Townships must be included in growth plans, says the writer. Picture: THE TIMES
Townships must be included in growth plans, says the writer. Picture: THE TIMES

In February, the finance minister highlighted in his budget speech the importance of the country’s cities in achieving inclusive and higher economic growth.

He said: "SA’s eight metros are home to 39%of our population but account for half of all employment (formal and informal) and 57% of the country’s economic output," adding that "we must take advantage of this dynamic to drive inclusive growth".

This is exactly what the Treasury, in co-operation and partnership with other government departments, is aiming to achieve. The department and the Department of Co-operative Governance recently hosted an executive leadership programme at the Gordon Institute of Business Science for eight metro municipalities (Johannesburg, Cape Town, eThekwini, Tshwane, Ekurhuleni, Nelson Mandela Bay, Buffalo City and Mangaung) and two intermediate city municipalities (Polokwane and uMhlathuze).

The focus of this programme is on methods of creating solutions to the complex challenges at the coalface of service delivery at municipalities. Municipalities need to look at long-term solutions and ensure inclusivity, resilience and productivity, but the urgency and complexity of immediate challenges makes this very difficult. The executive leadership programme has focused on addressing these challenges and equipping managers with some of the skills that will help them tackle blockages and stumbling blocks to the growth and development of their cities.

Cities are not identical to metros. The metropolitan areas of Tshwane, eThekwini, Nelson Mandela Bay, Buffalo City and Mangaung are responsible for large rural areas as well as cities. This data is provided for local government jurisdiction and therefore underrepresents the significance of cities’ contribution to inclusive economic growth.

Together, metropolitan municipalities account for a mere 2% of SA’s land area but accommodate 39% of the South African population; 42% of the national labour force (those aged between 15 and 64), 50% of employment and generate 57% of SA’s economic output (gross value added).

In addition, the economies of our metros have been growing significantly faster than the rest of the country. Between 2011 and 2016 metro economies grew by 11.1% (2.1% per year), while all other areas combined managed to grow only 4.6% (0.9% per year).

We must remember that cities are centres of social, cultural and economic innovation precisely because they allow people to interact. Large, dense urban areas provide the economies of agglomeration that lead to the emergence of new ideas and technologies, and new ways to do business.

All over the world young people migrate to cities to find these opportunities.

However, in SA if you are poor and black you remain excluded from this process.

This is also something the government as a whole is giving attention to by implementing policies that are aimed at emancipating previously disadvantaged citizens.

Metro governments, in fact all municipal governments, have an important role to play in enabling inclusive economic growth, but so far much municipal effort has been misdirected and ineffective.

If we are to sustainably develop our townships, it cannot be to keep them as separate from other residential areas in our cities but rather to break down the physical and economic divides that keep township residents excluded from the mainstream economy

SA’s environment of low growth and fiscal consolidation means that again we will need to make sure that we focus government programmes and do more with less.

These challenges also provide us with an opportunity to rethink some of our previous approaches and find new ways to stimulate faster and more inclusive growth.

During the executive leadership programme, participants were exposed to some of the challenges facing cities, hearing from municipalities, cities and businesses. One group visited two industrial nodes in Johannesburg: Kya Sands, where 616 companies are located, and Nancefield, the site of 107 companies. Both industrial nodes have adjacent informal settlements and both have issues with illegal electricity connections. This has affected the viability of the businesses in the industrial nodes, because the illegal connections have caused fires at mini-substations and therefore the interruption of electricity supply to businesses.

This example highlights the importance of the municipal role in economic development: back to basics, yes, but also facilitating complex social engagements and multi-stakeholder collaboration.

The question of township economies is necessarily a critical component of the question of inclusive economic growth.

About a third of working age South Africans, and almost half of the unemployed live in townships. Those who are employed spend a large portion of their income on travelling to work opportunities; those who are unemployed cannot afford to travel to search for work. Most townships were deliberately planned to be labour reservoirs, far from work opportunities.

If we are to sustainably develop our townships, it cannot be to keep them as separate from other residential areas in our cities but rather to break down the physical and economic divides that keep township residents excluded from the mainstream economy.

What this means is that ultimately our objective cannot be just to develop townships as if they are separate from our cities. Rather, we must integrate our townships with our cities, to unlock their potential as centres of interaction and drivers of growth.

This requires that municipalities not only improve their administrative and regulatory performance, but also their capacity to facilitate and broker complex social engagements and collaboration required to bridge these divides. We must abolish the apartheid city mentality to ensure inclusive economic growth.

• Mogajane is Treasury director-general.