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Browsing Economics by Author "Kaseeram, I."
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- ItemBudget Deficits, economic growth and external balances in SADC countries: a panel data and time series analysis(University of Zululand, 2017) Mavodyo, Elisha; Kaseeram, I.; Contogiannis, T.EThe role fiscal policy plays as a macro-economic stabilisation tool remains a contentious issue in macro-economics. Yet an understanding of the role fiscal policy plays in influencing external balances as well as economic growth is instructive upon policy makers to craft stimulus packages in order to enhance sustainable economic growth, bearing in mind, as well, that lack of fiscal space underscores the limits of discretionary fiscal policy. In the same vain, an awareness of the role of budget deficits in driving external balances plays a principal role in adopting fiscal prudence as a way of harnessing the widening current account deficits which may have dire consequences on the economy. Notwithstanding the importance such an understanding is to the achievement of the Southern African Development Community (SADC)’s goals of fighting poverty and attaining economic integration through adoption of sound macroeconomic policies, the SADC region has received very little scholarly attention on this contemporary issue. This thesis fills this gap in the literature by providing empirical evidence that is SADC specific on the role of fiscal policy in driving the external balances as well as the impact of fiscal policy in accounting for economic growth in the region. This goal is achieved in three separate chapters; chapter4, chapter 5, and chapter 6 of this thesis. In chapter 4 of this thesis the study analysed the co-movement between budget deficits and the external balances in 14 SADC member countries. Relying on evidence from the cutting edge Common Correlated Mean Group Estimator (CCEMG) and the system general methods of moments (GMM) estimation approaches, the study found evidence in support of the twin deficits hypothesis in the case of the 14 SADC member countries included in our analysis. The implications of these findings underscore the need to adopt fiscal austerity measures in order to harness the widening current account deficits which are way beyond the SADC set targets in most of the SADC member countries. Chapter 5 of this thesis presents the panel empirical evidence on the impact of public debt on subsequent economic growth in an unbalanced panel of 14 SADC member countries. Utilising various panel estimation approaches including the Dynamic Ordinary Least Squares (DOLS), the Fully Modified Ordinary Least Squares (FMOLS), the system GMM from use of initial values, and system GMM from the use of five and three-year averages. The study documents contradictory results on the relationship between public debt and economic growth. However, the study discriminated in favour of the DOLS which provide evidence in favour of the growth engendering role of public debt. Furthermore, to the best of the researchers’ knowledge no other study in the SADC context analysed the growth effects of public debt, particularly the non-linearities and the public debt-investment channels through which public debt is related to economic growth. To this end, the study found overwhelming evidence in support of the non-linearities in the relationship between public debt and economic growth. The policy implications of these findings are that though SADC member countries may rely on public debt as a counter cyclical measure but they ought to exercise restraint as excessive dependence on public debt beyond a certain threshold has detrimental effects on long run growth. Moreover, the analysis found that for public debt to be growth promoting it has to be channelled through investment in human capital. The last set of empirical evidence in this thesis is presented in chapter 6. Chapter 6 reports the empirical evidence on the role of fiscal policy, specifically budget deficits, on economic growth in South Africa, Madagascar and Lesotho. Empirical evidence in this chapter, robust to some of the recent developments in time series literature- the DOLS, FMOLS, and the Canonical Cointegration Regression (CCR)-, overwhelmingly establish the growth promoting role of fiscal policy in South Africa, Madagascar and Lesotho. These findings may be taken to suggest that budget deficit in the three SADC countries could be dedicated to growth enhancing activities like investment in both physical and human capital, investment in technology and health that supports growth. In the case of South Africa, this study went further to analyse the growth effects of budget deficits in a pre and post democratic South Africa (1994) as well as the role of budget deficit in a pre and post inflation targeting era (2000). The overall conclusion of this study is that debt spending, within limits, done in conjunction with broader developmental goals like investment in physical and social infrastructure, is essential for promoting growth in SADC countries.
