Township Economy

 

Hartnack, A. & Liedeman, R. Factors that contribute towards informal microenterprises going out of business in Delft South, 2010-2015: a qualitative investigation
Abstract: Little in-depth research has been conducted on the reasons why informal micro-enterprises in a township context in South Africa fail. Moreover, existing literature tends to focus solely on enterprise factors and deficiencies in business skill of enterprise owners. What has often been ignored, however, is a more holistic examination of how both enterprise-level challenges and deficiencies, and factors related to the household and broader socio-economic contexts of enterprise owners intersect to contribute to enterprise failure. Arising out of a wider longitudinal study of micro-enterprise in Delft South between 2010 and 2015, this paper provides a qualitative investigation of the reasons why some enterprises first identified in 2010 were subsequently closed by 2015. The paper presents evidence that among micro-enterprises which were operational for several years, a combination of broader socio-economic constraints (e.g. new forms of competition; increasing state regulation; crime and neighbourhood conflict) and unexpected household “shocks” (e.g. family sickness; death; imprisonment, retrenchment) play a crucial role in enterprise closure, in addition to deficiencies in business models or inadequate management skill. The paper also calls into question a simplistic and decontextualized understanding of enterprise “failure” since, for enterprises such as those included in case studies, despite their eventual demise there have been important benefits in household upward mobility, skills and educational acquisition, infrastructure and asset improvement over the life of the enterprise. Furthermore, their owners are often looking for fresh opportunities to start new enterprises where they can apply the skills and lessons they acquired in their previous businesses. Read full text.
Charman, A. J., Petersen, L., Piper, L., Liedeman, R., & Legg, T. 2015. Small area census approach to measure the township informal economy in South Africa. Journal of Mixed Methods Research, 1558689815572024.
Abstract: In this article, we describe a research approach to undertaking a small area census to identify informal economy activity, using a mixture of quantitative and qualitative tools. The method focuses on enterprise activity. The approach enables the researcher to record a broader spectrum of informal micro-enterprises through identifying businesses in situ within an area of sufficient scale to broadly reflect area-level market conditions and business dynamics. The approach comprises an enterprise census, a survey of all identified micro-enterprises in key sectors, in-depth interviews, and participatory research techniques. The article reports on the application of this method in eight case sites, located in township settlements within five major cities in South Africa. The research identified 9,400 individual enterprises, entailing 10,220 primary and secondary activities, distributed within a population of 325,000 and comprising 97,000 households. The approach permits significant advances to our understanding of the spatial dynamics of the informal sector. The research data has enabled the researcher to make original contributions to understanding informal enterprise activities in grocery retailing, liquor trade, and traditional medicine sectors.
Liedeman, R., Charman, A., Piper, L., and Petersen, L. 2013. Why are foreign-run spaza shops more successful? The rapidly changing spaza sector in South Africa. Econ3x3.
Abstract: This article examines the contrasting business models in the spaza shop sector, and compares foreign-run businesses with South African businesses. We argue that foreign shop keepers are more successful than South Africans because of the strength of their social networks, which provide them with access to labour and capital and enable collective purchasing and market domination. The article argues for a two-pronged policy that would formalise larger shops whilst permitting and encouraging informal micro and survivalist businesses.
Liedeman, R. 2013. Understanding the Internal Dynamics and Organisation of Spaza Shop Operators: A case study of how social networks enable entrepreneurialism amongst Somali but not South African traders in Delft South, Cape Town. University of the Western Cape.
Abstract: This thesis presents a study of spaza shop businesses in the Delft South township, Cape Town, South Africa. The major goal is to establish whether the advent of foreign run spaza businesses is due to a particular ‘entrepreneurial’ business model underwritten by relatively strong social networks. The study focuses primarily on South African and Somali owned spaza shops as previous research indicates that these are the two major groups of spaza operators in the area. The thesis centres on three core research questions: 1) is there a shift in spaza ownership from South African to Somali shopkeepers in Delft? 2) What are the different spaza business models in operation? 3) What is the significance of social networks or relationships to the success of these business models?
Charman, A., Petersen, L., and Piper, L. 2013. Enforced informalisation: The case of liquor retailers in South Africa. Development Southern Africa.
Abstract: After a decade of unsuccessful efforts to migrate informal businesses to South Africa’s formal economy there remains little understanding of the dynamics in this sector, especially as regards micro-enterprises. International literature discusses ‘exit’ and ‘exclusion’, holding that poor law enforcement is the reason for the persistence and growth of the informal economy. Through examining the informal liquor retail (shebeen) sector, we demonstrate that enforcement actually produces informality in this sector. Illustrated with examples from one of our sites in Delft South, Cape Town, the article describes key aspects of shebeen business practice, including the responses to greater law enforcement. Notably, instead of closing shop or facing the hurdles of compliance, the great majority of shebeens continue to evade the law by downscaling their activities. This finding has implications not just for liquor policy in South Africa, but for understanding both theories of formalisation and theories of the informal economy.
Herrick, C. and Charman, A. 2013. Shebeens and Crime: The multiple criminalities of South Africa liquor and its regulation. SA Crime Quarterly, 45.
Abstract: Recent liquor legislation has centred on shebeens as conduits for crime and violence. In contrast to this perspective, we argue that shebeens form part of a complex constellation of relationships influencing alcohol-related violence. Drawing on a survey of shebeen owners in one community in Cape Town, this article explores how their experiences of crime and police raids are reshaping the dynamics of the liquor trade amid conditions of poverty. It argues that inconsistent and often arbitrary policing is driving many shebeens into adopting covert strategies to manage the risks of closure, fines, temporary imprisonment and bribes demanded by the police. In so doing, liquor law enforcement may have inadvertently precipitated new types of violence in township drinking environments. The paper explores the broader implications of these processes for efforts to address alcohol and violence in sustainable and equitable ways that improve quality of life and wellbeing for all.
Charman, A., Petersen, L., and Piper, L. 2012. From local survivalism to foreign entrepreneurship: the transformation of the spaza sector in Delft, Cape Town. Transformation, 78.
Abstract: Small, home-based grocery stores, known as spaza shops, are ubiquitous throughout the township areas of urban South Africa, constituting the single most important business in the informal economy. In recent years, this retail market has become a site of fierce competition between South African shopkeepers and foreign entrepreneurs, especially Somalis, and is often cited in the media as one reason behind the xenophobic attacks on foreigners. Drawing on original data collected in the Delft township in the city of Cape Town, this paper demonstrates that foreign entrepreneurs, overwhelmingly Somalis, have come to own around half of the sizeable spaza market in Delft in the last five years. This increase is attributable to larger scale and price competitive behaviour as these entrepreneurs operate collectively in terms of buying shops, and stock, as well as in stock distribution. Also important are some more customer friendly services too. Compared to the more ‘survivalist’ local business model where individual owners look to supplement existing household income rather than generate an entire livelihood, the Somali business model has rapidly outcompeted local owners, bringing spaza prices down and forcing many locals to rent out their shop space to foreign shopkeepers. Consequently, while South African shopkeepers resent the Somali influx, most consumers appreciate the better prices and improved service. The rise of Somali shopkeepers thus represents a transformation of business practice in the spaza sector from survivalist to entrepreneurial modes.
