Keynote address by MS Maropene Ramokgopa, Minister in the Presidency for Planning, Monitoring, and Evaluation, during the township economy in BRICS dialogue 2023
Taking the BRICS Conversation to the Townships’ Program Director, Ms Katlego Msomi,
Mr Bheki Twala, President of the Township Economic Commission of South Africa (TECSA),
Cllr. Colleen Makhubele, Speaker of the City of Johannesburg,
Mr Sfiso Moyo, National Chairperson of TECSA,
Dr Lance Levin, Managing Director of CTI Services,
Distinguished Representatives of BRICS Members States,
Members of the Diplomatic Corps, Entrepreneurs and residents of Soweto,
Ladies and Gentlemen.
I am pleased and excited to participate in this important dialogue today. We are less than ten (10) days away from the much anticipated 15th BRICS Summit under the Chairship of South Africa for 2023. BRICS represents the world’s leading emerging market economies, namely Brazil, Russia, India, China, and South Africa, bringing together some 3.2 billion people.
South Africa’s Chairship, as led by His Excellency President Cyril Matamela Ramaphosa, is convened under the overarching theme “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism.” As you are aware, the inaugural BRICS Summit was held in 2009, and South Africa was invited to join in 2010 and attended its first Summit in Sanya, China, in 2011.
Since becoming a member of BRICS, South Africa has chaired this important Forum in 2013 and 2018, and now in 2023. In this regard, BRICS provides a unique opportunity to develop mutually beneficial cooperation among its member states. BRICS remains an important Forum in the current global geo political arena. South Africa emphasizes concrete cooperation with BRICS that contributes to a better South Africa, a better Africa, and a better world.
Through our participation in BRICS, South Africa continues to utilize our membership to contribute to the sustainable growth and development of our country by addressing the triple challenges of inequality, poverty, and unemployment. This is done through increased intra-BRICS trade, investment, tourism, capacity building, and skills development, amongst others.
Today we bring the first of its kind. We are bringing BRICS to our townships and ultimately taking our townships to BRICS. Our nation’s townships are marred with historical inequalities and social challenges that have had far-reaching impacts on the livelihoods of our people and overall development. Our townships, and Soweto in particular, hold a significant place in our history, representing the enduring legacy of apartheid and segregation. Our townships were created to ensure the stark inequalities in access to basic services, education, and economic opportunities exist.
However, in recent decades our townships have evolved into vibrant centres of entrepreneurship, cultural preservation, resilience, and innovation. This has led to the emergence of the township economy, which demonstrates the power of harnessing local potential to drive national growth, inclusivity, and sustainable development.
Our townships have emerged as vessels of economic transformation. In recent years, the Township Economy has become a focal point for local economic development, fostering entrepreneurship and community empowerment. Small businesses have emerged across townships, ranging from hair salons to grocery stores, tourism establishments, and tech start-ups to arts and crafts workshops. These enterprises generate income and create employment opportunities for our people.
Despite the important contributions and potential of the township economy, it is still faced with persistent challenges.
Ladies and Gentlemen
The National Development Plan (NDP) clearly stipulates that Small, Medium, and Micro Enterprises (SMMEs) are expected to generate 90% of the eleven million jobs to be created.
This places SMMEs at the forefront of addressing poverty and unemployment in the country. The NDP aims for this sector to contribute 60%-80% to GDP growth and employ 90% of the country’s workforce by 2030.
In 2017, the Second National Planning Commission (NPC) commissioned a study investigating the challenges SMMEs face in townships and rural areas. The study, entitled “Research on the Limited Success of Entrepreneurial Activity by Locals in Townships and Rural Areas,” revealed several obstacles hindering entrepreneurial and productive activity in these areas.
These included a lack of awareness of the capabilities and values of township and rural entrepreneurs, inadequate government support, and a lack of collaboration among entrepreneurs who tend to be fiercely competitive.
The study recommended prioritizing financial and non-financial services in townships (including informal settlements) and rural areas. This would improve the effectiveness and reach of business development services across all local municipalities. Local economic development should be decentralized by devolving mandates and competencies to local municipalities.
This will enable them to deliver business development services in partnership with provincial and national institutions, which are mandated to maintain an aggregated institutional system.
Partnerships with existing institutions should be established to provide better infrastructure and technology development. An intervention targeting local municipalities should address bulk infrastructure, small business facilities, technology transfer, and other areas.
In addition, the research confirmed that access to finance remains a significant barrier for many aspiring entrepreneurs. Limited access to funding and lack of collateral hinder the growth potential of these businesses. Therefore, it is crucial for financial institutions and policymakers to devise innovative ways to provide financial support to budding township entrepreneurs.
Furthermore, infrastructure and basic services are still inadequate in many townships. Inconsistent electricity supply, inadequate sanitation, increasing crime rates, and poor road networks hamper the efficiency of businesses and deter potential investors.
