JOHANNESBURG — GG Alcock is no stranger to BizNews as he’s been interviewed previously by Alec Hogg as well as having had one of his articles published on BizNews. It was therefore great to catch up with GG and find out about his latest book, ‘Kasinomic Revolution – The Rise of African Informal Economies‘. In this podcast, GG explains how the book consists of a series of fascinating case studies that illustrate how the informal economy in South Africa should be taken far more seriously. GG also goes on to explain how government officials in South Africa – both at local and national level – just don’t fully grasp the massive importance and potential of this sector. Take a listen. – Gareth van Zyl
It’s a warm welcome to entrepreneur and author GG Alcock, who has just published a new book entitled, ‘Kasinomic Revolution – The Rise of African Informal Economies.’ GG, thanks for chatting to us today.
Great, thank you.
Before we get into your latest book, you have a very interesting background that has shaped your worldview. You were born in Msinga in KwaZulu-Natal, and your parents, in fact, were activists who raised you and your brother in a mud hut, with no running water or electricity. You are fluent in Zulu as well. Can you tell us more about yourself and your background and where you grew up and what life was like there?
Sure, so as you said, we grew up in a mud hut, with no running water, no electricity. In fact, my mother still lives like that and walks down to the river for her bath etc. We were taught by my mother at home, under an acacia tree, and we always felt we were incredibly underprivileged since we had no toys, no TVs, those kinds of things. I guess we only realised later the huge privileges of growing up in that environment with not only learning the language but getting a fairly intimate understanding of the cultures and the behaviour of people within those environments. When I was a kid, I would ask my father if he would send me to university and he said he would never be able to afford it, but he’d brought me up ready for a life in Africa. Retrospectively, I realise now that a lot of my work in the informal economies and the lower income sectors of Africa has been inspired by growing up in those communities and understanding what worked.
It must have been an interesting time to be part of a community like that as well. Obviously, you’re white, you come from a different background and culture. How did the community approach you? Did they integrate you completely?
Yes, it was the mid-70s all the way through to the mid-80s. It was kind of my childhood, I guess. It was at the height of Apartheid. Msinga, where we grew up, was the most rural, poorest area in SA. Today, it’s still the poorest district officially, and it was one of the most violent places in Southern Africa, with a lot of faction fighting. It was also a frontier between the white world of white farmers and the black world of tribal people. And there was a huge amount of conflict between the whites and the blacks.
We were seen by the whites as ‘veraaiers’ or traitors and we ended up being adopted by the local tribe. We felt that the tribe was our home and we were brought up, my brother and I, to a large extent by friends of my father, who were tribal leaders. We were initiated with stick fighting and other activities as part of those communities, and even my name GG was given to me by the community. I was Christian Mark but I was never called that because the Zulus called me GG and that became my name. My brother’s name was Makonya. Yes, so initially when we moved there, we were seen as these strange people and suspicious by the Zulus…there were no other people who did anything like that. But by living in that way, we were very poor. We were as poor as them. We were barefoot etc. So, because of that, we participated in traditional ceremonies and we were very quickly as a family adopted as part of the community.
Just to fast-forward to your adult and working life, how did that upbringing shape your life these days because you’ve been a shebeen owner, a political activist, a community worker? You’re also the founder of Minanawe Marketing, a leading activations business in the Kasi Sector. So, clearly your upbringing there has shaped who you are today?
Yes, so when I left the valley, I became a political activist and I initially believed that I was going to be in politics and an anti-apartheid activist. And with the kind of changes in government, I decided there was no glory in poverty. I’m a migrant worker like all the Zulus I grew up with. So, I moved to what they call in Zulu ‘the wall of thunder’, which is Johannesburg, and I kind of struggled to arrange a host of different activities, starting with everything from running a shebeen, to running telephones through to the townships and eventually I ended up in the marketing industry, which I realised I was born into, I guess, from my background of understanding idioms and how to communicate to people. And it’s not just about the language it’s about a deeper thing; it’s about understanding humour and sarcasm and deeper insights about people.
That led me into the marketing world and creating communication that resonated with people, both at an emotional level as well as making sense from a basic communication level. The kind of language we use, the kind of communication we construct. Yes, I guess my big thing has also always been that we’re part of a community and we have a real need to give back and grow the people around us. My business Minanawe was built on the basis of utilising township or Kasi business to do the work we did to grow people within those environments. We really partnered to a large extent as much as possible, with communities. So, as much as we were doing well commercially, we always asked how can we partner with others? With some of the projects that I write about in the book, one was working with township guys on a food takeaway outlet, and on the one hand, he was doing incredibly well, but on the other hand it was about how do we elevate these businesses that are supporting us and help grow their profitability in their business? And I think it’s all about growing businesses in a partnership.
