Programme Director
Representatives of Small Business Organisations
Representatives from all our partners in government and the private sector
Distinguished guests
Members of the media
In his maiden State of the Province Address in June 2014, Gauteng Premier David Makhura committed this government to a development trajectory that is geared at transforming our townships from labour dormitories into thriving centres of production and commercial activity.
In what was a clear expression of confidence in the resilience and capacities of township businesses, Premier Makhura made the undertaking to lead an administration that placed townships at the centre of plans to reduce inequality, create decent jobs and fight poverty.
Through our programme for radical transformation, modernisation and re-industrialisation, the fifth administration made a pledge to improve the living standards of people residing in our townships.
We also made a call for township entrepreneurs to stand up and be counted. To work with us to change the economic landscape of this country and to disentangle the current situation where township residents and entrepreneurs occupy marginal positions in the South African economy.
To give practical expression to our quest to make townships viable economic entities, this government embarked on an unprecedented programme to consult with township business across all the regions of this province.
Our roadshows attracted multitudes of business people who filled community halls, churches and sports centres in all the townships we visited.
During these consultations, we met with a total of 50 000 entrepreneurs across 65 townships.
We heard of the enormous difficulties township businesses face in relation to securing markets for their goods and services and drew insight from those who bemoaned the shortage of industrial land for conducting business and the restrictive business regulations and compliance framework.
We were also made acutely aware of the onerous requirements that township businesses have to meet in order to qualify for private sector funding.
We travelled from one township to the other armed with the knowledge that history has always been unkind to township entrepreneurs.
From our conversations with township businesses, we emerged, as a collective with a strategy that places townships at the centre of our plans to grow the economy and redistribute wealth.
This spatial bias springs from our history of racial oppression and economic subjugation of African, Indian and Coloured people – a history that continues to exert a bearing on the present.
Our focus on townships is also inspired by our determination to build on foundation erected by the men and women who rose to defeat the drawbacks facing many black businesses under apartheid.
As we meet to launch what can only be described as the closest thing to a business census that South Africa has ever experienced, we are proud to assert that things are beginning to change and they are changing for the better.
Today we can speak of the notion of a Central Business District at the heart of a township – something that was completely unimaginable in the past.
Today, the idea that townships are not viable markets is completely at odds with the proliferation of big business across townships from Soweto to Thembisa, Katlehong to Orange Farm.
All the major supermaket chains have hundreds of branches and outlets in townships while banking sector has become fully entrenched in the township space.
Nearly all the major consumer goods brands are competing for the loyalties and spending power of the township consumer.
From food retail to clothing and hardware stores – big business continues to communicate the clear message that profit margins and bigger market share
lies in pentrating the township consumer market and tapping into the disposable incomes of township residents.
Programme Director,
As we celebrate these strides and sweeping changes, we must also deal with the reality that township residents still occupy marginal positions and derive little benefits from the spoils of our economy.
Research conducted by the World Bank estimates the worth of the economy of Diepsloot at R2 billion. Other studies suggest that the spending power of Soweto residents alone is R5 billion while the entire economy of this single township is worth as much as R12 billion.
Our estimations tell us that together, Gauteng townships contribute about R100 billion to the province's R1 trillion economy and almost 80% of the money generated from the sweat and toil of township people eventually leaves the township.
The economic activities that predominantly define the township economy are of the intermediary kind. Township businesses are still conduits for goods and services produced outside elsewhere. Far too many township businesses compete in over saturated sectors of the economy, providing the same services with little or no differentiation.
Even more worrying is the fact that fears of state harassment and lack of information about the benefits of many township businesses, many township businesses exist in the margins and live in the shadows.
Various studies on small business registrations indicate that less than 20% of businesses in townships are registered, and most of these businesses hold the view that registration places an unecessary budern on small businesses.
We know that many township businesses share these sentiments and strongly believe that formalising a business is tantamount to inviting the wrath of law enforcement agencies.
We also know that, as Department of Trade and Industry’s research points out, nearly 50% of unregistered enterprises in South Africa feel that their businesses are too small to formalise, while 18% lack knowledge about the registration process and benefits associated with formality.
Some of the concerns about the cumbersome nature of the business registration and compliance process are reflected in the 2015 World Bank’s
study on Doing Business in South Africa, which assessed the cost of doing business in 9 cities including Johannesburg, Ekurhuleni, Tshwane, Cape Town and Ethekwini and Mangaung and found that although South Africa’s business registration process is relatively cheaper, it is not time efficient and tends to be administratively tedious.
