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African Population Studies
Union for African Population Studies
ISSN: 0850-5780
Vol. 12, Num. 1, 1997

African Population Studies/Etude de la Population Africaine, Vol. 12, No. 1, March/mars 1997

Urbanization and the informal sector in the former South African ethnic homelands: a study of parallel trading in Transkei


Department of Sociology, University of Transkei, Umtata, South Africa

Code Number: ep97007


This article is a critical assessment of an aspect of the apartheid political economy in the former homelands. Two arguments are advanced. First, the poverty of the informal sector was a result of lack of capital investments in towns in Transkei during the apartheid era. Furthermore, the smallness of the informal sector and the dominance of the female population in the sector is a consequence of migration of productive male labour force into the developed enclaves of South Africa. Secondly, it is argued that the nature of urbanization mirrors the economic development of the towns. With the transition to democracy, the socio-economic underdevelopment may be reversed or at least transformed.

Le présent article est une évaluation critique d'un aspect de l'économie politique de l'Apartheid dans les anciens les homelands. Deux arguments sont avancés. Dabord, la pauvreté du secteur informel est dû à l'absence de dépenses d'investissement dans les villes du Transkei à l'ère de l'Apartheid. En outre, le caractère réduit du secteur informel et la prédominance de la population féminine dans le secteur est une conséquence de la migration de la main-d'oeuvre productive vers les enclaves développées d'Afrique du Sud. Ensuite, l’auteur soutient que la nature de l'urbanisation reflète le développement économique de la ville. Avec la transition vers la démocratie, le sous-développement socio-économique peut être jugulé ou du moins transformé.


The rapid increase in the heterogeneous population of urban centres in Africa is largely a colonial, apartheid and post-colonial phenomenon. Whenever peoples of various racial and ethnic groups to settled and engaged in income-generating commercial activities in one place they created, in such settlements, a new way of life known as urbanization. Wirth (1938) defined urban settlements or cities as relatively large, dense and permanent settlements of socially heterogeneous peoples. One of the fundamental reasons for the rapid growth of the urban population is the selective capitalist investments concentrated in such large or small settlements. The consequences of these selective investments are: first, the availability of income-generating opportunities, better infrastructures and supra-structures, formal and informal marketing opportunities and glittering and better life are associated with the modern cities. The administrative, economic and political functions performed in modern towns constitute a second set of pull factors. Urban centres, therefore, have become international and national bureaucratic, political, economic, and socio-cultural power-bases. Consequently, the modern urban settlements have become major destinations for national and international employment seekers. In addition, with the rapid increase and density of the heterogeneous population, the peoples by themselves have transformed the urban settlements into large market places of infinite human wants. The urbanites attempt to meet the infinite demands of the peoples through formal and informal activities.

The purpose of this paper is to examine the nature and relationship of urbanization and informal parallel trading in the Transkei, former Xhosa homeland of South Africa. This relationship is measured firstly in the context of the flow and destinations of rural-urban migration in South Africa. Secondly, we shall examine the limited wage employment options in the urban centres as catalysts of the expansion of parallel or pavement trading in the towns in Transkei. Lastly, we shall investigate the socio-economic and political forces that parallel traders contend with in towns in Transkei.

Data and method

The data for this paper are from a survey research project conducted in ten district towns of the former Transkei homeland. The project was undertaken in 1991-1992 and was funded by the University of Transkei. In this research we interviewed a sample of 517 people. As no frame of informal traders was available in the ten towns, we used a purposive method in selecting the sample. We chose people who were selling fruits and vegetables, ornaments and cosmetics, clothes, food and head gears and traditional medicinal herbs on the streets, pavements or in the open air. In this study, we refer to these as informal traders, "parallel traders" or micro-traders.

