Demystifying foreign traders perceived competitive advantage over SA shopkeepers

Dr Tashmia Ismail, head of the Gordon Institute of Business Science’s (Gibs) Inclusive Markets Programme says the key to creating a class of more competent and self-confident business people in South Africa is through cooperative competition and investment from formal markets.

According to Ismail local informal traders are in need of greater entrepreneurial education in order for them to harness better opportunities in the informal market and small business sector.

She adds that in order for our local township traders to feel significant within the economic system, there needs to be a greater effort from the formal sector and entities such as the ministry of Small Business Development to create an enabling environment.

To help them feel their businesses are valued, Ismail says these efforts should include:

  • making education and information accessible
  • making broadband available in townships
  • ensuring these communities have electricity and are clean
  • improving infrastructure such as roads

It is about integrating into the ecosystems of these micro economies of townships and informal settlements; and forming partnerships with people who work and run business.

Immigrant shop owners

The business practices of foreign shop owners has come into question in recent times, following the violent looting of foreign owned spaza shops in Soweto last month, and after the suggestion by Minister of Small Business Development Lindiwe Zulu for foreign traders to disclose their entrepreneurial ideas with South African shop owners.

A Sunday Times article, last week, said that the premise of the alleged xenophobic attacks and the mistrust towards immigrant shop owners was founded on perception that their business practices prejudice the competitiveness of local informal traders.

Speaking on the Redi Tlhabi Show, Ismail attributed the relative popularity of foreign traders to structured community networks such as Somali and Ethiopian entrepreneurs who are able to network, partner and collaborate.

The xenophobia is a symptom of the underlying issue that our local stores are not equipped with the basic business skills that give them an even platform to compete on.

The value of collaboration

Ismail says that the Gibs run GSK Spaza programme shows that foreign shop owners are more receptive to cooperative competition (coined 'co-opetition') and embrace the group buying concept.

She says that most foreign traders collaborate with each other in the bulk purchasing of good, then compete with each other in other ways. Her observation is that they are able to supply in different scales and have figured out a way to differentiate themselves from each other

She says that the only way to create a “leveled playing field” is to give local business owners an entrepreneurial education – a curriculum that gives them the vocabulary and the tools to be able to compete.

Gary in Kenwyn says that there is a significant amount of work that needs to be done in creating integrated networks between the formal and informal economy.

There isn't really a secret ingredient. In our experience, it all comes down to mindset. There is a big difference between somebody who is running a business because his life depends on it versus somebody who is running a business because he is being paid to do it.

Ismail says that equipping South Africans with business basics will catapult them into value creating industries.

Read more about the GSK Spaza programme [here](http:// GSK Spaza programme).

Listen to the full conversation on the Redi Tlhabi show below:

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