The township entrepreneurs who built a R1-trillion economy deserve accountable parity — now

Standard Bank recently released its inaugural Informal Economy Report, saying “80% of township businesses are unregistered”. It’s a striking statistic, but also a symptom of how we still talk about township entrepreneurs instead of with them.

Words shape worlds. Calling 80% of entrepreneurs “informal” suggests deficiency. In policy language, it codes for “less than” – a bias that seeps into laws, lending and public attitudes. 

It implies that the people building South Africa’s most dynamic local markets are somehow incomplete, waiting to be fixed, registered or rescued.

But informality in South Africa isn’t a moral failure. It’s a structural adaptation. Registration is not prohibitively expensive in rand terms, but the real costs are access barriers (internet, documentation), time away from trading and fear of harassment by authorities. As such, independence becomes rational. Many township businesses stay independent not because they can’t comply, but because formal systems were never built with them in mind.

The report “reveals” what township communities have long known: they are productive, creative and self-financed. The real revelation is for the formal sector, which is only now noticing the R1-trillion economy – nearly 19.5% of South Africa’s total employment – it has historically ignored.

What we call the “informal economy” is, in truth, the independent economy: millions of entrepreneurs who have built systems of production, distribution and trust outside the mainstream. They employ neighbours, circulate cash locally and innovate daily with minimal support. They deserve the same respect we grant corporates: measured not only by tax receipts but by livelihoods sustained and dignity restored.

Independence without accountability

But let us be honest about what independence also means: no food safety inspections, no consumer recourse, no labour protections, fire hazards in densely packed spaza shops and environmental damage from unmonitored waste. 

These aren’t abstract risks, they are daily realities that hurt the very communities these businesses serve.

The problem isn’t the entrepreneurs – it is that our regulatory system has only two settings: full compliance or total exclusion. A one-person spaza can’t afford the same health inspection regime as a Shoprite, but it still needs to meet basic hygiene standards.

So the question is not whether standards matter – they do. The question is: who sets them and who enforces them?

The answer cannot be “nobody” simply because the current system is unworkable. Independence needs accountability, but accountability designed for micro-enterprise realities, not imposed from corporate templates.

The work, then, is redesigning accountability itself. Here’s where we start:

Community-based verification: Peer networks that enforce quality and safety standards. Township businesses already police themselves through reputation and community trust. Strengthen these mechanisms without destroying their flexibility.

Tiered regulatory thresholds: Different compliance requirements for different scales. A salon with five stylists should not face the same labour law regime as a mining company, but workers still need basic protections.

Digital tools that reduce friction: Mobile-based systems for tracking inventory, verifying suppliers and enabling customer feedback.

Linking compliance to tangible value: Why register if there is no benefit? Voluntary compliance must unlock access to wholesale markets, municipal services, insurance and credit.

Independence does not mean lawlessness. It means recognising that accountability can exist outside state bureaucracy – and often does. The formal sector’s job is to strengthen what works, not replace it with systems designed for Sandton.

Building the dual system

South Africa is running two economies but governing them with one rulebook – written for only one. That’s the structural flaw, not the entrepreneurs.

At the United Nations Development Programme (UNDP), we are testing a different approach through initiatives like DIME (Digital Innovation for Modernising the “Informal Economy”): experiments in dual-system governance that recognise that two economies need two frameworks, governed with equal respect but different mechanisms.

For decades, economic success has been defined as moving from informal to formal, from survivalist to scalable. But not every entrepreneur wants to “scale up”. Many want stability, community presence and ownership of their time. Progress must be measured in human terms, not just financial ones.

If we want 80% of businesses to register, the answer isn’t lecturing them into compliance – it is redesigning the system so registration adds value through simplified processes, immediate access to credit and procurement, and tax regimes that recognise micro-enterprise realities. 

Ironically, the formal economy has much to learn from the independent one: agility, community capital, cash discipline and resilience without bailouts. These are not lessons of charity but of competitiveness.

South Africa’s future will not be built by dragging the independent economy into the formal one. It will be built when formal systems recognise alternative forms of accountability, governance and trust.

The new social contract is not about inclusion, it is about parity. The people driving the independent economy are already saving themselves. We are the ones playing catch-up.

The story isn’t that 80% of township businesses are unregistered. It is that they built a R1-trillion economy without the infrastructure, financing or policy support the formal economy takes for granted. Imagine what South Africa could become if the system finally worked for them, not against them. DM

Maxwell Gomera is the resident representative of UNDP South Africa and director of the Africa Sustainable Finance Hub.

Miles Kubheka is the founder of the Wakanda Food Accelerator and a partner in UNDP’s Digital Innovation for Modernising the Informal Economy (DIME) initiative.