In defence of the ubiquitous township mall

To watch shopping malls in urban townships being looted and burnt to the ground over the past week was to witness a tragedy. There seems to be little appreciation for the role the modern shopping mall plays in the lives of residents of such areas, and the impact this can have on transforming SA’s distorted spatial economy.

While many would deride them as a bourgeois import from the US, township shopping malls often represent one of the only places of social activity, shopping and, yes, aspiration in the sterile Verwoerdian dormitories in which they have been built, competing only with bleak, vandalised playgrounds, dull utilitarian sports grounds, neighbourhood spaza shops and street-side stalls.

They offer safe spaces for young adults to shop for a treasured item of clothing, for a mother to buy a trolley of groceries at the same discounted price as those in the wealthy suburbs. And they provide outlets for the same quality of formal banking as wealthier South Africans take for granted. They provide a place for the aged and vulnerable to safely access and spend their social grants. Most importantly, for lack of anything else in most townships the mall is the beginning of the dream of a middle-class life, a life wealthier South Africans take for granted.

SA investors have historically been sceptical of investing in urban townships, wary of the risk — literal and financial — and poor returns, so burgeoning black capital (and pride) has driven investment in these areas. The long-term strategy for such idealists is that investment in such expensive economic infrastructure signals to the market that this is a place worth putting money into, worth taking a chance on.

There are lots of positive externalities from these investments. For homeowners, proximity to these shopping malls is seen as aspirational, the property market in adjoining communities improves and banks provide bonds to new property owners. Such investment acts directly and indirectly to stabilise urban townships and retain its upwardly mobile residents.

For the government, these developments are a win-win. Aside from basic infrastructure, not one cent of this investment in economic infrastructure comes from the fiscus — private sector investment-driven malls enable government to sidestep investing public money in enabling infrastructure used to attract investors in local town centres in townships — if these even existed. 

National government is able to levy taxes on goods and services provided. Local government gets its cut from municipal rates and levies and does not have to double up on infrastructure or transport to other areas for the sake of shipping. Shopping malls can therefore represent the beginning of nodes of economic growth and development, retaining wealth in neighbouring communities outside the wealthy former white towns and cities.

To see such shopping centres destroyed in a few short days of wanton looting and destruction is to lose all of these socio-economic benefits; ones that present the genesis of reforming deeply skewed spatial patterns of the past. Will idealistic black investors start again and rebuild? Or will they take their insurance money and join their (no doubt tut-tutting, head-shaking) well-heeled fellow investors in the safe, well-off suburbs and overseas markets? Even if they’re prepared to stay the course, will they be able to leverage finance from investment funds or get loans from banks?

There is no doubt that investor confidence in urban townships throughout SA will be shaken by the events of the past two weeks, and this may be the single most difficult thing to rebuild. If a bank’s risk-rating formula shows risk above a certain level it will refuse to lend; if an investor can’t make his or her margins, they’ll walk away — such things are cold and unsentimental. But ultimately the wealthy are insured, and while all South Africans will pay a price for recent events, directly or indirectly, those with money are mobile, and at worst can take a loss and move on.

The biggest losers are the residents of urban townships, and the poorer such residents are the more negative the impact will be. The poorest are the least mobile and will have no choice but to accept the terms offered by those retail outlets still standing, whether that means queuing endlessly outside remaining shopping centres in closely-policed corrals, or paying inflated prices for scarce simple goods in corner spazas.

Opportunities for marginal employment will be even harder to come by. It is already clear that those communities worst hit by the riots will immediately experience increased hardship, increased marginalisation (through intensified policing), and higher localised food inflation (driven by food scarcity and local price gouging by unregulated spazas and traders). While this would be an inconvenience for wealthier people the poorest, without the resources to absorb such shocks or pay to travel from their communities to shop elsewhere, will be desperately worse off, especially in the short term.

Hendrik Verwoerd and all those who would have kept this country divided by race are smiling. Their vision of the bleak dormitory township, ground out in the dust of the urban areas in which so many South Africans exist, is again at risk of succeeding. Must these already hard-pressed communities simply accept this? Not for them the sleek neighboured air-conditioned mall of Instagram posts, aspirational dreams and occasional luxury goods. This cannot stand.

• Allan is MD and Heese economist at Municipal IQ, which provides data and intelligence on SA’s 257 municipalities.