Township Entrepreneurship – on Foreign-owned Enterprises and the Role of Corporates

Updated on 15 October 2018

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This article forms part of SME South Africa’s Township Entrepreneurship series. In the month of October we will explore the complexities, challenges and success stories of the township entrepreneurship ecosystem.

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This is part two of our conversation with Elvis Sekhaolelo (see part 1 here). He is the founder eKasi Entrepreneurs, a platform which works as a catalyst for youth entrepreneurship in townships. This week the focus is on what’s needed to increase participation of local communities in the economic activities taking place in townships.

Sekhaolelo is the founder of one of the biggest township business-focused events in the country, the Township Business Investment Summit & Expo, which focused on providing much-needed access to information, resources, funding and procurement opportunities to township entrepreneurs.

Today we are highlighting two contentious issues, the first is competition from foreign-owned businesses, second is the role of corporates and big brands in supporting and stimulating the township economy.

We fight for local businesses to be included economically in business developments happening on their doorstep

The state of township entrepreneurship

Township-based entrepreneurs continue to struggle against a lack of skills development, access to market and limited financial inclusion.

This is despite government’s efforts to build and strengthen township economies as envisioned in the government’s Township Economy Revitalisation Strategy which seeks to promote investment in the township economy, promote township manufacturing and productive activities and entrepreneurial development, as well as promoting access to markets.

Foreign-owned enterprises

The subject of foreign-owned businesses continues to be a thorny one for many local business owners and township communities. Research released in 2014 by  Cape Town based non-profit organisation, the Sustainable Livelihoods Foundation (SLF) shows that there is growing concern from local business owners that much of the economic value now generated within the spaza shop market, including wages, is exported from the township economy to home countries of these foreign entrepreneurs and workers. According to Unisa’s Bureau of Market Research the spaza shop market is a R7 billion sector.

Economic exclusion is one of the factors driving conflict between foreign-owned businesses and communities, says Sekhaolelo.

“The danger of not including township-based businesses and the community is that it can lead to riots and looting as we have seen a number of times (which gives way to criminals elements) which was not the right manner of handling this situation, but that’s what happens when the community is not included in the economic activities,” says Sekhaolelo.

This is why his organisation exists, says Sekhaolelo.

“Our consortium creates an environment where Soweto businesses can network, share opportunities and work together and secondly, we fight for local businesses to be included economically in business developments happening on their doorstep.

“We have started engaging a few of these companies that have a footprint in the communities to come to the table as far as supporting local business and investing in the communities.”

The role of corporates

Also in question is the responsibility of large corporates operating in townships – in particular their role in helping to advance businesses within the township communities in which they operate.

“The corporates are not doing much in the community given that they have a large footprint in townships,” says Sekhaolelo.

The ESD pillar of the B-BBEE scorecard requires that the government and corporates offer black entrepreneurs the opportunity to find support and training to further develop their small businesses, as well as procurement opportunities.

According to Sekhaolelo this is a key focus of the recently launched Soweto Chamber of Supply Chain (SCSC) organisation. “What we are doing as SCSC is that we develop and connect all suppliers around Soweto with businesses and to ensure we train them on quality service.”

Sekhaolelo says social corporate investments cannot be where corporate involvement ends.

“These companies need to invest back where they making money. We no longer have sports activities or youth clubs that we used to have which were made possible by the involvement of corporates in community programs.

“They also have a role to play as far as supporting township business. For examples, where do they hold their conferences? They don’t hold them in township conference hotels such as the Soweto hotel, to support local businesses.”

There is also a need for greater consultation with township entrepreneurs to find out what their needs are, says Sekhaolelo.

“The government also has a role to play to as far as proper consultation with the community to find out what are the needs township business and communities are [in order] to be able co-create programmes with the community for greater results.”

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