- ItemThe credit channel of monetary policy transmission in the selected emerging markets(University of Zululand, 2019) Ntshangase, Lwazi S.; Kaseeram, I.The credit channel has been investigated extensively in developed countries yet few studies have been conducted in emerging, developing and in less developed countries. This research employs a panel VAR model and five country-specific-VAR models to determine the effectiveness of the credit channel in the selected inflation targeting emerging markets (Brazil, Chile, Mexico, Russia and South Africa), that have implicitly or explicitly embraced the inflation targeting monetary policy framework, over the period 2000Q1-2016Q4. The balance sheet channel is not investigated due to a lack of data in the available database. The study adopted the traditional bank lending channel theory by Bernanke and Blinder (1988), according to which monetary policy rate shocks are propagated to economic variables through credit. The control variables in the models include gross domestic product, bank loans to the private sector, monetary policy rate, money supply, consumer price index and the nominal exchange rate. IRF are generated from the panel VAR model as averages, and compared to the IRF generated from each VAR model. Overall, the bank lending channel and interest rate channel were found to be according to theory and effective with a 1.5 period lag in the selected emerging markets. It is advisable for the five emerging countries to continue to develop innovations for greater efficiency in the conducting of monetary policy; this will further assist the more inelastic variables to become more responsive. The bank lending channel was found to be more effective in Brazil and Russia and the magnitudes of the decline of bank loans are quite similar for both countries, where, after the third period, the decline is about o.2% for a 1% initial shock to interest rates. However, the bank lending channel in South Africa, Chile and Mexico was found to be ineffective, perhaps due to the high indebtedness of consumers, perhaps arising out of financialization reasons. In the South African context, the authorities ought to revisit the National Credit Act to assess why bank loan issues are inelastic to monetary policy tightening.The causality patterns suggests that all variables Granger cause each other.
- ItemThe determinants of self-employment relative to being a wage earner in Ladysmith, KZN(2017) Kumalo, Siboniso Nhlanhla; Kaseeram, I.; Contogiannis, E.Following the unprecedented increase in the self-employment rates in South Africa, the study probes the determinants of self-employment relative to being a wage earner within the context of black owned businesses in Ladysmith, KZN. A questionnaire was administered to 450 respondents comprising 299 gainfully employed and 151 self-employed blacks, using a combination of convenience and snowball sampling for the self-employed and random methods to identify wage/salary earners. The study employed a logistic regression model to estimate the probability of being self-employed relative to being a wage/salary earner focusing on household income per capita, education, age, marital status, family business background, risk propensity, gender and access to finance as independent variables, gathered from the questionnaire, to shed new light on self-employment determinants. The study used the Hosmer-Lemeshow test to assess goodness of fit and the Wald test to assess the contribution of individual predictors in the model. Supported by descriptive statistics and chi squared test, the logistic results showed a positive and meaningful relationship between self-employment and age suggesting that as one becomes older each year increases the probability of being self-employed by 3.27%. With regards to gender, the results showed a positive relationship suggesting that being female increases the possibility of being self-employed by 57.35%. On the other hand, marital status results suggested that being single decreases the chances of being self-employed by 55.56% indicating that single people are more likely to be gainfully employed. Furthermore results revealed that an additional year of education increases the possibility of being of self-employed by 13.07%. When a person has a family business background, the possibility of that person being self-employed is higher by 146%, and lastly, increased funding opportunities cause an increase in self-employment by 397%.
- ItemDynamic relationships between sectoral electricity consumption, economic growth and electricity prices in South Africa(University of Zululand, 2017) Ezesele, Sunday L.; Kaseeram, I.; Contogiannis, T.Dynamic relationships between sectoral electricity consumption, economic growth and electricity prices in South Africa The purpose of this paper is to explore the dynamic relationship between the sectoral outputs, electricity supply and electricity price in South Africa within the endogenous growth model framework. Over the past two decades or more the relationship between economic growth and electricity consumption has received much attention due to its various policy implications. However, none of the studies considered the relationship between electricity consumption and sectoral output growth, additionally no study to the best of our knowledge considered the impact of electricity prices on sectoral (or on aggregate economic) growth. In the light of this, the current study uses multiple equation VAR and Johansen (1991) methodologies to assess the long run cointegrating and short run adjustment relationships between sectoral outputs, electricity consumption, and electricity price in South Africa for the period January 1991- March 2015 using monthly data. According to VECM results in the long run electricity supply affect the retail sector, while in the case of mining and wholesale sectors, growth in these sector puts upward pressure on electricity supply. In the long run manufacturing sector is not affected by and does not affect electricity supply. In the short run there were some unidirectional causalities, however, the crucial finding is that an abundance of electricity supply will enhance most of the sector under study. In the long run electricity price does not affect the manufacturing, wholesale and retail sectors, it only affects the mining sector. This implies that the manufacturing, retail and wholesale sectors can absorb the price increases in the long run but the mining sector is adversely affected by such price increases. In the short run the VECM results suggest that price adversely affects the mining and wholesale sectors. While the manufacturing and retail sectoral growths tend to affect price. However, the VAR results suggest that there is a bidirectional causality between electricity price and the manufacturing and mining sector in the short run. Moreover, there is no causality between electricity price and the retail and wholesale sectors respectively. Hence in summary evidence of causality running from price to growth, at least in some sectors over the short run , for example, in a labour intensive sector like mining and in the somewhat labour intensive wholesale and manufacturing sectors, hence electricity supply ought to be expanded in the economy to keep price down.
