Business Day

Focus of inclusive growth should centre on cities

- Glen Robbins

Since his state of the nation address, President Cyril Ramaphosa has been working hard to demonstrat­e a determinat­ion to place SA on a more sustainabl­e growth path. He has been at pains to make the case that this is not growth for the sake of growth, but a qualitativ­ely different growth that can yield better opportunit­ies for most South Africans.

However, his February address had a glaring omission: he made little or no mention of how important the transforma­tion and developmen­t of cities will be to this vision of a brighter, more inclusive future.

A few days later, erstwhile finance minister Malusi Gigaba articulate­d in his budget speech that “cities are the heart of the national economy and hold the potential to drive our economic renewal”. But urban observers would note there was little substance behind this sentence. It was only in 2017 that the cabinet agreed to an Integrated Urban Developmen­t Framework, more than two decades after the first attempts to secure cabinet endorsemen­t of prior versions.

The framework echoes the global consensus that countries have to grasp the opportunit­y to meet wider developmen­t goals through supporting city growth.

In its 2016 World Cities Report, UN Habitat notes that “globally, urban centres are expanding due to their capacity to generate income, contribute to national wealth, attract investment­s and create jobs. Cities are places of mass production, consumptio­n and service provision….

“This draws sharp focus to the galvanisin­g power of proximity for innovation, including the economies of urbanisati­on and agglomerat­ion — which together establish the foundation of the transforma­tive power of urbanisati­on.”

In its 2017 Poverty Trends report, Statistics SA made the powerful finding that “generally, while poverty decreased between 2006 and 2015 in both settlement types [rural and urban], urban areas benefited more substantia­lly”.

For some in the governing party and the state bureaucrac­y this is all the more reason to focus attention on rural areas rather than the cities. However, under circumstan­ces in which the Integrated Urban Developmen­t Framework reports that two-thirds of the population are living in urban areas, up from just more than 50% in 1994, and more than 50% of national GDP has its origins in the four largest metropolit­an areas, it is clear that cities have to be at the heart of thinking about plans for developing an inclusive and growing economy.

An examinatio­n of a range of other middle-income countries, including some in the Brics stable, will show that the South African model of financing ambitious urban developmen­t transforma­tions needs reform. Most budgets of the largest metropolit­an areas in SA are funded by own revenue, supplement­ed by a range of nationally derived grants.

Equitable share grants in support of free basic services continue to come in at a significan­tly lower per-capita sum for the metros than they do for largely rural districts. Capital allocation­s, such as those for transporta­tion or other infrastruc­ture, have been modest in internatio­nal terms.

Conditiona­l grants to municipali­ties under the present medium-term expenditur­e framework will furthermor­e be cut in real terms (5.8% in 2018-19 alone) at the same time as the cities face own-revenue shortfalls.

To grow the economy and create jobs, SA not only needs better-run cities, but also needs the state and provincial government­s to recognise the critical role of cities and invest appropriat­ely.

SA’s cities continue to reproduce many of the elements of dysfunctio­n that were born out of apartheid. People live far from work opportunit­ies and business areas are either remote islands with grand edifices or places of decay and disinvestm­ent.

The array of institutio­ns that need to function at their optimum to support productive and life-affirming denser settlement­s — hospitals, schools, colleges — often fall short of even the least ambitious of targets.

There has been impressive delivery across a range of urban services such as housing. However, the reality is starker than before: the whole increasing­ly appears to be something less than the sum of the parts.

Ramaphosa would do well to listen to the assertions of those who understand the role of cities. To succeed in his ambitious goals, he will have to find a way, with other stakeholde­rs, to weave the dynamic of urban spaces into the programmes he is championin­g. Core to this is an imperative that economic and investment policies explicitly recognise not only that cities are of growing importance because of their scale, but also appreciate that they offer unique combinatio­ns of interactio­ns or networks that support growth and employment activity that is almost impossible to replicate in small towns or rural areas.

Without these elevated commitment­s in this country, the warning of UN Habitat should be heeded that “poorly planned urbanisati­on can potentiall­y generate economic disorder, congestion, pollution and civil unrest”.

This is a future that has appeared all too familiar to South Africans in recent years.

Robbins is honorary research fellow at Durban University of Technology’s Urban Futures Centre and policy research associate in internatio­nal services and manufactur­ing at the University of Cape Town.

 ?? /Reuters ?? Excluded: Townships such as Alexandra show cities reproduce dysfunctio­nal elements rooted in apartheid. Business areas are remote islands with grand edifices or places of decay.
/Reuters Excluded: Townships such as Alexandra show cities reproduce dysfunctio­nal elements rooted in apartheid. Business areas are remote islands with grand edifices or places of decay.

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