By Mbangwa Xaba
The Standard Bank Township Informal Economy Report (2025) forced South Africa to confront a hard truth: township businesses, the backbone of local economies, remain excluded from the formal economy.
The report revealed that around 80% of these enterprises are unregistered, operating in the shadows of a system that still refuses to see them.
Yet, these entrepreneurs continue to innovate, create jobs, and sustain families—often without a single hand of support.
Like in the dark days of apartheid, they are building value where none was expected.
At the National Africa Federated Chamber of Commerce (Nafcoc), our mission remains clear: to defend, advance, and empower township business as the foundation of genuine economic freedom.
The report confirms what we have long known: township enterprises generate nearly R900-billion in annual economic activity.
That is close to a trillion rand built from the ground up by people shut out of mainstream finance, policy, and procurement.
This is not an informal economy; it is a survival economy sustained by courage and creativity.
But survival is not enough. The continued exclusion of township businesses is not accidental—it is structural.
It is the result of systemic barriers, outdated regulations, and institutional indifference that keep black entrepreneurs trapped outside the formal economy.
Institutions meant to enable development have lost their way. The Industrial Development Corporation (IDC)—once a lifeline for small and medium enterprises—has become a graveyard for township ambition.
Viable businesses collapse under endless paperwork. Promising applications die in queues, strangled by bureaucracy.
The same is true for many development finance agencies that treat township entrepreneurs as charity cases, not as credible economic partners.
Banks, too, remain inaccessible. Township entrepreneurs are still judged by collateral, not potential; by postcode, not performance.
Many do not even qualify to open business accounts because of rigid credit requirements or outdated documentation rules.
For too long, access to finance has been treated as a privilege.
The regulatory environment adds yet another layer of punishment. Registering or deregistering with the CIPC remains cumbersome and confusing. For a one-person business or cooperative, the cost—in time, paperwork, and frustration—is often greater than the benefit.
Tax compliance is equally burdensome. Even those exempt from tax are forced to file multiple returns, creating an administrative nightmare for small operators.
These are not signs of an enabling state; they are symptoms of a government that mistakes red tape for accountability.
And through it all, there is a deafening silence from those charged with fixing the system.
The minister of small business development says nothing. The Department of Trade, Industry and Competition is missing in action.
It is not simply that township businesses have been let down—it is the indifference that wounds the most.
That silence tells every entrepreneur in Soweto, Mdantsane, Umlazi or Seshego that they are on their own.
The cost of this neglect is devastating. According to Statistics South Africa, 145 township businesses were liquidated in September alone. So far this year 1 180 closures have been recorded—a 23.9% increase year on year.
Each closure represents more than a business lost; it is a broken family, a shattered dream, and a community pushed deeper into poverty.
Still, township entrepreneurs persist. From spaza shops and cash-and-carries to construction cooperatives, caterers, and service providers, they continue to build value, feed communities, and create jobs.
The trillion rand they generate is proof that the so-called “informal economy” is in fact the engine that keeps South Africa turning.
But resilience must not be mistaken for progress. We need structural reform to unlock the full potential of township enterprise.
Nafcoc calls for a national policy shift that formally recognises township businesses as the backbone of the economy.
We demand an urgent review of the IDC and all development finance institutions to return them to their founding mission—development, not destruction.
We further propose the creation of a Township Business Relief and Empowerment Fund to support businesses facing closure due to systemic exclusion.
Local government must also play its part: municipalities and big business must localise procurement to drive township growth and build real participation in supply chains.
Township business is the invisible giant of this economy. We are not asking for favors—we demand fairness. How can a trillion-rand sector still be labelled “informal”? It must be at the heart of South Africa’s economy.
The IDC and other state institutions must remember their purpose. Instead of burying township businesses under paperwork, they must help them grow.
Every shop, cooperative, and service provider is part of a larger story of innovation, dignity, and contribution.
South Africa cannot grow while its township majority remains excluded. The nearly trillion-rand value created by township businesses proves they are not the problem—they are the solution.
Our message is clear: recognise, support, and empower township business—and the nation will rise with it.
• Zulu is the secretary general of Nafcoc
