WORK2001 First International Conference on

Employment Creation in Development

University of the Witwatersrand
Johannesburg, South Africa, 2-5 April 2001

Work2001

THE ROLE OF STRUCTURAL ADJUSTMENT POLICIES IN THE

EXPANSION OF EMPLOYMENT IN THE BUILDING
CONSTRUCTION SECTOR IN KENYA AND TANZANIA
Jill Wells, International Labour Office, Switzerland
David Wall, Faculty of the Built Environment, South Bank University, UK

Abstract
The implementation of structural adjustment policies in many countries of sub-Saharan Africa
has impacted on the construction sector in a number of ways. One effect has been a shift in
production from the public to the private sector. Another is the liberalisation of markets and
break-up of monopolies in the building materials industries. Presenting evidence from Tanzania
and Kenya the paper argues that these changes have led to a fall in the volume of work passing
through the more formalised systems of production and an increase in activity in the informal
systems. Informal production systems use artisanal methods and are characterised by an
intensive use of labour, both in on-site construction and in the production and distribution of
building materials. This is an efficient (low cost) and appropriate way of working in a context of
capital scarcity and an urgent need for employment creation. The expansion of artisanal activity
in the informal systems is therefore seen as a beneficial outcome of economic reform. The
implications for policy are assessed.

Keywords: structural adjustment, construction, informal sector, artisanal

1. Introduction
In the past two decades many countries in sub-Saharan Africa have implemented structural
adjustment programmes. The general impact of these policies on urban labour markets is well
known - notably declining real wages, significant retrenchment of public sector workers, limited
employment growth in the formal sector and rising unemployment. An increasing number of
new urban job seekers, as well as many who were previously employed in the public sector, have
had to seek employment in the informal sector.
The construction sector, traditionally an important source of employment in African towns, has
also been affected by recent policy changes. On the demand side there have been severe cut
backs in public investment, resulting in a reduction in the number of publicly funded
construction projects and a virtual collapse of public sector housing. Significant changes
affecting the supply side include the deregulation of wages and prices, devaluation of currencies,
privatisation of enterprises in the building materials sector and the reduction or elimination of
tariff barriers on imported materials and components.
This paper charts recent developments in the building construction sector (broadly defined to
include building materials) in two neighbouring East African countries, Kenya and Tanzania. It
aims to show how the nature of employment in the sector has changed under the impact of
economic reform. It is argued that, while the immediate impact of some policy changes on
construction employment may have been negative, the longer term effect has been a dramatic
expansion of opportunities for productive employment in the sector.
It is recognised that there is a danger in attributing developments to a particular cause, such as a
change in policy. The economies of many countries were depressed prior to the adoption of
economic reforms and some of the developments examined in this paper can be traced back to
pre-reform years. To properly study the impact of policy changes we need to establish what
would have happened in the absence of the reforms (the counter-factual). We need, in other
words, to be able to compare the situation with and without Structural Adjustment Policies. This
is of course, extremely difficult to do. While being aware of the dangers, it can be demonstrated
that some developments in the construction sector are an obvious and rather direct outcome of
economic reform, while other developments may have their origin in a number of factors, of
which policy change is one.
Much of the information on which the paper is based comes from two recently completed
research projects in East Africa, both of them in the building materials field . The first project
involved tracing the commodity chains for timber from the forest to the construction sites in
four towns in Kenya and Tanzania (Nairobi, Kisumu, Dar es Salaam and Mwanza) in order to
assess the sustainability of current patterns of timber extraction. 3 The second project was a
3

