Self-made township restaurateur Itumeleng Mpatlanyana, right, and a friend.
A major summit on township and rural economies to fundamentally change the current development narrative in these communities is on the cards.

The summit seeks to ensure that the five legs of Broad-based Black Economic Empowerment (B-BEE) empower rural and township communities through economic activities such as share ownership, land acquisition, opportunities in infrastructure rollout projects, management development and skills acquisition.

It will be held in the Eastern Cape and is hosted by the President’s Black Economic Empowerment Advisory Council (PBEEAC) and the BEE commission led by acting commissioner Zodwa Ntuli.

The convener of the PBEEAC is Koko Khumalo, the chairperson President Jacob Zuma and in his absence Minister of Trade and Industry (dti) Rob Davies.

The dti is the secretariat of the PBEEAC. The summit flows from the unprecedented but welcome focus on township and rural economies since David Makhura became premier. Most provinces, and several national government departments, now have programmes that focus on these economies. The Treasury inadvertently started on this road more than 15 years ago on a limited scale with its neighbourhood development programme.

From what one has picked up the Treasury has now scaled up and it is even headed by a senior official. Very very good. Indeed, the liberation struggle was about people in the rural areas and townships. We thus cannot have a situation in which their lives have not changed much and, worse still, important programme like BEE hardly touch them.

Until lately, the focus was trickle-down economics which former MP Professor Ben Turok valiantly challenged. After all, trickle-down economics is nothing else but an aberration of the Washington Consensus. Asia, South America and independent African countries rejected this approach to development as it was more about getting them to conform to neo liberal policies than to enhance development.

Hence the Structural Adjustment Programmes (known as the SAPs and rigidly enforced by the International Monetary Fund) failed miserably to change lives, despite being administered in large dollops in several developing countries, for instance Ghana.

Economic activity

Getting back to the discussion of the day, in the apartheid era economic activity was in the white-owned industrial and commercial centres in their CBDs and industrial zones.

The majority of blacks were concentrated in the townships and rural areas, which were merely hostels in which they lived as cheap and/or temporary labour. Come 1994 we did not reverse this and the trend continued on its own volition and the more affluent blacks relocated to white areas.

Nothing wrong with this, but the townships and rural areas lamentably continued to be reservoirs of labour and the unemployed as there was no worthwhile industrial and commercial activity comparable to that of the former white areas.

In the meantime, because of developments in the country and thanks to the new ANC government, a new middle class emerged in these areas. This resulted in a growing market that attracted major business houses. Developers built shopping centres, but these accommodated mostly shops owned by existing white and foreign business houses.

Spending leak

The shopping malls did not develop local entrepreneurship and, as could be expected, the spending continued to leak out of these areas.

Yet, it is the circulation of money in any community that generates more economic activity and promotes development. Hence, life has changed marginally in these areas and improvements by the new and democratic order have not necessarily reversed the past. Instead, the townships and rural areas continue to be markets.

But, thanks to efforts by the visionary Makhura, the narrative on township and rural economies is changing as other provinces follow suit.

The envisaged summit must build on this and accelerate the process as it brings in new thinking; that townships and rural areas must cease being markets for others. Turok sagely proclaimed that wealth does not trickle down but must be created.

Thus, recommendations must be made on how legislation must be tweaked so that BEE stimulates economic participation for locals in these areas.

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It will also discuss the invasion of township and rural markets by shopping malls and foreign traders. While some food chains in the shopping malls source from black providers, the process has been ad hoc and not rigidly enforced by local authorities. The decimation of small businesses in such areas has resulted, a factor well documented in numerous studies by Andre Ligthelm of the Unisa Bureau for Market Research.

Sore point

The presence of the foreign traders is an ongoing sore point and results in sporadic attacks on them. For the record, while this also happened in Tanzania, the reaction by the locals was swift as they devised strategies that saw them retake their markets, and this was without physical attacks.

The summit must thus also devise approaches that see local entrepreneurs in the township and rural areas regain their markets through policy support and, above all, superior competition. Furthermore, the grant payouts to millions of beneficiaries in these areas could be the base of a vibrant financial ecosystem servicing local production and value chains.

The taxi industry is instructive as blacks are the consumers, but the value chains make billions for white business organisations and multinationals.

Indeed, the ponderings at the summit can take the country to a higher trajectory of developmental thinking and activism. The 11million jobs the National Development Plan envisages will not happen unless townships and rural areas are transformed from their consumer mode into being producer communities.

Dr Thami Mazwai is special adviser to the Minister of Small Business Development but writes in his personal capacity.