Salient attributes of business formalisation and their influence on smes development in Tanzania: the case of retail businesses in Ilala municipality, Dar es Salaam.

The frameworks in retail sector have been endeavouring to improve urban centres sector where Small and Medium Enterprise (SME) has ineffectively been formalised. Slow pace of formalisation progress in Dar es Salaam City has mainly been influenced with incapability, unconvinced infrastructures, and unflavoured fiscal policies. Others include: irregularities of power supply; multiple taxes; fuel shortages; uneasy accessibility of funding; strong competition among retailers; and, uncertain market. Even though numerous efforts have been established by municipalities to support SME vendors, the problem related to formalisation of SME is not well itemised in reputable bodies. This study therefore assessed the salient attributes of business formalisation and their influence on Small and Medium Enterprises (SMEs) development in Ilala municipality of Dar es Salaam City. The study was designed to include the information about the extent of formalisation cost, benefits of formalisation, and support services relating with the development of the SME sector. The study was set to employ qualitative research approach which was managed by the case study. This design used purposive and convenience sampling techniques to acquire 60 respondents from Kariakoo, Machinga Complex and Mchikichini outlets. Data were collected through interview method, with structured and semi-structured techniques include: self-administered questionnaires and Key Informant Interviews (KII). The acquired data were then presented in terms of tables and narration. The Statistical Package for Social Sciences (SPSS) for Windows version 24.0 and content analysis technique were performed to analyse the obtained data. The findings of the study reveal that cost is the most influencing factor towards SMEs formalisation. This was followed by perceived benefits, while, support services had positive but weak influence on SME formalisation. This provides insights that authorities (Ilala municipality) should continue improving the SMEs formalisation progress by concentrating more on the support services factor. In the light of this study, it is recommended that Ilala municipal council and other related authorities simplify tax administration by having single tax system for SMEs. This can also be implemented through establishment of ‘One-Stop Shops’ which will be dealing with business formalisation processes so as to improve working effectiveness.