Entrepreneurship in a Disadvantaged Black Community: A Case Study in the Gqebera Walmer Township, Port Elizabeth (South Africa)
Final Report Abstract
Based on official statistics and on results of prior empirical studies, the project started with the assumption that the black population of South Africa (constituting the vast majority of the inhabitants of the country) has a low probability of participation in entrepreneurial activities. The first objective of the project was to explain this empirical regularity. The second objective was to show possibilities and actively contribute to the question of what could be done to stimulate black entrepreneurship in South Africa. Since most black South Africans are still living in so-called townships, the project focused on entrepreneurship in disadvantaged townships. The project followed a case-study approach by empirically investigating the situation in a single township, in the Gqebera Walmer Township (GWT) in Port Elizabeth. The design of the study included expert interviews (n=24), focus group discussions (n=2), a standardized population survey in GWT about entrepreneurial attitudes and ambitions (n=309), and qualitative in-depth interviews with formal and informal (currently or formerly active) entrepreneurs in GWT (n=90). The main result of the study was the insight that we have to re-think the “lack hypothesis,” i.e., the proposition that the black township population has a low participation rate in entrepreneurial activities and a low level of entrepreneurial impetus. Although official statistics (mainly focusing on registered businesses) and assessments of entrepreneurship experts support the lack hypothesis, our own study shows mixed evidence. It is surely true that black South Africans living in townships seldom open up formal, officially registered businesses. However, the number of informal and mundane businesses is high, surprisingly many people have the ambition and intention to open up a new business in the near future, and the general entrepreneurial climate in the township contains a mixture of favourable and unfavourable aspects with respect to entrepreneurship. An important impediment to the economic development and improvement of black communities in South Africa is our finding of a “low trust culture.” The level of personal trust (i.e., trust in other people) is very low in the black population. Confronted with the question “Generally speaking, would you say that most people can be trusted, or that you need to be very careful in dealing with people?”, not more than 5 percent of the respondents in our survey answer “most people can be trusted,” 95 percent believe that “you need to be very careful.” The research team composed of German and South African researchers is currently still engaged in developing and testing entrepreneurship training programmes that will be specifically tailored for those living in disadvantaged township communities.
