The informal sector accounts for
the majority of employment in the townships and rural areas of South Africa.
But the country has barely scratched the surface in terms of the potential the sector has to uplift people from poverty
and contribute to reducing the high unemployment rate. Small businesses in the informal sector face many obstacles.
They often lack the training, knowledge, funds or equipment needed to become sustainable.
The sector is experiencing lower growth than in other developing countries, with many small businesses remaining low-income, unstable enterprises.
Minister Zulu explained that, after the oppression of apartheid, democratic South Africa started with a smaller base of small-, medium- and micro-sized enterprises (SMMEs) than its developing country peers.
“Under apartheid, black people were restricted from running businesses and owning land. In other developing countries, the informal sector is thriving.
We need to catch up and turn the situation around,” said Minister Zulu.
Less than five years ago, the Department of Small Business Development was established to find solutions to these problems and start implementing them on the ground.
Minister Zulu is currently on a journey across the country, to carry out the department’s Informal and Micro Enterprise Development Programme’s (IMEDP) purpose of providing support to small businesses.
Uplifting the informal sector A partnership between the department and the Small Enterprises Development Agency (SEDA), the IMEDP offers grants of up to R80 000 to informal and micro enterprises.
The goals are to improve their competitiveness
and sustainability, and to transform them into formal businesses that are part of the mainstream economy.
“Even people in the poorest areas must begin to do things for themselves. But people cannot be expected to do this when the environment is not conducive,” noted Minister Zulu.
“We are working together with provinces and local structures to look at what needs to be done to change the economic situation of people in townships,
beyond people waking up in the morning and looking for a job. It is all about transformation of the economy.”
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