The informal sector provides goods and services to meet the gap left by the traditional institutions, which were previously formal. Small businesses and micro-enterprises predominate in the informal sector. Usually the informal sector businesses start with very low capital, with no rights to land and with little or no skills in the activities that they perform. Often the small enterprises will also give work to the self-employed people's family members. The sector's development is based on limited capital, with the family usually owning the means of production.
Apprenticeship constitutes the major way of acquiring skills and knowledge.
Most of these micro-enterprises operate on open land with no right of occupancy. Most of these enterprises are organized in clusters located in different parts of Dar es Salaam City. They perform a variety of operations including metal work, woodcarving, painting, food vending, stone crushing, wholesale and retail sale of market products, and cargo handling. Children are frequently found in the workplace accompanying their mothers, mostly among catering and stone crushing operators. Young workers, particularly those out of school, represent a large part of the labour force in the informal sector.