Making a difference digitally. E-Commerce in South Africa

Table of Contents:

LIST OF FIGURES

INTRODUCTION

1. IMPORTANT FACTS ABOUT SOUTH AFRICA

2. E-COMMERCE
2.1 Definition of E-Commerce
2.2 E-Commerce landscape in South Africa
2.3 E-Commerce companies
2.4 E-Commerce companies for this master thesis

3. TOWNSHIPS
3.1 Definition of townships
3.2 History of South African townships
3.3 South African Townships Today

4. EDUCATION & UNEMPLOYMENT IN SOUTH AFRICA
4.1 Education in South Africa
4.2 Unemployment in South Africa
4.3 Youth Unemployment

5. METHOD: QUALITATIVE RESEARCH
5.1 Research structure
5.2 Semi-structured interviews
5.3 Interviewpartners
5.4 Interview questions
5.5 Analysisof Data

6. RESULTS & ANALYSIS

7. CONCLUSION

8.1 Suggested contributions from the state. A 3-step-plan
8.2 A critical look on the methodological approach
8.3 Future Outlook

9. bibliography

10. appendix

Qualitative Interview

Qualitative Interview

Qualitative Interview

Qualitative Interview

Qualitative Interview

Qualitative Interview

Official letter from bidorbuy.com

The JumpStart Program by Mr. Price Group

List of Figures

Figure 1: Contribution to GDP in billion Rand

Figure 2: Online Retail revenue in SA 1996-2011 in million Rand

Figure 3: Leading retail sites visited by South Africans - December

Figure 4: Products and services being purchased online in the last 3 months

Figure 5: Clothing and accessory E-Commerce stores

Figure 6: The biggest Townships in South Africa

Figure 7: Main areas of deprivation among the multidimensionally poor (MDP)

Figure 8: Access to water

Figure 10: Average Grade Eight science test scores for middle-income countries participating in TIMSS

Figure 11: Learner Reading Score compared to wealth quartiles

Figure 12: Unemployment rates in South Africa between 1980 and

Figure 13: Black unemployment rate by education in per cent

Figure 14: Youth Unemployment in South Africa

Figure 15: Unemployment rates for 18-24-year-olds by highest level ofeducation completed

Figure 16: Criteriasforworking in an E-Commerce company

Figure 17:The "Logbook" ofJumpstart

Introduction

According to the "South African B2C E-Commerce Report 2012", South Africa was already in 2011 the fifth largest country in Africa in terms ofthe number of Internet users. Today in 2014, there are approximately 12,5 million South African Internet users^[1]. Since several years, the E-Commerce sector is facing a boom in South Africa. However, not everybody seems to profit from or participate in this boom.

Economically and socially, South Africa is still deeply divided. The inequality within the population, the distance between rich and poor is extreme: The richest 20 percent of the population account for almost 70 percent of total income, the share of the poorest 20 percent is just under three percent. Almost a third (31.9%) of the population lives on the equivalent of less than 2 Dollars a day^[2]. Around seven million people are considered long-term unemployed with no job prospects, especially those living in informal settlements, the so-called „townships".

The social and economic inequality is a big problem for the country of South Africa. E-Commerce has the potential to resolve this problem, as it is booming and companies plan to extend their businesses as well as their employee numbers. The idea is to train people from the townships in order to get them to work in the E­Commerce business. Interesting for this thesis are those E-Commerce companies with big storage halls, as they are the ones who might be in need of untrained employees ofthe townships. Jobs could be needed in basic positions such as picking and packing, quality control and customer services in big warehouses. However, it is still unclear whether E-Commerce can actually help to solve or diminish inequality and if so, what the precise effect will be.

Supposed it would be actually possible to use training initiatives and programs in the form of cooperations of E-Commerce companies and township NGO's, resulting in dimishing unemployment and leading to permitting more people participate in the boom of E-Commerce, the South African economy and its society as a whole would gain a tremendous benefit.

The research question in this master thesis is interlinking the existing economic boom of E-Commerce with the high unemployment rate in the townships: Does the fast-growing E-Commerce in South Africa have an effect on the high unemployment rate in the townships? In the quest for an answer to this question, attention is paid to two related questions as well: Do the lowest social classes feel an improvement in their living standards after being hired by an E-Commerce business? And can E­commerce companies rely on employees from townships?

In order to to give a precise and complete answer to the research question, this research is built up out of different parts. The results from the qualitative research in the form of semi-structured interviews are combined with existing literature on the subject of South African E-Commerce, the history of townships and important findings on Education & Unemployment will support the scientific character of this thesis. The research is build up out of a theoretical part, which is to be found in the chapters one to four, and a practical part in the chapters five to six.

In the first part of this academic thesis, the South African society will be briefly explained and an overview will be given in terms of country figures, the cultural diversity and the importance of being a BRICS member, in order to get a feeling for South Africa as a country.

