Unlocking South Africa's Informal Food Sector

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71point4 > Blog archive > 2020 > May > 07 > Unlocking South Africa’s Informal Food Sector

Unlocking South Africa’s Informal Food Sector

Posted by: Illana Melzer
Category: Covid-19

A 2017 study of 1 000 informal food vendors in Cape Town by Dr. Godfrey Tawodzera and Professor Jonathan Crush found that only 7.3% of surveyed vendors keep business records and 3.9% use mobile phones to receive payments from customers. These two aspects are intrinsically linked – so much more work needs to be done to digitize the business models and channels of informal vendors in an effort to support their sustainability both in the the short term (get through lockdown) and in the long run.  In this blog, Frances Whitehead and Illana Melzer discuss this and other interventions to unlock the informal food sector in South Africa.

According to Stats SA’s latest Quarterly Labour Force Survey (Q4:2019 QLFS), approximately three million people, or 18% of employed people in South Africa, work in the informal sector.[1] Of those, at least 14% appear to operate within the informal food trade sector. This includes spaza shop owners and employees, as well as street vendors selling packaged goods, fresh produce, prepared food, meat and livestock. The informal food trade sector is therefore an important component of our economy. Despite this, in the early days of our country’s nationwide lockdown, the operations of informal food vendors were significantly compromised by inconsistent law enforcement; in some areas spaza shops were shut down and in other areas, vendors were told that they may only trade during certain hours.[2]

Source: Stats SA QLFS Q4: 2019

The experience many informal food traders and spaza shop owners have endured points to a clear failure on the part of government to ensure law enforcement understand the lockdown rules and regulations. Aside from creating uncertainty, this failure resulted in the unwarranted harassment and arrest of traders and the confiscation of produce by the SAPS and the SANDF. Many of these stories hit the headlines and were met with public outcry at the seemingly harsh treatment of vendors.[3] While the shut-down of unregistered spaza shops might have provided justification for xenophobic police violence against foreign informal business owners[4], even those informal food traders that were allowed to operate would have been negatively affected. Food vendors who rely on passing trade have undoubtedly experienced a drastic decline in sales, while others say they have not returned to work because they are uncertain about the permit application process[5]. Some, however, continue to operate out of their homes in an effort to put food on the table for their families.

Some informal food traders in Khayelitsha have continued to operate in an effort to keep their business going.

With few supermarkets serving large populations in lower income areas, particularly in townships, the informal sector plays a critical role in serving these customers. Previous studies estimate that 65% of households in low-income neighbourhoods in Cape Town frequently purchase goods from local informal food vendors.[6] Many informal food vendors provide access to fresh, healthy food for low-income households with precarious incomes, allowing for frequent, low-cost food purchases without additional transport expenditure.[7] In the township context where some households do not have refrigerators and cannot necessarily afford to buy in bulk, this is critical. They are also vital for creating employment and reducing poverty, fuelling South Africa’s vibrant township economy. In many cases, informal food vendors are the primary breadwinners for their large households. A 2017 study of over 1000 informal food vendors in Cape Town found that 78% of surveyed vendors reported that their business earnings was their only source of household income.[8] It is therefore not surprising that the effects of the lockdown on both low-income households and informal business owners have been devastating.

To quote from interviews recently conducted by 71point4 with informal food traders in Khayelitsha and Phillipi:

“The issue of not having something to put on the table when I have kids as a single parent… it’s very hard. Now that we have to quarantine in our homes, nobody buys chickens anymore and the business is going down.” – Ntombekhaya, chicken seller, Khayelitsha

“I have a braai stand but I can’t do business because my permit states that I must sell raw meat. It is difficult because it’s my only income. I can’t even support myself and we are nine in a household.” – Nosibusiso, braai stand owner, Khayelitsha

Although the government’s proposal to top up the Child Support Grant will provide some support, it is unlikely to replace lost income. A better outcome would see informal food vendors operating without the barriers of bureaucracy and the fear of arrest. Instead of harassing business owners, the government and law enforcement should actively support informal food vendors to maintain food security in low-income areas throughout the COVID-19 crisis.

