Ahmr vol 3(2) final press (sep 1 2017) min

AFRICAN HUMAN MOBILITY REVIEW
Volume 3 Number 2 May – August 2017
Guest Editor’s Note: Mythologies of Migration and the Informal Sector
Benign Neglect or Active Destruction? A Critical Analysis of Refugee and
Informal Sector Policy and Practice in South Africa
Jonathan Crush, Caroline Skinner and Manal Stulgaitis
Refugee Entrepreneurial Economies in Urban South Africa
Jonathan Crush, Godfrey Tawodzera, Cameron McCordic, Sujata Ramachandran and Robertson
Tengeh
Comparing Refugee and South African Migrant Enterprise in the Urban
Informal Sector
Jonathan Crush and Cameron McCordic
Security Risk and Xenophobia in the Urban Informal Sector
Sujata Ramachandran, Jonathan Crush and Godfrey Tawodzera
The Owners of Xenophobia: Zimbabwean Informal Enterprise and
Xenophobic Violence in South Africa
Jonathan Crush, Godfrey Tawodzera, Abel Chikanda and Daniel Tevera
Linking Harare and Johannesburg through Informal Cross-Border
Entrepreneurship
Godfrey Tawodzera and Abel Chikanda
Informal Entrepreneurship and Cross-Border Trade between
Mozambique and South Africa
Abel Chikanda and Ines Raimundo

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AHMR
_________________________________________________________________________________
Chief Editor
Dr Mulugeta F. Dinbabo University of the Western Cape, South Africa
Board Members
Dr Beneberu Assefa Wondimagegnhu Bahir Dar University, Ethiopia
Dr Delali Margaret Badasu University of Ghana, Ghana
Dr Edmond Agyeman University of Education, Winneba, Ghana
Dr Ernest Angu Pineteh University of Pretoria, South Africa
Dr Joseph Yaro University of Ghana, Ghana
Prof Laurence Piper University of the Western Cape, South Africa
Dr Linda Oucho African Migration and Development Policy Centre, Kenya
Prof Loren Landau University of Witwatersrand, South Africa
Dr Lothar Smith Radboud University, Netherlands
Dr Meselu Alamnie Mulugeta Bahir Dar University, Ethiopia
Prof Raul Delgado Wise Universidad Autónoma de Zacatecas, Mexico
Dr Razack Karriem University of the Western Cape, South Africa
Dr Sharon Penderis University of the Western Cape, South Africa
Prof Simon Bekker University of Stellenbosch, South Africa
Prof Shimelis Gulema Stony Brook University, New York
Prof Thomas Faist Bielefeld University, Germany
____________________________________________________________________________________
AHMR is an interdisciplinary peer-reviewed on-line journal created to encourage and facilitate
the study of all aspects (socio-economic, political, legislative and developmental) of Human
Mobility in Africa. Through the publication of original research, policy discussions and evidence
research papers, AHMR provides a comprehensive forum devoted exclusively to the analysis of
contemporaneous trends, migration patterns and some of the most important migration-related
issues. AHMR is published by the Scalabrini Institute for Human Mobility in Africa (SIHMA) a
member of the Network of the Scalabrinian Centers for Migration Studies, with institutions in
New York, Paris, Rome, Buenos Aires, Sao Paulo and Manila.
Articles and reviews in AHMR reflect the opinions of the contributors. All rights reserved. No
part of this publication may be reproduced without the written permission from the publisher.
ISSN 2410-7972 (online) ISSN 2411-6955 (print). Webpage: www.sihma.org.za
Copyright © 2017 by the SCALABRINI INSTITUTE FOR HUMAN MOBILITY IN AFRICA
47, Commercial St, 8001 Cape Town – South Africa
Tel. 0027 021 461 4741, Email: editor@sihma.org.za

iii
African Human Mobility Review
___________________________________________________________________________
Volume 3 Number 2 May – August 2017 – Special Issue
IV-XIV Guest Editor’s Note: Mythologies of Migration and the Informal Sector
Jonathan Crush
751 Benign Neglect or Active Destruction? A Critical Analysis of Refugee
and Informal Sector Policy and Practice in South Africa
Jonathan Crush, Caroline Skinner and Manal Stulgaitis
783 Refugee Entrepreneurial Economies in Urban South Africa
Jonathan Crush, Godfrey Tawodzera, Cameron McCordic, Sujata Ramachandran
and Robertson Tengeh
820 Comparing Refugee and South African Migrant Enterprise in the
Urban Informal Sector
Jonathan Crush and Cameron McCordic
854 Security Risk and Xenophobia in the Urban Informal Sector
Sujata Ramachandran, Jonathan Crush and Godfrey Tawodzera
879 The Owners of Xenophobia: Zimbabwean Informal Enterprise and
Xenophobic Violence in South Africa
Jonathan Crush, Godfrey Tawodzera, Abel Chikanda and Daniel Tevera
910 Linking Harare and Johannesburg through Informal Cross-Border
Entrepreneurship
Godfrey Tawodzera and Abel Chikanda
943 Informal Entrepreneurship and Cross-Border Trade between
Mozambique and South Africa
Abel Chikanda and Ines Raimundo

iv
Guest Editor’s note: Mythologies of Migrants in the Informal Sector
On a recent visit to Washington DC, I had an animated discussion with a taxi
driver who was an avid supporter of Donald Trump. The driver was not the
stereotypical white, middle-aged, small-town, working-class, non-college-
educated, angry voter who put Trump in the White House. Rather, he was a
former television producer and poet from India who had immigrated to the
US in the 1990s, and was adamant that Trump would stop the “flood of illegal
aliens” into the country. His vigorous defence of Trump was a surprise, as was
his buy-in to Trump’s anti-immigrant discourse of threat. There are few issues
in the contemporary world that generate so much uninformed debate and
misinformation as immigration (Blinder, 2015; de Haas, 2008; Hellwig and
Sinno, 2017; Valentino et al., 2013). In a recent three-volume study on the
mythologies of migration, Arcarazo and Wiesbrock (2015) argue that there
are three foundational and intertwined myths structuring citizen reactions
and government responses to established and new migration flows. The first
myth is that sovereign territories and local labour markets are being
“swamped” by migrants to the detriment of citizens. The second is that all
migration is driven by poverty in countries of origin. And the third is that
migration is economically negative for receiving countries. These myths, and
variants thereof, are present in public and policy responses to migrants
running informal-sector businesses in South Africa (Crush and
Ramachandran, 2015).
The swamping myth is particularly evident in the numbers game popular with
South African politicians, government officials and the media. In a briefing to
an Ad Hoc Parliamentary Committee on the work of the Inter-Ministerial
Committee on Migration (IMC) in 2015, for example, Minister Jeff Radebe
observed that “a heavy influx of foreign nationals has led to migration laws
not being adhered to due to border management laxity.” As a result, “it was
very clear [to the Minister at least] that in townships and in villages foreign
nationals were dominating” (PMG, 2015). Here, in just a few words, he
performed the common linguistic trick of juxtaposing migration, unlawful
entry, and the disadvantaging of South Africans. As if to emphasise that there
could be no other outcome from migration, he also asserted that there were
5-6 million migrants in the country, representing 10% of the population (NA,
2015: 5.4). A local current affairs television programme, Carte Blanche, later
claimed that there were as many as 6 million Malawians in South Africa,
representing one-third of that country’s population (Africa Check, 2017).
Others have implausibly claimed that there are 800,000 Nigerians in South

v
Africa. Statistics South Africa (SSA) is thus currently trying to work out why
Census 2011 recorded a total of 2,188,872 foreign-born people in the country
while the 2016 Community Survey recorded only 1,578,541 (SSA, 2016:25).
The implication that the foreign-born population might conceivably be
declining does not, as the SSA admits, “conform to expected outcomes” (SSA,
2016).
Similar hyperbole has clouded the issue of the number of asylum-seekers in
the country. The UNHCR (2016: 44) controversially claimed in 2015 that the
number of asylum-seekers in South Africa at the end of 2014 was 1,057,600.
South Africa, according to the UNHCR, therefore hosted more asylum-seekers
than any other country in the world, and more than double the number in
Germany in second place (UNHCR, 2016: 44). In its next annual report on
forced displacement, however, the UNHCR (2017: 45) noted that there had
been a “sharp reduction” from 1.1 million to 218,300 asylum-seekers at the
end of 2016. It would have much more helpful to admit that the 2015 figure
was a mistake and that South Africa was never, in fact, host to the largest
number of asylum-seekers (Stupart, 2016). Regrettably, the claim and the
numbers became part of government’s case for abandoning the rights-based
post-apartheid model of refugee protection and its replacement with the
draconian proposals of the recent Refugees Amendment Act (Cape Times,
2016). The White Paper on International Migration admits that the number is
actually less than 100,000 but still goes on to endorse and justify the new
exclusionary approach. The damage has been done, with fake numbers and
the authority of the UNHCR used to support the myth of swamping with
extremely detrimental implications for refugee protection.
The second foundational myth is that poverty is the root cause of all migration.
This is the myth that collapses the many complex and varied causes of
migration into one and homogenises all migrants into a single impoverished
category. This myth expresses itself in various ways in South African policy
discourse. For example, politicians regularly claim that South Africa is a
destination for migrants from poverty-stricken Africa, conveniently
overlooking that many countries are growing much faster economically than
South Africa and that the South African economy and job creation in the
country are major beneficiaries of investment in Africa. The motives of
migrants coming to South Africa from the rest of Africa are extremely diverse
and, in general, it is not the poorest who migrate. Even if we grant that poverty
is a root cause of some migration from neighbouring countries like Zimbabwe,
Mozambique and Lesotho, it does not follow that migrants are desperate and

vi
faceless victims. They are, in the main, highly motivated individuals with
extraordinary degrees of ingenuity, tenacity and resilience.
The homogenising and (mis)naming of migrants is a regular South African
pastime. There are the derogatory epithets that are used on the streets and in
communities to insult non-South Africans to their faces. As one Zimbabwean
cited in a paper in this special issue commented: “The children learn it from
their parents. They call us makwerekwere. Do you know even small kids can
call you makwerekwere? Is that not xenophobic?” However, there are other,
only slightly more sanitised, homogenising labels that erase diversity and
emphasise exclusion in policy discussion. In the 1990s, the apartheid-era term
“aliens” was used by politicians and the media to describe all migrants. This
term was replaced in the 2002 Immigration Act, but by an equally alienating
term: the “foreigner.” The terms “foreigner” and “illegal foreigner” are now
common currency, courtesy of the Act, and are used incessantly to draw a
sharp distinction between those who belong in South Africa and all those
(non-South African-born) who supposedly do not. Government also
frequently divides migrants into just two categories: economic migrants (said
to constitute 90% of the population) and refugees (the other 10%). An
associated claim repeated in the White Paper, for which there is also no proof,
is that 90% of refugees are really economic migrants.
The third foundational myth relates to the supposed negative economic
impacts of migrants on receiving countries. This myth has consistently been
undermined by research evidence that points to the positive impacts of
migration and migrant entrepreneurship on host economies (Kloosterman
and Rath, 2003; Fairlie and Lofstrom, 2015). In the South African case, this
mythology takes on a particular inflection: that is, that migrants are “stealing
our jobs”; a claim with superficial plausibility given the high rates of
unemployment in the country. However, past surveys have shown that the
proportion of South Africans who have actually lost a job to a migrant is
relatively low. And the calculus fails to take into account the economic
advantages to South Africans from hiring migrants and, by extension, the
benefits to the state in increased tax revenues. The negative economic impacts
argument has crystallised in recent years around opposition to the activities
of asylum-seekers and refugees in the informal sector, whose right to establish
and operate businesses in the informal economy has nevertheless been
upheld by the courts (Crush et al., 2015; Rogerson, 2016). The IMC, for
example, maintains that migrants are “dominating trade in certain sectors
such as consumable goods in informal settlements which has had a negative

vii
impact on unemployed and low skilled South Africans” (NA, 2015). The IMC
ignores the positive economic impacts of refugee and migrant informal
entrepreneurship including job creation for South Africans, profits for local
retailers and wholesalers, licensing fees paid to municipalities, cheaper goods
for poor consumers, and rent paid to South African property owners
(Basardien et al., 2014; Jinnah, 2010; Peberdy, 2016, 2017; Radipere, 2012;
Tawodzera et al., 2015). Indeed, South Africans have been publicly
condemned by government ministers for renting their properties to refugee
and migrant entrepreneurs (NA, 2015: 7.17).
The papers in this special issue on migrant entrepreneurship (and the projects
on which they are based) test all three foundational migration myths. First,
they examine claims that South Africa and, by extension, the South African
informal sector is being “swamped” by “foreigners.” Gauteng is generally
reckoned to be the province with the largest number of migrants. SSA (2016)
calculates that the province had 801,308 non-South African-born residents in
2016 or 6% of the total population. In most other provinces, the proportion is
1-3%. A survey of the Gauteng informal sector found that over 80% of small
businesses in the informal sector were still owned by South Africans (Peberdy,
2015). Certainly, there are more migrants in the informal sector in 2017 than
there were in 2000 or 2010 and there are more migrant than South African
entrepreneurs in parts of some cities (and vice-versa in other areas). Because
refugees, asylum-seekers and other migrants are shut out of sectors of the
formal labour market (as they have been in the security industry, or because
employers will not accept Section 22 and 24 permits as bona fide legal
entitlements to work), the numbers working informally have inevitably
swelled. Working in the tough and unrelenting environment of the informal
sector is not necessarily the first choice of the many migrants and refugees
who are more than qualified for formal employment.
Second, these papers provide a more nuanced and humanised picture of so-
called foreigners and their activities in the informal sector than is suggested
by the notion that they are all desperate survivalists fleeing poverty and strife
in other African countries. While a significant number of refugees say that they
work in the informal sector because they cannot get formal-sector jobs, many
also exhibit strong entrepreneurial characteristics, orientation and ambition.
This emerges both in their attitudinal profile of suitability for running their
own businesses and in the innovative business strategies that they have
developed. Perhaps most surprisingly, given the blanketing clouds of myth,
refugees are far more likely than their South African counterparts to want to

viii
contribute to the development of South Africa through running an informal
business. As the two papers in this collection focused on informal cross-
border traders clearly show, there is also significant entrepreneurial
orientation amongst these primarily female informal sector participants. Like
their less mobile counterparts, cross-border traders working the
transportation corridors between Harare, Maputo and Johannesburg are
dedicated and enterprising individuals with high levels of motivation.
Third, the papers in this collection take issue with the predominantly negative
stereotyping of migrant entrepreneurs to justify and promote harsher
sanctions against them. National, provincial and local level campaigns by the
police and army – with telling names such as Operation Fiela (‘sweep’ in
English), Hardstick and Clean Sweep – aim to create city environments swept
of informal entrepreneurship by migrants and refugees. However, in case such
“operations” are viewed (as they were by the courts) as cynical and
unconstitutional, it also seems necessary to target informal entrepreneurs
with the most negative language possible. The IMC, for example, asserts that
the impact of foreign national domination “is compounded by business models
used by migrants to discourage competition such as forming monopolies,
evading taxes, avoiding customs and selling illegal and expired goods” (NA,
2015). Or again, the previous Minister of Home Affairs pointed to the
seriousness of “the dynamics of migration, crime, drugs, prostitution, fraud
and unfair labour practices” (Gigaba, 2017). The most efficient, and
misleading, way to highlight the supposedly negative impact of migrant and
refugee entrepreneurship is to directly associate it with criminality. The
papers in this collection instead show that crime is a very real business
challenge for refugee and migrant entrepreneurs. Their many positive
economic contributions are made despite, not because of, crime.
In addition to replicating the foundational mythology of migration, South
Africa has several of its own homegrown myths about migrant entrepreneurs
in the informal sector. First, there is the myth, articulated by the Minister of
Small Business Development, that refugees enjoy a competitive advantage
over South Africans because trading and vending is ingrained and instinctual.
She claimed in an interview that foreign spaza shop owners are “better at
running shops than the local owners – they have a great network system. And
also that’s how they live. From the moment they are born, they are introduced
to trade. Their mothers, uncles – everyone trades. They start at an early
age…How are they able to make it when our people can’t? It is because they
know business. It is in their blood” (Zwane, 2014). Only a small proportion of

ix
the refugees and other migrant business owners interviewed for these studies
had experience running an informal sector enterprise before they came to
South Africa, however. The success of refugees and migrants in the informal
economy is not because entrepreneurship is innate, as the minister claimed,
but rather a function of hard work, innovation and competitive business
strategies. The tools of the trade were acquired on site.
The second homegrown myth is that South Africans are bad informal
entrepreneurs unable to compete with the “foreigner.” Many South Africans
have decided to opt out of the spaza business because it requires less work
and is more remunerative to rent their property to refugees and other
migrants. That said, there is still stiff competition in the informal economy
between South Africans and non-South Africans, as there is between South
Africans and other South Africans and between non-South Africans of one
nationality and another (Piper and Charman, 2016). There is also evidence
that antagonism towards refugee business owners is stoked by South African
trader associations who would rather not compete openly and fairly.
However, as the papers in this collection demonstrate, South Africans are
certainly not incompetent or incapable of competing. They, too, have their
own competitive strategies and carve out market niches, especially within the
informal food economy, where they operate with success.
Third, there is the myth that the post-2008 upsurge in violent attacks against
migrant-owned businesses in the informal sector is purely the work of fringe
criminal elements. According to the IMC, “the main causes of the violent
attacks (are) criminal actions that started with stealing of goods from foreign
owned spaza shops by South African criminals who are often drug addicts”
(NA, 2015). This is certainly called into question by the large crowds,
including many parents and children, that surround refugee and migrant-
owned shops during episodes of collective looting. Whenever there is a
particularly vicious flare-up, or after a spate of looting and murder,
government ministers and Cabinet are quick to proclaim that crime, not
xenophobia, is the driver (Misago, 2016). Indeed, there has been a persistent
strain of xenophobia denialism ever since former president Thabo Mbeki
proclaimed in 2008 that South Africans were not xenophobic. Most recently,
the IMC has vigorously denied the existence of xenophobia in the country:
“South Africans (are) not xenophobic; no evidence was found to indicate that
South Africans were xenophobic” (NA, 2015). The IMC has clearly not
acquainted itself with the large body of attitudinal research that proves
precisely the opposite (Crush et al., 2013; Gordon, 2016, 2017). As the paper

x
in this collection on Zimbabweans in the informal sector suggests, migrants
themselves have no hesitation in naming xenophobia for what it is. They say
South Africans are the owners of xenophobia, refer to violence against their
small businesses as “the xenophobia”, and recount numerous harrowing
incidents that are either triggered by xenophobia or, as in the case of service
delivery protests against government, quickly turn xenophobic.
Finally, there is the argument that xenophobia is not a factor because violence
and vulnerability to crime comes equally to all who work in the informal
sector. The suggestion here is that South Africans and non-South Africans are
equally vulnerable and to single out violence against the latter is to ignore the
identical plight faced by South Africans. Some statistical evidence on relative
vulnerability has been advanced in support of this argument (Piper and
Charman, 2016). The paper in this collection on business risk presents
alternative evidence. While it is true that South Africans in the informal sector
are not immune from crimes such as robbery and looting, the prevalence is
significantly higher amongst refugees and in different parts of the country.
Many refugees in towns in Limpopo had started businesses in large cities but
moved to what they assumed would be a safer operating environment after
the levels of violence and xenophobia became overwhelming. It is safer, but it
is certainly not safe.
South Africa is the process of a major overhaul of its migration and refugee
protection systems. In the case of migration for work, there are some grounds
for optimism in the recognition that South Africa is integrated into, and
benefits from, a regional SADC economy. The White Paper on International
Migration contains proposals for a streamlined skills-based immigration
policy and a system of work and trading permits for SADC citizens. In the case
of cross-border traders, the proposed system seems unnecessarily
bureaucratic unless the intention is to try to control numbers through quotas.
This is unworkable and it would be far simpler to allow visitors to the country
to both buy and sell goods. Whether proposals to issue quota-based permits
to migrants from other SADC countries will ever see the light of day is
questionable given the current upsurge in public complaints, now supported
by the unions, that migrants are taking jobs from South Africans. However, it
is the proposals for restructuring South Africa’s post-apartheid refugee
protection regime that are likely to have the most far-reaching impact on
livelihoods in the informal economy. As the first paper in this special issue
argues, the intention is to make South Africa undesirable by moving from an
urban integration towards a border encampment model, denying asylum-

xi
seekers their current right to pursue a livelihood while waiting for a hearing,
and ensuring that no refugee ever qualifies for permanent residence, no
matter how long they have been in the country. The proposed changes rest on
the shaky foundation of myth.
This issue is a contribution to the ongoing task of testing anti-migration
mythologies with fact. It comprises a selection of papers from three projects
implemented by the Southern African Migration Programme (SAMP) (see also
www.samponline.org): (a) the Growing Informal Cities project, an IDRC-
funded partnership between the African Centre for Cities (ACC), the Gauteng
City Regional Observatory (GCRO), Eduardo Mondlane University and Queen’s
University; (b) the Migrants in Countries in Crisis (MICIC) project between the
University of the Western Cape, the University of Limpopo, the Balsillie School
of International Affairs, the International Centre for Migration Policy
Development and the International Migration Institute at Oxford University;
and (c) the UNHCR-funded Refugee Economic Impacts project, a partnership
between researchers at the Universities of Cape Town, Limpopo and Western
Cape and the International Migration Research Centre.
Prof Jonathan Crush*
CIGI Chair in Global Migration and Development,
International Migration Research Center
Balsillie School of International Affairs
Waterloo, Canada
jcrush@balsillieschool.ca
* A recipient of numerous academic awards and honours, Professor Crush founded the Southern
African Migration Programme (a consortium of Canadian and African researchers) in 1997. In
2005, he co-founded the African Food Security Urban Network; a network of Canadian and
African universities, NGOs and municipal governments. In 2014, he established the Hungry
Cities Partnership; a research, policy and capacity-building network with partners in Canada,
Mexico, Jamaica, South Africa, Mozambique, Kenya, India and China. He also works with
the African Centre for Cities at the University of Cape Town, where he holds an Honorary
Professorship. He has authored or edited 14 books, over 150 journal articles and book chapters
and numerous published reports for governments, international agencies, and civil society
organizations.

xii
Acknowledgements
The contributors to this Special Issue wish to thank the following for their
support: the International Migration Research Centre, the International
Development Research Centre, the European Union and the UNHCR Geneva.
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AHMR, Vol.3 No2, May-August 2017 – Special Issue
751
Benign Neglect or Active Destruction? A Critical Analysis
of Refugee and Informal Sector Policy and Practice in
South Africa
Jonathan Crush*, Caroline Skinner** and Manal Stulgaitis***
Abstract
To fully comprehend the disabling policy environment in which refugees in South
Africa attempt to carve out a livelihood, it is important to analyse two largely
independent but overlapping streams of policy-making. This paper first
examines the post-apartheid refugee protection regime and traces how and why
a generous right-based approach has been progressively comprised by growing
restrictionism, exclusion and bureaucratic ineptitude. The 2017 Refugees
Amendment Act and White Paper on International Migration represent the
culmination of this process. While both are probably unimplementable and will
be the subject of numerous court challenges, they can be seen as a major retreat
and an increasing failure to protect. The second part of the paper traces the
history of national and municipal informal sector governance since the early
1990s. Since so many refugees are forced or choose to work informally, the
uncertainty and confusion this history has produced is of particular relevance.
Refugee entrepreneurs have regularly been the victims of general and targeted
informal sector eradication campaigns. Therefore, there is a fundamental
contradiction between a refugee protection policy that demands self-reliance
from refugees and informal sector policies that undermine self-reliance at every
turn.
Keywords Refugee protection, Refugees Act, detention centres, informal
sector, Home Affairs.
* International Migration Research Centre, Balsillie School of International Affairs, Waterloo,
Ontario, Canada N2L 6C2 Email: jcrush@balsillieschool.ca
** African Centre for Cities, University of Cape Town, Cape Town, South Africa
*** Independent Consultant, Cape Town

752
Introduction
The past decade has seen South Africa’s apparently generous asylum and
refugee system flounder, characterised by ever-growing wait times for status
decisions, increased barriers for application and renewal of permits, and
growing disregard for refugee law and court orders (Amit, 2011, 2012, 2015;
Johnson, 2015; Polzer Ngwato, 2013). The South African Government has
increasingly taken the position that the country’s post-apartheid refugee
protection legislation is far too generous and needs to be revised in the
direction of more restrictions and fewer rights. This has resulted in major
changes to the seminal 1998 Refugees Act in the form of the 2017 Refugees
Amendment Act, and the promise of a new approach to migration and refugee
protection in the Green Paper and White Papers on International Migration in
South Africa. These developments seek to align South Africa with the more
exclusionary and restrictive treatment of asylum-seekers and refugees in
many other countries (Fiddian-Qasmiyeh et al., 2014).
In the absence of material support from the government or the United Nations
High Commission for Refugees (UNHCR), one of the primary livelihood
strategies of asylum-seekers and refugees has been to create work for
themselves in the informal sector. The policy environment in which refugee
entrepreneurs run informal businesses on the streets and in residential areas
is framed by policy and legislation at national, provincial and local levels.
Those working in the informal sector face an ambiguous policy environment
that has occasionally supported but largely ignored – and at times actively
destroyed – informal sector livelihoods and those of migrant and refugee
businesses in particular.
To fully understand the disabling policy environment within which migrants
and refugees establish and operate their enterprises in the South African
informal sector, we need to bring together these two streams of analysis.
Therefore, this paper begins with a discussion of South Africa’s changing
refugee policies and practices and traces the erosion of the protective and
progressive refugee policy approach that characterised the immediate post-
apartheid period (Handmaker et al., 2011). In the context of the refugee
livelihoods which are central to the country’s local integration approach, it is

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vital to have effective and efficient recognition of refugee status and an
accompanying basket of rights to support survival through employment or
entrepreneurship (Jacobsen, 2005). The paper then reviews post-apartheid
informal sector policy and practice. While the informal sector largely fell
through policy gaps in the first ten years of democracy, the analysis suggests
that increasing attention has been paid to this issue in recent years. While
there have been longstanding tensions between foreign and South African
informal sector operators, from 2012 an overtly anti-foreign migrant
sentiment has been expressed in official policy and practice.
The paper underlines the need for both a rights-based asylum system and
more progressive policy towards the informal sector. Refugee entrepreneurs
and service providers agree that obtaining refugee status is key to enabling
refugee entrepreneurship and sustainable livelihoods. Despite the obstacles
put in their way, refugee business owners appear to be succeeding, at least on
par with their South African counterparts. This suggests that secure status and
the associated basket of rights are serving refugee entrepreneurs in the
context of sustainable livelihoods. While these arguments should mark a road
map to successful local integration, the South African Government continues
to pile on administrative and logistical barriers to the asylum process and
prospective refugees. These measures add to the ambiguity around migration
management in the country and complicate the prospects for refugees to
provide for themselves in a safe and sustainable manner.
The paper is based on a review of media and official government sources,
published and grey literature, and extended interviews with key informants in
Cape Town, Limpopo and Gauteng during 2015. A total of 30 in-depth
interviews were conducted including with sector researchers, refugee and
diaspora associations, refugee rights NGOs, law enforcement, the City of Cape
Town and Western Cape Governments and international organisations (such
as the IOM and UNHCR). Interviews were also conducted with national
government departments including Home Affairs, Labour and Small Business
Development.

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Refugee Policy and Practice
South Africa is a signatory to the 1951 United Nations Convention on the
Status of Refugees and the 1969 OAU Convention Governing the Specific
Aspects of Refugee Problems in Africa. Since the end of apartheid, it has built
a reputation as a protective and progressive refugee receiving country. South
Africa’s 1998 Refugees Act integrated international refugee protections into
domestic law and exceeded international standards in important respects. The
Act made generous allowances for freedom of movement, access to health and
education services, some social protection and the right to work. Most notably,
the Act embraced local integration over encampment, which was a progressive
choice in Africa at the time (Handmaker, 2001). Underpinning the Act was a
political and ideological approach which posited that refugees were permitted
and fully expected to temporarily integrate into the host country and benefit
from all attendant protections and rights granted to citizens by the
Constitution. Refugees who had been in the country for five years and were
still unable to return were entitled to apply for permanent residence. In return
for these progressive policies, both government and the UNHCR incurred
minimal costs in providing material support for asylum-seekers and refugees
in the country.
In the years since these somewhat idealistic beginnings, South Africa has seen
a distinct deterioration in the rights-based approach to refugee protection
(Amit, 2011, 2015; Handmaker et al., 2011; Igglesden & Schreier, 2011;
Landau, 2006). International praise for South Africa’s liberal approach has
been eroded by chronic processing delays, poor and ill-informed adjudication
and the corruption and mismanagement which has become endemic to the
asylum process. South Africa has one of the longest asylum adjudication
periods in the world, in some cases it lasts many years. After 2007, economic
free fall in Zimbabwe imposed significant pressure on the asylum system as
migrants from Zimbabwe moved in significant numbers to South Africa (Crush
& Tevera, 2010; Crush et al., 2015). Arguably, South Africa’s failure to
anticipate and account for the entry of Zimbabweans en masse created a
situation whereby the asylum system became contorted into something of a
‘catch all’ for generalised migration into South Africa. It is worth noting,

755
however, that part of the reason for the dramatic increase in asylum-seeking
from Zimbabwe was the establishment of a Refugee Reception Office in
Musina, close to Zimbabwe, specifically to speed up the issue of asylum-seeker
permits.
Those close to the process argue that the demand for a place in South Africa’s
asylum queue, with its attendant right to work, rendered the system
ineffectual at conducting legitimate asylum adjudication. In government
discourse, this has translated into a strident denunciation of “bogus” claimants
and “abuse of the system” by economic migrants (Mabuza, 2016). The official
position is that 90% of asylum-seekers are economic migrants, a figure
apparently based on the rate of acceptance of refugee claims (DHA, 2016: 29).
However, this conclusion is a non-sequitur, given the well-documented delays
in adjudication, the arbitrariness of many decisions, and the practice of
adjudicating claims by country or origin and not the personal experiences of
the individual claimant (Amit, 2012).
The reasons for this shift from rights and protections towards exclusion and
control are seen by some as the inevitable consequence of life in a country
where the majority still struggle to meet basic needs and there is competition
for scarce public resources such as education, health care and shelter, as well
as employment and other livelihood opportunities (Hassim et al., 2008). In this
zero sum game, every advantage that a refugee or asylum-seeker enjoys
necessarily disadvantages a South African. However, Gordon (2016) shows
that South Africans do not oppose refugee protection for reasons of economic
self-interest. Rather, their opposition, and that of many policy-makers, is
further evidence of the deeply xenophobic character of South African society,
with its attendant failure to acknowledge the positive economic, social and
cultural contribution that refugees and asylum-seekers make to the country
(Crush et al., 2015). As Gordon (2016: 1) argues, “public animosity towards
refugees in South Africa has motivated anti-immigrant riots, violence, and
prejudice which has negatively impacted on refugee protection.” Landau and
Duponchel (2011: 19) further suggest that “a protection strategy dedicated to
maximizing refugees’ freedom and integration may prove politically untenable
in an era of pronounced anti-immigrant hostilities.”

756
Government argues that the breakdown of the asylum system in South Africa,
and the need for a new approach, is because it has been overwhelmed by
economic migrants. For a while, it argued that there were a million
unprocessed asylum-seekers in the country, a figure that was uncritically
reproduced by the UNHCR and the media. The fact that the system itself was
badly under-resourced, staffed by small numbers of poorly-trained officers
and riddled with corruption was less-often acknowledged. The Green Paper
now admits that this figure was erroneous and that in mid-2015, South Africa
had only 78,339 active asylum-seekers (Section 22 permit holders) and had
issued 119,600 refugee (Section 24) permits since 2002 of which only 96,971
were still active. Having previously claimed that the country was one of the
largest refugee destinations in the world, this admission represented a
considerable climb-down by the Department of Home Affairs (DHA) (Stupart,
2016). Therefore, rather than being motivated by a need to address an overrun
system, the recent developments are better interpreted as a response to the
desire of South Africans to make the country an undesirable destination for
asylum-seekers by narrowing refugee rights and imposing additional
limitations on the ability of refugees to find safety and security in South Africa.
Within government, four inter-connected strategies have been developed to
achieve these ends. All are embodied in recent administrative decisions
including the 2016 Refugees Amendment Act (which passed Parliament in
March 2017 and currently awaits Cabinet approval before becoming law) and
the Green Paper and White Papers on International Migration in South Africa
(DHA, 2017). The first strategy has been to move away from an integration
towards an encampment model of protection. The DHA has now publicly
declared its intention of establishing what it calls Asylum-Seeker Processing
centres away from the country’s urban areas (which is widely and correctly
seen by critics as a euphemism for encampment) (DHA, 2016). Plans have
apparently been drawn up for the location and physical infrastructure of
detention centres close to the Zimbabwe and Mozambique borders (Mah &
Rivers, 2016) and, according to one source, construction has begun on a
detention centre at Lebombo. The White Paper notes that these detention
centres will accommodate all asylum-seekers during their status
determination process (DHA, 2016: 65).

757
Following from the proposal that asylum-seekers should be kept in secure
facilities while their claims are adjudicated, freedom of movement and
integration into local communities (as at present) would be halted. So-called
“low risk” asylum-seekers might be released into the care of national or
international organisations and family or community members. However,
asylum-seekers would not have the automatic right to work or study “since
their basic needs will be catered for in the processing centres” (DHA, 2016:
68). To try and pre-empt the inevitable, and justifiable, criticism towards
South Africa’s introduction of a policy of encampment, the Green Paper
awkwardly asserts that “these centres should not be considered as contrary to
the policy of non-encampment but as centres for mitigating security risks
posed by irregular migration. Only refugees and not asylum seekers will be
allowed to integrate into communities” (DHA, 2016: 66). The protestation that
this somehow represents a continuation of the country’s non-encampment
policy is disingenuous in the extreme. Under this policy, asylum-seekers will
be sequestered in detention centres for the duration of the adjudication
process, which is unrealistically envisioned to be a 60 to 90 day process.
Whether that process takes place within the proposed period or not, during
that time asylum-seekers will be fully dependent on government or the
UNHCR for food, shelter, health care, education and other basic needs.
Refugee service providers overwhelmingly agree that this is a no-win
situation: if services to refugees are better than services available to South
Africans, South Africans will cry foul and poor South Africans may even
present as refugees in order to access direly needed services. On the other
hand, if services in the detention centres are worse, South Africa will suffer the
criticism of the international community for failing in its duty to respect the
rights of refugees within its borders. The cost of constructing and maintaining
camps for large numbers of asylum-seekers will be massive and the UNHCR
has indicated that it will not underwrite detention costs despite appeals from
the South African Government (which has previously constrained the UNHCR
from offering material assistance to asylum-seekers.) If South Africa faced an
influx of asylum-seekers in the future akin to the over 200,000 Zimbabweans
between 2006 and 2009, it is hard to see how these centres would even begin
to cope.

