Message of Support by Deputy Minister Elizabeth Thabethe, MP, Delivered to the Women Informal Traders at Sea Point Civic Centre: Cape Town, 25 October 2011

I greet you all on behalf of the Department of Trade & Industry

On the 30th August 2011 during the dti‘s Women’s Month Celebration here in the Western Cape, Belhar Sports Complex, I made a commitment that I will return to meet with you and have a discussion on the issues of women in the informal sector. Today I am back to honour this commitment. This should be a reflection that Government is serious about listening to you and working together with you in finding solutions to the challenges that constrain your participation and contribution to South Africa’s economic growth.

As you would know, Government has continued to introduce measures to economically empower women and women in businesses. While there has been success in certain areas, there is still a huge potential on the women population that is still untapped. The majority of the active female population lies dormant while those who make attempts to engage in establishing enterprises continue to be confined in the micro and small-scale enterprises and the informal sector. Their integration into the formal sector is still constrained by limited access to finance, information, property, technology and technical skill.

Studies by the Global Entrepreneurship Monitor show that a far higher percentage of women entrepreneurs (as compared to men) are involved in the informal sector (80 per cent of female-owned businesses are informal, compared to 65 per cent of male-owned businesses). According to the South African White Paper, by far the largest sector is the survivalist enterprise sector. This means that most people are active in the informal sector where they have little institutional support. There has been a suggestion that the informal sector in South Africa accounts possibly for approximately 30 per cent of working South Africans, or between one and two million enterprises (World Bank 2006).

South Africa’s small enterprise sector, has in the last 17 years been full of excitement, challenges, disappointments and transformation.

The close interaction of political, social and economic changes is felt particularly strongly at the grassroots level of small and micro enterprises – in the townships, in city centres, in the new upmarket shopping malls and in backyard industries. At the same time, small enterprises could not be shielded from the impact of global economic crisis and technological transformations as well as the rise in competition in virtually all sectors, places and operational spheres which South Africa experienced after its reintegration into the global economy. Against this background, public sector support for small enterprises whose aim is to facilitate their emergence, profitability and growth, takes an important place in the broader spectrum of the government’s socioeconomic policies.

According to the Bureau of Market Research at the University of South Africa, the informal or unrecorded economy accommodated a substantial part of the South African workforce in 2004/2005. In 1980, 92,3 % of all employment was offered by the formal economy and 7,7 % by the informal sector. This changed in 2004 to a share of 79,4 % for the formal economy and 20,6 % for the informal economy. The labour absorption rate (ie the percentage of the population aged 15 to 64 years employed in the formal economy) dropped from 45,7 % in 1980 to just more than a quarter (27,7 %) in 2004.

The 2, 1 million informal workers are accommodated in a dual informal system, namely the second economy and the informal part of the modern (or first) economy. The second economy is characterized by survivalist businesses established as, inter alia, curbside (sidewalk) traders, traders in pedestrian malls and at transport interchanges, and small home-based businesses such as spaza shops. The first economy is modern but also houses an informal component. Informality in this sector originates primarily from the cumbersome procedures and regulations.

In this context, therefore, it is essential that government creates suitable legislative and regulatory environments that support development. The operating environment must allow for a wide variety of business support services that adequately meet the needs of the population including the rural and poor. In this support provision, priority should be given to business management skills to empower the majority of our informal sector operators to graduate into formal economy where growth opportunities are possible. Added to this, is the provision of financial services to the enterprising poor ensuring that it reaches the people where they are, especially in peri- urban and rural areas and at a cost more affordable than the costs currently charged by micro-finance practitioners.

To assist government to effectively intervene in the informal economy, it is therefore desirable to see informal traders getting organized into bodies or chambers that will represent their interests and also ensure that government support reaches their members. the dti and its agencies will continue to work at addressing such concerns and proposals.  Some of these agencies are here today and they can speak for themselves. We want to have a thriving economy where all citizens, irrespective of race, gender etc would have contributed. This cannot be achieved unless the women of South Africa rise up and commit to be part of this economic revolution

the dti will continue to play a catalytic role in ensuring that women who commit to taking their roles in the economy by engaging in entrepreneurship activities get the necessary support that they require.
Once again I wish to thank the province for hosting us.