Championing the township economy with Bulelani Balabala, founder of Township Entrepreneurs Alliance (TEA)
The Township Economy Summit is set to address the critical need for an inclusive and thriving economic future in South Africa by focusing on the unique challenges and opportunities within the township economy.
This summit will convene township entrepreneurs, corporate leaders, and government officials to explore actionable strategies for unlocking the full potential of a sector valued at over R900bn. The main objective of the summit is to unlock opportunities, information, and networking.
Over the past nine years, TEA has directly empowered more than 80,000+ township entrepreneurs, TEA has a national footprint covering all majority of South African townships, and this year’s two-day summit and awards promises to be its most impactful yet, celebrating innovation, resilience, and growth within South Africa’s vibrant township economy.
We chat to Bulelani Balabala, founder of Township Entrepreneurs Alliance (TEA), a transformative initiative aimed at empowering small businesses in township and rural areas, ahead of the summit and awards taking place from 21-22 November 2024 in Tembisa, Gauteng.
What is the state of the township economy in South Africa?
The current state of the township economy, especially when we zoom into the formal and informal sector, is one that is still marred to a degree with misunderstandings and misconceptions.
Over the past few years, we've seen government leaders and certain corporates from an e-enterprise supply development perspective talking about how township businesses need to formalise. But however, in reality, big business and corporate South Africa are the ones who actually need to formalise themselves on how the township economy works because the township economy has acted as an economy in and of itself that has been able to create employment, but over and above that, drive economic inclusion.
Whereas, because of the bureaucracy and the red tape that's already in the market, these entrepreneurs have found ways of operating in the absence of mainstream opportunities.
Although mainstream funding opportunities and development opportunities would have helped them to scale much faster and much quicker, they have found alternative ways.
How has the township economy evolved in recent years, particularly with changes in technology and consumer behavior?
There have been several changes in consumer behavior in the township.
However, when you sort of look at it, it's all been centered around what the township's very ethos is, and that ethos really is built around trust.
The township operates at the speed of trust, so any technology that is introduced to those markets needs to be one that is manageable and adaptable. And I think taking into consideration that this economy has individuals and entrepreneurs that primarily, in most cases, operate in a debt ratio, which then means that whatever technologies that you are bringing into the fold needs to be ones that are able to help them drive their business growth.
But also, importantly, they need to answer two main things: How will it make them money? And how will it save them money?
The moment one’s able to answer those two things, then it’s easier for one to get a clear picture in terms of whether innovation will drive growth.
The other part of it is really on the conversation around innovation, which is opening ourselves up to saying that innovation must not just be limited to technological innovation, but really innovation at its roots is when two ideologies collide or when two products come together for the benefit of one.
And I think when we apply that sort of mindset, you'll find that these amazing entrepreneurs have operated in that level of innovation.
I remember during the lockdown, I was talking to one entrepreneur who was talking about how, because they couldn't afford to heat up their chicken feed, through their farming and through traditional means, they utilized a traditional Mbaula, which is a fire bucket, to then reticulate the heat.
They found a great way of reticulating the heat across the feed, to keep the chickens healthy and eating. So, there are innovative processes and tools that we have utilized to keep ahead of the game.
What are the main challenges township businesses face, and how do entrepreneurs typically overcome them?
Some of the main challenges faced by township entrepreneurs dependent also on the part of the country that you operate in, is definitely crime.
In various parts of the country, entrepreneurs and small businesses are asked to pay protection fees for their businesses. And this is not just even for the formal, structured businesses, but this is just for any business across the border subjected to this “tax” of sort.
The second part for us is the lack of clear information. A lot of entrepreneurs really don't know what they need to do, and as a result, that then stifles their growth.
The third one is market access, market access to trading opportunities, shelf space, and big retail stores to be able to sell their products.
Also including democratisation of e-commerce platforms and affordability of them as well to be able for them to reach out to their customers.
And then the fourth one really is funding to scale, funding to grow. And then this is totally bigger than their traditional funding to start with.
What we've picked up is that a number of these entrepreneurs already have skin in the game, and the one thing that they're looking for is a boost up
What roles do small and micro-entrepreneurs play in the township economy, and what industries are the most prominent?
Small and micro enterprises play a pivotal role because I think it's within the micro enterprises that you would find a bulk number of informal businesses.
It then becomes important for us to understand that the economic growth that we are really looking for, the jobs that we're looking to create at an exponential level, can only be created through these micro enterprises because they carry the capabilities and the agility to be able to hire and absorb those two or three employees.
