Over the past Easter weekend, I was invited to speak with my colleague, Honorable Member of the WC Provincial Legislature Nomi Khondlo at a packed Business Breakfast hosted in a Nyanga church by Pastors Nhlanhla and Xoliswa Nkala. It was an honour and privilege to share a platform with successful entrepreneurs like Thandi Matoti Mvalo, Nomakhosazana Limani and Akona Mbadamana who shared their inspirational stories of resilience, courage and perseverance. Access to finance, access to markets and building the bridge between the formal and informal economy especial revitalization of Township Economy was the recurring theme.

This got me thinking about the great unequal economic landscape of the Western Cape especially in Cape Town and the growing disparities between formal and informal economies, they haves and the have nots… Somethings got it give.

The Western Cape economy is diverse, with key sectors including agriculture, financial, manufacturing, film, tourism, and services. The province is known for its wine and fruit production, as well as its vibrant tourism industry. Sadly the Economic Apartheid Spatial patterns have not change with economic ownership concentrated still in the hands of a few. The current economic structure is unsustainable and requires urgent intervention.

The informal sector plays a significant role in the Western Cape economy, providing employment opportunities and income for many residents. The informal sector comprises a variety of businesses and activities, such as street vendors, small retailers, artisans, and service providers, that typically operate outside the formal regulatory framework.

Here are some aspects of the informal sector in the Western Cape:

• Employment: The informal sector  provides more than 10% of total jobs and is an important source of employment, particularly for those who might have difficulty finding jobs in the formal sector due to lack of skills, education, or experience. Many people rely on the informal sector as their primary or secondary source of income.
• Contribution to the economy: While it is difficult to accurately measure the size and economic impact of the informal sector, it is generally believed to make a significant contribution to the overall economy through job creation, income generation, and consumption.
• Challenges: Informal businesses often face numerous challenges, such as limited access to finance, inadequate infrastructure, lack of training and skills development, and vulnerability to economic shocks. Additionally, they may be subject to harassment or exploitation due to their lack of formal recognition or protection.
• Policy and support: The Western Cape government and the City of Cape Town have recognized the importance of the informal sector and have implemented various policies and initiatives to support its growth and development. These include providing business support, training, and infrastructure improvements, as well as promoting the integration of informal businesses into the formal economy. Sadly it has limited impact and requires focused effort, resources and attention.

Having reviewed both the economic plans of Western Cape and Gauteng, I believe that inclusive and shared economic growth can be achieved by applying the potential of Township, Local, and Circular Economic Development principles in fostering economic opportunities in the region, we will address unemployment, income inequality, and social exclusion.

Herewith some of suggestions that require political will, collaboration, partnership and resource and community mobilisation.

Capacity Building

1. Township-focused vocational training centres

a. Partnership models with local educational institutions

b. Entrepreneurial Curriculum development and course offerings

c. Targeted skills training in high-potential sectors, such as agri-processing, renewable energy, and tourism

2. Mentorship programs

a. Identification of experienced entrepreneurs as mentors

b. Structure and duration of mentorship engagements

c. Networking events and knowledge-sharing workshops to foster peer learning and collaboration

Access to Finance

1. Our banks have failed us in providing affordable finance and we need alternative Western Cape microfinance institutions

a. Models for community-based and cooperative financial institutions

b. Credit programs tailored to informal businesses, including microloans, group loans, and asset financing

c. Capacity building for microfinance institutions in areas such as risk management, financial management, and client outreach

2. Western Cape investment fund

a. Structure and governance of the investment fund, including the roles of the government and private sector

b. Investment criteria and portfolio management, focusing on high-potential informal businesses in growth sectors

c. Monitoring and evaluation of the fund's performance and impact

C. Infrastructure Improvement

1. Township infrastructure upgrades

a. Assessment of existing infrastructure gaps and prioritization of projects

b. Strategies for improving transportation, sanitation, and water supply systems in townships

c. Development of marketplaces and shared workspaces for informal businesses, including design, construction, and management

2. Business hubs in strategic locations

a. Selection of locations and partnerships with local authorities

b. Provision of shared resources and services, such as internet access, meeting rooms, and business development support

c. Promotion of collaboration between formal and informal businesses within the hubs

The Gauteng Government has recently adopted the Township Economic Development Act which aims to stimulate economic growth, create employment, reduce poverty and transform townships into thriving, inclusive, and sustainable communities, contributing to the overall growth and prosperity of the Gauteng province.

