Immigrant and Local Micro-Entrepreneurs in South African Townships

In South Africa, the informal economy plays a significant role contributing 15-17% of employment and over 5% of GDP. While smaller than the regional average, it provides vital livelihoods and income, particularly for those marginalised from the formal labour market. Some immigrants facing barriers to formal employment as well turn to informal businesses, with rates of immigrant participation nearly double that of locals. Moreover, immigrant-owned micro-enterprises tend to outperform locally-owned ones. Despite existing studies on migrant experiences, the reasons for their prevalence and success remain unclear.

This comparative study aims to elucidate factors contributing to success in both migrant and local micro-enterprise ownership in South African townships. The objectives include assessing differing motivations, business strategies, challenges, and perceptions of success and struggle between the two groups.

The study used a qualitative comparative exploratory design. Three provinces were identified, from each a high concentration of informal micro-entrepreneurs, both local and migrant. These specific townships were chosen because the researchers already had established connections there, making access easier. The research sites were Ivory Park in Gauteng, Langa in the Western Cape, and Marikana in the North West.

Data collection involved in-depth, open-ended interviews with individual micro-entrepreneurs, both local and migrant. Additionally, focus group discussions (FGDs) with entrepreneurs were conducted. To ensure a good variety of perspectives, a two-step approach for participant selection was used: first, purposive sampling, specifically targeting key informants who could provide valuable insights into the context. Then, snowball sampling was used to identify micro-entrepreneurs. To gain even deeper understanding, follow-up interviews were conducted with some of the participants.

Through this comprehensive study, insights will be gained to inform strategies aimed at supporting and enhancing productive engagement in the informal sector within South African townships, ultimately contributing to economic empowerment and poverty alleviation.

The project collaborates with international organisations, academic institutions, and informal trader groups to facilitate access to research sites, engage participants, academics, CSO representatives and, disseminate findings.

On 3 July 2024, CSDA, in partnership with the World Bank, hosted a webinar where we presented the findings from a qualitative study that looked into factors contributing to the success of micro-enterprises owned by immigrants and nationals in South Africa. The research compares micro-entrepreneurs’ experiences in three South African townships, examining their motivations, business strategies, challenges, and success. The webinar also discussed additional support and protection for the micro-entrepreneurs.

The full webinar recording is available here.