Is the township economy the real engine of Gauteng’s growth?

A spaza shop in Katlehong (Gauteng).

Across Gauteng’s townships, a powerful economic ecosystem operates every day, often overlooked, yet responsible for sustaining millions of livelihoods. From spaza shops and street food vendors to backyard rentals and barber shops, township entrepreneurship has become one of South Africa’s most resilient economic forces.

Townships are home to roughly half of South Africa’s urban population and host between 800,000 and one million small businesses, supporting more than three million informal workers. Despite limited access to infrastructure, funding, and formal markets, these businesses continue to generate significant economic activity.

Spaza shops remain a cornerstone of township commerce. These small grocery outlets provide daily essentials such as bread, milk, maize meal, and airtime to surrounding communities. In many areas, a single spaza shop can generate between R2,000 and R3,000 in daily revenue, with earnings increasing significantly during grant payment periods.

credit: T-Bone barbershop.

Street food businesses are another major driver of township economic activity. From kotas and amagwinya to shisanyama and chicken dust, food vendors serve thousands of customers daily. A busy township fast-food outlet can sell between 80 and 150 kotas a day, generating several thousand rand in daily revenue.

Housing has also become part of the township economy. Backyard rental rooms provide affordable accommodation while creating an additional income stream for homeowners. In many cases, a small cluster of backyard rooms can generate several thousand rand in monthly income.

Hair salons and barbershops, often operating from converted garages or containers, serve as both businesses and social hubs. With steady customer flow, even a small grooming business can generate meaningful weekend revenue.

Street vendors selling fresh produce, snacks, or everyday items at taxi ranks and busy intersections form another important layer of the ecosystem. According to the International Labour Organization, street vending accounts for over 40 percent of informal employment across sub-Saharan Africa.

Beyond trading activity, townships also host powerful community-based financial systems. Stokvels, one of South Africa’s most successful grassroots financial models, collectively hold an estimated R50 billion in savings across more than 820,000 groups. These savings clubs enable members to pool resources for groceries, education, travel, and property investment.

Despite its scale and impact, the township economy still faces significant challenges. Limited access to funding, poor infrastructure, crime, and barriers to formal markets

continue to restrict growth potential. However, initiatives such as youth development grants, township enterprise programmes, and fintech platforms are beginning to expand access to resources for small township businesses.

What remains clear is that township entrepreneurship plays a critical role in South Africa’s broader economic landscape. These businesses fill gaps left by formal markets, create employment, and circulate wealth within communities.

The question is no longer whether the township economy exists. The real question is whether it is finally being recognised for the economic powerhouse it truly is.