LocalLinx

Township service providers lack a means of finding customers and building a reputation for reliable, quality work.  At the same time, township residents frequent services outside the township. Such services have known locations and a reputation of reliability. We will match township residents who need repairs or other services with local professionals thereby growing demand and supply within the townships. 

Historic context: Townships in South Africa were created under the apartheid regime as bedroom communities for workers who were employed in urban centers. This largely Black population commuted to nearby wealthier areas for their work. Thus, historically, services and retail shops existed largely outside of the townships.  This legacy remains.  The World Bank found that only 25% of money generated in the townships is spent there.  Hence, the types of support services and networks needed to back skilled worker enterprises is in poor quality or missing.

Current status: According to EVA financial, “Most [township] businesses are brought into existence for survival with little or no understanding of costs, responsibilities, markets, funding needs and other requirements of the business such as a lack of proper financial records and systems and technology.”

Deep economic implications: This legacy of separation of workers from the services and businesses has deep implications for townships and the country.  First, township residents were never trained to be entrepreneurs and, thus, lack not only the skills, infrastructure and knowledge of how to improve their businesses, but also lack examples of successful businesses within their neighborhood.  Second, there are few networks to advertise services and attract customers.  Customers come, generally through word-of-mouth or proximity. Third, the recent effort to educate township youth has resulted in a large number of high school educated youth without a concomitant demand for their labor.  Local businesses are few and youth lack the means and networks to seek employment elsewhere. Finally, people who live outside townships generally do not use services within the townships even though such service providers charge substantially less than those in urban areas.  There is a lack of trust and a credible network to link them with township services.

The opportunity:  It is estimated that informal sector of the township economy is worth US$35 million per year. Township incomes are growing. This growth can fuel increased circulation of monies within neighborhoods and townships – improving the environment for local businesses.

Youth unemployment:  Youth unemployed will not be solved through the formal sector alone. Youth face many barriers to employment outside their townships.  We tackle this tangentially by employing youth to build the neighborhood networks that fuel our listed businesses and customers.

Our solution uses technology to help make local communities more integrated and uses that same technology to educate the communities. Our first step is an app, which is leveraged by other community networks. We intend to share with the community insights gleaned from innovations and data.

Building trust: Existing township service providers have no experience in marketing or advertising.  Most of these are so-called “survivalist” businesses exist in order for the owner to survive – not to expand or make a profit.  LocalLinx will provide a safe, comfortable and easy means of enrolling in our app.  In much of Africa, this is established by some form of “ubuntu” (coming together for shared community interests). We'll use an ubuntu technique.

We’ll begin by employing a Township Director for each of our townships.  Before the app is applied in the area, the Township Director will invite some businesses, youth and established leaders in the community to come together to get information on the approach, share their concerns and suggest ideas. Participants will propose ways of approaching service providers. Later, they'll spread the word within the community.

Organizing service providers: Next, we’ll train youth and have them visit service providers.  We’ll have a period of slow roll-out so we get this right.  Youth will be paid to enroll service providers and get the extensive documentation needed to validate each of them (free police report, ID doc, address, 2-3 recent customers, pictures of their work or business, to name a few).  Later, we might add a profile of the service with more pictures and some short ad for top service providers – youth will be employed to do this work as well.

The app: Most people in townships have smartphones (about 80% penetration within South Africa) or have someone close to them with a smartphone. The app will be written for many platforms. The app will have functions like those in the U.S. – Thumbtack and Angi’s for example.  It will have adaptations for the township environment.  Customers can describe a job and submit it to the app. Service providers can bid on the job. Customers then choose a service provider based on availability, location, price and rating. Later, they will rate the service. Service providers provide extensive information for vetting and allow themselves to be photographed for the app. They sign a contract and bid for various jobs. An OTP will be given to verify their identity and that of customers. Service providers will acquire a rating and, we’ll indicate whether they are fully vetted. There are many systems of transferring money in South Africa and we’ll have a gateway to the most popular.  We’ll add a percentage to the service provider’s bid before passing it on to a prospective customer – this is our revenue. Several means of communication will be integrated between customers, service providers and ourselves. Later, we'll consider the use of metadata as an additional revenue source.

