Authors:  Liesl Pearson & Marilu Smit

A 2023 study1 by Forbes and Mastercard found that 91% of respondents in South Africa’s informal economy prefer non-cash payments, driven by safety concerns during the COVID-19 pandemic. This underscores the significant impact of the pandemic on consumer behaviour in the informal sector.

The shift from limited digital engagement to widespread adoption in South Africa’s informal retail trade highlights the country’s resilience and the transformative power of technology. Retail census studies by Frontline Research Group in 2019 and 2023 show a 20 percentage-point decrease in cash-only businesses, reflecting increased digital literacy and adoption of digital payment systems, which in turn fosters a more inclusive economy.

Frontline Research Group applied a random forest classifier machine learning algorithm, to uncover key determinants of digital inclusion among township retail outlets. Comparative analysis between the digital sophistication scores in the 2019 and 2023 retail census samples reveals higher scores in 2023, indicating an overall increase in digital sophistication among informal businesses in South African townships. These scores were determined based on a variety of factors, including access to Wi-Fi or internet services, the adoption of digital point-of-sale and payment facilities, the capability to sell airtime and data, acceptance of bank cards and mobile money, utilisation of mobile or internet banking, and the offering of additional services such as lotto ticket sales or pre-paid-electricity.

Factors most strongly linked to a digital inclusion are shown in charts 1 to 4 below.

2019 factor importance – Non-Alcohol Handlers vs. Alcohol Handlers; 2023 factor importance – Non-Alcohol Handlers vs. Alcohol Handlers

The factors most strongly linked to a digital inclusion are shown in the charts above. The feature scores indicate how significantly the specified feature improves the model’s ability to classify the data into traders that are digitally included vs traders who are not.

Digital Sophistication of Township Retail Trade

The analysis revealed higher digital sophistication scores in 2023 compared to 2019. Factors such as access to Wi-Fi, adoption of digital payment facilities, and mobile banking capabilities contributed to this increase. Government initiatives, private sector efforts, and educational programs have been key drivers of this digital transformation.

Drivers of Digital Inclusion

Key factors driving digital inclusion include product diversity, operational efficiency, and financial services. In 2023, features like business bank accounts, number of employees, and availability of generators emerged as significant predictors of digital inclusion. These insights highlight opportunities for FinTech and IoT solutions to enhance operational efficiencies and infrastructure.

Operational and Infrastructure Factors

Significant predictors of digital inclusion in 2023 include operational features like generators and business bank accounts, particularly for non-alcohol outlets. In the alcoholic sector, features such as electric meters and generators suggest potential for IoT solutions to optimise energy consumption and ensure uninterrupted operations.

Financial Inclusion and Transaction Services

The presence of business bank accounts indicates opportunities for financial institutions and FinTech to offer tailored services, such as credit facilities and payment solutions. The importance of financial services is more pronounced in the alcoholic sector, highlighting the need for targeted financial education and services.

Sustainable Energy Solutions

The importance of sustainable energy sources, such as solar and generators, in driving digital inclusion presents opportunities for renewable energy companies to develop affordable, reliable solutions, enhancing digital connectivity and inclusion for township outlets.

Strategic Interventions for Digital Inclusion

VAS providers can develop tailored services, from digital payment platforms to IoT-enabled supply chain management tools, by understanding the operational and infrastructure determinants of digital inclusion.

Policy Recommendations

Policymakers should focus on facilitating financial inclusion, enhancing digital literacy, and supporting infrastructure development to create an environment conducive to digital adoption.

Implications for Marketers

Empowering informal traders by leveraging their insights and networks can foster sustainable growth and create value for these traders and their communities. This approach builds trust and leverages modern, interactive tools for engaging and effective marketing initiatives aligned with the needs and behaviours of the target market.

For more information or a demonstration contact Liesl Pearson, Business Development. Tel +27 (0)86 999 0407, mobile +27 (0)82 441 7331 or email

1 Forbes Africa & Mastercard. (2023). Driving Financial Inclusion In South Africa’s informal Economy: The Landscape At The Bottom Of The Pyramid. Available at: