Standard Bank’s latest Township Informal Economy Report reveals that eight out of ten township traders are not registered. From our work with entrepreneurs, this reflects deeper barriers – not just administrative, but psychological and structural – that keep many businesses trapped in informality.
Compliance feels too hard
For most township entrepreneurs, compliance feels expensive, confusing and overwhelming. When the priority is survival – securing stock, paying rent, covering daily costs – filing annual returns naturally falls to the bottom of the list.
On top of that, many traders fear that registering will “invite SARS into their pockets,” a misconception that keeps them from engaging with processes that could open major opportunities.
Informality limits growth
Remaining unregistered may feel easier in the short term, but it comes at a cost.
Informal businesses cannot access credit, supplier databases, tenders or investment. Without a financial track record, even strong and ambitious traders hit a growth ceiling.
The mindset gap
A key insight from the report is the difference in mindset between local and foreign entrepreneurs.
Foreign traders tend to be more agile, customer-focused, and willing to take risks. Local entrepreneurs, often under intense financial pressure, remain stuck in short-term survival mode.
We believe entrepreneurship is 80% mindset and 20% execution. Without a shift toward long-term thinking, even talented entrepreneurs struggle to scale.
Compliance is a gateway
Compliance shouldn’t be viewed as punishment.
It is the pathway to:
- Funding
- Credibility
- Bigger markets
- Business resilience
When seen through this lens, formalisation becomes an investment in growth – not a threat.
What needs to change
Entrepreneurs need practical support that builds capability and confidence:
- Easier, cheaper compliance processes
- Financial literacy and mentorship
- Peer networks that reinforce growth thinking
- Education that demystifies SARS and CIPC
With the right support ecosystem, township entrepreneurs can shift from surviving to scaling.
Unlocking potential
South Africa’s township economy is full of talent and opportunity. By simplifying compliance, strengthening education, and encouraging a growth mindset, we can help traders step into the formal economy – and unlock the scale and stability that follow.
