th ANNUAL RESEARCH WORKSHOP Ledger.

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Presentation on theme: "1 “STRUCTURAL BARRIERS, CONSTRAINTS, AND URBAN YOUTH UNEMPLOYMENT: THE CASE OF ILALA MUNICIPALITY, DAR-ES-SALAAM ” 19 th ANNUAL RESEARCH WORKSHOP Ledger."— Presentation transcript:

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

2 1.Introduction 2.Background to the problem 3.Specific objectives 4.Research Findings  Main elements constraining young traders enterprises to transform  Illegitimisation of Youth Enterprises  Fines and penalties  Informal payment and bribes 5.Effect on urban youth enterprises  Factors causing some youth not to acquire productive capabilities  The state of multiple deprivations to urban youth self- employment 6.Way forward and recommendations for further research Outline

3  Urban youth unemployment in Tanzania (Dar-es-Salaam and other urban areas) is increasing (ILFS, 2006)  Proportion of youth, unemployed and in rural-urban migration is increasing (Census 2002, 2012)  Urban poverty concentrated among urban youth characterised by low capabilities to transform and lack of employment (ILFS, 2006; Kweka and Fox, 2011; Awinia 2013, 2014) Background to the Problem

4 1.To assess main constraints faced by young urban people’s UHUEs [to transform] … in the wake of business formalisation and regulation of informal markets 2.Suggest ways and strategies to eliminate the constraints and have urban youth employment enhanced through [transformation of] their UHUEs Objectives of the Study

5  Main elements constraining young traders Presentation of Research Findings Type of Constraint Faced Degree of Constraint HighlyExtremely Freq.% % Lack of Business Premises Prohibitive procedures for obtaining licenses Cost of obtaining a license Fines and penalties Loss of stock and assets during eviction Informal payments and bribes Failure of the enterprise (due to the above)

6 Constraints Faced by Youth Enterprises

7 Proportion of those who were Extremely Constrained

8  Lack of business premises presents itself as a leading constraint (64.1% said were extremely constrained in this dimension)  This leads to lack of access to other opportunities for enterprise transformation  This sub-sector is important to urban youth poverty  98.8% of youth who lacked premises said the UHUEs they have was their main source of employment Key Findings

9 Business Location of Main Activity% Within own or business partner’s home-with special business space18.6 Within own or business partner’s home-without special business space9.2 Structure attached to/outside own or business partner’s house1.3 Permanent building other than home13.3 Fixed stall/kiosk-at market11.0 Vehicle cart, temporary stall-at market6.1 Other temporary structure6.4 Fixed stall/kiosk-in street4.3 Vehicle cart, temporary stall-in street9.6 Construction site1.9 Customer’s/Employer’s house0.6 No fixed location/mobile17.7 Total100 Source: NBS (2007)

10  Municipal regulations illegitimises UHUEs of urban youth without business premises  This put young urban traders at constant conflict with municipal law enforcers  Causes loss or damage of stocks/assets  48.2% (extremely) and 31.5% (highly) constrained by resulting from uncertainty over their legal entitlements and city aux. police ‘cleansing’ operations The Concept of Illegitimisation

11  Uncertainty causes low investment and therefore affects transformative development of urban youth enterprises  Combined, 95.2% of urban youth interviewed said their enterprises were negatively affected by the prevailing state of illegitimisation  The state of Illegitimacy is created by municipal business regulations, works against transformation of youth enterprises for inclusive growth The Concept of Illegitimisation-2

12  The state of illegitimacy is responsible for other hidden- costs which constrain transformation of urban youth enterprises  The degree of constraint to urban youth self-employment enterprises were high (35.3%) and extreme (29.3%) due to forced payments of fines, penalties and various forms of punishment for trading in places without a valid business license Fines and Penalties

13  Lack of business premises contributes to constraints against transformation as above  Other constraints proceeding from lack of premises include a penalty for ‘loitering’ (meaning conducting business in a restricted area), also called (“polluting the environment”) was TShs 50,000  The ‘psychological effects’ from lacking legitimacy prevent long-term investment and innovation Fines and Penalties -2

14  38.6% urban youth were forced to pay informal payments and bribes  28.6% (10,000 p.m), 19% (5,000 p.m) and 15.9% (20,000 p.m)  Rate of informal payments and bribes depended most on location Informal Payment and Bribes

15  Correlation between lack of business premises, severely affected by informal payments and bribes and those severely affected by pymt of fines, penalties and other punishments  60.5% of those who said their UHUEs were severely constrained by informal payments and bribes also said they were severely constrained by fines, penalties and other punishments Youth enterprises that lacked business premises were multiple deprived – thus constrained

16  This creates shocks, risks and vulnerabilities, thus constraining UHUE youth self-employment enterprises to transform  Poorest urban youths affected most  Among the lowest income quintile (earning 50,000/- p.m and less) 91.2% among them said their UHUEs were affected in one way or another by solicitation of informal pymts and bribes  55% among the bottom-most quintile said they were highly constrained and 26.5% severely Youth enterprises that lacked business premises were multiple deprived – thus constrained-2

