South Africa

The South African taxi rank with more travellers than OR Tambo Airport

More people walk through the Baragwanath Transport Interchange and Traders Market each month than through OR Tambo and Cape Town International Airport combined. 

Commonly referred to as Baragwanath taxi rank, this transport node is one of the busiest in South Africa and has undergone several redevelopments. 

The latest, finished in 2008, expanded its capacity to accommodate around 500 street vendors with storage facilities, management offices, and support infrastructure. 

Twelve taxi operators use the node as a hub for transport around South Africa’s economic powerhouse, requiring around 800 ranking and holding bays. 

Informal economy expert GG Alcock said the sheer scale of this transport hub is emblematic of the hidden success story of South Africa’s ‘second’ economy. 

Alcock said it is a false narrative that South Africa suffers from widespread poverty and inequality, with most people living in a shack.

There has been a tremendous housing transformation in townships across South Africa, with many impressive houses springing up.

“If you go into townships today, you will find that most houses are impressive formal houses,” he said.

Alcock has previously estimated that the informal economy in South Africa is worth around R750 billion and that its structure closely mirrors that of the formal economy. 

With Baragwanath taxi rank receiving 13.5 million visitors a month, it is a major source of trade and revenue for retailers that capitalise on the passing traffic. 

Source: GG Alcock, Lesaka Technologies

The transport hub experiences more monthly footfall than South Africa’s two major international airports – OR Tambo in Johannesburg and Cape Town International – combined.

In April 2024, OR Tambo had 1.5 million passengers travelling through its terminals across international, domestic, and regional flights. Cape Town International had only 851,774 passengers pass through its gates. 

The 2.4 million passengers moving through South Africa’s premier airports is less than 20% of the monthly footfall through the Baragwanath taxi rank. 

The immense footfall through informal transport hubs represents a huge opportunity for retailers from small spaza shops to JSE-blue chip Shoprite. 

Alcock estimated the informal retail economy’s value at around R180 billion, with over 100,000 spaza shops nationwide and nearly 500,000 mobile traders. 

He also explained that the informal sector is growing at nearly double the rate of its formal peer at 22% per annum.  This has attracted the attention of blue-chip JSE-listed companies such as Shoprite and Tiger Brands. 

Last year, South Africa’s largest food processor announced plans to rapidly expand the range of products available in the informal economy. 

Tiger Brands aims to have its key product lines, from Ace Maize Meal to Jungle Oats, in between 130,000 and 150,000 stores within five years. So far, it has partnered with 46,000 stores in the first two years of its rollout. 

With these companies’ increasing role in the informal economy, more of the economic benefit will flow through to formal economic statistics, which should help shift the narrative around the sector. 

GG Alcock

Alcock has also dispelled the myth that the informal sector pays no tax, with parts contributing significantly to the fiscus. 

While many of the businesses in the informal economy are not registered companies and do not pay corporate income tax, they contribute to VAT. 

As they are not registered, these companies cannot claim VAT refunds as a formal business would. 

Furthermore, alcohol traders contribute to excise tax as to have a liquor licence, they have to be registered businesses and taxpayers. 

This sector is estimated to be worth R110 billion, with over 45,000 licenced taverns and bottle stores. 

Most spaza shops and alcohol traders will also contribute to the fiscus by purchasing supplies from formal businesses, often directly from large wholesalers. 

For example, many spaza shops or superettes will source stock from a Shoprite Usave, Pick n Pay Boxer, or even directly from food processors such as Tiger Brands. 

Taverns, shebeens, and liquor traders will purchase their stock directly from liquor wholesalers, Coca-Cola, or traditional bottle stores. 

Thus, the informal economy is significantly intertwined with its formal counterpart and contributes greatly to the bottom line of large, often JSE-listed businesses, contributing to the country’s fiscus.