48956 STATE OF THE CITIES REPORT 2006 S o u t h A f r i c a n CitiesNetwork STATE OF THE CITIES REPORT 2006 CONTENTS INTRODUCTION Foreword: Minister for Provincial and Local Government Foreword: Chairperson of South African Cities Network Acknowledgement: Chief Executive Officer of South African Cities Network Editorial Introduction Overview of contextual changes since SOCR 2004 CHAPTER 1 ­ INTRODUCTION 1 ­ 1 Target audience 1 ­ 2 Structure of the report 1 ­ 2 CHAPTER 2 ­ THE DYNAMICS OF THE SOUTH AFRICAN URBAN SYSTEM 2 ­ 1 Cities in a global economic context 2 ­ 3 Cities in the national context 2 ­ 7 Conclusion 2 ­ 28 CHAPTER 3 ­ URBAN TRENDS AND PERFORMANCE 3 ­ 1 Population dynamics 3 ­ 2 The productive city 3 ­ 8 The inclusive city 3 ­ 36 The well-governed city 3 ­ 52 The sustainable city 3 ­ 59 CHAPTER 4 ­ CITY STRATEGIES AND IMPLEMENTATION 4 ­ 1 The productive city 4 ­ 3 The sustainable city 4 ­ 15 The inclusive city 4 ­ 28 The well-governed city 4 ­ 51 CHAPTER 5 ­ EMERGING STRATEGIC AGENDAS 5 ­ 1 Urban development agenda 5 ­ 2 Urban growth agenda 5 ­ 11 Urban fiscal agenda 5 ­ 14 Urban services agenda 5 ­ 18 Urban governance agenda 5 ­ 22 CHAPTER 6 ­ CONCLUSIONS 6 ­ 1 GLOSSARY DATA SCHEDULES STATE OF THE CITIES REPORT 2006 FOREWORD BY THE MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT The Ministry and Department of Provincial and Local Government welcomes the publication of the State of the Cities Report 2006. This is a timely publication. It reflects on the five-year performance of the country's nine largest cities and the municipalities that govern them. It also anticipates new challenges that will confront these municipalities during their second term of government after the municipal elections in March 2006. Over the last five years, South Africa's cities can look back with some satisfaction at what they have achieved. Cities have worked hard at creating democratic and accountable government. This has involved the complete overhaul of the governance model that existed before 2000 when a new system of local government was introduced. Cities have also improved on their delivery of services to communities. Municipalities have extended water, electricity, roads and waste collection services to former township areas and upgraded infrastructure in the better-resourced neighbourhoods. Many cities have also taken on the task of promoting economic growth, by looking carefully at how both the first and second economies can be supported to become more productive. At the same time, cities continue to deal with issues of poverty and the need for improved social development, rolling out free basic services to the poor, upgrading sports facilities and building clinics. Cities have also begun to address important environmental issues like the need to reduce energy consumption and manage their natural resources more effectively. But many challenges still confront South African cities if they are to continue as engines of global connectivity and national growth. These challenges operate at three levels. · GLOBAL: There are new pressures on cities to compete for investment. As foreign investors look for new sites, South African cities will have to offer increasingly sophisticated telecommunications and freight infrastructure, desirable quality of life and a pool of highly skilled workers. South African cities will have to compare favourably with other cities in other parts of the world. · REGIONAL: South African cities are experiencing substantial population influxes as people move from rural areas and from other parts of the subcontinent. While urbanisation is a basic precondition for growth, it does not necessarily guarantee development. The challenges for the new century will be managing urban growth for economic advance, reconciling it with ecologically sustainable forms of development and reducing social exclusion. · LOCAL: Cities are also experiencing new pressures as the process of devolution places increasing responsibilities on municipalities to deliver urban services, to meet national growth priorities and to ensure that each and every neighbourhood offers citizens a brighter urban future. This requires cooperation between the cities, as well as a forum for sharing experiences and innovations. This thoroughly researched report from the South African Cities Network goes some way to fulfilling that function and providing a basis for discussion. It is my sincere hope that the report will be read with care by all organisations and individuals responsible for making cities better places and help provide us with the solid ground on which to base future initiatives. Fholisani Sydney Mufamadi Minister for Provincial and Local Government STATE OF THE CITIES REPORT 2006 I CHAPTER 2 CONTENTS THE DYNAMICS OF THE URBAN SYSTEM Cities in a global economic context 2 ­ 3 Cities without frontiers Cities in the national context 2 ­ 7 Typologies of urban areas 2 ­ 13 Urbanisation 2 ­ 14 Urban poverty 2 ­ 16 Migration 2 ­ 17 Urban-rural economic linkages 2 ­ 19 Informality in South African cities 2 ­ 24 Conclusion 2 ­ 28 2 ­ 1 STATE OF THE CITIES REPORT 2006 FOREWORD BY THE CHAIRPERSON SOUTH AFRICAN CITIES NETWORK If cities are running a marathon in their quest to build better living environments, profitable economies, and accessible amenities and achieve the urban ideal, then the 2006 State of the Cities Report can be seen as a water point on the route. We like to think that it is a place to pause and drink at the top of a steep hill, providing a view of the path we have travelled and a glimpse of the road ahead. The SA Cities Network has tried to strike a balance in providing space for "cheer-leaders" ­ those who acknowledge just how much South African cities have achieved in the eleven short years since democracy ­ and "coaches" ­ those who are critical of the pace of progress, the quality of services and perhaps express a lack of confidence in the cities' ability to deliver on their potential unless more drastic measures are taken. At this watering station we need to take a moment to reflect on performance relative to other cities (both in South Africa and the rest of the world) and to each city's own past performance. More importantly, we should take the time to consider the information on the route we face, the weather forecast and the state of our shoes before we plot our race plan for the road ahead. I trust that this new edition of the State of the Cities Report provides sufficient information and clear analysis on past performance and future challenges to inform all decision-makers in the cities in their attempts to shape the urban environment so that it can accommodate both economic growth and social development in the run-up to 2010 . . . and beyond. We should be reminded of the fact that in urban development terms 2010 ­ despite all its symbolism as the end of a decade and the year in which we play host to the world ­ is not the finish line. It should be seen, perhaps, as another important stage point in the marathon, but the race for sustainability, productivity, inclusivity and good governance will continue. As team runners in this marathon, government, the private sector, civil society and individual city dwellers should always be thinking about how to make sure that all members of the team make it up the next mountain in the best possible time. We need to optimise our investment in the cities to achieve the joint objectives of accommodating and fuelling economic growth while ensuring that everybody has access to basic services, amenities as well as jobs and income. Every urban resident should enjoy well-founded prospects for improved circumstances and a better quality of life in South Africa. My thanks go to the SACN CEO and every staff member in the secretariat for putting this report together; to my colleagues on the SACN Board of Directors for their guidance on the content and key messages for the report; and to all those who are working to make our cities better places to live, work and play. Andrew Boraine SACN Chairperson II STATE OF THE CITIES REPORT 2006 THANKS FROM THE CHIEF EXECUTIVE OFFICER SOUTH AFRICAN CITIES NETWORK A very large group of people made this report possible. The SA Cities Network is most grateful to: · Our partners and sponsors for the support they provided. They include: The Department of Provincial and Local Government (DPLG), the SA Local Government Association (Salga), the Development Bank of Southern Africa (DBSA), the Cities Alliance, Swedish International Development Assistance (Sida), US Agency for International Development (USAID) and Danish International Development Assistance (Danida). · Officials and leaders from our member cities who tirelessly provided the information and data required to answer the questions of our researchers. While there are too many individuals to name, the scope and quality of the information we are publishing is a tribute to all of them. · The researchers and writers who supplied us with incisive and accurate reports: Kevin Allen, Palmira Alloggia, Sarah Charlton, Glynn Davies, Rolfe Eberhardt, Johan Erasmus, Shanthinie Francis, Michael Goldblatt, Karen Heese, Tracy Jooste, Felicity Kitchin, Pieter Kok, Sharon Lewis, Nangamso Mabindla, Ntombini Marrengane, Nishendra Moodley, Stephen Narsoo, Seana Nkhahle, Cathy Oelofse, Mark Oranje, Ian Palmer, Glen Robbins, Benjamin Roberts, Joan Roodt, David Schmidt, Craig Schwabe, Melinda Silverman, Gillian Sykes, Alison Todes, Steve Topham, Elsona van Huyssteen, Philip van Ryneveld, Francois Viruly, Tanya Zack and S'bo Zama. · The individuals who gave their time and expertise to verify data and findings and assist us in shaping the themes in the report: Jenitha Badul, Andreas Bertoldi, Toby Chance, Dave de Groot, David Gardner, Maria Coetzee, Katherine Cox, Denis Cronson, Richard Gordge, Graeme Gotz, Phillip Harrison, Bernadette Leon, Maikel Liew Ke Song, Antoinette Louw, Hassen Mohamed, Pascal Moloi, Wayne Muller, Samantha Naidu, Mark Napier, Monty Narsoo, Sue Parnell, Edgar Pieterse, Portia Poulsen, Graham Richards, Kecia Rust, Andrew Shaw, Wilma Stander, Grové Steyn, and Ahmedi Vawda. · The editors, photographers, designers and other service providers who took a wealth of raw material and presented it in a coherent and accessible way: Melinda Silverman, editor-in-chief; Graphicor, production and design; Big Media, web publishing; knowledgedoc, video production; Simeka TWS, public relations; Ultra Litho, printing and Tom Khoza, photographer. We look forward to working with you all in improving our indicators of performance, establishing better data-collection systems and planning the content of the next edition of the State of the Cities Report. Sithole Mbanga Chief Executive Officer STATE OF THE CITIES REPORT 2006 III CHAPTER 1 CONTENTS INTRODUCTION Introduction 1 ­ 1 Target audience 1 ­ 2 Structure of the report 1 ­ 3 STATE OF THE CITIES REPORT 2006 1 ­ 1 1 ­ 1 STATE OF THE CITIES REPORT 2006 1 INTRODUCTION THE REPORT TALKS TO ALL URBAN STAKEHOLDERS, PEOPLE WHO LIVE IN CITIES AND TAKE AN INTEREST IN THE WELL-BEING OF CITIES The State of the Cities Report 2006 provides a qualitative and good governance and the management of cities. quantitative analysis of South Africa's largest cities, highlighting The report is also directed at the provincial and the important role played by cities in driving the national national spheres of government and at state- economy and improving the lives of South African residents. It owned enterprises with the intention of positively raises current debates about cities, provoking urban stakeholders influencing the national Medium Term Expenditure to think in new ways. Framework (MTEF) and Medium Term Strategic Framework (MTSF) processes. Finally the report This report follows on the first State of the Cities Report also talks to the private sector, community produced in 2004 (SOCR 2004). State of the Cities 2004 organisations, trade unions and universities. provided the first comprehensive picture of the major economic, social, environmental and governance realities affecting South It provides decision-makers with a useful Africa's nine largest cities. instrument for making strategic choices about cities. In short, the report talks to all urban The State of the Cities Report 2006 (SOCR 2006) builds on the stakeholders, people who live in cities and take an important information and analysis contained in SOCR 2004. While interest in the well-being of cities. the 2004 edition looked broadly at how cities were confronting the post-apartheid challenge in the ten years since democracy, the Structure of the report 2006 version examines a shorter time period between 2001 and The report is structured into six chapters. 2006 and therefore has a sharper and more contemporary focus. Chapter 1, the introduction provides an SOCR 2006 looks at what has been achieved in cities during the overview of the contents of the report, helping first municipal term of office under the new municipal readers to navigate the material. dispensation brought into being by the Local Government White Paper, the Municipal Structures Act and the Municipal Systems Chapter 2, Dynamics of the urban system provides Acts. SOCR 2006 provides detailed information and analysis of an overview of the role and importance of cities in trends that have affected urban development over the past five the global and national contexts. Chapter 2 argues years. But it also looks forward at challenges and opportunities that we live an increasingly urban age. Soon the likely to be posed in the years ahead. majority of people world-wide will be living in cities. In the context of globalisation, it is now cities, as Target audience much as countries, that drive economic growth. The report is aimed at a wide variety of readers. Firstly, it is aimed at municipalities, providing summarised city-specific comparative These global trends are echoed in the national data and information. This is intended to assist municipalities in context, where there is evidence of rapid, STATE OF THE CITIES REPORT 2006 1 ­ 2 ongoing urbanisation. More than half of South Africa's population now live in cities and towns. The South African Cities Network The South Cities Network (SACN) is a In a departure from conventional SOCR practice which has collaborative of South African cities and traditionally focused only on the nine South African Cities partners that encourages the exchange of Network (SACN) member cities, this chapter looks more broadly information, experience and best practices at a range of other South African urban spaces. It embraces an on urban development and city management. additional 12 cities and towns, to provide an analysis of 21 key It is an initiative of the Minister for Provincial and Local Government and nine city urban areas. In this respect the chapter acknowledges the 26 key municipalities, in partnership with the South urban nodes identified in the National Spatial Development African Local Government Association (Salga) Perspective which is being prepared by the Presidency and will and national and provincial government be officially released at the end of 2006. departments. The nine cities are The chapter argues that these 21 key urban areas which occupy · Buffalo City Municipality, only 2% of the land contribute almost 70% of the national · City of Cape Town economy. These 21 key urban areas also accommodate large · Ekurhuleni Metropolitan Municipality numbers of people living below the minimum living level. This · eThekwini Municipality · City of Johannesburg suggests that strategic investment in cities can achieve two · Mangaung Local Municipality, things simultaneously ­ help grow the economy, as well as · Msunduzi Municipality, address the considerable challenges of poverty, now increasingly · Nelson Mandela Metropolitan Municipality, located in cities. and · City of Tshwane. Chapter 2 also explores the complex relationships between the The goals of the SACN are to cities, towns and rural areas. It provides a perspective on the · Promote good governance and management nature of urbanisation and migration flows in Southern Africa and of South African cities its implications for cities. It explores urban-rural economic · Analyse strategic challenges facing South linkages, urban poverty, and the implications of informality as an African cities, particularly in the context of global economic integration important element of the South African urbanisation process. · Collect, analyse, disseminate and apply the experience of city government in the South Chapter 3, Urban performance focuses specifically on the nine African context South African Cities Network member cities. It consolidates data · Promote a shared learning partnership on what the nine cities have been doing over the last few years. between different spheres of government to support the governance of South African cities. This chapter condenses, simplifies and updates material found in the SOCR 2004 report and its associated almanac, adding new Further information on the work of the SACN is information where this is available. available at www.sacities.net. In order to organise a vast amount of quantitative data and city, the sustainable city, the inclusive city and the provide a benchmark for comparison, Chapter 3 relies on the well-governed city. same analytical framework used in SOCR 2004: the productive 1 ­ 3 STATE OF THE CITIES REPORT 2006 INTRODUCTION continued Analytical framework Productive cities Inclusive cities Programme philosophy Programme philosophy Can the local economy provide the majority of residents with Do residents have the opportunities and capacities to share opportunities for making a reasonable living? equitably in the social and economic benefits of city life? SACN programme objective SACN programme objective To grow the economy by facilitating co-operation and by To enable cities to address the socio-economic challenges of enhancing competitiveness in both the formal and less formal ongoing inequality in South Africa's cities. parts of the economy. This report looks at This report looks at Progress in providing residents with access to key urban Factors explaining the growth and potential of the urban services, indicators of social and economic inequality, spatial economy and how cities respond to urban economy challenges exclusion, quality of urban environments and city life. in the context of globalisation, emerging market confidence and significant increases in public investment in infrastructure in South Africa. City development strategies Programme philosophy What long-term, cross-sectoral intergovernmental and partnership issues do cities confront? SACN programme objective To promote an integrated approach to city development strategies. This report looks at Demographic change, complex growth and development trends, the dynamics of demand, market forces and the strategic partners with which local governments must engage. Sustainable cities Well-governed cities Programme philosophy Programme philosophy How is the city impacting on the limited reserve of non-renewable Is the political and institutional context stable, open and dynamic resources that sustains the settlement and makes it viable? enough to accommodate varied objectives and interests? SACN programme objective SACN programme objective To ensure that social and economic development responds To provide information and mechanisms that will facilitate appropriately to natural and other resources, and promotes innovative, inclusive, and proactive decision making equity and efficiency. and governance. This report looks at This report looks at The urban environmental management challenges facing How well South African cities are governed, exploring growing cities, the tough trade-offs that investment decisions institutional strength and capacity, financial prudence, urban require, and the importance of sustainability in planning and policy cohesion, administrative efficiency and modernisation. urban management. While the data is by no means perfect, the statistics present a member cities, to find out at first hand about each broad, high level perspective of urban trends and indicators, city's particular strategy. This allowed the writing sourced from publicly and privately generated national data sets. team to engage with officials who authored their respective city strategies and with city managers Chapter 4, Urban strategies focuses on what the different cities responsible for implementing them. These have tried to do in addressing the challenges of city workshops offered municipal officials the management and development. opportunity to reflect critically on: · Progress made by cities in the last five years ­ This chapter has emerged from an innovative process. what has been resolved and is therefore no This involved visits by the SOCR 2006 writing team to all nine longer a priority? STATE OF THE CITIES REPORT 2006 1 ­ 4 · Ongoing challenges still facing cities ­ what issues have not Chapter 5 examines the emerging strategic been adequately tackled and will be the focus of future agendas of national government and how these strategic plans? will influence South Africa's cities over the next five years. This process was supported by a detailed questionnaire. The outcomes of these workshops were recorded and then The chapter is divided into five sections: validated at another set of workshops. In this way, city officials · The urban development agenda examines key have played a critical role in devising the content for SOCR urban policy documents that are currently 2006. Material was also based on key city strategy documents being developed by national government; the and the outcomes of the Integrated Development Plan hearings. significant grant funding flowing from national government to cities; the urban Chapter 4 also utilises the analytical framework that guided development tax incentives; and the emerging SOCR 2004, looking at the productive city, the sustainable city, housing strategy "Breaking New Ground". the inclusive city, and the well-governed city. · The urban growth agenda focuses on the · The productive city examines how the nine SACN cities Accelerated and Shared Growth Initiative for responded to the productivity challenges in four areas - South Africa and provides a critical perspective economic development, second economy interventions, of what this means for cities. transport, and spatial planning. · The urban fiscal agenda examines three · The sustainable city examines the extent to which relatively new initiatives ­ the Municipal sustainability strategies have been integrated into city Finance Management Act, the abolition of strategies, the alignment between sustainability and urban Regional Services Council levies and the new services, and how cities are addressing both local and global property tax arrangements. All these will place sustainability concerns. considerable responsibilities on municipalities · The inclusive city provides a comparative description, analysis to ensure sound financial management. and evaluation of the strategy and service agenda of the SACN · The national urban service delivery agenda cities since 2000, focussing on: the roll-out of free basic focuses on the implications and challenges of services; approaches to housing; responses to HIV and Aids; the the establishment of Regional Electricity Expanded Public Works Programme; the challenges of creating Distributors (REDs) for cities and the possible an inclusive urban culture; and safety strategies. restructuring of water and sanitation services. · The well-governed city explores strategy formulation, · The urban governance agenda examines the implementation and monitoring; performance management; distribution of powers and functions between administrative restructuring; approaches to community the national, provincial and local spheres of participation and involvement; communication, marketing government and at the subsidy scheme. and branding; and the use of financial instruments to promote This section argues that the process of development. devolution will require careful inter- 1 ­ 5 STATE OF THE CITIES REPORT 2006 INTRODUCTION continued governmental dialogue and a possible rearrangement of subsidy mechanisms to allow municipalities to genuinely fulfil their mandate over the built environment. Chapter 6, the Conclusion, presents ten key challenges confronting cities for the next five years, and a ten-point plan of action to address these. The analytical overview of South Africa's cities is complemented by six stories about ordinary people. These illustrate that ongoing urban-rural linkages, informality, industrial growth, HIV/Aids, affordable housing and public transport are not only the concerns of urban-policy makers but the very stuff of everyday life for urban residents. STATE OF THE CITIES REPORT 2006 1 ­ 6 2 THE DYNAMICS OF THE URBAN SYSTEM Cities are centres of employment and production, and sites of technological innovation. They provide the spaces for social South African cities host global events interaction, learning and creativity and often provide the nation with identifiable cultural symbols. Cities accommodate the most All of South Africa's most recent global events were hosted in cities ­ the World Summit on cosmopolitan populations and are places where new ideas are Sustainable Development (Johannesburg 2002), most readily accepted. They are the main points of interchange the World Conference against Racism Racial in the transport web across the globe. They embody the Discrimination, Xenophobia and Related agglomeration benefits of proximity, increasing the possibility of Intolerance (Durban 2001), the Cricket World interactions, and speed, increasing the efficiency of moving Cup (Final in Johannesburg, 2003), and the people and goods. Rugby World Cup (Final in Johannesburg, 1995). In 2010 the FIFA Football World Cup will bring the biggest global sporting event to In the modern urban world, urban areas are the keys to a ten South African cities. country's success in the global marketplace. Cities are the places where local and global cultures meet. The institutions that govern, shape and transform a society ­ such as government, Cities are gateways to opportunity, or parasites finances, the legal system, education, health, and research ­ are on the surrounding countryside, sucking in located predominantly in cities. Cities accommodate the natural resources and young people. They are CITIES ARE THE MOST PRODUCTIVE SITES IN THE NATIONAL ECONOMY AS WELL AS AREAS THAT ACCOMMODATE THE LARGEST NUMBER OF POOR PEOPLE headquarters of the advertising and media industry and are the locations of great wealth side by side with deep hub of the creative industries ­ including music, fashion and fine poverty2. In the developing world, these arts ­ in a country or region1. patterns are often stark, fuelled by rapid urbanisation, ongoing migration and increasing As entry points to and from the global community, cities are the informality. spaces where the country meets the rest of the world, accommodating the busiest airports, sea-ports and the highest This chapter looks at urban change, both in the concentration of telecommunications infrastructure. world and in South Africa. It illustrates the growing importance of cities in the context of But cities can also be problematic: they have the capacity globalisation ­ and the growing importance of to exclude, to marginalise, to reinforce patterns of inequality, cities in South Africa. It is precisely because cities and to create insiders and outsiders. Cities that experience are simultaneously the most productive sites in pressures on services can be characterised by badly managed the national economy, as well as areas that urban growth patterns, environmental degradation, crime accommodate the largest number of poor people, and unemployment. Precisely because of high levels of that cities are strategically important places for concentration and the interdependence of urban systems, cities meeting the government's growth and are increasingly vulnerable to both natural and man-made development agendas. disasters. STATE OF THE CITIES REPORT 2006 2 ­ 2 Cities in a global economic context These cities were linked in a `global network of We live on an increasingly urban planet. Nearly 400 cities cities' across which labour and capital were around the world have populations greater than one million, controlled internationally through the information as shown in figure 2-1, and at least twenty of these have over revolution and by multinational corporations. 10 million inhabitants. These major cities are generally centres of "The result of this urban labour division was the command and control for business and government. appearance of service-orientated cities in the developed world; a higher share of manufacturing In the 1960s certain major cities were classified as 'world cities'. cities in the developing middle-income world; and They were centres of political and economic power, as well as informal-economy cities in the least-developed having very large populations. At the time, world cities included countries, only weakly connected to global New York, Paris, London, and Tokyo. networks"3. The Globalisation and World Cities Study Group (GaWC) measured the degree to By the 1980s globalisation had been identified as a major which cities are connected by the presence of influence on the world economy. Its impact was seen through national offices and regional branches of increasing flows of trade, information, investment and cultural multinational companies providing advanced practices across the world, and in the multinational mobility of producer services ­ accounting, advertising, capital and labour. These changes in the world space economy, banking, finance, law and management services. provoked urban theorists to identify a 'hierarchy of world cities' This analysis ranked the world cities into alpha ranked according the degree of economic power they exerted. (globally connected, 'pan-regional'), beta (major regional centres), and gamma (minor regional Figure 2-1: A world of cities ­ The 375 largest cities in the world, all with a population of over 1 million Source: UN-Habitat ­ The State of the World's Cities 2001 2 ­ 3 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued centres), with the majority located in the developed world (see figure 2-2). Globalisation and connectivity Using this measure, Johannesburg stands out as Africa's only The world city network analysis emphasises connectivity across the space of both world-ranked city, serving the continent and connected to the `developed' and `developing' world. The rest of the world. It is a hub in the regional network of capital 'traditional' world cities of London, Tokyo, New flows and connectivity across Africa, as well as a connection to York and Paris are in the same set of the global cities network. connections, to a greater or lesser extent, as the world cities of the Far East (such as Hong Kong, While this breakdown is useful, it fails to provide a complete Seoul, Singapore or Shanghai), Latin America (Mexico City or Sao Paulo) or Africa picture of urban global connectivity. A similar analysis of (Johannesburg). In this analysis, connectivity is manufacturing activities would usefully illuminate the effects of as significant as "command and control" globalisation on cities where the secondary sector continues to functions of the world economy. An example is be of importance. the reach of The Economist and Newsweek, two global weekly business magazines with editorial Since the 1990s, thinkers have been looking at the impact of offices around the world in what is "a roll-call of leading world cities." globalisation on the traditional nation state. The removal of trade barriers, cross-global investment flows by multi-national Source: companies, and opening up of domestic markets have Taylor PJ (2004) World City Network ­ A Global Network Analysis. This map is based on a list of weakened nation states as global economic actors. Countries The Economist editorial offices in Taylor's book. It remain important but are increasingly working as international was then updated from the magazine, with Newsweek offices added to the map. assemblages or regional blocs, such as the World Trade Organisation, the G7 and G8 (and the various other 'G' groups), the European Union, the African Union, and the Southern African Development Community. The locus of economic productivity has shifted to sub-national level ­ to city level. In short, cities are becoming more important than nations4. More recently, since the turn of the millennium, thinking has focused not just on cities but on the hinterlands of metropolitan regions ­ on the areas surrounding cities ­ and on the linkages between these different spaces. Regional economies that The Economist· Newsweek · straddle these spaces can prove to be powerful units, consisting The Economist and Newsweek editorial offices of "intricate networks of specialised but complementary forms of economic activity, together with large, multifaceted local labour markets"5. The most important of these are 'regional motors' efficient, sustainable and equitable than either of the global economy ­ they are 'global city-regions' (see mono-centric urban systems or smaller dispersed figure 2-3). settlements. Indeed, the European Spatial Development Programme, which was a model Global city-regions consist of single, bi-polar or multiple source for National Spatial Development metropolitan areas, functionally linked to their surrounding Perspective being developed by South Africa's hinterlands, giving rise to a polycentric or multi-centre spatial Presidency, promotes this type of urban formation form. Some analysts consider these systems more economically to build regional economic competitiveness. STATE OF THE CITIES REPORT 2006 2 ­ 4 Figure 2-2: The globalisation and world cities study group inventory of world cities Montrel Stockholm TOKYO MOSCOW SEOUL TORONTO Minneapolis Boston Hamburg Beijing LONDON Amsterdam Copenhagen Berlin Warsaw SAN FRANCISCO Dusseldorf Shanghai NEW YORK Osaka PARIS HONG CHICAGO Washington FRANKFURT KONG Taipei BRUSSELS Dallas Atlanta Prague Bangkok Manita ZURICH LOS ANGELES Miami Munich Budapest Kuala Lumpur Geneva Houston Jakarta Barcelona SINGAPORE MEXICO CITY MILAN Istanbul Caracus Jakarta MADRID Rome SAO PAULO SYDNEY Johannesburg Santiago Beunos Aries Melbourne ALPHA BETA GAMMA WORLD CITIES WORLD CITIES WORLD CITIES Source: GaWC Figure 2-3: The globalisation and world cities study group's regional world cities JAPAN NORTH EUROPE EAST Tokyo New York Brussels ASIA London NORTH AMERICA Miami Paris Hong Kong MIDDLE FRANCO- EAST PHONE Singapore AFRICA EU LATIN AFRICA SOUTH AMERICA RO EAST OCEANIA AMERICAS PE-AFRICA-MIDDLE EAST Johannesburg ASIA ASIA AND OCEANIA Panregional centres Major regional centres Minor regional centres Source: GaWC Instances of global city-regions in the developed world include include Sao Paulo in Brazil and the Pearl River the Randstad in the Netherlands (consisting of Rotterdam, Delta in China. The Gauteng Government has Amsterdam, Utrecht and The Hague), Greater London and recently adopted a development perspective on Greater Los Angeles. Global-city regions in developing countries growing this largely metropolitan province 2 ­ 5 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued (consisting of Johannesburg, Tshwane and Ekurhuleni plus three mainly urban district councils) as a globally competitive city- The urban space economy region. The urban space economy is the geographical distribution of economic activity, with its various The key challenges for developing successful global city-regions connections, linkages and flows of goods, include securing balanced economic growth and appropriate services, labour, capital, investment and institutional governance arrangements to ensure effective disinvestment. It explains core-periphery effects, explaining how dominant, dynamic economic cooperative decision-making among desperate groups. cores play major roles in a national economy. Successful city-regions seek to avoid wasteful competition The urban space economy explains why between the cities and towns in the city-region system. This businesses choose to locate close to one another. acknowledges that major development projects have to be It also helps describe economic impacts in areas coordinated effectively for the benefit of the city-region as a of out-migration, where there is relatively low whole. This approach emphasises 'spatial coalitions'- meaningful economic production but where remittances partnerships with business, civil society and other sections of from emigrants are important injections into the local home economy. The study of the urban government ­ as valuable assets in fostering a competitive space economy looks at spatial relationships regionalism. between individuals and organisations, and explores the economic reasons that underpin the Cities without frontiers? formation, functioning, and development of towns, cities and their hinterlands. Administrative geography often hampers city government. Boundaries and jurisdictional demarcations often distract from how cities really function. The 'flows in space' of people, goods, services and capital pay little respect to municipal boundaries. South African cities ­ ordinary cities? This means that city managers and politicians need a deeper understanding of the functional geography of their cities, not just Not all urban thinkers believe that the global city network is a useful concept for thinking the administrative jurisdictions for which they are responsible. about cities. Because these theories have their origins in the 'global north', they tend to reflect The impact of the administrative mindset is particularly the concerns of the developed world. By noticeable in mismatch of plans and programmes in adjacent contrast, in the 'global south', developmentalist approaches have continued to dominate, municipalities, and between municipalities and provinces. although global city discourses have been Research for the Gauteng Global City-Region initiative found influential in large cities such as Sao Paulo, instances where development corridors along transport routes Johannesburg, Shanghai and Mumbai. stopped at municipal boundaries, ignoring activities in the Some urban theorists have argued that this neighbouring municipality. Similarly, there were cases in 'north-south' dualism is problematic. They Gauteng where municipalities were promoting the development believe that global city approaches direct of new or expanded international freight hub airports ­ all attention only to those parts of the city that are well connected to the global economy, whereas developed in isolation, with little consideration for national or 'developmentalist' approaches focus attention provincial air-freight planning. only on the poorer, less successful parts of the city. Each approach only brings "a limited part of In 2005, the Department of Provincial and Local Government6 the city into sight". Most cities around the world ­ in the 'north' and 'south' ­ encompass both found that there was a national need for improving cross border rapidly globalising economies and poor and and multi-nodal planning. Although this is often cast as a need marginalised segments. What is needed is a lens for improved 'alignment', this should mean more than statutory that brings both into view. This suggests a or administrative compliance. It must be underpinned by a STATE OF THE CITIES REPORT 2006 2 ­ 6 shared approach to development, as well as the joint identification of comparative and competitive advantages of South African cities ­ ordinary cities? locations. (continued) move away from "perspectives which categorise Urban policy makers will need to know about the functional cities as Global, Third World, Mega, African etc." economic geography of the city and its region, how the different and instead the need for "attentiveness to the components relate to each other, what the key sectors are and diverse spatialities of 'ordinary cities'. how they are linked to each other, and how the local economy The 'ordinary city' approach emphasises the functions across the lines on the map. importance of local spaces ­ social as well as economic ­ and the need to strengthen the position of informal as well as formal Strengthening this understanding and developing a common enterprises. Thinking of cities as 'ordinary cities' approach will also help address the dangers of competition shifts attention to strategies for economic between towns and cities within regions. "This can lead to waste growth which are broad-based, take advantage and duplication of public resources, and promotion of growth at of diversity and have reference to social and political contexts: "growth paths which neglect the expense of another locality. At the extreme, this can lead to social needs and redistributional agendas can a 'race to the bottom' as cities vie with each other to offer come unstuck, as crises emerge or as reversals increased financial incentives, or abandon planning or land use of globalisation, for example, expose serious regulations, to attract investment"7. The emerging duplication social limitations" of proposed freight hub airports in Gauteng is a case in point. There is plenty of evidence that strategic planning in South African cities is taking account Building successful cities needs government and its partners to of both 'global city' and 'ordinary city' perspectives ­ the two are not incompatible, but think regionally and co-operate, with a common aim to build achieving a viable balance can be tricky. The competitiveness in the context of a balanced development test lies in constructing viable partnerships at all agenda. This approach has been termed 'competitive levels of government, private sector and regionalism' and recognises that certain development community, to deliver on these agendas. "Securing growth at the same time as challenges ­ including strategic economic planning, research expanding service delivery in politically contested and development, transport and communications infrastructure, and resource-poor environments represents a and coherent investment planning by state-owned enterprises ­ great challenge for local governments. Electoral can best be tackled with the cooperation of neighbouring or popular support may be dependent on developing effective services, and increasingly, jurisdictions and government structures8. ensuring that private firms meet the needs of the poor. On the other hand, long term viability or There are no successful regions without successful cities. Cities national state approval may depend on promoting dynamic economic growth". Working are of critical national importance. through such trade-offs, and making the hard choices requires a high degree of mutual trust. Cities in the national context Cities, and more specifically large cities, are the mainstays of Source: Robinson J (forthcoming 2006). Ordinary Cities: most countries' economies9. They are the spaces in which the Between Modernity and Development. Routledge surplus is generated for the development of areas with lower levels of economic output. They offer the largest concentrations (see figure 2-4). New ideas are generated and of customers and provide the biggest markets in the country10. new industries are spawned in cities. They provide the key distribution functions in most national and regional economies and the global economy11. The highest Cities are the engines of the national economy. concentrations of higher education facilities are found in cities The five biggest city economies in South Africa 2 ­ 7 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued TABLE 2-1: Selection of functional urban areas with the biggest contribution to the national economy: Overview of socio-economic indicators Percent- Percent- Percent- Percent- Percent- age of Total age of Persons age of Household age of age of Total national popu- national under persons income total GVA total national unem- unem- lation popu- MLL under for the area household Functional urban areas (2004) GVA ployment ployment (2001) lation (2005) MLL in SA (2001) income Bloemfontein 26 168 496,21 2,14 163054 1,83 792 421,15 1,76 293 784,43 1,25 9 788 477 067 1,81 Buffalo City 14 730 296,29 1,21 186574 2,09 708 779,00 1,58 437 499,58 1,86 7 633 031 970 1,41 Cape Town 137 148 900,43 11,23 458357 5,13 2 898 907,60 6,45 718 254,31 3,05 67 089 105 178 12,40 Johannesburg 221 376 293,10 18,13 849544 9,51 3 479 723,00 7,74 865 573,06 3,67 90 721 886 154 16,77 Tshwane 112 293 408,88 9,20 370366 4,15 1 987 548,70 4,42 515 537,37 2,19 53 735 847 154 9,94 Ekurhuleni 86 392 597,19 7,08 503542 5,64 2 123 275,80 4,72 589 449,32 2,50 46 508 953 247 8,60 Emfuleni 15 138 933,60 1,24 215104 2,41 808 994,81 1,80 404 070,80 1,71 8 729 687 377 1,61 eThekwini 122 116 536,40 10,00 697351 7,81 3 099 212,60 6,89 1 046 053,10 4,44 44 948 366 009 8,31 Evander 8 039 545,02 0,66 4811 0,05 27 392,60 0,06 10 994,15 0,05 537 167 072 0,10 Kimberley 4 713 530,19 0,39 24616 0,28 132 396,25 0,29 64 895,04 0,28 2 191 456 135 0,41 Middelburg 7 717 917,27 0,63 16516 0,18 89 625,16 0,20 38 061,66 0,16 1 641 711 724 0,30 Midvaal 4 564 643,08 0,37 10951 0,12 78 656,19 0,17 22 063,76 0,09 1 554 743 452 0,29 Mogale City 6 747 314,96 0,55 50617 0,57 255 622,48 0,57 55 015,02 0,23 4 725 317 489 0,87 Nelson Mandela 35 920 783,70 2,94 233891 2,62 1 014 219,90 2,25 448 437,33 1,90 14 072 461 446 2,60 Nelspruit 6 317 488,75 0,52 3281 0,04 38 809,47 0,09 12 179,36 0,05 1 448 928 388 0,27 Pietermaritzburg 9 023 335,53 0,74 63077 0,71 325 560,21 0,72 169 285,26 0,72 5 666 386 368 1,05 Richards Bay 6 045 538,32 0,50 4478 0,05 43 769,16 0,10 17 600,49 0,07 1 839 700 320 0,34 Rustenburg 8 448 529,30 0,69 23882 0,27 149 142,51 0,33 38 181,31 0,16 3 299 894 516 0,61 Sasolburg 8 117 923,43 0,66 13572 0,15 73 600,91 0,16 21 913,65 0,09 1 242 431 859 0,23 Stellenbosch 4 707 061,78 0,39 7005 0,08 79 060,68 0,18 11 260,31 0,05 2 056 183 280 0,38 Witbank 6 098 903,22 0,50 19374 0,22 107 765,29 0,24 39 370,32 0,17 2 443 826 352 0,45 TOP 21 FUAs: 851 827 976,67 69,77 3919963 43,89 18 314 483,00 40,71 5 819 479,60 24,67 371 875 562 556 68,75 Grand Total RSA 1 220 888 208,88 100,00 8930803 100,00 44 977 826,00 100,00 23 584 395,00 100,00 540 837 757 084 100,00 Source: NSDP Spatial Profiles May 2006: GVA (2004 at current prices) and Minimum Living Level (2004) from original SOURCE: Global Insight: Ricon (Pty) Ltd. Regional Economic Explorer Version 2.0C (190)) as DISAGGREGATED AND RE-AGGREGATED with Mesoframe Version 1.1. make significant contributions to the national economy employment opportunities and avenues for (see table 2-1). These five cities ­ Johannesburg, Cape Town, economic advancement. In 2001, the five biggest Tshwane, eThekwini and Ekurhuleni create: city economies provided 4 223 449 jobs, which · 55,71% of the national Geographic Value Added (GVA) in represents 44,1% of the national number of jobs manufacturing; of 9 583 77012. · 57,61% of the national GVA in construction; · 61,32% of the national GVA in wholesale and retail trade; A profile of urban South Africa · 68,48% of the national GVA in transport, storage and Research for the National Spatial Development communication; Perspective (NSDP) in 199913 showed that · 75,33% of the national GVA in financial, intermediation, insurance, real estate and business services; and economic activity is, as elsewhere in the world, · 52,98% in community, social and personal services. highly concentrated. The most recent update of the NSDP showed that 84,46% of the national In the current South African milieu, cities are also key spaces population and 77,31% of people living under for black economic empowerment because they provide many the Minimum Living Level (MLL) are located STATE OF THE CITIES REPORT 2006 2 ­ 8 Figure 2-4: Number of universities and public research institutions across South Africa cities and towns 12 10 and 8 institutions ch universities 6 of resear 4 Number public 2 0 ownT City Alice Pretoria Durban Umlazi Cape ygerbergT Elizabeth Johannesburg Bloemfontein anderbijlparkV Stellenbosch Buffalo Thohoyandou Potchefstroom Port KwaDlangewza Grahamstown Source: Council for Higher Education and Department of Science and Technology Table 2-2: The 21 key functional urban areas of South Africa and their associated municipalities The Gauteng global city region initiative Province Municipality The global city region is a new way of looking at urban Gauteng, not just as a collection of towns, Gauteng City of Johannesburg cities, local governments and boundaries, but as City of Tshwane (Pretoria) a single conurbation with potential at the global Ekurhuleni (East Rand) level. This change of focus is important for Emfuleni (Vereeniging/Vanderbijlpark) establishing institutional relationships that will Midvaal (Meyerton) lead the growth and development of the city- Mogale City (Krugersdorp) region. Its rise within the hierarchy of world cities Western Cape City of Cape Town will be one measure of the success of an African Stellenbosch urban renaissance. Eastern Cape Nelson Mandela (Port Elizabeth/Uitenhage/ Gauteng is the smallest, most urbanised and Despatch) economically powerful province of South Africa. Buffalo City (East London/King William's Town) It contributes 40% of the South African Gross Northern Cape Sol Plaatje (Kimberley) Domestic Product (GDP). It is also the most populous province with a population of Mpumalanga Emalahleni (Witbank) approximately 9,5 million people. On current Steve Tshwete (Middelburg) demographic projections, urban Gauteng will be Mbombela (Nelspruit) home to 14,6 million people and the 14th Govan Mbeki (Evander) largest urban region in the world by 2015. It KwaZulu-Natal eThekwini (Durban) also dominates the greater regional economy, Msunduzi (Pietermaritzburg) constituting 9% of Africa's Gross Geographic uMhlathuze (Richards Bay) Product (GGP). Free State Mangaung (Bloemfontein) Gauteng accommodates advanced producer Sasolburg services ­ accounting, advertising, banking, law North West Rustenburg and management services, important tertiary 2 ­ 9 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Figure 2-5: The 26 functional urban areas as identified by the NSDP Figure 2-6: The 26 functional urban areas and their economies STATE OF THE CITIES REPORT 2006 2 ­ 10 The Gauteng global city region initiative (continued) sectors in leading economic growth. The region is also a manufacturing centre within SADC and Sub-Saharan Africa. The international reach of Gauteng is highlighted by the presence of multi-nationals, including South African Breweries, Old Mutual, Anglo American and Didata, all of which are listed on the London Stock Exchange. The Gauteng Global City Region (GCR) initiative emerged in 2004. The objective is to "build Gauteng into an integrated and globally competitive region where the economic activities of different parts of the province complement each other in consolidating Gauteng as an economic hub of Africa and an internationally recognised global city-region." (2014 Gauteng Growth and Development Strategy) The GCR will replicate key success factors of city-regions: · Clear leadership · A vision and strategy · Effective institutional relations · Strong economic clusters, with a particular view to building new growth sectors · Good telecommunications and business linkages · 'Spatial coalitions' of partners working together ­ primarily government, business and social partners · A balanced approach to development, that actively incorporates and seeks to spread benefit to the poor. within 60km of areas that generate at least R1 billion of GVA Informed by the NSDP analysis (due for official per annum. While only constituting 31,24% of the national release in late 2006), spatial profiles and geo- land surface, these areas generate 95,59% of the total mapping, this State of the Cities Report has national GVA. developed a related perspective on the urban Figure 2-7: Key urban areas and their catchments 2 ­ 11 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Table 2-3: Typology of urban settlements in South Africa in the draft Urban Development Framework Settlement type Scale and settlement characteristics Economic base Institutional context Metropolitan Population over 1 million. Established Huge economic base plus the Metropolitan government cities formal core of industrial, commercial core of economic potential. consolidates fragmented municipal and suburban development. Formal Highest concentrations and history. Urban benefits not yet townships, hostels, and backyards. absolute numbers of urban poor. seamlessly applied to all residents. Informal settlements with significant RDP housing on the periphery. Secondary cities Population 250 000-1 million. Economic potential varies from Racially divided municipal history, Established formal core of mining, strong to weak according to now typically the core of a district commerce and suburban development. sectoral base and geographical municipality. Complex issues of Formal townships with backyards plus location. Rapid urbanisation and planning and cross subsidisation. informal and traditional settlements and some of the most extreme levels significant RDP housing on the periphery. of poverty. Large towns Population 25 000-250 000; Typically A few are booming, but many are Municipal capacity is stretched, once in `white' former colonial administrative centres, in severe decline. A relatively small, institutional systems are often non South Africa or the hubs of mining and industrial areas, but crucial elite population, in existent. The urban councils are old homeland but also old homeland capitals. Limited most cases employed in the public poorly equipped to deal with the capitals formal suburban stock, formalised sector, offers limited rates base. complex urban-rural interface of townships now extended with RDP Majority impoverished without the districts. housing and informal settlements. land or urban economic livelihoods. Small towns Population 2,000 to approximately Save for a few small locally Municipal and other public services providing crucial 25 000. Typically a small commercial, significant activities, the are in most instances weak or non- access and administrative, farming or tourist node. economies are in most cases existent. Councils are virtually service functions Small, generally ageing formal housing struggling and weak. Work is incapable of assisting communities. stock and a former township, spatially scarce and prospects for Services offered by the private integrated over the last decade with the employment of educated youth sector reserved for the few `old' town through RDP housing and virtually non-existent. inhabitants with a stable income, informal settlements. often a pension or grant. Displaced dense Population up to 400 000. Often depicted as `rural' these Prior to 1994 there was no urban settlements on Consolidated dense informal settlement large non-agricultural areas are administration. The introduction of homeland in traditional land characterised by characterised by a virtual absence local government post- 1994 boundaries absence of formal industrial or of a modern urban economy co-exists with traditional leadership commercial activity. and services. control; capacity is weak. Out-migration or split urban rural lifestyles are common. Source: DPLG and the Presidency (2005) space economy and has identified the 21 most important functional urban areas14 that make the highest contribution to Global policy perspectives on city national GVA (see table 2-2). development Over the past thirty years new policy These 21 functional urban areas and their key cities and towns perspectives have emerged in response to the cover only 2% of the South African land surface but account for new urban world in which we live. These have almost 70% of the national GVA15. (See figures 2-5 and 2-6 and been articulated by the United Nations Human table 2-1). These cities also accommodate 41,7% of the total Settlements Programme (UN-HABITAT) which population of South Africa, and approximately 24,7% of persons promotes "socially and environmentally sustainable towns and cities with the goal of living below the MLL as shown in table 2-1. STATE OF THE CITIES REPORT 2006 2 ­ 12 These 21 key towns and cities contribute: · 79,13% of the national GVA in manufacturing; Global policy perspectives on city · 69,79% of the national GVA in construction; development (continued) · 74,20% of the national GVA in wholesale and retail trade; providing adequate