Abstract:
The role of the informal sector in the development process is highly recognised and acknowledged. The sector contributes significantly to the production and distribution of goods and services. It creates employment and income to a substantial number of people. The sector is, however, blamed for inter-alia, not following rules and regulations of their countries. It is also seen as missing potential benefits of formalising. There are opinions that formalising costs are higher than the benefits. The paper discusses some potential and actual benefits and costs of formalising entrepreneurship in the informal sector in Tanzania. It is concluded that the informal sector is not a problem but an opportunity. It should be allowed to co-exist with the formal sector. In case of a need to formalize, the process has to be gradual and participatory in nature.
