Township economy estimated at nearly R1 trillion, but 80 percent of businesses remain unregistered
Most township businesses in South Africa remain unregistered, leaving them excluded from access to finance,
Image: File
Most township businesses in South Africa remain unregistered, leaving them excluded from access to finance, government support, and formal market opportunities.
This is according to Standard Bank’s first Township Informal Economy Report, which reveals that around 80% of businesses in these communities operate outside formal regulations such as tax compliance, VAT registration, and labour laws.
The report’s survey included businesses across five provinces, Gauteng, KwaZulu-Natal, Western Cape, Limpopo, and North West and covered enterprises with annual turnovers ranging from R100,000 to R50 million.
"These businesses are often not incorporated to make them legal entities, a reality that excludes them from access to finance, formal markets and digital tools that could enable them to grow".
"Despite these constraints, the township's informal economy is a critical component of South Africa’s labour market, accounting for nearly 19.5% of total employment in the last quarter of 2024 (Stats SA). Additionally, recent reports estimate the township economy to be worth almost a trillion rand".
The report also noted that most township entrepreneurs operate in highly competitive environments, with up to 20 similar businesses often found in a single community.
According to the report, fewer than 9% have access to bank loans, with most relying on personal savings or family support.
"While cash remains dominant, more than 56% prefer EFT or bank transfers, indicating readiness for safer digital payments 49% of businesses operate from homes or garages, with only 11% in commercial premises".
"Township businesses play a vital role in local supply chains, with many contributing through sponsorships and youth initiatives".
Naledzani Mosomane, Head of Enterprise and Supplier Development (ESD) at Business and Commercial Banking South Africa Standard Bank Group., said the insights reflect the lived realities of township entrepreneurs.
“The insights reflect the lived realities of township entrepreneurs, their resilience, their contribution, and the barriers that hold them back. For us at Standard Bank, it reinforces the importance of strong relationship management: being close to our clients, listening to their needs, and supporting them through every stage of their journey.”
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