DREAMERS OR CHANCERS: INTERROGATING MIGRANT MICROENTREPRENEURSHIP RESILIENCE IN SPAZA SHOP BUSINESSES,
SOWETO, SOUTH AFRICA
Simamkele Bokolo and Trynos Gumbo
Africa Institute of South Africa
Urban Informality and Migrant Entrepreneurship in Southern
African Cities
10 February 2014
Breakwater Lodge, Cape Town
1
INTRODUCTION
• The term informal economic sector was coined during the early 1970s after
field work research in Ghana by Keith Hart
• The concept has since then received widespread acknowledgement as an
integral part of the global economic development
• It employs millions of the unemployed populations in the world, providing
means of survival to some whilst lifting a significant proportion out of poverty
• South Africa has not been an exception, as the country continues experience an
upsurge of the informal economic sector
• Johannesburg as an economic hub of South Africa has a great number of the
country’s population and immigrants that [participate in the informal sector.
• Townships such as Soweto have high concentrations of immigrants that
participate in the informal economic sector.
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PROBLEM IDENTIFICATION
• World one problem – world of everyday life – The growth of informal
businesses, particularly trading is a cause of concern in most South African
cities
• Lack of jobs, poverty, high rural-urban and international migration are chief
causes
• World two problem – the world of science – Migrants have largely dominated
the informal economic sector within the country’s large cities such as
Johannesburg
• Why have migrants done very well in South Africa’s informal economy,
particularly those operating spaza shops in Soweto, out-playing local informal
entrepreneurs.
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RESEARCH METHODOLOGY
• Case study design was applied
• Soweto high density and low income township was chosen
• Mixed methods approach was used
• Quantitative – Deductive, closed questions and experimental
• Qualitative – Inductive, open–ended questions and exploratory
• Sampling – Stratification, Random; Purposive and Snowballing sampling techniques
• Triangulation – a variety of data collection techniques were use – questionnaires,
interviews, observations
Questionnaires
Migrant respondents
16
No. of respondents
14
12
10
8
6
4
2
0
Ethiopians
Bangladesh
Pakistan
Nationality
Somalis
5
Interviews
Target Group
Frequency
Local Spaza Shop Owners
10
Officials
5
6
Illustrations
7
Illustrations
8
RESEARCH METHODOLOGY CONT’D
• Data Analysis
• Statistical use of excel – quantitative data
• Content analysis – qualitative data
• Limitations
• Non co-operation
• Language barrier
• Absence of shop owners
• Arrogance of spaza owners
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THEORETICAL FRAMEWORK
• The study is underpinned by 2 sets of theories
• Firstly, theories informing migration patterns.
• Neoclassical theory - migration is informed by economic considerations of relative benefits and
costs.
• Secondly, theories informing migrant entrepreneurship in host countries
• Cultural theory - immigrants in a host country are characterised by cultural features that
encourage them to be self-employed.
• These features could include, dedication to hard work, membership of a strong ethnic
community, economical living acceptance of risk, compliance with social value patterns,
solidarity and loyalty, and determination towards self-employment.
• Disadvantage theory - immigrants are disadvantaged in many ways in the host countries
that hinders their progress whilst at the same time changing their behaviour
• The theory views migrant entrepreneurship as simply an alternative to unemployment
rather than as a sign of migrants wanting to succeed in the businesses
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RESEARCH FINDINGS : SOWETO CASE STUDY
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General Characteristics of Spaza Shops in Soweto
• The spaza shop business in Soweto is largely dominated by migrants,
outplaying their local counterparts.
• This dominance signals the continued entrance of migrants in SA.
Years of residence in SA
No. of people
12
10
8
6
4
2
0
Less than 2 years
2-4 years
years
4-6 years
6-8 years
GENERAL CHARACTERISTICS OF SPAZA SHOPS IN
SOWETO CONT’D
• Migrants are also continuing to enter the spaza shop business of
Soweto.
Period of business operation
7% 3%3%
Less than 1 month
1-6 months
14%
6-12 months
13%
17%
12-18 months
18-24 months
13%
24-30 months
30-36 months
30%
36 months and
above
GENERAL CHARACTERISTICS OF SPAZA SHOPS IN
SOWETO CONT’D
Customers served per day
14
No. of shop owners
12
10
8
13
6
8
4
6
2
3
0
Below 30
30-60
60-90
90 and above
No. of customers
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GENERAL CHARACTERISTICS OF SPAZA SHOPS
IN SOWETO CONT’D
Sourcing of funds
17%
33%
Savings
Loans from relatives
23%
Hire purchase
27%
Rotating Savings Credit
Association
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GENERAL CHARACTERISTICS OF SPAZA SHOPS
IN SOWETO CONT’D
Assets value
10%
7%
Below R10 000
36%
20%
R10 001- R15 000
R15 001- R20 000
R20 001- R25 000
R25 001 and above
27%
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STRATEGIES USED BY MIGRANTS
Strategy
Explanation
Mentorship
High reliance on mentorship by relatives.
Location
Street corners to maintain visibility.
Adaptation
Learn to communicate in local languages.
