Revitalizing Gauteng City-Region Township Economies Through Value Chain Development

Abstract

Integration into global and/or local value chains is increasingly being recognised as a way to promote the growth of small, medium and micro enterprises (SMMEs) in South Africa. In particular, by strengthening linkages between the largely informal township economies and the advanced formal economy, value chain development presents an opportunity to unlock the potential for township economies to contribute to the country’s growth process. This follows on from research that found evidence that integration into value chains increases competition and spurs innovation and growth of small businesses in developing countries. This chapter develops a conceptual framework for identifying the presence of both ‘vertical’ and ‘horizontal’ aspects of value chains, and the possible implications for township economic development processes. Special emphasis is placed on townships in the Gauteng City-Region, and Diepsloot is used as a case study. The framework is then used in the following ways: First, to highlight the relationships between consumers and suppliers of goods and services, focusing on the nature of integration into the local, regional, and global value chains. Second, to examine the impact of such integration on the performance of township businesses. Third, to examine how the impact of integration into value chains is influenced by the characteristics of the enterprise as well as the community in which the enterprise operates. In this way, the chapter contributes to discussions around the implementation of Gauteng province’s strategy to revitalize township economies, which is premised on providing support to township entrepreneurs across the value chain.