Immigrant entrepreneurship in South African informal sector shops

Mabolloane, Lebusa Maurel
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High unemployment is often highlighted as the one of most significant impediments to poverty reduction in South Africa. One of the major reasons for the high unemployment levels is the disproportional dependence of labour market entrants on formal sector occupations. The South African formal sector is unable to accommodate the rising number of job seekers in the country and this has led to the establishment of small informal businesses. Since 2005 there has been an emergence of immigrant entrepreneurs that have become major competitors in the South African informal sector, specifically the spaza shop market. The purpose of this research was to determine the reasons behind immigrant entrepreneurs’ entry into the spaza shop market, and to analyse the use of social and human capital in migrant-owned spaza shops. The research was completed by conducting a cross-sectional ethnographic study. Semi-structured interviews where held with immigrant spaza shop owners from two South African townships. In addition, the researcher immersed himself in the spaza shop environment by spending several hours observing each respondents and partaking in the daily activities of the spaza shops. The results of the study showed that there were various reasons why foreign nationals opted for entrepreneurship in the spaza shop market. These included push factors such as limited job opportunities in the mainstream job market, citizenship requirements and lack of qualifications. Three major pull factors were recognised as responsible for drawing migrant entrepreneurs into the spaza shop trade. These factors are: lack of government regulation in the informal sector, low start-up capital requirements and existing family involvement in the spaza shop market. The study also supports the human and social capital theories. Immigrant entrepreneurs in the South African spaza shop market relied more on social capital than they did on human capital.
Small business ;Informal sector (Economics) ;Immigrants -- Economic conditions;Entrepreneurship -- South Africa.