The research project entitled Construction Wood Markets in Four African Towns was funded by
DGXII of the Commission of the European Communities, Research and Technical Development Programme:
Cooperation with Third Countries and International Organisations. Additional funding was received from the UK
Department for International Development. The research was led by Dr. Jill Wells and was a multi-disciplinary
collaborative venture between South Bank University-London, The Institute of Development Studies of the
University of Dar es Salaam, the Faculty of Architecture Design and Development of the University of Nairobi and
the Forest Industries Market Studies Department of the University of Agricultural Sciences, Uppsala. Further details
of the findings can be found in Wall and Wells (2000a, 2000b)

study of the environmental impacts of artisanal stone quarrying in Kenya. 4 Although neither
project was specifically directed towards analysis of employment trends (both having an
environmental agenda), during the course of these studies it became very apparent that
significant changes were taking place in the construction sector (broadly defined to include
building materials) with implications for employment. Participation in these projects also
afforded the opportunity to observe and examine recent developments in the construction sector
proper. Indeed in the capital cities of Nairobi and to a lesser extent Dar es Salaam, it proved very
difficult to ignore them.
The paper is organised into three sections. The first section focuses on Kenya, where official data
shows a sharp fall in public sector construction, particularly building construction. However,
data on cement consumption indicates that private building activity is thriving. It is argued that
the shift from public to private has been accompanied by a decline in building regulation and a
fall in the volume of work passing through the more formalised systems of production, with a
consequent increase in activity in the informal system. An attempt is made to assess the
implications for employment associated with this shift.
One of the most noticeable developments affecting employment in the building sector in Kenya
is the increasing popularity of stone blocks, which are used in place of concrete blocks in load
bearing construction or as walling in concrete frame structures. The growth in the use of stone as
a building material has paralleled the shift from public to private construction and the growth of
the informal system. In section two of the paper the linkages between these developments are
uncovered and the employment implications of the growth of the artisanal stone quarrying
industry are discussed.
In section three attention turns to timber and to Tanzania. Some of the findings from research
into the commodity chains for timber are used to demonstrate the employment opportunities
created by recent changes in the organisation and technology of timber production, following a
programme of privatisation and liberalisation in the wood industries. The concluding section
summarises the findings and assesses the policy implications.
2. The shift to informal construction in Kenya
Table 1 shows various indices of construction output in Kenya between 1991 and 1995/6. The
use of 1982 as a base year enables comparison with the early 1980s. It can be seen from the
table that there was a sharp decline in the recorded value of both public and private buildings
completed in the main towns in the first part of the 1990s. Government expenditure on roads also
declined, but subsequently recovered. The decline in building activity was a continuation of a
past trend, with public building activity in 1991 less than 10%, and in 1995 less than 3%, of what
it had been in 1982. The decline in private building activity was not quite so steep but it still fell
by 50% during the five year period and in 1995 was less than 40% of the 1982 level.
However, it is interesting to note that cement consumption has followed a rather different
trajectory. Although falling in 1993 and 1994, it subsequently recovered. Throughout the period
4

The project was funded by the UK Department for International Development and led by the Intermediate
Technology Development Group, Rugby, UK. Further details can be found in Wells (2000)

it was well above what it had been in 1982 and by 1996 it had risen to double the 1982 level.
Table 1: Real trends in Building and Construction in Kenya,1991-1995 (1982=100)
1991

1992

1993

1994

1995

1996

Private building index

(main towns)

81.7

66.2

44.5

34.9

37.6

Public building index

(main towns)

9.6

7.8

5.5

3.8

2.9

cement

193

193

154

148

184

200

Index of government
expenditure on roads

73

52.1

46.7

80.1

91.6

115.7

Index
of
consumption

Source: Republic of Kenya, Economic Survey 1996 and 1997, Government Printer, Nairobi

The expansion of cement consumption while recorded building activity is falling can only be
explained by an expansion of unrecorded activity. The index in Table 1 is derived from data on
private buildings completed in the main towns, which is compiled from details of occupancy
certificates issued by the city councils. It is a well known fact that there has been a significant
decrease in the effective regulation of new building activity in Kenya in recent years. Many
privately-owned buildings, large as well as small, are now constructed without permits and
occupancy certificates are issued for only a small fraction of the new buildings completed each
year. According to Syagga and Malombe (1995) 60-80% of the houses constructed in the urban
areas of Kenya between 1985 and 1995 were outside of the system of planning control. It seems
that the capacity to regulate private building activity has been severely diminished by a
combination of decreasing resources and corruption. There is evidence of similar developments
in other sub-Saharan countries. 5
The scale and extent of unrecorded building activity in Kenyan towns is unknown. But it could
be gauged from the data on cement consumption. From Table 1 it can be seen that between 1982
and 1995 cement consumption increased by 84% while private recorded building activity fell by
63% and public activity virtually collapsed. This means that the increase in unrecorded building
activity must have been substantial to compensate for the fall in recorded activity and the
increased cement consumption.
If all construction that takes place without a building permit is considered as informal then
there has clearly been a big expansion of informal construction activity in Kenya in the past
decade. Some authors do define informal construction activity to embrace all unplanned or
unregulated building. 6 But generally the term informal is applied to the type of enterprise
involved in the production process (small, unregistered and undercapitalised) or the employment
status of the workers (unregulated self-employment) rather than to the status of the building. The
5

