A study of informal sector entrepreneurial activity within the townships in Emfuleni Local Municipality

Abstract

Past research has established that South Africa has a problem of high unemployment rate. This is accompanied by a low entrepreneurship activity that tends to lag far behind that of other developing countries as measured over the years by the Global Entrepreneurship Monitor (GEM) research. Entrepreneurship and small business are well recognised for their role in both economic growth and job creation. This study set out to investigate the informal sector entrepreneurial activity in Emfuleni Local Municipality which has experienced large scale retrenchments over the past decade. A literature survey was conducted to understand the characteristics, successful practices and weaknesses that distinguish the informal sector from the formal sector. The empirical study which was conducted by means of survey questionnaire among the informal sector entrepreneurs indicated that entrepreneurship in the informal sector can provide a form of income for some people that cannot be absorbed in the formal labour market. The findings of the study was that this area of entrepreneurship is dominated by the youth as more than half of the respondents were below the age of 35 years. It was also found that most of the entrepreneurs have never been formally employed which may be problematic when it comes to skills. While most of them recognised the importance of training and skills, they were also positive that they can benefit from training especially in the area of marketing and promoting their product and services.These entrepreneurs however do not seem to be benefiting from government initiatives such as the workshops offered by the local municipality and other assistance offered by the government agencies. The low skills level of most of these entrepreneurs may also hinder their ability to grow their businesses beyond the one–man operations. It is recommended therefore that the organisations such as the National Youth Development Agency double their efforts in helping the youth to become successful small business owners. The government agencies, particularly those targeting the youth should make a conceited effort to provide training in particular to these people if they are to make a lasting impact on job creation.