An assessment of survivalist enterprises in the Capricorn District Municipality

Abstract

This study aims to reconcile diverging views on public-sector support for survivalist enterprises. The study assessed all 566 survivalist enterprises in the records of the Capricorn District Municipality of Limpopo Province, South Africa. Data on variables such as demographic characteristics and the types of items traded were collected through questionnaires and analysed by means of cross-tabulations in the SPSS software program. The study found that most survivalist entrepreneurs had obtained at least a secondary education. Women ran the majority of these enterprises, and youth participation was also substantial. The study recommended providing these entrepreneurs with training in technical and financial management skills, but employing differentiated training strategies for urban and rural enterprises, as well as specifically targeting young entrepreneurs. Training should be conducted at a time that suits the entrepreneurs, for instance when business activity is lower.

Keywords:

• survivalist
• demographic
• enterprise
• Capricorn
• municipality

1. Introduction

1.1 Background of the study

The South African government has long acknowledged the critical role of small, medium and microenterprises (SMMEs), particularly their ability to mitigate the effects of poverty and unemployment in rural and informal urban areas (DTI, 2005; Chalera, 2007). However, the role of very small businesses, such as survivalist enterprises, has largely been ignored.

The promulgation of the National Small Business Act in 1996 was a clear indication of the government's commitment to the development of small businesses (Rogerson, 2004; Ferreira et al., 2010). The Department of Trade and Industry was tasked with implementing the initiatives stemming from the Act, in partnership with parastatals such as the Industrial Development Corporation, the Small Enterprise Foundation and Khula (Ferreira et al., 2010). Their support included skills and market development (Herbst, 2001; Molapo et al., 2008).

1.2 Statement of the research problem

In 1994 South Africa emerged from a political system that had entrenched ‘separate development’ for various races. Black people, who were in the majority, had been forcibly moved to rural ‘homelands’ (South African History Online, 2013) as apartheid legislation confined them to densely populated but marginalised areas far from the economic nodes. These locational disadvantages still significantly affect the performance of the small businesses they often started as a survival strategy. This study assesses survivalist enterprises through an empirical survey in a rural region, the Capricorn District Municipality in South Africa's Limpopo Province, to highlight the key characteristics of and challenges faced by the survivalist sector.

1.3 Objectives and limitations of the study

The objective of the study is to assess the demographic characteristics of the entrepreneurs (age, level of education and gender), the most-traded items and trading localities. Owing to cost and time constraints, the study is limited to a single district municipality (the others in the province being Vhembe, Mopani, Waterberg and Sekhukhune). However, this municipality is the economic hub of the province and shares a number of characteristics with the other districts, such as the existence of large rural and semi-urban areas.

The next section discusses survivalist enterprises as a component of the SMME sector. The paper then outlines the methodology for collecting and analysing both primary and secondary data. The final sections present the findings, conclusions and recommendations.

2. A brief review of the survivalist sector

2.1 Theoretical framework

The concept of survivalist enterprises originates from the disadvantage theory of business enterprise, which recognises that certain enterprises may be blocked from accessing opportunities in the economic mainstream (Boyd, 2000). It argues that some people are compelled by their disadvantaged situation to seek independent means of survival outside the formal economy.

In the broader economic context, the survivalist sub-sector is part of the SMME sector, along with SMMEs (Valodia, 2000; Herbst, 2001; Tustin, 2003; DTI, 2005; Chalera, 2007). Survivalist entrepreneurs are people who are unable to find paid jobs. Microenterprises are business that do not operate from a clearly defined location, lack operating licenses and permits, and are therefore not registered for value-added tax. Small enterprises are usually more formally established, occupy business premises and employ between five and 50 employees who are owners or are directly controlled by the owner-community. Medium enterprises operate from fixed business premises and, since they employ between 51 and 200 employees and have a turnover of up to R15 million per year, contribute significantly to both employment generation and government revenue.

In many societies, people are pushed into the survivalist sector by unfavourable conditions (such as economic downturns) and tend to return to the formal economy when conditions improve. However, South Africa is unique in that most survivalist entrepreneurs (notably women) have been engaged in the sector for their entire working life (Boyd, 2000). According to Hlongwane (2011), the negative effects of the former policy of separate development will continue to influence poor, usually black, people for many years, despite favourable new policies. Many participants in the informal job market have been trapped in a vicious cycle of illiteracy and marginalisation, and are unable to benefit from opportunities created by the Black Economic Empowerment initiative.

In line with Ligthelm (2008), this paper defines a survivalist entrepreneur as an informal entrepreneur with three clearly distinguishable characteristics: non-compliance with economic regulations; operating on a very small scale; and some dealing in forbidden activities such as smuggling and the resale of stolen goods.

