This investigation is a direct response to the challenges highlighted by township businesses in our engagements with them. We are particularly interested in the real impact of the expansion of retail giants into township markets, barriers to entry for small businesses, such as shopping mall tenancy agreements [and] the competition dynamics between local- and migrant-owned grocery retail businesses.”
These words by Gauteng Economic Development, Environment, Agriculture and Rural Development MEC Lebogang Maile demonstrate that government is finally in sync with what needs to be done to ensure that the much-vaunted Township Economic Revitalisation Strategy succeeds. Maile was addressing the Gauteng legislature in June. Barriers of entry into business need to be addressed urgently because these can, at times, destroy a potentially good business before it gets off the ground.
It has been noted in this before that the low educational levels of township entrepreneurs need to be taken into account in any strategy to uplift the township economy. Seemingly innocuous but necessary processes that require an entrepreneur to complete a few forms at any government agency can result in a township business failing to get off the ground. This might not necessarily be a barrier to entry for many businesses in the developed formal economy, but limited education can be an insurmountable barrier to entry for a promising township entrepreneur. Government agencies must, thus, be made sensitive to this.
It has been said repeatedly that migrant business owners in the township have come in with a new model of doing business that keeps their prices low and local businesses have been slow to respond. Examples such as retail giant Pick n Pay availing its distribution channels to spaza shop owners to enable them to pool their resources show the level of innovation that government and the private sector are willing to implement in ensuring a credible response to the economic challenges faced by township businesses.
The announcement that Massmart will partner township entrepreneurs in the establishment of over 500 retail shops in several townships, including Katlehong and Alexandra, is further evidence that government is serious about putting ‘flesh on the bone’ in the revitalisation of the township economy. It is one thing to urge township entrepreneurs to ‘wake up and compete’ and quite another to arm them to ensure that they compete successfully.
Partnerships between government, township entrepreneurs and the private sector can only result in a win-win situation for not only the economic stability of the township economy but also in the much-needed social cohesion and stability in the recently volatile Gauteng townships.
The realisation that there is a need for financing models specifically designed for the township economy seems to be gaining ground too, as examplified by the announcement by Maile that the Banking Association of South Africa and the Gauteng provincial government are “exploring incubation approaches and innovative financing models for township enterprises”. In the past, banking institutions stuck to traditional financing methods, even when dealing with the township economy, to the detriment of both the banks and township entrepreneurs.
While the aim of all initiatives to upgrade the township economy must be to prepare the entrepreneurs to function successfully in the mainstream economy, ignoring the unique features of the township economy can only harm any initiative aimed at successfully revitalising this economy.
The drive by government to source skills in the building and construction sectors for projects based in the townships can only mean one thing: efficiency. While it will take a while for the successful transfer of skills from major industrial players to equip township entrepreneurs to handle large construction projects, it is encouraging to note that township-based businesses are already being given access to maintenance jobs on government buildings, schools and hospitals. The efficiency that is introduced when locals do their own maintenance work can only bode well for the future of the township economy.
While it is the duty of government to provide conditions for township businesses to succeed, it is also the responsibility of township entrepreneurs and associations to put themselves in positions where they stand to benefit from initiatives aimed at growing the township economy.