Radical Prosperity: Townships as Seeds for a Bright South African Future


We need to compensate the descendants of people who had their property expropriated during apartheid and the period just before it, but that surely can’t be the whole story.

There is an opportunity cost associated with not being allowed to own land and take certain jobs or live in certain areas. This is impossible to quantify, and we might be tempted to try a stupid solution like government’s BEE/AA programs, welfare (including a universal basic income), and government’s land reform process.

Surely, there must be a market solution to the problem that doesn’t assume government is competent in allocating resources.

The township is one of the most iconic legacies of apartheid; a symbol of poverty and the engineered separation between races. They are also places where millions of people enjoy some of the happiest moments of their lives, me included.

So what if we could deal with this problem of compensating for opportunity costs by focusing on the township? What if this could be done through government doing less and not more: Spending less, regulating less and not taking away more liberty from their usual scapegoats.

A possible solution might be turning townships into special economic zones, where regulations are cut to the bone, taxes on businesses based there are at the lowest possible level and basically everything is done to create a favourable environment for starting and growing businesses. Land tenure for people living in the townships and their businesses would need to be titled and secure before this is implemented, of course.

The really good thing about this is that it would draw investment to the townships at a rate higher than other parts of the country such that in a single generation the townships might catch up to the rest of South Africa. We would see even richer Sandtons, Rosebanks, etc., springing up from the townships. The people living there would rapidly move into the middle class and a lot of them would become millionaires and billionaires.

The government has to commit fully to this, however. There can be no half measures. Some of the regulations they could do away with (or exempt townships from) could include legal tender laws as expressed in the Reserve Bank Act of 1989, allowing people in the townships to use alternative currencies, such as Bitcoin, for transactions.

The people moving into the townships (the benefits would apply to companies located in the townships regardless of who owns them: Win-win) would bring with them an increased demand for township property, meaning that people who own township plots could soon find themselves being overnight millionaires. New banks that have their head offices in these townships could even be exempt from the normal approval processes for new banks, meaning they could be founded faster and for a much lower cost (doing away with the non-existent need for a state bank, people can start their own and without having to deal with the conditions currently imposed by the state).

With no labour regulations in our townships, there would be no need for a government industrialisation plan or possibly even a beneficiation strategy for the minerals we produce, because we could process them in the townships.

Now, one of the problems might be the prevalence of crime, but I hope that the increased opportunity for prosperity would do away with that. It won’t do so immediately, and might not ever – who knows?

These reforms would benefit township entrepreneurs most of all, but big business would also benefit because they would now have an outlet for making their investments without having to deal with government trying to thwart them at every step.

Of course, with all these benefits, we would need to make some sacrifices.

These reforms would mean government is potentially receiving much less revenue as businesses moved from current CBDs to the new township tax havens. Government would have to be willing to make deep cuts to the welfare system as it is now, depending on the amount of taxes they take in. That’s why I think we can only implement these reforms after paying off government’s current sovereign debt.

We don’t have to do anything overnight is what I’m trying to say.

The reforms could be phased in by implementing them in two or three of the larger townships as a pilot project and gradually extending it to the rest of the country in phases depending on the feedback we get from the experiment.

I was born and raised in a township, and nothing would break my heart more than if they are still associated with poverty when my time to leave this Earth comes. I would like to believe that poverty is not destiny for the people I grew up with. Let’s give these proposals a shot.