LocalLinx is aimed at creating new demand within a township economy.  Our solution opens doors for small service providers which, in turn, creates conveniences for customers, grows the township economies and employs otherwise unemployed youth.

Businesses: LocalLinx envisions a variety of services to support weak township businesses, but we begin by creating a means of attracting additional customers, building a reputation and creating an avenue for exposure. Businesses will benefit from more customers, but they will also teach each other and learn to use LocalLinx in clever ways.  In turn, LocalLinx will adapt and learn from their innovations.

Residents: Residents of townships spend most of their money outside of the townships.  Residents report spending about 66% of their money outside of their township.  About half reported spending less than seven percent within the township. This is because businesses outside of township have, historically, better reputations and are better known.  There is good reason to believe that residents will frequent local shops when they know about them, when they’ve been vetted and when they’ve gained a good reputation.  They will save on money as township services charge 50 percent or less than urban center businesses for their services. Customers will also save on transportation.

Youth:  We began by considering the major problem of youth unemployment in townships. We realized that even trained youth had little chance of selling their skills because already existing businesses are often so marginal.  Even as we turned our focus to strengthening these businesses, we integrated youth into our business plan.  Youth will be fundamental in doing the leg work and networking required to enroll services, vet them and assure the accuracy of ratings.  Youth will also be employed as interns in our media, community and IT departments.

 The township: It is not immediately apparent to an outsider all the ways that townships themselves will benefit.  Clearly, more resilient businesses are a benefit. Having youth employed is a benefit. Residents who spend more of their money within the township benefits the residents and circulates more money within the township.  But, the largely hidden benefit will be the business environment.  Township residents can witness businesses gaining strength. Since LocalLinx centers will be in each township, they’ll also see a modern business which is home-grown. This increased awareness and pride is likely to positively affect the overall environment of the township.

Experience: The core team for LocalLinx came together after completion of a University of Johannesburg project entitled Networks for Digital Community Learning. Halatedzi Nedombenloni, Mgcineni Martins, and Jabulani Nkosi were Directors in this project.  The project premised that local communities would strengthen if allow to identify their own problems and build skills in assessing and analyzing the problems.  The community data, in turn, had value and would eventually lead to a self-sustaining project.  The project was highly successful in energizing communities, building collaboration across communities, training members of the communities in IT skills and assessing community problems.  Due to COVID delays, the project did not get to the step of producing data.  LocalLinx is built on this fundamental experience - communities can build their own strength, can work collaboratively and can build value.

Local Knowledge:  The key to a successful enterprise within South African townships begins with recognizing the value of local knowledge. Solutions which emerge from the global experience must be couched within the local context. Each of LocalLinx principals are residents of townships (one each in Johannesburg - Kwa-Thema, Pretoria – Thembisa, and near Cape Town - Zwelihle). LocalLinx principals succeeded even with the sub-par education systems in rural areas and townships – making them particularly attuned to township conditions but also able to absorb the lessons inherent in national, regional and global experiences.

Expertise: Each of the principals has expertise in a specialized area. All have relative comfort with digital media. Halatedzi Nedombenloni is a software engineer with substantial experience in app development.  He currently works in the AI field. Halatedzi will direct the entire project and oversee the IT Department.  He has recruited two other software engineers to help build the app.   Mgcineni Martins is self-taught in video engineering, photography and media.  He has compiled full-length videos, short videos and done substantial editing. Mgcineni will direct the Media and Marketing Department. Jabulani has spent decades in leadership roles in his community and has extensive networks beyond his community.  Jabulani will direct the Township Operations Department.

Drive and Ambition: The idea behind LocalLinx was not initially to build a social enterprise. The focus was on using our skills and experience to help solve massive township problems. Revenues or salaries was not a primary concern.  We were motivated to help members of our communities – especially unemployed youth. This is still our abiding motivation and strength.  Creating a social enterprise which is economically sustainable is a means of getting to sustainable solutions for communities.

