Townships and the Informal Economy

How townships built under apartheid remain centres of poverty and enterprise, how spaza shops and minibus taxis work, and why the informal sector is smaller than elsewhere.

Townships were created under apartheid as segregated areas for Black South Africans, often far from city centres.

Today

Millions still live in townships like Soweto, Khayelitsha and Alexandra.
Many lack good jobs nearby.

Informal businesses

Spaza shops: small home-based stores selling everyday goods.
Shebeens: informal taverns.
Hair salons, car washes and street vendors.

Minibus taxis

The minibus taxi industry carries most commuters.
Largely informal, with taxi associations controlling routes.
Violence between taxi associations over routes is a problem.

Why the informal sector is small

Apartheid-era restrictions on Black businesses.
Crime and extortion.
Competition from formal supermarkets.
Regulation.

Foreign-owned spazas

Many spaza shops are run by immigrants, leading at times to xenophobic tensions.

The spaza shop

A woman in Soweto runs a spaza shop from her front room, selling bread, airtime and cold drinks to neighbours.

Thinking townships have no economic activity

They host many small informal businesses and transport services.

Key takeaways

Townships were created under apartheid far from jobs.
Spaza shops, shebeens and minibus taxis thrive there.
South Africa's informal sector is relatively small.
Crime and past restrictions limit informal business.