shelter for all". This is · 80,96% of the national GVA in transport, storage and expressed in two major international documents communication; ­ the Vancouver Declaration (1976) and · 85,77% of the national GVA in financial, intermediation, Habitat Agenda (1996) ­ which stress: insurance, real estate and business services; and · The interdependency of rural and urban · 66,78% in community, social and personal services. areas. Cities and towns are engines of growth contributing to the development of both rural and urban human settlements Financial and community services, and wholesale and retail trade · The goal of providing adequate shelter for all feature as strong sectors in the 21 key cities illustrating that they in sustainable human settlements play important roles as regional service centres. · The vital role of urban areas in economic growth with the potential to maximise the benefits and to offset negative consequences The functional urban areas also play a critical role in relation to of globalisation their hinterlands (see figure 2-7). An analysis of surrounding · The importance of well-managed towns and catchments (estimated at 60 minutes driving time for metro- cities in adopting participatory and rights- politan areas and 30 minutes for the other centres) shows that: based approaches to development, · The catchments hold many people living below the MLL articulated in the Local Agenda 21 programme established in 1995. especially near metropolitan centres. For example 11,39% of the national population living below the MLL live near The Millennium Development Goals (MDGs) Johannesburg, and 15,71% live near eThekwini. adopted in 2000, amplify these ambitions, and · Mining and quarrying, and agriculture fishing and forestry set objectives to make urban areas more are more prominent in the catchments than in the functional productive and sustainable. In particular, they highlight the plight of the urban poor and slum areas. For example, while the Rustenburg core functional dwellers on the global scale, pointing out that urban area contributed 2,6% of national GVA in the mining "close to 900 million people live in urban slums, and quarrying sector, this together with its catchment an estimated one billion lack access to contributed almost 22% of the national GVA in mining and adequate water supply, two billion do not have quarrying in 2004. access to adequate sanitation and four billion live without adequate wastewater disposal". The UN Millennium Project to achieve the Typologies of urban areas MDGs set specific objectives to make cities more While the overlapping boundaries between the urban and the productive, address basic needs and include the rural has made it difficult to define settlements, there have been urban poor in improving economic growth: some efforts to differentiate various spaces in South Africa. The · Improving security of tenure for slum dwellers · Upgrading slums and improving housing unpublished draft Urban Development Framework, for example, · Expanding city-wide infrastructure and uses three indicators to define various settlement typologies: effective service delivery population size tied up with function, strength of the economy · Creating urban jobs through economic and the institutional situation in the municipalities in which the empowerment space is located (see table 2-3). · Providing alternatives to slum formation. Source: The European Spatial Planning Observation Network (ESPON) UN-Habitat: Mandate Overview. http://www.unhabitat.org/declarations programme takes a different approach. Rather than separate out Cities Alliance Annual Report 2004 the various categories of settlement type, ESPON proposes an 2 ­ 13 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Table 2-4: A classification of 21 key urban spaces/places in South Africa Official place name or Name Nature Size Stretch and role municipality Core urban Diverse economy with high GVA in most, or More than Provides gateway to global Cape Town regions all economic sectors, especially private sector R75 billion economy. Provides national and Ekurhuleni services and retail. Spatially the economy is GVA per supra-national, continental eThekwini clustered in a polycentric fashion with a annum cultural, educational and Johannesburg multiplicity of nodes with increasingly innovation functions. Tshwane specialised roles. Major urban Diverse economy, but with areas of national Between R9 Provides similar functions as the Mangaung areas economic significance in a few sectors, and 75 billion core areas, but typically does not Buffalo City typically manufacturing, public services, GVA per extend beyond the provincial Emfuleni or mining. While the economy is spread annum boundaries. Nelson Mandela over a region it is often concentrated in a Bay few nodes and their immediate surroundings. Msunduzi This is in most cases tied to the previous apartheid city development model. Significant urban Economy in most cases dominated by a Between R4,5 Is often of national economic Evander service centres* single sector, but with steady movement and R9 billion significance in terms of GVA Kimberley into other areas. This is typically either GVA per generated, but has less impact on Middelburg mining or manufacturing and is dependent annum the immediate surroundings. Midvaal on easy access to a natural resource, or Often it stands out as an island Mogale City combination of resources. Often the single in a sea of relatively low economic Mbombela sector was more prominent in the past. activity. Richards Bay In some cases the economy is in a Rustenburg downward cycle, with the service and retail Sasolburg function keeping it alive. Stellenbosch Witbank * These are not the only major urban service nodes, but other places like George, Polokwane, Newcastle, Klerksdorp, Potchefstroom, Umtata and Mafikeng could also classify as well if the GVA-requirement is lowered. urban-rural continuum with the intention of strengthening of or export harbour-driven, or is it diverse, the linkages between these spaces. This typology emphasises including both manufacturing and services; regions as opposed to settlements and the interconnections · stretch, meaning the footprint and role of the between the various spaces located in particular regions settlement in a wider region, if any. The 21 key South African towns and cities fall into three This categorisation focuses on key contributors to categories: core urban regions, major urban areas and significant the South African economy and excludes small urban centres (see table 2-4). This classification is based on the towns in predominantly rural settings. role of the space in wider regional economic development. The classification looks at: Urbanisation · the size of the economy in the settlement. Only towns and The movement of people in complex and cities with GVA in excess of R4,5 billion per annum are unpredictable ways has given rise to fuzzy included; definitions of urban and rural in the South African · the nature of the economy. Is it based on a single resource, context. There are three key drivers of STATE OF THE CITIES REPORT 2006 2 ­ 14 The National Spatial Development Perspective 1999-2006 The National Spatial Development Perspective (NSDP) is one of the most important documents in understanding urban development in South Africa. It originated in 1998 in the Presidency as a tool to guide public infrastructure investment and development spending. This stemmed from a deep concern that post-1994 government expenditure was not helping to eradicate the apartheid space economy. Work on the NSDP in 1999 introduced a set of principles based on the concepts of "need/poverty" and "development potential" to describe the national space economy. The NSDP argued that the Government's key social objective of poverty alleviation would best be achieved by focusing economic growth in economically sustainable areas with proven development potential. In areas with little or no potential, the focus, beyond providing the constitutionally mandated minimum services, should be on "people and not on places". This would involve high levels of development spending on social investments, such as human resource development, labour market intelligence, health and social transfers. This kind of "development spending" would enable young people, especially, to gravitate to areas with potential once they had matriculated. The explicit spatial nature of these principles led to a mapping of the South African space economy to provide a high-order indication of the location of potential and need in the country. In 2002, the NSPD was updated and was approved by Cabinet in 2003. In 2005 a further update of the NSDP began, incorporating 2001 Census data as well as provincial Growth and Development Strategies and municipal integrated development plans. The update also included new analyses and mapping techniques providing a more nuanced reading of the South African space economy. This revealed that the metros and secondary cities had: · high levels of concentration of economic activity; · high levels of population concentration; and · large numbers of people living below the Minimum Living Level (MLL). The bulk of districts in the country had relatively low levels of economic activity and high levels of people living below MLL. The starkness of this picture was further demonstrated by the fact that 77% of the country's geographic value added product (GVA) is generated in just 26 localities and nearly 58% in the three metropolitan areas of the Gauteng City Region, Cape Town and the Durban/Pietermaritzburg conurbation. As for poverty/need, the more detailed analysis highlighted the persistent socio-economic divide between urban and rural areas; former black townships and former white suburbs in the cities; and the former Bantustans and former 'white' South Africa. The emerging updated 2006 NSDP builds on the picture of the space economy and principles of the 2003 version but is more explicitly tied to government's stated objective of achieving and sustaining a 6% economic growth rate. It provides signals on how to address the challenges of the disparities in the space economy with a focus on maintaining and growing the economy in locations where the bulk of national GVA is currently generated. This strategy is supported by the belief that through investing in these areas the bulk of those living in poverty in South Africa will also be reached given that the broader areas (60 km radii) in which the 26 nodes are located are home to 77% of all people living below MLL in the country (more than 18 million), 84% of the total population, and 95% of the national economy. 2 ­ 15 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued urbanisation: natural population growth in cities, permanent migration from rural to urban areas and the reclassification of Typology of regions developed for the areas from 'rural' to 'urban' as a result of urban sprawl16. But European Union by the ESPON programme these processes are by no means simple. Unlike historical · Regions dominated by a large metropolis (one patterns of urbanisation in Europe, most developing countries large metropolis dominates a not too densely today are seeing far more complex movements than a once-off populated rural area). journey from the country to the city. Statistics SA, for instance, · Polycentric regions with high urban and rural notes that 67% of the migratory movements in the rural densities (many large cities dominating a northeast of the country in 2002 were of a temporary or circular dense pattern of medium and small sized nature17. towns in densely populated rural areas). · Polycentric regions with high urban densities (where the presence of cities is still significant These seasonal, weekly and daily commuting patterns create a but within a less dense rural area). series of fluid and often very costly linkages between a range of · Networks of medium and small towns spaces. Some of these movements are less a function of choice (regular network of towns scattered in rural than the result of continuing patterns of incompleteness, where areas with medium density). settlements lack the full range of amenities that cities can offer18. · Remote rural areas (regions where accessibility to cities is less developed). While this intricate movement pattern is necessary for survival, the persistence of a system of migration by which millions of Source: people move in and through a mix of urban, rural, quasi- ESPON (2002: 15) urban/rural spaces inhibits the building of lasting, formal relations or shared ways of living in any of these places19. The estimated annual continental urban growth In spite of this circular migration, urbanisation is proceeding rate is 4%, twice as high as that of Latin America rapidly in all regions of the developing world. In 2005, for the and Asia. In Africa, this increase is taking place in first time in human history, more people were living in urban spite of low urban economic growth rates in most than in rural areas. This is set to increase to 60% by 2030, with parts of the continent, giving rise to the 4,9 billion of a total population of 8,1 billion living in cities20. urbanisation of poverty27. UN-Habitat, for This contrasts sharply with the figure in 1840 when less than 4% example, has estimated that 72% of all urban of the world's population was living in cities21. residents in sub-Saharan Africa live in informal settlements28. It has been predicted that 90% of all future population growth will be in cities, and the bulk of this will in cities in the Urban poverty developing world22. This has prompted many countries to adopt Perceptions about cities can be misplaced. policies to stem the rate of urbanisation: the number of Statistics of per capita income can give the developing nations with these approaches rose from 54% in impression that all urban areas are performing 1996 to nearly 75% in 200323. In developed countries exactly well and that those living in urban areas are the opposite happened: the percentage of countries with these comparatively well off. As always, generalisations policies fell from approximately 50% to 25% in the same hide specific realities. An analysis of the 21 key period24. urban centres shows concentrations of deep poverty. Across these 21 centres which are the In Africa it is predicted that the percentage of people living in most important contributors to the national urban areas will have increased from 39% in 2003 to 54% in economy there are 5,8 million people living below 2030, which is nearly four times as high as the 15% in 195025. the minimum living level (MLL) (see table 2-1). STATE OF THE CITIES REPORT 2006 2 ­ 16 This is 24,7% of the national total population in this category. The stepping stone effect The metropolitan municipalities carry the greater proportion of people living below the MLL. eThekwini has over 1 million or 4% Small cities with less than 500 000 inhabitants and intermediate cities with between 1 and 5 of the national total of people living below the MLL; followed million inhabitants, not mega cities (cities with by Johannesburg with over 865 000 and 3,7% of the national 10 million or more people) will continue to total; Cape Town with over 718 000 and 3%; and Tshwane with absorb most of the urban population around over 500 000 and 2% of the national total. the world well into the future. They are often the first places where the social urban Migration transformation of families and individuals occurs. By offering economic linkages between The 2001 Census showed that South Africa had an urbanisation rural and urban environments, they can provide level of 56,25%29, but with wide variations among the country's the first step out of poverty for impoverished four population groups. Indians are the most urbanised at rural populations and a gateway to 97,49%, followed by the whites at 89,87%, coloureds at opportunities in larger cities. 86,78% and Africans at 47,47%30. Levels of urbanisation also vary substantially between the nine provinces (see table 2-5). Source: State of the World Cities 2006, UN-HABITAT Only three provinces ­ Gauteng, the Western Cape and the Northern Cape ­ have levels above the national figure, with period31. Nationally a total number of 44 million Limpopo Province the lowest at 10%. people did not migrate in the last five years. The number of migrants is less than 1 in every While the popular impression in South Africa is of large numbers 15 South Africans. of people moving to urban areas, fuelled by images of burgeoning informal settlements, recent evidence indicates a Of the 53 district and metropolitan municipalities, more nuanced picture. 19 experienced a net in-migration of people, while 34 district or metropolitan municipalities Data for the period 2001 to 2006 supplied by Statistics SA experienced a net out-migration (see tables 2-6 (2006) shows that 3 million South Africans migrated from one and 2-7). district or metropolitan municipality to another over this All the Gauteng and Western Cape district and Table 2-5: Urbanisation levels for the nine provinces in South metropolitan municipalities experienced a net in- Africa (2001) migration of people between 2001 and 2006. No municipalities in the Free State district Province Urbanisation level (%) municipalities experienced net in-migration. Only Gauteng 96 one each in Limpopo, Northern Cape and Eastern Western Cape 90 Cape, and two each in KwaZulu-Natal, North Northern Cape 80 Free State 75 West and Mpumalanga experienced net in- KwaZulu-Natal 45 migration. In most cases the movement was to North West 41 municipalities with either a strong metropolitan Mpumalanga 39 area or secondary city. Eastern Cape 38 Limpopo 10 South Africa 56 Primarily, the pattern is focused migration Source: Statistics SA (2006) towards Gauteng and the Western Cape, the two 2 ­ 17 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Table 2-6: Migration figures for municipalities experiencing the greatest in-migration of population between 2001 and 2006 In-migration as Total percentage of Net population total popula- Ranking Name of municipality Province in-migration in 2006 tion in 2006 1 Ekurhuleni MM Gauteng 140 252 2 384 020 5,88 2 City of Tshwane MM Gauteng 137 685 1 926 214 7,15 3 City of Cape Town MM Western Cape 129 400 2 952 385 4,38 4 City of Johannesburg MM Gauteng 120 330 2 993 716 4,02 5 West Rand DM Gauteng 42 674 732 759 5,82 6 eThekwini MM KwaZulu-Natal 27 277 2 978 811 0,92 7 Eden DM Western Cape 22 983 419 334 5,48 8 Bojanala Platinum DM North West 20 168 1 182 913 1,70 9 Boland DM Western Cape 18 770 595 564 3,15 10 Metsweding DM Gauteng 18 560 183 304 10,13 11 West Coast DM Western Cape 17 211 256 400 6,71 12 Overberg DM Western Cape 14 965 182 864 8,18 13 Umgungundlovu DM KwaZulu-Natal 13 149 931 729 1,41 14 Waterberg DM Limpopo 11 694 613 539 1,91 15 Nelson Mandela MM Eastern Cape 6 715 1 073 114 0,63 16 Southern DM North West 4 914 584 956 0,84 17 Ehlanzeni DM Mpumalanga 2 465 919 503 0,27 18 Siyanda DM Northern Cape 1 504 212 011 0,71 19 Nkangala DM Mpumalanga 1 452 1 034 098 0,14 Source: Statistics SA (2006) predominantly metropolitan provinces in the country. The rate of in-migration as a percentage of the total population is much Feminisation of migration higher in the municipalities in these two more urban provinces (between 3,15 and 10,13%) than in the more rural provinces Within the complex picture of rural and urban migration movements in and to South Africa (between 0,14 and 1,91%). Very high rates of in-migration in there has been a growing awareness of Metsweding (10,13%) and Overberg (8,18%) may also indicate increasing female out-migration from rural a stepping-stone effect as people move incrementally towards areas in recent years. The removal of movement the metropolitan centres. controls with the advent of democracy has allowed women to join their spouses in urban Amongst the twenty district or metropolitan municipalities that areas. For example, many vacant factories in Jeppestown in Johannesburg have been experienced a net out-migration of people between 2001 and tenanted by women whose husbands live in 2006 are five of the seven district and metropolitan nearby hostels. municipalities in the Eastern Cape, three of the four district municipalities in Limpopo and two of the four district Women are travelling more frequently for formal municipalities in the North West province. The three district or informal work ­ 55% of temporary female municipalities that experienced the largest net out-migration in migrants in the Statistics SA's Migration and Urbanisation survey (2006) gave "work/looking absolute numbers in this period were all in the Eastern Cape, for work" as the reason for their relocation. with Chris Hani District Municipality losing 8,51% of its When moving to urban areas these women population. STATE OF THE CITIES REPORT 2006 2 ­ 18 The single largest movements of people between 2001 and 2006 took place between the metropolitan municipalities in the Feminisation of migration Gauteng province, and more specifically from Johannesburg to Ekurhuleni (50 260 people) and in reverse (41 961 people). tend to be employed in less skilled jobs ­ particularly domestic work. However, they tend Other movements of more than twenty thousand people took to move shorter distances than their male place from: partners and return home more often. · Amatole and Chris Hani to Cape Town (40 214 people and 30 626 people respectively); At sub-provincial level, small towns emerged as · Bojanala Platinum and Capricorn to Tshwane (34 283 people key development nodes, attracting people ­ and 25 563 people); particularly women ­ who do not return to rural villages. This pattern can be seen particularly · Johannesburg to Tshwane and Cape Town (21 364 people along transport routes. Work on migration and 21 038 people); patterns to and from Bushbuckridge in · Sedibeng to Johannesburg (20 986 people); and Mpumalanga has shown that the N4 route · Capricorn to Ekurhuleni (20 178 people). between Johannesburg and Maputo in Mozambique plays a significant role. There are gender differences within these statistics indicating Destinations along this road include industrial and mining towns like Middelburg and Witbank that more women are moving to and from urban areas. This has which provide employment for men, but also for been termed 'the feminisation of migration' and has interesting women. consequences for both urban and rural areas. These movements result in: Urban ­ rural economic linkages · A continued stream of remittances to rural Despite a growing awareness of the links that between cities and areas, given that women migrants are more likely to remit than men; rural areas, discourses in the development field are still · Increases in the working-age female characterised by an urban and rural duality32. This runs against population in urban areas, but in lower-skilled the growing appreciation of rural production as a function of jobs and in the informal sector; urban consumption and vice versa, and of the importance of · A tendency towards risky behaviour. Low urban remittances for sustaining rural livelihoods33. A rural earnings may push women migrants to rely home-base often provides a place to recover from an on survivalist activities like transactional sex, which increases their risk of contracting HIV. unsuccessful attempt at being absorbed into the urban economy34. Research has also shown that for many it provides a Sources: socio-cultural grounding ­ "home" ­ a status it often retains for Statistics SA (2006) Migration and Urbanisation in South Africa life35. Cultural practices, fashions and new vocabularies also Singh, G. (2005) Patterns of Migration, Settlement and Dynamics of HIV/AIDS in South Africa, for SA migrate freely between the two, resulting in an increasingly Cities Network similar set of lifestyles. In fast-developing countries of Southeast Lehohla, P. (2006) Studies reveal the circular nature of urban migration. The Star Business Report Asia a new "partially urbanised countryside", which is something May 4, 2006 in between urban and rural, has emerged36. People inhabiting these urban/rural life-worlds have been referred to as "multi- rural labour, and many of the social, health, spatial households"37. educational, and other services that satisfy basic human needs in rural areas are distributed from The two sets of spaces are linked, because "... the major markets urban centres"38. The ESPON Programme in the for agricultural surpluses are in urban centres, most agricultural EU notes that urban and rural areas are "... inputs come from organisations in cities, workers seek connected economically, politically, socially and employment in towns as rising agricultural productivity frees physically through issues such as housing, 2 ­ 24 2 ­ 19 STATE OF THE CITIES REPORT 2006 PEOPLE BUILDING THE CITY SAMSON MABELE, A GOAT TRADER IN ALEXANDRA, FIGHTS TO HAVE THE GOAT TRADE ACCOMMODATED IN URBAN AREAS It's a busy afternoon at the end of the month in Samson Mabele's Mabele's business is inconsistent with the vision of yard in 9th Avenue, Alexandra. Fourteen families live on the plot. Johannesburg as a "world-class African city." The Mabele, a giant of a man, has to duck to get inside his two letter states that "The culture of indigenous blacks roomed brick house which, he shares with his wife and a of slaughtering of animals for ancestral rituals has chandelier. Around his house are various wood-and-iron shacks, resulted in the previous government allowing some freestanding brick rooms and a traditional thatched mud- blacks to live with slaughter animals in the black brick dwelling all organised neatly around a common access drive. townships to the detriment of health and the environment". The yard is also home to thirty sheep and goats, which spend their days in an open-air pen and their nights in a roofed shed The suggestion that Mabele's business is on either side of Mabele's home. unhygienic enrages him. He says that his neighbours do not complain "not one, because Two elegantly dressed men drive up in their white Volkswagen my kraals are clean. You can come every day and Jetta. They have come to buy goats to slaughter over the see that my kraals are clean. Even the inspectors weekend. They stand at the pen and study the goats carefully from the metro say it's clean." selecting two animals and settling on a price ­ R950 for the big one, R650 for the smaller one. However, according to Joel Masetle, the Environmental Health Manager for Region 7, Mabele's assistant, leaps over the kraal fence and wrestles the where Alexandra is located, the keeping of smaller of the two goats to the ground. With one fluid livestock is a big problem. Livestock cause traffic movement he heaves the bleating goat over his shoulder and disruptions if allowed to roam free. There is a into the open boot of the Jetta. He then repeats the process with problem of space in areas designed for residential the second goat. The bleating starts up again as the larger of the purposes only. Animals relieve themselves two goats is laid on top of the smaller one in the boot, but the anywhere, polluting streams and rivers. Animal goats soon settle down and two satisfied clients drive off. Goats excrement contains E coli bacteria. There is the are famously obliging. possibility of increased respiratory conditions through airborne diseases, or worsening asthma. Samson Mabele, who has been selling sheep and goats for Smells can bring flies. There are also objections fifteen years, is one of eight livestock traders operating in from the community with people complaining Alexandra. But Mabele's business is of ongoing concern to the about goats tipping over refuse bins or eating their environmental health officers of the Johannesburg council. gardens and vegetable patches, says Masetle. Since 1998, the council has served repeated notices on Mabele instructing him to remove his animals. The Johannesburg council acknowledges that there is a long history of livestock in urban areas, The most recent notice, which Mabele received in February from largely associated with cultural practices of the Section 59 Council Executive Committee, suggests that appeasing the ancestors. According to Masetle, STATE OF THE CITIES REPORT 2006 2 ­ 20 these practices cut across tribal boundaries and are very In the meantime, Samson Mabele has leased common. Masetle recognises that traditional slaughtering is a some land for himself ­ on a temporary basis ­ in business, which cannot be eradicated. The approach should Bramley View, a decayed industrial area just rather be to educate people about conditions to make it more outside Ales. Sheet and goats occupy one kraal, acceptable. pigs another, and Mabele's pride ­ a herd of six cattle ­ stir restively in a third. But for Samson Mabele there is no alternative but to ignore the various notices instructing him to move his animals to a rural area. Piles of lucerne from a farm in Brits and big bales Goats and sheep are his livelihood and his clientele is overwhelmingly of grass which Mabele buys from a smallholding urban, with customers living in Soweto, Tembisa, Diepsloot, Alex in Linbro Park create a jarring contrast with the `town', Bramley, Hillbrow and Jeppestown. "How can I go to the rural dense housing nearby, the freeway in distance, areas when I stay here and my customers are here?" the new industrial parks and the electricity lines overhead, evidence that the divide between town Mabele has made repeated efforts to legalise his business. He has and country, rural and urban is by no means clear a sheaf of letters that he has written since 1995 to Nelson cut. Mandela, Tokyo Sexwale and the Johannesburg authorities ­ and their replies, directing him to the Department of Land Affairs, instructing him to identify an available piece of land and referring him to someone else. But vacant land near Alexandra is hard to find. There is huge pressure in Alex to use every available hectare for housing. THE DIVIDE BETWEEN TOWN AND COUNTRY, RURAL AND URBAN IS NOT CLEAR CUT Mabele has tried to organise other livestock traders in Alex to discuss with council officials how animals can be accommodated. He agrees that the business should be regulated. According to the council's Masetle, Region 7 has developed a strategy ­ in consultation with livestock keepers, the Departments of Agriculture, Land Affairs, the SPCA, the Johannesburg Metro Police Department, veterinary services, municipal housing, environment, and health divisions ­ to balance the needs of livestock keepers and the City of Johannesburg. But this has not been implemented yet. 2 ­ 21 STATE OF THE CITIES REPORT 2006 PEOPLE BUILDING THE CITY TOBIAS MKIZE WORKS WITH BOVINE HEAD COOKERS TO IMPROVE ENVIRONMENTAL HEALTH IN DURBAN'S INNER CITY On the neatly scrubbed wooden serving board sits a chunk of Mkhize headed up the Bovine Head Cookers Task meat, flanked by a small pile of salt and a couple of chillies. Only Team. A study investigated the impacts of the when you look closely do you notice the long curling eyelashes, practice on the environment, and on the health of soft cheek and thick lips that identify this meal as part of a cow's the people. "We understand that the informal head. Welcome to the Bovine Head Cookers Market in Durban. economy is here to stay, and that is of great use. So we asked ourselves how could we be able to It's about 10:00 am and forty customers are enjoying a meal. talk about their issues, how could we look at their Customers are sitting on wooden benches at long communal issues positively?" dining tables, covered with plastic tablecloths, each provided with a set of sauces and condiments. Behind them, on the outer A new site was found only one block away from edges of the open-sided shed, the grisly business of preparation the original location, along the same route that is under way. The heads, which arrive frozen in municipal plastic- commuters use on their way to town. The traders bags, are severed but otherwise intact. Here they are deftly were each given their own cooking area, concrete skinned, then chopped into pieces with meat cleavers. The meat counter and chopping table. Their paraffin stoves is then boiled in big pots. were contained within a low three-sided concrete shelter, designed to minimise fire hazard. It's a messy business, generating all sorts of waste. Yet the Waste water from the cooking process now drains market is clean and orderly ­ the result of a joint effort between into a grille-covered channel that runs the length iTrump, the municipal agency charged with regenerating of the market. This in turn drains into three eThekwini's inner city, and the traders. conservancy tanks which the council empties every month. A specially designed filter separates It wasn't always this way. Before the head cookers had proper out the fat and hair, allowing only fluids to enter facilities, they used to set up business on the pavements nearby. the sewers. "We can now see how much damage For many passers-by it was a problem seeing heads displayed on was caused by polluted waste water being the pavement, and having blood splashing all over. Pavements chucked into the stormwater drains. On these became greasy and slippery, there were offensive smells and a lines we are winners. Our sea is no longer polluted lot of vermin ­ particularly rats. Waste water from the cooked and we are reaping the environmental benefits," heads was being poured into the stormwater drains, ending up says Mkhize. in the sea near the beaches. Customers start arriving at the head cookers' Then the municipality stepped in and decided that they should market from about 5:00 am on their way to work. be helping the head cookers rather than harassing them. Tobias That means an early start for the thirty head Mkhize, Senior Environmental Health Practitioner at the city's cookers, most of them women. One of them is Environmental Health Department, says: "We do not see the Khombisile Mhlongo, who has been trading on question of informal traders as a problem. For us it's a challenge the streets of Durban since 1988. "Bovine heads and an opportunity . . . and for the traders it's a business". are not easily found," says Mhlongo, and can be STATE OF THE CITIES REPORT 2006 2 ­ 22 sourced from only a limited number of butcheries, some as far paying any rental yet. Nevertheless, the facility, afield as Verulam and Pinetown. Head cookers hire men to running for five years now, has been an import collect heads from these butcheries by taxi. pilot project for a local authority engaging proactively with a range of previously Uncooked heads cost between R45 to R50. Mhlongo cooks unsupported informal activities in its midst. "But about 8 heads a day, each one yielding 10 to 14 pieces of meat. we learn," says Mkhize. At R7,00 per piece, income adds up to between R70 to R100 per head. From this must be deducted the transport costs of getting heads from the butcheries, the cost of cooking fuel and water charges. And then there is the cost of overnight storage for Mhlongo's stoves, cutlery and crockery. At closing time, each night she packs these into large wooden crates to be transported to storage spaces nearby. She pays R10 a week for storage space in Ark Street, and R7 per day to the `barrow boy' who wheels the load through the streets to and from the store. Beef heads are a delicacy amongst African men, particularly reserved for fathers, and prepared with ritual. Traditionally women in rural areas would not be involved in the preparation of heads. But now these urban women prepare them, and anyone eats them. "Everyone is buying, even white people," says Mhlongo. WE DO NOT SEE THE QUESTION OF INFORMAL TRADERS AS A PROBLEM "Business is good. But the facility could do with improvements," says Mhlongo. Electricity supply would be one. Mrs Khawula, the chairman of the head cookers committee says that "the drainage gets blocked, and then overflows causing flooding and bad smells. Traders occupying the outermost stalls get wet when it rains. The water bailiff system has proved to be problematic," says Mkhize. Few traders want to buy water at 50c for 25 litres from the person allocated the task of selling water in the market, when they can access it free from the taxi ranks. There are also ongoing negotiations about rent. Rentals for street traders are generally R10 ­ R35 per month for an open space, R25 ­ R35 for a space with a shelter over it. But this has proved hard to enforce and the Bovine Head Cookers are not 2 ­ 23 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Table 2-7: Migration figures for municipalities experiencing the greatest out-migration of population between 2001 and 2006 Out-migration Total as percentage of Net population total popula- Ranking Name of municipality Province out-migration in 2006 tion in 2006 1 O R Tambo DM Eastern Cape 95 737 1 677 914 5,71 2 Amatole DM Eastern Cape 83 514 1 708 126 4,89 3 Chris Hani DM Eastern Cape 65 846 773 505 8,51 4 Sekhukune DM Mpumalanga 62 575 936 016 6,69 5 Capricorn DM Limpopo 53 242 1 087 685 4,89 6 Vhembe DM Limpopo 31 405 1 241 013 2,53 7 Mopani DM Limpopo 29 075 937 041 3,10 8 Central DM North West 27 664 713 675 3,88 9 Alfred Nzo DM Eastern Cape 27 610 579 583 4,76 10 Lejweleputswa DM Free State 26 023 694 609 3,75 11 Bohlabela DM* Limpopo & Mpu 25 469 694 746 3,67 12 Umzinyathi DM KwaZulu-Natal 24 448 425 625 5,74 13 Ukhahlamba DM Eastern Cape 23 196 297 540 7,80 14 Thabo Mofutsanyane DM Free State 21 985 717 822 3,06 15 Zululand DM KwaZulu-Natal 21 333 769 971 2,77 16 Bophirima DM North West 16 352 426 431 3,83 17 Umkhanyakude DM KwaZulu-Natal 15 587 555 618 2,81 18 Gert Sibande DM Mpumalanga 14 988 851 892 1,76 19 Uthukela DM KwaZulu-Natal 13 865 585 690 2,37 20 uThungulu DM KwaZulu-Natal 12 600 809 710 1,56 * Bohlabela District Municipality was disestablished under boundary changes in March 2006, and incorporated into the Mopani and Ehlanzeni District Municipalities. Source: Statistics SA (2006) employment, education, transport, tourism and resources"39. Although there is a better understanding of The flows between these two spaces include: urban-rural linkages, the size of the link is · The transfer of people, such as commuting and migration; unknown because many transfers cannot be · The flows of goods, services and energy; quantified and many are unrecorded. · Financial transfers through trade, taxes and state disbursements; Informality in South African cities · The transfer of assets, including property rights, allocation of Urbanisation processes in South Africa are often state investment and capital; and seen as informal. Informal activity is associated · The flow of information, including technical information and with the illegal, extra-legal, unregistered. It is social ideas40. untaxed and often conducted in places where it is not allowed42. This type of definition carries a Relations between urban and rural spaces are not always pejorative, modernist judgement in which the positive. In many cases growing inequality between urban and formal s seen as the norm ­ the right ­ and that rural spaces is often a short-term outcome, illustrated by China's which deviates from this norm, as wrong43. and India's buoyant cities and impoverished rural villages41. STATE OF THE CITIES REPORT 2006 2 ­ 24 Over the last two decades attitudes towards the informal have changed, with the acknowledgement that the sector includes Urban versus rural development? positive, often highly ingenious, coping strategies by the poor44. This is due to greater appreciation of diversity and recognition of Cities are the engines of rural development in an environment of strong urban-rural linkages. different cultural life-worlds, leading to more sensitive definitions Improved infrastructure between rural areas of what is acceptable and what not45. This also entailed an and cities increases rural productivity and interrogation of modernist, colonial views to test their continued enhances rural residents' access to education, applicability. So for instance certain family and community health care, markets, credit, information, and survival methods may be acceptable in one culture, but other services. On the other hand, enhanced regarded as nepotism and bribery in another46. urban-rural linkages benefit cities through increased rural demand for urban goods and services and added value derived from Together these trends have meant that definitions of what is agricultural produce. permissible have become far more flexible. But, together with this greater acceptance and appreciation of different cultures Source: State of the World Cities 2006, UN-HABITAT and survival techniques, has come a greater degree of ambiguity, as authorities tolerate some activities more than others. All too often authorities do not act consistently: they Cities with their huge populations and abundance might allow unregistered provision of labour but will prohibit of public space have provided ideal settings for informal street trading47. informal activities, most of which are located in the retail and services sectors49. This process of Over the last two decades informality has been on the rise in informalisation has not been a peripheral event, cities throughout South Africa, largely as a result of the freeing but has increasingly become the norm, largely as up of urban spaces after decades of apartheid. This informality a result of the sheer numbers of the urban poor takes three forms: involved50. This process is no longer limited to the · unregulated and unlawful land use, settlement establishment illegal invasion of land by new arrivals to the city and unauthorised housing; or areas populated by the poor: the whole fabric · unregulated small- and micro-enterprises; and and being of the South African city is subject to · casual labour, unregistered employment, moonlighting and different degrees of informalisation, formalisation multiple jobs48. and attempts at re-formalisation (see table 2-8). Table 2-8: Categories of informal work arrangements Category of informal work Definition Informal sector Own-account workers, unpaid family workers, domestic servants and individuals working in production units of between 1 and 10 employees. Informal employment Informal wage workers and unpaid family workers who may work in the formal or the informal sector. They lack a contract, health and pension benefits, and social security coverage. Informal enterprises Defined by the nature of regulation in each context: the availability of a licence, and the payment of licences, taxes and fees. Informal economy Includes both private informal workers and the informal self-employed as well as employers in informal enterprises. Source: Bivens and Gammage (2005: 9) 2 ­ 25 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Table 2-9: Informal employment as percentage of total Four different theories have been offered as to the employment in five countries causes of informality. · The 'lack of growth hypothesis': growth in Informal Percentage gross domestic product (GDP) will lead to employment of total growth in formal employment, and that a rise Country Year in millions employment in informal employment must be the result of Egypt 1998 6,5 40,1 sluggish GDP growth. El Salvador 2002 1,7 69,1 India 1999 360,2 92,1 · The 'jobless growth theory': growth alone is South Africa 2003 2,7 22,5 not good enough, but that the extent of the Russia 2002 9,5 14,4 growth must be well in excess of productivity Source: Bivens and Gammage (2005: 9) growth, to off-set the labour-shedding outcomes of the latter. · The 'growth from below' theory: small- and Table 2-10: Highest educational qualifications of formal and micro-enterprises have simply been more informal workers in South Africa (2003) successful in fast-changing times than larger companies through greater flexibility and Formal Informal adaptability. Highest level of education workers workers · The 'period of adjustment theory': the None 4,1 12,3 informal sector is a result of inertia ­ the time Grade 0-3 2,8 7,4 it takes for old industries to adapt to new Grade 4-6 8,7 16,8 Grade 7-9 17,4 29,1 conditions, as well as for workers to shift from Grade 10-12 43,4 29,3 one industry to another, with some unable to Diploma 12,8 2,4 do so and moving into the informal sector51. Degree 8,9 1,2 Total* 98,1 98,5 Understandably, data on the scale and extent of * Totals do not add up to 100% because of rounding errors and informal activities is not readily available. But some because a small portion of the sample did not indicate their education macro-data from Statistics SA (2005) suggests that levels on a national level the informal sector constitutes Source: Bivens and Gammage (2005: 12) 25% of total employment or around 3 million people, and that this figure has remained constant since 2000. Bivens and Gammage52 have a slightly Table 2-11: Informal land occupation in urban areas as a different perspective. They argue that formal percentage of all housing (2000) employment growth in South Africa exceeded informal employment growth in the period 1999 Region Percentage to 2003 and that the informal sector is smaller, Sub-Saharan Africa 51,4 with 2,7 million workers in the informal sector, East Asia and the Pacific 41,2 amounting to 22,5% of total employment. Table Latin America and the Caribbean 26,4 Middle East and North Africa 25,9 2-9 provides a comparative analysis between data Eastern Europe and Central Asia 5,7 for South Africa and a selection of other Source: High Level Commission on Legal Empowerment of the Poor developing countries. (2006: 11) Incomes earned by workers in the informal sector are low. A study conducted South Africa in 2003 STATE OF THE CITIES REPORT 2006 2 ­ 26 found that 75% of the workers in a sample of informal workers approaches to collaborating with street traders, earned less than R1 000 a month53. Skills levels of those in the adopted an "Informal Economic Policy". This informal sector are below those in the formal sector (see table policy recognises the right of informal enterprises 2-10). to exist of as well as the need to support and manage the sector. This includes participation Informality is very visible in the case of housing, despite huge by informal traders in the planning, budgeting advances made by government. There are 2,4 million and performance monitoring processes of the households living in informal settlements in the country54. A city. This has had many positive impacts and large number of transactions in land and housing take place has helped prevent conflicts around trading outside the normal procedures resulting in unreliable housing spaces56. datasets. Table 2-11 illustrates the extent of informal land occupation in urban areas in different regions of the world. The City of Johannesburg has responded in a different way in its efforts to manage the obvious Some urban thinkers view the informal sector as a triumph of the desire of thousands of its people to live in well- poor over adversity, others as an unfortunate reality. Others located areas. This has come into sharp focus in again see it as a hindrance on human development. From a city the inner city, where the municipality's use of by- finances point of view it has serious implications because people laws to close illegally occupied and unsafe involved in informal activities typically do not pay taxes, and buildings has been criticised on grounds of therefore do not contribute to the maintenance and individuals' rights to shelter. development of the city. While this does not immediately disadvantage those in the informal sector, it could result, over The Western Cape Provincial government has time, in the deterioration of the urban stage on which they made provision for an "Informal Residential Zone" themselves are reliant for their livelihoods. Often informal to be included in all municipal zoning schemes, settlement speeds this process by occupying spaces of high and which ceases to exist as soon as the ecological value, or by creating a negative impression of the settlement is upgraded57. quality of city leadership in these places55. Municipalities have generally been slow in Many participants in the informal sector are often super- responding to informality. One reason may be an exploited because they fall outside of the ambit of labour unwillingness to suppress informality as it is seen legislation and cannot access the legal system. Lack of access to as the only recourse for the poor. Another may be proper health and education services, alienation from the often a lack of capacity, or a wish to understand more highly conspicuous wealth in cities, fear of eviction and a about it before responding. It could also be that tendency to resolve disputes by violence due to lack of access to city administrations see the problem as one of legal and policing services, undermines the quality of life of skills development, which is the concern of the residents in the informal sector and perpetuates the cycle of national and provincial spheres. Other writers poverty. This is aggravated further by their lack of access to have argued that it is a case of "state-withdrawal" credit, as they have nothing to offer as collateral. People in the by governments who tolerate the informal sector, informal sector often depend on private micro-lenders who but are not interested in changing the lives of exploit them even further. those trapped in it58. The process of engaging with informality is a relatively new Informality calls for changes to the existing phenomenon for many municipal governments. In 2000, regulatory framework, especially in the areas of Durban Municipality (now eThekwini), which has pioneered land use and land development. The clear call 2 ­ 27 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued from government for the eradication of the 'two economies', contributors to provincial and national with the informal squarely located in the second, means that city economies. This absence is likely to hamper urban governments will have to find ways to assist the informal it in progress and constrain the development of the making the transfer to the first59. The High Level Commission on nation. Legal Empowerment of the Poor argues that this can be achieved by "turn(ing) formality itself into a viable and attractive But two important urban policy documents are option for the poor". The process of recognising informal being developed: The Urban Development activities will require a host of reforms in other arenas, especially Framework which first emerged in 1997 is being the legal environment and "must be based on empirical re-conceptualised in the face of ongoing, rapid evidence of practices in the informal economy and developed urban change; and the Presidency is putting the with a clear understanding of local environments, systems, and finishing touches to the National Spatial needs"60. Development Perspective, due for release towards the end of 2006. These documents will help to Conclusion guide urban development in the future and are Notwithstanding the importance of cities in South Africa and the eagerly awaited by urban practitioners. challenges that they face, there is no dedicated legal or policy framework that deals explicitly with cities. Rather, policy and In the meantime urban policy-makers and legislation is directed towards municipalities, within the national practitioners should start thinking about the framework for local government. There is also no dedicated South African space economy in new ways ­ not ministry or government unit in the national or provincial spheres as a set of isolated cities circumscribed by prioritising cities. administrative municipal boundaries, but as a set of interconnected spaces characterised by Given the importance of cities to the nation, this lack of a dynamic flows of people, goods and movement. dedicated focus is notable. Other countries have acknowledged This will require a new regional perspective as well the importance and special circumstances in their cities through as institutional organisations that can foster targeted legislation. For example, Brazil, with 82% of its productive co-operation on matters of mutual population living in cities, enacted the federal City Statute in concern ­ regional economic planning, transport 2001. This empowers city authorities to develop a 'concept of infrastructure and mega-projects. This will help to the city' through a local Master Plan, and to intervene in local overcome destructive competition between cities land markets to address social exclusion and spatial segregation. and build productive co-operation within city- The Netherlands has a Major Town Policy which lays emphasis regions. on economic and infrastructural potential, integrated with social renewal. It is applied in rundown city areas and urban districts with special needs. The many complex issues that cities face ­ like competing in the global economy, providing and maintaining high quality services to millions of people amidst huge urban poverty, high levels of crime and enormous levels of environmental degradation ­ are often neglected in policy or legislation. There is also no special provision for intergovernmental collaboration between municipalities and provincial and national sector departments even though these municipalities are key STATE OF THE CITIES REPORT 2006 2 ­ 28 Endnotes 1 Sutherland, E. (2005) Human geography, human environments: 15In addition to the 21 key cities and towns Urbanisation, dynamics of change and sustainability. Monash identified in this report, functional urban areas University such as Klerksdorp, Carletonville, George, Welkom, 2 Scott AJ., Agnew J, Soja EW, Storper M (1999) Global City- Newcastle and Paarl also make significant Regions. Conference Theme Paper, Global City-Regions contributions of between R3 billion ­ R4,1 billion Conference, UCLA School of Public & Policy Research Rand of GVA/annum (based on 2004 GVA at 3 Van der Merwe IJ (2003) The Global Cities of Sub-Sahara Africa: current prices) to the national economy. Fact or Fiction? Globalisation and World Cities Study Group, 16Sutherland op cit and Statistics SA 2006 Research Bulletin 126 17Statistics SA 2006: 25 4 Sassen S (2003) When cities mean more than nations, who wins? 18Lalloo, K. (1999) Areas of contested citizenship: The World Paper 18 September 2003 Housing policy in South Africa, in Habitat 5 Scott, AJ. (1998) Regions and the World Economy: The Coming International, Vol 23 (1) pages 35 to 47 and Shape of Global Production, Competition, and Political Order. Statistics SA 2006 Oxford University Press. 19Lyons, M. (2004) Submission to the Commission 6 IDP hearings on Africa on the informal sector in Africa. Available 7 Gauteng Provincial Government Office of the Premier (2006). at http://www.commissionforafrica.org/english/ Gauteng Global City Region Perspective consultation/ubmissions/ro/sb-nov-dec04-159.pdf 8 McCarthy L (2000) Competitive Regionalism: Beyond Individual SACN (2004) State of the Cities Report 2004 Competition. US Economic Development Administration. 20Sutherland op cit 9 In 2005 the City of New York for instance had a Gross 21Sutherland op cit Metropolitan Product of nearly $500 billion, which, if it were a 22Sutherland op cit country, would make it the seventeenth largest economy in the 23United Nations 2003:14, as quoted in Statistics world. SA, 2006: 21 10Sutherland op cit 24United Nations 2003:14, as quoted in Statistics 11Sutherland op cit SA, 2006: 21 12Census 2001data, Statistics SA 25Statistics SA 2006: 21 and 26 13McCarthy op cit 26UN-Habitat 2004 14This was done using the innovative and much finer grained geo- 27Statistics SA 2006: 26 and Cohen, B. (2004) analysis platform (Mesoframe Version 1.1, CSIR, 2006), initially Urban Growth in Developing Countries: A review developed for use in the Department of Trade & Industry's of current trends and a caution regarding existing Geospread Project, and also used in the 2006-NSDP review. The forecasts, World Development 1:1, pages 23 to 51 "most significant functional urban areas" were determined by 28UN-Habitat, United Nations Human Settlement through a combination of: central place indices (a weighted index Programme 2003 of central place facilities developed by Prof M. Geyer, (2005) at 29Statistics SA 2006: 19 the University of the North West); an index based on the 30Statistics SA 2006: 19 household income profiles of the area; and actual land-cover (see 31This excludes movement within the same district or map entitled "Administrative and Functional Context of South metropolitan municipality. Africa, Geo-spatial Analysis Platform and NSDP Spatial Profiles, 32Adell, G. (1999) Theories and models of the peri- 31 May 2006"). urban interface: A challenging conceptual landscape. Development Planning Unit. London: University college. 