The real reason foreign-owned shops are thriving in South African townships

2015-02-07 00:20

A few years ago, a friend and I sat in a cafeteria at the University of the Free State, and as usual, began to engage each on the state of affairs in the country with a great deal of focus on issues that were and are still emphatic in the national discourse: youth unemployment and small-medium enterprises. While grappling with these issues, particularly the latter, we found ourselves confronted with the question of how foreign nationals had infiltrated markets in the townships and why their businesses were thriving.

In our assessment and analysis of the subject in question, as opposed to Lebogang Maile's suggestion that the primary reason for the dominance of foreign nationals in township markets is as a result of a value chain which he describes as being "capitalist" in nature, my friend and I agreed to and identified the fact that when our foreign counterparts first dipped their heads into the township market their products were much cheaper relative to those sold by the natives and this created a situation where the latter was compelled to down his prices, a challenge only few could withstand. As a result of the native's refusal/inability to lower his prices, the market became more competitive with foreign nationals attracting more customers, leading to the closure of local businesses which were subsequently occupied by other foreign nationals.

Take note, this sequence of events is no different from Archbishop Emeritus Desmond Tutu's classic narrative that when the missionaries came to Africa they had the Bible and we had the land. They said 'Let us pray', we closed our eyes and when we opened them we had the Bible and they had the land. In essence, the foreign nationals were knowledgeable, had a better understanding of business principles and understood the dynamics of the environment within which they intended to operate, hence they were the better negotiators. Their dominance did not come from a vacuum, it developed as a result of their ability to identify loopholes in our business models and their determination to exploit opportunities available before them.

Anyway, this is where Maile becomes correct, the principles of 'value chain' did come into effect. After a successful erosion of dozens of locally-owned shops, the now locally-based foreign entrepreneurs began to increase prices a little, with things like airtime being sold for a rand more than the actual retail price. Foreign nationals effectively dismantled the free market, and once successful, immediately proceeded to limit pricing to secure their monopoly in townships. Before we knew it, most, if not all of the shops in townships were in the hands of foreigners.

Now, like it or not, just as we are jealous of our European counterparts who since they set foot on South African soil have accumulated all the wealth the human mind can think of. In a country where millions are unemployed and are struggling to make ends meet, it was inevitable that someday our communities would turn against foreign business owners for relief from poverty and psychological strain- something psychologist don't mention in their characterisation of what poverty and suffering does to the human mind.

Nevertheless, beyond the xenophobic attacks, criminal acts, barbarism and all things evil, only one thing stands out, our foreign counterparts have come to South Africa and are making the most of their stay. They have sharp business acumen and are determined to achieve an incredible degree of outward success. Until such a time that we are prepared to learn, play fair and abide by the rules of the game, they will continue to be better than us.

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