In South Africa, the idea that the township economy needs to be ‘revitalised’ has begun to gain significant political traction. The Gauteng provincial government has responded to this challenge by setting out a strategy that promises to channel resources and create opportunities for micro-enterprises. The paper responds to development interventions such as this through interrogating the nature of the challenges facing micro-enterprises that need to be overcome in South African townships.
In response to the developmental need to stimulate micro-enterprise growth in South African townships, the paper poses the question: what approaches are most likely to have a positive impact on township businesses, given current micro-enterprise dynamics?
Primary research was undertaken in two neighbouring townships in Gauteng province, in Ivory Park and Tembisa.
The data comprises a geospatial census of enterprise activities, a survey of select firms and qualitative interviews with business owners. The research utilised a small-area census approach to obtain data on business activities within an area of approximately 2km2 in each site. The census enumerated 2509 micro-enterprises in Ivory Park and 1722 micro-enterprises in Tembisa. Firm interviews were conducted with business owners in four sectors: grocery retail, liquor retail, hair care and early childhood development centres.
The business census identifies a strong similarity in the structure of the townships’ informal micro-entrepreneurship despite the considerable differences in the socio-economic status of the respective case sites. The enterprise survey highlights the resource constraints of township businesses and thinness of local markets. Interviews with entrepreneurs reveal four main pathways through which individuals enter into self-employment with the most dynamic enterprises established by inward investing entrepreneurs. Spatial considerations exert an influence on the position of enterprise sectors, whilst access to land and business infrastructure are notable constraints.
Reflecting on the evidence, the paper concludes with making a call for a more low-geared development approach, focusing on lessening the legal, institutional and regulatory obstacles to enterprise growth as a first step. Municipalities have an important role in liberalising the spaces and places where township informal enterprises can and should be permitted to trade as well as creating a more favourable business environment. The challenges of crime and finance demand more purposeful action from the national government.
In South Africa, the idea that the township economy needs to be ‘revitalised’ has begun to gain significant political traction. For a while it had seemed as though the informal economy
This paper seeks to encourage reflection on the kinds of enterprise development interventions that might be possible, or indeed feasible, in urban townships. To explore such possibilities and practicalities, the aim is to examine actual informal micro-enterprise activities, their scope and scale, and the reported challenges of doing business in two specific township contexts in Gauteng, namely in the settlements of Ivory Park and Tembisa. The paper seeks to address questions about what business activities occur, where people conduct business, how entrepreneurs enter into the township informal economy, what challenges they face and how they respond to these issues. The emphasis in this paper is on the geographical context of the township, rather than on the size of the businesses operating therein – although most of the businesses in this study are ‘micro’ in size vis-à-vis assets and employment criteria – or the position of the enterprise relative to institutional processes of regulation. Our perspective includes micro-enterprises that are partially or fully legal and those that are illegal, and engaged in both licit and illicit activities.
There is a wide literature on informal micro-enterprises, and considerable research has focused on the South African context. Macro studies, drawing on nationally and regionally representative data sets, such as the Statistics South Africa Quarterly Labour Force Survey (QLFS), or independent surveys such as the one undertaken by the Finmark Trust (FinScope
Sector-specific studies, using qualitative and/or quantitative methods, have sought to examine entrepreneurial and firm dynamics (including resource allocation) and motivational considerations amongst township entrepreneurs. These include writings on grocery retail outlets (spaza shops) (Ligthelm
Counter to the concern with slow or little growth amongst survivalists, Neves and Du Toit (
Area studies have sought to understand the influence of the specific socio-political and urban context on enterprise activities (or absence thereof). These include the World Bank–funded study of the Diepsloot township economy (Mahajan
South African researchers have devoted little attention to understanding the impact of the institutional context on township business development. Research in the Global North recognises the polycentricism of policy approaches (especially differences between national and local levels) with respect to the institutional process of business regulation and divergences in enforcement in stimulating informal entrepreneurship (Webb et al.