see Mashamba (1997) on Zambia and URT (1997) on Tanzania. Even in Zimbabwe the system of
planning control, once rigidly enforced, is gradually being eroded ( Pritchard, 2000).
6

See, for example, UNCHS/ILO, 1995.

informal part of the construction sector, according to the usual definition, comprises individual
jobbing builders or small enterprises catering to that part of the construction market that Hindle
(1997) has called the domestic sector. Even using this definition it is clear that much of the
unrecorded building activity (as well as some that is recorded) is being implemented by the
informal sector.
In fact, we would go further and argue that the majority (by volume) of new buildings
constructed in Nairobi today (as well as in Dar es Salaam and other East African towns) are
produced through an informal system which is significantly different from the traditional
construction procurement system, established during the period of British colonial rule and used
on the majority of public sector projects. Under the traditional system, plans are drawn up by
architects and approved by planning authorities before the project is put out to tender. General
contractors then bid to complete the building, according to the architects design, for an agreed
price covering the cost of labour and materials. While the rules and regulations have evolved
over time in Britain, in most of the former colonies they have ossified and become increasingly
inappropriate. 7
The shift from public to private building and the weaker implementation of regulation has given
building owners/clients greater freedom to choose the most appropriate procurement and
production methods to construct their buildings. What they are choosing is a much more hands
on approach whereby the building owner (or his representative) buys the materials, supervises
the work and engages directly the services of small enterprises in the informal sector to provide
the labour. These enterprises may consist of a single craftsman (artisan) and his helper or a small
team of craftsmen and helpers under the direction of a contractor who is in fact a labour-only
contractor. Building plans, if required, can be purchased from architects, engineers or planners
for a small fee. These arrangements offer building owners much lower costs as well as flexibility
to build in stages if required. The purchase of materials by the client also gives him/her full
control over the money spent - while relieving the contractor of the cost, responsibility and risk
involved in materials purchase.
This method of building, which we have called the informal construction system is the same
method as that traditionally used for the construction of individual low cost houses. But in both
Nairobi and Dar es Salaam quite substantial buildings, including multi-storey buildings, (mostly
housing but also hotels, shops and other non-residential buildings) are now being produced in
this way by a myriad of small enterprises (labour contractors) and self employed workers. This
would seem to be a quite spectacular extension of informal house building methods into a new
area of the construction market. Ngare (1998) reports that an increasing proportion of private
clients are choosing to build using the informal system, either because it meets their needs for
incremental building (which the formal system does not) and/or because it offers a similar
outcome at lower cost.
The expansion of the informal construction system has clearly opened up a space for the growth
of small scale enterprises and self-employed builders in the construction sector, to supply labour
directly to private clients. But there is also evidence to suggest that much of the work let through
7

The inappropriateness of the traditional procurement system has been demonstrated by numerous authors
over the years, for example, Edmonds and Miles (1984), Wells (1986), Hindle (1998) Rwelamila et.al. (1999)

