The Gauteng Township Economic Development Bill that is being discussed in Parliament is not without precedent. This edition of the iZindaba Zokudla Virtual Farmers’ Lab introduces the Heroooes Circles, an organisation that aims at many of the same objectives of the Gauteng Township Economic Development Bill.
The Bill is based on the classification of “townships” and this makes them eligible fort the kind of support envisaged in the Bill. However, this may “ghettoise” Townships and even make them less attractive for investment. We all know that all “suburbs” are in fact called “townships” in town planning-speak, and it is very unclear if this Bill would really focus on the poorest areas, as many old “suburbs” have declined and many “township” areas have bloomed.
This Bill is also a typical glimpse into policymaking, and we welcome the special attention it bestows on townships, but it is still necessary to improve conditions for all enterprises across South Africa. We will not win if we give township enterprises a special deal whilst all enterprises in South Africa still have trouble with registration, funding, and of course, the dominance of the big corporates over the South African economy. The Bill makes a lot of noise about “licensing” township businesses and we would like to see if this is any different than the normal requirements of compliance. Once again, we need emerging and current enterprises to hold their own in an open-market economy and we would like to see how these licenses fit with current compliance standards and requirements.
The Bill envisages a funding facility and we are expecting loans and grants to businesses that will be “softer” than that offered in general by commercial banks. We would like to see such loans and grants leading up to improved creditworthiness of emerging and current businesses, and we are unclear if this will be achieved if the state loan and grant conditions are too “soft” compared to commercial banks. We need to enable township enterprises to hold their own in an open-market economy and we would like to see this achieved through the Bill.
The entry of new township enterprises to the economy will necessarily take place in a broader context, and in this sense the Bill does not elaborate on nor identify the competitive advantages a township business would have if it adopts sustainable, circular and also 4IR technology driven enterprise development strategies. Townships need to start “producing” value, and engagement in linear value chains may exploit township businesses, particularly if the value chain is heavy with large corporations who have concentrated power in the market. Circular and resource regenerative systems, particularly for food enterprises, from farms to processors, hold certain advantages for emerging enterprises, particularly if high-value products are produced, or if agro-ecological systems are developed. These imply a new circular approach where the ecosystem of enterprises and stakeholders around the enterprise are important, more so than linear suppliers and markets. We need township enterprises to be future-proof, and this needs to be given attention in the Bill.
However, what is interesting is how people respond to this Bill. This Bill has catalysed and crystalised responses from the ground up, and on Friday the 27th we will be listening to Heroooes Circles and their ideas on how to create economic wealth in the Townships.
Mr Mphuti Mphuti introduced the Heroooes circles to us. Heroooes Circles has a number of divisions and together they constitutes an approximate “business ecosystem” that wants to crown in spending in the township.
Ms Kefilwe Ndaba was our second guest and she heads the Heroooes circle Construction Division.
Their ideas are similar to the City of Johannesburg’s “Umastandi” plan, that aims to formalise backyard shacks.
The basic idea has emerged elsewhere, but it is worthwhile repeating it here: Many backyards in the townships are crowded with shacks that the owner rents out for income. Heroooes aims at formalising these backyard shacks and rebuilding these shacks to an apartment or “flat” specification. This is financed by the rental of the shack-dwellers and the rent is used for a particular period of time to finance the construction of these shacks. Once the construction is paid off, the developer will leave and the owner will take full ownership of this new infrastructure.
The idea behind this is to conserve capital in the township. This will also create new infrastructure or physical capital that is now available to the owner should they seek further loans or mortgages on the property. It is this local circulation of capital that is distinctive in this approach and we have seen this elsewhere in the world. This “Cleveland” model posits that the cause of poverty and unemployment is due to the lack of capital availability in poorer areas and suggests that the densification and deepening of trade and economic relationships amongst local actors is the key to the development of such areas. Money needs to circle at least 3 times and preferably up to 10 times amongst local actors and stakeholders for any real effects to be felt. This is the basic assumption behind Heroooes and we will watch this space with some interest going forward.
Heroooes will train all actors and stakeholders in this model of development that they propose. They do not need title deeps to be submitted and claim to be cheaper than the City of Johannesburg’s “Umastandi” programme. They aim to finance all of this on the social grants and other forms of capital available. They aim to place responsibility for local development squarely on local actors and stakeholders and want to impress on everyone to “trade locally and with ourselves” in order to re-develop the Townships.
What we see here is a recognition of the power of self-reliance and the benefits of building local business ecosystems. It is also interesting to note, that this programme depends upon the recognition of property rights of township dwellers. It shows us how to understand the “mystery of capital” and unlock the benefits of ownership for our people. It is by the use and transformation of property rights that we can create a different economic future for us all.
Please join us on Friday the 27th of August at 13h00 until 14h15 for this PRE-RECORDED Virtual Farmers’ Lab. Please click the link: https://www.facebook.com/events/261804539095411