The paper now turns to the two case sites to examine entrepreneurial constraints facing township micro-enterprises. The paper is structured into four further sections. Firstly, the paper introduces the case sites, providing an overview of their contrasting histories and demographic profiles. Secondly, we detail the methods utilised to gather data through an enterprise census and qualitative firm survey. Thirdly, the article examines the results. We first highlight the surprising similarities between the two case sites in the range of enterprises and their distribution. We then distinguish the different pathways that entrepreneurs have taken to establish their business. Then we describe the main obstacles that micro-enterprises confront. Fourthly and finally, the paper takes a sober reflection on the question posed at the outset: what developments are achievable given the business dynamics identified? The paper concludes with making a call for a more low-geared approach to township economic development, focusing on lessening the legal, institutional and regulatory obstacles to enterprise growth as a first step.
The case sites are portions of two adjoining townships: Ivory Park, which falls into the City of Johannesburg, and Tembisa, which falls into the City of Ekurhuleni. Our focus is on the sub-place areas of Section 2 and Section 5 in Ivory Park and the neighbourhoods of Entshonalanga, Umnonjaneni, Moedi, Khatamping, Endayini, Umfuyaneni and Umthambeka in Tembisa. In both cases, the research sites measure approximately 1.6 km2. The two townships are situated in Gauteng province. In topographical terms, the sites are divided by a small stream, though share a common spatial geography in relation to the broader metropolitan area. In their settlement histories, layout and demographic profiles, Ivory Park and Tembisa differ significantly. In the spatial segments under examination, there are no formally established markets. Instead, businesses have silently ‘encroached’ (Bayat
Ivory Park is a post-apartheid township. It was established in 1996 on a site at which an informal settlement had emerged (Mahon
Despite their dissimilarities (historical, spatial, demographic and structural), the two settlements share similar characteristics in socio-economic profiles. Unemployment is high (31.4% in Ivory Park and 34.5% in Tembisa, narrow definition) and spatially distributed across both sites. In terms of income distribution (using the 2011 StatisticsSA census data, categorised in quintiles), about one-fifth of households report ‘no-income’, 34% – 40% earn between R9600 and R38 000 per annum, and a further 24% – 34% earn between R38 001 and R153 800 per annum (see
Ivory Park and Tembisa, comparative socio-economic indicators.
Site | Total population | Total households | Female population (%) | Population in informal settlements (%) | No-income (%) | R1–R9600 (%) | R9601–R38 200 (%) | R38 201–153 800 (%) | R153 801–R614 400 (%) | Above R614 001 (%) |
---|---|---|---|---|---|---|---|---|---|---|
Ivory Park | 45 453 | 19 146 | 46 | 13 | 22.6 | 10.6 | 40.61 | 24 | 2 | 0.2 |
Tembisa | 41 673 | 10 467 | 49 | 4 | 19.5 | 7.7 | 33.94 | 34 | 5 | 0.4 |
Ivory Park accommodates a substantial community of migrants and immigrants. The census data indicate that 29% of the population gave their home language as Xitsonga, isiNdebele and other, thus potentially including Mozambicans and Zimbabweans. Some of the new settlers reside in shack settlements, which accommodate 13% of the population in Ivory Park, although most migrants and/or immigrants are accommodated in single dwelling ‘backyard’ structures built by the house owners who have thus acquired a highly profitable and reliable income stream.
Field research was undertaken over the period May 2012 – August 2012. The research formed part of a project to study the township informal economy in various localities.
The data from the census were extracted from the geographic information system (GIS) devices and compiled into a data set. Based on preliminary enterprise categorisation, field notes and photographs, each entry was classified into one of 34 categories of business activities (reflecting the goods and services provided; not industrial classifications which are inappropriate in their aggregation; see Wills
The results of the enterprise census are summarised in
Summary of enterprise census results.
Site | Variable | Data |
---|---|---|
Ivory Park | Total enterprises | 2509 |
Enterprises per 1000 population | 55.1 | |
Enterprises per 100 HHs | 13.1 | |
Percentage of enterprises on the high street | 31.9 | |
Tembisa | Total enterprises | 1722 |
Enterprises per 1000 population | 38.4 | |
Enterprises per 100 HHs | 9.0 | |
Percentage of enterprises on the high street | 34.0 |
HH, Household.
Though there are more micro-enterprises in Ivory Park than in Tembisa, the structure of the neighbourhood economies is not substantially different. This is a surprising result given the differences between the two settlements.
Ivory Park, enterprise activities per 1000 people.
Tembisa, enterprise activities per 1000 people.
