While everybody is fixated on seeing increase in the participation of black South Africans in the formal sector (both in business and at the workplace), the informal economy, where the black African majority dominate, is overlooked. Khwezi Mabasa, a senior researcher at Mistra and Polisee Space associate, observes this in an article published on BusinessLive.
Mabasa laments that the B-BBEE policy frameworks lump together black Africans, drawn from both formal and informal economic sectors, as one category. “Demographic data indicates that black African entrepreneurs are leading informal economic activity. Yet B-BBEE policy interventions have largely treated black entrepreneurs as a monolithic social group, without due consideration for differences in enterprise size, access to capital, sector participation and business strategies.”
To address the oversight, Mabasa suggests revision of the broader base beyond the JSE-listed space to create a comprehensive black enterprise support strategy for non-listed economic activity. “There should be a dedicated focus on the informal economy. The calibrated market transformation approach is more suitable for addressing other intersectional inequalities such as race, gender and urban/rural divides.”
As a result of being placed in the same category as formal businesses, which, typically, are registered and have an address, informal businesses have not been able to access financial assistance and other services from government in times of need. For instance, the COVID Debt Relief Finance Scheme, of which the government is a guarantor, is designed for small and medium businesses in the formal sector that are properly registered and can submit tax returns. Effectively, this rules out businesses in the informal sector, which are hardly hit by lockdowns as the majority of owners subsist on what they earn everyday.