2.2 Arguments on supporting survivalist entrepreneurs

Ligthelm (2008) holds that governments should not provide support to survivalist enterprises, as the ‘entrepreneurs’ lack both entrepreneurial skills and will, operate on a temporary basis and intend to abandon the enterprise as soon a formal job opportunity arises. Temkin (2009) concluded from a study in Mexico that the informally self-employed were poorer, older and less educated than their counterparts in the formal job market. As a result, they did not contribute much towards economic growth.

Scholars in favour of survivalist activities, such as Valodia (2001), emphasise the value of the focus on business-oriented women and youth. Vearey (2008) notes that due to its protective and integrative urban refugee policy, South Africa has attracted many foreigners, mostly from other African counties, who rely heavily on the survivalist sector. This paper is likewise in favour of supporting survivalist enterprises.

3. Methodology for data collection and analysis

3.1 Study area

This study was carried out in the Capricorn District in the Limpopo Province of South Africa. The district borders the Waterberg in the west, Greater Sekhukhune in the south, Vhembe in the north and Mopani on the eastern side. It consists of five local municipalities: Lepelle-Nkumpi in the south, Aganang in the west, Blouberg in the north-west, Molemole in the north, and Polokwane at the centre. The largest city is Polokwane, which is the economic hub and capital of the province.

3.2 Data collection and analysis

The study adopted both qualitative and quantitative methodologies for collecting and analysing secondary and primary data. Secondary data consisted of studies on the SMME sector in general, and the survivalist sector in particular, including articles in peer-reviewed journals and reports published by the Capricorn District Municipality and its five local municipalities (especially their Integrated Development Plans). Primary data were obtained from all 566 survivalist enterprises in the development nodes identified by the local economic division of the district municipality. The development nodes were Tibanefontein Rural Village Market in Aganang Local Municipality (44 survivalist enterprises); the towns of Senwabarwana in Blouberg Local Municipality (53 survivalist enterprises), Lebowakgomo in Lepelle-Nkumpi Local Municipality (201 survivalist enterprises) and Mogwadi in Molemole Local Municipality (56 survivalist enterprises); as well as the City of Polokwane in Polokwane Local Municipality (212 survivalist enterprises).

Responses recorded in the questionnaires were summarised in Excel spreadsheets. Since the study involved whole populations, there was no need for rigorous inferential statistical analysis. Instead, the Excel data were transferred into the IBM SPSS Version 22 software program for descriptive analysis, specifically cross-tabulations. Following Field (2009), levels of the two variables were arranged in a grid, showing locations (categorical variable A) and the number of observations (categorical variable B), as per Table 1. Three variables were assessed using this method – gender, educational attainment and traded items (food or non-food).

Table 1: Contingency/cross-tabulation table used for data analyses

Categorical variable B		Categorical variable A
		Observation A1	Observation A2	Observation A3, etc.	Total
Observation B1
Observation B2
Observation B3, etc.
Total

Source: Adapted from Field (2009).

One critical variable that the study sought to evaluate was the level of income generated through trading. However, most respondents were either reluctant to provide such information or lacked operational records. A follow-up study focusing on training, particularly on general and financial management (including recordkeeping), will be a major element of the intervention strategy.

Ethical considerations included obtaining permission from the research institute, the Capricorn District Municipality, the five local municipalities, the association that represents the interests of survivalist entrepreneurs and the survivalist entrepreneurs who participated in the study.

4. Study findings and discussions

Table 2 shows that more than one-half (56%) of the survivalist entrepreneurs in the Capricorn District had obtained at least a secondary education. This is significant, because it potentially facilitates their exposure to new skills and information. The table shows that the largest proportion of survivalist entrepreneurs with at least secondary education operated in the two most populous local municipalities, Lepelle-Nkumpi and Polokwane (respectively 22% and 18% of the total number of entrepreneurs). This finding is in line with that of Tustin (2003), who showed that over 60% of survivalist entrepreneurs in South Africa had obtained at least a secondary education.

Table 2: Educational attainment of survivalists in the local municipalities of the Capricorn District, Limpopo Province in South Africa, 2013

Description	Local municipality					Total
	Aganang	Blouberg	Lepelle Nkumpi	Molemole	Polokwane
Number holding primary education and below	18	19	77	29	109	252
% holding primary education and below	3.2%	3.4%	13.6%	5.1%	19.3%	44.5%
Number holding secondary education and above	26	34	124	27	103	314
% holding secondary education and above	4.6%	6.0%	21.9%	4.8%	18.2%	55.5%
Total for both education levels	44	53	201	56	212	566
% for each education level	7.8%	9.4%	35.5%	9.9%	37.5%	100.0%

Note: N = 566.

Source: From research results, 2013.

