OPINION | Legislative attempts to promote township economies are necessary and just

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A spaza shop owned by a foreigner in Soweto. Photo by Lucky Morajane
A spaza shop owned by a foreigner in Soweto. Photo by Lucky Morajane

Olwethu Mhaga argues that the "Gauteng Township Economic Development Bill" should be seen as representing a shift to maturity in the immigration policies of South Africa.

On 30 September 2020, the Gauteng provincial government (GPG) gazetted and published for public comment the "Gauteng Township Economic Development Bill".

With a stated objective of providing a framework for the promotion and development of the township economy, the publication of this bill has drawn far greater and harsher criticism than its innocuous-sounding goals should inspire. 

In many ways it represents the culmination of efforts by the GPG to revitalise the latent potential of the townships surrounding the main economic hubs of the province.

The premier must have been taken back when he was met with a harsh criticism suggesting the bill was unconstitutional and xenophobic.

He most likely expected admiration, which this crucial step in the fight to transform our nation should have been met with.

READ | Explainer: Gauteng provincial government's plan to ban foreigners from opening businesses in townships

Criticism of these necessary steps to rebuild township economies that serve inhabitants are nothing more than petty attempts to delegitimise the process. 

Regardless, critics offer very little in the way of solutions.

Some civil society and mainstream media commentators seem to desire the continuation of the approach of burying our heads in the sand and wishing the problem away.

Of course, these armchair critics are ready to do their bit with moral condemnation whenever violence erupts in our cities over the prevalence of immigrant-owned businesses in townships.

Although the bill addresses several areas to help revitalise township growth including policies and programmes, financial assistance, infrastructure development, etc. all the criticism has been levelled at Chapter 3 of the Bill which details "Economic Activities reserved for Citizens or Persons with Permanent Residency Status". 

This section restricts immigrants without permanent residence status from operating several businesses listed in Schedule 1 of the bill in areas designated as townships.

Bill labelled unconstitutional 

Critics have labelled this bill as unconstitutional, stating that it violates Section 9 (3) by discriminating against immigrants. 

Although immigrants remain a vulnerable group requiring protection in our society, as explained by the Constitutional Court in Larbi-Odam and Others v Member of the Executive Council for Education (North West province); this does not mean that they enjoy the same rights as citizens in South Africa. 

For example, the inability of non-citizens to vote in our elections as per Section 19 (3) of the Constitution does not constitute unfair discrimination. 

Ultimately the veracity of any allegation of unfair discrimination as envisaged by our Constitution must be determined by the courts. 

READ | Analysis: Is Gauteng's plan to ban foreigners from opening businesses in townships unconstitutional?

However, the provisions' intention of ensuring that the local inhabitants of townships enjoy ownership of the businesses in their communities; increasing the odds of the money they spend staying and circulating within those communities.

This is certainly a worthwhile and admirable goal that cannot be considered unjustifiable or unfair.

Other alarmist critics have stated that this bill restricts foreign investment when the country needs it the most. 

This would indeed be a concern if multinationals and foreign investors were readily waiting to pump large amounts of capital and open business in our townships. 

This is, however, not the reality we find ourselves in. 

Rather, not only do local township businesses face competition from local multinationals that often undercut their small competitors with their economies of scale, but they are also faced with competition from immigrants.

Fight for survival 

In their desperation for survival, immigrants often resort to any means to outcompete local small and informal businesses.

At this point in the conversation, many charges of laziness and entitlement are thrown at the poor of this country. 

Many middle class or wealthy South Africans accuse the poor of not working as hard as immigrants or seeking handouts or assistance from the government as a result of this laziness.

These perceptions are not borne out in reality. 

A study by Dr Simon Radipere and Dr Shepherd Dhliwayo researching the business performance of SMME's in the retail sector in Gauteng concluded that "the performance of the business was not informed by whether the owner [was] local or foreign" further adding that the their "findings did not support the assertion that foreign owners perform better than local owners".

More prudent critics such as the Free Market Foundation allude to immigrants having skills that are not possessed by local inhabitants of townships. 

They argue that upon the removal of these immigrant-owned businesses, large retail companies would take up the mantle as opposed to locals who are incapable of doing so. 

This assertion, however, is also not borne out in the facts. 

A 2016 study by the Southern African Migration Programme sampling 618 immigrant-owned informal businesses in Johannesburg with participants from Zimbabwe, Mozambique, Nigeria, the Democratic Republic of Congo, Lesotho, Pakistan, and India found that 56% of the entrepreneurs had been unemployed before coming to South Africa.

Only 2% owned informal businesses in their home country.

Furthermore, 47% had been unemployed in South Africa before starting their business with only 5% having been professional workers. 

Only 10% of the participants obtained their skills from previous work experience.  This challenges the notion that immigrants arrive in South Africa with greater skills   

Large influx

This bill should be seen as representing a shift to maturity in the immigration policies of South Africa, which have been governed by sentimentality rather than shrewd pragmatism. 

Democratic South Africa has experienced large influxes of unskilled and semi-skilled labour while at the same time experiencing a massive emigration of its skilled labour to developed countries such as the UK, Australia, New Zealand, and the US. 

Yet South Africa has some of the most discouraging legislation in terms of facilitating entering and staying as a legal migrant, which is how skilled migrants enter the country, as opposed to the free-for-all enjoyed at our borders by migrants who ultimately reside in our townships and rural areas.

There is growing resentment of immigrants by locals as competition grows for already scarce jobs and local market share.

The Gauteng Township Economic Development Bill is about ensuring that local inhabitants of our townships enjoy some control of their economy and ensuring that more of the money they spend remains in the communities. 

The FinMarket Trust has found that the total remittance from South Africa to the SADC region is around R11.2 billion per annum with an estimated 68% of that amount remitted through informal channels such as through buses and taxis. 

If the government can assist in ensuring that a fraction of the money arising from small and informal businesses remains in the townships instead of being sent to other countries; it certainly should. 

For this reason, the application of this bill, once enacted in Gauteng, should serve as a test case for implementation throughout the country.

READ | Opinion: Hatred and fear in the place of Gold: Dangerous anti-foreigner antipathy in Gauteng

Many will argue that this kind of legislation does nothing but fuel xenophobic sentiments in the country, especially considering the #PutSouthAfricansFirst movement. 

To continue to ignore the pleas of the poor while resorting to loud lectures on the evils of xenophobia would see the country repeating the same actions while expecting different results. 

Democratic South Africa has been incredibly generous to immigrants.

The total remittance leaving this country to SADC is but an indication of this generosity; however, due to the extraordinary circumstances we find ourselves in, this continued generosity is unsustainable. 

I applaud the GPG for making the difficult choices in helping the poorest sections of our society when no others were willing to do so.

- Olwethu Mhaga is a former Secretary-General of Students for Law and Social Justice and member of the ANC Youth League, Fourways branch. He has an LLB degree from the University of Pretoria. He writes in his personal capacity.

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