Creating cities of hope

24 April 2019

As the 2019 elections approach there has been too little debate on the policies that political parties are offering the electorate. At this time of multiple crises and challenges voters should engage political parties on how they intend to improve the quality of life and expand opportunities for all South Africans, especially the 50% of the population who are poor.

In a series of briefs, Agenda 2019, the CDE is encouraging voters to go beyond the slogans and ask hard questions and demand answers on key issues, before casting their votes.

A genuine political commitment to urban-led growth could transform the country’s economic prospects, and contribute significantly to making South Africa a more inclusive society. Political parties need a vision for national revival in which the opportunities for poor people to move out of poverty are transformed. Harnessing the power of cities and using them as a platform for generating vast new opportunities is one of the most effective ways to achieve this.

SA‘s future is urban. How do political parties propose to manage urbanization and expanding city growth? How do we create cities of hope?

No country that has ever become rich has done so without urbanising. Cities, with their dense populations, deep labour markets and highly differentiated economies, make human labour far more productive than is possible in other settings. Cities enable social prosperity by generating economies of scale in the provision of infrastructure and public services.

South Africans continue to move to urban areas, and cities’ young populations grow fast. The country is nearly 70% urbanised today, in 1994 only 50% of the population lived in urban areas. Many of these areas remain poor, but even the least developed towns offer more prospects to their residents than large swathes of our rural areas. Large cities such as Johannesburg and Cape Town have created hundreds of thousands of jobs over the past decade.

Poor rural people who move to the cities often experience immediate hardship and dislocation, but many also quickly improve their lives – why else would they move there? Urban employment, even where it is low paid or informal in character, can be a crucial first step out of poverty.

Too many South African policy makers are still ‘reluctant urbanisers’ believing that people would be better off staying in rural areas and that it is government’s job to bring opportunities to them there. Human history shows that this is certain to fail.

South Africa needs to tackle the legacies of the past. Apartheid left behind urban sprawl and weak urban connectivity, with poor residents on the urban periphery, far from employment and economic opportunity. The result is costly and inefficient public transportation systems.

Some 3-4 million ‘RDP housing opportunities’ have increased the housing stock, but the policy has reinforced urban sprawl and disadvantage because houses have often been built on cheap land on the outskirts of cities. The challenge is to build cities, not houses in the veld and to overcome the apartheid spatial legacy, not replicate it.

Here are the essential priorities for achieving inclusive urban growth.

Urban policy makers must put growth first. Cities face protests if they fail to deliver utility services, but few sanctions if they fail to deliver growth. City governments should be empowered to capture some of the gains from growth to use it to fund further growth. Our curent system does that very inefficiently.

Markets must drive growth. Successful development needs the market and the city to come together. The city brings scale, while properly functioning markets ensure efficient production and allocation. Business is the most dynamic element of urban economies, and a potential generator of prosperity and development

Cities need greater power including greater control over staff hiring and firing and their local business environment; they must have a bigger say in national policies that affect urban-led growth. Many of the eight metropolitan governments have the capacity to start right now. City revenues must be linked to growth outcomes to encourage cities to pursue pro-growth policies. Growing cities must embrace urbanisation and plan-ahead: they need long-term planning and multi-year expenditures, coordinated at different levels of government, and in partnership with the private sector.

The key issue facing South African voters is this: how can our cities be better managed so that they become platforms of opportunity rather than poverty?

So what do we need to know from the parties that want our votes?

How does your party plan to raise growth rates and encourage more investment in leading cities?

Growth is a city story. If the economy is to grow more rapidly and create mass employment this can only happen in our cities which must be at the centre of SA’s national growth strategy. Faster growth will only happen if private investors are encouraged to find new opportunities in our cities, and if they are given the space and support to establish successful businesses.

How will your party fight crime and reduce the cost of doing business in cities?

South African cities perform poorly with respect to the costs of starting a business when compared to many others (including African cities). This pushes investors towards cheaper locations. And in repeated surveys business managers have identified crime as a major constraint on investing in a new business and on expanding existing businesses.

How will you integrate townships into thriving unified urban economies?

The idea of ‘township economies’ has attracted a lot of attention, but policy-makers need to ask whether the benefits of this are greater than what can be achieved by seeking to integrate townships better into the urban economy. There are actions to be taken in townships to help local economies grow (deregulation, more land for development, rezoning) but the positive impact of growth in the wider city economy and opportunities for black entrepreneurs in the entire city far outweighs any benefits township specific programmes might deliver.

How will your party work with private business to promote urban-led growth?

Cities must place jobs and growth at the heart of urban strategy. In many places this will require the establishment of local growth coalitions involving city politicians, government and business. For example, if we want Johannesburg to be the continent’s financial centre, a coalition of national and urban interests need to promote this.

How will your party provide access to affordable housing close to centres of economic activity?

Cities must address the apartheid spatial legacy. This requires reconfiguring housing policy to encourage densification and rethinking transport policy which deserves far greater attention.

What is your strategy for more effective urban infrastructure spending?

Where urban infrastructure is inadequate, it sets ‘speed limits’ on the growth of urban economies. Shortage of funds at national level places a premium on new strategies, including partnerships with business, for maximising urban infrastructure delivery.

In brief then, South Africa needs accelerated inclusive growth that is urban-led, private sector driven, enabled by a smart state that understands markets, and targeted at mass employment.

Before you vote on 8 May, voters and journalists should ask the political parties these questions about cities, growth and jobs. And demand answers.

Ann Bernstein is head of the Centre for Development and Enterprise. This article is based on a new CDE publication, Agenda 2019: Creating Cities of Hope, www.cde.org.za