“Challenges to the growth of African immigrant-owned businesses in selected craft markets in Cape Town, South Africa”

This paper sought to ascertain the factors that impact on the growth of African immigrant-owned craft businesses in selected craft markets. The purposive and snowball non-probability sampling technique was deemed to be the best method to use in this study to select the respondents. The study utilized a mixed method approach to collect and analyze data. Questionnaires (quantitative) were administered to 122 African immigrant entrepreneurs, and in-depth interviews (qualitative) were conducted with the three municipality managers responsible for the four selected craft markets. The quantitative data were analyzed using the Statistical Packages for Social Sciences (SPSS) software, and face-to- face interviews were analysed by content analysis. Pushed by the need to survive and pulled by the many tourists in South Africa, African immigrant entrepreneurs turned to the craft business Seasonal and irregular nature of trade, competition, and xenophobia were noted to be the main growth challenges. Recommendations were made to the relevant stakeholders.


Introduction
The past 20 years have seen an unprecedented influx of African immigrant entrepreneurs into many cities in South Africa. An appreciable proportion of these immigrants settled in Cape Town for reasons such as its relative tranquillity (Van Eeden, 2011). The area surrounding Cape Town provides a variety of destinations for visitors, for example, Due to a number of push and pull factors, the African immigrants found themselves dominating the craft markets in Cape Town. For instance, it is believed that the majority of craft retail outlets are owned by African immigrant entrepreneurs who are forced into self-employment, because they are largely unable to secure formal employment (Kaiser and Associates, 2005;Mikolo, 2007). This comes against the backdrop that they are discriminated against in the labor market and often under-paid when they find a job (Tengeh, Ballard &Slabbert, 2011;El Bouk, Vedder&tePoel, 2013;Fatoki, 2014a). South Africans are given first preference when filling any job vacancy (Peberdy, 2000).
The numerous hurdles to be content with often limit Samson Nambei Asoba, Robertson K. Tengeh African immigrant-owned businesses to survivalist and micro enterprises (Khosa&Kalitanyi, 2014). In fact, it has been noted that a significant proportion of these African immigrant-owned businesses do not grow to small and medium-size businesses (Elk, 2004;Hay, 2008;Rogerson & Rogerson, 2011;Fatoki & Garwe, 2010). As Hay (2008) puts it, many craft businesses do not grow beyond the survivalist and micro level. Worst still, the Organisation for Economic Cooperation and Development (OECD, 2010) notes that the immigrant-owned businesses have a lesser chance of survival, when compared to local businesses.
The fact that immigrant-owned businesses do not grow is a cause of concern. This is particularly so, because the growth of African immigrant-owned businesses in craft markets would not only offer employment opportunities to African immigrants and the local population, but would also contribute to the Gross Domestic Product (GDP) of South Africa (Kalitanyi& Visser, 2010; Makhitha, 2015).
Though discerned to be a significant contributor to the socio-economic development of South Africa, the plight of immigrant-owned businesses has been largely neglected in policy and support initiatives over the past decades ( Fatoki, 2014a). Notwithstanding the prevalence of these studies, little attention has been given to the factors that affect the growth of African immigrant-owned craft businesses. More so, the factors that inhibit these businesses moving from survivalist and micro phase to the formal SME cohort have not been studied in the context of craft businesses in South Africa. Accordingly, the objective of this study was to determine the challenges that African immigrant-owned craft businesses faced during the growth phase.

Literature review
The literature review was conducted under the following themes: immigrant entrepreneurship, the importance of immigrant entrepreneurship, business growth, and challenges to the immigrant-owned businesses.
Immigrant entrepreneurship as a social phenomenon has intrigued many researchers over time, yet the concept is still in its developmental phase. Hence, a number of definitions -mostly "hybrids of entrepreneurship" have emerged. Put simply, immigrant entrepreneurship refers to entrepreneurial activities carried by immigrants in a country other than theirs, either through personal efforts or with assistance from acquaintances in the host or country of origin (Tengeh, 2011). The businesses owned and run by immigrants are referred to as immigrant-owned businesses. Thus, the term African immigrant entrepreneurship is utilized to describe the case where the process of entrepreneurship is carried out by an African immigrant in South Africa (Tengeh, 2011).

