Document Type

Migration Policy Series

Publication Date

3-1998

Department

Balsillie School of International Affairs

Abstract

Non-South African street traders are often portrayed in the South African media as “illegal”, ill-educated, new arrivals who take opportunities from South Africans and money from the country. The findings of this study challenge some of the basic myths about non-South African street traders and their activities.

The study also makes policy recommendations for changes in both immigration and customs policy on informal cross-border trade. The study examines the participation of non-South African street traders in regional cross-border trade and its implications for customs and immigration policy.

The study focuses on traders in the handicraft and curio sector, as they are significant participants in cross-border trade. The report is based on semi-structured interviews with 107 non-South African (73 from the SADC region) and 21 South African traders of handicrafts and curios in Johannesburg and Cape Town.

We also interviewed 22 South Africans who were employed by non- South African traders and 23 Zimbabwean curio sellers in Harare and Masvingo, Zimbabwe.

We then interviewed key informant traders as well as local government officials and representatives of the South African Department of Home Affairs. Mozambican traders, under-represented in the study, will be the subject of a subsequent report.

The findings of this study contradict or challenge much of the conventional wisdom about the informal sector and the migrants who work in it.

Myth: Participants in the informal sector are poorly educated and illiterate or semi-literate.

In this study, over 90% of non-South African respondents had some secondary education. Nearly 40% had a formal qualification. Over two-thirds had some form of further education or training; and 9% had some university experience. With one exception all the South African respondents had some secondary school education.

Myth: Informal sector participants are poverty-stricken and desperate people engaged in a struggle to “survive”.

The majority of respondents are pursuing a future as small entrepreneurs. Less than 50% were interested in finding formal employment and less than 5% were actively seeking employment. Some 29% said they had entered the business because they “enjoyed” trading and selfemployment and 7% categorised themselves as artists.

Myth: Foreign migrants are flooding to South Africa to flee a desperate situation at home.

Some 27% of the sample cite as the reason for coming to South Africa the opportunities offered by South Africa’s tourist market; 24% cited the strength of the economy or the rand; some 17% spoke more generally of South Africa’s attractions.

Myth: The presence of non-South African traders is a new phenomenon.

Most non-SADC traders are recent entrants. However, most traders from the SADC region have been travelling to South Africa to trade since at least 1990, and some before.

Myth: Non-South Africans want to settle permanently in South Africa.

Some 71% of readers identified their home country as their “permanent home”. Only 4% said “South Africa”. The overwhelming majority of married respondents and those with children said they did not want to bring their families to South Africa.

Myth: The participation of non-South Africans in South Africa’s economy is a net drain on the country. Foreigners drain wealth, they do not create it.

Cross-border traders invest the majority of their profits within the country in the (formal) retail and manufacturing sectors.

Traders assist South African exports by taking goods out of South Africa to sell in the region. Over 56% of all non-South Africans, but 78% of SADC respondents, take goods out of South Africa to trade. Only 27% do not.

Exported goods include electronics, appliances, clothes, shoes, household goods, and foodstuffs. These items are South African products which are being promoted by industrial and SADC export policy.

Estimates of the value of goods taken out of the country range from R500 to R10000 per trip. The majority take out goods valued between R2 000 and R3 000. Most traders returned home between four and eight times a year.

Official South African policy is to encourage trade with its SADC partners. There is no sound economic reason why such trade should be monopolised by large South African formal sector companies.

More than 50% of traders spend between 40% and 50% of their earnings in South Africa.

Myth: Non-South African street traders compete unfairly with South Africans and take away economic opportunity.

More than 20% of foreign traders employ South Africans in their business operations.

Only 15% of traders did not bring goods with them to sell. Curios, wood and stone carvings comprise 90% of the goods imported. The remaining 10% consisted of wire, clothes and crochet work and leather goods.

Mozambican traders bring vegetables, nuts, and cloth. None of these products are readily available within South Africa itself.

Myth: Non-South African traders from the continent have all entered South Africa “illegally”.

Most traders from the region enter on visitors visas, which allow people to enter but do not officially allow them to trade. There is no system of trading permits in place. African traders from outside the SADC region tend to be asylum seekers or refugees who are allowed to trade. Most traders pass through official border posts and pay duty. Some 63% said they had problems with customs officials. Most cited the high cost of duties, bribery and overcharging.

Myth: The Aliens Control Act is a suitable and efficient instrument for regulating cross-border trade.

The present system of restrictive regulation has negative consequences for informal cross-border traders as well as for the South African government. The issue of single-entry visas increases the workload of the issuing officers as traders have to constantly re-apply. Costs to government and traders are high.

The ambiguous visa status of traders and complex tariff schedules present opportunities for corrupt Home Affairs and Customs and Excise officials as well as police.

Duties paid at the border are a significant drain on the profit margin of traders. They also come with costs to the Department of Customs and Excise who have to administer the gathering of relatively small amounts of duties against complex tariff schedules.

Based on the findings of this study, various policy recommendations can be made:

  • The introduction of a new temporary permit category for individual informal sector cross-border traders, as recommended in the Draft Green Paper on International Migration, should be considered. The permit would allow multiple entry, reducing administrative costs and releasing Home Affairs officials to deal with more pressing concerns. It would also remove the ambiguous status of non-South African traders, remove opportunities for corruption and improve the regulation of the system.
  • A duty free allowance on goods carried by persons holding a trading permit should be considered. It would reduce administrative costs for Customs and Excise officials; free them to pursue smugglers of illegal goods; reduce opportunities for corruption; and encourage the development of small enterprises.
  • Reciprocal arrangements should be negotiated with neighbouring countries to ensure that South African traders are not disadvantaged.
  • Training in accounting and marketing should be introduced for South African informal sector participants as black South African entrepreneurship was suppressed by apartheid.

The Department of Arts and Culture could follow the example of the Zimbabwean government and offer training in traditional skills in arts and crafts as South Africa currently only produces a small range of handicrafts and curios for the tourist market.

Access to start-up capital is problematic for new entrants to the market. Micro-financing schemes should be considered as they would place South African traders in an advantageous position.

At the same time as South African traders have been attacking non- South African traders, the South African government has endeavoured to build trade links with neighbouring and other African states. The study places the activities of informal cross-border trade within the wider context of regional trade networks and flows of goods. The policy recommendations made here reflect the move to free up regional trade and a concern that small entrepreneurs should not be disadvantaged.

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