Growth will come from Alexandra not Sandton
Service delivery protests are not going away. If anything, they will probably intensify. We simply must put money into our informal sector. Final resolution will not be found in just meeting demands for basic living standards. That’s necessary, but it’s not the endgame.
Investing in our township economies is at the core of broad-based economic transformation. It is the bridge we need to build to address economic inequality.
We don’t need any more skyscrapers in Sandton. What are they if not just piles of cash stacked on top of each other as a monument to businesses that are going ex-growth? They don’t create new customers or grow new business. opportunities. Huge head offices are often the tired endgame, not the new shoots of business.
We don’t need preservation of established business models anything like we do risk-taking in radical new thinking. We had better get out of our comfort zones before it becomes downright uncomfortable to be found sitting in them.
Let’s invest where there is nothing. Invest to enable. Invest to create economies of new participants, rather than to harvest the diminishing (and departing) client bases built up in times gone by. Invest for opportunity, not obligation — see the virtuous circle of it all, be patient and determined.
The state, through centralised policy and decentralised ownership, will need to lead the way towards meaningful state capitalism.
At the margin, all excess capital should be invested in growth. Growth will come from Alexandra, not Sandton.
It will come from the future, not the past.
Our approach to investing in the informal sector needs to be less formal. The old, conventional wisdom metrics of business plan formulation will need to tolerate new variables. This isn’t reckless, this is foresight. This is a 2030 discussion — don’t expect results by next Easter.
Some extraordinary actions are needed. Electricity must be provided free to township economies. That alone would be grounds for an economic revolution. Eskom will not get those municipal and township debts settled and you cannot criminalise a nation that simply cannot afford to pay.
Infrastructure must be put in place, beyond obvious water and sanitation basics, that will enable the flow of goods and services seamlessly between our formal and informal economies, right down to the spaza shops and doorsteps of individual consumers.
Roads, efficient public transport, logistics, health care, schooling and security at the local level. Access to technology for all is essential, at the right price, subsidised if necessary.
Funding must be available for the lowest measurable trading flows. Technological oversight will enable needevidenced lending without asset backing. Real-time trading records become credit scores, loans are advanced and repaid frequently, like intraday. Borrow R500 at 11am to buy stock (or airtime to confirm an order) and repay the loan by 6pm when you balance the day’s books, to get the (low) intraday rate.
Enable all manner of electronic settlement with advantages for specific users (like grant beneficiaries) or pricing specifics (like VATexempt goods) through on-thespot, point-of-sale devices in walking distance of consumers.
Eventually the economies of scale created at the local trading point will enable wholesale purchasing there and lower the retail price to the point where it is more than competitive and a damn sight more convenient than heading to the mall. The end-point unit cost of consumption will converge and equate across all demographics and geographies and the prospect of broad-based economic dignity will become a visible reality.
Yes, there must be a deal. The deal is that you sign up to participate in the formal economy and pay tax, one day. There is a difference between paying tax and paying for service delivery — tax comes out of profit and you get to keep more than you pay (for now).
This very same tax is cycled back into the very same fledgling economic units, until independent business units begin to flourish.
The outcome is socially rewarding and yet the inputs are driven by the self-interest of creating more paying customers for established business. The virtuous cycle is obvious. It’s common sense. Imagine if we don’t do it.