‘Informal sector growing’

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InformalTraders Independent Newspapers. Picture: Boxer Ngwenya.

Pretoria - Informal businesses contribute five percent to South Africa's GDP, with the sector itself growing in recent years, Statistician General Pali Lehohla said on Thursday.

“The informal sector contribution to GDP has stayed at five percent throughout, from 2001 up to 2013,” he told media at the release of Statistics SA's latest Survey of Employers and the Self-Employed (SESE) in Pretoria.

The document is based on a survey of households, done last year, and is the fourth SESE.

Surveys were previously conducted in 2001, 2005, and 2009.

Lehohla said the SESE had highlighted the changing composition of the country's informal sector, and its contribution to employment.

“In terms of the informal sector's contribution to employment, out of the 15 million employed (nationally), the informal sector employs about 1.5m, which is 10 percent (of the total).”

The composition of the informal sector had also changed across time.

“The informal sector is now dominated by men, who constitute about 55 percent currently, compared to about 39 percent in 2001.

“Also, formerly, the informal sector was mainly trading (based), but now we see construction, manufacturing, and finance creeping into the sector.”

Lehohla said the estimated actual value of the sector, in terms of contribution to GDP, is “five percent of R2.4 trillion”.

This works out to R120 billion.

According to the SESE, there has been a rise in the number of informal businesses over the past four years.

“The number of persons running informal businesses declined from 2.3m in 2001, to 1.1m in 2009, and increased to 1.5m in 2013.”

These informal businesses were predominantly run by black Africans, men, and the less well-educated.

The SESE found that the province with the highest number of informal businesses was Limpopo, where 6.3 percent of working age people were involved in such ventures.

In Mpumalanga the figure was 6.1 percent, in Gauteng five percent, and in KwaZulu-Natal 4.7 percent.

The survey found that the main reason people started informal businesses was due to unemployment.

“This was reported by 60.6 percent of persons in 2001, and by 69.2 percent in 2013.”

Further, the vast majority (70 percent) of people who started informal businesses used their own money to do so.

Among those who did not use their own money, most borrowed from friends and relatives.

The survey found there had been an increase in the number of people who were able to get loans from commercial banks - from four percent in 2001 to 16.6 percent last year.

On turnovers and profit margins, the SESE found that “net profits for 64.9 percent of businesses were... low (at R1500 or lower in the month prior to the survey) and only 9.2 percent of businesses made net profits above R6000”. - Sapa



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