Black tax and micro-entrepreneurship in Thulamela Local Municipality forms, challenges and coping strategies

Abstract

Africans are, by nature, collectivist people. This is especially true for countries such as South Africa, where people live their lives as a community – they celebrate life’s achievements together and mourn life’s tragic moments together. Africans support each other as one big family, at least theoretically, however, in the recent past, effects of urbanisation and globalisation have reshaped, reorganised, and reoriented African families. The once communal and collectivist views towards life (that the community or family comes first before the individual) are fast being replaced by individualistic perspectives towards life. The nuclear family is rapidly taking centre stage. In the process, individual needs are crowding out those of the family and community. Communal needs are now being viewed as a burden. To describe this ‘new’ burden, modern society has coined a term to express its mixed emotions towards its responsibility towards the extended family; they call it “black tax”. As a form of tax, supporting one’s extended family results in greater good, at least in the long-run, however, in the short-run, high levels of indebtedness and growing personal needs make one’s obligation to the family almost seems morally wrong, insensitive, and illegal, hence, the word “black,” as in the black market – an informal underground market that is often immoral and illegal. By extension, contemporary South Africans seem to be saying that whilst looking after one’s extended family in the 21st century is immoral, insensitive, unreasonable, and expensive, we still will try our best to be play our part, whenever and wherever we can. Clearly, black tax affects the lives of individuals, particularly those being black taxed. Despite this growing phenomenon, the literature has largely ignored the effect of black tax on the life of ordinary people. The few available studies focus mostly on black tax within the middle class, employed, working population. Very little studies have looked at the effect of black tax on entrepreneurs, as they too are not immune to black tax. It was, therefore, opportune for this dissertation to address this gap within the literature. Consequently, the purpose of this study is to investigate the effects of black tax on micro-entrepreneurs, as well as to identify coping strategies employed by the latter to balance business needs and communal expectations. A qualitative case study was conducted in which 12 entrepreneurs from the Thulamela Local Municipality area participated. Data were collected using in-depth interviews. After transcription, the interviews were analysed by means of thematic analysis using ATLAS.ti. Results indicate a high prevalence of various forms of black tax, challenges as well as well-structured coping strategies, as employed by the entrepreneurs. The value of this dissertation is that it is among the first in contributing towards understanding the impact of black tax on micro-entrepreneurship within the South African context. Several theoretical and practical implications have been suggested.