Understanding sustainable livelihood strategies of informal traders: a case of Mount Frere, Eastern Cape

Abstract

This study sought to understand the livelihood strategies of informal traders in Mount Frere, Eastern Cape in South Africa. The study was conceived from the hypothesis that views informal economic participation as an alternative to formal employment, where the latter is scarce. The point of departure for the study was that informal trading of both goods and services is employed as a livelihood strategy in the battle against poverty. Placing the inquiry within the Sustainable Livelihoods Framework is a way of recognising that informal trading is in some cases the only survival strategy while in others it constitutes just one livelihood strategy closely linked to other diversified means of living. The Sustainable Livelihoods Approach was used as a framework to guide the analysis aimed at understanding the sustainable livelihoods of informal traders in Mount Frere, Eastern Cape in terms of the vulnerability context they find themselves in, the assets they use, the organisations or institutions that affect their activities and the results they get out of their informal entrepreneurial efforts. The review of theories, concepts and prior empirical studies on both the informal economy and sustainable livelihood strategies helped in identifying the challenges that are faced by informal traders as well as the coping strategies they employ, in order to relate these to the situation of the traders in Mount Frere, leading to a determination of the kind of support that may be rendered to them. The study focused on informal businesses, being those that are either not registered as legal businesses, or registered as legal businesses but not registered for tax. Data was collected from a sample of 125 informal traders, consisting of 100 CBD traders who operated within the CBD and 25 mobile traders who operated in the residential and rural areas around Mount Frere. The study followed the explanatory sequential mixed methods case study design in which the questionnaire and the semi-structured interview were used for data collection. The results from the study show that the predominant challenges the traders faced were competition, crime, inadequate infrastructure, and financial constraints. The traders however, employed strategies such as relying on social capital networks to mitigate the effect of some of the challenges. The majority of the traders in Mount Frere have other sources of income and the majority indicated that they got enough income from their informal operations to cater for individual and household basics such as food. These findings imply that informal trading evolves as a sustainable livelihood strategy, which depends on external support for it to flourish.