South Africa's "unseen economy" is growing fast.

South Africa's "unseen economy" is growing fast.

Written on 05/15/2019
Ntokozo Khumalo

Going into business should not be about location but about building a business that will be sustainable in the long term.

Township businesses are sprawling and the experts suggest small business owners think bigger than the grocery retailers or spaza shops, taverns and hair care salons.

Starting a business in the township, just like starting one anywhere else, requires in-depth research and analysis to get off the ground and remain sustainable, says KK Diaz, business strategist and CEO of A-Game Business Consulting, a business coaching consultancy that helps business people overcome their challenges as well as to achieve sustainable growth.

He warns that going into business should not be about location but about building a business that will be sustainable in the long term.

Diaz says people who are starting businesses should do so on the premise of starting a business for the 21st century, not necessarily just a township or suburban business but one that is scaleable for growth anywhere.

“If you are looking to build a long-standing business the idea has to outlive your immediate need for cash flow,” says Nathi Khumalo, CEO of economic transformation consulting firm, Traverse Advisory.

He says your business must add value to your potential customers, so understanding your initial market is important but so is tailoring the business for scalability.

Opportunities aplenty

Describing township businesses as the “unseen economy” where people deal mostly in cash, Michael Vacy-Lyle, CEO at FNB Business, says township businesses range from those in survivalist mode to highly organised and sizeable SME operations.

Business ideas portal lists retailers, salons, shisanyamas, motor and cellular services, repair shops and small-scale manufacturers as popular businesses in township.

Other part-time business opportunities include in-demand services like event planning and catering for weddings, parties, funerals and business events; social media and photography services to other businesses like shishanyamas; and tutoring young people in your area over weekends or in the evenings. suggests you use your skills in the kitchen and creative and developmental skills to offer services to not only earn extra money, but also to help develop your community.

Franchising is yet another opportunity. Franchising consulting firm Franchising Plus says you may want to consider entering the franchise industry if you are ready to go into business full time. The industry currently employs just under 350,000 people and contributes about 13% to South Africa’s gross domestic product.

The consulting firm says there numerous initiatives in townships that may be of assistance to you. This include:

  • Airbnb partnering with local enterprises to develop township-based tourism entrepreneurs;
  • Ithala Development Corporation, Sumitomo Rubber SA and Dunlop enabling job creation in townships by establishing containerised tyre fitment centres;
  • Absa contributing towards the transformation of township economies by investing in Spaza shops to enable them to compete with commercial retailers;
  • FNB helping township entrepreneurs digitalise their books and get banked;
  • Nedbank offering a supplier development programme to entrepreneurs on their database;
  • The Gauteng Township Economy Business Week, set to take place in June this year, which empowers entrepreneurs through interactive sessions with established business leaders on how to run a business, gain access to market and manage the finances of a business;
  • Some government institutions are prioritising SMEs in procurement by enabling businesses to register on a database of listed suppliers.

Franchising Plus suggests you check your local government websites for opportunities on a regular basis, as well as scouring the internet and local media for opportunities and partnerships.

Moving out of survivalist mode

Once established, and with local government agencies continuously pushing to grow township economies through financial and non-financial support and access to markets, you can start looking at moving your business out of survivalist mode.

For example, the Gauteng provincial government has over the last five years procured goods and services from township businesses worth more than R22-billion, offering the opportunity to scale your business over time.

Mthobeli January, a director at Laphumilanga Youth Development Association says there is also great appetite for private investment and partnerships in townships. “It’s about knowing what will work for your business,” he says.

Along with growing your business, it is important to remember that you are the engine of your business, no matter how big or small. According to Black Business Quarterly it is essential that you upskill yourself by improving on your education, business skills and other soft skills to remain on top of your game.


This article first appeared in Sowetan Live (Money)

DISCLAIMER: The material and information contained in this article is for general information purposes only. You should not rely upon the material or information in this article as the basis for making any business, legal or other decisions.