- ItemEfficiencies of small-scale sugarcane growers in the King Cetshwayo District Municipality of KwaZulu-Natal(University of Zululand, 2019) Bulagi, Mushoni, Benedict; Kaseeram, I.; Tewari, D.Low agricultural productivity remains a threat to the existence and sustainability of the small-scale production of crops. Unfavourable climatic conditions such as drought are a concern to the long-term supply of food in the context of a rapidly growing population. The continuous uncertainty surrounding access to credit, extension support and industry regulations exacerbate the dilemma faced by small-scale growers. Therefore, there is a need to develop strategies to promote agricultural efficiency and productivity. Sugarcane is a traditional crop produced in three provinces in South Africa and it contributes to the livelihoods of many small-scale sugarcane growers operating in the rural set-up. This thesis aimed to evaluate agricultural efficiencies, productivity and efficiency change and identify barriers to technical efficiency of small-scale sugarcane growers in the sugar producing regions of the King Cetshwayo district municipality. This is a grey area as existing studies have given more attention to SFA (Stochastic Frontier Analysis) and ranked constraints faced by small-scale sugarcane growers. The thesis analyses three methodological approaches to addressing the objectives of the thesis. The first objective was to analyse the technical, cost and allocative efficiency of a sample of 300 small cane growers located in the King Cetshwayo district municipality (KCDM) of Northern KwaZulu-Natal. This objective was achieved through estimating agricultural productive efficiency using Data Envelope Analysis (DEA). The second objective was to determine the chemical-input use efficiency, which was determined using the Slack-Based Measure (SBM) approach of the sampled cane growers. The third objective was to employ the Truncated Regression model to identify key socio-economic sources of technical efficiency; this chapter relied on field survey data of 300 sugarcane growers. The fourth objective measured input-oriented technical, cost and allocative efficiency of 160 small-scale sugarcane growers in the Felixton and Amatikulu regions. The fifth objective investigate the determinants of technical, cost and allocative efficiency in the Felixton and Amatikulu regions. Both objectives used the DEA and Truncated Regression model. The sixth objective decomposed agricultural efficiency change in small-scale sugarcane growers in the Amatikulu region using the Färe Primont Index (FPI) using farm-level data for 38 small-scale growers. Furthermore, the Bayesian Modelling Average technique (BMA) investigated policy-related sources of small-scale
- ItemAn empirical analysis of exchange rate pass-through to prices in South Africa(University of Zululand, 2017) Maduku, Harris; Contogiannis, E.; Kaseeram, I.The South African Reserve Bank (SARB) adopted an inflation targeting monetary policy with the effect from the 2000 in an attempt to curb inflation in the country. The band that was adopted was that of a minimum of 3% and a maximum of 6%. The main problem to the current monetary policy is the monthly inflation and other provincial inflation rates that are sometimes going outside the upper band of the target. Finding the duration taken by the price indices to respond to exchange rate fluctuations took a central interest to this research and also to find out the magnitude of the exchange rate fluctuations that are passed on to prices. This research did a comparative analysis from a SVAR and Recursive VAR to investigate exchange rate pass-through (ERPT) to tradable prices in South Africa for the period 2002-2015. Using monthly data, both estimations find the producer price index as the most contributing factor to inflation with an average of 22% of exchange rate fluctuations passed to prices. The argument behind the high pass-through in producer prices is mainly because of the high volumes of intermediate goods that are imported by the South African producers for local production. The results reveal that the impulse response functions are not very strong but the prices do not take long to respond to any exchange rate changes. We find that prices respond within 2 months to fluctuations in the exchange rate. It takes between 3 to 4 months for other price indices to respond to import prices. Also there is reverse causation on all the variables in the model but the magnitude differs from one variable to another. Large and persistent ERPT especially on import and producer prices accompanied by high wage demands and a depreciating currency are worrying factors for South Africa. Monetary policy makers are advised to put in place targeting measures on the exchange rate if inflation could be kept under control. Since inflation expectations play a pivotal role on inflation, it is wise for the upper band to be increased probably by 1% so that high inflation expectations that are influenced by inflation that is sometimes going outside the upper band can be held down.
