The Township Market
Value at the base of the urban economy in South Africa
Townships are regarded as the pits of the economy, built as settlements for non-white people during the South African Apartheid regime — township have developed as slums, ghettos and other undesirable vestiges of urban planning.
They are plagued by Spatial planning inefficiencies, lack of real infrastructure — be it roads, water-supply and especially telecommunications.
I have had the pleasure to be involved in this market for a number of years, starting with the supply of commodity products like meat and milk. Those businesses, like all commodity supply businesses, ended up being extremely difficult to run, as an ever increasing nubmer of competitors joined the market, with more aggressive pricing and a race to the bottom got started. This resulted in less overall value and income, for us to be able to remain in the market.
A while later, I was able to be part of an initiative to supply internet — unfortunately, only by line-of-sight, meaning that it was wireless and for only small suburbs within the township areas.
Fast-forward a number of years, I am trying to spend as much time in the various neighbourhoods as I can, looking for relevant opportunities and provide value. And oh boy, has my mind been blown away.
The hood is where it is at
South African townships are alive with opportunities — during the recent hard lock-down where many people lost their jobs in urban centres, they took some of the severance packages and started investing that in small dark kitchen enterprises across SOWETO, Umlazi and Khayelitsha. These restaurants offer quality, affordable food to many consumers.
I have also seen an increase in tech-startups across the country. Innovative founders with incredible businesses that could revolutionize their communities, South Africa and the African continent as as a whole. One small challenge: ACCESS TO CAPITAL/INVESTMENT.
Township based businesses, have the biggest hurdle on them, there is little to no venture backing for their startups. . . NONE what so ever.
Due to historical events, very few families are able to rally together and offer F&F investment. Where most families live hand-to-mouth, indulging young family members’ dreams of starting a business, is just not possible. As in any market across the world, there are ridiculous ideas, good ideas and exceptional ideas. The difference is that the exceptional ones also do not see the light of day, destroyed by the lack of effective infrastructure to help the idea gain traction and market relevance.
Venturing or venture capital as an asset class exists to go where few others have, to find new and interesting founders. It is about finding outliers — where better than in townships….
