Township economic development for residents should be spatially inform

Businesses create jobs and bring investment

BY MALIJENG NGQALENI

There is a need to reform policy to reduce barriers to formalization says the writer. Image: sowetanlive.co.za

The civil unrest last month brought specific attention to SA townships and highlighted the deep challenges of poverty and inequality in these settlements. The unrest affected some of the most important business assets and investments, including shopping malls, ATMs, petrol stations and township micro-enterprises.

It is important to consider the township as a socioeconomic space. There can be little doubt that SA townships, with few exceptions, have not undergone the kind of transition the post-apartheid state had envisaged.

As a legacy of apartheid-era spatial planning, most townships are poorly connected to the cities and urban core, in terms of their location and inadequacy of transport infrastructure. Residents spend a disproportionately high share of their income on transport, while commuters endure frustratingly tiresome journeys between home and work.

Job seekers without the resources to travel into centres of opportunity within the city are spatially stuck in townships, a reality that partially explains why SA has such high levels of discouraged work seekers – unemployed persons who have given up looking for jobs.

Within the townships, the spatial layout remains unsuited for economic development. Almost no land has been set aside for business activities. High streets are designed with transport objectives, with little consideration for economic potential and business activities.

Shopping malls and industrial areas are often on the periphery, reinforcing costly travel.

As places of residence, townships are under-resourced in social and community infrastructure, including public markets, halls and recreational facilities.

Informal settlements have increasingly emerged in any open space, including unsuitable localities such as beneath power lines. These slum settlements cannot provide a decent living and economic opportunities that are essential if we are to reduce poverty.

In spite of this, a township economy has begun to emerge in an impressive range of business scales from formal enterprises and survivalist traders.

Their activities range from grocery retailing, to selling fruit and vegetables, to operating food takeaway stands, taverns and nightclubs, as well as to provide services such as hair care and child education.

Township businesses have created jobs and brought investment into these economies. Furthermore, these micro-enterprises have made the townships more socio-culturally authentic and livable.

However, much still needs to be done. Too much consumer spending of the township rand flows out of the township, providing little to no additional benefit to residents. For townships to truly develop, businesses that help to retain this capital must be supported.

Secondly, at the level of individual businesses, micro-enterprises are confronted with a range of barriers that include inappropriate regulations, an absence of technology and infrastructure, financial constraints, especially in terms of access to micro-finance, social pressures and crime, in addition to the spatial constraints.

There is a need to reform policy to reduce barriers to formalisation. The ecosystem of business development support needs to be realigned to the actual needs and capabilities of micro-enterprises.

There is a need for investment in housing as well as public and social infrastructure. What is often missing are programmes for economic development within a single coherent strategy.

The National Treasury’s cities support programme (CSP) has initiated a township economic development project (TEDP) to foster economic connections that can have a transformative impact on local business opportunities, asset accumulation, social and lived experiences and environmental sustainability.

The project is providing support to five metros for strategies in five townships. Each township is different and hence site-specific economic opportunities have been identified and interventions will be tailored to match community and business needs with appropriate support.

Municipalities have a responsibility to drive township economic development. For townships to be socioeconomic spaces, the role of local government is paramount. Municipalities control land use; are responsible for the development (and maintenance) of bulk infrastructure; manage the use of public space; and provide many necessary social facilities.

The CSP’s TED project supports metros to address two areas of traditional weakness:

• the ability to plan transversally so that business support is not isolated from other line functions, such as housing or transport, and

• the ability to drive partnerships for project implementation across government and with the private sector.

Extending ownership to community members will help with protecting businesses

Area-based economic development planning must be inclusive and respond to local demands.

To enable the role of the metros in driving TED, the National Treasury and the department of small business development, along with several partners, have held a metro township economic development symposium. The aim was to enthuse the public, private sector, civil society actors and donors behind metro-driven evidence-based initiatives to revitalise township and well-located industrial spaces.

* Ngqaleni is National Treasury deputy director-general for intergovernmental relations and the article was first published by Sowetan.