Formalising the township economy

23rd October 2015 By: Sydney Majoko

A couple of columns ago, I highlighted the need for businesses that comprise the township economy to join the online community in order to reap the benefits that come with being ‘visible’. This kind of visibility allows consumers to locate these businesses with ease with the help of online tools like Google’s LocateMyBusiness. A new initiative by the Gauteng provincial government is a step in that direction.

My Township, My Business, My Economy – Qondis’ Ishishini Lakho is an initiative that will be launched this month in the Ivory Park area. Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development Lebogang Maile launches the drive to get ‘your business registered and increase your chances of accessing funding and nonfinancial support from both the public and private sectors’.

It has been argued before in this column that, in the face of worsening global economic realities, the turn-to industry in trying to arrest rampant unemployment has to be small-business initiatives. Since the majority of the unemployed reside in the townships, it only makes sense that small businesses in the townships become the drivers in the fight against unemployment. They are, after all, in the frontline of this battle.

The most common refrain of jobseekers in the townships, when talking about township businesses, is that “these businesses are not official”. What they mean is that the majority of the businesses tend not to be registered anywhere and that there is no official record of the existence of the businesses at any level of government. As a result of many years of official neglect, most township entrepreneurs stopped worrying about registration and got on with the business of operating their establishments. Only those with the know-how of registering a company or closed corporation did register with the companies arm of the Department of Trade and Industry.

The Qondis’ Ishishini Lakho business registration campaign, which translates as ‘fix your business’, will go a long way towards bringing a sense of formality to many establishments in the township economy. Done correctly, it should allow the authorities to quantify the actual participants in the township economy. It will allow the entrepreneurs to seek assistance from government from an informed position. But, most importantly, government will, for the first time, have hard figures with respect to who does what in the township economy, who owns which business and how to leverage the economy to generate employment to counter the effects of this seemingly endless global economic meltdown.

Registering small township businesses on a common government database will not only assist in providing targeted financial and nonfinancial help for the business, but also be the first step towards bringing these businesses into the online environment, albeit on a limited level. Tech-savvy consumers in the townships will easily find the businesses they want in their immediate township surrounds, while entrepreneurs who would otherwise have not had the opportunity to have an online presence will now benefit from the exposure by being listed on a government database.

A lot of work will have to go into convincing entrepreneurs that getting onto the database will be to their benefit. While the general view is that only businesses operated by foreign nationals are not keen on going onto a formal government database, many local entrepreneurs will be apprehensive about registering with government, even if it is only for fear of the red tape that is associated with government operations.

A way must be found to incentivise the township economy business registration campaign. The recently launched Township Entrepreneur Awards, for which nominations will formally open on November 2, is one way which can be used to show the benefits of having a business being formally registered on a government database.

A first prize of up to R1-million, which will be injected into the businesses that win certain of the categories, should be motivation enough for township businesses to want to be associated with government initiatives. The awards, the winners of which will be announced in February 2016 at a gala event, will go a long way towards publicising the intentions of government in recognising the contribution that the township economy makes in dealing with the unemployment monster.