Supporting township economies is key to the recovery of Kathorus
Township businesses in Kathorus have been going through turbulent times. This is what is being done by Nedbank and other organisations to support this vital small business sector.
Kathorus is an abbreviation for Katlehong, Thokoza and Vosloorus – the biggest townships in east Johannesburg. Located in the Ekurhuleni Municipality, Kathorus is home to informal businesses and small, medium and microenterprises (SMMEs) that are considered by some to be a crucial market segment contributing to South Africa’s gross domestic product (GDP).
The township economy is recognised as being critical to supporting South Africa’s small-business sector because it can unlock growth, inclusion and long-term social stability. In fact, the 2021 South African Township Marketing Report found that spaza shops contributed 5,2% to the economy and employed 2,6 million people.
Small businesses in Kathorus have had their difficulties
Small businesses were severely impacted by the Covid-19 lockdown restrictions and were also among the hardest-hit victims of the unrest in July 2021, with an estimated 50 000 informal traders believed to have been affected in Gauteng and KwaZulu-Natal – a large proportion of which were in Kathorus. As a result, the Small Enterprise Development Agency’s quarterly update for the third quarter of 2021 revealed that while the number of SMMEs rose by 1,7% compared to the same period in 2020, employment in the sector declined by 300 000 compared to Q3 2020, accounting for 75% of the job losses experienced overall during that quarter. This is particularly unfortunate, as Ekurhuleni Municipality is characterised by an extremely high unemployment rate of 31,6%, which is higher than both national and provincial levels.
To compound the challenges faced over the last few years, the small business sector is being particularly hard hit by load-shedding. Production is negatively affected by a lack of electricity and costs to source alternative energy are high. Profits are dwindling and the potential for retrenchments is increasing.
More challenges facing SMMEs in Kathorus include limited access to trading spaces and financing opportunities, limited access to entrepreneurship education and growing competition from large retail groups. But, despite these headwinds, Kathorus is awash with cash-intensive, largely informal businesses ranging from supermarkets, fast-food outlets and taverns to hair salons, back-room rentals and mechanics.
Looking for solutions
In support of this township economy, the Department of Economic Development, the Department of Agriculture, Land Reform and Rural Development, and the Department of Environment Affairs have drafted the Gauteng Township Economic Development Bill. This bill is designed to allow townships to become fully fledged commercial zones by streamlining rules on running a business, enabling communities to open and formalise township businesses while supporting township real estate and the taxi economy; creating conditions for business expansion and human resources and providing diversity in business ownership – an inclusive economy and transformative principles to drive the township economy.
There is no doubt that this bill will benefit township enterprises and the youth because employment opportunities are unlocked when township enterprises grow and Nedbank welcomes the implementation of this bill.
Nedbank is committed to being part of the solution
As financial experts who do good, Nedbank is dedicated to helping small businesses grow and thrive. This commitment to provide small businesses with comprehensive, integrated business support at all stages is integral to its growing popularity as a preferred SME banking partner.The bank has developed a range of solutions specifically designed to address the needs of the township economy. Most of these revolve around addressing informality by, for example, helping small emerging enterprises with formal business registration, building adequate payment channels and developing business capabilities by providing access to technology and advice.
Nedbank has also developed an initiative called ‘Beke le Beke’ (meaning ‘week in and week out’), which was established mainly to uplift entrepreneurs and informal traders through direct support. Through this initiative, Nedbank has been able to deliver impactful programmes to support, grow and inspire microentrepreneurs and small-business owners in the informal sector. Qualifying businesses also receive support in the form of funding, mentorship and guidance on essential business skills.
To provide solutions to the current energy challenges, Nedbank has arranged a variety of funding solutions to small business and consumers to overcome electricity challenges.
Its national network of dedicated small-business bankers is available to provide hands-on assistance and guidance on the funding of alternate power requirements as well as other banking requirements. Online banking and various digital channels come with free features, such as budgeting and invoicing solutions, while the free SimplyBiz network and support platform delivers business tools, inspiration and insights that go far beyond banking.
To find out how Nedbank can help your small business thrive in Kathorus, contact Thabo Lesley Thathana at lesleyt@nedbank.co.za or his team at small businessservices@nedbank.co.za.
