The recent acknowledgement by Pick n Pay of the informal retail sector as a potentially formidable competitive force signals a profound shift in our economic landscape. This sector, long overlooked and undervalued, is now emerging as a parallel economy that demands urgent strategic attention from both government and big business. From an ActionSA perspective, this moment offers a unique opportunity to rethink and reshape our economic empowerment policies to foster true inclusivity and sustainable growth.
Pick n Pay’s annual report highlights several transformative trends: the expansion of the informal economy, the removal of lease exclusivity clauses in shopping centres, and the rising preference for low-cost, hyperlocal shopping. These shifts will slowly erode the traditional supermarket model’s dominance and open avenues for township-based entrepreneurs, including Spaza Shops, and informal traders to thrive. The government backed-R500m Spaza Shop Support Fund – which came about, at least in part, because of ActionSA’s hard push through its #Spaza4Locals campaign – should underscore official recognition of this sector’s growing importance.
We therefore welcome these developments as validation of what we have long advocated: that economic empowerment must move beyond narrow, compliance-driven frameworks like BBBEE, which have failed to deliver broad-based posterity. Instead, we propose a transformative approach – Inclusive Economic Empowerment (IEE) – that targets the root causes of exclusion, unlocking opportunities for all South Africans, especially those in historically marginalised communities.
The informal retail sector’s growth is not just a market phenomenon; it is a social imperative. Stats SA reports that informal employment accounts for 19.5% of total employment, second only to the formal sector. This sector provides vital income and jobs, particularly for those with limited education, and is a lifeline for many households. Yet, it operates in a regulatory and economic environment that often marginalises rather than supports it.
It is truly refreshing that Pick n Pay CEO, Sean Summers, acknowledges the pluralistic retail environment where formal and informal sectors coexist, serving consumers’ needs for convenience and affordability. However, the formal sector faces margin pressures and must adapt by restructuring stores, revising leases, and expanding discount formats like Boxer to remain competitive. This new reality calls for a policy response that supports informal traders’ growth while encouraging formal businesses to innovate and invest inclusively.
From our standpoint, the government must urgently implement policies that empower informal traders as vital economic actors rather than fringe participants. This means:
- Creating a comprehensive informal business register to better understand and support entrepreneurial South Africans in this sector.
- Providing targeted financial support and capacity-building programs through the proposed Opportunity Fund, which ActionSA envisions as a transparent, accountable vehicle to remove barriers to entrepreneurship and skills development.
- Reforming regulatory frameworks to facilitate easier market access for informal traders, including revisiting lease exclusivity clauses and reducing bureaucratic hurdles.
- Encouraging partnerships between big business and township retailers, following Tiger Brand’s example of rebranding 2,000 Spaza Shops, to integrate informal traders into formal supply chains and value networks.
ActionSA’s Inclusive Economic Development policy goes further by proposing systemic reforms to the labour market and fiscal environment. We advocate for a tiered national minimum wage system that supports young entrepreneurs and inexperienced workers, making it easier for businesses to employ them without onerous costs. This approach will help absorb youth into the workforce, addressing unemployment and fostering economic inclusion.
Moreover, ActionSA proposes replacing the divisive and ineffective BBBEE compliance regime with an Opportunity Fund Levy – a 5% tax on private sector profits (excluding SMMEs) – to raise substantial resources for empowerment initiatives. This fund will invest in tertiary education, entrepreneurial stimulus, and infrastructure in underserved communities, ensuring that economic empowerment translates into real opportunities rather than mere compliance tick-boxes.
The government must also expand social welfare through a Universal Basic Stimulus (UBIS), providing financial support linked to poverty bands. This initiative doesn’t aim to create/worsen dependency but to give every South African the financial means to participate in and benefit from the economy. Big business, too, has a critical role to play. Companies must move beyond viewing informal traders as threats and, instead, embrace them as value chain partners in growth. For this to happen, it would require:
- Investing in supply chain integration and capacity-building for township entrepreneurs.
