A heartening development since the advent of democracy is the enhanced focus on township and rural economies. About time.
It is a crying shame that 21 years into democracy our townships and rural areas are still sprawls of poverty.
According to a 2015 report by Oxfam, our wealthiest, which is 4 percent of households, share 32 percent of total income while 66 percent of households receive only 21 percent of all income.
It states that more than half of South Africans live below the national poverty line and more than 10 percent live in extreme poverty. The poor referred to are in townships and rural areas. Yet, since 1994 South Africa has poured billions into townships and rural areas. Unfortunately, there is not much to show for it in terms of economic vitalisation, the one reliable antidote for poverty and inequality.
Small businesses in the townships and rural areas have hardly changed that much from the marginalism, informalism and survivalism of the past.
According to the grim figures released a few years ago by Finscope, 70 percent of black small businesses have turnovers of at most R70 000 a year. Yep, less than R6 000 a month, and this is turnover, not profit. An educated estimate for 2015 on the basis of a generous but unlikely 40 percent boost in sales on these businesses is that the turnover for 60 percent of them could now be about R120 000 a year. Still a paltry R10 000 a month in turnover. This is why we must welcome the focus on townships.
The Gauteng government is throwing hundreds of millions into the capacitation of township small businesses.
Tshwane City manager Jason Ngobeni has every reason to smile as a bakery in Mamelodi owned by locals simply cannot meet demand. This bakery is the outcome of the many initiatives in the townships by Premier David Makhura’s local government, its development agencies and municipalities.
This justifiable focus on township entrepreneurship can restructure our economy if we think out of the box. A new type of boldness is required, one that must see our government being more interventionist.
The reality is that while we have the individual successes, the overall economy is still in white hands. Let us look at the big picture. After the demise of colonialism, Western economies put numerous strategies in place to ensure that they did not lose their dominance in the previously colonised territories.
The most potent instrument the developed world used to keep developing countries in check is development aid, prescribing macro- and micropolicies, and trade and investment. After all, when you are in control of the resources, you are more able to maintain your dominance.
Foreigners
Karl Marx summed this up very well when he spoke of the superstructure, which Vladimir Lenin refined as the metropolitan-satellite relationship in which the satellites are always dependent on the metropolitan.
Rightly, the developing world has, over the ages, challenged the dominance of the developed world and the Brics Bank is the latest attempt to wrench itself off the leash.
Realising the danger, one of the major development banks in the West has offered to assist the Brics Bank with “technical assistance”; in other words, the Brics Bank must not be allowed to shake the development tree.
Thus, we must be wary of the metropolitan-satellite nexus as it has cascaded down to national level, with the dominant corporate structure having the power of life and death over all, including small business.
Hence, despite 15 years of black economic empowerment, black people still own less than 5 percent of shares on the JSE. It is no better in the small business sector. A report by Ntsika about 10 years ago showed that the informal sector was 95 percent black and formal small business was 80 percent white.
Things have now worsened and foreigners, rather than township residents, have a huge slice of township market.
While the Gauteng government is doing an admirable job in strengthening township entrepreneurship, it should also take into cognisance the superstructure that Marx spoke about.
Township spend
Otherwise it stands the danger, and shame, of its wondrous efforts strengthening the apartheid architecture we want to dismantle. Korea, Brazil and China put strategies in place that yanked them from the economic grip of the West, and have progressed wonderfully well.
In our case, with regard to the township economy, the Gauteng government should, firstly, make sure it assists only small businesses owned by township residents. If businesses owned by foreigners must be assisted, it must only be those that qualify in terms of the law.
Secondly, the Gauteng government must put in place strategies that ensure that township spend circulates in the townships more than seven times. More importantly, this township spend must grow businesses wholly owned by township residents, to the extent of creating new black-dominated value chains.
This is what the revitalisation of townships should be about. The townships are one of the few instruments we have to change the face of our economy – let us box cleverly this time. The Afrikaners and the Israelis did, why can’t we?
* Dr Thami Mazwai is special adviser to the minister of small business, but writes in his personal capacity.
** The views expressed here do not necessarily reflect those of Independent Media.
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