758
The second major strategy is to steadily put in place procedural,
administrative and logistical hurdles that complicate refugees’ already
tenuous status and sustainability in the belief that this will act as a disincentive
to asylum-seekers coming to the country and make life extremely difficult for
them if they do come. The most obvious example is the DHA cutting the
number of Refugee Reception Offices in the country in half, closing busy offices
at Crown Mines (Johannesburg), Cape Town and Port Elizabeth Refugee
Reception Offices (RRO). Only three RRO’s remained open: in Musina, Durban
and Pretoria. The closure was “not merely a technical, operational decision,
but one which impacts on the basic principles of the asylum system, namely
access (for initial applications, renewals, status determination interviews and
appeals) and administrative efficiency and fairness” (Polzer Ngwato, 2013).
Legal challenges have produced contradictory outcomes. The Supreme Court
of Appeal (SCA) ordered the re-opening of the Port Elizabeth RRO, a judgment
which the Department has been very slow to implement. In contrast, the Cape
Town High Court decided that the Cape Town RRO could remain closed. The
2016 Refugees Amendment Act gives the Director General of Home Affairs the
power to “dis-establish” any RRO and to force a whole category of asylum-
seeker (defined in terms of country of origin or “a particular gender, religion,
nationality, political opinion or social group”) to report at a designated RRO.
Second, and partly as a result, the administrative requirement that asylum-
seekers should renew their permits every one to six months at one of the RROs
(rather than an ordinary Home Affairs Office) imposes considerable financial
and other hardship. The period granted on renewal appears to be entirely
arbitrary and, according to some refugees, depends on how much they are
willing to pay under the table. Individuals and families who have found safety,
shelter, kin, communities, work or school in other parts of the country are
forced to travel to one of the RROs to ensure that they remain in status.
Furthermore, wait-times for receiving or renewing a permit can be
considerable. The scene outside the Marabastad (Pretoria) RRO was described
by one organisation as follows:
They go to Home Affairs to Marabastad to get their asylum permit. So they
come to Pretoria, there are queues and queues, never-ending queues. And

759
then each country has a day. So now you have come to the Home Affairs office
and it’s not your turn, your turn only comes after 4 days. And then you are told
that if you have ZAR 2,000, these officials walk around and if you have money,
you give them the money and go to the front of the queue. If you don’t have
money, then you are right at the back. And then you have to come back the
following week on the day of your country.
In a situation where asylum-seekers are almost exclusively self-supporting,
without the assistance of government or the international community, they
sacrifice valuable time and money, risk jeopardising employment, and travel
with or leave small children behind when they do so. Under the 2016 Act,
failure to renew an asylum-seeker permit within one month of expiry now
leads to automatic revocation of status, forfeiture of the right to renewal and
treatment as an “illegal foreigner” under the Immigration Act (that is, arrest
and deportation). Asylum-seekers whose claims are refused are also to be
treated as “illegal foreigners.” An asylum-seeker with an expired permit is also
guilty of an offence and liable to a fine and imprisonment of up to five years or
both. Any individual or group of asylum-seekers or refugees can now be
arrested and deported on the vaguely-worded grounds of “national interest,
national interest or public order.” These provisions would seem draconian
even if the system was efficient and transparent, a description that certainly
does not apply here.
The third strategy is to undercut court judgements that have affirmed the right
of asylum-seekers and refugees to employment and self-employment, the
essence of the post-apartheid model of refugee integration. The 2016 Act
explicitly seeks to overturn a judgment that permitted asylum-seekers to work
in South Africa while awaiting adjudication of their claim. Prior to the future
holding of asylum-seekers in detention centres (as envisaged by the Green
Paper), the onus will now be on “family and friends” to support the asylum-
seeker for their first four months in the country. If such support is not
available, the UNHCR and NGOs are permitted to provide “shelter and basic
necessities.” In both situations, the asylum-seeker is prohibited from working,
while government assumes no responsibility for their care and protection. The
Standing Committee on Refugee Affairs is also now empowered to unilaterally

760
decide under what conditions asylum-seekers may work or study. If they are
permitted to do so, they are required to provide a letter from the employer or
institution within fourteen days from the date of employment or enrolment.
The employer or institution can be fined ZAR 20,000 if they fail to provide the
documentation in the prescribed period. The right to work can also be revoked
by the Director General. The Act says nothing about the right to access
informal work or self-employment, a key component of earlier court
judgments.
The fourth strategy which will directly affect those with refugee status is to try
and ensure that protection is ever only temporary by making it extremely
difficult for refugees to progress to permanent residence and eventual
citizenship. The 1998 Act stated that refugees were entitled to apply for
permanent residence after five years of continuous residence in South Africa
and refugees “of good and sound character” could be issued with permanent
residence permits irrespective of the length of sojourn in the country. This is
clearly one reason why the maximum length of a refugee permit was set at four
years. It is unclear how many long-term refugees have tried to access or been
granted permanent residence. DHA (2016: 29) notes that there were 1,175
applications between mid-2014 and early 2016, but does not say how many
were successful.
In 2013, the DHA stripped all refugees from Angola of their refugee status
irrespective of length of residence and then issued them with two-year non-
renewable temporary residence permits (called Angolan Cessation Permits or
ACPs) (Carciotto, 2016). In 2016, after extensive negotiations with the DHA, it
was agreed that former Angolan refugees could apply for permanent
residence. The Western Cape High Court then issued an order by which all
former Angolan refugees with expired ACPs could apply for permanent
residence. In February 2017, the Scalabrini Centre of Cape Town submitted
1,757 applications on behalf of Angolan refugees to the DHA. The successful
court action not only prevents the summary deportation of former Angolan
refugees but potentially provides an important precedent for future cases of
cessation. However, the 2016 Act gives the Minister of Home Affairs new
powers to issue an order which ceases recognition of an individual refugee or

761
group of refugees or to revoke refugee status, without the obligation to
provide any justification for such an action. The right of a refugee to apply for
permanent residence has also been extended from five to ten years.
A final policy issue of relevance to this paper is asylum-seeker and refugee
access to financial services. As other papers in this special issue show, refugee
entrepreneurs have very limited access to start-up capital and other loans
from formal banking institutions. Prior to 2010, the Financial Intelligence
Centre Act (FICA) also prohibited refugees and asylum-seekers from opening
bank accounts in South Africa. That policy was later eased but among FICA’s
anti-money laundering provisions is a requirement for banks to verify the
identity of persons wishing to open a bank account. Banks are given wide
discretion as to how they implement the requirements, with the result that
many refuse to open bank accounts for refugees and asylum-seekers based on
the fear that they will not be able to correctly validate refugee identity
documents. In response to legal action, the DHA and FICA reached an
agreement for the former to provide banks with means to verify the
authenticity of refugee and asylum permits issued by the DHA.
In practice, opening a bank account remains a challenge for refugees and
asylum-seekers, with banks remaining distrustful of the various types of
documentation issued by Home Affairs, viewing it as less formal or secure than
a South African national identity card. At those institutions where it is possible
for a refugee to open a bank account, there have been instances of refugees
and asylum-seekers having their assets frozen when identity documents have
not been renewed on time, when identity documents change, or when the DHA
has failed to respond to verification enquiries in a timely manner. Service
providers report that ongoing challenges around the banking sector present a
very real risk to families struggling to meet basic survival needs. A frozen bank
account raises grave protection concerns, threatening the ability to pay rent,
buy food, care for children and even cover costs for long distance travel for the
purposes of renewing status documentation (Washinyira, 2012). The end
result, noted by several interviewees, is that in the townships and informal
settlements where many refugees own and operate their businesses, shops
and homes offer a ready target for criminals who are well aware that cash is

762
likely stored on the premises. This dynamic puts refugee families and
livelihoods at risk not only of loss of profits and other assets, but also of
violence and trauma when break-ins and robberies occur.
Informal Sector Policy and Practice
As noted in the introduction to the paper, due to the lack of formal job
opportunities, international migrants have little choice but to work in the
informal sector, suggesting that informal sector policy and practice shapes
livelihood opportunities. This section critically analyses this policy arena in
the post-apartheid period at national and provincial level and in the three
largest metropoles.
The apartheid state was particularly averse to informal sector activities. Lund
(1998: 6) reminds us that apartheid policies controlled where black South
Africans could live, what they could own and, through job reservation policies,
what work they could do. Black South Africans were forbidden by law from
engaging in manufacturing businesses and access to business premises was
strictly regulated to prevent them from operating businesses in ‘white’ areas
(Manning & Mashigo, 1994). In the mid-1980s, influx control laws became
increasingly unenforceable and were abolished in 1986. In 1987, the National
White Paper on Privatisation and Deregulation introduced a more tolerant
approach to black small business as part of a broader new economic
philosophy informed by the Reagan-Thatcher era of deregulation. The change
of attitude culminated in the Businesses Act 71 of 1991 (which repealed
numerous restrictive laws and secured a more liberal approach to business
licensing, premises and hours for both formal and informal businesses). This
legislation was a key measure for removing barriers to the operation of
informal activities and was, in effect, a complete reversal of the apartheid
approach. This piece of legislation is still in place today.
Subsequent to the passing of the Act, informal-sector activities increased in all
cities and towns. Local authorities, however, complained that they were
unable to cope, particularly with trading in public spaces. This led in 1993 to
the Businesses Amendment Act 186 of 1993 (RSA, 1993). The Act gave
provinces the discretion to develop their own legislation and allowed local
authorities to formulate street-trading bylaws, outline what was allowed and

763
declare restricted and prohibited trade zones. Since then, local authorities
across the country have promulgated such bylaws, evidently near mirror-
images of each other. In all of the major metropoles, for example, the sanction
in the case of violation was inappropriately criminalised – either a fine or
imprisonment, suggesting a punitive approach to street-trader management.
At a national level, the 1995 White Paper on the Development and Promotion
of Small Businesses was one of the first economic policy initiatives of the post-
apartheid government. The White Paper and the legislation that stemmed
from it – the National Small Business Act of 1996 – both acknowledge
survivalist and micro-enterprises as components of small business, thus
making them, on paper, beneficiaries of government support. However, both
documents are silent on the specific needs of these smaller players, suggesting
the role played by this group in the small business/informal sector was not
seen as a critical issue. Neither refer to foreign migrants or refugees. To
implement this new approach the Department of Trade and Industry (DTI) set
up the Ntsika Enterprise Promotion Agency as a facilitation and promotion
body for small businesses and Khula Finance to secure small-business access
to financial services. They supported the establishment of a country-wide
network of Local Business Development Centres (LBDCs) to provide non-
financial support to SMMEs. In 2004, a comprehensive review of the impact of
the post-apartheid government’s small, medium and micro enterprise (SMME)
programmes concluded that “existing government SMME programmes largely
have been biased towards the groups of small and medium-sized enterprises
and to a large extent have by-passed micro-enterprises and the informal
economy” (Rogerson 2004: 765). Devey et al. (2003; 2008) evaluated the
national-government skills-development system, concluding similarly that
those working in the informal-sector had “fallen into the gap” between small
businesses and the unemployed. These findings were echoed in Budlender et
al.’s (2004) informal sector budget analysis and confirmed by survey data
conducted with informal sector operators in Johannesburg and Durban
(Chandra & Rajaratnam, 2001; Skinner, 2005).
In 2003, President Mbeki publicly advocated for the idea of the ‘second
economy’ in an address to the National Council of Provinces. Mbeki’s (2003)

764
second economy was characterised by “underdevelopment, contributes little
to GDP, contains a large percentage of our population, incorporates the
poorest of our rural and urban poor, is structurally disconnected from both
the first and the global economy, and is incapable of self-generated growth and
development.” According to Mbeki (2003), Cabinet had resolved that the
development of the second economy required “the infusion of capital and
other resources by the democratic state to ensure the integration of this
economy within the developed sector.” This would be achieved in a number of
ways, including the development of SMMEs and cooperatives, the expansion
of micro-credit and skills development. Although the concept was not new, its
application to South Africa was a watershed moment for national informal
sector policy. For the first time since the end of apartheid, the informal sector
was given a policy profile. The whole idea of the second economy elicited a
flurry of criticism (Devey et al., 2006; du Toit and Neves, 2007). According to
Devey et al. (2006: 242), second economy arguments were based on the
premise that “the mainstream of the economy is working rather well, and
government action is needed to enhance the linkages between the first and
second economy and where appropriate to provide relief, such as public works
programmes, to those locked into the informal economy.”
While the critics pointed to the conceptual flaw of seeing the formal and
informal as structurally disconnected, subsequent policy pronouncements
suggested that the informal sector should be eradicated altogether. For
example, the next major statement on economic policy imperatives, the
Accelerated Shared Growth Initiative of South Africa (or ASGISA), called for
the “elimination” of the second economy (RSA, 2006: 11). In 2008, the
Presidency initiated the Second Economy Strategy Project which proposed the
progressive incorporation of the second into the first economy (Philip, 2009;
Philip & Hassen, 2008). The final strategic framework and headline strategies
were approved by Cabinet in January 2009 (after Mbeki’s recall as President
by the ANC). While the Community Works Programme (CWP) was
implemented, the rest of these headline strategies were not translated into the
activities at national, provincial and local government levels.

765
Since 2012, increasing attention has been paid to the informal sector at
national level – although in somewhat haphazard and uncoordinated fashion.
Different initiatives represent simultaneous neglect, support and suppression.
The National Development Plan (NDP), for example, assigns a large role to
small businesses in its employment scenarios and plans. The NDP’s ideal
scenario projects that 11 million jobs will be created by 2030, suggesting that
90% of these new jobs will be created by small and growing enterprises.
Depending on the scenario, the plan projects that the informal sector (and
domestic work) will create 1.2 million to 2.1 million jobs (NPC, 2012: 121).
However, the NDP chapter on the economy says nothing about strategies for
the informal sector as such, or how existing operators in the informal sector
will be supported, or how barriers to entry will be addressed to help generate
new jobs.
Meanwhile, also in 2012, the DTI established a new directorate for Informal
Business and Chamber Support. Rogerson (2016a: 175) notes that this was an
initial recognition by the department of the role of the informal sector in
broadening economic participation. By November 2012, the directorate had
established a reference group charged with developing a National Informal
Business Development Strategic Framework. Under the guidance of the
reference group, the DTI staff conducted consultations with stakeholders in
the informal sector, formal business and local government officials over a few
months, reporting back to the reference group in February 2013. This would
lead to the launch of the National Informal Business Upliftment Strategy
(NIBUS) in 2014.
In the same period, unbeknown to the Reference Group, another section of the
DTI was working on new legislation to replace the Businesses Amendment Act
of 1993. In March 2013, the DTI released the Draft Business Licensing Bill (DTI,
2013). The draft Bill’s stated aim was “to provide for a simple and enabling
framework for procedures for application of business licences by setting
norms and standards [providing] a framework for co-operative governance”
(DTI, 2013: 5). The DTI Minister, Rob Davies, publicly claimed that the Bill was
put in place to deal with illegal traders and semi-illegal practices in South
Africa, citing illegal imports, sub-standard goods, counterfeit goods and drug

766
and illegal liquor trading. In fact, such issues are already adequately dealt with
through other laws like the Customs and Excise Act of 1964, the Foodstuffs,
Cosmetics, and Disinfectants Act of 1972, the Counterfeit Goods Act of 1997,
the Drug and Drug Trafficking Act of 1992 and a draft of provincial level
legislation aimed at regulating (through the issuing of licences) informal liquor
outlets or shebeens. The draft Bill specified that anyone involved in business
activities – no matter how small – would need a licence. Foreign migrants
would only be licensed if they had business permits (which, according to the
2002 Immigration Act, have to be applied for in the country of origin and are
only granted if the applicant can demonstrate having ZAR 2.5 million to invest
in South Africa). The Bill suggested wide ranging discretionary powers be
given to both the licensing authority and inspectors, far greater than those
granted by the 1993 Business Amendment Act. Section 5.1a of that Act
mandates an upper limit on fines of ZAR 1,000 or imprisonment not exceeding
three months. The draft Bill proposed no upper limits on the fines charged;
those found guilty of contravening the Act could be imprisoned for up to ten
years.
The Draft Bill elicited a flurry of criticism, with many organisations pointing
out that the proposals were largely punitive and would result in large-scale
criminalising of the informal sector. A submission from StreetNet
International, on behalf of street trader organisations from all nine provinces,
was particularly vociferous:
What the [1991] Businesses Act added to the new South Africa was a
developmental approach […] instead of the old abolitionist approach
which characterised the Apartheid era. We believe that the repeal of the
Businesses Act and replacement with this Bill […] would take us back to
the era of forced removals (Horn, 2013: 2).
Tensions between foreign and South African informal sector operators have
characterised the informal sector since the mid-1990s (Peberdy & Rogerson,
2002). In trying to understand the motivation behind the draft bill, analysts
pointed to an upsurge of anti-foreign sentiment not only in the informal sector
itself but now from within government. Crush and Ramachandran (2015: 49)
cite the following examples:

767
A senior official in the Department of Home Affairs […] is reported to have
informed South African MPs that “if you go to Alexandra, you go to Sunnyside,
you go everywhere, spaza shops, hair salons, everything has been taken over
by foreign nationals […] they displace South Africans by making them not
competitive.” At an official meeting, then National Police Commissioner Bheki
Cele characterized immigrants and refugees as “people who jump borders,”
were flooding into the country and destroying the livelihoods of South African
informal traders. He continued: “our people have been economically displaced.
All these spaza shops [in the townships] are not run by locals […] One day our
people will revolt, and we’ve appealed to the Department of Trade and
Industry to do something about it.
The onerous conditions imposed on foreign migrants for accessing a licence
contained in the Bill would mean that few migrant informal operators would
qualify and would therefore be criminalised. Indeed, it has been argued that
the Bill was introduced to regulate foreign migrants in the interests of their
South African counterparts (Crush et al., 2015: 15-17). According to Rogerson
(personal communication), by May 2013, DTI officials conceded the Bill was
‘too blunt’ and in need of re-drafting. At the time of writing (April 2017), no
revised draft has been gazetted.
In part stemming from the work of the informal-business reference group, the
DTI released the National Informal Business Upliftment Strategy (NIBUS) in
early 2014 (Rogerson, 2016a). This is the first post-apartheid and nationally-
coordinated policy approach to the informal sector. NIBUS has two key
delivery arms – the Shared Economic Infrastructure Facility (SEIF) and the
Informal Business Upliftment Facility (IBUF) – tackling infrastructure and
skills deficits respectively. SEIF provides funding for new infrastructure and
upgrading or maintaining existing infrastructure shared by informal
businesses. Up to ZAR 2-million financing is available to municipalities on a
50:50 cost-sharing grant basis. IBUF focuses on skills development,
promotional material, product improvement, technology support, equipment
and help with registration. Part of the IBUF pilot involved training 1,000
informal traders in a partnership with the Wholesale and Retail Sector
Education and Training Authority.

768
This was the first time that the DTI had explicitly focused on the informal
sector through a strategy to tackle two critical needs, infrastructure and skills
development. The policy approach was also characterised by implicit and
explicit anti-migrant sentiment. It identifies a supposed “foreign trader
challenge” in the informal sector, noting that “there is evidence of violence and
unhappiness of local communities with regard to the takeover of local business
by foreign nationals” [our emphasis] (DTI, 2014: 10, 22). There are numerous
suggestions to strengthen specifically South African informal sector
businesses. The proposed solution to reduce the “xenophobia associated with
foreign national traders” is to “influence the type of businesses that foreign
nationals should run and the demarcated areas where these businesses should
be active” (DTI, 2014: 57). NIBUS cites the precedent of the Ghana Investment
Promotion Centre Act, which has reserved the sale of any goods in a market,
petty trading and hawking, and the operation of metered taxis, car hire
services, beauty salons and barber shops to nationals only, as well as India and
Malaysia’s restrictions on foreign economic participation (DTI, 2014: 22-3).
Much critical reference is made to the policies of the DHA with the DTI noting
incorrectly there are “no regulatory restrictions in controlling the influx of
foreigners” (DTI, 2014: 22). Rogerson (2016a: 184) concludes that “NIBUS is
a pro-development approach for South African informal entrepreneurs which
is allied to an anti-developmental agenda towards migrant entrepreneurs.”
Anti-foreign sentiment reinforces a generally punitive approach to the
informal sector that focuses on regulation and control. The November 2015
report of the Ad Hoc Parliamentary Committee investigating the 2015
xenophobic attacks on migrants and refugees working in the informal sector,
recommended the regulation of their township businesses. The report states,
for example, that municipal governments should improve systems for
providing and monitoring business permits, noting a “tendency of issuing too
many licenses” to businesses operating out of residential dwellings, many of
which do not comply with municipal by-laws (Parliament of South Africa,
2015: 38-39). There are also reports that disarray around licensing creates a
situation where refugee business owners are applying for licences they do not
need and paying fines for violating licences they are not required to have. This
punitive approach runs counter to good practice in management and support

769
of the informal economy both in South Africa and globally (Chen, 2012).
Ironically, increased regulation of township business would be destructive for
South African and migrant informal operators alike. The focus on curtailing
migrant entrepreneurship diverts attention from what Crush and
Ramachandran (2015: 53) identify as “the real, urgent need to support and
enhance opportunities for all small entrepreneurs.”
Provinces are also mandated to play a role in regulating and supporting the
informal sector, but have been slow in addressing the issue. While the 1993
amendment to the Businesses Act empowered provinces to develop dedicated
provincial business acts, to date no provinces have done that. For example, in
KwaZulu-Natal (KZN) an informal economy policy process was initiated in
2003. This resulted, after an eight-year process – in the KZN Informal Economy
Policy of 2011 – but it still has not been developed into a White Paper, the
precursor to new legislation. Such foot dragging suggests that it is not a
priority. In other provinces, reference is made to the informal sector in local
economic development strategies (as in Limpopo) as well as township
development strategies. The Western Cape promulgated its first dedicated
Informal Sector Framework (Western Cape Province, 2014) and Gauteng
recently released the Gauteng Informal Business Development Strategy
(Gauteng Province, 2015). Both focus on aligning the relevant departments’
work with NIBUS. All of the documents echo the need for financial and non-
financial support to informal businesses (especially through small-business
development centres), supporting informal trading in townships, improved
access to business-related infrastructure facilities and reviewing regulations
and bylaws to support the informal business sector (Gauteng Province, 2015:
47-59). On paper, all of these recommendations seem to be uncontroversial
and important steps forward.
However, a clear anti-foreign sentiment is also reflected at provincial level.
The Gauteng strategy, for example, states:
The existing competition for trading permits among local and foreign
nationals is evident. Unfortunately, there are no regulatory restrictions in
controlling the influx of foreign nationals. The Departments of Trade and
Industry and Home Affairs should assist the province in devising strategies

770
and policies to control foreign business activities (Gauteng Province, 2015:
45).
Similar sentiments are expressed in the Western Cape document (Western
Cape Province, 2014: 46). In KZN, the provincial government’s thrust has been
to form and fund the KZN Provincial Association of Traders, and fund traders’
training academies in various districts. The purpose of this initiative, as
outlined at its launch, is to “bring back our general dealer stores that used to
be seen in our townships and villages” adding that these “stores […] have been
sold to foreign nationals” (News 24, 2015). Statements like this suggest that
the provincial government aims to ‘level the playing field,’ favouring South
Africans over migrant and refugee operators.
The provincial government in Limpopo Province has perhaps the most overtly
hostile approach to migrants and refugees working in the informal sector. In
2012, it launched Operation Hardstick, an aggressive military-style campaign
that targeted small informal businesses run by migrants and refugees. The
Somali Association of South Africa supported by Lawyers for Human Rights
contested the action in the Courts. Court documents show that despite being
labelled a crime-fighting initiative, Operation Hardstick was selectively
enforced, affecting only migrant entrepreneurs and not South African
businesses in the same locations. Police shuttered over 600 businesses,
detained owners, confiscated stock, imposed fines for trading without permits
and verbally abused the owners. Affected business owners were informed that
“foreigners” were not allowed to operate in South Africa, that their asylum-
seeker and refugee permits did not entitle them to run a business and that they
should leave the area. Thirty displaced migrants from Ethiopia were forced to
flee when the house they had taken refuge in was fire-bombed (Supreme
Court, 2014).
The Court noted that police actions “tell a story of the most naked form of
xenophobic discrimination and of the utter desperation experienced by the
victims of that discrimination” (Supreme Court, 2014:6-7). The judgment
observed that “one is left with the uneasy feeling that the stance adopted by
the authorities in relation to the licensing of spaza shops and tuck-shops was
in order to induce foreign nationals who were destitute to leave our shores”

771
(Supreme Court, 2014:25). The Court ruled in favour the Somali Association
and effectively established the right to self-employment for all asylum-seekers
and refugees. Opposing the appeal were all three tiers of government –
national, provincial and municipal – including the Limpopo Member of the
Executive Council (MEC) for Safety, Security and Liaison; the Provincial
Commissioner of Police; the National Police Commissioner; the Standing
Committee on Refugee Affairs; the Ministers of Police, Labour and Home
Affairs; and two municipalities.
At local government level, there is a preoccupation with the most visible
element of the informal sector – street vendors – who operate in public spaces
over which there are often competing interests. However, a scan of policy
statements on street trading or the informal sector shows that, on paper, the
positive contribution of the informal sector is often recognised. For example,
in its street trading policy, the City of Johannesburg (2009: 3) states that
“informal trading is a positive development in the micro business sector as it
contributes to the creation of jobs and alleviation of poverty and has the
potential to expand further the City’s economic base.” The City of Cape Town’s
(2013: 8) policy advocates a “thriving informal trading sector that is valued
and integrated into the economic life, urban landscape and social activities
within the City of Cape Town.” The eThekwini Informal Economy Policy
(2001:1) states that the “informal economy makes an important contribution
to the economic and social life of Durban.”
Despite the positive rhetoric, city-level actions reveal an ambivalent, if not
actively hostile, approach to street traders. Wafer (2011) provides details of
the aggressive approach to street trading in Johannesburg over the post-
apartheid period. In late 2013, this culminated in a draconian action when the
Johannesburg City Council violently removed and confiscated the inventory of
about 6,000 inner-city street traders, many of them migrants (Zack, 2015;
Rogerson, 2016a; Rogerson 2016b). A group of traders took the City to court
and the Constitutional Court ruled in their favour. Acting Chief Justice
Moseneke stated that Operation Clean Sweep was an act of “humiliation and
degradation” and that the City’s attitude “may well border on the cynical”
(Constitutional Court, 2014). Street traders have returned to the streets but in

772
more limited numbers with the city declaring large inner- city areas to be
restricted and prohibited trade zones.
An analysis of Cape Town’s approach to street traders indicates systematic
exclusion in the inner-city, exemplified by the allocation of only 410 street-
trading bays in the whole inner city (Bukasa, 2014). Township trading is
characterised by long-term neglect. Zulu (2016) shows that in Khayelitsha, the
city council had invested very little in infrastructure for street traders and had
devolved the management of street trading to a small group of traders, with
negative consequences for many. Crush et al. (2015: 15) argue that, although
the policy environment in Cape Town varies across parts of the city and
between segments of the informal economy, “the modernist vision of a ‘world-
class city’ with its associated antipathy to informality dominates, and informal
space and activity is pathologized.”
Foreign migrants face an additional set of challenges. In an interview for this
study, the Cape Town Department of Economic Development claimed that “the
City, in terms of its policy around trading, doesn’t differentiate and we don’t
discriminate. There’s set criteria in terms of who qualifies (for a trading bay
and permit) and how that person qualifies. We don’t look at what nationality
the person is.” But, as the interviewed official admitted, the City is forced to
discriminate in practice because refugees have to produce documentation that
South Africans do not. In particular, the renewal of asylum and refugee permits
is extremely unpredictable (in terms of wait times and length granted) and
became much more difficult once the DHA declared that renewal had to be
effected at the office of application, which could be thousands of kilometres
away in Johannesburg or even Musina. One common way around this
challenge is for South Africans to obtain the permit and then rent the space to
refugees at a profit.
Gastrow and Amit (2015) detail the regulation of Somali-owned spaza shops
in Cape Town townships and show how mediation efforts led by the police and
non-governmental organisations have culminated in agreements prohibiting
the opening of new Somali shops in certain areas. They outline various formal
regulatory attempts to control and curtail the operations of Somali businesses
including fines, drafting new by-laws, issuing policy statements about foreign

773
shops and proposing laws tightening the regulation of the spaza market
(Gastrow & Amit 2015). They also note that both formal and informal
measures skirt the law, are applied in a discriminatory manner and stifle free
competition. The City thus appears to be protecting the interests of South
African spaza shop owners over their foreign counterparts. With respect to the
informal sector more generally, the modernist vision of the ‘world-class city’
with its associated antipathy towards informality and the pathologising of
informal space and activity, predominates.
Durban was once hailed for its relatively liberal stance on the informal sector
(Lund & Skinner, 2004; Dobson & Skinner, 2009). A progressive informal
sector policy was unanimously accepted by the City Council in 2001 and
remains official policy today. The Council’s actions reflect a more ambivalent
approach, however. For example, a Council-approved shopping mall
development at the inner-city Warwick Junction transport node threatened
6,000 traders operating there, and was only halted by a legal challenge
(Skinner, 2010). In 2013, traders in both the inner city and outlying areas
identified harassment by the police as their key business challenge (Dube et
al., 2013). In 2015, traders won a legal case challenging the constitutionality
of confiscating their goods, forcing the city to redraft the street trader by-laws.
Again, court action proved to be the only way to secure relief.
Conclusion
Distinct from many other refugee receiving countries, South Africa’s rights-
based refugee legislation has historically allowed for refugees and asylum-
seekers to access a broad array of rights from health services to education and
employment. South Africa has never hosted a dedicated refugee camp or
detention centre. In this environment, refugees and asylum-seekers have
independently found their way into South Africa’s social and economic fabric,
sending their children to South African schools, finding employment in South
African businesses and households and establishing their own formal and
informal businesses. The 2017 Amendment Act and White Paper are clear
evidence of a new and less generous policy direction which is intended to
shrink asylum space and further constrain the rights and protections afforded
to refugees and asylum-seekers.

774
Cumulatively, the changes documented in this paper illustrate a significant
shift in South Africa’s long held policy for the local integration of refugee
populations. By removing the right to work and confining asylum-seekers to
detention centres, it is assumed that the practice of asylum-seeking by
economic migrants will cease. This, of course, completely ignores evidence of
the positive economic contribution of refugees and asylum-seekers who,
under existing law, are permitted to pursue economic livelihoods. The ongoing
move away from a rights-based approach to refugee protection is seen most
clearly in the 2017 Refugees Amendment Act and the proposals in the 2017
White Paper on International Migration.
International trends which increasingly stress the positive development
impacts of refugee populations are being completed ignored (UNHCR, 2014;
World Bank, 2016). Rather, the emphasis is on the ‘exceptionalism’ of forced
migrants and the need to craft a coercive, non-developmental approach to
dealing with refugees. This represents a profound shift in the country’s
approach to refugee rights, protections and associated international
obligations, moving away from an integration approach towards a
containment approach. While the new approach may appear to be a local
response to intemperate local demands, it is part of a more global trend which
seeks to inhibit access to the physical territory and refugee protection systems
of those countries by erecting physical, economic and social barriers (Mountz,
2013; Mountz et al., 2013). If the proposed South African refugee policy is ever
operationalised in the face of the inevitable court and constitutional
challenges, it may deter non-refugee migrants from further afield, but it is
unlikely to act as a deterrent to economic migrants from neighbouring
countries. They will simply find other ways to come, live and work in South
Africa, a fact which seems to be acknowledged in the White Paper’s proposals
to make SADC-specific work, traders’ and micro-enterprise permits available
to migrants.
While there may be a belief that detention centres will reduce the flow of
genuine asylum-seekers to South Africa, there remains a whole set of
unanswered questions about whether there will be new policies that directly
affect those who have refugee status. Here the White Paper is almost silent,

775
although it does assert that under the existing system refugees are allowed to
apply for permanent residence “even though their status is inherently
temporary.” The Amendment Act extends the period of qualification to 10
years while the White Paper recommends abolishing this right altogether.
There is no indication of whether those with refugee status will be denied the
right to work, to self-employment, to freedom of movement and to access
health and educational services. On the other hand, they will not be given any
additional resources and will be expected to pursue their own livelihoods, as
at present.
To understand the challenges and obstacles that refugees face in securing
these livelihoods, it is important to examine the policy and regulatory
environment within which those in the informal sector try to survive. Refugees
and asylum-seekers confront a formidable set of challenges in operating their
informal enterprises in South African cities (Crush et al., 2015). At best
tolerated, and at worst hounded out of communities by xenophobic mobs and
violent entrepreneurship, South Africa is certainly not a safe haven for those
fleeing violence and persecution at home. However, as this paper argues,
xenophobic violence and police inaction are certainly not the only difficulties
they face. South African city managers oscillate between benign neglect and
active destruction of the vibrant and economically-productive informal sector.
Migrants and refugees who operate informal enterprises have been the main
targets in a series of national, provincial and local-level “operations” designed
to inhibit or eradicate their businesses from urban space. Thus, there is a
fundamental contradiction between a refugee protection policy that demands
self-reliance from refugees and informal sector policies that undermine self-
reliance at every turn.
A comparison of the 2015 Draft Refugees Amendment Bill and the final 2016
Act suggests that the petitions and representations of human rights groups
and refugee and migrant associations had little or no impact in softening the
legislation, so litigation in the courts is the most likely way to roll back these
draconian provisions. The courts have clearly played an increasingly
important role in securing the livelihoods of informal sector operators in
general, and migrant entrepreneurs in particular, in post-apartheid South

776
Africa. Litigation has been one of the key sources of support to migrant
entrepreneurs, highlighting the core contradiction between the rights
enshrined in the South African Constitution and South Africa’s relatively
progressive refugee protection regime, on the one hand, and the policies and
actions of key government departments and officials, on the other. Protecting
unalienable rights relies on a cohort of legal human rights non-governmental
organisations prioritising migrant livelihood rights and being willing and able
to pursue time-consuming and costly litigation on their behalf.
Acknowledgements
We wish to thank the UNHCR Geneva for funding the Refugee Economic
Impacts SAMP research project. Our thanks also go to Vanya Gastrow and
Sujata Ramachandran for their assistance.
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Zack, T. 2015. Making an area hot: Interrupting trade in an ethnic enclave in
Johannesburg’s inner city. In Crush, J., Chikanda, A., Skinner, C. (Eds.). Mean
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Implications for Informal Traders. MA Thesis, University of Cape Town.

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Refugee Entrepreneurial Economies in Urban South
Africa
Jonathan Crush*, Godfrey Tawodzera**, Cameron McCordic***, Sujata
Ramachandran**** and Robertson Tengeh*****
Abstract
The case-study literature on refugees and asylum-seekers in South Africa is
dominated by an overwhelming focus on the problems they face and their
marginalised existence, reinforcing an image of victimhood, exploitation and
vulnerability. In this paper, we seek to broaden the image of refugees and their
economic impacts beyond a narrow focus on their marginal status and
vulnerable position. They are viewed here as dynamic agents with skills and
capabilities who can play an integral role in transforming local settings and
contributing to economic development. This paper presents and discusses the
results of a survey of over 1,000 refugee informal business-owners in Cape Town
and small-town Limpopo. As well as providing new insights into the nature,
achievements and challenges of refugee entrepreneurship, the paper addresses
the question of whether geographical location makes a difference to the nature
of refugee entrepreneurial economies by contrasting the two groups of
entrepreneurs. Refugee entrepreneurs are more vulnerable to xenophobic
violence in Cape Town and to police misconduct in Limpopo. Otherwise, there are
remarkable similarities in the manner in which refugee entrepreneurs establish
and grow their businesses in large cities and small provincial towns.
Keywords Refugees, informal sector, entrepreneurial economies, xenophobia,
Cape Town, Limpopo.
* International Migration Research Centre, Balsillie School of International Affairs, 67 Erb Street
W, Waterloo, ON, N2L 6C2. Email: jcrush@balsillieschool.ca
** Department of Geography and Environmental Studies, University of Limpopo, P. Bag X1106,
Sovenga.
*** Balsillie School of International Affairs, 67 Erb Street W, Waterloo, ON, N2L 6C2.
**** Southern African Migration Programme, International Migration Research Centre, Balsillie
School of International Affairs, 67 Erb St West, Waterloo, Ontario, Canada N2L6C2.
***** Faculty of Informatics and Design, Cape Peninsula University of Technology, Cape Town,
South Africa.

784
Introduction
More than 60% of the world’s refugees now live in urban areas, according to
the UNHCR. Therefore, the social and economic impacts of refugee movements
are increasingly being felt in the towns and cities of host nations. In general,
the presence of refugees among urban populations is more likely to be
assessed in terms of perceived burdens rather than benefits (Omata & Weaver,
2015). Only recently has interest emerged in what has been characterised by
Jacobsen (2005) as the positive “economic lives of refugees.” Some researchers
have adopted the notion of “refugee economies” to highlight the strong
involvement of refugees in the many overlapping processes of production,
consumption, exchange, entrepreneurship and development of financial and
capital markets in host countries and beyond (Betts et al., 2014). However, it
would be a mistake to imagine that there are discrete spatially and
economically isolated “refugee economies” in the urban environment.
Refugees may dominate particular economic and geographical niches in the
urban economy but they continuously interact with and contribute to that
economy in ways that are poorly understood. As refugees increasingly become
the norm in the urbanising Global South, more research on the specifically
urban economic impacts of protracted refugee situations is therefore urgently
needed (Koizumi & Hoffstaedter, 2015).
This paper aims to contribute to recent literature that takes “refugee
livelihoods” as its point of departure (Buscher, 2011; Jacobsen, 2006; Omata
& Kaplan, 2013; de Vriese, 2006). A livelihoods perspective underscores the
need to adopt a rights-based approach to the economic activities of forced
migrants; to identify their resources, assets and skills; and to understand how
they respond to their situations and secure their livelihood needs. This
perspective represents a move away from welfare-centred models of
engagement focused on meeting basic needs, towards a capability approach
which emphasises refugees’ agency, right to choose and ability to control their
own environments (Landau, 2008). Identifying the economic advantages and
benefits associated with the presence of refugees is a key precondition for
making governments and local elites more responsive to refugee needs and
removing the barriers they face (Lyytinen & Kullenberg, 2013). This objective

785
coheres with the UNHCR’s (2014) Global Strategy for Livelihoods, which
underscores the need to enhance the economic capabilities of refugee
populations and build on their own resilience.
The sizable case-study literature on refugees and asylum-seekers in South
Africa is dominated by an overwhelming focus on the problems they face and
their marginalised existence, reinforcing an image of victimhood, exploitation
and vulnerability (Crush & Chikanda, 2014). In recent years, a more troubling
image has emerged of refugees as unfair and underhand competitors who
disadvantage poor South Africans (Desai, 2008; Gordon, 2016). Both
characterisations suffer from obvious problems. The former treats them in a
restricted manner as undifferentiated, homogeneous populations defined by
their marginalised status as recipients of protection in the host country. The
latter views them in a prejudicial manner through a warped understanding of
the nature of economic competition and refugee rights. Undue emphasis on
their legal standing as ‘refugees’ tends to minimise their education, credentials
and work experience in various fields. Furthermore, it underestimates their
creative energies, determination and ability to overcome some of these
challenges and re-build their lives in South Africa.
Post-apartheid South Africa has relied on a “self-settlement” approach to
refugees (Handmaker et al., 2011). The country imposes no restrictions on
freedom of movement and the geographical locations where refugees can
reside. They are not confined to refugee camps or physically separated from
citizens, which means they have direct interaction with South Africans with
the potential for both conflict and integration into local communities.
However, the South African self-settlement model does emphasise self-
sufficiency on the part of refugees in the process of resettlement, with little
assistance from state authorities (Polzer Ngwato, 2013). Existing studies
suggest that many urban refugees are unable, for various reasons, to access
formal employment in the cities and turn to the informal economy for their
livelihoods (Achiume, 2014; Jacobsen, 2006; Kavuro, 2015). Employment or
self-employment in the informal economy becomes a desirable option, if not a
necessity. Because urban informality is generally invisible to policy-makers,
scorned by politicians and seen as a site of desperation rather than

786
opportunity, its economic significance is often overlooked (Pavanello et al.,
2015; Williams, 2013).
The primary aim of this paper is to examine what we call “refugee
entrepreneurial economies” in urban South Africa. The paper builds on case-
study evidence on the activities of refugees in the South African informal
economy (Greyling, 2015;Jinnah, 2010; Owen, 2015; Smit & Rugunanan, 2014;
Thompson, 2016; Zack, 2015). Within the informal sector, refugee economies
have often been viewed as stagnant pools of desperation, providing narrow
opportunities and limited scope for advancement. But this is a misleading
characterisation. It is important to recognise the dynamism and growing
complexity of South African refugee economies and to re-shape our ideas
about the economic impacts of the informal sector (Roever & Skinner, 2016).
The important question is whether all forms of refugee activity in the informal
sector are associated with economic precariousness and social marginality, or
whether possibilities for real economic advancement exist (Crush et al.,
2015a).
In this paper, we seek to broaden the image of refugees and their economic
impacts beyond a narrow focus on their marginal status and vulnerability. We
view them as dynamic agents with skills and capabilities who can play an
integral role in transforming local settings and contributing to economic
development. This is not to undervalue the divergent ways through which
refugees earn a living in South Africa, nor to gloss over their struggles and the
pervasive discrimination, hostility and xenophobic violence they regularly
encounter, nor to exaggerate the significance of refugee entrepreneurship.
However, there is a need to re-calibrate the narrow, partial and negative lens
through which their economic potential is evaluated by politicians and policy-
makers. Here, we also address the question of whether geographical location
makes a difference to the nature of refugee entrepreneurial economies by
contrasting refugee enterprise in a major South African city (Cape Town) with
that in several smaller towns in a different part of the country (Limpopo
Province). Our aim is to ascertain whether geography matters in framing the
activities, challenges and impacts of refugee entrepreneurial economies.

