The townships bursting with potential.

Author:Mulligan, Gabriella

South Africas townships are renowned for their sprawling sizes, poverty and crime rates. But they are also home to plenty of vibrant entrepreneurial activity.

According to a recent World Bank Group study, over half of South Africa's population lives in townships and informal settlements, which account for 38% of the country's working age population. Yet despite this abundance of people able to contribute to the country's development, this has not translated into widespread interest in these communities as areas of potentially high business activity.

However, in recent years, a few plucky business hubs have been popping up in townships across the country, supporting South Africa's little-known entrepreneurs.

"Through understanding the base of the pyramid and how it works, township entrepreneurs understand anything can be sold, it's just a matter of how you sell it," says Melilizwe Gqobo, the founder of Hubspace. Hubspace supports young businesses in the township of Khayelitsha and has expanded to Woodstock and Philippi, providing office space and facilities as well as running business and soft skills training.

Gqobo believes that township entrepreneurs are some of the country's most dedicated businesspeople and present the future of South Africa's economy. "More than anything, what makes township entrepreneurs stand out is the understanding that there is no other option but to make a success. There is no plan B. That's such a drive that it's impossible to put it into words," he says.

Gqobo also points to townships as key consumer spaces thanks to their booming populations. However, he laments that despite their huge potential, township businesses have long struggled to attract attention and investors.

"There isn't a big appetite from private investors to put money behind township entrepreneurs, which is caused by a lack of knowing what's going on, and the stereotypes that townships are not conducive to markets," says Gqobo. "It takes a few people to look at townships in a different manner. It needs a few people not to be brainwashed, to look and see an untapped market."

Furthermore, he adds, poor infrastructure such as roads and internet connectivity as well as more specific shortcomings such as a lack of higher education institutes and technical skills training severely hinder township economies.

Reconstructed Living Lab (RLabs), originally launched in 2008 in Athlone, Cape Town, is another business hub supporting township businesses. RLabs...

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