Gauteng Township Economic Development Bill

Date: 29 September 2020

This draft Bill is in line with the announcements made during the 2019 State of the Province Address delivered by Premier David Makhura. The Bill seeks to enhance the regulatory management of the township economy, in order to lessen the regulatory burden on local enterprises. The Bill will further enable commercialization and sustainable growth, in order to create much-needed jobs.

The Gauteng Department of Economic Development has (29 June 2021) released its revised Gauteng Township Economic Development Bill, 2020 for public comment. Comments on the Bill may be lodged with the Gauteng Legislature on or before 30 July 2021.

Background to the Bill (an extract from the Memorandum on the objects of the Gauteng Township Economic Development BIll, an annexure to the Bill):

Despite the development and implementation of the Gauteng Township Economic Revitalisation Strategy and progress made since 2014 to date, township economy remains in the margins of the mainstream economy with high levels of poverty, unemployment and inequality. Key amongst the main causes is the regulatory failure or lack of enabling legislation to enhance the potential and growth of township enterprises.

The enactment of enabling legislation is proposed as a vehicle through which the Gauteng Provincial Government will drive economic development of township enterprises as one of the major programmes for the Gauteng economy to grow at a rate of 3,5% and drive down the unemployment rate to at least 20% by 2030. The Gauteng Township Economic Development Policy is designed to operate in tandem with the enabling legislation, the Gauteng Township Economic Development Act.

Therefore, the primary objective of the enabling legislation is to seek to empower the Executive Council to introduce programmes and projects that are geared at addressing the following constraints:

  • The regulatory failures which drive and re-enforce these conditions can be clearly identified.
  • The market fails townships because almost all township firms offering goods and services that big businesses and government could potentially buy are small, informal SMMEs who cannot access formal markets and financing for the goods and services they could provide.
  • Lack of proper commercial districts and high streets limits businesses to operate from homes or pavements – a situation understood by all financial service providers (including those distributing funding on behalf of government) as illegal and therefore as preventing these small, informal SMMEs from funding the expansion and/or growth of their businesses so that township streets do in fact become high streets.
  • The township real estate market faces its own specific version of this market failure. There is no affordable financing to expand these into formal commercial and residential buildings and no support available to work through the legal issues (title, ownership, zoning, compliance, et cetera).
  • The programmatic failure on the part of government at all levels has been the misdirection of funding and programmes that were designed to solve these problems.
  • The Regulations which set aside 30% of sub-contracting value on any government contracts over R30 million for emerging businesses provide no meaningful opportunities for over 9 out of 10 firms actually based in townships.
  • The funding targeted at SMMEs is not available to most township businesses, in large part because the rules on how formal lending works cannot recognise informal businesses and have no data on how risky (or not risky) it is to lend to these firms.
  •  Commercially viable land available in townships is not released and not used commercially on account of rules governing how land can be used and failure by all three spheres of government as well as the private sector to package and release land for use by township businesses.
  •  Failure to position transport nodes as enablers of economic development, e.g. taxi routes and taxi ranks should be the backbone of a province-wide network of commercial districts, high streets and real estate providing housing to commuters.
  •  Failure to support the backyard real estate market to drive township high streets. An informal real estate market serving 1 in 4 residents which remains informal is a massive opportunity lost and is currently an unrealised opportunity.

Accordingly, the Bill seeks to address these constraints and to give life to the principle encapsulated in the undertakings made by Premier Makhura during the 2019 and 2020 State of Province Addresses.

Table of contents:

Chapter 1: Preliminary provisions
Chapter 2: Designation of township areas
Chapter 3: Regulation of township-based enterprises
Chapter 4: Promotion and development of township-based enterprises
Chapter 5: Gauteng Township Economic Development Fund
Chapter 6: Municipalities
Chapter 7: General provisions.

 

Note: The complete text of the 2019 SOPA delivered by Premier Makhura can be accessed here.

SERI, LHR submission on the draft Township Economic Development Bill (26 November 2020):

  • The various documents can be accessed here

Earlier perspectives:

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