The socioeconomic impact of retail investment in Soweto: evaluation and policy recommendations

Date
2016
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University of Delaware
Abstract
The economy of South Africa is distinctively bifurcated. While a developed modern sector continues to expand, a substantial segment of the population has been excluded from the formal economy. This exclusion, in combination with the spatial impact of apartheid, has manifested in the crippled market development of defined geographic regions of the country, namely townships. Soweto, the conglomeration of townships southwest of Johannesburg, which represents South Africa’s largest urban residential area, has a negligible economic footprint, despite constituting well over one-third of the population of Johannesburg. Furthermore, high levels of unemployment continue to plague Soweto and household incomes remain low. This phenomenon has motivated the investigation of strategies to reduce the disparity between the human capital potential and the economic output of Soweto and to economically empower the low-income population of the region. Over the course of the past decade, increased investment in the retail trade sector has been made by national retailers in Soweto accompanying the proliferation of shopping mall developments in the community. This study applied a quantitative approach to estimate the socioeconomic impact of retail investment in Soweto between the years of 2005 and 2015. The surge in retail investment has caused economic growth in the region, but due to market and policy failures the benefits of growth are not proportionately accruing to the low-income population.
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