City-led development is the answer to South Africa’s jobs crisis

29 August 2017

Today, I met with the mayors of the four DA-led metros of Johannesburg, Tshwane, Cape Town and Nelson Mandela Bay in order to discuss our nation’s current economic crisis and how best DA-led cities can respond to this crisis, ignite economic growth and provide access to jobs in such challenging conditions.

In the meeting, we reflected and discussed DA economic policy and how it translates into city governance; shared best practice between metros; and defined core elements of city-led economic growth and development. Each mayor was given an opportunity to present their successes, challenges, and plans going forward to ignite economic growth.

Moreover, we all agreed on a set of core principles to guide DA-led cities in the economic space. They are as follows:

Infrastructure led growth;

Zero tolerance for corruption;

Fair access to opportunities;

Policy certainty and fiscal responsibility;

Reducing regulation and red tape;

Speeding up ease of doing business;

Investing in transport;

Investment facilitation including the introduction of incentives;

Private sector collaboration;

Investment in ICT;

Training and educational support through apprenticeships; and

Tackling with the legacy of apartheid spatial planning.

These principles guide all DA-led cities, and are already being implemented in various forms.  The mayors also reflected on the urgent need to ensure that parastatals and State Owned Entities (SOEs) fulfil their role as required. Metrorail, Eskom, Transnet, and our ports and harbours are essential to the proper functioning of governments at city level. All mayors committed to engage these SOEs in order to ensure that they do not hinder the development and functioning of our cities.

It is no secret that South Africa faces its worst economic crisis in recent times. Under the ANC-led national government, our country’s future – and the future of the poorest and most vulnerable - is being undermined at every juncture.

Our nation’s unemployment rate is currently at 27.7 % - the highest level since March 2003 – a 14 year high. This leaves a massive 9.3 million South Africans without work. They are joined by over 17 million South Africans who are trapped, dependent on social grants for survival and with little hope of supporting their families, and experiencing true freedom.

Just last week, StatsSA released a new report on poverty in South Africa. According to this report, over 55% of South Africans live in poverty. That’s more than 30 million people, and the graph is heading in the wrong direction.

Our economy has been relegated to junk status, and has entered a formal recession, now offering virtually no hope to the millions of our people left out, and left behind.

The ANC continues to spew out economic mistruths about the jobs crisis in our nation. They continue to blame our problems on “global trends” and external influences”. Yet “global trends” and “external influences” are not affecting fellow emerging economies nor BRICS nations - all of which have lower unemployment rates than South Africa.

Our economic crisis is a home-grown problem, which requires a home-grown solution.

DA-led cities ought to be running lean, efficient administrations that extend all the way to the day-to-day details – answer emails, return phone calls, follow up on complaints. Often dealing with our governments as a small entrepreneur is an endless nightmare of unanswered calls and emails, with endless trips to sort out admin issues. All of this chases away entrepreneurs and makes it more difficult to run a business. I have asked our mayors to set this ambitious goal: let DA-led cities be known for their ease of doing business. Let us be the friendliest, simplest, most conducive places in South Africa to start and run a small business.

What we do in DA-led cities to revive economic activity is going to be key to our country’s future. National government doesn’t speak enough about city-led growth, but I believe this will be the make-or-break factor if we want create job opportunities for the millions of South Africans without work. Yes, national policy is important too, but the scale of employment we require can only be achieved through city-led growth.

In fact, our largest cities already punch way above the national average when it comes to economic activity, and average income in the cities is around 60% higher than in rural areas. This is why people are flocking to our metropolitan centres in large numbers. Instead of urbanisation being a problem to overcome, it is actually key to bringing more people into our economy.

The DA now governs for almost 16 million people, in some form or another. What we do in these metros will have a significant impact on the lives of these people and, ultimately, the lives of all South Africans. And so it is crucial that we go about re-energising our cities in the right way.

I would now like to hand over to each of the mayors to highlight their achievements, successes and plans going forward when it comes to economic growth and job creation.

