Prospects for Revitalising Township Economies

Townships are an evident manifestation of spatial and economic inequality in South Africa. Located on the fringes of the traditional urban economies, townships are characterised by underdevelopment and bustle of informal business activities. The concentration of informal business activities tends to aggravate underdevelopment because of their inherent low productivity and inability to link with formal markets. Informal activities are however not homogenous. In this study of the non-retail component of the Tembisa informal sector, the authors make a distinction between the ‘stagnant, less productive’ Traditional Informal Enterprises (TIEs) and the ‘more dynamic and productive’ Modernising Informal Enterprises (MIEs). The authors develop a framework for classifying informal enterprises in terms of this distinction, using thirteen enterprise characteristics.

On the basis of a survey using a structured questionnaire, the authors then apply this framework to the identified enterprises and assess whether certain sections of Tembisa have sufficient conditions for the existence or emergence of MIEs that could form the basis for stimulating the local economy. Their results indicate that (non-retail) informal enterprises in Tembisa are mostly ‘traditional’ in nature. Townships cannot achieve internally-driven local economic revitalisation without the presence of, or at least sufficient conditions to support, emergent MIEs. Strategies to support informal enterprises or revitalise the township economy must be differentiated to suit the needs of, and constraints faced by, the different categories of informal enterprises, i.e. those that are more traditional and those that are more modernising.

Abstract based directly on the original source