The township economy:
a strategically significant game changer

By: Lebogang Maile

Upon coming into office as the fifth administration in 2014, we dedicated ourselves to radically transforming, modernising and re-industrialising Gauteng City Region’s economy. A significant part of this drive to structurally transform our economy and give historically disadvantaged individuals greater participation and ownership within the mainstream economy is vested in our Township Economy Revitalisation (TER) strategy which is geared towards ensuring that township enterprises graduate to high-value commodities through structured manufacturing and production of key township goods and services. The goal is to turn the township economy into a future growth node that will fundamentally change the characteristics of the Gauteng economy in the medium to long-term.

TER identifies government as a key role player in ensuring that the township economy is integrated into the mainstream through the provision of multifaceted incentives targeting strategic urban nodes, corridors and sectors.  Government’s role within the strategy is to create an enabling environment for township enterprises to flourish by revitalising and building the productive capacity of the township economy so that townships become productive centres of the economy as opposed to merely being consumers of the first economy.

TER is an integral part of our Transformation, Modernisation and Re-industrialisation programme which seeks to build an inclusive, labour-absorbing and growing economy for the benefit of all its citizens. Through TER we have taken a producer-driven value chain philosophy, which seeks to build relationships and transfer skills between township entrepreneurs and established businesses in order to give township enterprises a larger portion of the manufacturing value chain so they can play a greater role in mainstream economic activity.

It is in line with this thinking that we have taken the following measures to bring this dynamic vision to pass:

  • We have established an NDP task team on township and village economies in order to develop a natural framework for supporting township enterprises, including village-based enterprises.
  • We have actively engaged over 250 listed companies to secure necessary commitments to support the township economy. The Public Investment Corporation as an example has put aside a portion of investment funds-worth billions of rands-specifically for the development of the township economy.
  • We have established partnerships with the commercial banking sector to make funding available for the township economy. Through this partnership, we have already secured a commitment of R250 million towards the township economy from the sector and are continuing with engagements to increase this amount.
  • We are looking at innovative ways to include township SMMEs in the private sector value chain within the auspices of transformative partnerships and direct seed capital towards township enterprises.
  • Through our implementing agencies, we are actively promoting townships as locations for foreign and domestic investment as well as working towards exposing township enterprises’ products to export markets in order to deal with funding and market access challenges that often provide a bottleneck to the growth and sustainability of township enterprises.
  • We have entered into strategic partnerships with institutions of higher learning to ensure that the structural bottlenecks related to knowledge production, innovation, skills development as well as research and development that township enterprises are prone to are addressed accordingly.
  • We are working towards an integrated approach to enterprise development within GCR (i.e. close linkages between financial and non-financial support as well as access to public and private markets).
  • We have identified township tourism as a sector with huge potential for growth, development and job creation and are focussing on building this segment of GCRs economy.
  • As the Gauteng provincial government, we have set ourselves a target of 30% of our goods and services budget being spent on township enterprises by 2019. For the 2016/17 financial year this target has been set at 18%.

These are some of the measures we have taken in our drive to transform, modernise and re-industrialise our economy with a specific emphasis on revitalising and mainstreaming the township economy. We firmly believe in the potential of our township economy to give our people greater participation within, as well as ownership of the mainstream economy and are excited to see the private sector and other relevant stakeholders within society coming to the party in order to support this vision. Ours remains in Premier David Makhura’s words, “to create a Gauteng City Region that has  seamlessly integrated, economically inclusive, globally competitive diverse and dynamic sectors that contribute to employment and empowerment; with good cross-cutting infrastructure; smart regulations, innovation, skilled, healthy and talented workforce; a Gauteng City Region that is a strong platform deepening Africa’s industrialisation and economic integration through services, manufacturing, infrastructure development and trade.”