City of Johannesburg

As the economic hub of South Africa, the City of Johannesburg is in a prime position to address our country’s crippling unemployment crisis. The starting point is to position Johannesburg as a business-friendly city that is open for investment.

In this light, the Mayor’s focus is on making it easier for people to invest in the city through the establishment of one-stop-shops, as well as the investment facilitation desk located in the Mayor’s office.

The City has developed 20 critical “Service Delivery Standards” which relate to planning approvals and service related benchmarks as part of the ‘doing business index’ in South Africa. These are applied across the board to ensure that those who are investing and creating access to jobs in Johannesburg are attracted by the highest of standards. The City now also offers substantial incentives on rates and taxes along transit oriented development corridors.

Infrastructure development is central to city-led economic growth. Johannesburg has thus already allocated close on R10 billion to upgrading existing infrastructure, with a further R3.3 billion allocated for the development of new infrastructure. This development will foster conditions which are conducive for sustainable economic growth and development, creating many more jobs.

In terms of creating an ever-expanding hub of entrepreneurs, the City is expanding the Small, Micro, and Medium Enterprise (SMME) hub network with revised service offering. These will become Opportunity Centres that assist SMMEs to access tenders and provide overall business support, training and mentoring.

The City plans to double the number of SMME hubs from 7 to 14, bringing the total expenditure on SMME hubs to R16 million in the coming financial year. The goal is to have two hubs in each of Johannesburg’s seven regions, where young prospective entrepreneurs can receive support, training and mentoring. The total number of SMMEs supported by these hubs is expected to increase to 1250 per month by June 2018, and 2000 per month by 2021.

It is our view that the economy at all levels must be decentralized.  The City of Johannesburg plans to achieve this in numerous ways. There is currently a plan in the pipeline to revamp informal trader stalls in the inner city, at an estimated R15 million. Moreover, with a total budget of R55.9 billion, the City plans to leverage its supply chain to decentralize the economy by empowering SMMEs by giving them a significantly larger share of city tenders. The City has also allocated R5.2 billion specifically to the economic growth cluster in the next financial year.

Johannesburg has a major issue with spatial inequality as a result of Apartheid. The City has responded by prioritising infrastructure investment in poor communities as well as building a public transport system that makes job opportunities more accessible.

Metrobus operates just under 400 buses carrying over 50 000 passengers daily, some of whom are amongst the poorest residents of our city. The City increased Metrobus’s capacity by 50%, adding 200 new buses to its fleet, providing residents with greater access to transport.

The Inner City is set to be a focal point with large scale investment in high-density mixed use accommodation through construction projects that include artisan training programmes and skills development.

Lastly, the Mayor has launched an ambitious plan to attract private developers to the inner city to alleviate the housing crisis, create access to jobs, and develop skills. The City of Johannesburg is well on its way to achieving its target of 5% economic growth, which will create much needs jobs for the millions of South Africans left out of the economy.

City of Tshwane

In the Capital City, one of the biggest challenges remains the burdensome bureaucratic processes which act as unnecessary red tape which hinders investment, development, and in turn job creation.

In just under a year, the City had made huge strides in reversing this hangover from the previous ANC administration. Since then, the City has approved 256 plans for commercial rights with a total construction value for commercial development of over R10 billion.

A Property Developer Forum will be established within the next month, with a target of ensuring all development planning approval processes to be automated by June 2018 through the use of a real estate module to improve the turnaround time of building plans.

In addition to this, an electronic platform for water and electricity connections will be launched in November this year, which will lead to quicker, more reliable service delivery that attracts much needed investment to the city.

The City will be cutting the cost of doing business by slashing the waiting period for key services, including:

- Cutting the waiting time for construction permits  from 169 days  to  30 days;

- The waiting period for access electricity will be cut from 104 days  to 38 days; and

- Registering property will take a total period of 7 days as opposed to 30 days.

