Strengthening township economies in South Africa: the case for better regulation and policy innovation

Abstract

There is considerable policy interest in supporting township economies at present. This is important considering their history of marginalization and the extent of unemployment and poverty. However, the short-term injection of additional resources could simply leak out unless more conducive conditions are created for enterprises to grow and develop locally. The paper examines the framework of government laws, regulations and administrative procedures that inhibit township economic development. Inappropriate standards and onerous approval systems make it difficult for firms with growth aspirations and potential to formalize their operations and expand. The current situation oscillates between laissez-faire neglect and enforcement of punitive regulations, which creates uncertainty and opportunities for abuse. The paper concludes with some recommendations to create a more enabling environment, emphasizing the need for local experimentation and learning from reforms to different elements of the regulatory framework.