- Adopting flexible, cost-efficient retail formats that meet the needs of low-income consumers.
- Supporting local economic ecosystems by sourcing from informal traders and small businesses, provided they’re also enabled to provide both needed quantities and consistent quality.
These are the kind of collaborations that align with ActionSA’s vision of spatial and social cohesion, addressing the persistent inequalities that confine many South Africans to poverty and unemployment in townships and informal settlements.
The informal retail sector’s rise must therefore not be seen as a threat, but a clarion call for a new economic paradigm – one that transcends failed, outdated, policies and embraces inclusive, practical solutions. Our proposed approach offers a bold blueprint for economic empowerment that prioritises opportunity over entitlement, inclusion over exclusion, and partnership over division and economic alienation.
The government and big business must seize this moment to implement policies that recognise the informal economy’s vital role, dismantle barriers to participation, and invest in the people who drive our economy’s future. Only then can we claim to be building a prosperous, equitable South Africa where every citizen stands a chance to thrive. In we are to respond truthfully to our long-neglected Constitutional call to build a better country for all, we must do all we can to leverage the informal retail sector to boost empowerment and reduce poverty and unemployment.
Frankly, I see no other way to achieve this than by adopting a comprehensive, development-oriented approach that recognises the informal retail sector’s vital role in job creation, poverty reduction, and inclusive growth.
This informal retail economy is not just a survival mechanism for millions, but a dynamic engine of economic activity that, if properly supported, can drive sustainable empowerment and broader economic transformation to levels we have never seen before.
In summary, I believe that our country’s informal retail sector is, potentially, a powerful catalyst for economic empowerment. All we need is to widen our thinking and innovative horizons by replacing failed BBBEE policies with ones that combine smart formalisation, infrastructure investment, participatory governance, and partnerships with big business to benefit most, not the few who are politically connected. This sector’s true potential can be unlocked in this way.
Underpinning and supporting these proposals must be more law enforcement by relevant agencies to declare war against criminals in townships, villages, and informal settlements, as the entrepreneurs in these areas are too often targeted by the criminal underworld through racketeering and other crimes. It’s also important that these SMEs be reserved only to South Africans and legally documented residents.
If others remain stubbornly trapped in doing things the same way over and over again while expecting different outcomes, ActionSA is ready to play its part.
South Africa Should Leverage the Informal Retail Sector to Boost Economic Empowerment
The recent acknowledgement by Pick n Pay of the informal retail sector as a potentially formidable competitive force signals a profound shift in our economic landscape. This sector, long overlooked and undervalued, is now emerging as a parallel economy that demands urgent strategic attention from both government and big business. From an ActionSA perspective, this moment offers a unique opportunity to rethink and reshape our economic empowerment policies to foster true inclusivity and sustainable growth.
Pick n Pay’s annual report highlights several transformative trends: the expansion of the informal economy, the removal of lease exclusivity clauses in shopping centres, and the rising preference for low-cost, hyperlocal shopping. These shifts will slowly erode the traditional supermarket model’s dominance and open avenues for township-based entrepreneurs, including Spaza Shops, and informal traders to thrive. The government backed-R500m Spaza Shop Support Fund – which came about, at least in part, because of ActionSA’s hard push through its #Spaza4Locals campaign – should underscore official recognition of this sector’s growing importance.
We therefore welcome these developments as validation of what we have long advocated: that economic empowerment must move beyond narrow, compliance-driven frameworks like BBBEE, which have failed to deliver broad-based posterity. Instead, we propose a transformative approach – Inclusive Economic Empowerment (IEE) – that targets the root causes of exclusion, unlocking opportunities for all South Africans, especially those in historically marginalised communities.
