OR CHANCERS INTERROGATING MIGRANT MICROENTREPRENEURSHIP RESILIENCE IN SPAZA SHOP BUSINESSES SOWETO SOUTH AFRICA Simamkele Bokolo and Trynos Gumbo Africa Institute of South Africa ID: 505175
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DREAMERS OR CHANCERS: INTERROGATING MIGRANT MICRO-ENTREPRENEURSHIP RESILIENCE IN SPAZA SHOP BUSINESSES, SOWETO, SOUTH AFRICASimamkele Bokolo and Trynos GumboAfrica Institute of South AfricaUrban Informality and Migrant Entrepreneurship in Southern African Cities10 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 HartThe concept has since then received widespread acknowledgement as an integral part of the global economic developmentIt 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 sectorJohannesburg 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.2Slide3
PROBLEM
IDENTIFICATIONWorld 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 causesWorld two problem – the world of science – Migrants have largely dominated the informal economic sector within the country’s large cities such as JohannesburgWhy have migrants done very well in South Africa’s informal economy, particularly those operating spaza shops in Soweto, out-playing local informal entrepreneurs.3Slide4
RESEARCH METHODOLOGY
Case study design was applied Soweto high density and low income township was chosenMixed methods approach was used Quantitative – Deductive, closed questions and experimentalQualitative – Inductive, open–ended questions and exploratorySampling – Stratification, Random; Purposive and Snowballing sampling techniquesTriangulation – a variety of data collection techniques were use – questionnaires, interviews, observations Slide5
Questionnaires
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Interviews
6Target GroupFrequency
Local Spaza Shop Owners
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Officials
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Illustrations
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Illustrations
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RESEARCH METHODOLOGY CONT’D
Data AnalysisStatistical use of excel – quantitative dataContent analysis – qualitative data LimitationsNon co-operationLanguage barrierAbsence of shop ownersArrogance of spaza owners
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THEORETICAL FRAMEWORK
The study is underpinned by 2 sets of theoriesFirstly, theories informing migration patterns.Neoclassical theory - migration is informed by economic considerations of relative benefits and costs.Secondly, theories informing migrant entrepreneurship in host countriesCultural 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 behaviourThe theory views migrant entrepreneurship as simply an alternative to unemployment rather than as a sign of migrants wanting to succeed in the businesses10Slide11
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.Slide13
GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
Migrants are also continuing to enter the spaza shop business of Soweto.Slide14
GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
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GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
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GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
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STRATEGIES USED BY MIGRANTS
17StrategyExplanation
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.Slide18
STOCKING
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STOCKING CONT’D
Frequency of stockingGoods 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 factorCause 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 SHOPS
21ContributionsExamples
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.Slide22
RENTAL CONTRIBUTIONSSlide23
CHALLENGES FACED BY SPAZA SHOP OWNERS
Both migrant and local spaza shop owners face a number of challenges in operating their businesses.23Migrant spaza shopsLocal 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 locationSlide24
CHALLENGES OF MIGRANT SPAZA SHOPS
ConcernExplanation
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?25Slide26
DREAMERS
Foreigners have managed to penetrate the spaza shop business in Soweto that was traditionally a means of survival for localsThe process of acquiring premises, skills and network developments Placing or locating their spaza shops strategically -Proximity, convenience Financing, Marketing and Pricing – business successStocking - a mixture of small and big -responding to demandOperating hours –convenience and customer care and satisfaction 26Slide27
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 migrantsClear separation of use, i.e. business and residential useProper regulation of migrant owned spaza shops by city officialsMigrant spaza shops should be included in policy making.28Slide29
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.29Slide30Slide31
THE END
THANK YOU 31