Foreign traders have an edge

26 January 2015 - 09:08 By SIPHO MASOMBUKA and PENWELL DLAMINI

Foreign business owners thriving in the townships say their South African counterparts have a lot to learn.

Hayat Muhammad, a Pakistani who runs a shop in Nellmapius, Pretoria, trades through a hole in a security gate.

"We look at the socioeconomic status of the area. We are not profit-mongers; sometimes you need to carry that burden to keep customers," he said.

He pays R9.50 for a 1.25-litre bottle of soft drink and sells it for R10. Most shops sell it for R11.

Muhammad said that, in a township, you cannot sell an item at the same price as in town, where more people can afford it.

"Be well stocked, so people get everything in one place," he added.

Thami Mazwai, resident executive at Wits Business School, said foreign shop owners had the competitive edge because of the knowledge they had garnered over the years and the ability they had developed to operate in a particular environment.

"When you are an entrepreneur, it is your ability to manage the environment in which you operate that will distinguish you from others," Mazwai said.

The fact that Somalis opened their businesses early in the day and closed very late gave them another advantage over the locals.

Somalis, Ethiopians and Bangladeshis form networks that enable them to share risks and rewards, and dominate "the value chain in its various manifestations" in a way that South African traders cannot.

Labour legislation is another factor giving the edge to foreign shop owners, said Herman Mashaba, chairman of Lephatsi Investment.

"Try opening your shop in the early hours of the morning and close in the evening and see if South Africans [workers] will not take you to the Commission for Conciliation, Mediation and Arbitration."

South African shop owner Abram Thugwana said he was struggling to keep up with his foreign counterparts.

"They slash their prices to ridiculous levels to squeeze you out, then hike the prices. I can't afford that."


The Department of Home Affairs is going to investigate the legal status of the foreigners doing business in Soweto.

Department spokesman Mayihlome Tshwete said yesterday: "We will investigate allegations that some of the foreigners have entered South Africa illegally."

Speaking in Doornkop, Soweto , where the attacks on foreigners' shops began a week ago, ANC secretary-general Gwede Mantashe urged the local community to restore their street committees.

He said weak immigration laws could give rise to terror organisations such as Boko Haram and Islamic State operating in this country.

The rioting abated at the weekend as police said four people had been killed and 153 arrested for public violence and possession of stolen goods.

At least 11 foreigners were charged with offences ranging from possession of illegal firearms to attempted murder. - Kingdom Mabuza, Penwell Dlamini