A New Mall in Delft South: Good or Bad for Local Businesses?

This case study was included in a collaborative submission by SLF, PLAAS, the University of the Western Cape, and the Centre for Excellence in Food Security, in response to the Competition Commission’s inquiry into South Africa’s grocery retail market. The full submission is available here.

 

Some years ago, the City of Cape Town sold off a 9.7 ha site adjacent to Delft, to Shoprite Checkers (Pty) Ltd (whose co-founder and Chairman Christo Wiese has a personal fortune estimated at R93 billion). In 2016 it was announced that a shopping mall would be constructed on the site, with a proposed investment of R170m. According to an article in The New Age, “The City’s property management department has been facilitating the development of this site over the past few years and has been informed that the construction of the bulk services was due to commence soon”. In terms of broader investment, it is claimed that the developer will make a R2m contribution to developing a facility of the City’s choosing, create 240 “housing opportunities” (in a private property development), and employ local labour in the “different stages of development” of the mall.

 

Delft Enterprises by ZoneDelft South (population ~40,000) had over 1,600 microenterprises in 2015. The City’s land use zoning regulations render the great majority of these enterprises as illegal or at least extra-legal (shown in the map alongside), hindering their potential for formalising. Despite the enthusiastic response by the City of Cape Town as to the positive impacts of the mall, there is no evidence that this development will bring about economic opportunity to any of the resident microenterprises within the Delft community. There is no mention of the mall being compelled to make space for Delft township businesses of any nature. Moreover, researchers working with township entrepreneurs (such as SLF) have not been consulted by the City of Cape Town in the approval of the mall vis a vis their assessment of the socio-economic impact that the mall could have on local businesses.

 

Based on the parent company ownership, it is most likely that the tenanted businesses will include some or all of the following outlets that fall within their group: Shoprite, Checkers, Checkers Hyper, Usave, Computicket, OK Furniture, MediRite Pharmacy, LiquorShop, and Hungry Lion. Supermarkets and shopping malls virtually always include high street supermarket, liquor and take-away businesses within their tenants and services. These three kinds of business outlets alone directly compete with over half the township economy.

 

By actively facilitating development of shopping malls in the vicinity of the township, yet making no allowance for informal business, local government and big business form a highly effective partnership to outcompete and dominate the township retail grocery sector. Further to this outmanoeuvring, the new mall will form a localised monopoly of formal retail businesses – against which no township grocery retailer can ever expect to prosper or grow beyond its current informal status. In South Africa’s economy of entrenched inequality this scenario is highly problematic.

 

Much of the change required to level this playing field and limit the unfairness of structural conditions falls to government. Firstly, there is a critical requirement to ease the legal and technical processes for formalisation of informal businesses to take place. This includes activities such as amending and relaxing town planning laws to incorporate the residential reality of township informal grocery retailing, and easing the requirements for permitting and licensing in order to bring township business into a regulatory framework. Furthermore, future shopping mall developments must be compelled to incorporate (eg) 25% or more space for local township businesses. Explicit provision for secure, hygienic and appropriately-sheltered trading facilities ought to be incorporated in all planning and design for retail spaces in malls, as well as around key transit nodes like bus and train stations and along high streets and similar transit corridors. Without such and other similar actions, township enterprises will never have the opportunity to legitimise and grow in the face of market dominance by formal retail chains.

 

Words by: Leif Petersen

Editing by: Caitlin Tonkin