Informal sector’s contribution to GDP is stagnant

THE latest survey of employers and selfemployed South Africans by Statistics SA shows the informal sector’s contribution to gross domestic product has remained at about 5% from 2001 to 2013.

Its contribution to employment has declined by one percentage point, to 15.8%, over the same period.

Statistician-General Pali Lehohla said yesterday that the survey presented little evidence that the informal sector was benefiting from support programmes put in place by government to grow it and dent unemployment.

Government has acknowledged that a more focused approach is needed to help small businesses defined as “survivalists”, which operate mainly on the streets. According to the National Development Plan, these businesses include taxi operators, spaza shops, taverns, casual construction workers, hawkers and informal subcontractors.

Only businesses that were not registered for value added tax (VAT) were included in the survey.

Of the 1.5-million non-VAT businesses there are 143,000 who pay income tax and are in the formal sector.

Mr Lehohla said at the survey presentation in Pretoria that it was not evident that the informal sector was seen as the platform to identify and source a new group of entrepreneurs. The survey showed only 17% had entered the informal sector out of choice as the rest had no other option due to unemployment.

More than 69% of the people who started a business last year had no alternative, up from just under 61% in 2001 when the first survey was done. The percentage of people who started their own businesses after retrenchment declined from 4.7% in 2001 to 3.8% last year.

South African Institute for Entrepreneurship Chief Operating Officer Ernest Boateng said the current education policy left little room for entrepreneurship.

He said the emphasis was on enforcing an “employee mentality”.

The survey showed women, who dominated the informal sector in 2001, had been displaced by men. Mr Lehohla said this was because dominant sectors (construction, transport and finance) were more mechanised.