n Africa Insight - Regulating informal home-based trade in South Africa : xenophobia or a policy requirement?

Volume 44, Issue 2
  • ISSN : 0256-2804


In the past, the informal sector was habitually repressed by an overdose of regulation. More recently, governments across the developing world have relaxed many of these regulations. In South Africa, where the repression of the informal sector was extremely harsh owing to apartheid, such regulations have made way for some local policies - but also a high level of underregulation. In cities where informal trade policies and regulations still exist, they are mainly orientated towards street traders, with home-based enterprises virtually being ignored. This paper investigates the infiltration of many non-South Africans into the informal sector by means of home-based enterprises known as spaza shops. It is argued that the lack of appropriate regulation has contributed towards this process. We evaluate perceptions and views of customers and South African entrepreneurs, as well as local government responses. Ironically, South African entrepreneurs call for a higher degree of regulation. Although some of the concerns raised regarding business registration and health hazards are certainly valid, we argue that these concerns arise from a xenophobic attitude rather than a desire to promote home-based enterprises, and that they are extremely selective.

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