Industryline

Industryline – Property and Construction

Lee-Anne Bac Lee-Anne Bac

It's time for smaller municipalities to step up to the plate

With the 2016 Municipal Elections now over, city management track records have come under microscopic scrutiny. Service delivery, infrastructure challenges, crime and the like are all issues of stirring up political point scoring, but our joblessness burden remains the single biggest question facing municipalities at present.

Stats SA earlier this year said half a million more people who are actively looking for jobs today (5.7 million people) are unable to find any compared to the fourth quarter of 2015 (5.2 million people).  The rapid increase in South Africa’s working-age population to 36.4-million (up 159,000) since the previous quarter, coupled with the mass migration of rural populations to urban areas in the hope of finding work, means our cities are under pressure to attract investment.

To satisfy the hunger for jobs we can no longer only look to our first-tier cities – Johannesburg; Cape Town and Durban to come to our rescue. SA’s secondary cities, including the likes of Pietermaritzburg, Potchefstroom and Polokwane, have to find ways to reinvent themselves if they are to compete for business investment that will drive their economies forward and create jobs.

While there is no magic wand to bring investment flooding in, the reality is that businesses and workers are attracted to cities that not only enhance efficiencies but also feel relevant and vibrant. Such environments cultivate creative, productive workforces and long-term, sustainable businesses.

More than ever before South Africa’s smaller cities need to innovate to compete with bigger cities to attract new investment. Just how can this be achieved?

Identify and exploit strengths

Second tier cities need to identify their competitive advantage and develop them. The “jack-of-all-trades” approach is ineffective and cities must specialise in the key competitive advantages that they have. From ports to manufacturing to technology, cities must find a niche and use it to attract investment.  

A World Bank report, Competitive Cities for Jobs and Growth: What, Who and How, examines the characteristics that make up cities which are globally competitive. Researchers say all the cities they identified as globally competitive had a clear strategy to exploit their strengths.

For example, a city like Potchefstroom with its excellent academic facilities can use its expertise to create a sophisticated knowledge-based economy and position itself as a research and innovation hub. The city could look to attract knowledge workers and develop industries that complement its core strengths.

In addition its proximity to South Africa’s economic capital – Johannesburg - allows it to develop new travel and tourism offerings and then market these offerings to the country’s largest market just one and a half hours drive away.

Whether it’s manufacturing or intellectual capital, cities must look deep within themselves to determine what their strengths are or to determine what industries they can develop or create. In addition cities have to be acutely aware of what competitors are doing, and how to stay ahead through their specialist value offering – they need to think like a business and adapt accordingly.

Visionary leadership

Reinvented cities require leaders who can cut through the politics and bureaucracy to maximise the potential of their city for the people who live there or who want to live there. They have to focus on the long-term benefits beyond their five-year terms and resist the populist pressures in order to achieve sustainable growth.

Visionary leaders are those who are able to manage the political pressures while investing money into risky areas that will pay off in the long term. It’s near impossible for leaders to realise their vision in five years and this leads to short term actions that are not necessarily in the interest of the city in the longer term.

Gauteng Premier Mbazima Shilowa, for example, mooted the idea of the Gautrain years before the first soil was turned. Today the Gautrain has played a massive roll in enhancing Gauteng which continues to benefit from the world class speed train service. 

Use good data to tell a compelling story

Most cities in South Africa have local economic development plans which require them to publish data on economic and social performance. If presented differently, these figures could be part of the story to attract investors.

Cities that can provide businesses with good, concise information about relevant factors – economic performance, wellbeing of the population and where entrepreneurs are located, for example – will be the ones that attract investment. Communication must be constant and consistent over multiple platforms and messages should be crafted to maximise the City brand.

An international and /or national location

Cities must position themselves as an aspirational destination where people aspire to live, work and play. South Africans looking to relocate from their home town typically choose Johannesburg, Durban or Cape Town so the question becomes what are other first tier cities such as Port Elizabeth and Bloemfontein doing to attract skilled workers.

Similarly second tier cities should position themselves as national locations to attract skilled workers and investment. When a young person chooses a city where they can see a future for themselves they are two to three times more likely to stay. This vibrant and skilled workforce will draw national investment from businesses wanting to expand as well as the possibility of international companies looking to invest in new locations.

Focus on young people

Businesses want to invest in cities with a young workforce. Newtown in Johannesburg CBD is a prime example of not only inner city regeneration but an attraction for young people keen to live, socialise and shop.

Young people aren’t ready for the house in the suburbs. They want central areas where they can meet, relax and have fun with friends. Green spaces; river walks, downtown boulevards and art districts within modern city renewal and development are useful tools to draw people into the city. Together with activities such as the performing arts; night life and entertainment hubs – a concept known as “urban-walkable-retail” – cities can attract and retain young vibrant populations.

For more information about our Property and Construction advisory services, please contact us.