787
Methodology
Most refugees are initially drawn to the major South African cities of
Johannesburg, Durban, Port Elizabeth and Cape Town. In this study of refugee
entrepreneurship, the city of Cape Town was chosen as one of two study sites
because there is a significant concentration of refugees and a contextual
literature on refugee entrepreneurship in the city (Basardien et al., 2014;
Gastrow & Amit, 2013, 2015; Owen, 2015; Tawodzera et al., 2015). In recent
years, refugee entrepreneurs have also been establishing businesses in
smaller urban areas around the country. In 2012, a police campaign called
Operation Hardstick in Limpopo Province forcibly closed as many as 600 small
businesses run by migrants and refugees, suggesting that this province had
become a significant operating location for small-town entrepreneurs. In
contrast to Cape Town, however, very little research exists on refugee
livelihoods and entrepreneurship in Limpopo, which was chosen as the second
site for this study (Idemudia et al., 2013; Mothibi et al., 2015; Ramathetje &
Mtapuri, 2014).
The study focused only on informal sector business owners who hold refugee
(Section 24) permits under the Refugees Act. Holders of asylum-seeker
(Section 22) permits were not included as many of these migrants are unlikely
to be refugees, as conventionally defined. The South African Government
claims that 90% of asylum-seeker permit holders are “economic migrants” and
not genuine refugees as defined by the Refugee Conventions. While this figure
has been disputed by researchers, it is not possible to predict whether any
particular asylum-seeker permit holder will make the transition to full refugee
status. Indeed, there is every likelihood that the majority will not (Amit, 2011;
Amit & Kriger, 2014).
The number and geographical location of refugee enterprises in South Africa
is unknown, which means that there is no comprehensive database from which
to draw a sample. Therefore, this paper relied on “maximum variation
sampling” (MVS) using the methodology suggested by Williams and Gurtoo
(2010) in their study of the informal economy in Bangalore, India. In Cape
Town, the areas of the city in which the informal economy is known to operate
were first identified from the existing literature, personal knowledge and a

788
scoping of the city. This allowed for the exclusion of significant areas of the city
from the study, particularly high-income residential areas. Second, five
different types of area were identified – commercial, formal residential,
informal residential, mixed formal and informal residential and industrial –
and within each of these types contrasting and geographically separated areas
were chosen. There were two commercial areas (the CBD and Bellville), two
industrial areas (Maitland and Parow), three formal residential areas
(Observatory, Delft and Nyanga), three informal settlements (Khayelitsha,
Imizamo Yethu and Masiphumelele) and two mixed formal and informal
residential areas (Philippi and Dunoon). In Limpopo, the majority of migrant
entrepreneurs live in urban centres. Since many of these centres are relatively
small, the primary criterion for the application of MVS in Limpopo was
variable urban size. The selected towns are scattered around the province and
include Polokwane (population of 130,000), Thohoyandou (70,000), Musina
(43,000), Louis Trichardt (25,000), Tzaneen (14,500) and Burgersfort (6,000).
Sampling was conducted in each site using the mapped grid-pattern exhibited
by streets. Streets were sampled one after another in successive fashion
moving from west to east. After identifying the first five enterprises on a street,
and randomly selecting the first of the five for the sample, every third refugee-
owned enterprise was selected for interview. Where business owners were
not available, field workers made three call backs to the enterprise, after which
a substitution was made. In each of the two study areas, a total of 504 refugee
entrepreneurs were interviewed. The survey instrument was administered
using tablet technology and collected information on a wide variety of issues
pertaining to business set-up, activities, operation, profitability, challenges
and economic impacts. The enterprise survey was complemented with fifty in-
depth interviews with business-owners in each research location and three
focus groups with refugees from the same country in each location. This paper
presents some of the results of the survey supplemented with a selection of
observations from the entrepreneurs about their experiences running
businesses in South Africa.

789
Refugee Profile
This section of the paper compares refugee business owners in Cape Town
with those in small town Limpopo to ascertain if there are any significant
differences in their respective socio-demographic and migration profiles.
First, male refugee entrepreneurs clearly dominate in both areas, with only
20-25% of business owners being women (Table 1). This is generally
consistent with the predominantly male character of refugee migration to
South Africa. The entrepreneurs in both locations tend to be relatively young,
with 80% in Cape Town and 77% in Limpopo being under the age of 40. Very
few entrepreneurs in either location were over the age of 50. Accepting the
International Labour Organisation definition of “young people” in Africa as
anyone under the age of 35, this would mean that 54% of those in Cape Town
and 57% of those in Limpopo are young entrepreneurs (Kew, 2015). There are
no significant differences between the two groups of refugee entrepreneurs in
terms of age profile. However, the difficulties and challenges facing youth
entrepreneurs in South Africa, and how these are addressed by refugee youth,
warrant further investigation (Fatoki & Chindoga, 2011; Gwija et al., 2014).
Despite the similarities in sex and age breakdown between the two samples,
there are marked differences in the countries of origin of refugee
entrepreneurs. In the Cape Town sample, the most numerous group was from
Somalia, which is consistent with other studies showing a significant Somali
presence in the informal economy of the city (Basardien et al., 2014; Gastrow
& Amit, 2013, 2015; Tawodzera et al., 2015). While there are some Somali-
owned businesses in Limpopo and Ethiopian-owned businesses in Cape Town,
the largest group in this sample of refugee entrepreneurs in Limpopo towns
was from Ethiopia (28%). Some national groups are well-represented in both
places, including refugees from the Democratic Republic of the Congo (DRC)
(17% in Cape Town and 11% in Limpopo) and Zimbabwe (7% in Cape Town
and 11% in Limpopo).

790
Table 1: Demographic Profile of Refugee Entrepreneurs
Cape Town
%
Limpopo
%
Sex
Male 75.2 80.0
Female 24.8 20.0
Age
<21 0.0 0.2
21-25 8.5 10.8
26-30 20.1 23.4
31-35 25.2 22.2
36-40 26.6 21.0
41-45 12.2 11.4
46-50 4.3 6.8
>50 3.0 4.4
Country of origin
Somalia 26.9 7.4
DRC 16.9 11.0
Cameroon 11.6 0.8
Ethiopia 9.2 28.1
Zimbabwe 7.2 11.1
Congo Brazzaville 3.0 0.6
Burundi 1.4 0.6
Angola 1.0 0.6
Rwanda 0.8 0.2

791
In both the Cape Town and Limpopo samples, there are small numbers of
refugees from the same countries, notably Burundi, Cameroon, Congo
Brazzaville, Eritrea, Rwanda and Sudan. In sum, both areas are dominated by
refugees from one or two (albeit different) countries, but beyond that there is
considerable diversity in the makeup of the refugee entrepreneurial
population.
The vast majority of sampled refugee business owners (over 90% in both
research locations) arrived in South Africa after 2000 (Figure 1). Limpopo has
a slightly greater proportion of recent arrivals than Cape Town. For example,
71% of the refugees in Limpopo migrated to South Africa after 2005,
compared to 61% of those in Cape Town. Or again, 26% of those in Limpopo
arrived in South Africa after 2010, compared to only 16% in Cape Town. This
raises the possibility that more recent forced migrants may be avoiding the
large cities and going straight to smaller urban centres. However, in Limpopo
there is a clear lag between year of migration to South Africa and year of arrival
in the province (Figure 2). As many as 64% of the sampled refugee
entrepreneurs in Limpopo had first lived in another South African town or city
(compared to only 27% in Cape Town) (Table 2). In other words, Cape Town
was the first destination for nearly three-quarters of the refugee
entrepreneurs in that sample, while Limpopo was the first destination for only
13% of the entrepreneurs sampled there.
Sudan 0.2 1.0
Eritrea 0.2 4.6
Other 21.6 34.4

792
Figure 1: Year of Arrival in South Africa
Figure 2: Migration of Limpopo Entrepreneurs
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1991 - 1995 1996 - 2000 2001 - 2005 2006 - 2010 2011 - 2016
%
Year
Cape Town Refugees (n=501) Limpopo Refugees (n=502)
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1991 - 1995 1996 - 2000 2001 - 2005 2006 - 2010 2011 - 2016
%
Year
Arrival in South Africa (n=502) Arrival in this City (n=502)

793
Table 2: Previous Places of Residence in South Africa
Cape Town Refugees
%
Limpopo Refugees
%
Major cities
Johannesburg 15.7 29.0
Pretoria 4.2 12.9
Durban 3.2 5.0
Cape Town n/a 4.6
Port Elizabeth 1.6 2.4
Other urban centres
Other Western Cape 0.2 1.2
Other Limpopo 1.2 16.9
Other Gauteng 0.0 1.6
Other KwaZulu-Natal 0.2 1.2
Other Eastern Cape 0.2 0.2
Free State 0.4 1.6
North West 0.2 1.6
Northern Cape 0.6 1.4
Mpumalanga 0.4 6.7
Note: Multiple response question
In the Limpopo sample, previous places of residence were dominated by the
large cities, particularly Johannesburg (29%) and Pretoria (13%), but also
Durban (5%) and even Cape Town, which is nearly 2,000km away (5%). The
movement of refugees from Limpopo to Cape Town was much more limited.
As many as 17% of the Limpopo refugees had lived in another town in the
province, suggesting the existence of some intra-provincial mobility. This kind
of movement was virtually absent in the case of Cape Town and the Western
Cape Province. In the Cape Town sample, the majority of the 28% who had
lived in another urban area came from Johannesburg, with much smaller
numbers from cities such as Pretoria and Durban.
The major reason for relocation from large cities to small-town Limpopo
concerns the pattern of violence against non-South African informal

794
businesses (Crush et al., 2015b). Nationwide xenophobic attacks on migrants
and refugees in 2008 led to considerable loss of life, damage to property and
internal displacement (Hassim et al., 2008; Landau, 2012). In 2015,
widespread xenophobic violence again wracked the country. Unlike the
indiscriminate violence of 2008, these attacks mainly targeted small informal
businesses run by migrants, asylum-seekers and refugees. Drawing on an
extensive database of media coverage of xenophobic incidents, Crush and
Ramachandran (2015a) chronicle an escalating pattern of xenophobic
violence directed at migrants and refugees between 2008 and 2015. Refugee-
owned businesses are regular targets of attacks and certain locations have
witnessed collective violence in repeated cycles, including loss of store
contents through looting and arson, damage to shop structure, forcible store
closures, temporary or permanent displacement and loss of life (Crush &
Ramachandran, 2015b). The impact of xenophobic violence is exacerbated by
poor police response and follow-up. Refugees have little faith in police
protection or judicial reparation, and even see the police as perpetrators or
instigators of violence (Haile, 2012; Okpechi, 2011). Steinberg (2012) argues
that it is the perceived failure of the authorities to control migration that has
exacerbated retaliatory xenophobic mob violence.
Some studies have suggested that attacks on refugee-owned businesses are
instigated or orchestrated by South African competitors, including various
shadowy informal business associations (Crush & Ramachandran, 2015a).
This phenomenon – dubbed “violent entrepreneurship” by Charman and Piper
(2012) – involves the use of intimidatory violence as a business strategy to
drive non-South African competitors out of an area. The most frequent and
intense xenophobic attacks and instances of violent entrepreneurship have
occurred in low-income neighbourhoods in large cities. The in-depth
interviews with Limpopo refugee entrepreneurs for this study confirmed that
xenophobic violence was a major factor in relocation from cities of first refuge.
One Somali refugee recounted how he had arrived in Johannesburg after a long
and difficult journey through several countries; experiences consistent with
those of other Somali refugees (Jinnah, 2010; Sadouni, 2009). In Johannesburg,
he lived with his brother and neighbours from the same village in Somalia. His
brother operated a business buying goods in the CBD and selling them at his

795
shop in Soweto. He worked for his brother for a while but found the experience
unnerving: “I did not want to operate in Soweto. The people there were nice
but there were others who were just rough. I had seen two people being killed
in broad daylight and they were all foreigners and their shops were robbed. So
I wanted to go somewhere else.” With his brother’s assistance he bought a
small spaza (informal shop) in Orange Farm south of Johannesburg and ran it
for a year:
Orange Farm was a good area for business but it was not safe. As a
foreigner you are always conscious of your security and you can feel that
this place is not good. It is far from the Johannesburg CBD and there are
few police there. So even when there are robberies, the police come very
late and sometimes they do not come at all. I was robbed seven times in
the period that I stayed in Orange Farm. Most of the time the robbers
would come when it is at night and you are still operating. They pounce
on you with sticks, spanners or iron bars and they hit you hard. So I was
almost killed twice and I thought this is enough. Let me leave this place.
Then I left and came here (Interview with Somali Refugee, Polokwane,
12 March 2016).
Experience of violent crime and fears over personal safety were recurrent
motives for moving to Limpopo. Interviewees moved to escape being injured
or murdered rather than specifically to set up a new business. One Eritrean
refugee, for example, had his spaza looted and burnt to the ground: “I came
here because I was running for my life. I was not thinking of doing business,
but of surviving. I was almost killed that night” (Interview with Eritrean
Refugee, 21 March 2016).
Piper and Charman (2016) have argued that South African business owners
are just as vulnerable to violent attacks and crime as their refugee
counterparts and suggest that xenophobia is, therefore, not a factor. However,
the interviewees in Limpopo clearly saw the violence in Johannesburg and
other centres as motivated by xenophobia. As the former Orange Farm
business owner noted: “There were many spaza shops around me, but they
kept stealing from me. Is that not xenophobia? Why not steal from the locals?
The customers sometimes harass you because you are a foreigner. They take

796
your goods and are a problem in paying. So, yes, I have been affected a lot by
xenophobia.”
The province of Limpopo appears to be a safer haven and less inhospitable
business environment than South Africa’s large cities. As many as 45% of
sampled Cape Town refugees said that xenophobia had affected their business
operations to some extent (20%) or a great deal (25%). The equivalent figures
in Limpopo were 31% in total (19% to some extent and 12% not at all).
Refugees in Cape Town, for example, appear to be more vulnerable to theft and
physical attack from South African citizens. For example, in the sample, 57%
of refugees in Cape Town reported often or sometimes having their goods and
stock stolen, compared to 39% of those in Limpopo. Similarly, 54% of refugees
in Cape Town often or sometimes had money stolen, compared to 32% in
Limpopo. The incidents of prejudice and verbal andphysical assault by citizens
were similar in both places. But while relocation to Limpopo may lessen the
chance of victimisation, it certainly does not eliminate it. Many of the refugees
interviewed in Limpopo told stories of being robbed and having their business
premises destroyed. However, police misconduct also emerged as a greater
problem for refugees in Limpopo. Alfaro-Velcamp and Shaw (2016) show that
police disregard for the rights of refugees and migrants is a significant problem
in Cape Town and other large cities. This survey found that police harassment,
demands for bribes, confiscation of goods and physical violence were all more
common in Limpopo than in Cape Town (Table 3).

797
Table 3: Challenges Faced by Refugee Entrepreneurs in South Africa
Cape Town
Refugees
(% often/
sometimes)
Limpopo
Refugees
(% often/
sometimes)
Theft of goods/stock 56.7 38.7
Theft of money/income 44.2 31.8
Physical violence by South Africans 23.5 19.2
Confiscation of goods by police 10.2 19.1
Harassment/demands for bribes
by police
10.7 26.5
Physical violence by police 6.8 8.8
Verbal insults 32.6 35.7
Prejudice against my nationality 48.0 47.9
Business Characteristics and Strategies
Despite being located in very different parts of South Africa, and nearly 2,000
km apart, the sampled Cape Town and Limpopo refugee entrepreneurs
engaged in a similarly wide range of economic activities. The vast majority in
both locations is in the retail sector (75-79%), followed by services (25-28%)
and manufacturing (4.4%-7.5%) (Table 4). The kinds of goods being sold and
services offered are very similar as well. Among the sampled Limpopo refugee
entrepreneurs, the most common items sold are clothing/footwear,
confectionary, soft drinks and toiletries/cosmetics. In Cape Town, the most
common items sold are cigarettes, clothing/footwear, personal accessories
and confectionary and beverages (Table 5). Comparing the two, the main
difference lies in the greater numbers of refugees selling confectionary,
household products, and toiletries and cosmetics in Limpopo.

798
Table 4: Economic Sector of Refugee Enterprises
Cape Town
Refugees
Limpopo
Refugees
No. % No. %
Retail, trade and wholesale 400 79.4 378 75.0
Manufacturing 38 7.5 22 4.4
Services 128 25.4 143 28.4
Other 1 0.2 1 0.2
Table 5: Goods and Services Offered by Refugee Entrepreneurs
Cape Town
Refugees
%
Limpopo
Refugees
%
Retail
Soft drinks (e.g. Coke, Fanta) 23.0 21.6
Cigarettes 21.4 18.5
Clothing and footwear 18.8 20.2
Personal accessories (e.g. bags,
sunglasses)
14.5 18.5
Confectionary (sweets/candies and
cakes)
13.7 20.2
Fresh produce (fruits and vegetables) 11.3 15.5
Toiletries and cosmetics 9.5 20.0
Cooked food ready to eat 7.5 6.0
Electronics 6.3 8.7
Arts and crafts 5.0 0.2
Books/newspapers 3.8 2.0
Household products 3.6 15.1
Hardware/tools 1.6 2.8
Music/film CDs/DVDs 1.0 4.2
Car parts 0.8 0.2
Livestock (e.g. chickens) 0.2 0.2
Alcohol 0.4 0.4

799
Other 9.9 18.5
Services
Haircutting and braiding 10.9 19.2
IT/internet 4.4 1.0
Telephone 1.6 1.6
Shoe repairs 1.2 0.2
Traditional doctor 0.4 0.0
Accommodation 0.2 0.2
Car repairs 0.2 0.8
Medicine (pharmacy) 0.2 0.0
Transportation (taxi/passengers) 0.2 0.2
Car wash 0.0 0.8
Financial 0.0 0.2
Rentals 0.0 0.2
Transportation (goods) 0.0 0.2
Construction 0.0 0.0
Car parking/guarding 0.0 0.0
Other 5.4 5.8
Note: multiple response question
The primary sources of business start-up capital in both areas were very
similar, suggesting that being in a large city does not provide additional
financing opportunities (Table 6). Approximately 85% of the sampled
refugees in both Cape Town and Limpopo used their personal savings to start
their businesses. Around 20% of both groups used loans from relatives, 12-
14% used loans from non-relatives and 12% used gifts from relatives. A small
number in both areas used remittances from outside the country to establish
their businesses. Only a handful of refugees in both areas were able to access
funding from banks, NGOs or the UNHCR. The only difference worth noting
was that more entrepreneurs in Limpopo were able to access goods on credit
with which to start their businesses.
Despite the similarities in sources of start-up capital, the amounts needed to
establish a business did differ. In Limpopo, the sampled refugee entrepreneurs

800
seemed to be able to start businesses with less capital (Figure 3). 34% percent
had less than ZAR 5,000 compared to 21% of the Cape Town refugee
entrepreneurs, and 63% had less than ZAR 10,000 compared to 52% of the
Cape Town entrepreneurs. At the other end of the scale, 27% of the sampled
Cape Town refugees had more than ZAR 50,000 in start-up capital compared
to only 15% of those in Limpopo.
Table 6: Primary Sources of Start-Up Capital
Cape Town
Refugees
%
Limpopo
Refugees
%
Personal savings 85.9 84.3
Loan from relatives 19.8 20.2
Gift from relatives 13.7 11.7
Loan from non-relatives 12.1 14.3
Loan from church 2.4 0.2
Money from relatives in another
country
2.4 2.4
Loan from mosque 1.4 0.2
Loan from informal financial
institutions
1.2 1.4
Bank loan 0.8 1.2
Loan from government agency 0.2 0.0
Goods on credit 0.0 9.1
Loan or grant from NGO 0.0 1.4
Loan or grant from UNHCR 0.0 0.4
Usurers/mashonisa (money lenders) 0.0 0.2
Other source 2.2 6.9

801
Figure 3: Amount of Start-Up Capital Used by Refugee Entrepreneurs
Despite their lack of prior business experience, refugees in South Africa have
developed a range of strategies to maximise their returns. Table 7 lists a
variety of business strategies and shows how many sampled refugees employ
them in the conduct of their business. The most common strategies include
bulk purchasing, extended hours of operation, keeping business records,
negotiating prices with suppliers, allowing customers to buy goods on credit
and competitive prices. Refugees consult other entrepreneurs, suppliers and
the media for information about the price of goods. These are all
commonsense business strategies and certainly do not fall into the category of
0 5 10 15 20 25 30 35 40
Less than R5,000
R5,000 – R9,999
R10,000 – R19,999
R20,000 – R29,999
R30,000 – R49,999
R50,000 – R99,999
R100,000 – R199,999
R200,000 – R499,999
R500,000 – R999,999
R1,000,000 and above
%
Start-UpAmount(inRands)
Limpopo Refugees (n=468) Cape Town Refugees (n=462)

802
underhand or secret tactics that the South African Minister of Small Business
Development accused them of employing. There was very little difference in
the frequency of use of business strategies by the two groups of refugees.
However, living in a large city seems to provide more opportunity for buying
in bulk, negotiating with suppliers and getting information on prices from
other entrepreneurs. Almost one-third of the Limpopo refugees travel to
Johannesburg to purchase supplies, while most Cape Town refugees obtain
their goods in the city. This probably affords the latter greater opportunity for
bulk buying, negotiation with suppliers and information-sharing.
Table 7: Business Strategies of Refugee Entrepreneurs
Cape Town
Refugees
%
Limpopo
Refugees
%
Obtain price information from other
entrepreneurs
75.6 57.9
Purchase stock in bulk 69.7 56.3
Extended hours of operation 69.5 65.5
Negotiate prices with suppliers 67.7 59.8
Keep business records 59.4 55.7
Obtain price information by calling
suppliers
57.2 61.2
Negotiate prices with customers 47.8 60.5
Offer credit to customers 42.0 44.8
Sell goods more cheaply than
competitors
42.0 38.6
Charge different prices for different
customers
37.1 30.3
Give discounts to regular customers 34.9 39.1
Obtain price information from media 31.9 28.1
Partner with other businesses to
distribute risk
28.1 34.2
Engage in shareholding 10.3 25.9
Purchase insurance 3.2 7.0

803
Entrepreneurial Economies
In this study, we used two measures of business success: (a) net monthly profit
and (b) the difference between the current value of the enterprise and the
initial capital outlay. With regards to the first indicator, net profit, it is clear
that although refugees in Limpopo are able to start a business with a smaller
capital outlay than those in Cape Town, their enterprises are not as profitable.
The sampled Limpopo refugees earned less on average than their Cape Town
counterparts: ZAR 7,246 per month compared to ZAR 11,315 in Cape Town
(Table 8). Only one-third of the sampled Cape Town entrepreneurs made less
than ZAR 5,000 per month compared to 58% of those in Limpopo. Or again,
70% of the Limpopo entrepreneurs make less than ZAR 7,500 per month
compared to only 49% of those in Cape Town.
With regards to the second indicator of business success the difference
between the amount of start-up capital and the current value of the enterprise
in both Cape Town and Limpopo there are clear indications of increased value.
For example, 21% of the sampled entrepreneurs in Cape Town started with
less than ZAR 5,000 but only 3% of the businesses were currently valued at
less than ZAR 5,000 (Table 9). In Limpopo, the equivalent figures were 34%
(start-up) and 14% (current value). In both locations, therefore, there was
significant upward movement out of the lowest value category. A similar
pattern can be observed with businesses that started with less than ZAR
20,000. In Cape Town, 51% fell into this start-up category but only 26% of
businesses fell into this value category. The proportion of sampled businesses
in the ZAR 50,000-plus category increased from 27% to 47% and in Limpopo
from 15% to 42%. This suggests that higher value businesses may actually be
performing better in Limpopo than they are in Cape Town.

804
Table 8: Net Monthly Profit of Refugee Entrepreneurs
Cape Town
Refugees
Limpopo
Refugees
% cumulative % % cumulative %
<= ZAR2500 14.7 14.7 18.1 18.1
ZAR2,501-ZAR5,000 18.6 33.3 40.0 58.1
ZAR5,001-ZAR7,500 15.5 48.8 10.9 70.0
ZAR7,501-ZAR10,000 15.3 73.1 12.7 82.7
ZAR10,001-ZAR12,500 6.2 79.3 3.0 85.7
ZAR12,501-ZAR15,000 8.8 88.1 5.1 90.8
ZAR15,001-ZAR17,500 1.4 89.5 2.3 93.1
ZAR17,501-ZAR20,000 6.5 96.0 3.9 95.0
>ZAR20,000 4.0 100.0 5.0 100.0

805
The establishment and growth of sampled refugee businesses has economic
spin-offs for a variety of South African stakeholders. The first beneficiaries are
formal sector suppliers including wholesalers, supermarkets, fresh produce
markets, retailers and manufacturers. Around two-thirds of the sampled
refugees in both Cape Town and Limpopo purchase supplies from wholesalers,
who are easily the largest beneficiaries of their patronage (Table 10). Other
beneficiaries vary in relative importance, reflecting the difference between
operating in a large city and a small town. For example, refugees in Cape Town
are more likely to patronise supermarkets and factories while those in
Limpopo are more likely to patronise small shops. The fact that more Cape
Town refugees purchase directly from farms is primarily a reflection of the
existence of a market gardening area (the Philippi Horticultural Area) within
the city limits (Battersby-Lennard & Haysom, 2012). The average monthly
spend at wholesalers was very similar in both Cape Town and Limpopo.
Otherwise, the amounts spent varied considerably but, in general, the more
important the source, the greater the amount is spent.
Table 9: Increase in Value of Refugee Enterprises
Cape Town Refugees Limpopo Refugees
Start
up
%
Current value
%
Start
up
%
Current value
%
<ZAR5,000 21.4 3.4 33.6 13.6
ZAR5,000-ZAR9,999 14.1 9.2 12.2 9.5
ZAR10,000-ZAR19,999 16.2 13.0 17.1 11.8
ZAR20,000-ZAR29,999 7.1 13.2 10.9 11.6
ZAR30,000-ZAR49,999 14.1 14.1 10.9 11.8
ZAR50,000-ZAR99,999 12.6 20.2 8.8 13.2
ZAR100,000-ZAR199,999 10.4 15.2 4.7 15.2
ZAR200,000-ZAR499,999 3.9 10.3 1.5 10.7
ZAR500,000-ZAR999,999 0.2 0.9 0.2 1.8
>ZAR1,000,000 0.0 0.4 0.2 0.7

806
Table 10: Main Suppliers Used by Refugee Entrepreneurs
Cape
Town
Refugees
%
Limpopo
Refugees
%.
Cape
Town
Ave
spend
(ZAR/
month)
Limpopo
Ave
spend
(ZAR/
month)
Wholesaler 64.1 57.9 34,565 34,908
Direct from factory 12.7 3.6 9,575 20,278
Supermarkets 9.7 4.2 12,253 3,979
Fresh produce markets 5.6 4.2 28,021 2,000
Non-South African
informal
producers/retailers
4.8 8.5 9,121 15,549
Small shops/retailers 4.2 17.9 3,738 6,876
South African informal
sector producers/retailers
2.6 3.8 7,631 3,859
Direct from farms 1.6 0.8 19,625 4,875
Other sources 5.6 3.6 14,855 4,586
The second major beneficiary of the activities of refugee entrepreneurs is the
South African treasury. While most businesses operate in the informal sector
and are too small to pay income tax, they do pay value-added tax (VAT) on
most goods purchased from formal sector suppliers. One Ethiopian refugee in
a Limpopo focus group observed that they not only paid VAT on goods but also
were unable to claim rebates:
There are many things we do to help the economy. We operate our
businesses and we buy our stock from the wholesalers. We pay VAT there
so our money is going into the economy. We pay a lot of money that way.
Some of our people go to buy goods that are worth ZAR 200,000 or even
more. Some buy every week and some buy every day. So imagine if you
are paying ZAR 200,000 for goods and VAT is 14% so that is more than

807
ZAR 25,000 I am paying to the government. Even after paying this large
amount of VAT we suffer because we cannot claim some of it because we
do not have the documents. We are not registered. If we were registered
at the end of the year we would claim some of the VAT like South Africans
do. We are actually paying more and contributing more through VAT
than most South African small businesses (Focus Group Participant,
Burgersfort, 1 April 2016).
Another participant claimed that business registration was impossible
because “government does not want to register us.”1
Third, as these refugees noted, they pay heavy rents to South African property
owners:
South Africans are surviving on us because we pay them money to rent
their shops. I pay ZAR 4,000 per month to my landlord to use the shop.
That is a lot of money. How many local people can afford to pay that
money? Locals do not pay that kind of money when they rent. They will
pay ZAR 1,000 or ZAR 1,500 only, not ZAR 4,000. We pay because we have
no choice, we want to do business and survive.2
While over half of both groups of refugees paid rent to a private South African
owner, this was more common in Limpopo (almost 66%) (Table 11). However,
the average monthly rentals paid to landlords were very similar: ZAR 4,838 in
Cape Town and ZAR 4,555 in Limpopo. Renting also provides refugees with a
modicum of protection. As one noted, “If your landlord is respected or feared,
then you are okay because the thugs will not come and break in.”3 The Cape
Town refugee entrepreneurs were more likely to own their business premises
although the numbers were small (7% compared to 2% in Limpopo). Fourth,
the municipal government has a direct financial interest in its dealings with
refugees. Particularly in Cape Town, refugees pay into municipal coffers
through rent for business sites. This amounted to 22% of the refugee
entrepreneurs in Cape Town compared to only 4% in Limpopo. These rents
1 Focus Group Participant, Burgersfort, 1 April 2016.
2 Ibid.
3 Ibid.

808
were higher in Cape Town, an average of ZAR 879 per month compared to only
ZAR 311 per month in Limpopo. Additionally, as many as 28% of Limpopo-
based refugees (and 21% of those in Cape Town) pay an annual license fee to
the municipality. The cost of a business license is much higher in Cape Town
at ZAR 1,959 per year compared to only ZAR 752 per year in Limpopo.
Table 11: Occupancy Status of Business Premises
Cape
Town
Refugees
%
Limpopo
Refugees
%
Cape
Town rent
(R/month)
Limpopo
rent
(R/month)
Pay rent to private
owner who is a South
African (company or
individual)
53.6 65.9 7,541 4,838
Pay rent to
council/municipality
21.5 3.8 860 879
Pay rent to private
owner who is not a
South African
(company or
individual)
9.4 8.8 2,800 3,180
Owner or part-owner 7.4 2.2
Rent-free, with
permission
5.2 6.4
Rent-free, without
permission
1.2 10.6
Share space/premises
with others
0.0 0.4
Other 1.6 1.8
Fifth, there is a growing consensus in the research literature that migrant
businesses in the informal economy create jobs for South Africans, and that
this needs to be acknowledged by government. As one refugee observed: “The
government does not want to accept that we are contributing. When they talk

809
about us they make it look like we are only taking, taking and taking from the
South Africans.”4 Another pointed out the mutual benefits of employing South
Africans:
We employ a lot of South Africans. If your business starts to grow, you
employ, not only our people from Ethiopia, but also locals. They help with
customers and other things. They speak the language and understand
quickly what the customer wants. Even though I understand the
language, there are words that I do not know and so it is better when you
employ a South African, they will talk and agree and I will communicate
with my employee. The locals need work and we also need workers, so it
is a mutual benefit.5
Some refugees also find that employing South Africans is a form of security
against theft, although it can be a double-edged sword:
It is good security because they will know the local thugs and thieves and
so they may tell them to leave you alone. If you have a bad employee, they
may connive with the thieves and steal from you, so it is both ways.
Sometimes we employ locals that we know, when we know their parents
and we talk to them so that they do not steal and run away. It is better
to employ someone from around the area, someone in the community.6
Around half (52%) of the Cape Town refugee entrepreneurs and just under
half (45%) of the Limpopo entrepreneurs employ people in their businesses
(Table 12). In terms of the pro file of employees, the Cape Town and Limpopo
entrepreneurs were equally likely to employ South Africans (around 50% of
the total number of jobs created). While the Limpopo entrepreneurs favoured
female employees (51% versus 45% of total employees), both groups
preferred to hire South African women over men (with 65-70% of South
African employees in both sites being female). What this suggests is that, in
both large cities and small urban areas, refugee entrepreneurs may be
4 Ibid.
5 Ibid.
6 Ibid.

810
providing jobs for more South African women than men and thereby
contributing to lowering the female unemployment rate.
Table 12: Employment Generation by Refugee Enterprises
Cape Town Refugees Limpopo Refugees
No. of
employees
% No. of
employees
%
South African Males 66 17.7 37 11.8
South African Females 120 32.2 82 26.1
Home Country Males 101 27.2 81 25.8
Home Country
Females
28 7.5 26 8.3
Other Country Males 35 9.4 37 11.8
Other Country Females 22 5.6 51 16.2
Finally, it is clear from the accounts of refugees in both Cape Town and
Limpopo that one of the primary beneficiaries of their activities in the informal
economy is the South African consumer who can access goods and services
much more cheaply than from formal sector suppliers. These include
necessities such as cheaper food for the food insecure, luxuries such as
household and personal products and services such as panel-beating. For
example, one group of five Zimbabwean refugees in Cape Town (including a
former teacher), operate a panel-beating and spray-painting business in an
industrial area of the city. In a focus group, they discussed at length how and
why they established the business, their business challenges and the nature of
the service they offer to South Africans:
We are very good at this business. There are many people who come here
because they cannot afford to repair their cars in these expensive
garages, so we are offering them services otherwise they would not be
driving their cars. That is a good service we are offering. Some of the
customers actually go to the garages first and the charges there will
make them come to us (Focus Group Discussion, Cape Town, 22 February
2016).

811
These refugees also argued, in a prescient manner, that their activities saved
the South African Government and the UNHCR from having to support them.
As one commented: “In Europe the governments look after the refugees and
every month they get paid like they are working. But here we are working for
ourselves and are saving the government a lot of money.”7
Conclusion
This paper aims to contribute to the literature on urban refugee livelihoods in
the Global South and, in particular, to a small but growing body of work on
urban refugee entrepreneurship in cities of refuge (Campbell, 2005, 2006;
Gastrow & Amit, 2013; Omata, 2012; Pavanello et al., 2015; Thompson, 2016).
The concept of ‘refugee economies’ is a valuable starting point for restoring
agency, self-reliance and innovation to populations all too often represented
as passive victims. One of the defining characteristics of many large cities in
the rapidly urbanising South is the high degree of informality of shelter,
services and economic livelihoods. As Simone (2004) argues, this involves
“highly mobile and provisional possibilities for how people live and make
things, how they use the urban environment and collaborate with one
another.” Furthermore, these urban spaces provide for “upscaling a variety of
entrepreneurial activities through the dense intersections of actors from
different countries and situations.” It is these dynamic, shifting and dangerous
informal urban spaces inwhich refugees often arrive, with few resources other
than a will to survive, a few social contacts and a drive to support themselves
in the absence of financial support from the host government and
international agencies.
South Africa is sometimes hailed as having an extremely progressive refugee
protection regime by the standards of the rest of Africa. Refugees enjoy
freedoms denied in other countries, including the right to move and live
anywhere and the right to work and be self-employed. Many opt for
employment and self-employment in the informal economy because they find
it extremely difficult to access the formal labour market or to establish and
operate a business in the formal economy. Newly-arrived refugees, including
7 Focus Group Discussion, Cape Town, 22 February 2016.

