Are SA townships a new frontier for industrialisation?

Genesis Analytics conducted a study for the Department of Trade, Industry and Competition (dtic) focused on mapping township economies and finding opportunities for industrialisation and economic development. 

The background to the study is that a high rate of unemployment, persistent poverty and record levels of inequality remain South Africa’s three biggest development challenges. Townships are at the centre of this triple crisis, with unemployment being particularly high among the youth, women, black people and those with lower levels of education, or those who reside in historically excluded areas such as townships. 

Poverty, too, is relatively high in townships, estimated at 55.5%. Despite the challenges presented, a large proportion of South Africa’s population resides in townships. This is driven by multiple factors, including the lower cost of accommodation compared to urban areas and the comfort of familiarity and culture. While townships were a focus area of the study, it did include a rural aspect.

Genesis Analytics sampled 20 townships across the country and conducted a comprehensive assessment of the economic, social, demographic, political and environmental context of each township. A mapping exercise was conducted to understand the policy instruments, funding or incentive packages by both government and the private sector support systems. This began with a national overview of the instruments active at the time and was completed with a stocktaking of all other provincial and district-level initiatives.

An issues-driven analysis was used to identify and understand the specific constraints to investment and inclusive growth in township economies or key sectors. Quantitative data was used to establish key socio-economic indicators while qualitative data by means of stakeholder consultations brought nuance to this data, contributing to a more holistic understanding of each township context.

The study culminated in the identification of industrial and related economic opportunities for support in the 20 townships. During this phase of the project, the research team sought to outline the nature of the opportunity, the size and the location. In order to ensure that our analysis is systematic and credible, the consulting team developed a Competitiveness Appraisal Matrix to contrast and compare the economic outlook for priority sectors.