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

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

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

20  88.3% of youth said they did not have business premises  Importance: 66.7% of those who did not own business premises said their UHUEs were their main source of employment  56.5% failed to transform their enterprises because they were severely constrained by (a) long, (b) bureaucratic, (c) complicated procedure for obtaining business license  Licenses were inaccessible to them – mainly because they did not own a business premises  35.1% said difficult conditions in acquiring a business license served as a severe barrier to transformation of their UHUEs. 25.2% (a big barrier). 73.9% (overall) Youth enterprises that lacked business premises were multiple deprived – thus constrained-6

21  94.6% said they were unable to obtain business premises. As a result they could also not obtain a business license  Lack of business license constrained urban youth to participate in the financial sector thus being excluded from the opportunity to transform their enterprises  45.3% (severely) and 49.2% (highly) urban youth enterprises constrained to transform by lack of banking and financial services  As a result of the foregoing, 94.4% said all the various constraining factors made them unable, in one way or the other, to conduct their enterprise (total collapse)  46.9% (contributed severely), 31.8% (to a big extent) and 15.6% (to a small extent) Youth enterprises that lacked business premises were multiple deprived – thus constrained-7

22 CONCLUSIONS

23  Municipal authorities should create more business premises for young people  35% said nothing is currently being done by municipal officials to obtain more premises  48.5% said the area where they are currently work is restricted - putting them in conflict with the law Options to reduce youth unemployment through transformative productive capabilities

24  Build-on the Open Air Market (Gulio) Model  94.5% said open air markets on pavements contributed to increasing access of premises  47.5% (to a big extent) and 26.5% (very significantly)  95.2% (contributed positively to creation of urban youth employment), 35.4% (very significantly)  64.9% favour municipal auth. to enact by-laws that would allow urban youth to trade on pavements (in the style of machingas)  22% (strongly favoured) liberalisation of the pavement sector  Such measures would contribute to enlargement of capabilities among youth to create self-employment (access to business premises- >participation in financial/banking sector ->dev. of transformative productive capabilities, innovation and efficiency) Options to reduce youth unemployment through transformative productive capabilities-2

25  64.9% favour municipal auth. to enact by-laws that would allow urban youth to trade on pavements (in the style of machingas)  22% (strongly favoured) liberalisation of the pavement sector  Such measures would contribute to enlargement of capabilities among youth to create self-employment (access to business premises->participation in financial/banking sector ->dev. of transformative productive capabilitities, innovation and efficiency) Options to reduce youth unemployment through transformative productive capabilities-2

26 1.The space and importance of low capabilities urban enterprises needs to be identified in the ongoing enterprise transformation/formalisation agenda 2.Recognise primary motivation of starting UHUEs is not enterprise development – hence formalisation /transformation for enterprise development is not their priority Recommendations

27 3.Undertake municipal reforms to foster urban youth employment/enterprise development through creation of business premises for informal enterprises 4.Need to liberalise the ‘pavement economy’ 5.Create UHUE forums/assoc to promote self-regulation 6.Future urban road construction should take into account the need to create more space for business premises for urban youth Recommendations-2

28 KNOWLEDGE GAP AND AREA FOR FURTHER RESEARCH

29  It is true that micro-enterprises are constrained to transform  The main area of constraint is capability deprivations to transform and undertake business development for more inclusive growth  The conclusion of the present study show inability of urban youth enterprises to transform is not only in the constraints and lack-of, but in capability deprivations as manifest in inequalities between capabilities of urban youth to transform Knowledge Gap

30  There are some enterprises, including youth enterprises which have been able to transform even under present conditions  The knowledge gap is: (1) “what are the key drivers behind the successful transformation of urban enterprises?” (2) “what are the main factors that make some enterprises to transform and develop while others do not?” Knowledge Gap -2

31  The present study was undertaken to contribute to knowledge development in the area of enterprise development for more inclusive growth  The study looked at how informal urban enterprises of the youth are constrained to transform  Conversely, it is equally, and even more important to look into “pathways” that have been taken by enterprises that have successfully transformed Area for Further Research

32  This approach will generate valuable lessons for policy, identify, codify and enable facilitation and dissemination of common best practices of enterprise transformation for inclusive growth  The findings will be empirical, coming from practitioners themselves, and based on facts and experience Area of Further Research-2

33 Title: Key Drivers behind successful Transformation of Urban Enterprises: Comparative study of Transformed SMEs in Carpentry and Agro-processing in Ilala District Objective:  To identify main drivers that contribute to transformation of urban enterprises Specific objectives:  Map-out pathways followed by urban enterprises that managed to transform  Identify extent that transformed enterprises contribute to urban employment creation - THE END - Objectives of the Proposed Study

34 Methodological Supplement

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

36 No.Area No. of youth in HEs to be interviewed 1. G/mboto Cluster G/mboto Cluster Mchikichini Cluster Mchikichini Cluster Total200 Sample-size

37  Purpose judgmental for qualitative interviews  Stratified sampling technique for the structured quantitative questionnaire survey  Level 1: Purposive (choice of clusters/groups)  Level 2: Random (listing of total population then choosing through simple random sampling) Sample Selection

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

39 THE END


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