Cities are the key to SA’s future prosperity

Johannesburg, Africa’s most industrialised city, is led by a mayor, Kabelo Gwamanda, who never finished school and is accused by the Democratic Alliance of once running a Ponzi scheme.

Mayors and former mayors of at least four of South Africa’s eight metropolitan municipalities have been charged with fraud. This excludes Murunwa Makrawela, who was briefly mayor of Tshwane before it became apparent he allegedly forged a certificate declaring himself to be a rehabilitated insolvent, according to a recent Centre for Development and Enterprise (CDE) report entitled South Africa’s future will be decided in our cities.

Future prosperity

This in unlikely to instil confidence in the overall quality of governance in our cities. The CDE says SA’s future prosperity lies in its cities, though this is not inevitable.

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While some cities fail, others succeed, and it is critical to follow the trail blazed by the successful ones, and ensure they are governed by credible and legitimate leaders.

“When cities do not have considerable or even exclusive jurisdiction over critical functions like policing, public transport planning and the like, as is the case in South Africa, challenges in the coordination of activities across government can stymie even the best plans,” says the report.

There are wide variances in employment growth between cities – with Cape Town growing 3.3% a year and Tshwane 2.2% annually between 2014 and 2020. The comparable figure in Joburg was just 0.8%, while Nelson Mandela Bay saw no growth at all.

The reason cities recorded such poor growth is due to several shocks, from Covid-19 and load shedding to rising interest rates, crime, and declining public infrastructure.

Ill-conceived policy choices

On top of this, cities had to contend with ill-conceived policy choices that raise the costs of doing business, from proposals to expropriate land without compensation to BEE and “an unwillingness to contemplate a wider role for markets and competition in South Africa’s developmental trajectory,” says the CDE.

Joburg’s size and layout is a consequence of the gold deposits found there in the 1800s and its basic form is shaped, in part, by the roads and railways initially laid out to service those mines and the growth or economic hubs around those points.

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South African cities are shaped by the spatial logic of apartheid, with townships located on the edge of industrial areas in a pattern that is uniquely unproductive, not to mention unjust and inequitable.

Cities’ impact on prosperity is greatest when urbanisation is driven by a parallel process of industrialisation, argues the CDE.

Arguably, post-apartheid growth in the cities is driven less by migrants’ expectation of finding work than their quest for access to better services such as health and education.

Proper land use is critical to prosperity, and cities designed to discourage densification can experience lower productivity, not least through the higher costs of transport to reach commercial or retail nodes.

“The failure to embrace the benefits of densification are manifest in other ways too. An example of this is that retailing in South Africa’s cities is disproportionately located in shopping centres rather than high streets. While this does not necessarily reduce the quantum of retailing in the city, it affects the competitiveness of small, independent businesses,” says the CDE.

Crime increases the costs of doing business

Crime has added to the costs of doing business in South African cities, most of which have per capita rates of violent crime that are among the highest in the world.

Apart from these challenges, city governments in South Africa have used their revenue-raising powers to raise rates and taxes far more quickly than either inflation or GDP.

It’s reckoned that rates and taxes have increased by a 11% a year compounded, while inflation has been 6% a year.

Meanwhile, the standard of services has declined.

How can cities do better?

The answer to that question, says the CDE, is better governance. That means more than simply reducing corruption, it means raising the quality of personnel who manage our cities.

Cities should be considered as labour markets, where densification is encouraged, provided building regulations are enforced and infrastructure is sufficient to meet the population needs.

Cities that adopt a pro-development stance are likely to thrive more than those that don’t.

Progress is constrained by interest groups opposed to development, particularly those seeking to guard their own neighbourhoods.

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“More generally, people sometimes fail to recognise that the repurposing of buildings and neighbourhoods is what keeps cities alive, and unnecessary delays help ensure that cities stagnate,” says the CDE.

Crime prevention could be bolstered by allowing cities’ policing agencies to investigate crimes, employment growth, CCTV cameras and similar technologies, and creating an enabling environment for growth.