Relevance of immigrant entrepreneurship.
Vinogradov and Isaksen (2007) point out that, in recent years, small businesses have benefited both immigrants and the host countries. Kloosterman and van der Leun (1999) maintain that immigrant entrepreneurship contributes to the host country's economic and social welfare through therevitalization of declining neighborhoods, introduction of new and cheap products and opening of trade links between countries. Furthermore, it is believed that immigrant entrepreneurs can serve as role models to both fellow immigrants and citizens of the host country. This view is supported by Minghuan (2000) who states that immigrant entrepreneurs may act as selfappointed leaders in the community and, thus, contribute to the integration of immigrants and local people.
A number of authors concur that immigrant entrepreneurs may generate employment opportunities for both immigrants and natives, therefore, contributing poverty reduction and economic growth (Kloosterman& van der Leun, 1999;Fairlie, 2008;Kalitanyi& Visser, 2010;Tengeh, 2011). Particularly important to the South African economy is the magnitude of the skills that can be transferred from immigrant to nonimmigrant employees, and the resultant effect that this may have on economic growth and development.

Growth of a business.
There is no generally accepted definition, tool, method nor criterion for measuring growth and a number of scholars have gauged this differently. For instance, El Bouk et al. (2013), Birley and Westhead (1990), Altinay and Altinay (2008), Fatoki and Garwe (2010) alluded to one or combination of changes in sales, assets, employment, productivity and profit margins. In this paper, the concept of growth alludes to Africanowned craft businesses that have been in existence for more than 42 months and have successfully progressed from the survivalist and micro-phase to the small business phase (Naman&Slevin 1993, cited by Altinay&Altinay, 2008).

Growth challenges of immigrant-owned businesses.
Generally, survivalist and micro entrepreneurs face more severe sales and income fluctuation than persons employed in traditional jobs. The seasonality and irregular nature of trade make it difficult to forecast. Khosa and Kalitanyi (2014) found that sales are very high in summer months and drop drastically during winter. Making reference to sales and income fluctuations, the V&A Waterfront (2013) notes that African immigrants selling crafts experience the greatest sales volume during the festive season, because it is the peak season for tourists in South Africa. Khosa and Kalitanyi (2014) recommend that African immigrants form partnerships with locals to minimise cost and to gain access to government grants. Furthermore, Chikamhi (2011) points out that the craft markets were poorly designed and the weather pattern in Cape Town disrupts trading during the winter season, thus limiting the possibility of growth.
As one of the challenges, xenophobia refers to the intense dislike or fear of foreigners by citizens of the host country. The word xenophobia is derived from the Greek "xenos" meaning stranger or foreigner and "phobos" meaning fear. Xenophobic violence has gained particular relevance since 2008 in South Africa. Two prominent waves of antiimmigrant attacks swept a number of townships in South Africa in 2008 and 2015, in which immigrant-owned shops were looted, and a number of deaths registered (Mail & Guardian, 2015). Immigrants tend to invest cautiously or stand to lose everything should another attack happen. implores investigation into immigrant entrepreneur's access to formal finance, especially from the demand and supply side perspectives.
Businesses or organizations that serve the same market or satisfy the same needs tend to competitors. Given that many African immigrant businesses tend to serve the same niche markets, competition makes growth a challenge for the less competitive. In a related study, Khosa and Kalitanyi (2014) observed that the majority of African immigrant entrepreneurs felt that competition is particularly intense in Cape Town, and this affects profitability and growth. DEDKZN and SEDA (2007) argue that competition occurs not only within South African businesses (African immigrant businesses and non-African immigrant businesses) but also from international trade with China and India. Rogerson (2010b) suggests that crafters should constantly produce new, innovative craft products to meet the challenge in both domestic and foreign markets. ). In a related study, Hunter and Skinner (2001) noted a respondent that remarked that: "People shout at me, because I cannot speak Zulu". This language barrier affects customer relationships. Therefore, African immigrant entrepreneurs must be able to communicate effectively in the host country in which they conduct their business. Beyond this, language proficiency allows immigrants the benefits of integration into a community, access to business advice, and bank loans among others.
Crime and corruption impact negatively on the business. In 2007, South Africa was listed as one of the five most murderous nations (UNODC, 2007). Between 2010 and 2011, business robberies increased by 0.9% and of particular concern is the fact that 13277 robberies cases were recorded in Cape Town Central (South Africa, SAPS, 2011). With crime on the rise, Fatoki and Garwe (2010), point out that the effect of crime on business is glaring in South Africa. Hence, business owners tend to focus more on operational matters rather than staying ahead of competitors. The increasing expenditure on crime prevention deterred the growth of most businesses.

