Get the townships and rural areas humming

THE COMING weekend will see the North-West Province host another indaba to address the poverty, unemployment and inequality that bedevils South Africa, and in which the victims are in the country’s townships and rural areas.

The Gauteng province started on this route two years ago when energetic Premier David Makhura took office and it has been accompanied by some sterling work.

“Where black South Africa lives” should have gotten prime attention from 1994 onwards, instead of improvements here and there. Unfortunately, post 1994 we were all obsessed with “rainbow nationness”, forgetting that the playing fields were grossly unequal.

The current #FeesMustFall quandary is testimony to the inequality of social existence. We could have more of such in future, and in other dimensions and sectors. To avoid this, the discussions at the North-West indaba must centre on the ownership of economic activity by locals, after the initial what must be done summit earlier this year. Ownership of economic activity by locals ensures that the rand circulates in these areas. This generates more opportunities, thus more jobs.

Research released in 2008 by the University of South Africa (Unisa) points out that since the late 1990s township inhabitants experienced substantial economic upliftment. This, together with the fact that traditional retailing areas are becoming saturated, has caused national retailers to increasingly focus in these emerging markets. This resulted in an increase in shopping centre development in townships.

The increase of township shopping malls is that while it became easier for household to get all they needed under one roof while the malls decimated local small businesses.

Unisa’s Andre Ligthelm did a survey and reports that of 300 businesses selected in 2007, almost three in every five (56.8 percent) closed their doors during the 2007 to 2011 period. Also, as the stores in the malls are not owned by locals, the spend in rand terms continues to leak out. This impact could have been lessened if local authorities, when approving applications for the development of malls, prescribed that 20 percent or more of wares to be sold must be sourced locally and/or from an adjoining black township.

This would have resulted in the creation of new economic activity in the township and the malls would then have a multiplier effect. It is therefore difficult to understand the ululation regarding Pick n Pay partnering with a Soweto Spaza shop. True, the Spaza has multiplied its profits ten times but it is also market expansion for the giant retailer. The township spaza shop is going to be an extension of the Pick n Pay brand.

This is a franchisee operation and the retailer itself says so. So why the song and dance when we have so many franchisee operations in the townships? This model gets 3 of out 10; but the several other models that the Gauteng government and its municipalities of Johannesburg, Tshwane and Ekurhuleni have initiated in the last two years get full marks. One of these, Jozi@Work, has great potential more in the artisan space. The Gauteng government has done well, but this Pick n Pay thing simply does not gel, unless there is something more we are not aware of. The bother is that the Gauteng government is virtually funding and blessing a big player to expand its footprint in the township.

We can only hope that the BEE commission has noted this transaction. Pick n Pay must not be allowed to claim enterprise development points when the Gauteng government also funded the exercise. There is nothing wrong with black-white partnerships, but we cannot have the government support partnerships that result in money leaking out of the township when the opposite must apply.

Detriment Worse still to the detriment of other local operators in the area. Instead, the government must ensure that these areas are no longer the fortune at the base of the pyramid for traditional businesses not located in the townships or rural areas.

Thus, the North West indaba must design models of rural areas and township vitalisation that ensure that the rand rotates in the areas as this increases economic activity in the locality.

Such models will not come from big businesses themselves who as, at the end of the day, they must maximise their profits. They thus become Greeks bearing gifts. Aikona. It is in this spirit that the Presidential Black Economic Empowerment Advisory Council will host a national summit in the eastern Cape early next year to discuss new approaches to the vitalisation of township and rural economies. Just as the National Planning Commission is also planning seven dialogues in Limpopo, the Eastern Cape, North West, Western Cape, KwaZulu- Natal and Gauteng to look at township and rural economies in the implementation of the National Development Plan. As the NDP envisages the creation of 11 million jobs by 2030; this is possible if only there is heightened economic activity in these areas. For our own survival, we desperately need to get the townships and rural areas humming. This is the only way we can pull them back from the precipice of poverty and marginalisation.

Thus, all the indabas on township and rural economies must come with solutions that do not entrench the economic superstructure we inherited. They must be creative and generate alternative value chains and operations. This, let me state reverently, is the Gospel according to “Saint” Joseph Schumpeter, who to many is the God of Entrepreneurship. Recall his theory of “Creative Destruction”?

Dr Thami Mazwai is special adviser to the Minister of Small Business Development, but writes in his personal capacity.