sample dissertation

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

SUPERVISOR’S 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.

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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

vii

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

viii

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

NGO’s

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

http://en.wikipedia.org/wiki/Drawing

http://en.wikipedia.org/wiki/Specification_%28technical_standard%29

http://en.wikipedia.org/wiki/Surveying

http://en.wikipedia.org/wiki/Civil_engineer

http://en.wikipedia.org/wiki/Quantity_surveyor


http://en.wikipedia.org/wiki/Mechanical_engineers

http://en.wikipedia.org/wiki/Electrical_engineers

http://en.wikipedia.org/wiki/Structural_engineer

http://en.wikipedia.org/wiki/Fire_protection_engineer

http://en.wikipedia.org/wiki/Fire_protection_engineer

http://en.wikipedia.org/wiki/Bill_of_quantities



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.

http://en.wikipedia.org/wiki/Building_engineering

http://en.wikipedia.org/wiki/Contract

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 (K‟Obonyo, 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), client‟s 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 doesn‟t 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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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

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No 64.

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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).

Mumbai Krishnaswami, O. R. (2002). Methodology of Research in

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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Kenya, First meeting of CIB Group 29: Construction in Developing

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

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

Countries, London

Seng‟enge, R (2000), Increasing the share of local contractors in

construction projects: options and strategies, Proceedings to Contractors

Registration Board Annual Workshops, 2000, Towards attainment of a

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

Study f Kenya. Unpublished Report for the ILO.

Walliman, N. (2005). „Your Research Project, A step by step guide for

first time researcher’. 2nd edition Sage Publications London

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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-------------------------------

44

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--------------------

45

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------------------------------------------------------

46

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 ----------------------------------------------------------------

--------------------

47

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 ( )


4.4 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 ( )


4.7 Specify the nature of payment

1. Piecework ( )

2. Daily ( )

3. Weekly ( )

4. Monthly ( )


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

month ---------------

4.9 Do you know how the wage is determined?

1. Yes ( )

49

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 ( )

50

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 ( )

51

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 ( )

52

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)------------------------------------------------

--------

53

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? ----------------------------------------------------

54

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

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