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WORKSHOP PRESENTATION WORKSHOP THEME: URBAN INFORMALITY AND MIGRANT ENTREPRENEURSHIP IN SOUTHERN AFRICAN CITIES CAPE TOWN: 10-11 February 2014.

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Presentation on theme: "WORKSHOP PRESENTATION WORKSHOP THEME: URBAN INFORMALITY AND MIGRANT ENTREPRENEURSHIP IN SOUTHERN AFRICAN CITIES CAPE TOWN: 10-11 February 2014."— Presentation transcript:

1 WORKSHOP PRESENTATION WORKSHOP THEME: URBAN INFORMALITY AND MIGRANT ENTREPRENEURSHIP IN SOUTHERN AFRICAN CITIES CAPE TOWN: February 2014

2 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Introduction & background: Cape Town CBD and all its suburbs are hosts of many immigrant entrepreneurs (small business owners). Many of them are successful business people; displaying entrepreneurial skills. They survive by these businesses.

3 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Introduction & background: Over millions of years, humans have developed specialised skills that have allowed them to survive and thrive as a species. From learning to create and use tools, to language and social skills, humans have adapted and innovated in the given environment of each age (Toren, 2012).

4 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Introduction & background: If people want to be successful entrepreneurs, there are skills that they must each learn and hone in order to thrive in today’s business world, and they need to be able to adapt those skills to their surroundings (Toren, 2012),

5 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Introduction & background: 15% of university graduation rate in RSA (Letseka and Maile, 2008:3), one of the lowest in the world, Huge challenge wrt to the necessary skills in many fields. However, a number of foreign nationals with a variety of skills that could be useful to the economic growth suffer all kind of prejudices including police harassments (Rogerson, 1999).

6 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Introduction & background: Due to the lack of any social and financial support, foreign nationals gain their livelihood by operating small businesses, and their high involvement in businesses continues to attract different social organisations and academics alike to investigate the extent to which their entrepreneurial activities benefit local citizens.

7 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Research objectives: 1.Assess the biographical correlates with regards to the involvement in the business, 2.Identify the type of businesses African immigrants entrepreneurs are involved in, 3.Determine how African immigrant entrepreneurs select business locations, 4.Determine means by which entrepreneurship skills are transmitted from African immigrants to locals.

8 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Literature review: entrepreneurial skills Lack of critical skills sets is a cause of over 90% of businesses failure (Khoo, 2012). Essential skills to succeed as an entrepreneur: creativity and innovation, organisational development, management and people development, sales and marketing, money management operations and systems development (Khoo, 2012).

9 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Literature review: Further entrepreneurial skills: negotiation skills, network skills and leadership skills (Gomez-Mejia, Balkin, and Cardy, 2005:335) Thinking of becoming an entrepreneur is to acquire “personal skills” in a sense of developing entrepreneurial mind set, essentially abandoning the get rich quick mentality, as well as have integrity (Martins: 2012).

10 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Literature review: Negotiation skills are skills required when an exchange of goods or services between two or more parties takes place. With negotiation skills both parties ensure to find common ground, which is referred to as a win-win negotiating (Martins, 2012). Gomez-Mejia, Balkin et al. 2005:336 underscore the above opinion.

11 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Networking skills (personal or business) entails gathering information and building alliances. A personal network is based on relationships between the entrepreneur and other entrepreneurs, suppliers, creditors, investors, friends, academia and others (Gomez-Mejia et al. 2005:336).

12 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Leadership skills: Quality leaders provide a shared vision for others to work toward common goals. As leaders, entrepreneurs inspire and motivate employees to do what is good for the enterprise, even when it is not in their short-term interest (Gomez-Mejia et al. 2005:338). Martins (2012), Toren (2012) and Altman (2009) and Dad (2012).

13 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Marketing and sales skills: To have revenues and profits, businesses first need to have customers and to get customers the entrepreneur must be able to market the business and possess the skills to close the sale (Mahin, 2012). Every business is a people’s business, and whatever business one is in, it involves selling and the more skilled an entrepreneur is at the sales, the more successful the business will be (Toren, 2012).

14 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Financial skills: Entrepreneurs are in business to make money. It is therefore important that they have the ability to handle that money well (cash flow) (Frances, Suzanne, and Verdick, 2012). Communication skills is the hub of all other skills, and if an entrepreneur does not have it, none of the other skills above will be fully developed, no matter how hard she/he tries (Toren, 2012)

15 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? METHODOLOGY: – SAMPLE Target population: immigrant entrepreneurs operating from the suburbs of Bellville, Cape Town CBD, Nyanga and Wynberg. Reasons of choosing these areas: a heavy presence of immigrant entrepreneurs.

