The structure of the economy of the City of Johannesburg, its economic history and the energy of its people lie at the centre of local economic development policy. Indeed, economies grow and create jobs through a creative, development programme that appreciates and values the local reality.
One of the foremost theorists of development economics, Michael Sherraden, persuasively contends that local economic development should exploit local assets to grow local output. His theory of asset-based development finds value in empowering local persons, especially those in the margins of the mainstream, local economic activities and structures – the forgotten people of Johannesburg.
Similarly, Amartya Sen’s capability approach is an intellectual monument to defeating stagnancy and poverty, especially in its call for empowerment of local economies, society’s attempts to attain economic opportunities, a bottom-up approach to development, and upliftment of the status of vulnerable members of the community. Indeed, these are my ideals in public administration and community leadership: the embrace of shared growth and the creation of lasting economic value for our residents.
For over 130 years, the Johannesburg economy has been the location of opportunities. The mining boom provided jobs to vast number of people; its output accounts for a significant share of the national economy; its resources stimulated industry; and its people generate an energy shared by the rest of the population. Over the years, a succession of renewal programmes have succeeded each other, but challenges abound.
For example, the City of Johannesburg is challenged by an unemployment rate of 33% and sector analysis shows that crucial industries have shifted operations, undermining the economic competitiveness of the city. Statistics indicate that in 1996, manufacturing accounted for 20% of the Johannesburg economy but by 2013 that share of the manufacturing economy had shrunk to 16%. Contractions are recorded of other sectors during same period, including electricity and other household consumables that declined by 1% and 7% respectively. Mining production has also declined substantially in Johannesburg.
Sectorial decline is the leading variable explaining high levels of unemployment, and this is occurring in an economy that for a significant period experienced the phenomenon of jobless growth. Other implications of economic sector decline are insufficient research and innovation in the affected sector, human capital stagnation, and dearth of innovation.
Both the private sector and municipality should work closely with our two internationally acclaimed public universities, Wits University and University of Johannesburg, to embark in research and development. Business cycles and competitiveness economics in other markets indicate that these variables tend to form a vicious cycle that ultimately leads to the destruction of the local economic asset.
For the Johannesburg economy, its sectorials economic history should act as a source of renewal for increasing input and promoting full employment. The revival of manufacturing is a local economic development solution that will promote greater labour absorption for both the semi-skilled and highly skilled cohorts. The rise in the city financial services sector – from 22% in 1996 to 32% by 2013 – shows that the revival of the manufacturing sector requires appreciation of local people to exploit local capabilities and resources, and convert these into competitive products for the global markets. The new city administration continues to make substantial financial resources available for both human capital and enterprise development as Johannesburg establishes itself as a development hub.
The growing population is a source of economic growth for Johannesburg. The City’s population is currently around 4.94 million residents and this represents 8,9% of the South African population. Johannesburg receives approximately 3027 migrants per month, in particular seeking employment opportunities.
This population will come in handy in infrastructure development, manufacturing and agri-processing. Most internal population movements take place for economic reasons. However this has put a lot of pressure on our capacity to provide services. Service delivery protests have emerged as existing infrastructure takes strain from a surge in utilisation.
For most underserviced Johannesburg communities, the major needs are housing and settlements requirements, roads, waste management, security, and community social services such as the building of crèches, schools and community centres, amongst others.
Consistent with the ethos of community development, the shared growth brand of Johannesburg local economic development programme prioritises investment in local infrastructure. Infrastructure investment is linked with overall user needs and these span roads, urban housing, township general economic development, community cleaning service, schools and safety.
Our administration has planned for the provision of these in a way that will provide multiplier effects, and this programme objective has innovative solutions regarding job creation and local business growth. The spirit of our procurement policy encourages winning bidders to provide internship and apprentice opportunities to local students and graduates; this is to promote exposure and opportunity for retraining in relevant expertise for young people.
Infrastructure development offers unparalleled opportunity to launch widespread public works programmes. However, this should not be an opportunity to promote job casualisation and temporary solutions. Rather, employment opportunities in infrastructure programmes should be used for business creation by communities as they collaborate to create enduring cooperatives. In the same way, infrastructure development initiatives are used to provide commercial opportunities to local microenterprises to sustain their businesses, learn new skills, and grow the local economy.
Indeed, this approach to Johannesburg local economic development takes cognisance of the capabilities and entrepreneurial energy of its people. From the inner city to nondescript corners of the metro boundaries, Johannesburg is at work in the informal economy.
A typical walk in the street reveals local entrepreneurs providing assorted services including haircuts and styling, restaurant services under a makeshift tent, innovative kindergarten services, and microfinance street trading services, amongst others. These economic activities may be unregulated and informal but they act as an inalienable source of income and employment for our communities.
Our approach should include formalising these economic activities, providing an ideal environment for local asset business growth, and protecting our entrepreneurs from street pimps and sharks. Practical steps include providing the necessary support for registering such businesses in a less onerous manner, assisting proprietors to meet regulatory requirements, and providing trading structures, public toilets in commercial precincts, and adequate security.
Our local development policy is a confluence of strategies at a community level that will revive the Johannesburg economy and propel it to lofty economic heights. It is a celebration of local people, their economic activities, their skills and capabilities that will rewrite the economic fortunes of the city. The enviable success of the tiny island of Singapore is a result of a series of local economic growth and employment strategies that uplifted its people and simultaneously improved a rural, backwater island enclave into a strong industrialised and innovative city state. And that is the destiny of the City of Johannesburg.
Another version of this opinion piece was published by The Star.
Dr. Dagada is a Member of Mayoral Committee for Finance at the City of Johannesburg. He is on Twitter: @Rabelani_Dagada
