Cooperatives as an instrument for formalizing the informal sector : a case study of Tanzania

Abstract

Cooperative association has become an increasingly popular solution to various development issues. The most recent of these is the informal sector, which is a vast sector consisting of unregistered enterprises and informal workers. This research examines the use of cooperative association as a potential instrument for formalizing the informal sector. Since cooperatives exist in various typologies and in various sectors, they are uniquely positioned to potentially formalize informal sector enterprises. Formalization allows for those engaged in informal work to be legally recognized by the state, contribute to taxes, benefit from labour regulations, and have access to social welfare. Tanzania provides an excellent case study in which to analyze the nexus of formalization, the informal sector and the role cooperatives can play in bridging the two together.