The theory of parallel trading

Several studies have defined informal sector (ILO-JASPA 1988, Mijere 1989, Seshamani 1990, Ncube 1991, and Yankson 1991) in terms of its dependence on the formal, private and public sectors. The formal sectors such as the public or private sectors of agriculture, textile and manufacturing industries and mining provided goods and services utilized and sold in the informal sector. The urban settlements, on the other hand, provided customers and infrastructures for the informal sector. Thus parallel traders bought their merchandise from wholesalers and even retailers in the urban shops. The wage employees in the formal private and public sectors were the customers of the parallel trade. To a large extent, the expansion and development of parallel retailing depended first on the unemployment rate. The second factor for the growth of the informal sector was the strength of the urban economy, characterized by money circulation from the formal sector and the heterogeneity of the urban settlement itself. Lastly, and perhaps most importantly, is the capital investments in the modern cities.

Yankson (1991:4), in his study of Ghana, asked whether the "informal sector has autonomous prospects for growth and long- term development." "Does it have an autonomous dynamism for development or does it depend on the pattern of growth of the formal sector/public and private?" He concluded correctly that the two sectors are dependent on each other. Indeed the informal and formal sectors are two faces of the capitalist phenomenon.

Other social scientists have explored further the linkages between the informal and formal sectors. Seshamani (1990) defined the informal sector as comprising "all those activities which generate incomes that go unrecorded in the formal accounts of the national economy". The linkage here is based on the incorporation or non-incorporation of the informal trade incomes by the national or international governments. Because the informal trade was not easy to regulate, it was perceived as making no contributions to the State revenue. Our study will show the dependency of the two sectors upon each other, and upon the urbanization phenomenon in the Transkei.

In their recent studies, Ncube (1991) and Yankson (1991) have, however, rejected the "formal" and "informal" concepts in contemporary capitalist political economy. They have preferred "pseudo formal", "non-formal", "unstructured" and "low-income". Mary Osirim (1994) used the term micro-enterprise for the informal sector. The disputes over these concepts may be attributed to the nature of the capitalist phenomenon that incorporates all other modes of production and yet fails to create gainful employment for the labour force. In the Transkei towns, the dispute over the concepts were based on the absence or inadequacy of formal marketing infrastructures. In reality, the so-called informal sector provided both formal and informal marketing functions. Besides, as we will show below, the government and municipal leaders have been looking for ways to regulate activities of the informal sector.

Disputes over the adjectives "formal" or "informal" reveal the modern employment and unemployment realities faced by capitalist development in the modern world and especially in the third world countries. Indeed, today, many government leaders and business men and women in Africa have accepted and recognized the informal sector business activities. They have reversed their hostilities to parallel traders and abrogated the laws that restrained informal sector activities because of the endemic structures of urban unemployment in the modern capitalist world.

In this paper, therefore, we have preferred the term parallel trading to street, pavement, sidewalk, open-air selling and informal trading, because this concept embraces all aspects of this business. The term does not designate the places where the business activities take place nor the manner of business. The term "parallel trading" further incorporates the activities of "vendors" and "hawkers". Furthermore, parallel businesses compare and compete with the so-called formal businesses. Paradoxically, these two sectors are daughters/sons of the capitalist system. They both facilitate capital accumulation.

The structure of parallel trading

The informal sector, comprising small productive and service activities, has become a viable field of study and socio-economic activities. Many scholars have undertaken research in the sub-fields of this sector. African researchers, such as Ncube (1991), Seshamani (1991), Yankson (1991), Mijere (1989) have observed that this sector is a post-colonial entrepreneurial phenomenon. In this era, the parallel sector, whether productive or service, has emerged as viable economic business due to the inability of the formal sector, both private and public, to create job opportunities for the urban as well as the rural labour force, in the third world countries of Africa, Asia and Latin America.

