Digital inclusion in South Africa’s informal trade sector is a pivotal element of the country’s economic fabric, given the substantial contribution of the informal sector to the economy and employment. The informal market primarily comprises of businesses in townships, rural, and outlying areas, and is estimated at 600 billion rand annually according to GG Alcock founder of KasiNomics (Lesaka Technologies, 2023). The Stats SA Quarterly Labour Force Survey for Q3 2023, found that the informal sector accounts for 18.3% of the country’s total jobs. Historically, this sector has faced challenges to digital inclusion. Gaps in digital literacy and inadequate digital infrastructure in certain areas were significant contributors to the sector’s digital exclusion.

However, in more recent years, a notable shift towards digital inclusion has been observed. Mastercard’s New Payment Index 2022 showed that 95% of South African consumers had used at least one emerging digital payment method over the previous year.

This transition is also supported by data from the Lesaka Informal Economy Digitalisation Index, which showed card-based transactions skyrocketing within the sector. Martin Wright, CEO of Kazang, a company that offers prepaid value-added services (VAS) in South Africa, highlighted that the rise of fintech firms offering low-cost merchant services and often free point-of-sale (POS), align with the increased preference for digital payments the informal economy’s more structured areas, such as large cash and carries, independent wholesalers, and superettes on main roads​​.

The rise in card payments and other digital POS is also supported by two Retail Census studies conducted by Frontline Research Africa, in 2019 and 2023, which saw a significant, 32 percentage points increase in the number of outlets that accept cards in 2023 vs. 2019.

In addition to card payments, digital POS (chart 2) payment facilities also saw a significant increase from 12% to 50%. The largest increases were seen among Shebeens, Taverns and Independent Superettes / Corner Café’s.

The push towards digital inclusion is multifaceted, involving innovative solutions tailored to meet the unique needs of the informal sector. Mukuru, a leading financial services platform, exemplifies this by leveraging digital technologies to bridge the gap to previously inaccessible financial services. Platforms such as this aim to connect participants in the informal sector to resources, they might previously not have had access to, thereby fostering economic growth and stability.