Kariakoo reorganisation plan wins support

DAR ES SALAAM: STAKEHOLDERS have welcomed plans by the Dar es Salaam Regional Government to reclassify all businesses operating in Kariakoo, saying the move could improve access to formal shops, increase tax compliance and boost revenue collection.

The initiative follows a recent statement by Dar es Salaam Regional Commissioner Albert Chalamila that the region plans to formalise all businesses in Kariakoo and classify them according to their size.

Mr Chalamila also said the region was conducting a soft campaign to return small traders to areas previously allocated to them by the government.

Speaking in an exclusive interview with the Daily News, on Friday, Tanzania Association of Tax Consultants (TATC) Chairperson Victoria Soka described the plans as a positive strategy that could make Kariakoo more accessible and vibrant by encouraging formal business operations.

Ms Soka said informal traders had occupied key streets and access routes, including Msimbazi, making it difficult for customers to reach formal shops.

“For so long, informal small traders have been preventing customers from accessing formal shops in Kariakoo by blocking the entry routes with their businesses. It has been very difficult for customers to access the shops in Kariakoo,” she said.

She said the situation had affected sales by large retailers, consequently reducing the taxes they paid.

Ms Soka said re-allocating traders to designated areas, including the Machinga Complex, would enable them to operate smoothly while paying the required charges, increasing revenue for the Dar es Salaam City Council and ensuring the Tanzania Revenue Authority (TRA) collected the appropriate taxes.

She said formalisation would also enable TRA officers to monitor tax payments more effectively and ensure customers received receipts for goods purchased.

The initiative, she added, would strengthen Kariakoo’s position as a regional business hub serving customers from neighbouring countries, including the Democratic Republic of Congo (DRC).

Seasoned business expert Dr Sylvester Jotta of St Augustine University of Tanzania (SAUT) said formalising businesses in Kariakoo would strengthen international customers’ confidence in goods sold at the commercial centre.

“Many international buyers prefer formal businesses. As you know, today Kariakoo is like the Dubai of East Africa. They are comfortable purchasing goods from sellers who are licensed and registered,” he said.

Dr Jotta said the move could also support GDP growth by making it easier to measure the contribution of small and medium enterprises (SMEs) once they were formalised.

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However, he urged the government to address the challenges that push traders into informality, particularly compliance costs.

“One of the major causes is compliance cost, which seems to be very high, prompting many traders to opt to go informal,” he said.

He said the government should provide incentives, including access to loans, to encourage traders to formalise their businesses.

Meanwhile, University of Dar es Salaam (UDSM) Associate Professor of Economics Dr Martin Chegere said formalisation could disrupt Kariakoo’s traditional informal business ecosystem in the short term but generate notable gains in the long term if consistently enforced.

“In the long run, the government will increase tax collection and retailers will observe quality standards of their products,” he said.

Prof Chegere said the campaign would succeed only if traders were consistently engaged, laws enforced and businesses allocated to appropriate areas where they could interact with customers effectively.

“Business formalisation is not new in Tanzania. I think what has been lacking is consistent legal enforcement,” he said.

He commended the government for engaging traders on relocation plans, saying dialogue would help the two sides reach consensus on suitable locations.

Prof Chegere added that the move could also reduce the role of middlemen in Kariakoo, whom he said had contributed to price increases for some goods, including clothes.