The study echoed the frustrations of small businesses with delays for construction permits, electricity connections, property transfers and registration, tax registration and municipal rates clearances.
Programme Director,
Over the next six months, this campaign will demonstrate just how just how easy and hassle-free this process can be. We want to reduce the number of days it takes to register a business in this province and fast-track approvals for building permits, zoning, transfer of properties and electricity and water connections.
As a campaign, Qondis’ ishishini lakho is intricately tied to the pledge we made about the township economy in the first few days of this administration’s tenure in office.
Part of what we seek to achieve with this campaign is to allay fears and dispel misconceptions about formality and make decisive interventions to address the burning concerns of township businesses.
Just yesterday a thousand field workers – who are the hands and feet of this campaign – conducted door to door visits to over 1600 businesses in Ebony Park, Rabbie Ridge, Kaalfontein and Ivory Park to compile data on the nature and sectoral spread of businesses in this area, disseminate information about financial and non-financial support for township enterprises as well as to deal with queries and concerns raised by businesses in these areas.
Qondis’ ishishini lakho is our assurance that township businesses do not have to exist in the shadows and that the benefits of formalisation far outweigh the costs.
In the first instance, registered businesses are able to expand avenues available for public and private sector funding opportunities and targeted enterprise development and support.
Secondly, formalised businesses have a greater chance of expanding their customer base to provide goods and services to bigger markets and bigger clients. Formality means growing your business beyond the survivalist stages.
Lastly and perhaps of more importance than all the factors I have outlined, is that this campaign will introduce a mechanism through township entrepreneurs can hold government and big business to account.
From now on there will be no excuse for any government department or agency to overlook township businesses in procurement processes once we have completed the lengthy and meticulous process and have registered more than 10 000 of township enterprises across different sectors of our economy.
The paint jobs, plumbing, electrical and other maintenance work in our schools, libraries, clinics, hospitals and police stations must be done by township people – not as exploited workers under established white businesses or labour brokers but as business owners and employers in their own right.
We insist that the money we spend on procuring bread and milk for our school nutritional programme and for patients in our health facilities be redirected towards township merchants.
Today we can speak of concrete examples of government stepping in to guarantee market access for township business.
This government has made a firm commitment to spend 30% of its budget during this term of office on township businesses. We have ring-fenced all procurement spend under R500 000 for township businesses.
Almost 300 township businesses in construction and maintenance are currently providing their services in public buildings, schools, hospitals and police stations across Gauteng.
Over 50 township clothing and textile businesses are supplying linen to hospitals in the province
The same hospitals are procuring 40% of fresh produce supplies from black farmers – a figure which is going to be doubled by 2016.
A total of 20% of the budget for bread in our hospitals is earmarked for township businesses. This figure will be doubled in will be increased to 40% next year. This government is determined to demonstrate that our actions on the township economy match our words.
Equally, the outcomes of this campaign will rob big business of any excuse to
evade supporting township businesses and suppliers. The days of big business hiding behind the woodwork of non-compliance with regulations or the lack of sufficient and skilled businesses from townships are fast coming to an end.
Programme Director,
This government takes the mission to revitalise township economies very seriously and that is why we have made support for township businesses is pre-condition for established business that enter into procurement contracts with Gauteng. The support and development of township enterprises is no longer an optional extra but a pre-requisite for anyone who wants to do business with this government.
Our position on the township economy is an unequivocal rejection of the notion that a people trampled to the bottom rugs of society through racist policy and repressive laws can suddenly pull themselves by their own boot-strings.
As we move along with the campaign, we will equally intensify our work in:
- Securing partnerships for market access, enterprenuerial support and incubation for township businesses
- Addressing the infrastructural needs of township businesses through our programme on industrial parks and enterprise hubs
- Championing a legal and regulatory framework that is conducive to the development of strong township businesses
- Incentivising and recognising innovation, hardwork and resilience of township enterprenuers through the Township Enterpreneur Awards
- Securing self sufficient funding options for township businesses, which includes tapping into the R44 billion commanded by the Stokvel market
- And promoting the entry of township businesses into the productive sectors of the economy and supporting the expansion of those already engaged in these sectors.
The paradigm shift that we want to witness in our economy will not occur without the determination of township enterprenuers to forge ahead with the struggle for a transformed and redistributive economy.
We implore you, as the real agents of change for this programme, to partner with us in the mission to transform our townships into habitable spaces where we can work, do business and engage in leisure.
I thank you.
