Looking UP: CoJ committed to driving growth in Joburg

Historically, Johannesburg has always been regarded as the economic hub of SA. Dada Morero, the CoJ’s Finance MMC speaks to SOUTH AFRICAN BUSINESS INTEGRATOR about strategic plans to tackle challenges and enable sustainable growth of the City.

What are key opportunities to enable sustainable growth?
Looking at the Growth and Development Strategy 2040 and the Spatial Development Framework, the Inner City has been identified as the core of the City of Johannesburg and plays a significant role in terms of economic growth and development.

We have in the past decade undertaken proactive efforts to regenerate the Inner City and the City at large. Several high-level strategies have been developed to counter the state of decay and bring change, stability and investment in the Inner City and across the city respectively.

These are collaborative efforts with residents, businesses, institutions of higher learning and civil society, among others. Our plans for this initiative include:

• The Inner-City Transformation Roadmap: This roadmap pulls together all affected stakeholders and required resources to deal with the challenges and pushes innovation to create a sustainable and productive Inner City.
• The Inner-City Investment Masterplan: This plan aims to create a funding mechanism for Inner City projects. The masterplan also catalogues private investment opportunities that are expected to emerge.
• Spatial Development Frameworks (SDF) and localised plans: This identifies the main challenges and opportunities in the city, sets a spatial vision, and outlines strategies to achieve that vision.
• The Informal Trading Policy & Bylaw: This will allow traders in the city to be registered and regulated to be included in the formal economy of the City. This will assist the City to better manage the informal trading areas and spaces, especially the Inner City where clean and safety issues normally emanate. This will help the city to be more appealing and regulated so that bylaw enforcement can take place effectively.
  

It should also be noted that we did a recent review of the GDS to better consider our current context and challenges, taking stock of Census 2022, Covid-19, cost-of-living, the energy crisis, and the technological revolution – we expect formal approval of the revision in 2024.

What are some of the focus areas for 2024?
We are focusing on the reliability of energy supply through the energy mix to drive economic growth. Furthermore, City Power was announced as the implementing agency for the Provincial Energy Plan and to this end City Power has started with the implementation of some of the programmes that were planned since the Energy Indaba.

City Power is installing solar high mast lights, replacing stolen transformers – even in Eskom-supplied areas – rolling out solar geysers mostly in non-affluent areas, and solar rooftops on all City-owned buildings.

Additionally, the City is focused on the effective use of technology through the Smart City initiatives to improve service delivery and create a safer City.

What are some of the challenges in CoJ?
Johannesburg is a vibrant and culturally rich city but is subject to struggles associated with developing countries. The rapid urbanisation experienced by many cities in the developing world means that faster population growth rates often contribute to large-scale urban poverty, housing shortages, infrastructure backlogs and environmental degradation.

We identified 11 strategic priorities to deal with challenges faced by Johannesburg namely: good governance; financial sustainability; the energy mix; sustainable service delivery; infrastructure development and refurbishment; job creation; safer city; active and engaged citizenry; sustained economic growth; green economy; and Smart City. A number of programmes are aligned to these priorities currently being rolled out in all seven regions of the City.

What is the City doing to enable SME growth?
Our Economic Development Strategy aims to unlock opportunities for SMEs by:

• Increasing localised production – replacing imports by getting firms in Johannesburg and South Africa to become competitive suppliers.
• Increasing economic activity in different regions within the City – promoting increased economic growth in regions based on their different profiles and comparative advantages.
• Increasing small entrepreneurship activity through increased collaboration with the private sector valuechains and City supported-SMME hubs; and
• Increasing connectivity with the rest of Africa through increased trade and investment links with the rest of Africa, including targeted development of economic precincts that reflect that Johannesburg is the economic hub of southern and eastern Africa.
  

There have been numerous reports about ailing infrastructure and challenges regarding service delivery. How does this impact investment?
As we are all aware infrastructure plays a critical role in unlocking investment. The continent has been known for less developed infrastructure, which already impacts on the quality and quantum of investments to enable economic growth.

Furthermore, infrastructure betters the proficiency of the City and lowers the cost of doing business, thus ensuring sustained levels of economic growth through foreign direct investments and encouraging business retention. We are cognisant that the impact of ailing infrastructure results in businesses moving from a specific location to an area that has developed infrastructure.