As part ofthe theoretical scientific literature, the definition of E-Commerce and the existing landscape of E-Commerce structure in South Africa will be investigated in the second chapter. Furthermore, it will be explained, which companies are to be found on the South African E-Commerce market and subsequently, in another step, which companies especially are useful regarding the topic of this master thesis. That is to say that the focus will be on companies that particularly hire people from the townships.

In the third part, this master thesis provides an in depth analysis of the definition, history and Todays' life of townships. This is important, as it later helps to understand the burdens for both the employees from townships as well as their employers in terms of understanding the culture of people from townships.

A lack of education and high unemployment are both big issues in South African townships, and are moreover closely linked. A lack of education obviously diminishes somebodys chances on the labour market, and vice versa the status of unemployment is likely to affect further educational plans for a person as well as his or her children. In the fourth part of the thesis, these issues are highlighted and the situation E-Commerce companies are facing when hiring employees from townships is sketched.

In the fifth part the research method ofqualitative interviews will be presented and it will be explained why and how this method was used. Questions for these semi- structured interviews were drafted on the basis of the theoretical research conducted in the first three chapters and posed to experts from E-Commerce companies as well as to experts from NGO's working in the townships. The analysis ofdata was conducted with the use ofthe "coding" technique, which interlinks corresponding topics of different interviews in order to draw up generalized conclusions.

Based on the qualitative surveys that were carried out in cooperation both with experts from E-Commerce companies as well as with experts from NGO's working in the townships, the sixth chapter will present the results and analysis of the qualitative Interviews.

The seventh part presents a conclusion in order to answer the research question and to have a brief overview of this master thesis.

The discussion in chapter eight will propose a three-step plan of alternatives that could actually help to lower the unemployment rate in South Africa. Furthermore, a critical look on the methodological approach will be provided, where the own research will be criticized in order to reflect the main findings and to be able to place them into context. Moreover, pointing out the errors in the own research will provide the initiative for future research, which is why an an outlook for future fields and questions will be explored.

In the last part, the bibliography will be listed and an appendix will give further insight and show the typed down qualitative interviews.

1. Important facts about South Africa

South Africa has the second largest economy in Africa in terms of the nominal Gross Domestic Product (GDP) ofalmost 12.000 US-Dollars per capita. It is ranked the 25th biggest economy worldwide according to the total GDP of 623 billion US-Dollars^[3]. South Africa has almost 53 million inhabitants and its area is of 1.221.037 square kilometers, therefore it is more than three times bigger than Germany. South Africa's ethnic groups are 79.2% Black Africans, 8.9% Coloureds, 8.9% Whites, 2.5% Indian or Asian and 0.5% other ethnicities^[4]. Each ethnic group has their specific language or sometimes even various languages, which is why there are eleven official languages. The three most spoken first languages are Zulu (22%), Xhosa (16%), and Afrikaans (13,5%). Despite the fact that English is recognised as the language of commerce and science, it was ranked fourth and was listed as the first language of only 9.6% of South Africans in 2011^[5]. This is important, as it shows the wide diversity of cultures, languages and religions which make South Africa a multiethnic society.

In 2010, South Africa joined the BRIC group and is now called "BRICS". Its membership means a cooperation with Brazil, Russia, India and China on an economical, cultural and technological level. The joining has the synergy to bring investments, expertise and functional technologies that potentially could help Africa to accelerate its infrastructure development, that in turn could encourage inter- African trade and help develop regional economic integration in the African region^[6]. However, South Africa has struggled with many changes due to its Apartheid history until 1994, which is why there are enormous problems concerning education, unemployment, inequality, racial issues and living conditions in townships.

2. E-Commerce

2.1 Definition of E-Commerce

E-Commerce or electronic commerce is in general a part ofthe electronic business, which involves buying and selling goods and services via electronic connections. The Journal of Management and research defines it as "doing business online or buying products and services through web store fronts"^[7]. It describes any kind of business transactions, whether it is the sale or the purchase of goods and services, as well as electronically transacted business processes in which the parties electronically operate to each other and are not in physical exchange contact.^[8]

A more general definition is: „E-Commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals"^[9].

There are four different types of E-Commerce:

1. Business-to-consumer E-Commerce (B2C) refers to online business with a focus on individual end consumers. It is most the common type of E- Commerce.^[10]

2. Business-to-business E-Commerce (B2B) refers to businesses servicing other businesses. It is the largest form of E-Commerce based on market volume and about ten times larger than the size of B2C E-Commerce.

