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In the final part of his keynote address to the BizNews 10th celebration, author and informal economy expert GG Alcock engages with delegates, answering their questions and enlightening the audience about massive advances in Sa’s informal sector. He also attacks the army of myths that is anchoring South Africa’s economic potential. Don’t miss his missive at the end where he reminds us of what he could – and could not – get across to fix the homesickness of a then London-based expat. – Alec Hogg.
Edited transcript of the engagement between GG Alcock and delegates to the conference celebrating the 10th anniversary of BizNews.
BizNews community member: Given what you’ve said about the informal sector not being recorded by the official data, can you unpack for us what the actual unemployment rate is now in South Africa?
GG Alcock: My argument is it’s not higher than 15%. It’s not about unemployment, but rather any form of income, including non-traditional sources like renting out a bedroom or doing laundry. We should measure it this way, and if we do, the rate is closer to 15%. Pre-COVID, it was about 12%. COVID has had an impact, but it’s still around 15%.
Alec Hogg: But one third of our population, 19 million people, are getting social grants?
GG Alcock: No, it’s 9 million people receiving social grants. There are 19 million beneficiaries, including 9 million childcare recipients and 3 million old age pensioners.
Alec Hogg: Okay. So we shouldn’t be whining too much about the 19 million?
GG Alcock: Rather, we must ask, why do we measure 15-year-olds as part of our workforce? That skews the numbers and leads to conflicting figures. For example, reports say unemployment has gone up while jobs have grown. It’s insane, and it adds to doomsday perceptions. We need to focus on the 80 to 90% of our population who are doing well and find ways to help them do even better.
Alec Hogg: You know that we are hardwired to pay more attention to negative news. That’s just human nature.
BizNews community member: I have two questions. What is the split between cash moving through these economies versus debit cards? And how might decentralising the banking system help these economies?
GG Alcock: Around 80% of that environment is cash, but digitisation is accelerating. We are seeing a remarkable transformation towards card payments, especially in lower economic groups. It might even drop to about 30 or 40% in the future. On your second point, the problem isn’t about creating community banks, but forcing banks to give business loans. We lack what we call development credit in South Africa. Business loans for small amounts with short repayment terms are essential but unavailable. We should be legislating to make it possible, and we must not disregard informal income like backroom rental as proof of affordability. Banks need to be more open to understanding the unique circumstances of their clientele.
BizNews community member: Concerning the measurement of the informal economy, what suggestions do you have for quantifying it besides physically going and counting everything? Also, with the significant increase in load shedding over the last year, what has been the impact on the informal part of the economy?
GG Alcock: To measure the informal economy, we need to recognise that we’re often data-rich but insights-poor. Insight can be more valuable than the data itself. For instance, I observe things like backroom rentals and then search for corresponding data, such as the fact that 23% of households are one-person households. We can cross-tabulate what we’re seeing anecdotally with existing data. The Johannesburg Fresh Produce market, for example, turns over 9 billion rand a year, with 60% coming from informal traders. We can find data in places like markets, wholesalers, the taxi industry, and used spares.
On load shedding, it’s a mixed bag. It has a huge impact, especially because cell phone towers’ batteries are stolen, leading to no communication at all during outages. But load shedding also affects different businesses differently. Bakers are hit hard, but grilled chicken vendors do well. Overall, it has a massive, disproportionate impact on township and rural businesses.
Alec Hogg: Clem Sunter is also going to be at BNC#6. He’s a big fan of yours. Do you see progress in your joint informal manifesto promoting entrepreneurship?
GG Alcock: There are initiatives like Nasi Spani aiming to create jobs, but the focus should be on entrepreneurialism, not just employment. The mindset of creating rows of blue-collar workers is outdated, and the government cannot seem to understand that. We should be fostering businesses, whether they start as a small shop or grow into the next Nando’s. However, the government remains fixated on job creation, which is about control and unionisation.
Alec Hogg: GG Alcock, thank you.
GG Alcock: Last thing, since it’s your birthday and also my wife’s 50th, I’d like to just to steal a minute.
Biznews is amazing about all sorts of business stuff but one of the things that I’ve always enjoyed is Alec’s sense of humour and how he’s built this into into Biznews – and we need the lighter side often. A few years ago Alec sent me an email looking for red cappuccinos and then he actually posted my reply and I thought it’d be appropriate to repeat it here because I thought it was a lot of fun.
You wrote: “Since arriving in London almost a year ago. I managed to find a ready supply of Mrs Ball’s chutney and even secured tastes like home boerewors. , and even secured tastes like home. But of course. But one product that hasn’t made it across the Atlantic is the red cappuccino. So I’ve been asking friends back home for help, among them GG Alcock. His response delivered much more than I bargained for.”
And this was my reply. Alec, I can arrange umqombothi beer ingredients; sorghum harvested and crushed by hand on flat grinding stones in the tribal lands near Bergville. I can arrange the best Durban Poison picked by hand in the sweaty, arid Tugela Valley by topless maidens. I can arrange Zulu goats fat from nibbling on acacia and tamboti leaves in the thick scrub of Uncubeu tribal land. I can arrange a Kota dripping with Atchar and layered with polony and slap chips from Panisa’s container in Zola. Soweto. I can arrange Umabonakude, the green bark of the fever-tree infused with eel oil, chopped fresh on the flat sandy coastal plains of uMhlabalingane, used to ensure success in getting a job. I could probably with a little effort and assistance from some of my Soweto dodgy pals or some Nigerian export connections in Yeoville, get all of the above to London. But red cappacinno – angazi.
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