That being said, we have done a lot of work in identifying issues, and we have solid plans in place to address challenges, inclusive of infrastructure challenges.

An example of this is that in the City, we have identified energy as a major concern for businesses considering expansions. Energy challenges has resulted in businesses delaying investment plans and some are even looking at other foreign destinations. To address this, the City has taken a proactive approach through initiatives such as the Short Power Purchase Agreement, which looks at the private sector supplying the City with additional power to better manage the energy constraints.

Additionally our local Investment Promotions Agency – DED – is on hand to help investors to navigate challenges that may arise pertaining to challenges be it electrical, transport and so forth.

Yes, we have some challenges, but things are looking up and Johannesburg remains a preferred investment destination for domestic and foreign investments for a number of reasons including:

• Quality infrastructure and efficient logistics;
• Largest presence of multinationals in Africa;
• Lucrative emerging market;
• Favourable market access to global markets;
• Innovation and tech hub;
• It’s Africa’s leading financial services sector;
• Excellent quality of life;
• It’s a premier destination for business and medical tourism; and
• We have an advanced financial market infrastructure, with the Johannesburg Exchange, which is ranked among the world’s top 20 stock exchanges by market capitalisation and offers investors an efficient platform for capital raising.

How is the City faring in terms of improving trade facilitation?
As mentioned earlier, Johannesburg is ideally positioned to benefit from trade due to its proximity to major routes, which provide for ease of access to international markets.

The City is home to the largest dry inland port in Africa, which improves the flow of imports and exports. The City regularly collaborates with different organisations, local and foreign, to improve exports through capacitation programmes, organisations such as the Department of Trade Industry and Competition, National Empowerment Fund, Gauteng Growth Development Agency, Gauteng Enterprise Propeller and Johannesburg Chamber of Commerce of Industry. These stakeholders have established programmes that benefit SMMEs to fully tap into the global market.

[Refer to Figure 1] Overall looking at the trends in the value of merchandise imports and exports there has been steady growth for the most part.

The city’s foreign trade balance peaked in 2008, i.e., just before the negative trade effects of the global financial crisis began to manifest themselves.

In value terms, the data indicates that imports increased from R43 billion in 1996 to R521 billion in 2021, while exports increased from R35 billion to R778 billion during the same period.

There was a slight trade deficit for much of the period from 1996 to 2007. This was followed by a few years of trade surpluses before a trade deficit emerged once again for the city from 2012 to 2015. Since then, the deficit has been widening, likely attributable to slower growth in Johannesburg’s manufacturing sector and fewer exports. Trade surplus in 2020 and 2021 was because of global Covid-19 lockdown rules and reduced imports due to restrictions.

[Refer to Figure 2] It is evident that that the value of merchandise exports for Johannesburg has grown significantly and has grown at a comparatively greater rate than that of Gauteng and South Africa at large. The value of Johannesburg’s exports was estimated to have increased by 2 114% between 1996 and 2021, compared with 1 616% for Gauteng and 1 371 % for South Africa respectively.

In terms of import values, there was cumulative growth in imports for Johannesburg, Gauteng, and South Africa at 1 108%, 1 064% and 1 110% respectively.

In terms of the importance of different world regions as sources of imports for Johannesburg, there are also clear shifts in the data between 1996 and 2021. The share of total imports from Europe fell by nearly more than half, from 47% to 20%, while the share of imports from North America dropped from 16% to 9%. Over the same period, the share of imports from Asia rose from 25% to 40%, and those from Africa increased from 3% to 10%. Imports from the Middle East rose in share from 6% to 15%, and for South America remained at 2%. This data clearly illustrates the rising importance of South-South trade in the City’s export and import economy.

Gauteng was recently said to be the number one region for domestic travel. How does Johannesburg feature in this?
The Johannesburg Tourism Company works in collaboration with strategic stakeholders to position Johannesburg as a leading business and lifestyle destination in Africa. We have seen some great results namely, winning bids to host numerous global events such as: AfriCities; C40; One Young World; Junior Chamber International Africa and Middle East Conference; and Meetings Africa.

As per the GDS 2024, the vision for Joburg is to be a World-class African City of the Future that is vibrant, equitable, strengthened through its diversity; and provides quality of life and sustainability to all its inhabitants.