TRADING PLACES:

CROSS-BORDER TRADERS AND THE SOUTH AFRICAN INFORMAL SECTOR

by:

Sally Peberdy

Southern African Migration Project

Migration Policy Series No. 6

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EXECUTIVE SUMMARY

Non-South African street traders are often portrayed in the South Africa media as "illegal", ill-educated, new arrivals who take opportunities from South Africans, and money from the country. The findings of this study challenge some of the basic myths about non-South African street traders and their activities. The study also makes policy recommendations for changes in both immigration and customs policy regarding informal cross border trade.

The study examines the participation of non-South African street traders in regional cross border trade and its implications for customs and immigration policy. The study focuses on traders in the handicraft and curio sector as they are significant participants in cross border trade. The report is based on semi-structured interviews with 107 non-South African (73 from the SADC region) and 21 South African traders of handicrafts and curios in Johannesburg and Cape Town. We also interviewed 22 South Africans who were employed by non-South African traders and 23 Zimbabwean curio sellers in Harare and Masvingo, Zimbabwe. We then interviewed key informant traders as well as local government officials and representatives of the South African Department of Home Affairs. Mozambican traders, under-represented in the study, will be the subject of a subsequent report.

The findings of this study contradict or challenge much of the conventional wisdom about the informal sector and the migrants who work in it.

In this study, over 90 per cent of non-South African respondents had some secondary education. Nearly 40 per cent had a formal qualification. Over two thirds had some form of further education or training; and 9 had some university experience. With one exception all the South African respondents had some secondary school education.

The majority of respondents are pursuing a future as small entrepreneurs. Less than 50 per cent were interested in finding formal employment and less than 5 per cent were actively seeking employment. Some 29 per cent said they had entered the business because they "enjoyed" trading and self-employment and 7 per cent categorized themselves as artists.

Some 27 per cent of the sample cite, as the reason for coming to South Africa, the opportunities offered by South Africa's tourist market; 24 per cent cited the strength of the economy or the rand; some 17 per cent spoke more generally of South Africa's attractions.

Most non-SADC traders are recent entrants. However, most traders from the SADC region have been travelling to South Africa to trade since at least 1990, and some before.

Some 71 per cent of readers identified their home country as their "permanent home." Only 4 per cent said "South Africa". The overwhelming majority of married respondents and those with children said they did not want to bring their families to South Africa.

• Cross border traders invest the majority of their profits within the country in the (formal) retail and manufacturing sectors.

• Traders assist South African exports by taking goods out of South Africa to sell in the region. Over 56 per cent of all non-South Africans, but 78 per cent of SADC respondents, take goods out of South Africa to trade. Only 27 per cent do not.

• Exported goods include electronics, appliances, clothes, shoes, household goods, and food stuffs. These items are South African products which are being promoted by industrial and SADC export policy.

• Estimates of the value of goods taken out of the country range from R500 to R10,000 per trip. The majority take out goods valued between R2,000-R3,000. Most traders returned home between 4-8 times per year.

• Official South African policy is to encourage trade with its SADC partners. There is no sound economic reason why should be monopolized by large South African formal sector companies.

• Over 50 per cent of traders spend between 40-50 per cent of their earnings in South Africa.

• Over 20% of foreign traders employ South Africans in their business operations.

• Only 15 per cent of traders did not bring goods with them to sell. Curios, wood and stone carvings comprise 90 per cent of the goods imported. The remaining 10 per cent consisted of wire, clothes and crochet work and leather goods. Mozambican traders bring vegetables, nuts, and cloth. None of these products are readily available within South Africa itself.

• The majority of traders from the region enter on visitors visas. Visitors visas allow people to enter but do not officially allow them to trade. There is no system of trading permits in place. African traders from outside the SADC region tend to be asylum seekers or refugees who are allowed to trade.

• Most traders pass through official border posts and pay duty. Some 63 per cent said they had problems with customs officials. Most cited the high cost of duties, bribery and overcharging.

• The present system of restrictive regulation has negative consequences for informal cross border traders as well as for the South African government.

• The issue of single entry visas increases the workload of the issuing offices as traders have to constantly reapply. Costs to government and traders are high.

• The ambiguous visa status of traders and complex tariff schedules present opportunities for corrupt Home Affairs and Customs and Excise officials as well as police.

• Duties paid at the border are a significant drain on the profit margin of traders. They also come with costs to the Department of Customs and Excise who have to administer the gathering of relatively small amounts of duties against complex tariff schedules.

Based on the findings of this study, various policy recommendations can be made:

At the same time as South African traders have been attacking non-South African traders, the South African government has endeavoured to build trade links with neighbouring and other African states. The study places the activities of informal cross border trade within the wider context of regional trade networks and flows of goods. The policy recommendations made here reflect the move to free up regional trade and a concern that small entrepreneurs should not be disadvantaged.