South Africa’s township economy is worth more than R900 billion a year, yet most of it operates outside the formal financial system. This is according to a new report released by Standard Bank this month.

The Township Informal Economy Report was based on interviews with 250 informal businesses and 17 township SMEs, and found that around 80% of enterprises remain unregistered, while 61% rely on personal savings to start or sustain their ventures. Despite limited access to formal credit, the sector supports more than 7 500 jobs and accounts for almost 20% of national employment.

Retail and wholesale trade make up 15% of township activity, followed by transport (14%) and hospitality (13%), with most businesses operating from homes (49%) or street locations (25%). Digital payments are growing, with 56% of entrepreneurs now using bank transfers or EFTs, but cash still dominates daily transactions.

The report highlights persistent barriers to growth including high banking fees, complex loan requirements, and weak infrastructure. “Even when I have a signed business contract in hand, it is not easy to get funding,” one respondent said, while another noted that costly deposit fees pushed customers away from formal banking.

Standard Bank argues that low-cost, easy-to-use financial products and practical digital tools could help move township firms from survival to growth. It calls for gradual formalisation, transparent pricing, and stronger support for entrepreneurs to expand beyond local markets.