In terms of support for SMMEs, by the end of next year the City will have established a comprehensive partnership model between SMMEs and the City through a state-of-the-art blended incubation model - run and administered by a Non-Profit Company. This comprehensive model bridge the divide between city services and SMME needs, and will include skills development initiatives, and graduate and intern programmes.

While the state should not be the creator and supplier of the majority of jobs, the Expanded Public Works Programme (EPWP) plays an important role in creating opportunity in our current economic malaise.  The City will be creating 23 000 EPWP work opportunities over the medium term to alleviate the burden of poverty and ensure people can find work opportunities.

In so doing, a revision of EPWP Policy is to serve before this week’s Tshwane Council meeting to become a pro-skills development initiative and ensure a rotation of beneficiaries for maximum impact by end September 2017.

Attracting investment is the leading driver of growth and job creation at city level. Over the past 11 months, this administration has attracted over R2.3 billion in investment, exceeding its own target. This was enabled by an investor portal that has been established in the office of the Executive Mayor Msimanga which is making headway in fast-tracking strategic investments for the benefit of the city and its people. This highlights that with a clean, competent and service-oriented government, investors flock, leading to job-creating economic growth.

The City is also in the process of establishing 4 regional jobs centres will be operational by the end of June 2018

The development of the Automotive Supplier Park 130 area is well underway, and has five phases of development planned. This Automotive Supplier Park is a manufacturing cluster which houses different technologies, services and service providers, contributing to the sustainability and growth of the South African automotive industry. Infrastructure for the first two phases - approximately 50 ha- has been completed with over 100,000m2 of buildings erected to date.

Under DA-led governance, the Capital City is now open for business.

City of Cape Town

As the Metro that has been under DA-governance for the longest, the City of Cape Town has become the blueprint for city-led growth and development in post-apartheid South Africa. And the facts back this assertion up.

The City remains the top investment destination in the country, attracting over R2.67 billion in the past financial year. Moreover, according to StatsSA, the City of Cape Town has the lowest unemployment level of any city in the entire country. This is not by chance, but by change.

The City’s total infrastructure investment now totals R22 billion, with a further R3 billion spent on repairs and maintenance to existing infrastructure. The City’s target of 20% renewable energy by 2020 – along with its investment in waste-to-energy plants and its court action to force the Energy Minister to allow it to procure electricity from independent producers – are precisely the kind of energy interventions that make it attractive to investors.

Add to this the ambitious MyCiti bus service, with 5 new corridors in the pipeline, the wide-scale rollout of broadband and fibre, the innovative Youth Cafes - where youngsters can prepare CVs, and hunt for jobs - and the extensive red tape reduction programme, and it is little wonder that Cape Town is the country’s most investor-friendly city.

To this date, the City has invested almost R100 million in Wesgro and a number of Special Purpose Vehicles, and in return collectively facilitated over R14.2 billion in investments into Cape Town, creating more than 28 200 direct jobs. These Special Purpose Vehicles include the Cape Information Technology Initiative (CITI), Cape Town Fashion Council (CTFC), Clotex, Cape Craft and Design Institute (CCDI), GreenCape, and Business Process Enabling South Africa (BPeSA WC).

The City has also launched an inaugural Green Bond of R1 billion – the first of its kind in South Africa - and received offers totalling R4.3 billion in response. The Green Bond has been certified by the Climate Bonds Initiative and awarded a GB1 rating. This has attracted the major investment of the GRI Gestamp Wind Steel production facility in the Green Technology Industrial Park in Atlantis, which will create hundreds of new jobs opportunities.

This is supplemented by the launch of Invest Cape Town Brand, positioning Cape Town as a globally competitive business destination, targeting different sectors, including the Green Economy.

The City has also adopted a Transit-Orientated Development (TOD) Strategic Framework to address apartheid spatial planning, urbanisation and the high cost of public transport, and stimulating economic growth. This is best evidenced in the MyCiti transport system, a world-class public transport initiative, which now also offers free transport for unemployed South Africans seeking work - another great way in which barriers to employment are being broken down.

