Magister Economicae - MEcon / The main objective of this research was to measure and compare the influence of institutions (government laws, rules, regulations) on the transaction cost of establishing microenterprises in informal/township areas and suburbs. The research target area was Maitland (a suburb) and Joe Slovo (a township area). A research framework was developed using the theories of institutions and the TACE. In order to achieve the research objectives, both quantitative and qualitative research designs were used. A total research sample of 40 microenterprise owners were selected from these two areas. A random sampling technique was used to select half (twenty) microenterprise traders in Maitland and the other half (twenty) from Joe Slovo. The research also applied non-random sampling technique to select relevant government institutions that regulate microenterprises in these two areas. The research has collected both primary and secondary data. To collect the primary data, face-to-face interviews were held with the shop owners in the two research sites and government (City) officials. A questionnaire containing both open-ended and closed-ended questions was used in collecting the primary data. The secondary data was collected using desktop (internet) search and also physically searching government archives and publications. Descriptive statistics (frequency distributions and graphical representations) of the data were used to analyze and compare the data collected in a meaningful way. The research also used non-parametric independent samples t-test to compare the differences of the transaction costs of establishing microenterprises in Joe Slovo and in Maitland. The data collected was analyzed and compared using SPSS statistical research analysis software. The results show, to establish a microenterprise business, microenterprise owners in both formal and informal areas need to comply with the environmental health laws. In addition to complying with the environmental health laws, microenterprises in formal areas are obliged to comply with the City zoning scheme and seek permission to establish businesses in these areas. The application process for seeking the City zoning approval is cumbersome and subjective. The results show that entrepreneurs in informal/township areas are automatically allowed by the local government to establish microenterprises in these areas and need not comply with the Zoning Scheme. The main findings of the study reveal that microenterprises in formal suburbs face higher TACs in establishing businesses in these areas when compared to those in township areas.

Since the dawn of democracy, South Africa has received high numbers of refugees from around the African continent in particular. One of the largest groups of refugees, Somalis, have established numerous enterprises in South African cities, concentrated in micro and small business sectors, particularly in the grocery and textile industries. The presence of Somali entrepreneurs and their role in the South African economy is contested, framed in relation to township informal economies and debates on xenophobia. Research to-date, however, focuses almost exclusively on Somali informal micro-enterprises in the spaza shop sector. To address this gap in the research and debate, this thesis examines Somali entrepreneurs, their development of varied formal enterprises, and their business strategies. I demonstrate in that these small formal businesses operate beyond the micro township-based informal spaza sector, building networks between township and city formal economies, and linking multiple economic sectors. In doing so, they act as a medium between producers of goods and general city consumers. The research demonstrates that Somali immigrant entrepreneurs can be considered what Bonacich (1973) describes as “middleman minorities.” This argument builds on qualitative research in Cape Town with Somali refugees who own formal small businesses that employ between five and a hundred employees. I draw on their histories, examine the evolution of their businesses, to substantiate how as newcomers - refugees, with limited knowledge about South African business dynamics, and little access to resources of the country - they managed to find their feet in business in varied ways. I show how Bellville as Cape Town’s Little Mogadishu, acts as a business hub and melting pot, a place to meet, to work together and connect their businesses to the rest of the city. From these histories, experiences, and networks, I analyse the business strategies that Somali entrepreneurs draw on, which include partnerships, shareholding, the building of trust, and their own mobility. I also investigate what enabled them to get a foot in the door when they first arrived, find new business opportunities, and access new markets in the city, region, and in some cases beyond. I argue that Somali immigrant entrepreneurs have created a diverse set of complex formal businesses, ranging from the sale of textiles, the processing of animal products, to consumer household goods. Through these businesses, these entrepreneurs have created jobs, new economic networks, new products, and extended markets, as well as physical retail and wholesale spaces. In making this argument, this research offers a better understanding of entrepreneurial work and its logics in the Cape Town Somali immigrant community. Their own experiences as entrepreneurs, as well as their business strategies, exceed by far narratives of informality, the spaza shop sector, and experiences of violence and xenophobia. This research broadens understandings of immigrant entrepreneurial activity in South African cities, and shift existing negative perceptions that depict refugees and immigrants as burdens on host communities and cities. I hope the research might also help inform the formulation of relevant policies for transitioning informal micro-enterprises in the country into small formal enterprises, one strategy that might address the critical issue of high unemployment in South African cities and society.

MCom (Business Management) / Department of Business Management / The spaza-shop sector is an integral part of the Small, Medium and Micro Enterprises (SMMEs) in the South African economy. The industry is made up of more than 100 000 enterprises with a collective annual turnover of R7 billion. Spaza shops also contribute about 4% (about 100 000 jobs) of employment in the informal sector. Spaza shops usually have a short lifespan and rarely grow; the failure rate of spaza shops, including those owned by immigrants is very high in South Africa. It is estimated that the failure rate of small businesses (including spaza shops) in South Africa is between 70% and 80%. It is also noted that about 50% of small businesses fail within the first five years of commencement of business, irrespective of the country. Despite severe competitive pressures faced by SMMEs, immigrants (especially Somalis and Ethiopians) have established a strong foothold in the spaza-shop sector. The main objective of the study was to investigate the success factors of immigrant-owned spaza shops in Thulamela Local Municipality. To address the research question, which focuses on the lived experiences and perceptions of participants, the interpretivist paradigm was used. A qualitative approach was adopted with a sample of 25 participants; purposive sampling was used to select participants with the required characteristics. Structured interview questions administered through face-to-face interviews were used to collect data and content analysis was used to analyse data. The data collected revealed that there are a plethora of success factors that are enhancing the continuance and sustenance of immigrant spaza shops in Thulamela Local Municipality. Of these, the most frequently given ones include - human capital, networks, culture, superior customer service, long operating hours and business location. The researcher recommended that immigrant spaza-shop entrepreneurs should establish a mentorship program that will assist in training other local spaza-owners to successfully manage their enterprises, in a bid to create harmony within the sector and to promote job creation. / NRF

Text in English / The aim of this research is to assess the impact social capital has had on Somali businesses. It argues against the perception that Somali business expertise is derived solely from the principles of economics. It argues that social capital plays a pivotal role in shaping the Somali spirit of entrepreneurship. The role of social capital in the creation of Somali human and financial capital is examined. This thesis, being a qualitative study, used semi-structured, unstructured interviews and direct observation as data collection methods. / Sociology / M.A. (Sociology)