Dominant Factors for Informal Employment in Manufacturing MSMEs in Tanzania

A Case of Leather Industry

Abstract

Many studies about informal employment in the manufacturing sectors have attracted high research interest due
to its significant role in job creation and contribution to the country’s gross domestic product (GDP). Yet
empirical evidence indicates few studies have been conducted in the developing countries of Africa. This study
was intended to establish the dominant factors for informal employment in Tanzania's macro, small, and medium
manufacturing enterprises (MSMEs). A structured questionnaire was used to collect primary data (n = 120)
from manufacturing MSMEs in the Mwanza region. The exploratory factor analysis (EFA) and confirmatory
analysis (CFA) were performed to establish the dominant factors for informal employment in MSMEs. The
results revealed twelve (12) dominant factors for individuals to opt to work informally in the MSMEs of
Tanzania as they scored a mean value greater than 3, i.e., loaded values above 0.5 in EFA, and loaded values
above 0.3 in the CFA test. A study to explore the variables related to the gendered proportion of unemployed in
the regions of Tanzania (i.e., male and female unemployment ratio in the leather industry) is recommended.
Hence, the study findings provide critical information about informal employment in the leather industry to
policy-makers and planning instruments in Tanzania and beyond.