Red tape blocks Khayelitsha small businesses

This article has been updated with a response from Minister Alan Winde. See Update at the bottom of article.

“It is impossible for a business to flourish in the township,” says Wongama Baleni the barista for Khayelitsha’s first coffee shop, Department of Coffee (DOC). The shop was featured by GroundUp in 2012. It has since been celebrated in the media, including in City Press, etv and CNN.

Both DOC and Espinaca Innovations, which distributes food to pre-schools, orphanages and the community, have been trying for months to expand their businesses but the owners are finding it nearly impossible because, they say, of the way they are being treated by the City of Cape Town and “those in charge” of the Violence Prevention through Urban Upgrading (VPUU), where DOC currently trades.

VPUU is a City of Cape Town project initiated in 2006 in partnership with the German Government through the German Development Bank (KfW). Its aim is to reduce crime and empower local residents.

DOC has for a couple of months been looking to expand by opening at least two other coffee shops in Khayelitsha as well as making the current shop bigger. But the owners have been hitting dead-ends.

“What people see on the outside is different from what is actually happening on the inside. We cannot even get permission to add a (shipping) container to extend our shop because of reasons unknown to us. We pay expensive rent that is even more than what other traders make in a month on sales. We do not understand why the VPUU management is still managing public infrastructure when it is supposed to be managed by the community. They have no confidence that the community can run businesses,” says coffee Barista Wongama Baleni.

”VPUU management have no confidence that the community can run businesses.”

According to Baleni, DOC pays R1,804 monthly rent. This excludes electricity and water. “There are so many spaces available for us to open other shops but we are not getting the permission to do so. There was a space at Lookout Hill [in Khayelitsha] that we tried but we were told by the City that putting a container there would mess up the structure of the building. If we wanted to open a shop there we would need to get an architect who would design the place for us.”

“This is what drives us to crime,” says a clearly fed up Baleni.

Founder of Espinaca Innovations, Lufefe Nomjana, has been moving from place to place to run his business because he cannot get any fixed building to trade from. Nomjana bakes and sells loaves of spinach bread. With the help of his employees, these are distributed on bike or foot around the township.

Last year Nomjana tried to get a space from the vacant Harare Square, but till today he has not received a response. There was a spot available for sale. Nomjana put in an application to buy it but says he does not know what has happened to his application.

Last year Nomjana tried to get a space from the vacant Harare Square, but till today he has not received a response.

“I don’t know who received the application as I sent it by email. I phoned a landline number to follow up about a month ago, and the person I spoke to told me that they had received something that looked like my application,” Nomjana says.

He also tried another place in Harare suburb called Grassroot, which had an unused shop. “But the people I spoke to kept referring me to other people,” he says.

He also tried to get a blue container at Harare Square. “I was told that I couldn’t use that as it was meant for security guards, only to find out that there are currently no security guards employed after the previous ones were let go!”

He is exasperated. “I honestly cannot tell you the people I communicated with throughout my search for a space because we simply do not know who the decision makers are. We don’t know who to talk to, so you end up talking to different people each time. The problem here is that the mission with this whole VPUU is hidden. Their ears are not on the ground. They are taking and not giving,” said Nomjana.

”We simply do not know who the decision makers are. We don’t know who to talk to.”

Nomjana currently works from Spar with his five employees and says he has given up on getting space to operate at Harare Square. He has since met with people from Lookout Hill who are keen to house him, but he has not received a proper response yet. He says if things do not work out at Lookout Hill, he will rent a space as a backyarder where he can set up a container, which he would turn into a bakery that distributes rather than sells directly to the public.

Nomjana says, “It is tough out here for us, because at times you find that just because a person is known or because they were funded before and have a track record, they get spaces easily. But for a person like me who is still building my business, trying to get that track record, it is a nightmare.”

Cathy Skillicorn Architects, which is responsible for a development in Harare Square, describes it as a place of “hustle & bustle”. When GroundUp visited Harare Square on Friday afternoon during lunch time the place was empty, except for a few people who were visiting the library and the internet cafe. The rest of the work units were shut by metal doors with no indication as to whether there was a business operating at a particular unit. Residents said this is how the square is on any day of the week.

Another trader, who did not want to be named, said she is not at all happy with trading at the VPUU site. She sells backpacks and clothing which she says hardly make her enough money as a day can go by without having sold anything and she is still expected to pay rent, electricity and water.

A VPUU trader who sells bags and clothes says if she had a choice she would close shop. Photo by Mary-Anne Gontsana.

“We are not even using our lights because it is daylight and it is hot, but we have to pay for electricity. Crime is high this side and there is no security, just volunteers who run away when trouble comes.” She says that not long ago one of the traders was almost raped right in her shop and the people responsible for security just ran way. “We are told that upgrading will take place in our shops and we will have to close for a month while that happens, but we know that this is just a way of kicking us out. They think we are stupid, that we are fools,” she said.

Michael Krause, team leader of the VPUU, says the facilities they provided were discussed with the traders and input was requested to make these “suitable for the Khayelitsha context”. Rentals were discussed right at the start with the traders, he says.

“There is no profit included in the rental.”

Krause added, “Currently we don’t know whom the traders pay to secure the space to trade. It is not the City of Cape Town or VPUU. Rentals are set at a rate that allows for maintenance of buildings, to provide certain levels of security and to provide business support. There is no profit included in the rental. The rentals vary between the facilities and are measured per square meter. In general, close to the station the rental is higher than far away from the station as there are less feet. Since we started we have not increased the rental although we agreed to increase the rental by the inflation rate. The rentals are cheaper than in commercial spaces in Khayelitsha.”

Krause admitted that security and safety was a problem but claims that since the VPUU started, murder has dropped by 40 percent. (GroundUp cannot confirm this statistic.)

The provincial government, led by Alan Winde, the MEC for Finance, Economic Development and Tourism, has been running a campaign called Red Tape Reduction. On a widely played radio advert Winde says, “One of our main goals is to facilitate economic growth and create jobs. As a businessperson you know all too often red tape is a challenge for your new or existing business.” The advert encourages entrepreneurs to call a helpline set up to “get rid of red tape.”

We tried to contact Winde but his PA recommended we speak to Mayco Member for Safety and Security, JP Smith. Smith did not return our calls by the time of publication.

The Red Tape Reduction helpline is 0861 888 126.

Update

Minister Winde sent the following response:

The Ministry of Finance, Economic Development and Tourism prides itself on being highly responsive.

With regard to red tape queries, we deal with these in coordination with the Red Tape Unit within our Department which manages our Red tape campaign, and is contactable via e-mail at redtape [at] westerncape.gov.za or on 0861 888 126. These details are widely advertised, and I encourage businesses to contact them as they will do their utmost to resolve red tape queries that are hampering business.

There are some queries, however, that we cannot resolve to the satisfaction of businesses. The request by the entrepreneurs from the DOC to add a container to their current operation was one such query. The area in which their business resides is a formal, ‘built’ environment. In a meeting late last year with Premier Zille, MAYCO member Garreth Bloor from the City of Cape Town, and myself, several other options for expansion were put forward to DOC, including the erection of an awning under which tables could be placed, and we encourage the owners to take these up.

With regard to the request for information we received from GroundUp journalist Mary-Anne Gontsana, we treated this as a media query Her particular questions were around rental rates at the VPUU, the processes required to access space and community involvement in VPUU decision making. We therefore referred her to the place we believed would provide the most accurate information relating to the technical operations of the VPUU.