INTERNATIONAL MIGRATION, IMMIGRANT ENTREPRENEURS AND SOUTH AFRICA'S SMALL ENTERPRISE ECONOMY

by:

C.M. Rogerson

Southern African Migration Project

Migration Policy Series No. 3

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EXECUTIVE SUMMARY

Since 1990 there has been a growing movement of foreign migrants and refugees to South Africa. The migrants have come primarily from South Africa's traditional supply areas, including many SADC countries. An increasing number, however, are from elsewhere in Africa and further afield. South Africa's new migration regime has generated considerable controversy within the country. The policy debate focuses on the implications of migration for the national labour market and for the development of new national immigration policy.

The best-documented form of migration by temporary workers is from surrounding African countries in such sectors as mining and agriculture. Less well-known are the migrants and new immigrants who have established themselves in the informal and small enterprise economy. This report examines and analyses the role of new foreign migrants working in the SMME sector of South Africa's major city. Johannesburg is of particular interest because the city is the focal point for much of the current international migratory flow into South Africa.

The study is based on a detailed survey of 70 immigrant entrepreneurs who have established small businesses in Johannesburg. These entrepreneurs operate their businesses in the inner-city of Johannesburg, an area which has experienced dramatic changes in its organization, residential complexion and business make-up over the last decade. Large parts of the inner-city have, in fact, been taken over by foreign migrants. Foreign owned SMMEs are now particularly a significant element of the changing economy and landscape of the Johannesburg inner-city. Several general conclusions can be drawn about foreign migrant involvement in the SMME sector:

The study allows us to distinguish between two distinct groups of migrant-entrepreneurs, namely migrants from the Southern African Development Community (SADC) countries and non-SADC migrants. The research points to a number of marked differences between SMMEs operated by SADC and non-SADC migrants:

The entrepreneurs face a number of problems operating their businesses. Most frequently cited were (a) access to finance and credit including difficulties opening bank accounts; (b) problems associated with acquiring visas and permits and dealing with customs (with SADC migrants experiencing greater problems); (c) harassment by police and local officials; and (d) being targeted by criminals and gangs.

 

The most important set of policy-relevant findings in this study relate to the role of foreign-owned SMMEs in job creation:


These small immigrant-run businesses are thus clearly contributing directly towards local job creation in Johannesburg for South African workers. Once the business is well-established the major beneficiaries in job creation are South Africans. In the long-term, given the continuing prosperity and growth of these enterprises, an ever-increasing proportion of South African workers will be absorbed into these small businesses.


In ameliorating the xenophobia that surrounds foreign-owned business, it is essential that national and local policy-makers appreciate and openly acknowledge the positive role - both existing and potential - of these businesses. In particular, this issue will be crucial in the context of future job creation and local economic development planning for Johannesburg. In fact, given the concentration of businesses and entrepreneurs' residences in the inner-city areas of Johannesburg, the potential role of these SMMEs in contributing towards the economic and social regeneration of decaying areas of inner-city Johannesburg must not be overlooked by Johannesburg city planner and policy-makers. The same could be true of other South African cities as well.