The Deputy Minister of Trade, Industry and Competition, Ms Nomalungelo Gina has assured Members of Parliament that the department is in the process of rolling out interventions that will see the rural and township economy occupying its rightful place in the mainstream economy of South Africa and contributing meaningfully in creating jobs, alleviating poverty and growing the economy. Gina was briefing the National Council of Provinces (NCOP) on measures to unlock and grow the full potential of the township economy.
Gina said townships were at the centre of the triple crisis that South Africa is experiencing; namely high unemployment, persistent poverty, and record-high levels of inequality.
“The reality of the South African situation is that unemployment is exceptionally high among the youth, women, Blacks, those with lower levels of education, and those who reside in historically excluded areas such as townships. Poverty levels are relatively high in townships, estimated at 55.5% in 2022. This is promoting the economic divide between suburbs and cities and historically excluded areas such as townships, resulting in high Gini co-efficiency of 63% for SA – making it the most unequal society in the world,” said Gina.
She added that the little existing manufacturing that is taking place in the townships was characterised by short value chains and hardly any integration with external markets – with the majority of products sold by township enterprises exclusively produced by large companies outside township.
“The Reimagined Industrial Strategy (RIS) presents a multi-pronged approach to industrial development and highlights revitalisation of townships as one of the five engines of growth with a particular objective of achieving economic inclusion,” she said.
Gina identified several challenges that stifle the development of the township economy. These include the absence of coherent policy and strategic alignment to address the township and rural economy amongst the three spheres of government; lack of supporting economic or industrial infrastructure; lack of facilities for logistics and distribution supplies; and poor linkages to national value chains.
“To respond to these challenges, the dtic has developed a coherent Township and Rural Economy Development Framework to support township enterprise hubs, zones, and clusters in partnership with provinces, development finance institutions and private sector. We are in the process of identifying and quantifying economic opportunities that drive localisation and import substitution. We would like to provide critical infrastructure support, primarily for manufacturing and value add opportunities and investments in state-owned industrial parks that are in townships and rural based,” explained Gina.
She added that the dtic has commissioned a study on township mapping opportunities to profile the township and rural economy under economic and demographic variables, as well as other key social characteristics. The study will also identify current support mechanisms for the township and rural economy, including funding or incentive packages by both government and the private sector, sector support systems, and governance support structures.
“The study, which commenced in September this year and will run until March 2023, will include the mapping and identification of opportunities in 20 townships looking into various aspects such as the economic linkages with other townships and the broader economy, extent of industrialisation, critical challenges affecting economic development, funding and financial instruments,” said Gina.
Gina told MPs that work on five metro townships for the development of business case studies has started. These are eThekwini for distribution and logistics hubs, Ekurhuleni for repurpose factories in the Labore Industrial Park for township clusters, City of Joburg for revitalisation of industrial parks in Soweto, Saldanha Bay for clustering of SMMEs for opportunities using public local, private industry opportunities, City of Tshwane for repurposing or developing a township manufacturing hub at the Babelegi Industrial Park and the Buffalo Municipality for creating a township enterprise hub at the Dimbaza Industrial Park.
“We are also engaging with the National Business Initiative (NBI) with the aim of collaborating with the private business association to promote investment into the township-based industrial parks. As the dtic, we also seek to leverage what our agencies, particularly the Industrial Development Corporation and the National Empowerment Fund are currently having as packages of incentives towards township development in a more streamlined manner to support the work that the department is starting,” concluded Gina.
Bongani Lukhele – Director: Media Relations
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Issued by: The Department of Trade, Industry and Competition (the dtic)
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