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South African Journal of Economic and Management Sciences

On-line version ISSN 2222-3436
Print version ISSN 1015-8812

S. Afr. j. econ. manag. sci. vol.13 n.3 Pretoria Jan. 2010




Debt financing the capital requirements of South African informal market traders



Derek Schraader; Louise Whittaker; Ian McKay

Wits Business School, University of the Witwatersrand




This paper describes a case study that was undertaken to determine whether formal sector personal debt financing might contribute to the funding of South African informal market traders. The case study was conducted at the Natalspruit informal market in Ekhurhuleni, Gauteng. Quantitative questionnaire surveys and a financial diaries project established that market traders in the market have capital requirements large enough to justify the use of formal sector debt financing, can generate sufficient operating profits to pay for formal sector debt financing and would be willing to utilise formal sector debt financing if given the opportunity. However, formal sector debt financing is most relevant to those informal market traders with the skills and motivation to utilise financing effectively and who are willing to inject more formality into their businesses.

Keywords: informal markets, informal trading, micro enterprise finance

JEL: O17



“Full text available only in PDF format”




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Accepted November 2009



1 According to the official definition of unemployment
2 The authors gratefully acknowledge the support of the Ekhuruleni Metropolitan Council for this research.
3 The term 'hawker' closely corresponded with the definition of the informal market
4 According to this survey informal/street/market/ stall traders generated an average annual turnover of R18 620 (which equates to an average monthly turnover of R1 552). Using a net profit margin of 25 per cent, this category of small business was generating an average monthly net profit of R388.
5 The MFRC was the forerunner to the NCR (and is still the custodian for much of the data.
6 A South African ID document can also be issued to a person to whom permanent residence has been granted, a person who has been exempt in terms of the Aliens Control Act, 1991, or to a refugee.

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