Virtual Entrepreneur

Bags Full Of Possibilities For Job Creation

August 5th, 2006 | Author: MrMoney

Business Day:
Job creation is often seen as requiring big projects, massive capital outlay or state intervention. Business and government overlook opportunities in the so-called 2nd economy. Instead of pouring money into job creation, why not support and expand existing markets created by the entrepreneurial instincts of poor people?

An excellent example of this is the Johannesburg cross-border retail trade sector, where more than half a million people are coming into the city each year to shop, bringing in between R15bn and R20bn a year. Figures from South African Tourism indicate that 1/3, or R15,7bn, of the total spend by domestic and international tourists in SA in 2004 was in Johannesburg. Of this, R5,7bn, or more than 1/3, was from regional shoppers travelling overland to SA.

Cross-border retail tourism is a significant contributor to the South African economy, as well as to Johannesburg. These shoppers not only boost the business of local retailers but also help develop other businesses around them. Entrepreneurs have grasped the opportunity to provide food, transport, low-cost accommodation and storage for goods – and there is potential for growth.

Research by development agency ComMark Trust in collaboration with the environmental affairs and tourism department and the City of Johannesburg shows that cross-border trade is also an important contributor to employment.

Estimates from interviews with Mozambican shoppers, conducted at Park Station in central Johannesburg, suggest an employment multiplier in the source country of 1,2 employees for every overland shopping visitor to SA. Moreover, estimates drawn from these interviews indicate that each trader directly supports more than 2 dependents.

The research reveals:

Shoppers are mainly women aged 25-45, who travel to SA as often as twice to 3 times a month.

The most important source market is Zimbabwe, followed by Mozambique. Malawi and Zambia are becoming increasingly significant source markets.

Mozambique had the highest spend per visitor, at R16914, followed by Zambia at R10528. Malawi came 3rd with R10103 per person, and Zimbabwe followed with R9402.

It is estimated that more than 450000 shoppers arrive in Johannesburg by road and at least 90000 by air.

Given the economic contributions these cross-border shoppers make, it is surprising that little is being done to maximise their shopping experience. They still face many inconveniences. Chief among these are:

No cross-border rail services. Rail services operate only within SA, from the main border post serving Zimbabwe (Beitbridge) and Mozambique (Komatipoort). Spoornet suspended cross-border rail services outside SA in 2000 for Zimbabwe and in 2002 for Mozambique because of delays and disruptions caused by border formalities. Rail commuters to Johannesburg therefore rely on road transport.

A lack of user-friendly and efficient public transport in Johannesburg.

The absence of a convenient VAT refund facility means many shoppers do not claim their refunds. ComMark estimates that this amounts to R215m in unclaimed VAT, which could have been ploughed back into the economy of Johannesburg.

An insufficient supply of affordable, secure formal accommodation.

A lack of safe and conveniently located storage space.

As a strategic 1st step towards solving these problems, ComMark has helped establish the Joburg Cross-Border Shopping Association. The association has been legally constituted as a Section 21 (not for profit) company representing suppliers of goods, providers of transport and logistics, providers of accommodation, suppliers of space, tourism and banking facilities. The association is on a membership drive to bring in a range of industry players, from large corporations to small businesses. It is also working with government, including the environmental affairs and tourism department, the revenue service and the City of Johannesburg.

Development strategist CK Prahalad argues in his book The Fortune at the Bottom of the Pyramid that there may be better ways of helping the poor than charity. His message is that if companies start to acknowledge the poor as entrepreneurs and consumers, opportunities will open up.

The Joburg Cross-Border Shopping Association believes the city could become the Dubai of southern Africa. In recognising this, it is paving the way for others – and the region will benefit from the economic growth of Johannesburg becoming a shopping hub.

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