International Advisors: LocalLinx professionals initially came together to build on our shared success in the Networks for Digital Community Learning project. They contacted Dr. Lynn Ilon, a Knowledge Economist, who designed the Digital Community project.  She has extensive relevant experience and years working in poor international communities. Now retired, she is guiding LocalLinx to build a sustainable social enterprise.  

Dr. Ilon is recruiting other international professionals to volunteer in the initial phases of LocalLinx. On stand-by now are international advisors in IT, marketing, management and media.

We have worked on two university-funded projects designed to connect institutions more closely with their communities – Zambia and South Africa. We learned how to build on community energy, vision and efforts. We also developed a working team of township leaders with substantial skills.  We know how to build township efforts that solve local problems. This is the framework upon which LocalLinx is built. We have good international expertise to guide us as a social enterprise.

The major problems in a viable township enterprise have been researched in the two university-funded research projects. We now know that we can be successful in building trust, bringing together community members to outline problems and solutions, collaborating remotely, identifying township problems which have viable solutions, incorporating IT, media and township local knowledge. We will move ahead. By July, we expect to have a working prototype app. We will have gathered some local businesses to advise us. We will have trained some youth. Likely, we will have modest local support. By next March, we anticipate that we will have a modest positive net income.

This is a nascent team. The principals have skills and knowledge but no experience in running an enterprise, scaling to new townships or countries and managing large amounts of data.  Dr. Ilon is working to get informal global advisors, but, it would be better if such advice came from MIT as, presumably, MIT Solvers is set-up to provide such advice.

IT help. Halatedzi needs help with writing an app that can eventually hold large amounts of transactions and data.  He also needs someone that can turn the raw app into something that has a good graphical interface.

Media help. Mgcineni needs help video editing techniques and setting up and managing social media. He has a rudimentary set-up in his small one-room house and is self-taught. Guidance by someone who knows a world of possibilities, techniques and examples would advance LocalLinx’s ability to reach customers and to scale.

Networking help.  Jabulani will help build our funding support.  We believe that local South African sources can help with initial costs and with eventual expansion.  But, how does one approach this?  What are the pitfalls?

Enterprise Design help.  Lynn needs more experienced people to help design a viable corporate structure which is both largely flat but insulated from internal corruption. Help with assumptions and projections of the business plan is needed.  Also, to be sustainable, her knowledge needs to be passed on to the local principals. How to do that?

Data value and management. The principals have been clear – no exploitation of the communities. Yet, there is an acknowledgement of the value of data and metadata. What design allows communities to gain insights from LocalLinx collected data without allowing random people to access that data?  This is a big question that needs to be negotiated between local concerns and data possibilities.

Finally, the local principals lack international exposure.  While bright, expert knowledge absorbers and highly motivated, exposure to a global group of experts, advisors and fellow entrepreneurs is a fundamental need.  Moving from local needs to global purview is a necessary element of sustainability.

Integrates local knowledge: Often an IT solution begins by building on existing solutions - generally conceived from the top down. It would be easy to copy Angi or Thumbtack from the U.S. and apply it to townships. But this would not solve the problem within townships. People will not automatically enroll in an app if they do not know who is behind it and understand its source.  Our design is founded on a local process which builds local networks. The township businesses, leaders and youth will be behind these networks and will build trust.  Trust begets a sense of ownership and pride. This is the root of our design.

Is built within townships by skilled residents: Our principals live and work within the initial townships.  Rather than sitting far away behind computer, the principals walk outside their doors to buy food, get their hair cut and find repairmen. We will represent, for the townships, pride, success and ethical practices. From the perspective of the global world this may not be an innovation.  From the perspective of a solution for the community, it is part of why it will succeed.

