Ecosystem Snapshot

South Africa Township Economy

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Currently there are over 500 townships in the country, whose combined land mass surpasses that of Johannesburg and Durban combined1 and which are home to an estimated 40% of South Africa’s urban population.2 Much like the rest of the country, townships are plagued with high unemployment rates.3 Most township businesses are necessity-based and unable to grow beyond a store front or small-scale operation.4 Additionally, these businesses tend to operate informally, with low financial and employment returns.5 The World Bank estimates that only 15% of township enterprises are formally registered, compared with 30% of similar enterprises in urban areas6, and they generally do not provide goods or services that reach larger markets or create quality jobs.7

The scope of this report is limited to the townships, peri-urban, and rural areas of the Eastern Cape, Gauteng, and Western Cape Provinces. Some of the country’s largest cities, including Cape Town, Pretoria, and Johannesburg, are in these Provinces, and they are an important economic focus for the country. The Gauteng and Western Cape Provinces contribute nearly half of the country’s GDP and one third of the country’s population. The Eastern Cape Province sits between the highly economically active Western Cape and KwaZulu-Natal Provinces; and while it currently relies heavily on the automotive sector, there is significant potential for growth in other industries such as agriculture and agro-processing, manufacturing, and green industries.8

While more is understood about the small and growing businesses (SGBs) in metropolitan areas, less is known about the entrepreneurial ecosystems in the townships and how to support the primarily micro, necessity-based businesses that operate there. This report focuses on identifying the key actors implementing programmes to support entrepreneurs and small businesses operating in townships in the Eastern Cape, Gauteng, and Western Cape Provinces, the challenges the entrepreneurial support providers face, and the opportunities to strengthen this ecosystem.

Year of first activities in South Africa Township Economy

A Deeper Dive on Gender in Township Economies

The Gender Deep Dive: Building Women's Businesses in South African Township Economies: A View On Intersectional Approaches to Entrepreneurial Support takes a closer look specifically at the support provided to women entrepreneurs in township economies. It is based on desktop research, data from the Ecosystem Snapshot, and in-depth interviews with entrepreneurial support organisations. We asked them about their reasons for focusing on women entrepreneurs, their approaches used in doing so, and which approaches have worked particularly well. The report describes how township-based women entrepreneurs face a double set of intersecting and mutually reinforcing challenges - those inherent in being township-based entrepreneurs; those inherent in being women entrepreneurs; and those specific to the experience of township-based women entrepreneurs. The report provides a loose framework of ESO approaches used in supporting women entrepreneurs, categorised according to which set of challenges they take into account. It concludes with key recommendations for the ecosystem, directed at ESOs, donors, and researchers respectively. 

To read more, click here.

2 Key Takeaways about South Africa Township Economy

Top 3 Sectors

  1. Agriculture & Food
  2. Artisanal
  3. Information & communication technology (including gaming)

Key Challenge in the Sector

43% say Access to finance is the greatest challenge.

Footnotes

[1] Schwabe, C.Township megatrends – South Africa’s Township Potential Atlas. AfricaScope. 7 October 2020.

[2] Pernegger, L. and Godehart, S. (2007). Townships in the South African Geographic Landscape – Physical and Social Legacies and Challenges. Training for Township Renewal Initiative.

[3] Naidoo, P. South Africa’s unemployment rate is now highest in the world. Al Jazeera. 24 August 2021.

[4] Scheba, A. and Turok, I. N. (2020). Strengthening Township Economies in South Africa: the Case for Better Regulation and Policy Innovation. Urban Forum

[5] Cities Support Programme. Township Economies Series #1.

[6] Mahajan,S. (2014). Economics of South African Townships: Special Focus on Diepsloot. World Bank Group.

[7] Scheba, A. and Turok, I. N. (2020). Strengthening Township Economies in South Africa: the Case for Better Regulation and Policy Innovation. Urban Forum.

[8] Eastern Cape Provincial Website. Accessed 15 October 2021.

 

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