PB 16/45 - The South African Township Economy and Informal Micro-enterprises: What are the prospects for youth employment and entrepreneurship?

Andrew Charman

Date of Publication: 
June 2016

The informal economy provides opportunities for employment and entrepreneurship. Work in township micro-enterprises offers the unemployed youth a point of entry into the labour market. Those engaged in ‘make work jobs’ will no doubt abandon informal work for better opportunities and formal employment when available. Whether youth persist in informal work, or exist, the township economy provides opportunities to acquire skills, gain on-the-job experience, and build social networks. There are good business opportunities for those youth able to apply their knowledge and skills, and to mobilise capital. In some sectors, South African young face both competition (and lessons) from immigrant youth entrepreneurs. There are three areas in which township youth entrepreneurs exhibit high potential for business success. Youth able to translate their ‘hobbies’ into enterprise activities. Youth that are brought into family businesses. Youth with jobs who establish informal micro-enterprises as a safety-net or investment strategy. Government programmes should provide youth, at an early age, with exposure to tools (to enable home production and enhance productivity) and technologies (especially information and communication technologies). In teaching scholars about businesses, the curriculum should provide them with an introduction of the kind of micro-enterprises in which young persons have an interest and aptitude, and that could relate to hobbies, such as design, music making, and DJing. Young South Africans are more likely to enter the non-retail service sectors. Finally, programmes should target i) family businesses to retain youth within the business, ii) employed youth who seek to invest in township micro-enterprises to create opportunities for themselves and work for others.

View Policy Brief: DPRU PB 16/45