DISCUSSION PAPERNo. 2626 | MAY 2026 Supporting Small-Scale Gibson MudirizaSamantha De MartinoWendy Cunningham Series Description The Social Policy and Labor Discussion Paper series presents analysis and research that informs policy dialogue andoperational practice across social protection, social development, and labor markets. Social Protection: the collection covers the full lifecycle of Social Assistance, Social Insurance, Care, and Social Labor: the collection covers Active and Passive Labor Market Programs, Training and Skills Development, Youth SocialDevelopment:the collection covers Community and Local Development,Inclusion,Cohesion,Forced Across all areas, the series highlights cross-cutting issues such as Climate Change, Fragility and Conflict, and Copyright © 2026 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW,Washington DC 20433 Telephone: +1 (202) 473 1000; Internet: www.worldbank.org.This work is a product of the staff of The World Bank with external contributions. The findings,interpretations, and conclusions expressed in this work do not necessarily reflect the views of The The World Bank does not guarantee the accuracy of the data included in this work. The boundaries,colors, denominations, and other information shown on any map in this work do not imply any RIGHTS AND PERMISSIONS The material in this work is subject to copyright. Because The World Bank encourages dissemination ofits knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long Any queries on rights and licenses, including subsidiary rights, should be addressed to World BankPublications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: +1 (202) 522 Supporting Small-ScaleMicro-Entrepreneurship in South Gibson Mudiriza, Samantha De Martino, and Wendy Cunningham Abstract Drawing on qualitative data from 11 key informants and 75 small-scale firm owners in South Africa’stownships,this paper identifies five factors shaping micro-entrepreneurial success.First,micro-entrepreneurship often begins as employment of last resort but evolves into a deliberatechoice as owners value its autonomy and independence. Second, social and communal networksexpand access to shared resources, information, and markets. Third, complex processes and limited Keywords:Informal economy, entrepreneurship, South AfricaJEL Codes:J46, L26, O17, O55 Acknowledgements This policy note was authored by World Bank staffincludingSamantha De Martino, GibsonMudiriza, and Wendy Cunningham, under the guidance of Suleiman Namara and Iftikhar Malik.The authors express their deep gratitude to Lauren Graham, Senzelwe Mthembu, AnthonyKaziboni,Tunisha Naidoo, and Dominique Ralaralafrom the Centre for Social Development inAfrica (CSDA) at the University of Johannesburg, as well as Ariane De Lannoy from the SouthernAfrica Labour and Development Research Unit (SALDRU) at the University of Cape Town, for their Abstract....................................................................................................................................1Acknowledgements....................................................................................................................2Acronyms..................................................................................................................................3Executive Summary....................................................................................................................4I.Introduction......................................................................................................................7II.Methodology.....................................................................................................................9Sites for focus group discussions (FGDs).....................................................................................9Sampling and data collection.................................................................................................10 Acronyms CSDACentre for Social Development in AfricaDSBDDepartment of Small Business DevelopmentFGDsFocus Group DiscussionsKENASVITKenya National Alliance of Street Vendors and Informal TradersKNOMADGlobal Knowledge Partnership on Migration and DevelopmentNITASANational Informal Traders Alliance of South AfricaSALDRUSouthern Africa Labour and Development Research Unit Executive Summary South Africahasone of the highest unemployment rates globally, currently standing at 32.9percent.At the same time, the country has a comparatively small informal sector given its level Thispaperexplores the factors that contribute to the success and challenges of small-scale micro-enterprises in South African townships.Itutilizesqualitative research methodstogather insightson motivations, strategies, successes, and challenges faced by micro-entrepreneurs in townships Thestudyhas five primary findings. First,entrepreneurship