812
those with advanced skills and professional qualifications, initially find
themselves accepting menial work on construction sites or as dish-washers in
restaurants. Those with relatives or friends already in the country often work
in their informal businesses until they have saved enough money to launch
their own. They start small and, with extremely hard work, self-sacrifice and
hardship, their businesses take off. Thus, South Africa provides an important
example of refugee self-reliance, motivation and agency through informal
entrepreneurship.
At the same time, South Africa is one of the most xenophobic countries in the
world and migrants of any kind are extremely unwelcome. Large-scale
violence directed at migrants and refugees wracked the country in 2008 and
again in 2015. In this span of time, extreme xenophobia, in the form of violent
attacks on migrant and refugee-owned shops and small businesses, has
escalated. The state refuses to acknowledge that xenophobia exists, much less
that something should be done about it. Attacks on foreign businesses are
dismissed as general criminality, which might be an acceptable rhetorical
position if there was evidence that the police provide adequate protection and
justice for the victims. The evidence of human rights observers and previous
studies, and confirmed here, is that policing is lackadaisical at best and
certainly does very little to protect refugees from re-victimisation in their
chosen country of refuge. The fact that informal businesses started and run by
refugees have become a particular target means that the South African city has
become a hazardous place for refugee entrepreneurs.
Refugee economic opportunity and entrepreneurial activity is likely to vary
significantly between camp and urban environments. This paper has
addressed the question of variability between urban environments within the
same destination country by comparing refugee entrepreneurship in the large
city of Cape Town with a population of over 3 million and several small towns
in the predominantly rural province of Limpopo, none with a population larger
than 150,000. The research shows that refugee entrepreneurial activity in
Limpopo is a more recent phenomenon and is largely a function of refugees
moving away from large cities such as Johannesburg where their businesses
and lives are in greater danger. While Somali refugees predominate in Cape

813
Town and Ethiopian refugees in Limpopo, the refugee populations in both
areas are equally diverse and tend to be engaged in the same wide range of
activities.
Less start-up capital is needed in Limpopo but the refugees in both areas
pursue similar business strategies and make similar contributions to the local
economies. They face many of the same business challenges, including
problems with documentation and the refusal of banks to offer credit, although
small town policing appears to be harsher and more corrupt. While South
African consumers clearly benefit from and appreciate their presence, migrant
entrepreneurs are more vulnerable to xenophobic violence in Cape Town than
Limpopo. In short, different urban geographies do shape the local nature of
refugee entrepreneurial economies, but there are also remarkable similarities
in the manner in which unconnected refugee entrepreneurs establish and
grow their businesses in large cities and small provincial towns.
Acknowledgements
Impacts SAMP research project on which this paper is based.
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Comparing Refugee and South African Migrant Enterprise
in the Urban Informal Sector
Jonathan Crush* and Cameron McCordic**
Abstract
Comparisons between the informal business operations of South Africans and
international migrants are increasingly common. The conventional wisdom is
that survivalist South Africans are being displaced by entrepreneurial migrants
with a long tradition of informal enterprise. This paper is the first attempt to
explicitly compare the informal enterprises established by refugees and South
African migrants in urban areas. The paper is based on a comparative analysis
of over 2,000 refugee and South African informal enterprises. The stereotyping
of refugees in public discourse as undermining and destroying South African
competitors is far-removed from the reality. The idea that refugees have a
competitive advantage as experienced entrepreneurs is also clearly fallacious.
Refugees are extremely motivated, hard-working and dedicated, and employ a
number of legitimate business strategies to achieve success. To suggest, on the
other hand, that South African migrants are poor business people is equally
fallacious. While refugees seem able to access greater amounts of start-up
capital (although neither they nor South Africans can access formal bank loans),
both groups are seemingly able to grow their businesses. Thus, there is a need for
much greater nuance in policy and academic discussions about the impact of
refugee migration on the South African informal economy.
Keywords Informal sector, business strategies, xenophobia, refugee
entrepreneurs, South African migrant entrepreneurs.
*
International Migration Research Centre, Balsillie School of International Affairs, 67 Erb St
West, Waterloo, Ontario, Canada N2L6C2. Email address: jcrush@balsillieschool.ca
**
Balsillie School of International Affairs, 67 Erb St West, Waterloo, Ontario, Canada N2L6C2.
Email address: cmccordic@balsillieschool.ca

821
Introduction
In 2014, South Africa’s Minister of Small Business Development, Lindiwe Zulu,
publicly compared South African and migrant informal entrepreneurs. She
suggested that South Africans were largely inept business owners who should
learn from the business practices of their foreign counterparts who were
“better at running shops than the local owners” (Zwane, 2014). At the same
time, South Africans were said to be at a natural disadvantage because they
had no history of entrepreneurship. The reason for refugee success, she
continued, is that business “is in their blood […] from the moment they are
born, they are introduced to trade. Their mothers, uncles, everyone trades.” As
a result, they “operate in the same communities in which we fail” (Zwane,
2014). Such stereotypical comparisons of refugee and South African informal
business are echoed in the research literature. There is a common idea in the
business literature, for example, that poor black South Africans lack
entrepreneurial ambition and this, in turn, helps explain the relatively small
size of the South African informal economy and the high rate of local informal
business failure (Hutchinson & de Beer, 2013; Iwu et al., 2016; Ligthelm, 2011;
Preisendörfer et al., 2012a, 2012b, 2014a, 2014b). This paper sets out to
examine and contest the contrasting stereotypes that surround both South
African and refugee entrepreneurs.
Comparisons between the informal business operations of South Africans and
international migrants are increasingly common. The conventional wisdom is
that “survivalist” South Africans in the informal economy are being displaced
by “entrepreneurial” migrants (Charman et al., 2012). South Africans
supposedly display a “survivalist mentality and one dimensional [business]
strategy,” leading to poorer performance than migrants (Basardien et al.,
2014: 57). Comparing South African and Somali spaza shop owners in Cape
Town, Basardien et al. (2014) found that the latter scored better on various
indicators of entrepreneurial orientation, including achievement, innovation,
personal initiative and autonomy. In addition, migrant businesses grew faster
and created more jobs than South African businesses. By contrast, some have
suggested that business failure is not inevitable and that South African
survivalists can grow their enterprises and create jobs (Choto et al., 2014; Iwu

822
et al., 2016). Other studies have suggested that the gap between South African
and migrant entrepreneurs is not as great as is commonly supposed. One study
of 500 retail enterprises in Gauteng, for example, found that motivations to
start a business did not differ significantly between South Africans and
immigrants (Radipere, 2012; Radipere & Dhliwayo, 2014). Callaghan and
Venter’s (2011) study of street traders in inner-city Johannesburg concluded
that South Africans were actually more innovative than migrants, although
they did not display the same levels of proactiveness and competitive
aggression. While migrant traders had earned more than their South African
counterparts in 2008 and 2010, in 2009 the South Africans were the higher
earners (Callaghan, 2013).
What is often overlooked in the public discourse and research literature about
informal business competition between South Africans and non-South
Africans is the fact that many South Africans in the informal economy are
themselves migrants. By consistently representing business and other
competition as a conflict between ‘South Africans’ and ‘foreigners,’ the fact that
much of the supposed competition is between two groups of migrants is lost.
Therefore, this paper aims to systematically compare a group of South African
and non-South African migrant entrepreneurs and to assess the similarities
and differences between them. The two groups are (i) refugees (holders of
Section 24 permits) in Cape Town and Limpopo and (ii) South African
migrants operating businesses in the same localities. The survey drew a
sample of 1,068 South African migrant entrepreneurs and 1,008 refugee
entrepreneurs (split approximately equally across the two locations of Cape
Town and urban Limpopo). The maximum variation sampling methodology
used to select the refugees for interview is explained in Crush et al. (2015).
Exactly the same procedure was used to select the comparator group of South
African informal business; that is, random selection of respondents within
each area identified. For the purposes of this comparative analysis, we have
combined the two sub-groups of refugees (in Cape Town and Limpopo) into
one group and have done the same with the South Africans.

823
Motivating Entrepreneurship
South Africans and refugees appear to face very different livelihood prospects
in the country’s urban areas. Although South Africa does not have refugee
encampment policy and refugees are permitted by law to pursue employment,
there is much evidence to suggest that they face considerable barriers in
accessing the formal labour market (Crea et al., 2016; Jinnah, 2010; Kavuro,
2015; Rugunanan & Smit, 2011). They have been shut out of the security
industry (where many were initially employed) and they face considerable
hurdles in getting employers to accept their documentation. South Africans, on
the other hand, should theoretically have none of these problems but they face
other hurdles including limited skills and training, job competition, and high
rates of unemployment (currently around 30% nationally and as high as 45%
amongst urban youth) (Graham & De Lannoy, 2016; Klasen & Woolard, 2009).
South African migrants to the cities often end up living in informal settlements
far from formal job opportunities, and also have to compete in the job market
with long-time residents of the city who have a significant geographical and
networking advantage. For both sets of migrants, then, the informal economy
can often be the only livelihood niche they can find.
The general literature on informal entrepreneurship conventionally divides
participants into survival (or necessity) entrepreneurs and opportunity
entrepreneurs (Williams, 2007, 2015; Williams & Gurtoo, 2012; Williams &
Youseff, 2014). The former are driven to participate purely by the need to
survive and because they have no other choice. The latter choose to work in
the informal sector because they see greater opportunities for economic
advancement, they prefer to work for themselves rather than for others or
they feel that they have the right aptitude. Distinguishing between these two
types of entrepreneur and their likely differences in entrepreneurial
motivation and orientation has generated a large body of empirical and
methodological literature. In the South African context, studies of
entrepreneurial motivation have sought to go beyond the idea of survivalism
and demonstrate that many participants in the informal economy are not
driven there out of desperation but are highly motivated entrepreneurs

824
(Callaghan & Venter, 2011; Fatoki & Patswawairi, 2012; Khosa & Kalitanyi,
2015; Venter, 2012).
One of the most common ways of deciding what lies behind personal decisions
to establish an informal enterprise is to measure what is known as
entrepreneurial motivation. This involves the development of possible
reasons why the informal enterprise was started and then asking respondents
to rank them on a Likert scale from 1 (no importance) to 5 (extremely
important). In this study, both refugees and South African migrants were
presented with 24 different possibilities to rate. A mean score was calculated
for each group on each statement (Table 1). For ease of interpretation, we
have grouped the 24 statements under 4 main themes (a) economic survival;
(b) provision of employment or a service to others; (c) business experience
and appeal and (d) entrepreneurial orientation. Two things immediately stand
out from a descriptive comparison of means. First, both refugees and migrants
tend to assign the same relative importance to each of the 24 factors, which
might suggest that they have a similar motivational profile, rating the same
factors as relatively important and unimportant. The second notable finding is
that almost across the board, even on statements that had a low mean score,
refugees scored more highly than South African migrants. This could indicate
a greater general degree of commitment to participation in the informal
economy amongst refugees.

825
Table 1: Entrepreneurial Motivation of Refugees and South Africans
South
Africans
(Mean
Score)
Refugees
(Mean
Score)
Economic Survival/Financial Support of
Dependants
I needed more money just to survive 4.10 4.31
I wanted to give my family greater financial security 3.69 3.97
I was unemployed and unable to find a job 3.43 2.89
I wanted to make more money to send to my family in
my home area/country
3.00 3.57
I had a job but it did not pay enough 2.29 2.24
I had a job but it did not suit my qualifications and
experience
1.44 1.62
Providing Employment/Product/Service
I wanted to provide a product/service to South
Africans
2.74 3.41
I wanted to contribute to the development of South
Africa
2.69 3.35
I wanted to provide a service/product to non-South
Africans/migrants and refugees
2.46 3.00
I wanted to provide employment for people from my
home area/country
1.93 2.25
I wanted to provide employment for members of my
family
2.19 2.27

826
I wanted to provide employment for other South
Africans
2.10 2.29
Business Experience/Appeal
I wanted more control over my own time/to be my
own boss
3.08 3.72
I have always wanted to run my own business 3.06 3.75
Support and help in starting my business was
available from other South Africans/refugees
2.05 3.03
I decided to go into business in partnership with
others
1.62 2.37
My family has always been involved in business 1.81 2.34
Entrepreneurial Orientation
I have the right personality to run my own business 3.01 3.45
I wanted to do something new and challenging 2.83 3.34
I like to learn new skills 2.83 3.41
I enjoy taking risks 2.73 3.24
I like to challenge myself 2.84 3.37
I wanted to increase my status in the community 2.48 2.99
I wanted to compete with others and be the best 2.48 3.07
Significantly, the only two reasons for entrepreneurship on which South
Africans scored higher than refugees were “I was unemployed and unable to
find a job” and “I had a job but it did not pay enough.” This suggests that for
South African migrants, informal sector participation is more closely tied to
the absence of formal employment than it is for refugees. Of the four groups of
factors, economic survival motivations scored most highly for both groups,
and providing an employment or service was the least important. The highest

827
single factor for both groups was the need for more money to survive (both
with means over 4.0). Also very important for both was the desire to provide
family with greater financial security and the desire to make more money to
remit to family at home. In other words, financial support of dependants is a
strong motivating factor for informal sector entrepreneurship. Neither group
was highly motivated by a desire to provide employment for others, but
refugees were ironically much more likely to be motivated by a desire to
provide a service or product to South Africans (3.41 versus 2.74) and to
contribute to the development of South Africa (3.35 versus 2.69).
Although both groups said that wanting to run their own business and be their
own boss was important to them, the refugees scored significantly higher on
both factors. One of the major differences between the two was the amount of
help and support they could count on from others, with refugees scoring much
higher than South Africans (3.03 versus 2.05). Refugees were also consistently
more positive about their personal aptitude for running a business. This is
clear in the grouping of entrepreneurial orientation factors where refugees
scored above 3.0 on 6 of the 7 factors, compared to South Africans who scored
above 3.0 on only 1 of the 7 factors.
While these frequency distributions tell an interesting story about the
differences and similarities between South African migrant and refugee
entrepreneurs, it is difficult to gauge their statistical significance. The main
challenge is that the dependent variable for the comparison (the importance
ranking for each variable) is at an ordinal level of measurement with varying
distributions across each sampled group. This means that we need to use non-
parametric tests of difference and bin the motivation factors into binary level
indicators. Each indicator was therefore assigned two values: not important (1
in the original scale) and important (2-5 in the original scale). A combination
of odds ratio calculations and Pearson’s Chi-Square Test of independence were
used to test for significance. The odds ratio calculations show how migrant
status is associated with a change in the odds of ranking each motivation factor
(where a value greater than 1 indicates increased odds and less than 1
indicates decreased odds). These calculations are supported by 95%
confidence intervals and the p-values taken from a Chi-Square analysis (where

828
an alpha of 0.05 is used as a threshold for a statistically significant difference
in the distribution of scores across the two groups) (Table 2).
Table 2: Odds Ratio Calculations of Motivational Factors
Entrepreneurial
Motivation
Factor
Odds
Ratio
95% Confidence
Interval
Pearson
Chi-
Square
Df P-
Value
(2-
sided)
Lower Upper
I was
unemployed and
unable to find a
job**
0.496 0.411 0.599 54.036 1 <.001
I had a job but it
did not pay
enough
1.012 0.851 1.204 .019 1 0.895
I had a job but it
did not suit my
qualifications and
experience**
1.631 1.322 2.012 21.088 1 <.001
I wanted to
provide
employment for
members of my
family**
1.344 1.128 1.600 10.970 1 0.001
I wanted to
provide
employment for
people from my
home
area/country**
1.840 1.540 2.198 45.499 1 <.001
I wanted to
provide
employment for
1.597 1.341 1.902 27.682 1 <.001

829
other South
Africans**
I needed more
money just to
survive**
1.770 1.275 2.457 11.880 1 0.001
I wanted to give
my family greater
financial
security**
1.651 1.294 2.105 16.483 1 <.001
I wanted to make
more money to
send to my family
in my home
area/country**
2.942 2.393 3.618 109.114 1 <.001
I decided to go
into business in
partnership with
others**
2.931 2.423 3.545 126.855 1 <.001
Support and help
in starting my
business was
available from
other South
Africans/refugees
**
3.155 2.635 3.778 160.774 1 <.001
My family has
always been
involved in
business**
2.149 1.793 2.575 69.422 1 <.001
I wanted to
provide a
service/product
2.085 1.741 2.496 64.788 1 <.001

830
to non-South
Africans/migrant
s and refugees**
I wanted to
provide a
product/service
to South
Africans**
2.550 2.103 3.093 92.934 1 <.001
I have always
wanted to run my
own business**
2.806 2.268 3.471 94.245 1 <.001
I have the right
personality to run
my own
business**
2.176 1.787 2.650 61.018 1 <.001
I wanted to do
something new
and challenging**
2.289 1.890 2.772 73.209 1 <.001
I like to learn new
skills**
2.590 2.128 3.153 92.620 1 <.001
I enjoy taking
risks**
2.299 1.901 2.781 75.044 1 <.001
I like to challenge
myself**
2.466 2.028 2.998 83.975 1 <.001
I wanted more
control over my
own time/to be
my own boss**
2.887 2.331 3.574 98.785 1 <.001
I wanted to
increase my
2.193 1.832 2.626 74.095 1 <.001

831
status in the
community**
I wanted to
compete with
others and be the
best**
2.581 2.151 3.096 106.434 1 <.001
I wanted to
contribute to the
development of
South Africa**
3.677 3.001 4.505 166.788 1 <.001
* p<.05 on both Pearson’s Chi-Square and Fisher’s Exact Test
** p<.01 on both Pearson’s Chi-Square and Fisher’s Exact Test
Note: Odds Ratios measure change in odds from refugee to South African
entrepreneurs
The major conclusions from the analysis are as follows: first, refugee
entrepreneurs have about 50% lower odds of starting their business because
of being unable to find a job. Second, refugees had four times the odds of
desiring to contribute to the development of South Africa and three times the
odds of stressing the importance of obtaining help from others in starting their
business and going into partnership with others. Third, refugees had nearly
three times the odds of starting a business with the intention of remitting
money to family at home. Finally, refugees had two to three times the odds of
assigning importance to the range of personal entrepreneurial orientation
factors.
Contrasting Business Profiles
The survey highlighted a number of similarities and differences in the informal
business activities of refugee and South African migrant enterprises. Firstly,
more South Africans had been in business for a longer period of time (Table 3
and Figure 1). For example, 19% of the South African businesses were
established before 2000, compared to only 2% of the refugee businesses.
However, the majority of all businesses were started in the last decade, with
61% of refugee businesses and 44% of South African businesses established

832
after 2010. This finding is certainly consistent with the general perception that
refugees have been entering the informal economy in growing numbers.
Table 3: Year of Business Establishment
Year South Africans Refugees
No. % No. %
<= 1990 46 4.4 1 0.1
1991-1995 49 4.7 1 0.1
1996-2000 115 11.0 18 1.8
2001-2005 124 11.9 70 7.1
2006-2010 246 23.6 293 29.6
2011-2016 462 44.3 608 61.4
Total 1,042 100.0 991 100.0
Figure 1: Year of business establishment
0
10
20
30
40
50
60
70
<= 1990 1991 – 1995 1996 – 2000 2001 – 2005 2006 – 2010 2011 – 2016
%
Year of Business Establishment
South Africans Refugees

833
Second, since both groups are migrants to the city, it is important to see if they
go into business as soon as they arrive or if business start-up comes at a later
time. Only 32% of refugees and 21% of South Africans started a business
within the first year of arrival (Table 4). This general pattern of a greater time
lapse on the part of the South Africans is further demonstrated by the fact that
41% of them started their business within two years of arrival, compared to
61% of the refugees. Both groups have similar numbers who waited 3 to 10
years, but starting a business after 10 years or more was definitely a South
African preserve (at 24% compared to 3% of refugees). The general time lapse
in both groups indicates that immediate start-up is not an option for most.
Rather, both tend to work first in the formal or informal economy, often to
raise the start-up capital to branch out on their own.
Table 4: Time Lapse Between Year of Migration and Business Start-Up
Years No. % No. %
0 213 21.4 304 32.0
1-2 196 19.7 277 29.2
3-5 173 17.4 201 21.2
6-10 172 17.3 140 14.7
>10 242 24.3 28 2.9
Third, it is theoretically possible that the shorter time-lag between migration
and start-up amongst refugees is also because they have prior business
experience. This would certainly be consistent with the views of Minister Zulu
summarised at the beginning of this paper (Zwane, 2014). The respondents
were all asked what their main occupation was prior to leaving their home
country or area. Only 9% of the South Africans said they were operating their
own informal sector business. The figure for refugees was higher, at 18%, but

834
this does not suggest a massive competitive advantage conferred by prior
experience. In other words, over 80% of the refugee entrepreneurs were not
operating an informal sector business prior to migrating to South Africa. The
stereotypical idea that refugees somehow have business “in their blood” is,
therefore, not supported by the evidence of this survey.
Fourth, the survey found that the majority of enterprises of both refugees and
South African migrants are located in the retail sector (Table 5). A small
number of businesses (9% of refugees and 6% of South Africans) are involved
in more than one sector; for example, a business that manufactured and sold
arts and crafts would count as both a retail and manufacturing enterprise. Or
a business offering a service, such as a hair salon, may also be involved in
retailing products. At this sectoral level of analysis, it appears that there is
potential for significant intra-sectoral competition between the two groups.
However, if the activity profile is disaggregated, the picture is more nuanced
(Table 6).
Table 5: Sectors of Informal Business Operation
Sector No. % No. %
Retail, Trade and Wholesale 828 77.5 778 77.2
Services 262 24.5 271 26.9
Manufacturing 41 3.8 60 6.0
Other 4 0.4 2 0.2

835
Table 6: Main Goods and Services Provided
% of Total
Enterprises
Owned by
South
Africans
% of Total
Enterprises
Owned by
Refugees
% of
South
Africans
Selling
Product
or
Service
% of
Refugee s
Selling
Product or
Service
Retail
Food and
Beverages
Fruit and
vegetables
27.1 13.4 68.2 31.8
Cooked food
(ready to eat)
18.4 6.7 74.3 25.7
Confectionary 17.5 17.0 52.2 47.8
Canned Drinks 13.1 22.3 38.4 61.6
Livestock (e.g.
chickens)
1.7 0.2 90.0 10.0
Alcohol 0.9 0.4 71.4 28.6
Personal and
Household Goods
Cigarettes 13.3 19.9 40.8 59.2
Clothing and
footwear
7.7 19.5 29.4 70.6
Accessories (bags,
sunglasses)
6.1 16.5 28.1 71.9

836
Toiletries and
Cosmetics
3.9 14.8 22.0 78.0
Household
Products
3.4 9.3 27.7 72.3
Electronics 1.8 7.5 20.0 80.0
CDs/DVDs 1.1 2.6 31.6 68.4
Books/newspapers 0.7 2.9 19.4 80.6
Other Goods
Arts and Crafts 1.1 2.6 31.6 68.4
Hardware/tools 1.1 2.2 35.3 64.7
Car parts 0.5 0.5 50.0 50.0
Other 15.3 14.2 53.2 46.8
Services
Haircutting and
braiding
6.4 15.1 30.9 69.1
Car washing 3.4 0.4 90.0 10.0
Car
parking/guarding
2.3 0.0 100.0 0.0
Shoe repairs 2.0 0.7 75.0 25.0
Car repairs 1.2 0.5 27.8 72.2
Telephone 1.2 1.6 44.8 55.2
IT/Internet 0.9 2.7 27.0 73.0
Transportation
(taxi/passengers)
0.5 0.2 71.4 0.2
Rentals 0.4 0.1 80.0 20.0

837
Financial (loans) 0.3 0.1 75.0 25.0
Accommodation 0.2 0.2 50.0 50.0
Construction
(building)
0.2 0.0 100.0 0.0
Traditional doctor 0.2 0.2 50.0 50.0
Transportation
(goods)
0.2 0.1 66.6 33.4
Medicine
(pharmacy)
0.1 0.1 50.0 50.0
Other 5.3 5.6 50.4 49.6
Manufacturing
Sewing/tailoring 1.7 2.0 47.4 52.6
Arts and crafts 0.7 0.4 66.6 33.4
Shoe repair 0.5 0.5 50.0 50.0
Furniture making 0.4 0.6 40.0 60.0
Security (gates
and burglar bars)
0.1 0.4 20.0 80.0
Waste recycling 0.0 0.1 0.0 100.0
Other 0.6 1.9 24.0 76.0
Table 6 shows that at least some South Africans and refugees are involved in
every activity. However, they also tend to occupy and dominate different
niches. South Africans are more strongly represented in food retail (the main
exception being confectionary and the sale of canned drinks with roughly
equal participation). Around 70% of the entrepreneurs who were selling fresh
produce and cooked food were South Africans. On the other hand, over 70% of
those selling most types of personal and household products were refugees. In

838
the service sector, refugees dominate hair cutting and braiding, as well as car
repairs and IT. South Africans tend to dominate shoe repairs, transportation
and car washing and guarding. In the manufacturing sector, there is less
differentiation, although the overall numbers of participants are small
compared with retail and services.
Fourth, there was a significant difference in the amount of start-capital used
by the two groups (Figure 2). Almost 80% of the South Africans started their
businesses with less than ZAR 5,000, while the equivalent figure was only 27%
for refugees. At the other end of the spectrum, only 6% of the South Africans
had start-up capital of more than ZAR 20,000, compared to 43% of the
refugees. This certainly suggests that refugees have access to greater amounts
of start-up capital but it may also be that the barriers to entry are much lower
in the food sector (which is dominated by South Africans) as the initial spend
on stock is likely much lower than for businesses selling personal and
household goods. It is significant that of the 28% of refugees who started with
less than ZAR 5,000, most were food retailers.
Figure 2: Amount of start-up capital
0
10
20
30
40
50
60
70
80
90
%
Startup Capital Amount

839
Fifth, both groups had added value to their businesses since start-up (Table 7).
For example, while 78% of South Africans started with less than ZAR 5,000,
only 40% valued their enterprise as still less than ZAR 5,000 (a fall of 28%).
Similarly, with refugees the equivalent figures were 28% and 9% (a fall of
19%). The proportion of South African businesses with a current value of over
ZAR 20,000 was 25% (compared to only 6% at start-up). In the case of
refugees, the equivalent figures were 70% and 43%). In other words, 19% of
South Africans and 27% of refugees had moved up into the highest value
bracket.
Table 7: Current Business Value
No. % No. %
Less than ZAR5,000 349 40.1 75 8.5
ZAR5,000-9,999 177 20.3 83 9.4
ZAR10,000-19,999 128 14.7 110 12.4
ZAR20,000-29,999 57 6.6 110 12.4
ZAR30,000-49,999 59 6.8 115 13.0
ZAR50,000-99,999 46 5.3 148 16.7
ZAR100,000-199,999 28 3.2 135 15.2
ZAR200,000-499,999 18 2.1 93 10.5
ZAR500,000-999,999 3 0.3 12 1.4
<=ZAR1,000,000 5 0.6 5 0.6
Total 870 100.0 886 100.0

840
To assess the statistical significance of these differences, key variable
comparisons were drawn out from the frequency distributions and binned
into binary-level variables. These included (a) year of establishment (<=2010
and > 2010); (b) start-up capital (<ZAR 5,000 and >ZAR 5,000); and (c) current
business value (<ZAR 5,000 and >ZAR 5,000). The odds ratio calculations
performed in Table 8 provide convergent validity for the observed frequency
distributions. Independent of the influence of any other variables, the South
African entrepreneurs had almost twice the odds of running a business
established before 2011, almost ten times the odds of starting a business with
less than ZAR 5,000 and almost seven times the odds of currently running a
business valued at less than ZAR 5,000. All of these comparisons yielded p-
values less than the alpha of 0.01 on both the Pearson’s Chi-Square Test and
the Fisher’s Exact Test.
Table 8: Odds Ratio Calculations of Business Characteristics
95% C.I. P-Values
Variables Odds
Ratio
Lower Upper Chi-
Square
Fisher's
Exact
Test
Established business
before 2011**
1.993 1.67 2.379 <.001 <.001
Less than R5,000 in start-
up amount**
9.579 7.772 11.807 <.001 <.001
Less than R5,000 in
current value **
7.243 5.515 9.514 <.001 <.001
entrepreneurs

841
Business Strategies
Given the official and business literature perception that non-South Africans
are much better at running businesses than their South African counterparts,
it is important to see if the two groups pursue different business strategies and
activities. The first point of comparison concerns where the two groups choose
to locate their business operations. In the case of Cape Town, there are areas
of the city where each group tends to dominate: refugee businesses are more
common in the CBD and Bellville, for instance, while South Africans are more
commonly located along transport routes in and out of the city (such as on
streets and at taxi ranks and bus terminals). This difference is clear from Table
9. Half of the South Africans operate stalls on roadsides and 21% operate at
taxi ranks. This compares with only 31% and 2% of refugees, respectively. The
other major difference is that half of the refugees operate from a fixed shop or
workshop, compared to only 8% of the South Africans.
Table 9: Usual Location of Business Activities
Business Location No. % No. %
Temporary stall on the street/roadside 290 27.2 166 16.5
Permanent stall on the street/roadside 246 23.0 147 14.6
Taxi rank 221 20.7 22 2.2
In my home 102 9.6 34 3.4
No fixed location, mobile 87 8.1 26 2.6
Workshop or shop 86 8.1 525 52.1
Permanent stall in a market 87 8.1 106 10.5
Bus terminal 52 4.9 9 0.9
Railway station 21 2.0 1 0.1

842
Vehicle (car, truck, motor bike, bike) 19 1.8 3 0.3
In customer’s home 16 1.5 16 1.6
Craft market 6 0.6 7 0.7
Restaurant or hotel 2 0.2 8 0.8
Other 37 3.5 38 3.8
Note: Multiple choice question
In addition to the observed variations in business location, the reasons for
locational decisions also varied between the two groups (Table 10). When
compared with the refugee entrepreneurs, the South African migrant
entrepreneurs had greater odds of choosing a business location based on it
having the greatest number of customers, the tradition of doing business in a
location, the cheapness of land and a limited number of police in the area. The
refugees had higher odds of choosing their business location based on the
other locational factors, especially access to services, property rentals, safety
concerns and distance from other competitors.
Table 10: Odds Ratio Calculations of Reasons for Business Location
95% C.I. for
O.R.
P-Values
Reasons Odds
Ratio
Lower Upper Chi-
Square
Fisher's
Exact
Test
Place with greatest number of
customers**
2.231 1.707 2.915 <.001 <.001
Access to services such as
water/electricity**
0.341 0.284 0.409 <.001 <.001
Have a permit to operate
there**
0.746 0.624 0.893 .001 .001
Rents are cheaper 0.969 0.807 1.163 0.732 0.744

843
Safer than other locations** 0.673 0.564 0.803 <.001 <.001
Due to passing traffic 0.949 0.775 1.163 0.615 0.641
Close to home 0.869 0.73 1.036 0.117 0.118
Own/rent the land** 0.458 0.381 0.55 <.001 <.001
Close to other enterprises* 0.825 0.692 0.984 0.032 0.035
Distant from other
competitors**
0.647 0.534 0.784 <.001 <.001
Always done business there** 1.262 1.061 1.501 0.009 0.009
Close to public transport 0.987 0.811 1.2 0.893 0.92
Cheap land** 1.739 1.424 2.123 <.001 <.001
Few or no police* 1.251 1.017 1.54 0.034 0.035
entrepreneurs
Refugee entrepreneurs were much more likely than South Africans to rent
their business premises (Table 11). Almost 60% of them paid rent to a South
African landlord. Another 13% paid rent to the municipality (as did 10% of the
South Africans). Nearly 50% of South Africans operated their businesses rent-
free (compared to only 5% of refugees). What this means, in effect, is that
around three-quarters of South Africans do not pay any rent for their
premises, while over 80% of refugees do. The refugee entrepreneurs also pay
a higher monthly rent, on average, than those South Africans who do pay rent
(ZAR 4,000 per month versus ZAR 2,820 per month). In effect, many South
Africans are able to augment their household income through renting business
premises to refugees and therefore benefit from their presence.

844
Table 11: Occupancy/Tenure Status of Business Premises
South
Africans
Refugees
Tenure Status No. % No. %
Rent-free, with permission 276 26.1 58 5.8
I own it/am part owner 256 24.2 48 4.8
Rent-free, without permission (squatting) 214 20.3 59 5.9
Pay rent to private owner who is a South
African (company or individual)
145 13.7 595 59.7
Pay rent to council/municipality 104 9.8 126 12.7
Share space/premises with others 28 2.7 2 0.2
Pay rent to private owner who is not a South
African (company or individual)
17 1.6 91 9.1
Other 16 1.5 17 1.7
Another area of business strategy comparison concerns where the two groups
source their goods and whether they tend to patronise the same outlets (Table
12). Most of the respondent refugees buy their supplies at wholesalers while
South Africans patronise wholesalers and supermarkets in almost equal
numbers. South African respondents also obtain goods from fresh produce
markets and direct from farms in greater numbers. With the exception of
factory purchase, refugees tend to spend more on average at all outlets. For
example, while fewer refugees patronise supermarkets, their average monthly
spend is ZAR 8,693 compared with only ZAR 3,219 by the South Africans. In
total, the South African respondents spend more than the refugees at
supermarkets, fresh produce markets and buying direct from farms. Refugees
spend five times as much on average at wholesalers and a great deal more in
total (ZAR 21 million compared to less than ZAR 2 million).

845
Table 12: Patronage of Different Suppliers
Source % of
Total
Using
Source
Mean
Monthly
Spend
(ZAR)
Total
Annual
Spend
(ZAR)
%
Using
Source
Mean
Monthly
Spend
(ZAR)
Total
Annual
Spend
(ZAR)
Wholesaler 27.8 6,248 1,855,724 61.0 34,728 21,357,827
Supermarkets 27.3 3,219 936,642 8.5 8,693 747,640
Small
shops/retailers
11.4 1,798 219,407 11.0 6,282 697,350
Fresh produce
markets
9.6 4,751 489,364 4.9 16,869 826,600
Direct from
farms
9.6 8,875 905,270 1.2 14,708 176,500
Direct from
factory
7.4 32,216 2,545,050 8.2 11,924 977,800
SA informal
sector
enterprises
5.5 1,956 115,391 3.2 5,391 172,520
Non-SA
informal sector
enterprises
3.2 1,607 54,650 6.7 13,246 887,500
Other sources 5.1 3,486 188,250 4.6 10,838 498,525
There is a common assumption that other strategies adopted by refugees give
them a strong competitive advantage over South Africans. In addition to
greater business acumen and skills, they have been viewed, inter alia, as
securing discounts through group purchasing, offering credit to consumers,
operating for longer hours and selling goods more cheaply. Statistical

846
comparison of these, and other, business strategies indicates their relative
importance to each group (Table 13). The refugees had lower odds of adjusting
their operating hours to times of the day when there were most customers and
purchasing insurance. South African migrant entrepreneurs had lower odds of
operating for extended hours (0.743) and individual bulk purchasing (0.67).
However, they were two to five times as likely to keep business records
(0.475), sell goods more cheaply than competitors (0.395), purchase in bulk
with others (0.244) and negotiate with suppliers (0.340).
Table 13: Odds Ratio Calculations of Business Strategies
95% C.I. for
O.R.
P-Values
Odds
Ratio
Lower Upper Chi-
Square
Fisher's
Exact
Test
I open my business only
during the periods of the
day when I have the
most customers*
1.213 1.020 1.443 0.029 0.030
I purchase insurance 1.078 0.732 1.587 0.703 0.768
I offer credit for
customers
0.918 0.770 1.093 0.336 0.348
I extend my hours of
operation**
0.743 0.620 0.890 .001 0.001
I purchase stock in bulk
myself**
0.670 0.562 0.800 <.001 <.001
I change different prices
for different
customers**
0.660 0.545 0.799 <.001 <.001

847
I look for the cheapest
prices for goods by
consulting the media**
0.656 0.538 0.800 <.001 <.001
I engage in
shareholding**
0.562 0.437 0.722 <.001 <.001
I keep records of my
business accounts**
0.475 0.398 0.566 <.001 <.001
I look for the cheapest
prices for goods by
asking other
entrepreneurs**
0.439 0.367 0.525 <.001 <.001
I sell goods more
cheaply than my
competitors**
0.395 0.325 0.481 <.001 <.001
I purchase stock in bulk
together with others**
0.344 0.278 0.424 <.001 <.001
I negotiate prices with
my suppliers**
0.340 0.284 0.407 <.001 <.001
I look for cheapest
prices for goods by
calling suppliers**
0.230 0.191 0.278 <.001 <.001
entrepreneurs
The final point of business strategy comparison concerns the hiring practices
of the two groups of entrepreneurs. Almost half of the refugee entrepreneurs
have paid employees compared to only 21% of the South Africans. The
refugees in this sample provided three times as many jobs as the South

848
Africans. Table 14 provides statistical confirmation of the greater
employment-generating potential of refugees using odds ratio, Chi-Square and
Fisher’s Exact Test calculations.
A breakdown of employees by sex and national origin shows some differences
in the hiring patterns of the two groups. In total, 9% of refugees hire South
African men full-time and 1% part-time. The equivalent figures for South
African enterprises are 8% and 4%. Refugees show a preference for hiring
South African women over men, with 16% employing women full-time and 4%
part-time (compared to 9% and 1% for men). In the sample as a whole, 30%
are South Africans employed by refugees and 28% are South Africans
employed by other South Africans.
Table 14: Odds Ratio Calculations for Employment-Generation
95% C.I. P-Values
Variables Odds
Ratio
Lower Upper Chi-
Square
Fisher's
Exact
Test
Currently have employees** 0.273 0.225 0.332 <.001 <.001
This suggests that both refugee and South African enterprises create jobs for
South Africans in roughly equal numbers. The major difference is in the
employment of non-South Africans. Less than 5% of the total number of
employees are non-South Africans employed by South Africans, whereas 39%
are non-South Africans employed by refugees.
Conclusion
This paper is the first attempt to explicitly compare the informal enterprises
established by different categories of migrant in South African urban areas.
This comparative analysis of refugees and internal migrants suggests that

849
there is a need for much greater nuance in policy and academic discussions
about the impact of refugee migration on the South African informal economy.
The stereotyping of refugees in public discourse as undermining and
destroying South African competitors is clearly far-removed from the reality.
While refugees seem able to access greater amounts of start-up capital
(although neither they nor South Africans can access formal bank loans), both
groups are seemingly able to grow their businesses. This is partly because they
tend to occupy different niches in the informal economy, with South Africans
focused more on the food sector and refugees focused more on services and
retailing household goods. This may help explain another difference between
the two, with refugees tending to patronise wholesalers for their supplies and
South Africans purchasing from supermarkets and fresh produce markets.
The idea promulgated by the South African Minister of Small Business
Development, that refugees have a competitive advantage as experienced or
“in their blood” entrepreneurs, is clearly fallacious. South Africa’s refugee
legislation and restrictive employment policies mean that working for, and
then establishing, an informal enterprise is virtually the only available
livelihood option. But to argue that refugees come to South Africa with a pre-
existing skill and business experience is misplaced. Instead, refugees (like
small business owners everywhere) are extremely motivated, hard-working
and dedicated. They employ a number of business strategies to achieve
monetary success, although business expansion is hampered by the fact that
only a portion of business profits can be reinvested in the business as the rest
go to support dependants in South Africa and the home country. These
strategies are not illegal or even underhand but are quite transparent and
could be emulated. To suggest, on the other hand, that South African migrants
are poor business people, as the minister also suggested, is just as fallacious. It
is true that the odds of refugees pursuing a particular strategy (such as giving
goods on credit) are generally higher than a South African doing so, but this
does not mean that no South Africans pursue the strategy, as many clearly do.
Instead of constantly pitting refugees against South Africans as the official
mind likes to do, it would be more productive to treat them in policy terms as
a single group attempting, often against considerable odds, to establish and

850
grow a small business in a hostile or indifferent economic and political
environment.
Acknowledgements
We wish to thank the UNHCR in Geneva for funding the Refugee Economic
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854
Security Risk and Xenophobia in the Urban Informal
Sector
Sujata Ramachandran*, Jonathan Crush** and Godfrey Tawodzera***
Abstract
Whenever there are violent attacks on refugee and migrant businesses in South
Africa’s informal sector, politicians, officials and commissions of enquiry deny
that xenophobia is a driving force or indeed exists at all in the county. A new
strain of nativist research in South Africa does not deny the existence of
xenophobia but argues that it is an insignificant factor in the violence. It is
argued that because South African and non-South African enterprises are
equally at risk, the reasons for the violence are internal to the sector itself. This
paper critiques this position on the basis of the results of a survey of over 2,000
enterprises in the contrasting geographical sites of Cape Town and small town
Limpopo. The survey results reported in this paper focus on security risks and the
experience of victimisation and the experience of the two groups of enterprise
operator are systematically compared. The findings show that while both
cohorts experience many of the same security risks, refugee operators are
significantly more exposed to most threats including verbal abuse, theft,
unprovoked attacks and harassment by law enforcement agencies. Far from
being irrelevant, xenophobia is an important additional risk for refugee
entrepreneurs, as they themselves clearly recognise.
Keywords Security risks, informal sector, xenophobia, refugee entrepreneurs,
South African entrepreneurs.
* Southern African Migration Programme, International Migration Research Centre, Balsillie
School of International Affairs, 67 Erb St West, Waterloo, Ontario, Canada N2L6C2.
** International Migration Research Centre, Balsillie School of International Affairs, 67 Erb St
*** Department of Geography and Environmental Studies, University of Limpopo, P. Bag X1106,
Sovenga.

