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Growth, poverty and the prospects for informal self employment

David Neves


Contemporary South Africa is a lower middle income country context marked by some of the highest levels of incomeinequality in the world. In much of the developing world the informal section is the default option for those unable to secure employment in the formal sector. Yet despite this, South Africa with its high levels of unemployment and poverty has some of the lowest levels of self employment in the developing world. This has led several commentators to speculate on the constraints to informal self employment within this context. Thispaper examines informal self employment within South African, including its promise for addressing issues of chronic poverty and economic marginalization. In order to accomplish this, the informal sector is examined indepth, including the manner in which small-scale, survivalist informal self employment is both shaped by social networks, and frequent represents an extension of poor household’s more general livelihood generating activities. The enquiry furthermore considers the range of constraints which the informally self employed face. These include: South Africa’s unfavourable spatial, labour market and human capital formation legacies; the prevailing adverse incorporation of the poor into the larger political economy, and the failures of intermediation which theemergent self-employed typically face. The paper argues informal self employment offers up crucial, yet simultaneously constrained, prospects for escape from chronic poverty. These prospects are evaluated, and in concluding a range of key points of policy leverage for maximising the benefits of informal self employment, are elucidated. 

Publication Type(s)

Conference Paper

Ten Years of War Against Poverty Conference Papers

Conference: Ten Years of War Against Poverty


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