LANDIWE J MAHLANGU: Why spatially blind policies are no longer sufficient

UN Habitat recently launched its Global Action Plan on Informal Settlements and Slums, part of the UN sustainable development goals agenda. I could not think of anything more relevant to this country, which may in fact explain the UN’s choice of SA as the venue for the launch.

Spatial transformation matters more in SA than most other parts of the world, since a key and defining feature of apartheid was spatial planning that resulted in black people being condemned to the least developed and most deprived areas of the country. In rural areas this was the homelands, and in urban areas it was townships. These places were essentially dormitory and labour reserves for the surrounding towns or urban centres. It was inevitable that they became synonymous with poverty, deprivation and unemployment.

These trends have, unfortunately, continued in postapartheid SA, albeit in slightly different configurations. De-industrialisation and gentrification have put paid to the hopes of many jobseekers, the majority of whom are young, being able to come to cities for job opportunities and better living conditions. Instead of urbanisation turning SA’s towns and cities into engines for economic growth and productivity, it has just urbanised poverty.

SA has become not only more deprived and unequal, but these inequities have become spatial, deep and structural. For instance, while unemployment is now sitting at 34% nationally, in some areas the rate of joblessness is as high as 80%. Over the past decade SA has rolled out all manner of social safety nets and measures to counter extreme poverty. But most of these stemmed from national government and were spatially blind. The level of grant dependency has crossed a critical threshold of 50%, with most of those who rely on grants in the Eastern Cape, Limpopo and Free State. 

While nationally-driven social safety nets and other interventions are necessary for preventing extreme poverty, they are by no means sufficient to combat the triple challenges of inequality, poverty and joblessness. Spatial disparity and inequity could become intractable unless deliberate and robust policies are put in place to prevent this. Regional and local economic development means harnessing local resources, skills and entrepreneurship. It requires policy co-ordination of a suite of development policies and interventions and collaboration among institutional actors, including the private sector. 

There has to be recognition that some places, regions and towns of our country need nuanced and differentiated strategy to reach their competitiveness and to level-up with other regions or towns. It is a given that there must be alignment with national policies through the current intergovernmental relations framework. But alignment does not necessarily mean symmetry. Policy must be strategic and enabling rather that slavish and uniform.

Macroeconomic policies should deliberately take into account both regional and local challenges and competitiveness. It is time to consider local business taxes in areas where they can be levied and collected by major cities. While this may bring back memories of the unpopular former regional services council levies, they are a key fiscal instrument that is a normal feature in most European cities, for example. Such local revenue can provide the resources necessary to implement spatial and place-based economic development

The regional implications of monetary policy also needs to be considered. There is an assumption that SA Reserve Bank policy applies nationwide and thus affects everyone equally, but this is false. Changes in the policy rate and exchange rate fluctuations have different effects in different parts of the country. The countryside is littered with stranded industrial assets and abandoned properties that are casualties of the aggressive monetary stance the SA Reserve Bank has taken. 

Climate change is another factor that calls for a differentiated approach, since its effects are often localised and particular parts of the country are particularly vulnerable. Cities and towns on the front line of the climate change battle are therefore leading in terms of not only adaptation but also implementing mitigation measures. The national commitment to net zero carbon emissions has severe implications in places such as Emalahleni and Vaal, for instance, since they experience higher air pollution as hosts of two “dirty” industries, coal and steel. In both cases these industries employ a substantial number of locals and their role in the regional economy is significant. The manner in which we approach these towns will have to be markedly different than other areas, even in the same province or district.

At the centre of regional and local economic recovery and development is the use of a combination of microeconomic policies, including industrial policies, skills development and SMME and other place-based initiatives. This will have to be enabled by quality infrastructure, skills and talent mobilisation and place-based development institutions and agencies. It is therefore inconceivable that any region or city can make meaningful economic progress without these specialised development agencies.

It was interesting that the recent local government summit showcased the district development model as an instrument and platform to achieve local economic recovery and development. The model is without doubt a game-changer. But it is not without drawbacks. The first is that it is anchored on the current districts, municipal configuration and boundaries, which are not without defects.

The spatial logic of some districts and regions has long been questioned. One example is the Vaal Triangle, whose true development potential is undermined by the spatial aberration that results in the country’s key development nodes being split between different provinces and two districts. These boundary configurations create administrative constraints.

The second drawback of the district development model, whose centrepiece in the One Plan, which should galvanise all the role players including private sector, is that it is lopsided. The emphasis is on public sector actors, and the involvement of other social partners is limited. There was little private sector involvement in the local government summit. And yet this sector is critical for the recovery and regeneration of local economies. Private sector involvement needs a more innovative place-based engagement framework for sustained involvement.

It has become clear that while spatially blind policies and intervention like social protection, the Covid-19 and social relief of distress grants and housing subsidies are necessary, they are in no way sufficient. There must be a deliberate effort targeting deprived regions using a combination of place- based intervention and incentive. This will ensure that no region or area gets marginalised or left behind.

The suite of policy interventions should cover both supply and demand, ranging from lifeline tariffs to special economic zones. This should also involved blended finance aimed at both local social regeneration and sustainable local economic development and investment.

Mahlangu, a former Municipal Demarcation Board chair, is chief economist and director at Amazwe Advisory.