Charman, A. and Piper, L. 2012. Xenophobia, Criminality and Violent Entrepreneurship: Violence against Somali Shopkeepers in Delft South, Cape Town, South Africa. South African Review of Sociology, 43:3.
Abstract: Violence against Somali shopkeepers is often cited as evidence of xenophobic attitudes and violence in South Africa. However, as argued in this article, it is not necessarily the case that such violence is driven by anti-foreigner sentiment. Instead, as illustrated in the case of Delft, a poor, mixed-race area in the City of Cape Town, violence against spaza shopkeepers may also be explained in terms of criminal activities and economic competition in the form of ‘violent entrepreneurship’. This argument is made drawing on a survey of over 100 spaza shopkeepers, a household survey, police statistics, and interviews and focus groups with key stakeholders living in Delft. The key insight is that despite a recent history of intense economic competition in the spaza market in which foreign shopkeepers have come to dominate, levels of violent crime against foreign shopkeepers, 80 per cent of whom are Somali, are not significantly higher than against South African shopkeepers. In addition, while South African shopkeepers openly resent the Somali advent, most consumers remain indifferent to their presence and certainly prefer the lower prices. While our findings cannot be generalised beyond this case, they do alert us to the importance of locating arguments about xenophobia in the wider context of crime and violence in South Africa, as well as paying close attention to the local particularities that can turn general sentiment into xenophobic action.
Charman, A., C. Herrick & L. Petersen, 2014 ‘Formalising urban informality: micro-enterprises and the regulation of liquor in Cape Town’, The Journal of Modern African Studies.
Abstract: In early 2012, South Africa’s Western Cape Province enacted new alcohol control legislation amid mounting concern with the costs of alcohol-related harms. This has focused on urban shebeen closure to control the informal, unlicensed trade and the harms it generates through crime, violence and injury. In contrast to policy discourse, this paper contends that rather than existing outside regulation, the city’s shebeeners embrace multiple (self and collective) regulatory strategies to manage the inherent risks of their own informality. Drawing on novel empirical data including a ‘business census’ and interviews with the police and liquor traders across four Cape Town case study sites, the paper adds new depth to contemporary engagements with the appropriate and equitable regulation of the South African informal liquor trade.
Charman, A., L. Petersen, & T. Govender, 2014.‘Shebeens as spaces and places of informality, enterprise, drinking and sociability’, South African Geographical Journal.
Abstract: The paper explores the complex role of drinking in Sweet Home Farm (an informal settlement) through an examination of its contextual setting and its spatial characteristics. It examines, through a social-spatial ethnographic method and focus on a series of case studies, how shebeens are positioned in terms of their relationship to urban settlement, their role in providing publicly accessible venues within an over-crowed slum and influence on drinking outcomes. Our analysis of space focuses on the context of the informal settlement as an (un)regulated space which permits emergent spatial expressions and arrangements. Through a detail examination of four case studies, we consider the intimate configuration and organisation (place) of specific venues. From the perspective of place, the analysis examines the use (and non-use) of equipment/objects and internal architecture to define the character of particular typologies of establishments and their positioning vis-a-vis market niches. We reflect on the role and impact of shebeens on life within Sweet Home Farm, both in terms of providing space for socialisation and in supporting diverse cultures of drinking and business forms.

