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

Mail & Guardian - - Business - Ntem­beko Nqapela & Ebrahim Fakir

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

Mean streets: The lo­gis­tics and supply chains to and from town­ships re­main per­pet­u­ally un­der­de­vel­oped and un­der­ser­viced. Photo: David Har­ri­son

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