2 ­ 29 STATE OF THE CITIES REPORT 2006 THE DYNAMICS OF THE URBAN SYSTEM continued Garrett, J. and Chowdhurry, S. (2004) Urban-rural links in 48Lyons op cit transformation in Bangladesh: A review of the issues. International Hansen, K.T. and Vaa, M. (2004) Reconsidering Food Policy Research Institute. Washington informaility: Perspectives from urban Africa 33Smith, A. and Stenning, A. (2004) Beyond household economies: Few et al 2002 Articulations and spaces of economic practice in Post-Socialism 49see Lyons 2004; Watson 2006; and Hansen and McIntosh Xaba & Associates (2005) Role of women: Rural-urban Vaa, 2004 linkages and household livelihoods. Prepared for the KZN 50see Davis 2004; Hansen and Vaa 2004; and Beall, Provincial Planning and Development Commission. UNDES 2002 Crankshaw and Parnell 2002: 24 34McIntosh Xaba & Associates op cit Lesetedi, G.N. (2003) Urban- 51Bivens, L.J. and Gammage, S. (2005) Will better rural linkages as an urban survival strategy among urban dwellers workers lead to better jobs in the developing in Botswana: the case of the Broadhurst residents. Journal of world? In Avirgan, T., Bivens L.J. and Gammage, S. Political Ecology, Vol 10: 37-46 (eds.) Good jobs, bad jobs, no jobs: Labour 35Lesetedi op cit; and De Bruijn, Van Dijk et al, 2001, as referenced markets and informal work in Egypt, El Salvador, in Statistics SA, 2006: 26 India, Russia and South Africa. Global Policy 36Davis 2004; and see McIntosh Xaba & Associates, 2005: 8 Network. 37Adell 1999: 3 Smith and Stenning op cit 38Rondinelli 1983, as quoted in Adell 1999: 13 522005: 19 39ESPON, 2002: 10 53Bivens and Gammage op cit 40Preston 1975 in ESPON 2002 54Watson op cit 41Gulati A., Shenggen, F. and Dalafi, S. (2005) The dragon and the 55High Level Commission on Legal Empowerment of elephant: Agricultural and rural reforms in China and India. the Poor 2006 International Foop Policy Research Institute. Washington Adell op 56Kuiper, M. and van der Ree, K. (2006) Growing cit. out of poverty: Urban Job creation and the 42Badenhorst M.S. (1988) The residential structure of the Millennium Development Goals. Global Urban metropolis: Socio-spatial analysis of the South African case. Development, Vol 2, Issue 1, March. Unpublished PhD thesis. RAU 57Watson 2006 43see Watson, V. (2006 forthcoming) Responding to informality. 58see Lourenquo-Lindell, I. (2002) Walking the tight- Chapter of forthcoming book on the first ten years of planning in rope: Informal livelihoods and social networks in a post-apartheid South Africa West African city. Unpublished PhD thesis. 44see Lyons op cit and Rogerson, C. (1997) Globalisation or Stockholm University. informalisation? African urban economies in the 1990s, in C. 59see Watson op cit Rakodi (ed.) The urban challenge in Africa: Growth and 602006: 3 Management inlarge cities. Tokyo: United Nations University Press 45Simone, A. (2004) For the city yet to come: Changing African life in four cities. Durham: Duke University Press. Watson, V. (2002) The usefulness of normative planning theories in the context of Sub-Saharan Africa. Planning Theory, 1, 1:27-52 Oranje 2003 46see Simone op cit and Watson 2006 op cit 47High Level Commission on Legal Empowerment of the Poor 2006 STATE OF THE CITIES REPORT 2006 2 ­ 30 CHAPTER 3 CONTENTS URBAN TRENDS AND PERFORMANCE Population dynamics 3 ­ 2 The productive city 3 ­ 8 Economic growth 3 ­ 8 Exports and imports 3 ­ 10 Employment 3 ­ 16 Property 3 ­ 31 The inclusive city 3 ­ 36 Water 3 ­ 37 Sanitation 3 ­ 38 Electricity 3 ­ 39 Refuse removal 3 ­ 41 Housing 3 ­ 41 Social and community services 3 ­ 43 Wealth distribution 3 ­ 43 Human development 3 ­ 46 HIV/Aids 3 ­ 47 Quality of life 3 ­ 47 The well-governed city 3 ­ 52 Government 3 ­ 52 Community 3 ­ 55 The sustainable city 3 ­ 59 Urban density 3 ­ 59 Public transport 3 ­ 60 Sustainability indicators 3 ­ 63 3 ­ 1 STATE OF THE CITIES REPORT 2006 3 URBAN TRENDS AND PERFORMANCE The changing nature of cities is important to all urban stakeholders, but urban flux is often difficult to read. This Reliability of the data chapter puts numbers to these changes and provides current statistical information about how South African cities have The last State of Cities Report relied heavily on the 1996 and 2001 census data, supplemented performed. Relying on the same conceptual framework that by a variety of other sources such as Statistics informed the 2004 State of the Cities Report, and using the SA's Census of Construction, reports by the 2004 report as a benchmark, it provides a commentary on: Regional Services Councils, Treasury's database · population dynamics; on local government, Global Insight's figures on Gross Value Added, All Media Products Survey · the productive city; (AMPs) data, information requests from the · the inclusive city; National Ports Authority, the Airports Company · the well-governed city; and of South Africa, and from municipalities. · the sustainable city. This chapter follows a similar route, but because Population dynamics the next full census is only in 2011, other techniques were used to update the data. Some Population estimates provide a critical basis for the analysis of new sources of data have emerged since 2004, patterns and trends. Since no official population statistics exist such as the Financial Census of Municipalities for the cities, estimates were developed. The 2005 population and the Non-Financial Census of Local estimates provided in the almanac are based on Statistics SA's Government, while others no longer exist. Statistics SA provides annual provincial mid-year provincial estimates for 20051. population estimates, an annual Labour Force Survey (LFS) and General Household Survey The HSRC's population estimates for 2005 presented here, differ (GHS), but these are provided on a national notably from those produced by other organisations, such as the basis. Statistics SA provided some of the local Bureau of Market Research (BMR)2, Development Bank of government data and assisted in analysing current LFS and GHS data for the nine Southern Africa (DBSA)3, Quantec (for 2004)4, Global Insight (for SACN cities. 2004)5, and the Demographic Information Bureau's work done for the CSIR6. Nevertheless, since the 2001 census, no new official demographic and economic statistics have been produced at a municipal level. As a Most of these estimates for 2004/2005 are shown in Table 3-17. result, data had to be created or sourced from The figures in the last column, under "HSRC (mid-year)" are organisations which produce their own figures those used in this report. Despite problems, these figures are based on various sources. Where possible, valid and are defensible since they are based on official 2005 researchers worked with official statistics. mid-year population estimates. 3,09% per year over the period 1970-1996). Because of difficulties in comparing 2001 with 20058, Declining city population growth rates coincide populations trends are indicated for the period 1996-2005 with declining national population growth. South instead of 2001­2005. The population estimates for 1996 and Africa's total population increased from 2005 are illustrated in figure 3-1. 11 415 925 to 21 794 328 in the period 1946- 1970, and then grew to 40 583 570 in the period From figure 3-2 it is clear that the populations of the nine major 1970-1996. By 2005, the population reached cities in South Africa have grown considerably since the mid- 46 888 200. With annual national growth rates 1990s at an average annual rate of 1,92%. This growth has been over these periods of 2,73% for 1946­1970, much slower than the growth experienced during the preceding 2,42% for 1970­1996 and 1,62% for 1996­2005, 50 years (3,45% per year over the period 1946-1970, and it is clear that the city population growth rate has STATE OF THE CITIES REPORT 2006 3 ­ 2 Table 3-1: Some city population estimates for 2004/2005 Population numbers for 2004 or 2005 as estimated by the organisations indicated 2004 2005 HSRC DBSA HSRC (mid- Quantec BMR- (mid- Municipality year) derived* Low High year) eThekwini 3 190 214 3 128 954 2 914 520 3 266 956 3 331 870 3 161 844 Johannesburg 3 221 601 3 225 404 2 845 527 3 642 926 3 714 118 3 295 088 Cape Town 2 923 637 2 984 884 2 811 280 3 069 455 3 130 392 2 969 458 Ekurhuleni 2 494 502 2 508 719 2 266 233 2 806 919 2 861 745 2 528 303 Nelson Mandela Bay 1 117 521 1 054 356 943 812 976 731 1 016 687 1 100 320 Tshwane 2 018 181 2 004 012 1 199 337 2 184 489 2 227 463 2 040 517 Subtotal: Metropolitan cities 14 965 656 14 906 329 12 980 709 15 947 476 16 282 275 15 095 530 Buffalo City 775 441 743 096 694 670 675 596 703 295 765 343 Mangaung 707 094 655 334 641 848 654 560 667 703 705 156 Msunduzi 561 590 568 769 374 359 554 315 565 481 565 196 Subtotal: Other major cities 2 044 125 1 967 199 1 710 877 1 884 471 1 936 479 2 035 695 Total: All nine cities 17 009 782 16 873 528 14 691 586 17 831 947 18 218 754 17 131 225 *The figures for Buffalo City, Mangaung and Msunduzi were derived by the HSRC (using GIS techniques) from the population estimates for the relevant magisterial districts that had been produced by the Bureau of Market Research (BMR) been consistently higher than the total population growth rate "Gauteng, Western Cape and KwaZulu-Natal had for the country. a positive net migration rate" during the period 2001­2006. The Statistics SA estimates suggest This is partially confirmed by the inter-provincial migration that the major metropolitan areas in these three analyses presented by Statistics SA (2005)9, which indicates that provinces have experienced a positive net in- Figure 3-1: City populations (1996 and 2005) 3 500 000 3 000 000 2 500 000 2 000 000 Population 1 500 000 1 000 000 500 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 1996 2005 3 ­ 3 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-2: National and city population growth. Average annual growth rates for 1946-1970, 1970-1996 and 1996-2005 5 4 annum) 3 per (% rate 2 Growth 1 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Tshwane City average National (SA) Mandela Spatial entity 1946-1970 1970-1996 1996-2005 Figure 3-3: City population densities in 1996, 2001 and 2005 (number of persons per square kilometre) 2 500 2 000 2 1 500 Persons/km 1 000 500 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City average City 1996 2001 2005 migration10. The slowdown in city and national growth rates can the same as 2001. Between 1996 and 2005 the probably be ascribed to reduced fertility levels over the last nine cities' total annual population growth was decade and the impact of recent Aids deaths, as shown in below 2%, but the three Gauteng metropolitan figure 3-5. centres showed higher-than-average growth rates with Johannesburg growing annually at 2,50%, The mid-year population estimates for 2005 indicate that the Ekurhuleni at 2,49% and Tshwane at 2,17%11. ranks of the nine major cities in terms of population size are still Figure 3-3 shows the six metropolitan areas, STATE OF THE CITIES REPORT 2006 3 ­ 4 Johannesburg (with 2 003 persons per square kilometre), Figure 3-4 illustrates the problems with the eThekwini (1 379/km2), Cape Town (1 207/km2), Ekurhuleni population data. It shows that the contribution of (1 313/km2), Tshwane (938/km2), and Nelson Mandela Metro the nine cities to the country's total national (561/km2) having the highest overall city population population in 2001 was notably larger than both concentrations in 2005. the 2005 estimates and the 1996 census figures. Their overall contribution increased from about 36% in 1996 to 37% in 2001 only to decline again to 36% in 2005. Consequently, there is no Figure 3-4: Cities' overall contribution to the total national clear, consistent trend in the nine cities' population (1996, 2001 and 2005) contribution to the total population of South Africa. There are similar inconsistent trends for all 1996 the cities, except Msunduzi which shows a consistent decline in its contribution to the 37% national population. 36% The recent overall decline in the city population 36% relative to that of the country as a whole contradicts trends in sub-Saharan Africa, including 35% South Africa, that were described by the United 35% Nations12 as heading towards an absolute decline in the rural population. The explanation for this counter-intuitive finding lies in relative urban growth outside the nine major cities. Secondary 2005 2001 cities and other towns experienced relatively high Figure 3-5: Estimated city HIV prevalence rates (1996, 2001 and 2005) 16 14 12 (%) 10 rate 8 6 Prevalence 4 2 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Tshwane City average National (SA) Mandela City 1996 2001 2005 Source: Quantec 3 ­ 5 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-6: Estimated city death rates (1996, 2001 and 2005) 2,0 1,8 1,6 1,4 (%) 1,2 rate 1,0 0,8 Death 0,6 0,4 0,2 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City average City 1996 2001 2005 Source: Quantec Figure 3-7: Age composition of the city population (2005) (see schedule at the back of the book for data) 3 500 3 000 2 500 2 000 (thousands) 1 500 Population 1 000 500 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 0-4 years 5-14 years 15-34 years 35-64 years 65+ years population growth compared to the major cities and rural areas, possible to determine how this has affected life confirming a trend identified in the 2004 State of the Cities expectancy levels in the cities since 200013. The Report. HSRC survey of HIV prevalence14 shows that labour migration is associated with higher Figures 3-5 and 3-6, derived from Quantec statistics for 2004 prevalence levels. At some mines in South Africa, suggest that HIV prevalence and Aids deaths in the major cities for example, the HIV rate reaches 50%, have increased significantly since 1996. However, it is not significantly higher than the rate among the STATE OF THE CITIES REPORT 2006 3 ­ 6 population as a whole. Also, urban informal settlements were Between 1996 and 2001 the average city found to have the highest HIV prevalence levels in 2002 as well household size decreased notably from 3,96 to as in 2005. The impact of Aids deaths in the cities will soon 3,58. There is no evidence that this trend would become very significant given the large numbers of urban have changed since. Table 3-2 therefore presents residents who live in informal settlements. household sizes and numbers for the nine cities based on an extrapolation of the 1996-2001 Figure 3-7 shows the estimated age composition of the city trend15. On this basis, the 2005 average city populations in 2005, while figure 3-8 indicates the changes over household size is estimated at a mere 3,31. The time (1996, 2001 and 2005) in the overall city population. There largest 2005 estimated mean household size was has been a consistent increase between 1996 and 2005 of city for Msunduzi (4,05), followed by Cape Town residents aged between 15 and 34 years, with a corresponding (3,71), eThekwini (3,67) and Nelson Mandela Bay decrease of residents aged 65 years and older. The trends for the (3,53), all with averages of more than 3,5 persons other age categories are less consistent. The future age per household. The only city with an estimated composition of the country's urban population will probably be average household size below three people in determined by the impact of Aids deaths, which will affect 2005 was Johannesburg (2,90). These reduced different age groups in different ways. household sizes led to an estimated annual growth in the number of city households at a rate of 3,99% over the period 1996-2005, which is Figure 3-8: Age composition of the SACN cities' populations notably higher than the very low rate of increase (1996, 2001 and 2005) implied by the number of households over the period 2001-2005 (2,87% per year) but 45 conspicuously lower than the rate previously estimated for the period 1996-2001 (4,89%). 40 Even with relatively slow city population growth, 35 the rapid decline in city household size will result 30 in a significant increase in the number of (%) 25 households in the cities. This will have very serious 20 implications for municipal service-delivery Proportion 15 demands and for the sustainability of cities. 10 5 0 0-4 5-14 15-34 35-64 65+ Age group (in years) 1996 2001 2004 Table 3-2: HSRC estimates of the 2005 city average household sizes and numbers of households Buffalo Cape Nelson Total or Indicator City Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Mandela Tshwane average Average household size 3,25 3,71 3,02 3,67 2,90 3,16 4,05 3,53 3,25 3,31 Number of households 235 351 801 303 836 004 861 540 1 135 097 223 118 139 650 311 934 628 788 5 182 701 3 ­ 7 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued The productive city Economic data presents particular problems. No official figures Measuring local and regional economies ­ GGP or GVA? for Gross Geographic Product (GGP) have been produced since 1994, and a range of economic indicators are not available at Prior to 1994, national government conducted a municipal or district level. There are also difficulties in comparing regular census of firms which generated key Labour Force Survey data with the census ­ and sometimes with economic parameters at a magisterial district previous Labour Force Surveys ­ due to differences in the level. Ironically, at the time, very few local definition of employment. Data provided by the Development governments used this data to develop policy. From this source it was possible to calculate Bank of Southern Africa (derived from Global Insight base data, what was known as Gross Geographic Product recalculated for each local authority) is used to provide Gross (GGP). This could be understood as a regional Value Added figures ­ a proxy for GGP. Quantec data is used for or local equivalent to national Gross Domestic examining long-term employment trends. The numbers of Product (GDP). GGP reflects the level of output employed and unemployed provided in the almanac are based in the economy and includes taxes and on the weighted 2005 Labour Force Survey, but should not be subsidies. The last official publication of GGP statistics was in 1994. Since then the directly compared to 2001 employment figures. The absence of manufacturing census, relevant at the local level, official municipal economic data is a critical gap which needs to has also been discontinued. The result is that be urgently addressed. The following indicators have been used today, a very interested policy audience at the to measure economic performance in the nine SACN cities: local level has had to rely on alternative sources. growth, exports and imports, Regional Services Council levies, employment and property. Today, new sources are being created through using economic models, supplemented by more current data sets available at the national and Economic growth provincial level, to re-configure the original data Figure 3-9, which provides an analysis of Gross Value Added gathered between 1970 and 1994. This (GVA) data, suggests that economic growth has accelerated in exercise, undertaken primarily by private sector the nine cities, increasing from 3,2% per year over the 1996- data providers, has resulted in the publication 2001 period, to 3,8% per year over the 2001-2004 period. of data sets referred to as Gross Value Added (GVA). GVA excludes taxes and subsidies from Figure 3-10 shows that growth has been marginally higher than its calculations and tends to draw on data sets the national average of 3,7% per year in the 2001-2004 period, around inputs to firms. Today, these modelled and the share of the nine cities has remained roughly constant statistics are the most commonly used in local at 62,5% in both 2001 and 2004. Apart from Nelson Mandela policy making. Metro, all cities grew faster than in the 1996-2001 period, and all growth rates exceeded 2,8% per year. Growth has been The two sets of statistics, GGP and GVA come up with different figures. This is not surprising as particularly concentrated in the Gauteng metros, where rates they are not directly comparable and might have been in the order of 4,7% to 5,3% per year over the 2001- display different levels of growth over time. Some 2004 period. Buffalo City, Msunduzi and Mangaung all cities such as Msunduzi have chosen to collect a accelerated their growth rates considerably compared to the range of locally available data sets to get a previous period. better sense of grass-roots economic activity (retail sales, employment in firms etc). Johannesburg, eThekwini and Ekurhuleni have Economic growth outstripped population growth in most cities, chosen to not rely excessively on highly modelled and GVA per capita has risen in almost all cases. In contrast to data and to supplement local economic analysis the 1996-2001 period, when overall per capita GVA increased with firm surveys. Cape Town has tried to only slightly from R31 863 in 1996 to R32 521 in 2001, and remodel the available data. These efforts STATE OF THE CITIES REPORT 2006 3 ­ 8 when some cities experienced a decline, per capita growth was more substantial, rising to R35 441 in 2004 (see figure 3-11). Measuring local and regional economies ­ The seemingly low population growth rates in part account for GGP or GVA? the sharper rise, but economic growth was also faster than in the contribute to a finer grain of analysis than previous period. There has been a substantial upward shift in per would emerge if policymakers relied only on the capita GVA in several cities since 1996. Sharp rises are original GGP or more recent GVA data sets. particularly evident in Johannesburg and Tshwane, which, This report uses the GVA data set as it is most widely used amongst the cities. It reflects figures Figure 3-9: Average annual GVA growth 2001-2004 at 2000 prices. However, it should be noted that the data is modelled and therefore has 6,00 some shortcomings. Where possible, it should be examined in conjunction with local sources 5,00 of economic information. 4,00 The South African Cities Network has been (%) working with cities and Statistics SA to try and 3,00 reach consensus on new nationally authorised Growth data sets of sub-regional economies. It is hoped 2,00 that this will improve economic analysis in forthcoming State of the Cities Reports. 1,00 0,00 City ownT (SA) together with Cape Town, also had the highest Nelson Mandela shwaneT average per capita GVA by 2004. The smaller cities Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi City Johannesburg National experienced lower growth in per capita GVA from Cities 1996, and also had lower per capita GVA figures than the metros. Figure 3-10: City GVA as a percentage of national GVA Figures 3-12 and 3-13 contain diagrams showing the changing sectoral composition of GVA for 20,00 each of the cities in 2005. They indicate the 18,00 significance of finance, commerce and services in 16,00 Johannesburg, Tshwane and Cape Town, whereas 14,00 manufacturing is more dominant in Ekurhuleni, 12,00 Nelson Mandela Metro, and eThekwini. In 10,00 centage Msunduzi and Mangaung, services were more Per 8,00 significant, but in all cases, as might be expected, 6,00 finance and commerce were important sectors. 4,00 2,00 Growth in most cities was driven particularly by 0,00 the commercial and finance sectors, and in several City ownT Nelson cases by construction and transport as well. The Mandela shwaneT Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi consumer and property booms have been Johannesburg Cities particularly noticeable in the cities. The nine cities 3 ­ 9 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-11: GVA per capita 1996, 2001, 2004 60 000 50 000 40 000 30 000 Rands 20 000 10 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane Cities GVA per capita 1996 (Rand) 1996 GVA per capita 2001 (Rand) 2001 GVA per capita 2004 (Rand) 2004 now account for some 82,2% of the nation's GVA in finance, and Growth rates are similar to national increases, with 68,5% of its GVA in commerce. Growth rates in manufacturing some cities growing faster than the national were slower, but nevertheless positive in all nine cities, other average. Imports for production have also than Mangaung. Manufacturing growth rates of over 3% per increased ranging from 10,3% per year in Nelson year over the 2001-2004 period were experienced in all of the Mandela Bay to 17,5% in Tshwane over this Gauteng metros, with lower growth rates elsewhere. period. Both imports and exports were mainly Manufacturing growth rates picked up in Ekurhuleni and linked to manufacturing, but some cities also had Msunduzi in the 2001-2004 period compared to the 1996-2001 a significant share of imports or exports linked to period, but in most cities, manufacturing growth rates were mining16. slower than over the previous period. Despite structural changes towards the tertiary sector, the nine cities still account for some These figures do not include consumer imports, 64,8% of national GVA in manufacturing. which have increased dramatically in the past few years. Increasing exports and imports has raised Exports and imports the amount of cargo handled in some of the port The 1995-2004 period has seen a significant growth in exports cities ­ particularly eThekwini (see figure 3-14). in the six metros, with annual average growth ranging from This is boosting their economies, but also placing 12,6% in eThekwini to 21,5% in Tshwane (see table 3-3). greater pressure on existing infrastructure. Table 3-3: Annual average growth (%) in exports and imports by city, 1995-2004 Johannes- Nelson Cape Town Ekurhuleni eThekwini burg Mandela Tshwane National Imports 16,7 14,3 14,0 12,9 12,9 17,6 14,2 Exports 17,7 12,5 12,5 15,8 17,0 21,5 16,4 Source: Erasmus and Tomlinson (2005), Roodt and Hall (2005) based on Quantec STATE OF THE CITIES REPORT 2006 3 ­ 10 Figure 3-12: Changing sectoral composition of gross value added Buffalo City: Sector share of GVA 60 000 50 000 40 000 30 000 Rands 20 000 10 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 Cape Town: Sector share of GVA 40 000 000 35 000 000 30 000 000 25 000 000 20 000 000 Rands 15 000 000 10 000 000 5 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 Ekurhuleni: Sector share of GVA 20 000 000 18 000 000 16 000 000 14 000 000 12 000 000 10 000 000 Rands 8 000 000 6 000 000 4 000 000 2 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 3 ­ 11 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-12: Changing sectoral composition of gross value added (continued) eThekwini: Sector share of GVA 30 000 000 25 000 000 20 000 000 15 000 000 Rands 10 000 000 5 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 Johannesburg: Sector share of GVA 60 000 000 50 000 000 40 000 000 30 000 000 Rands 20 000 000 10 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 Mangaung: Sector share of GVA 6 000 000 5 000 000 4 000 000 3 000 000 Rands 2 000 000 1 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 STATE OF THE CITIES REPORT 2006 3 ­ 12 Msunduzi: Sector share of GVA 3 000 000 2 500 000 2 000 000 1 500 000 Rands 1 000 000 500 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 Nelson Mandela: Sector share of GVA 9 000 000 8 000 000 7 000 000 6 000 000 5 000 000 Rands 4 000 000 3 000 000 2 000 000 1 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 Tshwane: Sector share of GVA 25 000 000 20 000 000 15 000 000 Rands 10 000 000 5 000 000 0 Agriculture Mining Manufacturing Energy Construction Commerce Transport Financial Services Sectors GVA 1996 GVA 2001 GVA 2004 3 ­ 13 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-13: Sectoral composition of GVA 2004 Buffalo City Cape Town Agriculture 1% Mining 0% Agriculture 1% Mining 0% Manufacturing 19% Energy 1% Manufacturing 16% Energy 1% Construction 3% Commerce 17% Construction 3% Commerce 17% Transport 9% Financial 18% Transport 11% Finance 32% Services 32% Services 19% Ekurhuleni eThekwini Agriculture 0% Mining 2% Agriculture 1% Mining 0% Manufacturing 25% Energy 2% Manufacturing 26% Energy 2% Construction 3% Commerce 15% Construction 3% Commerce 15% Transport 15% Finance 23% Transport 14% Finance 21% Services 15% Services 18% Johannesburg Agriculture 0% Mining 1% Manufacturing 15% Energy 2% Construction 3% Commerce 18% Transport 11% Finance 33% Services 17% STATE OF THE CITIES REPORT 2006 3 ­ 14 Figure 3-13: Sectoral composition of GVA 2004 (continued) Mangaung Msunduzi Agriculture 2% Mining 0% Agriculture 2% Mining 0% Manufacturing 7% Energy 2% Manufacturing 16% Energy 2% Construction 2% Commerce 19% Construction 3% Commerce 11% Transport 14% Finance 18% Transport 12% Finance 22% Services 36% Services 32% Nelson Mandela Tshwane Agriculture 1% Mining 0% Agriculture 0% Mining 0% Manufacturing 29% Energy 1% Manufacturing 13% Energy 2% Construction 3% Commerce 15% Construction 3% Commerce 14% Transport 13% Finance 16% Transport 16% Finance 27% Services 22% Services 25% 3 ­ 15 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Table 3-4: Regional Services Council levies Labour Force Survey, but these cannot be compared to census figures, so Quantec data is % Increase used to discuss the main trends. According to RSC Levies RSC Levies in RSC Levies Quantec, economic growth in the nine cities is (R'000) (R'000) 2002/3 ­ 2002/3 2003/4 2003/4 being accompanied by a slow decline in rates of unemployment, and rises in rates of employment. Buffalo City N/A N/A N/A Cape Town 706 911 780 028 10,3 This pattern is broadly consistent with national Ekurhuleni 541 400 551 588 1,9 trends in the Labour Force Surveys17. The trend is eThekwini 423 895 435 833 2,8 similar to change in the LFS expanded Johannesburg 1 260 982 1 325 925 5,2 Mangaung N/A N/A N/A unemployment rate which also shows a decline Msunduzi N/A N/A N/A from 35,72% unemployed in 2002 to 33,31% Nelson Mandela 174 223 194 007 11,4 unemployed in 2005 (see figures in the schedule Tshwane 447 323 494 170 10,5 at the back of the book)18. Source: Stats SA Based on Quantec data, unemployment rates in Regional Services Council levies the nine cities declined from 28,2% in 2001 to Increasing regional services councils (RSC) levies ­ a tax on 26,7% in 2004, closely tracking national trends turnover and payroll ­ also provides an indicator of economic (see table 3-5 and figure 3-15). For both the nation performance in cities. All six metros increased their RSC levy and the city average, levels of unemployment were income over the 2002/3-2003/4 period, and in Cape Town, still higher in 2004 than in 1996. Unemployment Tshwane and Nelson Mandela Metro, increases were over 10% has declined in all cities other than Nelson (see table 3-4). Mandela Metro and Buffalo City, where unemployment rates rose marginally. There has Employment been an absolute decline in the numbers of Employment and unemployment figures are controversial, with unemployed between 2001 and 2004 in the nine variations between data sets. The almanac provides 2005 cities taken as a whole, mirroring national trends. employment and unemployment figures drawing from the Only the Gauteng metros and eThekwini have Table 3-5: Changing unemployment rates (1996-2004) (Quantec) Unemployed Unemployed Unemployed Unemploy- Unemploy- Unemploy- Unemployment ment rate % ment rate % ment rate % growth rate 1996 2001 2004 1996 2001 2004 2001/4 Buffalo City 67 714 98 893 105 555 29,39 38,44 39,08 (2,20) Cape Town 184 745 270 169 275 730 17,76 23,89 23,40 (0,68) Ekurhuleni 243 707 332 933 318 602 26,64 31,65 29,14 (1,46) eThekwini 273 095 368 815 366 527 24,40 29,61 28,09 (0,21) Johannesburg 292 478 389 414 366 371 22,70 26,07 23,56 (2,01) Mangaung 47 669 64 425 64 902 21,98 27,27 26,42 0,25 Msunduzi 57 602 73 481 70 930 30,22 35,10 33,12 (1,17) Nelson Mandela 94 695 133 308 140 415 28,93 36,72 36,87 1,75 Tshwane 148 331 202 899 198 982 18,97 23,88 22,32 (0,65) TOTAL 9 CITIES 1 410 036 1 934 337 1 908 014 23,17 28,29 26,75 (0,46) National 3 162 821 4 307 211 4 284 036 23,08 28,46 27,13 (0,18) Share of national 45 45 45 STATE OF THE CITIES REPORT 2006 3 ­ 16 Figure 3-14: Metric tons of cargo handled by port Although the cities have marginally less unemployment than the nation as a whole, almost 45 000 half of the unemployed live in the nine SACN 40 000 cities. In 2005, some 46,5% of national 35 000 unemployment was concentrated in cities. The equivalent figure on Quantec data for 2004 was 30 000 44,5%, similar to 1996 and 2001. In the 2005 LFS 25 000 onsT and 2004 Quantec data, unemployment rates 20 000 were lowest in Tshwane, Cape Town and 15 000 Johannesburg, and highest in Buffalo City and 10 000 Nelson Mandela Metro, where they were well 5 000 above national figures. 0 Buffalo City Cape Town eThekwini Nelson Mandela Around half of the country's employment is Cities concentrated in the nine cities. On LFS 2005 data, Metric tons of cargo handled by port (000) 1996 Metric tons of cargo handled by port (000) 2000 the cities provided 50,04% of national Metric tons of cargo handled by port (000) 2005 employment. On Quantec data for 2004 the Source: National Ports Authority equivalent figure was 45,41%, similar to figures for 2001 and 1996 (see table 3-6). Johannesburg experienced absolute declines in unemployment, while others provided the largest share of national have seen increasing numbers of unemployed. Unemployment employment at 10,32% in 2004 (Quantec) and rates in all cities remain high, but overall are marginally lower 11,79% in 2005 (LFS), while the Gauteng metros than national figures. Using 2005 LFS data, some 25,39% of accounted for 23,05% in 2004 (Quantec) (see economically active people were unemployed in the nine cities figure 3-16) and 24,9% in 2005 (LFS). Relative in total, compared to 26,7% nationally. Quantec data shows shares were similar in previous years. similar relationships, as indicated in table 3-5. Figure 3-15: Quantec unemployment rate 45 40 35 30 25 centage 20 Per 15 10 5 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Tshwane Total National (SA) Mandela City Unemployment rate % 1996 Unemployment rate % 2001 Unemployment rate % 2004 Source: Quantec 3 ­ 17 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Table 3-6: Changing employment levels (1996-2004) (Quantec) 96-01 01-04 % national % national % national 1996 2001 2004 growth growth 1996 2001 2004 TOTAL EMPLOYMENT Buffalo City 162 666 158 374 164 557 (0,53) 1,28 1,54 1,46 1,43 City of Cape Town 855 518 860 564 902 706 0,12 1,61 8,12 7,95 7,84 Ekurhuleni Metropolitan Municipality 671 098 718 884 774 773 1,39 2,53 6,37 6,64 6,73 eThekwini Municipality 846 065 876 891 938 482 0,72 2,29 8,03 8,10 8,15 Johannesburg Metropolitan Municipality 996 154 1 104 295 1 188 388 2,08 2,48 9,45 10,20 10,33 Mangaung 169 231 171 866 180 759 0,31 1,70 1,61 1,59 1,57 Msunduzi 133 021 135 873 143 223 0,43 1,77 1,26 1,26 1,24 Nelson Mandela 232 639 229 699 240 442 (0,25) 1,54 2,21 2,12 2,09 City of Tshwane Metropolitan Municipality 610 388 646 659 692 437 1,16 2,31 5,79 5,97 6,02 TOTAL 9 CITIES 4 676 781 4 903 105 5 225 768 0,95 2,15 44,37 45,29 45,41 National 10 540 899 10 825 650 11 508 464 0,53 2,06 FORMAL EMPLOYMENT Buffalo City 138 286 126 429 124 690 (1,78) (0,46) 1,66 1,56 1,50 City of Cape Town 737 166 703 447 715 505 (0,93) 0,57 8,86 8,70 8,60 eThekwini Municipality 637 720 621 971 643 245 (0,50) 1,13 7,67 7,69 7,74 Ekurhuleni Metropolitan Municipality 517 088 527 832 562 079 0,41 2,12 6,22 6,53 6,76 Johannesburg Metropolitan Municipality 771 631 835 302 891 642 1,60 2,20 9,28 10,33 10,72 Mangaung 134 342 129 561 130 931 (0,72) 0,35 1,61 1,60 1,57 Msunduzi 97 151 94 820 96 890 (0,48) 0,72 1,17 1,17 1,17 Mangaung 134 342 129 561 130 931 (0,72) 0,35 1,61 1,60 1,57 Msunduzi 97 151 94 820 96 890 (0,48) 0,72 1,17 1,17 1,17 Nelson Mandela 203 332 190 249 190 999 (1,32) 0,13 2,44 2,35 2,30 City of Tshwane Metropolitan Municipality 484 346 494 136 521 110 0,40 1,79 5,82 6,11 6,27 TOTAL 9 CITIES 3 721 062 3 723 747 3 877 091 0,01 1,35 44,73 46,05 46,62 National 8 319 461 8 085 555 8 315 612 (0,57) 0,94 INFORMAL EMPLOYMENT Buffalo City 24 381 31 946 39 867 5,55 7,66 1,10 1,17 1,25 City of Cape Town 118 352 157 117 187 201 5,83 6,01 5,33 5,73 5,86 Ekurhuleni Metropolitan Municipality 154 011 191 051 212 695 4,40 3,64 6,93 6,97 6,66 eThekwini Municipality 208 344 254 920 295 237 4,12 5,02 9,38 9,30 9,25 Johannesburg Metropolitan Municipality 224 523 268 994 296 746 3,68 3,33 10,11 9,82 9,29 Mangaung 34 889 42 304 49 828 3,93 5,61 1,57 1,54 1,56 Msunduzi 35 869 41 053 46 333 2,74 4,12 1,61 1,50 1,45 Nelson Mandela 29 308 39 450 49 442 6,12 7,82 1,32 1,44 1,55 City of Tshwane Metropolitan Municipality 126 042 152 523 171 327 3,89 3,95 5,67 5,57 5,37 TOTAL 9 CITIES 955 719 1 179 358 1 348 676 4,29 4,57 43,02 43,04 42,24 National 2 221 438 2 740 095 3 192 853 3,11 5,23 STATE OF THE CITIES REPORT 2006 3 ­ 18 Figure 3-16: Percentage of national employment 12 10 8 6 centage Per 4 2 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 1996 2001 2004 Source: Labour Force Survey, 2005 Figure 3-17: Quantec annual average growth in employment being accompanied by increases in employment 2001-2004 in the cities, employment increases are still less than economic growth rates. Employment growth 3,00 rates of the nine cities at 1,39% per year between 1996 and 2004 were lower than population 2,50 growth rates at 1,92% over the 1996-2005 period. The period since 2001 might have seen a 2,00 shift in these trends with more rapid growth in (%) employment and a slowing of population growth. 1,50 Growth of employment over the 2001-2004 Growth 1,00 period was fastest in Gauteng (with rates of 2,52% in Ekurhuleni, 2,47% in Johannesburg, and 0,50 2,3% in Tshwane), and in eThekwini, with rates of 2,28% per year. All nine cities experienced 0 employment growth rates which were faster than City ownT Nelson Mandela shwaneT verageA National in the 1996-2001 period, and all were over 1,5% Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi Johannesburg per year. Buffalo City and Nelson Mandela Metro Cities reversed previous trends towards employment decline (see figure 3-18). Compared to the 1990s when employment growth was slow, growth rates have picked up since 2001, mirroring national Figures for employment include informal trends. On Quantec data, employment grew by 2,15% per year employment. On Quantec data, employment between 2001 and 2004, compared to 0,95% per year in the growth in the formal sector was much slower than 1996-2001 period (see figure 3-17 and table 3-6). Overall overall employment growth, with growth rates of employment growth in the nine cities was slightly faster than 1,35% per year in all nine cities between 2001 national employment growth. Although economic growth is and 2004, but still faster than the 0,01% annual 3 ­ 19 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued growth in the 1996-2001 period (see figure 3-19). Only Figure 3-21, drawn from Erasmus and Tomlinson Johannesburg and Ekurhuleni experienced formal employment (2005) using Quantec data, shows that remune- growth rates of over 2% per year between 2001 and 2004, while ration levels outstripped formal employment Buffalo City declined slightly. Between 1996 and 2004, only growth, underpinning increasing levels of Tshwane, Ekurhuleni and Johannesburg experienced growth in inequality. Growth in levels of remuneration has formal employment, with all other cities declining. The been faster among skilled (clerks, service workers, employment challenge remains significant for cities. The trend craft workers) and highly skilled (managers, towards a growing informal economy, prevalent in much of professionals) occupations in almost all cities Africa, is conspicuous (see figure 3-20). other than Buffalo City (see figure 3-22). Figure 3-18: Changing total employment levels (1996-2004) 1 400 000 1 200 000 1 000 000 800 000 600 000 Employment 400 000 200 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Neslon Mandela Tshwane Figure 3-19: Changing formal employment levels (1996-2004) 1 000 000 900 000 800 000 700 000 600 000 500 000 Employment 400 000 300 000 200 000 100 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Neslon Mandela Tshwane STATE OF THE CITIES REPORT 2006 3 ­ 20 Figure 3-20: Changing informal employment levels (1996-2004) 350 000 300 000 250 000 200 000 150 000 Employment 100 000 50 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Neslon Mandela Tshwane Employment for skilled and semi-skilled formal occupations has manufacturing as the most important source of also grown more rapidly than employment for unskilled employment. Manufacturing has grown in relative occupations in most cities, and in several cities, levels of unskilled importance in Nelson Mandela Bay, Msunduzi work has declined since 1995 (see figure 3-23). The pattern in and Ekurhuleni, but it is only in Nelson Mandela Johannesburg, and to some extent, Tshwane, is different. Here Bay where the increased share of manufacturing is formal unskilled occupations have also increased at rates similar less than that of commerce. to more skilled occupations. Table 3-7 drawn from Erasmus and Tomlinson (2005) shows the population in the nine cities by levels of education in 2004. It highlights the predominantly low levels of education in the cities, with 17,9% having no schooling, only 40% having more than a Grade 9 education, and only 7% with qualifications higher than matric or Grade 12. Tshwane at 30% and Johannesburg at 27% had the largest proportion of residents with Grade 12 and higher levels of education. Less than 22% of residents of the smaller cities had matrics19. Figure 3-24 shows the composition of employment by sector, and changes between 2001 and 2005. Patterns are similar to those for GVA, but finance is less important and commerce and services are more significant in most cities. Commerce has become more important in terms of employment in all cities, reflecting the impact of the consumer boom. In the case of eThekwini, LFS 2005 figures suggest that it has outstripped 3 ­ 21 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-21: Growth in employment (place of work) and remuneration (Rand, current prices), 1995 to 2004 (Erasmus based on Quantec) Buffalo City Cape Town 240 240 220 220 200 200 100) 180 100) 180 = = 160 160 (1995 (1995 140 140 Index Index 120 120 100 100 80 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Employment Remuneration Employment Remuneration Ekurhuleni eThekwini 220 240 200 220 200 180 100) 100) 180 = 160 = 160 (1995 140 (1995 140 Index Index 120 120 100 100 80 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Employment Remuneration Employment Remuneration Johannesburg 260 240 220 200 100) = 180 (1995 160 Index 140 120 100 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Employment Remuneration STATE OF THE CITIES REPORT 2006 3 ­ 22 Figure 3-21: Growth in employment (place of work) and remuneration (Rand, current prices), 1995 to 2004 (Erasmus based on Quantec) (continued) Mangaung Msunduzi 240 240 220 220 200 200 100) 180 100) 180 = = 160 160 (1995 (1995 140 140 Index Index 120 120 100 100 80 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Employment Remuneration Employment Remuneration p Nelson Mandela Tshwane 260 240 240 220 220 200 200 100) 100) 180 = = 180 160 (1995 160 (1995 140 Index 140 Index 120 120 100 100 80 80 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Employment Remuneration Employment Remuneration 3 ­ 23 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-22: Growth in remuneration (Rand, current prices), according to skills level, 1995 to 2004 (Erasmus 2005 based on Quantec) Buffalo City Cape Town 300 300 250 250 100) = 200 100) = 200 (1995 (1995 150 150 Index Index 100 100 50 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled Ekurhuleni eThekwini 300 300 250 250 100) = 200 100) = 200 (1995 (1995 150 150 Index Index 100 100 50 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled Johannesburg 300 250 100) = 200 (1995 150 Index 100 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Hilghly skilled Skilled Semi- and unskilled STATE OF THE CITIES REPORT 2006 3 ­ 24 Figure 3-22: Growth in remuneration (Rand, current prices), according to skills level, 1995 to 2004 (Erasmus 2005 based on Quantec) (continued) Mangaung Msunduzi 300 300 250 250 100) = 200 100) = 200 (1995 (1995 150 150 Index Index 100 100 50 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled Nelson Mandela Tshwane 300 300 250 250 100) = 200 100) = 200 (1995 (1995 150 150 Index Index 100 100 50 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled 3 ­ 25 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-23: Growth in skills(levels (employed by place of work), 1995 to 2004 (Erasmus based on Quantec) ) ) Buffalo City Cape Town 115 115 110 110 100) = 105 100) = 105 (1995 (1995 100 100 Index Index 95 95 90 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled Ekurhuleni eThekwini 135 130 130 125 125 120 120 100) 100) 115 = = 115 110 (1995 110 (1995 105 Index 105 Index 100 100 95 95 90 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled Johannesburg 140 135 130 125 100) = 120 115 (1995 110 Index105 100 95 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Hilghly skilled Skilled Semi- and unskilled STATE OF THE CITIES REPORT 2006 3 ­ 26 Figure 3-23: Growth in skills levels (employed by place of work), 1995 to 2004 (Erasmus based on Quantec) (continued) Mangaung Msunduzi 115 130 125 110 120 100) 115 = 105 100) = 110 (1995 (1995 100 105 Index Index 100 95 95 90 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled Nelson Mandela Tshwane 120 130 125 115 120 110 100) 100) 115 = = 105 110 (1995 (1995 105 Index100 Index 100 95 95 90 90 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Years Years Hilghly skilled Skilled Semi- and unskilled Hilghly skilled Skilled Semi- and unskilled 3 ­ 27 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-24: Composition of employment by sector Buffalo City 30 25 20 (%) share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 Cape Town 30 25 20 (%) share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 Ekurhuleni 30 25 20 (%) share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 STATE OF THE CITIES REPORT 2006 3 ­ 28 eThekwini 30 25 20 (%) share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 Johannesburg 30 25 20 (%) share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 Mangaung 35 30 25 (%) 20 share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 3 ­ 29 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-24: Composition of employment by sector Msunduzi 35 30 25 (%) 20 share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 Nelson Mandela 35 30 25 (%) 20 share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 Tshwane 35 30 25 (%) 20 share 15 Sectoral 10 5 0 Agriculture, Mining and Manufacturing Electricity, gas Construction Wholesale and Transport, Financial Community, Private hunting, forestry quarrying and water retail trade storage intermediation social households and fishing supply and insurance, and personal communication real estate services and and business government services Sectors 2001 2005 STATE OF THE CITIES REPORT 2006 3 ­ 30 Table 3-7: Total population by highest level of education, 2004 GET FET HET Other No Cert/Dip Post Cert/Dip school- Grd 10/ Grd 11/ Grd 12/ with gradu- without City ing ABET 1 ABET 2 ABET 3 ABET 4 NTCI NTCII NTCIII matric Degree ate matric Total Buffalo City % 16,2 11,0 8,1 12,2 15,1 8,9 6,3 15,4 4,5 1,2 0,5 0,5 100,0 Cape Town % 15,5 8,9 7,9 11,8 16,1 9,9 5,0 16,6 4,4 2,0 1,3 0,5 100,0 Ekurhuleni % 20,5 9,5 8,0 10,5 12,6 9,0 6,2 16,9 4,2 1,3 0,6 0,6 100,0 eThekwini % 18,4 9,9 8,1 10,3 13,1 8,6 6,7 18,3 4,0 1,4 0,7 0,5 100,0 Johannesburg % 18,3 8,2 7,2 10,0 13,0 8,8 6,5 18,6 4,9 2,4 1,6 0,5 100,0 Mangaung % 18,7 11,9 10,1 12,9 13,3 7,2 5,4 14,5 3,6 1,4 0,7 0,3 100,0 Msunduzi % 18,6 11,2 8,8 11,1 13,6 8,4 6,6 16,0 3,5 1,3 0,7 0,4 100,0 Nelson Mandela% 14,5 9,6 7,8 12,0 15,6 10,5 6,4 17,5 3,7 1,3 0,6 0,4 100,0 Tshwane % 18,5 9,2 7,6 9,6 11,5 7,8 5,1 19,6 5,8 2,9 1,8 0,5 100,0 Average: 9 cities 17,9 9,4 7,9 10,8 13,6 8,9 6,0 17,6 4,4 1,9 1,1 0,5 100,0 Total 59,6 32,5 7,4 0,5 100,0 Source: Quantec Table 3-8: Total returns on property (national) Property 2001 2002 2003 2004 The period since the last State of Cities Report has Retail 13,2 11,0 17,3 26,1 seen strong growth in the property market. Table Offices 7,8 5,0 8,9 16,7 3-8 shows sharp increases in returns on property in Industrial 7,5 8,8 17,7 24,4 2004. Retail property has seen particularly strong Other 9,6 22,0 24,0 27,5 All Property 10,5 9,6 15,3 23,4 growth, following the consumer boom. Investors Source: Sapix/IPD have been exploring areas such as township shopping centres, retail facilities in newly developing residential areas, out-of-town shopping Figure 3-25: Slowdown in industrial vacancies centres, and redeveloping well-positioned retail 18 premises in densifying areas. Industrial property has 16 also seen increasing returns, as manufacturing growth has led to a growing uptake of industrial 14 property and declining vacancies (see figure 3-25). 12 2 10 After a period of rapid growth, the office property Rand/m 8 market is shifting back to an equilibrium 6 scenario20. This is the result of higher take-up rates 4 and the stabilisation of supply. The banking sector 2 is also taking a more cautious view of new developments, which should play a role in 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 ensuring that the sector remains in equilibrium. Years This is also due to a rise in building costs, which is Vacancy rate Gross rent Net operating profit Net income eroding developer profits and slowing the pace of Source: Viruly new developments. 3 ­ 31 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-26: Inner city offices ­ vacancy rate 30 25 20 cent 15 Per 10 5 0 March March March March March March March March March March March March March March March March March 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1990 Johannesburg Durban Cape Town Pretoria Vacancy rates for all A-grade21 office properties have declined, to Information on office rentals (cost per metre2 of their lowest levels in five years. Although A-grade property in space) shows that office rentals in inner cities have inner cities is experiencing declining vacancy rates, these increased since 2002, with the exception of vacancy rates are still higher than in decentralised areas. Cape Johannesburg, but patterns are more mixed in Town has seen a particularly sharp decline in inner city A-grade22 decentralised areas. Inner city rentals are office vacancies, reflecting regeneration efforts in the core. nevertheless lower than in decentralised areas, Vacancy rates in B-grade offices are far higher than in A-grade and in some cities, A-grade inner city rentals are buildings in all cities, but in all cities other than Johannesburg, lower than B-grade rents in decentralised areas vacancies in B-grade offices have been declining as well (see (see figure 3-27). figure 3-26). Figure 3-27: Decentralised offices ­ vacancy rate 18 16 14 12 10 cent Per 8 6 4 2 0 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q3 Q3 Q3 Q3 Q3 Q3 Q3 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Johannesburg Durban Cape Town Pretoria STATE OF THE CITIES REPORT 2006 3 ­ 32 The property boom can also be seen from the rising value of passed. Most cities have experienced growth in building plans passed since 2002 (see figures 3-28, 3-29, 3-30). commercial building plans passed. There are These figures should be interpreted cautiously as investment in sharp increases in industrial buildings plans passed construction is notoriously lumpy, and construction can lag far in Ekurhuleni and Tshwane. behind planning permission. Growth in building plans passed has been greatest in Johannesburg and Cape Town, and to a Significant investment has gone into the lesser extent in Tshwane and eThekwini. The residential sector residential property market, and the average accounts for a substantial part of the growth in building plans house price has increased substantially in all cities passed, particularly in Johannesburg and Cape Town. Patterns where data is available. Average nominal property are slightly different for commercial and industrial building plans prices increased between 2002 and 2005 by 82% Figure 3-28: Value of building plans passed 9 000 000 8 000 000 7 000 000 6 000 000 5 000 000 Rands 4 000 000 3 000 000 2 000 000 1 000 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Value of building plans passed 2002 Value of building plans passed 2003 Value of building plans passed 2004 Figure 3-29: Value of commercial building plans passed 1 200 000 1 000 000 800 000 600 000 Rands 400 000 200 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Value of commercial building plans passed ('000) 2002 Value of commercial building plans passed ('000) 2003 Value of commercial building plans passed ('000) 2003 3 ­ 33 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-30: Value of industrial building plans passed 3 000 000 2 500 000 2 000 000 1 500 000 Rands 1 000 000 500 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Value of industrial building plans passed ('000) 2002 Value of industrial building plans passed ('000) 2003 Value of industrial building plans passed ('000) 2003 Figure 3-31: Average nominal house prices, 2002-2005 to 125%, with greater increases in cities outside of Gauteng and Cape Town. Prices were nevertheless 900 still highest in Cape Town and Tshwane in 2005 800 (see figure 3-31). 700 The value of building plans passed is as much a 600 reflection of economic growth as an indicator of 500 private sector confidence in the future of the thousands 400 municipality, and could also be interpreted as an Rand300 indication of good governance. 