 

Ecology & Society

 

Petersen, L.M., Moll, E.J., Collins, R. & Hockings, M.T. 2012. Development of a compendium of local, wild-harvested species used in the informal economy trade, Cape Town, South Africa. Ecology and Society. 17(2):26.
Abstract: Wild harvesting has taken place over millennia in Africa. However urbanization and cash economies have effectively altered harvesting from being cultural, traditional, and subsistence activities that are part of a rural norm, to being a subculture of commonly illicit activities located primarily within the urban, cash-based, informal economy. This paper focuses on Cape Town, South Africa where high levels of poverty and extensive population growth have led to a rapidly growing informal industry based on the cultural, subsistence, and entrepreneurial harvesting and consumption of products obtained from the local natural environment. Through a process of literature reviews, database analysis, and key informant interviews, a compendium of harvested species was developed, illustrating the breadth of illicit harvesting of products from nature reserves, public open space, and other commonage within the City. The compendium records 448 locally occurring species (198 animals and 250 plants) that are extracted for medicinal, energy, ornamental, sustenance, nursery, and other uses. The sustainability of harvesting is questionable; nearly 70% of all harvested flora and 100% of all collected fauna are either killed or reproductively harmed through the harvesting processes. Furthermore, for the 183 indigenous flora species currently recorded on the International Union for Conservation of Nature (IUCN) Red List, 28% (51) hold assessments ranging from Declining through to Critically Endangered. With respect to the more poorly assessed fauna (46 spp.), approximately 24% (11) have Declining or Threatened status.
Petersen, L. M., Charman, A. J., Moll, E. J., Collins, R. J., & Hockings, M. T. 2014. Bush Doctors and Wild Medicine: The Scale of Trade in Cape Town's Informal Economy of Wild-Harvested Medicine and Traditional Healing. Society & Natural Resources. 27(3):315-336.
Abstract: South Africa’s organically emerged cultural business of traditional healing is almost exclusively reliant on wild-harvested resources extracted from wilderness areas or open-access commons. The wild medicine business has been described for much of South Africa, although is little understood in Cape Town, the urban centerpiece of the Cape Floristic Region (CFR). A census of different traditional healer typologies in five typical working-class residential areas (representing ∼71,500 residents) was conducted to assess the nature and extent of traditional medicine harvesting and trade. Extrapolating these findings for the city reveals a local industry of more than 15,000 practitioners collectively conducting trade worth US $15.6 million per year. More than 40% of the volume of traditional medicines traded in the city is harvested from the CFR. Future conservation approaches must consider that the business of traditional healing and dispensing wild-harvested medicines is both economically important and culturally entrenched.
Petersen. L. M., Moll, E. J., Hockings, M. T. and Collins, R. J. (2014) Implementing value chain analysis to investigate drivers and sustainability of Cape Town's informal economy of wild-harvested traditional medicine. Local Environment, 20 9: 1040-1061. doi:10.1080/13549839.2014.887667
Abstract: Despite a highly visible presence, policy-maker knowledge of the drivers and participants in the informal economy of wild-harvested medicinal plants in Cape Town remains limited. To illuminate the workings of this local cultural business activity, the researchers adopted value chain analysis (VCA) for dissecting harvesting, trading and consumer demand in the trade. The study included qualitative, open-ended interviews with 58 traditional healers and a quantitative consumer study of 235 township households. Cape Town’s traditional healers are numerous and potentially more uniquely culturally diverse than elsewhere, serving various community health needs. Healer groups enhance their healing reputation by utilising wild-sourced medicines – much of which is harvested locally. Their services remain culturally important and utilised by at least 50% of all consumer respondents. The VCA revealed a universal healer and consumer requirement for wild medicine stocks which has considerable implications for policy-making, protected area management and traditional medicine-oriented conservation projects. Read full text.

 

Citizen Action for Justice and
Democracy

 

