Bridging the Gap: Unlocking the True Potential of Township Businesses in South Africa

In the heart of Gauteng, behind the bustle and blaring minibus taxis, lies an economy quietly pulsing with energy. In a tiny workshop in Soweto’s Orlando West, 28-year-old Mbali Nkosi welds metal frames for digitally-printed furniture. She jokes that “the street taught me hustle, the internet taught me hope”. But Mbali still cannot access a business bank loan because her enterprise is unregistered — just one example of the barrier between township innovation and formal opportunity.

A R 1 Trillion Economy… Locked Out

Recent research conducted by Standard Bank reveals that township businesses in South Africa form an economy valued at almost R1 trillion annually. Business Report+2Business Tech Africa+2 Yet despite this scale, nearly 80 % of township enterprises remain unregistered, meaning they operate outside formal regulatory frameworks, cutting them off from conventional finance, procurement channels, digital platforms and growth. Standard Bank+2Business Day+2One of the report’s authors noted:

“This report shows the structural challenges facing township entrepreneurs and what it will take to overcome them.” — Simone Cooper, Head of Business & Commercial Banking, Standard Bank. Business Tech Africa

Across multiple provinces — including Gauteng, KwaZulu-Natal, Western Cape and Limpopo — the survey examined enterprises with turnovers from R100,000 to R50 million and found that informality remains the norm. Business Report

Lives, Voices, Hustles

In Tembisa township, 34-year-old taxi-panel-beating entrepreneur Thabo Dlamini repairs vehicles one side of the street, while his wife sells lunch plates outside the garage. He says:

“I’m working twice as hard as someone in Sandton, for half the pay. My problem isn’t customers — it’s the tools, the stock, the system.”

Thabo’s story is echoed across townships. A recent report found that while many aspire to grow, they often fall back to survival mode. A BusinessDay article noted:

“Without scale or differentiation, many businesses struggle to grow beyond subsistence levels.” Business Day

Further, the competitive density is intense:

“Entrepreneurs often face up to 20 similar businesses per community, squeezing margins.” IOL

For many, the cash-only economy remains dominant. Although over 56 % preferred bank transfers or EFT, the majority still transact in cash, limiting traceability and scalability. Business Report+1

The Hidden Costs of Hustle

The informal status of these businesses comes at a cost. According to the survey, fewer than 9 % of township entrepreneurs accessed bank loans; most rely on personal savings or family support. Business Tech Africa For Mbali in Soweto, the issue is paperwork and trust:

“I got one offer for a small loan but they said ‘you must have three years audited accounts’. I’ve got three years of hustle, not firm accounts.”

In Cape Town’s Khayelitsha, fueled by post-load-shedding disruptions, many township entrepreneurs face operational interruptions. A 2023 report found that 64 % of township businesses cease operations during power cuts, and 66 % have shed jobs as a result. Startup Magazine South Africa

The Opportunity in Plain View

Despite these headwinds, the township economy presents a “sleeping giant” of opportunity. The survey found that some businesses reported turnovers above R500,000; approximately 14 % achieved over R1 million in annual revenue. Engineering News

“With the right partnerships, township SMEs can move from survival to scale.” — Naledzani Mosomane, Head of Enterprise & Supplier Development, Standard Bank. inner-city-gazette.com

What Needs To Change

Township entrepreneurs aren’t asking for silver bullets — they want frameworks, access and connection. Here are key enablers:

• Formalization made easier: Reducing the cost and complexity of registration, providing one-stop support.
• Business literacy training: Many entrepreneurs still don’t know how to track inventory, calculate margins or manage cash flow.
• Digital inclusion: Merchant platforms, e-commerce literacy and digital payments can unlock scalability.
• Market access pathways: Linking township enterprises to procurement opportunities, supply-chains and corporate networks.
• Local hub and outreach models: Because commuting long distances for workshops is often not viable.

Enter Thabiso Connect

At the Thabiso Monyane Foundation we believe that the pathway from hustle to scale lies in bridging township innovation with mainstream enterprise. Our new initiative, Thabiso Connect, is a 6-month hub and outreach program in Gauteng designed to formalize enterprises, build business fundamentals, drive digital adoption and create linkages to corporates. We will work side-by-side with entrepreneurs like Mbali, Thabo and many more — not just training them but preparing them for scale.

“It’s not enough to survive. We want to build businesses that last.” — Mbali Nkosi

A Call to Collaboration

Township entrepreneurs are not waiting; they’re working. But they need structures that reflect their reality and ambition. As the economy changes, so must the support they receive — from token training warehouses to actionable, applied, scaled programs. For corporate, government and social sector leaders reading this: the township economy is more than a statistic. It’s millions of livelihoods. It’s the future of inclusive growth. It deserves more than talk — it needs strategic, sustained investment. And if we act together — with formalization, literacy, digital tools and market access — we can turn what was once survival into sustainable scale.

About the Author:

Thabiso Monyane is the Founder & Executive Director of the Thabiso Monyane Foundation, a South African non-profit dedicated to empowering township youth and communities through innovation, education and opportunity.