Capitec chief executive officer, Gerrie Fourie has questioned South Africa’s official unemployment figures, suggesting the rate could be significantly lower when the country’s vast informal sector is taken into account, as reported by Business Day.
According to the latest data from Stats SA, South Africa’s unemployment rate rose to 32.9%, but Fourie argues this figure is misleading.
“What is interesting is when you look at the unemployment rate, we talk about 32%. But Stats SA doesn’t count self-employed people. I really think that is an area we must correct. The unemployment rate is probably actually 10%. Just go look at the number of people in the township informal market, who are selling all sorts of stuff, who have a turnover of R1,000 a day,” Fourie said.
Fourie, who is preparing to retire from South Africa’s largest bank by customer base—with over 24 million clients – in July, believes the informal economy plays a far greater role in employment and economic activity than the data reflects.
“To grow SA, we need to understand what is happening there [in the emerging market]. If we really had a 32% unemployment rate, we would have had unrest. If you go to the townships, most people have back-rooms to rent out, everyone is doing something. If we are talking job creation, let’s go out and encourage these entrepreneurs.”
Fourie criticized Stats SA for overlooking this “emerging market,” describing the entrepreneurs within it as “discouraged” job seekers. He added that Capitec sees this under-recognized sector as a “growth unicorn” and is working to extend its retail banking success into business banking by serving these informal operators.
Capitec estimates that South Africa has around 3 million formal SMMEs and an additional 3 million “emerging” businesses operating informally. The bank sees a major opportunity in serving the informal SME segment.
Speaking at an event in Stellenbosch in late 2024, Francois Viviers, Capitec’s executive for marketing and communications, highlighted the potential of this underserved market.
“We think there is double that in the informal sector, and we have seen in our research that there are people who are operating in township areas who provide fresh food to the market or provide transport, own a couple of hair salons or run a Tshisanyama, that have high turnover all of it cash and they are not included in the formal banking space.”
“We believe if you can include them by enabling their digital payments, creating visibility of their turnover, then that creates a possibility for us to provide funding that they can use to grow their business. That is where we see an opportunity.”
South Africa’s small, medium and micro enterprises (SMMEs) are already major economic contributors, accounting for approximately 34% of GDP and employing around 60% of the workforce, according to the Banking Association of South Africa.
However, FinScope’s MSME 2024 survey reports that 72% of these businesses operate informally and rely primarily on cash transactions. The sector’s total estimated turnover stands at R5.29 trillion.
At Capitec’s recent annual financial results presentation, Fourie reiterated the bank’s commitment to tapping into this sector. “There’s about 3 million spaza shops out there, 70% of them in the informal market. How do we capture that market and actually unlock the potential in South Africa?”
“We see growth potential in the informal economy in South Africa. There is a need for credit, insurance, VAS, payment channels, education and support that has not previously been addressed. We will work towards meeting this need. We have a large branch network in the right strategic locations, and we will leverage this,” said Fourie.
South Africa’s informal sector plays a crucial yet often overlooked role in the country’s economy, providing jobs and incomes for millions who struggle to find opportunities in the formal labour market.
According to a Quarterly Labour Force Survey (QLFS) released by Statistics South Africa (Stats SA), informal sector employment accounted for 19.5% of total employment in the fourth quarter of 2024.
StatsSA conducted a Survey of Employers and Self-Employed (SESE) in 2023. The Survey collects information on businesses not registered for value added tax (VAT). These businesses are referred to as businesses in the informal sector.
Despite economic uncertainties, the informal economy has shown resilience, with 1.9 million South Africans running non-VAT registered businesses in 2023, up from 1.5 million a decade earlier.
