The Thought Leader

Judith Chinkumbi

Dear Partners of The Townships Project,

It is a marvel to be able to look at 2022 as the year that we celebrate how resilient South Africans have been. For the most part, we celebrate, especially, the businesses that are located in our townships for making it this far and those that did not give up. To the businesses that did give up, The Townships Projects team is here to find practical solutions to support that dream deferred.

The Townships Project aims to empower small business entrepreneurs based in townships across South Africa by providing them with the necessary skills to sustain and grow their businesses as they continue to be the key contributors to the socio-economic development in South Africa.

There’s never been a greater time than today to transform South Africa’s economic narrative. In both the state of the nation address and the budget speech, the country’s high unemployment and low labour absorption rate remains a key priority area for improvement. South Africa is currently experiencing its highest unemployment rate at 36.6%. The Covid-19 pandemic coupled with the rampant destruction caused by the July civil unrest has bred the prolonged stagnation in South Africa’s economic growth. The post-pandemic recovery plan has made no solid provisions to aid our jobless society.

A stagnant economy cannot withstand the pressures of a growing population. The years 2021/2022 can be coined as South Africa’s ‘bounce-back’ phase. In order to revert to long-term growth, a different approach is needed. In the past year, South Africa has redeemed itself by expanding economically by more than 4.0%. What is needed to further this positive, optimistic streak is a refined approach to economic recovery. The South African economy lacks flexibility in a sense that it does not have the room to explore different solutions or the luxury of being able to readily bounce back from error. This risk perception is very telling and indicative of South Africa being a country in need of a fundamental shift. The central focus should be on improving what is known to work, that is job creation as a stimulator of economic growth.

South Africa’s socio-economic stability is highly reliant on job prosperity. The interventions of job prosperity should not only be conferred to private-sector investment. Job creation also arises from entrepreneurship. South Africans need the correct knowledge capital to create and innovate businesses that will create jobs to foster economic growth. Entrepreneurship will have an impactful change on the direction of the South African economy. It is no illusion that additional jobs will create a more sustainable economy. There is an urgent need to specifically target the areas that require urgent interventions such as townships which are sprawled across the country.  Part of the answer to joblessness is the broadening the tax base by ensuring that the right support is provided to township entrepreneurs.

Should one have a geographical reflection of South Africa’s townships, they are currently at 532 in total. There are 21.7 million people spread across South Africa’s townships. Many of which are living under impoverished circumstances, the Covid-19 pandemic has only exacerbated these conditions. During the period between February – June 2020, there was a 2.2 million decrease in employment countrywide. It is inevitable that township dwellers were hit the hardest through this. The social relief distress grants were created to aid South Africans who are unable to meet their basic needs due to the pandemic. Although it is a temporary feature, the R350 grants have been pivotal in retaining stability within the township economy. The health of township economies is contingent on public participation. People in townships need to have the financial muscle to be active economic participants that will keep the economic cycle flowing.

Informal businesses are multifaceted within township economies, they operate from a multitude of industries that offer different goods and services. Contrary to surface-level misconception of townships economies being the general functioning of retail, the spaza shops, fast food outlets, and taverns. Township economies have additional businesses such as property rentals, childcare services, transport, and hair salons amongst many more. They may not contribute formally through taxes but they provide livelihoods, employment, and incomes. Informal businesses are lifelines for families that lack formal employment, they keep families from living below the poverty line.

The development of these township economic industries is highly reliant on upcoming entrepreneurs and their small businesses. It is therefore of utmost importance to equip township entrepreneurs with knowledge capital so they develop and innovate businesses that will create employment. In the ecosystem and functioning of the South African economy, entrepreneurship will have impactful changes in the direction of the economy. It is no illusion that additional jobs will create a more sustainable economy.

South African townships are hubs of entrepreneurial activity. There is great potential waiting to be unearthed in these communities. If presented with opportunities for funding, education and networking, South African entrepreneurs would greatly excel in creating sustainable township economies. Governments and entrepreneurs are running the same race, they merely just need to hold hands. Both parties share a common goal of achieving economic development and social emancipation. The South African government needs to assume an authoritarian role in regulating the functioning of micro-businesses in townships. Organisations such as The Townships Project exist as a facilitator in ensuring entrepreneurs are at their best capabilities to ensure their success. Township entrepreneurs should also be used as a key contributor in policy-making frameworks.

The year 2022 is no different for The Townships Project (TTP). TTP will continue to heed the call and aid entrepreneurs in thriving with their small businesses. TTP acknowledges the importance and relevance of entrepreneurs in boosting the local economy. This year, through the Building Better Businesses Symposium, TTP will once again provide small business owners with the best tools of trade to keep them resolute and resilient.  The Building Better Businesses Symposium is designed to address the specific needs of township entrepreneurs and showcases the force for good that social entrepreneurship brings to township economies.

Yours in Building Better Businesses,

Judith Chinkumbi