Informal township businesses and socio-economic challenges: a case of South Africa.

Abstract

Most African countries continue to face challenges that negatively impact social wellbeing and the economy of the country such as unemployment, poverty, poor educational systems, gender inequality, income inequality, and poor health care systems. South Africa is no exception to these challenges and has recently faced another challenge, namely an increase in immigration. Immigration growth in SA has, inter alia, contributed to informal business growth in most townships in the country. Economic activities taking place in townships areas have an important role of ameliorating some of the existing socio-economic challenges for township residents. SA’s growth potential lies in promoting economic activities taking place in township communities. This thesis discusses the rise and nature of informal businesses across SA and within the Inanda, Ntuzuma and Kwamashu (INK) townships in relation to existing socio-economic challenges and provides insight into how informal businesses may help to ameliorate the socio-economic challenges citizens face. Using secondary data sourced from the Survey of Employers and Self-Employed for the period 2001–2017, a descriptive analysis was conducted to understand informal business activities and ownership nationally. Primary data was also collected (through a survey questionnaire) for the analysis of local versus foreign INK informal business ownership and activities, analysed through the descriptive analysis and multivariate econometric models (earnings regression model and probit model estimating improvement in standard of living of participants). The two econometric models were estimated on STATA software to determine how participation in INK informal business ownership and income generated may affect socio-economic conditions of participants. This study considers both aggregate information on the informal economy and micro level information through primary data collection and will therefore further the understanding of informal businesses on the ground, by permitting a level of questioning and information gathering that is not possible in the collection of aggregate data.