It is not uncommon to hear politicians extolling the untapped virtues of entrepreneurs as South Africa’s saviours in the making. By 2030, for instance, it is imagined that they will generate 90% of all new jobs.
But is this doable given that most of these anticipated entrepreneurs live in poor areas?
The 22-million people living in townships and informal settlements account for 38% of the country’s working-age citizens, and also make up 60% of the country’s unemployed.
Entrepreneurs in these contexts are poorly resourced and poorly understood, and the little we do understand about the realities they face tells us that they are being stifled.
We know that township entrepreneurs and township-based entrepreneurs — those who operate solely in townships and those who do business inside and outside of these areas — struggle to get finance from traditional sources such as banks and government programmes, and we are beginning to appreciate they are cut off from information that could help their businesses.
The 2018 SME South Africa Report tells us that just 6% of entrepreneurs surveyed had received money from government and 9% from non-governmental sources, because, in many cases, people didn’t know how to access or apply for this funding. That same report highlighted a growing need for mentorship and assistance with expanding markets and networks.
These shortcomings are not mere bumps in the road; they are calamitous potholes. They threaten to fail the entrepreneurs and the country, which has invested so much hope – and money – in entrepreneurship.
That faith is not unfounded. Nurturing and bolstering township entrepreneurs could inject life into poorer households and areas and help reshape the economy for the better, but we need to find ways to fill in those potholes — and fast. Here are four simple things we can do differently to get things moving.
One of the biggest challenges faced by entrepreneurs is a shortage of infrastructure. And by infrastructure we mean everything from office and factory spaces to the registration and legal frameworks required to set up a business. These are reminders that townships were never imagined as breeding grounds for businesses; they were simply places from which people were expected to commute to and from work.
For township economies to blossom into fully-fledged economic drivers, the spatial organisation and the economic system will have to be turned on its head. And there are practical ways to do so. Imagine converting the mostly underused government service centres in townships into neural hubs core production spaces from which the youth can access services and run businesses. The Bandwidth Barn in Khayelitsha, Cape Town, a business incubator for young black entrepreneurs looking to break into the tech industry, is the country’s only township-based tech hub. We need more of these initiatives to support organisations and entrepreneurs creating products and services for township economies.
One of the most neglected areas of support for black businesses is social capital — those social networks that connect them to support and markets. eKasi Entrepreneurs exposes people to opportunities through it social networks. Likewise, the Township Business Investment Summit & Expo (the second of which took place in Soweto in August) offers a platform where township-based entrepreneurs can get access to information, resources, funding and procurement opportunities, and build their own networks. But eKasi’s capacity is limited and can only work with a small number of entrepreneurs. There are many more people out there bursting with ideas that could transform townships — and ultimately the country. With a helping hand entrepreneurs could achieve so much more.
Listen to people
A good rule of thumb, when talking about how to boost township entrepreneurship, is a bit of humility is not a bad thing. Often those going into townships to work with aspiring entrepreneurs make the mistake of presuming to know what those entrepreneurs need. Yet these entrepreneurs usually have a very good sense of what they need, and what their own shortcomings are. More opportunities must be created to let the voice of these entrepreneurs be heard.
Tell success stories
Those who doubt the potential of township-based entrepreneurs to transform these areas should consider the story of Nhlanhla Ndlovu, whose construction company, Hustlenomics, trains women and youth to replace backyard shacks with durable alternative building technology. The business earned the company first prize at the 2018 SAB Foundation Social Innovation and Disability Empowerment Awards.
Or take Tebogo Ramahlo, who has in quick time increased the revenues of his construction firm, Task Build SA, which works with craftsmen and artisans from townships, from five digits to eight, and believes the company is capable of competing in an open market.
Think of young Sizwe Nzima, who developed Iyeza Express, uses bicycles to drop off prescriptions at people’s homes.
These entrepreneurs are among the many who serve as beacons for what is possible. Their stories will inspire others to follow in their footsteps. The potential out there is significant, but if we don’t act soon, much of it will go to waste. A collaborative approach is needed to re-configure outmoded aspects of the economic system and bring about real social change.
Elvis M Sekhaolelo is founder and executive director of eKasi Entrepreneurs