Does DA-led coalition have what it takes to revive Joburg’s CBD?

A quick drive through Johannesburg’s inner city central business district (CBD) on a busy day provides a window to a vibrant economy dominated by small traders, street hawkers, restaurants, pubs, night clubs, liquor stores and a whole host of small businesses.  

While there is something wonderful about the city’s flourishing economy, there is also something troubling about what is happening there. The city is a paradox of application of skilful entrepreneurship, but simultaneously the contravention or lack of enforcement of municipal bylaws. This has contributed to the CBD sliding into squalor and urban decay.

This urban decay has been worsened over the past two decades by the migration of large, blue-chip companies from the CBD to Sandton, Rosebank, Fourways, Randburg, Waterfall and many other areas. In some parts of the Johannesburg inner city the failure to enforce bylaws has resulted in a laissez-faire, free market economy that is unhindered by government intervention. There is no evidence of the government policing businesses, directing trade and collecting taxes.

The city is a melting pot of stiff economic competition of businesses providing similar products or services, closely packed together, vying for customers. If British economists and laissez-faire proponents Adam Smith and David Ricardo were still alive today they would be impressed to see their brand of economics in action in the CBD, the city once roamed by the Randlords, who built its economy after the discovery of gold in 1886 in the city’s outskirts.

It remains to be seen whether the DA-led coalition municipal government, which now controls Johannesburg under the mayorship of Mpho Phalatse, will have the wherewithal to impose bylaws in the city, surrounding suburbs and townships. In some of the streets traders and street vendors block sidewalks and litter on the pavements, making a mockery of the notion that Johannesburg is a world class African city.

Nkuli Mbundu, Johannesburg’s mayoral committee member for economic development, has promised to bring R30bn worth of investment into the CBD and to formalise informal trading through the allocation of permits to small traders. If he succeeds with his mission it will drastically enhance the fortunes of the inner city.

The last time the government attempted to regulate trade in the city centre violence broke out. In August 2019 the SA Police Service and Johannesburg metro police conducted a law enforcement operation to confiscate illegal and counterfeit goods from traders and street vendors.

Traders and vendors

The traders and vendors, mainly foreign immigrants, did not take kindly to their trade being interfered with. They responded by pelting police armoured vehicles with bottles, stones and petrol bombs, forcing the police to withdraw to avoid bloodshed.

The operation was undertaken after complaints about a spike in the sale and distribution of illegal goods in the CBD. This unlawful practice has had a negatively effect on legitimate businesses. The victims of this illegal trade face unfair competition from competitors that have not invested in intellectual property rights and marketing. Not only has this illegal trade resulted in loss of revenue and employment, it has also led to loss of potential tax revenue.

Despite the challenges faced by the CBD, including bylaw contravention, crumbling infrastructure, overcrowding and hijacked buildings, the Johannesburg inner city is still home to some of the best prime commercial and residential real estate in SA. There have been attempts before to rejuvenate or gentrify the inner city by attracting investors and property developers in places like Braamfontein, New Town and the Maboneng Precinct, but a lot more still needs to done to turn the CBD around.

In 2018 former Johannesburg mayor Herman Mashaba came up with a plan to release 500 hijacked or abandoned inner city buildings to property investors and financiers. The plan revolved around consolidating the buildings into mixed-use developments for commercial and business use, student accommodation, and low-cost housing units.

Mashaba, who was mayor on a DA ticket but is now ActionSA leader, wanted property developers to provide affordable housing with monthly rentals ranging between R800 and R1,000. During his three-year stint as mayor from 2016 to 2019 Mashaba claims he released more than 150 hijacked buildings worth R32bn for redevelopment.

Hijacked buildings

According to an article by GroundUp, published on the Citizen website on November 5, hijacked buildings are dilapidated and many have no electricity or have illegal electrical connections and no proper water and sanitation provision. Residents in these buildings are charged monthly rentals of R250 by hijackers and slumlords.

There is no doubt that the inner city requires upgrading, but that must not lead to the displacement of low-income residents through huge hikes of rents by property developers. A study done in 2019 by Quentin Brummet of University of Chicago and Davin Reed of Philadelphia Federal Reserve Bank found that gentrification has long-term benefits for low-income neighbourhoods and causes little displacement.

The study, which focused on the 100 largest US metro areas, also found that low-income neighbourhoods that did not gentrify in 2000-2012 lost 8% of their residents and that average incomes declined 21% in those neighbourhoods.

The lesson for Johannesburg is that it needs to tighten enforcement of bylaws and gentrify to attract investment and boost employment and the incomes of residents.

• Ntingi is founder of GetBiz.