Examining activities of youth informal entrepreneurs in South Africa: An analysis using SESE data

Abstract

South Africa experiences societal challenges related to its high unemployment rate, as noted by Mlatsheni and Leibbrandt (2011). The high unemployment rate is in conjunction with low entrepreneurship activity, which lags far behind that of other developing countries, as measured over time by the Global Entrepreneurship Monitor (GEM) research. As such, unemployed individuals resort to the option of entering the informal sector to make a living. However, informal employment, while offering an alternative, is often characterised by barriers to entry and further compounded by low wages and poor working conditions. Hence, working in the informal economy might not be the first preference for many job seekers (Graham and Mlatsheni, 2015). Nonetheless, the informal sector, which accounted for 18% of the country's gross domestic product in 2019 (Laframboise, 2019), provides self-employment and entrepreneurship opportunities for many youths. This research paper investigated entrepreneurial activities performed by the youth in South Africa's informal sector. The data for the analysis came from an informal sector survey conducted by Statistics South Africa (StatsSA), known as the Survey of Employers and the Self-Employed (SESE). Descriptive statistics looked at the business activities of youth entrepreneurs in the sector. The research employed a probit regression to assess the probability of success of youth-run informal firms as well as whether these youth enterprises were likely to create employment