Key objectives and strategies of the policy include:

• Infrastructure development: Improve infrastructure and services in the townships, including transportation, utilities, and internet connectivity, to attract investment and create a conducive environment for business growth.
• Business support and development: Provide training, mentorship, and financial support to township-based entrepreneurs and small businesses to help them grow and create jobs.
• Local procurement: Encourage government departments and private businesses to source goods and services from local township suppliers, thereby boosting the local economy.
• Access to finance: Facilitate access to affordable financial services, loans, and grants for township businesses to foster growth and innovation.
• Skills development and education: Enhance the quality of education and vocational training in townships to equip residents with the skills required for the modern economy.
• Inclusive and participatory planning: Engage township residents and stakeholders in the planning and implementation of development projects, ensuring that their needs and priorities are taken into account.
• Spatial integration: Promote the development of mixed-use areas that integrate residential, commercial, and industrial activities, thereby reducing the need for long commutes and improving residents' access to job opportunities.
• Partnerships and collaboration: Foster collaboration between government agencies, private businesses, and community organizations to leverage resources and expertise for township development.
• Monitoring and evaluation: Establish a robust monitoring and evaluation system to measure the impact of the policy and ensure its effectiveness.

The economic programme of Gauteng Provincial Government focuses on 10 high-growth sectors, with an emphasis on the transversal role of linking investment facilitation to value-chain transformation and SMME empowerment through active enterprise and supplier development, specifically including linkage to clusters of township suppliers, both operating from existing premises and from revitalised township industrial estates.

These 10 high-growth sectors  are:

1. Energy, with a focus on new technologies and a diverse energy mix
2. Transportation and logistics
3. ICT and digital services with a focus on the gig economy
4. Tourism and Hospitality
5. Food, Beverages, Agro-processing and agribusiness
6. Construction and Infrastructure
7. Automotive, Aerospace and Defense
8. Financial services
9. Cultural and creative services
10. Industrial Cannabis

Without being complacent or arrogant I believe we can learn, analyze, review and adapt relevant policies in Gauteng, such as inclusive procurement, tax incentives, and land-use regulations and modify policies and programmes to suit the Western Cape context, considering regional priorities and stakeholder feedback. 

• Let’s cut the bureaucratic red tape and simplify trade and business permit municipal by laws and strengthening enforcement mechanisms to ensure compliance with labour, environmental, and safety standards.
• We need Business Against Crime forums not only in the CBD but in all our Townships and Dorpies Economic nodes to stop the kidnapping and extortion.  
• Let’s empowering local businesses and entrepreneurs, improving infrastructure, and enhancing the overall quality of life in the townships.
• We need to create tax and other incentives for businesses innovation collaborating with informal enterprises like the Presidential YES Programme. 
• Communication and awareness. Let’s develop communication campaigns to highlight the benefits of integration of the informal and formal economies featuring success stories and best practices and organize workshops, seminars, and webinars to share knowledge and experiences among stakeholders
• The City of Cape Town and Western Cape Provincial as well as all established business must have enterprise development scheme and procurement policies that favour inclusive value chains, including local content requirements and preferential treatment for businesses working with informal suppliers.  Local is Lekker and to maximise broader economic participation we need to monitor compliance in local procurement in all our economic sectors especially the monopolise and concentrated economic sectors like agriculture, retail, finance, banks, insurance, construction and telecommunications.
• We have WESGRO but maybe it’s time for Western Cape Economic Development Agency or Council where  its mandate must be extended to bridge this gap between the informal and formal economy and serve all economic citizens not only a few

All of this requires that we move out of our economic laagers, out of our comfort zone, away from THEM and US. Stop the blame game. Accept that we need each other and by working together we can achieve more lets foster collaboration, lets build bridges of trust trough Stakeholder engagement,  Public-Private Partnerships, Networking events, shared platforms and Business-to-business matchmaking. Calling on all, Business Leaders big and emerging, public servants, community and worker leaders, academic.

We need all hands on deck! Lets build Transparency and accountability.

We will be embarking on road shows to advocate for Township, Local and Circular economic models to be implemented. We call on the WC Premier, all Mayors, all our councillors, captains of industry, stake holders and roll players to join us as we host a Western Cape Township Economy Conference. Let’s plan NOW and act together to create this equal opportunities and shared and inclusive growth that all of us together can work and strive for.  

Written by Faiez Jacobs, ANC Member of Parliament for Greater Athlone and Whip for the Small Business Portfolio Committee