The small-scale of micro-manufacturing, relative to all activities, might be anticipated, though the significance of the sector should not be overstated. Most of the businesses were artisanal producers, making items such as burglar bars and gates, cupboards, prefabricated ‘zozo’ huts, beds and mattresses made with recycled springs, dresses and shoes (particularly in ‘ethnic’ styles). There were examples of collaborative production (in bed making), though limited evidence of employment and downstream value chain links. In most cases, manufactured wares were sold at the point of production which was usually on the street or an open piece of land. Amongst the artisanal crafts persons, some have advanced skills though many exhibit rudimentary skills. The use of hand tools predominates. These craft persons tend to work alone (though immigrant furniture makers work in small groups), replenishing materials once products are sold and trade at the point of production. Core business strategies of these entrepreneurs are, one, to produce goods of ‘cultural’ value, two, to provide customised items for home renovations (gates and burglar bars), three, to sell products that are cheaper (in many cases because the product is knowingly inferior) and four, to target persons unable to purchase from formal stores (because they cannot access credit and/or acquire furniture on hire purchase).
Business activities are conducted in different spatial localities. The home, or residential context, is especially important for retailers operating within a house or shack selling groceries, snacks, cold drinks, liquor and fast food such as ‘kota’ (bread and filling) outlets. Education services, such as crèches and educares, are usually home-based, as are businesses that collect scrap materials and need the storage space of a yard. The street hosts a different range of businesses. These include green grocers, street fast food outlets (such as braai stands), hair care businesses and ambulatory hawkers selling anything from clothes to homeware (brooms, dish towels, dusters, etc.). Across the range of street environments, the ‘high street’ (major roads and transit routes) is particularly significant for certain kinds of business activity. In Ivory Park, 32% of all businesses’ activities are situated on the high street; the corresponding figure for Tembisa is 34%. This finding shows a higher percentage of business activity on the high street than the 23% recorded in the Western Cape sites (see Charman & Petersen
Ivory Park, percentage of enterprise category situated on the high street.
Tembisa, percentage of enterprise category situated on the high street.
Spatial logics not only determine where enterprises are situated but also influence the nature of the business infrastructure itself. On the high street, notably in places with high pedestrian density such as close to transport nodes, residential properties have been converted into business units that in turn sustain an infrastructure of signage, public entrances and veranda that encroach (and appropriate) public space. Permanent structures include containers, shacks, and kiosks, whilst semi-permanent stands include gazebos, tarpaulin and post, rudimentary trading counter and umbrella stands. Some traders use open land (for car repair and manufacturing activities) or display their goods on the ground. There are also a range of mobile businesses and entrepreneurs whose minimal space requirements enable them to position their trade in sites of high pedestrian density. In contrast, home-based businesses such as spaza shops tend to occupy a single room or outbuilding, such as a shack
The characteristics of entrepreneurship vary from sector to sector. The data below (
Business ownership and/or gender (% of enterprise category).
Site | Gender | Educare | Hair care | Tavern | Spaza |
---|---|---|---|---|---|
Ivory Park | Male | 24.2 | 39.5 | 50.5 | 79.5 |
Female | 75.8 | 60.5 | 49.5 | 20.5 | |
Tembisa | Male | 7.1 | 55.6 | 50.9 | 81.5 |
Female | 92.9 | 44.4 | 49.1 | 18.5 |
Business ownership and/or county of nationality (% of enterprise category).
Site | Bangladesh | Ethiopia | Ghana | Lesotho | Malawi | Mozambique | Nigeria | Pakistan | South Africa | Somalia | Zimbabwe |
---|---|---|---|---|---|---|---|---|---|---|---|
Ivory Park | - | - | - | - | - | - | - | - | - | - | - |
Educare | - | - | - | - | - | 4.3 | - | - | 95.7 | - | - |
Tavern | - | 0.3 | 0.3 | 7.1 | - | - | 90.9 | - | 1.2 | ||
Spaza | 10.1 | 24.9 | - | 0.5 | - | 19.4 | - | 0.5 | 33.2 | 4.6 | 6.9 |
Hair care | - | - | 1.1 | - | - | 14.1 | 1.1 | - | 31.5 | - | 52.2 |
Tembisa | - | - | - | - | - | - | - | - | - | - | - |
Educare | - | - | - | - | - | - | - | - | 100 | - | - |
Tavern | - | - | - | - | - | - | - | - | 100 | - | - |
Spaza | 12.3 | 37.7 | - | 0.8 | - | 1.5 | - | - | 37.7 | 2.3 | 7.7 |
Hair care | - | - | 5.7 | - | - | 34.0 | - | - | 32.1 | - | 28.3 |
Business ownership and/or age (% of enterprise category).
