Standard Bank Releases First Township Informal Economy Report

Standard Bank has released its inaugural Township Informal Economy Report, offering valuable insights into one of South Africa’s most vibrant yet underserved markets. The findings reveal that nearly 80% of township businesses remain unregistered, a statistic that stresses the scale of informality shaping this sector. According to Statistics South Africa (Stats SA), unregistered businesses are those operating outside formal regulatory frameworks such as VAT registration, labour regulations, and tax compliance. This lack of formal incorporation excludes many township enterprises from accessing finance, formal markets, and digital tools that could drive growth and sustainability.

A Trillion-Rand Sector

Despite these limitations, the township informal economy remains a cornerstone of South Africa’s economic fabric, contributing significantly to employment and local livelihoods. Stats SA data shows that the informal sector accounted for 19.5% of total employment in the last quarter of 2024. Moreover, the township economy is estimated to be worth nearly R1 trillion, reflecting its immense untapped potential. To put this in perspective, South Africa’s nominal GDP at market prices in 2024 stood at R7.3 trillion, meaning township-based enterprises represent a sizable share of the country’s productive output. Against this backdrop, Standard Bank’s research shows both the resilience of township entrepreneurs and the systemic barriers that continue to limit their inclusion and expansion.

Survey Findings Across Five Provinces

The survey, conducted across Gauteng, KwaZulu-Natal, Western Cape, Limpopo, and North West, examined enterprises with annual turnovers ranging from R100,000 to R50 million. It confirmed the township economy’s scale and diversity while identifying persistent challenges related to finance, infrastructure, and digital access.

“This report shows the structural challenges facing township entrepreneurs and what it will take to overcome them. It highlights the importance of market access, access to funding, and digital enablement. With the right partnerships, township SMEs can move from survival to scale,” said Simone Cooper, Head of Business & Commercial Banking South Africa, Standard Bank Group.

Key Insights from the Report

• 80% of businesses are unregistered, limiting access to finance and formal opportunities.
• Entrepreneurs compete with up to 20 similar businesses per community, squeezing margins.
• Fewer than 9% have access to bank loans, relying mostly on personal savings or family support.
• While cash remains dominant, 56% prefer EFTs or bank transfers, showing readiness for digital payments.
• 49% of businesses operate from homes or garages, while only 11% use commercial premises.
• Township businesses play an important role in local supply chains, often contributing through sponsorships and youth initiatives.

Empowering Township Entrepreneurs

According to Naledzani Mosomane, Head of Enterprise and Supplier Development at Standard Bank, “The insights reflect the lived realities of township entrepreneurs their resilience, their contribution, and the barriers that hold them back. For us, it reinforces the importance of strong relationship management: being close to our clients, listening to their needs, and supporting them through every stage of their journey.”

The report’s findings will guide Standard Bank’s partnerships with government, corporates, and development agencies to unlock township growth. It also highlights the need for affordable digital and merchant solutions and structured support to help informal businesses formalise.

Standard Bank Solutions for Township SMEs

In response to these needs, Standard Bank has developed a suite of small business solutions tailored to the realities of township entrepreneurs. MyMoBiz provides an entry-level transactional account designed for informal traders and micro-enterprises, while SimplyBLU offers an integrated merchant platform that enables card acceptance, invoicing, and online visibility. Complementing these tools are small business insurance products and working capital loans critical resources that empower township enterprises to formalise, scale, and thrive within South Africa’s dynamic SME landscape.