Last week, the Competition Commission of South Africa warned that structural barriers continue to make it difficult for businesses in township and rural economies to compete and grow.
The Commission’s newly published Rural and Township Economy Project research report examines the market and regulatory challenges facing businesses in historically underserved areas. The research identifies procurement, access to formal retail and digital markets, and regulatory red tape as some of the key obstacles.
According to the report, independent and informal businesses often face higher procurement costs and less reliable access to stock than large chains and franchises, which benefit from established formal supply networks. Smaller businesses also have limited access to malls, shopping centres and e-commerce platforms, while licensing, zoning and municipal requirements can make formalisation costly and difficult.
The Commission is also calling for a more nuanced approach to assessing competition in these markets. It argues that businesses selling similar products in the same area should not automatically be considered close competitors, as consumers may view them differently based on factors such as price, variety, quality and accessibility.
The report signals that the Commission intends to work with municipalities and government departments to address regulatory barriers, while engaging with the retail, supply, distribution and e-commerce sectors to improve market access for smaller businesses.
It also leaves the door open to enforcement action, identifying exclusionary access to retail channels, discriminatory procurement conditions and supply arrangements that disadvantage smaller or historically disadvantaged businesses as areas that could warrant further investigation.
The Commission says the report provides an evidence base for future enforcement, policy engagement and cooperation between government institutions, putting township and rural economies firmly on the competition-policy agenda.
