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This study explores the labour market linkages between the informal and formal sectors, using the first four waves of the National Income Dynamics Study data. The main focus is on three groups of e...

An important component of the informal economy in South Africa, the Spaza sector is portrayed as dominated by foreign nationals who outcompete South African shopkeepers on price. Indeed, this business competition from foreign nationals is a key reason given to explain xenophobia in South Africa. This article sets out to interrogate this widely held assumption. Drawing on evidence from over 1000 Spaza shops from South Africa’s three main cities, the article makes the case that business competitiveness does not correspond with ‘foreign’ or South African identities in a simple way. Firstly, while citizenship or nationality is a factor, it is not captured by the labels of ‘foreign’ versus South African, as there are significant differences by nationality within the ‘foreign’. Secondly, not all foreign nationalities out-compete South Africans on price. Thirdly, place matters too, not only because we find different nationalities in different cities, but also because there are different patterns of price...

After a decade of unsuccessful efforts to migrate informal businesses to South Africa's formal economy there remains little understanding of the dynamics in this sector, especially as regards micro-enterprises. International literature discusses ‘exit’ and ‘exclusion’, holding that poor law enforcement is the reason for the persistence and growth of the informal economy. Through examining the informal liquor retail (shebeen) sector, we demonstrate that enforcement actually produces informality in this sector. Illustrated with examples from one of our sites in Delft South, Cape Town, the article describes key aspects of shebeen business practice, including the responses to greater law enforcement. Notably, instead of closing shop or facing the hurdles of compliance, the great majority of shebeens continue to evade the law by downscaling their activities. This finding has implications not just for liquor policy in South Africa, but for understanding both theories of formalisation and theories of the informa...

Government and business interest in the informal sector has been aroused by the sector's perceived ability to provide employment and thus lessen the politically destabilizing effects of unemployment. In the light of research carried out in a black township near Durban, the possible effects of deregulation on the development of the informal sector are examined. It is suggested that, since the sector's principal role was found to be to supplement an often meagre formal sector wage and there were few opportunities for capital accumulation, deregulation alone would be insufficient to promote growth of the sector.