Ncube (1991) observed that the informal sector consisted of the following three small structures which were considered illegal in the colonial and apartheid periods:

  1. Production and services. These included petty carpentry, building contractors, tailoring, tin-smithing, basket-making, pottery, wood carving, car, radio and TV repairs, stone crushing, mining etc. They were characterized by small-scale production, labour-intensive and individual or household ownership.
  2. Credit/financial activities and currency exchanges. This informal financial marketing activities have come about because of the collapse of local African currencies and the over-evaluation of foreign currencies in the face of economic crisis and the availability of foreign exchange. Currency markets (commonly known as black currency markets) have mushroomed on the streets in urban areas and immigration posts to provide hard currencies to individual and small-scale business traders.
  3. Trading and selling. These activities included buying and selling new and second hand commodities such as agricultural produce, textile and manufacturing goods, cross-border trade in goods and services.

All these petty, individual or family-owned business activities were labelled illegal in the colonial and early post-colonial periods. As such, they were suppressed by white colonial, apartheid and post-colonial authorities in order to protect and promote the emerging formal businesses. In independent Zambia, Mijere (1989) showed how the government and municipal law- enforcing agents harassed school dropouts for selling single cigarette sticks to smokers. In persecuting the "Mishanga Boys," as they were called, the police were enforcing Chapter 707 of the laws of Zambia, stating that no person should sell goods by way of business, unless he or she was the holder of a licence. The law declared further that a person contravening the provisions of the Act shall be guilty of an offence. For the Mishanga Boys, however, their parallel trading was a self-created source of income in a country that provided gainful employment to only 10 percent of the labour force.

Similarly, Tomaselli (1984) outlined the conflicts between the Transkei law- enforcing agents and the hawkers. She argued firstly that street selling was a "refuge occupation-- an occupation of last resort for unsuccessful work-seekers". Secondly, she stated that the Transkei Government harassed and prosecuted street traders for the following reasons:

  1. The hawkers posed unfair competition to formal traders;
  2. The hawkers caused obstructions on the sidewalks and public places;
  3. They created poor impressions about the city upon visitors and tourists; and
  4. The hawkers were a menace to public health as they caused littering on the streets.

Later, to transform the ever-growing illegitimate small-scale retailing on the streets of Umtata, the government issued the following regulations:

  1. Hawkers had to buy a licence authorizing them to conduct their business;
  2. Hawkers should be on constant move, while selling their merchandise; and
  3. Hawkers were to be restricted to certain geographical areas of the town.

Despite these restrictions, our study found out that the parallel trading business continued to grow and was growing not only in Umtata but also in other urban centres of Transkei. The basic reasons for the spread and development of the informal parallel trading, which were not recognized by colonial and early post-colonial governments, were to be found in the state of the third world capitalist political economies. The formal capitalist economies implanted in third world countries of Africa, Asia, and Latin America were unable to provide gainful employment to those looking for it, especially in urban areas. In addition, the capitalist economy incorporated all sectors of human survival. For example, all members of capitalist societies, employed and unemployed alike, needed money to buy goods and services necessary for life. For small traders and sellers, these small-scale activities were self-implemented strategies for survival in the urban environments.

Notably, the informal sources of income-generating activities, in the colonial or apartheid era, were unnecessary because the rural-urban migration was restrained through selective migratory policies such as influx control and pass laws. Besides, the capitalist political economy had not yet incorporated subsistence economies. Thus, a rural dweller could survive without money. In addition, many black people, at this time, maintained that the urban areas were not their homes; they lived in towns or cities for the periods they were on paid labour contracts, after which, the contracted employees returned to their villages to be re-incorporated into their subsistence economies. The urban areas were perceived by Africans as residential areas (villages) of the white people. But this perception and trends changed with political independence. The urban areas became centres of wage-based employment, better standards of living, improved social services and market opportunities. For these reasons, the rural and urban Africans wanted to live in the big urban settlements.

Urbanization in the ethnic homelands

In the early periods of African colonization, for instance, the early explorers and colonial administrators directed rural labour migrants towards areas with precious minerals and raw materials. As Toure (1992) observed, this led to the foreign capital investments and the exploitation of minerals in the Southern African countries of Botswana, Namibia, South Africa, Zambia and Zimbabwe. The capital investments in the mines sowed the seed of international and national labour migration and urbanization processes into Southern Africa.