- ItemEmpirical analysis of money demand in South Africa (1980-2011): an autoregressive distributed lag approach.(University of Zululand, 2013) Mutsau, Isaac; Kaseeram, I.; Contogiannis, E.The estimation of money demand function and determination of its stability is common practice in macroeconomic research due to its significance in the transmission mechanism of monetary policy. This study investigates stability of the long-run money demand for both narrow and broad money in South Africa over the period 1980 to 2011, using expenditure components of Gross Domestic Product (GDP) as scale variables, the real effective exchange rate, inflation and a representative short-term interest rate as opportunity cost variables. The bounds testing procedure, a single equation cointegration technique, is applied to test for cointegration between the endogenous and exogenous variables. To achieve this objective, the Autoregressive Distributed Lag (ARDL) approach (Pesaran et al., 2001) is employed to estimate the long-run equilibrium relationships between real money balances and disaggregated expenditure components of Gross Domestic Product in addition to the interest rate and inflation as variables reflecting the opportunity cost of holding money. Both short-run and long-run relationships are explored to understand the dynamic adjustments through the error correction mechanisms of the model. The CUSUM and CUSUMQ tests (Brown et al., 1975) are applied to examine the possibility of structural breaks in money demand functions, as well as parameter stability. Results indicate that M2 and M3 money aggregates are cointegrated and are maintaining a stable long-run relationship with their determinants. However, M0 and M1 monetary aggregates are found not co-integrated with their determinants. Different expenditure components have different influence on the demand for broad money. This research also gives evidence that demand for broad money has remained stable despite the external shocks experienced in the previous years due to the global economic meltdown.
- ItemThe estimation of the Cobb- Douglas production functions for the South African agricultural sector and a selection of its subsectors.(University of Zululand, 2015) Hlongwa, Lungani; Kaseeram, I.; Contogiannis, E.The main focus of this study is to apply a Cobb-Douglas production function to estimate agricultural production functions at both the aggregate and sub-sectorial levels in order to determine the productivity of land, labour and capital, while maintaining rainfall levels as a control variable for the South African economy over the period from 1975 to 2012. This task will be accomplished by applying cointegration techniques, Johansen’s (1988) vector auto regression (VAR) methodologies and error correction mechanisms to capture short run disequilibrium between agricultural production function and its determinants. Specifically the main objective of this study is to derive plausible estimates of the marginal productivities of land, labour and capital. Moreover this study will attempt to establish the nature of the long and short run relationships between land, labour and capital in the aggregate sector and the maize and wheat subsectors. However before the empirical analysis is conducted the study will first attempt to explain the relevant theories of growth and, which will then serve as a basis for examining South African growth experiences and policy prescription more specifically in the agricultural sector, for the purposes of understanding the South African agricultural sector growth phenomenon and choosing appropriate determinates of agricultural production growth. The findings of the VECM, FMOLS, CCR and DOLS methods strongly suggest that the marginal productivities of capital and land were positive while that of labour was negative; all the coefficients were statistically significant except for capital. Additionally the marginal productivity of land exceeded unity , thus implying that land productivity exhibits increasing returns to scale which confirms the trends that the number of farms have been decreasing but their land acreage have been increasing. While the negative marginal productivity of labour suggests that the South African aggregate agricultural sector is overwhelmed by severe diminishing marginal returns to labour, which explains the observed persistent decline in employment in the agricultural sector over the past three decades or more.
