South Africa has some of the most modern cities in Africa. In many respects, the cities — Johannesburg, Cape Town, eThekwini, Nelson Mandela Bay, Mangaung, Tshwane, Ekurhuleni and Buffalo City — share characteristics with other world cities: sophisticated social and economic infrastructure and concentrations of economic activity.
They are also characterised by considerable inward population migration from rural areas and from other parts of the world, especially the rest of the continent.
In 1900, less than 15% of the world population was urban, but by the year 2000, around half lived in urban areas. In SA, the 50% mark was reached in the 1980s, according to Statistics SA.
Sadly, though, the country’s cities are also where the apartheid spatial form expresses itself the most pervasively.
Too many South Africans travel long distances, spend a huge proportion of their income and inordinate amounts of time between places in which they live and work. So, if the goal of reducing the cost of living for households spelled out in the National Development Plan is to be achieved, deliberate and radical transformation of the country’s urban spaces and transport systems must occur.
If we are to find new pathways to a more inclusive economic growth, the cities must lead unreservedly. They must grow, but the growth must be enjoyed by all, equitably.
The recent report by the Centre for Development and Enterprise highlights our cities as engines of growth and proposes key measures to support this growth. This year, the government adopted the Integrated Urban Development Framework — a first for SA and one of few in the world.
For urbanisation to be positive for national development, SA’s response to the phenomenon should have two complementary features. Firstly, it needs a clear rural development strategy that, among many things, modernises and formalises land rights and is aligned to the urbanisation strategy. This means that investment in transport and communication links should be aimed at facilitating the flow of goods and services between rural and urban areas.
Secondly, our cities need to be ready to accommodate inward migration. The apartheid-style spatial patterns do not facilitate higher levels of productivity and do not generate the benefits of agglomeration and creativity seen in other parts of the world. More and more, city planning must seek to reduce the distances travelled between home and work; it must reduce the amount of disposable income that goes to transport and it must seek to cut the cost of doing business across the board.
This is in everyone’s interest.
More than at any other time, SA’s city governments need to be in a position to finance more of their infrastructure requirements from their own resources. Given fiscal constraints, a greater share of the capital investment needed to transform cities has to come from revenues generated within the metros themselves in partnership with the private sector.
The role of the private sector in boosting investment in infrastructure cannot be underestimated. In recognition of this, the government hosted an Urban Investment Partnership Conference in August 2015, at which metros’ capital programmes were introduced to investors. Metros are now working to develop long-term borrowing strategies that can attract more private investment. All metros have developed plans that align public investment in strategic transit-oriented “integration zones” in which economic activities can thrive.
Metros should encourage development in areas that knit city spaces together more productively. Housing programmes should use existing land parcels close to the city and work opportunities and residential areas should be interspersed, creating many origins and destinations along a transit route. Such an approach would mean shorter trips for people, less travel time and a more viable public transport.
In 2015-16, metros budgeted to spend R217bn, between 9% and 13% of gross value added, depending on the metro. More than 16% of this expenditure is allocated for capital investment. Our metros are clearly significant economic players in their own right, and their performance, therefore, is important. While some still have challenges, performance has been improving steadily.
It is encouraging that some of our metros — Johannesburg, Cape Town, Ekurhuleni and Nelson Mandela Bay — have achieved improved credit ratings. The improvement has been attributed in part to good budgetary performance, strong liquidity position and moderate debt levels. Good credit ratings should be a means to an end: carefully managed leverage to expand the urban public infrastructure base and to crowd in private sector investment in ways that create more and better work opportunities.
The Treasury is assisting metros to align their planning and budgeting practices to smoothen capital performance more evenly over the financial year to avoid the hockey stick syndrome — where most of the budget is spent towards the end of the year.
The ability of the cities to plan for and spend their capital expenditure budgets will be the determining factor in how effectively cities roll out infrastructure that reduces the cost of doing business and improves the lives of the people.
Countries that facilitate urbanisation benefit from an “urban dividend” that is enormously valuable for inclusive economic development. The extraordinarily high rates of economic growth in China in the past two decades had a great deal to do with the rapid urbanisation that took place at the same time.
City governments have an especially important role to play in transforming our cities into viable local economies.
This is not an area that can be managed effectively by the national government. National departments and agencies can complement cities’ developmental plans by ensuring that they work closely with city governments and their investments are geared to support metro spatial plans.
It is encouraging that several metro governments are already making progress in this area. They are integrating their planning, housing, infrastructure and public transport programmes into co-ordinated efforts to make cities more productive, inclusive and socially and economically viable. Co-ordination between metros, national and provincial departments and agencies, together with private investors and developers is improving.
These developments are very positive for the country. Our success in growing the economy, reducing poverty, creating jobs and improving the quality of life for all South Africans will benefit greatly from better planned urban spaces and thriving city economies. SA has what it takes to move in the right direction. But it won’t happen automatically and painlessly. It requires boldness, very deliberate strategies and practical, results-focused partnerships’
• Fuzile is director-general of the Treasury
via Centre For Development And Enterprise, South Africa
http://www.cde.org.za