INFORMAL ENTREPRENEURSHIP: A FOCUS ON SOUTH AFRICAN TOWNSHIP ENTREPRENEURS

Abstract

The informal sector is increasingly recognized in terms of its entrepreneurial potential. However there is a general lack of empirical research on small, medium and micro enterprises (SMMEs) effectiveness in the informal economy in Africa. Recognizing this research gap, this article investigates entrepreneurial enabling factors in the South African township context to determine their impact on SMME’s performance. Township-based SMMEs in South Africa’s largest province, Gauteng, are surveyed and hypotheses are tested with correlation and regression analyses. Results indicate that access to finance and markets, institutional support, and skill and competency development are all significant predictors of enterprise performance. Empirical investigations in under-researched African contexts are important to highlight differences in enabling factors when compared to western contexts. In South African townships, which are plagued by high inequality, poverty, high unemployment and several other socio-economic challenges, it is an important policy which takes into account the variety of enabling environment factors that impact enterprise performance.

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