Why our economy needs foreign owned businesses, and how we benefit from them

Photo: A foreign shop owner stands guard inside his Alexandra spaza shop. EWN/File.

Research by Dr Sally Peberdy of the Gauteng City-Region Observatory (GCRO) shows that far from taking jobs from South Africans, more foreign shop owners in Soweto employ locals that local entrepreneurs.

The research has come into the spotlight after last week’s Soweto attacks sparked by a Somali shop owner allegedly shooting a 14-year-old boy.

Peberdy’s research shows that a majority of foreign nationals who are entrepreneurs are trading legally, and that if the government were to “stop” them from doing business, South Africans would suffer just as much as the foreign nationals.

What we have in terms of foreign traders are people who are creating employment, providing employment for themselves, as well as creating employment for other people. So by trying to put people out of business it would be hurting ourselves, we find that also those traders are buying goods from the formal sector … many of those formal sector suppliers are employing South Africans and are South African businesses … they pay some tax through that. So we would be losing out a lot if we put foreign owned businesses out of business

Researcher, Dr Sally Peberdy

Speaking on 702 after questions were raised around her comments that foreign nationals should share their ideas with local business owners, Minister of Small Business Development, Lindiwe Zulu reminded South Africans that our historical background has disadvantaged a majority of “black South Africans who were left out from participating in the economy of the country”.

Perdeby acknowledged that while Minister Zulu’s point is true, the questions need to be guided towards government to find what the government is doing to better equip local entrepreneurs.

We found that South Africans were more likely to be starting their businesses with less than R5000 than foreign owned businesses … So what we need to be looking at is how do we enable South Africans to capitalize their businesses and find access to capital because we do know that lack of capital does hinder people’s ability to develop business

Researcher, Dr Sally Peberdy

Contrary to the perception that foreigners are “taking over” the informal sector, Perdeby’s research found that 2 out of 10 informal business owners were South African as were nearly nine out of 10 (87%) of formal sector business owners.

The attacks on foreign migrant entrepreneurs and the suggestions to shut them down and so on, is actually going to hurt South Africans, and what we’ve seen in Soweto is a minority of people who are intolerant plus some criminals and opportunists and they are hurting not only those foreign business owners but they are hurting South Africans

Researcher, Dr Sally Peberdy

Listen to Dr Perdeby explain how shutting down foreign nationals’ businesses will have an adverse effect on jobs, rent, suppliers and tax in South Africa:


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