Abstract
Informal trade has grown at an alarming rate in South Africa because of lack of employment opportunities in both the private and public sectors. This has resulted in many unemployed members of the population joining the informal business sector. The majority of people in this sector do not have skills that are needed in the formal employment sector, others are semi-literate and a small percentage has some level of qualification. Nevertheless, this sector is plagued by a number of challenges which this article presents. The article reports on the study that was conducted at Greater Letaba Municipality in Limpopo Province. The aim of the study was to investigate the challenges that were faced by informal traders in Greater Letaba Municipality in Limpopo Province in South Africa. The area was chosen because of its accessibility to the researchers and its potential to provide relevant and accurate information for the research project. Thus, a qualitative research method was used to collect data through face to face interviews. The research discovered that some of the challenges experienced by the informal traders in the area ranged from lack of support from the local municipality to structural challenges like lack of ablution facilities and limited access to electricity. Furthermore, other challenges concerned safety and health issues that were also gender based. Most of the traders in the area were women; an element which attest to the fact that it is difficult to find employment in the country when one is less educated and is also a woman.
Highlights
This article discusses the legislative framework governing small businesses in South Africa, literature review on challenges faced by informal business sector, research methodology, findings and recommendations.It has been estimated that approximately 1 million businesses operate outside the formal economy in South Africa and about 1, 8 million people are employed in these informal businesses (SBP,2005; Roux and Klaaren: 2002)
The following are the findings of the study: In Greater Letaba Municipality area women formed the majority of traders in the informal sector
Most traders in the area have a low level of education and the informal sector serves as a refuge
Summary
This article discusses the legislative framework governing small businesses in South Africa, literature review on challenges faced by informal business sector, research methodology, findings and recommendations. It has been estimated that approximately 1 million businesses operate outside the formal economy in South Africa and about 1, 8 million people are employed in these informal businesses (SBP,2005; Roux and Klaaren: 2002). BEES (2005) state that internationally, SMMEs are noted for their contribution to innovation and their ability to impact on growth. Small and medium-sized enterprises account for 60 to 70 percent of jobs in most SADC (Southern African Development Co-operation) countries; they account for a disproportionately large share of new jobs (OECD, 2007). The OECD study (2005) noted that many start-ups do not survive for more than five years and fewer still develop into high-growth firms.
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