Township Economy Needs Policy Reforms to Unlock Sustainable Growth

South Africa’s township economy, estimated to be worth between R900 billion and R1 trillion, continues to face challenges including regulatory barriers, limited access to finance and economic leakage.

Annelene Dippenaar, Chief Business Officer at Shop2Shop, says urgent reforms are needed to help township businesses survive and contribute meaningfully to economic growth.

“The township economy is worth somewhere between R900 billion and R1 trillion. What is less often said is that it grew without support. It grew despite policy and regulation that was never designed for it,” says Dippenaar.

She notes that approximately 70% of township businesses do not survive beyond three years, highlighting business sustainability as a major concern.
Dippenaar also calls for simpler registration processes, arguing that excessive red tape prevents many entrepreneurs from formalising their businesses.

“Very often the registration requirements are not fit for purpose, extremely onerous, or simply impossible to comply with,” she says.

On access to finance, she believes financial institutions should consider alternative data, such as transaction histories, instead of relying solely on conventional lending requirements.
“The constraint is eligibility criteria, not capital,” she says.

Dippenaar further highlights economic leakage, noting that roughly half of township and rural household spending leaves local economies. She advocates for collective buying initiatives, improved stock distribution and stronger partnerships between large businesses and township enterprises.

“A productive economy means more of the value chain sits inside the community, including processing, assembly, logistics and light manufacturing,” she explains.

She also emphasises the importance of digital payments and accurate record-keeping in helping small businesses become more visible and gain access to credit.
“The gap is infrastructure, not capability,” says Dippenaar.

Looking ahead, she believes government should prioritise better data collection, simpler regulations and adequate municipal funding to ensure that township economic policies translate into measurable results.

“We need to understand what these entrepreneurs contribute to the economy and then support that growth,” she concludes.