Entrepreneurial economies
in urban South Africa

May 9, 2017 | By More

The latest publication from our sister project SAMP, the Southern African Migration Programme, is Refugee Entrepreneurial Economies in Urban South Africa by Jonathan Crush, Godfrey Tawodzera, Cameron McCordic and Sujata Ramachandran.

One of the defining characteristics of many large cities in the rapidly urbanizing global South is the high degree of informality of shelter, services and economic livelihoods. It is these dynamic, shifting and dangerous informal urban spaces that refugees often arrive in with few resources other than a will to survive, a few social contacts and a drive to support themselves in the absence of financial support from the host government and international agencies. This report addresses the question of variability in economic opportunity and entrepreneurial activity between urban environments within the same destination country – South Africa – by comparing refugee entrepreneurship in Cape Town, South Africa’s second largest city, and several small towns in the province of Limpopo.

• Informal cross-border trading in Zimbabwe has become more than a survivalist strategy and should be seen as an important pillar of the country’s economy. According to one trader, having more than one business was a necessity given the unpredictable nature of informal trade:

I sell clothes and shoes, but I also have another income from selling foodstuffs. Clothes do not sell faster than food so when I am in need of faster cash I know that I will always get some from trading food. However, the profit from food is not much so it just takes care of my immediate needs. When I am looking for serious money, I know I will get it from clothes and shoes even if they are bought less frequently. 

Informal Entrepreneurship and Cross-Border Trade between Zimbabwe and South Africa, by Abel Chikanda and Godfrey Tawodzera, is another policy paper from SAMP. This report, part of SAMP’s Growing Informal Cities series, provides a current picture of informal cross-border trading in Zimbabwe and detailed insights into the activities of traders from the capital, Harare, who travel regularly to Johannesburg, South Africa, as part of their business. The traders make a monthly profit that exceeds the salaries of most Zimbabweans in formal employment. Furthermore, many traders have been able to grow their businesses to such an extent that they hire people from outside their families. In Zimbabwe, this trade remains a female-dominated activity and traders are generally well educated and relatively young. Almost all respondents interviewed had started their businesses in the post-2000 era. Most had never held a formal job and went into informal cross-border trading either because they were unemployed or already involved in informal sector activities in Zimbabwe. This report notes important contributions these traders make to both the Zimbabwean and South African economies. The contribution of the informal economy in generating jobs and reducing unemployment needs to be acknowledged in Zimbabwe by policies that encourage rather than restrict the operation of informal trade.

• Also from SAMP is a report – Competition or Co-operation? South African and Migrant Entrepreneurs in Johannesburg –  which explores and compares the experiences of international and South African migrant entrepreneurs operating informal sector businesses in Johannesburg.

This policy paper by Sally Peberdy examines how these entrepreneurs set up their businesses, rates of business growth, contributions they make to local and household economies, the challenges they face and their various interactions. The comprehensive survey challenges many widespread opinions about informal sector entrepreneurship in the city and shows that participation in the informal sector does not necessarily put people in a marginal economic position. It indicates that the success of informal sector enterprises is complex and likely to be related more to start-up capital, the type of business pursued, and re-investment of capital than nationality. It shows that many if not most of the challenges entrepreneurs face are shared by international migrants and South Africans. This suggests that efforts would most fruitfully be placed on identifying where best practices could enable all entrepreneurs in the informal sector to develop profitable businesses that employ more people and contribute to the city’s development.



Category: Food Security News

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