formal channels to large contracting enterprises is in practice subcontracted to firms and workers
in the informal sector. It seems that large contractors in Kenya and Tanzania have responded to
declining workloads (as contractors have done elsewhere) by disbanding their permanent
workforce and relying on subcontractors for their labour supply. Recent research in Tanzania has
confirmed that informal construction enterprises supply labour both to private clients and to
other contractors when the opportunities arise (Mlinga and Lema, 2000).
These developments are captured to some extent in published data. According to the Economic
Survey, 1996, informal construction employment in Kenya rose from 17,800 in 1992 to 31,600
in 1995, an increase of 75% in four years, while formal (private) employment increased only
slight during the period to reach 47,000 in 1995 (both sets of figures are undoubtedly
underestimates). The same source noted that the informal construction sector continued to
create more additional jobs than the modern sector (ROK, 1996:165). In Tanzania, there were
only 22,000 employees in formal construction enterprises in 1994 (URT, 1996), whereas, the
National Informal Sector Survey (URT 1991) found 163,438 operators and employees working
in informal construction enterprises (defined as having fewer than 5 employees) - although not
all were working all of the time.
The shift in employment from large (formal) to small (informal) enterprises does not in itself
indicate an expansion of employment opportunities. However, there are a number of reasons to
believe that the shift of activity from the formal to the informal system has had a positive impact
on employment.
First, observation suggests that the production methods used on-site by small enterprises in the
informal sector are more labour intensive than the methods used by larger builders in the formal
system. One obvious reason is that the small enterprises that provide labour in the informal
system do not have the capital needed to purchase equipment. There is some evidence to support
this conclusion. In their study of 405 unregistered (informal) building enterprises in four towns
in Tanzania, Mlinga and Lema (2000) found that 65% of enterprises did not own any kind of
equipment. A total of 137 respondents said they carry out concrete work for private clients but
only 21 own a concrete mixer, let alone any more elaborate equipment for mixing or placing
concrete. However, equipment can be hired and a high proportion of respondents said that they
can hire concrete mixers and vibrators, when needed, from other informal (unregistered)
enterprises. While the use of hired concrete mixers may reduce somewhat employment
opportunities on site, large numbers are still employed in carrying and placing the cement by
hand and employment opportunities are also created in the equipment hire business. 8
The second, and most important, impact of the shift to the informal construction system is the
employment generated in the production and distribution of building materials and components.
We have seen that in the informal construction system it is the building owners (or their agents)
who buy materials. Most building owners in Nairobi and Dar es Salaam today are buying their
materials and components from artisanal producers in the informal sector. In both cities there is
evidence of a rapid growth in recent years of small enterprises producing materials and
components using artisanal methods based on hand tools with simple division of labour and
8

It may also be the case that the absence of professional fees or contractors profits in the informal
construction system implies a redistribution of expenditure towards wage earners. If the absence of fees and profits
also results in a lower costs, then more can be built for any given sum, thereby creating more jobs.

little capital equipment. They can be seen in markets or along the streets producing components
of concrete (block, slabs), metal (windows, grills, gates), wood (joinery and furniture) or stone
(aggregates, blocks). Some of the items made by artisanal producers are similar to manufactured
items they are replacing: others are alternatives. Although they may be of lower quality they are
good enough, and invariably cheaper than the industrially produced item. It is reported that one
established factory producing window frames in Nairobi has been pushed out of business by the
Jua Kali producers. 9 Similar developments are reported from Zambia (Mashamba,1997)
3. The expansion of artisanal stone quarrying in Kenya
One material that has grown enormously in popularity in many towns in Kenya is building stone.
There is plenty of suitable stone for building (a soft volcanic tuff) in the Rift Valley of Kenya.
Stone blocks, produced in small quarries using artisanal methods, have been used as a building
material in Nairobi and other Kenyan towns since colonial times. However, in the 1960s and
1970s the use of stone was limited by its inability to compete with concrete blocks. Building
with stone requires large amounts of labour, both in the quarry (in excavating and cutting the
stone) and in the dressing of the stone on the building site, particularly if the specification
requires that the stone be dressed to a high standard. The relatively high level of wages (at least
for skilled labour) in the formal construction industry together with low (government controlled)
prices of cement made it more expensive to build with stone. A further factor inhibiting the use
of stone on large projects was the inability to produce large quantities of stone at short notice due
to the artisanal methods of production and lack of capital which prevented producers (typically
small and under-capitalised) from stockpiling.
However, a series of developments around the end of the 1980s contributed to a rapid growth in
the popularity of stone. First, the shift of building activity to the private sector, and in particular
the expansion of the informal system where it is common to build in stages, meant that stone
could be purchased in small quantities. Artisanal producers are better placed to meet small and
regular orders, rather than the large orders that might come from public sector clients. Secondly,
private sector clients building in the informal system tend to be less particular about the standard
of finish than public sector clients building in the formal system with its more exacting
standards. For example, private clients often choose to dress the stone on one side only, or not at
all, which significantly reduces the costs. The wages paid for stone dressing have also probably
fallen. Third, and probably the most important, was the sharp increase in the price of cement
following decontrol in 1992, which caused the cost advantage to swing strongly against the use
of concrete blocks. 10
The production capacity of the stone quarries has gradually expanded in line with demand. Stone
quarrying in Kenya is characterised by the presence of a large number of enterprises each
operating on a small scale and employing low levels of technology and large numbers of
workers. Expansion has been achieved through the opening of quarries in new areas and the
9

