Townships are still a world apart
Bids to unleash their economic potential have failed largely because the motives, networks and practices of the informal economy are ignored
Dormitory-style, underserviced, insecure, overcrowded and noisy — this characterises the living conditions in most of South Africa’s townships.They remain as they were conceived — spatially disconnected and alienated from mainstream economic activity.
Potholed dusty roads that are muddy when it rains; row upon row of chemical toilets forming lines outside homes, with the stench from open latrines and blocked pipes filling the air; overcrowded, small matchbox-style homes; and limited distribution of recreation facilities — this is the reality of townships, even in parts of the seemingly modernised Soweto.
It was thought that after South Africa’s political transition from apartheid, in addition to the provision of political and socioeconomic rights and the development of a welfare state, immediate attention would be given to the spatial, infrastructural and economic reform of the townships to remedy their deliberate marginalisation and underdevelopment.
This was not the case and it was perhaps the key oversight of the reform efforts in the early years of the transition to democratic government. The inherited neglect of the townships has largely continued, and even efforts to revitalise them have hit conceptual and practical snags.
Limitations
The townships were never conceived to have the potential for development, and their space and location are the primary difficulties that have to be faced when it comes to economic development and the revitalisation of their limited economies.
The costs associated with this are astronomical because of extraordinarily high input costs. First, the topography of township land is hard to excavate and develop. Second, the distance of the townships from core infrastructure and service points, such as water sources, electricity grids, major arterial roads and other infrastructure linked to commercial and industrial hubs compounds the costs. Also a poor road and route network in and out of these areas means transporting goods, services and people is expensive.
Consequently, the logistics and supply chains to and from townships, which are vital to manufacturing and industry, remain underdeveloped and underserviced. Where infrastructure, amenities and services do become available, the cost is so high that the average township resident and business, because of their lower than average income and business turnover, can’t afford them.
The expectation post-1994 was that the excluded and marginalised people in the townships would be moved closer to the cities and urban areas. This, in the main, did not happen and was largely only an option for the small and the developing businesses and professional, technical and managerial class. And where this did happen, especially in affordable, middle-class suburbs close to cities, there was a mass exodus of previous (white) inhabitants, capital flight and with it a decline in property investment and property values.
This has had the dual effect of displacing investment and simultaneously hollowing out the solid middle class that could have contributed to developing the township economy, particularly in the commercial and services sectors, which are not as reliant on heavy infrastructure as manufacturing and other industries are.
An internal migration from nonmetropolitan and rural areas has seen an underclass moving into the townships and the proliferation of informal settlements, which have overburdened the already sparse services and infrastructure.
The government’s response to this has been the provision of RDP housing and some social housing for middle-income earners. Although these address a social need, they don’t yield economic value.
Add to this the lingering legacy of anti-apartheid rates and taxes boycotts, the illegal and irregular service connections (water, electricity, telephony) and the comparatively lower collection of service fees and rates from townships by local councils, and it all dampens the necessary revenue base that aids money multiplication and circulation.
Legacy issues
Efforts to stimulate the economies of the townships have focused on the provision of infrastructure, largely in services, and limited commercial sector services, such as retail banking, restaurants, small-scale retail, the duplication of large national chains at micro level and the establishment of malls or small-scale industrial parks, such as the one in Orlando West, Soweto.
But these have limited capacity to absorb labour and limited potential to develop a market, which stunts the generation of revenue. Consequently, this dims the prospects for the rapid replication, expansion and transfer of these effort to other areas, or for scaling them up.
This is in contrast to the microeconomies and businesses operating in the formal economy, which continue to enjoy growth, expansion and success by virtue of their residual and subsequently reinforced strategic positioning that places them at a comparative and competitive advantage. They benefit from new business development incentives and subsidies, technological advancements and inherited economies of scale.
Of course, the caveat here is that, with the global food, fuel and finance crises, coupled with South Africa’s fragmented and fractured political landscape, poor growth and high unemployment, businesses in the formal sector have also experienced some degree of stagnation.
Efforts at connecting the township economy with the pre-existing city and suburban economic, commercial and industrial nodes offered some glimmers of hope for township revitalisation, but the ways in which they are able to integrate the township into the mainstream economy are limited.
One of the frequent laments emerging from these initiatives is the absence of an “entrepreneurial culture and spirit” in the townships. But nothing could be further from the truth.
Township economies, even in the informal sector, demonstrate the inhabitants’ creativity and resilience in bridging apartheid’s spatial and economic exclusion. For example, as an alternative to the high transport costs involved in getting to work — in mines, homes, gardens, factories and offices, economic hubs, shopping malls and retail centres — people created a makeshift township economy.
This saw the proliferation of unlicensed kiosks and spaza shops generating subsistence incomes for the unemployed, the hitherto unregulated commuter minibus taxi industry, the development of stokvels and savings clubs as financing mechanisms, roadside food stalls, taverns and restaurants, the unregulated home and backyard mechanics, panel beaters, spray painters, barber shops, salons and beauty stalls, shoe, sandal and bag makers and repairers, sewing and haberdashery stalls, tyre retreaders, carpenters and cabinet makers as well as upholsterers and furniture refurbishers.
Add to this list the roadside autoelectric entrepreneurs and retailers of low-end sunglasses, earphones, perfumes, home and car cellphone chargers, leather belts, watches, wallets, hair and nail clippers, shoe and nail polish. Key to this cohort’s survival is mobility and its ability to scan and analyse sales prospects on a continual and ad hoc basis.
Non-mobile township entrepreneurs mostly operate in about 3m2 stalls around shopping malls and retail centres.
Little understanding
Understanding the cultures, motives, networks and practices of this informal, unlicensed and unregulated economy is vital to its development, formalisation and integration into the formal economy, and for the provision of basic commercial, financial and business support services to these areas.
One such initiative aims to group and cluster township businesses for the purposes of service provision, market creation and regulation in designated spaces such as incubation hubs, innovation centres or industrial parks.
But any act such as clustering or any form of organisation is counterintuitive to the manner in which these businesses can be enhanced. For one, a group-and-cluster approach will have a curtailing effect on their nimbleness and mobility and will destroy this segment of entrepreneurs.
In stimulating township economies, policymakers are having to navigate seemingly irresolvable contradictions, which stem from the fact that it is easier for the government to provide services if the business operators and vendors are clustered together, creating economies of scale for the state.
But the business operators might be reluctant to be grouped and clustered together with competitors offering the same range of goods, products and services.
From a policy perspective, the first problem that needs to be appreciated is the limited scope of current township revitalisation strategies. They implicitly place a focus on Gauteng’s townships, with Soweto idealised as a benchmark for township development, which leads to the neglect of townships elsewhere.
Second, the treasury allocation for township revitalisation is too small given the needs and requirements of countrywide economic development of townships. This needs to be scaled up.
Third, the skewed allocation of planning resources, with 90% of funding allocated to technical assistance and a paltry 10% to infrastructure development, needs to be rethought. Addressing these three policy issues would be a good start for growing township economies.
The townships were never conceived to have the potential for development