200 The property boom is reflected in increasing 100 property tax revenues for municipalities. Property 0 2002 2003 2004 2005 tax revenues per capita have increased in all cities Years from 2001/2 to 2004/5 (see figure 3-32). GVA Cape Town Ekurhuleni eThekwini Johannesburg and employment in construction have also risen. Mangaung Nelson Mandela Tshwane But rising construction costs, shown in figure 3-33, property prices and rentals impose greater costs on residents and business. Viruly23 reports a major residential stock shortage for housing worth less than R400 000. STATE OF THE CITIES REPORT 2006 3 ­ 34 Figure 3-32: Total property tax revenue per capita 900 800 700 600 500 Rands 400 300 200 100 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Total property tax revenue per capita 2001/2002 Total property tax revenue per capita 2004/2005 Source: Treasury Local Government Database Figure 3-33: Building cost index (percentage change) 25 20 15 10 change % 5 0 -5 Q1/93 Q2/93 Q3/93 Q4/93 Q1/94 Q2/94 Q3/94 Q4/94 Q1/95 Q2/95 Q3/95 Q4/95 Q1/96 Q2/96 Q3/96 Q4/96 Q1/97 Q2/97 Q3/97 Q4/97 Q1/98 Q2/98 Q3/98 Q4/98 Q1/99 Q2/99 Q3/99 Q4/99 Q1/00 Q2/00 Q3/00 Q4/00 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Source: Bureau of Economic Research 3 ­ 35 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued The inclusive city The following section therefore does two things: it A number of indicators can be used to measure the extent to looks at key indicators for inclusivity, but at the which all residents are able to share in the social benefits of urban same time draws out the sustainability impacts of life. These include residents' access to basic urban services, levels these trends. This section uses the following of health and education24, patterns of wealth distribution, and indicators to examine inclusivity, and in some the quality of life offered by cities. In this way city leaders can help instances sustainability, of the nine SACN cities: to structure residents' material, psychological and financial Water, sanitation, and electricity provision; refuse commitment to the city. These factors, in turn, contribute to the removal; housing supply; social and community social and environmental sustainability the city. services; wealth distribution; human development; HIV/Aids; and quality of life. Figure 3-34: Number of households with access to water in dwelling 700 000 600 000 500 000 400 000 households of 300 000 Number 200 000 100 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 1996 2001 2004 Figure 3-35: Percentage of households with access to water in dwelling 100 80 60 households of 40 centage Per 20 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane National City 1996 2001 2004 STATE OF THE CITIES REPORT 2006 3 ­ 36 Figure 3-36: Number of households without access to water on site 250 000 200 000 150 000 households of 100 000 Number 50 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 1996 2001 2004 Water below the corresponding 1996 shares in all cities Between 2001 and 2004, an increasing number of households except Mangaung, which is notably different. The gained access to water connections in their houses in all nine percentage of households without water on site SACN cities (see figure 3-34). Apart from Buffalo City, the number declined between 2001 and 2004 in all cities of water connections into dwellings exceeded the 1996 figures in except Msunduzi. However, there has been all the cities. At the same time, the number of households without progress in reducing the percentage backlog in all running water on site (either in yards or directly in dwellings) has cities between 1996 and 2004, which deviates decreased in all cities except Msunduzi during the 2001-2004 slightly from the message portrayed the numerical period (see figures 3-36). However, despite this progress, the backlog. backlogs in eThekwini, Nelson Mandela Bay and Msunduzi still remain higher than their 1996 levels. Access to and use of water is also an indicator of environmental sustainability, particularly in the Given the substantive variance in the population sizes and numbers context of water scarcity in South Africa. As figures of households across the cities, the share of the backlog in 2004 is 3-36 and 3-37 show, large numbers of urban also disproportionately distributed across the cities. Some 37% of residents do not have access to clean water within households without access to an on-site water connection are in or in close proximity to their homes. This indicator eThekwini, which is the second most populous city after however is historically skewed in that black urban Johannesburg. A further 12% of the backlog is found in Tshwane, residents previously had limited access to water with the remainder spread evenly across the other seven cities. resources, while white urban residents have had generous access and may have used excessive A different trend in access to water between 1996 and 2004 amounts of water. An increase in water use per emerges from the percentages of households with water in their capita may reflect a greater degree of access to dwelling and without water on site (see figures 3-35 and 3-37). water by previously disadvantaged communities, The percentage of households with water has increased in all which is a positive sustainability indicator. cities except eThekwini, where the figure remains virtually unchanged. While this is consistent with the numerical backlogs, The availability of water within dwellings has the share of households with water in their dwellings remains increased for all cities between 2001 and 2004, 3 ­ 37 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued which contributes positively to the health and well being of the Sanitation urban population However, in almost all of the cities 40% of Figures for the number of households with a households do not have water in their dwelling which ventilated improved pit (VIP) latrine or less undermines sustainability. Communal taps have a number of provide an indication of sanitation conditions. negative impacts such as water waste, time taken to collect Figure 3-38 shows that the absolute number of water, and ill-health as a result of reduced water use because of households with access to a VIP latrine or less has difficulties with collection. decreased between 2001 and 2004 for all cities except Msunduzi and eThekwini. Current water consumption in cities is likely to increase because of economic and population growth and is unsustainable in the The percentage backlog for sanitation shown in long-term. figure 3-39 shows a similar declining trend in all Figure 3-37: Percentage of households without access to water on site 50 40 30 households of 20 centage Per 10 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane National City 1996 2001 2004 Figure 3-38: Number of households with access to VIP toilet or less 350 000 300 000 250 000 200 000 households of 150 000 Number 100 000 50 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 2001 2004 STATE OF THE CITIES REPORT 2006 3 ­ 38 Figure 3-39: Percentage of households with access to VIP toilet or less 60 50 40 households of 30 centage 20 Per 10 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane National City 2001 2004 Figure 3-40: Number of households not using electricity for lighting 200 000 180 000 160 000 140 000 120 000 households 100 000 of 80 000 Number 60 000 40 000 20 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 1996 2001 2004 cities except Msunduzi and eThekwini. Only Msunduzi continues water quality ­ both in rivers and underground ­ to have a greater share of households with a VIP latrine or less in and on pollution levels. relation to the national average. Electricity The number of households with very poor sanitation has Even though improved access to electricity decreased in seven of the nine cities. Mangaung, eThekwini and increases resource pressure and the 'ecological Msunduzi still have one in three households without adequate footprints' of cities as they draw electricity from access to sanitation. Poor sanitation has serious implications for further and further away, formal service provision the sustainability of cities and the quality of natural water bodies. is more sustainable than no service provision. The absence of adequate sanitation impacts on health, and 3 ­ 39 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued An absence of electricity often means that residents are forced to has different cost implications for household use wood and paraffin for cooking and heating. This causes members, with electricity for lighting generally localised outdoor air pollution and indoor air pollution with its cheaper than for cooking or heating. Preferences associated health risks. But the provision of electricity to for certain fuel types and the household's ability to households does not necessarily mean that households will pay for electrical appliances also play a critical abandon other types of fuel. Electricity is relatively expensive and role. Given that poor families are likely to rely on sometimes unreliable particularly if there are frequent power a variety of fuels and switch from one to another, outages. this analysis looks only at electricity for lighting, because this is relatively affordable and does not Households will make strategic decisions about using electricity require large initial investments. for lighting, cooking and heating. Each of these different uses Figure 3-41: Percentage of households not using electricity for lighting 60 50 40 households of 30 centage 20 Per 10 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Tshwane All nine cities National Mandela City 1996 2001 2004 Figure 3-42: Number of households without adequate refuse removal (adequate = 1/week collection) 250 000 200 000 150 000 households of 100 000 Number 50 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 1996 2001 2004 STATE OF THE CITIES REPORT 2006 3 ­ 40 Figure 3-40 indicates that there has been a considerable reduction A different pattern emerges from analysing the in the number of households not using electricity for lighting percentage of households without adequate refuse between 1996 and 2004. While the 2004 State of the Cities removal in each city (see figure 3-43). Seven of the Report showed an upward trend for both the numbers of cities appear to have experienced improvements in households with and without electricity for lighting between 1996 addressing the percentage backlog between 1996 and 2001, this trend changed in the 2001-2004 period. The and 2004, while Johannesburg remains virtually diminishing backlog has meant that the proportion of households unchanged and Nelson Mandela Metro has receiving this service is beginning to improve. By 2004, 88% of encountered a significant rise in the backlog. The households in the SACN cities were using electricity for lighting, share of households that do not receive regular compared to 78% in 1996. In terms of the backlog, sizable refuse removal in both Msunduzi and Buffalo City improvements appear to have been made in reducing the remains high in spite of some improvement over numbers not using electricity for lighting in both Mangaung and the period. Nelson Mandela Bay, Tshwane and Cape Town. eThekwini are positioned slightly above the average percentage backlog for the nine cities. The percentage of households that do not use electricity for Comparing the nine cities to the national average lighting (see figure 3-41) is consistent with the pattern shown in reveals that the cities ­ even those with the the numerical backlog. This indicates progress across each of the greatest backlog ­ are comparably better off in nine cities. Mangaung, Buffalo City and Cape Town appear to terms of refuse collection than the country as a have made significant gains over the interval. Only Buffalo City whole, a situation that can largely be ascribed to has a greater share of households without electricity for lighting the higher levels of deprivation that persists in rural compared to the national average, which reaffirms that city areas, especially in the former homeland areas. residents generally experience less deprivation in the residential domain compared to the South African average25. Housing The number of households with access to formal Refuse removal housing in all SACN cities has continued to The number of households not receiving a municipal waste demonstrate a rising trend between 2001 and collection service at least once a week in the SACN cities increased 2004 (table 3-9). In common with the 1996-2001 by 90 073 between 2001 and 2004 (figure 3-42), representing an figures, it is clear that progress towards beating the increase of 13,3% and a reversal from the declining trend housing backlog has not been uniformly achieved. documented between 1996 and 200126. With an increase of 105 At the aggregate level, there was an increase of 855 households, eThekwini seems to account for the largest 82 373 households (or 8,1%) without formal increase in those without an adequate service, followed by housing between 2001 and 2004. The absolute Johannesburg and Nelson Mandela Bay, with increases of 36 602 increase in the number of households gaining and 26 660 respectively. For Johannesburg and Nelson Mandela access in the 2001-2004 period (approximately Bay this represents an apparent continuation of a trend observed 237 000) therefore exceeds the increase in the between 1996 and 2001. This has serious implications for backlog. The annual rate of change in the backlog environmental sustainability as waste and pollution have negative grew slightly faster than the annual rate of change health impacts and compromise the environmental quality of in provision (2,7% versus 2,3% per year neighbourhoods. For eThekwini, the countervailing directional respectively) (see figure 3-44). shifts for the two periods suggest something amiss with the figures. Despite these reversals, there have been improvements in At the city-level, the pattern is again more textured. the number of households with adequate refuse removal in Johannesburg, eThekwini, Buffalo City, Msunduzi, Mangaung, Cape Town and Ekurhuleni27. and Nelson Mandela Bay reflect the aggregate 3 ­ 41 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued picture, with a consistent absolute increase in the number of A key issue that gets subsumed in the general households both with and without formal housing. Of these, the discussion on changing patterns of access to percentage change in the numbers without formal housing has services in the cities is that of quality. Key policy accelerated in Msunduzi, eThekwini and Nelson Mandela Metro in strategies, such as the Reconstruction and the 2001-2004 period compared to the 1996-2001. In Development Programme and the Programme of Johannesburg and Buffalo City, the backlog has worsened, but Action and the Accelerated and Shared Growth there has been a slowdown in the rate at which the backlog is Initiative of South Africa (Asgi-SA), emphasise growing. Despite an increase in backlog between 1996 and 2001 numerical, time-bound targets and tend to ignore in Cape Town, Ekurhuleni, Tshwane and Mangaung, there are questions of quality. now signs that the backlog has begun to shrink. Table 3-9: Change in access to formal housing, 1996-2004 (numbers and percentages) Number of hsh without Number of hsh with % change in % change in formal shelter formal shelter number of hsh number of hsh without formal with formal housing housing 2004 2001 1996 2004 2001 1996 2001-04 1996-2001 2001-04 1996-2001 Buffalo City 60 006 54 647 42 063 148 218 120 464 99 074 9,81% 29,92% 23,04% 21,59% Cape Town 136 623 142 983 125 233 642 197 599 745 516 867 (4,45%) 14,17% 7,08% 16,03% Ekurhuleni 200 177 213 091 156 283 559 369 521 385 376 893 (6,06%) 36,35% 7,29% 38,34% eThekwini 213 465 150 390 139 801 591 712 572 746 452 339 41,94% 7,57% 3,31% 26,62% Johannesburg 246 845 212 408 155 459 780 091 780 017 561 856 16,21% 36,63% 0,01% 38,83% Mangaung 19 314 43 811 34 747 182 817 132 668 108 405 (55,92%) 26,09% 37,80% 22,38% Msunduzi 35 994 16 321 10 102 97 228 90 110 82 849 120,54% 61,56% 7,90% 8,76% Nelson Mandela 66 416 59 795 60 673 218 882 196 148 160 784 11,07% (1,45%) 11,59% 21,99% Tshwane 124 662 129 688 82 582 453 177 423 086 337 609 (3,88%) 57,04% 7,11% 25,32% Total of 9 cities 1 105 507 1 023 134 806 943 .. 3 436 369 2 696 676 8,05% 26,79% 6,90% 27,43% Figure 3-43: Percentage of households without adequate refuse removal (adequate = 1/week collection) 50 40 30 households of 20 centage Per 10 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Tshwane All nine cities National Mandela City 1996 2004 STATE OF THE CITIES REPORT 2006 3 ­ 42 Figure 3-44: Annual percentage change in households with and without formal shelter, 2001-2004 50 40 30 20 households of 10 centage 0 Per -10 -20 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane All nine cities City Annual % change in households without formal shelter 2001-2004 Annual % change in households with formal shelter 2001-2004 Social and community services ownership of household durable goods. It is used Generally, in all nine SACN cities there has been a small as a measure of deprivation in the domain of the improvement in access to social and economic services such as living environment. In the absence of updated clinics, libraries and parks and a decrease in access to sports income and expenditure data at the city level, an fields (see figure 3-45). Nevertheless, the provision of these examination of LSMs helps to illustrate the facilities is still low. changing nature and distribution of wealth in the SACN cities. The LSM segments households into Wealth distribution ten categories, with LSM1 being the most The Living Standard Measure (LSM) is a composite index deprived and LSM10 being the least deprived. consisting primarily of a set of indicators relating to the Figure 3-45: Access to facilities, 2005 0,40 0,35 0,30 people 0,25 000 10 0,20 per 0,15 Number 0,10 0,5 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Libraries Parks Sports fields 3 ­ 43 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Between 2002 and 2004, there was a clear decline in living standards in Nelson Mandela Metro, Buffalo City, Mangaung and Sizing up inequality ­ Gini coefficients or Msunduzi, with a downward shift from LSMs 5-10 into the lower living standard measures? LSM categories (see table 3-10). This was especially pronounced The Gini coefficient is the most widely-used in Buffalo City and Msunduzi. eThekwini shows a similar trend, summary statistic of income inequality. It with a reduction in LSMs 3-10 and a sizable increase in the lowest ranges from 0, which signifies perfect equality category. The changes emerging from the remaining SACN cities where every household has the same income, to provide some evidence of a bifurcation, with a crowding out of 1, which signifies absolute concentration (where households from the middle living standards categories towards one household earns all the income and other the outer ranges. In Johannesburg, there appears to have been a households earn nothing). National level change in the Gini co-efficient between 2001 reduction in the share of households falling into the middle LSM and 2004 was estimated from Van der Berg et categories 3-6, with a small gain in LSMs 7-8 and more al (2005). This rate of change was applied to substantive increase in the uppermost LSMs. There has also been 2001 Gini coefficients for the cities to arrive at a small increase of those in the lowest LSMs 1-2. Cape Town estimates for 2004. shows very little change between the two years, with modest losses to the middle LSMs and small gains in the lowest and The Living Standards Measure (LSM) was developed by the South African Advertising highest LSMs. Ekurhuleni follows a similar pattern, but with a Research Foundation (SAARF) in 1988/89 by more notable move out of the middle bands into the lowest LSM combining a set of variables from SAARF's All category. Tshwane also manifests a notable move out of the Media and Products Survey (AMPS). The LSM is middle bands, but an increase in the higher LSM categories. a measure of wealth, premised on standard of Figure 3-46 shows the percentage of households in each of the living rather than income, as is the case with nine cities that fall into LSM bands 1-5 in both 2002 and 2004. the Gini coefficient. The current version of the measure is a composite index of 29 variables, Again, the declining living standards in eThekwini, Nelson which uses criteria such as ownership of Mandela Bay, Buffalo City, Mangaung and Msunduzi over the household consumer durables and degree of period are evident. urbanisation to segment households into ten relatively homogeneous living standards The household Gini coefficients for the SACN cities suggest that categories (or bands). This ranges from LSM there has been a small reduction in levels of inequality in the band 1 at the bottom, which includes households that are most deprived in terms of SACN cities between 2001 and 2005 (see figure 3-47). This their living environment, to LSM band 10 at the top, containing households that are least Table 3-10: Changes in the percentage of households deprived. grouped in living standard measure (LSM) categories, 2002-2004 Source: Van der Berg, S., Burger, R., Louw, M. Yu, D. (2005) Trends in poverty and inequality since the LSM1-2 LSM3-4 LSM5-6 LSM7-8 LSM9-10 political transition. Stellenbosch Economic Working Papers: 1/2005. Buffalo City 29,57% 7,74% (26,95%) (9,11%) (5,01%) Cape Town 1,04% (0,80%) (1,32%) (0,37%) 1,83% Ekurhuleni 6,29% (10,16%) (2,65%) (1,50%) 3,22% positive development should be tempered by the eThekwini 15,32% (1,72%) (3,36%) (6,23%) (6,22%) Johannesburg 2,18% (4,98%) (11,08%) 0,62% 10,27% fact that inequality in the cities remains Mangaung 5,00% 0,25% 2,40% (7,16%) (1,12%) dramatically high. South African cities continue to Msunduzi 29,02% 3,30% (27,21%) (10,45%) (2,58%) have inequality measures similar to some of the Nelson Mandela 5,67% 4,29% (3,71%) (2,57%) (5,31%) world's most unequal societies. Even in Cape Tshwane 3,52% (1,21%) (6,87%) 1,38% 4,00% Town, which has the lowest Gini coefficient of the STATE OF THE CITIES REPORT 2006 3 ­ 44 Figure 3-46: Percentage of households in the five most deprived LSM categories, 2002 and 2004 80 70 60 50 households of 40 30 centage Per 20 10 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City LSM 1-5 (2002) LSM 1-5 (2004) Figure 3-47: Household Gini coefficient (PDG method), 2001-2005 0,80 0,75 0,70 coefficient Gini 0,65 0,60 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane National City 2001 2005 SACN cities, levels of inequality are still comparatively high. The Gini coefficient is a measure of inequality in picture of inequality at the city level approximates that of the income whereas the LSM is an indicator of provincial and national level.28 This worryingly high level of inequality in the living environment as gauged by inequality points to an urgent need to address equity concerns asset ownership. The two do not necessarily point and implement poverty reduction strategies. This presents a in the same direction. For instance, a wealthy serious challenge for city planners and policymakers hoping to entrepreneur may decide to live a more austere realise the vision of inclusive cities in South Africa. existence, without a dishwasher, DVD player, M- Net subscription or television. Conversely, a The apparently divergent trends in the Gini coefficient and the pensioner with a much lower income may decide LSMs may be partly ascribed to methodological differences: the to invest in appliances or other modern comforts, 3 ­ 45 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued either by drawing on her savings or buying on hire purchase. For Human development this reason, the two measures describe different kinds of The human development index (HDI) is a deprivation. Evidence of rising household debt levels over the composite index of economic and social past few years may also explain the differences in the trends, wellbeing based on life expectancy, educational since the relationship between household income and assets attainment and a decent standard of living. owned may weaken as households increasingly spend beyond The index is measured on a scale of 0 to 1, with their means. Migration patterns in the nine cities may also 0 being the lowest level of development and 1 the influence the comparability of the measures. highest level. An HDI value of between 1 and 0,8 is regarded as a high level of human development; a value of between 0,799 and 0,5 is regarded as a medium level of human Figure 3-48: Human development index, 2005 development, and a value of between 0,499 and 0 as a low level of human development. 0,75 Figure 3-48 shows the HDI values for the nine 0,70 score SACN cities in 2005. While all cities would be Index classified as having medium levels of human 0,65 development, there are noteworthy differences, ranging from a high of 0,74 in Cape 0,60 Development Town to 0,64 for Buffalo City. Only Cape Town, Tshwane, Johannesburg and Ekurhuleni fall above 0,55 Human the average human development score of 0,69. This is broadly consistent with provincial HDI 0,50 trends between 1990 and 2003, with Gauteng City ownT cities Nelson Province and the Western Cape having higher Mandela shwaneT National nine Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi levels of human development29. eThekwini and Johannesburg All Cities Figure 3-49: Satisfaction with quality of life, 2002-2005 80 60 satisfied 40 centage Per 20 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane All nine cities City 2002-2003 2004-2005 2005 STATE OF THE CITIES REPORT 2006 3 ­ 46 Nelson Mandela Bay, both with scores of 0,68, fall slightly short Johannesburg, eThekwini and Cape Town of the average, while the smaller cities of Buffalo City, Mangaung approximate the SACN cities average. and Msunduzi demonstrate a more pronounced human development gap. Because most of the cities have not analysed quality of life over an extended period, it is not HIV/Aids possible to compare whether residents have Health indicators are a cause for concern. As indicated in figure becoming increasingly more or less satisfied over 3-5, most of the SACN cities since 1996. Inter-city inequality in time. Results from eThekwini and Johannesburg, health is stark, with the prevalence rate in Msunduzi estimated however indicate that the levels of satisfaction at 3.5 times higher than Cape Town in 2004. However, with the have remained rather static. In Johannesburg they spread of the disease, this ratio between the city with the highest have declined marginally over the past couple of HIV and Aids prevalence rate and the lowest has narrowed over years. The increasing trend derived for eThekwini time, from 6.9 in 1996 to 4,3 in 2001 and finally to 3.5 in 2004. should be interpreted with caution given that they Of the nine SACN cities, the HIV prevalence rates in Msunduzi, are derived from two different surveys. eThekwini, Mangaung, Ekurhuleni and Johannesburg have remained persistently higher than average since 1996, whereas Presenting information at the aggregate city level the prevalence rates in both Cape Town and Nelson Mandela masks significant differences that exist within Bay have been consistently below average. cities, particularly with respect to race and spatial location. Quality of life In the two years since the release of the State of the Cities Report 2004, there has been an interest in producing quality of life studies at the municipal level. These are important instruments helping municipal decision makers get a better understanding of their residents. eThekwini has a long-standing quality of life research programme conducted on an annual basis since 1998. Buffalo City conducted a study in 2001, while the City of Johannesburg commissioned Residents Satisfaction Surveys in both 2003 and 2004. A quality of life study was conducted in Msunduzi during the 2005/06 financial year and the data is currently being analysed. Combining the information from these municipal studies with the results of the HSRC's 2005 South African Social Attitudes Survey (SASAS) presents some interesting preliminary insights about perceived quality of life in the SACN cities (see figure 3-49). Overall, 58% of the residents of the nine SACN cities appear to be satisfied with their quality of life. In keeping with the broad finding of persisting inequalities, residents of Msunduzi, Ekurhuleni and Buffalo City remain more than 15 percent below the average quality of life perceived in the nine cities. Residents of Mangaung, Tshwane and Nelson Mandela Bay are relatively more satisfied with the quality of their lives. 3 ­ 47 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Understanding the household budget Both municipalities and national government have made enormous strides in rolling out various subsidies to the poorest urban residents in the form of housing, transport and free municipal services. But have these subsidies really helped improve the lives of the poor? In trying to answer this question, the household budgets of six household income-groups have been analysed. Table A: Household income groups hh group hh income R/month Very poor 823 Poor 1 647 Lower middle 2 531 Medium 6 507 Medium high 15 867 High 34 012 Note: These household groups are derived from work done by the City of Johannesburg. Assume that each of these households receives a package of services, depending on that household's location in the city. Table B: Indicative package of services provided to household groups in a typical city Household group Municipal services Assumed housing Assumed transport Very poor Water supply on site, using 6kl/month Access to 'Peoples Housing No access to bus or train service; or less) waterborne sanitation, gravel Process' with serviced site and reliant on minibus taxis. road, electricity with prepaid meter personal investment in an informal Fare R0,50/passenger km. (using 50kWh/month or less), weekly dwelling. Capital cost R16 000 for 1 return trip per day for 15 km solid waste collection and access to serviced plot and R3 000 for top commuting distance municipal public services structure Poor As above but with water use at Typical 'RDP' housing package: No access to bus or train service; 12 kl/month and electricity use own plot of about 200 sq metres reliant on minibus taxis. Fare R0,50/ at 350 kWh/month with 40 sq metre formal dwelling. passenger km. 1 return trip per day Capital cost R38 000 for 15 km commuting distance Lower middle As above but with paved road and High density housing unit. Capital Access to bus. Cost R0,35/passenger water use at 25 kl/month and cost R76 000 km. 1,5 return trip per day for 15 km electricity use at 780 kWh/month commuting distance Medium As above but with paved road and Formal housing unit valued at Access to bus. Fare R0,35/passenger water use at 25 kl/month and R150 000 km. 1,5 return trips per day for 15 km electricity use at 860 kWh/month commuting distance Medium high As above but with paved road and Formal housing unit valued at Use of small private car. Cost R2,00 water use at 35 kl/month and R500 000 per passenger km. 1.5 return trips per electricity use at 1 100 kWh/month day for 15 km commuting distance High As above but with paved road and Formal housing unit valued at Use of large private car. Cost R2,50 water use at 60 kl/month and R1 000 000 per passenger km. 2 return trips per electricity use at 1 600 kWh/month day for 15 km commuting distance Note: 1. Various assumptions have been made about the location of particular households in a typical city. For the purpose of this analysis, it has been assumed that very poor households are located on the urban periphery, far away from economic opportunities, municipal bus lines or commuter rail stations. This is not always the case. Locations on the urban periphery may be close to job opportunities, given patterns of urban dispersion and the emergence of new 'edge cities'. Similarly many of the poorest households can be found in overcrowded, deteriorating inner city flats. These residents might have lower transport requirements, do not benefit from any housing subsidies, and may not be able to receive free municipal services such as water and electricity. 2. Water and sanitation consumption figures are taken from Johannesburg case studies. High electricity consumption by the poor is notable. STATE OF THE CITIES REPORT 2006 3 ­ 48 Understanding the household budget Table C: Total costs incurred in providing the service R/hh/month Municipal services Housing Transport Total cost Very poor 156 279 375 810 Poor 394 424 375 1,192 Lower middle 620 848 788 2 255 Medium 741 1 673 788 3 202 Medium high 892 5 578 2 250 8 720 High 1 305 11 157 3 750 16 212 Note: 1. These costs include cost incurred by the municipality, transport operator and household (in the case of private sources of finance for housing and operating a private vehicle) 2. The actual cost of the municipal services package could be much higher if municipal overhead costs were allocated proportionally to this group. In fact the assumption is made that overheads are covered by other consumer groups in a city. Figure A: Cost of a package of municipally influenced services 3 500 3 000 2 500 2 000 (R/h/h/month) 1 500 Cost 1 000 500 0 Very poor Poor Lower middle Medium Transport Housing Municipal services Based on the existing subsidy arrangements, it is possible to estimate the amount of subsidy allocated to each household group. This is based on the following assumptions: · Water supply is charged on a rising block tariff basis with a zero charge for the first 6 kl/month and with a tariff below cost for the second block (up to 12 kl/month). · Electricity is charged at a fixed rate per kWh with the first 50 kWh free to those using below 800kWk/month. · Sanitation and solid waste services are charged on the basis of property value with a cut-off at R50 000 below which the charge is zero and with a 'rising block' charge for higher value properties. · Roads and municipal public services are paid for via property rates with the rate being zero for properties valued at below R50 000. · The housing subsidy is R38 000 and is accessed progressively in the case of the People's Housing Process. · The bus subsidy is equal to R0,35 per passenger km, half the cost of providing the service. · There is no taxi subsidy, because the taxi re-capitalisation system not yet functional. 3 ­ 49 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Understanding the household budget Based on these assumptions the level of subsidy per household group is as follows: Table D: Calculated level of subsidy made available per household per month Municipal services Housing Transport Total Very poor 156 179 ­ 335 Poor 170 424 ­ 594 Lower middle 62 424 394 880 Medium 0 ­ 394 394 Medium high 0 ­ ­ 0 High 0 ­ ­ 0 Note: In the case of housing subsidies the capital amounts have been annualised (assuming payments at 12% interest over a 20 year period). Figure B: Levels of subsidy per household 3 500 3 000 2 500 (R/h/h/month) 2 000 subsidy to 1 500 1 000 amount 500 Effective 0 Very poor Poor Lower middle Medium Transport Housing Municipal services The striking feature of this analysis, shown in figure B, is that 'lower middle' income households receive higher levels of subsidy than the poorest households. This is caused by: · The fact that the poorest residents typically do not have access to municipal buses and trains which are highly subsidised, forcing them to rely on un-subsidised taxis for public transport. · The poorest people in cities typically have not yet accessed full housing subsidies or may not have accessed subsidies at all and be renting (in a backyard shack, for example). This has serious impacts on household bills, as shown in table E. Table E: Estimated household expenditure on a package of municipally influenced services Household expenditure (R/hh/month) hh income Municipal hh group (R/hh/month) services Housing Transport Total Very poor 823 ­ 100 375 475 Poor 1 647 223 ­ 375 598 Lower middle 2 531 558 424 394 1 375 Medium 6 507 741 1 673 394 2 808 Medium high 15 867 1 115 5 020 2 250 8 386 High 34 012 1 864 8 925 3 750 14 540 STATE OF THE CITIES REPORT 2006 3 ­ 50 Understanding the household budget Table F: Percentage of household income spent on municipally influenced services (estimate) hh group Municipal services Housing Transport Total Very poor 0% 12% 46% 58% Poor 14% 0% 23% 36% Lower middle 22% 17% 16% 54% Medium 11% 26% 6% 43% Medium high 7% 32% 14% 53% High 5% 26% 11% 43% Figure C: Relative percentages of household income spent on municipally influenced services package 70 60 50 40 cent Per 30 20 10 0 Very poor Poor Lower middle Medium Medium high High Transport Housing Municipal services Some key conclusions can be made from figure C, bearing in mind that the analysis is approximate and intended to give an overall picture: · Expenditure on municipally influenced services as a percentage of household budget is relatively consistent across income groups in the range of 35% to 55% of household income. However, when reduced back to actual amounts per household, the money that remains for 'very poor' and 'poor' groups after paying for this package is very little. This constrains what 'very poor' and 'poor' households have available to spend on 'private consumption' goods like food and clothing. · The level of expenditure on public transport for the 'very poor' group is not affordable, if travel costs are based on the assumption that a household member, each day, must reach an employment destination 15 km away from home. · The lower middle income group are also financially stressed not only because of the high municipal services bills (with the high costs driven mainly through high electricity consumption) but because they will often be paying for housing above the level provided by the housing subsidy. In the latter case, this would occur in a situation where they are renting in a 'social housing' development. For a city to function effectively and to use subsidies in ways that maximise impact on the poor, cities should have control over both housing and public transport subsidies, with only the broadest constraints on how these subsidies are used. It will then be possible for cities to make arrangements for households located far from job opportunities, buses and trains, to get higher levels of public transport subsidies. Poor households living in the inner city, in deteriorating buildings will need higher levels of housing subsidies. The rough figures show that a substantial degree of equity can be achieved and the spatial dysfunctionalities of South African cities can be reduced if housing subsidies and transport subsidies are targeted more strategically. 3 ­ 51 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued The well-governed city Government To understand if cities are being governed well, it is important to One way of assessing whether or not cities have have a picture of how the key sectors in cities ­ government, performed well in terms of governance is to look business and the community ­ relate to one another within the at some non-quantitative indicators relating to the current legislative and policy framework. This helps to establish city's financial practices. Table 3-11 shows key indicators that can be used to measure effective governance. whether the city has received an unqualified Unfortunately there is very little data to describe the well-governed audit, whether the city manager has been city. While financial data has become more accessible through the suspended, and the city's credit rating. new municipal censuses and the National Treasury database30, other aspects of governance are more difficult to assess. These indicators can be interpreted in a number of ways. The suspension of the city manager, for Figure 3-50 shows that governance is more than the local example, does not necessarily mean that the city municipality, but a complex set of relationships between all manager was corrupt or incompetent, but could three spheres of government, business and the community. This reflect problems in the relationship between the requires a shift away from a state-centred perspective to include city manager and the elected politicians, or other civic associations, private-sector organisations, community appointed officials, or political interference in groups and social movements31. legitimate city management. What the suspension does indicate is that there are problems in the This has clear implications for the role of local government. The overall governance environment. This has shift to effective local governance "involves a variety of local occurred in five of the nine cities since 2000. agents in the sharing of power, with municipal government having a co-ordinating rather than a monopolistic and Receiving a qualified audit or disclaimer raises controlling role"32. questions over financial management, performance management, monitoring and reporting. Only two of the nine SACN cities received unqualified audits in 2004/5. Figure 3-50: Governance = Government + Business + Community While the credit ratings depend on the type of city and are not directly comparable, these are being taken more seriously by city management, and Government · Intergovernmental have generally improved with eThekwini currently · Within the local government shpere the highest. Table 3-12 shows municipal budgets for the 2004/5 financial year. Two important indicators Growth Coalition integrated into the workings of the city, business Degree of community here are the proportion of total capital involvement in business satisfaction involvement in budgeting, government spending on economic platform GOVERNANCE expenditure on the key services of water and electricity. Johannesburg, for example, spent a Incorporation of business plan Community involvement in into IDPs Degree of business policy development confidence fairly high proportion on both water and electricity to deal with historic backlogs in Job creation maintenance. It is important to monitor Business Community · Formal structures (ward · Organised committees, "Big Mama" expenditure on water and electricity over a period · Non-organised workshops) Provision of labour · Informal structures of several years to ensure that a proper STATE OF THE CITIES REPORT 2006 3 ­ 52 Table 3-11: Selected non-financial indicators of government and good governance Status of AG's City manager Municipality audit report, 2004/5i suspended since 2000 Credit rating, 2002/3 Buffalo City Qualified Yes ST:A3vi; LT:BBB (Global Credit) Cape Town Unqualified No Ekurhuleni Disclaimer No ST:A1iv, LT: +Av (Global Credit) eThekwini Unqualified No AA (Global Credit)iii Johannesburg Disclaimer No LT:A; ST:F2 (Fitch Ibca)ii Mangaung Qualified Yes ST:A1:LT:A (Global Credit) Msunduzi Qualified Yes ST:A3; LT:BBB (Global Credit) Nelson Mandela Qualified Yes Tshwane Qualified Yes ST:A1, LT: +A (Global Credit) i From information provided by IMFO ­ a qualified audit means that there is one or more problems with the audit in the view of the Auditor General, with some problems being more serious than others. Examples are: RSC levies, unsure Customer debtors, Long term debtors, Fixed assets. A disclaimer means that there is insufficient information for the Auditor General to make an assessment. ii The use of credit ratings defines their function: "investment grade" ratings (international Long-term (LT) `AAA' ­ 'BBB-' categories; Short-term (ST) `F1' ­ `F3') indicates highest credit quality (lowest risk) i.e. with strong ability to pay financial commitments, and may have a + added to indicate exceptional strength. F2 indicates good credit quality, and F3 fair credit quality (international Long-term `BB+' ­ `D'; Short-term `B' ­ `D') either signal a higher level of credit risk or that a default has already occurred. iiiGlobal Credit Ratings examines the following areas in assessing the credit ratings of local authorities: Economic structure, Demographic composition, Financial performance and ratio analysis, Management and administrative structures and Political and legal considerations. (http://www.globalratings.net). iv A1 = Very high certainty of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. v The Long term rating ranges from AAA to DD, with A+ and A both being High credit quality. Protection factors are good. However, risk factors are more variable and greater in periods of economic stress, and BBB being Adequate protection factors and considered sufficient for prudent investment. However, there is considerable variability in risk during economic cycles. vi A3 = Satisfactory liquidity and other protection factors qualify issues as to investment grade. However, risk factors are larger and subject to more variation. maintenance and renewal programme is in place. Low raise their own income. Table 3-13 illustrates that expenditure on these services could either be interpreted as eThekwini has the lowest reliance on subsidies neglect of maintenance, or one year in a consistently effective and grants as a proportion of total revenue, maintenance programme. closely followed by Johannesburg, Tshwane, Ekurhuleni and Msunduzi. Nelson Mandela Bay Table 3-13 illustrates budgeted revenue and budgeted has the highest reliance on outside income. expenditure for the nine cities. Cities earn their income from a variety of sources, including regional levies (levied on businesses The proportion of budget spent provides an until June 2006), property rates, services charges, subsidies and indication of good governance. If a municipality grants. Electricity is one of the key sources of revenue for most has the capacity to spend close to all its budget, large cities, ranging from 20,3% total operating revenue in Cape this indicates that the systems within government Town to 38% in Ekurhuleni. ­ like financial services and service delivery ­ are working efficiently. Some municipalities have Subsidies and grants represent the reliance of cities on outside recorded over 100% of their budget spent. This sources of income. The balance of revenue earned thus could be due to rollovers from the previous year. represents the financial independence of cities, or their ability to However, reflecting increased expenditure is not 3 ­ 53 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Table 3-12: Municipal capital budgets 2004/05 ­ Budgeted expenditure Capital Car Roads, tricity Capital Land parks, Sewage Infrastructure Specialised as expenditure as Community pavements, expenditure and per bus per Street stormwater centage centage reticulation purification Refuse buildings terminals, Housing lighting vehicles Total assets Assets bridges, on ranks other of of on sites (R'000) water (%) (%) total (%) taxi total elec- (%) and (%) (%) (%) (%) (%) (%) (%) Municipality Buffalo City 5,6 7,8 11,5 0,3 6,5 22,1 14,5 0,1 4,2 0,5 9,3 16,7 0,8 328 801 Cape Town 1,4 20,0 8,2 8,0 14,2 8,3 16,3 0,9 1,5 0,3 11,0 8,8 1,1 1 534 907 Ekurhuleni 6,9 20,3 4,3 0,2 6,3 4,7 29,2 0,0 8,0 6,7 5,2 6,9 1,1 1 079 310 eThekwini 7,5 13,1 13,6 0,3 12,1 5,4 26,0 0,4 2,6 6,1 2,0 10,0 1,0 2 292 669 Johannesburg 5,1 12,1 19,9 4,0 19,9 2,9 13,2 4,0 2,0 6,1 6,9 4,0 0,0 1 972 291 Mangaung 5,2 22,0 12,5 19,3 20,3 4,6 1,1 0,0 1,8 11,3 2,0 242 276 Msunduzi 22,6 11,6 5,7 7,9 20,5 3,5 3,8 2,7 1,4 4,1 16,2 187 050 Nelson Mandela 3,8 15,8 12,5 0,1 13,5 8,9 1,1 0,6 29,6 12,4 1,7 566 164 Tshwane 8,6 21,8 16,4 1,7 11,1 9,1 0,0 2,0 0,2 5,2 7,4 14,0 2,7 1 224 407 in compliance with the Municipal Finance Management Act as case of eThekwini, which has a favourable credit budgets should be amended through an 'adjustment budget'. rating, the acid test ratio is 0.6:1, as they have There are extraneous factors, other than capacity, that could included the current portion of a long term loan inhibit a municipality's ability to spend its budget. These include in current liabilities for 2003/433. Msunduzi has difficulties in acquiring land for projects, slow Environmental the most favourable acid test ratio, followed by Impact Assessment processes, and poor planning in terms of the that of Ekurhuleni. Mangaung has the least Service Delivery Budget Implementation Plan (SDBIP). favourable acid test ratio. In the 2004/05 financial year, Cape Town spent just over 60% of The percentage of revenue collected compared to both its operating and capital budget, while Johannesburg spent that of revenue billed provides a valuable over 100% of its budget. eThekwini spent 90% and 95% of its indicator of the overall efficiency of municipalities capital and operating budget respectively (see table 3-14). in collecting funds due to them. Only a few cities Tshwane has performed relatively well spending almost 98% have provided this information over the last two and 89% of its capital and operating budget. years. Msunduzi indicates a dramatic improve- ment in debt collection between 2002/3 and The acid test ratio (see table 3-15) provides an indication of 2005, to 98% (see table 3-16). financial prudence and is viewed seriously by rating agencies. It is calculated as follows: current assets minus inventory divided The debtors age analysis indicates the debt owed by current liabilities. The accepted acid test ratio is 1:1. This to each city. Debt over 90 days often represents means the institution can meet its current credit obligations historic debt. High levels of debt can also indicate without disposing of its inventory. While the 1:1 ratio is the high levels of poverty and residents' inability to accepted norm, this needs to be examined in terms of the pay for services, rather than inefficiencies in overall financial position of the organisation. For example, in the collection on the part of the city (see table 3-16). STATE OF THE CITIES REPORT 2006 3 ­ 54 Table 3-13: Municipal operating budgets 2004/05 (revenue) Budgeted revenue Regional Electricity per centage centage Subsidies tage Subsidies Regional of levies Property total revenue Refuse of Other total total and as Electricity of Sanitation and income per income removal grants as levies grants income income cen- rates W per- ater Total Municipality as Buffalo City 250 778 386 154 28,9 139 545 96 720 83 484 225 927 152 273 16,9 1 334 652 Cape Town 850 150 7,5 2 322 385 2 302 728 20,3 781 986 537 655 433 585 1 193 514 2 903 503 10,5 11 325 505 Ekurhuleni 574 300 7,9 1 424 599 2 762 922 38,0 1 010 332 305 608 315 728 417 462 468 356 5,7 7 279 307 eThekwini 173 751 2,0 2 583 378 2 921 000 34,1 1 142 894 49 266 84 461 336 630 1 265 476 3,9 8 556 855 Johannesburg 1 480 484 12,4 2 732 325 3 217 221 27,0 2 560 590 394 771 486 432 1 063 973 4,1 11 935 796 Mangaung 196 666 436 722 30,9 187 135 69 994 217 300 306 455 15,4 1 414 272 Msunduzi 269 255 444 472 37,3 158 504 54 550 35 627 77 892 151 382 6,5 1 191 682 Nelson Mandela 202 445 6,5 467 166 1 018 500 32,5 248 041 182 388 92 649 650 982 271 396 20,8 3 133 567 Tshwane 520 200 7,7 1 446 500 2 343 000 34,7 898 800 203 300 213 500 318 058 814 070 4,7 6 757 428 Table 3-13: Municipal operating budgets 2004/05 (expenditure) Budgeted expenditure Salaries, Salaries, Electricity Interest Less per Contributors W Repairs, Provisions centage wages, ater amounts wages, Sewer and bulk bulk Gross of maintenance allowances redemption for expenditure reallocated total allowances pur pur payments to budgeted working chase chases Other funds special capital budget To tal Municipality as Buffalo City 472 138 225 528 64 886 294 315 56 405 159 418 61 950 1334 640 35 1 334 640 Cape Town 2 947 391 1 555 900 166 006 4 805 004 820 271 1 033 963 375 632 11 704 167 378 662 26 11 325 505 Ekurhuleni 2 242 113 1 674 496 753 708 154 357 2 782 020 709 008 211 768 25 210 632 894 9185 574 2 048 072 31 7 137 502 eThekwini 2 745 514 1 606 801 660 388 2 388 332 976 120 1 348 063 35 783 (3 175) 9757 825 1 200 970 32 8 556 855 Johannesburg 3 210 047 2 096 052 1 328 805 3 616 512 188 523 570 556 936 192 11 946 687 27 11 946 687 Mangaung 477 817 267 487 134 454 378 686 112 504 127 911 27 942 1526 801 114400 34 1 412 401 Msunduzi 361 270 279 885 113 098 40 381 378 643 43 212 147 370 84 983 1448842 261 080 31 1 187 782 Nelson Mandela 880 166 561 928 1 565 154 223 025 31 245 438 045 177 003 3876 567 743 844 28 3 132 723 Tshwane 2 207 120 1 112 977 549 800 260 829 2 164 254 861 716 687 044 7843 740 1086312 33 6 757 428 Community ascribing importance to civil society. There should The relationship between the community and government also be effective mechanisms for communication structures is an import indicator of good governance. This can between government and community, an be measured by looking at the effectiveness of both formal and absence of crime, efficiency of land release to keep informal channels of communication between the city and its up with migration into the city, and an ability by residents. Good relationships between community and government to exert control over areas in its government will mean that residents feel involved in the jurisdiction. practices of government and that government reciprocates by 3 ­ 55 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Table 3-14: Spending capacity of municipalities, 2004/5 Capital Operating Total expenditure Capex Percentage expenditure Opex Percentage budget budget spent spent budget spent spent Municipality (Rm) (Rm) (%) (Rm) (Rm) (%) Buffalo City 1 506 328 177 54,00 1 178 1 096 93,00 Cape Town 10 370 1 535 935 60,90 8 835 5 417 61,30 Ekurhuleni 8 606 1 079 760 70,40 7 527 6 117 81,30 eThekwini 10 591 2 665 2 399 90,00 7 926 7 532 95,00 Johannesburg 13 946 1 972 2 085 105,70 11 974 12 279 102,50 Mangaung 1 561 242 176 72,70 1 319 960 72,80 Msunduzi 1 378 187 1 191 Nelson Mandela 4 285 556 3 729 3 891 104,40 Tshwane 8 215 1 224 1 195 97,60 6 991 6 223 89,00 Source: Based on Local Government Database provided by Treasury Table 3-15: Acid test ratio 2003/4 Nelson Indicator Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Mandela Tshwane Current assets minus inventory (R'000) 196 892 2 278 289 1 625 383 2 241 345 3 975 578 260 027 514 159 434 456 1 662 776 Current liabilities (R'000) 424 974 3 363 840 1 516 229 3 521 762 4 443 737 801 977 293 989 567 428 2 822 399 Acid test ratio 0,5:1 0,7:1 1,1:1 0,6:1 0,9:1 0,3:1 1,7:1 0,8:1 0,6:1 Source: StatsSA Table 3-16: Revenue collection and debtors analysis Buffalo Johannes- Nelson Indicator Date City Cape Town Ekurhuleni eThekwini burg Mangaung Msunduzi Mandela Tshwane Percentage revenue billed 2006 97,2% collected vs 2005 87,4% 93,2% 98,8% revenue billed 2002/3 83,0% 93,0% 89,0% 88,0% 92,0% 88,0% 97,0% Debtors Age Analysis, 2004/5 * 0 ­ 30 days Amount 100 185 561 709 695 829 255 043 777 911 17 222 142 178 286 100 % 22,3% 14,5% 10,2% 10,9% 8,4% 4,0% 16,2% 15,4% 31 ­ 60 days Amount 24 601 137 726 213 129 82 625 360 437 28 080 26 715 106 200 % 5,5% 3,6% 3,1% 3,5% 3,9% 6,6% 3,0% 5,7% 61 ­ 90 days Amount 17 608 85 902 135 006 40 293 262 292 13 923 11 607 1 467 000 % 3,9% 2,2% 2,0% 1,7% 2,8% 3,3% 1,3% 78,9% Over 90 days Amount 306 897 3 094 174 5 809 020 1 961 870 7 818 727 367 886 698 194 % 68,3% 79,8% 84,8% 83,8% 84,8% 86,1% 79,5% 68,3% Total 449 291 3 879 510 6 852 984 2 339 692 9 219 368 427 110 878 693 1 859 300 *Not available for Msunduzi Source: % revenue collected ­ municipalities, debtors age analysis ­ Local Government database from Treasury STATE OF THE CITIES REPORT 2006 3 ­ 56 Table 3-17: Residents' perceptions of government Nelson Total Johannesburg Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi or Mandela Ts average hwane City Town Indicator Percentage registered voter turnout, 2006 52,4% 49,8% 43,0% 44,2% 40,4% 44,9% 47,8% 41,2% 56,1% 43,0% Number of street marches/service delivery protests in 2005/6 35 65 31 Percentage residents satisfied with: Trust local government (municipality) 78% 39% 43% 40% 36% 49% 41% 43% 36% 41% Access to municipal officials 17% 63% 47% 61% 46% 53% 66% 67% 48% 56% Helpfulness of municipal officials 17% 56% 39% 57% 37% 46% 58% 45% 42% 49% Ability of municipality to respond to complaints 20% 49% 31% 49% 36% 40% 37% 40% 41% 43% Ability of municipality to rectify problems 15% 48% 31% 48% 39% 33% 39% 44% 43% 42% Quantity of water available to householders 46% 79% 78% 76% 83% 75% 74% 73% 79% 77% Safeness of water for drinking 59% 84% 95% 89% 89% 79% 88% 69% 94% 86% Billing system that is in place 34% 65% 41% 57% 41% 56% 35% 62% 39% 53% Cost of water and sanitation services 24% 62% 41% 38% 36% 50% 26% 49% 39% 44% Provision of free basic services 24% 57% 32% 60% 28% 45% 44% 32% 36% 46% Type of toilet provided by municipality 29% 72% 61% 78% 80% 40% 63% 74% 81% 72% Safety/health of toilet available to householders 39% 78% 64% 80% 83% 62% 71% 73% 84% 76% Municipal disposal of waste water 27% 61% 59% 70% 66% 48% 68% 54% 75% 64% Government handling supply of water and sanitation 41% 76% 54% 82% 75% 63% 76% 63% 79% 73% Government handling providing electricity in neighbourhood 41% 76% 51% 85% 63% 88% 76% 69% 81% 74% Government handling removal of refuse in neighbourhood 24% 75% 56% 82% 68% 70% 67% 64% 77% 72% Government handling affordable housing in neighbourhood 17% 41% 30% 42% 27% 53% 26% 34% 38% 37% Government handling access to health care in neighbourhood 46% 44% 43% 51% 43% 53% 50% 38% 61% 47% Government handling treatment of sexually transmitted infections 43% 40% 41% 26% 25% 46% 46% 31% 39% 34% Government handling cutting crime in neighbourhood 20% 19% 18% 13% 10% 33% 23% 15% 16% 16% Government creating jobs in your neighbourhood 17% 13% 5% 9% 5% 20% 6% 9% 11% 10% Government handling land reform in neighbourhood 24% 21% 23% 23% 27% 47% 37% 26% 25% 25% Government handling providing social grants in neighbourhood 80% 47% 70% 50% 59% 69% 63% 30% 65% 54% Source: HSRC's South African Social Attitudes Survey (SASAS) 2005 Sample sizes are too small to make inferences in the cases of Buffalo City and Msunduzi As can be seen from table 3-17, Nelson Mandela and Buffalo Table 3-17 also indicates residents' attitudes to City had the highest proportion of turnout of registered voters government performance. Across all cities, in the 2006 local government elections, suggesting relatively residents were least satisfied with government's high levels of residents' involvement in government. The lowest ability to create jobs in the area. After that, turnout was in Johannesburg. residents were unhappy with government's handling of crime in the neighbourhood. Low 3 ­ 57 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Figure 3-51: Business burglars 12 000 10 000 8 000 6 000 Incidents 4 000 2 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Business burglars 1996 Business burglars 2001 Business burglars 2004 levels of satisfaction in most cities are also related to 'business burglaries' appear to have declined in all government's handling of land reform. In the largest five cities, cities. In some cases, numbers of burglaries the highest levels of satisfaction are over the safety of the increased from 1996 to 2001, but in all cases, drinking water. Interestingly, Mangaung records no levels of numbers have dropped to 2004, often to levels satisfaction less than 20%. below those in 1996 (see figure 3-51). Burglaries aimed at business provide one indicator of levels of crime in cities. According to South African Police Services data, STATE OF THE CITIES REPORT 2006 3 ­ 58 The sustainable city unsustainable use of fossil fuels and results in There is very little data describing the ecological dimensions of high levels of air pollution; the sustainable city. No municipal level data is collected at · Inefficient land utilisation patterns, consuming national or even at provincial level, and data sourced from vast tracts of open agricultural land on the municipalities directly is extremely patchy. This suggests that the urban periphery; monitoring and recording of environmental sustainability is a · Inconvenience for residents who have to relatively low priority for many of the nine SACN cities. There are spend large amounts of time commuting from however some initiatives in place to improve the sustainability of one part of the city to another; South African cities. For example, a global forum on biodiversity · High costs for municipalities who are obliged held in Rome in June 2006 revealed that South African cities are to deliver services to far-flung areas; and leaders in conserving biodiversity in urban areas. · Infrastructural inefficiencies that arise when relatively few people utilise available resources. The concept of urban sustainability looks at the relationship New housing developments built since 1994 have between urban activities and the bio-physical environment ­ perpetuated these low-density urban patterns. both within cities and beyond the cities' borders. When urban Housing schemes, generally using project-linked centres grow they utilise resources from well beyond their housing subsidies, have promoted the familiar geographic boundaries. The environmental performance of one-house per plot housing typology ­ often on cities must therefore be analysed at two scales: the urban periphery reinforcing the sprawling, · There should be an improvement of environmental quality fragmented, racially divided character of South within city boundaries; and African cities. · Cities should also transfer fewer environmental costs to other people, other ecosystems and future generations. But the question of density is a contested issue. Other researchers have argued that densifying Given that concepts of sustainability include ecological, social, cities may increase the geographical loading on economic and governance dimensions, some sustainability the environment34. This results in a loss of indicators, such as waste and water, growth in property available natural spaces and increasing pressure development, and the impact of HIV/Aids, have been addressed on available resources, infrastructure and services. in other parts of this chapter. This part reviews two sustainability indicators that have not been reported on elsewhere and then Figure 3-3 reflects the changing densities in South summarises the key trends in sustainability across a range of African cities. It shows that urban density varies indicators. considerably across the different urban centres in South Africa, with Johannesburg being the most Urban density dense urban area in the country followed by Urban density has important implications for environmental eThekwini and Cape Town. Ekurhuleni as part of sustainability. Some urban theorists have identified low-density the Gauteng conurbation is also relatively dense. development as one of the critical factors inhibiting the creation Of the smaller cities Msunduzi is the most dense of sustainable settlements: Low-density settlements are and Mangaung the least dense. Densities to some problematic in that they generate: extent reflect local government demarcations, · Inadequate population thresholds which are unable to with some cities having large rural areas within support viable public transport, shops or social facilities; their boundaries. The densities of South African · Vast distances between neighbourhoods forcing residents to cities are much lower than other global urban rely on motorised transport which in turn contributes to centres. Inner London has densities of 13 346 3 ­ 59 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued people per square km, Paris 24 439 people per square km, developed on greenfield sites on the urban edge. Calcutta metropolitan area has a density of 23 801 people per They are also an indicator of greater polarisation square km while Portland, Oregon has a density similar to that of and social divisions within cities, as urban residents South African cities ­ 1 560 people per square km35. isolate themselves from the city as a whole. South African cities are characterised by sprawl. This has its Table 3-18 shows that the value of townhouse origins in colonial land utilisation patterns, apartheid segregation plans passed has increased dramatically. This and the more recent impact of decentralisation, which has been growth is also likely to be indicative of the rise in a key feature of urban development in most South African cities. gated communities, since townhouses are usually Although Cape Town suffers from urban sprawl, it also has high developed on this basis. It also reflects the concentrations of dense development as a result of the high land increasing value and market demand for values close to Table Mountain and the Cape Peninsula mountain townhouse complexes in the upper income group. range. Attempts have been made to compact other cities, with densification initiatives such as the new Point Precinct Public transport Development in the inner city of eThekwini Municipality, the Public transport is a useful indicator of urban development of the integrated settlement of Cato Manor in sustainability: good public transport makes cities eThekwini and Blue IQ's Newtown Precinct in Johannesburg. more accessible and reduces the need for private Most of the initiatives for densification within the inner city and transport. Between 1996 and 2003, the use of surrounding areas also focus on urban renewal. public transport ­ including trains, buses and taxis ­ increased in the six metros, both as a share and All of the nine cities have shown an increase in density between in absolute terms (see figure 3-52). 