The impact of retail centre development on local economic development in Ndwedwe Local Municipal[it]y, KwaZulu-Natal.

Abstract

The informal sector has employed a lot of underprivileged people for about two decades in South Africa. However, South Africa is still facing high unemployment rates and poverty; even with the informal sector as an alternative to solving this socio-economic issue. Moreover, local government is mandated to promote local economic development and curb the issue of unemployment and poverty. As a result, the informal retail sector is one of the significant contributors to local economic development in township and rural areas. Besides, the informal sector faced many challenges, such as poor governance, low productivity, etc. In addition, they recently faced two significant challenges: the emergence of formal retailers and immigrant spaza-shop. Establishing formal retail centres in townships and rural areas has brought debates on whether formal retailers are good or bad for the local economy of these areas. Thus, the study focuses on the impact of formal retail development on the informal economy at Ndwedwe Municipality. The study adopted qualitative research methods to explore the impact of retail centre development on the local economic development of Ndwedwe Municipality in KwaZulu-Natal, iLembe District. The research places the informal business sector and the taxi industry as the major areas affected by this development. Individual interviews (N=10) were conducted at Ndwedwe Municipality Ward 15 with informal traders (street hawkers and spaza shop owners) and taxi owners/drivers. This study used the Institutional theory as a lens to guide the study. Interviews were analysed employing thematic analysis. The key findings confirm that formal retail centres have both negatively and positively affect the local economy. Positive aspects are that it creates employment for the local community, brings goods and services closer to the people, and offers a range of goods and services to the local people. Indirectly, formal retail centres also result in infrastructural development, such as roads, electricity, and buildings. The negative side of formal retail centres is the competition between the formal and informal sectors. As a result, the formal sector out-competes the informal sector, primarily because lack of the knowledge of running a business and insufficient resources. Therefore, this study recommends local government to uplift previously disadvantaged communities and close the gap between the informal and formal sector. In addition, capacity building can contribute to the informal sector to able to effectively compete with the formal sector.