Stocking
Stock to meet demand.
Saving
Maintain simple lifestyles to save for the business.
Small profit, quick returns
Aim not to maximise profits at once, e.g. For a loaf of
bread a 20cents profit is made.
Long operating hours
Operating hours are usually form 6am-9pm
Security
Their shops have buglers, and operate from buildings
rather than makeshift structures.
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STOCKING
Money used to stock goods
8%
23%
12%
Below R250
R251-R500
R501-R750
R750-R1000
R1001 and above
11%
46%
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STOCKING CONT’D
Frequency of stocking
Goods stocked
Everyday
Bread, Cigarettes
2-3 days a week
Soft drinks, milk, cheese, chips, sweets, airtime
4-5 days a week
Yoghurts, modern medicines, spices, stock cubes, soups
Weekly
Maize meal, rice, sugar, tea, coffee
2-3 times a week
Washing and cleaning items, hair products
Monthly
Batteries, locks, spirit, polish, matches, toys
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RESILIENCE FACTORS
Resilience factor
Cause
Life skills
Informal; self-taught
Enduring hardships
Perseverance learnt through past experiences
Migration networks/ties
Reliance on relatives in times of financial
difficulty
Religious ties
Strict adherence to their religious beliefs and
practices and identify better with one another.
Adaptation
Good
relations
forged
with
customers,
suppliers and community members.
Savings
Money is not misused but saved for the
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CONTRIBUTIONS BY MIGRANT SPAZA SHOPS
Contributions
Examples
Sales to the suppliers
They buy their stock from SA suppliers such as Cash and Carry,
Devland Cash and Carry, Makro Stores, Jumbo
Infrastructural development
Many are responsible for building the structures that they are
operating from.
Rentals
They pay rents to their landlords ranging between R1000 and
R2500
Reduced prices of goods
Customers are benefiting
Convenience to customers
Proximity to customers and longer trading hours.
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RENTAL CONTRIBUTIONS
7%
17%
R1000-R1500
24%
R1501-R2000
R2001-R2500
R2501 and
above
52%
CHALLENGES FACED BY SPAZA SHOP OWNERS
• Both migrant and local spaza shop owners face a number of challenges in
operating their businesses.
Migrant spaza shops
Local spaza shops
Hooliganism/harassment from customers
Lack of funds to expand businesses
and residences
Theft and robberies
Labour costs
High rentals
Lack of entrepreneurial skills
Resentment from locals
Non-strategic location
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CHALLENGES OF MIGRANT SPAZA SHOPS
Concern
Explanation
Health concerns
Shop structures have shared purposes, i.e. business and
residential. Unhygienic, sell cheap unhealthy products
Employment creation concerns
The owners operate their own spaza shops with the
assistance of relatives. In cases where they hire they prefer
foreign nationals and not locals.
Gender imbalance concerns
Migrant shops are dominated by males,
Poor regulations and monitoring
They do not pay any fees or levies to the city council, e.g.
roads or any other.
Unfair competition
The pricing system of migrants is flawed and does not reflect
the obtaining prices from the market and this largely
suffocates local spaza shops.
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DREAMERS OR CHANCERS?
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DREAMERS
Foreigners have managed to penetrate the spaza shop business in Soweto that
was traditionally a means of survival for locals
1. The process of acquiring premises, skills and network developments
2. Placing or locating their spaza shops strategically -Proximity, convenience
3. Financing, Marketing and Pricing – business success
4. Stocking - a mixture of small and big -responding to demand
5. Operating hours –convenience and customer care and satisfaction
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CHANCERS
They are take advantage of less specific rules and regulations, also absence of
clear policies on the operation of spaza shops
1. The land use in townships is regulated through Annexure F of the Black
Communities Development Act of 1986 which permits trading in residential
properties –primary rights
2. Spaza shops are not covered by the Informal Trading policy of the City of
Johannesburg, even the Metropolitan Trading Company of the city does not
concern itself with spaza shop owners.
3. Mixed use of premises that is not regulated and monitored – housing and
business operations under one roof
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RECOMMENDATIONS
• Locals could draw some lessons from the strategies
employed by migrants
• Clear separation of use, i.e. business and residential use
• Proper regulation of migrant owned spaza shops by city
officials
• Migrant spaza shops should be included in policy making.
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CONCLUSIONS
• The business strategies employed by migrants in their businesses
have obviously given them the urge over local owned businesses.
• Their success is seen in their resilience even with reports of their
shops being looted and robbed very often.
• Even though some local shop owners view them as a threat to their
businesses they have been widely welcomed by customers who
benefit from convenient location and reduced prices in migrant
spaza shops.
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Historical
Context
(democratic
dispensation,
economic
liberalisation)
Institutional
Context (laws
and regulations
e.g. Asylum,
primary rights;
globalisation)
Growth of
Migrant
Microentrepreneurs
hip
Structural context
(social e.g. black
Africans, high
population,
economic,
governance,
Spatial Context
(regionallocation of SA
within the SSA,
central location
of JHB in SA,
proximity of
Soweto to JHB)
THE END
THANK YOU
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