Let’s talk about your latest book, Kasinomics. It’s a very interesting title. So, what inspired you to write it and what is it about?
My first book was called Third World Child, which was about growing up in a rural community and moving to the city. The second one was Kasinomics, which was really to a large extent about the work we were doing in the township environment, but also exposing the scale of the Kasi Economy. So, ‘Kasi’ has become a really cool term to describe the township and it’s kind of a bit of swagger if you’re a Kasi person. I really combined Kasi with the economics and poised it as a phrase to reflect on informal economies, whether they were in a township or in a city, or wherever they may be.
Kasinomics really was about exposing the scale and the opportunities of that environment. Kasinomics is kind of the next leap. I think when Kasinomics came out the formal sector people passed a bleary eye on it and said, ‘maybe there’s some business there.’ And for me, my next book Kasinomics Revolution is about how I believe there’s a revolution happening in the informal sector with a multitude of businesses and, in some ways, these businesses are responding to our massive unemployment problem. But on the other hand, it’s built on typical African township entrepreneurial value and it’s applying culturally connected offerings to people within those environments which often the formal sector doesn’t get or doesn’t understand, or doesn’t know how to supply. This transformation is really important on two levels. On one level, it’s a massive economic opportunity in a country where the government says it wants to create one million jobs. Well, you know what, they’re never going to create one million jobs doing the same thing over and over.
So, we have the opportunities – there’s this massive world of entrepreneurs and micro-businesses in this informal sector that needs to be recognised and, in some ways, there’s an opportunity for businesses, to partner with them and network with these businesses. On the other hand, it’s an opportunity for township people to actually recognise the opportunities around them, as opposed to looking outside of the township. On another level, we have a responsibility from a government perspective and from financial institutions and from municipalities etc to regulate and finance and support these businesses so that we can encourage this sector as a business in its own right.
It always strikes me, when driving through places like rural KZN or rural SA, that there definitely is a lot of small businesses in these areas, townships, etc. Would you say that there’s a strong entrepreneurial spirit there that has the potential to be unleashed?
Yes, I always struggle with the word ‘entrepreneurial’ … But the first answer is yes. There’s a lot of drive out there in terms of creating businesses and opportunities, but it’s more in the micro-business sector. So, are they entrepreneurs or are they micro-business people? One way or another there is this multitude of businesses. The prevailing view is that these businesses are subsistence or survivalist business, which is absolute rubbish. The reality is that we don’t recognise how big these businesses are or how big their profitability is. Of the few of what I called Kasinomic gorillas that I profiled in my book – one of them is a lady and her husband in downtown Johannesburg. They retail 3,000 vetkoeks every single morning for R1 each. Plus, they sell about R500 worth of tea, coffee – polony, etc. So, they put in their pocket between R2,500 and R3,500 every single day. Their profitability is about 40-50%. So, they make R1,000 and they’re there seven days a week, from 03h00 – 10h00. They make themselves R25,000 to R30,000 a month, cash. Yet you walk past them and you would never recognise them until you pause and you actually look.
And I’ve profiled a whole bunch of these businesses. There’s a lady in a school selling items and making R6,000 a month selling food to school kids. Now, if we take the government schools – there are about 10,000 to 12,000 township schools and about 10 ladies per township school. So, take that number and assume that each one of them is making R3,000 to R6,000 – there’s a massive sector just in the townships, call it the informal tuckshop. The lady in the school that I profile in the book is one of many similar to her and she put two children through university. Her husband is unemployed, and she’s been sitting at that same table at that school for 26 years, and she doesn’t want to leave. I said, if you could get another job, would you ever take one? She laughed at me, and she said, ‘what, and come and work for you in your kitchen and wash your underpants?’
Everyone says if she had another job she wouldn’t do what she’s doing. Well, she doesn’t want to come and be my domestic and work for 7 – 9 hours a day where, instead, she could be where she works for 3 hours a day at the school, and she makes R6,000 a month and she’s been there for 26 years. There are many more people like this, some are larger, some are smaller where there’s a multitude of businesses and the problem is that most of these businesses are constrained. They’re constrained by the opportunities to finance them, they’re constrained by the municipality wanting to pick them off the streets when they’re selling vetkoek on the street corner. They’re constrained by the opportunity for profitably. And primarily finance.
