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Revitalizing Gauteng City-Region Township Economies Through Value Chain Development

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The Changing Space Economy of City-Regions

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Abstract

Integration into global and/or local value chains is increasingly being recognised as a way to promote the growth of small, medium and micro enterprises (SMMEs) in South Africa. In particular, by strengthening linkages between the largely informal township economies and the advanced formal economy, value chain development presents an opportunity to unlock the potential for township economies to contribute to the country’s growth process. This follows on from research that found evidence that integration into value chains increases competition and spurs innovation and growth of small businesses in developing countries. This chapter develops a conceptual framework for identifying the presence of both ‘vertical’ and ‘horizontal’ aspects of value chains, and the possible implications for township economic development processes. Special emphasis is placed on townships in the Gauteng City-Region, and Diepsloot is used as a case study. The framework is then used in the following ways: First, to highlight the relationships between consumers and suppliers of goods and services, focusing on the nature of integration into the local, regional, and global value chains. Second, to examine the impact of such integration on the performance of township businesses. Third, to examine how the impact of integration into value chains is influenced by the characteristics of the enterprise as well as the community in which the enterprise operates. In this way, the chapter contributes to discussions around the implementation of Gauteng province’s strategy to revitalize township economies, which is premised on providing support to township entrepreneurs across the value chain.

The views expressed in the article are those of the authors and not those of the organizations to which they are affiliated.

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Notes

  1. 1.

    Using the lower bound poverty line of Rs 443 per month in 2010/11 (see Stats SA 2015).

  2. 2.

    For example, an extensive network of minibus taxis connects Diepsloot to the economic centres nearby. This means of transport is too expensive and time-consuming to bridge the geographical divide in a meaningful way. No train or bus service exists that offers a less expensive alternative.

  3. 3.

    The choice of using sources of supplies is determined largely by data availability. Data on where sales from the enterprise end up would have enabled us to examine the extent to which township enterprises are producers rather than consumers of some external supplies. While this would have been a better proxy for integration, information on this was not collected, unfortunately.

  4. 4.

    The variable education is a categorical variable with the following values: 1 = no formal education; 2 = enrolled in primary school but did not finish; 3 = completed primary school; 4 = started but did not finish secondary school; 5 = completed secondary school; 6 = vocational training; 7 = some university education.

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Acknowledgements

Christian Hamann is thanked for the preparation of the figures in this chapter. The useful comments of the two reviewers who read an earlier version of this chapter are acknowledged.

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Authors and Affiliations

  1. University of Pretoria, Pretoria, South Africa

    Phindile Ngwenya

  2. World Bank, Pretoria, South Africa

    Precious Zikhali

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  1. Phindile Ngwenya
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Correspondence to Phindile Ngwenya .

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  1. University of the Witwatersrand, Gauteng City-Region Observatory, a partnership between the University of Johannesburg, The University of the Witwatersrand, the Gauteng Provincial Government and organized local government, Johannesburg, South Africa

    Koech Cheruiyot

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Ngwenya, P., Zikhali, P. (2018). Revitalizing Gauteng City-Region Township Economies Through Value Chain Development. In: Cheruiyot, K. (eds) The Changing Space Economy of City-Regions. GeoJournal Library(). Springer, Cham. https://doi.org/10.1007/978-3-319-67483-4_9

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  • DOI: https://doi.org/10.1007/978-3-319-67483-4_9

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