\u201cThe numbers I have access to add up to an informal economy of R750 billion a year in terms of turnover,\u201d he said.<\/p>\n\n\n\n
However, he said these numbers only represent between two-thirds and three-quarters of the full size of South Africa\u2019s informal sector.<\/p>\n\n\n\n
That means that the true size of the township and informal economy is between R1 trillion and R1.125 trillion.<\/p>\n\n\n\n
Based on Trade Intelligence’s research, Alcock highlighted a few of the biggest sectors by turnover in South Africa\u2019s information economy.<\/p>\n\n\n\n
- \n
- Spaza shops<\/strong> account for R190 billion across 100,000 outlets.<\/li>\n<\/ul>\n\n\n\n
- \n
- The fast-food sector<\/strong> accounts for R90 billion across 50,000 outlets.<\/li>\n<\/ul>\n\n\n\n
- \n
- The beauty sector<\/strong> accounts for R10 billion annually.<\/li>\n<\/ul>\n\n\n\n
- \n
- The taxi sector<\/strong> accounts for R50 billion a year across 250,000 vehicles.<\/li>\n<\/ul>\n\n\n\n
- \n
- The multi-sector<\/strong> is worth around R18 billion per year.<\/li>\n<\/ul>\n\n\n\n
- \n
- Savings stokvels<\/strong> are worth R44 billion per year.<\/li>\n<\/ul>\n\n\n\n
- \n
- The backroom rental sector<\/strong> in townships is worth R20 billion annually.<\/li>\n<\/ul>\n\n\n\n
- \n
- The spaza shop rental economy<\/strong> is around R25 billion per year.<\/li>\n<\/ul>\n\n\n\n
He added that numerous other large sectors exist in the informal economy, including automotive, construction, catering, car washes, and bakeries.<\/p>\n\n\n\n
\u201cIf you take a mirror to the formal economy, you will find every sector represented in the informal economy,\u201d he said.<\/p>\n\n\n\n
\u201cThey are successful, and in many cases, these businesses came from the formal sector to serve the informal sector.\u201d<\/p>\n\n\n\n
Capitec CEO Gerrie Fourie also recently said the informal sector is under-valued, and that it forms an important part of South Africa\u2019s economic future.<\/p>\n\n\n\n
Formalising the informal economy<\/h2>\n\n\n\n
![\"\"](\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2024\/05\/GG-Alcock-1024x576.jpg\")
<\/a>Informal economy expert GG Alcock<\/figcaption><\/figure>\n\n\n\n Alcock said it was a misnomer that informal businesses trade in cash and want to stay under the radar to avoid paying tax.<\/p>\n\n\n\n
He said card payments have rapidly grown in South Africa\u2019s informal sector. One company, Lesaka, has over R2 billion per month throughput on its informal merchant’s Kazang POS devices. <\/p>\n\n\n\n
“In January 2021, 100% of these merchant’s wallet top-ups were in cash. By November 2024, 40% of the wallet top-up were now digital,\u201d he said.<\/p>\n\n\n\n
This shows that there has been a dramatic shift away from cash in South Africa\u2019s informal economy, and this trend is accelerating.<\/p>\n\n\n\n
Alcock said this shows that a hybrid model marrying the informal and formal sectors is emerging in the country.<\/p>\n\n\n\n
\u201cWhile the business remains informal, the payment methods are moving away from cash to formal digital payments,\u201d he said.<\/p>\n\n\n\n
Another area where the informal economy can benefit from formalisation is to secure the place where businesses operate.<\/p>\n\n\n\n
This will help these businesses invest and grow, which in turn will create value and allow the owners to sell if necessary.<\/p>\n\n\n\n
He likened it to hot dog stands in New York, where the owners must get approval and pay rent for the place they operate.<\/p>\n\n\n\n
Alcock advised South African authorities to consider formalising a part of the informal economy to assist and grow this sector.<\/p>\n\n\n\n
This includes leaving some of these businesses’ informal characteristics, which help them operate seamlessly, alone.<\/p>\n\n\n\n
\u201cWe need to recognise that these are real businesses built by township entrepreneurs. Many of them are large businesses,\u201d he said.<\/p>\n","protected":false},"excerpt":{"rendered":"
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- The spaza shop rental economy<\/strong> is around R25 billion per year.<\/li>\n<\/ul>\n\n\n\n
- The backroom rental sector<\/strong> in townships is worth R20 billion annually.<\/li>\n<\/ul>\n\n\n\n
- Savings stokvels<\/strong> are worth R44 billion per year.<\/li>\n<\/ul>\n\n\n\n
- The multi-sector<\/strong> is worth around R18 billion per year.<\/li>\n<\/ul>\n\n\n\n
- The taxi sector<\/strong> accounts for R50 billion a year across 250,000 vehicles.<\/li>\n<\/ul>\n\n\n\n
- The beauty sector<\/strong> accounts for R10 billion annually.<\/li>\n<\/ul>\n\n\n\n
- The fast-food sector<\/strong> accounts for R90 billion across 50,000 outlets.<\/li>\n<\/ul>\n\n\n\n