As from the 19th century, the region, and especially South Africa, began to attract international and internal migrants to the mines. The urban as well as rural areas were therefore transformed through the mine economy. The mine economy in turn led to the concentration of industrial and political economic power in the major urban areas in South Africa. These urban towns became hubs of national economies and centres of administrative, economic and political authority.

Despite the apartheid policies, the urban areas pulled and attracted able-bodied black people from rural villages who came for gainful employment in these mineral-rich areas and administrative centres. The urban enclaves therefore contributed to the underdevelopment of the rural areas or black homelands and the development of the urban areas.

The apartheid and the mines political economies became the ideal types of capitalist investment and capital accumulation in South Africa. They became the sources of internal uneven capitalist development and underdevelopment. To ensure a continuous flow of cheap black labour, the white political class enacted the Native Act of 1913, the Native Land and Trust Act in 1926 and the 1936 Bantu Trust Land Act. These laws allocated small portions of the South African land, about 1,221,042 Sq. Km, to black Africans while the white minority population reserved for itself a large proportion of arable land and the mineral-rich areas of the country. Furthermore, in 1959, the apartheid Nationalist Government "perfected" discriminatory laws by enacting the Bantu Self-Government Act.

This Act gave the white minority government legal bases to create internal African, Coloured and Indian "colonies". The government granted self-governing and independent status to ten black ethnic reserves, called "homelands" or "Bantustans". Table 1.0 below shows the ten States, population size and density and the years of independence or self-rule. The four ethnic homelands of Transkei, Bophuthatswana, Venda and Ciskei were granted independent status while the six black reserves of Gazankulu, Kangwane, KwaNdebele, KwaZulu, Lebowa, and Qwaqwa were granted self-governing status.

For the purposes of this paper, these homelands were first pools of black labour and suppliers of cheap migratory labour to the mines and industrialized enclaves of white South Africa. The able-bodied labour force, mainly the males, immigrated from the homelands to the modernized areas of South Africa. At the height of apartheid the "immigrants" from the black homelands were considered as foreign labour in the white areas and excluded from certain skilled jobs. Secondly, the homelands became easily accessible markets for goods and services from South Africa. Thus, the ideology of separate development contributed to the accumulation of wealth in the white enclaves of South Africa. In addition, the ideology underdeveloped the Bantustans of South Africa.

 Table 1. Homeland ethnicity, population density and year of self-rule




Pop. Density






G. Nkulu

K. Ngwane

K. Ndebele

K. Zulu









S. Ndebele


N. Sdebele
































Source: Population of Homelands: Information 1992. Population Density of Homelands: Wilson 1989 Population of Self-Governing Homelands: 1991. South African Population Census.

Social characteristics

The nature of these apartheid-created homelands meant that their urban centres lacked the heterogeneous character of modern capitalist centres. The urban populations in all the homelands were small and homogeneous, belonging mainly to one ethnic group or tribe. Our study confirmed the homogeneity of the urban populations in Transkei: out of the sample of 517 respondents, 84% were Xhosa, 1.93% were Zulu, 6.77% were Sotho and about 7% belonged to other tribes. Xhosa was the national and official language in Transkei, just as siZulu was in Zululand.

Secondly, our sample showed that the parallel trading business was dominated by women. Out of the sample of 517, 84% (434) were women and only about 18% (93) were men. The mean age of the interviewees was 40 and the majority fell within the 31-50 age categories.

To the question, "Have you been to school"?, 446 respondents answered in the positive and only 62 said that they had never been to school. But the majority of those who had been to school stated that they reached only Standard Five. We observed further that the majority of our respondents were rural-urban migrants. They told us that they were born in the rural areas. The mean number of years spent in urban areas was approximately 17 years.

