Nearly half of South Africa’s working-age population, and almost two-thirds of unemployed people, live in townships. These areas were created under apartheid as places where workers slept but did not build businesses or strong local economies. As a result, many townships still struggle with poverty, unemployment, and limited economic opportunities.
Today, the question is simple but urgent: how can government and business work together to create jobs, support entrepreneurs, and grow township economies?
Why townships matter to South Africa’s economy
South Africa is one of the most unequal countries in the world. A small number of large companies dominate many industries, making it difficult for small businesses to enter the market and grow. At the same time, the economy is not creating enough jobs.
Manufacturing, which once played a significant role in job creation, has shrunk over the years. Services such as retail, finance, and tourism now make up a larger share of the economy, but these sectors do not always create enough decent jobs, especially for young people.
The private sector already employs most working South Africans and plays a vital role in building infrastructure and investing in skills. If township economies are strengthened, they can become a powerful source of new businesses, jobs, and income, especially for communities that have been left behind. Understanding different types of townships
Not all townships are the same.
Some, like Soweto, Mamelodi, and Langa, are long-established and located close to major cities. Others, such as Diepsloot and Khayelitsha, have grown rapidly and include large informal settlements. These areas often receive new migrants from rural areas and other countries. There are also smaller, peri-urban townships near rural towns, which usually lack basic services and infrastructure.
Despite these differences, many townships face similar challenges: poor infrastructure, limited access to markets, lack of skills, and difficulty accessing finance.
The challenges holding township economies back
Government efforts to develop township economies have so far had limited success. One reason is that many residents lack the skills or support needed to start and grow sustainable businesses. As a result, many small-town businesses operate in crowded, low-profit areas, such as small retail, where competition is high, and growth is limited.
Other significant challenges include:
Limited access to funding
Weak infrastructure
Complicated regulations
Poor coordination between national, provincial, and local government programmes
Even though the potential is clear, these barriers make it difficult for township businesses to succeed.
How government and business can work together
To unlock township economies, both the government and the private sector must play a role.
Government can:
Reduce red tape and make it easier to start and run small businesses
Improve access to finance for micro, small, and medium enterprises
Invest in infrastructure such as roads, internet, and public spaces
Support local economic development programmes that are well-coordinated and properly monitored
The private sector can:
Include township businesses in their supply chains
Support skills development and business training
Partner with the government on business incubators and funding initiatives
Use tools like credit guarantees and venture capital to help small businesses grow
Improving land ownership security can also help entrepreneurs use their property as collateral to access funding.
Creating opportunities for young people
Reviving township economies is especially important for young people. More than one-third of South Africans aged 15–34 are not in education, employment, or training. Without jobs or skills, many young people are left with few options.
Entrepreneurship, small business support, and skills development can help address this challenge. However, past programmes have often failed due to poor planning, corruption, and weak oversight. Agencies meant to support small businesses exist, but their real impact is not always clear.
To make a real difference, programmes must be better designed, adequately funded, and closely monitored.
Building skills, safety, and local opportunities
Addressing skills shortages is critical. Education and training systems must work closely with employers to ensure that people gain the skills actually needed in the economy.
Townships also have untapped potential in cultural tourism. Improving safety, increasing visible policing, and supporting local tour guides can create jobs and attract visitors, while protecting both residents and tourists.
