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Growing retailers in Gauteng townships investigated

June 23, 2015

The Gauteng government is particularly interested in the real impact of the expansion of retail giants into township markets, Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development Lebogang Maile said on Tuesday.

Issues such as barriers to entry for small business such as shopping mall tenancy agreements as well as the competition dynamics between local and migrant owned grocery retail businesses in townships are other challenges Maile wants to get clarity on.

He urged township businesses to support the Competition Commission’s market inquiry into the expansion of the grocery retail sector in townships.

“This investigation is a direct response to the challenges highlighted by township businesses in our engagements with them,” said Maile.

He highlighted some of the progress made in the implementation of the Township Economic Revitalisation Strategy.

This included a partnership with MassMart that will result in a R650m cash injection into various townships across Gauteng.

“This partnership will see the establishment of 500 retail shops within Gauteng townships and give township entrepreneurs ownership opportunities in these shops. The project will be piloted across the six townships of Katlehong, Attridgeville, Sharpville, Randfontein, Alexandra and Khutsong. It is envisaged to create more than 1 000 jobs,” said Maile.
 
Another project is a partnership to secure spaza shops a foothold to Pick n Pay’s distribution channels, giving them access to a variety of stock and merchandise at competitive pricing.

“This will allow spaza shop owners to pool their resources and take full advantage of the benefits of bulk buying,” explained Maile.
 
The Banking Association of South Africa (Basa) and Gauteng are also exploring incubation approaches and innovative financing models for township enterprises. Maile said this partnership will open avenues for resource mobilisation and enterprise development of township businesses.
 
There are 287 township businesses in construction and building maintenance companies are undertaking government construction projects, maintenance of electricity and lighting, plumbing and the structural upkeep of government buildings, schools, hospitals and police stations.

Furthermore, 53 township-based and black owned clothing and textile businesses are currently supplying linen to public hospitals in Gauteng.

Environmental facelift

Another issue raised by Maile related to the Gauteng Environmental Authorisations Process.

Surveys on the cost of business in Gauteng often pointed out delays in getting environmental authorisations for developments as one of the biggest hurdles to a smooth business environment.

As much as 19% of the 500 small businesses surveyed in 2013 cited glitches associated the Environmental Impact Assessment (EIA) process, as a big challenge for doing business in the province.

“To resolve these challenges, Gauteng will introduce a new and completely automated EIA system that will allow prospective investors to submit their applications with supporting documents online while receiving online feedback about the status of their application as it goes through various phases,” said Maile.

According to Maile, the new automated system will significantly reduce the turnaround time for environmental impact assessments and decision-making. It will reduce the turn-around time from an average of 18 months to 90 days.

Robust economic plans
 
Gauteng will continue facilitating job creating investment in the economy, said Maile.

Some of the key projects for the 2015/2016 include R222m invested for an incubation facility through which eight black owned SMMEs will supply parts and components for a Nissan pickup truck which is due for production in 2018.

This project will create 27 000 jobs in the medium to long term and increase black participation in the automotive industry.  
 
Another key project proceeding well, in his view, is work on the OR Tambo IDZ. The Department of Trade and Industry (dti) has allocated R200m to kick-start the project.

The IDZ will boost manufacturing capability in targeted, export driven sectors such as pharmaceuticals and electronics assembly.
 

The Gauteng Provincial Government has finalised regional economic and industrial plans for the West Rand and Sedibeng. An amount of R3bn has been allocated to spur the industrialisation of the Western and Southern corridors through agro-processing, green industries and tourism.

Agro-processing
 
Maile also outlined plans to expand the agro-processing industry in Gauteng, which includes food processing, beverage and furniture manufacturing as well as the processing of leather products.
 
While Gauteng occupies the smallest land-mass at 1.4%, it has a fairly big agro-processing industry, with over half of food processing companies being based in Gauteng.

The food and beverage sector has experienced an 18% growth from 1996 to 2013 and now employs well over 120 000 people in the province.

“The sector faces many challenges, including minimal lack of black participation and a sharp increase in imports in most divisions of the sector,” said Maile.

Since the adoption of the Gauteng Agro-Processing Strategy in March 2015, partnership agreements have been reached with Woolworths and Pick n Pay to provide agreements for famers, training, quality management, brand packaging and grading as well as post-harvest handling.
 
Public hospitals will source 40% of their fresh produce supplies from black emerging farmers. Gauteng aims to increase this to 80% by the year 2016.  
 
Further plans are to facilitate access to economic infrastructure such as abattoirs and storage facilities, access to inputs such as seeds, animal feed and fertiliser at competitive prices, market opportunities and integration into established value chains.
 
Reviving fresh produce markets that are located near townships is another project and R7m has been committed to infrastructure upgrades at the Vereeniging Fresh Produce Market.
 
The department is also trying to establish four agri-parks, namely in Bekkersdal, Khutsong, Sebokeng and Eikenhof.

“The agri-parks will not only increase the volume of economic activity in townships, but will expose unemployed youths to farming opportunities, provide economic infrastructure for clustered agricultural production and encourage agricultural value-adding activities in townships,” said Maile.

Source: Fin24

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