855
Introduction
In early 2015, South Africa experienced a new wave of violent attacks on
migrants, the culmination of several years of more localised but escalating
collective violence targeting migrant-owned businesses in the country (Crush
& Ramachandran, 2015a). After May 2008, when South Africa had witnessed
a previous round of large-scale violence against migrants, a decisive shift had
occurred in state discourses and management of xenophobia. The
government’s stance towards xenophobia had moved from a lack of
acknowledgement of its presence and policy neglect to public rejection and
denial of its very existence in the country (Crush & Ramachandran, 2014). This
shift framed the way in which government interpreted and responded to
renewed violence in 2015. This response had three key elements: first, denial
of the existence of xenophobia and as an explanation for the violence; second,
blaming migrants for their own victimisation; and third, attributing ongoing
violence against migrant-owned businesses as the work of criminal elements
(Bekker, 2015; Crush & Ramachandran, 2015a; Misago, 2016).
The major formal government response to the international and broader
African outrage over the violence was the establishment of an Inter-Ministerial
Committee on Migration (IMC) housed in the Presidency. As many as fifteen
government ministers sat on the IMC, which was expanded in March 2017 to
include all provincial premiers and the South African Local Government
Association (SALGA). The stated brief of the IMC was to address “all the
underlying causes of the tensions between communities and the foreign
nationals” (Williams, 2015), which appeared to indicate that the problem of
xenophobia was finally being taken seriously at the highest levels of
government. The reality proved to be very different. In April 2015, the IMC
launched Operation Fiela (“sweep” in Sesotho), which was officially described
as “a multidisciplinary interdepartmental operation aimed at eliminating
criminality and general lawlessness from our communities […] so that the
people of South Africa can be and feel safe” (Gov.za, 2015). As a response to
xenophobic violence, the actions of the IMC seemed grossly inappropriate and
were roundly condemned by international and local human rights
organisations. Lawyers for Human Rights, for example, characterised

856
Operation Fiela as “state-sponsored xenophobia” and “institutional
xenophobia” that blurred stark differences between “criminals” and migrants,
while deepening the divide between citizens and foreigners by bolstering
negative perceptions, instead of correcting them” (Jordaan, 2015; LHR, 2015).
A central component of Operation Fiela was a massive police and army drive
to harass migrants and migrant-owned businesses (Nicolson, 2015a). The IMC
made its conclusions about the 2015 anti-migrant violence known in
Parliament. According to the Chair, Minister Jeff Radebe, the primary cause
was uncontrolled migration and “increased competition arising from the
socio-economic circumstances in South Africa.” Foreign nationals were placing
a strain on government services and “dominating trade in certain sectors such
as consumable goods in informal settlements which has had a negative impact
on unemployed and low skilled South Africans.” These unsubstantiated
findings – essentially blaming the violence on migrants and the poor
enforcement of migration controls – were compounded by the Chair’s
observation at a press conference that “as the Inter-Ministerial Committee,
we’ve concluded that South Africans are not xenophobic” (Davis, 2015).
The Parliamentary Ad Hoc Committee constituted to investigate the 2015
violence reached the same conclusions. In the course of deliberations to
finalise their report, members of the Committee made highly pejorative
statements about migrants (PMG, 2015). They indicated that the competitive
advantage enjoyed by foreign-owned businesses was achieved through the use
of “unfair, competitive trading practices.” They emphasised that the violence
and looting directed at migrant businesses and properties was the direct result
of “competition for trading spaces” and “overcrowded trading spaces” and said
there was no “credible evidence” that migrant-run businesses created
employment. At public consultations, the committee chair chastised the media
for using the term ‘xenophobia’ to describe episodes of violence targeting
migrant-operated businesses (Masinga, 2015). She reportedly characterised
the violence as “criminals […] targeting shops to get food and had nothing to
do with foreign nationals.” The Committee’s final report reached the
conclusion that xenophobia did not exist, explaining the violence as the actions
of criminals “who are often drug addicts” (PJC, 2015: 35; Nicolson, 2015b).

857
Xenophobia denialism was also evident in the report of the KwaZulu-Natal
Special Reference Group (SRG), an independent commission of enquiry
appointed by the provincial government and headed by Judge Navi Pillay
(formerly the UN High Commissioner for Human Rights) (SRG, 2015). The SPG
argued that the immediate cause of the outbreak of violence was “deliberate
efforts of select individuals, some of whom had interests in the informal
trading sector, to drive away competition by foreign national-owned
businesses […] These deliberate efforts sparked the outbreak of widespread
incidents of criminality, violence and looting of properties owned by foreign
nationals” (SRG, 2015: 9-10). Furthermore, “many of the perceptions of
foreign national traders, although largely unfounded, contributed to
heightened tensions” (SRG, 2015: x). The SRG studiously avoided labelling the
violence as xenophobic or seeing xenophobia as a contributing or even
motivating factor. At most, it conceded that “the violent attacks against foreign
nationals were, in some measure, fuelled by dominant and negative
perceptions that exist amongst locals and foreign nationals about one another”
(SRG, 2015). However, it is hard to see how the attitudes of foreign nationals
could be responsible for their own violent victimisation and none of the mob
violence was perpetrated by migrants on South Africans.
This entrenched and contradictory tendency – denying the existence of
xenophobia while simultaneously blaming migrants in ways that border on the
xenophobic – has been a defining characteristic of official responses to the
escalating attacks nationwide on migrant and refugee-owned informal
businesses (Crush & Ramachandran, 2015a). If mere criminality is the source
of the plague of chronic violence against non-South African entrepreneurs, we
might expect South Africans operating in the same areas to be equally affected.
Some researchers have claimed that this is, in fact, the case (Charman & Piper,
2012; Charman et al., 2012; Piper & Charman, 2016). They argue that the
attacks on informal businesses in South Africa are structural in nature, shaped
by competition and other localised factors other than nationality or
xenophobia. In a study of Delft in Cape Town, Charman and Piper (2012: 81)
maintain that “despite a recent history of intense economic competition in the
spaza market in which foreign shopkeepers have come to dominate, levels of
violent crime against foreign shopkeepers […] are not significantly higher than

858
against South African shopkeepers.” They conclude, as a consequence, that
there is no need to invoke xenophobia to explain violence against non-South
African informal enterprises, a conclusion that ironically echoes that of
government officials and the commissions of enquiry. Rather, “some
combination of criminality and economic competition seems to explain the
violence” (Charman & Piper, 2012: 89).
In a larger study, Piper and Charman (2016: 332) examine patterns of violence
in three cities and conclude that “it simply is not true that […] South African
shopkeepers experience less violent crime than foreign shopkeepers” and
therefore that “the chance of being violently targeted is less about nationality,
and more about whether you keep prices low and (presumably) profits high.”
In this paper, we provide alternate evidence that contradicts the conclusion
about the unimportance of nationality in explaining citizen and police violence
in the informal sector. The paper draws on a study of over 2,000 informal
sector businesses in Cape Town and Limpopo Province, half owned by
refugees and half owned by South Africans. The methodology is described in
Crush et al (2015).
Security Risks and Vulnerabilities
The sustainability of informal enterprises is shaped by the challenges they
encounter and the manner in which they are able to effectively manage
business risks. A sizeable body of research has shown that small enterprises
in the South African informal economy face significant business obstacles,
preventing them from maximising their potential (Abor & Quartey, 2010;
Crush et al., 2015; Grant, 2013; Thompson, 2016; Willemse, 2011). These
business risks include limited trading spaces; lack of access to loans from
formal financial institutions; few technical, financial and business-related
skills; excessive licensing or regulatory restrictions on business operations;
lack of a well-defined policy framework for such operators; intense
competition with other similar businesses; and lack of infrastructure such as
adequate storage facilities (Callaghan & Venter, 2011; Gastrow & Amit, 2015;
Ligthelm, 2011; Rogerson, 2016a, 2016b; Venter, 2012).

859
In South Africa, business risks are compounded by security risks because of
the extremely unpredictable and often dangerous operating environment.
These security risks are of several main types. In many cities, the informal
economy is regarded with suspicion and even outright hostility by
municipalities, and is seen as a reservoir of crime and illegality (Rogerson,
2016a). The resulting oppressive regulatory environment is enforced by the
South African Police Services (SAPS) and by municipal police who make
regular raids, issue fines and confiscate goods (Rogerson, 2016b; Skinner,
2008). Harassment by police and enforcement officials is compounded by
police conduct including demand for bribes and illegal confiscation of business
inventory/stock. Informal businesses are regular targets of national
(Operation Fiela), provincial (Operation Hardstick in Limpopo) and city-wide
(Operation Clean Sweep in Johannesburg) police purges of the streets and
large-scale seizure of stock. The courts have generally concluded that these
operations are largely targeted at the foreign-owned businesses. A 2014
Supreme Court (2014: 25) judgment striking down Operation Hardstick in
Limpopo, for example, left the Court with “the uneasy feeling that the stance
adopted by the authorities in relation to the licensing of spaza shops and tuck-
shops was in order to induce foreign nationals who were destitute to leave our
shores.” The obverse of police misconduct is a failure to provide consistent
protection when businesses are under threat or are victims of crime and other
violence.
Many informal businesses service the basic needs of low-income, crime-ridden
communities. This means that, by definition, they are vulnerable to
opportunistic and often violent crime in the form of theft, robbery and assault.
There is also a clear pattern of escalating group or mob violence in many parts
of the country that is increasingly directed at informal businesses (Crush &
Ramachandran, 2015a). Nationwide mob violence and looting in May 2008
and early 2015 were the most high-profile examples but in the years in
between and since there have been numerous more localised attacks. These
assaults generally involve widespread looting, destruction and burning of
property and physical assault and murder. There is considerable evidence that
this form of violence is targeted almost exclusively at foreign-owned
businesses and, therefore, cannot be as easily dismissed as non-xenophobic.

860
The question to be addressed is whether these security risks – government
purges, police misconduct, opportunistic crime and mob violence – affect
South African and non-South African informal businesses with equal intensity.
If we accept the argument of Charman and Piper (2012) that xenophobia is not
a factor, then we would expect there to be no difference between the frequency
and severity with which the two groups are affected by these risks. If, however,
there is systematic evidence that these risks are felt or experienced more
severely by non-South African migrant informal business owners, then
xenophobia needs to be reintroduced as an explanatory factor.
As part of the 2016 survey of 2,000 informal businesses in Cape Town and
Limpopo, respondents were asked a series of questions about the frequency
with which they had experienced various security-related risks. We rely here
on self-reporting since police crime statistics are unavailable and unreliable
(particularly since many incidents go unreported or unprosecuted when they
are reported). In addition, we accept the argument of Charman and Piper
(2012) that risk may be under-reported since many informal businesses are
comparatively new and may not yet have been exposed to these risks. At the
same time, it is important to note that under-reporting is less likely amongst
South Africans since they have a longer history of business operations in Cape
Town and Limpopo.
Table 1 presents the aggregated results of the security risks question for the
two groups of entrepreneurs. First, it is clear from the table that not every
South African and refugee respondent has been affected by the stated risks.
Indeed, the majority of both groups have not been affected to date. This is an
important initial finding because it does suggest that most informal
entrepreneurs are able to run their businesses without any significant threat
or interference. This may be because of where they are located or the
measures and precautions they take to protect themselves. Second, it is clear
that South Africans are not completely immune from any of these risks. Nearly
one-third had been affected by robbery of their stock and nearly 20% had had
income stolen. The degree of vulnerability to other security risks was much
lower but not non-existent. To this extent, therefore, Piper and Charman
(2016) are correct that South Africans in the informal sector are also victims

861
of crime. But there is no support for their contention that South Africans and
non-South Africans are equally at risk or victimised.
Table 1: Security Risks Facing Refugee and South African Entrepreneurs
Refugees
% Affected
South Africans
% Affected
Crime/theft of goods/stock 47.8 30.9
Crime/theft of money/income 38.1 18.5
Verbal insults against my business 34.2 7.9
Conflict with South African entrepreneurs 32.7 21.1
Conflict with refugee entrepreneurs 27.1 19.0
Physical attacks/assaults by South Africans 21.4 3.5
Harassment/demand of bribes by police 18.7 5.5
Confiscation of goods by police 14.7 6.4
Arrest/detention of
entrepreneur/employees
8.5 1.4
Physical attacks/assaults by police 7.9 1.1
Prejudice against my gender 6.5 5.0
On every single count, the proportion of refugees who had been affected was
higher, sometimes significantly so. For example, 47% of refugees cited
prejudice against their nationality as a risk to their business (compared to only
2% of South Africans). Or again, 34% of refugees were affected by related
verbal insults against their business, compared to only 8% of South Africans.
48% of refugees, compared with 31% of South Africans, had been affected by
theft of their goods and stock. Similarly, 38% of refugees, compared with 19%

862
of South Africans, had been affected by theft of their income. Refugees
reported higher levels of conflict with South African competitors (33%) than
South Africans did with refugees (19%) and with other South Africans (21%).
Interestingly, refugees also reported higher levels of conflict with other
refugee businesses (27%). The precise details and outcomes of such conflicts
need further research, but suggest that we cannot assume that refugees are a
homogenous group with identical interests.
Table 2 statistically validates the descriptive comparisons that suggest that
refugees are more likely than South Africans to be affected by the various
security risks. The difference in the frequency distributions is statistically
significant at an alpha of 0.01 according the Pearson’s Chi-Square
(x2(2048)=490.678, df=3, p<.001) and the Fisher’s Exact Test (531.104,
p<.001). South African entrepreneurs had lower odds of experiencing every
potential risk on the list. Refugees were nearly three times as likely to be
victims of theft of income and five times as likely to be subject to demands for
bribes by police. The odds of a refugee entrepreneur being physically
assaulted, experiencing prejudice and being arrested and detained were over
five times higher than for South Africans.

863
Table 2: Odds Ratio Calculations for Business Problems
95%
Confidence
interval
Odds
Ratio
Lower Upper Pearso
n Chi-
square
Df P-Value
(2-
sided)
n
Prejudice against
my gender
0.782 0.539 1.136 1.671 1 0.196 2051
Conflict with
refugee
entrepreneurs**
0.644 0.524 0.792 17.489 1 <.001 2056
Conflict with
South African
entrepreneurs**
0.552 0.453 0.673 34.938 1 <.001 2054
Crime/theft of
goods/stock**
0.492 0.411 0.589 60.363 1 <.001 2052
Crime/theft of
money/income*
*
0.373 0.305 0.456 95.509 1 <.001 2050
Harassment/de
mands for bribes
by police**
0.241 0.176 0.330 88.722 1 <.001 2046
Confiscation of
goods by
police**
0.403 0.298 0.545 36.629 1 <.001 2047
Arrest/detention
of
0.179 0.105 0.303 50.513 1 <.001 2045

864
yourself/employ
ees**
Verbal insults
against your
business**
0.167 0.129 0.216 214.406 1 <.001 2050
Physical
attacks/assaults
by police**
0.158 0.089 0.282 50.517 1 <.001 2052
Physical
attacks/assaults
by other South
Africans**
0.137 0.096 0.196 150.979 1 <.001 2047
Prejudice against
my nationality**
0.025 0.017 0.039 577.723 1 <.001 2049
*p<.05 **p<.01
In theory, we might expect to see higher degrees of informal business security
risks for both groups in large cities such as Cape Town compared to the much
smaller towns of Limpopo (Table 3). In the case of refugees, and with the
exception of prejudice and verbal insults and treatment by police, Limpopo
was indeed safer than Cape Town. For South Africans, Cape Town was also a
more dangerous place to run a business. For example, 56% of refugees and
31% of South Africans had experienced theft of goods in Cape Town. In
Limpopo, the equivalent figures were 38% and 30%, a much lower spread
than in Cape Town. In both locations, however, the risks are significantly
higher for refugees than South Africans. Indeed, refugees in Limpopo were less
secure than South Africans in both Limpopo and Cape Town. Theft of goods
had affected 38% of refugees in Limpopo, compared with around 30% of South
Africans in both Limpopo and Cape Town. Or again, 31% of refugees in
Limpopo had experienced theft of money, compared with 12% of South
Africans in Limpopo and 26% in Cape Town. Some 19% of Limpopo refugees

865
had experienced physical assault or attack, compared with 2% of South
Africans in Limpopo and 7% in Cape Town.
Table 3: Security Risks Facing Refugee and South African Entrepreneurs
by Location
Cape Town Limpopo
Refugees
%
Affected
South
Africans
%
Affected
Refugees
%
Affected
South
Africans
%
Affected
Prejudice against my nationality 47.2 3.6 47.6 1.1
Crime/theft of goods/stock 56.2 30.9 38.3 30.4
Crime/theft of money/income 43.8 25.7 31.3 11.8
Verbal insults against my
business
32.1 9.0 35.3 6.9
Conflict with South African
entrepreneurs
34.5 20.3 30.2 21.4
Conflict with refugee
entrepreneurs
27.9 15.7 25.6 22.1
Physical attacks/assaults by
South Africans
23.0 5.8 19.0 1.6
Harassment/demand of bribes by
police
10.5 6.6 26.2 3.9
Confiscation of goods by police 10.1 8.0 18.8 4.9
Arrest/detention of
7.5 2.0 9.1 1.2
police
6.7 1.6 8.7 1.1

866
Prejudice against my gender 5.8 6.8 6.9 3.5
Another common belief is that security risks are higher in informal
settlements than in other parts of the city, particularly as many of the reports
of violence against informal businesses come from the latter areas and general
crime levels are also much higher. To test this hypothesis, we focused only on
Cape Town and divided refugees and South Africans into two groups according
to their operation in either an informal or formal part of the city (Table 4). In
the case of both refugees and South Africans, the risks are higher in informal
settlements across almost all indicators. However, the difference in the degree
of risk between refugees and South Africans is significantly greater in informal
settlements than it is in formal areas of the city. The only indicator where
formal areas are riskier for both is the chance of having goods confiscated by
the police. Since the police barely venture into large swathes of informal
settlements, this is not surprising. Refugees are slightly more likely to
experience theft of goods in the formal versus informal areas (57% versus
54%), but the difference is small and indicates that this is a major risk for the
majority of businesses irrespective of location.
Unsurprisingly, refugees were far more likely than South Africans to say that
their business operations had been negatively affected by xenophobia: 38%
versus 5% (Table 5). There are two possible reasons for South Africans being
affected: first, when collective violence occurs at a particular localised
settlement, it is possible that in the general chaos and mayhem, South African-
owned businesses may also be caught up in the looting and vandalism. As one
South African owner noted “when these attacks start, it becomes difficult for
us to move and every business becomes a target. Xenophobia does not only
affect foreigners, it affects everyone” (Interview, 3 March 2016). A second
explanation is that there are cascading, spill-over effects on those South
African small businesses with cooperative, dependent relationships and
linkages with affected migrant-operated businesses (Peberdy, 2017).

867
Table 4: Security Risks Facing Refugee and South African
Entrepreneurs in Cape Town
Formal Areas Informal Areas
Refugees
%
Affected
South
Africans
%
Affected
Refugees
%
Affected
South
Africans
%
Affected
Prejudice against my
nationality
44.9 1.7 53.8 6.2
Crime/theft of goods/stock 57.0 26.7 53.8 36.7
Crime/theft of
money/income
41.4 19.5 50.8 34.3
Verbal insults against my
business
30.1 6.8 37.9 11.9
Conflict with South African
entrepreneurs
29.6 20.9 48.5 19.5
Conflict with refugee
entrepreneurs
25.5 18.5 34.8 11.9
South Africans
21.2 3.8 28.0 8.6
Harassment/demand of
bribes by police
8.9 8.6 15.2 3.8
Confiscation of goods by
police
10.2 8.9 9.8 6.7
Arrest/detention of
5.1 1.7 14.4 2.4

868
police
4.8 0.7 12.1 2.9
Prejudice against my gender 5.6 4.1 6.1 10.5
Table 5: Impact of Xenophobia on Business Operations
Refugees
%
South Africans
%
A great deal 18.3 1.4
To some extent 19.3 3.5
Not very much 18.4 5.7
Not at all 43.9 89.4
Strategies of Self-Protection
The dangerous and unpredictable environment in which informal
entrepreneurs ply their trade in South African cities presents serious security
challenges. It is clear from the previous section that while both groups are
affected, refugees are much more vulnerable than South Africans to a range of
risks. There is no a priori reason why this might be the case, other than the fact
that refugees are targeted because their presence, which is viewed by citizens
and officials as unwelcome and even illegitimate. This was certainly the view
of most of the refugees interviewed for this study who consistently identified
the manifestations of xenophobia as the major security problem they faced:
Some [customers] swear at me, my customers sometimes steal from me
and when you catch them, they tell [you] harshly that you are a foreigner.
And that you need to go back to your country. You are always faced with
difficulties when you are a foreigner and as such you need to be patient
and know how to deal with different kinds of people. There is too much
disrespect here from South Africans because even someone who is way

869
younger than you, they can swear and say nasty things to you if you are
a foreigner. And they tell straight that South Africa is their country
(Interview with Somali refugee, 12 March 2016).
If you are a foreigner, you are always affected by xenophobia. There is no
way that you can live here and not be affected. Xenophobia starts from
your customer. Some customers are very rude and if you respond, they
will talk to you in their own language and scold you and then tell you to
go back [to your country]. They have bad words for foreigners. Many
times, my business was robbed when I was in Johannesburg. It was
because I was a foreigner because they rarely stole from locals.
Sometimes criminals would come to you and ask you to give them money
and they would just ask you the foreigner. Why not the local people? That
is xenophobia (Interview with Ethiopian refugee, 19 March 2016).
Xenophobia affect[s] us all. We know who we are. We are foreigners and
that doesn’t change. Nothing changes the reality. We live under alert
anytime no matter the set up in which we are operating in. We always
know that the same people we are dealing with can anytime become a
danger to us. It is difficult to trust any person in South Africa. The person
who is with you here today, when there is a protest and foreigners are
being attacked, he will be the first to attack you. There is no safety. I have
not been attacked but I have seen other people being attacked and it is
serious. It kills your business and it can also kill you (Interview with
Congolese refugee, 25 February 2016).
Xenophobia is the most critical problem. I have been directly affected and
have been caught up in the troubles. People have harassed me a lot, just
talking like they want to kill you or to burn you or other such things. But
that was when I was in Durban. Here [Cape Town] I have not been
harassed. But there are many people who have been victims. They have
been harassed and their goods destroyed, especially when there are
strikes. The people just target anything that they can get. They are very
cruel and they do not care what the owner will do to survive (Interview
with Congolese refugee, 19 February 2016).

870
Xenophobia affects everyone who is a foreigner. When people loot your
shop is that not xenophobia? When they chase you away from operating
in an area because you are a foreigner that is xenophobia. There is
xenophobia here, everywhere in this country. I have friends in other parts
of the country, it is xenophobia where they live. I think South Africa is the
only country with such xenophobia. I have been affected many times.
When I was in Gugulethu, we were robbed. That was xenophobia because
they were robbing foreign-owned shops. Here I have been affected once
during a strike and they took some things from the shop. So, xenophobia
is everywhere here. The community leaders do not protect us during the
strikes. Some of the leaders are at the forefront of looting when strikes
occur, so how can they help? The government must protect us from
xenophobia and crime. The police need to do their work better because
right now they are not (Interview with Somali refugee, 7 March 2016).
Inadequate police protection and failure to respond when refugee businesses
are under attack deepens exposure to security risks. A Congolese refugee said
that the only recourse available was to “run away” as the “police here in such
instances, they don’t protect us, but instead abuse us” (Interview with
Congolese refugee, Cape Town, 5 March 2016). Others displayed similar
distrust of the police because of perceptions of bias:
The police are not very helpful. If you have a case against a South African,
they will always side with the South African. So, it’s a waste of time to
report a case against a South African (Interview with Congolese refugee,
24 February 2016).
How accurate are these perceptions of South African hostility towards refugee
businesses and business-owners? A 2010 SAMP national survey of South
African citizens found that only 20% were in favour of making it easier for
migrants to establish small businesses and for migrant traders to buy and sell.
Only 25% felt that refugees should be allowed to work in South Africa. A
similar proportion said they would take part in actions to prevent migrants
from operating a business in their neighbourhood, 15% said they would
combine with others to force migrants to leave and 11% said they were
prepared to use violence against them. Over 55% agreed with the proposition

871
that the reason why migrants were victims of violence was because they did
not belong in South Africa. Only 36% said that refugees should always enjoy
police protection and 25% that they should never enjoy protection (Crush et
al., 2013: 32-38).
A number of studies have suggested that to lower the risks of victimisation,
migrants adopt various measures to protect themselves and their employees
(Gastrow, 2013; Hikam, 2011; Gastrow & Amit, 2015; Smit & Rugunanan,
2014). This survey sought to establish how common some of these strategies
actually are and whether they are also adopted by South Africans (Table 6).
One of the most common strategies is risk-sharing by partnering with other
businesses. Nearly one-third of refugees and 17% of South Africans adopt risk-
sharing through partnership. Sleeping on business premises (often a modified
container) is a strategy pursued by both groups but, again, by more refugees
(19% versus 9% of South Africans). There have been several high-profile
shootings of robbers by refugees under attack but this survey found that only
6% keep weapons for self-protection. Other strategies (pursued by less than
10% of refugees and 5% of South Africans) include paying security guards and
paying protection money to the police or community leaders. Around 5% of
both groups purchase insurance. Table 7 analyses if the differences between
the refugees and South Africans are statistically significant. With the exception
of paying for insurance, refugees were far more likely than South Africans to
adopt strategies of self-protection. Refugees were five times as likely to pay for
protection and twice as likely to sleep on their business premises and to
partner with others to distribute risk.

872
Table 6: Protection Strategies Used by Informal Sector Entrepreneurs
Refugees
%
South
Africans
%
I partner with other businesses to distribute
risks
31.0 17.4
I sleep on my business premises 18.8 8.7
I pay for security guards 7.3 1.9
I keep weapons for self-protection 5.8 4.0
I pay the police for protection 5.5 1.0
I purchase insurance 5.1 5.5
I pay community leaders for protection 2.5 0.6
Various other strategies emerged in the course of the in-depth interviews
although it is not known how common these are. For example, some refugees
said that they like to hire South Africans to assist in communication with
customers and also because it reduces their vulnerability to violence. In
addition to paying protection money to police and community leaders,
refugees in one part of Cape Town pay regular protection money to the local
taxi association. The taxi association then uses this reality to extort money
from South Africans in the area as well. Others make sure that they do not keep
all their stock on the business premises out of fear that they will be cleaned
out during looting or confiscation of goods by the police. Still others are only
open for business when they know that the police are no longer patrolling.

873
Table 7: Odds Ratio Calculations of Business Strategies
95% C.I. for O.R. P-Values
Odds
Ratio
Lower Upper Chi-
Square
Fisher's
Exact
Test
I purchase insurance 1.078 0.732 1.587 0.703 0.768
I keep weapons for self-
protection*
0.648 0.430 0.976 0.037 0.039
I partner with other
businesses to distribute
risks**
0.470 0.382 0.579 <.001 <.001
I sleep on my business
premises**
0.411 0.315 0.537 <.001 <.001
I pay for security
guards**
0.245 0.148 0.405 <.001 <.001
I pay community leaders
for protection**
0.222 0.091 0.543 <.001 <.001
I pay the police for
protection**
0.180 0.094 0.347 <.001 <.001
Conclusion
In this paper, we have undertaken a comparative risks assessment and
vulnerabilities analysis for refugee and South African entrepreneurs operating
small business ventures in the informal economies of Cape Town city and
various towns of Limpopo Province. Our results show that while both groups
are exposed to several risks concurrently, refugee enterprises are far more
vulnerable and overexposed. The social and structural insecurity experienced
by refugee entrepreneurs is unambiguous from several key findings. Despite

874
operating in the same localised environment and under similar conditions, this
group encounters a more challenging set of hurdles and on a more frequent
basis. The general act of operating small businesses in the informal economic
sector does make business owners of all kinds vulnerable, but this alone
cannot explain the greater vulnerabilities of the refugee cohort. Instead,
xenophobia and refugee business owners’ status as ‘outsiders’ adds another
layer of risk for these operators. Limited access to police protection and
mistreatment by them only exacerbates this insecurity.
What is also evident from our research and other recent studies is that the
majority of refugee operators have not, to date, been affected by a range of
potential risks. In part, this may be because of the mitigation strategies they
adopt. As refugee and migrant communities grow in South Africa, the
emergence of some individuals who are successfully able to mitigate common
risks and build their enterprises is to be expected. However, rather than
treating these achievements with suspicion and negativity, as the official mind
tends to do, greater attempts need to be made to harness these productive
capacities for the growth of local informal, entrepreneurial economies. These
abilities are not an abnormal development nor are they driven largely or
entirely by unfair advantages or the use of illicit practices. Ultimately,
comprehensive national and localised strategies are required to develop and
support informal entrepreneurship and small business growth in South Africa.
In this process, both citizen-operated and refugee enterprises must be crucial
stakeholders, and not written-off as insignificant, unequal or illegal.
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The Owners of Xenophobia: Zimbabwean Informal
Enterprise and Xenophobic Violence in South Africa
Jonathan Crush*, Godfrey Tawodzera**, Abel Chikanda*** and Daniel
Tevera****
Abstract
This paper is a contribution to our understanding of the intertwined economic
and political crises in Zimbabwe and the crisis of xenophobia in South Africa.
There have been few studies to date specifically examining the impact of
xenophobic violence on Zimbabweans trying to make a living in the South
African informal economy. The paper first provides a picture of Zimbabwean
migrant entrepreneurship using survey data from a 2015 study of migrants in
the informal economy. All of the Zimbabwean entrepreneurs interviewed in
depth for the study in 2016 had either witnessed or been the victims of
xenophobic violence or both. The interviews focused on the experience and
impact of xenophobic violence on personal safety and business operations. The
migrant accounts clearly demonstrate that they see xenophobia as a key driver
of the hostility, looting and violence that they experience. The paper argues that
the deep-rooted crisis in Zimbabwe, which has driven many to South Africa in the
first place, makes return home in the face of xenophobia a non-viable option.
Zimbabweans are forced to adopt a number of self-protection strategies, none of
which ultimately provide insurance against future attack.
Keywords Zimbabwean Informal Enterprise and Xenophobic Violence.
* International Migration Research Centre, Balsillie School of International Affairs, 67 Erb St
** Department of Geography and Environmental Studies, University of Limpopo, P. Bag X1106,
Sovenga. Email address: godfreyltawodzera@yahoo.com
*** Department of Geography & Atmospheric Science, and African & African-American Studies,
University of Kansas, Lawrence, Kansas State, USA 66045. Email address: achikanda@ku.edu
**** Department of Geography & Environmental Studies, University of Western Cape, Robert
Sobukwe Road, Bellville 7535. Email: dtevera@uwc.ac.za

880
“South Africans are very xenophobic – they are the owners of xenophobia”
(Zimbabwean migrant, Cape Town, 2016).
Introduction
The above arresting image of South Africans as the “owners of xenophobia” is
confirmed by numerous surveys suggesting that levels of xenophobia in South
Africa are unprecedented globally (Crush et al., 2013). South Africa’s crisis of
xenophobia is defined by the discrimination and intolerance to which
migrants are exposed on a daily basis. According to Misago et al. (2015: 17),
xenophobia manifests in “a broad spectrum of behaviours including
discriminatory, stereotyping and dehumanizing remarks; discriminatory
policies and practices by government and private officials such as exclusion
from public services to which target groups are entitled; selective enforcement
of by-laws by local authorities; assault and harassment by state agents
particularly the police and immigration officials; as well as public threats and
violence […]that often results in massive loss of lives and livelihoods.”
The nub of the crisis of xenophobia in South Africa is when feelings of hostility
and intolerance manifest as extreme xenophobia, which Crush and
Ramachandran (2015a) define as “a heightened form of xenophobia in which
hostility and opposition to those perceived as outsiders and foreigners is
strongly embedded and expressed through aggressive acts directed at
migrants and refugees [and] recurrent episodes of violence.” Xenophobic
violence represents ‘tipping points’ or intense moments in the general ongoing
crisis of xenophobia. Southern African Migration Project’s (SAMP) national
surveys have consistently found that a significant minority of South African
citizens are willing to resort to violence to rid their communities of migrants
(Crush, 2008; Crush et al., 2013). The deadliest examples of extreme
xenophobia in South Africa to date were high-profile and widespread violence
against migrants and refugees in May 2008 and March 2015. The nature and
impacts of the 2008 crisis are now well-documented, although there remain
differences of opinion about its causes (Bekker, 2015; Cabane, 2015; Desai,
2015; Everatt, 2011; Hassim et al., 2008; Hayem, 2013; Landau, 2012;
Steinberg, 2012).

881
For all its strengths, the literature on May 2008 tends to treat the victims of
xenophobic violence in an undifferentiated fashion, leading to the assumption
that all migrants – irrespective of national origin, legal status, length of time in
the country and livelihood activity – were equally at risk. Yet, attitudinal
surveys clearly show that South Africans differentiate between migrants of
different national origin and that Zimbabweans are amongst the most disliked
(Crush et al., 2013). Discussions of May 2008 also do not differentiate
sufficiently between the types of targets that were attacked. For example,
many African migrants and refugees operated small businesses in the informal
economy of affected urban areas and these enterprises came under sustained
attack during the pogrom. In 2015, one of the explicit targets of the xenophobic
attacks was informal businesses run by migrants and refugees. Violent attacks
on migrant and refugee entrepreneurs and their businesses have not been
confined to acute episodes of extreme xenophobia such as those in May 2008
and March 2015 (Charman & Piper, 2012; Crush et al., 2015; Crush &
Ramachandran, 2015a, 2015b; Tevera, 2013). Ongoing acts of extreme
xenophobia have increasingly manifested in the form of collective violence
targeted at migrant and refugee-owned businesses.
The frequency and ferocity of such attacks have increased over time and
cannot simply be written off, as the state seeks to do, as ‘mere criminality.’
Chronic extreme xenophobia has prompted various responses and remedial
actions by migrants and refugees including paying protection money, beefing
up business security, arming in self-defence, avoiding neighbourhoods known
to be particularly dangerous and moving away from the major cities to smaller
urban centres (Crush et al., 2015a). Zimbabweans are not the only small
business owners who have become victims of extreme xenophobia in South
Africa; attacks on migrants and refugees from other countries are also well
documented (Gastrow, 2013; Gastrow & Amit, 2015; Piper & Charman, 2016).
However, there have been few studies to date specifically examining the
impact of xenophobic violence on Zimbabweans trying to make a living in the
South African informal economy (Duri, 2016; Hungwe, 2014; Sibanda &
Sibanda, 2014).

