Gauteng's Township Retail Programme boosting economic access in townships

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With as much as half of South Africa’s urban population living in townships and informal settlements, the Gauteng government is on a mission to revive and equip the township economy with bulk buying capabilities through the Gauteng Township Retail Programme. Buying stock in bulk enables shop owners to benefit from lower prices that come with economies of scale. The programme also offers producers of goods market access for their wares that they otherwise wouldn’t get from big retailers.

In a Q&A Mathopane Masha, the Gauteng provincial government’s chief director for inclusive economy talks about how the programme is geared to empower township entrepreneurs and bring access to the economy to people’s doors in line with the Gauteng Township Economic Development Act.

Here Masha answers seven of the most important questions on the matter:

How important is the Gauteng Township Retail Program to the township economy?

The program is really geared to create jobs in the township. We have about 50 or so people that are producing different things like mahewu, juice and many other things. Part of the support is to also make sure that we help them with product testing and certification. All in all, the intention is to make sure that we use the township retail as a means to an end to drive and stimulate local production. We have identified about 200 product categories which basically fit into what you call a fast scale-up of the township retail stock.

We offer training development so anyone who comes into the programme will be taken through a training programme to make sure that they have the basics, but secondly to make sure that they can sort out certain basic things like their tax issues, business registration and any compliance related issues. We also assist them with administrative support.

What else do you offer on the programme?

We also offer economic structure support where we refurbish their stores, we look at the installation of shelving in their stores. We also look at proper inventory management systems and technology support in terms of payment systems. This is then linked to the local distribution centre where we are then able to drive logistics and transportation and local distribution.

We also offer funding support. We assist with cash flow when they need to buy stock in bulk. We also look at market access for them through store promotions and brand activations in and around where their stores are located.

What has been the greatest success of the Gauteng Township Retail Programme?

The greatest success for us is triggering the stimulation of local production and providing support through product testing and product certification. We have never really done it before so we see it as a contribution towards reindustrialising the province and making sure that we stimulate production in our townships. The other success has been creating jobs there, where people are around the township. The intention is that we want to in the next 2-3 years create about 30 000 jobs. In the current financial year, we have created just under 10 000 jobs. It’s different kinds of jobs: some are seasonal and some are permanent jobs in those stores.

What is your vision for the programme in the next 5 years?

The intention is to entrench this programme as a backdrop to the township economy that can create jobs, drive local production and manufacturing and can develop the raw township brand while at the same time, providing people with opportunities where we can convert township retail stores that can perform multiple functions that are aligned with community demands.

Part of Masha's vision for expansion includes equipping the stores with the tools to perform functions such as withdrawing and sending funds as well as sending packages, as is the case in some of the bigger retailers in the country.

What is the biggest misconception about the township economy?

People think that the township economy lacks innovation, creativity and the capacity to create sustainable jobs which is not true. Historically we have seen a lot of entrepreneurs who have come out of the township and established themselves in our country.

The design of a programme also includes a particular focus on dispelling those misconceptions by profiling success stories in the township 

Who are some of the stakeholders you have worked with in the Gauteng Township Retail Programme?

We worked on this project with Family Tree Holdings, a township-based enterprise and supplier-based development platform. They have done this before on a smaller scale. We like their model because it is entrenched in driving bulk buying capabilities for township-based enterprises. The model includes working with organised local business formations and also an array of established entities in the Fast-Moving Consumer Goods space.

How the model works is that we have about 22 township-based business associations we work with and SMMEs. In total, we have about 20 000 plus SMMEs we work with within the programme. That helps a lot in terms of driving certain things like bulk buying capabilities, helping them to compete in terms of price and so forth. We are always exploring new partners with interesting ideas.

What incentives do businesses and retailers have to start distribution centres in townships?

As part of the township act, we have a funding instrument that we provide to SMMEs but our view is that for anyone to start a distribution centre, you need a cash-managed area. You need to be able to say for example, I have 20 000 stores that I am going to be supplying and based on that you can design a transport and logistics network and link that to a warehousing solution; in this case a localised distribution centre. I wouldn’t say that people should start with money in mind, they have to sort out the networks and value chain opportunities. They have to have people that are willing to buy from them. They have to have all of that in place before they can actually think about a distribution centre.

You also have to be able to drive certain value into the programme or at least the centres in terms of pricing, you have to be able to be willing to at least provide certain percentage sourcing to locally produced products. For us, those are the things that we focus on in terms of engaging anybody as a potential partner for establishing local centres and providing access to the township database around supplier opportunities.

This post was sponsored by the Gauteng Government and produced by Adspace Studio.

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