Capitec CEO Gerrie Fourie’s assertion (Business Day, June 10, 2025) that South Africa’s unemployment rate could be as low as 10% when accounting for the informal sector is an optimistic but unsubstantiated claim that overlooks deep structural challenges, including social grant dependency and youth unemployment.
Fourie argues that Stats SA’s 32.9% unemployment rate (Q1 2025) is inflated because it excludes self-employed individuals in townships, such as vendors with R1,000/day turnovers or those renting back-rooms. He cites Mexico’s 55% informal sector and low unemployment (~3–4%) as a model, supported by a UCT/Harvard paper noting South Africa’s “abnormally low” informality relative to its GDP per capita. Capitec’s 2 trillion data points and estimate of 3 million “emerging” businesses reinforce his view of a vibrant informal economy.
However, Fourie’s claim is problematic. Stats SA already counts informal sector workers (2.9 million in Q1 2023, 17% of employment), contradicting his assertion that self-employed people are excluded. Achieving a 10% unemployment rate requires ~5.2 million additional jobs, an implausible scale even if Capitec’s 3 million informal businesses employ 1–2 people each. Many informal activities are precarious, with earnings below the poverty line (R1,558/month), masking underemployment.
Social grants, supporting over 18 million people (including 8 million SRD grants), enable survivalist activities but do not equate to sustainable employment. Fourie’s example of high-turnover vendors is anecdotal and unrepresentative, as Capitec’s own data (Briefly.co.za, 2023) shows clients getting poorer amid inflation. Youth unemployment (46.1% for ages 15–34; Q1 2025) further undermines the claim, as regulatory barriers and skills mismatches limit informal opportunities for young people, many of whom are discouraged work-seekers.
The Mexico comparison is aspirational but ignores South Africa’s unique constraints, like restrictive zoning and crime, which the UCT/Harvard paper identifies as limiting informality. While deregulation could boost the sector, current data doesn’t support a 10% unemployment rate. Fourie’s optimism aligns with Capitec’s strategy to grow business banking (R22 billion loan book), suggesting a bias toward highlighting informal sector potential.
South Africa’s informal economy is vital, but redefining unemployment to include precarious work risks glossing over inequality (highest global Gini coefficient) and structural issues. Policymakers should focus on deregulation and better data collection, as Fourie and the UCT/Harvard paper suggest, but claims of a 10% unemployment rate are speculative without rigorous evidence. Addressing grant dependency and youth unemployment requires more than redefining metrics—it demands reform different from failed tried and tested policies.
