Business relationships between informal and formal traders in Tanzania: a case study of hawkers and shop operators in Dar es Salaam city.

The study explored the business relationships that exist between informal and formal traders in Tanzania focusing on hawkers and shop operators. Using qualitative approach (snowball sampling technique), in-depth interviews with the hawkers, shop operators, Municipal Councils' Trade Officers and hawkers' organisations were done as well as focus group discussions with the hawkers. Immature customer-supplier relationship is the primary relationship that exists between hawkers and shop operators in which the former buy products from the latter at lower prices than other customers. Others are advertisement and selling of the products, information sharing, marketing of defective and below standard products and tenant owner relationship. A few mature customer-supplier relationships are developed with other complementary relationships (advertisement and selling of the products and marketing of defective and below standard products}. Trade liberalisation, introduction of Value Added Tax (VAT), city authority harassments and importation of defective and below standard products were revealed to motivate the business relationships. Mature relationships are developed by social ties rather than business interactions as the latter do not guarantee the mutual trust and commitment required in them. A very few of them are developed through buying and selling interactions. Contrary to empirical findings, the informality of the hawkers strengthens the customer- supplier relationships. The study recommends policies to discourage the mature relationships since all of them are undesirable to business policies. Hawking business should be gradually transformed to formal trade. The government should implement policies that will ensure collection of affordable tax and levies from hawkers who should be fully involved in selection of areas for their business. The Tanzania Bureau of Standards should effectively control importation of below standard and defective products.