Gugulethu, the urban sprawl 15kms from Cape Town in South Africa, is a vibrant township pulsating with the beats of Africa.
Mzoli’s, the popular shisa nyama here that barbecues meat to mouth-watering perfection, is almost synonymous with the township, attracting droves of locals and tourists to Gugulethu.
On weekends particularly, the action spills on to the streets with vendors selling anything from slogan t-shirts to recycled glasses of ciders and beers, to hats and tattoos.
The ‘church of meat’, as Mzoli’s is often referred to, famously attracts over a thousand people every day, as they enjoy their braai and drinks in a convivial setting to heart-thumping music. It’s not just the grilled meats that’s the attraction here, but the tantalizing sauces used to barbecue them.
“They call us the ‘church of meat’ because instead of being at church, [people] are here,” says Sisanda Mangele, the outlet’s operations manager. Her father, Mzoli Ngcawuzele, owns the place.
Mzoli’s started in 1998 when they were selling tripe in the back of the garage in their home. Today, they have grown from butchery to bastion of meat, turning over R10 million (about $710,000) annually with 20 employees.
“We had four freezers for our stock. We grew from that and raised capital and we also received a loan. We didn’t realize that this could be a tourist destination. It started with the locals, then it spread out. People started coming in with their associates, colleagues, friends and family,” says Mangele.
Mzoli’s is a magnet not just for ravenous tourists; they are also a case study for aspiring entrepreneurs hungry for ideas.
“People come here for advice when they are about to open their businesses. We advise them on passion, and investing in something they are interested in,” says Mangele.
Part of the counsel they give is that nothing comes easy, even now.
“The fluctuating rand affects us as well as unemployment. With unemployment on the rise, crime has increased but there are people watching out for them,” says Mangele. Despite the odds, it’s the perfect example of how business can thrive in a township.
There is a growing demand to maximize the potential of South Africa’s township economies estimated to be worth billions, although there are few records to quantify the amount of money moving within the industry.
Moipone Molotsi, Director at the Centre for Small Business Development (CSBD) at the University of Johannesburg, says business is booming especially among the new generation, but the shortcomings are many.
“It’s just that it is not captured for people to understand what is happening in the townships. You have people that have branched into clothing manufacturing, retail, and information technology. When you go into the township, you see a lot of people manufacturing products for major companies but they are undocumented,” stresses Molotsi.
Molotsi recommends an innovative and competitive mindset in order to make it in this market. But she says that’s not always the case.
“You still have the masses who are managing the business because it was passed on to them, so they are not business-minded hence we see a number of those businesses running down,” she says.
Township enterprises fail to take care of their businesses, one of the reasons they fail, so they need to up their game.
“The market understands itself, they do not want to go into a shop that is smelly and is not well taken care of, and the service is bad. That is why you see them moving onto the shops in the suburbs, because they demand a service which is lacking in most of shops in the township,” she says.
The township is involved in diverse economic activities, ranging from spaza shops, street vendors, hair salons, shebeens and minibus taxis, to mechanical services, manufacturing, burial societies, stokvels and childcare services. These are largely micro enterprises with low capital and a low skills base, however, a proper business model is needed, says Molotsi.
The Alexandra and Soweto townships in the Gauteng province of South Africa are no different when it comes to being examples of thriving informal economies: common sights are vendors selling everything from fruit to fat cakes.
“Whether they understand the business or not, it does not matter for them [entrepreneurs], and that is why their businesses are not always a success. But if people were to come together and work as a team, things would be different,” says Molotsi.
Aspiring entrepreneurs should make a point of asking themselves how they intend making a profit with their business model and if the model is not already in existence. The government has taken strides in ensuring growth in this market, but the industry seems to be at a halt.
“The government is doing far much more to support entrepreneurs and the township in general. You have a lot of counterparts out of the country that do not have the same programs in place. The heart of the country is in the right place, but you could say that they lack implementation. In as much as there is training and mentorship programs, entrepreneurs are still not making progress. The question we should be asking ourselves is why?” says Molotsi.
She reckons the country should redirect its focus.
“We are more focused on being quantity-based rather than being quality-based. We have not prioritized as a nation what sectors we should be focused on developing; like how China was with and their technology enterprises [sector]. They focused on that sector and they invested more in that market,” she says.
Another trend is that some businesses do not have financial records, deliberately, because they do not want to account to authorities how much they are making.
“This becomes a problem when they need to access funding,” she says.
Township entrepreneurs also have issues owning properties. Fanny Mokoena, an entrepreneur in the Meadowlands suburb of Johannesburg, testifies to this.
Mokoena is owner of a tavern, restaurant, hospitality school, and a petrol station. She says in her years of being in business, most of her challenges have been at the petrol station.
“I have been running the petrol station for 23 years and as of now, I don’t have a property lease agreement. I can’t even count the number of times I have been in and out of the City of Joburg Property Company, I have really been struggling,” she attests.
“How am I expected to run a successful business without a proper lease agreement? Who will be willing to invest in your business when you do not have the proper paperwork? Which insurance company will come and insure my business, because I am like a squatter?” asks Mokoena.
Her challenges do not end there. She says government policy changes as well as lack of confidence in black-owned enterprise have caused her businesses to spiral.
“The government’s policy changes have affected the catering company. Business is not as much as it used to be. The government barely requires catering services for their meetings.
“People as well have no confidence in township catering companies to cater for their weddings, they would rather go to the suburbs. I feel like they have been disappointed so much maybe that is why black people lack confidence in their businesses,” she says.
But she can only do her bit by delivering services to the best of her ability, and hopes other entrepreneurs in the townships are doing the same.
The lack of adequate business support from the government, lease agreement problems as well as minimal support from community members have made Mokoena lose faith in the term ‘township economy’.
“When ‘township economy’ was launched, I was there. All I know I was part of the group that was going around preaching ‘township economy’, but I never got to experience it. I don’t know what that is,” she says.
Mokoena believes these are post-apartheid terms, such as Black Economic Empowerment (BEE), that lack substance and affirmative action.
“They don’t mean anything. When these programs are being launched, they call crowds, but when it is time for implementation, we don’t see the results,” says Mokoena.
In the bigger scheme of things, most businesses in the township have had very little contribution to South Africa’s economy. This is because they are historically disadvantaged by their location and have had no manufacturing capacities, so they had a minimal contribution to the development of productive sectors.
The glimmer of hope is the private sector, with banks like Absa, supporting the market. In July, they announced R10.5 million (about $745,000) to uplift spaza shops into sustainable businesses that can compete with major retailers in the mainstream economy.
“Absa’s support will not only see the sustainable establishment of spaza shops but it is envisaged to create jobs and help these spaza shops net triple times more profit as they have in the past. The project has already seen transformed spazas record a 300% increase in airtime sales,” says Tshepo Seeta, Founder and Managing Director of eSpaza Sum.
Experts agree on the lack of recognition of the importance of social organization, embracement of social capital and the hand-holding approach in supporting township enterprises. The one-size-fits-all enterprise development strategies have further alienated entrepreneurial initiatives in the townships in the past.
Gauteng’s MEC of Finance, Barbara Creecy, reported in her 2017 budget speech the government spent R600 million (about $42 million) to boost the economy in 2014, which they then increased to R6 billion (about $425 million) last year, having 2,800 businesses benefiting directly. More needs to be done.
The purpose of most township businesses used to be about addressing the needs of the community whilst also providing the families in them basic needs. However, that has changed.
Enterprises like Mzoli’s and resourceful entrepreneurs like Mokoena have the desire to consistently deliver services successfully no matter the odds to wider markets, and they have proven they can.