2001 and 2005, but this may not be significant in terms of sustainability in the short term given the relatively low densities But there are different trends for the various of South African cities compared to other urban areas in other modes of public transport (see figure 3-53): parts of the world. However, population growth without the · The use of rail has remained proportionately associated growth in services ­ water, waste, energy and the same but with variations across the six housing ­ will have an immediate negative impact on metros; environmental sustainability. Population growth will also result · Bus use has declined; in the densification of poorer settlements in the city, while the · The use of taxis has increased; and wealthy continue to move out to the edges, contributing to · Walking as a form of transport has declined. further urban sprawl. This suggests that there has been a shift from Many South Africa cities have seen the growth of gated buses to taxis, and that taxis are an increasingly communities on the edges of cities. This trend represents both dominant form of public transport. There was a greater densification, because the housing occupies less land, it 17% increase in taxi ridership in Cape Town alone but also increasing urban sprawl, as these complexes are often between 2002 and 2003. However taxis are not Table 3-18: Value of townhouse plans passed as a percentage of total residential plans Buffalo Johannes- Nelson City Cape Town burg Ekurhuleni eThekwini Mangaung Msunduzi Mandela Tshwane 2004 10 11 15 40 35 43 40 26 41 2002 1 7 16 16 29 34 8 10 36 STATE OF THE CITIES REPORT 2006 3 ­ 60 subsidised and are also the most expensive form of public There are also significant cost impacts of these transport for distances greater than approximately 5 km. A trend trends affecting the ability of the poor to access away from high occupancy vehicles, like buses, to vehicles the urban system. Situations in which more than carrying fewer passengers, like taxis and cars, has negative 10% of households spend over 15% of household implications for urban sustainability, resulting in increased traffic incomes on work journeys can be regarded as congestion, increased levels of emissions and greater use of fossil discriminatory37. According to the National fuels. Household Travel Survey of 2003, 37% of public transport commuters in metropolitan areas spend Figure 3-52: Use of public transport, 1996 and 2003 70 60 50 40 cent Per 30 20 10 0 Cape Town Ekurhuleni eThekwini Johannesburg Nelson Mandela Tshwane All Metros Bay 1996 2003 Figure 3-53: Percentage share of transport modes by city, 1996 and 2003 100 80 60 cent Per 40 20 0 1996 2003 1996 2003 1996 2003 1996 2003 1996 2003 1996 2003 1996 2003 Cape Town Ekurhuleni eThekwini Johannesburg Nelson Mandela Tshwane All Metros Bay Train Bus Taxi Car Walk Other 3 ­ 61 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued over 15% of their personal income on transport, and 24% spend · Bus subsidies at R2.3 billion a year (about 40% over 20% of their income on transport. Below a certain income of operating costs for commuter bus services) threshold, residents resort to walking. have not proved sufficient to increase bus ridership. According to Johannesburg's 2003 Integrated Transport Plan, · Both bus and rail commuter subsidies appear to 46% of commuters were spending more than 10% of their be poorly targeted, and are not reaching poor, personal income on work trips. In 2005, in Gauteng, more than often stranded passengers. Subsidies still reflect 480 000 people spent more than 20% of their income on public commuting patterns from former homelands, transport38. potentially reinforcing apartheid city form. · While minibus taxis receive no formal The poorest households in South African cities are most likely to subsidies, they have indirectly benefited from rely on taxis which are un-subsidised and are the most expensive lower levels of enforcement by not having to form of public transport for high volume routes. comply with roadworthiness or traffic laws. The implementation of the taxi recapitalisation Dissatisfaction with public transport services is high. According project will provide eligible taxi owners with a to the 2003 National Household Travel Survey capital subsidy, which will reduce their · 47% of households thought that public transport facilities operating costs through the reduction of were not available or too far away interest and redemption payments. However, · 32% of households were concerned with safety and driver the project will also introduce stricter vehicle behaviour, particularly in relation to taxi services; and safety standards and operating conditions, · 15% cited the high cost of public transport. resulting in increased operating costs for taxi operators. Despite this, there are no plans Low-income and informal households identified inaccessible currently to subsidise their operational costs. public transport services as a key issue. This suggests that public · The poorest urban residents rely on taxis and transport is failing those who rely on it the most, namely poor pay the most per trip. households. High taxi fares also emerged as a key concern for informal households in a Johannesburg survey. Some of the key debates facing the transportation sector at the moment include: While statistics are hard to come by, car ownership appears to be · The need to revisit the transport subsidy increasing rapidly, alongside worsening congestion on roads. system; Over the past two years, new car sales have increased by 27% · Addressing the affordability and accessibility of per annum on average. The total number of new vehicles the public transport system, particularly for the bought in 2005 totalled approximately 617 000, which poor. Public transport expenditure has a major represents a 10% increase on the 6.3 million registered light impact on the household budgets of the poor, vehicles in March 200539. generally far greater than the municipal services bill. In summary: · The need to recognise the intimate · Rail subsidies at R2.7 billion a year (67% of operating costs), relationship between housing and transport, combined with an inability to collect sufficient fares to cover both in terms of planning and ongoing the rest of the operating costs, have resulted a declining rail subsidy implications; system. · The devolution of public transport functions to cities; STATE OF THE CITIES REPORT 2006 3 ­ 62 · Development of clear financial framework; · The viability of the Transport Authority as laid out in the National Land Transport Transition Act of 2000. The overall result of the current transport situation is one of increasing congestion, longer travel times, soaring fuel bills and less access for the poor. All point to lower levels of urban sustainability. Sustainability indicators It is clear that the principle of sustainability has started framing decision making in the nine cities in South Africa. This is reflected in national legislation and municipal level policies and programmes. However, the implementation of these ideals is proving difficult. There are however many examples of initiatives that are taking place within the nine cities, such as the conservancy programme in Tshwane, the environmental services approach in eThekwini and Cape Town's biodiversity strategy. Energy, waste and water programmes are also improving the provision of basic services. Many of the cities are now producing State of Environment Reports, although these tend to be more about strategy than the reporting of environmental data. Cape Town's Sustainability Report provides a good example of the value of environmental reporting. However, pressures on cities for development, and the trends for service and housing provision indicate that environmental issues are not being taken seriously at a political level. This will compromise long-term sustainable development. Improved reporting, through the collection of reliable and comparable data, is critical in making meaningful judgements about sustainability in South African cities. 3 ­ 63 STATE OF THE CITIES REPORT 2006 URBAN TRENDS AND PERFORMANCE continued Endnotes 1 The city estimates were based on the Stats SA 2005 mid-year 13The ASSA2003 AIDS and Demographic Model population estimates for the provinces that were disaggregated to which was released on 28 November 2005 has not district municipality (DC) level by Prof. Dawie Stoker for the HSRC. yet been placed on the ASSA website at: To obtain estimates for the three non-metropolitan cities, namely http://www.assa.org.za/. [Last accessed on 17 May Buffalo City, Mangaung and Msunduzi, the DC mid-year estimates 2006.] were then further disaggregated down to the local government level 14Shisana, O. et al (2005) South African National HIV by the HSRC's GIS Centre. Prevalence, HIV Incidence, Behaviour and 2 Steenkamp, H.A. (2005). Population estimates for South Africa by Communication Survey. Cape Town: HSRC. magisterial district, metropolitan area and province, 2001 and 15It should be noted that figures in table 3-2 are not 2005. Research Report No 342. Pretoria: Bureau of Market the same as those in the accompanying almanac. It Research, University of South Africa. was decided not to rely on the estimates of 3 Unpublished estimates produced and kindly provided by Mr J M household numbers for 2005 calculated directly Calitz, DBSA. from the 2005 mid-year population estimates 4 Estimates (for 2004) from Quantec South Africa Standardised presented in the almanac. These were based on the Industry Database. (See: http://www.quantec.co.za.) 2001 average household size, which means that 5 See http://www.globalinsight.co.za/products/ REF.asp their use inevitably leads to a circular argument. 6 Unpublished estimates for the Presidency, produced by the A new estimation of the 2005 mean household size Demographic Information Bureau (DIB), Pretoria. (as contained in Table 3-2) was therefore 7 No permission has been obtained to publish the other estimates undertaken by the HSRC. The formula used for mentioned. estimating the average household size was as 8 Statistics SA's provincial population estimates are based on a follows: projection of 2001 census figures. However the 2001 figures have 4 been revised since the actual census report, and are therefore a Mean2005 = Mean2001* Mean2001 different base from the 2001 census figures for the cities reflected in Mean1996 the 2004 State of Cities report and in this almanac. 9 Statistics South Africa. 2005. Mid-year population estimates, South where: Mean2005 = estimated average household Africa, 2005. Statistical Release P0302. Pretoria. size in 2005 10Migration to the cities seems to be continuing, but circular Mean2001 = 2001 census-based average migration is still prevalent (as reported by the Statistician General, household size Mr Pali Lehohla, "Studies reveal the circular nature of urban Mean1996 = 1996 census-based average migration" in Business Report of 4 May 2006). Circular migration, household size often most visible in informal settlements, not only contributes to 16Erasmus, J. & Tomlinson, R. (2005) Skills popular perceptions of rapid city growth but it also presents a major development strategies for inclusive and productive challenge to formal housing and service delivery by city cities: phase 1 report. Prepared for the South African municipalities. Cities Network, October. 11The growth rates reported for the period 1996­2001 in the 2004 Hall, E. and Roodt, J. (2005) An analysis of the skills State of the Cities Report for Johannesburg (4,10%), Ekurhuleni profile of the cities of the South African Cities (4,12%) and Tshwane (3,37%), which were based on the 2001 Network. Report to the South African Cities Network census data, were apparently far too high. (October) 12United Nations (2004) World urbanization prospects: The 2003 17Statistics South Africa (2006) Labour Force Survey revision. New York: Population Division, UN Department of September 2005. P0210 Economic and Social Affairs. STATE OF THE CITIES REPORT 2006 3 ­ 64 18Figures for the expanded unemployment rate are higher than 29UNDP (2003) South Africa Human Development Quantec's unemployment figures, which are based on the official Report 2003: The Challenge of Sustainable definition of unemployment. The expanded unemployment rate Development in South Africa: Unlocking People's definition includes categories of work-seekers who are not part of Creativity. Oxford University Press, p.44. the official definition of the unemployed. 30It should be noted that financial information from 19Hall and Roodt op cit. the Treasury data base provides information on 20Viruly Consulting (2006) The South African Property Market. Report budgets, whereas data from Statistics SA reflects to the HSRC as an input to the State of Cities Report 2006. actual revenues and expenditures. 21A-grade office buildings are generally not older than 15 years, 31Beall, J, Crackshaw, O, and Parnell, S (2002) unless they have had a major renovation. They are in prime Uniting a Divided City: Governance and Social locations, with high quality finishes, have adequate on-site parking Exclusion in Johannesburg, London: Earthscan. and air-conditioning. Market rentals are near the top of the range 32Plummer, J. (2002) Focusing Partnerships: in the metropolitan area in which the building is located. A Sourcebook for Municipal Capacity Building 22B-grade offices are generally older buildings, but accommodation in Public-Private Partnerships. London: Earthscan. and finishes are close to modern standards as a result of 33Interview with Mr Krish Kumar, Chief Finance Officer refurbishments and renovation from time to time. They are air- 34Jenks M. and Burgess, R. (eds.) (2000): Compact conditioned and have on-site parking, unless special circumstances Cities: Sustainable Urban Forms in Developing pertain. Rents will generally be lower than A-grade buildings. Countries. London: Spon Press 23Viruly op cit. Jenks, M., Burton, E. and Williams, K. (eds.) (1990): 24No indicators for education have been included in this chapter as The Compact City: A Sustainable Urban Form? these are not available at a municipal level. The only health issue London: Spon Press addressed in this chapter is HIV/Aids. Although both health and Williams, K., Burton, E., and Jenks, M. (eds.) education are provincial functions, local government should engage (2000): Achieving Sustainable Urban Form. coherently with other spheres of government to ensure effective London: Spon Press delivery. 35Wendell Cox Consultancy 2001 25It needs to be acknowledged that pockets of poverty within cities, 36Provincial Expenditure Review, 2006 with poorer access to basic services than average, obviously remain. 37Armstrong-Wright maxim Unfortunately, the law of averages means that these tend to be lost 38www.joburg.gov.za when referring to city-level development indicators. 39Provincial Expenditure Review, 2006 26The number of households without adequate refuse removal decreased by 3,1% over the period. 27This explains why the increase in the numerical backlog for all nine cities between 2001 and 2004 (at 90 073) remains lower than the increase in the numerical backlog for eThekwini (105 855 households). 28See for example UNDP (2003) South Africa Human Development Report 2003: The Challenge of Sustainable Development in South Africa: Unlocking People's Creativity. Oxford University Press, p.44, Hoogeveen, J.G. and B. Özler (2004) Not Separate, Not Equal: Poverty and Inequality in Post-Apartheid South Africa. Washington, D.C.: World Bank. 3 ­ 65 STATE OF THE CITIES REPORT 2006 CHAPTER 4 CONTENTS CITY STRATEGIES AND IMPLEMENTATION Analytical framework 4 ­ 2 City strategy and the productive city 4 ­ 3 Economic development strategies and urban productivity 4 ­ 4 Second economy interventions 4 ­ 8 Transportation strategies and urban productivity 4 ­ 10 Spatial strategies and urban productivity 4 ­ 12 Strategic challenges for enhancing productivity 4 ­ 14 City strategy and the sustainable city 4 ­ 15 Urban-level sustainability strategies 4 ­ 15 Sustainable urban development in South Africa 4 ­ 17 Integration of sustainability into city strategies 4 ­ 17 From environmental regulation to sustainable development 4 ­ 18 Alignment with service delivery programmes 4 ­ 18 Evolution of city sustainability strategies 4 ­ 20 The local and the global 4 ­ 21 Emerging strategic directions 4 ­ 23 Sustainability indicators and information management 4 ­ 24 Resource efficiency 4 ­ 25 Limitations and remaining challenges 4 ­ 28 City strategy and the inclusive city 4 ­ 28 Basic service provision and indigent support 4 ­ 30 Housing support and settlement integration 4 ­ 32 The Expanded Public Works Programme 4 ­ 37 Safety initiatives 4 ­ 38 HIV and Aids strategies 4 ­ 42 Culture and creativity 4 ­ 48 Limitations and remaining challenges 4 ­ 49 City strategy and the well-governed city 4 ­ 51 Political structures 4 ­ 52 Administrative transformation 4 ­ 52 Strategic and performance management 4 ­ 58 The relationship with citizens and other stakeholders 4 ­ 58 Corporate governance, probity and financial management 4 ­ 60 Intergovernmental relations 4 ­ 63 4 ­ 1 STATE OF THE CITIES REPORT 2006 4 CITY STRATEGY This chapter examines how the nine SACN cities responded to the bold new agenda for municipalities outlined in the Local The Municipal Systems Act and the Government White Paper, the Municipal Systems Act and the Municipal Systems Act Municipal Structures Act. It focuses on the first term of office of the The MStructuresA and MSystemsA of 2000 new municipalities and looks at a five-year period, from the time ushered in new arrangements for the nine these municipalities were inaugurated after the local government SACN municipalities. Six of these became single elections on 5 December 2000 until the next set of elections on tier metropolitan "category A" municipalities, 1 March 2006. amalgamating the former local and metropolitan councils of what had formerly The chapter explores the strategies of these new municipalities been a two tier system. For some metros this involved a change in municipal boundaries, in coming to terms with the challenge of developmental local extending the reach ­ and increasing the government. It asks some important questions: challenges ­ of the new metropolitan councils. · How did these municipalities understand the challenges? The remaining three SACN cities became · What did they plan to do? "category B" municipalities, also incorporating · What did they actually do? other areas adjoining the former city boundary. · How did this evolve over the five-year term of office? These three non-metropolitan cities now fell within the boundaries of a district municipality. · What were their achievements and what were their shortfalls? Analytical framework This chapter relies on the analytical framework of the 2004 State Urban issues are complex and cross-cutting of the Cities Report, using the four quadrants of the productive, the sustainable, the inclusive, and the well-governed city. These Categorising urban activities into the four concepts are used to describe different aspects of city quadrants ­ productive, inclusive, sustainable, well-governed ­ is a useful technique but does management: the productive city refers to activities focused on not neatly resolve all the issues. Many urban the economy; the sustainable city refers to environmental issues; activities straddle a number of different the inclusive city describes actions focused on social issues; and quadrants. HIV and Aids, for example, might the well-governed city refers to processes of governance and primarily be categorised as a social issue administration. because it disrupts households, but it also has an economic dimension because it erodes the city's labour force. HIV and Aids also The chapter is the result of a highly interactive process. impacts on governance as cities struggle to The SACN held work-sessions with the management teams of provide appropriate services to residents who each of the SACN cities, to find out from city managers are ill who are increasingly unable to pay for themselves what they were doing. This was supplemented by them. This suggests is that the strategic questionnaires, interviews, some informal surveys and a review questions for cities are typically complex, cross- of key municipal documents. The analysis that has emerged cutting and inter-related. Any other scheme for categorising action in the cities would have from this process is largely comparative. What did the cities similar problems. The categories are a share in common in their strategic approach? Where did they somewhat arbitrary ­ but very useful ­ way of differ? How might this be explained? What conclusions can be dividing a complex menu of municipal actions drawn? What are the outstanding and emerging challenges that into digestible pieces. cities will need to address in their next term of office? STATE OF THE CITIES REPORT 2006 4 ­ 2 City strategy and the productive city In the immediate post-1994 period, urban policy focused on the Urban productivity provision of basic services to residents disadvantaged by The concept of urban productivity describes apartheid. This took the form of housing, water, sanitation and outcomes from the multiple points of interaction electricity. Initially, very little attention was devoted to thinking between local economic processes on the one about how these services might be integrated with improving hand and urban management and development the productivity of South Africa's cities and how they might processes on the other. Urban productivity is the enhance economic efficiency. The result is that many gains that result of the actions, past and present, of many different institutions, organisations and processes might have been made by addressing basic needs have been found in cities. Definitions of productivity centre compromised by lack of attention to urban productivity issues. on the scale and scope of wealth generation This can be clearly seen, for example, from patterns of low- effects that arise from choices made by individuals income housing delivery on the urban periphery. This locates and groups in private, civic and public sectors. residents far from economic opportunity and increases the costs Urban spaces are places in which people produce of economic participation of the poor. goods and services and also reproduce the labour force. They can inhibit productivity or enhance its This emphasis on basic needs has been accompanied by talk of effectiveness. If the right choices are made about economic growth and job creation. Indeed, city participatory the allocation of efforts and resources, they can help create wealth. According to contemporary and technical planning processes have typically identified urban analysis, productivity is closely tied to economic growth and job creation as pressing priorities. But this matters of sustainability, governance and has rarely been translated into city strategies. While there has inclusivity. Sustained levels of poverty and been some attempt at developing economic strategies and deprivation hinder productivity gains in the moving towards more integrated transport and infrastructure long run and productivity barriers, in turn, planning, the concept of productivity is often implied, rather undermine development prospects. than explicit. Productivity is narrowly interpreted as the return A wide range of factors impact on productivity: on public investment in municipal service provision. There is · Social structure little explicit consideration of how municipal choices impact on · Skills · Asset distribution and access to capital and broader notions of urban productivity such as the costs of doing land business and costs of living. · Governance (not just in the public sector but also in the private sector and the civil sphere) Urban productivity is of increasing national concern with · Provision of public goods and infrastructure questions being raised about the role of cities in such processes.1 · Geography Cities themselves have begun to recognise these challenges. · Effectively functioning markets · Institutional density and capabilities Some city municipalities have been placing greater emphasis on improved billing, streamlined procurement, infrastructure While local government can have a major upgrades, maintenance, and on public transport integration. impact on urban productivity ­ either constraining it, enhancing it or playing a Some cities have also been exploring partnership ventures with contradictory role ­ it is critical to recognise various economic stakeholders to tackle specific local productivity that other spheres of government, other local obstacles ranging from skills shortages to land development stakeholders, global economic intersections barriers. But these initiatives have had limited impacts at this and a host of other processes also contribute stage. A 2004 report by the Small Business Project2, for example, to urban development scenarios. 4 ­ 3 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Figure 4-1: Breakdown of recurring compliance costs Economic development strategies and urban (Small Business Project 2004) productivity South Africa's economic restructuring in the past decade has had major, but different, impacts on all nine SACN cities. Depressed commodity prices and rising extraction costs saw the closure of mines employing tens of thousands of people in Ekurhuleni and Johannesburg. During this same period, eThekwini, Buffalo City and Cape Town experienced the loss of more than 50 000 clothing and textile jobs because of trade liberalisation and Tax compliance 26% Additional/sector regulations 21% competition from cheaper imports. Between 1996 Labour and employment 17% Employment equity/BEE 12% and 2001 the average rate of economic growth in Annual registration 9% Information to Government 8% Local Government regulations 6% the nine SACN cities was 2,65% rising to 3,94% in the period 2001 to 2004 (see figure 4-2). All cities saw a growth in unemployment during this points to municipalities as key contributors to the costs of doing period and most recorded only modest increases business (see figure 4-1). This suggests that matters of urban in formal employment. However, economic productivity need ongoing attention. restructuring combined with favourable global trends have started to yield increased levels of This section looks at how South Africa's city municipalities growth for nearly all the cities since 2000. responded to the productivity challenges in four areas ­ economic development, `second economy' interventions, In this context, economic development strategies transport, and spatial planning. in South Africa's nine largest cities went through a period of rapid evolution. A decade ago very few Figure 4-2: Percentage change in total city product 1996/2001 and 2001/2004 6,0 5,0 4,0 (%) 3,0 cent Per 2,0 1,0 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane Average 1996/2001 2001/2004 STATE OF THE CITIES REPORT 2006 4 ­ 4 urban centres in South Africa had explicit economic development programmes. Today each of the nine SACN cities Examples of city LED-related capital projects has some form of economic development strategy. A key factor differentiating one strategy from another was the level of · East London IDZ infrastructure (Buffalo City) · ICC Durban expansion and ICC Arena capacity built up during the late 1990s. Despite the focus on (eThekwini) economic development issues in city integrated development · Bloemfontein-Mangaung LED corridor plans (IDPs), some cities have dedicated very few resources to (Mangaung) · Freedom Square in Pietermaritzburg focused economic development programmes. Often, economic (Msunduzi) development units within municipalities consist of only one or · Infrastructure maintenance in Kempton Park two officials. Documented strategy material from these cities is (Ekurhuleni) generally less elaborate than that of cities with significant · Khayalitsha node project (Cape Town) · Inner City nodes in Johannesburg (Joburg) economic development staff capacity and matching budgets to · Beachfront upgrading in Port Elizabeth buy in expertise. (Nelson Mandela Bay) · Science Park (Tshwane) The rationale behind economic development programmes in cities has tended to focus on low levels of local economic growth and high levels of unemployment and poverty3. A survey of the as identified by the cities in order of descending nine SACN cities conducted for SOCR 2006 shows that seven strategic importance. have stand-alone economic development strategies and the remaining two are in the process of developing these. The survey Almost all the cities attributed some strategic also showed which areas of local economic development (LED) importance to most of the items on the list. The were the most important for cities. These are shown in table 4-1, four largest cities attach greater importance to knowledge and service sector activities while the Table 4-1: LED strategy focus areas in descending order smaller cities place more emphasis on information of importance (based on average score for the provision and development of local institutions. nine cities) This is to be expected: the service sector is far more dominant in larger city economies whereas 1. Regeneration of economic zones market and institutional failures are likely to be 2. Property development more common in smaller local economies. 3. Manufacturing sectors 4. Small business development 5. Partnership building City officials working in economic development 6. Regeneration of townships also prioritised the closely related issues of 7. Investment marketing and facilitation regeneration and property development. The 8. Institutional development considerable influence and leverage of the city in 9. Skills development these areas and the high visibility of these 10. Improving city administrative effectiveness and efficiency interventions, has resulted in a bias towards these 11. Development of new economic assets 12. Black economic empowerment types of activities. This suggests possible under- 13. Urban agriculture investment in more process-oriented interventions 14. Informal economy development that might yield gains over a longer period of time, 15. Tourism marketing but in less tangible ways. 16. New bulk infrastructure 17. Knowledge and services sectors The survey of city officials also reflects a strong 18. Information provision focus on the particular economic circumstances 4 ­ 5 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued of individual cities. eThekwini and Ekurhuleni have prioritised The reasons for these failures generally include: manufacturing sector development. Johannesburg on the other · Inappropriate institutional arrangements for hand has a focus on the ICT sector as a prominent programme. economic development, particularly `silo Smaller cities with a significant rural hinterland, like Buffalo City thinking' in municipalities, where each and Mangaung, emphasised urban agriculture. Some cities department focuses only on its narrowly have put effort into shifting their economies to faster growth defined mandate, without considering other sectors. In this context Michael Porter's caution deserves interlinking issues; attention: "An equally if not more important policy focus is to · A tendency to manage processes in an upgrade the productivity of all the clusters in which the region excessively bureaucratic way, often has a meaningful position."4 compounded by inconsistencies due to changing procedural and legislative Despite the widespread recognition of skills as a key factor in circumstances; improving economic prospects it only enjoys a limited emphasis · Funds allocated to enterprise development within city economic development planning. Only Ekurhuleni programmes were often used to cover ever- and Mangaung identify it as one of the most important focus rising fixed costs; areas in the IDP. eThekwini and Johannesburg give it some · Limitations on dedicated resources, both prominence in their longer-term city strategies. City officials human and financial; explained that central and provincial governments did little to · Lack of integration of plans amongst local, include local government in skills-related processes and that a provincial and national players with a lack of decentralised decision making did little to secure particular concern at the lack of consultation appropriate levels of municipal responsiveness. about key economic policy matters; · Lack of an effective organised local business There was broad consensus from the cities about their voice; achievements in the last five years in the field of economic · No coherent partnerships amongst business, development. Most identified the creation of a dedicated local civil society and government and a lack of economic development (LED) capability, usually in the form of leadership amongst these parties at the local LED units, as a major step forward. Most also confirmed that level; and small, medium and micro enterprise (SMME) development was · Poor management of decision making seen as an arena where economic development strategy had interfaces between politicians and officials been most effective. But these claims need further verification as leading to confused roles and responsibilities. most cities acknowledged weaknesses in their monitoring and evaluation systems. The prominence of economic development in city strategy is without question. All but two of the The focus areas identified as the least successful included cities report that it is either the top priority or one tourism, marketing and branding, procurement reform, and of the top three strategic priorities in city strategy. public-private partnerships. Cities also reported that there were How then does budgeting match up to this? governance and effectiveness problems with municipal economic development Section 21 companies. Cities expressed Analysis of city operational budgets reveals that concerns about efforts to support non-sustainable SMMEs and the average allocation to support economic the degree to which economic development has been development work is 1,8% of total municipal integrated with other municipal activities. operating spending. Remove the one city which spends more than 4% from the group, and the average drops to around 1%. This suggests that in STATE OF THE CITIES REPORT 2006 4 ­ 6 the realm of economic development, cities have a long way to expect highly visible capital investments to have go to match capacity and programme spending with their trickle-down benefits, but resources to `sweat' the strategic intentions. If cities are to become significant local asset to ensure it can yield ongoing benefits are economic actors they will need funds from operating budgets to often missing. This situation points to a lack of build capabilities and embark on productive programmes. One post-project maintenance, and also an absence possible factor behind these low allocations is that LED of institutional arrangements to ensure that the operating budgets have been built up from a very low base or asset ultimately delivers on its employment- no base whatsoever. In a very constrained budgetary creation and economic growth objectives. Most environment, this would involve shifting resources from one cities identified this as a major challenge when a department to another and budget cuts elsewhere in the city's operational funds are limited and when council. City officials also identified the limited ­ almost non- staffing and support infrastructure costs are rising. existent ­ programme funding allocated through central government grants to local economic development processes.5 Municipal officials were also asked to identify the factors that would be most important to The picture changes considerably when looking at the capital enhancing the effectiveness and impact of LED budgets of cities. Here economic development-related work in cities. Unsurprisingly for a survey expenditure reported by cities appears to be much stronger conducted with municipal LED staff, the most proportionately and is generally growing as a proportion of total important factor identified was that of increasing capital expenditure. The smaller cities, with relatively limited the skills and the number of LED staff. Closely capital budgets, spend almost double the 4,3% average of related was a call for increased and more all nine cities on LED-related capital projects with the larger cities consistent attention to economic development in the 1,5% ­ 5% bracket. This reflects an attempt by the smaller challenges by municipal political and bureaucratic cities to raise absolute spending on economic development- leadership. Municipal officials also identified related capital spending closer to a sum which the large cities improved partnerships with business and are spending in absolute terms. While one of the larger cities improved partnerships with national government might allocate 4% of a capital budget to LED-related projects, as benefiting the effectiveness of LED at the possibly amounting to in the region of R70-80 million, a smaller municipal level. Smaller cities also indicated that city's 8% allocation of a capital budget might only amount to improved, nationally-verified, low-cost data on R20-30 million. This expenditure varies substantially from year the local economy was important in creating to year according to the nature of projects being funded and more effective policy and interventions. shifting definitions of what constitutes economic development- related capital spending. Clearly all capital spending has some According to officials, national initiatives that had economic impact, but it is far from clear how much of the most benefited local LED activities were: expenditure captured under this label was intended to have · Auto cluster initiatives explicit economic benefits. · Industrial Development Zones · Department of Labour support for skills The mismatch between the scale of capital spending and development operating funding of LED work requires some discussion. The · Stable fiscal policy environment and the cities expressed concern about the effectiveness and emphasis on generating growth and sustainability of much LED-related capital spending. Officials employment noted that to effectively leverage the projected benefits of a · Broad-based black economic empowerment LED related asset, the project would need to be supported by · The ongoing attention being given to SMME a range of non-capital programmes. There is a tendency to development. 4 ­ 7 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued The mention of the Motor Industry Development Programme enquiries, most businesses find themselves having and various cluster processes is not at all surprising, given that to deal with increased bureaucratic requirements five cities are involved in manufacturing automotive and complex decision-making processes. These components and motor vehicle assembly. complexities have also been a factor in the burgeoning informal sector where policy changes Officials also identified those national processes which had and inconsistent processes of implementation constrained the effectiveness of local LED strategies: have left street traders more, rather than less, · Poor interaction and coordination amongst the three spheres vulnerable. of government · The lack of delivery of explicit programmes across the In an urban environment where up to a third of spectrum of DTI work taking account of cities' particular needs working-age people are unemployed there is an · Lack of a clear national perspective on cities in national policy imperative for cities to understand the economic, · Ongoing institutional changes and therefore urban productivity, ramifications for · Factors hindering creation of local development agencies. households of land-use planning, transportation and the provision of municipal services. Projects in Interactions with city officials suggest that cities and provinces Tshwane and eThekwini to roll-out low cost often worked at cross-purposes on various programmes resulting telecommunications access for poor households in duplication or project delays, but there were some examples of illustrate that it is indeed possible to generate productive co-operation, such as Gauteng's Blue IQ initiative. urban productivity around the issue of Officials consistently raised concerns that national government telecommunications and ensure benefits to poorer departments tended to roll out initiatives without engaging with urban households. city municipalities, who understand the local dynamics of their city economies and could provide useful input in the design and Second economy interventions delivery of national programmes. For example, the commissioning Cities have embarked on numerous interventions of customised sector plans by the DTI did little to differentiate to support the `second economy'. These include between regions in terms of their position in value chains. affirmative procurement policies, SMME support initiatives and the promotion and management of The surveyed officials saw the past five years as a period of informal trading. consolidation. They identified an increasing local acceptance of their LED role which was sometimes matched by the allocation Yet despite a significant policy and legal basis for of meaningful resources. This growing confidence should enable pro-poor LED that focuses on interventions in the city municipalities to take more responsibility for economic second economy, the policy guidelines remain development outcomes in the cities. incoherent and elusive. Interventions by municipalities remain ad hoc with minimal results. However, in many cases it appears that improved growth prospects and increased municipal confidence around LED The debate between pro-poor and pro-growth interventions has been accompanied by declining attention strategies remains unresolved with some cities towards other key issues relevant to urban productivity. such as Johannesburg focusing more on Stakeholders outside local government make the point that pro-growth strategies to enhance their insufficient attention has been given to `getting the basics right' competitiveness in the global market, while like improving the efficiency of administrative processes and others such as Mangaung focusing mainly on regulations and keeping costs competitive. While some cities interventions targeting the second economy. The have created special teams to address strategic business informal economy of Mangaung accounts for STATE OF THE CITIES REPORT 2006 4 ­ 8 First and second economies Since 2000 the terms `first economy' and `second economy' have been used in many national government pronouncements and these terms are now widely used by policy makers in other spheres of government. National government policy documents present the `first' and `second' economies as having some of the following characteristics, primarily engineered under apartheid: First Economy Second Economy Dominated by a small, mainly white, minority The bulk of South Africans, almost all African High skill Low skill Globally connected Disconnected from global economic processes Internationally competitive Very weak competitive base Access to capital and land Little or no access to capital and land Access to and know-how of information and Little or no access to and know-how of information and communications technology (ICT) communications technology (ICT) Operating from world class environments Operating from isolated environments with poor infrastructure and services Formal enterprise Informal or micro enterprise The purpose, according to national government policy, of identifying the `two economies' is to ensure that policies can be tailored to the different issues operating within each economy. This is meant to avoid a situation where policy fails to respond to differentiated needs ­ especially the needs of the poor. The `two economies' framework has been criticised as too simplistic. Critics have argued that the character of the 'first economy' perpetuates the economic marginalisation of the majority. Irrespective of the terminology, the challenge for local government is become relevant to both the poor as well as to those businesses that have potential to drive the performance of local economies in a sustainable way. This requires adoption of explicit policies and programmes that avoid actions which perpetuate inequalities. almost 50% of local jobs. eThekwini is positioning itself to have paid some attention to small and informal compete globally but is also promoting the second economy businesses. An investigation of pro-poor LED in through interventions like small business support, community South Africa in 2005 conducted by Rhodes tourism, urban agriculture and by providing township business University demonstrated that cities have centres. Key initiatives include the Warwick Junction and the supported the second economy through a range Regeneration Fund. Poverty alleviation through community- of interventions including: infrastructure based environmental management programmes feature provision; social development; provision of prominently in Cape Town's LED strategy. This involves free/subsidised services in terms of indigent disposing of 20% of the city's refuse via a partnership between policies; preferential procurement policies the municipality, a non-governmental organisation and targeting under-resourced service providers; private business. small-business development support, skills development and marketing. In most SACN cities there has been an acknowledgement that there is an overlap between first and second economy interventions. Even those that focus on global competitiveness 4 ­ 9 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Transportation strategies and urban productivity Existing transport infrastructure has not served the economy Good urban transport is a win-win-win well, with the result that private sector operators and the informal, private taxi industry provided the only meaningful One of the primary strategies for deceasing emissions, preventing climate change and alternative. In the immediate post-1994 period, local improving resident health in cities is upgrading government tended to focus on: transport systems. Efficient mobility is essential · Extending the tarred road networks within townships and to to the economic success of cities, and mobility peripheral nodes; is facilitated by transport systems that are · Seeking means to restructure highly fragmented bus services cost-effective, responsive to changing and to stem the haemorrhaging of public funds; demands, environmentally sound, and accessible to all residents. · Establishing forums with various service providers ­ mainly private bus services and taxi operators ­ in an attempt to Source: State of the World Cities 2006, UN-HABITAT introduce a measure of regulation and co-ordination; · Planning for the extension of services, improving levels of operation and lobbying for improved national policy Instead, the IDPs argued that transport frameworks to enable greater integration with other modes. infrastructure investments could play a critical role in creating a more efficient and equitable spatial Local government progress on these key transportation issues structure. Strategic public transport would help has been patchy. The environment prior to 2000 was further transform apartheid spatial planning as well as complicated by policy inconsistency at the national level. stem post-apartheid trends of urban sprawl. Some National government failed to progress fully on the taxi of the IDPs also made tentative claims about cities recapitalisation process and there were stalled reforms to the having to embrace changing economic commuter rail network. But some progress was made on the circumstances by investing in new business reallocation of municipality road budgets to new capital projects development nodes. Some IDPs also directed in the townships and the provision of extensive formal rank significant resources towards maintaining existing facilities for taxi operators. Municipalities also began to exhibit transport infrastructure networks, particularly an emerging strategic planning capability as processes of those serving economic zones experiencing rapid transformation stabilised. Nevertheless, despite these positive increases in freight and private vehicle use. signs most municipal officials concede that in the period prior to 2000 most residents who relied on commuter transport Many city strategy documents and business plans experienced erratic levels of service. Reasons for poor services recognise that effective transport investments can included: reduced public bus services resulting from contribute to spatial transformation and greater privatisation or budget cuts, old and poorly-maintained urban productivity. However, despite some equipment, institutional conflict between role-players on the common threads, responses to the strategic street and in the boardrooms, and the mismatches between challenges remain relatively uneven. This funding for supply of public transportation services and the unevenness can be ascribed to regional demand for these services. investment patterns by government in the past or the geographic location of the cities. Rail, for These problems are eloquently detailed in the IDPs of the post- example, features prominently in eThekwini, 2000 municipalities. These IDPs suggest that many of the Johannesburg and Cape Town but is rarely councils were seeking to move away from notions of transport included in Msunduzi's and Mangaung's strategic services aiming purely at getting people from point A to point B. transportation planning.6 In other cases the STATE OF THE CITIES REPORT 2006 4 ­ 10 unevenness continues to reflect the different institutional status At a strategic level, the 2010 Soccer World Cup has of the municipalities in different cities. Buffalo City, Mangaung accelerated city transportation planning in the and Msunduzi, which are category B municipalities and fall prospective host cities. A key challenge identified by within district councils, expressed some concern at the shortage all the municipalities has been to ensure that the of funds being allocated at the district level for city transport exceptional investments to meet the World Cup priorities. Neglect of critical rural-urban linkages has also been commitments will be able to serve the city long after identified as a problem for all the cities. These generally have not the event itself. Officials from cities that will not be been well-integrated with urban transportation. hosting matches have also committed themselves to substantially transforming the nature of public Institutional matters also continue to present challenges to the transportation in their cities in the next decade. metropolitan municipalities. Recently these debates have centred on the promulgation of the National Land Many cities are developing more effective Transportation Transition Bill. This bill allows metropolitan management and investment strategies to deal councils to establish Metropolitan Transport Authorities (MTAs) with freight transport. These cities are looking to with the responsibility to: improve the integration of road transport with rail, · Prepare transport plans and at port and air platforms that better serve the · Develop transport policy economy. All the port cities have engaged in · Perform financial planning dialogue with Transnet and the National Port · Manage movement of persons and goods Authority because of substantial growth in · Promote public participation maritime cargo handling and the shift in freight · Perform transport contracting function transportation from rail to road. While the Transnet family of transport parastatals have traditionally eThekwini was the first of the six metros to try and establish a guarded their own plans, greater levels of co- MTA, and many of the others have undertaken considerable operation are emerging around preparing for planning work towards this objective. But eThekwini has future investments. In Durban, Transnet and reported that despite its ability to meet the establishment eThekwini Municipality have formed a joint conditions, other transport stakeholders ­ including the National planning forum to address day-to-day problems Department of Transport, Metrorail and National Treasury ­ have and to plan the future for the Port of Durban. not yet made the necessary adjustments to their own practices There are similar attempts at co-operative to enable the MTA to fulfil its designated functions. planning between various Transnet and private sector players and the City of Johannesburg Despite the continued uncertainty in the institutional around the City Deep facility. The announcement frameworks, the metros have proceeded with the development of investment plans by the parastatals to increase of Integrated Transport Plans (ITPs) and the roll-out of various capacity around strategic port and rail facilities programmes including the introduction of operating licences for during 2005 has added increased impetus to these service providers. Municipalities have tried to devise co- interactions. But municipal officials have sounded operative arrangements with sector stakeholders, like taxi a word of caution: weak maintenance spend on operators, to try and achieve progress through negotiation. Co- transport infrastructure and constraints to budgets operation around strategic transport investment has been a for new investment could inhibit a number of major topic of conversation in Gauteng City Region dialogue projects. between the Gauteng Provincial Government and the major Gauteng urban areas (see page 2 ­ 17). 