The situation is very different in other African countries. A 2009 study in the Ugandan capital, Kampala, found that 88% of street vendors were women with low levels of education (Muyanja et al., 2011), while in the Kwara State of Nigeria 63% of female survivalist entrepreneurs had no formal education (Ogunlade & Adebayo, 2009). In contrast, only 5% of very small traders in South Africa had no formal education (AICDD, 2005). The view that survivalist entrepreneurs are less educated, as discussed in the literature review above, can therefore not be generalised to all countries. It is worth noting from Table 2 that even in the local municipality with the lowest proportion of survivalist entrepreneurs (Aganang), the majority (26/44 = 59%) had at least a secondary education.

Table 3 presents the items commonly traded by the survivalist entrepreneurs in the district, classified as either food (e.g. porridge, meat, vegetables and fruit) or non-food items (e.g. clothing, airtime and hairdressing). The entrepreneurs obtained most of these products from wholesalers and supermarkets in Polokwane, although vegetables and fruit were obtained directly from smallholder producers from the irrigation schemes in the area. Substantial quantities of vegetables and fruit were available throughout the year, with the exception of seasonal products such as mangoes and pawpaws. Details of these transactions were not available, as the survivalist entrepreneurs generally did not keep operational records.

Table 3: Food and non-food trading by survivalists in the local municipalities of the Capricorn District, Limpopo Province in South Africa, 2013

	Local municipality
Trading activities	Aganang	Blouberg	Lepelle Nkumpi	Molemole	Polokwane	Total
Number selling food items (meat, vegetables, etc.)	20	50	117	42	188	417
% selling food items	3.5%	8.8%	20.7%	7.4%	33.2%	73.7%
Number selling non-food items (clothing, air time, etc.)	24	3	84	14	24	149
% selling non-food items	4.2%	.5%	14.8%	2.5%	4.2%	26.3%
Total selling both food and non-food items	44	53	201	56	212	566
% selling both food and non-food items	7.8%	9.4%	35.5%	9.9%	37.5%	100.0%

Note: N = 566.

Source: From research results, 2013.

Table 3 shows that the largest proportion of survivalist entrepreneurs in densely populated centres, such as Polokwane (33%) and Lebowakgomo (21%), sold food rather than non-food items. In addition, the difference between metropolitan and semi-urban areas in terms of food sales was minimal. A comparison between Polokwane and Senwabarwana (a semi-urban area) shows similar proportions of food sales – 89% and 94% respectively of the survivalist entrepreneurs in these areas traded in food. This suggests that a strategy aimed at improving food sales by survivalist entrepreneurs should pay equal attention to these different areas.

Non-food trading, which amounted to 26% of total sales, was more concentrated in rural areas. Table 3 shows that Aganang, a rural local municipality, contributed as much to total non-food sales as the metropolitan Polokwane (4%). However, the prevalence of non-food sales is very different between the two large towns, Polokwane and Lebowakgomo (4.2% and 14.8% respectively). One reason for this may be that Polokwane has many large, formal businesses that sell non-food items and crowd out survivalist entrepreneurs. Lebowakgomo (in Lepelle-Nkumpi) has fewer malls, plazas and supermarkets, and trading is not as competitive. Prudent entrepreneurs are clearly reluctant to trade in highly competitive markets such as Polokwane, which undermines the view in the literature that survivalist entrepreneurs do not have entrepreneurial and business skills.

Table 4 presents the gender dimension of survivalist entrepreneurs in the Capricorn District. About 76% were female, and the largest concentrations of female traders were located in Polokwane and Lepelle-Nkumpi (respectively 29% and 28% of the total number of female traders).

Table 4: Gender of survivalists in the local municipalities of the Capricorn District, Limpopo Province in South Africa

	Local municipality
Gender	Aganang	Blouberg	Lepelle Nkumpi	Molemole	Polokwane	District total
Number of females in sample	35	36	156	43	162	432
% of females in sample	6.2%	6.4%	27.6%	7.6%	28.6%	76.3%
Number of males in sample	9	17	45	13	50	134
% of males in sample	1.6%	3.0%	8.0%	2.3%	8.8%	23.7%
Gender total	44	53	201	56	212	566

Note: N = 566.

Source: From research results, 2013.

According to the African Institute for Community-Driven Development (AICDD, 2005), just over one-half (52%) of survivalist entrepreneurs in the Mangaung District were female. Wardrop (2006) likewise found that street sellers in Durban were mostly young women, who depended on income from survivalist activities to support their families.

In this study, Aganang had the highest proportion of female survivalist entrepreneurs (80% female and only 20% male). The proportions in the other municipalities were: Lepelle-Nkumpi, 78%; Molemole, 77%; and Polokwane, 76%. In the Blouberg Local Municipality, the proportion of women was relatively lower, at 68%. This finding confirms the view that women are the primary role players in the survivalist sector, and neglecting this sector could further marginalise them.