Site | Sector | 0–19 | 20–29 | 30–39 | 40–49 | 50–59 | Over 60 |
---|---|---|---|---|---|---|---|
Ivory Park | Tavern | 3 | 26 | 28 | 23 | 13 | 7 |
Spaza | 5 | 41 | 28 | 15 | 8 | 2 | |
Hair care | 6 | 48 | 38 | 7 | 1 | 0 | |
Tembisa | Tavern | 1 | 25 | 19 | 20 | 20 | 15 |
Spaza | 2 | 41 | 32 | 14 | 7 | 4 | |
Hair care | 2 | 54 | 40 | 4 | 0 | 0 |
Note: Age data on educares are not available.
Spaza shops are predominately male-run businesses, a finding that might seem surprising given that spaza shops were historically thought of as business enterprises run equally by men and women (indeed, as family run entities). The result reflects the fact that nowadays merely 33% of shops in Ivory Park and 37% of shops in Tembisa are run by South Africans. Roughly 70% of all spaza shops are operated from rented premises with the landlords earning R1200 per month (median value). This suggests that the monthly return on labour did not justify the efforts of former shopkeepers in an environment which has become highly price competitive (Piper & Yu
The data on the educational background of the business owners are patchy, apart from the hair care sector where this information is most reliable. The data set comprises 133 responses. Only one individual had obtained a post-tertiary qualification. At the other end of the spectrum, a handful of individuals have no schooling. Most of the salon owners have either obtained matric (24% in Ivory Park; 27% in Tembisa) or completed some level of high school education. As a sector characterised by young entrepreneurs, it appears that many of the persons owning and working in salons have dropped out of school. It is possible that salon work has acquired a reputation as ‘work for drop-outs’, therefore lessening the attractiveness of the sector for persons interested in pursuing post-school training in the field of hair care. As in the spaza sector, South African hair salon entrepreneurs are a minority, comprising 32% of businesses in both Ivory Park and Tembisa. In contrast, over 60% of the salons in both sites are operated by nationals from Mozambique and Zimbabwe. The renowned Franco and West African barber shops, ubiquitous in some townships and settlements (Weller
Most hair salons are run by the owners (73% in Ivory Park and 88% in Tembisa). Spaza shops and tavern and/or shebeens are categories in which employment is frequently observed, see
Employment (% within enterprise category).
Site | Category | Employees (including owner) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
1 | 2 | 3 | 4 | 5 | 6 | 8 | 9 | > 10 | ||
Ivory Park | Tavern | 52 | 35 | 6 | 3 | 3 | 1 | 0 | 0 | 1 |
Spaza | 36 | 48 | 12 | 1 | 1 | 0 | 0 | 0 | 0 | |
Tembisa | Tavern | 74 | 13 | 7 | 1 | 1 | 2 | 1 | 1 | 1 |
Spaza | 26 | 53 | 19 | 2 | 0 | 0 | 0 | 0 | 0 |
The educare sector is an outlier in the provision of employment. All bar one of the businesses we surveyed were run by South Africans, who as mentioned above are mostly women, whilst 88% of educares are owner-operated. Most educares had been running for several years (9 years median in Ivory Park; 4 year median in Tembisa), and it seems that rarely does business ownership transfer from one entrepreneur to another (partly because of the infrastructure requirement). As can be expected, educares have a relatively high labour requirement. Less than 12% of the educares in Ivory Park and 17% in Tembisa are single-person operations. The employment profile differs between the sites with about 48% of educares in Tembisa employing three or more persons, though in Ivory Park over 80% of educares employ three or more persons. The registration of educares with the Department of Social Welfare and Development impacts the characteristics of the enterprise. Sector registration enables the enterprise to gain access to pupil subsidies, and the regulatory criteria compel the businesses to invest in facilities and adopt minimum standards. The registered businesses employ more workers. Yet only half the educares in the survey were registered. Informants report that the obstacles to registration include land-use zoning, the lack of space within homes and insufficient resources to meet all the compliance criteria.
