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The informal sector is currently fuelling the South African economy, said GG Alcock, an informal economy expert, during a BKB GrainCo discussion panel at NAMPO Cape on Wednesday.
In fact, Alcock said he believes that joblessness is at 10%, rather than the official figures of around 30%. One of the reasons he believes this is that 41% of youths who claimed to be unemployed, in fact, earn a monthly salary of around R15 000.
In South Africa, the notion that you need a bank account and payslips to prove you have a steady income is creating a barrier, which needs to change, Alcock said. He told of a man who earns an income selling a popular South African street food, known as ‘kotas’ and wanted to buy a new off-road vehicle in cash with his earnings. “When their financing department wanted to know how he earned his income, he replied, ‘Kotas’. They refused to sell him the vehicle.”
Flourishing households
While the South African media often portrays South Africa as a country where most citizens live in shacks, this is not the reality. “Only 13% of the population lives in informal dwellings and 84% of South Africans live in formal houses.”
People also need to rethink the way they view wealthy households. Alcock said there are currently more houses worth R1,5 million or more in the former homelands, than there are in Cape Town’s Melkbosstrand, Gordon’s Bay, Wellington, Paarl, Stellenbosch, and Franschhoek combined.
South African households are also becoming smaller. A total of 27% of households in the country consist of one person and 39% of households consist of two to three people. “Smaller households spend more on luxury items such as technology,” Alcock said, adding that South Africa’s current household situation looks much like Sweden’s did in the sixties and seventies.
Sugary success
Nico de Serra, CEO of Atlanta Sugar, spoke about the success they’ve had in marketing their product through informal channels, such as Stokvel hampers. Atlanta Sugar is a subsidiary of the BKB Group.
Around 40% of all business is conducted through cash-and-carry businesses and around 60% is done through supermarkets, De Serra said, emphasising the fact that wholesale businesses have a combined turnover of around R30 billion per annum in South Africa. Atlanta Sugar’s market share of this, is around 5%.
Auction potential
Johan Stumpf, CEO of the BKB Group, said their livestock business has also experienced the strength of the informal economy. A few years ago, they started an annual livestock auction at Jozini, a rural settlement in the uMkhanyakude District Municipality of KwaZulu-Natal. The small town is situated on a main route to Mozambique and is close to the Pongolapoort Dam, also known as Lake Jozini.
Within two years, the Jozini auction became one of their most lucrative auctions, Stumpf said. “Buyers are willing to pay 8 to 10% more for cattle at that auction compared to a commercial auction, because this is the one time per year that they do buy cattle. And they don’t want cheap animals – they are buying animals for a wedding, and they want bragging rights.” – Susan Marais, Plaas Media