The informal retail sector’s growth is not just a market phenomenon; it is a social imperative. Stats SA reports that informal employment accounts for 19.5% of total employment, second only to the formal sector. This sector provides vital income and jobs, particularly for those with limited education, and is a lifeline for many households. Yet, it operates in a regulatory and economic environment that often marginalises rather than supports it.
It is truly refreshing that Pick n Pay CEO, Sean Summers, acknowledges the pluralistic retail environment where formal and informal sectors coexist, serving consumers’ needs for convenience and affordability. However, the formal sector faces margin pressures and must adapt by restructuring stores, revising leases, and expanding discount formats like Boxer to remain competitive. This new reality calls for a policy response that supports informal traders’ growth while encouraging formal businesses to innovate and invest inclusively.
From our standpoint, the government must urgently implement policies that empower informal traders as vital economic actors rather than fringe participants. This means:
ActionSA’s Inclusive Economic Development policy goes further by proposing systemic reforms to the labour market and fiscal environment. We advocate for a tiered national minimum wage system that supports young entrepreneurs and inexperienced workers, making it easier for businesses to employ them without onerous costs. This approach will help absorb youth into the workforce, addressing unemployment and fostering economic inclusion.
Moreover, ActionSA proposes replacing the divisive and ineffective BBBEE compliance regime with an Opportunity Fund Levy – a 5% tax on private sector profits (excluding SMMEs) – to raise substantial resources for empowerment initiatives. This fund will invest in tertiary education, entrepreneurial stimulus, and infrastructure in underserved communities, ensuring that economic empowerment translates into real opportunities rather than mere compliance tick-boxes.
The government must also expand social welfare through a Universal Basic Stimulus (UBIS), providing financial support linked to poverty bands. This initiative doesn’t aim to create/worsen dependency but to give every South African the financial means to participate in and benefit from the economy. Big business, too, has a critical role to play. Companies must move beyond viewing informal traders as threats and, instead, embrace them as value chain partners in growth. For this to happen, it would require:
These are the kind of collaborations that align with ActionSA’s vision of spatial and social cohesion, addressing the persistent inequalities that confine many South Africans to poverty and unemployment in townships and informal settlements.
The informal retail sector’s rise must therefore not be seen as a threat, but a clarion call for a new economic paradigm – one that transcends failed, outdated, policies and embraces inclusive, practical solutions. Our proposed approach offers a bold blueprint for economic empowerment that prioritises opportunity over entitlement, inclusion over exclusion, and partnership over division and economic alienation.
The government and big business must seize this moment to implement policies that recognise the informal economy’s vital role, dismantle barriers to participation, and invest in the people who drive our economy’s future. Only then can we claim to be building a prosperous, equitable South Africa where every citizen stands a chance to thrive. In we are to respond truthfully to our long-neglected Constitutional call to build a better country for all, we must do all we can to leverage the informal retail sector to boost empowerment and reduce poverty and unemployment.
Frankly, I see no other way to achieve this than by adopting a comprehensive, development-oriented approach that recognises the informal retail sector’s vital role in job creation, poverty reduction, and inclusive growth.
This informal retail economy is not just a survival mechanism for millions, but a dynamic engine of economic activity that, if properly supported, can drive sustainable empowerment and broader economic transformation to levels we have never seen before.
In summary, I believe that our country’s informal retail sector is, potentially, a powerful catalyst for economic empowerment. All we need is to widen our thinking and innovative horizons by replacing failed BBBEE policies with ones that combine smart formalisation, infrastructure investment, participatory governance, and partnerships with big business to benefit most, not the few who are politically connected. This sector’s true potential can be unlocked in this way.
Underpinning and supporting these proposals must be more law enforcement by relevant agencies to declare war against criminals in townships, villages, and informal settlements, as the entrepreneurs in these areas are too often targeted by the criminal underworld through racketeering and other crimes. It’s also important that these SMEs be reserved only to South Africans and legally documented residents.
If others remain stubbornly trapped in doing things the same way over and over again while expecting different outcomes, ActionSA is ready to play its part.