JASON F BELL: To rebuild Gauteng as an industrial hub we need broad knowledge of its activities

Fuelled by the gold rush, modern-day Gauteng rose to become SA’s economic powerhouse, a status solidified under the uneven development agenda of apartheid. Because of this, the province is the hub of the country’s urban, industrial, commercial, financial and administrative activities.

Uneven development was a direct consequence of apartheid’s racist and classist policies that determined the spatial arrangement of these activities. Apartheid’s economy, narrowly focused on a few industries, became unstable and unresilient towards the end of the regime because of its lack of diversification and dwindling support.

Despite its flaws, apartheid’s spatial and industrial legacy persisted in the post-apartheid era, hampered by barriers to entry and a lack of structural reform. Since 1994 Gauteng’s economy has faced considerable transformation as tertiary activities have gained prominence in its economic composition at the expense of its industrial activities.

Recognising this, the Gauteng Investment Conference noted the critical need to restructure the provincial economy as a leading investment destination and an international trade hub, anchored by a well-developed and robust industrial base.

However, given the challenges facing SA’s industrial sectors (and by extension, Gauteng), policymakers would benefit from understanding post-apartheid industrial changes, to be able to understand each region’s ability to respond to sector-specific shocks (that is, its resilience).

To understand this, the Gauteng City-Region Observatory mapped Gauteng’s industrial changes post-apartheid — its location shifts and whether industries diversified or became more concentrated. Through this exercise we provide some detail around the scope and scale of Gauteng’s changing industrial landscape since 1994.

Something borrowed

During apartheid, industrial activity was concentrated in the Pretoria-Witwatersrand-Vereeniging complex. The legacy of apartheid’s distorted social and spatial arrangements is evident in the Pretoria-Witwatersrand-Vereeniging complex, a system that limited access to urban and economic participation.

Beyond the core urban and industrial areas, places where portions of the black urban population were displaced suffered severe neglect and decay. Strategically located on the province’s borders, designated growth points and border industry areas would eventually develop some industry, but ultimately failed because of a lack of resources and distance from the Pretoria-Witwatersrand-Vereeniging market.

Gauteng’s economy in 1994 showed apartheid’s lasting impact, specialising in mining (gold, coal, metals) and related manufacturing (metal products, machinery, petrochemicals and cars). The urban and industrial spatial arrangements that developed in apartheid’s wake would continue for years, posing and persistent challenges for the democratic government.

Something ... (re)new? 

Gauteng’s industrial specialisation changed dramatically between 1994 and 2023. During this period Gauteng’s economy underwent restructuring. This was partly due to structural factors and partly due to the government’s efforts to restructure the province’s uneven industrial landscape, redressing apartheid’s spatial legacies and managing the country’s response to globalisation.

Notably, there has been a decline in high-value manufacturing and growth in low-value agricultural and mining activities. Historical centres of industrial activity such as Johannesburg, Ekurhuleni and Tshwane saw marked differences in their industrial specialisations, swapping manufacturing for mining, forestry and fisheries. These are indicative of declines in value addition, wages and productivity.

While manufacturing is still present, the analysis shows that it is no longer as significant as other activities in these economies. These patterns of declining manufacturing activity echo national deindustrialisation trends and have caught the attention of provincial policymakers who prioritise structurally transforming the economy around renewed emphasis on manufacturing and other industrial sectors.

Critically, our analysis illustrates only a certain industry’s production proportion in an area compared to Gauteng’s entire economy, highlighting its proficiency. However, it is only half the story. We also need to assess changes in each region’s industrial activity and whether those regions are experiencing diversification or concentration of their industrial activities.  

Something “blue” (and pink)

Literature on industrial change notes a strong spatial relationship between economic sectoral structures and regional resilience (the ability to withstand shocks). Looking at it from a distance, the peripheries of geographies often face challenges. These include concentrated industrial structures, low activity and less innovation, which makes them less resilient and more vulnerable.  

Our analysis of Gauteng’s changing distribution of industrial activity shows a noticeable transformation in where diversified industrialisation is unfolding. Periphery areas have become proficient in more industrial activities (indicated by shades of blue). Areas within Sedibeng and the West Rand district municipalities have gained proficiency in more than five industries on average, with Mogale City being the most proficient region with 14 industries.

In contrast, areas within the once-dominant Pretoria-Witwatersrand-Vereeniging core (Johannesburg, Ekurhuleni and Tshwane metropolitan areas excluding the Vaal Triangle) have suffered the most significant hollowing out of diversified industrial activities, becoming more concentrated in the process (indicated by shades of pink) — albeit to different degrees.  

The industrial cores of Ekurhuleni and Johannesburg have concentrated (darker pink), except in the Kempton Park to Boksburg region. But Tshwane has not suffered the same fate. All its planning regions, except Centurion, either became more diversified (indicated by their light shades of blue) or remained unchanged (indicated by grey) since 1994.

We need to go deeper to understand the dynamics behind these declines. For example, Johannesburg’s decline in manufacturing activities has been accompanied by rapid urban population growth and a structural shift in its economy towards tertiary activities such as finance, insurance, real estate and business services. Combined, these have played their part in the city’s worsening unemployment, inequality and poverty, but have also driven a structural shift in the city’s economic base.

Diversification is espoused as a desirable policy aim to bolster regional development and strengthen linkages between and within areas of industrial activity; however, we should not be so reductionist as to ignore now-concentrated areas that were once the bastions of industrial activity.

Rather, what we should do is identify hotspots of industrial change, what activities are being undertaken, and why these changes are unfolding. From this we can begin identifying opportunities within clusters of established industrial activities to strengthen linkages throughout Gauteng and to the wider suite of economic activities, including the tertiary sector. It also allows us to identify inter-regional linkages and sub-sectoral interactions that inform and shape future provincial and regional industrial policies.

Additionally, by including spatial factors in industrial development and investment plans, Gauteng can develop targeted industrial policies that serve regional development needs and encourage collaboration across the economic, social and urban sectors.

To that end, the Gauteng Growth & Development Agency adopted a spatial-industrial framework in 2014 (later forming part of GGT2030). This corridor-based development approach (supported by the Gauteng City-Region Observatory and Indlulamithi Scenarios 2035) integrates economic, urban and infrastructure activity. Such an approach is critical for achieving regionally balanced growth.   

Such an integrated approach requires close collaboration among stakeholders and government departments that have traditionally operated in silos. This will mark a shift from the fragmented policy environment of the past to one that promotes co-ownership and co-production of ideas and policies. 

With this approach and mindset, we can put ourselves in a strong position to re-industrialise the province. Now we need to follow through on well designed policy with well implemented action that collectively tackles the issues facing Gauteng’s economy.

• Bell is a researcher at the Gauteng City-Region Observatory.