SA’s private sector can promote migrant entrepreneurs who create jobs and skills

The private sector plays a critical role in many aspects of migration. The adoption of the Global Compact for Safe, Orderly and Regular Migration in 2018, which provides a comprehensive approach to migration, is a key example that demonstrates the importance of the private sector’s contribution in migration policy development, including migration management.

At the local level, the private sector has been at the forefront of processes aimed at creating employment and business growth, in the midst of difficult circumstances as a result of the Covid-19 pandemic. The sector has been influential in advocating for better migration policies that facilitate the mobility of labour, especially attracting critical skills needed in our economy. As corporates, they have an obligation to ensure their business interests are protected while also complementing the government’s efforts to create employment and reduce poverty. It is therefore imperative that the sector supports conducive migration-friendly policies that are inclusive and sensitive to the plight of migrants.

But what other roles does the private sector in South Africa play to promote migrant entrepreneurship beyond influencing migration policy?

It should be appreciated that migrants are part of the private sector because they operate in both the formal and informal sectors. According to the Institute for Security Studies, the Quarterly Labour Force Survey of 2017 shows that 47% of migrants are employed in precarious and unregulated environments and, of these, nearly 39% are employed in the informal economy.

Additionally, a 2020 research report by Amanda Bisong and Anna Knoll, titled Mapping Private Sector Engagement, found that the private sector has traditionally been and continues to be used by public sector actors for resource mobilisation and funding. 

One of the major difficulties migrant entrepreneurs in South Africa face is the lack of capital in their business ventures because they do not have a credit history, documentation and other requirements for getting loans from financial institutions. To compensate, migrant entrepreneurs establish informal financial associations to generate and consolidate capital. These associations come in many forms ranging from rotating savings and credit programmes to social welfare strategies operated and provided by employers.

Furthermore, the focus of the private sector on business oriented interests in promoting better migrant policies has spilled over into the support of skills designed not only to improve business operations and boost productivity but also to support the South African economy in achieving sustainable development goals such as employment creation.

A 2017 study by Sally Peberdy investigating the relationship between South African and migrant entrepreneurs in Johannesburg found that about 47% of South Africans relied on immigrant businesses for supplies, about 51% had gained important skills from immigrant businesses and about 53% rented their business premises to immigrant businesses. Overall, more than 50% of South Africans said their relationships with immigrant businesses were on good terms.

Additionally, the South African economy is so diverse that it offers opportunities for growth and expansion of both micro- and macro-economic activities, which migrant entrepreneurs are willing to take up. As a result, migrants end up as owners of these small, medium and micro enterprises, contributing to the growth of the South African economy through tax payment, service provision and employment creation.  

The benefits of promoting migrant entrepreneurship by the private sector have been many but the most important include social cohesion, employment creation and skills development and sharing. Stokvels or associations are a mechanism for social cohesion not only among migrants but also between migrant entrepreneurs and South African hosts through the constant exchange of money, goods, services and business knowledge. 

The private sector acts as a bridge that can facilitate the relationship between the government and migrant entrepreneurs. A government department such as home affairs and private sector can work together in streamlining migration policies that facilitate the attraction and retention of skilled migrants to complete local human resources in building the South African economy.It is prudent for the government to identify, develop and implement mechanisms that incorporate, encourage and sustain partnerships with the private sector in migration programmes and policies to ensure the development of migrant entrepreneurs specifically but also migration in general. According to the Organisation for Economic Co-operation and Development (OECD), private sector engagement is central in reaching development goals and it can help to strengthen the link between “displacement, migration and sustainable development”. The sustained operation of micro-economic establishments by both South African and migrant entrepreneurs is one of the key economic activities that feeds into sustainable development. This stresses the importance of joint solutions.

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Paul Kariuki
Paul Kariuki

Dr Paul Kariuki is the director of the Democracy Development Programme in Durban. These are his own views.

Tawanda Matema
Tawanda Matema is a project manager at the Konrad Adenauer Stiftung working on its migration project.

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