4 ­ 11 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued The city's planning capacities might also be improved by the many planning frameworks which guide existing release of well-located, under-utilised, parastatal land. This is the urban development processes are inadequate to result of a decision by the Department of Public Enterprises to meet contemporary challenges. For example, dispose of more than R10 billion worth of non-core state owned structure plans developed in the 1960s and 1970s enterprise property assets.7 City authorities in Mangaung and for older industrial areas have proved inadequate Nelson Mandela Bay have identified the transfer of these land for the changing space requirements of today's parcels as being a key element in their plans for the economic businesses. development of their cities. Strategic spatial planning has been seen as a tool While transport has been an important issue across the to transform apartheid-based spatial relations that municipalities in the past few years it has often come second to still characterise urban South Africa. As a result investments made by municipalities in housing and basic services. municipalities have used a common set of More recently cities are starting to see transportation investments principles to guide strategic spatial planning as a mechanism to integrate cities spatially as well as a tool to link processes, with terms like `efficient' and `equitable' other elements of city strategy with one another. Tshwane, for appearing consistently. The spatial imagery example, has identified its proposed transport network as the developed during these processes has been central binding element in its spatial strategy and as a core factor in in influencing choices about where investments ensuring the municipality can work successfully. should be directed. This has driven a programme to extend services and develop community Transport systems are key factors in reducing the costs of social facilities in former black townships. There has also and economic interactions and allowing goods and services to be been a substantial increase in the accuracy of data exchanged efficiently. Ineffective systems operating on poor being fed into these spatial planning processes. infrastructure platforms will mean that cities cannot offer a Most of the large city municipalities now have productive environment for firms or offer points of access to the critical Geographic Information Systems (GIS) urban poor where they might find income generating prospects8. capability with information on the location of investments, levels of services, household Spatial strategies and urban productivity characteristics, key institutions and public facilities. Since the late 1990s, when municipalities were obliged to There is now potential to translate spatial plans develop Integrated Development Plans (IDPs), these have been into well-informed investment decisions. Cities no accompanied by Spatial Development Frameworks (SDFs). SDFs longer rely on the assumption-driven, vague city- provide a strategic spatial context in which decisions about land wide spatial frameworks that dominated in the use, urban management and infrastructure investment can be pre-2000 era. made. SDFs give insight into both the present distribution of various land uses as well as future investment intentions for the While the capability of officials and politicians to public sector, private sector and households. do spatial planning has been significantly improved there are still challenges. Municipalities While the approach to strategic spatial planning differs have not always used these plans to communicate substantially in each city, influenced by different geographical, effectively with various stakeholders. Transforming social, economic and political processes, the intentions behind the often complex images into legible material that development of spatial strategies appear relatively uniform across might be useful to local communities has rarely the cities: Cities are increasingly looking to use spatial strategies taken place. Municipal officials admitted that the to guide future public and private investment rather than simply ongoing obsession in South Africa's large cities recording its location as it happens. There is recognition that with strategic-level planning has meant STATE OF THE CITIES REPORT 2006 4 ­ 12 neglecting the critical bridge between macro-level frameworks municipalities from realising the potential of and local-level, community-based spatial plans. Exceptions to strategic spatial planning. this have occurred in inner-city redevelopment plans, township centre regeneration initiatives, industrial area revitalisation Despite these widely recognised weaknesses, projects or plans for sensitive ecological zones. But localised there is evidence that municipalities are seeking to planning has not been widespread. Mangaung has proved to be tackle the disjunctures between strategic intent an exception with its consultation-intensive IDP processes. and action at the spatial level. Buffalo City has eThekwini has also begun to make some progress, largely within made some progress towards realising its the five selected area-based management zones, but not all of intention of investing in corridors of movement these have translated into contemporary strategic land-use between East London and Mdantsane. Mangaung management frameworks at the community level. is also developing the link between Bloemfontein and Botshabelo/Thaba Nchu. Tshwane is The implications of this include a level of stakeholder fatigue prioritising investments in transportation with strategic macro-level planning, conflicts and indecision infrastructure and services to make their spatial about development agendas in local areas and a level of planning intentions more meaningful. In disempowerment of stakeholders who struggle to access spatial eThekwini, road investments near the Riverhorse planning frameworks with sufficient clarity to guide them in Valley Business Estate (a joint venture with the their decisions. Tongaat Hulett Group), has seen the development of a new road linking a relatively isolated A key issue raised in the DPLG's IDP review processes has been the KwaMashu with a major employment growth often contradictory nature of council investment decisions when area. Nelson Mandela Bay, Cape Town and mapped against the intentions in strategic spatial frameworks. For eThekwini have also stepped up interventions to instance many municipalities have identified some form of `urban improve spatial form by limiting developments in edge' in an attempt to manage processes of sprawl and avoid its sensitive environmental zones or areas without sustainability pitfalls. Yet these same municipalities continue to the carrying capacity and potential densities to permit new greenfield investment nodes and facilitate new low- make infrastructure investments viable. cost housing on the urban periphery. A key challenge is to link the spatial planning There are many reasons for these contradictory processes such processes in the cities with those of provincial as the influence of pressure groups reluctant to accommodate authorities and with surrounding municipalities new low-income settlements in their neighbourhoods and a lack and districts. The importance of key urban spaces, of legal clarity about the status of strategic spatial plans. as reflected in the National Spatial Development Government policy has also not always helped ­ a fact most Perspective, is not necessarily carried through into clearly illustrated within the field of housing for low-income spatial frameworks by some provinces. It is also communities. In this case pressures to speed up greenfield highly problematic that strategic spatial planning housing delivery and to meet the constraints of the subsidy processes often end at municipal boundaries system have seen municipalities opting to locate projects on when practical considerations would suggest that low-cost land with fewer competing development pressures on much closer alignment and shared governance is the urban periphery or even beyond. Patterns of investment required over zones of interaction. It makes little have also not always supported spatial goals of using well- sense for one municipality to identify a zone such located land more effectively by redeveloping space closer to the as a river bank as having an important ecological urban economic core. Relentless private sector development role to play, whilst a neighbouring municipality pressures towards decentralisation have constrained plans to intensively develop its side of the river. 4 ­ 13 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued In terms of urban productivity, it is important to translate conceptual spatial planning, founded on relevant local The Johannesburg Fashion District principles, into meaningful investment processes. All the cities agree that sprawl and fragmented development present This catalytic project has significant pro-poor growth implications. The initiative has involved considerable challenges. To date, many of the municipalities over 1 000 clothing micro-manufactures many have responded by redistributing expenditure to areas based on of whom are migrant workers from other parts an evaluation of present needs. However, the long-term costs of of South African and the rest of the continent. investment patterns which reinforce sprawl are likely to Johannesburg has helped the micro-manufacturers undermine prospects of building on developmental thresholds. focus on niche markets, which in turn has helped Rather, cities should redirect public and private investment to them compete with other global players. those processes that enhance urban productivity such as densification and regeneration. Patterns of low-density residential development, combined with fragmented economic The government's Accelerated Shared Growth nodes and weakly integrated service infrastructure will not Initiative for South Africa (Asgi-SA) has identified a benefit urban productivity in the longer term. number of productivity constraints that have ramifications at an urban level. For instance, there Strategic challenges for enhancing productivity are concerns that South Africa's logistics costs as a South Africa's cities have witnessed their municipalities percentage of GDP, presently at around 15%, are developing a greater degree of consciousness around their roles too high. This in turn has translated into a in relation to urban productivity. In the period prior to 2000 the National Freight Logistics Strategy. Yet the focus was on meeting basic needs. The period subsequent to strategy does little to identify actions to resolve 2000 has seen a more strategic approach on the part of critical investment, institutional and governance municipalities to questions of urban productivity. Cities have blockages at the city level where 25% to 50% of been busy translating concepts and plans into action. Sufficient the logistics costs in supply chains present time has also passed to start measuring the impacts of these themselves. Equally, programmes related to skills actions against their original intentions. development have tended to bypass effective interaction with city administrations as well as Over the past five years city officials have identified a number of stakeholders in cities at a decentralised level. This key challenges in translating urban development processes into has been aggravated by somewhat inconsistent improved urban productivity for households and businesses. attention to such matters by municipalities where Municipalities have come to recognise that cities have both the argument that `It is not our mandate' holds potential to enhance productivity, but also that "cities also sway despite claims of `joined-up government'. destroy income ­ they create costs for urban dwellers."9 Research on cities internationally has shown that This suggests that municipalities and urban stakeholders need to "increasing the average level of education in a look more deeply at the persistence of conditions that metropolitan area by one grade increases total undermine urban productivity. For instance high levels of factor productivity by 2,8%."11 Evidence like this inequality can mean that small sections of the population should drive concerted urban productivity capture a disproportionate level of public goods and monopolise enhancement agendas that have both economic these to the exclusion of other urban residents. Equally growth enhancing effects as well as strong problematic would be persistent increases in municipal tax and distributional benefits in urban societies. service costs at levels consistently in excess of inflation which tend to have a disproportionate cost on the urban poor and As urbanisation proceeds apace and challenges for small businesses.10 urban spaces become more complex, cities and STATE OF THE CITIES REPORT 2006 4 ­ 14 their municipalities will have to increasingly `act smart' in Although there are some common threads, the identifying interventions that yield development gains through nine cities have not all had the same response to enhancing urban productivity. Interventions by eThekwini and the sustainable development challenge. This is Tshwane to pilot low cost telecommunications and data access appropriate, as the local environmental and for citizens and business over their electrical network and developmental circumstances differ across the Johannesburg's wireless network programme suggest that such cities. The cities do, however, in large measure 'smart' thinking is finding a place in municipal agendas. `Smart' define sustainability in the same way: as the thinking has also been displayed in projects such as Cape Town's management of natural resources flows and Bandwidth Barn, Johannesburg's inner city Fashion District and environmental quality to allow cities to meet their Ekurhuleni's industry cluster processes. developmental objectives. In these cases municipalities have extended their notions of Although a broad understanding of the concept public goods provision where market failures present themselves. of sustainability can include the sustainability of These new points of focus have been combined effectively with city finances, human resource capacity and other more traditional urban management and development tools to resources, the more narrow understanding of seek long-term repositioning of urban productivity platforms. sustainability which focuses on environmental In an increasingly globally competitive economic context cities, issues is used here. While the broader elements of will have to show themselves to be adept at harnessing the sustainability are crucial, they are contained knowledge spill-overs of such innovative urban practice, whether within the notions of the productive, inclusive, it originates in the formal public or private sphere or in the and well-governed city and are addressed under informal spaces that characterise so much of South African urban those themes. life. These knowledge gains should also be applied with some urgency to the negative externalities that characterise urban Urban-level sustainability strategies space such as crime, environmental degradation and the There are many opportunities in cities to enhance alienation of various social groups. resource efficiencies in ways which support local economic development and environmental City strategies and the sustainable city objectives. Water demand management, for The World Summit on Sustainable Development held in 2001 example, reduces the net cost of water to in Johannesburg was a particularly significant event for firms while meeting a clear natural resource South African cities. The summit did not lead to any direct management goal. Similarly, programmes such as change in the governance mandate for cities but it raised the waste recycling can meet employment and small profile of sustainability as one of the guiding principles of business development objectives while attaining urban management. The period since the summit has seen an environmental objective. municipalities increasingly involved in environmental management and sustainability planning. This shift has partly It is becoming increasingly clear, from local and been one of consciousness, with cities following international international experience, that improved trends towards the integration of sustainability concerns into environmental quality and reductions in natural public policy. It has also been due to national circumstances resource use can provide virtuous cycles for urban including the devolution of certain environmental management development, economic growth, and social functions to local government. Municipalities are also paying cohesion and equity. It is not inevitable, however, more attention to the direct impact of environmental and that environmental objectives will complement natural resource constraints on cities themselves and the need to economic and social objectives. Real conflicts can find local solutions to these problems. arise, particularly between immediate and longer 4 ­ 15 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued The concept of a sustainable city Cities are the centres of population concentration and economic activity. They are consequently the centres of consumption and transformation of natural resources. Resource consumption, in turn, leads to the generation of waste and pollution. The physical flow of resources from raw materials to waste in the economy is therefore channelled through cities, with cities being critical points of demand for these resources and generators of the consequent waste and pollutants. The vast majority of resources used in cities are drawn from elsewhere ­ water, energy and raw materials come from a large hinterland. Typically these hinterlands extend beyond national borders. In South Africa both water and energy are, at times, imported. The Gauteng cities, for example, depend mainly on water from the Lesotho Highlands. Cities depend on regional, national and global systems to provide their resources. Similarly, natural environmental systems are required to disperse, breakdown or store air pollutants, solid waste and water effluent. The physical growth of cities has major impacts. City expansion transforms agricultural and natural land outside city boundaries into paved surfaces, reducing arable land and species habitats and altering the hydrological characteristics of these areas. The changes in water flows, typically including more rapid run-off, in turn pose physical dangers to urban inhabitants in low lying locations. These physical resource flows provide a basis for understanding urban sustainability: A sustainable city seeks to ensure that there is sustainable resource use over time as well as sustainable approaches to waste generation and disposal which do not undercut the very resources on which the city depends. A complementary view of sustainability at the urban level focuses on those environmental hazards generated or concentrated by urban areas themselves. These are not problems of resource degradation or over-use but rather urban environmental problems due to the living environments created within cities. These problems include biological pathogens in the air, water, soil or food, chemical pollutants and physical hazards. Although all urban residents are exposed to these environmental threats in one form or the other, it is the urban poor who bear the brunt of these environmental problems in cities. Environmental hazards are important causes of ill-health, injury and premature death for the urban poor. These hazards are directly linked to the common service delivery challenges facing South African cities, such as a lack of sufficient and affordable housing, and inadequate provision for water, sanitation, drainage and waste collection. The costs of these hazards extend beyond their direct impacts on those affected. They generate costs on the economy, including increased public health expenditure and reductions in private sector productivity due to absenteeism and illness. Sources: Hardoy, J., Mitlin, D., and Satterthwaite, D., (1992) Environmental Problems in Third World Cities. London: Earthscan Publications Satterthwaite, D., (no date) The links between poverty and the environment in urban areas of Africa, Asia and Latin America. London: International Institute for Environment and Development term objectives. The most common example in South African development needs. This implies managing the cities is the short-term need to provide affordable housing impacts of urban processes at various levels. against the long-term need for compact, resource-efficient cities. · At the local level, the focus is on the creation of The housing challenge has largely been met by low-income healthy and resource efficient housing; safe housing developments near the urban periphery, resulting in and pollutant-free neighbourhoods; and higher energy use for transport and service delivery and higher accessible green urban spaces. This includes ongoing time and money costs for the urban poor. resource-efficient and affordable transport between neighbourhoods and between home The challenge of urban sustainable development strategies is to and work. successfully create environmentally sustainable cities in the · Regionally, cities need to manage their medium- and long-term while addressing current pressing social impacts on water catchments and air-sheds STATE OF THE CITIES REPORT 2006 4 ­ 16 and to manage waste flows within the carrying capacity of the natural environment. Urban environmental hazards · At the global level, cities are increasingly accepting some responsibility for the management of global environmental Informal settlements are known to be at greater risk from disasters ­ natural, technological or services such as climate stability and ozone layer protection. environmental. In Cape Town, many informal This largely implies some form of city-wide energy strategy. settlements are built on inappropriate sites such as former rubble dumps, like Sweet Home Farm Sustainable urban development in South Africa in Philippi, and wetlands, like parts of The history of urban development under apartheid created Masiphumelele. These factors, coupled with high winter rainfall make informal settlements specific conditions which mitigate against sustainable cities. For in Cape Town especially prone to flooding. example, large distance between white city centres and black The sub-standard level of housing in informal townships led to high energy inefficiencies, air pollution and settlements means that residents are particularly wasteful trip times. Post-apartheid housing policy has been susceptible to the extreme weather that often forced to focus on low-cost and short-term housing delivery occurs in Cape Town including strong winds and freezing temperatures. Fires are also a risk solutions, sacrificing long-term gains. to informal dwellings, because of high densities and the use of flammable building materials. The long-term impacts on the economy of these spatial patterns Source: are being recognised at the level of national economic strategy. Cape Town, IDP Review 06/07 The Accelerated and Shared Growth Initiative for South Africa, for example, sees spatial form as one of the structural constraints Also, the powers of local government are limited to economic growth partly because "the price of labour of the with respect to sustainability interventions. For poor is pushed up by the fact that many live a great distance from example, the establishment of lead-free fuel their places of work."12 Encouragingly, there is an emerging standards implemented by the Department of consensus between economic development and sustainability Minerals and Energy in 2006 was not a solution objectives on this issue at least. available to municipalities facing high levels of urban lead pollution. Altering unsustainable There are other special conditions that South African cities face, resource use patterns within cities is also only including the heavy reliance of the urban poor on coal for partially under municipal control. While draconian heating and paraffin for lighting in the absence of affordable energy restrictions could be implemented in clean energy sources. The search for shelter and locations near theory, in reality municipalities are limited to fairly employment opportunities has led to settlements being established in dangerous and polluted locations like flood-prone restrictive price incentives and persuasive tactics. areas in eThekwini13 and dolomitic areas in Johannesburg which However, even within this narrow band of options carry a threat of sinkhole formation. some municipalities have become very creative in achieving certain environmental objectives. An extraordinarily varied set of responses are required to develop sustainable urban areas. Most require a range of municipal Integration of sustainability into city strategies departments to alter their traditional ways of planning or service Interviews with the cities suggest that the SACN delivery. While the IDP process provides a framework for the municipalities are increasingly seeing sustainable integration of municipal plans, it is clear that sector plans are still development as a core component of city being developed with considerable autonomy within cities. It is strategies rather than a separate environmental difficult for sustainability considerations to steer, or strongly function which they have to fulfil. This is influence, planning for infrastructure delivery, local economic supported by a consideration of the city IDPs in development or spatial planning. which sustainability, in one form or the other, 4 ­ 17 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued typically enters city development planning at the level of a strategic objective. It is highly significant that all nine SACN cities Integration of sustainability into have placed environmental considerations within their formal IDP eThekwini's IDP and strategic processes, with six of them elevating it to the level A major conceptual shift in understanding how of a core strategic objective, priority or goal (see table 4-2). to address sustainability occurred within the eThekwini IDP development process due to a It can be argued that local government in South Africa has comment received during a public consultation advanced further than national government in the integration of process. The city notes that ".. one astute sustainability into practical development strategies. This is due observer, struck at the heart of the city's to the easier task of cross-sectoral integration at the local level strategy when he questioned how the city was articulating its views on sustainability: `... but but also due to placing sustainability at, or near, the core of surely the issue of sustainability is everybody's strategic planning. responsibility, and does not just lie with a single cluster/department within the council and only The idea of a sustainable city has clearly helped to shape policy in a single chapter of the IDP...?'" in the major South Africa cities over the last five years in the areas "This observation that sustainability is not just of service delivery, such as water, waste management and about conserving the environment, nor is it electricity provision; in spatial planning and transport; and even the concern of a single municipal cluster or within municipal government operations themselves. Although department, but the responsibility of the entire far from complete, the process of integration, or mainstreaming, organisation, helped reshape thinking around how the city would engage with the issue of of sustainability considerations into urban governance has sustainability.... The revision process required a clearly advanced considerably. substantial re-conceptualisation and reworking of the city's approach to `sustainable development'. The translation of sustainability strategies into practice has, It necessitated rewriting Chapter Two of the IDP however, been variable, with some sectors far more advanced so that sustainability would become the lifeblood than others and some key sectors not yet managing to overcome of the city strategy and not just one of the critical areas that needed focus. Given the renewed focus their historical inertia and move onto a sustainable path. around city sustainability, the value of the debate sparked... cannot be underestimated." From environmental regulation to sustainable development Source: The most significant conceptual change taking place within the eThekwini Municipality 2004 SACN cities is a move away from environmental management towards including sustainability into the city vision. The major sectors impacting on the environmental sustainability of a city actions have substantively been shaped by fall outside the control of traditional environmental considerations of sustainability. departments. These include transport, housing, economic development and infrastructure services. Most cities are Alignment with service delivery programmes recognising the futility of attempting to drive sustainable The sustainability agenda has benefited from a development in these sectors solely through a single clear alignment with city strategies of inclusivity environmental management department and have identified the and service delivery in the post-1994 need to encourage all sectors of city management to think about dispensation. The emphasis on the provision of sustainability in relation to service delivery. adequate and affordable shelter, water and sanitation, electricity, paved roads and storm- However, despite real attempts at moving sustainability into the water drainage is arguably having the most centre of city strategy, there are relatively few areas where city immediate and long-term impact on addressing STATE OF THE CITIES REPORT 2006 4 ­ 18 Table 4-2: Sustainability as expressed within municipal IDP strategic objectives City Understanding of sustainability Johannesburg The Strategic Agenda, which is the annually determined set of priorities, sits at the heart of the 2004/05 IDP. The Strategic Agenda comprises 13 strategic thrusts, including "sustainable development and environmental management". Key targets include issuing food hygiene management certificates for informal and formal food premises across the city, implementing an energy retrofit and waste treatment works project to reduce energy demand, increasing the volume of waste recycled in the city by 5% and increasing the number of fines for contravening environmental health regulations ­ to 2 112 by June 2005 and 2 376 by June 2006. eThekwini The 2003-2007 Integrated Development Plan (IDP) establishes sustainable development as the core goal for local government. Cape Town A sustainable city that offers a future to our children and their children (IDP Review, 06/07 Financial Year) ....2020 goals include: water use and waste production down 30%; access to safe green space within walking distance for all; renewable energy share equal to 10% of energy consumed. (IDP Review, 06/07 Financial Year) .....directive to ensure that sustainability runs through the city's broad development programme. In addition a number of cross-sectoral thematic or integrating strategies serve to support sustainable development within the city through implementation of projects in support of the city's Integrated Metropolitan Environmental Policy (eg. Air Quality, Energy and Climate Change, Waste, Water and sanitation, Catchment management, Biodiversity, Coastal zone, Environmental health, Local Agenda 21, Education and training, and Scenic, cultural and heritage assets... Ekurhuleni Not explicit. Included within a number of strategic objectives within the IDP Tshwane Tshwane Vision: The leading international African Capital City of excellence that empowers the community to prosper in a safe and healthy environment. Environmental sustainability is not one of the city's seven key strategic objectives. Nelson Mandela Vision 2020: The Nelson Mandela metropolitan area practices social justice in a culture of public participation Bay guided by an efficient, accountable, non-racial, non-sexist and sustainable municipality that focuses on sustainable environmental, social and economic development, improving the quality of life of its communities in a secured, safe and tourist friendly environment. Sustainable environment is broader than just identifying dumping sites for waste and litter management or even cutting of grass. It should rather take into consideration innovations of renewable energy uses and compliance with international environmental standards. The effect of this forward looking policy should result in attracting quality investments and improving the duration of our natural resources. The challenge must be to intensify public education on sustainable environment. Buffalo City Buffalo City vision is a people-centred place of opportunity where the basic needs of all are met in a safe, healthy and sustainable environment Keys issues include: Basic needs, Housing and building communities: Buffalo City Municipality has successfully re-oriented its administration to deliver on basic needs and housing, however, there still remains a huge challenge to meet the remaining backlogs within the targeted time-frames. The challenge is not just about providing basic services and housing, however, but about `building sustainable communities' where residents have access to social and community facilities, economic opportunities, a healthy and sustainable environment and where further opportunities can be accessed through convenient public transport and a safe road network. Mangaung Mangaung Vision: By 2015 Mangaung is recognised nationally and internationally as a safe and attractive place to live, work and invest. ....Mangaung is attractive, safe, clean, green and healthy, and sought after by visitors and investors. This is supported by eight development objectives one of which is Mangaung has an attractive environment with clean, well-kept natural open spaces, parks and well-maintained built environment Msunduzi Environmental sustainability not a specific IDP objective but rather incorporated (mainstreamed) into the various objectives and strategies addressed within the IDP. 4 ­ 19 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued environmental threats to urban residents. In many respects South African cities are replicating the major sanitation and Sanitation is a women's issue service improvements that occurred in European cities a century ago. These interventions, alongside improved primary health A disproportionate share of the labour and health burden of inadequate sanitation falls on care, should start bearing fruit in reduced illness, improved women. For women living in slums, a long wait infant mortality rates and better quality of life for the urban poor. at the public toilet can mean that children are left unattended, or that a household chore is Improvements in urban air quality have also come from outside delayed. Unhygienic public toilets and latrines of direct local environmental interventions. Most important have threaten the health of women, who are prone been the recent phase-out of leaded petrol, the paving of sand- to reproductive health infections caused by poor sanitation. Also, because it is generally women roads in townships, and electricity extension. The largest who are responsible for the disposal of human remaining air quality problem across the cities, is low-level waste when provision of sanitation is inadequate, particulate and sulphur pollution from households' coal burning they are more susceptible to diseases associated ­ especially in winter. This pollution also has an indoor with contact with human excreta. component, affecting mainly women and children who are at Although men may also suffer from the burden home for longer periods. of poor sanitation they are more likely to resort to other means to relive themselves. In many The relatively high cost of electricity and electrical appliances for slums, men urinate or defecate along railway the urban poor has entrenched cheap coal as the heating fuel of tracks or in open spaces. But women ­ whose anatomy, modesty and susceptibility to attack choice ­ especially in those cities in the interior where coal is does not allow them to discreetly relieve cheapest. Despite the increasing penetration of electricity themselves in public ­ have no choice but to connections, this remains a major unmet environmental wait until dark, usually early in the morning challenge. This issue is on the environmental agenda of a when there is less risk of being accosted. number of cities but successful solutions to this problem require `Going to the toilet' for these women often collaboration between cities and require the support of national means squatting in a private spot or waking up before dawn to queue at public toilets. government, industry and research institutions. Cleaner coal Source: options, cleaner burning methods (like those popularised by the State of the World Cities 2006, UN-HABITAT Department of Minerals and Energy), and appropriately designed appliances will all benefit from economies of scale that are hard to generate at a city level. poisonings and burns. Buffalo City is an exception, with an experiment to distribute of There is an increasing focus on the extension of safe and paraffin gels as a safer alternative. accessible green urban spaces. There is a trend to locate these recreational spaces within the context of planned city-wide Evolution of city sustainability strategies open-space systems that are also intended to conserve Despite the fact that most programmes around biodiversity and maintain environmental services like floodwater sustainability have been short-term and relatively retention and watershed management. But indicators on the limited in scope, there are indications of more actual impact of these open-space systems remain elusive. substantial interventions directed at changing the urban form and economy. These longer-term But there are signs that other environmental health and safety interventions will be necessary in creating more challenges are not being met. For example, there is little sustainable cities and will require major alterations evidence of city-wide strategies towards reducing the large in the way city services are delivered. number of household injuries and deaths due to paraffin STATE OF THE CITIES REPORT 2006 4 ­ 20 There are for example, some shifts to more sustainable housing Cities are also thinking in increasingly sophis- in Buffalo City, Cape Town, eThekwini and Msunduzi. These ticated ways about sustainability. Figure 4-3 projects involve a broader consideration of household energy illustrates the evolution of city thinking about use and take into account the long-term costs to consumers and electricity for example. From initially focusing only the city. The results are a greater focus on housing design and on provision, cities are also thinking about making construction and the long-term impacts of housing location. In electricity affordable to the poor, and then taking this way sustainability considerations, alongside ones of environmental issues into consideration. Ultimately affordability and access for the poor, are being brought into the cities are seeing electricity as one component or heart of urban planning and housing delivery. urban energy use with the long-term goal of providing sustainable energy services in the most Cities are also prioritising short-term actions to create safe and appropriate form. Action is following some way healthy living spaces. This approach translates into an emphasis behind concept but in strategic terms the on access to clean and adequate water and sanitation; open- evolution of thinking is important. space systems and conservation; waste management; and electricity provision. This provides the easiest alignment with The local and the global the urban service delivery agenda. These considerations have Cities are also seeing sustainability as more than been well-integrated into city service delivery and infrastructure just local environmental management. There is a planning and are bringing important improvements in the growing concern with regional and even global urban environment. sustainable development issues. The rationale for regional concerns is relatively clear as major cities Figure 4-3: Evolution of energy strategies will inevitably have a significant impact on water resources and regional catchment areas. It is also relatively easy to see how these catchment processes in turn will have an impact on a city's Electricity connections water resources. Cape Town, which has placed (Electrification programme) considerable emphasis on water demand management, is a case in point. But cities are also beginning to consider issues of Electricity access global concern, primarily climate change. The (Free basic electricity) rationale for these considerations is less clear. South African cities alone are unlikely to have any noticeable impact on the process of global warming and they certainly have no legislative Environmentally sound electricity requirement to address this issue. Nevertheless, a (Example: Compact fluorescent lightbulbs) number of cities, such as Ekurhuleni, Cape Town and eThekwini have noted that, as responsible global actors, they should reduce the levels of Energy services greenhouse gas emissions within their cities and (Example: solar water heating, clean coal, have initiated appropriate programmes. housing insulation, energy demand management) 4 ­ 21 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Cities and the Clean Development Mechanism The Clean Development Mechanism (CDM) is a greenhouse emissions trading mechanism established under the Kyoto Protocol to help countries reduce climate change impacts. The CDM allows emissions reductions projects to be established within developing countries. The emission reduction credits generated by these projects can then be sold to countries or companies which can use them towards meeting their own emission reduction quotas under the protocol. The revenue gained from the sales of credits contributes to the financial viability and sustainability of the projects. Municipalities in South Africa have taken the lead in utilising the CDM, and have been in advance of both the private sector and national government in understanding the benefits of this new market. The first South African CDM project was the innovative Kuyasa energy efficiency project. This project, developed as a partnership between the NGO SouthSouthNorth and the City of Cape Town, is based on a set of energy efficiency measures for low income households including solar water heating, low energy lightbulbs and ceiling insulation. The pilot project has been implemented in Khayelitsha, Cape Town with the intention of extending it to 2 300 households. In addition to the greenhouse gas reduction benefits, the project will also reduce household energy bills; improve the comfort and quality of life of the participants; and create local skills in energy efficient technology. Landfill gas recovery projects have been initiated in eThekwini, Ekurhuleni, Msunduzi and Cape Town. These projects recover methane gas produced by municipal waste. This gas can either be safely flared or, where viable, used for power generation or industrial heating. For example, eThekwini's project, supported by the World Bank, is at an advanced stage and will use the gas for electricity generation. These projects have the potential to both reduce local and global air pollutants from waste disposal and to make use of a currently wasted energy resource. There are other municipal emission reduction options under consideration in municipal buildings and transport fleets, waste water treatment and other areas that show promise as potential CDM projects. Certain greenhouse gas mitigation measures also have local approaches to energy use, provision and advantages. More energy efficient urban forms, transport policy generation. Underpinning these strategies is the which places emphasis on high-volume mass transit, landfill gas recognition that sustainable energy management capture, and household energy efficiency all have local as well as is vital for economic development, environmental global benefits. There are also potential financial benefits, in the sustainability and poverty alleviation14. form of the sale of carbon credits via the Clean Development Mechanism (CDM) of the Kyoto Protocol, for some of these Despite increased attention to sustainability interventions. Most of the cities are exploring the opportunities planning, the cities have not made any significant afforded by the CDM in the areas of landfill gas, wastewater and widespread interventions with regards to treatment, and energy efficiency. A more cynical view is that the energy use. Major interventions in changing funding agencies driving these initiatives have successfully raised household and industrial energy use patterns; the profile of climate change mitigation efforts. altering the fuel mix to cleaner fuels and managing transport energy use still remain aspirations. Whatever the rationale for the adoption of climate change Despite this, the evolution of strategic thinking programmes, one of the main outcomes has been an increased towards energy services provides an illustration of emphasis by cities on understanding their energy usage. The significant progress in city strategy towards focus on energy was spurred by the adoption of the Cape Town sustainability. This is elaborated in figure 4-3. Declaration on Energy for Cities in 2003. In line with the declaration, a growing number of cities have prepared, or are Cities are also becoming increasingly conscious of currently preparing, city energy strategies addressing their own vulnerability to climate change. This is STATE OF THE CITIES REPORT 2006 4 ­ 22 Community co-operatives in Nelson Mandela Metro clean up townships In Nelson Mandela Metro, council officials have helped some of the poorest township residents to form local co-operatives to keep their neighbourhoods clean. These co-operatives employ 194 people across the municipal area. The co-ops are the product of a joint initiative by two metro departments working closely together: · The metro's Economic Development, Tourism and Agriculture Department was intent on creating jobs; · The Department of Environmental Affairs was determined to provide township residents with affordable refuse removal. Rather than outsourcing cleaning to a large company, the metro embarked on an innovative scheme to allow township residents to clean their own areas, making sure that money circulated within the local community. The metro chose to set up co-ops rather than conventional businesses in order to create more jobs. Co-operatives are initiated with the idea of employing a particular number of people. This differs from a close corporation, for instance, where there is no certainty about how many jobs will be created. Co-operatives are also less hierarchical. The first opportunity to test the co-operative model arose when the metro's Department of Environmental Affairs issued tenders for refuse collection in various wards. The co-ops responded to the tenders ­ and won. By far the best example of this community-based maintenance programme is in Walmer Township, fifteen kilometres west of the Port Elizabeth central business district. Here co-op members, dressed in blue overalls emblazoned with the co-op's name Sodlasonke ­ which means "we will eat together" ­ collect refuse on a weekly basis from over 7000 households. The co-op started with ten members in September 2004 and has since grown to 42. The co-op now also owns a truck for refuse collection. The co-op has both permanent employees as well as about 20 temporary staff employed on a rotating basis to ensure that as many residents as possible benefit from the initiative. Salaries range from about R3 000 to R1 000 ­ not a lot, but better than nothing in area where 83% of the residents are unemployed, 60% of which are women and the youth. being factored into the long-term plans of a number of cities, City stresses its coast line and ports; Msunduzi typically focusing on water resource issues. Coastal cities are also focuses on agricultural potential and open space aware of potential sea level rises and the possible spread of disease amenities for the promotion of investment; vectors, such as malaria-carrying mosquitoes, to the cities. eThekwini, Nelson Mandela Bay and Cape Town ascribe importance to the protection of Emerging strategic directions their respective natural resource amenities for All nine SACN cities have placed environmental considerations tourism. within their formal IDP and are demonstrably moving towards integrating sustainability considerations across their areas of This instrumental view of the environment is operation. This is not an even process and the various cities an appropriate strategic response to city emphasise different elements of environmental management circumstances. In some cities the link between the and sustainable development. Within these different emphases ecosystem and economy of the city is pronounced. some commonalities are apparent. For example, eThekwini depends heavily on its local environmental for tourism which makes up A number of cities largely see environmental resources as the 24% of the city's gross geographical product15. basis for economic or social development opportunities. Buffalo It is also more vulnerable to direct environmental 4 ­ 23 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued disruption than Johannesburg or Mangaung because of flooding opportunities. This translates into a lack of clarity or sea level rises. It is not surprising then that environmental regarding budget allocations: Only a few cities management and sustainability is high on the agenda in this city, could provide a clear sense of how decisions and that sustainability planning is focused on those resources about resources for environmental management providing environmental services to the city. are made. Other cities have tended to link sustainability concerns to poverty There are signs of improvements, however, in the alleviation measures and economic development interventions. level of environmental information that is being There are projects in Cape Town, Nelson Mandela Bay, gathered and managed and the clear expectation eThekwini, Mangaung and Tshwane which focus simultaneously from cities that this will improve strategic on employment creation, local economic development and planning for sustainability. Increasingly environmental protection. These projects typically address refuse sophisticated GIS systems are particularly useful collection, waste management and recycling. In Msunduzi there when managing complex environmental systems. are alien vegetation clearing projects; the establishment of These systems, together with other analytical nurseries for indigenous medicinal herbs; eco-tourism projects; software such as air dispersion models, have craft projects using local natural resources; and a range of urban improved the accuracy of environmental controls. agriculture initiatives for food production. Most of these projects are small scale, low-tech enterprises. There have also been attempts by many of the cities, such as Johannesburg, Ekurhuleni, Cape But more ambitious projects are being piloted in Cape Town and Town, eThekwini, and Tshwane to bring together more recently in Ekurhuleni. These two cities have identified the an environmental picture of their cities through installation of solar water heaters on a large scale as potentially "State of Environment Reports" or similar important environmental interventions. They are also being seen documents. Unfortunately these documents are as having poverty alleviation benefits by reducing household not produced regularly; do not have consistent energy bills. More importantly, they represent an economic performance indicators or monitoring systems; intervention in that they are intended to create a market for solar and often seem only tangentially linked to policy water technology. If this market is big enough, this will lead to the development. A possible reason for this is that formation of local suppliers and employment in this new industry. these documents have been produced by outside agencies including the national DEAT and external The distinction between cities that emphasise the instrumental donor agencies, rather than the cities themselves. nature of natural resource protection and those that emphasise This seems to have reduced the sustainability of the developmental aspects of environmental management is not the "State of Environment" reporting process clear cut. There are certainly elements of both approaches in all itself, as well as the integration of these processes the cities. The majority of the cities have taken different routes with development planning in the cities. from understanding the state of the city environment, to developing a strategic approach and then to identifying and At the same time cities are developing more resourcing priority areas for intervention. sophisticated and better informed managers and management systems to address issues of