3. Consumer-to-business E-Commerce (C2B): A consumer posts his project with a fixed budget online and within hours companies review the consumer's requirements and bid on the project.^[11]

4. Consumer-to-consumer E-Commerce (C2C) focuses on consumers, who sell and buy from each other, (for example ebay and Gumtree).^[12]

Nowadays, E-Commerce is developing new variants of existing types of E­Commerce. Forexample, Business-to-Government E-Commerce (B2G) can be defined as a part of B2B selling to governments.

Additionally, Peer-to-Peer E-Commerce (P2P) is another new type that enables Internet users to share files and other information directly without any intermediary. An example for that would be the forums ofGnutella. It is built on top of a P2P computing platform. Ebay and other Person-to-person online auction sites are examples of P2P communities built on top of a client-server computing architecture^[13]. Mobile Commerce (M-Commerce) is based on use ofwireless digital devices, such as laptops and smartphones^[14].

2.2 E-Commerce landscape in South Africa

At the end of 2011, South Africa had approximately 8.5-million Internet users. This represented no less than a 25 percent increase over the 2010 figure of 6.8-million, maintaining a high growth rate due to the explosion ofsmartphones in the South African market. Still, access infrastructure is limited to major urban areas, especially in other countries of Africa. But the continent is catching up fast. Next year, for the first time, smartphone sales in South Africa will overtake those of ordinary phones.^[15]

Five years ahead from today, more than half of those phones used will be smartphones: One in fourAfricans will have a smartphone. What this means for South Africa is internet access, social networking, market information,job seeking and entertainment within immediate reach of almost every economically active person in Africa.^[16]

Today in 2014, there are approximately 12.5 million South African Internet users, according to the South African E-Commerce Report 2014^[17]. As the population of South Africa constantly rises, the number of internet users does so, too. The South African Internet economy, as a proportion ofthe GDP (Gross Domestic Product), is therefore estimated to make up 2.1 percent of the South African economy, as is to be seen in the following graph:

illustration not visible in this excerpt

Figure 1: Contribution toGDPin billion Rand. Source: Goldstuck, Arthur: (2012) The quiet engine of the South African Economy. South Africa and the Internet: The report. p.3- 26. This may not seem to be much, but it is almost equal to such sectors as agriculture (2.1%) and utilities (2.6%) and it is still rising at around 0.1% per year.^[18] These figures match up to data collected in 2012 by the Boston Consulting Group, which indicated the South African Internet economy to amount to 1.9 percent in 2010, and growing to 2.5 percent by 2016.^[19]

It also underlines the fact that the internet in South Africa is in a phase of rapid growth, which is reflected in the extensive and highly visible activity of laying down network infrastructure to support demand. Also, the E-Commerce retail is increasing rapidly and can be desribed as in a boom state, like Figure 2 shows:

illustration not visible in this excerpt

Figure 2: Online Retail revenue in SA 1996-2011: In Million Rand. 150m Rand are about 10m EUR. Source: The Boston Consulting Group (2012) The connected World: The $4.2 Trillion Opportunity.^[20]

As seen in Figure 2, the Online Retail Revenue in South Africa from 1996 until 2011 followed a strict exponentially increased curve with its peak at 2011 at around 2600 million Rand which back in 2011 was an equal sum to 236 million Euros.^[21]

2.3 E-Commerce companies

Putting an emphasis on the landscape of E-Commerce businesses, the following table lists up the big E-Commerce companies in South Africa. These are the leading online retail sites. They indicate in which specific context this research will be conducted:

illustration not visible in this excerpt

Figure 3: Leading retail sites visited by South Africans - December 2013. Source: Effective Measure Dashboard December 20 1 3.^[22] These Figures are based on the Effective Measure panel of 9000 panelists inSAand exclude classified sites.

As to be seen in Figure 3, big online warehouses like Kalahari, which is the South African answer to Amazon, and Amazon itself, have by far the biggest audiences with a unique audience ofalmost a million. They are followed by bidorbuy, which is the South African answer to ebay, and Groupon, which is an online-shopping community and takealot.com, a virtual music store.

The top five products and services offered via Internet are books (45.77%), airline tickets (40.29%), hotel reservations (27.36%), event tickets (27.15%) and music (24.57%) which can be seen in the following graphic among others:

illustration not visible in this excerpt

Figure 4: Products and services being purchased online in the last 3 months ^[23]

2.4 E-Commerce companies for this master thesis

Now, important for this master thesis will be those companies, that have relatively big storage halls, as they are the ones who might be in need of uneducated and untrained employees ofthe townships. The following chart will show the most important companies regarding clothing and accessory E-Commerce stores:

illustration not visible in this excerpt

Figure 5: Clothing and accessory E-Commerce stores ^[24]

In order to search for interview partners for this master thesis, it would make sense to pick out the five biggest companies. Among these, Kalahari (45.76%), Amazon (31.66%), Bidorbuy (18.61%), Woolworths.co.za (16.95%) and PicknPay (13.74%) are to be found. Groupon, Bidorbuy and takealot.com do not have any store halls since they provide only services. Following the above reasoning, one may hypothesise that these companies have less need for uneducated and untrained staff. Therefore, they are left out of scope in this thesis. More information concerning the decision process of which companies were interviewed will be further explained in the chapter "Research method" and the Chapter "Results".