Thirdly, we examined the marital status of our respondents. Table 2 shows that out of 189 respondents who were not married, 62.54% (156) were single women and 17.46 % (33) were single men. The mean number of children was 4.7. This Table further demonstrates the dominance of women in all marital categories.In examining the number of children our interviewees had, we found that about 32% (166) of the 517 people had 4-5 children. The mean number of children for the sample was 4.7. The sample further showed that, out of the 166 respondents with 4-5 children about 89% (147) were females while only 12% (19) were males.

 Table 2. Distribution of respondents by marital status































In analyzing the female parameters we also discovered that 156 or (36.03%) of the 433 females were heads of households and only 157 (or 36.26%) were married women. But if we include the categories widowed (69) divorced (17) and separated (29), the total numbers of female-headed households was 271 or 62.59 percent, thus supporting the general hypothesis of large numbers of female-headed households.

Lastly, the ideology of separate capitalist development stifled investment possibilities in the homelands, thereby promoting homeland emigration of the productive labour force. The apartheid ideology discouraged White, Asian and non-Xhosa business men and women from establishing businesses in the Transkei. As the homeland scheme was drawn after the exploration of minerals and productive areas, the homelands had little known wealth. The Transkei and other homelands depended, to a large extent, on the central government for a large section of their budgets.

However, the central government financed only the infrastructures, social services and civil services. With the world economic embargo and apartheid-imposed restrictions, the homelands were denied support from the international financial institutions. Thus, with limited capitalist investments, the rural homeland towns could not compete with the industrialized towns of white South Africa in creating jobs and attracting rural-urban migrants.

Factors such as female dominance, low levels of education, lack of investments, and female-headed households pointed to the nature of urban population distribution in Transkei. Demographic studies have revealed that females and the less educated people are less inclined to migrate. In addition, the productive labour force tends to migrate to areas that offer better opportunities, leaving the less productive people in underdeveloped areas. This study, therefore, confirms these demographic findings as the less educated people, females and children remained in the homelands.

Table 3 compares the rural and urban population size and change in the ten Transkei Districts in which we conducted our research. The 1980 Population Census was taken four years after the Transkei was granted independence while the 1991 Population Census was conducted 15 years after independence. The data from the two Censuses show that Transkei has a large rural population and a small urban population.

The population of Lady Frere may be explained by the fact that Lady Frere was a black township of Queenstown. The majority of Xhosa workers in the industrial enterprises of Queenstown lived in either Lady Frere or Ezibeleni, and commuted to Queenstown for work and other business activities. Lady Frere, by itself, had too little capital investment to provide urban employment. The Town Clerk informed us that there were no industries in Lady Frere and that the Government was the major employer. We further noted that the town had four small supermarkets, one 10-bed hotel, three fast food shops, and two petrol stations. Lady Frere had no financial institution.

The population growth of Umtata was attributed to the fact that it was the Administrative and Legislative Capital of the semi- independent State of Transkei and home of the University of Transkei. The population growth of Butterworth in the intercensal period (1980-1991) decreased from 56 to 40 percent. This may be explained by the advent of a progressive military government in Bantu Holomisa. The Military government scraped of the tax exemptions for industries in Transkei. In addition, the military regime, through the Labour Relations Decree No.12 of 1990, liberalized labour laws and allowed the workers to form trade unions.

Table 3. Transkei rural and urban population size and percentage change of selected districts







% Change



% Change

B. Worth



L. Frere


Mt. Frere

































































Source: Transkei 1980 Population Census; Transkei 1991 Population Census: Preliminary Results.

In conclusion, the 1980 urban percentage of the total population was 4.93% while that of 1991 was 5.05%. These urban percentages of the total population were smaller than other towns on the African Continent.

Table 4. The urban and parallel traders population of each town


Urban Pop.

Traders Urban Pop.

% of Pop.





Lady Frere


Mt. Fletcher

Mt. Frere











1,348 1





































Sources: i. 1980 Population Census; ii. Taken on Days of Interviews 1991-1992

It was noticed through our study that although the Transkei towns had a small urban population they still had a number of parallel traders. Table 4.0 shows the population of urban residents, parallel traders and the sample of traders drawn in the towns covered by our research. This table further demonstrates the percentage of parallel traders in relation to the population of the towns studies.

