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Why the township economy matters

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Mthokozisi Tshuma

23 August 2023

Econ 3x3


uKESA Librarian 2


South Africa

In this blog, the author discusses the prevailing situation in South Africa, a country known for its substantial inequality and economic disparities. The author highlights how the economy lacks inclusivity for all economic participants, leading to significant income gaps. A key characteristic is the high concentration of economic activity within various sectors, coupled with notable barriers that deter micro, small, and medium enterprises (MSMEs) from entering the market.

Over time, the role of the manufacturing sector in driving economic expansion has declined significantly, dropping from 22.3% in 1994 to 12% in 2022. Meanwhile, the services sector has experienced growth, contributing more to the GDP—rising from 57.3% in 1994 to 62.6% in 2022. Despite these economic shifts, the current growth pattern is inadequate in terms of generating adequate employment opportunities. The country faces a pressing need to address both its high unemployment rate, which stood at 32.6% in the second quarter of 2023, and the prevalent income poverty. Acknowledging the significance of the private sector, which employs roughly 75% of the working-age population and has been instrumental in infrastructure and research and development investments, becomes crucial. To address these challenges, both policymakers and the private sector must prioritise the revitalisation of township economies. This strategic focus can provide a conducive environment for entrepreneurship and the growth of small businesses. By working collaboratively, they can tap into untapped economic potential, leading to job creation, reduced inequality, and the empowerment of local communities.


Abstract based directly on original source.


Website References

Built environment




Economic growth




Human settlements



Local community


Poverty & inequality

Private sector

Public sector


South Africa


Township economies

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