Despite the invisibility of the informal sector, it is considered to contribute up to 30% of the Gross Domestic Product (GDP) of South Africa. The informal sector (and specifically the development of SMMEs) can be an economic growth driver for the country and not only help South Africa to recover from the ravages of the Covid-19 pandemic but also position it to embrace the Fourth Industrial Revolution (4IR) – one of government’s stated priorities.
Yet, while there has been much talk of creating smart cities (notably in President Ramaphosa’s State of the Nation addresses from 2019 onwards), little has been mentioned regarding townships.
We believe that by focusing on creating smart townships, entrepreneurship can be stimulated, the contribution of the informal economy can be maximised, and digital transformation can be accelerated. Furthermore, creating smart townships is a concrete step towards addressing socio-economic inequality, creating jobs and addressing pervasive poverty.
Incorporating townships into South Africa’s 4IR strategy will ensure some of the country’s largest communities are included as active players, with access to technologies such as the Internet of Things (IoT), virtual and augmented reality (VR/AV), cryptocurrency, and cashless payments, among others. In turn, entrepreneurs in the townships will be able to leverage these technologies in their businesses without having to travel to cities to do so, thus increasing their already substantial contribution to GDP and positioning South Africa for the future. It will also help to circulate more money within township economies instead of cash being spent elsewhere.
Understanding the unique township context
Smart townships can share similarities to smart cities, but there are important differences and a unique township context that needs to be taken into account. For example, in the face of Covid-19, online shopping has boomed in South African cities, with on-demand grocery apps like Sixty60 from Checkers experiencing exponential take-up. This, in turn, has seen it expand to all nine provinces, creating thousands of jobs along the way.
Similarly, services like Takealot have boomed, driven by changing consumer shopping habits and the various lockdowns. However, while there may be demand for similar services within townships, there are challenges that make it harder for entrepreneurs to deliver these services. For example, consumers may not be able to provide street addresses, and mobile internet connectivity is still expensive, while broadband rollout into townships remains tricky and fairly uncommon. Many people and some entrepreneurs are also still unaware of emerging technologies, never mind having access to them or the ability to put them to use.
If townships were to be prioritised in terms of developing digital infrastructure, providing training and partnership opportunities, they could be the new innovation hubs of the country.
Building blocks for smart spaces
In our initial research, we came across a 2016 model for smart cities developed by Khatoun and Zeadally from an article entitled Smart cities: Concepts, architectures, research opportunities, which we believe could be adapted to suit smart townships. It addresses the types of connectivity required to build a ‘smart space’ and the aspects of society that need to be factored in, from mobility to governance.
Building on this, we propose a digital infrastructure value chain model for building the smart township, which includes digital skills training for and upskilling of township entrepreneurs.
Last-mile connectivity, whether fibre or mobile networks, is a key foundation for building smart townships and needs to be layered with access to cloud technologies, an understanding of consumer needs and wants, and – critically – skills relevant to the age of 4IR.
Smart centres
We recommend creating business parks in townships that could serve multiple purposes. Firstly, by creating these spaces in partnership with the communities, a sense of ownership and community stewardship could be fostered. This would assist with the security of infrastructure and create a safer environment.
For example, an entrepreneur we interviewed, James Matshubeng, MD of Matoto Technologies, expressed a view that although there’s talk of using drone delivery technologies in the near future, there are concerns from potential operators about sending drones into townships in case they are stolen or vandalised. However, suppose the community buys into the technology as a solution that works for the people living there and adopts it as “ours”. In that case, there is far less likelihood of this happening.
We saw instances of this playing out during the unrest in July 2021. In communities where people felt the malls were owned and operated by outsiders, stripping value from the township, looting and vandalism were high. In communities where people felt a sense of ownership towards the malls, they banded together to protect them from rioters and looters.
Business parks could also create bridges between township entrepreneurs and corporates. For example, an organisation like Takealot could partner with a local entrepreneur to develop a depot. Shoppers could collect orders from the depot instead of providing a street address and ensuring they were available for the delivery, especially where street addresses are inaccurate or do not exist.
Financial institutions could create satellite offices at these business parks so that people could visit a branch to apply for a loan, for example, instead of having to travel to the city. These offices could employ people from the local community as staff, who would understand the context and language of the specific environment and assist with things like smart documentation systems in a way that community members could understand and trust.
These centres could be connectivity hubs, set up with broadband or mobile internet access, and offer training facilities and courses, partnering with local government and corporates to run such initiatives as part of their enterprise development and socio-economic investment programmes. These centres could offer training at various levels, from business skills to software coding and intellectual property.
We believe these business parks could become the epicentre of smart townships and a springboard for innovation and entrepreneurship.
Recommendations
- Put smart townships on the national agenda: Government needs to prioritise building smart townships in its economic agenda, set specific and achievable objectives, and allocate adequate research and resources towards achieving them.
- Organise the informal sector: To participate more fully in the economy and access the full range of opportunities available (including funding, training, etc.), informal businesses will need to be regulated to some extent. Where this is difficult, such as in the taxi industry, belonging to something like a body corporate could be used as a criterion for qualification (e.g. for a government subsidy). Formalisation would give the government and other stakeholders a grasp of the scale of the market and provide practical channels for targeted support interventions.
- Upskill township entrepreneurs: To participate fully in the digital economy, entrepreneurs need digital skills. The government and the private sector should consider digital skills training alongside other development initiatives (such as funding programmes) to help entrepreneurs contribute to the future development of the smart township and digital economy.
- Regulate, manage and prioritise Information and Communication Technology (ICT) infrastructure deployment: The government must ensure that there are clear policies and regulations to enable the private sector to deploy ICT infrastructure to the township to enable a digital economy.
Dr. Moshe T. Masonta
Dr. Motshedisi (Tshidi) Mathibe is a full-time faculty member at GIBS. Her research interests are social entrepreneurship, women entrepreneurship, informal sector, township economy, and base-of-the-pyramid markets. She is collaborating with Dr. Tonderai Muchenje, who lectures at the Tshwane University of Technology, and Dr. Moshe T. Masonta, principal researcher and a research group leader at the Council for Scientific and Industrial Research (CSIR), to explore the idea of smart townships. The three co-authors hope to publish their initial insights in a chapter of a book under development by the Department of Business Studies at Landmark University in Nigeria on the future of entrepreneurship in Africa, focusing on the challenges and opportunities post Covid-19 pandemic.
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