We noticed that the percentage for the people in parallel trading was higher in towns with a larger industrial, political and administrative base. This phenomenon may be explained in two ways. Firstly, Umtata and Butterworth had a larger percentage in the informal sector than other towns in Transkei because of the presence of the public and economic bases that attracted employment seekers. The public sector was the major employer, offering jobs to a large proportion of the labour force. Secondly, more petty industries were located in these towns. Unlike the smaller towns of Transkei, the public sector and economic infrastructures were greater in Umtata and Butterworth.

We further noticed, however, that the number of street traders fluctuated from day to day at the time of this research. The fundamental explanation was that parallel traders perceived the work as their own and did not feel compelled to come to work as wage-earning employees in the formal sector. In addition, parallel trading, as noticed in our studies, was easy to enter and depended on non-formal skills.

Employment options in Transkei

By establishing the ideology of apartheid, the white political class made uneven capitalist development and incorporation an official state policy. To facilitate the control of black people in these territories, the white political class governed the majority Africans through indirect rule, governing through tribal chiefs. The white central government committed itself to provide financial assistance to the homelands.

Table 5. Employment by sector inside Transkei, 1989


Retail and Wholesale


Hotel and Catering


Banks and Financial Institutions

Building Construction










Source: Republic of Transkei Statistical Bulletin 1990.

The homelands therefore lacked human entrepreneurship and capital investments to initiate development and capital accumulation. Thus, in the homelands, the labour force found employment mainly in the service industries, government sectors and in the homeland parastatals. Table 5 shows the number of people employed in the formal sector inside Transkei in 1989. The total number of people employed in the formal sector was estimated at 154,774 or 6.00% of the Transkei de facto population of 2.6 million people. 56.54 percent of the people in formal employment were in the government sector with about 11.60 percent in the manufacturing, building and construction sectors. Thus, about 32 percent found work in the service industries.

In this research we examined some industries that offered gainful employment in the towns concerned. For instance, in Idutywa, a town 80km from Umtata, the capital of Transkei, and 30Km from Butterworth, the industrial capital, the Town Clerk told us that there were no industries that offered employment except the service industry and the government and municipal departments. On the day of the research we counted the following service industries:

Table 6. Number of service industries

  Service Industries


1. Hotels, Restaurants and Takeaways

2. Clothing Shops

3. Supermarkets

4. Furniture Shops

5. Banks and Insurance firms

6. Petrol Stations







* Some Supermarkets also served as Clothing Shops.

We noted that these industries that offered paid employment to people in Transkei were subsidiaries of companies in the former white South Africa. The black Transkei managers were agents of the white entrepreneurs. The goods they sold came from South Africa. We observed only a few indigenous service industries such as Transkei National Building Society(TNBS), Transkei Development Corporation (TDC), and Transkei Agricultural Corporation (TRACOR). Young people in Transkei, who could not find wage employment in the homeland, either migrated to South Africa or took to self-employment. As Table 4 above showed, 138 or 9.39 percent of the Idutywa urban population were parallel traders.

The employment situation in the formal sector was better in Butterworth, the industrial town, and in Umtata, the former capital of Transkei. The Transkeian political class chose Butterworth to be "the growth point", where industrialization was to begin in the former homeland. The main industries that offered paid employment in Butterworth at the time of this research are shown in Table 7. The total urban population of Butterworth was estimated at 25,000. Thus, the number of employees in these industries was only 15 percent of the total urban population. Some of the people who were not employed in these industries found employment in Government and municipal departments and Butterworth service sector industries. At the time of the research, we counted the following service industries: 10 Hotels/Restaurants/Takeaways, 12 Supermarkets, 12 Clothing Shops, 5 Furniture Shops, 4 Petrol Stations/Garages, and 4 financial institutions. But the government sector, the manufacturing, textile industries and service industries could not employ the whole labour force. Thus, 240 of the urban unemployed found work for themselves in the informal sector.

