Bushra Razack | CEO | Philippi Village | mail me |
Amidst the rising cost of living, interest rate and fuel price hikes, and load shedding, the elephant in the room remains persistently high rates of unemployment.
Much fanfare tends to surround any announcement of a small decline in the quarterly unemployment rate as it did at the end of November 2022 when Statistics South Africa revealed that the official unemployment figure had decreased by one percentage point between the second and third quarters of 2022 from 33.9% to 32.9%.
It is currently hard to create more jobs
What we should not be forgetting is that even with this decline, more than 7.7 million people remain unemployed and reliant on social grants for their survival. Under the expanded definition of employment, more than half of people living in Limpopo and North West are unemployed.
Unemployed and working-class households are bearing the brunt of the higher cost of living. Although domestic inflation has been easing since its July 2022 peak, food inflation continues to rise, increasing from 12.3% in October to 12.8% in November. Data indicates that retail trade sales have contracted year-on-year. Manufacturing confidence remains low while mining activity has been on a decline for nine consecutive months, primarily due to persistent load shedding.
Economists and analysts agree that in the current environment it will be hard to create more jobs. Business confidence – a key metric for job creation – has remained below the neutral 50 level for the sixth consecutive month according to the RMB/BER Business Confidence Index.
A constrained energy supply and frequent bouts of load shedding coupled with strike action, high wage demands and growing input costs have combined to mute business confidence, which in turn constrains job creation.
Saving SA from further growing unemployment
To change this downward trajectory, structural reforms need to be accelerated and South Africa’s global competitiveness increased to enable consistent economic growth of 5% each year.
Government has called for business and the private sector to drive growth in order to save South Africa from further economic decline and growing unemployment. The SMME sector, in particular, is regarded as a critical driver of economic growth.
Small and medium sized businesses account for around 98% of businesses across South Africa and contribute 39% of GDP. The challenge, however, are that these businesses are also amongst the most vulnerable to external economic trends.
According to a study conducted by the University of the Western Cape, South Africa has a high start-up failure rate with between 70 to 80% of small businesses failing in the first five years. Energy constraints, for example, have hit many of these businesses hard just as they are struggling to recover from the ravages of lockdown restrictions. High rental and electricity costs don’t help matters.
Aiming to address some of the challenges faced by emerging entrepreneurs and small business owners is our organisation, an integrated, mixed-use development situated in the Cape Flats township of Philippi. Our innovative development offers a vibrant and energetic business hub which includes 54 affordable rental spaces for offices or workshops while the development’s ‘Container Walk’ provides six and 12-metre converted containers for communal workspaces, offices or storage space for small businesses and emerging entrepreneurs from the surrounding Philippi local community.
In addition to benefiting from safe and more cost-effective workspaces, tenants also benefit from not having to travel significant distances to reach their place of work, meaning that their costs are reduced.
The development’s commercial space is integrally linked to the local community through a number of facilities and amenities on offer including a football field, BMX cycle track, running track, library, sewing school, amphitheatre, coffee shop, health services as well as training opportunities.
In conclusion
We are strengthening the connections between people, the places they share, and the potential opportunities that exist through collaborative processes that identify shared value. We focus on the drivers that encourage people to come together, communicate and relate.
We often ignore how this can spark inspiration, innovation and growth. This is how a space like Philippi Village can allow for proximity to challenges to be an opportunity to co-create solutions that are relevant and have a real impact within the community and our country. This proximity is also why our nurtured connections unlock local and grassroots innovation ecosystems, and enables the people from the community by reducing disconnect, increasing collaboration and participation as well as improving access to information and networks in a safe, beautiful and inspiring space.
What our models reveals is that there are solutions and ways in which to recognise the opportunities and knowledge that exist in our country’s township spaces, mitigate risks to ensure that more small businesses survive and thrive, despite a challenging macroeconomic environment.
The township can serve as a hub for innovations and solutions not just for townships but for society as a whole.