Piper, L. & Wheeler, J. 2013. Pervasive But Not the Political Order: Violence, Xenophobia and Insecurity in Townships. IDS Agency and Governance Policy Brief 5.
Abstract: The South African team set out to explore the xenophobic violence of the last ten years that characterises many poor, black, urban settlements in the major cities of South Africa. The project moved from the assumptions that the xenophobic violence was (i) driven by armed non-state actors, and thus constituted a form of (ii) non-state rule by such groups, even if this rule was (iii) limited both in space to particular poor, black urban township, and in time to the expression of violence for moments (at most days) when the authority of the state was surpassed. These ideas were explored through a case-study site of Imizamo Yethu in Hout Bay, Cape Town, a settlement of around 30 000 people with a significant number of foreign residents and a history of at least some xenophobic violence. Data was gathered through mixed methods including a survey of 306 households, over a dozen interviews with key community leaders, and a series of half a dozen Participatory Action Research workshops with both local and foreign respondents, community leaders and ‘normal’ residents.
Shahrokh, T. & Wheeler, J.2014. Agency and Citizenship in a Context of Gender-Based Violence. IDS Evidence Report 73.
Abstract: This pilot evaluation explores how citizenship and agency among social activists can be fostered in contexts of urban violence at the local level. Many initiatives and approaches to addressing violence, particularly urban violence, tend to focus on security sector reform and policing, infrastructure and livelihoods. The role of citizens living in slums, informal settlements and housing estates in acting to stop violence and promoting peaceful relations is less understood and supported. In the urban context, violence is often a means of getting access to scarce resources (such as employment), political power, as well as enforcing discriminatory social norms such as those surrounding gender, age, race, religion and ethnicity. The focus of this pilot is to understand how a sense of democratic citizenship and the ability to act on that citizenship at the local level can contribute to reducing different types of urban violence and promote security, and how becoming an activist against violence can contribute to constructing a sense of citizenship. The case study for this analysis is based in the informal settlement of Khayelitsha, Cape Town, and focuses on community activism against gender-based violence.
Gupte, J., Shahrokh, T. & Wheeler, J.2014. Tackling Urban Violence in Mumbai and Cape Town through Citizen Engagement and Community Action. IDS Policy Briefing 71.
Abstract: Urban violence is an urgent and growing problem in many cities across the world. It comes in a multitude of forms such as gender-based violence, gangs and drug-related violence, police violence, religious riots, vigilante groups, and others. This briefing focuses on gender-based violence in Cape Town, South Africa, and juvenile crime in Mumbai, India, to explore how those living with this violence may be enabled to address it themselves. Those living in poverty find a variety of responses to violence and this briefing shares evidence of how citizens can contribute both independently and through collective action to building safer communities.
E. Mills, T. Shahrokh, J. Wheeler, G. Black, R. Cornelius & L. van den Heever, 2015. Turning the Tide: The Role of Collective Action for Addressing Structural and Gender-based Violence in South Africa. IDS Evidence Report 118, Empowerment of Women and Girls.
Abstract: The case study discussed in this Evidence Report explores the value and limitations of collective action in challenging the community, political, social and economic institutions that reinforce harmful masculinities and gender norms related to sexual and gender-based violence (SGBV). As such, the concept of structural violence is used to locate SGBV in a social, economic and political context that draws histories of entrenched inequalities in South Africa into the present. The research findings reinforce a relational and constructed understanding of gender emphasising that gender norms can be reconfigured and positively transformed. We argue that this transformation can be catalysed through networked and multidimensional strategies of collective action that engage the personal agency of men and women and their interpersonal relationships at multiple levels and across boundaries of social class, race and gender. This collectively needs to be conscious of and engaged with the structural inequalities that deeply influence trajectories of change. Citizens and civil society must work with the institutions – political, religious, social and economic – that reinforce structural violence in order to ensure their accountability in ending SGBV.
Howard, J., Wheeler, J, 2015. What community development and citizen participation should contribute to the new global framework for sustainable development? Community Dev J. 50 (4): 552-570.
Abstract: In September 2015, the sustainable development goals (SDGs) replaced the millennium development goals. The ambitions of the SDGs are to transform the current aid architecture and promote environmental, economic and social well-being on a global scale. The process of how this new global framework for sustainable development has been designed is unique in terms of the extent of opportunities for people’s participation. This article considers what lessons the debate on community development can offer the new global development framework. First, we analyse existing attempts to include ‘voices’ from the local level in the process of formulating the SDGs, drawing on existing literature on critical community development and citizen participation. We find that the inclusion of citizen perspectives in the SDG process was largely tokenistic. Building on this critique, we go on to explore the propositions within the critical community development literature about an approach to implementing the SDGs that could be truly transformative. Finally, we consider the insights from the critical community development literature in relation to the findings of a global network of participatory research that aimed to influence the SDG design and implementation. We explore how citizen’s participation in the new global framework could become more significant through deeper and more strategic forms of representation and engagement. In conclusion, we return to examine the prospects and practical requirements for a more bottom-up and transformative approach to implementing the new global framework.

 

Book Chapters

Charman, A.J.E., Petersen, L.M., 2015. Chapter 4. A Transnational Space of Business: The Informal Economy of Ivory Park, Johannesburg. Mean Streets. Migration, Xenophobia and Informality in South Africa. Southern African Migration Programme, the African Centre for Cities, International Development Research Centre.

Charman, A.J.E., Petersen, L.M & T. Govender, 2015. Street trade in Ivory Park,  in Mortenbock, P. and H. Mooshammer. Informal Market Worlds. The architecture of economic pressure. NAI010 Publishers.

Charman, A., 2013. ‘Chapter 2. Social protection and labour markets in Malawi: the centrality of agriculture’, in Social protection, growth and employment: evidence from India, Kenya, Malawi, Mexico and Tajikistan. UNDP.