A pro-migrant lobby group has threatened to challenge a law aimed at supporting and funding township enterprises owned by South Africans if it infringes on the rights of migrants to own and operate businesses in Gauteng townships.
Gauteng premier David Makhura promulgated into law the Gauteng Township Economic Development Act in Soweto on Friday.
Business Day has previously reported that if passed, the legislation, which was described as unconstitutional by the African Diaspora Forum, has the potential to increase xenophobia as it could restrict where foreign nationals may set up formal and informal businesses in SA’s economic hub.
The legislation is intended to designate township areas as places that are “reserved for the exclusive and sole [benefit] of citizens and people who have permanent residency status in the republic”.
The law makes provision for financial assistance to be provided to township enterprises owned by locals, and Makhura said nearly R1bn had been raised so far in an effort aimed at achieving an inclusive economy to create much-needed jobs.
SA’s township economy is valued at R400bn, equivalent to almost 8% of GDP annually, and employs about 2.6-million people. The sector includes 30,000 spazas (local supermarkets), which are valued at R200bn a year and are dominated by Somalis, Ethiopians, Pakistanis and Bangladeshis.
Foreign-owned spaza shops and their owners and employees are regularly subject to vicious attacks in the country.
Tension
There has been rising tension between locals and foreign nationals in Gauteng recently, with several ministers, including police minister Bheki Cele and his home affairs counterpart, Aaron Motsoaledi, visiting hotspots in Johannesburg to try to quell the violence.
In his keynote address on Friday, Makhura did not mince his words, saying: “This act will make it possible and mandatory for provincial and local government to actively support township businesses, especially businesses owned by South Africans, I want to emphasise. This law is meant for businesses owned by South Africans.”
As part of the legislation, a township partnership fund has been set up, with Makhura saying R850m had been raised to date. “We are talking to a few more partners, we are finalising details. We want the partnership fund to at least be R1bn by year end,” he said.
Amir Sheikh, spokesperson of the African Diaspora Forum, said the lobby group welcomes any progressive measures by the government that will bring “business unity, intercommunity mutual work relationship [and] cohesion, and that will promote and develop the township economy, [which has] long been disregarded in both funding opportunities, policy and legislation”.
The township economy can thrive only if the government “accord[s] all traders rights to dignity and equality, and socioeconomic rights as envisaged in the bill of rights and constitution”, Sheikh said.
“We disregard the discriminatory, populist approach and rhetoric by the Gauteng premier in popularising the bill ... ahead of [Friday’s] signing of the bill into law.
“Migrant business owners in SA, despite their status in the country, whether asylum seekers, refugees, permanent residents or naturalised citizens, were not beneficiaries of any government support or funding and they will always remain an integral, indispensable part and parcel of the Gauteng and SA economy,” he said.
“Where their rights to own and operate businesses in the township are infringed in any form, we and our partners and like-minded organisations ... will not hesitate to take the Gauteng government to task and challenge the matter in a court.”
‘New deal’
Makhura was adamant on Friday, likening the legislation to Obamacare, saying: “This is a new deal for the township economy. This is our Obamacare for township economy. Obamacare was about including large sections of Americans who were left out of the healthcare. This bill is about inclusion, transformation, shared prosperity.”
The premier said provincial departments and local councils would be required to report how much they spend in buying goods and services from township businesses.
“The law makes it easy to release land to township businesses, for those who want land to expand and grow their business. The law allows us to release provincial-owned land, municipal and government land for businesses that want to expand and create jobs.
“We [will] release land on long-term lease.”
Gauteng economic development MEC and former Johannesburg executive mayor Parks Tau said the legislation would reshape the “economic geography of township and informal settlements.
“It will transform the economic fortunes of our townships ... so that they contribute to economic growth and employment facilitation.
“The act will allow enterprises access to finance, training, equipment, new markets. It’s a developmental legislative framework [aimed at] addressing economic, geographic, technological and social inequalities that were exacerbated by both Covid-19 and the July unrest.”
The act’s regulations will be promulgated by June, Tau said.
Financial assistance
DA MPL and economic development shadow MEC Makashule Gana said: “I supported the bill and I am happy that it has been signed into law. The act must be implemented without delay, but it should never be used for political sloganeering. It must benefit township businesses and entrepreneurs so that they create the much-needed jobs for the people of Gauteng.
“The act is not xenophobic in any way; the act makes provision for financial assistance to be given to businesses fully or partially owned by South Africans.”
Tshepo Ramodibe, head of corporate affairs at the Industrial Development Corporation (IDC), which contributed R250m to the township partnership fund, said: “The IDC is ready to support implementation as a founding partner and provide support and expertise.”
Themba Ndlovu, president of the Gauteng chapter of the National African Federated Chamber of Commerce and Industry, said the chamber was thrilled the provincial government was prioritising township entrepreneurs. The legislation is “a dream come true”.
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