Adapting with inventiveness of users: African communities do not lack for innovation and drive.  Residents have survived for generations with poor infrastructure, education and legal systems.  They have learned to innovate and adapt.  Users and residents will not hesitate to invent unforeseen ways of using the app or tell us what their problems are. LocalLinx principals are their neighbors, and they’ll knock on our doors and suggest changes, adaptations and additions.  We expect this, we will adapt with them, and we will use this community proclivity to strengthen LocalLinx.

A component of a greater whole: As the idea of LocalLinx developed, the need for strengthening township businesses and local youth became apparent. Thus, LocalConx is registered as an umbrella social enterprise - LocalLinx is our first initiative. LocalLinx can only go so far in building local services without being part of an integrated whole.  For example, services cannot grow much without registering with the government, learning accounting, accessing sources of capital and acquiring insurance.  We see this as the bigger picture.  LocalLinx is built with the notion that supporting elements will come into play, overlap and, eventually, form a cohesive whole.

Emerging from an under-resourced environment: The three principals know our community’s problems, live them every day and can see what works and does not work. The business environment did not grow easily from a need.  It was hindered and discouraged within the previous South African environment. Most businesses and prospective customers exist in an environment with a shortage of support services.  This is the environment in which LocalConx will grow and thrive as we introduce these support services.

Townships were never meant to house businesses.  Neither were township residents schooled to be business owners. This apartheid legacy has meant that present day businesses within townships have little physical, institutional or knowledge infrastructure to support them. We intend to begin to build the knowledge and institutional structure. We begin with a system that matches customers with services. Eventually, we'll use the data we collect to educate the community and to train businesses in necessary skills.

The apartheid legacy means that demand for services within the township is suppressed. Indeed, township people often think that, to get quality services, they need to go outside the township. LocalLinx provides the beginnings of a knowledge infrastructure and, importantly, contributes to changing the common view of township businesses.

Township demand:  Within the township, 34% of all businesses are small service providers.  Our app leveraged by our community networking process will increase the visibility and access to service providers.  The app’s business rating function begins to create an environment where such businesses are trusted.  We expect these factors to raise demand of township service providers.

Township supply: Some 66% of all township household income is spent outside of the township. Customers follow a long history of using service providers in the urban center or along the highways leading to the township.  We expect our app to be a cause to rethink these previous patterns.  To change this, the app must be easy to use, and instill a sense of safety and trust in township services.  We will vet the service providers, indicate the status of their vetting and provide a means of rating the service.  Further, our hands-on networking process will create a word-of-mouth buzz which will entice customers to explore the app.

Township youth: A major concern within nearly all townships is the presence of unemployed youth.  In South Africa, an estimated 61 percent of youth ages 15-24 are unemployed. Simply training youth does little if the local businesses are not present to employ them. Youth will be employed to enroll, vet and profile service providers. In this way, youth are being trained to be reliable, follow instructions, verify their work and show up. We will also employ them as interns within our township centers and headquarters to learn simple data, IT, canvassing skills and analysis. Finally, we want to explore the possibility of having youth apprentice some of the service providers.

Urban area dynamic: We recognize that urban centers residents rarely, if ever, use the skilled labor of townships for repair or skills. We will target this population of cusfomers as a second step. 

Our impact goals match the areas of impact described in the previous question – Township demand, supply and youth. Also, we want to get a small foothold in urban centers in order to move to a second phase: urban center customers. Below are our targets which are pulled directly from our business model.

 TARGETS  FOR MONTH 3/ YEAR 1/ YEAR 2 

Township Demand

Growth:

Businesses enrollments: 244, 2552, 5631

% of target saturation of businesses enroll: 5%, 35%, 70%

Efficiency:

Rate of business sign-up grows at modest exponential rate [per month sign-ups]: 72, 268, 257

% of new businesses that approached LocalLinx to register themselves: 3%, 40%, 70%

Township Supply

Growth:

Saturation of adults in township: 0.1%, 1.0%, 1.5%

Number of customers grows at modest exponential rate: 386, 3861, 7723

Efficiency:

Customers rate businesses at increasing rate: 50%, 70%, 90%

Township Youth

Growth:

Youth successfully complete training on how to sign-up businesses: 76, 197, 300

Youth sign up to work on LocalLinx: 63, 164, 250

Youth are successful in completing business sign-up: 72, 1609, 3079

Efficiency:

Business enrollment p youth: 4, 12, 14

Retention rate for 1 yr among LocalLinx youth increase, 50%, 70%, 90%

Urban Customers

Growth:

Customers from urban areas download and begin to use app, 0, 100, 500

LocalLinx as a business

Growth:

(see above demand, supply, youth)

Efficiency:

% of relevant customers, App problems shrinks, 20%, 10%, 2%

App problems become less central to functioning, 15%, 5%, 0%

Upon follow-up, rating scale reflects quality work, 50%, 70%, 98%

LocalLinx able to fix problems quickly (days on avg), 7, 2, 1

LocalLinx able to address customer problems successfully, 70%, 90%, 95%

LocalLinx able to address customer problems quickly (avg # of days), 5, 3, 1

Our solution leverages a web application as its central technology, facilitating seamless integration across various platforms. The application boasts essential features like geolocation, enabling users to locate nearby businesses that align with their requirements. In cases where multiple options are available, a rating system assists in identifying the most suitable business. Should several businesses meet the client's needs equally, the client retains the autonomy to select their preferred service provider.

 A crucial component is the incorporation of a secure payment gateway. Upon selecting a business, clients make payments through the application, with funds securely held within our financial systems. This system ensures prompt refunds if the chosen business fails to deliver, safeguarding the client's investment. Additionally, it protects service providers from potential fraud, guaranteeing fair compensation for their services.

 For seamless navigation, the application integrates GPS systems like Google Maps, guiding businesses to the client's location. In-app instant messaging facilitates communication between clients and businesses, aiding coordination and ensuring a smooth experience. Live location tracking allows clients to monitor the service provider's progress, enhancing transparency and peace of mind.

 To cater to users of all technical proficiencies, we prioritize an intuitive graphical user interface. This design element ensures ease of use, accommodating even those less familiar with technology, and enhancing overall accessibility and satisfaction with the service.

3 owners/managers; 2 software developer volunteers and 2 foreign advisors

LocalConx/LocalLinx Management

Halatedzi Nedombeloni, South African, CEO and Director of IT

Mgcineni Martins, South African, Director Media

Jabulani Nkosi, South African, Director of Township Networks

LocalLinx IT workers

Lutendo Maumela, South African, Software Developer

Lebohang Kotane, South Arican, Software Developer

Foreign Advisors

Lynn Ilon, U.S., Knowledge Economics Advisor

Charlie Amadeus, U.S. IT industry & security

International Project Manager Expertise - to be added soon

Township networks - researched five years in Zambia and South Africa.

The three LocalLinx principals and Dr. Ilon worked together for two years on a University of Johnsburg project that organized townships to collect and validate township data and teach township youth digital skills.

This experience was the impetus for the three principals to approach Dr. Ilon. The principals were designing a framework to tackle youth unemployment within their three townships.  This evolved into the core LocalLinx idea. The team has been working on LocalLinx for three months. We’ll have a working app in five months.

LocalLinx is all about empowering one of the most marginalized populations in South Africa – the Black township resident.  Townships were created to separate and house the three non-White ethnic groups (Blacks, Coloured and Indians - as defined by South Africa). Townships have evolved and now have many businesses, but such businesses, generally, are small, poorly funded, under-resourced and lack a business infrastructure.  

LocalConx (parent company of LocalLinx) intends to build a digital infrastructure for businesses and customers within Black townships.  Our app can scale easily across the country and within the Southern Africa region (which house similar communities). The app is built on a township network.  That is, within each township, there will be a neighborhood center for LocalLinx activities, a group of youth and a Township Director to reach out to service businesses, build trust and to solve problems.

LocalConx principals who are building LocalLinx are Black South Africans who live within these townships.