Jua kali (literal interpretation hot sun) is the term most commonly used in Kenya to describe economic
activities in the informal sector
10

Concrete blocks are still preferred, however, by contractors working in the formal sector. A number of
explanations are put forward, notably the smoother finish obtainable with concrete blocks and reduced need for
labour on site. Cynical observers maintain that contractors prefer to use blocks because they make the blocks
themselves and can make extra profit by cheating on the cement.

employment of more workers - an extension rather than intensification of production. This could
indicate that the existing size of quarries is optimal, given the technology employed. 11 The stone
is extracted, cut and shaped by hand, using only very simple tools, most of which are produced
and repaired by the local informal sector. The Quarry and Mineworkers Union estimated in
1996 that there may be around 200,000 quarry workers in the country as a whole, which
represents 10% of the estimated total employment in small businesses and micro-enterprises in
Kenya (Mjaria, 1997). 20,000 workers are estimated to be directly employed in quarries serving
the Nairobi market alone (ibid). Many others are employed in support activities, such as
transporting stone to markets, manufacturing and repairing tools and cooking food for quarry
workers.
The quality of jobs in the quarrying industry is difficult to evaluate as no systematic or
comprehensive surveys have been done. There are a number of different agents involved. A key
role is played by a group which is loosely called quarry owners. Most quarry owners do not
own the land on which they are quarrying, however, but only a right or concession to quarry
stone on land owned by others. Hence they are more appropriately called concession holders.
Concessions holders are generally of modest means and some 25% of concession holders in the
quarries around Nairobi are women (Mjaria 1997). 12
The concessions around Nairobi are typically 50 x 100 feet and worked to a depth of 20 to 30
feet. Each concession would employ 10 to 15 men and produce 400 to 500 running feet of stone
per day (cross section 9"x9", 6"x9" or 4"x9"). The workers are normally engaged and paid by the
concession holder. The main tasks and methods of payment are as follows:
- removal of overburden: two men work together with a shovel and wheelbarrow: they are paid
per square metre with the rate depending on the depth of overburden
- drilling holes for blasting the rock: hole are drilled manually by two men working together
using a 25 to 30 foot metal pole with steel chisel at the bottom: they are paid per foot drilled
- preparation of explosives and blasting: a licensed blaster is sometimes hired
- splitting and rough shaping the stone: two artisans plus two assistants break and roughly shape
the stone using a hammer and chisel: they are paid per running foot of stone produced: the
average production rate is around 200 feet per man per day.
- clearing waste and piling up the stones: these tasks are done by casual workers paid per day
The rates for the various tasks are set by the market. Some of the tasks require skills (although
the level of skill is said to have declined with the recent expansion of activity). The rates of pay
therefore reflect the conditions of supply and demand in the market for that particular skill. Stone
cutting skills are critical and stone cutters can earn good wages (3-4 times the minimum wage).
Research in Nairobi has shown that artisans may earn as much as concession holders (Mjaria
1997). It has been reported that in some parts of Kenya stone cutters share the proceeds from
sale on a 50:50 basis with the concession holder (Agevi and Ogero, 1990).
11

There are also two quarries producing machine cut stone, but this is a higher quality product (being
dressed on all four sides) and sells at a higher price, occupying a niche at the quality end of the market.
12

To open a quarry requires between US$750 and US$2000, mostly for working capital to pay wages for
the initial excavation and production before the first stone is sold. The majority of concession holders cannot afford
to invest in lorries to transport stone to markets, hence stone transport has remained a separate business.

