Informal sector has a crucial role in the global economy

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Driven by micro enterprises across multiple sectors, the kasi economy, also known as the ‘hidden economy’, accounts for one-third of local jobs. These vibrant and innovative communities are home to 11.6 million people, indicating that townships represent billions of rands in spending power.

“In terms of cross-border opportunities, businesses in the township economy definitely benefit from the insights and learning opportunities at SAITEX 2024,” mentioned Councillor Leah Knott, MMC, Department of Economic Development, in her opening keynote address at SAITEX 2024.

Research released by Accenture Africa in 2023 revealed that more than 150,000 spaza shops make up part of South Africa’s “hidden economy”, which has an estimated market size of R178bn.

The informal sector accounts for about 42% of all employment and contributes about 6% of the national GDP: that’s about $25bn (R470bn).

Over the past five years, the informal sector has been growing at the expense of the formal sector at a Compound Annual Growth Rate of 14.17%, and there is no sign of this trajectory slowing down.

The kasi economy is almost circular, as businesses are created by residents and supported by their fellow township citizens, with more than 70% of South African households purchasing from informal traders, which include hawkers, small and large spazas, superettes and mini and midi wholesalers.

By 2030, small retailers in this micro economy are anticipated to create 70% of all new jobs.

"Lessons learnt"

Dr Sindiswa Mzamo (Global President, Circle of Global Business Women) led the talk on “Lessons learnt - what has been done to boost Gauteng’s township business”, and was joined by Nosipho Khonkwane, general manager of Gauteng Enterprise Propeller (GEP).

Some of the key lessons covered was that success or business sustainability in township businesses is dependent on the fit between the specific business and its environment, and that one size certainly doesn’t fit all - some businesses need grant funding and business development services before thinking of taking out a loan.

In order to grow, some stark figures came to light: a small business needs access to finance (R86 mil and 346 mil SMME funding gap in SA) in order to have a chance at success.

For close to 30 years, SAITEX has been a hub for discovering diverse opportunities within the region. It connects traders with a network of international and local businesses, providing a platform to explore innovative products, solutions, and services tailored to their needs.

Industry experts explored the latest innovations, creative ideas and actionable insights designed to encourage growth and empower local township economies. Themed sessions included eKasi talks, SMME Focus Day and e-commerce workshops.

Entering new markets

A focus on entering new markets followed, unpacking what every entrepreneur needs to know, highlighting the UAE and South Africa business case, followed by leading expert Sergio Carlos Macamo (Commercial Counsellor, High Commission of the Republic of Mozambique) offering practical insights on navigating new export markets to stay compliant - customs, tariffs, and cultures.

A highlight of these talks included the signing of a Memorandum of Understanding (MOU) between the SMME Chamber of Commerce and the Embassy of the United Arab Emirates, which aims to simplify business for SMMEs between the UAE and South Africa, enabling easier market access for small businesses in both regions.

This significant event took place during the insightful session, "UAE and South Africa Business Case: Entering New Markets – What Every Entrepreneur Needs to Know" and was graced by His Excellency Ambassador Mahash Saeed Alhameli of the UAE.

The SMME Chamber, a strategic partner for SAITEX 2024, is the voice for small business in Africa, dedicated to creating an ecosystem that provides access to markets, financial inclusion, and socio-economic opportunities.

Day 2 had a strong SMME focus, with the first session discussing how women and youth can be included in business and the ways to overcome trade barriers. This inspiring panel discussion, moderated by Dr Sindiswa Mzamo (Global President, Circle of Global Business Women) and joined by Lethabo Sithole (Amila Africa), Jacqueline Nzisabira (Regional Policy Advisor, UN Women), Nancy Sangqu (Founder, Milani International) and Mpume Zwane Langa (CEO, Afrisource and MD, Maxim Industries Africa), delved into the significant role of women and youth in trade, particularly in light of the AfCFTA Protocol on Women and Youth in Trade.

This protocol addresses specific constraints and barriers faced by women and youth in trading across the continent, creating an environment that allows them to access markets, enhance competitiveness, and participate in regional and global value chains.

SAITEX facilitates tangible international and local trade relationships and enables the private sector to demonstrate their innovations, solutions, and services to thousands of buyers, retailers, distributors, and wholesalers from multiple trade sectors.

“It’s one thing to have a cool idea, it’s another thing to execute on it. If you’re going to start anything, you need to be comfortable with failure,” remarked Vuyo Tofile, managing director of Timbaktuu, one of the emerging markets enabler workshop presenters.

Tofile established Timbaktuu Group Africa with the sole purpose of providing unserved and underserved communities with an innovative and frictionless way to better access goods, services, and opportunities, opening doors to a more inclusive economy and enabling individuals and communities to better participate in their country’s economy.

He went on to explain that we all have this fear of starting but have an even bigger fear of failing.

“And yet my fears were course-correcting me to the path I should have been on. What I realised and learnt along the way is if you know that it works out in the end, you end up making decisions faster,” said Tofile.

He started as an entrepreneur selling boerewors rolls, learning along the way that you can sell anything at any price you want, if you keep iterating your product and improving it over time. “But you have to have confidence when selling it at that price,” exclaimed Tofile.

Another interesting workshop discussing why you should sell cross-border using E-commerce, was delivered by Alastair Tempest, CEO of Ecommerce Forum of Africa.

“One of the big problems in Africa is the little data and research available on Pan-African campaigns,” shared Tempest. “But you need to find what you can, and maybe even create some research yourself.”

One of the exciting changes in cross-border payments discussed was that of the Transactions Cleared on an Immediate Basis (TCIB) scheme developed by BankservAfrica.

“It is literally transforming cross-border payments in the SADC region for many businesses,” says Tempest.

TCIB is a cross-border remittance service that enables clearing of funds between South Africa and Zambia in just 60 seconds! As a formal, regulated & inexpensive solution, the TCIB solution ensures greater convenience and accessibility.

Lowering remittance costs is listed in the United Nations’ Sustainable Development Goal 10 for 2030 for reducing inequalities, stating ‘reducing the cost of remittance transfers can substantially increase disposable income for remittance-receiving families.’

The aim is to lower average costs to three per cent globally to allow remittance families to save an additional US$20 billion annually.

Returning for its third year, the Enterprise Development Pavilion, sponsored by the Johannesburg Convention Bureau, provided a dedicated space for SMMEs throughout the conference to showcase their cutting-edge products and services.

“This platform links emerging businesses, especially black-owned and women-owned enterprises, with key industry buyers, providing valuable exposure and market access. Through this initiative, we empower these businesses to flourish and shape the dynamic future of hospitality,” said Thandubuhle Mgudlwa, chief executive officer, The Johannesburg Tourism Company.

“SAITEX 2024, Africa's leading multi-sector trade exhibition, was a resounding success. The event showcased remarkable collaboration on the show floor, attracting a record-breaking attendance of over 4,900 people over three days. With more than 120 exhibitors, 18 workshop sessions, and 37 speakers, participants left inspired to address challenges and drive growth in the retail economy,” concluded Phetogo Kubheka, event director, Transport and Trade Portfolio at dmg events.