How informal cross border trade extends the reach of Johannesburg’s retail and wholesale sectors

What is happening at bus stations and taxi ranks in the centre of Johannesburg? Who is getting on and off and what is being loaded up? Many people at these transit hubs are informal or small scale cross border traders with their goods. Johannesburg is the main destination of informal cross border traders from the rest of southern Africa — people who travel to South Africa to buy goods for their businesses in their home country.

The contributions of informal cross border traders may not look like much when their bags and boxes are loaded onto buses and taxis around the city centre, but their business contributes substantially to the city’s retail and wholesale sectors. The traders’ reach extends far beyond the borders of Johannesburg, Gauteng and South Africa, into other African countries. It is possible to shop at South African owned food and clothes stores in Harare, Maputo, Lusaka, Manzini, Gaborone and Maseru. But it is in the markets and streets of these African cities, towns and villages that many people buy goods and food from South Africa — goods carried and sold there by informal cross border traders.

Cross border 2
Photo credit: Peter McKenzie.

In 2014, SA Tourism counted 521,838 African land border entries to South Africa ‘to shop for business.’[1] It does not show how many travelled to Johannesburg, but a 2008 Southern African Migration Project (SAMP) survey found the city was the destination of 41% of cross border traders entering South Africa – the equivalent of over 213,000 visits in 2014.[2]

A 2014 Gauteng City-Region Observatory (GCRO) survey of 665 southern African informal cross border traders in Johannesburg to shop found on average traders spent R10,568 per person per trip on goods. SA Tourism (2014) found people travelling to South Africa to shop for business spent R17,000 per trip. So in 2014 informal cross border traders contributed between R2.3 and R3.6 billion to the city’s wholesale and retail economy.

The GCRO 2014 survey found traders buy from multiple outlets in the formal wholesale and retail sectors including wholesalers (46%), factories (37%), Oriental Plaza (45%) and Chinese run malls (62%) and small shops and retailers (21%). While many are market sensitive, buying to suit changing demand in their home countries, they mostly bought clothing and shoes (41%), accessories (31%), bedding (23%), toiletries and cosmetics (21%), pre-owned clothes and shoes (18%) and household products (15%).

Traders also spend on food and accommodation in South Africa. In the GCRO 2014 survey the 44% who stay with family and friends highlight the importance of the migrant community in the city in enabling trade as respondents saved on accommodation costs and got information about where to buy. Others rent rooms and stay in hotels and bed and breakfasts, on their own and with others. Average spend per trip on accommodation for those that paid for it was R453 and average spend on transport was R1,091.

Table: Financial spend of informal sector cross-border traders

GCRO 2014 survey of informal cross border traders Collective spend of 665 traders in GCRO 2014 survey in one trip to Johannesburg to shop for business Annual collective spend of 213,000 trips to shop for business in Johannesburg (2014)
Direct spend on goods R10,568

(SA Tourism R17,000)

R7,027,720 R2.3-R3.6 billion
Average spend on transport on last trip to Johannesburg R1,091 R725,515 R232,383,000
Average spend on accommodation on last trip to Johannesburg

(56% paying for accommodation)

R453 R168,516

(372 traders only)

R54,033,840

(56% of visits)

Traders also contribute to the tax base of South Africa and their home countries. They pay VAT on goods purchased from the formal sector in South Africa. Although VAT can be claimed back at the border three quarters of interviewees in the GCRO 2014 survey did not do this. Traders should pay duties on goods they take from one country to another when owed. In the GCRO 2014 survey the 443 traders who paid duties contributed over R280,000 to the tax base of their home countries in just one trip for business.

Cross border 3
Photo credit: Peter McKenzie.

So if you find yourself waiting at a border post for a bus load of people to be processed through immigration and customs be patient. It is more than probable that most, if not all, are informal cross border traders extending the reach of South Africa’s formal sector retail and wholesale economy into the villages, towns and cities of the region.

 

Sally Peberdy is a senior researcher with the Gauteng City-Region Observatory (www.gcro.ac.za), a partnership of the University of Johannesburg, the University of the Witwatersrand, the Gauteng Provincial Government and organised local government. Her research interests are in the areas of internal and cross border migration and informal sector entrepreneurship and trade.

The research on which this article is based was funded by the GCRO and the International Development Research Centre (IDRC) through the Southern African Migration Programme and the African Centre for Cities.

For further information contact Sally Peberdy: sally.peberdy@gcro.ac.za or 011 717 7280.

All photos: Peter McKenzie.

References:

[1] SATourism, 2014 Annual Tourism Performance Report (2015), Government Printer: Pretoria, pp. 36-37. (www.southafrica.net).

[2] S. Peberdy, D. Tevera, E. Campbell, I. Raimundo, M. Tsoka, N. Zindela, G. Tawodzera, N. Nickanor, C. Mulenga, T. Green, N. Msibi (2008) ‘Monitoring informal sector cross border trade in Southern Africa’, unpublished report, (2008) SAMP, pp.60. For more on this survey see: Peberdy, S., Crush, J. Tevera, D., Tevera, D., Campbell, E., Zindela, N., Raimundo, I., Green, T., Chikanda, A., and G. Tawodzera (2015) ‘Transnational entrepreneurship and informal cross-border trade with South Africa,’ in J. Crush, A. Chikanda and C. Skinner (eds.) Mean Streets: Migration, Xenophobia and Informality in South Africa, SAMP, University of Cape Town and IDRC: Cape Town and Ottawa: 207-228; and Peberdy, S., Campbell, E., Cau, B., Crush, J., Green, T., Msibi, N., Mulenga, L., Nickanor, N., Raimundo, I., Tevera, D., Tawodzera, G., Tsoka, M., Zindela, N. (2015) ‘Calibrating Informal Cross-Border Trade in Southern Africa’ SAMP Migration Policy Series No. 69 (http://imrc.ca/wp-content/uploads/2015/05/PS-69-Calibrating-Informal-Cross-Border-Trade-in-Southern-Africa.pdf).

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