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A Look inside South African Micro Businesses - Blog

A Look inside South African Micro Businesses

A Look inside South African Micro Businesses

South Africa’s informal sector is large. Some estimates put the value of informal businesses to the economy at R450m in 2010 – a number that is a conservative estimate.

One of the great tasks in the nation is growing these businesses. Many informal businesses – or micro businesses – are located in low-income housing areas. Developing businesses in these areas has a number of positive effects – it brings more capital into these areas, it drives better conditions for living and business, and it encourages other entrepreneurial minds to give the business world a go.

South Africa’s informal sector is large. Some estimates put the value of informal businesses to the economy at R450m in 2010 – a number that is a conservative estimate.

One of the great tasks in the nation is growing these businesses. Many informal businesses – or micro businesses – are located in low-income housing areas. Developing businesses in these areas has a number of positive effects – it brings more capital into these areas, it drives better conditions for living and business, and it encourages other entrepreneurial minds to give the business world a go.

One remarkable recent study of South Africa’s micro business sector takes a comprehensive look at the business activities that go on in a northern Johannesburg, Gauteng area called Ivory Park. The project, called Emergent City, collects research from two main sources, the Sustainable Livelihoods Foundation, and UrbanWorks Architecture

The aims of this study are to better understand the dynamics in one particular location, in order to develop insights into how businesses operate currently, and how the environment for entrepreneurs can be improved. If a significant share of South African informal micro enterprises can move from being unregistered to registered, not only will the tax coffers get a boost, but the ability of these firms to grow will be improved as funding becomes available.

The project is divided into seven parts, with images accompanying text, in order to explain an environment that might otherwise puzzle the outside observer. The ‘Sections’ section, for instance, uses photos and diagrams to show and explain how public space is use in high streets, taxi ranks, and neighbourhood streets. It shows how different kinds of economic activity in different sections work with the allocated spaces. Paired with the ‘Annotated Street Life’ section, the viewer gets a deep insight into how space is currently used for commerce.

The ‘'Trade’ and ‘Structures’ sections catalogue the various types of micro businesses found in the area – 17 in total – and then provides a series of narratives, provided by the micro business owners of the area. The structures that many micro businesses rely on can be incredibly small – a fire drum for braaied meat, mielies, and so on – or relatively large, like a shipping container.

The practical value for this research might not be immediately obvious. However, for a micro business lender, or a small business accountant looking to help micro businesses move into the formal sector, having a thorough catalogue of the kinds of commerce that currently exists provides a new way to interpret the capital owned by micro businesses. Seeing a business environment opened up with research is important for those whose experience has tended towards more conventional business environments.

Further, for those in the government, using this sort of research as a guide can help service delivery and interventions – for instance, a smart planner might push for wider pavements so as to accommodate more pedestrian traffic, in order to get more eyes on the product for street based vendors. If a property developer is looking to invest in low-income business premises, research of this calibre can inform the kind of developments, as well as the likelihood of successful business rentals.

The Emergent City looks at the many ways micro businesses work, and provides ideas as to how these small businesses might come to lead the elevation of the areas in which they operate.