Author(s)

Zacharia S. Masanyiwa^*, Erick S. Mosha, Sarah F. Mamboya

Institute of Rural Development Planning, Dodoma, Tanzania.

Social security is widely recognized as a basic human right. However, in most developing countries, majority of the population, especially in the informal sector is not covered by existing social security schemes. This paper examines factors influencing informal sector workers’ participation in the formal social security schemes in Dodoma City, Tanzania. The specific objectives of the paper are to 1) identify the type of economic activities performed by informal sector workers, and 2) analyze the determinants of informal sector workers participation in formal social security schemes. The paper draws on survey data collected from 184 informal sector workers’ through structured interviews and documentary review, and analyzed for descriptive statistics, chi-square test and binary logistic regression. The findings revealed that a relatively higher proportion female (56%) than male (44%) were involved in the informal economic activities, mainly food vending (32%), selling cereals (20%) and petty shops (18%). Only about one quarter of the informal sector workers (23%) were members of the formal social security schemes, and a substantial proportion was involved in the relatively informal schemes, such as village community banks (67%), savings and credit cooperative societies (59%) and rotating saving and credit associations (6%) as alternatives to formal social security schemes. The factors that significantly influenced informal sector workers’ participation in the formal social security schemes were sex, contribution rates, monthly income, capital and nature of the business. Given the low participation of informal sector workers in the formal social security schemes, it is recommended that deliberate efforts should be put in place to educate informal sector workers on the importance of the social security schemes, including the benefits offered by the schemes. Similarly, social security schemes should set their monthly contribution rates at a level that is affordable to informal sector workers given their relatively low incomes, and design benefits packages that fit the need of the informal sector workers.

Social Security, Informal Sector, Participation, Social Security Schemes, Tanzania

Masanyiwa, Z. , Mosha, E. and Mamboya, S. (2020) Factors Influencing Participation of Informal Sector Workers in Formal Social Security Schemes in Dodoma City, Tanzania. Open Journal of Social Sciences, 8, 229-242. doi: 10.4236/jss.2020.86020.