Learning from the riots: Linking formal, informal economies

Johannesburg – South Africa recently experienced public unrest and insurrection that resulted in a looting spree and destruction of property.

While President Cyril Ramaphosa has condemned criminal acts and called for stability, our city economies and local and township businesses have been badly affected, with jobs lost and livelihoods threatened.

Looking at efforts to rebuild the country and bring the economy to its productive state, where should the focus be centralised and what opportunities exist?

The various publications by the South African Cities Network (SACN) are a good starting point and include a number of key messages.

The need to understand the critical challenges facing urban economies and potential areas for growth under this climate are even more acute.

In a paper titled The Role of Informal Economies in Transforming the Space Economy, the link between formal and informal economies is examined.

Over the past few days, we have seen informal entrepreneurs operating alongside damaged malls and shopping centres.

Citizens can no longer be considered passive recipients of urban services. The need for a shift in mindset across the government and society should be emphasised.

This should be taken as a call for power to be shared and citizens’ expertise and willingness to deliver services should be leveraged in earnest.

Township economies are bearing the brunt of looting and damage to property.

This is detrimental to the wellbeing of ordinary people because township economies ought to play an active and transformative role in the aftermath, especially in most affected areas of Kwa-Zulu Natal and Gauteng.

The sustained shock is in addition to the institutional barriers to the growth and development of township economies that the SACN seeks to address through its township economies action research initiative.

The lack of integration of the informal economy into the formal economic landscape is a result of a fragmented regulatory framework pertaining mostly to township economies. Through digital marketing and digital business practices, as well as generating digital products and services, the digital economy has the potential to increase the competitiveness of township economies.

There is an obvious need to capacitate and assist township entrepreneurs to understand the digital economy and how they can transform and enhance their businesses.

If the past few weeks have taught us anything, it is that township entrepreneurs need a hand up, not a handout.

By Kopano Ntsoane

• Ntsoane is a junior researcher at The South African Cities Network.

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