💸 Tapping SA's R425bn Hidden Economy…

Plus: Most in-demand dev skills, a new kind of loadshedding & some shiny new BRICS.
Newsletter
August 25, 2023

Hi there,

Craving that UK pizza? Apparently, England’s gig economy workers can’t stop hitting on their customers (1 in every 3), so watchdogs are stepping in to make ordering food and rides less awkward.

In this Open Letter:
  • Big shots: That R425bn kasi opportunity.
  • Secret sauce, a new type of Loadshedding & some new BRICS.
  • Right code: SA’s most in-demand dev skills.
  • Poll results: Where you buy fashion online.

TRENDING NOW

SA’s Virtually Untapped R425bn Market

It’s no secret some 1-in-5 South Africans reside in townships. What is staggering, though, is the sheer magnitude of the economic potential they harbour.

Contrary to the popular narrative of township dwellers being confined to shacks and mired in poverty, economic activist GG Alcock says the economic figures tell a different story.

Wake up Neo

Take a stroll through these areas and you might witness traffic jams, hinting at a prospering market. A first job for many fresh graduates here might be at a carwash, serving a part of the now 10 million unfinanced cars in SA – yes, lots of people in townships now have cars!

The Hidden Economic Powerhouse

According to Alcock’s talk at BizNews, a deeper dive into the township's financial landscape is illuminating:

  • Backroom rentals (that is people renting out a room or a shed on their property) generate around R20 billion annually.
  • The beauty industry thrives with salons and hair extension sellers raking in R10 billion a year.
  • Commercial property in townships? Spaza shop rentals contribute a substantial R25 billion to the annual economy.
  • Speaking of spaza shops, the market itself stands tall at a whopping R160 billion spread across ±100’000 outlets.
  • Hungry mouths find solace in the informal fast-food market, generating a hefty R50 billion through ±45’000 outlets.
  • A nod to South Africa's vibrant nightlife, ±45’000 licensed taverns and shebeens pull in R110 billion each year.
  • The hustle and bustle of the taxi industry adds another R50 billion.

In total, these businesses generate an estimated R425 billion annually. To grasp the enormity of this figure, it equals the combined revenue from South Africa's mining and agriculture sectors!

IPO’s are so pre-2020

Navigating the Challenges

However, there are hurdles to cross.

  • The preference for cash transactions, while direct, impedes the smooth flow of funds across supply chains.
  • The crime rates in these areas pose significant challenges.
  • The absence of subsidised transport means that the majority rely on minibus taxis, with fares taking up a sizeable chunk of the residents' disposable income.
  • Moreover, the informal nature of most businesses here results in minimal taxation, which, if harnessed, could elevate the service quality in these areas.
  • Businesses need infrastructure to flourish. While profit taxes fund essential services, townships often face shortfalls. A prime example is the stark difference in how different areas deal with loadshedding.
  • A Woolworths in a more affluent area during load shedding operates almost as usual, while a township's spaza shop clearly feels the brunt, showcasing how small businesses face a bigger impact.
😭

Innovators Stepping Up

There's a silver lining, as entrepreneurs and innovators are increasingly turning their gaze towards these untapped markets.

For instance, Waitr, a car wash management app, has made waves in the digital domain. Platforms like Delivery Ka Speed, Order Kasi, and others are revolutionising e-commerce in townships.

The payment sector has long been a lucrative one with key players like Flash, Shop2Shop, and Ikhoka already well established. Rumour has it Flash’s 1Voucher does 8 figures a month by allowing customers to convert a spaza shop-bought 1Voucher for anything from airtime to paying DStv or sports betting.

Even groceries have gone digital with Boxer Online running a distribution pilot in KZN and YeboFresh which we covered in a post recently.

And there are many more. In essence, there's R425 billion up for grabs, awaiting those with the vision to harness it. The townships, often underestimated, are vibrant hubs of potential. The question isn't if this potential will be realised, but when and by whom. So, are you ready to jump in?

IN SHORT

🥩 Steak Sauce. Spur Steak Ranches have released their financial results, which look mighty meaty. Despite challenging economic conditions, the franchise chain has capitalised on loadshedding, ensuring their grills stay on even when the power is off, and has shown a 24.9% increase in restaurant sales.

🏗️ Peak Property. Cape Town CBD is experiencing a resurgence after the ol’ Covid. Property investment in the inner city in 2022 has surpassed R3.5 billion. The developments are a mix of residential, commercial, mixed-use, retail and one parastatal property. Lekker man, lekker.

Loadshedding Shorts: Eskom graciously wants to let South Africans use some power during loadshedding – provided it’s under 10 amps. China is also donating R167 million worth of emergency power equipment to SA – that’s a lot of mops and knee guards. But not to worry – solar-savvy South Africans have installed their own Medupi-level worth of rooftop power generation (with the only difference, it actually works most of the time).

🦚 “The Indian Peacock has Landed”. On Wednesday, India became only the 4th nation to land on the moon and the 1st to land on the Lunar South Pole with the Chandrayaan-3 touching down a little after 6PM (IST). Fun fact: The $75 million budget is less than half what it cost to make the movie “Interstellar”. Someone read the Lean Startup.

🧱 6 More BRICS in the Wall. In what’s been a busy 3 days at the BRICS Summit held in Jozi, the current members have agreed to grant membership to 6 more countries to join the bloc next year. The new countries include Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. (And, sadly, they’re not changing the name to BAREESIICUS, which would have been epic.)

30-MINUTE PODCAST

3 Most In-Demand Devs Skills

If you’re still not clear on all the tech talent opportunities out there, you gotta check out this week’s podcast episode. We spoke to Jessica Hawkey of redAcademy about how they groom new tech talent and help onboard them into companies every year.

It’s a quick 30 minutes with some gold insights…

Just the highlights

1. Traditional coding languages are still hot

Jessica says here they still see a major trend towards Java and C#. Most companies have large systems and they can’t just jump to new tech, so if you’re a software dev who wants to be almost assured a job, that’s still a solid way to go.

2. There’s a huge need for Front-end and Back-end developers

Have a look at this part of the conversation where Jessica says she’s heard that there are nearly 30k junior vacancies in the software space in South Africa. And it’s almost continuous, with companies having to look outside of the country – despite the fact that we have people in need of work right here in the country.

3. Explore emerging tech, too

Build your career off a solid base, then explore the new stuff. As Jessica explains right here, most companies still hire for the traditional tech, because that’s what their infrastructure requires. But the new and exciting stuff is coming in, so always keep upskilling and exploring.

Like our podcast? Remember to subscribe and never miss an episode.

THE RESULTS

Oh, how interesting… we asked you last time where you buy fashion online, and like 68% of people in this community don’t buy clothing online — if you are building in this space, you are probably early.

🟩🟩🟩🟩🟩🟩 ⛔ I don't (68%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🌸 Shein or other Chinese shop (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 📦 Amazon (0)
🟨⬜️⬜️⬜️⬜️⬜️ 👠 Superbalist (19%)
⬜️⬜️⬜️⬜️⬜️⬜️ 🛒 Bash (3%)
⬜️⬜️⬜️⬜️⬜️⬜️ 👚 Thrift (Facebook marketplace) (8%)

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