It may be concluded that many new employment opportunities have been created in stone
quarrying in the past decade, with additional jobs created for stone dressers on the building sites.
While there will have been some job losses elsewhere (e.g. in the production of sand, aggregates
and concrete blocks) the higher labour content of stone production means that the gains must
have far outweighed the losses. Also the higher level of skill required for dressing stone suggests
that the jobs created in stone quarrying are at least as well paid, and probably better, than those
they have replaced.
4. Changing employment patterns in the timber industry in Tanzania
Construction activity in African towns also uses a lot of wood. Recent research into the
commodity chains for wood from the rural areas where it is produced to four East African
towns (Nairobi, Dar es Salaam, Kisumu and Mwanza) where it is consumed revealed a very
buoyant demand for wood from the building industry, as well as from furniture makers.
Some wood is used in its natural, unprocessed state as round wood or poles in traditional
construction (although this type of structure is declining in the towns). Large numbers of poles
are also used for scaffolding and as props in multi-storey construction. However, the production,
felling and distribution of poles to the markets in the towns is not the focus of this paper. While
it also creates a lot of employment, the organisation of production has not changed a great deal in
recent years and there is some evidence that it is a declining business.
Much greater quantities of wood are used in urban construction in the form of sawn timber.
Sawn timber is used in permanent applications, mainly for roof construction, doors and door
frames, window frames and other joinery. It is also used in very large quantities as temporary
support to concrete (formwork). Only on the largest buildings is there evidence of substitution
away from wooden formwork to steel, while substitution of aluminium windows and doors has
occurred in only a few high cost buildings.
Reliable figures for wood consumption in East African towns are not available. Estimates based
on field research suggest around 150,000 cubic metres of wood in the form of sawn timber was
consumed in the city of Dar es Salaam in 1998 in construction and furniture making.
Approximately one third was hardwood from the natural forest and two thirds softwood from the
industrial forest plantations. Ten years ago a much higher percentage would have been
hardwood, but in the past decade there has been substitution of hardwood by plantation softwood
in Tanzanian towns and the process is on-going.
The past decade has also seen a fundamental change in the wood supply systems, from an
integrated structure dominated by the public sector, to a much more fragmented structure
characterised by many small enterprises linked by an even larger number of agents. Early
sawmills in Tanzania were established by European or Asian entrepreneurs, to saw hardwoods
from the natural forest. The government entered the arena in the 1970s nationalising many
privately owned mills and establishing new ones. Most new mills were in the softwood
plantations which were then reaching maturity. Government also established industries on the
basis of plantation timber, producing pulp and paper, chipboards, fibreboards, plywood,
furniture etc. All of these, together with the sawmills, were operated by Tanzania Wood
Industries Corporation (TWICO), which had a virtual monopoly of production and distribution.
As recently as 1994, 90% of the sawn softwood timber on the market was supplied by TWICO

