The barriers to technology adoption among businesses in the informal economy in Cape Town

Abstract

Background: Despite being significant contributors to the economy, informal businesses operate with limited resources. In South Africa, the informal sector is substantial, accounting for approximately 30% of total employment and around 6% of gross domestic product (GDP). These businesses often struggle to adopt and leverage technology constraining their capacity for growth and innovation, ultimately limiting their contribution to economic development and the alleviation of socio-economic challenges.

Objectives: The objective of this study was to investigate the factors that influence the barriers to adopting digital technologies in South Africa’s informal economy.

Method: This study adopted a qualitative research approach, using semi-structured interviews and purposive sampling to collect data from 14 informal business owners in Cape Town. Participants provided informed consent and thematic analysis was conducted using the Unified Theory of Acceptance and Use of Technology (UTAUT) framework.

Results: Findings revealed barriers including cash preference, load-shedding, crime and digital incompetency obstructing technology adoption. Despite these hurdles, the potential benefits of digital technology for informal businesses were underscored.

Conclusion: The study suggests untapped potential in enhancing technology adoption among informal businesses through targeted interventions. By addressing identified barriers, such initiatives could significantly bolster the informal economy’s impact on South Africa’s socio-economic landscape.

Contribution: This research contributes to understanding the complexities surrounding technology adoption in South Africa’s informal economy. It offers insights for policymakers, practitioners and stakeholders seeking to promote digital inclusion and economic empowerment within marginalised sectors.