 One the LocalLinx goals is to eventually attract White customers to the skilled services within Black townships - such services charge much less than similar services in the urban centers.  We’ve been interviewing township businesses, and they indicate that this is one of their goals.  Some existing businesses currently attract a small number of Indian or Coloured customers. We begin, however, by enticing Black township residents to use the services within their township. Some 80% of the South African population is Black and 40 percent live in urban townships. We have several elements designed to attract this population. Building trust and reliability are key to the perception of township services as valuable, trustworthy and reliable.

We are building a social enterprise that links customers with township service providers. At some level, this is an app.  App success, however, depends up multi-layered township process.

Value added:  For the service provider, LocalLinx gives them access to additional customers. To the customer, we help them locate businesses in their area that can perform the services they are seeking.  This is done through an app.  For the service provider, this allows them to expand their business.  For the customer, this provides an easy way to find trustable services in their neighborhood.

Hidden value:  The largely rag-tag township businesses largely exist without advertising, capitalization, accounting, business expansion, and customer services. Businesses are used to an environment that has many scams and fraud. Once established, we’ll provide a source that is trusted, known and reliable.  Our first goal, then, is to establish our reputation. Without trust, we have no customers.

 Building customers and businesses: In the three townships initially targeted by LocalLinx, there are an estimated 56,574 service providers.  There are 386,130 adults.  Our LocalLinx principals live within these townships and know their environment.  Their experience plus targeted interviews with service providers indicates that service providers would welcome an app – that is, if the service providers can trust it. As the app is being written and tested (by developers within the Thembisa township), two other principals will be designing and creating the human network needed to build a customer base. 

Township network:  We begin by building a township network. Four steps are needed before the app can gain traction: (1) gathering together businesses, elders, leaders and youth in order to understand the concept, endorse it and suggest elements, (2) training youth to visit services and enroll them, (3) gathering documents from businesses so we can vet them, and (4) getting the information into the app.  Prospective customers elicit no risk by downloading the app and they will be curious about an app designed just for a township. LocalLinx may have to create incentives for the first few who use the app, but, with increasing speed, the app will earn trust.

These processes, anticipated hiccups and growth projections are built into our business model spreadsheets. The model differs from a Silicon Valley start-up model. The LocalLinx model has been built by Dr. Ilon who has decades of experience in estimating and implementing some US$1.4 billion in international development projects. The estimates are meant to be conservative with a hope that they are a fairly accurate guide.

Fee for service: Our primary means of funding our social enterprise is a fee for service model.  Township service providers will agree to a modest add-on in the price they’ve quoted customers. The added-on is paid to LocalLinx.  Businesses have told us that unreliable payments, fraud and scams are rampant. A selling point of our app is that it is a safe, reliable, trusted service for handling transactions between service providers and customers. 

Conservative assumptions: We use conservative assumptions in our business plan. For example, our plan shows economic sustainability when based on the enrollment of only 20% of eligible service providers. At one year, 25% of this enrollment will get a job per day. At one year, LocalLinx will be mostly fully staffed with most staff at 50% of target salary - reaching full salary at year two.  At six months of roll-out, we estimate we’ll have a modest net income. As we grow, our income will be more stable and incorporate more businesses and users. 

Organizational Support: There is a growing international team who are supporting LocalConx and its LocalLinx app until local capacity to plan, manage corporate investments and envision possibilities is in place.  That effort is being headed by Dr. Lynn Ilon (www.lynnilon.com). We’re hoping that MIT might lead us to other organizational support.

Local support: South Africa has a legislative framework designed to incentivize corporations to contribute 1% of their net profits to Broad-based Black Empowerment (BBEE). In order to be BBEE certified (eligible for government contracts), corporations must give this 1% to socio-economic causes.  We are seeking a corporation who will support LocalLinx.  The business plan includes a five-month lead for the app to be prototyped and then largely working.  Our neighborhood network will be built in the meantime to enroll and vet companies and build buzz and trust. 

Venture capital: We have researched and are in touch with the South African venture capital “finders”. We haven’t decided whether to go this route to support expansion. We’ll make that decision at about one year. Nevertheless, such people can lead us to Angel investors and government funds that can support our start-up.