The Gauteng Department of Economic Development expects a R650-million cash injection into the township economy following the conclusion of a deal with retail giant Massmart.

Economic Development MEC Lebogang Maile told a media briefing on Tuesday at the Gauteng Provincial Legislature in Johannesburg that the partnership would see 500 retail shops established in Gauteng to give township entrepreneurs ownership opportunities.

The project would be piloted in Katlehong, Attridgeville, Sharpville, Randfontein, Alexandra and Khutsong and it was estimated it would create more than 1 000 jobs.

Further to the department’s progress in implementing the Township Economic Revitalisation Strategy, Maile advised that a partnership had been concluded with Pick n Pay to secure spaza shops a foothold in the supermarket chain’s distribution channels, giving them access to numerous stock and merchandise at competitive pricing.

“This will encourage all spaza shop owners to pool their resources and take full advantage of the benefits of bulk buying,” highlighted Maile.

He urged township businesses to put their weight behind the Competition Commission’s Market Inquiry into the expansion of the grocery retail sector in townships.

“This investigation is a direct response to the challenges highlighted by the township businesses in our engagements with them. We are particularly interested in the real impact of the expansion of retail giants into township markets and barriers to entry for small business, such as shopping mall tenancy agreements and the competition dynamics between local and migrant-owned grocery retail businesses,” Maile explained. 

To open avenues for resource mobilisation and enterprise development targeted at township business, he also noted a partnership with the Banking Association of South Africa and Gauteng, which was exploring incubation approaches and innovative financing models for township enterprises.

The province would also make use of services in construction and building maintenance offered by 287 township-based businesses, which would undertake government construction projects, maintenance of electricity and lighting, and plumbing and the structural upkeep of buildings, schools, hospitals and police stations.

Further, 53 township-based and black-owned clothing and textile businesses would this financial year supply linen to Gauteng’s public hospitals.

“The desired outcome is to multiply the presence of township businesses in the productive sectors of the economy,” Maile added.

In her Budget Vote speech on Tuesday, Finance MEC Barbara Creecy advised that the Gauteng provincial Treasury (GPT) was looking at mainly directing purchases of below R500 000 to township suppliers across all departments and their agencies.

The rollout of this initiative was expected from August.

She said according to analysis, last year 5% of the Gauteng government’s spend went to township enterprises, adding that up until 2019 the GPT would like to grow the proportion of that spend to about 30%. “Our target for this financial year is 12%.”

There were many difficulties encountered by new, township-based businesses in accessing formal markets in general and government procurement opportunities, Creecy stressed.

Therefore, in support of the Provincial Strategy on Township Economic Revitalisation, the Gauteng Provincial Treasury had developed a procurement strategy that would serve as a catalyst for the revitalisation of township economies in the province.

The key interventions of this strategy included growing the number of township suppliers on Gauteng’s central database, revising the government procurement guidelines and conducting training for township enterprises and government procurement units, and increasing awareness of market access opportunities for township enterprises as well as the local manufacturing content requirements for goods sourced from township and mainstream enterprises.

“This, in turn, will give greater impetus to the procurement of local content,” said Creecy.