Mxolisi G. Buthelezi
Every week there’s a commentator telling all and sundry about the township economy. How big it is, how lucrative it has become and all the trappings. No less than five years ago you couldn’t find any decent write up, statistics and basic research about this economy.
The term itself was popularised by the former Gauteng Premier David Makhura and his team. So, what is this “township economy”. As part of our dipstick research, (yep, everybody is doing research in this market now) we got a chance to engage with some officials with the aim of understanding this enigma. They conducted research (here we go again) in to the nine biggest townships in Gauteng.
Some of the interesting statistics from that was the identification of five major sectors that supposedly inform this township economy. Retail was the biggest sector, specifically grocery retail/spaza shops. No manufacturing whatsoever. And no, making amagiwinya doesn’t cut it.
In short, what is termed as an economy is nothing but the movement of goods (and some services) for consumption by township dwellers. I deliberately use the term ‘dwellers’ as it explains why townships don’t produce nor manufacture anything people consume. Townships were created to house cheap labour to build the economy of the country hence people were dwellers…until recently as 30 years ago; we are now the residents. The Group Areas Act ensured that natives know ‘their place’, literally.
Some people still don’t even have title deeds of the homes that were occupied by their grandparents.
Without dwelling much on the past; with more people flocking into major cities and towns, townships grew – as did unemployment and job opportunities. Some creative folks started trading in these areas. This saw birth of the multi-billion taxi industry followed by shebeens, corner shops and later spaza shops
They had to be creative because the Apartheid regime didn’t allow natives to own, produce or operate commercial ventures. All sorts of laws were in place to ensure this was strictly adhered to. Of course, this didn’t stop some of the big business that wanted these consumers with ‘red eyes’ (if you want to trade in the townships you best know these nuisances).
Chief culprit was the beer company. So many township stories, good and mostly bad are told about how their products shaped the life of township dwellers. The Group Areas Act prohibited big business (white) to openly trade in the townships. This gave an opportunity for local traders to have the slice of the cake mainly as distributors of the products, for consumption.
Grocery store owners became a very crucial part of the community. As kids we envied kids from such families, rich kids. These store owners were more than just traders but became community leaders too. They carried the community, helping out whenever they were called to do so. Most became very passionate about their businesses. The biggest mistake most of them did was to prevent their children from taking over and growing these businesses. Just about everyone wanted their kids to have the best education so that they can be doctors, lawyers, engineers etc. A story for another day.
By the time the Group Areas Act was cancelled in the 1990’s, big business especially retailers, were unleashed into the townships through”our malls”. The new government didn’t look at this properly and township businesses were vulnerable. Taxi industry ‘survived’ the onslaught because of the nature of the beast. Although others argue that actually they didn’t survive.
Basically, all sectors of the township economy somewhat were taken over by big business. Financial services sector is very active here from funeral undertakers to stokvels.
It is safe to say township grocery retail sector was shaken and totally decimated by big retailers way before some of foreign nationals could even point where South Africa is on the map. They came in and wiped out the already limping local traders. This happened even with black business organisations around. Most had tasted the sweet honey of black economic empowerment and totally abandoned their constituencies as they fought for positions in their organisations.
Local spaza shops were there for a taking. The silo mentality, lack of modern skills of running convenience stores contributed to this problem, not to mentioned lack of adequate resources.
In our research we found that most people still viewed spaza shops as a low barrier entry business. Nothing can be further from the truth. This sector is evolving every day.
Fintech companies are pushing each other for slice of cake. Most don’t even know that at least 80% of these spaza shops are no longer in the hands of locals hence they struggle to penetrate the market easily, unless some ignore country’s laws including FICA (Financial Intelligence Centre Act), chasing profits.
The current tragedies occurring as a result of food poisoning in the townships could have been abated. Big business could have empowered local businesses who have been supportive of their businesses for all this time. But again, profits surpassed everything. In 2018 the Competition Commission held a marathon enquiries into the sector. Red flags were there. Recommendations were not implemented.
Before his term came to an end, Premier Makhura launched the Township Economic Development Act (TEDA) in Orlando, Soweto. I was there to witness this. We listened to all the good things this act will do. We clapped and sang (that’s what we do, we’ve got rhythm they say). That was the end of it. Not sure if he left with it.
So, with all the township economy commentators I’ve listened to so far, from academics to ‘experts’, I don’t hear of any practical solutions. When I listen to ordinary township traders, store owners (those that are still holding on) and aspirant store owners, one thing is glaring. It’s no longer business as usual in the townships. In short, find a ‘tribe’, a network or a collective because silo mentality is dead.
Mxolisi G. Buthelezi is the Founder of Khona La Local Stores. A Network of independent township and rural retail stores trading under Khona La brand. Khona La and eKasi Traders Network are hosting the Township Retail and Hospitality Traders Networking Event on the 27th November 2024 in Naledi, Soweto.
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