Table 7. Industries and number of employees



1. Pep Textile Industries

2. Tanda Milling

3. Tally (Pty) Ltd

4. Sun-Textile Ltd.

5. Ohlsson's Breweries

6. Tannery Protea

Total employees








We found similar economic infrastructures in other small rural towns like Lady Frere, Mt. Fletcher and Umzimkulu. Lady Frere, a rural town, 216 km from Umtata, had an urban and rural population of 1,470 and 153,529 respectively. The Town Clerk informed us that, apart from subsistence agriculture, the government sector was the major employer in Lady Frere. The service industry was the second major employer. We counted four Supermarkets, one hotel, and three takeaways, three clothing stores, two petrol stations and one furniture shop. The town depended on Queenstown for its financial and major shopping activities. Table 4 above showed a small number of parallel traders. We estimated that the population of street traders grew in relation to the level of investments and growth of the town population and that of unemployment in Transkei.

The military regime and parallel trading

Unlike the civilian Matanzima regime, we found out that the military government adopted a laisser-faire policy towards open-market traders. Although the military government tried to regulate parallel trading business through the licensing system, the town clerks in all the towns informed us that it was difficult both to issue licences and to monitor a fluctuating business. It was in Umtata alone that we noticed somme efforts at trading. The Municipal Health Officer informed us that the Umtata Municipal Council established street committees whose main responsibilities were to allocate "sidewalk plots" and issue licences to the applicants. Once an applicant had been given a plot and a letter by the street committee chairperson, he/she went to the Municipal Licensing Office for contractual details.

Nevertheless, our findings showed that only a few sellers in Transkei had licences. Some sellers said that they had paid a fee of R5.00 to the municipal office but no licence had been issued to them. Other sellers told us that they had not applied for licences. As other researchers (Nattrass, 1982; Muller, 1984; Tomaselli, 1984) observed, the street traders were harassed under the civilian regimes. But the Transkei Military Government leaders allowed parallel trading because they perceived it as self-employment. The government adopted a laisser-faire trade policy to enable petty traders to conduct their businesses without harassment.

Parallel trading as urban self-employment

We have reported above that the majority of our respondents spent five years in school and that the majority of the people with low education were women. As these people were unskilled, they were usually offered low-wage jobs in the formal sector. This section compares the number of years and remunerations obtained in the formal and informal parallel trading for the unskilled urban people.

First, we examined the number of years our interviewees spent in parallel trading. Table 8 illustrated that out of the sample of 517 people 28.41% (123) women and 11% (15) men had been in business for more than ten years. The mean number of years they spent in business was 10 years.

 Table 8. Distribution of respondents by gender and number of years spent in parallel trading


Number of Years










































Secondly, we asked our informants why they began selling on sidewalks. Their responses fell within the following categories: "no other job", "no source of income", "no means to support the children" and as "self-employment". Table 9 illustrated the various responses to our question. We have rounded up the percentages in this table, as some of our respondents' answers were not properly framed or were missing. These responses confirm that most of our interviewees were unemployed people.

 Table 9. Percentage distribution by gender and reasons for self-employment in parallel trading.


 No Other Job

No Source Income


Support Children



Total (N)





















Out of 417 respondents, 228 or 55 percent of the sample reported that they were in parallel trading because they had "no other job". 228 were in Parallel trading because of lack of paid employment; 184 or 81 percent were women.

Thirdly, we examined whether our respondents had any other source of income such as remittances from their spouses and or children. Some told us that they had no spouse and those with children said that they received no money from them. Even those who were married informed us that they had no other source of income. Thus, street trading was not only self-occupation but their main source of income. Parallel trading was therefore an urban strategy for survival for the majority of these people.

Lastly, to explore the employability of our respondents, we asked them to tell us about their previous paid employment. We found out that they were involved in a variety of unskilled job categories: domestic servant/housekeeper, gardener, labourer, shop assistant/teller at wholesale stores, night watchman and tailor. We however observed that 34% (176) of the people had never been in gainful employment. Furthermore, the majority of those 85% (150) who had never been employed were females.