Research design and methodology
Following the counsel of scholars such as Zikmund, Babin, Carr and Griffin, (2010), and Brynard and Hanekom, (2006), the population of this study comprised African immigrants at the selected craft markets and the municipality managers responsible for managing the selected markets. This study focused on four craft markets in the Cape Town area: Greenmarket Square in the central business district of Cape Town, Stellenbosch craft market, Franschhoek craft market and Hout Bay craft market.
Franschhoek is a small farming town within the jurisdiction of Stellenbosch Municipality. Hout Bay is a small fishing town within the jurisdiction of the City of Cape Town. The researcher selected these markets, because they are very popular tourist markets.
In line with Khan (2008), the sample frame of this study constitutes African immigrant entrepreneurowned businesses that are three or more years old, located in one of the selected markets. The municipality managers of the selected markets were eligible for selection.
According to Oppong (2013), purposive sampling is a method of sampling in which the researcher selects participants based on their knowledge or experience of the topic being researched. The purposive and snowball non-probability sampling technique was deemed the best method to use in this study, because the researcher had the data on the numbers of stalls in each craft market, but could not identify the African immigrant entrepreneurs. In snowball sampling, a few potential respondents are identified, to begin with and then asked to recommend others they may know who also meet the required criteria for inclusion in the study (Tengeh, 2011). In fact, Tengeh (2011) asserts that snowball sampling is useful when it is very difficult to approach the participant directly.
The Raosoft (2009) software was utilized to calculate the sample size and 122 was adopted for the study. The projected sample size consisted of 117 stalls at Greenmarket Square craft market, 25 stalls at Stellenbosch craft market, 21 stalls at Franschhoek craft market and 21 stalls at Hout Bay craft market. With a total number of 178 stalls, and aiming to uphold a 95% confidence level (i.e., 5% error margin), the ideal sample size as recommended by the calculator was 122; the response distribution is 50%; and the recommended sample size is 122.
Aiming to maximize the benefits of both methods, a blended approach was adopted to collect and analyze the data. The mixed research method is premised on collecting data using both quantitative and qualitative research methods in a single study, to understand a research problem (Johnson, Onwuegbuzie& Turner, 2007). According to Green, Caracelli and Graham (1989, cited by Creswell & Clark, 2011), the reasons for choosing a mixed method approach include, but not limited to the use of the result of one method to develop or inform the other method. Hence, it enhances correspondence and corroboration of the results of different methods. Beyond the benefits of triangulation mentioned earlier, the researchers believed that the mixed method approach was the most suitable for this study, as it was benchmarked against other related and recently published studies such as Tengeh et al., (2011) and Khosa and Kalitanyi (2014). The questionnaire was designed to accommodate 5-point Likert scale questions besides closed -and open-ended questions and multiple answer questions. Questions were formulated to capture growth and to measure the difference between the current and start-up turnover. Furthermore, the researcher utilized the interview guide to conduct in-depth face-to-face interviews to solicit information from each of the three municipal managers.
Though integrated at the end, the quantitative and qualitative data were analyzed in different phases. Firstly, quantitative data were analyzed separately using the SPSS. Secondly, qualitative data collected from interviews were sorted into themes and specific categories. The categories were placed in line with the research question. The result of the qualitative tool was, then, carefully aligned and integrated with the results of the quantitative method.