The interviews with the owners indicate that there are four main pathways by which people establish businesses. The first relates to what is referred to as ‘make work jobs’: these usually start out as livelihood strategies through which persons that are unemployed seek to make ‘ends meet’ utilising whatever assets and resources are accessible and affordable. The business then unfolds, developing a scale that was unimaginable at the outset, confirming that survivalist businesses can grow beyond initial projections. Steve (Informant 1698), to provide one example, runs a spaza shop in Ivory Park. He started the shop 13 years ago with R700 after he lost his job. He set up the business in a portion of his mother’s house and after a while the business did sufficiently well to enable him to buy out his mother’s house.
The second pathway is based on the acquisition of skills, on-the-job experience and access to the market or customers through working. Young entrepreneurs in the entertainment sector, such as disk jockeys, acquire their skills through their hobby of making and/or playing music which, in turn, can process into a business as their craft gains reputation. On-the-job skills acquisition is an important pathway for employees to acquire entrepreneurial skills. This route to entrepreneurship in the hair care sector is common, as in the case of Monica’s (2594) business. A Mozambican national, she started plaiting hair in a salon where she acquired her skills and then when she had accumulated enough money she set up in business on her own, taking some of the customers with her. She has one employee and makes about R2500 per month.
The third pathway is through a strategic investment to establish the business. In many cases the investor is not involved in the running of the business; either they have a job which provides the source of investment capital or they own other businesses. Many of the immigrant run spaza shops have been established by investors, either through setting up new shops or buying out struggling businesses. Spaza shops are now often bought and sold. In response to a question about whether the business could be purchased and the possible sales price, the research learnt that well-stocked spaza shops in Ivory Park and Tembisa sell for between R60 000 and R85 000 on average. But the spaza scenario in which entrepreneurs purchase established businesses with the objective of selling them at a profit is not evident in other sectors. Usually, the investment sums are smaller and the business is started from scratch. Martin (2697), for example, purchased his salon (excluding building) from an individual for R2000 after seeing an advertisement posted in the street. Upon acquiring the business, he maintained the lease agreement with the property owner, paying R200 per month for rent, water and electricity.
Successful township entrepreneurs often diversify their investments in a range of sectors or acquire multiple outlets. Shifting investment away from the core business is done to minimise risks (theft, state regulation and jealously, to mention some of the explanations provided). It is not uncommon for successful entrepreneurs to own minibus taxis, provide school transport services and operate a tavern, spaza shop or butchery. In the survey of tavern owners, for example, 9% had other business interests, most commonly a spaza shop, then meat and food scales (take away), recycling and rental income.
A fourth pathway is where the businesses are passed on within the extended family, such as from parents to children. There are fewer cases of this pathway within the data set. Where a business requires a licence or operates from a permanent structure or has accumulated business assets, there is a greater rationale for maintaining the business within the family as an ongoing concern.
What do the entrepreneurs regard as their main obstacles in growing their enterprise and what are their strategies to overcome these challenges? Firstly, it should be recognised that some owners passively accede to the lowly state of their business and have no intention to pursue growth. This is not uncommon in the informal economy where markets are established on a confluence of commercial and social rationales (see Neves & Du Toit
The research invested perceived obstacles to enterprise growth; see
Perceived obstacles to enterprise growth (% responses and/or categories).
