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Gauteng’s vision is talk of the township

| Economic factors

Townships have consistently played second fiddle to urban areas, where investment across the business spectrum has long been concentrated.

But the latest ace in the Gauteng provincial government’s deck of economic cards is redirecting some of its spend to townships, where it wants to create jobs.

This noble and commendable cause has been met with optimism by some of the biggest retail players in the country, but quite how Gauteng will execute its plan to boost township development remains uncertain.

Not quite urban nor rural but spatially cut off from both domains, townships are often characterised as areas of no man’s land.

A study released last year by the World Bank shows that SA’s township economy lags those of many of the country’s peers, despite half of its urban population living in townships and informal settlements.

Gauteng Economic Development MEC Lebogang Maile says his department will pump 30% of its five-year R90bn budget into township economies and his provincial counterparts will follow suit.

"We want to take the township economy to a higher level where townships are no longer seen as sites of consumption but also of manufacturing and production."

FDI inflows accelerated from R10.2bn in the third quarter of last year to R17.2bn in the fourth quarter, Reserve Bank data show. Inward FDI amounted to R62bn last year, lower than the R80.1bn recorded in 2013.

However, Maile believes that private companies such as Pick n Pay and Massmart could help attain the Gauteng government’s goal by sourcing stock from businesses located in the areas in which they operate. Pick n Pay chairman Gareth Ackerman says the retailer is willing to work with Gauteng to explore "how our franchise model can be extended to provide more opportunities including in townships".

Massmart corporate affairs executive Brian Leroni says the company supports Maile’s drive to jump-start the township economy. Through its wholesale businesses including Jumbo Cash & Carry, Massmart has been "providing township-based retail entrepreneurs with favourable credit terms and merchandise deals, and providing marketing support", says Leroni.

Spar CE Graham O’Connor says "the MEC is vague on the exact services he hopes to develop with township entrepreneurs", but Spar would "be interested to engage if the opportunity presented (itself)".

Economist Iraj Abedian says collaboration between big business and township entrepreneurs has the potential to be successful, but "retailers have a responsibility to give them (local suppliers) market opportunities" and the producers’ responsibility is to provide quality products on time.

And prejudicial thinking between buyers and suppliers needed to stop.

"(There is a) perception that buyers are not being affirmative, they are not being reasonable and are not taking into account their history.

"Buyers think they (suppliers) can’t be trusted and that their quality is not good ... They need to sit across the table and talk," Abedian says.

There were other barriers preventing local producers from participating in the market. How municipalities managed communities was key and they should consider improving the provision of services such as electricity, water and refuse collection. The effect of municipal regulations and rates also needed to be considered.

Lack of access to funding, market access, skills and the dearth of networking opportunities have hamstrung township development, says Maile, who remains optimistic that Gauteng’s goal can be reached despite the odds.

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