(Mungure, 1994).
However, TWICO mills and factories are today, without exception, in financial difficulties. Most
are for sale. Some that have been sold have ceased production, while others are struggling to
survive. 13 The major difficulty is the high operating costs due, in part, to the legacy of overmanning that is usually associated with public sector enterprises, but also to the type of
machinery and equipment, which is automated and stationary and seems more appropriate for a
high wage, industrialised economy than for a country where wages are low and the industrial
base undeveloped. These older, capital intensive, stationary sawmills are today unable to
compete on price with the many new local entrants to the sawmilling business, who are using
small mobile saw benches or pitsawing techniques, both of which make use of low labour costs
and save on transport cost by moving production to the trees.
The greatest competition to the established producers comes from the pitsawers. A comparison
of costs of producing timber by pitsawing or by machine revealed a clear cost advantage in
favour of the former. This is passed on to the consumer, with pitsawn timber selling in Dar es
Salaam at around two thirds of the price of machine cut timber. For this reason it is preferred by
the vast majority of building owners in the growing informal sector and by many formal
contractors as well.
While pitsawing is increasingly important in the plantations, in the natural forest it is rapidly
becoming the only production method. An added factor here is the diminishing availability of
preferred species which means that trees are being cut in more and more remote areas of the
forest that can only be reached on foot. Sawing the trees in situ and carrying out the sawn
planks by hand (or bicycle) is often the only feasible method of exploitation.
A variety of agents are involved in the production and distribution of pitsawn timber. The main
participants are the pitsawers who fell the tree and saw it into planks using a simple, two handed
saw: casual labourers who are sometimes employed to undertake ancillary operations such as
clearing the ground and digging the pit and who also carry the timber to the nearest road or
railway, either by hand or by bicycle: and variety of traders , or agents working on their behalf,
who buy and sell timber and arrange transport to the town.
Some pitsawers operate independently, going in pairs to the forest, locating and sawing a tree
and selling the wood to traders on the spot or to furniture makers in nearby towns. However, a
key coordinating role is often played by pitsawing contractors, who serve as a link between the
pitsawers and labourers who do the work and the customers who buy the timber. The
relationship between pitsawing contractors and individual pitsawers varies, but generally the
contractor will obtain the license (if any), provide the pitsawers with equipment (saws), food and
medicine and pay them a fixed rate for each piece of timber produced. The pitsawers, however,
are generally not paid until after the timber has been sold. Hence the capital required to finance
the operation is partly provided by the pitsawing contractors and partly by the pitsawers
themselves, through the provision of their labour.

13

Amongst the newly privatised mills struggling to survive is Sao Hill Timber, the biggest sawmill in the
country which is now under Norwegian management

Analysis of rates of pay and productivity of pitsawers working for pitsawing contractors and
sawing timber in the natural forest in 1999 revealed earnings of around US$ 2-3 per day. Rates
are set by the market and were reported to be lower in areas where pitsawing is declining and in
the plantations, where there is a surplus of pitsawers, but considerably higher in regions where
pitsawing is expanding. Everywhere earnings from pitsawing are well above the 80 cents or so
paid to casual labourers in sawmills. Pitsawing contractors operating a number of saws (10 was
not uncommon) earn much more and those who also deal in timber are able to accumulate on a
significant scale.
It is interesting that despite significant accumulation, we found no evidence of pitsawing
contractors choosing to invest in machinery and equipment, such as small mobile sawmills. In
fact all the evidence suggests that the trend is the other way. For example, we found in Kenya a
sawmill owner with fully operational equipment who was employing pitsawers to saw softwood
by hand on the premises. These observations indicate that entrepreneurs are not forced to adopt
labour intensive techniques simply because they lack the capital required to invest in equipment,
but rather that the adoption of pitsawing is a conscious and rational choice, given the current
relative price of capital and labour.
Clearly the move to pitsawing is creating a large number of jobs in the timber business. The
additional employment created can be assessed from a comparison of labour productivity in
sawmills with that of the pitsawers. Data from 8 sawmills located in the plantations and sawing
softwood showed an average output per person employed ranging from 0.2 to 0.33 cubic metres
of sawn timber per person per shift. This means that the number of person days required to
produce one cubic metre of timber is somewhere between 3 and 5. Pitsawers, on the other hand,
produce between 0.06 and 0.07 cubic metres per day sawing softwood in the plantations. Hence
to produce one cubic metre of wood by pitsawing will require between 14 and 17 person days.
It may be concluded that pitsawing of plantation softwood produces roughly 4 times more
employment than sawmilling. The means that the 100,000 cubic metres of softwood sold in Dar
es Salaam each year would generate 400,000 man days of work if machine sawn but 1,600,000 if
hand sawn.
Pitsawing operations in the natural forest are even more labour intensive. With output varying
between 0.044 and 0.059 cubic metres per person per day, it will take between 17 and 23 person
days to produce one cubic metre of sawn timber. At least as much labour again would be
required to carry the timber out of the forest. At these levels of productivity, production of the
50,000 cubic metres of hardwood timber consumed each year in Dar es Salaam would generate
one million man days of work for pitsawers and an equal number of man days for casuals
carrying timber to the roadside or railway.
5. Conclusion
The developments described above are specific examples, drawn from two countries in East
Africa, of what are believed to be much more general trends. The major developments are
summarised as follows.
First, there has been a shift in building activity from the public to the private sector, which has
been accompanied by an expansion of activity in the informal system. The informal construction
system is characterised by a much closer involvement of the building owners or clients in the

