Give tax breaks to drive investment in townships, says property tycoon Mike Nkuna

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The spaza sector is dominated by immigrants who pay their South African landlords an estimated R25 billion in rental per year, participants were told.
The spaza sector is dominated by immigrants who pay their South African landlords an estimated R25 billion in rental per year, participants were told.

Government should consider tax incentives to drive investment in townships, businessman Mike Nkuna has said.

The property tycoon is executive chair of Masingita Property Investments and has a commercial property portfolio in Soweto estimated at over R2 billion. The group owns some 15 shopping malls around the country.

Speaking during a virtual webinar held by International Housing Solutions on Wednesday, Nkuna said in addition to tax incentives, other conditions should also be considered, such as employment of local residents.

He further called for government to support bulk infrastructure for developments in townships.

The businessman, who recently made headlines when the Masingita-owned Protea and Jabulani malls were looted during the July unrest, recalled his own experience of starting from buying "the corner shop" to eventually developing shopping centres.

"Townships were initially designed in a way that prevented formal development. Some of us saw opportunities to buy a corner shop and then buy houses around it and change the zoning to business and later put up a shopping centre. We made sure we designed it with shop fittings, for example, as if it was a development for Sandton," he said.

"Government's role is to be an enabler so we as businesspeople can come into an area and start doing development. We need visionaries in SA," he added. 

Driving economic growth in SA's townships has long been on government's radar. Most recently, the new Township Bill was tabled in the Gauteng Legislature. Among other things, it aims to support small businesses to help enable economic recovery in the province.

Speaking during the same webinar, GG Alcock, an entrepreneur and author of KasiNomics and Third World, said the retail sector had undergone dramatic changes in many of SA's townships. Spaza shops were challenging large retailers, he said, with an estimated turnover of some R150 billion per year.

Moreover, Alcock said, spaza shopkeepers are paying their landlords an estimated R25 billion in rentals per year.

He further cited a growth in "high streets" along popular taxi routes, with many businesses relocating to these areas in search of access to customers. An "enabling environment" should be created for them to do so, he said.

Lusanda Netshitenzhe, CEO of business incubator TUHF21, echoed Nkuna's call for support of emerging township businesses, saying this could help create "economic hubs".

"The time has arrived for this sort of support in townships. A lot more still needs to be done to make sure viable economic hubs are established. It is not just about creating places to live, but to create 'activated streets' lined with businesses in medium density areas.

"Government has a role to play in this, so that neighbourhoods dense enough so they can provide economic opportunities are established," said Netshitenzhe.

"This must be tastefully done along busy taxi routes. Look at how Sandton was developed from what was a farm. The zoning was changed to allow densities and now it is the economic hub of Johannesburg. We want to create that in townships too."

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