Innovation in the Informal Sector

South Africa is a country where 25% of its population is unemployed. Although apartheid is over the spread of resources and income is still very unbalanced. Wealth lies with either the white middle to upper class or the new up and coming black elite – the Black Diamonds. Unfortunately a large proportion of the country lives under the bread line and have to starve, sell drugs, steel, beg or use their innovation to survive. The later is what this article about.The country is truly confused, it has a good currency that trades under R7 to the US dollar (1st January 2011), a first world infrastructure – yet as mentioned before a large proportion of the country is living in poverty. This has lead many a person, normally African to use their intuitive and become street entrepreneurs.There are several different types of street businesses which make these innovative citizens money and take some strain off of our economy. This article will discuss some of the more prevalent ones.The first is the street vendor, making on average between R50–R100 per day – they sell loose cigarettes colloquially known as ‘gwais’ either Mega or Stuyvesant which cost R1 and R2 respectively and sweets. After speaking to one such vendor called Azor he informed me that he makes a profit of R8 off of one sold box of mega and R30 of off Stuyvesant. He sells about 4 boxes of mega a day making a R48 profit, and about one box of Stuyvesant making R30. Furthermore he sells sweets and chips and makes about R20 profit on these a day. On top of this Azor also fixes shoes for R20 on average making about R40 extra in this venture. So from an initial outlay of about R100 he profits R190 on a good day on commodities alone. Azor is also getting his cordless pay phone working which will up his profit. Accommodation is about R800 a month, he works everyday so he makes about R3500–R4000 per month. Azor spends about R500 a month on food meaning he has at least R2200 to spend and buy more supplies clothes and electricity each month. What a wise businessman.The second type is the ‘mielie’ salesman or should I say woman. Heard from a distance a way by their familiar call of ‘mielies’ the mielie vendor is a unique South African cultural item or role player dating from the apartheid era. Normally they push their heavy load of ‘mielies’ – the local name for corn on the cob – up and down our streets in trolleys and carry some on their heads. After speaking to one such business woman – Violet – she reckons on a good day she sells 15 dozen ‘mielies’ at R20 a dozen. She buys them for R1. This means she profits R60 a day. She works 26 days a week which means she makes R1560 a month. She pays R800 for accommodation and R300 for transport each month so she has R460 left for food. A cheap meal can be put together for about R10 in South Africa, meaning she is left with about R160 to play with each month. Business, students, economists – taking notes?The next type of innovative informal worker to be discussed in this article is the car guard. After speaking to one such person called Andre who has been doing the job for 3 years and had found two stolen cars prompting him to call the police thus helping us battle crime, he made it evident that he makes an average of R30 per day as he works at a small complex. Car guards that work at bigger parking lots and or complexes obliviously make more. Andre and his counter parts look after the safety of your car and rely on the owners’ generosity for a tip. On a good day he can make up to R70. He also washes cars at a price of R20 but he says with the recent rainy whether that business has not been so good. He reckons he pays R20 a night for accommodation. So lets look at his case R30 multiplied by 28 days a week means he makes R840 a month on average, when he washes cars lets say he does one a week he makes R1000 a month. His accommodation leaves him with only R200 left for food meaning he can buy 2 mielies and loaf of bread or a can of food a day to eat. Its a difficult life, but hey his surviving not stealing and helping our economy. To me this is admirable.There are also other types of informal entrepreneur not mentioned in this article like the broom makers, atrisans flower sellers. The flower sellers get their produce from shops when they are about to throw them out and sell them on the street corners. They have to pay a hawkers licence though. They make about R100 per day. Working everyday these businessmen make an average of R2000–R3000 per month. The broom makers are scarce these days so unfortunately I can not give you details on their business. Hawkers licences range from R100–R150 per month.The artisans deserve an article dedicated entirely to themselves so will not be discussed in this one.Business in South Africa needs entrepreneurs, but not everybody can afford the luxury of an office or registered company, thus the informal sector with these aforementioned entrepreneurs is of paramount importance to get pressure off of the formal sector, ease poverty and stem crime. To me the innovation, hard-work, perseverance and humility of such people is highly admirable.These people to me are truly South African citizens.