Abstract
In 2014, the World Bank pronounced how the informal sector is probably responsible for half of the GDP in developing countries. This sector can no longer be ignored as it is embedded in most developing countries’ economies. In a country like South Africa, the informal sector is a gateway to economic freedom where the historically deprived groups were left behind and could not participate in the formal economic sectors, as they would have liked. This was due to racially skewed policies of the apartheid regime. The country saw black racial groups marginalised from acquiring appropriate skills, education and resources to allow them to participate in the formal economy. The barrier to entry into formal economies resulted in the significant rise of the informal economy. One of the most prevalent business forms in this sector has been Spaza Shops. In fact, in South Africa, Spaza Shops have become synonymous with the informal sector. Post-apartheid, with the opening of the country’s borders over the years, there has been an increase in foreign owned Spaza Shops both legally and illegally, at the expense of locally owned ones. Using an exploratory research design, this paper sought to uncover various practices and procedures that have been accredited to the success of foreign owned Spaza’s in townships. Through qualitative engagement with relevant literature published over a period of six years, a relationship between foreign owned businesses and locally owned businesses in the townships of South Africa was investigated. The study outcomes identified motives for increased and successful foreign owned businesses in townships. These are Networking and Economies of Scales; Socio-Economic Motivators; Geographic Location; Financial Management, Entrepreneurial Orientation and Business practice. All of these motives are seen as equally important and can be used to upskill and motivate local informal traders to be as competitive within the township economy.
Highlights
Small, home-based, micro, informal enterprises such as ‘Spaza Shops’ and tuck shops, are synonymous with low income residential areas
This study aimed at identifying the importance of entrepreneurship in the informal sector and the barriers that these entrepreneurs face on a daily basis in South Africa
This study investigated how Spaza Shop owners in South Africa utilise mobile communication technology and evaluated opportunities created by the use of mobile communication devices to attain a competitive advantage
Summary
Home-based, micro, informal enterprises such as ‘Spaza Shops’ and tuck shops, are synonymous with low income residential areas. This is a phenomenon experienced, the world over, but unequivocally so apropos the context of South African townships. This study seeks to analyse the growth that foreign-run Spaza Shops have had in comparison to South African businesses. From the mid 1990’s, South Africa has seen an extensive reallocation of income distribution towards low-income households (Ligthelm, 2011) This has contributed to a significant increase in economic growth and consumer spending within townships. Trade industry sources like ‘Spazanews.co.za’, assert that this sector comprises of more than 100 000 establishments with a collective turnover of R7-billion, annually (Liedeman, Charman, Piper, and Peterson, 2013)
Sign-in/Register to view highlights & summary Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