Site | Sector | Laws | Licensing | Police harassment | Finance | Non-payment | Unemployment | Competition | Crime | Location and infrastructure | Facilities | Other |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Ivory Park | Educare | 37 | - | - | 40 | 17 | - | - | - | 37 | 31 | - |
Tembisa | Educare | 9 | - | - | 56 | 13 | - | - | - | 13 | 19 | - |
Ivory Park | Tavern | - | 17 | 33 | 11 | - | 8 | - | 23 | 13 | - | 34 |
Tembisa | Tavern | - | 7 | 12 | 10 | - | 2 | - | 28 | 5 | - | 21 |
Ivory Park | Spaza | 3 | 7 | 7 | 27 | - | - | 12 | 10 | 12 | - | 15 |
Tembisa | Spaza | 5 | - | 4 | 23 | - | - | 24 | 33 | 7 | - | 5 |
Ivory Park | Hair care | 1 | - | - | 27 | - | - | 14 | 3 | 20 | 11 | 29 |
Tembisa | Hair care | - | - | - | 36 | - | 2 | 15 | 5 | 15 | 2 | 27 |
Regulatory barriers affect educares, tavern and/or shebeens and spaza shops, especially those that trade (illicitly) in liquor. In the case of liquor traders, more informants identified police harassment as a barrier than licensing or other laws. The twin obstacles of licensing and police harassment were more commonly cited by liquor traders in Ivory Park, where (as previously noted) merely 11% of micro-enterprises have liquor licences. Small survivalist liquor-selling businesses were less affected by crime, though larger businesses had to deal with armed robbery (28 businesses) and other kinds of theft. A particular challenge for unlicensed shebeen operators is posed by conmen who offer to assist the business owners acquire liquor licences. Crime impacts heavily spaza shops, with Tembisa spaza traders more commonly affected by crime than their counterparts in Ivory Park (33% of responses vs. 10%). In the spaza sector, with respect to a separate question, 82 shopkeepers (23% of the category) recalled incidents of robbery and/or theft over the past 5 years, with incidents of crime affecting all nationalities equally on both sites. Other reports of crime (across all sectors) included the use of counterfeit notes, non-payment of debts, social and political harassment and extortion from petty thugs (for cigarettes from spaza shops). Complaints about police raids, fines and stock confiscation are surprisingly common in the spaza sector, especially amongst those businesses selling beer. Yet immigrant shopkeepers (who do not sell beer) also complained about police raids which are undertaken in the name of searching for illegal (grey market) cigarettes (sold widely in most shops).
An obstacle listed across all four sectors are the challenges presented by the business location (disadvantages of the place at which the enterprise operates) and/or the inadequacy of the infrastructure out of which the business trades. The comparatively greater number of responses to this variable amongst Ivory Park entrepreneurs (37% vs 13% in educare; 20% vs. 15% in hair care) is due, in part, to the insecurity of business tenure as a result of the informality in land-use and ownership. Many hair care businesses operate on the street verge. In hair care and educare sectors, lack of physical space to extend the business infrastructure was commonly identified as an obstacle to growth. These entrepreneurs would want to expand their premise but cannot access land. Another challenge is that high street salons are not connected to the municipal water and sewerage lines; most of them use buckets to access water. Several of the educare owners spoke of the absence of space for children to play, inadequacy of the toilets and crammed conditions in classrooms. Space constraints sorely affect the possibilities of taverns to provide adequate seating, recreational facilities and storage. Liquor products are thus stored in the house, and thresholds between public and private space overlap and compete for space. In the spaza sector, it is not uncommon for the shopkeeper(s) (especially immigrants who rent the shop building) to sleep within the store.
The challenge of business competition was persistently reported by South African spaza shop keepers (12% in Ivory Park; 24% in Tembisa) as well as entrepreneurs running educares (data omitted in quantitative survey) and hair salons (14% Ivory Park; 15% Tembisa). At the time this research was undertaken, a number of South Africans spaza shops had closed because of competition. For those continuing in business, such as Zandile (Informant 1877), she responded to increasing competition through lowering her prices, providing credit and selling alcohol. An often cited strategy for addressing competition is to shift to a new locality. It is noteworthy that many respondents gave enterprise specific responses to the question of growth obstacles. These are recorded under ‘other’. The factors mentioned ranged from issues of a sociocultural–psychological dimension (such as jealously, witchcraft and bad luck), to external shocks on the household (resulting from death and disability), to relationships problems issues within the family. Other issues were high transport costs, tenancy disputes and electricity supply issues. Immigrants specifically complained of their inability to acquire bank accounts. There is minimal evidence that people work cooperatively, for example, to enhance purchasing power. This was cited as a cause of poor competitiveness amongst some South African informants. Eddie (Informant 1531), for example, once ran a spaza, which he now rents out to Ethiopian shopkeepers. He endeavoured to create a ‘collective association’ to enable bulk purchasing. But no one was willing to join him. He explained ‘people refused because of a lack of trust, a lack of education, they did not understand how much more profitable the business of spaza shops could be’. In contrast, the research came across several cases of stokvel groups working effectively to mobilise finance and enhance business opportunities. These self-selecting groups are highly effective in enforcing compliance with the stokvel rules.