- ItemAn evaluation of the perspectives of government and small to medium enterprises on the viability of special economic zones in Limpopo province(University of Zululand, 2018) Naidoo, Logambal; Kaseeram, I.; Heeralal, S.This study investigated the perspectives of government and small to medium enterprises on the viability of special economic zones in the Limpopo Province of South Africa. South African studies by various scholars have documented many challenges faced by South Africa’s experiments with IDZs which prevented them from being the panacea for the huge unemployment and development constraints that the country faced. The research methodology was based on a qualitative baseline study designed to gather primary data, via a purposive sampling approach, from key informants in Limpopo province, namely, the municipalities and SMEs in Tubatse and Musina. Nineteen key informants in the province were interviewed. Additionally, the study was supplemented by the review of national and local government documents regarding the identified SEZs. Descriptive statistics were used to analyse the data, the findings suggested that the local government and the small to medium enterprises believed that SEZs were a viable vehicle for attracting investments and promoting SME development in the Limpopo Province. However, there were gaps in terms of information gathering from national, provincial and local government and the SMEs. The main limitation in this study is that the Department of Trade and Industry refused to be interviewed and informants from all levels of government were afraid of shared information being disseminated to the public domain. Furthermore, a group of farmers also refused to be part of the study for fear of losing a plot of land allocated to them. The main recommendations from this study is that the South African government should not repeat the errors it made with the IDZs in regard to inflexible labour policies and limited incentives; to formulate a successful industrial policy that attracts the investment and skills transfer commitment from all successful South African businesses and international investors instead of relying on certain ‘politically correct’ partners; government and all investors to develop a memorandum of understanding to address the mass unemployment, produce black industrialists and promote SMEs as recommended by the National Development Plan; government’s communications strategy should be transparent with regular information dissemination concerning the ongoing establishment of SEZs; government should create an investor friendly environment through ensuring the protection of private property rights and rooting out corruption and patronage in state owned enterprises and government, and finally the implementation of a business friendly National Development Plan.
- ItemFinancial development, economic growth and income inequality: a panel data approach(University of Zululand, 2019) Mthimkhulu, Sithembiso Felix; Kaseeram, I.Since the pattern of income distribution can be influenced by financial development, it is of major importance to both developing and developed economies. To add to the body of literature, this paper tested empirically, within a panel data framework, the theoretical foundations of the linear relationship between financial development and income inequality developed by Galor and Zeira (1993) and Banerjee and Newman (1993). Moreover, the nonlinear theoretical relationship advocated by Greenwood and Javanovic (1990) was evaluated. The study employed an unbalanced dataset over the 1970 - 2014 period, involving 142 developed and developing countries. It was found that financial development increases income inequality as measured by the Gini coefficient, after controlling for country fixed effects. These results are robust to different measures of financial development and control variables. The policy implication is that a wealth tax, as advocated by Piketty (2014) to subsidise social spending, is critical in order to address the disparities caused by financial development.
- ItemGender and performance of micro and small enterprises in the uMkhanyakude District(University of Zululand, 2015) Nxumalo, Nomfundo N.; Kaseeram, I.Contemporary development theory asserts that women play a role in uplifting their families and developing their communities. The recent promotion of entrepreneurship among women in rural communities has been shown to be a formidably successful approach to development. Owing to the paucity of local studies in this vein, this project investigated the causal factors behind female entrepreneurs of uMkhanyakude district staying in business for two years or longer. Primary data were collected from entrepreneurs operating their businesses in the locality using snowball sampling method, hence a sample of 273 entrepreneurs were generated and interviewed by means of questionnaires over the three months period (September to November 2014). Two logistic regressions were used: the first one assessed the factors that impact on the performance of SMEs; the second, was used to estimate factors increasing the probability of women staying in business. The first regression showed that women tend to influence the performance of rural SMEs positively and that access to credit is the other crucial factor that determines business success. Further study revealed that the higher the levels of business experience, education, business success and hours spent on business the greater the chances of women staying in business. Financial and input constraints are major restrictions on women staying in business. Finally, married women are found to be less likely to stay in business than single women. The study concluded that Grameen-bank type programmes which offer poor rural women low-cost loans for entrepreneurial purposes could benefit uMkhanyakude area.
