Street vendors and home-based businesses in Soweto suffered significantly between 2007 and 2008. This was partly due to the introduction of malls in the township. Townships have historically been characterised by small, mostly informal, businesses selling basic products and services, according to the report. The increase in consumer expenditure by residents in Soweto during the past decade, and the fact that 83% of residents expressed no intention of moving out of their townships, has contributed to the development of large shopping malls. These new malls pose a threat to the survival of the informal business sector in the township.

Only 57% of small businesses were still operating from the same premises in 2008 as in 2007. During the same period, 13% had relocated to other premises, and 30% had closed down. There was one common trait among the owners of the surviving business, which was the fact that they had implemented considerably more entrepreneurial initiatives than the owners of businesses which had failed. Most of the surviving businesses were in shopping centres, and were more formalised. Their survival rate of 70% between 2007 and 2008 was significantly higher than that of home-based businesses and street vendors, which had survival rates of 54% and 28% respectively.

Several other characteristics of the surviving businesses were highlighted by Professor Ligthelm as follows:

·         Successful businesses were older than the businesses that failed;

·         Were established due to opportunity, and not instigated by unemployment as is the case with the failed businesses;

·         Were characterised by full-time involvement of the owner(s);

·         Were mainly incorporated, franchises, or multi-owned institutions;

·         Operated in a permanent brick structure;

·         Had access to several amenities, such as telephones and vehicles; and

·         Had higher employment figures and turnover than the failed businesses.

The failed businesses did not adjust their business strategies to the more competitive environment, and simply ignored the emergence of the shopping malls. The trends in Soweto are most likely relevant in other townships, which have also had developments of large shopping malls, as well as for other areas which are planning such centres.

Municipalities should not simply ignore the informal sector because of its impact on employment and sustainability. All three municipalities which have had their Major Urban Poverty Challenges Identification (MUPCI) workshops highlighted the significance of the informal sector for the economic support of the large unemployed population.

In order to analyse and discuss other research about the City of Johannesburg collated by the Institute, councillors and officials in Johannesburg are encouraged to attend the MUPCI workshop on 31st August 2009, at the Metropolitan Centre. To find out more about the workshop, or to send an RSVP, please contact Simon Mathabatha on (011) 492 0600 ext 2009.

- Nthamaga Kgafela