Nedbank chief economist, Nicky Weimar, speaking at the Township Retail Investment Summit held yesterday morning in Alexandra Township. Picture: Nicola Mawson Independent Newspapers
Nicola Mawson
Entrepreneurship is not just a business venture for those living in South Africa’s townships; it is critical for survival.
This stark reality was articulated by Bongani Chinkanda, Executive Director of HDI Youth Marketeers, during the Township Retail Investment Summit held yesterday morning in Alexandra Township.
Chinkanda underscored the urgent need for entrepreneurial initiatives, stating bluntly, “Entrepreneurship is not an option, it’s about survival… there is no option to fail”.
Chinkanda added that, when it comes to investment, bankers should sit and listen to entrepreneurs’ stories because “in there are the nuances that will determine your return”.
Stacy Saggers, commercial growth director at marketing data, insights and consultancy company Kantar South Africa, shared findings from the company’s latest research, which for the first time included insights derived from township demographics.
The survey revealed a grim picture: 47% of township households depend on salaries, 45% rely on grants, and various others resort to informal means, such as street selling or piece work. Encouragingly, 13% of those surveyed indicated they own their own businesses, with 11% engaging in street vending, thereby demonstrating a degree of entrepreneurial spirit even in adversity.
As South Africans grapple with financial hardship, Saggers noted the growing trend of seeking supplementary income through various side hustles, including reselling products purchased online from platforms like Shein and Temu.
“People are constantly looking at potential hustles,” she stated, highlighting a community-driven resilience that is becoming increasingly vital.
Nedbank chief economist, Nicky Weimar, told the audience that households were becoming more willing to spend as salaries in real terms start growing, employment starts growing somewhat, interest rates come down, and inflation starts to settle at the mid-point of the South African Reserve Bank’s target 3-6%.
Weimar noted that high inflation affects low-income earners the most, with the so-called middle class being hit from both sides by high inflation and interest rates. “It is the middle class that is squeezed the most severally,” with those living in townships being the most affected.
However, she said, South Africa is at the start of a meaningful economic recovery, with inflation expected to settle at 4.6% by the end of the year, and a cumulative drop in interest rates to the point where the prime lending rate is 10.25% by March next year. There are, she noted, upside risks, including the volatile rand and global conflict.
The rand, Weimar said: “Is the naughty child of the foreign exchange markets. The only thing you can predict about the rand is that you can’t predict it.”
She added that “South African consumers do like to spend” and this figure does not generally contract, with the first quarter decline being an outlier.
“That was a rare thing,” she said.
Retail sales surprised on the upside in the last quarter, coming in at 4.1% higher year-on-year as of the second quarter.
Weimar explained that “what happens when people feel wealthy is that they tend to spend in anticipation of that return”.
Jason McCormick, CEO of Exemplar - a developer, owner, and manager of township and rural retail spaces - said: “Who would have thought that township retail would become sexy.”
BUSINESS REPORT