Sustainability indicators and information management sustainability. Cities are clearly in a better position Few cities have rigorous indicators of sustainability or than five years ago to understand their urban performance management systems to monitor and review systems and the interaction between urban progress. There are also few transparent approaches to processes and the natural systems in which they identifying environmental priorities ­ both threats and are located. There also appears to be a widespread STATE OF THE CITIES REPORT 2006 4 ­ 24 introduction of formal environmental management systems. Unaccounted for water losses in particular, have This can be seen in Nelson Mandela Bay, Mangaung, Ekurhuleni had a massive impact on the finances of city water and Buffalo City. These processes should assist in environmental services and are a focus of attention in all the cities integration across city departments and agencies. (see figure 4-4). Although there is significant variability of unaccounted water between cities it A number of cities have also adopted broader environmental clearly represents an important natural resource awareness and education as a local government responsibility. and financial loss for most of the cities. Johannesburg, Mangaung, Tshwane and Cape Town all place significant stress on public education and awareness-raising Attention is now being turned to the energy around sustainable development. These cities are making better efficiency of cities, largely through city energy information on the urban environment available to their citizens. strategy processes. Energy efficiency has the merit of reducing household energy bills and hence The use of economic approaches to ascribe value to alleviating poverty, as well as having environmental environmental services is now also being pioneered. This has benefits. But it is not always financially attractive for helped city planners prepare cost-benefit analyses which take municipalities who receive significant revenue from into account the full costs of alternative service delivery options. the sale of electricity. Although not yet widespread, such methods have been used by eThekwini in planning their open-space system and in Longer-term trends towards resource efficiency understanding the full costs of alternative locations for low- include the densification of the urban form, which income housing. is being driven by moves to improve public transport and create a more efficient taxi industry. Resource efficiency Over time these trends should assist in reducing A common and often implicit theme emerging over the last five the resource intensity of city economies. years has been improvements in the resource efficiency of cities. The initial spur for reducing resource use has been financial. Figure 4-4: Unaccounted for water 40 35 30 25 (%) 20 cent Per 15 10 5 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane Average 2003/4 2004/5 4 ­ 25 STATE OF THE CITIES REPORT 2006 PEOPLE BUILDING THE CITY INDUSTRY COMES TO MSUNDUZI David Gengan, a council official in Msunduzi municipality has a that was ready for development. We packaged a spectacular view from his ninth floor office. Laid out below him is couple of projects that we thought would attract the orderly grid of the old town centre, and in the distance are "the investment and we announced a concessions grass-covered and rolling hills, lovely beyond any singing" evoked package." The city also identified four key sectors by Alan Paton in the opening pages of `Cry the Beloved Country'. that would attract investment: · Aluminium downstreaming. The city is home But when Gengan gazes out of the window, he doesn't look at to the largest aluminium rolling mill in the the pretty landscape. He is gazing down at the busy traffic on southern hemisphere the N3 motorway, the swooping roofs of the R270 million · Wooden furniture. The city is at the centre of Midland Liberty Mall and the messy construction site next door, the woodbelt running through the midlands where Liberty Properties are adding on another 30 000 square · Footwear and leather. The area has always metres of retail space. To Gengan's eyes, these sights are more been known as the shoe capital of South beautiful than the hills ­ indicators of Msunduzi's impressive Africa, and growth over the last five years and a vindication of Gengan's · Tourism. The city is located in the heart of the hard work at attracting investment to the town. scenic midlands. Gengan explains that when he took on the job, "the city was not By all accounts the conference was a great geared to assist in economic development. We had some success. Amongst the investors who attended industrial land for sale, but otherwise nothing."His boss, Rob were Theodore and Helmi Lodemann, a German Haswell, joked that the economic development office consisted couple in their late seventies, who were looking at only of "David Gengan and a broken fax machine." But today an opportunity in the aluminium downstreaming things are different. Msunduzi is pursuing one of the most sector. Torn between setting up a new factory in aggressive local economic development strategies in the Pinetown, near their customers, or in country. Gengan, the manager for investment attraction, Pietermaritzburg, close to their supplier ­ Hulett explains that Msunduzi now has a business unit called Economic Aluminium ­ the couple elected to invest in Development and Growth and that this is "breaking new ground Msunduzi. "They actually announced at the for the municipality." conference that they were coming to Pietermaritzburg," says Gengan. "They were Gengan knows of forty new businesses that have come to happy with our attitude to investment and with Msunduzi, and another forty that have decided to expand in the concessions we were offering." response to the strategy. That translates into about 4 000 jobs, an impressive number for a city which seemed well on the way These concessions include "a discount on rates, to collapse only five years ago. discounts on electricity, free connections for services, waivers on plan approval fees. If the "Pietermaritzburg was going through a trough in the early company produces large amounts of effluent that 2000s," explains Gengan. "We were feeling the brunt of would drain into our sewers ­ we negotiate." It is globalisation. Our footwear industry, once the mainstay of the precisely this willingness to talk through the town, was in trouble because of cheap imports. There was a problems that businesses experience that has sense of doom and gloom." endeared the municipality to local investors. But then a number of things happened. "We held our first Dialogue between the municipality and investment conference ever in the city. We invited international, developers takes place within an investment national, and local investors. We put out some commercial land committee which has been set up by Gengan and STATE OF THE CITIES REPORT 2006 4 ­ 26 his colleagues. "It's multidisciplinary," explains Gengan. "Every manager. "We were exporting more and more to department involved with development is on that committee ­ China and India. We took on another 16 workers the environment people, the chief water engineer, the town and we started with a third shift." planner... It's like a one-stop shop for the developer. We meet twice a month and invite developers to come and tell us "Today," says Lodemann, "we employ eighty about their plans. Then we tell the developer where there people, have four shifts, working 24 hours a day might be a problem and how we can overcome it. We have 7 days a week, producing two and half thousand had very good feedback from investors about the committee." tons of high-tech aluminium. That's worth a lot of money, because by weight aluminium is Concessions packages are somewhat controversial in local more expensive than gold. Counting all our government circles. Gengan acknowledges that while investors workers' dependants, that means about 600 understandably love the rebates, the "treasurer almost fell off his people rely on us." chair when we proposed this. He said it was dangerous to eat into his budgeted income. We then said a new building is not Gengan is as proud of Alltube's success as the part of your income yet. So we give a rates discount on new Lodemanns. He maintains good relations with the buildings starting at 100% in the first year, decreasing by 33% Lodemanns, and regularly takes other potential per year thereafter." investors to see the factory. And in turn the Lodemanns maintain an amicable relationship The incentive package clearly appealed to the Lodemanns. with Gengan, plying him with Swiss chocolates "The city sold us prime industrial land at cost" says Theodore whenever he comes by. Lodemann, "and today its value has probably doubled." "No, no!" interjects Helmi Lodemann, who has an equally firm MSUNDUZI IS PURSUING ONE OF THE MOST AGGRESSIVE LOCAL ECONOMIC DEVELOPMENT STRATEGIES IN THE COUNTRY understanding of the business, "It has tripled." "They also offered us a 20% reduction in electricity fees," says Theodore, "which is still far too high". "Nothing, not enough," insists Helmi, "We are an aluminium factory. We use a lot." The Lodemanns started up their South African business in 2001, transforming flat aluminium strips into delicate aluminium pipes at their Alltube factory, strategically sited next to the Hulett's mill. At the time they employed eight people on the factory This time they want Gengan to wrangle further floor, and two others in the office, supplying only the local reductions on their electricity bill and to secure automotive industry. permission from the roads department to widen the factory driveway. Even without the Toblerone, it Within two years they had employed another eight people to is likely that Gengan will oblige. It is his job to keep work a second shift and started exporting, and by 2005 the firm Msunduzi investors happy. "When I go back to the "was humming", to quote Kobus Hitchcock, the general office," says Gengan, "I'll see what I can do." 4 ­ 27 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Limitations and remaining challenges government as well as national and international The SACN cities are far from models of urban sustainability. But market forces have impacts on resource use and in the last five years cities have made important advances in management that can over-ride local interventions. setting sustainability objectives and in strategising about how Cities do not appear to have well developed these might be achieved. approaches to working with these other institutions. In many cases there is a different There has been significant progress in improving the information institutional allocation of costs of environmental base upon which cities make decisions. However, the complexity impacts versus the cost of mitigation actions. For of sustainability issues makes the need for performance targets example, air quality costs are borne by the and indicators imperative. These need regular updating. While provincial public health department whereas cities have been improving their "State of the Environment" management costs are borne by the city. There is a reporting and environmental management systems these similar situation with regards to transport costs initiatives are still relatively ad hoc and limited. Common associated with housing location. indicators and realistic benchmarks across the cities have not been agreed, making progress difficult to track objectively. Good governance is at the core of meeting the urban sustainability challenge. This implies both a Many of the innovative sustainability programmes of cities have recognition of the various dimensions of the been funded from extra-municipal budgets. These include problem; a prioritisation of those environmental international development aid funding, DEAT poverty relief funds, hazards impacting on the poor; and a close and once-off funding attached to the World Summit on integration of solutions with local economic Sustainable Development. This indicates a lack of commitment development, financial sustainability and poverty from cities and also raises the possibility of external priorities reduction initiatives. It is very rare that community driving city strategies. Cities are also confronting unfunded needs assessments identify environmental matters mandates. There is a particular concern about new responsibilities or sustainability as priorities. These items may be of cities that do not have corresponding financial flows from implicit in some expressed needs. But in some national government, specifically for air quality management. regards sustainability, in the sense of long-term stability and planning, remains a leadership and There is little indication that cities are considering alternative governance issue. Similarly, some environmental service delivery approaches or that cities are utilising appropriate issues are technically complex and require technologies at scale. There is scant evidence that alternative responsible and informed government to make public transport options, small-scale sewage treatment plants; assessments of priorities based on renewable energy sources; and water-efficient appliances are identified needs. being considered by city governments. Where innovation exists, it is not clear that there are appropriate mechanisms to share City strategy and the knowledge or to encourage uptake of new ideas and inclusive city technologies. A particular limitation, across the cities, has been Poor people are increasingly concentrated in the inability to move towards more sustainable and cities. This is the result of urbanisation trends and environmentally sound transport options, for all income levels. the economic characteristics of globalisation. The other major limitation has been progress in controlling the Cities are also marked by a widening of the gap urban form and in densifying cities. between the wealthy, in high-wage occupations, and the poor, who are often unemployed or have Many of the controls over natural resource use and environmental marginalised low-skill jobs. This is both a global as management are not held at the urban level. Other spheres of well as national phenomenon. STATE OF THE CITIES REPORT 2006 4 ­ 28 What we know about anti-poverty success Anti-poverty success requires a multi-dimensional holistic approach There are at least five different approaches to defining ­ and attempting to reduce ­ poverty. One focuses on income. Another uses basic needs, like water and sewerage, schools and clinics. A third focuses on social exclusion including dimensions of racism, sexism and geographic isolation. A fourth involves decision making, and political empowerment. A fifth concentrates on human development through community participation, job creation and providing infrastructure. There is considerable debate as to which approach is most appropriate and experience shows that none is successful on its own. Reducing poverty requires an integrated approach that addresses the multiple facets and incorporates the actions of many stakeholders including all spheres of government, the private sector and civil society. Anti-poverty strategies tend to be more effective when they are targeted at a neighbourhood level Urban neighbourhoods are living and working environments of the poor which can best benefit from an integrated neighbourhood approach to local development. This implies a process whereby increased neighbourhood income triggers off both investment in housing, infrastructure and economic activities, and increased spending in the neighbourhood economy. Effective anti-poverty strategies require a range of discrete customised interventions targeted at addressing the needs of different categories of poor people Different measures are needed to ensure that the improving poor continue to improve; the coping poor graduate out of their precarious state, and the declining poor have an opportunity to reverse their condition. It is important to recognise the resourcefulness of community initiatives and the informal sector in employment, housing and service strategies People should be subjects rather than objects of development. This emphasis on citizen participation is not new. Slum upgrading and site-and-services approaches are based in the recognition that people can and should provide their own housing. Some thinkers argue that the need is to involve the government in the people's processes rather than the other way around. The role of women in the development process should be explicitly acknowledged and women should be explicitly empowered in the process Research shows that women and girls tend to work harder than men, are more likely to invest their earnings in their children, are major producers as well as consumers, and shoulder critical, life-sustaining responsibilities. Women's empowerment is particularly important for determining a country's demographic trends--trends that in turn affect its economic success and environmental sustainability. As a group constituting slightly more than half the population who are disproportionately poor, the extent to which women and girls benefit from development policies and programs in turn has a major impact on countries' overall development success. Urban poverty is exacerbated by other trends. Poor communities classes, poses important questions about located in a declining inner city or on the urban periphery find citizenship and identity. The existence in many it difficult to access urban opportunities. Daily they confront the communities of `informal governance arrange- spatial disjuncture between jobs and housing and the limitations ments' where shacklords and gangsters control of current transport systems. Many wealthy people on the other many aspects of community life also results in the hand withdraw into gated communities and `privatised denial of rights and exclusion. governance' arrangements. This is reinforced by large-scale migration into cities The growth of inequality, the consequent decline of human creating increasingly culturally diverse urban areas. solidarity, and the evident retreat from public life of the middle Most South African cities have a growing population 4 ­ 29 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued of immigrants from elsewhere in Africa, many of them illegal. Many The outstanding backlogs are largely a product of immigrants who see their tenure in the city as temporary, may on-going formation of informal settlements flowing be more concerned with substantive economic and social rights from in-migration into the city. Many of the than formal citizenship. Their marginality may be compounded backlog differences between cities relate to the rate by vicious xenophobia. Similarly, high-income residents with of in-migration. Cities with below-average international work contracts are at once disengaged from local population growth such as Nelson Mandela politics but demand a high quality of city life. Bay will have smaller service backlogs than the high-growth Gauteng metropolitan areas. The size In this context of growing diversity, there is a greater emphasis of the backlog also relates to the size of the rural on identity politics, with residents defining themselves on the population living within the municipal boundary. basis of their sexuality, religion or ethnicity. This shift is Buffalo City, eThekwini, Msunduzi, Mangaung and reinforced by the changing shape of the city from one centred Tshwane have large populations of relatively poor round a single, shared, central city core to a much more people living in rural settings. In these areas, service polycentric urban arrangement.16 levels appropriate and affordable within more formal, urban settings tend to be unworkable. This urban reality of poverty, growing inequality and deepening These cities have differentiated approaches to social polarisation, is largely driven by trends beyond the control service levels in rural and urban settings. of city municipalities. Yet municipalities have a responsibility to find ways of mitigating the impact of poverty and social exclusion Prior to 2000, government recognised that many through its partnerships, programmes and policies. Inclusivity is a residents were too poor to pay for the services central priority in the IDPs of all nine municipalities. they would receive. The extension of basic services was therefore accompanied by a Basic service provision and indigent support mechanism to address the question of The sustainable provision of basic services to all residents on a affordability. Charging the economic cost or even fair and equitable basis has been the most critical municipal a subsidised cost to residents who did not have priority post-apartheid. This flowed from the imperative to the capacity to pay simply resulted in a trend of redress the inequities of the apartheid legacy and the obligations low payment rates and rapidly rising municipal of the Constitution. It was also a necessary response to the on- debt, undermining the viability and legitimacy of going challenge of rapid urbanisation during the first decade of municipal financial management. democracy. It acknowledged the basic needs approach to poverty reduction, recognising that the foundation of inclusivity In line with national government policy, cities and poverty targeting was to ensure that the poor had access to have adopted some common approaches to this the basics of water, energy, sanitation and refuse collection. challenge. The first has been the provision of a basic amount of free services to the indigent. This After 2000, all South African cities put significant effort into has been supplemented by other indigent support addressing their basic service provision backlogs. This action measures like rates exemptions for properties was supported by substantial national government grants. below a particular value threshold. These grants covered both the capital requirements17 and operational subsidies to support the poor18. There has been There is some variation between municipalities in significant improvement in the statistics across all cities both in the quantum of free basic services provided, the number of new households receiving some level of service especially in the allocation of free water. Some and in the percentage of households receiving services cities provide free basic services package (see pages 3 ­ 36 to 3 ­ 42). significantly better than national norms. STATE OF THE CITIES REPORT 2006 4 ­ 30 The difference between the norm and the higher level package In general, the concerted emphasis on extending is paid out of the municipal rates account. Cape Town for service provision to all and providing a free example makes available 50 KWH of free electricity per month to quantum to the poor is having a number of those consuming below an average of 450 KWH per month. The positive impacts: national norm is to make the free electricity available only to · These services represent a major transfer of those consuming less than 150 KWH per month. The variations resources to individual poor households; are also the result of system constraints. There is often a · The extended provision of water, sanitation difference between what the municipality would like to provide and electricity represents a major public good and what Eskom can technically supply. that will impact positively on public health and on air and water quality; This approach has improved municipal revenue collection · The indigent approach has had a very positive mechanisms by reducing non-payment for services and impact on municipal debt management. The enhanced the legitimacy of the municipality amongst residents. approach has contributed to improvements in The approach has also been supplemented by the on-going roll- collection rates by removing from the pool out of pre-paid meters for electricity which prevents the those who cannot afford to pay; and accumulation of arrears once the free limit has been exceeded, · There has been a significant increase in the the upgrading of billing systems and increasing sophistication of number and the percentage of poor credit control methods19. households receiving basic municipal services. Some cities have put effort into modelling the total municipal There are inevitably some limitations: account in order to understand its impact on different categories · A significant number of the poorest households of resident so that the pro-poor tariff structure is affordable and remain un-serviced or partially un-serviced. This equitable to all. means that they do not receive the free basic service benefit. Some municipalities are trying There have been a number of different approaches to identifying to find innovative ways of enabling households indigents. Some cities register indigents and pay an indigent in un-serviced or under-serviced houses to grant to cover services and to create a mechanism to write off receive the benefit. For example, Cape Town is historic debt. Others see the administrative burden as being exploring providing free fuel gel, which is much unmanageable and only focus on self-selection via consumption safer than paraffin, to informal settlements level choices (see table 4-3). where it is not feasible to provide electricity. Table 4- 3: Approaches to indigent relief and free basic services Approach Description Example Targeted Indigent relief is aimed specifically at the poor and which requires households Johannesburg to register for a free or subsidised service. Self-targeted Households receive access to free basic services providing they fall within a eThekwini specified property value range and consume less than a specified limit of the service. This approach is self-regulatory, and households who qualify and who consume more than the specified limit of the free service, are penalised. Blanket All households are given a free portion of water and electricity, with a step Buffalo City tariff structure in place to subsidise the free portion of the service 4 ­ 31 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued · The use of metered consumption as the primary means of In 2005, residential buildings represented 47% of delivering the pro-poor free service benefit excludes many of the value of all building plans passed, varying the urban poor. It assumes a certain household size in between 38,3% in Nelson Mandela Bay and determining the threshold quantum. This does not take into 61,5% in Johannesburg. The value of residential account the extensive reality of backyard dwellers and multi- building plans passed has also grown very family households. Residents in these situations often pay a significantly ­ from R7,5 billion in 2002 to premium given the high aggregate consumption through R23,5 billion in 2005, at an annual average a single meter. increase of 34,8%20. Within the cities, the most · The on-going problem of illegal connections and by-passing impressive increase in the value of residential of meters in some areas. This typically occurs where there are building plans passed has been in Tshwane. In significant numbers of un-serviced dwellings close to 2005 alone, Tshwane passed residential building serviced dwellings or where there is backyarding. plans valued at 122,8% more than the previous · There remain challenges regarding credit control in poor year (see figure 4-6). areas. What happens when poor households exceed their free allocation and incur debts which they do not pay? There Property market buoyancy; a significant shift to are currently uncertain and varied credit control regimes that denser, high-security housing options; and changes apply within and across cities. in household dynamics (especially the declining average household size) have all fuelled private Housing support and settlement integration housing delivery. Public investment in subsidised Residential development is a key driver of urban development. The housing ­ although erratic over the last four years ­ value of building plans passed in the nine cities between 2002 and has also spurred residential development in all the 2005 has risen very steeply from R17,8 billion in 2002 to R49,2 billion cities. Most of this construction activity is focused in 2005, at an annual average of 40,4% (see figure 4-5). on the high end of the income scale. Most new housing construction involved houses worth more than R750 000. For example, in Johannesburg less Figure 4-5: Value of building plans passed in 2005 than 15% of all private housing delivery involved 14 units valued at less than R750 000 in 2003 and 2004 (see table 4-4). 12 10 The consequences of this skewed delivery pattern is significant. First, delivery of subsidised housing is 8 not meeting demand, suggesting a spill-over into billions 6 informal housing arrangements. Second, the lack Rand of housing delivery that might be affordable to a 4 household earning between R1 500 and R7 500 2 a month means that even households able to pay some of the costs of their own housing must opt 0 for sub-optimal housing. They are forced down City ownT Nelson Mandela shwaneT the housing market, in the absence of other Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi Johannesburg alternatives. City Non-residential buildings In Johannesburg in 2004, combined private and Residential buildings public sector delivery was half the estimated STATE OF THE CITIES REPORT 2006 4 ­ 32 Figure 4-6: Value of residential building plans passed (2002 ­ 2005) 8 000 000 7 000 000 6 000 000 5 000 000 4 000 000 R'000 3 000 000 2 000 000 1 000 000 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City 2002 2003 2004 2005 55 000 units needed annually just to keep up with population from R3,8 billion in 2002/03 to R4,8 billion in growth. It is unlikely, in this scenario, that the housing backlog 2005/06, at an average increase of 8,4% per will be eradicated even in the medium-term. year.21 Housing delivery has been relatively erratic with the annual number of subsidised houses Public housing delivery is driven almost exclusively by the completed nationally ranging from 203 588 units funding that is available for housing subsidies from the national in 2002/03 to 129 552 units in 2004/05 government, disbursed via the provinces. The allocation for this (see figure 4-7). conditional grant has seen steady growth in recent years, rising Table 4-4: Housing opportunities in Johannesburg in 2003 and 2004 Ave value 2003 2004 Private sector Social housing R350 000 ­ R750 000 ­ 200 Sectional title R750 000 + 3 964 4 065 Better buildings R200 000 ­ R750 000 ­ ­ Mortgage units (low income) 30-80m2 R350 000 ­ R750 000 1 434 1 039 Mortgage units (high income) R750 000 + 2 197 2 768 Total private 7 595 8 072 Public sector Formal housing R0k-R3,5k 4 664 1 402 Incremental housing R0k-R3 121 34 Social housing R0k-R3 1 157 1 076 Total Johannesburg 5 942 2 512 Total new opportunities 13 537 10 584 4 ­ 33 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Figure 4-7: Number of subsidised houses completed The BNG strategy is being piloted through nine major projects around the country, driven 250 000 primarily by provincial departments of housing, sometimes in collaboration with the national 200 000 Ministry of Housing. However, many of the cities have developed city-level strategies and 150 000 implementation plans of their own. 100 000 Johannesburg is in the process of finalising a housing policy framework. This is intended to 50 000 promote sustainable human settlements and integration, strengthen housing assets, and 0 promote the upgrading of informal settlements. 2001/02 2002/03 2003/04 2004/05 2005/06 The city is also intent on achieving accreditation to Western Cape North West Northern Cape Mpumulanga administer housing programmes. Johannesburg Limpopo KwaZulu-Natal Gauteng Free State is faced with a huge public housing delivery Eastern Cape challenge. There is an estimated backlog of 336 972 affordable units in the city. This In 2004 the Ministry of Housing presented a new strategy for means that government needs to deliver public housing, the Comprehensive Plan for the Development of 48 130 subsidised units per year if the BNG target Sustainable Human Settlements, known as "Breaking New of eradicating all informal settlements by 2014 is Ground" or BNG. This strategy has the potential to radically to be achieved. In terms of the current housing transform existing housing delivery, but there is a daunting list component of its IDP, Johannesburg is aiming to of legislative, institutional and administrative reforms still needed deliver 100 000 housing units in the next five if public housing delivery is to achieve the principles of the BNG years. This is a reasonable and achievable target for strategy. These include: the municipality, but it is not adequate to meet on · Finalising the framework for the accreditation of municipalities, the national BNG target. ensuring that housing administration functions are devolved and that funds are budgeted for the accredited municipalities. Johannesburg sees its role as mobilising and · Rewriting the instructions and conditions associated with incentivising the private sector to deliver an administering housing subsidy funds by amending the appropriate range of housing across the Housing Act and publishing a new Housing Code. This affordability spectrum. As part of policy process provides the Ministry of Housing with a good formulation, Johannesburg has identified small opportunity to simplify the administrative systems and make backyard landlords as a target for support. This is a it easier for provinces and accredited municipalities to relatively controversial strategy that is not promote appropriate housing delivery. addressed in national policy or in the BNG · Defining the partnership arrangements that will allow banks, strategy. Housing for people with disabilities, child- investors and other financial services institutions to achieve headed households and other vulnerable and the investment and lending targets for affordable housing, as special groups is an important part of set out in the Financial Sector Charter. Johannesburg's housing policy framework, but is taking place in the absence of appropriate subsidy instruments. STATE OF THE CITIES REPORT 2006 4 ­ 34 Understanding "Breaking New Ground" In many ways, the comprehensive plan for the development of sustainable human settlements provides a welcome departure from the approach to public housing delivery that has become entrenched since 1994. The new strategy defines four major new housing delivery directions: · A conceptual shift from a commoditised, project-based housing delivery model to a responsive, area-based human settlement development model, with a priority focus on upgrading some informal settlements. · The introduction of new housing subsidy mechanisms ­ described as `sharper instruments' ­ to satisfy a more diverse range of housing needs, like alternative tenure options and affordable rental housing. · The principle of devolving the housing function to municipalities through an accreditation process. · The shift from subsidising housing delivery purely to satisfy the constitutional mandate of ensuring adequate housing for all South Africans to regulating the entire housing market, making housing markets work for the poor and ensuring that subsidised housing units become economic assets for beneficiaries. From housing to human settlements The shift from housing delivery that happens largely through greenfields projects, which provide a standardised housing product for qualifying beneficiaries only, to an area-based development approach that upgrades or develops residential neighbourhoods on infill sites with adequate community services and amenities (like parks and libraries and community halls) is long overdue. The Housing White Paper (1994) clearly articulates the objective of developing sustainable settlements, but the original housing subsidy instruments have not given effect to this objective. A key barrier to the development of affordable housing on well-located infill sites has been the reliance on private developers to identify and assemble land for subsidised projects. Where municipalities have played a stronger role in identifying land for housing and acting as developer (such as the erstwhile Durban Metro), housing projects were better integrated into the urban fabric. The BNG strategy recognises this barrier and recommends a new approach to identifying and assembling land that is suitable for housing that includes co-ordinating information about public land between the Department of Land Affairs and municipalities, improving the efficiency of the process for the vesting of land, providing capacity support for national and provincial government to acquire land and defining the role of local government in the acquisition of land for housing. Sharpening the housing instruments The BNG strategy identifies a series of new housing subsidy mechanisms and proposes significant amendments to existing housing subsidies. The key changes include: · Collapsing the conditional grants for housing subsidies and for human settlement redevelopment into a singe conditional grant with a new framework of conditions that allows for a phased approach to human settlement development on an area by area basis (prioritised in order to upgrade all informal settlements by 2014). · Introducing more responsive and flexible conditions to the funding of human settlement development that will allow for appropriate spending on land and infrastructure. These are two key variable cost components in human settlement development projects, and the previous limit on the proportion of housing subsidies that could be spent on land and infrastructure resulted in housing projects being built on the cheapest possible land with a minimum level of services (such as gravel roads and VIPs instead of water-borne sanitation in urban areas). This funding for land and infrastructure will not be limited only to qualifying beneficiaries (in terms of housing subsidy qualification criteria) but will apply to all households living in a settlement earmarked for upgrading. · The BNG strategy also reviews the housing subsidy bands and the household income qualification criteria. The strategy proposes that housing subsidies should be extended up the income scale by making credit- and savings-linked subsidies available to households earning between R3 500 and R7 000 per month. Secondly, a new social housing capital subsidy is being introduced. This will provide a larger grant than the conventional housing subsidies in order to fund the urban restructuring and densification objectives of social housing because this type of housing is more expensive to build. Thirdly, the compulsory beneficiary contribution has been waived for households earning less than R1 500 per month, and those participating in peoples' housing projects or self-build housing projects. · The BNG strategy also proposes that social facilities and amenities, like multi-purpose community centres, parks, transport interchanges or sports facilities, should be constructed as part of every project. 4 ­ 35 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Understanding "Breaking New Ground" continued Roles and responsibilities for housing The phased devolution of responsibility for the administration of housing subsidies to municipalities is an important element of the BNG strategy. An accreditation framework and targets for the phased accreditation of municipalities have been developed. Once a municipality is fully accredited it will receive a multi-year allocation from the integration housing and human settlement conditional grant (appropriated in terms of the Division of Revenue Act) and will be responsible for allocating grants for projects and administering the application and disbursement of the grants. This will allow municipalities to plan and co-ordinate housing delivery with other infrastructure funding. The Ministry of Housing has also introduced a provision that allows municipalities to use a proportion of their allocation from the integrated housing and human settlement development grant for operational spending in order to establish and run municipal housing units that will be able to fulfil these new responsibilities. Creating housing assets There are also new initiatives to support the development of the affordable housing finance market. The financial services sector has set itself lending and investment targets for affordable housing, and there have been discussions about the role of government in supporting the development of the affordable mortgage market. Other fiscal incentives are also being developed to promote public-private partnerships in the delivery of affordable housing. The Ministry of Housing is also investigating the introduction of a new Housing Development Act that might introduce targets for residential property developers to set aside a proportion of their commercial housing projects for low-income residents in the hope of creating more integrated housing environments. In Johannesburg, the human settlements focus is limited to · The proposal that land costs should be funded sustainability in new housing environments, where the housing out of a separate subsidy through the team has the most influence. The city acknowledges that this Department of Land Affairs will increase the focus should be broadened to existing settlements and that administrative complexity of housing delivery. there is a need to strengthen the understanding of sustainable · There is a need to deal with complex funding human settlements in the planning components in the and functional arrangements in the municipality. development of sustainable human settlements. Aspects such as greening and urban agriculture, eThekwini, believes that there are some simple administrative spatial development plans, street lighting, multi- reforms that would have a big impact on the efficiency of purpose centres, foster care, rainwater tanks and housing delivery. eThekwini is constrained by limitations in the local economic development initiatives all need funding allocation for housing subsidies within its jurisdiction. to be considered from both a capital and Land invasions, evictions, household formation, and increasing operational funding perspective when planning migration are all manifestations of unsatisfied housing demand human settlement projects. in eThekwini. The municipality has the capacity to deliver housing at a faster pace, and has developed a housing cost- In order to address these challenges, eThekwini model, based on an area-by-area analysis, that has revealed the believes that the accreditation of municipalities following funding challenges: should be fast-tracked to allow municipalities to · Land availability is a problem. State land is more difficult to approve their own projects and co-ordinate acquire than private land because of administrative human settlement development. Housing funding complexity. Given the high cost of private land, adequate partnerships remain a challenge. There is a need funding for land remains a barrier to housing delivery. for consultations between the housing STATE OF THE CITIES REPORT 2006 4 ­ 36 departments and provincial treasuries and municipal finance Cape Town established dedicated EPWP business officers to work out the best approach to raising bridging units to co-ordinate the implementation of the finance or facilitating finance partnerships within the prescripts EPWP, while eThekwini and Mangaung made use of the MFMA. of the Municipal Infrastructure Grant (MIG) Programme Management Units (PMUs). In Ekurhuleni, municipal housing priorities include upgrading, Johannesburg established steering committees to densification and greenfields projects, affordable rental drive the process and relied on all departments accommodation, social housing, PPPs and bridge financing in within the municipality to implement their order to speed up delivery. Municipal housing sector plans have projects using EPWP principles. been developed at the precinct level, and are located within the spatial development framework for the city. Mixed income and Most municipalities also appointed champions to life-cycle planning has also been undertaken at the drive the implementation of the programme at a neighbourhood level. political level. The majority of municipalities have also played an active role in the provincial steering Having established a comprehensive range of plans, Ekurhuleni committees set up to coordinate the work of the has chosen to implement these plans through a city-wide various EPWP sectors across local and provincial human settlement response. Within selected precincts, in six government. regions across the city, intervention strategies are defined and priced. Because the allocation of housing and infrastructure The EPWP has largely been implemented through grants to Ekurhuleni are not adequate to fund these in full, the the infrastructure sector, with the exception of the city is faced with the need to influence national budgets and eThekwini, Cape Town and Nelson Mandela Bay mobilise private investment.22 which have undertaken work in the social, economic and the environment and cultural While all the cities are supportive of the broad objectives of BNG sectors. and the principle of delivering housing in sustainable human settlements, they would like pace of reform to be substantially The EPWP Readiness Audit conducted by SACN in increased. 2004 revealed that the eight member cities of the SACN (excluding Johannesburg) had a combined The Expanded Public Works Programme budget of approximately R8,5 billion for the The Expanded Public Works Programme (EPWP) is a national 2004/2005 financial year, and R9,5 billion for the programme to create work opportunities. This has the potential 2005/06 and the 2006/07 financial years for to make cities more inclusive by employing people who have capital works that could potentially have been difficulties finding jobs because they lack skills, and by offering implemented through the EPWP. But only projects training. Cities can contribute to the EPWP through worth R1,08 billion utilised EPWP principles in six infrastructure projects, economic development, social of the nine SACN cities. Although this falls well development, and the environmental and cultural sectors. In below the R8,5 billion potential budget, the figure order to implement the EPWP, all the public sector institutions of R1,08 billion represents a significant are required to prepare plans showing how they are going to achievement in view of the difficulties increase the participation of the unemployed and marginalised experienced in implementing the programme in their areas of jurisdiction using their current budgets. (see table 4-5). There is still an opportunity to re- organise existing budgets to scale up the EPWP Different municipalities have responded differently in setting up and enhance it impacts. institutional arrangements to drive implementation of the EPWP. 4 ­ 37 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued The State of Readiness Assessment estimated that a total of In addition to EPWP projects implemented by the 107 000 jobs could be created if cities re-orientated their capital municipalities, there are a significant number of works budgets towards EPWP projects. By May 2006 national and provincial EPWP projects being approximately 20 419 job opportunities (697 318 person-days) implemented in the SACN cities, often in partnership had been created (see table 4-6). with the municipalities. In the first six quarters of the EPWP more than 22 000 work opportunities were Four groups have been targeted to undergo training related to created through these programmes for residents of EPWP: councillors, project managers, consultants, contractors the nine SACN cities. It is anticipated that this and EPWP beneficiaries. But a review of training provided on a number will continue to grow. number of EPWP projects in six SACN cities suggests that very little accredited training is being provided, with a corresponding Eight of the nine member cities also partnered with increase in non-accredited training. There has been the National Department of Public Works and the approximately 5 330 person-days of accredited training Construction Education and Training Authority compared to the 13 181 person-days of non-accredited training. (CETA) in the Vuk'uphile Learnerships programmes This has been ascribed to limited accredited training service to train contractors and site supervisors in providers in the provinces and poor enforcement of accreditation implementing EPWP projects. So far a total of requirements for the EPWP projects (see table 4-7). 480 learnerships have been implemented in the member cities through this programme. As part of Table 4-5: Budget allocation for EPWP for the their training, these learners will implement SACN cities (2005/06) 480 EPWP projects in the member cities. 2005/06 2005/06 The employment demographics of the various Member city EPWP Budget Expenditure projects have not always met the targets Tshwane Municipality R71 914 000 R38 848 766 suggested in the Code of Good Practice for Buffalo City Municipality R38 200 000 R36 037 511 Employment and Conditions of Work for Special eThekwini Municipality R242 998 046 R160 110 427 Mangaung Municipality R36 136 782 R31 192 707 Public Works Programmes. For example, 45% of City of Cape Town R647 119 088 R271 699 463 the jobs created have gone to women, compared Nelson Mandela Bay R38 000 000 Information not to the 60% target set in the code. Similarly the available employment of people with disabilities is Totals R1 074 367 900 R537 888 850 approximately 1,3% compared to the 2% target set in the code. But the 40% of youths employed Table 4-6: Total number of jobs created by the EPWP on the programme has exceeded the 20% target. per city (May 2006) Safety initiatives Total person-days There is a perception that South African cities Number of of employment continue to be unsafe. This constrains urban City jobs created to date investment and undermines citizenship with Mangaung 901 60 037 many urban residents retreating behind privatised Tshwane 829 59 343 security arrangements. Nationally, the two eThekwini 7 369 139 226 Buffalo City 5 116 45 801 primary causes of deaths due to non-natural Cape Town 6 204 392 911 causes are murder and road accidents.23 (see Total 20 419 697 318 figures 4-8 and 4-9). STATE OF THE CITIES REPORT 2006 4 ­ 38 Table 4-7: EPWP related training in municipalities (May 2006) City Training of officials Training of contractors Sector Mangaung No information available 20 contractors and 40 site supervisors Infrastructure Tshwane 52 municipal officials 25 contractors and 50 site supervisors Infrastructure Johannesburg No information available 12 contractors and 24 site supervisors Infrastructure eThekwini 60 municipal officials ­ NQF Level 5 24 contractors and 48 supervisors Infrastructure 15 municipal officials ­ NQF Level 7 Buffalo City 5 municipal officials ­ NQF Level 7 10 contractors and 20 site supervisors Infrastructure 4 municipal officials ­ NQF Level 5 Nelson Mandela Metro 31 municipal officials ­ NQF Level 5 20 contractors and 40 supervisors Infrastructure Ekurhuleni No information available 25 contractors and 50 site supervisors Cape Town 157 municipal officials attended 24 contractors and 48 site supervisors Infrastructure 102 municipal officials ­ NQF Level 5 in a partnership with the province NNF L7 candidates assessed on 8 May 2006 and awaiting results Total 269 municipal officials 160 contractors and 320 site supervisors Municipalities play a role in mitigating the risks that cause these In addition to SAPS, metropolitan police officers deaths by taking responsibility for metro policing services, and have become a visible feature in five of the cities. traffic law enforcement. These include the Durban City Police (established in July 2000), the Johannesburg The safety and security function is largely a national government Metropolitan Police Department (April 2001), function, with the National Department of Safety and Security the Cape Town City Police Department managing the South African Police Service (SAPS). There are (December 2001), and the Tshwane and 1 121 SAPS-run police stations around the country, and 264 or Ekurhuleni Metropolitan Police Departments 24% of these are located in the nine SACN cities (see table 4-8). (both established in February 2002)24. The statutory functions of a municipal police service Figure 4-8: National causes of death are traffic policing, policing of municipal bylaws 600 000 and regulations, and preventing crime. 500 000 On average these cities anticipate spending approximately R400 million each in 2006/07 to 400 000 staff and operate their metropolitan police deaths of services. When total spending on public safety is 300 000 considered in these cities (metro police and Number 200 000 emergency response services) it accounted for an average of 8% of total operating spend in 100 000 2004/05. The other cities have significantly lower spending on public safety (at an average of 5% of 0 2001 2002 2003 2004 total operating budgets in 2004/05).25 (see figure Year Number of deaths due to other non-natural causes 4-10). Number of deaths due to murder Number of deaths due to road accidents Number of deaths due to natural causes 4 ­ 39 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Figure 4-9: Proportion of deaths due to non-natural causes fulfilling their traffic law enforcement (2001 ­ 2004) responsibilities. A June 2002 activity report for the Tshwane Metropolitan Police Department revealed that of the 20 476 hours worked that month, 43% were related to traffic policing, 23% to crime prevention and 2% to by-law enforcement, with the remainder devoted to other duties such as administration, court appearances or training.27 Similarly, of the 12 828 calls logged by the Johannesburg Metropolitan Police Department in the last Number of deaths due to road accidents 23% Number of deaths due to murder 40% quarter of 2003, 80,5% were traffic-related, Number of deaths due to other non-natural causes 37% 10,5% related to by-law enforcement, and 9% to crime. The enforcement of by-laws has been complicated Table 4-8: Police stations in the SACN cities by the process of rationalising the different regulations from former municipal jurisdictions Number Average area into a single, consolidated metro-wide set of by- of police per police laws. These processes have taken metropolitan stations Area km2 station councils longer than anticipated. Cape Town 58 2 460 42 Johannesburg 38 1 644 43 Nelson Mandela Bay 17 1 958 115 When it comes to policing, providing a deterrent Buffalo City 22 2 527 115 is key to the notion of crime prevention. Ekurhuleni 36 1 924 53 Tactics such as visible police patrols, roadblocks, eThekwini 43 2 291 53 search and seizure operations, and targeted Mangaung 14 6 283 449 Msunduzi 8 633 79 arrests are important deterrent strategies. Previous Tshwane 28 2 174 78 research has found that metropolitan police departments have interpreted their crime prevention mandate in different ways. Some have A sample comparative analysis of five provinces with SACN cities established specialised units to tackle targeted shows that there are about 82 000 SAPS officers, 5 200 metro crimes like hijacking, others focus on joint police officers and a further 1 896 provincial traffic enforcement operations with SAPS, and others have social officers, making up a total of almost 90 000 enforcement crime prevention units that focus on public officers.26 This yields an average coverage of one enforcement education and awareness activities with schools officer per 6 km2 and one enforcement officer per 369 people. and other community structures28. Even more telling is the ratio of one sworn police officer to 378 people. This can be compared to equivalent international In general, crime statistics over the period 1996 to ratios of 1: 242 in Australia, 1:286 in the UK, 1:392 in the USA, 2004 have shown a steady rise in most major 1:517 in Denmark, and 1:647 in Finland. categories. Between 2002 and 2004 many of the more serious crimes such as murder and hijacking Most of the new metropolitan police officers were previously showed signs of stabilising and perhaps municipal traffic officials, and have been relatively successful in decreasing slightly. On a city-by-city analysis, the STATE OF THE CITIES REPORT 2006 4 ­ 40 Figure 4-10: Proportion of operational spend on public safety 2004/05 14 000 000 12 000 000 10 000 000 8 000 000 R'000 6 000 000 4 000 000 2 000 000 0 Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Nelson Mandela Tshwane City Public safety Total operational budget Table 4-9: Enforcement capacity in the provinces accommodating the nine SACN cities Total SAPS Number of Number of number of Provincial Provincial sworn metro provincial enforcement population area City area police police traffic officers in (million) km2 km2 officers officers officers Province Eastern Cape (2 cities) 7,1 169 580 4 485 15 020 272 15 292 Free State (1 city) 2,9 129 480 6 283 8 339 357 8 696 Gauteng (3 cities) 8,9 17 125 5 742 24 717 3 245 430 28 392 KwaZulu-Natal (2 cities) 9,6 92 100 2 924 18 740 1 142 422 20 304 Western Cape (1 city) 4,5 129 370 2 460 15 416 798 414 16 628 Total 82 232 5 185 1 895 89 312 trends are more difficult to read. Figure 4-11 shows the number of cases of public violence by city for 1996, 2001 and 2004. In The broken windows theory Buffalo City, Cape Town and Johannesburg there were more reported incidences of public violence in 2004 than ever before. The `broken windows' theory suggests that the metro police should have a different approach eThekwini has a fairly stable pattern of annual incidents, and to crime prevention than the SAPS. According to Ekurhuleni, Tshwane, Mangaung and Msunduzi recorded fewer this theory, crime thrives in localities where order incidents per year over the period. appears to have broken down. Factors such as broken windows, uncut grass and weeds, graffiti, loud noise, unregulated squatting, hawking or Many city residents continue to believe that the police ­ both parking and illegal dumping all contribute to SAPS and metro police ­ do not have effective crime prevention an environment that breeds insecurity. This strategies. Figure 4-12 shows how few residents are satisfied undermines community cohesion, and criminal elements start to gain control, contributing to with crime prevention in their neighbourhoods. the likelihood of serious crime. 