3. Townships

3.1 Definition oftownships

A South African township is a specific type of slum. However, its history differs in terms of what other slums are like around the rest of the world. Before exploring what a South African township is, here is at first a broader definition ofwhat a slum is: „A Slum is a segregated residential area in usually urban agglomerations, which should be understood as an inner-city emergency shelter. Characteristics are signs of deterioration of the building fabric, low living standards, poor infrastructure and a high proportion of unemployment and workers in the informal sector. Slums are to be seen more likely in developing countries as a collecting quarters for urban migrants in the context of increasing rural exodus".^[25]

The UN-Habitat report, "The Challenge of Slums" contains an entire chapter on the definition of slums and methodology to capture this statistically. An insightful definition of a slum is: „(...) a contiguous settlement where the inhabitants are characterized as having inadequate housing and basic services. A slum is often not recognized and addressed by the public authorities as an integral or equal part of the city.^[26] "

The report's characteristics for slums are as follows:

1. Poor localization (in public space, on steep slopes, large distance tojobs, etc.).
2. Lack of protection from the climatic conditions, natural and other risks.
3. Temporary construction and serious design deficiencies.
4. Small and smallest area and overcrowding of premises.
5. Lack of infrastructure , particularly water and sanitation.
6. Lack of legal protection and unsecured residence.

Depending on which and how many of these slum criteria are met, a differentiated and comparable picture of informal settlements can be constructed. This is important, as it allows comparison between other slums and can possibly show further distinctions. A deficit of this definition is that it does not explain the difference between a South African township and a slum in the rest of the world.

Now, the South African townships do differ from the slums described above. Not in terms of their features or characteristics, but especially in terms of their history.

The history of South African townships begins with the increasing eviction of black South Africans by city and state authorities. Around the years 1870 and 1890, when the first gold and diamond mines were established around Johannesburg, black South Africans had been drawn to work on these gold mines^[27]. The history of South African townships will be described and explained more thoroughly in the next chapter.

For now it suffices to state that the main difference between a "normal slum" and a South African township lies in this history. While a "normal" slum's existence is due to its poverty and therefore is created randomly anywhere, where space is available and unplanned, a South African township existence was forced and organized by the state.

Nevertheless, the above-mentioned characteristics of slums in terms of the lack of infrastructure do also apply for most of South African townships, at least after Apartheid, as to be seen later in the chapter "Townships Today". In the case of South African townships then, a seventh criterium can be added to the existing list:

7. Creation and existence was forced and organized by the state.

A look at the history of South Africa can provide insights into why every South African city has urban structures of townships and why they are such a big problem for the country.

3.2 History of South African townships

Initially, black South Africans who had been drawn to work in the gold and diamond mines were accommodated in different areas in the suburbs of Johannesburg, for example in Brickfields (Newtown). The increasing work immigration had a catastrophal effect on the living conditions in the urban centres, especially in Johannesburg. Already in 1895, over 80.000 workers were living in the mining camps. At that time, there was not yet any racial segregation. The working community consisted of blacks as well as Boers.^[28]

Shortly after the Boer war in 1902, black South African and Indian residents were removed of Brickfields by British-controlled city authorities to "evacuation camps" in 1904. After that, an outbreak of plague was reported^[29].

In order to make sure there were enough workers available, 1911 the "Land Act" law was passed by the government which reduced the availability of buying land for black people. It restricted the possibility of buying land to areas within a reserve. As a flu epidemic burst out in 1918, the British government took advantage of this disease and tried to get rid of the massive overcrowding in the camps. As an excuse for the disease, the government began building houses, which were exclusively built for blacks in the districts of Martindale, Sophiatown and Newclare^[30].

The newly-built area was called the "Western Native Township" and was the first step of segregation of races organized by the government in the surroundings of Johannesburg. After long discussions, Boers decided that "(...) the urban African population should be treated as principally a labour reserve at the disposal of whites"^[31],^[32]. This means, it was decided, that the black population should be kept out of the cities, but still be used as labourers when needed. After the "Land Act", many similar laws followed, which could be seen as Apartheid already.

In 1923 the "Urban Areas Act" was issued which permitted the relocation of black labourers into areas outside of the cities. This law deemed urban areas in South Africa as "white" and required all black Africans in cities and towns to carry around permits called "passes" at all times. Anyone found without a pass would be arrested immediately and sent to a rural area. A major boost for the utilisation of this system was the rise of the mining sector from the 1880s: Pass laws provided a convenient means of controlling workers' mobility and enforcing contracts^[33].

