The COVID-19 pandemic and national lockdown have highlighted the central role that township and informal businesses play in the local economy as well as their resilience under the most difficult circumstances. Accounting for an estimated 3 million non-agricultural jobs (Stats SA), the informal sector could lead South Africa’s economic recovery beyond the crisis.
That’s according to Bianca Lima-Boekhoud, Group Head of Transformation at Blue Label Telecoms, who says that small, survivalist enterprises have shown extraordinary hardiness throughout the harshest levels of the national lockdown. “Even though they have had limited access to financial resources or other support from local authorities and government, small township businesses have shown amazing adaptability in these trying times,” she adds.
“Whether it’s township bakers allowing customers to order over social media or hawkers selling hand-made masks, these businesses have found ways to survive and even thrive. This informal economy – taxis, barbers, spazas, hawkers, fast food outlets and so much more – is testament to the inventiveness and entrepreneurial spirit in our nation. Helping to sustain this economy is key to South Africa’s future growth.”
Lima-Boekhoud says the township and informal economy plays an underappreciated role in supporting the formal economy, whether that’s by helping workers get to factories, shops and offices via the taxi network or by buying FMCG products to sell on the roadside. “The pandemic has put many township businesses and livelihoods under strain,” she says.
“As we move through COVID-19, supporting this economy should therefore be a priority for corporate BBBEE and social investment strategies. One of the questions we should be asking is how we can create better linkages with these businesses and help them to become part of the formal economy value chain. Strengthening informal and micro enterprises is the best lever we have for creating economic opportunity for people from disadvantaged communities.”
Lima-Boekhoud says the enterprise development pillar of BBBEE offers companies a tool and the incentive to work more closely with small and micro businesses in the townships. “We have seen that microbusinesses in townships can survive the most adverse circumstances,” she adds. “Now, the focus should be on helping them grow, so they can in turn create jobs and wealth for the community.”
One of the key ways larger companies can help township entrepreneurs is by incorporating them into their value chains, whether that means helping them to become product resellers or choosing them as vendors. This support, along with mentoring, training and financial support (such as favourable credit terms or discounts), can help an informal business to grow into a formal company.
Technology is also key, says Lima-Boekhoud. Many entrepreneurs in townships are eager to embrace instant messaging, social media, digital payments and even ecommerce, but high data costs and other barriers remain. “Investing in ICT is key to bridging this digital divide,” she adds. “To be part of the formal economy, a business also needs to be part of the digital economy.”
Lima-Boekhoud says: “Enterprise development is about equipping community entrepreneurs with the tools they need to grow a sustainable business. Each township business that thrives and grows brings us closer to the dream of an inclusive, transformed and growing economy that works for everyone in the country.”