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Abstract:
It is a widely acknowledged problem that South Africa's township economies are largely underdeveloped and have limited access to resources such as information and sound business service advice. According to World Bank (2015) report, the townships and the informal settlements of South Africa are similar in much of the developing world. However, there is something distinct about the South African townships and informal settlements. They are not rural, not fully urban, lying somewhat in limbo. Unlike most urban slums, they are geographically distant from urban economic centres. Although South African townships and informal settlements account for 38 percent of the country's working-age population, they are home to almost 60 percent of its unemployed. Thus, the lack of economic activity in township and informal settlements lie at the very heart of the South African development challenge (World Bank, 2015:2) The informal sector is that part of the economy, which is covering the marginal livelihoods and survival activities, which are outside the reach of the regulatory bodies of the state. This sector has in fact always been seen as a temporary safety net for the unemployed and marginalized groups of people. Its contribution to national economies has been growing significantly in many developing countries. Informal sector creates employment for the majority of people whilst labour absorption capacity of the formal sector declines (Beeton, 2010). This study uses both qualitative and quantitative research methods on a cross sectional data collected from a sample of 100 informal traders in Nelson Mandela Metropolitan townships. The results show that there exists a very strong entrepreneurial culture in the townships but this culture is constrained by a number of factors; namely; inter alia, business processes, marketing issues, finance, local and foreign competition, family business succession and lack of co-operative approach to business.
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