882
This paper is based on two sources of data. First, SAMP’s Growing Informal
Cities Project surveyed over 1,000 randomly selected migrant-owned informal
sector enterprises in Cape Town and Johannesburg in 2015 (Peberdy, 2016;
Tawodzera et al., 2016). The survey sample included 304 Zimbabwean-owned
enterprises. For the purposes of this paper, we extracted this data from the
larger database. Second, 50 in-depth interviews were conducted in 2016 with
Zimbabwean informal business-owners in Cape Town, Johannesburg and
Polokwane as part of SAMP participation in the Migrants in Countries in Crisis
(MICIC) project. This paper is a contribution to our understanding of the
intertwined economic and political crises in Zimbabwe and the crisis of
xenophobia in South Africa. It also aims to contribute to the more general
literature on migrants in countries in crisis in a situation of intersectionality
where migrants are forced to navigate a state of crisis in both the country of
origin and the country of destination. The term “migration in countries in
crisis” is usually taken to refer to the plight of migrants caught up in an
unexpected crisis situation in a “host country” (Koser, 2014; Martin et al.,
2014; Weerasinghe & Taylor, 2015). Although emergencies affecting migrants
are becoming increasingly complex and multifaceted, the intersection of crisis
situations in countries of origin and destination have been given insufficient
attention (IOM, 2012; McAdam, 2014). A dual or multiple crisis situation
spanning origin and destination presents new, and not easily resolved,
challenges for the management of crisis and the safety of migrants (Hendow
et al., 2016; Perching, 2016).
Crisis-Driven Migration
Betts and Kaytaz (2009: 2) label the exodus from Zimbabwe an example of
“survival migration,” which they define as refugees and “people who are forced
to cross an international border to flee state failure, severe environmental
distress, or widespread livelihood collapse.” Under conditions of survival
migration, the traditional distinction between refugees and economic
migrants breaks down (Betts, 2013). The argument that all Zimbabwean
migrants should be defined as “survival migrants” requires closer scrutiny. For
example, it is based in part on the view that conditions in Zimbabwe are so
dire that out-migration for survival is the only option. However, this does not

883
explain why the majority of Zimbabweans have not left nor the role of
migration in reducing pressures for further out-migration through
remittances (Crush & Tevera, 2010).
The argument that all Zimbabweans are “survival migrants” also runs the risk
of homogenising migrant flows and downplaying the heterogeneity of
migration movement out of the country. The idea that all migrants from
Zimbabwe are “survival migrants” also seems to rest on the admittedly
desperate situation of migrants in squalid transit shelters in the border town
of Musina and at overcrowded safe havens such as churches (Betts & Kaytaz,
2009; Kuljian, 2013). The idea of “survival migration” fits this sub-set of
Zimbabwean migrants but certainly does not encompass them all. Far from
being the desperate and destitute people conveyed by images of “survival
migration,” many Zimbabwean migrants to South Africa exhibit considerable
ingenuity, industry and energy.
A recent survey of Zimbabwean migrants in Cape Town and Johannesburg
found that over 60% of migrants who had come to South Africa in the previous
decade were formally employed and only 18% were unemployed (Crush et al.,
2015b). At the same time, increasing numbers were doing more menial jobs
including 25% in manual work, 13% in the service industry and 8% in
domestic work. A longitudinal study of day labourers in Tshwane
demonstrates the increase in Zimbabweans seeking casual work, which rose
from 7% in 2004 to 33% in 2007 to 45% of workseekers in 2015 (Blaauw et
al., 2016).
The extent of participation by Zimbabwean migrants in the South African
informal sector is unknown. SAMP’s 2005 national survey of migrant-sending
households in Zimbabwe found that 21% of working migrants outside the
country were in the informal economy (Crush & Tevera, 2010: 12). A 2007
survey of migrants in Johannesburg found that 19% were working as hawkers
or artisans (Makina, 2010). SAMP’s 2010 survey of recent Zimbabwean
migrants in Johannesburg and Cape Town found that 27% were working or
deriving income from the informal economy (Crush et al., 2015a). Crush and
Tawodzera’s (2017) survey of poorer Zimbabwean households in South Africa
found that 36% of household members in employment were working in the

884
informal economy. While indicative, these studies suggest that somewhere
between 20-30% of Zimbabwean migrants in major South African cities could
be involved in the informal economy. They also suggest that the importance of
informal sector employment to Zimbabweans has increased over time.
The 2015 SAMP survey of migrant enterprises found a distinct gender bias in
both cities with 60% of Zimbabwe entrepreneurs in Cape Town and 65% in
Johannesburg being male. This was a marked contrast to the business of
informal cross-border trading between Zimbabwe and South Africa which is
dominated by female Zimbabweans (Chikanda & Tawodzera, 2017). The
number of migrant entrepreneurs who arrived in South Africa peaked in the
years between 2005 and 2010, at the height of the economic crisis in
Zimbabwe, and appears to have fallen since (Figure 1). Less than 2% had
migrated to South Africa before 1994. Nearly 18% of the Johannesburg
migrant entrepreneurs had moved there before 2000 compared to only 2% of
those in Cape Town. Over time, Cape Town has become an increasingly
attractive destination. As many as 88% of the migrants in Cape Town arrived
in the city after 2005 (compared to 52% of those who moved to
Johannesburg).
Figure 1: Comparison of Year of Migration and Year of Establishing Informal
Business.

885
Only 5% of the survey respondents had experience working in the
Zimbabwean informal economy prior to migrating to South Africa. Those with
prior experience had generally been involved in informal cross-border trading
and were therefore familiar with South Africa. One male migrant described the
transition as follows:
I used to come here as a trader from the early 2000s. I stopped in 2005
and came here to South Africa to live. My business is about making and
selling electric jugs and brooms. I used to come here and sell them and
go back home. There are some reasons why I came to stay. One is that
the economic situation was getting bad. [Zimbabwe] was no longer the
same. I was selling things and not making much money. I wanted to build
a house in Zimbabwe and I was failing to do so. The cost of living was
high. I had just married and things were tough. Then there was the issue
of politics. My wife was harassed when I was in Johannesburg buying
goods. They came and searched our house and they found nothing. They
wanted evidence that I was a sell-out, but they did not find anything. My
wife was pregnant so I saw that they could injure her if they came back
next time. That is when I moved to South Africa (Johannesburg Interview
No. 4).
In this case, economic hardship and political harassment were additional
factors in the decision to move to South Africa. The overall reasons for
migration to South Africa were clearly related to the ongoing economic crisis
in Zimbabwe. Over 80% agreed with the proposition that they had come to
South Africa in order to provide for family back home. As many as 73% said
they had come to South Africa to look for employment (Figure 2). There was a
marked difference here between the Johannesburg and Cape Town
respondents (with 82% and 59% in agreement, respectively) which may
reflect differences in the perception (and reality) of labour market access in
the two cities.

886
Figure 2: Reasons for Migrating to South Africa
The reverse was true with regard to starting a business as a reason for
migration, with 56% in Cape Town and 35% in Johannesburg in agreement. In
general, this suggests that Johannesburg is seen as a place where it is easier to
obtain formal sector employment and Cape Town is a more amenable location
for starting an informal business. Unemployment was a significant driver of
migration, with 39% of the sample reporting that they were unemployed prior
to leaving Zimbabwe. Again, there was a marked difference between the
entrepreneurs in the two cities: only 20% of the Cape Town respondents were
unemployed prior to leaving compared with 51% of the Johannesburg
respondents. The high proportion who said that they had migrated as refugees
or asylum-seekers is a reflection of the fact that over 300,000 Zimbabweans
applied for asylum-seeker permits between 2004 and 2010 in order to legalise
their stay in South Africa (Amit & Kriger, 2014). At the same time, a proportion
of this number left because of political persecution. Exactly how many is
difficult to say given that South Africa has approved less than 3,000 of all
Zimbabwean refugee claimants.
The survey found that relatively few of the Zimbabwean entrepreneurs did not
have papers permitting them to be in and/or legally work in the country (Table
1). Just over one-third of the migrants had asylum-seeker (Section 22) permits

887
but only 5% had recognised refugee status (Section 24 permits). Both asylum-
seekers and refugees have a legal right to work and earn. Around one-quarter
had work permits, which the majority would have acquired under the
Zimbabwe Dispensation Programme (ZDP) in 2010 and 2014 (Thebe, 2017).
Around 10% of the migrants had visitor’s permits which are usually issued for
90 days at a time. Only 15% were undocumented and did not have permits to
reside and/or work in South Africa.
Table 1: Legal Status of Zimbabwean Entrepreneurs
Total
(%)
Cape Town
(%)
Johannesburg
(%)
Asylum-seeker permit 35.9 43.2 31.2
Work permit 24.7 17.8 29.0
Visitor’s permit 9.5 8.5 10.2
Refugee permit 5.3 8.5 3.2
Permanent resident 4.6 3.4 5.4
Undocumented 14.5 16.1 13.4
Other 2.3 0.8 3.3
No answer 3.1 1.6 4.3
The majority of the surveyed Zimbabwean migrant enterprises were in the
retail, trade and wholesale sector, followed by services and manufacturing,
with slight differences between the two cities (Figure 3). As Figure 1 shows,
most migrants did not immediately start an informal business on arrival but
first needed to raise start-up capital. Migrants and refugees face severe
obstacles in accessing loans from formal sources in South Africa as they
require collateral (Tawodzera et al., 2015). Just over three-quarters of the
migrant entrepreneurs in this survey relied on their personal savings to start
their businesses (Table 2). There was slightly greater reliance on personal

888
savings by entrepreneurs in Johannesburg (87%) than Cape Town (64%).
More Zimbabwean migrants in Cape Town were able to access funds from
relatives and non-relatives.
Figure 3: Sectoral Breakdown of Zimbabwean Migrant Businesses
Table 2: Primary Sources of Start-Up Capital
Total
(%)
Cape Town
(%)
Johannesburg
(%)
Personal savings 78.0 64.4 86.6
Loan from relatives 9.2 13.6 6.5
Loan from non-relatives 6.6 15.3 1.1
Money lenders 2.0 1.7 2.2
Loan from informal financial
institutions
2.0 1.7 2.2
Business credit (goods on terms) 0.7 0.0 1.1

889
Loan from micro-finance
institution
0.3 0.8 0.0
Other source of capital 1.3 2.5 0.5
Experiencing Xenophobia
All of the Zimbabwean entrepreneurs interviewed in depth had either
witnessed or been the victims of xenophobic violence or both. The interviews
focused on the experiences and impact of xenophobic violence on personal
safety and business operations. Many of those interviewed had come to South
Africa after the nationwide attacks on migrants in May 2008 but none were
unaware of the violence or did not know some of the victims. Those who had
been in the country at the time lost almost everything they had, but they did
not return permanently to Zimbabwe, a primary objective of their attackers.
Instead, they took refuge in shelters and churches and re-started their
businesses once the worst of the violence was over. Three accounts in widely
separated parts of the country (Alexandra Park in Johannesburg, Imizamo
Yethu in Cape Town and Mankweng in Polokwane) show both the destructive
nature of the 2008 xenophobic violence and the responses of the migrants:
During the xenophobic attacks of 2008 I was there. My musika was
destroyed. People came marching and asking foreigners to leave […] They
came and destroyed the musika. It was made up of cardboard and
corrugated iron sheets. They destroyed it. The cardboard was burnt and
the corrugated sheets were taken and some of them thrown all over. I lost
a lot of money there. Maybe ZAR 3,000. I had a lot of goods and I was also
selling beans, groundnuts and even matemba and fish. I lost everything. I
was only able to carry a few things and fled. Otherwise they would have
killed me as well. What could they do? The people that start the violence
are the ones that can even kill you. Many people died in Alex Park. They
died. I actually saw a person who had been stoned to death and he was
lying there for a day without the police getting him (Johannesburg
Interview No. 13).

890
I had just closed my spaza and had not even reached home when I saw
people singing and getting up here. They were coming from the direction
of the police station coming uphill. We had already heard of xenophobia
and so I knew it was happening here. I wanted to go back and get some
things from the spaza but I was too late because they were moving fast. I
just had time to change direction and ended up in Hout Bay. There were
other Zimbabweans who had also run away and were there. I joined them
and we went to Wynberg and stayed there at the police station. There were
many of us. Like me, most people had nothing because they never had time
to go home and get clothes or blankets. I called someone in Rosebank and
they told us that they were staying at a Methodist church there so that is
where we went. We spent three weeks there. My spaza shop was looted. I
never got anything back, not even a single sweet. They took everything so
I had to start from scratch (Cape Town Interview No. 20).
I was living in Mankweng with two other ladies from Zimbabwe. We were
renting a room in Zone 2. We had been living there for some time and we
knew most of the people there. But when xenophobia erupted it was as if
we had never lived there. We saw some of the people that we knew actually
looting things belonging to foreigners. We were confronted by a group of
young men – and they demanded money otherwise they would kill us. It
was like a dream. We could not believe it. We were robbed there, close to
the road, where everyone could see. They just took what they wanted and
went away singing. I lost my bag, my wallet and my friend also lost
everything. I was scared that we could be killed or raped. Even now I
cannot believe that I survived. We went to the highway, the N1 and hiked
to Musina and then home to Zimbabwe. I only came back after a month
when things had calmed down. I stopped doing business for over a month.
I had no money to start over. I had to borrow some money and it took time
to recover. Some of my customers moved with my money and I never
recovered the money. I had to start from scratch and it was difficult
(Polokwane Interview No. 3).
Most of the respondents recounted incidents of violence that had personally
affected them since 2008. These accounts revealed a number of features

891
common to all xenophobic attacks on migrant businesses. First, much of the
violence seems to the migrants to be spontaneous and occurs without
warning. In practice, this is rarely the case as many attacks are preceded by
community meetings from which migrants are excluded (Landau, 2012).
Therefore, they have little notice or ability to take evasive action. As one victim
of violence in the informal settlement of Diepsloot near Johannesburg in 2013
observed:
They just occur haphazardly. We cannot always tell what happens next so
it is difficult to do anything and to think of a way to respond. It just
happens when you are least aware of the problems that are about to erupt.
Sometimes we are caught up with all our wares and they are destroyed
and stolen and so it is difficult to do anything (Johannesburg Interview No.
10).
The journalist, Anton Harber’s (2011) portrait of Diepsloot paints a picture of
a volatile settlement in which vigilante justice and attacks on foreign-owned
businesses are common. In 2008, for example, “they showed no
discrimination in targeting men, women and children, and destroyed, looted
and burnt down their businesses and houses” (Harber, 2011: 123).
Second, the perpetrators of xenophobic violence are often from the same
community and are even personally known to the victims:
The people that robbed us are in this community and we know them.
They are the community members here. Some of the people here do not
like us foreigners. They pretend when you deal with them to like us. But
they do not like us (Johannesburg Interview No. 2).
The fact that migrant entrepreneurs are able to provide goods, including food,
at competitive prices and offer credit to consumers is clearly insufficient to
protect them when violence erupts. In one part of Khayelitsha, there is
reportedly little violence as long as migrant business owners pay protection
money to the powerful local taxi association. In many other areas, the
respondents reported that community leaders are either ineffective in dealing
with the violence or, in some cases, actively foment hostility and instigate
attacks.

892
Third, the looting of stock on the premises is a constant feature in the
narratives of the migrant business-owners. As one observed:
There are hard core thieves who rob people and also jobless people
around who are now taking advantage of these xenophobic attacks and
robbing people to get money because they have nothing to do with their
lives (Johannesburg Interview No. 1).
However, the respondents consistently maintained that robbery per se was
not the prime motive for the attacks. As one respondent noted:
They target shops, the owners as well as the goods inside. They only
target foreign owned shops. There is more to that (than robbery), they
want us to leave their country because they hate our businesses here and
they say we are finishing their jobs (Johannesburg Interview No. 3).
Others pointed out that South African business owners in the same vicinity are
left alone during crowd violence, that attacks often involve vicious physical
assaults against the person, and that they are usually accompanied by
vituperative xenophobic language:
People were being beaten up and they were dying. A group of South
Africans moved around this whole squatter camp terrorising all
foreigners and they used to move with someone who knew where all
foreigners stayed. These people moved with knobkerries, metal sticks,
sjamboks and any sort of weapon you can think of for distraction. If you
were a foreigner and did not have a passport they would beat you up
(Johannesburg Interview No. 3).
The violence was there for two days or so and I thought it was over. I
went to service a car in Heideveld. When I was coming back I passed
through my friend’s place and he accompanied me half way. When he
had gone, and I was in Sisulu Street down there, they attacked me with a
plank and something like a rubber. They hit me all over and even
stomped on me. It was xenophobia. They told me that they would kill me
and that I was a foreigner and not wanted here. I cried and asked for
them to leave me and they continued. No-one intervened. It was past 8pm
and there were still people moving about. A few other guys joined in. I

893
was saved by a car that passed, when its lights flashed at them they ran
away. They told me that next time they would kill me (Cape Town
Interview No. 3).
I was robbed in broad daylight here in Masiphumelele. It was not a real
robbery, it was a gang just saying foreigners must leave. I was about to
park my car when the group of men descended on me. They asked for my
ID and when I said let me go and get it, they pounced on me and started
pushing me. My neighbours just looked on. I asked what I had done but
they were just singing derogatory songs. It was pure xenophobia. Most of
the locals here joined and wanted to chase me out. Even my neighbours
were caught up in that chaos and were told to go. You see, when there is
a small thing that happens, it ends up being that foreigners must be
chased away. Is that not xenophobia? Many times here I have been
insulted only because I am a foreigner. You ferry someone’s goods and
they pay you little and the next time you want your balance they start
some story that you are a thief or so on and the others join in. Is that not
xenophobia? Why do they not do that to South Africans? Why only to
foreigners? These people have xenophobia in their blood (Cape Town
Interview No. 13).
Fourth, many of the accounts describe how an anti-government service
delivery protest or march can quickly disintegrate into mob violence and
looting of shops and stores owned by migrants. The connection between the
two events is not immediately obvious but, according to the respondents, the
looting is never indiscriminate but only targets migrants. The reason,
according to some, is that they become scapegoats for the government’s failure
to deliver services
South Africans are not friendly. They say this is their country and they do
what they want to us, hurting us. These locals ask services from their
government and if they are not given them they demonstrate and if their
concerns are not heard they put their frustrations on foreigners. Most of
them are uneducated so they think we are the cause of their problem and
when they see you in business they think you are taking over their
business. They target foreigners in business. They start with businesses

894
and sometimes when their concerns are not heard they even start
attacking those not in business and foreigners in their homes (Cape
Town Interview No. 11).
Fifth, there was some evidence of “violent entrepreneurship” involving attacks
orchestrated by South African competitors. One Zimbabwean entrepreneur in
Polokwane, for example, described how he had established a business selling
and repairing cell phones. He said that his South African competitors reported
him to the police for dealing in stolen phones but his records showed that all
his transactions were legitimate. According to him they had tried several times
to get him arrested. The reason? “They even tell me to my face that they want
me out of this place because I am a foreigner. How can they fail to make
business when I as a foreigner is doing well? That is their quarrel. Some have
even organised thieves to rob me and I have been robbed twice.”
Sixth, xenophobic violence is gender-indiscriminate in that both male and
female migrants recounted equally harrowing stories. Lefko-Everett (2010)
has argued that one of the most common strategies adopted by Zimbabwean
women migrants travelling to South Africa as cross-border traders is to travel
and stay in groups as a means of protection. Zimbabwean women living in
South Africa and selling on the streets are generally unable to benefit from
group protection. One woman in Johannesburg described her experience and
helpless situation as follows:
They were calling me names and some were telling me to go back to
Zimbabwe saying I would die that night. Some of the foreigners who were
there and had been trying to support me saw that the situation was
getting serious and just disappeared. I lost most of my goods that day as
people just started taking them. The lady who was selling close to me also
lost her products as people just took and went. It was terrible. No-one
was on our side. They just did not care that we were females. They just
harassed us. I even thought of going back home that day. What stopped
me is the thought of going back to look at my kids without anything. And
there was nothing that I would do in Zimbabwe. Here we live with
xenophobia every day. We see it happening and there is nothing that we
can do (Johannesburg Interview No. 10).

895
Finally, the respondents differed on whether Zimbabweans were particular
targets. Most said that all foreign-owned businesses were targeted, not simply
Zimbabweans. A number commented that the type of business made a
difference, with food and grocery shops being especially vulnerable. However,
virtually all agreed on one point: the purpose of the attacks was not simply to
steal certain desirable goods but to clean them out and destroy their business
premises and operations so that they could not continue to operate. There
were numerous examples of entrepreneurs who had lost all of their stock and
also had their premises vandalised and wrecked, even when they were
operating from containers, which are generally considered to be the best form
of protection:
They broke and took away everything as if they don’t want one to be in
business. If they wanted goods only, they would have just broken in and
taken stuff only but they destroyed, breaking windows and even
removing them and most people are not yet back on their feet (Cape
Town Interview No. 8).
In 2011, the business was attacked by local people. The shop was
attacked by the mob. They looted everything and left me with almost
nothing. I had goods worth over R 15,000 in here. Everything except
some few bottles of cooking oil and cigarettes remained. It almost
destroyed my business. I was left with very little. I had not saved much so
it took me some time to be on my feet again. I had to borrow some money
from friends because I needed to restock. I cannot afford to stock much
as I am not sure what happens tomorrow. These days we no longer put
everything here. Some of the stock is at home so that if the steal here, I
will have some of my stock at home to start again. I just replenish what
is in short supply here (Cape Town Interview No. 10).
We had just brought stuff from Zimbabweans on a Sunday. They were
worth about R 10,000 and included nyimo, mbambaira, nzungu,
matemba and we had also just stocked the local products. We had bought
a lot of crates like onions for about ZAR 15,000. All these products were
in the container and the container was destroyed. They upended it and
spilled all the products that were inside to the ground. Some of the

896
products were burnt, taken and we were left with nothing. And because
we had just stocked we didn’t have any money at home so we had to start
all over from scratch (Cape Town Interview No. 1).
Responses to Xenophobic Violence
The pervasive view amongst South African politicians that xenophobia does
not even exist in the country seems particularly odious given the experiences
of Zimbabwean and other migrants. The term “xenophobia” itself was used by
all the respondents to describe the harassment and physical abuse they
experience and some even referred to the widespread violence in 2008 and
2015 as “the xenophobia.” However, they were also asked if they thought
South Africans were xenophobic and, if so, why. No-one answered the question
in the negative. A selection of responses clearly indicate that for Zimbabweans,
South Africans are, indeed, the “owners of xenophobia”:
I can say that three-quarters of them show their hatred towards us foreign
nationals. They don’t like us. Xenophobia is a South African thing. It
happens more than anywhere in the world I think. Everything they do
shows it. They do not like us. They speak to us like we are not like them.
They look down upon us. They are like that whether they are Christians or
not. The children learn it from their parents. They call us makwerekwere.
Do you know even small kids can call you makwerekwere? Is that not
xenophobic? (Johannesburg Interview No. 2).
If you want to see how they hate us, just have a disagreement and they will
tell you bad things, telling you that you will die. What kind of a person
wants to see another person dying? Life is sacred, but here in South Africa
no one seems to care about that. They would rather you die so that they
can get what you have. This is the only society where people kill each other
over very simple disagreements (Johannesburg Interview No. 10).
You can see it almost every day in the train and other places when you pass
they call you derogatory names like makwerekwere. We can see it every
day in our daily life and we live with it. It does not only happen to people
doing business, but it happens to any foreigner no matter whom. If you

897
can’t speak their language, you already are a kwerekwere and you are in
trouble (Cape Town Interview No. 4).
The way they see us, they see us as if we are lesser than them. They say bad
things about us, like we are thieves and we are ugly and we do not bath,
such things. But they know most of these things are not true but they like
saying them anyway (Cape Town Interview No. 10).
Is there a country in the world where foreigners are killed and burnt like
here? No. South Africa is a place like no other place. It is a country with
people that do not care about other people. Look at the way they kill
foreigners. The way they chase foreigners and steal their goods and injure
them. That is not done by normal people. South Africans are xenophobic.
They do not fear evil spirits from the dead. They just kill and the next hour
they are busy braaiing and singing and eating amagwinya. They are not
normal people (Cape Town Interview No. 12).
The language and practices of xenophobia cow the victims into silence and a
sense of helplessness, short of returning to Zimbabwe, which is not seen as a
viable option. As one respondent said:
“Here we live with xenophobia every day. We see it happening and there is
nothing that we can do” (Johannesburg Interview No. 10). And another: “I
remain silent because I am Zimbabwean and I can’t go against what they
say. But they have to realise that we are the same we have the same skin
as black people but we just keep quiet even as they insult us”
The interviews provide important insights into how migrant entrepreneurs
themselves respond to the threat and reality of xenophobic violence. From the
responses of some of the migrants, it appears that trying to “fit in” and
integrate by learning local languages, dress codes and cultural practices is one
way to try and pre-empt attacks (Hungwe, 2012, 2013). However, these
strategies are no guarantee of protection when mob violence breaks out:
I was robbed during the day. There was a strike and I was coming from
the shops. I was not here the previous day and so I did not know that
there was a strike. When they saw me coming the mob ran to me. I was

898
beaten and robbed. They knew I was a foreigner. I can speak three local
languages and I spoke in isiZulu but they knew me, some of them and
they said he is a Zimbabwean and they attacked me. If I was a local I was
not going to be attacked. I had ZAR 1,800. All was taken. That was my
money that I had collected from my customers. They robbed me because
I was a Zimbabwean, a foreigner (Johannesburg Interview No. 2).
A number of the respondents observed that unlike some migrant groups, such
as Somalis and Ethiopians, Zimbabweans are not inclined to band together to
form associations or groups to lobby for and secure protection for their
members. Some did suggest that there was safety innumbers and that by doing
business in areas where there were many other migrant businesses, the
chances of being attacked were considerably reduced. One respondent
explained the attraction of running a business in the Johannesburg CBD as
follows: “You will find that incidences of xenophobic attacks are very rare in
Joburg central where they are a lot of foreigners. Also, Park Station is a
strategic location which supplies the whole of South Africa so our protection
as foreigners is better” (Johannesburg Interview No. 13). The downside of
operating in safer spaces is that business competition is extremely fierce.
Most were aware that a great deal of the xenophobic violence was confined to
low-income areas, particularly informal settlements. While it was possible for
some to avoid doing business in these areas, and instead operating in areas of
the city where attacks were less frequent, this was not a feasible option for all.
Many Zimbabwean migrants to South Africa do not have the financial
resources to afford accommodation nor the means to run a business anywhere
other than informal settlements.
A number of the respondents noted that the unpredictability of the attacks
made it difficult to plan in advance. Some said that they made sure that they
did not keep all of their stock at the place of business, storing some of it at
home or in rented containers. All tried to minimise the amount of cash they
kept on the premises, although not many Zimbabwean entrepreneurs have
access to formal banking facilities. One noted that as soon as he had made
some money, he immediately remitted it to Zimbabwe “so that even if I am
attacked, there is nothing much that they can take from me. It is better if my

899
family can have that money” (Polokwane Interview No. 6). Another said that
he was planning to relocate once he had sufficient capital saved up:
Surely experience is the best teacher but I think you plan when you have
money, so I am thinking of saving a lot of money and looking for safer
business locations like in town. I am thinking so because in 2008 they
also attacked my business. They just broke and took away all my stuff,
now they have burnt the structure down. So I re-constructed and started
again so I am now thinking how I am to keep myself and my stuff safe
(Cape Town Interview No. 15).
Various reactive strategies were mentioned when their businesses were
attacked. These included temporarily ceasing business operations, staying
indoors at home and moving to stay with friends or relatives in other parts of
the city “until the dust settled,” as one put it. Others said that the best strategy
was simply to flee the area (or as one graphically put it “you run with your
life”), if possible taking some valuable item with them which they could later
sell and restart the business with. None of the respondents said that
xenophobic attacks would put them permanently out of business. On the
contrary, most said they would simply raise the capital and start up again.
The logical implication of the determination to stay in business is that
xenophobic violence has failed in its two main aims: to drive migrant
entrepreneurs out of business and to drive them out of the country and back
to Zimbabwe. The respondents were asked if they would return to Zimbabwe
as a result of xenophobic attacks and the general consensus was that they
would not. A significant number noted that they had settled in South Africa
with their families and did not want to return. Many more made reference to
the fact that the crisis in Zimbabwe meant that there was nothing for them to
return to, even if they wished to do so:
There is nothing in Zimbabwe. I am not going back. I am trying to make
my life here. My wife is here and my child is here. I am not going back
there. Zimbabwe is a country I love. It’s just that at the moment things
are tough and there is really nothing to do when you return back home

900
While the hardships which I face in South Africa are many they are still
better than the hardships I endured back in Zimbabwe. In the event of
future attacks, I could try and survive because at least I will be doing
something (Johannesburg Interview No. 13).
I could never go back because there are no means of surviving. I could
simply have to look for an alternative way to survive while in South
Africa. Even if they attack me I will look for another means to survive as
long as I am not dead (Johannesburg Interview No. 19).
I am not going back. There is nothing to do in Zimbabwe especially
because we left a long time ago. What will we do there? So we stay here
because this is where our life is. We are establishing here and so if you
leave you have to start again. I am not going back. When xenophobia
starts we simply move to areas that are safe and return when it is quiet
(Cape Town Interview No. 12).
Perceptions of Government Inaction
All of the respondents were asked about the response of the South African and
Zimbabwean governments to xenophobic violence. The responses ranged
from the outright cynical to the totally dismissive. Not a single respondent said
they had been helped by either government and none were prepared to defend
their response to xenophobic violence. Most were extremely critical of both
governments. The general consensus was not that the governments did not do
enough but rather that they did nothing at all. In the case of the Zimbabwean
Government, the prevailing sentiment was captured by one Johannesburg
respondent who said:
The Zimbabwean Government does nothing. I have never heard them
comment or say anything about these attacks. They do not help us at all.
They do not send anyone to come and see how we are living and even
provide us with assistance. There is no government that helps us
Explanations for why the government “does nothing” ranged from sheer lack
of interest in what happened to Zimbabweans outside the country, a lack of

901
resources to do anything to help and a desire to see Zimbabweans return home
instead of staying in South Africa.
Much harsher criticism was reserved for the South African Government’s
practice of “doing nothing”:
The South African government does not do anything. At least nothing
that I know of. They are just silent. We just see the police, but they come
too late and do not do anything. They do not arrest anyone even though
you report. They are just moving about, but really doing nothing. I
sometimes think that even the police hate us the foreigners. Would they
do the same and not help if foreigners attack local people? No, they
would arrest us. So the police do not help us and would rather see us
gone. Even the community leaders do not do anything (Johannesburg
Interview No. 2).
Some of the people in government are fuelling xenophobia. They are also
xenophobic because they say a lot of things that are not true. Like we are
the ones who are causing problems here. They had problems here before
we came. They are very corrupt but they are the ones that tell people that
foreigners are the cause of the problems. People listen to the government.
They keep saying that foreigners are bad. What do you expect the people
to do? The people follow their government (Cape Town Interview No. 5).
They are the ones that cause it so they do not care. The one that occurred
in Durban it was the King who incited people. Now he is saying he did not
do it but we all saw him on TV. The government does not care for us. They
care about their people only. If it were foreigners doing violence against
the locals, we would all be in jail (Cape Town Interview No. 6).
Some felt that xenophobic violence was tolerated by government because it
supposedly achieved the desired effect of getting “foreigners” to leave the
country.
A recurring theme was police inaction during episodes of mass xenophobic
violence. Some felt that the police were extremely slow to respond. As one
respondent noted “the police usually come late when everything has been
done and people have been killed or their goods stolen” (Cape Town Interview

902
No. 5). Others commented on how the police offered no protection even when
they were present:
Both the City of Cape Town and the police are not protecting us at all.
Like on the day that the people were demonstrating, the police were
there. They were just walking. After they were passing, the people started
taking our things. There was no one to protect us and no one to stop
those people. So, I don’t know what they are doing. I think they just put
on uniform and walk around. When there is trouble they don’t come to
protect us (Cape Town Interview No. 4).
The police just stand at the robots. Or they run away. There is poor
enforcement because their response is very slow. Containers were being
opened and things taken while the police stared. They are either scared
of the people or because it’s their own people so they can’t stop them.
There were three police vehicles, but they just stood while people’s
containers were being opened. Only foreign containers were broken and
they knew whose container it is. No containers for local Xhosas (South
Africans) were broken into and destroyed (Cape Town Interview No. 12).
One respondent felt that the reason for inaction was that “South Africans do
not fear police” and compared the police behaviour with that in Zimbabwe:
They throw stones at the police. Have you ever seen people throwing
stones at the police in Zimbabwe? No, they do not do that. Here they just
do what they want. So they attack foreigners even if the police are there.
Unless the police are using teargas or throwing water. But they rarely do
that. But you can run to a police station if you are close and seek refuge.
There are other areas where the local people even attacked police
stations – attacked foreigners in police stations (Cape Town Interview
No. 7).
There was also a pervasive view that there was little point in reporting theft
or assault to the police because nothing was ever done, based on past
experiences of police inaction. Dockets may have been opened but the
perpetrators were rarely arrested and brought to book and stolen goods were
rarely, if ever, recovered:

903
It was the mob that took the things and what would I tell the police?
Besides there were many people whose goods were destroyed that I never
bothered. The police do not help much. It is useless to report to the police.
The police here do not care. Especially if you are a foreigner. They will
just tell you it is a mob. They cannot arrest a mob (Johannesburg
Interview No. 2).
The argument that the police were not particularly concerned by what
happened to “foreigners” was very common. One respondent claimed that
even if a perpetrator was arrested, “as soon as they have gone around the
corner they will ask for a bribe and release the person. As soon as the person
is released they will either come and shoot you or permanently injure you”
(Johannesburg Interview No. 18). Another said that they had reported a
robbery to the police and even named the assailants but little was done:
They took down my details and the details of the things I lost. I listed all
of them and went with them to the police station. I was told that they
would call me when they have made progress and that was that. I went
back but there was no progress. The officer who was dealing with the
issue kept telling me there were no suspects and that there was nothing
they could do. I even gave them some names of the suspects because I had
seen some of them, but the police officer did not even take them down.
He insisted that there needed to be a witness for him to put those people
as witnesses. I thought he should have at least questioned them or gone
to their homes and searched. Neither was done (Polokwane Interview
No. 4).
Apart from the failure to protect, in a xenophobic environment in which
migrants are extremely vulnerable, there is always the possibility that the
police themselves might seek to take advantage of the situation for their own
personal gain. This was certainly the view of many of the respondents who
described persistent police harassment, and even theft, during business hours:
They know that we are not South Africans. Sometimes the metro and
police can just come and take your products. During winter they came
and took socks and hats. Once you just try to confront them, they tell you

904
that this is not your country, go back to your country. Tomorrow the
same thing can happen again. The police officer will just come and say
they lost the gloves and take another pair. If that day they are in the
mood of arresting people, they will arrest you despite the fact that they
took your things before. Some are those who arrest you and ask for a
certain amount of money like ZAR 200 even if you don’t have it. Maybe
that day you only made ZAR 50 and if you try to explain that you don’t
have the money, they threaten to take all your stock. If the stock value is
more than ZAR 200 and I don’t have it, I am forced to ask from other
people. If they assist me, I give them and they go and if not, they take all
my stock (Johannesburg Interview No. 1).
Confiscation of stock appears to be relatively common and the owners are
forced to pay large fines to retrieve their goods. In many cases, the fines are so
heavy that they simply abandon the goods, borrow money and begin again.
Simply to be allowed to operate in an area for a day or to avoid impounding of
goods may require payment of a bribe of up to ZAR 200. Mobile vendors play
a continuous cat and mouse game with the police, ready to pack up their goods
and disappear at the first sign of a police car. In sum, police protection cannot
be counted on during episodes of mob violence and there is also very little
redress when individuals report crimes against their businesses or themselves
to the police. Fear of reprisals from those they report or identify is also a very
real disincentive to getting the police involved. As a result, there is a certain
fatalism and resignation to the inevitability of losing goods and property in
general or isolated attacks.
Conclusion
Crush and Ramachandran (2015a) argue that there are three main policy and
scholarly responses to violence against migrants in general, and migrant
entrepreneurs in particular: xenophobia denialism (the official position of the
South African government since 2008 and supported by some researchers
who argue that South Africans are equally as vulnerable to violence as
migrants); xenophobia minimalism (whose proponents suggest that
xenophobia may exist but it is an epiphenomenon and that the real causes lie
elsewhere) and xenophobia realism (which argues that xenophobia is not only

905
widespread and real but can take a violent form in specific places and under
certain circumstances). This paper revisits these arguments from the
perspective of a group of migrants themselves, that is Zimbabweans running
businesses in the informal economy. The migrants clearly have no difficulty in
naming what happens to them as xenophobic. Nor do they hesitate, on the
basis of first-hand experience, to name South Africans as the “owners of
xenophobia.” Their accounts clearly demonstrate that they see xenophobia as
a key driver of the hostility, looting and violence that they experience. We
suggest in this paper that xenophobic violence has several key and common
characteristics that constantly put Zimbabwean informal enterprise owners at
risk of losing their and their property. We also argue that the deep-rooted
crisis in Zimbabwe, which has driven many to South Africa in the first place,
makes return home in the face of xenophobia a non-viable option. Instead,
Zimbabweans are forced to adopt a number of self-protection strategies, none
of which are ultimately an insurance against attack.
Acknowledgements
We would like to acknowledge the financial support of the International
Development Research Centre (IDRC) and the EU-funded Migrants in
Countries in Crisis (MICIC) Project.
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Linking Harare and Johannesburg through Informal
Cross-Border Entrepreneurship
Godfrey Tawodzera* and Abel Chikanda**
Abstract
Zimbabwe has witnessed a rapid expansion of informal cross border trading
(ICBT) with neighbouring countries over the past two and a half decades. That
expansion has largely been due to a persistent decline in the economy since the
introduction of the Economic Structural Adjustment Programme (ESAP) in the
1990s, which led to the closure of many industries, increased unemployment and
forced many people into the informal sector. This 2014 study sought to provide
a current picture of ICBT in Zimbabwe by interviewing 514 informal
entrepreneurs involved in ICBT between Harare (Zimbabwe) and Johannesburg
(South Africa). The sample profile revealed that ICBT in Zimbabwe is dominated
by females and young adults and that traders are fairly educated. The study
results demonstrate the important role played by ICBT in the survival of
households in the country. The traders make important contributions to the
Zimbabwean economy through business establishment, providing goods that are
unavailable in the country, availing goods cheaper than the formal retail sector
and benefiting the fiscus through import duties. In South Africa, ICBT benefits
wholesalers from whom traders purchase their goods and supports the South
African transport and hospitality industries. The report concludes that ICBT in
Zimbabwe has become more than a survivalist strategy. It is contributing to the
economy by generating jobs and reducing unemployment. Therefore, there is a
need for policies that encourage rather than restrict the operation of informal
trade.
Keywords Cross-border traders, informal economy, international trade,
Harare, Johannesburg.
* Department of Geography & Environmental Studies, University of Limpopo, P. Bag X1106,
Sovenga
** Department of Geography & Atmospheric Science and African & African-American Studies,
University of Kansas, Lawrence, Kansas State, USA 66045.