Still before World War II, another law was issued which prohibited the entrance to cities for blacks and legalized the relocation of unemployed black people to the reserves: The „Native'sTrust and Land Act" of 1936 assured that 13,6 % ofthe land of South Africa would belong to the black society and were so-called „Reserves"^[34]. Considering the fact that at this time the black population accounted about 61% of the general population, this area ratio was very small. From that time on, black people were only permitted to live either in the black population areas or to live and work on farms which were owned by whites.

This law effectuated that townships around Johannesburg were growing from 1935, and also systematic, large-scale buildings took place for the first time^[35]. However, the target of achieving a complete and total segregation failed due to the large amounts of black labourers.

The relocation of black people legalized by law led to building the very first township called „Orlando" in the South ofJohannesburg. In the following ten years, it would be known as „South Western Township" (Soweto) and was the first black only population area. Already in 1938, there were living 35200 people^[36] in Soweto. After initial intensification of the resettlements and expansions of the townships, the forced removals were temporarily stopped due to World War 2. The increased demand of the industry of manpower during the war led to the loosening of immigration controls and a liberalization of racial segregation. Between 1936 and 1946 the black population doubled from 230.000 to 500.000, which led to a massive overcrowding in these areas^[37].

After the success of the National Party in the parliamentary elections of 1948, the legal prerequisites for the manifestation of „separate development" in South Africa were created. The responsible Minister Dr. Hendrik Verwoerd made no secret of the fact that he would only allow the stay of blacks in the urban centers as long as they were available as laborers for the whites. According to Monique Marcks, a scholar affiliated with the University ofWitwatersrand who did research on various townships, „Dr. Verwoerd saw Africans as essentially temporary sojouners in white urban areas, allowed to be there only for as long as they ministered the needs of the whites"^[38].

Under the regime of Dr. Verwoerd, several essential laws were issued in the 1950s, which were related to the areas of life, labor market and education and only had one aim: the systematic promotion of racial segregation for the benefit of whites and disadvantage of blacks.

Especially two laws were crucial for the establishment and development of townships: The „Population Registration Act" and the „Group Areas Act", both from the year 1950. They were quite more than just an extension of the similar laws of the 1920's, as they did not only provide a spacial, that means geographical separation of the races. Moreover, they determined that each South African had to be associated with a particular race and ethnicity. Especially the „Population Registration Act" required people to be identified and registered from birth as one offour distinct racial groups: White, Coloured, Bantu (BlackAfrican), and other^[39]. As Nelson Mandela described it later: "Where one was allowed to live and work could rest on such absurd distinctions as the curl of one's hair or the size of one's lips.^[40] "

According to the race or ethnicity, a permanent resident was only allowed in the respective designated area. Despite the protest, which was expressed in various forms, the government began immediately with the practical implementation of these laws.

The movement of the blacks into the Townships were called "forced removals". The "forced removals" began on February 10th of 1955. The blacks were removed from the black and multiracial residential areas Sophiatown and Newclare to the newly build townships Diepkloof and Meadowland^[41]. Until 1955, Sophiatown had been one ofthe few urban areas where blacks were allowed to own land. In the morning of the 10th of February, heavily armed police forced the residents to leave their houses and were loading them with their personal belongings onto official trucks. The inhabitants ofthe multiracial areas were brought to a wide area about 19 km away from the city centre. This area was called Meadowlands and the government had bought it in 1953^[42].

A new white suburb named Triumph was built in the former Sophiatown area, which was then destroyed by bulldozers. This forced removal and destruction type of circle was repeated in the following years. Under the Group Areas Act, almost 600.000 coloured, Indian and Chinese people were moved. In District Six in Cape Town, 55.000 coloured and Indian people were forced to move to new townships on the Cape Flats. As part of the resettlement, nearly 50.000 homes were built in Soweto (former Orlando) from 1954 to 1969, at a population in Johannesburg of 740.000 in 1968^[43]. This data shows how densely populated the townships were.

3.3 South African Townships Today

In the 1980s, the Apartheid government was losing more and more control over the movement of the population. Additionally, the government was facing strong critique from international protests, especially since the Soweto Uprising and the Sharpville Massacre. In 1986, as the South African government announced the end of urban-influx controls and removing the system of pass laws, thousands of rural people fled from the homelands to the cities townships. Although the political power predominantly remained in white hands, more and more blacks were starting to make their way to the city. This process was helped by the repealing of the Population Registration Act, Group Areas Act and Land Act in 1991^[44]. The townships were simply not prepared for the large number of newcomers and the sprawl began.

With the end ofApartheid and the dissolution ofthe homelands, even further movements from the surrounding areas continued. "Informal settlements" were built everywhere, condoned illegal settlements that emerged on the edge of the stands. In these areas, there was no electricity, no water and no sewage.

