1. DREAMERS OR CHANCERS: INTERROGATING MIGRANT MICRO- ENTREPRENEURSHIP RESILIENCE IN SPAZA SHOP BUSINESSES, SOWETO, SOUTH AFRICA Simamkele Bokolo and Trynos Gumbo Africa Institute of South Africa Urban Informality and Migrant Entrepreneurship in Southern African Cities 10 February 2014 Breakwater Lodge, Cape Town

2. 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.

3. 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.

4. 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

5. Questionnaires

6. Interviews Target Group Frequency Local Spaza Shop Owners 10 Officials5

7. Illustrations

8. Illustrations

9. 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

10. 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

11. RESEARCH FINDINGS : SOWETO CASE STUDY

12. 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.

13. GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D
Migrants are also continuing to enter the spaza shop business of Soweto.

14. GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D

15. GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D

16. GENERAL CHARACTERISTICS OF SPAZA SHOPS IN SOWETO CONT’D

17. STRATEGIES USED BY MIGRANTS
Strategy
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.

18. STOCKING

19. STOCKING CONT’D Frequency of stocking Goods stocked Everyday
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

20. 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.

21. CONTRIBUTIONS BY MIGRANT SPAZA SHOPS
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.

22. RENTAL CONTRIBUTIONS

23. 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

24. 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.

25. DREAMERS OR CHANCERS?

26. DREAMERS
Foreigners have managed to penetrate the spaza shop business in Soweto that was traditionally a means of survival for locals
The process of acquiring premises, skills and network developments
Placing or locating their spaza shops strategically -Proximity, convenience
Financing, Marketing and Pricing – business success
Stocking - a mixture of small and big -responding to demand
Operating hours –convenience and customer care and satisfaction

27. 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

28. 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.

29. 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.

30. Historical Context (democratic dispensation, economic liberalisation)
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)

31. THE END THANK YOU