911
Introduction
Across the Southern African Development Community (SADC) region,
informal cross-border trade (ICBT) is a well-established entrepreneurial
activity accounting for 30-40% of intra-regional trade (Makombe, 2011;
Mijere, 2009; Peberdy et al., 2015). For Zimbabwe, ICBT not only expands the
market for Zimbabwean goods (such as handicrafts) but also imports a wide
variety of perishables and non-perishables for the Zimbabwean consumers.
ICBT is not a new phenomenon in Zimbabwe, dating back to the 1990s when
the country started experiencing serious economic hardships (Gaidzanwa,
1998; Kurebwa, 2015). The first decade after Zimbabwe’s independence in
1980 was a period of relative growth and stability: the real GDP growth rate
averaged 7% per annum, average annual inflation was in the single digits,
budget deficit as a percentage of GDP was generally around 5% per annum and
export growth averaged around 15% per year (Malaba, 2006). However,
government expenditure rose dramatically over the same period to over 50%
of GDP by 1990, largely due to increased spending on health, social services
and infrastructure (Brown, 2000). Consequently, there was relatively less
spending on capital projects to grow the economy. The result was increasing
unemployment, which reached 26% by 1990, up from just 8% at
independence (Robinson, 1991). National government debt reached 71% of
GDP in 1989 (Munjoma, 1999) and by 1997, per capita incomes were lower
than in 1990 (Mupedziswa & Gumbo, 2001).
A decade after the country’s independence, and against this backdrop of a
contracting economy, the Government of Zimbabwe launched a series of
economic reforms. The first phase, launched in 1990, was the International
Monetary Fund (IMF) and the World Bank-funded Economic Structural
Adjustment Programme (ESAP) (Mupedziswa & Gumbo, 2001). This was
succeeded by the Zimbabwe Programme for Economic and Social
Transformation (ZIMPREST) in 1997 (Government of Zimbabwe, 1997). The
austerity measures imposed on the economy by these reforms (such as the
removal of subsidies on food and agricultural inputs, the removal of controls
on prices, labour and wages and the operation of social services at cost
recovery levels) led to a host of negative impacts that included the closure of

912
many factories, massive retrenchments, declining real wages and skyrocketing
consumer prices. The resultant decline in the formal economy led to a growth
in the informal sector (Kamete, 2017; Tibaijuka, 2005). ICBT as a household
livelihood strategy also began to escalate, as thousands of jobless workers had
no choice but to enter the informal economy. Despite South Africa imposing
tough visa restrictions on Zimbabweans after 1995, cross-border trading
continued to be an important source of livelihood for many Zimbabweans.
Just as South Africa removed visa restrictions in 2005, the Government of
Zimbabwe launched an assault on all forms of urban informality through
Operation Murambatsvina (Chirisa, 2007; Potts, 2006; Tibaijuka, 2005).
Though this operation temporarily interrupted the trade, ICTB quickly re-
established itself as informal entrepreneurs had few viable alternatives. In
2007, at the height of Zimbabwe’s economic crisis, SAMP conducted a border
monitoring study of informal traders at four major border posts and found that
the trade was not only increasing and diversifying, but more men were also
becoming involved (Tevera & Tawodzera, 2007). As Zimbabwe’s shops
emptied and the purchasing power of the Zimbabwean dollar evaporated
during the economic meltdown of 2008, ICBT traders played a critical role in
ensuring that essential supplies, such as foodstuffs, remained accessible to
many households. The volume of informal trade at the Zimbabwean borders
with South Africa and Botswana reached record proportions during the crisis
(Ama et al., 2013; Campbell & Crush, 2014; Kachere, 2011).
In 2009, the Zimbabwean economy stabilised after the inauguration of the
Government of National Unity. Stabilisation was short-lived as the country’s
economic situation has deteriorated once again. However, the period of
economic stability following the crisis of 2007-8 does raise the question of
whether and what impact it had on ICBT. On the one hand, many goods that
were formerly unavailable in the country returned to the shops. On the other,
formal sector unemployment remained stubbornly high and many households
continued to rely on the informal economy for their livelihoods (Tawodzera,
2014). In June 2016, the Government of Zimbabwe, through Statutory
Instrument 64 of 2016, banned the importation of a wide variety of goods,
including various processed and tinned foods, bottled water, dairy products,

913
household furniture, fertilizer, cotton fabric and some building materials.
According to the Minister of Industry and Commerce, the move was designed
“to support our local industry […] buying locally manufactured goods; whether
it involves purchasing machinery worth millions or even just a T-shirt; begins
a cycle in which you re-invest money into the local economy, instead of
spending it on an imported product and sending the money outbound”
(Pindula News, 2016). The announcement triggered widespread protests by
informal cross-border traders in Harare and at the Beitbridge border post
between Zimbabwe and South Africa. The ostensible reason was that the
livelihoods of many in the informal economy, who made a living importing
goods from South Africa and Botswana, were under threat by the state (Kalaba,
2016; Scoones, 2016).
A recent study has estimated that there are as many as 3.5 million Micro Small
and Medium (MSME) enterprises in Zimbabwe (Finmark Trust, 2014). Of
these, 2 million (or 71%) are individual entrepreneurs, 800,000 have
employees and nearly half reported that the business was their only source of
income (Finmark Trust, 2014). Additionally, 85% of these businesses were not
registered and therefore operated in the informal economy, hence
underscoring the importance of the informal sector to the livelihoods and
sustenance of many Zimbabweans. Against this backdrop, the Growing
Informal Cities project set out to examine the nature and role of contemporary
ICBT between Zimbabwe and South Africa by interviewing a sample of ICBT
entrepreneurs in Harare in 2014. In this paper, we discuss the findings of this
survey and demonstrate that despite many challenges and obstacles, ICBT
continues to thrive.
Research Methodology
The research on which this paper is based employed both qualitative and
quantitative techniques to obtain a profile of Zimbabwean cross-border
traders and insights into their motivation, operations, challenges and
opportunities. A questionnaire was administered to a total of 534 ICBT traders
in Harare (Table 1). Only traders who were trading in the informal sector (not
registered for tax purposes); had been in operation for at least a year to allow
for a retrospective analysis of the start-up, problems and opportunities; and

914
were conducting business primarily between Harare and Johannesburg were
interviewed. Because it is impossible to draw a representative sample of cross-
border traders, the study adopted a snowball sampling strategy. This involved
identifying a small group of cross-border traders in multiple locations across
Harare. These traders were then used as initial sampling units and were asked
to identify other traders to be included in the sample. Each interviewed cross-
border trader was asked to identify at least three other traders, from which
one was randomly selected for interview. The process was repeated until the
desired sample size was achieved.
Table 1: Sampled Areas of Harare
No. %
Harare CBD 263 49.6
Mbare and Mupedzanhamo 110 20.6
Chitungwiza, Makoni and St Mary’s 36 6.7
Highfield and Machipisa 33 6.1
Avondale 20 3.7
Kuwadzana 17 3.2
Warren Park 1 15 2.8
Epworth 12 2.2
Glen View 3, 7 and 8 12 2.2
Mabvuku – Tafara 12 2.2
Other 4 0.7
Total 534 100.0
In addition to the questionnaire survey, 24 in-depth interviews were
conducted with selected cross-border traders in Harare using a semi-
structured interview schedule. The interviews allowed for further probing on

915
the origins and contemporary context of ICBT as well as other key issues
surrounding the trade. Two focus group discussions were also held in Harare
and focused on understanding the nature of the trade, relationships with local
authorities and the police and the challenges faced in the traders’ everyday
lives. Three in-depth interviews were also conducted with traders’
organisations in the city that were able to supply information relevant to
cross-border trading, particularly issues relating to space, licensing and how
traders organise. Because of the complexity of ICBT, it is possible that some
trading activities were not captured in the survey. Those operating home-
based businesses, and those selling to middlemen, may be under-represented,
for example. These limitations notwithstanding, the size of the sample from
across the city is likely to give a generally accurate picture of Harare’s cross-
border trade.
Profile of ICBT Entrepreneurs
ICBT from Zimbabwe has traditionally been dominated by female traders with
limited involvement of males (Muzvidziwa, 2001, 2015). In Southern Africa as
a whole, women make up an estimated 70-80% of informal cross-border
traders (UNIFEM, 2010). The majority of traders interviewed in this study
were females (68%) with males constituting only 32%. The sample was also
relatively young, with a mean age of 33 years. The dominance of young people
in cross-border trading between Zimbabwe and South Africa is explained by
the arduous nature of the trade, which involves a great deal of travelling and
spending considerable time waiting at border posts and the places where
goods are sourced.
Cross-border trade in the 1990s was associated with the less educated and
unskilled (Muzvidziwa, 2015). However, this Harare sample was better
educated with only 1% of the sample having not completed primary school,
while two-thirds had a high school diploma, 17% had some secondary level
education, 11% had a college certificate and 3% had at least an undergraduate
degree. The entry of better-educated people into ICBT is certainly a result of
continuing high unemployment levels in Zimbabwe. In terms of marital status,
17% of this sample had never been married, 66% were married and 16% were
divorced, separated or widowed.

916
The largest number of traders were living in nuclear households (43%), while
28% were from extended households (Table 2). A significant minority (17%)
were from female-centred households while only 5% were male-centred.
What this suggests is that female ICBT traders came from a variety of different
household structures, which would have meant different domestic roles and
responsibilities and different abilities to trade full-time. In general, the array
of people involved in ICBT indicates that it is no longer the preserve of a few.
An economic activity once completely dominated by low-income households
and a relatively uneducated population has become a viable livelihood
alternative for others reeling under economic pressure. Although still
dominated by women, male traders are involved in increasing numbers as
ICBT has increasingly become a business for all.
Table 2: Household Structure of ICBT Traders
No. %
Female-centred 97 18.3
Male-centred 26 4.9
Nuclear 228 42.9
Extended 145 27.3
Single person household 35 6.6
Total 531 100.0
Only 1% of the ICBT businesses surveyed were established before 1990. This
is primarily because the economy of the country was still strong and most
workers were being absorbed in the formal sector. Around 11% were
established in the 1990s, the decade of the Economic Structural Adjustment
Programme (ESAP), while another 15% started cross-border trading between
2000 and 2005. By far the largest proportion of ICBT traders began operations
during and after the economic crisis of 2008, with nearly three-quarters
starting up between 2006 and 2014. The rate of start-up seems to have fallen
slightly after 2010, most probably as a result of the stabilisation of the

917
economy after the establishment of the GNU as well as the more stable political
environment. Because most food became available in the country through
formal sector imports, the incentive to continue ICBT, especially involving
food, was no longer as compelling.
Because high rates of unemployment are thought to be one of the main reasons
pushing people into the informal economy and ICBT, the survey sought to find
out what occupation the traders were engaged in before starting their
enterprises. Around one-third were unemployed (Table 3). Another 22% were
already working in the informal economy either running a business that did
not involve ICBT or being employed by someone else (6%). This suggests that
the majority of traders went straight into ICBT, rather than expanding into
ICBT from an existing enterprise. Another 36% of the traders were employed
in a formal sector job immediately prior to establishing an ICBT business.
Table 3: Occupation Before Starting ICBT Business
No. %
Unemployed
Unemployed/job seeker 178 33.4
Informal Economy
Operated own informal sector business in Zimbabwe
only
89 16.7
Employed by someone in the informal economy 32 6.0
Employed
Office worker 40 7.5
Manual worker (skilled) 35 6.6
Manual worker (unskilled) 35 6.6
Professional (e.g. lawyer, doctor, academic, engineer) 15 2.8
Teacher 10 1.9

918
Health worker 9 1.7
Employer/manager 6 1.1
Police/military/security 4 0.8
Domestic worker 3 0.6
Agricultural worker 2 0.4
Other occupation 32 6.0
Other
Businessman/woman formal sector (self-employed) 7 1.3
Scholar/student 36 6.8
Total 533 100.0
Around 30% of the sample indicated that they had additional sources of
income while 70% survived solely on the ICBT business. The majority of those
with alternative income-generating sources indicated that they were involved
in non-ICBT businesses (55%), while 11% were deriving income from part-
time or casual work (Table 4). According to one trader, having more than one
business was a necessity given the unpredictable nature of the informal trade:
I sell clothes and shoes, but I also have another income from
selling foodstuffs. Clothes do not sell faster than food so when I
am in need of faster cash I know that I will always get some from
trading food. However, the profit from food is not much so it just
takes care of my immediate needs. When I am looking for serious
money, I know I will get it from clothes and shoes even if they are
bought less frequently (Interview No. 4, Harare, 27 September
2014).

919
Table 4: Other Income Generating Activities
No. %
Another non-ICBT business 85 55.9
Part-time/casual work 17 11.2
Another ICBT business 14 9.2
Formal employment in the private sector 7 4.6
Formal employment in the public sector 3 2.0
Rentals 3 2.0
Other work 23 15.1
Total 152 100.0
Entrepreneurial Motivation
There is a general assumption in the literature on the informal economy in
Zimbabwe that people participate because they have no choice. This would
imply that most participants in ICBT are necessity-driven entrepreneurs,
pushed to participate by the need to survive. However, ICBT is not the easiest
or most obvious form of informal activity and may attract those with different,
more opportunity-driven entrepreneurial motivations. Therefore, the study
examined the reasons why traders started an ICBT business. Respondents
were asked to rate 27 factors as motivations for starting their ICBT business
on a scale from 1 (no importance) to 5 (extremely important). The responses
confirm the importance of financial survival in pushing people into cross-
border trading (Table 5). Easily the most important factors were the need to
make more money just to survive (a mean score of 4.9) and the need to give
their families greater financial security (4.6). This suggests that ICBT is largely
a necessity-driven survival strategy to generate income. Employment-related
factors, including unemployment and having an undesirable job, were
significantly less important.

920
Table 5: Entrepreneurial Motivation of ICBT Entrepreneurs
Mean
Score
Survivalist factors
I needed more money just to survive 4.9
I wanted to give my family greater financial security 4.6
I was unemployed and unable to find a job 3.0
I had a job but it did not pay enough 2.6
I wanted to provide employment for members of my family 2.3
I had a job but it did not suit my qualifications and experience 1.2
Entrepreneurial orientation
I have always wanted to run my own business 4.2
I wanted more control over my own time/to be my own boss 3.9
I like to challenge myself 2.9
I wanted to do something new and challenging 2.7
I have the right personality to be involved in cross-border trade 2.6
I wanted to compete with others and be the best 2.5
I like to learn new skills 2.5
I enjoy taking risks 2.4
Market opportunities
I wanted to expand my business 3.2
I had a good idea for a product to sell to people in Zimbabwe 3.1
I started cross-border trading to grow my business 3.1
There were shortages of certain goods in my home country 3.0

921
I had a good idea for a product to sell in South Africa 1.2
I had a good idea for a product to sell to people from my home
country
1.2
Building and utilising social capital
I wanted to increase my status in the community 3.2
I wanted to contribute to the development of my home country 2.7
Support and help in starting my business was available from
family members
2.5
I wanted to provide employment for other people 2.1
My family members have always been involved in cross-border
trade
2.1
Support and help in starting my business was available from
other traders
1.9
I decided to go into business in partnership with others 1.5
The second set of factors relates more to self-assessment of personality traits
usually associated with entrepreneurship. A desire to own one’s own business
did rate relatively highly (at 4.2), as did the related desire to be one’s own boss
(3.9). However, the other personality-related factors had low ratings, which
suggest that the traders did not see themselves as natural entrepreneurs. They
were generally more alert to the market opportunities provided by
participation in ICBT, with a number of factors scoring around 3.0 on average
including awareness of shortages in Zimbabwe, having a good idea for a
product to sell, and wanting to expand an existing business.
Financing ICBT
The amount of start-up capital required to engage in ICBT has been a deterrent
for low-income individuals and households in the past (Muzvidziwa, 2007). In
this survey, almost three-quarters of the sample had minimal start-up capital

922
of ZAR 5,000 or less, which suggests that the entry threshold may have
declined (Figure 1). Only 8% had started their business with a capital outlay
of more than ZAR 10,000. According to some respondents, a basic ICBT
business can be established with as little as ZAR 2,000. As one commented:
Cross-border business does not need a lot of money to start. You only
need to be clever and buy things that sell faster and are wanted by the
people. Then you can increase your stock as time goes on. I started my
business with ZAR 1,500 buying and selling rice when the country was
in dire need of food. I would buy rice from Musina and sell in Harare
and do two trips a week. I used trucks which are cheaper and did not
sleep in South Africa, so I reduced my costs (Interview No. 9, Harare,
28 September 2014).
Most of the traders acquired their start-up capital from multiple personal
sources. About 58% used their personal savings, 38% borrowed money from
relatives, while 2% borrowed from non-relatives and 1% from informal
money lenders. Very few (1.2%) started their ICBT business with money from
formal sources such as banks and micro-finance institutions. While start-up
capital is important for the business to take off, most businesses require a
constant injection of cash during their life-span, especially in the initial stages
(Abdulsaleh & Worthington, 2013). In this survey, almost one-third (27%) of
the traders reported borrowing additional money for their business in the
year prior to the study (Table 6).

923
Figure 1: Capital used to start an ICBT business
Table 6: Sources of Operating Loans
No. %
Loan from relatives 77 53.2
Micro-finance institution 21 15.0
Bank 17 12.0
Informal financial institution 9 6.3
Money lenders 9 6.3
Loan from other business owners 6 4.2
Business credit (goods on terms) 1 0.7
Other sources 9 6.3
Total 144 100.0

924
The majority reported that they had borrowed from relatives. According to the
traders, relatives are the best source of loans because they do not place
stringent conditions on the borrower and are likely to be understanding
should they default on the loan or delay the repayment:
Of course I have borrowed a number of times to finance my business,
but I only borrow from my close relatives. They are very
understanding when you can’t pay them back or delay the
repayment. If you borrow from other people, they give you all sorts
of problems in that they can even come and take your goods as
surety, or even sell your goods (Interview No. 10, Harare, 29
September 2014).
A small number of traders had obtained additional loans from micro-finance
institutions (15%) and banks (12%). With the introduction of the US dollar
(USD) as one of the trading currencies in the country in 2009, a number of
micro-finance institutions were established in Harare. These organisations
lend money on a short-term basis, ranging from days to months, but rarely for
periods exceeding a year. Their interest rates are generally higher than those
offered by the banks but they are less stringent on surety requirements,
accepting such assets as cars, fridges, stoves, TVs and washing machines as
surety. Banks, on the other hand, generally prefer immovable properties such
as houses. In the absence of such property, a borrower is expected to show
evidence of employment and ability to repay through submitting pay-slips.
One trader compared the two in this way:
I borrow many times when my stocks are low and I need to boost my
business. I usually borrow from micro-finance houses where I can
just leave the registration book of my car and get it when I repay
them. Banks require many documents which I do not have. I also do
not own a house for surety. So I prefer the microfinances as they are
simple. I can apply in the morning and get the money before the end
of the day (Interview No. 7, Harare, 28 September 2014).
Other sources of loans include informal financial institutions and money
lenders. Stokvels (money clubs) lend money to members at reasonable rates

925
and the repayment period is usually mutually agreed upon with the borrower
who is also a member. Money lenders, however, tend to lend at punitive rates
and can use brutal coercive methods to enforce repayment in case of a default.
As a result, most ICBT traders avoid doing business with them. A few traders
(4%) said they preferred to borrow from each other before going to banks and
money lenders. This is because the terms of repayment from fellow traders are
very favourable and there is a mutual understanding of the challenges of the
trade.
How much do the traders borrow from these various sources? Loans from
fellow traders were ZAR 16,667 on average, compared to ZAR 12,187 from
banks, ZAR 11,214 from micro-finance institutions, ZAR 7,444 from informal
financial institutions, ZAR 6,335 from relatives and ZAR 3,527 from money-
lenders. A key determinant of where money is borrowed is the interest
charged on the loan. The highest interest rates are charged by money lenders
(averaging 23%), followed by stokvels (18%), micro-finance institutions
(17%) and banks (12%).
Almost all traders (95%) said they use loans to purchase goods for resale,
while others use the funds to meet transportation costs (57%) and for rental
of the market stalls (10%). In Harare, some traders have no stalls of their own
and rent from others on a daily, weekly or monthly basis. Most ICBT traders
use public transport (buses and haulage trucks) to ferry their goods from
South Africa and incur significant costs. Traders who take arts and curio
products to South Africa to sell use the money to transport their goods as far
afield as Cape Town and Port Elizabeth. What is clear is that loans are used for
basic business expenses and not for other household needs. Many traders
(51%) indicated that the borrowed money significantly increased the volume
of their sales (Figure 2). Others reported an increase in the profitability and
competitiveness of their business (23%), and diversification of the products
they traded (8%). However, not all traders had positive experiences. As one
recounted:
I borrowed ZAR 20,000 from a micro-finance in March so that I could
buy more stock. However, that loan has caused me more problems
than any real benefits because from that time everything has been

926
going downhill. The interest rate was such that I was expected to pay
back the ZAR 20,000 plus ZAR 5,000 interest in two months. When I
bought more stock from Johannesburg, I paid too much duty at the
border and when I resold the goods in Harare, I failed to raise the
initial ZAR 20,000. The micro-finance then took my car and gave me
seven days to pay, which I failed to do and my car was sold (Interview
No. 3, Harare, 27 September 2014).
Figure 2: Impact of loans on ICBT business activity
Less than 20% of the ICBT traders had applied for a bank loan to finance their
business at start-up or for ongoing operations. When asked about the reasons
for low patronage of banks, around one-quarter indicated that they had no
interest in getting a bank loan, 14% that banks asked for too much collateral,
while 13% were dissuaded by the high interest rates, and 12% said the
application process was too complicated for them to understand (Table 7).
Only half of those who did apply for a bank loan were successful. Most were
rejected because they had insufficient collateral. According to a trader whose
application had been rejected, the documentation required by the bank was
also especially onerous:

927
I have applied for a loan and every time my application is rejected I
am given a different reason. The first time I was told that I did not
have sufficient collateral even though I had submitted title deeds for
a plot. The second time I was told that the amount of money I needed
was too much and could not be covered by the plot. I eventually just
gave up. But it is frustrating after having wasted so much time and
money looking for documents and printing, and travelling to and from
the bank (Interview No. 5, Harare, 28 September 2014).
Table 7: Main Reasons for Not Applying for a Bank Loan
No. %
Not interested in getting a loan 101 24.5
Guarantee/collateral asked for is too much 59 14.3
Interest rates are too high 54 13.1
Application procedures too complicated 49 11.9
Did not think it would be approved 47 11.4
Don't have a bank account 46 11.2
No need for a loan – had sufficient capital 33 8.0
Other reason 23 5.6
Total 412 100.0
Buying in Johannesburg, Selling in Harare
ICBT traders from Harare are highly mobile, spending only 1.79 days in South
Africa on average per visit, although a few stay for several weeks, particularly
if they are taking goods to sell. The traders travel relatively frequently to South
Africa, with 67% making at least one trip per month and 82% travelling more
than four times per year. The vast majority do not have their own means of
transport to South Africa and rely on bus services (99%), trucks (3.9%), their
own vehicles (1.1%) and taxis (0.6%). Only a few traders (0.2%) travel by

928
plane. Some ICBT traders use their services of informal transporters
(omalayisha) as it saves them the trouble of having to transport their own
goods through the border. The omalayisha are well-known to the customs
officials on both sides of the border, which enables them to carry goods
without paying customs duties (Thebe, 2015).
Chinese malls in Johannesburg are an important source of goods for traders
(Laribee, 2008). In Johannesburg, the majority of Zimbabwean ICBT traders
purchase their goods at outlets such as China Mall (26%), other Chinese-run
malls (25%) and Oriental Plaza (5%) (Figure 3). Some buy from wholesalers
(14%) while others patronise independent small shops/retailers (13%) or
small shops/retailers in malls (8%). A much smaller number purchase goods
from factories, supermarkets, the informal sector and direct from farmers.
Figure 3: Source of goods in Johannesburg
The kinds of goods purchased in South Africa in 2015 for resale in Zimbabwe
varied widely (Table 8). By far the most common items were new clothing and
footwear, with 88% of all traders buying these items. Other goods included
accessories such as bags and suitcases (bought by 27%), bedding materials

929
(20%), electronics (12%) and household products (8%). Foodstuffs, which
were carried by three-quarters of ICBT traders in 2008, were not at all popular
any longer in 2015 (Peberdy et al., 2015). This is a reflection of post-2009
developments in Zimbabwe that led to a more abundant supply of food
products in the country (Tawodzera, 2014). On a typical trip, the traders spend
an average of ZAR 8,328 on a variety of products for resale, with a minimum
spend of ZAR 1,000 and a maximum of ZAR 150,000. Only a small number of
the traders take products from Zimbabwe to sell in South Africa. These include
arts and crafts, fabrics, bedding, household products and new clothing and
footwear.
Table 8: Goods Purchased in South Africa
No. %
New clothing and footwear 467 87.6
Accessories (bags, sunglasses, etc.) 141 26.4
Bedding 104 19.5
Electronics 64 12.0
Household products 41 7.7
Hardware/tools 31 5.8
Toiletries and cosmetics 30 5.6
Cell phones/accessories 24 4.5
CDs/DVDs 15 3.5
Cooking oil 11 2.1
Pre-owned clothing and footwear 9 1.7
Furniture 5 0.9
Stationery 5 0.9
Rice and pasta 4 0.8

930
Tea/coffee 4 0.8
Sugar 4 0.8
Beds and mattresses 4 0.8
Milk (fresh/sour) 3 0.6
Spare parts and raw materials 2 0.4
Eggs 2 0.4
Snacks 2 0.4
Car parts 2 0.4
Confectionary 1 0.2
Mealie meal 1 0.2
Bread 1 0.2
Tinned/canned fruits and vegetables 1 0.2
Plastic goods 1 0.2
Toys, sports equipment 1 0.2
Note: multiple response question
Although the overwhelming majority of the traders sell their goods in the
country’s capital, where the survey was conducted, more than 10% also sell
goods in other major cities such as Bulawayo and Masvingo, and in smaller
urban centres such as Gokwe and Mutoko. As many as 86% sell their products
in their own stall in an informal market while 24% sell through friends, family
and other personal networks, 16% from their houses, 10% from their own
shop in the informal sector, 9% on the street, 7% door-to-door and 2.5% in
offices and other workplaces.

931
Economic Contributions
An important objective of this research was to assess the importance of ICBT
trade to the economies of both Zimbabwe and South Africa. This is particularly
important in the case of Zimbabwe where the informal economy is viewed as
a problem by government and a hindrance to the success of formal businesses
(Ngundu, 2010; Rogerson, 2016). First, it is clear from the wide variety of
goods imported by the ICBT traders that there is a ready market in Zimbabwe
for their products. This means, in turn, that they are servicing the needs of
Zimbabwean consumers either by providing goods that are unavailable in the
country or at a cheaper rate than supplied by local producers and the formal
retail sector. Given high rates of unemployment and the fact that many
households are cash-strapped, the ICBT traders play a critical role in servicing
the basic consumer needs of Zimbabweans.
Second, the ICBT enterprises contribute to the economy through business
establishment, growth and the strategic deployment of their profits. On
average, the surveyed traders were recording total sales worth ZAR 12,000
per month. Sales ranged from as low as ZAR 1,000 per month for the small
traders to as high as ZAR 130,000 per month for those dealing in large
quantities of goods, especially those trading in hardware and building
materials. The reported profits averaged ZAR 4,765 per month but were also
highly variable, ranging from a minimum of ZAR 200 per month to a maximum
of ZAR 45,000 per month. Traders with high sales turnover generally reported
higher monthly profits. The size of these profits indicates that ICBT is not just
a survivalist enterprise, but rather a viable business operation. More than half
(59%) of the ICBT operators reported that their income had increased since
embarking on ICBT while a further 24% reported that their income was
variable, sometimes increasing and at other times decreasing. Only 15%
indicated that their income had decreased since starting an ICBT business,
buttressing the important role that ICBT plays in the livelihoods of many
Zimbabweans.
Third, given that the income of the majority of the traders had improved
significantly through ICBT, it is important to know whether or not they use
their profits for the businesses or themselves. Over 90% reported spending

932
their profits on family needs, including paying rent for accommodation, buying
food for the family and other obligatory family expenses (Table 9). Nearly
three-quarters said that they reinvest their profits in the business, presumably
to buy more stock.
Table 9: Use of Business Profits
No. %
Spent on family needs in Zimbabwe 489 91.6
Re-investment in business 391 73.2
Education 230 43.1
Spent on self 210 39.3
Personal savings 152 28.5
Spent on family needs outside Zimbabwe 3 0.6
Retirement fund 3 0.6
Re-investment in business outside Zimbabwe 4 0.7
Fourth, as well as stimulating the economy through the reinvestment of profits
inside and outside the business, ICBT traders contribute to Zimbabwe’s
economy through job creation. Most traders personally procure goods in
South Africa and hire people to sell them in Harare. A total of 37% of the
traders employ people in their businesses. Of the 308 people employed in the
enterprises surveyed, 236 (or 77%) were in paid positions. Even when
members of the family are involved in the business, they tend to be
compensated for their time. Of the 128 family members employed, 71% were
in paid positions. As many as 61% of the paid jobs went to non-family
members. In sum, employment generated by the ICBT traders is shared fairly
evenly between family and non-family members and there is a general
preference for female labour in the business hires.

933
Finally, other beneficiaries include the Zimbabwean bus companies and the
general Zimbabwean fiscus, which benefits from duties levied at the border on
returning traders bringing in products whose value is above the duty free
limit. On their last trip to South Africa, the ICBT traders paid ZAR 431 on
average in import customs duties, which amounts to ZAR 228,529 levied on
these traders alone. Given that this sample is only a small proportion of the
total number of ICBT traders and that each trader crosses several times a year,
the total duties levied undoubtedly run into ZAR millions.
In terms of contributions to the South African economy, the ICBT traders
contribute, firstly, through expenditures while in the country. The largest
beneficiaries are South African wholesalers and others from whom the traders
purchase their goods. The traders also support the South African transport and
hospitality industries. Overall, traders spent an average of ZAR 8,039 on their
last trip to South Africa. The spending on particular items included ZAR 6,737
on goods (or ZAR 3.5 million in total), ZAR 683 on transportation (ZAR
361,000), ZAR 42 (ZAR 22,000) on accommodation and ZAR 141 on other
costs (Figure 4).
Figure 4: Amounts spent on last trip to South Africa.

934
Second, South Africa benefits from the value added tax (VAT) paid by the
traders. Visitors to South Africa who buy goods for use in their home country
are eligible to apply for a VAT refund when they exit the country. Visitors are
supposed to request a tax invoice when they buy the goods in South Africa and
present it at the border for VAT refund. However, only 22% of the cross-border
traders said they claim VAT back at the border. Over one-third (37%) did not
even know that they could do so. Another third said that the process of
claiming VAT at the border wasted too much time. The delays are exacerbated
by the fact that ownership levels of motor vehicles is very low and reliance on
public transport high, which means that they only have limited time to wait.
Nearly 10% noted that the receipts which they get from South African retailers
are invalid for the purpose of claiming VAT. Receipts from Chinese-owned
shops, in particular, generally do not meet the requirements for claiming VAT.
Others do not claim VAT simply because they do not want to declare their
goods and feel that claiming exposes their goods to customs scrutiny. There is
clearly a serious lack of information on the procedures for claiming VAT
refunds at the border. Unclaimed or unreimbursed VAT benefits the South
African Revenue Services (SARS).
Business Problems and Challenges
Cross-border traders confront numerous challenges in the course of their
business activities. These are of two main types: (a) those related to customs
and immigration at the border and (b) those related to their daily business
operations in both South Africa and Zimbabwe.
By far the most common customs and immigration problems relate to the
queues and delays at the border. Almost all of the traders indicated that they
often experienced delays (Table 10). ICBT has become a way of life for a
significant number of Zimbabweans and this has put pressure on immigration
officials operating at the Beitbridge and Musina border posts.
Another common problem experienced by the traders relates to the high
duties levied at the border (86% said they experience this problem). In his
mid-term fiscal policy review statement in September 2014, Zimbabwean
Finance Minister Patrick Chinamasa increased duty on various finished

935
products including meat and dairy products, beverages, vegetables, soap and
furniture. He also removed foodstuffs, beverages and washing preparations
from the duty free facility. While the stated rationale for these measures was
to ‘protect local industry’ the local companies that once produced these goods
closed down at the height of the economic crisis in 2007-8. Consequently,
imposing higher duties does not deter traders from bringing these goods into
the country but simply burdens the general population that relies on these
goods.
Table 10: Problems Experienced by Zimbabwean Traders at Border
Yes
(%)
No
(%)
Long queues/congestion/delays at border post 96.4 3.6
Duties paid are too high 85.5 14.5
Restrictions on import/export of goods (type & volume) 77.6 22.4
Transport problems/poor road networks/transport prices
high
72.1 27.9
Too much corruption at border post 66.8 33.2
Days allowed in South Africa are too few 42.0 58.0
Unwarranted confiscation/detention of goods 41.6 58.4
Verbal harassment by South African police, army, border
officials
36.3 63.7
Verbal harassment by Zimbabwean police, army, border
officials
18.9 81.1
Physical harassment/assault by South African police, army,
border officials
18.0 82.0
Physical harassment/assault by other people 16.8 83.2

936
Physical harassment/assault by Zimbabwean police, army,
border officials
9.6 90.4
Other problems cited by a significant number of traders included restrictions
on the import or export of goods (78%) and corruption at the border (67%).
The problem of corruption has also been highlighted elsewhere (Fitzmaurice,
2009; Kwanisai et al., 2014). The delays at the border have created an
opportunity for touts who know that the traders want to cross the border
quickly and will pay a small fee for officials to speed up the clearing processes
for them. Some traders have also lost money to bogus agents masquerading as
immigration and customs officials. Harassment, both verbal and physical, was
highlighted as a problem by a small number of traders. For instance, verbal
and physical harassment/assault by South African police, army and border
officials is experienced by 36% and 18% respectively. In Zimbabwe, the
incidence of this is lower at 19% and 10%.
Perhaps the biggest business challenge confronting ICBTs is competition from
other traders (experienced by 84%) (Table 11). Another significant problem
is competition from large retailers or supermarkets (experienced by 60%).
These outlets enjoy economies of scale as they buy goods in bulk from
suppliers at low prices and are able to price their goods competitively.
However, even the large supermarkets cannot outcompete the informal sector
traders. For instance, beverages, foodstuffs and detergents are sold on
pavements in Harare at cheaper prices than those charged by retail
supermarkets.
Given the evidence of pervasive animosity of South African informal
entrepreneurs towards foreign-owned enterprises, it is notable that few of the
ICBT traders from Zimbabwe experience serious problems: only 8%
experience harassment by South African competitors (Crush &
Ramachandran, 2015). Harassment by the South African municipal authorities
is marginally more common (13%), however, as many as 39% had
experienced harassment in Harare. Other significant problems experienced by
the traders in their daily operations include confiscation of goods and

937
difficulty getting merchandise back thereafter, and discrimination based on
nationality.
Table 11: Problems Related to Operating ICBT Business
Yes
%
No
%
Business competition
Competition from other traders 84.0 16.0
Competition from large retailers or supermarkets 60.0 40.0
Difficulty negotiating with other traders/conflicts among
traders
49.6 50.4
Harassment by South African traders 8.4 91.6
Operational challenges
Theft of money or goods 46.9 53.1
No relevant training in accounting, marketing, other
business skills
30.5 69.5
Problems securing a selling site in Zimbabwe 29.3 70.7
Policy environment
Harassment by authorities in Zimbabwe 39.4 60.6
Confiscation of goods/difficulty getting confiscated goods
back
25.1 74.9
Harassment by authorities in South Africa 22.8 87.2
Discrimination
Prejudice against my gender 16.5 83.5

938
A related dimension of discrimination is the potential challenge posed by
xenophobia in South Africa. As many as 78% said they had not been affected
by xenophobia at all in their business operations. This suggests that
Zimbabwean entrepreneurs on short-term visits are able to avoid the worst
excesses of xenophobic violence, unlike their resident compatriots. Robbery is
a more serious problem with 30% having been robbed in Zimbabwe and 28%
in South Africa. This suggests that ICBT traders are at risk of victimisation in
both Zimbabwe and South Africa, primarily because their business is cash-
based. In June 2016, for example, a spate of robberies targeting buses carrying
cross-border traders from Zimbabwe was reported in South Africa, bringing
to the fore the dangers that traders face in their business (The Chronicle, 2016;
The Herald, 2016).
Conclusion
International cross-border trade has become a widespread, entrenched and
crucial component of the Zimbabwean economy and livelihoods in generals.
Its importance has risen significantly amidst a prolonged decline in the formal
economy. This paper has provided detailed insights into contemporary ICBT
activities between Harare and Johannesburg, showing that Zimbabwean
traders travel regularly to South Africa, with three-quarters of the sample
reporting that they visit Johannesburg for business at least once per month.
They reported making monthly profits of more than ZAR 4,000 per month, far
exceeding the salaries of most people in formal employment in the country.
This is despite the small initial capital outlay involved, averaging around ZAR
5,000.
ICBT traders have been able to grow their businesses to such an extent that
they are able to hire non-family members. ICBT has therefore become more
than a survivalist strategy and should be seen as an important pillar of the
Zimbabwean economy. The contribution of the informal economy in
generating jobs and reducing unemployment needs to be acknowledged by
policies that encourage rather than restrict the operation of informal trade.
Traders make important contributions through business establishment,
providing goods that are unavailable in the country, availing goods cheaper
than the formal retail sector and benefiting the fiscus through import duties.