Our profiles in the book also look at the immigrant Spaza-sector where the Somalis and Pakistanis work. They have received a huge amount of publicity but the biggest thing about these immigrant traders is that they actually group together to finance their businesses and they utilise informal Stokvel type financing. As such, they are able to be hugely successful and compete with the likes of Shoprite and Pick n Pay etc. If you use that as an example, the opportunities are massive. Can you imagine the opportunities if we took those small businesses and doubled their size? They’d employ more people; they’d make more money. And if we brought them into the tax net, the benefits would be significant. Most of them would pay tax if they received something for it. A hawker on the street corner said ‘if I had a space allocated to me, I would pay rent!’ They’re not averse to being part of these things but they currently don’t receive any services, any support or anything for it.
Do you think that the government and big business has completely overlooked this sector and neglected it? Even though it’s potentially a massive sector?
100% in fact 200%. They have ignored it and it’s a tragedy. I heard the Minister of Small Business saying that we need to create more entrepreneurs in the townships. I was like, ‘are you mad.’ There are thousands and thousands of entrepreneurs in the townships. It’s your visual of what is an entrepreneur, you know. They’re looking for Bill Gates and Elon Musk. They’re not looking for Paul Mankhize who is selling vetkoeks on the street corner who could potentially be the next Mr Pie or Nando’s or whatever it might be. If we take Nando’s as an example, where did that come from, and why can’t every single one of these small businesses who is selling food in the township be the next big Nando’s with a little bit of support and networking etc.
Business, and especially, FMCG (Fast-Moving Consumer Goods) sector, are increasingly looking towards the informal and low-income sectors and Kasi sectors. Shoprite is penetrating dramatically into that sector. They have recently launched U-Save which is a container type store. So, the FMCG grocery type businesses are entering that space more and more. The automotive industries don’t even know how to start in those sectors. Governments, like the City of Johannesburg for example, kick the hawkers off the street because they’re an eye-sore. They don’t recognise these as businesses. The biggest problem is that there is a sense that these are subsistence and survivalist businesses on the one hand. And on the other hand, there are questions like ‘is this the kind of business we want to create?’ And there’s a fear that these places are smelly, unhygienic or don’t run good businesses and then the third element is that we don’t quantify them. Because there’s no quantifying aspect, we have no real research that provides real quantitative data. People then say, well what’s the business case? We don’t recognise it and we don’t have any information. But this is one of the reasons why I wanted to write about it because in the absence of quantitative data, sometimes you need to show case studies, and I illustrate case studies, where we built a R1.5bn industry for Parmalat cheese slices in the township food market which never existed before. So, the tragedy is if you look at Uber and Airbnb there was never a business model that quantitively measured the scale or opportunity is there, that was freeing people’s homes for Airbnb as an example. What they recognised is that there is such a thing, number one, and number two, they said let’s explore the potential of this.
Opportunities are not necessarily quantifiable. It’s about understanding the nature of the beast. And that is what I wanted to point out and both to township entrepreneurs and the youth and say, look in the mirror – don’t look out the window. But also, I really would like to push government to think more carefully. We talk about the increase of economies and then we ignore this economy. I believe that the only solution to an inclusive economy is for us to change our mindset around this informal sector. We need to go as far as, for instance, as changing the laws, so that you can finance a business using slight measurements of what credit you can give a business.
Just as a final question, after people read your book, what messages do you want them to walk away with?
I ended with messages to half the world, I guess! On one level, I would like township youth and informal businesses to take more pride in the fact that their businesses are businesses. Those who aren’t in that sector should also look at opportunities to enter that sector and not just walk around desperately, trying to get into an unemployment queue and get a job at Edgars or Shoprite or wherever that might be.
The other one is that I think that businesses need to look at this market and see what are the opportunities – whether they’re a financial institution, whether they’re in the automotive sector or whether it’s the FMCG sector. I think many of them recognise the opportunity but they don’t realise that they have to do business differently in these sectors. It’s not just about affordability but it’s about how do you structure something that suits the lifestyles, or needs, or pain-points of the communities or the businesses.
Then lastly, I really wish that government and municipalities can look at how do they change bylaws? How do they create an enabling environment within cities, within townships, and within rural areas, which actually enable these businesses and make it easier to set up and also, to grow these businesses?
GG Alcock, it’s been absolutely fascinating talking to you and finding out more about your book and your career, and your life.
Great, thank you very much.