In an age of information and instant communication, ICT is a necessity for a growing city. Cape Town is currently branded as Africa’s Information Technology hub with more than 20 acceleration programmes and more than 25 co-working spaces, where access to information and up to date technology is available. Each acceleration programme supports between 10 and 15 start-ups every year.

The City has also piloted the Investment Incentive Scheme, which has two core functions. Firstly to provide “non-financial incentives”, such as fast-tracking land use and building plan applications; providing biodiversity to manage natural resources efficiently with businesses. And secondly to provide “hard financial incentives”, such as exemption of application fees for land and building plans; waiving development facilitation fees; debt- write off when businesses meet employment targets; and rate rebate and electricity tariff subsidy incentive.

An investment of over R10 million in the Cape Innovation and Technology Institute (CiTi) and funded CapaCiti, a job-readiness programme that has upskilled more than 900 underprivileged youth from low-income areas - with a 96% successful placement rate.

Lastly, in terms of youth empowerment, R5.5 million for has been allocated to external bursaries, R6.7 million for learnerships and R9.9 million for apprenticeships. This is supported by the Mayor’s Job Creation Fund, where R340 million has been allocated to create job opportunities. The City also provides young workers with a stipend whilst they receive their training.

Lastly, there are plans being implemented to supplement the water supply outside of the dam system, to ensure stability of supply in a time of protracted drought. The City is building water resilience by sourcing 100 Ml per day from groundwater extraction, and 50 Ml per day from land-based containers and a desalination barge. Water reuse measures to provide 50 Ml per day from land-based permanent desalination from Cape Town Harbour is also underway, with an addition 200 Ml from marine-based desalination at Cape Town Harbour and Gordon’s Bay.

Cape Town is truly leading the way as the benchmark for long-term city-led economic development in South Africa.

Nelson Mandela Bay

When the DA-led government took control of Nelson Mandela Bay, it was in financially precarious position following decades of ANC corruption and maladministration. The most immediate task was to put in place a system to restore financial stability. After less than a year in government, the City’s Capex rate is at 93%, and boasts a 93.7% revenue collection rate – the best financial position the metro has been in for over 7 years

Thus far, the City has created 4000 new job opportunities, and has committed to provide bursaries to 1800 students – to the total value of R34 million. Moreover 300 young people have already this year gone through learnerships in the City, to ensure that they have the requisite skills to provide them access to better jobs.

The Mayor will also be establishing a dedicated “Jobs Desk” in his office to facilitate the municipal bursary process, and will expand incentives for business to employ first time job seekers – particularly the youth.

Going forward, the City will establish a professional Trade and Investment Promotion entity, focusing particularly on attracting new investments on Nelson Mandela Bay.

The City also plans to revitalize the EPWP programme, in order to focus on skills development that empower beneficiaries to access further employment opportunities. This will include a skills database of all residents who have gone through the EPWP programme so that businesses can access people with relevant skills.

Lastly a localised 'Ease of Doing Business' task team will be established to monitor key indicators of business and slash unnecessary regulation and red tape.

Nelson Mandela Bay is the leading light in the Eastern Cape when it comes to growth and opportunity, and will continue as such for years to come under DA-led governance.

Conclusion

Make no mistake, there is still much more to do to develop and grow our cities and our nation. There are still millions of South Africans left out of the economy – without a job, and without hope of a better future.

But make no mistake, where we are in government, the DA will make it not just our main focus – but our civic duty – to create work and to create opportunity for those left out.

Indeed, we will only be free as a nation when every South African - regardless of race, gender, sexual orientation, or circumstances of birth - has the opportunity to enter the economy and play a meaningful role in the development of our nation.

Amid a dire and crippling national economic environment, DA-led governments will do all in their power to create access to jobs, opportunity and wealth for all – not just the connected few.

Issued by Mmusi Maimane, Leader of the Democratic Alliance, 29 August 2017