The township or the ‘kasi’ is home to the majority of South Africans. Within the townships is a growing economy. This economy is estimated to contain 150 000 stores with at least 11,1 million regular customers. To better understand this economy, we need to understand ‘kasinomics’.
According to research from Trade Intelligence, the kasi economy is estimated to be worth around R197 billion in 2023. It’s not a surprise that the township economy is growing so rapidly.
With most people living in the townships, they have no choice but to create their own economy because the inner-city suburbs are far, and travelling is sometimes expensive.
As a small business owner, you will want to participate in the growing township economy and how your business can be part of it.
What Is the Township/Kasi Economy?
The township economy is mostly made up of small businesses as well as informal businesses. The majority of these businesses include spaza shops, hawkers, pavement sellers and street vendors. Outside of spaza shops which provide customers with groceries and other related products, the other businesses (hawkers, street vendors etc) typically sell one or many nice products.
Some of these informal businesses also provide services. In the township, you can find street mechanics, salons, shoe repairers and even funeral homes. And although these businesses are also available in the suburbs, having them in the township means the money continuously circulates within the township economy. This helps create more businesses, grow existing businesses and provide employment opportunities.
Challenges Within the Township Economy
Despite the booming economy, there are many challenges that face the people within the township. Some of the challenges that are within the township economy include:
Limited Access to Funding – There are many initiatives and agencies that are designed to provide funding to small businesses. However, in the township, the businesses are typically informal and unregistered, so they are not always considered for funding.
Limited Access to Markets – Township entrepreneurs and enterprises struggle to access markets outside the township. Due to the distance between the township and the suburbs, businesses cannot reach customers and sell their products or services in larger markets.
Lack of Proper Infrastructure – There aren’t many proper buildings or retail spaces which can accommodate the many businesses that exist in the township. Additionally, elements such as improper roads, lack of electricity and unreliable waste collection make it hard to maintain businesses.
Lack of Skills – Many entrepreneurs lack the proper skills to run businesses. This is made worse by the limited availability of skills development programmes and lack of access to education due to costs.
Additionally, factors such as high crime levels and inadequate regulations and laws, mean that entrepreneurs are reluctant to provide services and products in those areas.
Opportunities Within the Township Economy
Although numerous challenges are present in the townships, there is also an abundance of opportunities for entrepreneurs and small businesses. Some of the opportunities include:
Collective Spending Power – According to experts, the collective spending power in the township is worth billions. This presents a high potential for businesses to tap into the market and reap the benefits.
Untapped Sectors – As the landscape and demand for different services and products change, it opens up opportunities for different businesses. These days you find niche coffee shops, highly rated restaurants, breweries and manufacturers in the townships. This showcases that anyone with a viable business idea can be successful.
Technology-enabled Opportunities – Since the COVID-19 pandemic, a lot of township businesses have integrated technology to improve services and products. An example of this is the availability of delivery services that utilise e-commerce tech to provide people with groceries and food right at their doorstep.
It’s important that we recognise the growing opportunities within the township market. Any business or brand which is thinking ahead will want to take advantage of this billion-rand market that is growing every day.
Financing Opportunities for Township Entrepreneurs
It’s important that while explaining the opportunities present in the township market, we also outline how to get started and the need for funding. Proper funding can help entrepreneurs start businesses and help existing businesses grow.
Some of the financing opportunities for township entrepreneurs and businesses include:
Township and Rural Empowerment Programme (TREP)
This programme is a government initiative which seeks to support informal, micro and small enterprises. The focus is especially on businesses within township economies. The TREP is managed by the Small Enterprise Finance Agency (Sefa) and includes finance and business development opportunities.
The programme includes a one-stop-shop business support service, business incubation for entrepreneurs, financing opportunities and product development support.
The National Youth Development Agency (NYDA) Grant Programme
The NYDA grant programme seeks to provide youth-owned businesses with support, training, mentorship, education and funding. The programme focuses on businesses within rural and township areas.
The NYDA programme supports businesses in a range of sectors. Some of the businesses supported by this programme include street vendors, cleaning services, hair salons, car washes, plumbers and car mechanics amongst many others.
Rural, Township and Community Development Fund
This fund is part of the National Empowerment Fund (NEF). The NEF’s mandate is to provide social and economic upliftment to township and rural communities. It provides funding to rural entrepreneurs and facilitates skills transfer and involvement by community groups.
The fund focuses on businesses within the agro-processing and manufacturing, eco-tourism, forestry and fisheries, commercial property, aqua and marine, culture and non-farming activities based in rural areas.
These funding opportunities are run by the government and other government agencies. Of course, there are private funding opportunities available too. Companies like Takealot have also launched initiatives focused on empowering township entrepreneurs.
This just showcases that there is a growing focus on enhancing the existing township economy. By being part of it, you can start a business which grows quickly and leads to high sales and profits.
At the rate the township economy is growing, now is the right time to do some market research, find a viable business opportunity and create a business built to last for a long time.