So, I think the big thing and real question at the end of the day is their willingness to support these enterprises so that they're able to then drive this development and growth.
In our work with over 80,000 entrepreneurs across the country, we’ve observed that these micro enterprises often employ a steady three to five employees each.
So, you can almost unpack exponentially what that would look like if you were able to then create market access opportunities for them to increase their impact on job creation and economic development
How are township entrepreneurs innovating to compete with larger businesses, and what advantages do they have?
The one competitive advantage that any small business or micro-enterprise has is agility. And over and above that, being a township entrepreneur and one who has embraced their surroundings and where they come from means that they've got a keen understanding of their consumers.
Because a large majority of South Africa's workforce lives in the township and a significant portion of South Africa's population lives in township and rural communities, so being a township entrepreneur means that you've got first-hand insights on consumer behavior.
Now, that then helps you in terms of innovating new products that your customers would understand. But it equally means that you've got the upper-hand advantage in as far as implementation of services against big business because you are direct to consumer, but most importantly, you've been able to build trust and credibility with the consumer because you come from those areas; you come from the township.
In what ways is digitisation transforming township businesses, and what barriers still exist for wider technology adoption?
Digitisation is an enabler, and I am a firm believer in this. I mean looking back, 10 years ago when we started, there were big infrastructural issues in the country.
When you look at where we are now, where there's availability of internet connectivity across the country and the affordability of it as well, it's sort of getting better.
So, digitisation is a game-changer in several ways.
We have seen the rise in crime, where certain parts of the country, entrepreneurs or small businesses are forced to pay protection fees. So being able to digitise your business, especially from a payment solution, where you can access payments, means that you become safer.
Number one, you become less susceptible to crime. And then number two, you democratise access to your products and services, so anyone can buy your product, and that makes it easier because now you've got better cash flow, and it increases your sales.
On the other hand, digitisation is really being able to take advantage, and we've seen the adoption of entrepreneurs taking advantage of platforms like a Facebook marketplace and e-commerce platforms like Shopify, where they're creating their own stores with the whole pursuit of being able to sell their products.
So, digitisation is an ongoing conversation, but however, it's a game-changer for the township entrepreneur. Adoption is there because you must always remember one thing: adoption for any small or micro enterprise must always be predicated or driven by two things.
The one is, how is it saving me money? The second part is, How is it making me money? The moment any brand or any product is able to answer this, then it's going to be easy for you to place your product in the hands of the entrepreneurs, because they won’t just see it as a product placement; they'll see it as a tool to help them advance their business.
Where do you see the township economy in the next 5-10 years, and what trends do you think will shape its future?
In the next five to 10 years I see a very digitised township economy, but also that is its own feeder with a hyper-centralisation of products and commerce platforms that are driven towards certain areas so that there's a heightened level of localisation and so that there's democratisation of access to platforms and communities where the informal business or what is considered an informal business is no longer an informal business.
We need to change how we orientate ourselves around the township and these enterprises that operate within, because when you look at the informal businesses or the informal sector as it's called by your Stats SA and other organs of the state, this is the most formal market you'll ever come across that has been able to find ways of breeding life into itself because of the red tape and because it was not able to operate within mainstream economic tools or platforms.
So, I think the biggest trend that I see is hyper-localisation being the first one; number two, digitisation, number three, more localised products being manufactured within those township communities and being developed and exported to other parts of the world.
The fourth trend that I really see is also the consumer awakening to holding brands accountable, that the age of buying products from brands that are not directly contributing to the economic growth or the economic emancipation of its consumers is going to come to an end to a certain degree because the consumer is now awakening to not just localisation but what are brands doing and what are brands standing for in and around helping them get to where they need to go.
In closing, the township economy is a very powerful economy. It is primarily driven by trust and efficiency in delivery.
This economy has found a way of building a cohesive environment for its self-existence and being able to stimulate livelihoods and not just to put bread on the table.
In fact, the mindset that we have sometimes around the township and us feeling sorry for street vendors on the side of the road is a misperception of how well they are doing or how well some of them are doing in that particular market and economy.
I think if one really wants to tap into the power of the township economy, one must operate in a space, in a place of humility.
Humility is driven by honest understanding. And most importantly, just really rewiring your perceptions and misperceptions and formalizing yourself to how the township works.
But for you to participate in this space as a large corporation, you need to operate and participate in this space driven by trust and most importantly, building meaningful connections, not just for benefit now and immediate quick sale now, but for future inclusive economic growth that is mutually beneficial.
