Approximately 70% of the South African
population resides in townships – an impressive pool of prospective consumers
by any scale – with 30% of the country’s gross domestic profit (GDP) enjoying contribution from the informal market.
Stokvels and the taxi business in South Africa are both R1-billion industries, enjoying their primary source of earnings from the township market.
“I can confidently say that once this market becomes resourceful and properly structured, it can easily contribute a minimum of 50% towards our country’s GDP,”
says Thabiso Maphanga, CEO of the Break Bread Group, a marketing and communications agency active primarily in the township space.
Informal settlements like Diepsloot and Soweto, South Africa’s townships
for example, have spending power of R2-billion and R5-billion respectively.
However, research conducted by the World Bank Group shows that only 25% of money generated in townships is ploughed back into the community.
THE BROADER ECONOMY Active, healthy township economies are vital to the success of South Africa’s overall economy.
The majority of impoverished people live in townships − and most aspire to move to the suburbs.
When someone becomes successful, they often leave the township and take their success (and spending power) with them, says Stephen Read, founder of Entrepreneur News Network Africa.
“This is not just removing a positive role model from the community,
of prospective consumers it is also removing skills and experience from supporting the local school, church and community.”
Township entrepreneur and founder of Mama’s Spices & Herbs, Mikie Monoketsi, echoes Read: South Africa’s townships
“The more the township economy grows, the better it is for the well-being of our overall economy.
This will also encourage both the public and private sectors to invest more in townships – not only with resources, but also with opportunities.
Another important fact: when the township economy is active and thriving, jobs are being created, which means a reduction in poverty and substance abuse.”
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