And still today, townships are in lack of basic services. Unemployment is extremely high, as well as crime, alcohol and drug abuse^[45]. The government has done much in recent years to improve the living conditions ofthe residents. However, due to corruption, incompetence and continuing immigration of people from rural areas and also foreign sub-saharan countries, yet no comprehensive improvement could be found^{[46] [47]} 45% ofall the adult South African population live in townships or informal settlements. When focussing on only black adults of South Africa, its two third who live in townships^[48]. Figure 6 lists up the biggest townships of South Africa with over 80.000 inhabitants.

illustration not visible in this excerpt

Figure 6: The biggest Townships in South Africa. Source: Own research and wikipedia.com. Wikipedia was used as a source, since official registration numbers are understated.

However, the above mentioned numbers are only the figures of registered people living in the townships. Those who are living there illegally exceed the numbers by far, as the township Khayelitsha is to be known to have a million inhabitants, instead of 391.000 officially registered inhabitants.^[49]

illustration not visible in this excerpt

Figure 7: Main areas of deprivation among the multidimensionally poor (MDP). Source: Finn, A., Leibbrandt, M., Woolard, I. (2013) The significant decline in poverty in its many dimensions since 1993.

The following graph shows the main areas of lack of basic services that people in the townships are confronted with:

As to be seen clearly, in 1993, sanitation, water and electricity were the three indicators in which the multidimensionally poorwere most deprived. Inhabitants of townships are usually seen as multidimensionally poor, since they face a lack of basic services in at least three areas. In 2010, sanitation and water remained as the two areas ofgreatest deprivation, with asset deprivation moving into third place. On the whole, the living standards dimension remains the main source of deprivation^[50].

However, it is difficult to say that most townships in South Africa have no electricity. It is obvious, that there are often power outages and that there is an overload of electrical wires, which lead to the only power box in their specific area. Tapping these power boxes is not only illegal, but also very dangerous. Still, it has been done and most houses in the townships have wires coming out of them. The government does not want power boxes being used by actual non-residents, so they refuse to install more power boxes.

Water is also a challenging situation to deal with in the townships as to be seen in Figure 7. Normally, each section ofthe townships has one pump. The water is used for everything from drinking, bathing, cleaning clothes, cooking and cleaning the house. When too many residents use water at the same time, the pressure of the pumps becomes low. With low pressure, the water becomes difficult to get. Having very little water accessible to each section makes it very hard to get enough water per day per household.

The following chart shows how many households ofthe township 'Khayelitsha' in Cape Town have piped water on sites, in dwellings and how many make use of communal taps:

-41.7% of households indicated that they had piped water on site.
-A further 37.2% indicated that they made use of communal taps.
-20% of households had piped water in dwelling.

illustration not visible in this excerpt

Figure 8: Access to water. Source: A Population Profile of Khayelitsha. Compiled by Information and Knowledge Management Department from Statistics SA Census data, April 2005.

The sanitation problem within the townships is due to a very poorly planned and constructed sewage system. It was not built for a growing population so it is not able to grow with the number of its inhabitants and is thus causing an overload on the system. This overload causes problems such as frequent surcharges, blockages, as well as spilling over and road flooding. Most areas within the townships have a limited number of public toilets. These are so over used, abused, that they actually become health hazards for the community^[51]. Figure 9 indicates the percentage of people having access to formal sanitation or chemical toilets in the township of Khayelitsha in 2005:

- Most households (65.1%) have a flush or a chemical toilet.
-25.9% do not have access to formal sanitation.
-8.8% have a bucket latrine.
-0.2% have access to a pit latrine.

illustration not visible in this excerpt

Figure 9: Sanitation. Source: A Population Profile of Khayelitsha. Compiled by Information and Knowledge Management Department from Statistics SA Census data, April 2005.

When building the houses so close together and so densely packed in one area, it was not foreseen that there is only poor access for maintenance of the sewerage system. It is difficult for either local plumbers or government plumbers to accomplish their job and fix the pipes, having so many houses in one area and very little room in between each house. It could potentially end up causing more problems such as more flooding, more traffic around the construction area besides a long wait for the resident to live without water^[52].

4. Education & Unemployment in South Africa

4.1 Education in South Africa

The educational levels of inhabitants from townships are extremely low, which diminishes their chances on the labour market considerably. As this research is about finding solutions to the problem of unemployment in townships through E­Commerce, some insight into the situation ofeducation and unemployment in townships, as well as their mutual relationships and influences, is necessary.

South Africa has made significant progress in terms of equalizing its racially divided society caused by Apartheid since their change towards democracy in 1994.