The paper has sought to outline the state of the township economy in two different localities. The overall situation is cause for concern, even though there is considerable evidence of livelihood resilience and entrepreneurship. Although we cannot extrapolate our results across other township settlements, the data on the two case sites are rigorous (based on a census approach), insightful in qualitative terms and provide a compelling perspective on what business activities occur, where people conduct business, how they get into business, what constraints the entrepreneurs have to confront and, finally, reflect on the common business strategies that have been pursued to achieve growth. The research found a surprising consistency between Ivory Park and Tembisa in the scale, scope and spatial distribution of micro-enterprises, despite their socio-demographic, spatial and historical differences. The results are also not dissimilar to the state of entrepreneurship in five townships in the Western Cape that were studied using the same methodological approach (Charman & Petersen
Based on this insight into township micro-entrepreneurship, we return to the question posed at the outset, namely what should government do to stimulate the township economy? A simple answer is to keep strategies low-geared, focusing on achievable results. Ambitious plans to change the structure of the economy towards manufacturing and non-food and/or drink retail are likely to disappoint and will not benefit the majority of existing businesses. Throughout the paper the issue of space is mentioned. There is a need to make land available for business expansion. People need title deeds to formalise market transitions and invest in property assets. The current land-use zoning approach is illogical. Townships are mixed business area and should be recognised as such. The street environment is central to businesses, and trading in particular should be legitimised and respected, whilst municipal authorities should seek to maximise the use of the street including verges and unutilised land for business activities without overly prescribing the manner in which the space is utilised. Mobility is crucial to most businesses. Municipal authorities should be accommodating towards diverse forms of transport including trollies, push-carts and the like. Street lighting can lengthen the business day, allowing traders to target markets at times when they are busiest: early in the morning and evening. Infrastructure for business would also help, especially in places of dense trading, but as infrastructure needs to be inclusive of a range of spatial requirements it should not comprise homogenous units, laid in geometric order. Instead, infrastructure should permit the flexible and fluid use of facilities, reflecting business needs and spatial requirements, organised and managed through participatory processes.
In sectors where regulation is deemed necessary, the requirements should be positioned at the capacity of the micro-enterprise and the capability of the entrepreneurs, recognising that township entrepreneurs are disadvantaged vis-à-vis formal businesses. A process of ‘facilitating formalisation’ (Williams & Nadin
National government has the core responsibility to tackle crime. Yet the role of the police needs to be carefully strategised, especially in enforcement of regulatory compliance where opportunities for bribery and the abuse of power are difficult to prevent. Finally, government should be encouraged to refocus its attention on markets that have greater potential for productivity enhancement of township residents. This requires rethinking the spatial implications of township revitalisation. Township entrepreneurs may achieve greater success selling goods and services outside the geographical confines of the township, in inner-city or suburban neighbourhoods. These markets are more lucrative and sustain demand for a greater diversity of goods and services. Yet municipal policies have a determining impact on where, when and how micro-enterprises may operate, usually with the intention to either control or exclude. The institutional incongruence between national, provincial and municipal objectives should be redressed. Thinking differently entails not only liberating new market places and spaces outside the township but also ensuring that the township poor have the priority to operate businesses in these contexts.
The research was commissioned by the Sustainable Livelihoods Foundation. The author thus acknowledges them for making available the data on which this article is based. The research findings and conclusions are those of the author alone and the Foundation had no influence on either the interpretation of the data or on the author’s decision to publish the findings. The author acknowledges the Rockefeller Foundation’s Bellagio residency programme during which time the article was written. The author acknowledges the research support of colleagues Leif Petersen, Rory Liedeman and Caitlin Tonkin. The author benefited from the comments of the
The author declares that he has no financial or personal relationships that may have inappropriately influenced him in writing this article.
The informal economy is understood to consist of partially or completely unregistered and unregulated businesses, and includes unregistered employees.
A ‘microenterprise’ refers to a small business that is usually not registered for business tax and which typically employs fewer than five employees, engaged to work on an informal basis.
The research was commissioned by the Sustainable Livelihoods Foundation. The author led the research process and data collection.
Educares are home-based microenterprises that provide out-of-home care and educational services for children between the ages of 0 and 6. Educares range in their size and business offering. Although some educares are formally recognised by local municipalities and departments of social welfare, others are largely informal. Those that are recognised are commonly eligible for subsidies per child. Although it is a requirement (at municipal and provincial levels of government) for these businesses to be registered with the municipality and/or Provincial Department for Social Welfare and Development (DSWD), registration is seldom enforced.