Why Informal Businesses Are Raking More Incomes Than Private Sector Employment

Finding, exploiting, or creating an opportunity is art, and keeping one's mind open means more than just thinking outside the box for African entrepreneurs. Forms of economies, social structures and political frameworks are the post-colonial scars that completely changed the face of the African way of life. 8-5PM jobs became the culture as rural to urban migration quickly became the trend. Obviously, the pursuit of happiness was now directly tied to experiencing the city lifestyle, attaining hierarchy in the government, and keeping up with global trends such as the fancy cars of the era.

It has been more than half a century of conditioning now (i.e. in countries like Tanzania that got their independence in the early 60s). And the African must really think whether the tie, the cufflinks, the ironed collar, buttoned blue shirt and occasional meals at Serena Hotel events is the key to financial freedom or just a glorified form of slavery.

Part of the original intent of taking my MBA, I have constantly sought the truth about the business environment of Tanzania, and found myself prying into small businesses to know how much their take-home is, on the best and on the worst days of business. These businesses are often not built for scale, but why do you need scale when sustainability works for you? My intent was know the real math behind these businesses. When you find out that a notable number of boda boda drivers today are well educated graduates of the best universities locally, you would be both worried and astonished.

The humble business of squeezing juice out of sugarcane is another number cruncher in the banks of many solopreneurs. It's a street business and many pedestrians, including myself, have enjoyed the taste of the natural juice that's iced with a mixture of lemons and sometimes ginger. Little did I know that a couple of 1.5meter long sticks of sugarcane, say 40, can be worth a total of $4 (this is especially true when the supplier is yourself or someone who grows the crop himself). The sticks are juiced into cups with a squeezing machine, that consumes little electricity, and then sold at a day profit of no less than $18. I said profit, not revenue.

Need I say, if your conscious is not besotted yet, that this 'low class' business earns you more in a month than uber driving does. A $15 take home at 10PM is already what the average driver can call a good day. But it doesn't stop there...

Suppose you work 26 days a month, you're earning from your juice hustle roughly $500. This is higher pay compared to the average salary of a degree holding employee in Tanzania, whether it's a school teacher, accountant, lawyer, doctor. Take note, I am not saying that self employment is for everyone. If it's not for you then good, learn about bonds and investments, this allows you to remain employed while your income is partly used to generate a secondary income. You can't expect to get rich while trying to fulfil another person's dreams. It is either you have a business of your own or a side hustle of financially investing in other businesses.

And of course, other factors come to play when we talk business. Inflation can affect sugarcane prices and your location can subject you to irregular demand. But if you can pay yourself more, why stick to a desk and presumptuously wait 3 years for your boss to promote you? Why not learn to save and create more business from your first? The luxurious appearance of blue collar jobs have kept us boxed in from pursuing more profitable means. Wearing the white man's tie and getting to office in style has been preferred as it gives a sense of professional status but at the expense of better pay, freedom of schedule, and the chance to go to prayer meeting on Wednesday evening without having to ask some CEO for permission.

I had once gone to get my laptop bag reinforced by a shoemaker friend of mine. I returned for the fixed bag the next day and negotiated to pay him near half his asking price. He agreed and now I had to take off my wallet and find out that I did not even have the half. Fortunately, I was able to pay through mobile money, borrowing a little M-Pesa amount that I can easily pay off later. The shoe maker jokingly asked if I was sending 1m ($450) to his phone. I joked that I hadn't remembered the last time I withdrew such an amount.

The casual talk went on as I inspected the bag. And he said something profound before I left; that the thing with poor persons is the condition of poverty that they have cultured themselves into, that it is so difficult to get them out. If you were to offer the average poor man $450, he'd blow it in a few days so that he can return to the condition he knows best. The low-mid income person is likewise the same. He/she will contribute lots of money to one day events such as weddings of friends and relatives, leaving some cash in the account until the heart has consumed the will power and that too with withdrawn.

Could this be the reason why investors would rather throw billions to renovate a burning old gothic building in Paris (speaking of the Notre Dam incident in 2022) than donate the money to poor Africans that struggle for basic needs? Objectively, they know that higher returns can be expected from a building that has more tourist visits than the Eiffel tower, compared to a class of people that have been receiving international aid for more than 60 years post-independence, being proven time and again to make no meaningful improvements or yield notable returns. There needs to be thought-through, transformational, and institutionalized deliberations by government to shift the mindset of the regular citizen towards capitalistic ends. This will serve the poor man better than demonizing capitalism as though 'ubuntu' and the former cannot coexist.

I am convinced, as should you be, when I look at some local farmers banking on applied industry knowledge and sheer honesty, mechanics diligently with their own garages, poultry farmers signing checks for their smelly chickens, and intermediaries and suppliers adding value to their raw materials. If you look closely, you will find that they not only drive the economy; they drive SUVs and German cars too.

I will quote you three things from the most credible masterpiece: 'Humble yourself', 'do not despise humble beginnings' and lastly, 'in all labor there is profit'.