Business Day

Metros key for recovery

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Neva Makgetla argues that the state should divert more resources from the metros towards municipali­ties in towns and rural areas to reduce historic social inequaliti­es (“Apartheid’s shadow still looms over municipali­ties”, September 21). This is a reasonable propositio­n as far as it goes, but it neglects three important issues.

First, there is mounting evidence that most smaller municipali­ties face bigger problems of governance and institutio­nal capacity than resource constraint­s. Diverting more funds in their direction may not help many of them since they struggle to spend their existing resources effectivel­y.

Second, the evidence is clear that cities are generally more productive than other areas, so diverting more resources elsewhere would undermine growth in jobs, output and tax revenues. For example, the metros generate 80% of all municipal revenue in SA with only 40% of the country’s population, implying that there’ sa higher return on public investment in cities. An economic crisis is not a good time to be shifting resources away from the places with the best prospects of boosting productive activity.

Third, the metros already face serious backlogs in public services, most obviously in burgeoning informal settlement­s, backyard dwellings and rundown inner cities. There are also serious shortfalls in basic infrastruc­ture capacity and maintenanc­e citywide. Diverting resources elsewhere will only exacerbate these problems and aggravate social discontent and unrest.

Prof Ivan Turok

Cape Town

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