Figure 1 presents the age distribution of survivalist entrepreneurs in the Capricorn District, showing a normal distribution with an average age of about 41 years, clustered in the range of 30 to 52 years (a standard deviation of 11 years). The participation of young people between the ages of 25 and 35 is quite significant, and the highest participation rate is between the ages of 32 and 34 years. This is in line with the AICDD (2005) finding that young people, mainly women between 25 and 29 years of age, dominate the small business sector. In contrast, participation by the elderly (above the retirement age of 65 years) is minimal in the district, which could probably be ascribed to the provision of old age pensions by the government. These findings again do not support the contention that most survivalists are elderly.

Figure 1: Age spread of survivalists in the Capricorn District (N = 566)

Source: Study results, 2013.

Survivalist entrepreneurs listed their major challenge as being frequent harassment by the authorities, especially the destruction of informal trading infrastructure (such as tables, umbrellas, etc.) and threats of arrest.

5. Conclusion

The aim of this study was to assess survivalist enterprises in the Capricorn District. This was prompted by observations in the literature that these entrepreneurs did not deserve assistance from external agencies, given their lack of entrepreneurial skills, business acumen and educational attainment, as well as their relatively advanced age. The secondary data used in the study included journal articles and reports of the district municipality. Primary data were obtained from all 566 survivalist enterprises identified by the local economic division of the district municipality, which were located in the most populous areas of its five local municipalities (trading locality in brackets): Polokwane (City of Polokwane), Lepelle-Nkumpi (Lebowakgomo), Blouberg (Senwabarwana), Molemole (Mogwadi) and Aganang (Tibanefontein Rural Village Market). The data were analysed through cross-tabulations.

The main significance of the study is that it highlighted important characteristics to be considered when planning an intervention strategy for the survivalist sector. For example, it found that, contrary to findings in other countries (but in line with previous studies in Durban and Mangaung), most survivalist entrepreneurs possessed sufficient education to acquire new skills and access information with relative ease. Instead of simply targeting the general SMME sector, specific training interventions are needed to transfer technical and managerial skills to survivalist entrepreneurs. The study also found that, after consistent harassment by the authorities, many survivalist entrepreneurs had organised themselves at the local and district municipal levels. These organisations might facilitate the effective implementation of intervention strategies, as well as the provision of group loans by both public and private-sector institutions, since they could assist in monitoring the use and repayment of loans within the groups.

Another important finding was that roughly four out of five survivalist entrepreneurs were women, a proportion that was fairly constant in the various local municipalities. Contrary to other findings that most survivalist entrepreneurs are elderly, this study found participants to be fairly young, with an average age of about 41 years, clustered around 30 to 52 years. Youth participation was significant (mainly between the ages of 32 and 34 years), while participation of the elderly (over 65 years) was minimal. These findings show that neglecting the survivalist sector could further disempower women and young people, and undermine the government's aim of empowering these groups. Supporting this sector with skills transfer and other essential assistance may allow women and young people to graduate into more profitable and employment-generating business ventures.

The literature review suggested that survivalist entrepreneurs lack entrepreneurship and business acumen. However, this study found that trading in non-food items was lower in Polokwane than in the other large trading area, Lebowakgomo, probably due to the larger number of formal shopping areas in Polokwane. This demonstrates at least some inherent entrepreneurial qualities among the survivalist entrepreneurs, in that they concentrate on areas in which they have a competitive advantage.

6. Recommendations

Based on these findings, this paper recommends the following:

• Provision of training: the level of education of survivalist entrepreneurs in the Capricorn District equips them to benefit from training in technical, financial and managerial skills, by both public and private agencies.

• Different interventions in urban and rural areas: traders in urban areas focus more on food items, while their counterparts in rural areas are more likely to trade non-food items.

• Focus on the youth: the significant participation of young people in informal trading helps to mitigate the high unemployment in the district. Special programmes to enhance young people's entrepreneurial skills are needed, which could include targeted training through the Services Sector Education and Training Authority's Venture Creation initiative.

• Appropriate timing: training programmes should ideally be conducted when business activities are slow, for instance in midweek or over weekends.

• Role of civil society: the changing political landscape in South Africa has seen the emergence of political formations with significant youth support, primarily because they focus on economic empowerment. It is too early to assess their success in this regard, not least because of their radical approaches.

• Additional research: while these findings would apply to most districts in the Limpopo Province, further validation studies may be needed in other provinces and regions.

Disclosure statement

No potential conflict of interest was reported by the author.

Funding

This study was supported by the Capricorn District Municipality and the University of Venda Research and Publication Directorate.