The challenges of forming partnerships between informal businesses in informal settlements and corporate South Africa

• Main Author: Hadebe, Nomthandazo
• Format: Others
• Language: en
• Published: 2010
• Online Access: http://hdl.handle.net/10539/8186

Since the institution of apartheid in the last century, informal businesses have not been looked at in a positive light. Some of them have been attacked, some have been displaced in the city, and much more profoundly, they have been rendered invisible in both urban and industrial policy. While the dawn of a new democracy has facilitated the development of new policies to cater as much as possible for this sector, many of them still fall through the crevices. The reasons given are: they are small, informal and ‘unbankable.’ In the informal settlements of South Africa, these reasons have been epitomized by many other associated social, political and economic justifications. For these reasons, the formation of partnerships between informal businesses in townships and corporate South Africa has remained a pipe dream. This study seeks to explore the reasons for the persistence of this scenario. In doing so, the research starts by adopting a ‘continental approach’, that is, exploring the literature dealing with experiences of informal businesses in various continents such as Latin America, South Asia and Africa. This approach is accompanied by a comparative analysis of these experiences, with particular reference to South Africa. The discussion of these experiences is linked to the investigation of the Diepsloot case study whereby twelve informal operators were interviewed in terms of their partnership linkages with corporate South Africa. The interviews were also conducted amongst corporate businesses such as Group Five and Corobrick. The major finding of this research is that the informal sector has the potential to operate effective businesses, but it is constrained by overly restrictive by-laws, lack of business skills and access to financial assistance. The research reveals that there is a maze of linkages that exist between various actors in the townships and the rest of the country which are defined in social, political and economic terms, but are not yet part of the transaction in developing partnerships in economic development. The researcher makes the planning recommendation that Provincial governments working with local municipalities should develop policies and a comprehensive management plans to provide skills training, access to capital in order to encourage corporate South Africa to engage businesses operating in informal settlements with a view of creating sustainable partnerships.