Addressing these infrastructural and social deficiencies requires a collaborative effort involving both public and private stakeholders. Therefore, we only have seven years to change the trajectory on the township economies by accelerating existing mechanisms to strengthen local economic development as envisioned in the country’s Economic Reconstruction and Recovery Plan. Program Director, to ensure the sustained growth of the Township Economy, a multipronged approach is essential.
Firstly, education and skills development must be prioritized. Providing quality education and training equips township residents with the knowledge and skills necessary to build, expand and explore new economic sectors. By investing in a skilled workforce, we are in a better position to attract more investors to stimulate economic development. Secondly, partnerships between the government, the private sector, and civil society are critical.
In his 2022 State of the Nation Address (SONA) President Cyril Ramaphosa made the impetus for the strengthening of social compacts to address the country’s macroeconomic challenges including low economic growth, growing inflation, and unprecedented unemployment figures.
Through effective and targeted social compacts, we have the potential to remedy some of the challenges experienced by township entrepreneurs. Government policies should be tailored to encourage investment, while private sector entities can offer mentorship, funding, and market access.
Thirdly, we must leverage on our country’s enabling legislation to capacitate, support and accelerate township economies.
The preamble of the Township Economy Development Act of 2022 states; “South African policies for economic growth and development recognize that responding to challenging local economic conditions demand a focus on areas with economic problems and deprived populations that need targeted government assistance to encourage increased access to key services, social and economic opportunities and growth of new businesses.”
Therefore, the act aims to institutionalize, coordinate, and integrate interventions aimed at enabling the promotion, development, and operation of township economic activities.
For example, the act makes specific provisions for the Gauteng provincial government to spend 40% of its procurement budget on township-based enterprises and aims to transform townships into fully-fledged commercial zones. Although the Gauteng provincial government did the development of the act, the act sets progressive precedence across the country on how to nurture and facilitate the growth of the township economy through a developmental lens to promote sustainability.
To harness the full potential of the Township Economy, it is essential to establish policies that encourage and support small businesses. Currently, the Department of Small Business Development and the National Planning Commission are collaborating with The Presidency Red Tape team to develop a targeted agenda for regulatory SMME reform in South Africa aimed at improving the business-enabling environment. Some of the critical outputs of this team must be to ensure the country’s existing legislation encourage and support small businesses by promoting access to finance, education, and skills development for township entrepreneurs to overcome obstacles and seize opportunities.
Ladies and gentlemen
we must give practical meaning to thinking globally and acting locally. The BRICS relationship extends beyond the governments of the member countries. Bodies like the BRICS Business Council, BRICS Women’s Business Alliance, BRICS Think Tanks Council, and BRICS Civil Forum ensure that the opportunities of this association are explored across society.
The relationship seeks to promote people-to-people contact, including among youth formations. Among other things, this person to-person contact enhances travel and tourism between BRICS countries.
Therefore, townships within BRICS nations must also benefit from the opportunities of this association. The Township Economy is not confined to one individual nation. It is a collective endeavor.
Through innovative entrepreneurship, townships have become engines of economic vitality, contributing significantly to the nations’ GDPs and fostering job creation. BRICS member countries have the capacity to leverage the combined resources, experiences, and expertise to support each other in nurturing vibrant township economies. Joint ventures, investment partnerships, and knowledge-sharing initiatives can bring a transformative impact.
Collaboration among BRICS members to exchange best practices and sharing insights on how to nurture and sustain township economies will go a long way. These exchanges can encompass strategies for infrastructure development, technology adoption, and the creation of favorable business environments. By doing so, this can collectively uplift the millions of individuals who call townships their home. In this spirit, a Township Economic Development Forum within the BRICS framework could be something worth considering as a proposal for the summit to consider.
This platform would be a repository of best practices, case studies, and innovative policies, fostering cross-learning and cooperation among BRICS member countries. Moreover, by creating mechanisms to facilitate investments in township projects, this can accelerate the pace of development and upliftment.
In conclusion, one of the founding values of BRICS is the need to restructure the global political, economic, and financial architecture to be more equitable, balanced, and representative.
The Township Economy in South Africa has the potential to contribute to that cause. We must rewrite the narrative of our townships and create a transformative, more inclusive future for all. Let us seize this moment to foster innovation, promote entrepreneurship, and build a thriving Township Economy that stands as a catalyst for development.
In the words of the Chair of BRICS, President Cyril Matamela Ramphosa; “One of the priorities during our chair ship is to build a partnership between BRICS and Africa to unlock mutually beneficial opportunities for increased trade, investment, and infrastructure development.”
Our townships remain the gateway to the economic participation of millions of our people.
We must be deliberate about taking BRICS to townships and our townships to BRICS.
I thank you.