16 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Qualification of respondent: any immigrant entrepreneur who employs any number of South Africans. Sample size: 120 African immigrant entrepreneurs. Sampling technique: convenience (one of non-probability sampling techniques).

17 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? METHODOLOGY: – INSTRUMENT FOR DATA COLLECTION: A semi-structured questionnaire was designed to be used in a form of scheduled structured interview. Pilot-test was conducted to ensure clarity, comprehension and ease of use. Final questionnaire was designed after pilot- test.

18 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? The instrument was utilised for collecting data measuring the respondents’ characteristics, the types of businesses they run, the obtaining of business locations. A set of questions to the immigrant entrepreneurs to measure the transmission of entrepreneurial skills from foreigners to locals was included in the questionnaire.

19 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? A set of questions to the South African employees to measure the level of entrepreneurial skills transmission was included in the questionnaire. Data collection: Data were collected in two different ways:  Scheduled structured interview between data collectors and respondents  Self-administered questionnaires due to time constraints from the respondents

20 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Data collection: Respondents participated with their own consent and were free to ask any question for clarifications. Respondents were also free not to answer to any question they were not comfortable with. The collected data were presented in a tabular format, while analysis was done by categorising questions according to the research objectives.

21 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Validity: The study relied on similar researches about the positive impact of immigrants on South Africans and since the sample was drawn from a diverse of origins of immigrants on African continent, content validity was maintained. Also, employees that are South Africans have confirmed the findings.

22 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Reliability: To ensure clarity, correct wording and comprehension of instructions, as well as the easy use of the questionnaire and that the study was reliable, a pilot study was run thereby maintaining construct validity. Furthermore, findings were compared with LR findings and similarities were established.

23 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Findings: Objective 1: Respondents’ biographical info: – 97% males: Reasons: – African males are more entrepreneurial than females – Many economic migrants leave their partners behind in their venture of looking for greener pastures – Traditionally, African males support family financially.

24 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? This finding correlates with Rogerson’ (1999) finding that immigrants’ businesses are run by single, male entrepreneur who works 64 hours a week, and 6 days a week. The age group of is the most represented and covers 47% of all the respondents. The majority of respondents from Somalia have only completed primary school due to the inexistence of central government for more than two decades (Marriot, 2008:108).

25 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Objective 2: Activities African immigrants are involved in: 35% involved in clothing 28% : footwear products, bags and belts. 23%: selling retailing ethnic clothes and foods, motor-car repairs/panel beating, and hairdressing salons Other activities include operation of restaurants, nightclubs, cafes, music shops, several import- export businesses and practising as traditional healers.

26 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Malawian and Mozambicans immigrants: clothes production or curio selling, Zimbabweans are more visible in motor-car repair and curio-selling activities. West Africans are mainly in ethnic businesses related to clothes, food retailing and operation of restaurants. Also (Rogerson, 1999:6) reached the same conclusion.

27 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Objective 3: Location preference: 39%: prefer to run their businesses in big suburbs rather than in town centres because of the rental of the premises, which is higher in the CBD. 31%: prefer to run their businesses in a town centre (clientele all day long) 30% prefer to run their businesses in townships but with sentiments of fear.

28 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Objective 4: Entrepreneurial skills transmission: Training and/or teaching: 42% Experience: 33% Imitation: 25 %

29 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? 15 South Africans employees were also interviewed concerning their opinions about entrepreneurial skills transmission. Variables used: – Training and teaching: 28% – Experience: 22% – learning and imitation: 32% – and motivation to engage in entrepreneurial activity: 18%

30 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Recommendations: 1. The prospective change of immigration law takes into account the immigrant entrepreneurs (providing training, financial support, provision of proper traveling documents, etc). 2. Academics to further their researches into the field of immigrant entrepreneurship.

31 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? South Africa presents credible economic and political settings that guarantee better living conditions, hence it will continue to be an attractive destination for many foreigner migrants. The paper has argued that local population benefit from the foreign immigrant entrepreneurs by learning how to run a small business, therefore, migrants cannot be regarded as liabilities.

32 Migrants and their entrepreneurial skills in South Africa: Assets or Liabilities? Limitations: Sample size Study only conducted in Cape Town. Results reflect the current situation and apply in Cape Town. The study only involved African immigrants i.e. those who come from African continent.


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