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Gauteng Township Economic Development Bill 2020 Written comments

Gauteng Township Economic Development Bill 2020

Outlined below, hereby the written comments and summary of the input from The South African Institute of Black Property Practitioners (SAIBPP) on the Gauteng Township Economic Development Bill, 2020.

 

ABOUT SAIBPP

The South African Institute of Black Property Practitioners (SAIBPP) is a South African-based non-profit professional association formed in 1996 for the purpose of advocating for and facilitating transformation within the property sector and built environment. SAIBPPs membership includes +2500 individual practitioners, professionals, and companies as well as 1600 students who are located at various university-based chapters.

SAIBPP is a well-established entity that has been instrumental in shaping key national policy pertaining to B-BBEE legislation through the property charter, driving black-owned SMME development, and youth participation in the property sector and continues to lead the charge in this regard.

 

COMMENTS AND REPRESENTATIONS FROM SAIBPP

The existing reality of townships in Gauteng and in general

  1. Still today, many urban townships are as hubs for migration and economic dynamism. But at the same time, they remain economically and socially disconnected from major urban centres and remain as poverty traps and concentrations of inequality;
  2. Post-apartheid planning has not managed to institute the much-envisaged turnaround of townships. Planning and delivery of new settlements, mainly through the Reconstruction and Development Programme (RDP) and social housing programmes, located on the most readily available and cheapest land, has reinforced the spatial dislocation of the poor, pushing them further from economic centres and job opportunities. Connectivity in and out of townships is often limited to a handful of routes, a deliberate product of apartheid spatial engineering to contain the movement of people;
  3. Economic activities in townships tend to be informal, ad-hoc, and lack strategic integration. A majority of township economic activities have not advanced past micro-enterprise level, with a handful of activities dominating the township economy, including spaza shops, taverns and personal services. Within some townships, particularly in the large cities, there are positive trends of burgeoning formal economic activities across a variety of sectors. That trend however is prevalent to a handful of larger cities.

Gauteng Township Economic Development Bill 2020

  1. Schedule 1 (Part A: Economic Activities Reserved for South African Citizens And Persons With Permanent Residency Status In The Republic & Part B: Designated Township Areas) have been omitted from the Bill. Inadvertently?
  2. The bill is weak in articulating the economic activity areas, segmentation of trading categories or transaction sectors in which township-based businesses are conducted, accordingly it fails to recognize that township business is not only about retail and shopping centers; consequently, neglecting the economic drivers and the key value chain participation.
  3. The fundamental drivers of entrepreneurship and enterprises irrespective of their location is access to trading assets (property), enforcement of the local laws (rule of law), access to finance (money) and access to market (economic opportunities) the absence of any of these is a design for failure of any entrepreneurial machinations. This bill makes very weak attempt, if any, to address any of these shortcomings, goes a long way to mask the troubles of local business as uniquely impoverished by the impact of non-citizen activities.
  4. Regrettably there is absence in the bill of any mention of investment in basic infrastructure or creating conditions to harness the trading ecosystem around the existing local value chains and the development of entrepreneurs within the target areas.
  5. Provincial government has a vast property portfolio that could be harnessed to create opportunities and to ease cost of doing business in the province by partnering with professionals in the field of construction, real estate and business/ enterprise development to model local economic networks, and granting leases to emerging landlords who can build development portfolios and enterprising commercial centres on the back on long blue chip leaseholds and construction projects, without relying on retail consumption as cornerstone of township economies.
  6. The bill is silent on regulatory tools such as land use schemes which criminalize business or non-residential uses within township residential areas. One of the inherent flaws of segregated townships is the lack of diversification of land uses. Segregation of uses is what coerces residents of townships to commute out of township areas to areas of employment. Townships were established as single-use residential areas with no intention to develop them into anything other than dormitory towns. This was coupled by restricted tenure options which bred the tenure security challenges faced today. The attempts by the community to actuate economic activity have been hindered by compliance and regulatory requirements that continue to relegate township businesses to illegality as they are often onerous and make it difficult for small enterprises in townships to understand, apply and comply with. Chapter 7(28) of the bill does not decisively deal with the land use hinderances to creating economy. SAIBPP argues for more concise township economic development approach that recognizes the diversity of townships and addresses key barriers to development including land and connectivity.
  7. Local municipalities and provincial government are mandated with stimulating economic development by engaging and soliciting support from all relevant stakeholders to find the most viable local solutions for local prosperity. This mandate is oftentimes challenged by competing national priority programs, limited coordination between national and local governments, and dynamics of a complicated political economy that have often yielded sub-optimal development results. This, amongst other things, has contributed to a mistrust between township communities and governments and has limited the role of the government in creating inclusive environments, a key pillar to township development. This perception of mistrust and lack of transparency is putting a strain on government and hindering their mandate to stimulate and sustain an inclusion approach for local economic development.
  8. Under apartheid, townships were mainly residential enclaves, and since democracy there were no strategic investments in neighborhood improvement, improving open spaces and other aspects of livability in townships that have proven to have major impacts on improving economic and recreational activities. There has been some consideration of open spaces such as buffer zones and open plots of land strewn throughout the townships, but the lack of maintenance of these and lagging municipal service provision, for instance in waste management, lead to the misuse of these spaces.
  9. The public transport system (busses and trains) in townships is relatively good, especially in linking the townships to major economic nodes, however these rarely cater for inter-township movement. This gap is often filled by mini-bus taxis which are very responsive in meeting people’s movement needs but pose different risks. Public infrastructure, in particular transport networks are critical to create economic interactions, facilitates access to locational networks and link businesses to markets. Without properly defined trade routes, the township entrepreneurs are reduced to highly valuable importers of goods and services as opposed to value adding producers of products.
  10. There is a need to develop credible data, information, and knowledge on townships through researching townships. Government could play a more explicit role in engaging with citizens and activist groups through effective participatory planning in order to better harness citizen energies to understanding challenges and finding solutions. At the same time, there are several local institutions and initiatives that have proven capable of providing localized urban management solutions, and these must be supported and scaled wherever feasible.

