OPINION | Migrant entrepreneurship is good for South Africa's economy

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A demonstrator holds a sign during a protest against xenophobia outside of the main gate of the South African High Commission which was shut down to avert reprisal attacks in Abuja. (Kola Sulaimon, AFP)
A demonstrator holds a sign during a protest against xenophobia outside of the main gate of the South African High Commission which was shut down to avert reprisal attacks in Abuja. (Kola Sulaimon, AFP)

Whilst their entrepreneurship contribution is often not recognised and is under-reported, there is undeniable evidence that it does add value in local township economies in various parts of the country, writes Democracy Development Program (DDP) director Dr. Paul Kariuki. 


Since the dawn of democracy, African migrants have engaged in various entrepreneurship activities, creating employment opportunities for both South Africans and fellow migrants.

A recent study conducted by the Democracy Development Program (DDP) in selected parts of the greater Durban metropolitan found out that African migrants from 10 African countries were actively engaged in entrepreneurial activities that employed both South Africans and fellow migrants.

These findings have not yet been published. However, they do provide useful insights into the contribution that African migrant entrepreneurs are making to the city's economy.

Moreover, these preliminary findings go a long way to negate a narrative that portrays African migrant entrepreneurs as criminals, unproductive, and irrelevant to the economy.

READ | OPINION | Post Covid-19: Will South Africa slide into a xenophobic and authoritarian state?

The recent xenophobic attacks on African migrant entrepreneurs that took place in Durban earlier this year, were partly fuelled by the notion that the entrepreneurs were in the country to take jobs meant for South Africans.

Sadly, many of them were dispossessed of the trading places and lost their businesses which were the primary sources of their livelihoods. The increasing incidences of tension between African migrants and their South African counterparts emanate mostly from the competitive nature of business activities by African migrants, who often trade with small amounts of capital, often generated through informal means.

Benefits of migrant entrepreneurship 

Whilst their entrepreneurship contribution is often not recognised and is under-reported, there is undeniable evidence that it does add value in local township economies in various parts of the country - the beneficiaries, local communities, access goods which are often cheaper, closer to them, often appropriate quantities and at times of the day that are convenient to them.

Other beneficiaries of African migrant entrepreneurs are South African landlords, who rent out spaces for trading purposes. Moreover, in their efforts to eke out a living, African migrant entrepreneurs bring these business goods, services, and skills to locations often not served by the formal economy. The entrepreneurs often buy their goods in bulk, repackage, and sell them in quantities that communities can afford at reasonable prices. In the same vein, they contribute to the formal economy by paying Value Added Tax (VAT).

So, then how can the trade relations between African migrant entrepreneurs and their local South African counterparts be harmonised so that they are mutually beneficial.

Firstly, it is critical to creating opportunities for engagement between the two entrepreneurial communities where useful business information and business strategies can be shared in an atmosphere of trust and collegiality.

There is empirical evidence that suggests African migrant entrepreneurs' competitive edge emanates from skilful sourcing of products and services the needs of their customers. The business model that they use often emphasises low markups and high sale quantities.

Ultimately, the high turnover is higher in most cases. Such strategies can easily be shared when a conducive environment is created. The government at all levels of governance collaborating with organised civil society and associations representing African migrants can serve as the starting point towards mutual information sharing.

Facilitating dialogue 

Secondly, the other important area of focus involves policy engagement that facilitates dialogues between government, especially local government, organised civil society, and African migrant entrepreneurs.

These policy dialogues would aim at acknowledging that the micro-entrepreneurship endeavours by African migrants are recognised as important contributors to the city economies. Documented studies have shown that many African migrant entrepreneurs face constant security threats, especially in townships and lately in the city centre.

The policy conversations then are about exploring the areas of concerns from both sides - government and African migrant entrepreneurs are addressed and regulations harmonised to support local economies.

READ | OPINION | Is South Africa prepared for the next wave of xenophobic violence?

In acknowledging the challenges that the nation has faced due to the Covid-19 pandemic and contraction of the economy, it is all hands on the deck working together as partners towards employment creation and poverty reduction.

The contribution of African migrant entrepreneurs to the local economies is one of those crucial efforts and they need to be recognised, acknowledged, and supported.

This way, the anti-African sentiment is curtailed. In its place, a new narrative emerges, one of ubuntu, premised on our shared identity as Africans, striving towards a common vision, a prosperous, peaceful, thriving, self-reliant continent, developed by its own citizens.

This is the essence of Africa Day. 

- Dr. Paul Kariuki is the Executive Director of the Democracy Development Program (DDP) and the views are personal.

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