1. (1)
(2004.3) (PROFILE OF INFORMAL SECTOR)
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MEDIA RELEASE FOR RELEASE ON: 2004-02-11
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SIZE, STRUCTURE AND PROFILE OF THE INFORMAL RETAIL SECTOR IN
SOUTH AFRICA
The informal retail sector in South Africa is increasingly being acknowledged by
manufacturers and wholesalers as an important delivery channel of goods to consumers. A
report compiled by Prof André Ligthelm of the Bureau of Market Research (BMR) of Unisa
on the characteristics of the informal retail sector, estimated the share of informal trade sector
at approximately R32 billion in 2002. This represents approximately 10 % of retail trade
sales in South Africa.
In contrast with the oftenly expressed notion that the informal and formal sector operates as
two separate ‘economies’ with limited linkages, the study finds considerable linkages
between these two sectors. Linkages are manifested in various ways through, inter alia,
increased product delivery to informal retailers, promotion sales available to them and even
the availability of supplier credit to especially township general dealers. The linkages
contribute considerably to the survival potential of small informal retailers especially due to
the availability of merchandise at more affordable prices, which in essence, allows them to
continue with their trading businesses (the lack of trading stock is often reported as the single
most serious problem encountered by informal retailers).
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2. (2)
(2004.3) (PROFILE OF INFORMAL SECTOR)
Table 1 shows the type of support received by informal township retailers from suppliers.
Almost nine in every ten informal retailers received deliveries of merchandise. Other types
of support include promotion material, signboards, shop equipment, discount prices and
credit.
TABLE 1
TYPE OF SUPPORT RECEIVED FROM SUPPLIERS
Spaza/tuck
shop
Hawker/
street vendor
General dealer
Type of support in township
% % %
Deliveries 87,9 86,7 89,6
Promotion material 60,8 21,1 53,7
Name on signboard 48,6 4,4 62,7
Shop equipment 32,1 16,7 43,3
Discount prices 19,0 17,8 34,3
Credit 8,6 0,0 13,4
The picture emerging from the research depicts a continuum of informal retailers ranging
from fairly developed businesses to enterprises purely established for household survival
purposes. This wide array of informal retailers creates an excellent foundation for advancing
entrepreneurship and allowing some of the businesses to gradually upgrade to more formal
business structures. At the same time, it should be noted that a large percentage of informal
businesses were established in a nonlucrative business environment and are therefore
operating at a bare survival level.
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3. (3)
(2004.3) (PROFILE OF INFORMAL SECTOR)
This continuum of fairly established to survivalist businesses is clearly identifiable by type of
business. The following three types were identified in the study, namely township general
dealers, spaza shops and hawkers. Township general dealers seem to be far more established
than hawkers. Spaza shops occupy more or less a middle position. Figure 1 shows the
response to the question ‘Will you accept a job in the formal sector if offered today?’
Interesting to note that more than a third (36,6 %) of hawkers perceived their business
endeavour as a permanent career path. The figure for township general dealers is 76,8 % and
for spaza owners 57,2 %.
FIGURE 1
PERCENTAGE OF OWNERS WHO WOULD NOT ACCEPT A JOB IN THE
FORMAL SECTOR
76.8
57.2
36.6
0 20 40 60 80 100
Hawker/street
vendor
Spaza shop
General dealer
Percentage
The relative stability in the informal trade sector is also confirmed by the survival rate of
various types of businesses. The percentage of retailers in operation for longer than five
years are:
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4. (4)
(2004.3) (PROFILE OF INFORMAL SECTOR)
• General dealers : 63,7 %
• Spaza shops : 36,0 %
• Hawkers/street vendors : 19,0 %
SIZE, STRUCTURE AND PROFILE OF THE INFORMAL RETAIL SECTOR IN
SOUTH AFRICA (Research Report no 323) was compiled by Prof André Ligthelm of the
Bureau of Market Research. The report of 90 pages is obtainable from the BMR, P O Box
392, Unisa, 0003.
END
Date of release: 2004-02-11
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Professional enquiries: Other enquiries
Prof AA Ligthelm Mrs M Lamb
Bureau of Market Research Bureau of Market Research
University of South Africa University of South Africa
PO Box 392 P O Box 392
UNISA UNISA
0003 0003
Tel (012) 429-3151 Tel (012) 429-3070
Fax (012) 429-3170 Fax (012) 429-3170
E-mail: ligthaa@unisa.ac.za E-mail: lambm@unisa.ac.za