- ItemThe impact of female-headed households on schooling outcomes in the Mbonambi Area(University of Zululand, 2016) Zondo, Senzo; Kaseeram, I.The literature is mixed in regard to the schooling outcomes of children raised in female headed households in rural areas. Some studies have found that children from female headed households may experience better schooling outcomes, but high levels of poverty and inequality often prevent female heads from acting on their preferences to invest more heavily in their children thus resulting in below average schooling achievement of their children. Mbonambi is a rural area located within the heart of Northern Zululand which comprises a high proportion of female relative to male headed households primarily due to men opting for labour migration to urban areas and only rarely returning home. The main focus of this study was to investigate the relationship between femaleheaded households and their children’s schooling outcomes compared to that of their male counterparts. The researcher used a questionnaire to conduct interviews to obtain primary data from both female and male headed households in the Mbonambi locality employing the systematic random sampling method. The researcher gathered a sample of 455 children living in 301 households, of which 193 and 108 comprised female and male headed households, respectively. The questionnaire was designed such that information was gathered on possible factors that impacted on a child’s performance which was observed by viewing the child’s most recent school report. The possible factors were obtained from the literature and included parental involvement, parental gender, parental education, parental age, household total income, family size, health status of the child. The cross tabulation Chi-squared approach as well as the more rigorous logistic regression model was employed to analyse the survey data. The logistic regression modelled the dichotomous dependent variable: schooling outcomes (pass =1 or fail=0) as the dependent variable and a set of independent variables as explanatory variables. The findings of the regression results which in most cases were corroborated by the cross tabulation statistics demonstrated that there are no differences in the schooling performance of children coming from both male and female headed households. This analysis supports the hypothesis that women have been empowered to manage their households as well as men do. Additionally the results showed that income, the education attainment of parents, a larger family size and Parental involvement in their children’s education are important factors in increasing the probability of a child performing well at school. Moreover a significant proportion of the female heads were women over fifty years of age and their children tended to perform poorly at school relative to the younger parents.The study concluded that government interventions to raise the income level of the Mbonambi community especially women in the form of access to credit and educational grants and other opportunities in the agricultural sector will have positive spinoffs in regard to the educational attainment of their children. Moreover, that strong social network can empower older women and smaller households to provide positive emotional support for their children to perform well at school.
- ItemThe impact of financial market development and financialisation on economic growth in South Africa(University of Zululand, 2017) Ziramba, Douglas; Kaseeram, I.The issue of financialisation found its way through financial market developments in several economies including the South African economy, in the sense that foreign investors sought lucrative short-term investments in economies with relatively sophisticated financial markets that offered high positive interest rate differential in the debt markets and huge returns in the equity markets. The primary goal of this research study is to analyse, evaluate and identify the dynamic long run relationship between financial market development; financialisation and economic growth in South Africa over the period. Apart from determining the long run cointegrating relationship between financialisation, financial market development and economic growth the study wishes to also study the short run adjustments of the said variables due to disequilibria arising from the cointegrating relationship. To achieve these objectives various econometric approaches used include the co-integration analysis, the Vector Autoregressive (VAR) and the Vector Error Correction models (VECM), as well as the single equation methods such as the Fully Modified Ordinary Least Squares (FMOLS), the Dynamic Least Squares (DOLS) and the Canonical Cointegration Regression (CCR). The VAR/VECM analyses concluded that there is a plausible long-term cointegrating relationship between the variables as predicted by economic theory. Additionally, although there are some valid short run adjustment relationships, however, GDP growth in the short run have adjustment relationships contrary to expectations The single equation methods confirmed the finding of the Johansen (1991) VAR/VECM approach that financialisation has negative long run impact on economic growth while financial development has a positive impact as reflected by the signs of the coefficients of the respective proxies for financialisation and financial development in all the models estimated. Two proxies were used for financialisation which included bank credit extended to households and net purchases of financial asset by foreigners, while three proxies were employed for financial development which included stock market volume trade at the Johannesburg Securities Exchange, the broad money supply (M3) and bank credit. This is a first South African study to consider such a relationship incorporating the financialisation variable and is one of the very few global papers, of this kind, involving emerging markets.
- ItemRetail petrol industry in South Africa(2010) Matsho, Jim; Shrestha, B.C.; Kaseeram, I.The petroleum industry has attracted a lot of attention in recent years. The industry is one of the major contributors to the South African GDP. In recent years, increases in petrol price created a huge challenge for the service station retailers to run sustainable, profitable and viable businesses, as the price increases impacted negatively on sales volumes. The new entrants in the market and new competition from other retail businesses necessitated changes in the industry. The petroleum industry introduced new business centres at the service stations to generate revenue for the business to ensure profitability and viability. The proliferation of service stations, regulated retailer margins on petrol and volume performance have all created concerns about the survival of individual service stations. The effects of crude oil price fluctuations on the economy ultimately affect the motorists and retailers. The South African petrol price largely depends on international market conditions. The industry faces change and challenges. The future uncertainty of the supply of exhaustible resources like crude oil impacts on the crude price experienced by the global market. The energy demand thus exerts another pressure on price as the world economy grows rapidly. The uncertainty about whether to deregulate the liquid fuel industry adds a new dimension to the industry’s future. The study focus area highlights findings which can be extrapolated to other similar cities in South Africa. At the end of the day, a retail operator should know the businesses very well as the profit margins are fixed.