Fewer than 9% of businesses in South Africa’s townships have access to bank loans, according to the inaugural Township Informal Economy Report, released by Standard Bank last week. Most of these businesses rely on personal savings or family support.
The findings reveal that nearly 80% of township businesses remain unregistered. According to Statistics South Africa (Stats SA), unregistered businesses are those that operate outside formal regulatory frameworks including VAT registration, labour regulations, and tax compliance. These businesses are often not incorporated to make them legal entities, a reality that excludes them from access to finance, formal markets and digital tools that could enable them to grow.
Despite these constraints, the township informal economy is a critical component of South Africa’s labour market, accounting for nearly 19.5% of total employment in the last quarter of 2024 (Stats SA). Additionally, recent reports estimate the township economy to be worth almost a trillion rand. For scale, South Africa’s nominal gross domestic product (GDP) at market prices in 2024 was R7.3-trillion (Stats SA). Against this backdrop, Standard Bank’s research highlights both the resilience of township entrepreneurs and the systemic barriers that continue to hold them back.
The survey, conducted across Gauteng, KwaZulu-Natal, Western Cape, Limpopo and North-West, covered enterprises with annual turnovers ranging from R100,000 to R50-million. It confirms the township economy’s scale, while also identifying critical constraints that limit growth and inclusion.
“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,” says Simone Cooper, Head of Business & Commercial Banking South Africa, Standard Bank Group.
Some of the key findings indicate that:
- Nearly 80% of surveyed businesses are unregistered, excluding them from finance and formal opportunities.
- Entrepreneurs often face up to 20 similar businesses per community, squeezing margins.
- Fewer than 9% have access to bank loans, with most relying on personal savings or family support.
- While cash remains dominant, more than 56% prefer EFT or bank transfers, indicating readiness for safer digital payments.
- 49% of businesses operate from homes or garages, with only 11% in commercial premises.
- Township businesses play a vital role in local supply chains, with many contributing through sponsorships and youth initiatives.
“The insights reflect the lived realities of township entrepreneurs, their resilience, their contribution, and the barriers that hold them back,” says Naledzani Mosomane, Standard Bank Group head of enterprise and supplier development (ESD) for business and commercial banking. “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,”
Standard Bank says it has commissioned this report to ensure its SME offerings continue to respond directly to the realities of township entrepreneurs. Insights will also inform the bank’s collaborations with partners in government, corporates and development agencies – strengthening collective efforts to unlock growth in the township economy. The report underscores the need for affordable digital and merchant solutions, alongside step-by-step support to help township businesses formalise and expand.
- To read the report, click here.