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Last week’s images of
running battles between the police and hawkers in downtown Johannesburg caught
headlines because the images were so violent and shocking.
Beneath the rubber
bullets and bricks, is a story of the economy that is changing character. Jeppe
Street, where the running battles and subsequent raids took place, is a shopper’s
haven. On Monday, when I was last there, it was a bit of a war zone after last
week’s clashes and by mid-week, it was a policing zone after the cops swooped
to find guns by the hundreds.
You can find anything
downtown where a largely untracked economy thrives. Probably guns too, although
I’ve never shopped for those.
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I love going there. You
can find bales of wonderful African fabrics, great denims and styles that aren’t
at Woolworths, my staples store. Hair products are cheaper and street
hairstylists turn the pavements into creative genius as they braid and weave
for a stream of fashionable clients.
At what used to be the
medical centre of the city, Lister Building, you can walk floor to floor where
Ethiopian traders pile bales of denim amidst Ethiopian cloth and dresses. There
is a lot else to see too. When tired, stop for a traditional coffee at
cafés on the top floor. There are ‘fong kong’ shops selling counterfeits that
are near perfect. They do a roaring trade, in fact, so roaring that the real
brands instigated the police raids that resulted in last week’s running
battles. They claim retail sales losses of hundreds of millions of rands and
have enlisted the support of law enforcement to regularly impound goods. It’s a
pretty useless endeavour as that part of town is like an inland port, as
researchers have noted, and goods come in so fast that stopping the trade is a
And why would you want
to? A disaggregation of tourism statistics will show that a significant export
earner (tourism is counted as an export) is the intra-African trade done there.
Traders from across the region and further afield flock into Johannesburg by
bus, train, car and even on foot some time to get a foothold into what must
surely be a multi-billion rand sector by now.
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It is largely, but not
completely, untracked in the national statistics. People work in that economy
but don’t find themselves in the labour market tracking systems in any accurate
measure, suggesting that unemployment is not as high as suggested in the
official surveys, the latest of which was released last week.
As you head into the
city, the mix between cars and taxis on the roads gives way almost completely
to taxis. The entire taxi industry is untracked, either for corporate or income
tax or in the employment statistics (because drivers are largely not registered
employees) yet it is a huge driver of car sales and a significant economic
input. Of course, the industry contributes to the fiscus through VAT or a fuel
tax, but its contribution to GDP is likely to be significantly undercounted.
While Johannesburg’s is
the largest informal or untracked economy, there are similar nodes across the
country in cities and towns. In this way, the economy is coming to more closely
resemble a Pan-African economy where the informal and untracked is much bigger
than the formal and tracked economy.
In time, this will
become the new normal. Already, the ballooning national debt (likely to come in
at between 68% to 69% of GDP) plus the plummet down the investment-grade
rankings and official employment statistics, all show that South Africa is rapidly
joining the rump of the third or developing world.
This group lies outside
the pack of what are called emerging market countries or even leading emerging
market economies, where we have always been placed.
We are falling out of
that pack more quickly than Caster Semenya out of the starting blocks. This
gives the South African business sector existential angst, but the ineluctable
plunge is now the new normal. And a visit to Jeppe Street (once the raids have
died down and the trade’s back to normal) will show that while one economy may
be dying, another is full of vibrant and colourful life.
There’s a twist in the
tale. The problem with this exciting new growing economy is that it can never
support the national solidarity system of grants, free education and health
that most South Africans are dependent on. If you want to support the
solidarity economy, then you have to keep the formal and tracked economy
growing and at current trajectories, across various measures, that is not