The bill on the economic development of the cantons changes the situation…


It is an irrefutable fact that, on the whole, present-day South African townships and informal settlements have not changed much from their pre-1994 configurations. ensure, for the majority, basic socio-economic rights such as housing, water, electricity, education and health.

What has not been achieved significantly, arguably, is the structural transformation of townships and informal settlements from their apartheid function, primarily as dormitories for work and catchment areas for the consumption of goods. and commercial services.

The tabling and passage by a majority of political parties of the Townships Economic Development Bill last week in the Gauteng Legislative Assembly is a game-changer to gradually change the economic geography of townships and informal settlements. Since these geographical spaces include settlements for the majority population, it is logical that legislation and public policies focus on their material development.

In fact, for the very survival of the construction of sustainable projects of national formation and social cohesion, it is logical that the emphasis is placed on townships and informal settlements to address the spatial and wealth inequalities mainly inherited from the social engineering of apartheid.

The bill should be welcomed and supported by all ideological interests, as it seeks to bring townships closer to mainstream economic opportunity, bridge disconnected divides between urban and peri-urban classes, and promote convergence between formal and informal economies.

It is an unprecedented and far-reaching legislative instrument to affirm township citizens and communities who have been deprived through human generations of strategic advantages to assert their basic human rights. These socio-economic rights are enshrined in the 1955 Freedom Charter based on the principles of promoting “equal rights and shared opportunities” and “reparation, redistribution, social, economic and spatial justice”.

Likewise, the revolutionary significance of this bill is illuminated by the 1996 Constitution which enjoins democratic government “to improve the quality of life of all citizens and to unleash the potential of each person”. It will soon be signed into law (Township Economic Development Act) by the Premier of Gauteng.

It is no exaggeration to say that these rights vested in government at national and local levels are non-negotiable to affirm the dignity of township and informal settlement dwellers who are excluded from meaningful participation in the formal and informal economies. As a result, their structural disadvantage prevents them from engaging in economic opportunities in high growth sectors and facilitating investments in value chains.

Sadly, it’s no surprise that the Global Entrepreneurial Monitor (GEM), in its 2021-22 report, ranked South Africa’s ‘entrepreneurial ecosystem’ as the sixth worst on a comparable global scale (respectfully ) in Sudan. The GEM rating ranks factors such as small and medium-sized enterprises (SMEs) access to finance, regulatory support, business education, taxes, research and development, and bureaucracy.

Therefore, the Township Economic Development Act is a mechanism for empowering SMEs through active business and supplier development. Specifically, it is a platform to enable or link SMEs to township supplier clusters that in some cases operate from revitalized township industrial areas. Providing opportunities and decisively addressing spatial inequalities, as envisioned by the implementation of this law, will achieve the following benefits:

  • This will change the way townships and informal settlements are regulated and governed into job-creating activities from their current configuration as mere unemployment pools for people of working age;
  • It provides for the establishment of better procurement rules and support for the government and its contractors to buy from large business groups based in the townships;
  • There must be a dedicated financing mechanism to establish an SME fund to provide wholesale blended finance to intermediaries that can reduce lending risks to township-based businesses;
  • It is an innovative act for the vast taxi economy to commercialize and transform these transport nodes into mini central business districts; and
  • It provides for the rapid release of commercial land and the establishment of township commercial areas and the upgrading of backyard real estate.

These policy and legislative interventions have the measurable potential to transform townships from working dormitories into active economic geographies that are vibrant centers of and for the creation of inclusive self-employment. As World Bank economist Sandeep Mahajan put it in a 2014 report focusing on Diepsloot’s positively untapped potential, this is an area that has “viable middle ground: a vibrant economic structure large-scale middle-income that hosts a range of businesses, both labor-intensive and small businesses”.

To a large extent, passing the Townships Economic Development Bill is not legislation and policy that belongs to the government. To be viable and gain ground that ultimately contributes to the city-region of Gauteng, to South Africa and to our African continent, role and responsibility is an existential necessity. Fortunately, in the many engagements that the Gauteng Department of Economic Development has undertaken with industry and private sector stakeholders, there is a willingness to work with government at all levels.

The urgency of implementing this law and permanently resourcing it, through public-private partnerships, is a way to transcend the historical wrongs that have deprived the black majority of activity and participation. lucrative economies. It is a game-changer to enable, without discrimination, citizens and communities to participate in the economy, formal and informal, so that the ideal of economic liberation envisioned in the Freedom Charter and the Constitution becomes real and tangible.

With this Bill, the Gauteng government led by Prime Minister David Makhura has moved from statements of intent as found in the Charter and Constitution, to statements of action and deed to affirm a better life for all South Africans, especially in the city-region of Gauteng, which is the irreplaceable economic engine of the country and the continent. DM

Parks Tau is the Gauteng MEC for economic development.


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