However, huge challenges of education, poverty and unemployment still remain. It is estimated by the South African National Planning Commission that almost a third of the population was earning less than two Dollars a day in 2008 and at 0.63 in 2009 the Gini coefficient was the highest in the world^[53],^[54].

Focussing on education in this chapter, South Africa has the worst education system ofworldwide middle-income countries that took part in various international assessments and tests ofeducational achievement^[55]. Ofthe 42 participating countries at the 8th grade, 21 are classified as middle-income countries according to the World Bank and these are used to calculate the TIMSS middle-income country Grade Eight mean (equally weighted).

They are: Ghana, Morocco, Syria, Indonesia, Palestine, Jordan, Iran, Chile,Tunisia, Macedonia, Thailand, Georgia, Malaysia, Lebanon, Turkey, Romania, Armenia, Ukraine, Kazakhstan, Lithuania and Russia.

The following figure shows how poorly South Africa performed in the mathematics and science test TIMSS:

[...]

---

^[1] South Africa E-Commerce Report (2014). IAB South Africa Report, 2014. P. 3-23.

^[2] http://data.worldbank.org/indicator/SI.POV.2DAY (Retrieved on 03.05.2014).

^[3] International Monetary Fund. (Retrieved 15.6.2014)

^[4] Census 2011: Census in brief. Pretoria: Statistics South Africa. 2012.

^[5] Constitution of South Africa (2010), Chapter 1, Section 6. (Retrieved on 03.05.2014)

^[6] Besada, H; Tok, E.; Winters, K. (2013). South Africa in the BRICS. Opportunities, Challenges and Prospects. Africa Institute ofSouth Africa Africa insight Vol. 42(4) - March2013 P. 2-5.

^[7] Jain, D. P. (2013). Study of level of practicing E-Commerce and perceived satisfaction of it by different segments of consumers for different segments of consumers for different selected products in Ahmednagar city. IBMRD's Journal of Management & Research, 1(1). Volume 3, Issue 1, March 2014. P. 321.

^[8] Hess, T.(2011) 2. Aufl., Wiesbaden, 2011 in: Sjurts, I.: Gabler Lexikon Medienwirtschaft.

^[9] Lallana, E. et al. (2012) ePrimer: An Introduction to E-Commerce. IJCSMS International Journal of Computer Science & Management Studies, Vol. 12, Issue 03, Sept 2012. P. 461 - 463.

^[10] Laudon, K., Traver, C. (2011). E-Commerce 2011. Business. Technology. Society. Seventh Edition, Euopean Edition, Harlow: Pearson Education Limited. P. 47.

^[11] E-Commerce/Internet (1999): B2B: 2B or Not 2B? Goldman Sachs Investment Research, November 1999. V. 1.1, P. 68-71.

^[12] Laudon, K., Traver, C. (2011). E-Commerce 2011. Business. Technology. Society. Seventh Edition, Euopean Edition, Harlow: Pearson Education Limited. P. 47.

^[13] Xiong, L., Liu, L. (2003). A reputation-based trust model for peer-to-peer E-Commerce communities. In E­Commerce, 2003. CEC 2003. IEEE International Conference. P. 275.

^[14] Laudon, K., Traver, C. (2011). E-Commerce 2011. Business. Technology. Society. Seventh Edition, Euopean Edition, Harlow: Pearson Education Limited. P. 58.

^[15] Goldstuck, Arthur: (2012) The quiet engine of the South African Economy. South Africa and the Internet: The report. P. 9.

^[16] Goldstuck, Arthur: (2012) The quiet engine ofthe South African Economy. South Africa and the Internet: The report. P. 11.

^[17] South Africa E-Commerce Report (2014). IAB South Africa Report, 2014. P. 3-23.

^[18] Goldstuck, Arthur: (2012) The quiet engine of the South African Economy. South Africa and the Internet: The report. P. 3-26.

^[19] Goldstuck, Arthur: (2012) The quiet engine of the South African Economy. South Africa and the Internet: The report. P. 8.

^[20] The Boston Consulting Group (2012): The connected World: The $4.2 Trillion Opportunity.

^[21] The Boston Consulting Group (2012): The connected World: The $4.2 Trillion Opportunity.

^[22] South Africa E-Commerce Report (2014). IAB South Africa Report, 2014. P. 2..

^[23] South Africa E-Commerce Report (2014). IAB South Africa Report, 2014. P. 17.

^[24] South Africa E-Commerce Report (2014). IAB South Africa Report, 2014. P. 19.

^[25] Springer Gabler Verlag (2014). Gabler Wirtschaftslexikon. (Retrieved on 06.05.2014). http://wirtschaftslexikon.gabler.de/Archiv/11581/slum-v8.html

^[26] The Challenge ofSlums (2003) Global Report on Human Settlements. United Nations Human Settlements eme. Earthscan Publications Ltd London and Sterling, P. 11.

