The Employment Research Unit undertook three surveys on the informal sector during 1985 and 1986, two among Blacks and one among Coloureds. The aim of the surveys was to establish the composition and nature of the sector in the Port Elizabeth/Uitenhage area. It was found that in both these sectors most of the respondents were involved in trading and that very few were involved in manufacturing. Incomes earned by most of the respondents were low. and compared to subsistence level incomes only, It also appeared that the employment creation spin‐off was low. Similar problems inhibited the growth and development of this sector for both Blacks and Coloureds. They were: short‐ and long‐term loans, accommodation, poor infrastructure, and legal restrictions.