production process. Clients provide materials and employ directly the building workers, who
may be individual artisans or small groups working under a labour contractor. Observation
suggests that the production methods used in the informal system are more labour intensive than
the methods used by larger builders. Hence it may be concluded that the shift from the formal to
the informal system of building is accompanied by a change of technology towards one that is
more intensive in the use of labour.
Secondly, quite dramatic changes have been observed in the organisation and technology of
production in the building materials industries. In African countries the industrial base is
fragile and production costs high. This is particularly so in countries such as Tanzania where
industries were established and run by government and operated behind high protective barriers.
The opening up of these economies has left many industries unable to compete. In the building
materials sector competition comes not (as might be expected) from imports but from similar or
alternative products produced by small enterprises in the informal sector. The growth of small
enterprises producing building materials and components (blocks, grills, doors, windows etc.)
using artisanal methods is very evident in the cities. But the paper has shown that some of the
basic materials from which these products are made, notable timber and stone, are being
produced by similar methods in other smaller enterprises located in the peri-urban and rural
areas.
Structural adjustment policies would appear to provide a part of the explanation for the
expansion of artisanal production methods in the building materials sector - as well as for the
shift from public to private, formal to informal construction systems. On the supply side,
privatisation and deregulation have opened up markets previously occupied by monopolies, cuts
in the civil service have pushed able people with some capital into business, while depreciation
of local currencies and deregulation of wages have altered the relative price of capital and
labour, leading to the adoption of more labour intensive technologies. On the demand side,
reductions in public sector spending, retrenchment within the salaried section of the labour
market and increased self-employment have redistributed spending power and consumer
demand. In the rapidly expanding private market the bulk of demand is for buildings that can be
supplied at low cost. It is partly because the quality requirements are less stringent in this market
that building materials and components (rough cut stone or hand sawn timber) made by artisanal
methods are able to compete.
The shift towards artisanal production suggests a new model of industrial development in
African countries, one which is based on a more genuine form of import substitution (compared
with import replication of past models) and which offers wider opportunities for participation,
with important implications for income distribution, poverty alleviation and human capital
development . The labour intensive nature of activities creates income and employment for a
large number of semi-skilled and unskilled workers, with substantial multiplier effects to the
wider community. Other benefits include widespread acquisition and development of technical
and managerial skills and familiarisation with market processes, which may provide a basis for
further industrial development with more complex technologies in the future.
These developments are seen as a beneficial outcome of economic reform. However, they are not
always perceived in such a positive light. Small enterprises and individuals operating in the
informal systems are under pressure from a number of directions. Notably from the construction
professions who see their livelihoods being eroded by the breakdown of the old formal structures

and institutions regulating activity in the construction industry. Also from environmentalists
who protest at the felling of trees or digging of quarries and forget that shelter is a universal need
which cannot be met without some impact upon the environment. Hostility also sometimes come
from government officials who find that they cannot control the new production systems as they
did the old, with a consequent erosion of the tax base.
There are a number of implications. First, it is important that all concerned (governments,
donors, NGOs etc) recognise the positive contribution to economic growth and poverty
alleviation brought about by the development of the informal production systems. The second
priority is to formulate policies that will support the agents involved in the informal systems
while finding new and innovative methods of regulating where regulation is needed - for
example to protect the health and safety of workers and consumers in the towns or to ensure a
sustainable flow of resources from the countryside. The attention of academics and
professionals in the construction sector is drawn to the urgent need for research in this area.
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Contact details:
Jill Wells, Construction Specialist
International Labour Organisation
CH-1211 Geneva 22, Switzerland
David Wall
Faculty of the Built Environment, South Bank University
Wandsworth Road, London SW8 2JZ, UK