Majola Spaza - Cape Digital Foundation

In South Africa, more innovation could improve productivity, create jobs and reduce poverty.  The Cape Digital Foundation believes that valuable innovation will be born of an Internet-enabled informal sector.  If the citizens of our townships are to become smart citizens – benefitting from their contribution to a modern digital economy – it is essential that they have access to technology and are enabled to put their digital skills to good use in their everyday lives at home and at work – or in choosing to be dynamic entrepreneurs and business owners.

Here are population statistics that serve to set the scene in the first of a series of articles that aim to provide insight into various facets of township enterprise and SMMEs in the Cape Town metropolitan area.

South Africa’s working population

According to World Population Review, the population of South Africa is currently estimated at 57.2 million citizens, with an even split between males and females who are on average just over 26 years of age. Research conducted by World Bank Group in 2014 reveals that approximately 60 percent of the population are urban-dwellers, and that about half of the population live in townships and informal settlements.

Township dwellers account for 38 percent of the country’s working-age citizens and about 60 percent of South Africa’s unemployed.

The Western Cape’s working population

According to a Western Cape Government overview Cape Town’s population (which includes the West Coast up to Atlantis, north of Cape Town; and the suburbs and townships that lie on the Peninsula and  the Cape Flats, flanking False Bay to beyond Gordon’s Bay, and stretching to the Hottentots Holland in the east) was estimated at 4.01 million in 2017, with the adult population an even split between male and female and largely made up of working age citizens between the ages of 25 and 50 – peaking at 25 to 34. In February 2018 the City of Cape Town announced that Cape Town’s unemployment rate is the lowest in the country, sitting at 21.7 percent and down by 2.2 percent year-on-year.  It is possible that this percentage is distorted, and should reflect a higher rate of unemployment if the results were calculated based on outdated population figures gathered in the South African National Census of 2011.

Western Cape townships’ working population

By the same token, in terms of the working population (and total population count) in Western Cape townships, most formal statistics are out of date, still being based on population figures gathered in the Census 2011. For example, according to the Census 2011, Khayelitsha housed an estimated population of just under 400,000 people, while today the total population of Khayelitsha is estimated to be well above 1 million (and some institutions say above 2 million) people.

The Western Cape’s township economy

When it comes to comparing the Western Cape’s business sectors with those of our townships and informal settlements there is still no established national report which provides accurate information about the township economy. There is real evidence that, in the main, township enterprises fall into the services and retail sectors. These are largely micro-enterprises with low capital and a low skills base ranging from spaza shops, shebeens, minibus taxis and mechanical services, to hair salons, child care services and street vending along with burial societies and stokvels.

In 2014 Stellenbosch University’s Khayelitsha’s Small Business Project (who estimated the population at ± 820,000 at the time) “guestimated” the following breakdown in SMME’s in this township:

Medium-sized enterprises 500
Formal small enterprises 7 500
Informal micro-enterprises 32 000
Survivalists 45 000
Total 85 000

Although most township enterprises are established to address mostly a specific local or community need, this does not mean that they are incapable of successfully delivering their products to wider markets.  The challenges currently faced by township SMMEs include:

  • Access to finance and credit
  • Lack of access to markets
  • Lack of infrastructure – including electricity and water
  • Overcrowding in the few premises that offer better infrastructure
  • Over-saturation in certain business sectors
  • An inadequately educated workforce
  • Inefficient government bureaucracy
  • High levels of crime
  • Many entrepreneurs lack the fundamental skills required to run a business – that is to be gainfully self-employed or to own and manage a micro enterprise, or larger, with a view to turning a profit and growing the business.

Digital inclusion leads to social inclusion, which enables township enterprise

We are in the midst of digital technology ushering in a new economic era. Particularly as it helps business to overcome the physical limitations of capital and labour, expose new sources of value and growth, increase efficiency and drive competitiveness.  Along with these improvements, digital technology also brings disruption and radical new ways of engaging and doing business.  In the future it is vital that digital technology becomes a leading driver of the South African economy, but where is the starting point in enabling people and promoting the benefits of digital technology to township enterprise?

The possible answer lies in ground-up initiatives that seek to change the lives of every citizen through their uptake and use of technology – because advances in technology are not about the technology itself, but rather about the citizen-led social change that it facilitates. This is where people will find the inspiration to create solutions that will ultimately lead to self-sustainability, job creation, and participation in South Africa’s digital economy.

Take for example Regina Kgatle, an Electrical and Computer Engineering postgraduate student from UCT, who founded the company Educade. Regina has artfully disguised educational content in arcade-style games housed in arcade machines made from e-waste and other recycled materials, embracing technology and blurring the lines between learning and play. Educade emphasises the positive role of teaching through technological platforms, and the importance of play as a learning incentive. In 2017 Regina was voted by Geekulcha among Top 15 Young Geeks in South Africa who are playing a part in the digital revolution in South Africa.

Another example is township business, Khayelitsha Cookies, which started off in 2004 as a small project to help women learn how to bake and sell cookies in order to earn an income.  Khayelitsha Cookies has now expanded to employ around 50 people and supplies Garden Court, Southern Sun Hotels, Tsogo Sun Casinos and Pick n Pay. In 2017 global research consultants, Frost and Sullivan’s South African office recognised the company with their 2017 South African Customer Service Leadership Award for ensuring customer satisfaction, empowering its employees, and positively impacting the community. Khayelitsha Cookies is currently using their website, social media and PR to crowd fund a new factory, brick by brick.

It is with the over-arching purpose of stimulating digital uptake that Cape Digital Foundation has a mission to connect the unconnected and stimulate the everyday use of digital technology – ultimately for the betterment of peoples’ lives and the benefit of their contribution to our country’s economy.

HOW CAN DIGITAL SKILLS LEAD TO A GROWTH IN TOWNSHIP ENTERPRISE?

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