Economic impact of social capital in the previously disadvantaged communities of the Nelson Mandela Metropolitan

Faced with unemployment crisis, the creation of jobs and stimulation of economic growth becomes an important issue that needs to be urgently addressed in South Africa. The informal sector plays an important economic function in the South African economy and thus contributes to the country’s economic growth. The informal sector is dominated by people from previously disadvantaged communities. The main reason most of these township businesses are created is self-employment and poverty alleviation. The study will demonstrate the usefulness of and economic role played by social capital in the Port Elizabeth townships. Furthermore, the study will further prove that balancing is very important and that too much or too little of any given form of social capital is counterproductive. In recent years Port Elizabeth townships have been flooded by Somali traders. The informal sector is dominated by Somali traders. Social networks can affect business and economic performances. Social networks enable Somali traders to succeed where Xhosa traders have failed. The Somali traders are succeeding because they are emphasizing both bonding and bridging social capital. Xhosa traders are failing because they are placing too much emphasis on bonding social capital. Chapter Two has focused on the literature review and theory of social capital. In Chapter Three the research methodology was provided. Chapter four has focused on the report on empirical findings. Finally Chapter Five has focused on the implications of the findings and provide the summary, conclusion and recommendations