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How corporates can build bridges to transform the township economy and prevent future unrest

Bulelani Balabala
By Bulelani Balabala
23 Oct 2024
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The July riots of 2021 were a stark reminder of the urgent need to address systemic issues within the township economy. Ignoring these problems is not an option. It is in everyone’s best interests to ensure that the township economy is vibrant and inclusive.

July this year marked the third anniversary of the devastating riots that engulfed Gauteng and KwaZulu-Natal, two major provinces in South Africa, in 2021. 

These riots weren’t just about looting; they were the result of long-standing economic and social issues within our township communities. The townships have always been a boiling pot of economic frustration and lack of service delivery. The socioeconomic impact of a failed state is most felt by marginalised people in townships and even rural areas. 

Statistics from the insurance industry constantly show that few small businesses have insurance policies. So, when protests turn violent, the biggest loser is small businesses because their recovery is often impossible. 

The historical context of townships


Townships have a painful history. They were deliberately created to segregate black individuals from economic hubs, pushing them into marginalised areas with limited resources and opportunities. This historical segregation has led to systemic issues that continue to plague these communities today. The frustration and economic exclusion in these areas create a boiling pot of discontent, which can easily spill over into unrest, as we saw in July 2021.

The reality of small business challenges 


Small businesses are vital to the township economy, but they face significant hurdles. 

According to recent statistics, two-thirds of small businesses in South Africa fail within the first five years. This high failure rate is due to multiple factors, including lack of access to finance, insufficient support structures, and limited market access. Despite these challenges, small businesses are essential for job creation and economic growth. Small businesses in the township continue to show tremendous resilience despite the challenges.

 In South Africa, small businesses represent more than 98% of formal businesses, yet they create less than a third of all formal jobs. This discrepancy highlights the need for better support and development initiatives. The survival rate of these businesses is low, with two-thirds failing within the first five years and about 20% failing within the first two years. High youth unemployment and the prevalence of informal sector operations further exacerbate the situation.

In light of the above, the reality is that the “informal economy” is a big economic driver and creates millions of jobs. However, we fail this significant part of the economy by excluding ourselves from participating in this thriving market. Once you take on the task of understanding the township economy, you will realise that we need the township economy more than it actually needs us. So, you ask, where will growth come from? It will come from small businesses and the township economy.

The role of corporates in supporting the township economy


To prevent future unrest and foster a thriving township economy, corporate South Africa must play an active role. Here are three key strategies to consider:

  • Meaningful impact: Corporate social investment programmes must be more than just a box-ticking exercise. They need to be targeted and impactful, addressing the root causes of economic disparity. This involves investing in infrastructure, education, and business development within townships. For example, corporations can fund training programmes that equip township entrepreneurs with essential skills and knowledge.

  • Effective use of funds: Utilise corporate social investment programmes and enterprise development funds to create sustainable support models. This includes simplifying regulatory processes and providing access to finance through innovative channels. For example, creating micro-loan programmes or partnerships with financial institutions can provide much-needed capital to small businesses.

  • Leveraging existing resources: Integrate township businesses into corporate supply chains. Providing market access and opportunities for growth can make township businesses strategic partners rather than mere suppliers. This approach not only supports small businesses, but also diversifies the supply base for larger corporations.


Building an inclusive economy


To ensure long-term stability and prevent future unrest, we must build an inclusive economy. This involves:

  • Education and skills development: Implement training programmes tailored to the needs of township entrepreneurs. Workshops, mentorship programmes and vocational training can provide the necessary skills to thrive in the modern economy.

  • Access to finance: Create channels for easy access to both traditional and non-traditional financial resources. Simplifying application processes for funds and providing various financial products can help address the capital needs of small businesses.

  • Regulatory support: Simplify and streamline bureaucratic processes to make it easier for small businesses to operate. Reducing red tape and creating resources to help entrepreneurs navigate the regulatory landscape can significantly affect their success.


 The 2021 July riots were a stark reminder of the urgent need to address the systemic issues within the township economy. Ignoring these problems is not an option. By taking deliberate and meaningful actions, corporate South Africa can help create a more inclusive and resilient economy. It is in everyone’s best interest to ensure that the township economy is vibrant and inclusive. This involves a shift in mindset from viewing these areas as charity cases to recognising them as integral parts of the national economy. DM

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