The Viability of Informal Micro-enterprise in South Africa

This paper analyzes entrepreneurs in South Africa‘s informal sector. The aim is to determine the extent to which African informal retail trade spawns viable enterprises. To assess the prospects for South Africa‘s informal retail sector, questionnaires were obtained from owners of small-scale establishments in random sample taken throughout the country in 2007. Owner salary and sales data provide a lens to understand viability. Regression analysis tests hypotheses identified as crucial to higher income and sales, including access to capital, size, male/female ownership, business training, and the proximity shopping centers. Also tested is the influence of urbanization externalities on sales and owner income. Access to capital and positive urban externalities have a strong influence on the ability to generate a sustainable livelihood for informal entrepreneurs. After controlling for startup capital, it appears that women entrepreneurs face distinct difficulties in generating a viable income through informal retail trade.