In Search of South Africa's 'Second Economy': Chronic Poverty, Economic Marginalisation and Adverse Incorporation in Mt Frere and Khayelitsha

"Since 2003 South African policy discourse about persistent poverty has been dominated by the notion that poor people stay poor because they are trapped in a 'second economy' disconnected from the mainstream 'First-World Economy'. This paper considers the adequacy of this notion in the light of research conducted in 2002 and 2005/06 in Mount Frere in the rural Eastern Cape and in Cape Town's African suburbs. It argues that a process of simultaneous monetisation, de-agrarianisation and de-industrialisation has created a heavy reliance on a formal sector in which employment is becoming increasingly elusive and fragile. We begin with a brief account of the rise of 'second economy' talk and its reception. This is followed by a brief overview of the research project, the findings of which this paper is based on, and a discussion of poverty, migrancy and adverse incorporation in the Eastern Cape and in Cape Town's African Townships. The paper next considers what these realities mean for informal sector activity and self- employment."