What’s a rand got to do with it?

In South Africa’s formal economy a rand can’t get you very far. Have you ever popped in to your local grocer to get what you’re after and spent just one rand?

While one rand can’t buy much in the formal economy it can go a long way in the country’s bustling informal economy. In this cash economy, where consumers are on the move, one rand can buy a crunchy barbecued chicken foot, a delicious deep fried ball of dough, a variety of sweets, a candy dipped apple, a tea bag or two, a loose cigarette, even a slice of home-baked cake.

R1-1
A home store with a small section of R1 items. Credit: Nava Derakhshani

In South Africa’s townships many residential homes double as places of informal business. Entrepreneurial innovation is essential in an economy where formal jobs are a scarcity and home-based businesses are common as a coping method for individuals with limited access to a secure income. These tiny micro-enterprises are generally run by women who are excluded from the job market because of their age or due to household burdens that they need to attend to (in the absence of reliable partners). These businesses might be small and can at best be described as ‘survivalist’ in nature but their significance to livelihoods should not be overlooked. The large volumes of cash that move through this informal system through multiple small transactions, which often involve sales of no more than one rand, create an essential income for many people.

These informal businesses run from a range of places, including setups in township high streets to catch the high density of moving traffic, stands outside schools, and also mobile street hawkers.

Survivalist businesses provide a stepping stone into the world of entrepreneurship. The importance of small scale sales for the livelihoods of individuals who often don’t have other avenues to earn an income is seldom recognised. Yet it offers the survivalist entrepreneur a chance to compete in the retail economy through selling just that single teabag that someone may need to make a cup of tea.

Nava Derakhshani works for the Sustainable Livelihoods Foundation. She  has a passion for environmental sustainability and believes that social equality and access to resources are significant determinants for ecological care. She is interested in the dynamics and dynamism of urban systems, informality, resilience and food security.

Top photo: a display of products that sell for R1 or less in the informal economy. Credit: Justin Patrick

 

 

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