Comment: The Gauteng Township Economic Development Bill must be explicit in how it aims to supports these organized agents within the township space. In many other context, governments are able to co-finance/co-support organizations in townships and informal spaces. E.g. if you have savings scheme/stockvel for economic development purposes, they are often met half away (counter-funded) by government (financial or otherwise) if there is a common public good to be attained.

Chapter 2

  1. What is the purpose of designating an area a “township” for the purposes of this act? In the legal sense, townships are defined differently in terms of Land use schemes. In fact, most schemes and legislation seek to ensure that it standardizes definitions and land use practices so that there is uniformity in the manner that one deals with land uses in affluent areas vs “township” areas. The concern is that this bill creates a set of rules for less developed and underserviced communities, and another for affluent suburbs.
  2. Accordingly it is recommended that using a standard based on minimum income levels, availability and quality of infrastructure and poverty measures as a relative standard set based on average standard of living would be the best measure since it recognizes the township areas as part of broader economic intergration, and this measure also an indicator for socio-economic progress,

Chapter 3

  1. Business activities that are “designated in column 3 of Table A of Schedule 2, in a designated township, exclusively and solely reserved for ownership and operation by a citizen of, or a person who has permanent residency status in, the Republic” does not appear to be consistent with constitutionally listed activities and land uses that a municipal land use scheme currently support.
  2. Similarly, in the event of a variance, this bill is silent which instrument will take precedent. SPLUMA advocates for devolution of planning to municipalities taking charge of their planning activities. This proposed legislation suggest taking precedent over SPLUMA, this undermine planning at local level such as that previously experienced when provincial Townships Boards (through the Development Facilitation Act- DFA) were granted authority to make decisions that affected local municipalities often to the detriment and disapproval of the local municipality hence SPLUMA came into effect. It thus does not appear and it is evident from the proposed bill that there has very little if any the engagement with local municipality, if they were, this bill is silent on how these issues will be addressed, also in Chapter 7 (Sec 28).

Chapter 4

  1. The establishment of a Gauteng Township Economic Development Fund is a welcome and novel idea. However, experience from previous similar funds at national and provincial levels have proven inadequate and failures. Because the criterion for accessing those funds was either unclear or stringent in line with normal commercial funding principles.
  2. This bill has no indication of the qualifying criteria for accessing the proposed Gauteng Township Economic Development Fund. The bill only just states that it should be a “township-based enterprise”, whatever that means. As a consequence, this bill is designing the fund as a non-starter
  3. It is our contention that the Fund should not replicate existing small business and micro enterprise funding models, especially those that are existing and are granted through the Gauteng and other provincial governments, national government and other state institutions. Black businesses, start-ups, small businesses and informal traders currently find it impossible to access these funds, establishing another fund on the same principles would not change anything, however it will merely exist to add to the frustrations of the Black entrepreneurs and black-owned business.
  4. Majority of these government funding institutions spend more than 80% of their budget not on physical funding of deserving businesses but on training and ‘enterprise development ‘support. Research indicates that the consumption of these government grants and funding in the majority benefits training providers and so-called ED providers, resulting in less than 5% of real money going towards supporting target businesses.
  5. It is thus recommended that the fund that is to be established should modeled along the lines of a development venture capital fund; which achieves the following key purposes, to;
    • Exclusively provide enterprise development capital to enterprises and entrepreneurs in underserved communities using venture capital funding model;
    • Support start-ups, micro-enterprises and emerging entrepreneurs in the target areas with real money using new venture capital funding methods;
    • Provide policy research and development support to small businesses, start-ups, micro-enterprises, and emerging entrepreneurs in the target communities.

 

With regard this submission, SAIBPP will require acknowledgement of receipt, update on progress and any requests, queries and representations regarding these comments correspondence should be directed to vuyiswa@saibpp.co.za or info@saibpp.co.za

 

Mr Lerotholi Tholo Makhaola

 

SAIBPP President

Useful links

Gauteng Township Economic Development Bill 2020

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