Township Businesses in South Africa

Updated on 20 June 2022

As South Africa recovers from the COVID-19 pandemic, the informal township economy will play a critical role in the country’s economic recovery and job creation.

South Africa’s townships are well-known for their entrepreneurial spirit despite the many hurdles township entrepreneurs face. These range from a lack of resources and funding required to start and expand their enterprises, as well as limited access to infrastructure, expertise and support.

For a deeper look at what’s needed to fulfil the potential of the township economy, we look at three challenges that informal businesses face.

Infrastructure

Inadequate infrastructure poses a significant challenge that restricts township businesses’ ability to produce and deliver goods and services. Spaces such as business hubs, office spaces and other essential facilities that are necessary for the full operation of a business are often in short supply. Similarly, access to IT infrastructure and basic services such as electricity or transport continue to be difficult for township-based entrepreneurs to access.

Internet access has been especially relevant since COVID-19. Many townships are still largely excluded from fibre networks and business owners have to rely on mobile data as the only option to stay connected. As a result, small businesses miss out on the benefits of technology such as building an online presence, increased efficiency and cost savings.

Support Networks

The role of business incubators, hubs and support networks in building successful township enterprises cannot be overstated. Incubators and hubs are where entrepreneurs go for support and to access resources they need, which typically include training, mentorship, workspaces and business development, as well as help sourcing funding from VCs, angel investors and the government.

There are also opportunities for entrepreneurs to join support networks like the Township Entrepreneurs Alliance (TEA) which has impacted entrepreneurs in townships in Gauteng as well as parts of Durban. These offer business owners the opportunity to meet like-minded entrepreneurs or meet potential customers or investors.

Skills Development

While many entrepreneurs have industry-specific skills required to launch their business, many will throughout their journey have to develop entrepreneurial skills such as sales and marketing, financial management, customer service, and project management, to build a successful business.

Entrepreneurs should also not forget to develop their ‘soft skills’ which are equally important in building a business. In the article ‘4 ‘New School’ Entrepreneurial Skills’ Viresh Harduth, Vice President: New Customer Acquisition (Small & Medium Businesses) for Sage Africa & Middle East, shares the following list of skills that are critical for small business owners.