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DREAMERS OR CHANCERS: INTERROGATING MIGRANT MICRO-ENTREPRENEURSHIP RESILIENCE IN SPAZA SHOP BUSINESSES,
SOWETO, SOUTH AFRICA
Simamkele Bokolo and Trynos GumboAfrica Institute of South Africa
Urban Informality and Migrant Entrepreneurship in Southern African Cities
10 February 2014Breakwater Lodge, Cape Town
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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.
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
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Questionnaires
Ethiopians Bangladesh Pakistan Somalis0
2
4
6
8
10
12
14
16
Migrant respondents
Nationality
No.
of r
espo
nden
ts
6
Interviews Target Group Frequency
Local Spaza Shop Owners 10
Officials 5
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Illustrations
8
Illustrations
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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
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.
Less than 2 years 2-4 years 4-6 years 6-8 years02468
1012
Years of residence in SA
years
No.
of p
eopl
e
GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
• Migrants are also continuing to enter the spaza shop business of Soweto.
3%13%
17%
30%
13%
13%
7% 3%Period of business operation Less than 1 month
1-6 months
6-12 months
12-18 months
18-24 months
24-30 months
30-36 months
36 months and above
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GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
Below 30 30-60 60-90 90 and above0
2
4
6
8
10
12
14
3
8
13
6
Customers served per day
No. of customers
No.
of s
hop
owne
rs
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GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
33%
27%
23%
17%
Sourcing of funds
SavingsLoans from relativesHire purchaseRotating Savings Credit Associ-ation
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GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
37%
27%
20%
10%7%Assets value
Below R10 000
R10 001- R15 000
R15 001- R20 000
R20 001- R25 000
R25 001 and above
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STRATEGIES USED BY MIGRANTSStrategy 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 23%
46%
12%
12%
8%
Money used to stock goods
Below R250R251-R500R501-R750R750-R1000R1001 and above
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STOCKING CONT’D Frequency of stocking Goods stockedEveryday 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 business.
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CONTRIBUTIONS BY MIGRANT SPAZA SHOPSContributions 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.
RENTAL CONTRIBUTIONS
17%
52%
24%
7%
R1000-R1500
R1501-R2000
R2001-R2500
R2501 and above
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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 and residences
Lack of funds to expand businesses
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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DREAMERSForeigners 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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CHANCERSThey 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.
Growth of Migrant Micro-
entrepreneurship
Historical Context
(democratic dispensation,
economic liberalisation)
Spatial Context (regional-
location of SA within the SSA, central location
of JHB in SA, proximity of
Soweto to JHB)
Structural context (social
e.g. black Africans, high population, economic,
governance, religious)
Institutional Context (laws
and regulations e.g. Asylum,
primary rights; globalisation)
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THE END
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