Township stock exchange to boost Gauteng’s growth
Gauteng might be the economic hub of the country but much of the economy — in all sectors — is in the hands of no more than a handful of companies.
“We can’t do miracles,” said Lebogang Maile, the Gauteng MEC for economic development, agriculture and rural development.
Instead, he has focused his department on the “micro factors” it can control to grow, industrialise and modernise the provincial economy.
These include improving both the cost and ease of doing business, and boosting the township economy through measures such as a township stock exchange.
His department recently launched the Gauteng Economic Plan, which has received backing from Finance Minister Pravin Gordhan, Deputy President Cyril Ramaphosa and Business Unity South Africa (Busa), among others.
Maile said the first thing that drafting the plan revealed was the concentrated nature of ownership in the Gauteng economy.
Of the 11 sectors they researched, between four and eight firms were responsible for the bulk of production, accounting for between 70% and 90% of each sector.
Although the economy is diversi- fied and has huge potential to propel growth, “it has not been doing well but cannot be looked at in isolation” without considering the national and global economy, he said.
He points to factors such as the commodity price slump and the slowdown in global growth, as well as other external factors that are controlled and affected by the national government.
He specifically refers to, and uses the term, Nenegate — the marketshaking episode in December when President Jacob Zuma fired then- finance minister Nhlanhla Nene and replaced him with backbencher Des van Rooyen, before relenting and reinstalling Gordhan, who had been finance minister before Nene.
Such actions contribute to a negative policy environment, which has led to the spectre of a ratings downgrade looming over South Africa, Maile said.
The Gauteng government has a plan to revitalise the economies of the province’s townships, and aims to procure 30% of its goods from enterprises based there.
It is focusing on 104 townships occupied by coloured, Indian and black people in a bid to unlock spending — which, according to Statistics South Africa’s general household survey, is low per individual township household.
But, because of the large populations living in Gauteng’s townships, these areas hold huge potential from a volume point of view.
“The township economy is worth R100-billion, while the stokvel industry is estimated to be worth around R70-billion,” Maile said, adding that the key is to make this money circulate within the townships.
“We are not saying big business, including retailers, must not go into townships, but we need them to change their model and source some of their goods from the township without compromising their standards.”
The country’s first township stock exchange will be l aunched this month, a concept that is still embryonic and will develop over the long term, Maile said. This will pool the resources of those who wish to invest in township enterprises and help businesses to raise funding to grow.
“The idea is that we need an alternative to the JSE, which currently has a monopoly,” he said, adding that in major economies many cities have their own stock exchanges.
Maile said the provincial government has managed to improve the ease of applications for business permits and has reduced the time it takes to pay service providers from the 30-day period stipulated by the national government to two weeks.
The MEC has instructed agencies operating under his department to reduce this even further to 48 hours.
The plan targets strategic sectors and starts with manufacturing and services. One of its aims is to increase the amount of locally manufactured components in the automotive industry.
To bridge the skills gap, the Automotive Industry Development Centre, a government agency, has been roped in.
Other plans include introducing more roofs with solar panels and commissioning power stations in the province’s three metros to supply 1 000MW of power, which is usually the shortfall in Gauteng when Eskom cuts electricity supply.
The strategy will also see a greater investment to boost business tourism, with the construction of two new convention centres in Tshwane and Ekurhuleni.
A key pillar of the strategy is to increase intra-Africa trade, which is currently 14% and rose from R512-billion in 2014 to R518-billion in 2015.