Background characteristics of the respondents.
Looking at the profile and characteristic of the participants, it emerged that the majority of respondents weremale (70.8%), while only 29.2% were females. Interestingly, 35.5% of the respondents were between the ages of 20 to 40 years and a slight majority of 36.4% were between 41 to 60 years. In the same vain, 28.1% of respondents were over 60 years. In terms of marital status, 16.5 % of respondents were single, while 69.4% were married. The majority (18.0%) of respondents hailed from Cameroon and Zimbabwe respectively, followed by the Democratic Republic of Congo with 16.4%. Only 0.8% of the respondents came from Egypt.
Approximately sixty percent (59.8 %) of therespondents operated at Greenmarket Square, while 17.2% operated at Stellenbosch craft market. A slightmajority (60.3%) of respondents had a secondary or high school education. This was followed by 19.0% who had been to auniversity, and only 2.5% of the respondents had no formal education.
The sample for the personal interviews was made of 3 municipal managers drawn from each site, who had 8, 11 and 35 years of work experience correspondingly. Hence, the managers were in a privilegedposition to correlate the entrepreneur's claims with rich in-depth information. The managers unanimously established that their role was to create an enabling environment for entrepreneurs and to ensure that the entrepreneurs comply with the by-laws of the municipality. This finding is supported by those of Pahwa, Bester, Nieuwenhuyzen, Dawood, Pieterse, Kane, Schlemer, Bot, Hamilton, Madel& Eden (2006), Masonganye (2010) and Gudlhuza (2012). According to Pahwa et al. (2006), municipalities aim to be proactive in business support both at the provincial and national levels. Verbatim reports that captivated the role of the municipal managers included the following from participant 1: "The role of municipality firstly is to create an enabling environment for crafters. Our second role also is the development of crafters to run their business in business principles. Thirdly, the management of those sites, and to ensure they comply with the by-laws of the municipality. So we link very closely with our law enforcement". Table 1, the overwhelming majority (65%) of the respondents agreed that the seasonal and irregular nature of trade makes it difficult to forecast, thus, limiting the possibility of growth, whereas only 14.1% respondents disagreed. This findingis supported by Chikamhi (2011) who points out that the craft markets are poorly designed and the weather pattern in Cape Town disrupts trading during the winter, thus, limiting the possibility of growth.  Secondly, Xenophobia emerged as one of the challenges to business growth. As recounted in Table 2, an overwhelming majority (66.9%) of the respondents concurredthat xenophobia is a challenge to the growof a business, whereas 26.4% disagreed. This verdict resonates with Khosa (2014) who established the same with respect to the growth of African immigrantowned businesses in Cape Town. One may argue that thisresult has been positively influenced by the fact the most-recent xenophobic attack in April 2015 was still fresh on the minds of the respondents at the time data collection. Both studies found that South Africans are xenophobic, and this informs the "popular" descriptions of African immigrants as illegal, uneducated, job-takers, and so forth.