Naturally, this would require flexibility regarding how informal vendors are allowed to operate, requiring a very different model of interaction between vendors and authorities, principally in municipal government. There may be opportunities for some vendors to expand their operational space or be relocated to vacant premises with access to water and sanitation services (such as taxi ranks, parkings lots or school grounds) where social distancing in queues is possible. This would reduce overcrowding outside supermarkets and simultaneously reduce the need for households to use public transport to access food. Cooperation with law enforcement would not only ensure that social distancing rules are followed, but would also provide protection from theft and potentially violent conflict — a material benefit, particularly for women-owned businesses.

Queues of Khayelitsha residents waiting to access Shoprite, one of the few large grocery stores in Makhaza.

Beyond this, a lockdown-induced restructuring could present an opportunity for lasting, structural transformation of informal food supply chains. Currently, many small-scale producers and informal vendors are unable to access stock efficiently. This could be addressed by improving distribution between producers and smaller food vendors. The mobilisation of temporarily unemployed taxi drivers and the repurposing of underutilised transport assets could transport and deliver produce, while unused facilities in lower income areas that might have been used for social gatherings could be used to safely store stock. Besides combatting job insecurity, this would significantly reduce the need for informal business owners to travel to congested markets, reducing their exposure to the virus.

In addition, the flow of funds within supply chains could be digitised to enable new servicing models. An accessible, low-cost digital payments infrastructure that supports small and micro businesses would provide visibility on commercial activity which currently remains invisible. This would enable financial inclusion in the informal sector where business owners are typically unable to access finance because they lack documented evidence of trading activity. It would also provide security to business owners and customers who would no longer be required to carry cash. Beyond this, it would keep everyone safe. Moving away from cash allows for distance sales, minimises excessive queuing outside ATM machines and could reduce the spread of the virus by eliminating the handling of cash.

The COVID-19 crisis offers the government an unprecedented opportunity to rethink existing policy and focus on interventions that will have an enduring impact. Of course, we need immediate economic interventions to sustain the livelihoods of South Africa’s poorest households and prevent a potential humanitarian crisis. It is therefore critical to facilitate the operation of the informal food sector in these times. Beyond this, we must develop mechanisms to restructure and digitise food supply chains so that smaller businesses can thrive in the long run.

Authors: Illana Melzer & Frances Whitehead

References
[1] StatsSA defines the informal sector as “organisations that are not registered in any way. They are generally small in nature, and are seldom run from business premises. Instead, they are generally run from homes, street pavements and other informal arrangements”.
[2] PLAAS.2020. Food in the time of coronavirus: Why we should be very, very afraid.https://www.plaas.org.za/food-in-the-time-of-the-coronavirus-why-we-should-be-very-very-afraid/ (Accessed 1 May 2020).
[3] Shange, N. 2020. Help for woman arrested selling atchaar during lockdown in Soweto. https://www.timeslive.co.za/news/south-africa/2020-04-23-help-for-woman-arrested-selling-atchaar-during-lockdown-in-soweto/(Accessed 6 May 2020).
[4] Sizani, M. 2020. Covid-19: Police shut immigrant-owned spaza shops after Minister’s xenophobic statement. https://www.groundup.org.za/article/covid-19-police-shut-down-immigrant-owned-spaza-shops-after-minster-ntshavhenis-xenophobic-statement/(Accessed 1 May 2020).
[5] Manyane, M. 2020. Informal traders tell of battle to get lockdown trading permits. https://www.iol.co.za/sundayindependent/news/informal-traders-tell-of-battle-to-get-lockdown-trading-permits-47211423 (Accessed 1 May 2020).
[6] Tawodzera, G., Crush, J. 2019. Inclusive growth and the informal food sector, Cape Town, South Africa. https://hungrycities.net/wp-content/uploads/2019/08/HCP16.pdf (Accessed 6 May 2020).
[7] PLAAS. 2020. Food in the time of the coronavirus: Why we should be very, very afraid. https://www.plaas.org.za/food-in-the-time-of-the-coronavirus-why-we-should-be-very-very-afraid/ (Accessed 1 May 2020).
[8] Tawodzera, G., Crush, J. 2019. Inclusive growth and the informal food sector, Cape Town, South Africa. https://hungrycities.net/wp-content/uploads/2019/08/HCP16.pdf (Accessed 6 May 2020)

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Author: Illana Melzer

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