Navigating Informality: A Study of the Unbanked Poor in Dar es Salaam

Abstract

The intersection of informal economic structures and government policy frameworks poses significant challenges for financial inclusion and socio-economic development, particularly for street vendors in Dar es Salaam. Despite policy efforts aimed at formalizing this sector, these vendors often marginalized and operating on the fringes of the economy continue to face substantial barriers to accessing financial services and achieving economic stability. This study investigates the institutional incoherence that underpins these barriers, utilizing a qualitative methodology that includes interviews with street vendors, government officials, and financial institution representatives. Through this approach, the study provides an in-depth exploration of the lived experiences of street vendors, offering a nuanced understanding of the socio-economic dynamics that contribute to their continued financial exclusion. The research makes three key contributions to the study of informal economies and financial inclusion. Empirically, it provides detailed accounts of the challenges faced by street vendors, filling a critical gap in our understanding of their daily struggles and interactions with formal institutions. Theoretically, the thesis advances institutional theory by highlighting the failures in governance and policy that perpetuate exclusion and by proposing a framework for more inclusive and responsive institutional reforms. Practically, the research offers actionable recommendations for policymakers, emphasizing the importance of a human rights-based approach to development, the need for tailored financial products, and the potential of technological innovations to bridge the gap between formal and informal economies. By addressing these issues, the thesis not only contributes to the academic discourse on financial inclusion and socio-economic development but also provides a roadmap for creating a more equitable and sustainable economic environment in Tanzania and similar contexts.