939
In South Africa, ICBT benefits wholesalers and other outlets from which
traders purchase their goods, South African transport and hospitality
industries and the South African Treasury through unclaimed VAT. Official
denunciation of the supposed damage done to South Africa by the non-South
African informal sector enterprises rarely mentions ICBT; perhaps this is
because the evidence of their benefit to the country is so overwhelming.
Acknowledgements
We would like to acknowledge the International Development Research
Centre (IDRC) for its support of the SAMP Growing Informal Cities Project.
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943
Informal Entrepreneurship and Cross-Border Trade
between Mozambique and South Africa
Abel Chikanda* and Ines Raimundo**
Abstract
Informal cross-border trading is an essential part of Maputo’s informal economy.
This paper presents the results of a 2014 SAMP survey of informal entrepreneurs
involved in cross-border trade between Johannesburg and Maputo. A
questionnaire was administered to a sample of 403 informal traders in 7 markets
in Maputo. The study showed that most of the entrepreneurs began their business
activities as vendors and only later moved into cross-border trading. The
overwhelming majority used their personal savings to start their business and
they face significant barriers in accessing business loans from formal banking
channels. The study demonstrates the importance of cross-border traders to both
the Mozambican and South African economy. In South Africa, the cross-border
traders make a significant contribution by buying local goods and utilising the
services provided by the country’s travel and hospitality industry. In
Mozambique, they supply affordable products to the country’s growing informal
sector and play an important role in generating employment.
Keywords Cross-border traders, informal economy, informal sector,
migration, South Africa.
Introduction
Over the past decade, the Mozambican economy has experienced GDP growth
rates above 6% (ADB, 2016). This has made Mozambique the fastest growing
non-oil economy in Sub-Saharan Africa (Nucifora & da Silva, 2011). However,
there has been limited formal employment generation (Jones & Tarp, 2013).
Most of the country’s urban working population is still in the informal
economy (Jenkins, 2013) and nearly two-thirds of the economically active
population in Maputo City is involved in the informal economy in some way
* Department of Geography & Atmospheric Science, African & African-American Studies,
University of Kansas, Lawrence, Kansas State, USA 66045. Email address: achikanda@ku.edu.
** Faculty of Arts and Social Sciences, University of Eduardo Mondlane, Maputo, Mozambique.

944
(Jenkins, 2012). A 2007 survey found that 70% of households were involved
in informal economic activities, with a significantly higher participation rate
by female-headed (86%) than male-headed (62%) households (Paulo et al.,
2007). Maputo’s informal economy is firmly integrated into the national and
local economies of neighbouring states such as Mozambique and Swaziland
and the primary mechanism of integration is informal cross-border trade or
ICBT.
In the late 1990s and early 2000s, female ICBT traders became important
players in the Mozambican economy, particularly in the supply of food as well
as non-agricultural products such as electrical goods and building materials
(Macamo, 1999). A SAMP border monitoring study in Mozambique in 2006-
2007 showed that women made up 71% of the total number of cross-border
traders (Peberdy et al., 2015). A significant feature of the post-2000 cross-
border trade from Mozambique was its diversity. A number of Mozambican
traders (36.5%) said they also traded between Swaziland and Mozambique,
buying goods in Swaziland to sell in Maputo (Peberdy, 2000a). Those
travelling to South Africa to buy goods for resale tended to gravitate towards
Johannesburg and Durban, while the rest travelled to towns in the
neighbouring province of Mpumalanga (Peberdy, 2000b).
Among Mozambicans, the expressions dumba nengue (trust your feet) and
dumba kutsutsuma (run if you can) are used to describe the informal economy
(War on Want, 2006). This terminology clearly reflects the tension that exists
between informal traders and law enforcement agents. Compared with other
cities in the region, however, Maputo has traditionally adopted a more tolerant
approach to the informal economy (Kamete & Lindell, 2010; Rogerson, 2016).
Policy interventions aim to discourage informality through registration and
formalisation rather than by eradication and punishment (Dibben et al., 2015).
Two main strategies have been pursued by the municipal government. First,
formal urban markets have been established, existing informal markets have
been upgraded and vendors now pay rent for stands. When Xikhelene market
was upgraded, for example, all trading on the streets around the old market
was eliminated (Ulset, 2010). Second, a simplified tax system was introduced
that requires traders to pay business tax either as a lump sum or as a

945
percentage of turnover (Dibben et al., 2015). This initiative has been
hampered by low uptake and strong resistance from the informal traders.
Informal trade is a major catalyst for involvement in informal economies
globally (Desai, 2009). The ECA (2010: 143) has noted that “informal trade is
as old as the informal economy. It is the main source of job creation in Africa,
providing between 20 per cent and 75 per cent of total employment in most
countries.” Informal trade also plays a vital role in linking informal economies
in different Southern African cities. This requires a perspective on informality
that takes into account the impacts of interaction between different urban
informal economies across the region (Akinboade, 2005). The volume of cross
border trade has been monitored at the Mozambique and South Africa border
in the past but this paper provides the opportunity to engage in an in-depth
analysis of different types of cross-border trade and how ICBT is integrated
into Maputo’s informal economy (Dlela, 2006; Peberdy, 2007; Peberdy &
Crush, 1998). There has been a tendency in the past to view informal traders
as sole operators rather than micro-enterprises with the potential to grow
significantly, to create jobs and to generate the capital to branch out into other
sectors of the informal and formal economy. By viewing informal traders as
entrepreneurs per se and their activities as a potentially strong promoter of
growth and employment, we are in a position to move beyond the idea that
ICBT traders are “survivalists” struggling to make ends meet, and rather
towards an analysis of the potential for growing their businesses, the obstacles
they face and the kinds of policy environment they require in order to realise
their entrepreneurial ambitions (Lesser & Moisé-Leeman, 2009; Peberdy &
Crush, 2001; Söderbaum, 2007).
Research Methodology
In the first phase of the research on which this paper is based, a survey
questionnaire was administered to a sample of 403 informal traders in 7
Maputo markets. The sample was divided into 3 entrepreneurial categories
(Table 1):

946
 Category A: 243 Mozambican traders who travel to and from Johannesburg
as part of their business, buying goods in South Africa and selling them in
Maputo.
 Category B: 61 Mozambican traders who travel to and from Johannesburg,
buying goods in South Africa and supplying other informal traders in
Maputo. These traders supply vendors in the markets and small shops.
 Category C: 99 Mozambican informal traders who do not travel, but
purchase goods from cross-border traders for resale.
In sum, 61% of the sample were cross-border traders who travel to and from
South Africa as part of their business, 14% were trader intermediaries who
travel to South Africa to buy goods and sell to other traders on return, and 29%
did not cross international borders but obtained their goods from those who
did.
Table 1: Market Location and Types of Trader
Markets Category
A
Category
B
Category
C
Total No. of
Interviews
Xipamanine 58 11 23 92
Malanga and
Fajardo
48 13 18 79
Xiquelene 42 9 16 67
Estrela
Vermelha
37 9 13 59
Mandela 23 6 11 40
Museu 22 6 10 38
Praça de Touros 13 7 8 28
Total 243 61 99 403

947
The sampling procedure tried to capture the range of products sold in different
markets as markets are getting more specialised, primarily because of their
geographical location and potential customer base. Most customers who buy
at Museu Market, for example, come from the relatively wealthy areas of
Museu, Polana and Sommerschield, while people who buy at Xiquelene mainly
come from poor wards. Foodstuffs are the primary product at Xiquelene, while
Museu's main products are alcohol and cigarettes. Praça de Touros market is
situated in one of the busiest areas of Maputo and mainly caters to vehicle
owners who need spare parts and also has a car-repair garage. Estrela
Vermelha market, also known as Red Star Shopping Centre, sells a variety of
goods including household furniture, alcohol and cigarettes. This market is
located between Central and Alto Mae wards, and suburbs such as Mafalala,
and serves people in both middle- and low-income brackets.
Not all of the goods in the markets come from South Africa. In addition to
locally sourced agricultural products, goods come from as far afield as Europe
and South America. For instance, frozen chicken from Brazil is a common sight
in many of the markets (de Oliveira et al., 2015). There is also a major trade in
imported second-hand clothes. At the Xipamanine market in Maputo, for
instance, hundreds of traders sell second-hand clothing from Australia, Europe
and North America (Brooks, 2012, 2013; Ericsson & Brooks, 2014). Many of
the clothes that reach Xipamanine are of low quality and, according to one
researcher, neither improve the lives of the vendors nor the consumers, an
outcome which he terms “clothing poverty” (Brooks, 2015).
In the second phase of the research, four focus group discussions were
conducted with traders from the following markets: Xiquelene, Zimpeto,
Malanga and Museu. Key informant interviews were also conducted with
different government, private sector and international organisation
stakeholders with an interest in the informal economy. Among the issues
covered in the interviews were the history of cross-border trade in the
country, the role of cross-border trade in economic development, legislation
governing the informal economy and the challenges faced by cross-border
traders.

948
Profile of ICBT Traders
There is a general perception that cross-border trading in Mozambique is
predominantly undertaken by women, while men tend to stay at home and sell
products brought into the country by women (de Vletter & Polanda, 2001;
Peberdy 2000a; Peberdy et al., 2015). However, some studies have shown
greater participation of men in Mozambican informal cross-border trade over
time (Macamo, 1999). In this study, 56% of those interviewed were men
(Table 2). It is likely that the profile of the respondents would have weighted
more heavily in favour of women if the study had been conducted at the
border. Women tend to find it easier to be involved in cross-border trade and
leave the marketing of the products to either their husbands or sons
(Raimundo, 2010). The predominance of women in cross-border trade has
been attributed to their long experience in crossing borders dating back to the
early days of Mozambique’s 16-year civil war; their business acumen; their
familiarity with managers of wholesale storehouses in Johannesburg; and the
fact that they find it more difficult than men to access formal employment
(Raimundo, 2010). Male respondents claimed that females are better
equipped to deal with customs officials and have strategies for avoiding paying
import duties; that they themselves viewed trading as more of a hobby or a
way to generate extra income; and that they have greater access to jobs in the
formal sector.
Racially, the overwhelming majority of the respondents (99%) were Black,
while a minority were of mixed race, Indian or Asian. The mean age of the
sample was 37 years with 42% aged between 30 and 39 and 28% between 40
and 49. Around 10% were over the age of 50, and the oldest respondent was
78. Participation by young people in the trade was relatively limited with only
20% under the age of 30. Across all the categories, individuals aged between
20 and 49 made up more than 90% of the total participants.

949
Table 2: Gender, Race and Age Profile of Traders
Cross-
border
traders (%)
Cross-border trader
intermediaries (%)
Non-cross-
border
traders
(%)
Total
Gender (N=402)
Male 35.1 6.5 14.9 56.5
Female 26.3 7.2 10.0 43.5
Total 61.4 13.7 24.9 100.0
Race (N=391)
Black 98.3 98.2 100.0 98.7
Mixed race 0.4 1.8 0.0 0.5
Indian 0.4 0.0 0.0 0.3
Other Asian 0.4 0.0 0.0 0.3
Other race 0.4 0.0 0.0 0.3
Age (N=395)
Below 20 0.0 0.0 1.0 0.3
20-29 18.9 16.7 28.6 21.0
30-39 42.8 44.4 36.7 41.5
40-49 29.6 29.6 23.5 28.1
50-59 6.2 7.4 9.2 7.1
60-69 2.1 1.9 0.0 1.5
70 and above 0.4 0.0 1.0 0.5

950
Involvement in the informal economy is usually associated with low levels of
educational attainment (Amaral & Quintin, 2006; Wilson et al., 2006). As many
as 75% of the respondents had less than high school qualifications, and fewer
than 2% had completed an undergraduate degree (Figure 1). Interestingly,
traders who do not travel to Johannesburg themselves but obtain goods from
cross-border traders, had the highest level of education, with 28% having
completed at least high school, compared to 22% of the cross-border traders
who travel to Johannesburg as part of their business and 16% of the
intermediaries who supply goods to non-cross-border traders in Maputo.
Figure 1: Highest level of education of traders.
In understanding how household structure affects participation in the
business of informal trade, marital status needs to be considered. For example,
are the traders independent operators looking out for themselves? Are they
heads of households that depend on them for a livelihood? Or are they just
contributing to household income? Given that this business can require cross-
border traders to be away from the household for several days at a time, there
was an expectation that it might be dominated by single, widowed and
divorced people. However, the survey found that only 29% were single (which
0
5
10
15
20
25
30
35
Noformalschooling
Someprimary
schooling
Primary
(completed)
Somesecondary
Secondary/High
school/diploma
Undergraduate
degree
Postgraduate
degree
Other
Percentage

951
tallies with the more mature age profile of the entrepreneurs) and 6% were
divorced or widowed. Of the rest, 38% were married or in a common law
relationship and a further 26% were co-habiting.
More than half of the respondents (52%) came from nuclear households
(defined as a family made up of husband/male partner and wife/female
partner with or without children). About 16% came from male-centred
households, where there is no wife/female partner in the household and 13%
were from female-centred households. Another 11% were from extended
households, while only 7% lived alone. An AFSUN survey in Maputo in
2008/2009 showed that the majority of residents in the poorer areas of the
city came from extended households, even though female-centred and nuclear
households were also common (Raimundo et al., 2014). This seems to suggest
variation in patterns of participation by type of household. In total, 66% of
households are male-headed nuclear and extended family households. These
households constitute 63% of the traders’ households (although the reason
why extended families are far less likely to participate than nuclear families is
unclear). The major difference is in female-centred household participation
where these households constitute 27% of all households but only supply 13%
of traders, suggesting that these household heads are inhibited from
participation because they cannot leave their children. Male-centred
households appear not to have a problem, with 8% of the total number of
households supplying 16% of the traders.
Business Start-Up and Ownership
There is an assumption in the literature that many informal entrepreneurs are
pushed into participation by unemployment (Jones & Tarp, 2013; Sparks &
Barnett, 2010). However, only 26% of the respondents were unemployed
before they started their business. Another 19% had been students (Table 3).
Around 30% had been employed, primarily in low-paying jobs such as
domestic work (9%), agriculture (5%) and unskilled manual labour (3%). Less
than 5% had occupied skilled or semi-skilled positions. The rest were already
employed (8%) or self-employed (17%) in the informal economy in another
enterprise.

952
Table 3: Occupation Prior to Starting the Business
No. %
Unemployed/job seeker 105 26.3
Pupil/student 76 19.0
Operated informal sector business based only in
Mozambique
68 17.0
Domestic worker 37 9.3
Employed by someone in the informal economy 30 7.5
Agricultural worker 19 4.8
Manual worker (unskilled) 12 3.0
Businessman/woman formal sector (self-employed) 11 2.8
Manual worker (skilled) 7 1.8
Office worker 6 1.5
Police/military/security 3 0.8
Teacher 3 0.8
Health worker 2 0.5
Professional (e.g. lawyer, doctor, academic, engineer) 1 0.3
Other occupation 19 4.8
Total 399 100.0
In contrast to ICBT traders from countries such as Zimbabwe, the majority of
the Maputo City entrepreneurs had been involved in the informal economy for
many years. As many as 43% had established informal businesses before 2000
and another 41% had done so between 2000 and 2010. Less than 20% had set
up shop in the last five years, which may suggest that entry into a highly
competitive business is becoming more difficult. The survey also showed that
most of the entrepreneurs began their business activities as vendors and only
later moved into cross-border trading. So, while over 40% had started their
businesses before 2000, only 21% were engaged in ICBT at that time (Figure
2). Conversely, while 57% established their businesses after 2000, the
proportion who started ICBT activities during this period was close to 80%.
This indicates that most ICBT traders are post-2000 entrants to that market, a
direct result of various economic factors and market opportunities. Factors of
relevance include the devastating floods of 2000, which impacted many

953
households; the lifting of South African visa restrictions in 2005; and the
strengthening of the metical in comparison to the rand (Christie & Hanlon,
2001).
Figure 2: Year of business start-up and entry into cross-border trade.
The overwhelming majority of the respondents started their businesses from
a very low base with three-quarters having less than ZAR 10,000
(approximately USD850) to invest (Figure 3). Of these, the majority had
between ZAR 2,001 and ZAR 5,000 (USD170-USD425). Just 15% had invested
ZAR 20,000 (USD 1,700) or more. This group was most likely to be cross-
border traders (83%) rather than cross-border intermediaries or non-cross-
border traders. The non-cross-border traders tended to have the lowest levels
of start-up capital with nearly 90% investing ZAR 10,000 or less in their
businesses. The sources of capital used to start the business varied but the
majority (82%) had used personal savings. Other sources of start-up business
capital included loans from relatives (used by 33%), bank loans (9%) and
loans from informal financial sources (8%). Access to formal sources of
business capital was limited, constituting a general reflection of the lack of
support given to informal enterprises by formal financial institutions.
0,0
10,0
20,0
30,0
40,0
50,0
60,0
1971-1980 1981-1990 1991-2000 2001-2010 2011-2014
Percentage
Year business started Year started ICBT activities

954
Figure 3: Amount of money used to start business.
One recent study showed that nearly 80% of Mozambicans have no access to
any sort of banking or microfinance services (Finmark Trust, 2009). Only 12%
of the sample had access to banking services; 10% to the informal
microfinance sector and 1% to formal microfinance services. However, this
study of informal entrepreneurs in Maputo found that although most could not
get bank loans, as many as 44% had a bank account. Lack of access to business
financing from formal sources is common among informal entrepreneurs.
Benjamin and Mbaye (2012) have noted that informal entrepreneurs in Africa
frequently fail to access business finance because of the onerous procedures
required for loan applications as well as the collateral requirements. The
situation is no different in Mozambique: 27% indicated that they cannot apply
for bank loans because of the high interest rates and 24% do not have interest
at all in applying for bank loans. In an effort to improve financial access to
informal entrepreneurs, Moza Bank became the first private bank of
Mozambique to give loans to informal traders through the ASSOTSI - Informal
Cross-Border Trade Association. The loans are only available to ASSOTSI
0,0
5,0
10,0
15,0
20,0
25,0
30,0
R500orless
R501-R1,000
R1,001-R2,000
R2,001-R5,000
R5,001-R10,000
R10,001-R20,000
R20,001-R30,000
R30,000-R40,000
R40,001-R50,000
R50,001andabove
Percentage
Cross border traders Cross border trader intermediaries
Non-cross border traders

955
members who can present a reference from ASSOTSI and a simplified tax
return. The loans may be up to one-third of the annual business turnover
shown in the tax return, to a maximum loan of MZN100,000 (Baxter &
Allwright, 2015).
The programme officer of the Competitiveness and Private Sector
Development Project noted that several government funding schemes are
available to small and medium-scale enterprises, but not to businesses in the
informal economy:
The Government of Mozambique through the Ministry of Commerce and
Industry has established the Enterprise Competitiveness and Private Sector
Development Project, which funds small and middle enterprises for
competitiveness. The State does not recognise unlicensed businesses which
are run by cross-border traders. To be funded one needs to be licensed. The
informal economy is not eligible for funds (Interview, 25 November 2015).
Just over one-third of the respondents were aware of the scheme but only 2%
had applied, suggesting that they are aware of the ineligibility of informal
enterprises for government assistance.
Business Strategies
The research sought to examine the ICBT linkages and flows between Maputo
and Johannesburg. Johannesburg was the primary place, and beneficiary, of
the purchase of goods by Mozambican traders. On average, the cross-border
traders spend 1.52 days in South Africa on each trip. As many as 54% travel to
Johannesburg at least once a week, which translates to nearly 80 days per year
spent in South Africa. A further 34% travel there at least once a month, which
translates to 18 days per year in South Africa (Figure 4). As many as 8% of the
respondents indicated that they also buy goods in other places in Gauteng,
such as Pretoria and Randfontein. More than one-third of the respondents
purchased goods from other places in South Africa, especially from towns
close to the Mozambican border such as Nelspruit, Malelane and Komatipoort.
The traders are therefore able to conduct their business activities in South
Africa and return to Mozambique within the same day. A small number of
respondents (around 12%) also travel to other countries to conduct their

956
business, including Swaziland, China and Dubai. As many as 27% of those who
travel to these other countries for business are non-Mozambican nationals.
Figure 4: Frequency of trips to Johannesburg
Most of the traders sell the goods from South Africa in Maputo, the capital,
while a small number (less than 5%) also sell their goods in other cities such
as Xai Xai and Beira. The goods are sold mainly in their own shops in the
informal sector (38%) or in their own stalls in an informal market (24%).
However, there is also evidence of informal-formal sector linkages with 9%
selling in their own shops in the formal sector, 8% selling to retailers, 3% to
wholesalers and 1% to restaurant owners.
A total of 424 other people were employed directly in the businesses
interviewed (Figure 5). Around half (51%) provide employment to others, or
an average of 2.1 jobs per business. A significant proportion of the traders
employ more than one person: 27% of those providing employment had two
employees, 10% had three employees and 5% had four or more employees.
There was a major difference in the employment practices between those who
travel to South Africa and those who do not (58% versus 31% providing jobs).
This confirms that many cross-border traders prefer to focus on their cross-
border activities and employ others to sell the goods on their behalf in Maputo.
Non-family members made up 69% of the paid employees and the rest were
0
10
20
30
40
50
60
At least once
every week
At least once
every month
More than 4
times per
year
2 - 4 times
per year
At least once
per year
Other
Percentage

957
family members, with a total of eight employees below the age of 18. Some
71% of the employees were men, confirming that there is an explicit focus on
male employment in the businesses supported by ICBT. This seems to support
our earlier observation that men prefer not to cross borders but are employed
by women in the sale of goods in Mozambique.
Figure 5: Employment by traders
The involvement of children in the informal economy is a controversial issue
(ILO, 2004; Thorsen, 2012). Some regard their involvement as an essential
part of household survival strategy (Becker, 2004). Others view it as child
labour that limits the proper development of children and should therefore be
eliminated (Burra, 2005). The survey found that 16% of enterprises involve
children in their business in different capacities. Participation was higher
among children of cross-border traders (20%) than non-cross-border traders
(7%). Among those who involve their children, 53% said their children help
them to sell goods, 43% sometimes ask their children to look after the stall and
5% involve them in other ways.
Participation in cross-border trading is sometimes viewed as a part-time
activity to supplement income from other sources. The overwhelming
majority of respondents (90%) have no other income-generating activity and
rely solely on their ICBT-supported business for survival. Discussions of
informal entrepreneurship have focused on whether the sector can create
viable enterprises that can provide decent incomes to the participants (ILO,
0
50
100
150
200
250
300
Family members -
over 18 years
Family members -
under 18 years
Other people from
your country
People from other
countries
Numberofemployees

958
2009; Sparks & Barnett, 2010). In other words, can cross-border traders
generate incomes comparable to formal sector jobs? The traders generate an
average of ZAR 21,838 per month (USD 1,850) in total sales and a profit of ZAR
7,087 per month (USD 600) (Table 4). Cross-border traders who travel to
Johannesburg as part of their business activities are likely to generate more
monthly sales and profit than non-cross-border traders or cross-border trader
intermediaries.
Table 4: Total Monthly Sales and Profit
Mean monthly sales
(ZAR)
Mean monthly profit
(ZAR)
Cross-border traders 25,639.89 8,169.68
Cross-border trader
intermediaries
11,098.04 6,101.39
Non-cross-border traders 16,416.67 5,095.15
Total average 21,838.28 7,086.82
Note: 1 ZAR = 0.085 USD at the time of the survey
Cross-border entrepreneurial activity is certainly financially beneficial to the
participants. Nearly two-thirds (64%) said that their income status had
increased compared to the period before they started their business and only
6% said it had decreased. Another 26% said that their income was variable,
fluctuating according to market conditions. The greatest improvement was
reported by the cross-border traders. The profits generated from informal
business play an important role in meeting personal (79%) and family (77%)
needs. One-quarter of respondents were investing the proceeds in education
of family members, more than the proportion re-investing income in the
business itself (only 19%). One-third said that profits were being saved for
future use. Just under 10% send money outside of Mozambique as remittances
either to support the needs of their family members or for investment in
business.

959
Contributions to the South African Economy
Who benefits most in South Africa from the purchasing behaviour of
Mozambican cross-border entrepreneurs? This section examines the activities
of those cross-border traders who travel to South Africa and seeks to identify
the South African beneficiaries of Mozambican ICBT (Peberdy et al., 2015).
First, ICBT between South Africa and Mozambique contributes to South
Africa’s massive trade surplus by exporting South African goods and importing
far less from Mozambique. Only 5% of the traders sell products from
Mozambique in South Africa (including cigarettes, fabric/capulana, fresh fruit
and vegetables and alcohol). Most of these products are sold through personal
networks, but they are also sold to wholesalers and informal vendors.
Second, a wide variety of outlets in South Africa benefit from patronage by
Mozambican traders, including wholesalers, supermarkets, small retailers
(formal and informal), factories, farms and fresh produce markets. Easily the
most important beneficiaries of Mozambican patronage are South African
wholesalers (used by 48%). Other important sources of goods for the traders
include the Johannesburg Fresh Produce Market (21%), supermarkets (16%),
manufacturers (16%) and small shops or retailers either in a mall (15%) or
outside a mall (9%) (Table 5). Chinese shops are also popular with the cross-
border traders, with 19% buying goods from the China Mall and 11% buying
goods from other Chinese-run malls.

960
Table 5: Source of Goods in South Africa
%
Wholesalers 48.4
City Deep/Johannesburg Fresh Produce Market 20.7
China Mall 18.4
Supermarkets 16.4
Manufacturer/factories 15.8
Small shops/retailers (in a mall) 14.8
Other Chinese-run mall 10.5
Small shops/retailers (not in a mall) 8.9
Direct from farmers 5.3
Other fresh produce markets 4.9
Informal sector producer/retailer 3.6
Oriental Plaza 1.0
Other place 2.3
N=304
The goods bought in South Africa can be grouped into five main categories:
food and beverages, household/home goods, personal goods, electrical goods
and miscellaneous. In the first category of food and beverages, the most
common items were cooking oil (purchased by 22% on their last visit), eggs
(20%), alcohol (20%), mealie meal (18%) and fresh fruit and vegetables
(18%). The most popular household/home goods were household products
(26%) and bedding material such as blankets and duvets (8%). Personal goods
were dominated by new clothing and footwear (19%), while electronics and
cellphones and phone accessories were the most popular electrical goods
bought in South Africa.
A third party benefitting from the presence of the Mozambican traders is the
South African Treasury. Most of the prices that the traders pay for their goods
include VAT, although VAT refunds can be claimed as these goods are not

961
consumed within South Africa. VAT refunds ensure that the traders are not
double taxed through paying VAT in South Africa and customs duty at the
border. However, on their last trip to South Africa, only 55% of traders had
claimed the VAT to which they were entitled. Of the 45% who did not claim
VAT, nearly half said they did not know the procedure and 36% said that the
procedure takes too long. In focus group discussions, it emerged that one of
the reasons was that bus drivers did not want to spend time at the border
while customs officials searched for goods. This makes it extremely difficult
for the traders using public transport to submit VAT refund claims. Those
using taxis or their own vehicles are more likely to claim VAT refunds. While
it is advantageous for South Africa if people do not claim these refunds when
they leave the country, it is fundamentally unfair to the traders. The
Mozambican Government and civil society should certainly launch a campaign
aimed at educating the cross-border traders on their rights and the procedures
to claim VAT refunds. In addition, the Mozambican Government needs to work
with its South African counterparts to clear the bureaucratic bottlenecks
related to claiming VAT refunds.
Fourth, ICBT traders spent money on transportation, accommodation and
food when in South Africa. About 37% usually stay in paid accommodation,
including rented rooms, hotels, guesthouses and B&Bs (Table 6). Those who
do not pay for accommodation sleep at the bus or train station, on the street,
in an automobile or stay with friends and family. Public transport is the most
common way for traders to travel to and from Johannesburg, including buses
(used by 43%), trucks (15%), taxis (11%) and trains (1%). Others use private
transport including their own vehicles (13%), individually-rented vehicles
(11%) and vehicles rented with others (6%), but still pay for petrol and other
costs such as parking in South Africa.

962
Table 6: Accommodation in South Africa
No. %
Paid accommodation
Rent/rent shared room 36 15.2
Hotel (shared room) 34 14.3
Bed and breakfast/guest house/lodge (own room) 13 5.5
Hotel (own room) 3 1.3
Bed and breakfast/guest house/lodge (shared room) 2 0.8
Non-paying accommodation
Bus or train station 51 21.5
Stay with friends and family 40 16.9
Street 35 14.8
In car or truck 14 5.9
Stay with partner 9 3.8
Total 237 100.0
In terms of the monetary spend in South Africa, the cross-border traders
reported spending an average of ZAR 14,287 on goods, ZAR 1,714 on customs
duties, ZAR 1,441 on transport, ZAR 218 on accommodation and ZAR 258 on
other expenses on their last trip to South Africa. In total, a trader travelling
from Maputo to Johannesburg thus spent approximately ZAR 17,900 per trip
on business-related costs. This translates to nearly ZAR 5.4 million per trip for
the entire sample, most of which directly benefits the South African economy
(Table 7). The financial contribution of cross-border traders to the South
African economy is clearly significant.

963
Table 7: Contribution to Local and Regional Economy
Buying
goods
(ZAR)
Paying
duty at
the
border
(ZAR)
Transport
(ZAR)
Accom-
modatio
n
(ZAR)
Addition
al costs
(ZAR)
Total
(ZAR)
Amount
per
individual
R14,287.21 R1,714.38 R1,441.21 R218.28 R258.49 R17,920
Total
amount for
sample
R4,343,311 R521,171 438,127 R66,357 R78,580 R5,447,549
Note: 1 ZAR = 0.085 USD at the time of the survey
Business Challenges
In general, the ICBT traders do not have problems with their documentation
and immigration status when in South Africa. The introduction of the visa
exemption for Mozambicans certainly played a significant role in reducing
undocumented migration from Mozambique. Most significantly, only 2%
travel to South Africa with no official documentation. As such, the vast majority
of the Mozambican ICBT traders enter the country using legal channels.
The most important border or customs-related problem cited by the cross-
border traders was corruption, experienced often or sometimes by 86% of the
respondents (Table 8). Corruption leads to a reduction in government customs
revenue collection and may also result in a reduction of the profit margins of
the cross-border traders, which ultimately reduces prospects for business
expansion. Others claimed that the duties that they pay at the border are too
high (85% often/sometimes), while long queues, congestion and delays at the
border are experienced often/sometimes by 82% of the cross-border traders.
Clearly, the cross-border traders are dissatisfied with the time it takes them to
clear customs at the border and there is evidence to suggest that paying bribes
can help speed up the process. Some of the study participants noted that they

964
use the magaigai or intermediaries with experience in dealing with customs
officials in an attempt to avoid paying the high duties.
Table 8: Problems Related to Customs and Immigration
Yes
(%)
No
(%)
Too much corruption at border post 86.0 14.0
Duties paid are too high 85.3 14.7
Long queues/congestion/delays at border post 82.3 17.7
Restrictions on import/export of goods (type and volume) 66.7 33.3
Unwarranted confiscation/detention of goods 65.3 34.7
Verbal harassment by South African police, army, border
officials
19.7 80.3
Verbal harassment by Mozambican police, army, border
officials
19.3 80.7
Physical harassment/beating/violation of human rights by
South African police, army, border officials
12.0 88.0
Physical harassment/beating/violation of human rights by
Mozambican police, army, border officials
11.0 89.0
Physical harassment/beating by other people 8.3 91.7
Other respondents noted that they experience restrictions on the types and
volumes of goods that they can either import or export (experienced
often/sometimes by 67% of respondents). During the focus group discussions,
one trader noted that “we can import spare vehicles, vegetables, groceries,
fruit, meat, furniture, alcohol. The only limitation is related with duties and
some do not know the Common Customs Tariff, which is a heavy book to be
read.” The Common Customs Tariff is composed of 97 categories of products
and sub products. The president of the Mukhero Association commented on
the Common Customs Tariff as follows:
Mukheristas get advice from the association about their rights and
obligations and some were trained. All the time that the Government
updates duties or other related issues the associations are informed. As a
matter of fact, before any increase or changes on Common Customs Tariff,

965
the Government calls the associations to inform them, otherwise we block
the streets. When the Government of South Africa introduced a new
regulation that every crosser should prove they had an amount of ZAR
3,000, we felt that was a decision that had to be discussed between the two
governments. We were concerned about security and not every trader
carries that amount of money. South African should understand that we
bring money to them and we are no longer poor as it was in the past during
civil war.8
Others cited the unwarranted confiscation/detention of goods at the border
(56% often/sometimes). A focus group participant noted that they are
sometimes forced to leave their goods at the border if they fail to reach a
reasonable agreement with customs officials. Participants noted that it was
not worthwhile trying to get goods back because of the high cost of import
duty, especially on goods such as cigarettes and alcohol. The customs
department is said to auction confiscated goods.
Even though only a small number of respondents reported cases of
harassment and abuse, these are significant enough to warrant attention.
Verbal harassment by police, army and border officials had been experienced
often/sometimes by the cross-border traders on both the South African (16%)
and Mozambican (16%) sides of the border. Physical
harassment/beating/violation of human rights by police, army and border
officials had also been experienced often/sometimes on both the South African
(11%) and Mozambican (10%) sides of the border.
The president of the Mukhero Association described the border as a site of
struggle between traders and customs officials:
It is a titanic fight as both officers and traders are strong. Traders have
their way of fighting and avoiding customs, while customs use their power
as official authority, but we do have our own ways of counteracting them.
However, this fight ended by the time the cross-border traders realised
that the only way of this fight was to meet with the authorities, as the
government did in Rome with RENAMO. Conversation is the only way to
8 Interview, 3 September 2014.

966
avoid death of people, because the authorities were using fire weapons as
well as some traders also had weapons.9
The challenges faced by the traders in their daily operations can be divided
into two categories: those experienced while conducting business operations
in Mozambique and those encountered when travelling to South Africa for
business. In Mozambique, the most common problems related to competition
from other traders (65.5%), competition from large retailers or supermarkets
(45%), insecurity or problems securing a selling site (43%), conflicts with
other traders (35%) and confiscation of merchandise (34%) (Table 9).
Table 9: Challenges in Daily Operations of Business
Yes (%) No (%)
In Mozambique (N=400)
Competition from other traders 65.5 34.5
Competition from large retailers or supermarkets 45.0 55.0
Insecurity of selling site/problems securing a selling
site when needed
42.8 57.3
Difficulty negotiating with other traders/conflicts
among traders
34.5 65.5
Confiscation of goods/difficulty getting confiscated
goods back
33.8 66.3
Theft of money or goods 31.5 68.5
Harassment by authorities in Mozambique 18.0 82.0
In South Africa (N=300)
Difficulty finding an affordable and safe place to stay 21.7 78.3
Insecurity of selling site/problems securing a selling
site
18.0 82.0
Harassment by authorities in South Africa 12.7 87.3
Harassment by South African traders 9.7 90.3
9 Ibid.

967
Theft of goods is experienced by the traders on their way home from South
Africa. This is related to renewed conflict in Mozambique where armed
opposition party members are said to attack travellers in order to loot their
cash and goods. One of the focus group discussion participants noted that:
Bandits assault the Mukheristas taxis. They use mats with nails to punch
the tyres. Then they steal their money. Some of Mukheristas do carry a lot
of money, sometimes more than R 10, 000 in one trip. Last year one of our
mates was on her way to Johannesburg when the taxi she was travelling in
was ambushed near Machado. She lost more than R 40,000 cash in the
robbery. There were 10 traders in that taxi.10
In South Africa, the biggest challenges relate to the difficulty of finding an
affordable and safe place to stay in Johannesburg (22%), insecure trading sites
(18%), prejudice against their nationality (13%), harassment by the police or
municipal authorities (13%) and harassment by South African traders (10%).
The study also sought to understand the cross-border traders’ experiences of
xenophobia in South Africa. Nearly one in five of the respondents (19%) noted
that their business had been affected by xenophobia a great deal or to some
extent (Figure 6). However, as many as 63% said that xenophobia had not
affected their business at all. While these findings are encouraging, given the
widespread xenophobic attitudes and attacks on informal entrepreneurs, it is
likely that Mozambicans are able to avoid the worst forms of victimisation by
having a legal right to be in the country, by not remaining long and by not
competing directly with South African informal businesses (Crush &
Ramachandran, 2015).
10 Focus Group Participant, Zimpeto market, 5 December 2014.

968
Figure 6: Extent to which xenophobia has affected business operations
Finally, the respondents were asked about their treatment while conducting
their business activities in both Mozambique and South Africa. Across all but
one of the measures, the traders experienced more problems in Mozambique
than in South Africa. They have had their business goods looted more often in
Mozambique than in South Africa (47% versus 19%). They have been robbed
more in Mozambique than in South Africa (39% versus 15%) and they have
also been assaulted more (19% versus 12%). In addition, harassment by local
authorities was more frequent in Mozambique (11%) than in South Africa
(5%), as were incidents of unlawful arrest (6% and 1%, respectively).
Conclusion
Cross-border trading has become a way of life for many in Mozambique,
geographically encompassing every part of the country and also involving
migrants from other countries residing in Mozambique. Cross-border trade in
Mozambique is primarily done by women with men mainly involved in the sale
of the products brought back from South Africa. The traders are clearly playing
a key role in supplying commodities that are in scarce supply in Mozambique.
0,0
10,0
20,0
30,0
40,0
50,0
60,0
70,0
A great deal To some extent Not very much Not at all
Percentage

969
Even though the sector is an important part of the Mozambican economy, little
support is granted to the traders by local and municipal authorities or the
private sector. Access to finance remains a major obstacle to business success
as neither the government nor private banks provide loans to the traders.
This paper has demonstrated the specific roles played by the cross-border
traders in the economies of both Mozambique and South Africa. It has shown
that cross-border traders contribute to the South African economy through
buying goods, as well as paying for accommodation and transport costs. The
cross-border traders are directly contributing to the retail, hospitality and
transport sectors in South Africa, thereby creating and sustaining jobs in those
sectors. In Mozambique, the traders pay import duty for the goods bought in
South Africa and they play a significant role in reducing poverty and
unemployment in the country. Therefore, the policy environment should
encourage rather than discourage the operation of ICBT. A change in the
attitude of government towards cross-border traders is required as they do
contribute to poverty alleviation, and there is a definite need for a forum that
involves government and municipal officials and the traders.
Therefore, there is scope to include the informal traders in Mozambique’s
poverty alleviation strategy. Although they are regarded as informal, they pay
taxes to the local authorities for access to trading sites. They also buy goods in
South Africa, some of which are sold to formal retailers, thereby blurring the
formal-informal boundary. The informal tag becomes a hindrance when
considering the functioning of the Mozambican economy. The traders need to
be seen as an essential component of the Mozambican (and South African)
economy because, in their absence, both would be poorer than they are today.
Acknowledgements
We would like to acknowledge the International Development Research
Centre (IDRC) for its support of the SAMP Growing Informal Cities Project.
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