Other results. Firstly, seasonality and the irregularity of trade emerged as one of thechallenges that African immigrants-owned craft businesses faced a number during growth phase. According to
Thirdly, the participants reported a lack of credit facilities as a challenge to growth.The results in Table 3 show that a slight majority (54.2%) of the respondents agreed that the lack of credit facilities is a challenge to growth, whereas 28% disagreed. This result correlates those of Rogerson (2010b) who suggests that the core challenge to SMMEs is how to secure finance for either start-up or cash flow. Cash flow is critical to obtain material, equipment, skilled labor and premises. Given that bank's funding is driven by asset-based assessments and appropriateness of ideas, it is suggested that new funding mechanisms be introduced, possibly by government, to make seed capital available to entrepreneurs without the stringent requirement of commercial banks (GEM, 2013). Fourthly, lack of support from DTI and the local government was noted as a challenge. Table 4 indicates that a slightlyless than majority (49.1%) of the respondents disregard the lack of support from the DTI and local government as a challenge to business growth, while 42% of the respondents agreed with this statement and felt that the lack of support from the DTI and local government is not a challenge to growing a business. This finding is supported by Khosa and Kalitanyi (2014) who also found that the DTI does not assist immigrant entrepreneurs. Fifthly, the inability to communicate effectively in the local language was noted as a constraint.  Hunter and Skinner (2001) also share the view that the local language is a problem to immigrants in South Africa. Khosa and Kalitanyi (2014) state that there are some benefits to be derived from the knowledge of local languages. Sixthly, competition emerged as a constraint to growth. The findings in Table 6 illustrate that an overwhelming majority of (62.3%) respondents agreed that competition is a constraint to growth, whereas only (24.6%) respondents disagreed. This outcome is supported by Khosa and Kalitanyi (2014) who found that competition is very tough among immigrant entrepreneurs in Cape Town. Competition occurs not only within South African businesses but also from international trade with China and India. Hernandez and Costanade (2007, cited by Rogerson & Rogerson, 2011), share a similar view and state that low entry barriers increase the level of competition and it becomes difficult to increase productivity and growth.  Lastly, lack of entrepreneurial skills emerged as a challenge to growth. Table 8 shows that a slight majority (43.3%) of respondents disagreed that lack of entrepreneurial skills is a challenge to growth, while 34.7% of the participants agreed with the statement. Wickham (2001) and Khosa and Kalitanyi (2014) share similar views and found that entrepreneurial skills are critical for the survival and growth of a business.

Conclusion
Against the backdrop that a notable proportion of African immigrant-owned survivalist and microbusinesses do not grow and develop into small and medium size enterprises (SMEs) in the selected craft markets, this paper sought to determine the associated factors. The study found that seasonal and the irregular nature of trade; competition; and xenophobia were the most precarious challenges to the growth of Africa immigrant craft businesses. Collaborating the results of the quantitative method, the municipal managers noted that xenophobia and competition were the most outstanding challenges that immigrant entrepreneurs in their jurisdiction faced.
Emanating from the findings of this study, a number of recommendations were made.

Recommendations
The seasonal nature of trade is a challenge to do business in open stalls at craft markets. The researcher recommends that the municipality management erect permanent, weather-proof stalls at the selected markets. Permanent structures will help African immigrants by minimising the cost of damages to products caused by wind and rain, especially during the Cape winter months.
Xenophobia was stated as a challenge to the growth of African immigrant entrepreneur businesses. The researcher recommends that the municipality managers encourage anti-xenophobic sentiment through workshops and advertise the benefits of integrating African immigrant entrepreneurs into the local communities.
Competition was identified as a challenge during the growth phase of craft businesses. The researcher recommends that municipality managers accept new applicants only if they bring rare products which are different from the existing products at the craft market. The researcher also recommends that the municipality should organize workshops to educate African immigrant entrepreneurs on the benefits of selling unique products at the craft market.
Access to finance was identified as a crucial factor to enable the African immigrant entrepreneurs to grow their craft businesses. The researcher recommends intervention by the municipality managers to persuade these monetary agencies to extend their funding assistance to include deserving African immigrant entrepreneurs. Besides financial assistance, the DTI could provide mentorship to African immigrant entrepreneurs.

Suggestions for future research
The researchers believe that continuing research will assist in improving current circumstances of African immigrant entrepreneurs and create an environment which is conducive to them starting and growing their craft businesses in South Africa.
This study focused mainly on factors affecting the growth of African immigrant-owned businesses.
The study was limited to handmade craftware sold in four selected craft markets, being Greenmarket Square, Stellenbosch, Franschhoek and Hout Bay. Future studies should focus on other crafts and other craft markets in South Africa.
Comparative studies should be conducted on African immigrant-owned craft businesses in other countries. This will enable policy-makers to understand African immigrant-owned craft businesses in a more holistic manner.