^[27] Diercks, Tobias (2000) Südafrikas Township-Jugend und die "Wahrheits- und Versöhnungskommission" - Eine Fallstudie in Diepkloof, Soweto. P. 36-38

^[28] Posel, D. (1999) The making of Apartheid 1948-1961. Conflict and Promises, P. 38.

^[29] Rakodi, Carole (1997): Johannesburg: A city and metropolitan area in transformation". The urban challenge in Africa: Growth and management of its large cities. The "mega-cities" of Africa. United Nations University Press. P. 11-16.

^[30] Diercks, Tobias (2000) Südafrikas Township-Jugend und die "Wahrheits- und Versöhnungskommission" - Eine Fallstudie in Diepkloof, Soweto. P. 38-40.

^[31] Posel, D. (1999) The making of Apartheid 1948-1961. Conflict and Promises, P. 39.

^[32] Marcks, Monique (1993) Organisation, Identity and Violence amongst Activist Diepkloof Youth, 1984 - 1993. Dissertation an der University of Witwatersrand, Johannesburg 1993. P. 95.

^[33] Report ofthe Inter-departmental committee on the native pass laws. Union ofSouth Africa. 1925. P. 2. Link: http://www.archive.org/stream/reportofinterdep00sout#page/2/mode/1up (Retrieved on 2.5.14)

^[34] Lang, Andrea (1999): Separate Development and the Department of Bantu Administration in South Africa. Work from the Institute ofAfrican Studies No. 103 Hamburg (composite Foundation German Overseas Institute) P.88

^[35] Marcks, Monique (1993) Organisation, Identity and Violence amongst Activist Diepkloof Youth, 1984 - 1993. Dissertation an der University of Witwatersrand, Johannesburg 1993. P. 95

^[36] Carr, W.J.P (1990) Soweto: It's Creation, Life and Decline. P. 25 and 29.

^[37] Mashabela, Harry (1988): Townships of the PWV. South African Institute of Race Relations. P. 50.

^[38] Marcks, Monique (1993) Organisation, Identity and Violence amongst Activist Diepkloof Youth, 1984 - 1993. Dissertation an der University of Witwatersrand, Johannesburg 1993. P. 95.

^[39] The Population Registration Act No 30 of 1950: http://africanhistory.about.com/od/apartheidlaws/ g/No30of50.htm. (Retrieved on 08.05.2014)

^[40] Mandela, Nelson (1994): Long Walk to Freedom, P. 140.

^[41] Carr, W.J.P (1990) Soweto: It's Creation, Life and Decline. P. 88.

^[42] Mashabela, Harry (1988): Townships of the PWV. South African Institute of Race Relations. P. 55.

^[43] Carr, W.J.P (1990) Soweto: It's Creation, Life and Decline. P. 90.

^[44] The Population Registration Act No 30 of 1950: http://africanhistory.about.com/od/apartheidlaws/ g/No30of50.htm. (Retrieved on 08.05.2014)

^[45] The Challenge of Slums (2003) Global Report on Human Settlements. United Nations Human Settlements Programme. Earthscan Publications Ltd London and Sterling, P. 75-76.

^[46] Arora, V., Ricci, L.A. (2010) Unemployment and the Labor Market. IMF; 31 March 2010, P. 28.

^[47] Morris, M., and L. Pitt (1995). "Informal Sector Activity as Entrepreneurship: Insights from a South African Township," Journal of Small Business Management 33, 78-86.

^[48] Shapiro, L. (2007) The new urban geography. The changing face of Suburbia. Futurefact 2007. http://www.futurefact.co.za/system/files/filedepot/2/Presentation%20-%20Futurefact%202007%20The%20New%20Urban%20Geography%20-%20The%20Changing%20Face%20of%20Suburbia.pdf (Retrieved on 12.05.14)

^[49] http://www.howwemadeitinafrica.com/south-africas-townships-offering-untapped-business-opportunities/11522/ (Retrieved May 14th 2014)

^[50] Finn, A., Leibbrandt, M., Woolard, I. (2013) The significant decline in poverty in its many dimensions since 1993. SALDRU, University of Cape Town. P. 6

^[51] The Challenge ofSlums (2003) Global Report on Human Settlements. United Nations Human Settlements Programme. Earthscan Publications Ltd London and Sterling, P. 72-74.

^[52] The Challenge ofSlums (2003) Global Report on Human Settlements. United Nations Human Settlements Programme. Earthscan Publications Ltd London and Sterling, P. 69.

^[53] NPC. (2011). Diagnostic Overview. Pretoria: The Presidency, National Planning Commission.

^[54] http://data.worldbank.org/indicator/SI.POV.GINI (Retrieved 15.6.2014)

^[55] PIRLS (2011): Progress in International Reading and Literacy Studies.