In the early 2000s, former president Thabo Mbeki introduced into the public imagination the notion that SA has a dual economy. The first is characterised by formality and development while the second, the informal economy in which the urban poor and marginalised communities participate, is characterised by underdevelopment.
Given SA’s persistently high rates of inequality, a dual and unequal economy is unsurprising. Interestingly, this dual economy, as opposed to flagging the problem of inequality, focuses on calls and efforts to rid SA of the informal economy through regulation and formalisation. Rather than finding ways to truly value and nurture the informal economy, efforts and resources have been directed towards formal sector small business development. These efforts, particularly for young black South Africans, have not arrested the trend of youth unemployment and economic exclusion.
According to studies by the Human Sciences Research Council in 2018, an estimated 2.5m people worked in the informal sector, with more than half operating as informal traders, employing upward of 800,000 people.
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