We further noted that the majority of people who had been in gainful employment worked for a short period. Out of 517 respondents, 53.77% (278) had been in their first paid employment for less than one year and only 3.48% (18) of our interviewees had been in formal employment for more than 20 years.

The nature of gainful employment covered by our sample was illustrated by the amount of money they received per month. Table 10.0 shows the various wage scales for our interviewees. This table reveals that 387 (75%) of the people engaged in such employment had received less than R100 per month. A few respondents indicated that they received more than R400 a month. Furthermore, the table shows that the females dominated the lowest wage scales while the males dominated the higher categories. Out of 27 people who received R401 and above 17 (62.96%) were men and only 10 were women. In contrast, 89.66% of the women and only 10.34% of the men who had been in paid employment received less than R100 per month.

Table 10. Percentage distribution of respondents by gender and wage received per month (in rands)





































We also examined the nature of employment covered by our sample by asking them to give us the reasons why they left their first paid labour. The reasons fell in the following categories: "just left work", "business was closed", "boss resigned and went away", "resigned because of wage dissatisfaction", became "sick/pregnant and lost the job", and "was expelled". The number of people who left work for these reasons was small, but these reasons point to the insignificance of these jobs.

These reasons and the wage received per month demonstrate that pavement sellers did not have adequate skills for stable paid employment in the formal sector. Besides, they received a subsistence wage for the purchase of the basic necessities of life.

Urban subsistence strategies

In this study, parallel trading was envisaged as an urban subsistence economic activity, much similar to the urban subsistence wage employment for the unskilled workers. In general, the subsistence wage under-skilled employees received in the formal sector did not enable them to save. In the same manner, our findings show that the income accruing in the informal parallel trading sector was for the day-to-day household consumption.

Table 11 illustrates that the majority (56%) of the people in our study earned less than R20 per day.

 Table 11. Percentage distribution of respondents by gender and amount of money made per day (in rands).




































Some added that their incomes increased "if business was good", and others said "if people had money in their pockets". Some of our informants indicated that they depended on the wages their customers received. Most traders said "we make more money at the end of the month when our bosses are paid."

Our study found out that the money parallel traders made was insufficient to meet their household needs. Out of 517 people, 395 (76.40%) stated that the money they earned was insufficient. For this reason, the majority of our interviewees said they preferred paid employment to their trade. They explained that gainful employment offered more money and better working conditions than parallel trading.


This paper has examined the nature of urbanization as a factor in the development of parallel trading in the former homeland of Transkei. We have demonstrated with the data collected in the Transkei that the apartheid ideology of separate ethnic and racial development stifled urbanization in the homelands. The apartheid Influx Control Policies, the Bantu Trust Land Act and the Bantu Self-Government Act restricted the free movement and settlement of Africans within their tribal lands. In addition, the apartheid regime controlled not only rural-urban, and urban migration and settlements in the South African ethnic and racial homelands, but also the process of urbanization. Thus, the towns of Transkei were merely large villages in which 90 percent of the urban population were Xhosa.

Secondly, and most significantly, by controlling the process of urbanization, the apartheid regime promoted the underdevelopment of homeland towns. We have shown that the separate development policies facilitated capital investment in and migration into the white areas of South Africa. By contrast, the policy cultivated the culture of migration in the Transkei. Thus, the productive labour migrated from the homeland, leaving the unproductive labour force.

More importantly, the findings of this study corroborated the fact that the poverty of the informal sector was an indication of lack of capital investments in the towns of Transkei. Furthermore, the smallness of the informal sector and the dominance of the female population in the sector was a consequence of migration of productive labour force into the developed enclaves of South Africa. The policies of apartheid have been important factors that contributed to the socio-economic underdevelopment of the Transkei and other former homelands of South Africa.


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Copyright 1997 - Union for African Population Studies.

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