4 ­ 41 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Figure 4-11: Public violence 1996-2004 180 160 stations 140 police 120 at 100 reported 80 cases 60 of 40 20 Number 0 Buffalo City Cape Town Ekurhuleni eThekwini Johannesburg Mangaung Msunduzi Nelson Mandela Tshwane City Public violence 1996 Public violence 2001 Public violence 2004 Figure 4-12: Percentage of surveyed residents who are The report on the global Aids epidemic released satisfied with how Government handles crime on 1 June 2006 paints a bleak picture of progress prevention in their neighbourhood towards reducing HIV and Aids. Although the (HRSC survey 2005) spread of HIV appears to have levelled off on the African continent, HIV mitigation efforts still lag 100 behind with insufficient commitment of human, 90 financial and institutional resources to fight the 80 disease (see figure 4-13). 70 60 The HIV and Aids pandemic is often seen only as a 50 centage health problem, and therefore the sole Per 40 responsibility of health departments. This narrow National average 30 interpretation obscures the more complex 20 interrelationships between the pandemic and 10 other urban processes like population 0 movements, urban poverty, access to housing and City ownT services ­ and the increasing inability of the poor Nelson Mandela shwaneT to pay for these services. Buffalo Cape Ekurhuleni eThekwini Mangaung Msunduzi Johannesburg Common indicators for HIV prevalence among HIV and Aids households include race, age, gender and HIV prevalence and Aids deaths in the nine SACN cities have settlement type. It is most common in Africans increased significantly since 1996 (see page 3 ­ 5). This destroys aged 25-34, among women, and in people living households, undermines social stability and perpetuates social in informal settlements. This last factor is most exclusion. Aids deaths also impact on urban productivity and significant for urban managers given that it is urban governance. most difficult in these places to deliver the urban STATE OF THE CITIES REPORT 2006 4 ­ 42 Figure 4-13: HIV epidemic in sub-Saharan Africa, 1985-2005 g p , 30 15 25 12 (millions) HIV (15-49) 20 with 9 adult 15 living 6 10 people prevalence, of HIV 3 5 % Number 0 0 1985 1990 1995 2000 2005 Number of people living with HIV % of HIV prevalence, adults (15-49) This bar indicates the range around the estimate services ­ water, sanitation and electricity ­ that might help A vicious cycle emerges, in which urban poverty mitigate the effects of the disease. exacerbates HIV and Aids, and HIV and Aids exacerbates urban poverty. The problems of social HIV and Aids increases the economic pressures that create access associated with poverty, such as migrancy, and migrancy in turn increases the spread of HIV and inadequate housing, sanitation and urban Aids, a vicious circle that puts the most vulnerable households at services, and inadequate nutrition, exacerbate the even greater risk. Complex population shifts arise: the disease spread of opportunistic diseases that may strike drives infected people out of the cities and back to families in rural during the later stages of the disease. At the same areas for care in the final stages of the disease. Orphaned children time, the increased need for households to spend are sent back to rural areas to be cared for by grandparents or money on medicine, coupled with the inability of relatives. A reverse pattern also occurs, driving infected people breadwinners to earn a living, plunges households from rural areas to cities in search of better health care, and placing into poverty. The impact of poverty is experienced increasing strain on the cities to deliver appropriate services.29 not only by households where one or more members are affected by HIV/Aids, but by the HIV and Aids tends to be elusive: no symptoms are immediately families of relatives or friends, who must take up visible, and the disease acts slowly over a number of years. their burdens. This impacts on the ability of An urban manager can be easily misled into assuming that no increasingly impoverished households to pay for crisis exists, and that therefore no urgent response is necessary municipal services, which in turn impacts on at the urban level. City officials need to understand the urban governance.30 trajectory of the disease, which tends to affect residents during their most productive years, both as workers and as parents Because of the particular trajectory of the disease raising children. Children become orphans, spreading the as it transforms from HIV into Aids, illnesses and economic burden to the families of relatives. These problems are symptoms change over time. The various stages worsened by stigmatisation, compounding exclusion and of the disease will have different impacts on how division in the city. households respond to prevention and care, 4 ­ 43 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued which in turn relates to housing and municipal services. Table A number of South African mayors and city 4-10 shows the nature of households' various needs for housing managers have made combating HIV and Aids a and municipal services to deal with various stages of the disease. priority during their terms of office. This has For example, in stage 3, clean water and sanitation are necessary resulted in the establishment HIV and Aids units for preventing diarrhoea, for replacing fluids, for providing care, which reports to the city manager, taking the and for preventing the illness from spreading. discussion about HIV beyond the health department. The cities have also mobilised This suggests that municipal managers can play an important different strategies to manage the impact of HIV role in mitigating the effects of HIV and Aids by ensuring and Aids ranging from: adequate provision of housing and the delivery of municipal · a multi-sectored approach services. Table 4-10: Examples of illnesses and the role of housing and services Stage 1. Acute HIV infection. Infected person is fully active and asymptomatic For example: Seroconversion illness Symptoms: Glandular fever-like symptoms including fever, rash, joint pains and enlarged lymph nodes at the time of seroconversion. Comments: These illnesses do not depend directly on services for care and prevention Stage 2. Early disease. Infected person has symptoms but remains quite active For example: Herpes zoster or shingles Symptoms: An intensely painful rash with blisters. Comments: Poor personal hygiene creates a predisposition to many infectious skin conditions and is a risk factor for the development of secondary bacterial infection in skin conditions whatever the cause. Poor hygiene may put other household members at risk of infection. Stage 3. Late disease. Infected person is bedridden < 50% of normal daytime For example: Unexplained chronic diarrhoea Symptoms: Usually watery rather than bloody stools Comments: Caused by drinking water contaminated by sewage or eating food that has been in contact with contaminated water, flies or soiled hands. The risk of infection higher with inadequate sanitation and overcrowding. Domestic, personal and food hygiene is very important in preventing infection and access to plentiful, clean water needed. Stage 4. AIDS. Infected person is bedridden > 50% of normal daytime For example: Tuberculosis that has spread beyond the lungs to other organs Symptoms: Coughing, loss of appetite and weight, fever, night sweats. Because it is widespread throughout the body symptoms also relate to site of infection. Comments: Probably the most common AIDS defining illness. The risk of infection is higher with overcrowding. Source Tomlinson, R and Mkhabela, I (2005) HIV and Aids and urban poverty. Discussion document prepared for SACN STATE OF THE CITIES REPORT 2006 4 ­ 44 · political and administrative support (championing) Many of the smaller cities are tackling HIV and · mainstreaming within the local government departments. Aids as a workplace and community issue with little or no resources, with the result that these The cities have been providing ongoing prevention, voluntary initiatives are uneven. Only a small number have counselling and testing, care and support for the infected and launched and maintained sustainable HIV and affected, anti-retroviral treatment programmes, as well as Aids programmes due to lack of funds, lack of general wellness programmes. Municipalities have also been political and administrative will, limited support providing similar programmes for their own employees. and resources. Msunduzi and Buffalo City have Through workplace testing that has included senior managers, provided strong political support for HIV and Aids local authorities have been able to remove some of the fear programmes. Msunduzi's HIV and Aids strategy associated with HIV. has been showcased as an international best practice case study illustrating how the city has Structurally, HIV and Aids custodianship is often a victim of orchestrated partnerships with local hospitals and organogram failure, with HIV and Aids units being placed under clinics, non-governmental organisations, faith- the jurisdiction of inappropriate departmental reporting lines. based organisations, funding agencies and This undermines the performance of the overall HIV and Aids organisations concerned with children in distress. strategy. Some cities have successfully translated commitment into action by restructuring departments and ensuring that the HIV and Aids manager holds an influential position in top management. Cape Town has been proactive in developing HIV related services and in coordinating its services with those of provincial government and non-governmental organisations. An interesting innovation based in Cape Town ­ Cell Life Project ­ uses cellular phone technology for recording patients' adherence to anti-retroviral treatment and tracks home-care visits. In Johannesburg, the Esselen Street Clinic project targets vulnerable groupings where services are tailored for the needs of refugees and non-national migrants. Translation services are provided within the voluntary counselling and testing programmes. In Alexandra, an innovative housing project will provide cluster homes for foster care, integrated within the fabric of the residential area. 4 ­ 45 STATE OF THE CITIES REPORT 2006 PEOPLE BUILDING THE CITY CECELIA SATO: CARING FOR PEOPLE WITH HIV AND AIDS IN THE ABSENCE OF BASIC INFRASTRUCTURAL SERVICES There is nothing remarkable about long queues when food is run support groups for the infected and the being handed out for free, particularly in poor areas. This is what directly affected. "It is very difficult," says Sato, happens in Diepsloot, in the north of Johannesburg one warm, "particularly in an environment where people are summer afternoon. Small clusters of people are lining up waiting being rejected from homes because they have for the arrival of a bakkie bringing food from the local Pick 'n HIV." Pay. Then they stream into the Vuselela Drop-in Centre, a one- stop shop for HIV and Aids counselling and awareness, to choose Sato firmly believes that home-based care needs between bread-rolls that have reached their sell-by-dates or to be complemented by visits from a professional cakes that are slightly stale. nurse. "There will be patients that need TB injections, but they cannot even get up to go to But for Cecelia Sato, the retired nurse who established the drop- the clinic. It is not an easy thing to do ­ home- in centre and runs it on a daily basis, the long queues are a small based care ­ but it is an essential service. It's often victory. "When we first started giving free food, people thought not safe. Nursing work is done by females. You go it was poisoned, that it gave you HIV. They wouldn't eat. When all by yourself to places where there are tsotsis. they saw me in the street they called me `Sister Aids.'" You are at risk of being raped. There is often a language barrier, particularly with foreigners. But today that has all changed. Thanks largely to the work The worst nightmare is the ambulance. You can that Sato and her colleagues have been doing at Vuselela for phone and wait for an hour. Another challenge is the past six years, some of the stigma associated with Aids food. You see, we service a very poor area. That is has been removed. "Now, they eat, and now they call me why I have a relationship with Pick 'n Pay. You Ma Cecelia!" cannot distance poverty from HIV." Cecelia Sato established the Vuselela Drop-in Centre in 2000, Sister Eunice Khubeka is one of the professional working out of a two-roomed corrugated iron shack, no nurses who works out of Vuselela. She has the different from other structures in the immediate vicinity. Now matronly authority of a nurse with decades of her organisation has spilled out into five additional containers, experience, tough and gentle at the same time. wheedled out of medical companies, residents of the nearby Every day she accompanies the home-based care upmarket suburb of Dainfern and US-based Aids NGOs. workers on their rounds, making sure that she gets to see her sixty or so "clients" at least once a week. Today she works together with two professional nurses, three She accomplishes this on foot, on roads that are peer educators and 38 volunteer home-based caregivers, "not level, in a settlement that is very scattered." educating, counselling and caring for people in Diepsloot, Johannesburg's most impoverished region. The centre has been "When we come into a client's house there are a identified by the Department of Health as a "non medical site" lot of variables," says Khubeka. "But the big thing and receives support from the department in the form of small is poverty. I want to wash ­ but there is nothing. stipends for the home-based caregivers. The peer trainers create So I take a bag with washcloths. Then there is the awareness of HIV and Aids: "How do you get it, how do you basic need for food. Most people here are prevent it, how do you live with it". Other volunteer counsellors unemployed. We get a food supplement from the STATE OF THE CITIES REPORT 2006 4 ­ 46 Department of Health called Pilane. Then we can give the reinforced what I teach about HIV. You are not medication. Or sometimes there is food but no fuel. In dead because you have HIV. HIV is a condition extensions 7 and 9 there are communal toilets only. This is not that people can live with for a number of years. If conducive if you have diarrhoea. Sometimes the home-based we teach it right, people can live longer. People caregiver will tidy the house, or if there are school-going can contribute provided they discover early ­ children will wash their uniforms. I want people to feel proud." which is why I advise people to get tested. The big Sister Khubeka sees her role as four-part, offering psychological, unfortunate part is that people will go very late to physical, social and spiritual comfort. the hospital." "Unfortunately," says Khubeka, "Some patients are not compliant. Diseases are blamed on witchcraft." Michael Mohapo, one of the youth workers, confirms that this is a problem. "You get to hear what people feel. They know about HIV but there are myths ­ myths that HIV can be cured by a traditional healer." Both Sato and Khubeka also face serious challenges due to the lack of infrastructure in the area. Khubeka echoes Sato's complaints about the transport problems that arise in a neighbourhood with badly rutted sand roads and few tarred access routes. "When we phone for an ambulance, we are told WHEN WE PHONE FOR AN AMBULANCE, WE ARE TOLD TO BRING THE PATIENT TO A MAIN ROAD. BUT WHAT IF THE PATIENT CAN'T WALK? to bring the patient to a main road. But what if the patient can't walk? Then we have to hire a taxi. Then the taxi driver says: `This one who is so sick... not in my taxi.'" A lack of basic services also hampers the operations of the drop- in centre. There is no Telkom line, even though Sato has applied repeatedly. The stove and fridge built into the kitchen container cannot be used, because there is no electricity. One of Sato's happier stories is about a young couple, both of whom had HIV, who wanted to get married, but could not afford the festivities. "So," said Sato, "I phoned Kaya FM and people responded... and they had a lovely wedding. Gauteng MEC Gwen Ramaghopa even came." "For me, the wedding 4 ­ 47 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Culture and creativity Urban culture is also recognised as a potential In the face of increasing diversity in cities, and the tendency of strategy for harmonising different social interests in different groups to splinter off in pursuit of identity politics, a city. The assumption that culture is a point of many cities are beginning to recognise that culture can play connectivity and inclusivity in the city has led to the a role in fostering tolerance and building a collective identity. development of public spaces and cultural This coincides with a recognition that cities are crucibles amenities where public art, performance art, of artistic creativity. festivals and unique cultural events can be showcased and made accessible to all citizens. Cities are using culture as a key tool to build urban citizenship Cape Town is pursuing a vision of establishing and to redevelop urban spaces for economic benefit.31 Cities places of inclusion in the `Uluntu Plaza Dignified promote culture through physical projects ­ through urban Places Programme', a project intended to create renewal, the creation of public space, and the development of high quality urban environments and social cultural precincts. They also celebrate, showcase and support facilities as lead projects in key areas across the culture in more symbolic ways ­ through financial support, city.32 The new Constitutional Court, erected on the promotion of civic identity, and events. site of Johannesburg's notorious prison complex, now houses institutions that celebrate democracy Some municipalities have used urban renewal, or the physical and human rights in post-apartheid South Africa.33 redevelopment of obsolete buildings to create distinctive precincts that give a city a particular character. South African There is also a trend towards developing `cultural inner city regions have witnessed such renewal in areas like districts' which spatially concentrate economic Newtown in Johannesburg; the Cape Town central city; Florida activities. This can be seen in Newtown and in the Road, Morningside and Stanford Hill in eThekwini; and Hatfield fashion district in central Johannesburg, and in the in Tshwane. South African coastal cities have also redeveloped proposed cultural precinct in the inner city of their docklands, converting disused port infrastructure into eThekwini and Cape Town. mixed use, retail, business, residential, entertainment and cultural spaces. The V&A Waterfront in Cape Town and the Point Various annual festivals in South Africa's cities and development in Durban are successful examples. towns have been conceptualised with a view to celebrating cultural diversity, stimulating economic Culture can be a catalyst of employment growth. There is growth, and promoting tourism. The National evidence that using cultural capital to transform older parts of Festival of the Arts in Grahamstown, the Macufe cities has enhanced urban employment, tourism and cultural Festival in Mangaung, the Klein Karoo National Arts regeneration. But equally, there are signs that not everyone Festival in Oudtshoorn and the Aardklop National benefits. Gentrifiers, who are able to pay higher prices, alter the Arts Festival in Potchefstroom attract over 500 000 character of areas, displacing low-income residents and visitors every year. The annual Celebrate eThekwini disrupting the social spaces of original tenants. event includes a mix of social, family, heritage, sports, artistic, cultural, environmental and spiritual Cities in developing countries have focused on reviving events that highlight the region's diversity.34 traditional crafts. These have fed a tourist appetite for cultural heritage. The promotion of arts, crafts and services that are While many events take place in city centres, the locally authentic has become a mechanism for marketing Absa Soweto Festival is a unique cultural event in developing cities and for creating jobs. that it takes place in the heart of the township. This festival combines a lifestyle and leisure exhibition, an SMME development programme, a STATE OF THE CITIES REPORT 2006 4 ­ 48 careers village, entertainment, a fashion show and beauty settlement" in the approach to housing the poor. pageant, a boxing tournament, a kids zone, a travel and tourism These efforts are focused on facilitating denser, expo, arts, crafts and heritage tours. The festival helps break better-located, mixed income, environmentally down the artificial barriers that exist between the people who sustainable government-assisted housing in line live in the townships and those who live in the suburbs in an with Breaking New Ground. But there is still attempt to promote urban inclusivity. considerable work to be done in developing the policy, regulatory and financial instruments Limitations and remaining challenges required for this approach to be implemented at a The focus of municipal poverty reduction and social inclusion meaningful scale. efforts during the period 2000 ­ 2006 has been on infrastructure linked initiatives ­ basic services, the provision of subsidised All the city municipalities have put an emphasis on housing, and job creation linked to infrastructure provision and the social development aspects of inclusion and urban renewal. poverty reduction efforts. There is an explicit recognition in all the IDPs that the development There have been substantial achievements. In particular, a widely of social and human capital is a crucial part of the adopted approach of providing an equitable package of basic development process. Many innovative services to all residents, including a defined quantum of free programmes have been tried in areas including services to the poor, had been implemented. Financial support HIV and Aids, gender, safety and security and for the free basic services via the Municipal Infrastructure Grant community building. and the Equitable Share grant has limited the subsidy burden on the municipal fiscus. The success and viability of this approach is However, it is acknowledged that this remains an reflected in rising collection rates, major increases in service area of conceptual weakness and that most cities provision to informal settlements and increasing investments lack any integrated strategy for building social and in infrastructure maintenance, although this is still too low. The human capital. City programmes have generally infrastructure-focused services have also developed established focused on symptoms and relief but have no clear ways of working more effectively with poor communities ­ in strategies or sustained programmes to build social situ upgrade, labour intensive construction and maintenance in and human capital. line with EPWP principles. Overall, the infrastructure service emphasis has There is recognition that the ways in which these infrastructure- predominated over the `softer' social services. An based efforts have been implemented have had some inevitable consequence is that there has been a unintended, negative consequences. A consequence of much decline in proportion of both capital and housing and service delivery interventions for the poor over the operating budgets allocated to the social past decade has been the creation of large dormitory functions over the past five years. National settlements of low-cost mass housing on the urban periphery transfers to municipalities have also been almost where the price of land is cheap. These areas are typically far exclusively focused on basic services and on from economic opportunity and have limited and expensive housing. transport access. They also tend to reinforce the segregation of the city along racial and income lines. This is likely to trap people Part of the reason for neglecting the human in poverty and imposes long-term social costs. capital issues has been the relatively unclear definition of local government's role regarding In an attempt to address these limitations, municipalities are social development. Social functions such as placing an increasing emphasis on "integrated human education, welfare, policing are either provincial 4 ­ 49 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Balancing rights Should the municipality be required to provide illegal occupiers of land or property with alternative accommodation before it evicts them from that land or property? This question has come into sharp focus in the Johannesburg inner city, where municipality has undertaken many high profile evictions of poor urban residents from illegally occupied `bad' buildings. The Johannesburg Inner City Regeneration Strategy points to some 235 bad buildings that need to be cleared and renovated. Joburg argues that such evictions are unfortunate but justifiable and necessary. They suggest that the renovation of `bad' buildings is crucial in turning around urban decay and creating dignified and liveable accommodation. They argue that such redevelopment attracts investment, creates employment opportunities and contributes to growth and collective well- being. They also argue that the state of many of these buildings is hazardous to the health and safety of the residents and those living in the area and that they have a legal duty to intervene. Joburg has further taken the view that they cannot be required to provide alternative accommodation in the inner city for those who are evicted. This would result in a lack of fairness and equity where other individuals might have a stronger claim to such housing because they are higher on the housing waiting list or have a greater need. It would also undermine a planned and systematic approach to dealing with housing backlogs and would ultimately encourage illegal occupation because this then improves the occupiers chances of accessing housing. Anti-eviction organisations contest this reasoning. They dispute whether the rights of poor inner city residents to housing can be overturned by an appeal to a more general public interest. They suggest that the "trickle down" impact of inner city regeneration has little affect on the urban poor and that the evictions have a devastating impact on the poorest of the poor. They also point out that the evictions do not solve the problem, but simply displaces it elsewhere. The evicted residents generally remain in the area creating homelessness and overcrowding in other areas. They also contest the way in which the evictions have been carried out and the timing of timing evictions, which compromises the already precarious situation of the poorest urban residents. Importantly, the courts have taken a different perspective to that of the municipality. The landmark Jajbhay judgement of March 2006 ruled that the Johannesburg's housing policy failed to comply with the Constitution because it does not cater for the needs of the inner city poor. He ordered Joburg to devise and implement a comprehensive plan to cater for residents of the inner city needing accommodation. The judgement says that poor residents of "bad buildings" of the inner city of Johannesburg must be given alternative housing in the inner city if the municipality wants to evict them. The judgement is now on appeal. or national functions. Other social functions represent shared accommodation problem themselves? Or should mandates with major problems related to unfunded mandates cities invest resources in upgrading buildings? and poor intergovernmental coordination. Health, libraries and How do cities deal with the unintended support for arts and culture are the most notable examples. consequences of gentrification which will displace the poor? When derelict buildings have been There is also an acute recognition that the process of realising upgraded, who is entitled to live there? Do the the socio-economic rights articulated in the Constitution poses a illegal former tenants of the derelict building have range of difficult dilemmas. How should these rights be realised first right to or do those higher up on the housing given resource constraints? How, for example, do cities address waiting list have preference? These are dilemmas the problem of tenants living in derelict buildings in the inner for which there are no easy answers and where city? Do cities support economic growth in the area in the hope new wisdom can only emerge from practice. that enhanced income will enable residents to solve the STATE OF THE CITIES REPORT 2006 4 ­ 50 The well-governed city There is growing recognition internationally that the quality of Defining the well-governed city city governance makes a profound difference to the development Governance, as distinct from government, is potential of a city and its ability to successfully tackle its a relatively new concept that emerged as an development challenges. important policy idea during the 1990s. It flows from the recognition that power exists both inside and outside the formal structures of government The first term of office of the new municipalities established in and that the inter-relationship between 2000 was above all a grand experiment in developing forms of government, private sector and civil society is a urban government and governance more appropriate to the critical factor affecting the performance of cities, needs of cities in a changing context. regions and countries. It also lays stress on `process', where decisions emerge from a complex set of relationships between many actors with There were many drivers of innovation in government and varied agendas. "Urban governance is the sum governance. of the many ways individuals and institutions, · The Municipal Structures Act established strong city public and private, plan and manage the governments with boundaries that generally encompassed common affairs of the city. It is a continuing process through which conflicting or diverse the functional region of the major urban centres. These are interests may be accommodated and cooperative led by executive mayors. It also tried to promote new action can be taken. It includes formal institutions relationships with communities through mechanisms such as as well as informal arrangements and the social ward committees and sub-councils. capital of citizens." (UN HABITAT) · The Municipal Systems Act sought to modernise municipal Urban governance refers to how a city administration and to establish a new relationship between community organises itself, determines its government and the citizens in line with the governance ethos. priorities, allocates resources, selects who has voice and holds each other to account. · The Municipal Finance Management Act sought to improve corporate governance and financial management practice. However, the even more challenging and debate relates to what might constitute "good governance." Again there are a number of But change and innovation is not simply a response to legislative definitions. A common thread points to inclusive imperatives. Good local and international practice has been a planning and decision-making processes as being strong influence. The severe nature of South Africa's urban key to good governance. Typically, the discussion about "good governance" tends to have an development problems and the historic challenge of building a outcome orientation. UN-HABITAT for example sound relationship between city and its citizens has also driven promotes the following definition of good urban municipalities to find new ways of deepening this relationship. governance: "Urban governance is inextricably linked to the welfare of the citizenry. Good urban This section explores some of the key areas of change in governance must enable women and men to access the benefits of urban citizenship. Good government and governance practice focusing on those areas urban governance, based on the principle of which have most dominated the agendas of city municipal urban citizenship, affirms that no man, woman leadership: or child can be denied access to the necessities · The functioning of political structures of urban life, including adequate shelter, security of tenure, safe water, sanitation, a clean · Organisation and transformation of the administration environment, health, education and nutrition, · Strategy and performance management employment and public safety and mobility. · Relationship with citizens and stakeholders and mechanisms Through good urban governance, citizens are for participation provided with the platform which will allow them to use their talents to the full to improve their · Corporate governance social and economic conditions." · Inter-governmental relations 4 ­ 51 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Political structures suspended or replaced during term of office in six The Municipal Structures Act resulted in major changes to the of the nine SACN cities and mayors were political structures of local government. The Act replaced the suspended or changed in three cities (see table ceremonial position of the mayor with the position of speaker. 3-11). The respective roles of executive councillors The position of mayor was expanded either as an executive and top managers and the lines between political mayor supported by an advisory mayoral committee which and administrative responsibilities have not always applied in all provinces outside of KwaZulu-Natal and the been clear, given that legislation has increased the Western Cape (from 2000 to 2002) or as chairperson of an power of both the executive mayor and municipal Executive Committee where executive authority is not vested in manager. Experience has shown the personal the office of mayor but in the committee. relationship between the mayor and city manager and their respective profiles is very important in There is an acknowledgement that there have been many determining how these tensions are resolved in advantages in creating executive mayors. Many mayors have practice. become influential and high profile political players and have provided a focal point for leadership and city positioning. It has A key conclusion from the past term of office is also facilitated a more responsive executive, able to make that political legitimacy, continuity and a sound decisions speedily and efficiently. relationship between the political and administrative leadership are key determinants of However, care needs to be taken that the decision-making effective municipal management and consequently process remains transparent and accessible. Some mayoral of the performance of the municipality as a whole. committees (Maycos) have tended to come to conclusions in caucus without the participation of officials. Different models of Administrative transformation the mayoral committees have emerged in practice from quasi- On 5 December 2000, the previous two-tier cabinets where individual Mayco members have political system of local government for metropolitan areas responsibility for their portfolios, to limited advisory bodies was dissolved. All employees, assets and where power largely resides with the executive mayor and the commitments of the previous councils were city manager. transferred to the new metropolitan councils. The three non-metropolitan SACN city municipalities The existence of large metropolitan councils, sometimes with also incorporated adjoining areas but now fell more than 200 councillors, has required careful management within district municipalities. and good resourcing. Ordinary councillors have participated through Section 79 and 80 committees and ward committees. The creation of these new entities with extensive But there are common complaints that ordinary councillors have powers and functions, large areas of jurisdiction not participated actively or have been marginalised. There is and strong fiscal capacity can be seen as a major recognition that new ways of enhancing the role of non- intervention. This has helped municipalities executive councillors in oversight, representative and undertake the urban restructuring required community-liaison functions are critical. Different councils have to address the apartheid legacy of inequity and provided different levels of support to councillors ranging from spatial fragmentation and to position the city extensive help, including training, provision of laptop computers in an era of increasing global competition and ward offices, to fairly minimal assistance. amongst cities. In many municipalities there has been significant instability in the Each city has faced the task of both amalgamating political and administrative relationship. City managers were a number of previous municipalities into a single STATE OF THE CITIES REPORT 2006 4 ­ 52 organisation while at the same time re-organising its way of had largely completed its restructuring as a single working to address daunting developmental challenges. administration prior to 2000. Cape Town, at the Re-organisation was based on the acknowledgement that a other extreme, only finalised its new organisation major change in the functioning of the local government in 2005. administration system was required. The traditional hierarchical bureaucracy with its characteristic departmental `silos' has been The key underlying challenge has been to design seen as no longer adequate. Municipalities have tried to shift structures that gave effect to the new strategic towards more `networked' organisations, characterised perspective of "developmental" local government internally by less hierarchical and bureaucratic forms of which could play a more proactive role in the organising and externally by greater use of partnerships, cities. Again, there are many common features alliances and outsourcing. across the city municipalities in their approach to organisation design. In some instances this restructuring followed a series of ad hoc initiatives across the different municipalities since 1996 to The first feature is the general emergence of modernise their organisations. These have included: stronger corporate centres. This is reflected in a · The adoption of a `strategic management-type' structures significant increase in human resource capacity which sought to break down functional silos or line in corporate strategic functions including departments by focusing on integrated strategic integrated development planning, performance management; management and communication. In many · The introduction of some matrix-type structures of both a instances, these functions have been located project and geographic nature; and within the office of the city manager. In other · Some business process experimentation with organisational instances, it has been placed under a strong boundaries including the establishment of community corporate executive director. Tshwane and Cape partnerships, joint venture companies with the private sector Town have appointed chief operations officers in and the outsourcing of identified non-core functions. order to free up city managers to focus on corporate leadership functions. The amalgamation of the pre-2000 administrations and their reorganisation into new unified and integrated single city A second common feature has been the emphasis administration typically involved placing all staff into an interim on establishing strong city or metropolitan scale holding arrangement based on the previous structures. This took service delivery organisations. In almost all place while a new top management was appointed and a new instances individual services ­ whether these were organisational structure was determined. This organogram was infrastructure focused services such as water then populated via appointment and placement. Large scale reticulation or whether it was community services mergers of this nature tend to displace a significant percentage ­ have been centralised into single city-scale of senior staff. A conscious effort to limit redundancies was service departments or entities. This is generally made given the cost implications, and only a limited understandable given the need to integrate number of voluntary severance arrangements occurred. No city different former administrations, to build a unified municipality experienced any serious disruption through culture, and to achieve an equitable allocation of industrial action or lack of service continuity during the process. resources. Each city has chosen to restructure in different ways because of A number of different organisational formats for the very different legacies they inherited. The time scales of the achieving these focused city-wide service exercise also varied considerably. Johannesburg, for example, departments or entities were used. 4 ­ 53 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Managing the service portfolio The business of South African city municipalities is extremely diverse and they are responsible for a wide range of very different functions. These range from highly standardised services such as electricity and water reticulation delivered to individual households which generate their own income through tariffs to property rates funded customised community services such as municipal health and community development addressing complex local problems to regulatory functions such as enforcing traffic laws. Each of these different categories of service fulfills a different strategic role in supporting city development and each faces different strategic challenges. The table below splits municipal functions up into three kinds of services with different focuses and logics. Services portfolio analysis for South African cities 2006 Household services Community services City-wide services Associated functions Electricity, water, sanitation, Housing, safety and security, Spatial planning, land use solid waste municipal health, libraries, management, economic community facilities, sport development, environment, and recreation, community transport and roads planning and social development, and management, disaster local area management. management Provider status Municipality as monopoly Alternative providers (the Municipality as authority provider market also provides and (regulator and planner) municipal focus on poor who cannot access market) Funding Service tariffs supplemented Rates and levies Rates and levies by grants supplemented by user fees supplemented by designated and grants grants Recipients/ Individual households Communities (of place and City as a whole beneficiaries of need) Funding logic Income grows as Budget pressures as Funding uncertainties provision expands demand grows Provision challenge Expanding provision to all Focused smarter provision Allocating limited through cross-subsidisation for viability and equity resources to strategic priorities Contribution to Basic infrastructure Community cohesion, Urban efficiency, jobs, city development and service provision safety nets, "stairway" competitiveness Progress 2000-2006 Sustainable model for basic Innovative projects but Major improvements in service extension in place lack of mainstreaming and urban planning and capacity but underinvestment in impact. maintenance Strategic challenge "continuous improvement "rethink way of work" "coherent strategy for grow and sustainability" and share" Critical issues · Infrastructure maintenance · Framework for human · Transport and connectivity for 2006-2010 and upgrading for settlements and housing investments growth provision · Sustainable development · Framework for human and practices social capital development STATE OF THE CITIES REPORT 2006 4 ­ 54 The Johannesburg iGoli 2010 utilised a bold `client contractor' Other city municipalities maintained decentralised approach to create a corporate centre with capacity to manage offices. For example, Mangaung and Buffalo City individual services via service level contracts. The services maintain offices in Thaba Nchu and King Williams themselves have been recast as quasi-independent public Town respectively. These function as local entities. The tighter legislative environment associated with the management centres and customer complaint Section 78 procedures of the Municipal Systems Act and the points, although service management and practical challenges of managing `client-contractor' relationships operations are the responsibility of the head office. has meant that most cities re-organised within the framework of internal service departments. Johannesburg itself has sought to A further form of area management is focused on tighten its control over the entities over the period of office. `priority zones'. This took a number of forms from the growing emergence of City Improvement The internal service re-organisation focus has been typically Districts enabling higher levels of urban supplemented by some attention to ring-fencing in order to management and top-up funding as pioneered in improve service transparency and improve management. There Cape Town to the area-based approach of have also been many examples of getting out of non-core eThekwini where dedicated management business. Cape Town, for example, sold off its fresh produce capacity was created for five specific areas. market and abattoir. There has also been an effort to improve horizontal No municipalities have made use of the public-private and vertical integration and communication and partnerships envisaged in the Local Government White Paper as to facilitate `joined-up' government including: a possible mechanism for delivering the major services of the · Growing allocation of resources to cross- municipality. Service delivery partnerships that did emerge functional projects which require services to tended to be very specific and often related to new technology. work together towards common goals; For example, a number of cities entered into service partnerships · The use of service clusters as a way of breaking with private companies around traffic enforcement cameras and down functional silo thinking; close-circuit television monitoring. The further restructuring of · Performance management focus on outcomes specific sectors such as the anticipated restructuring of the rather than service inputs and outputs; electricity distribution industry into REDs (see Chapter 5), the · The introduction of one-stop-shop facilities establishment of transport authorities and the like, will now where different services can be accessed at a occur within the context of capacitated city government with an single point. enhanced ability to oversee municipal entities. There is general acknowledgement that the This focus on establishing strong corporate management and human resources (HR) situation has been a metropolitan-scale service delivery entities has been challenging one. HR practice in local government supplemented in some cities by a level of area-based has historically been inflexible with rigid job administration. Johannesburg is the only city that has descriptions and job grading systems, weak established a general form of area management. This involved supervisory systems and long-term under- the establishment of 11 regions with regional managers who investment in building capability and skills. had line responsibility for the delivery of certain local services, Change in this area has been hindered by a highly such as health, as well as a broader oversight for services in unionised and antagonistic labour relations the region. environment. At the start of the term, 4 ­ 55 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued municipalities also had staff profiles that were not representative of the population, particularly at middle management level. How do city budgets measure up to private sector entities and parastatals (as Transformation and ensuring better representivity have been key per 2004/05 financial statements) priorities for all councils and major improvements in Revenue 2004/05 employment equity have been achieved in all councils. Change as shown in audited management and service improvement initiatives have been statements of common to all city municipalities but the impact of these Organisation financial performance programmes is unclear at this stage. There is a shared view that Transnet R42 259 million internal human capital development has been very uneven and Eskom R41 127 million that the national skills deficit is also reflected within the South African Airways R17 442 million city administrations. The need for upgrading staff skills at all Nampak (industrial) R15 481 million levels is critical. Edcon (retail, includes Edgars, Boardmans etc) R13 590 million City of Johannesburg R13 149 million The restructuring of South Africa's municipalities has been Woolworths Group R12 988 million accompanied by major efforts to modernise management and Santam (insurance) R11 355 million operations. All cities have made substantial investments in eThekwini Metropolitan information and communications technology (ICT) Municipality R9 778 million infrastructure to provide a single integrated system for the whole City of Cape Town R9 292 million Ekurhuleni Metropolitan municipality as well as enhanced management information and Municipality R8 064 million service delivery capacity. These include: Harmony Gold (mining · Large scale system change through installing major company, listed on NYSE) R7 822 million enterprise resource planning systems (such as SAP) as was Netcare (hospitals and undertaken by Cape Town35 and is now being pursued by a health care) R7 533 million number of other cities including Tshwane and Johannesburg; Highveld Steel R7 155 million City of Tshwane R6 948 million · Developing customised open source systems (as pioneered Illovo Group (sugar producer) R5 143 million in eThekwini); Mr Price R4 636 million · Replacing legacy systems with common accounting, Johnnic Group (media and database and application software solutions. Msunduzi, for entertainment) R4 225 million example, has successfully implemented a Promis system Rainbow Chickens R3 830 million across the new council, representing significant African Bank Investments Ltd R3 383 million Mustek Ltd (computers, modernisation. includes Mecer) R2 942 million Nelson Mandela Bay There is acknowledgement within the cities that these initiatives Metropolitan Municipality R2 924 million have required a major investment of money and management Concor (construction resources and that it often takes longer than planned for these company) R1 624 million new approaches to be bedded down. Buffalo City Municipality R1 547 million Mangaung Municipality R1 415 million Msunduzi Municipality R1 228 million Basil Read (construction company) R469 million STATE OF THE CITIES REPORT 2006 4 ­ 56 Are city managers and staff overpaid? Much publicity has been given to the salaries paid to municipal managers. The following table gives salaries for each city for 2004/05. Salaries of municipal managers of the nine cities 2004/05 (R'000s) Buffalo City 854 Cape Town 1 104 Ekurhuleni 1 102 eThekwini 1 027 Johannesburg 1 000 Mangaung 1 057 Msuduzi 707 Nelson Mandela Bay 738 Tshwane 973 The following table shows the salaries of some comparable positions in the public and parastatal sectors. Salaries of Chief Executives of key parastatals and national government departments Entity CEO remuneration Comments Director-General in national R872 628 ­ R940 056 Total package differs according to notch government department SAA R2 295 million (7 months) Basic: R2 180 000, Retirement: R115 000. But note that this was only for a seven month period Eskom R13 045 million (15 months) For 15 month period to end March 2005: Basic: R3 794 000, Bonus: R2 765 000, Additional bonus and restraint of trade: R6 486 000 Transnet R2 599 million Of more significance to municipal finances are the relatively high salaries paid to unskilled employees, compared to the market equivalent. The following table shows the total cost of employment of the lowest paid unskilled permanent employee in the City of Cape Town in 2005/06. Note that because employees have often retained conditions of service from previous administrations there is variation across the metropolitan council. The amounts given here are typical amounts. It is possible that labourers could be paid more ­ up to a maximum, theoretically, of R87 291 if all benefits, such as the health benefit, are used to the maximum, but this is unlikely. While this total cost of employment may be unremarkable in the context of capital intensive industries, in the highly labour intensive municipal sector it is not only high but represents a very significant cost driver. Total annual cost of employment of lowest level employee (labourer) in City of Cape Town 2005/06 Item Amount Comment Basic wage R44 930 This is across the metro Pension contribution paid by employer R8 087 Most receive 18% of basic wage although some members of SAMWU provident fund get 12% Medical contribution by employer R9 312 This is an average lower end cost based on actual figures. Figure could in theory be up to R23 439 (National capping level) Housing subsidy R5 040 Assumes a bond up to R85 000 is utilised. Group Life Insurance R322 This figure varies quite significantly but is not a major component of total package 13th cheque R3 744 Total R71 435 4 ­ 57 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Strategic and performance management A number of cities, for example eThekwini, have The core focus of strategic planning in the municipalities has also introduced a networked software-based been the development of Integrated Development Plans (IDPs). system. All the cities have also tried to link the Producing such plans with significant citizen participation is a performance management system to the legislative requirement. All the cities have compliant five-year individual appraisal and the performance bonuses IDPs that were developed through on-going annual reviews. of some employees. There is acknowledgement that the discipline of the IDP process It is difficult at this stage to evaluate the impact of has resulted in a significant general improvement in strategic the significant investment in performance planning capacity over time. Business plan and budget management on actual municipal performance. alignment with the IDP has also improved. The IDP, as an explicit Some concerns about performance management annual public statement of priorities linked to budgets, provides in practice have been expressed. It has tended to an important basis for accountability to citizens and be resource intensive and many of the city stakeholders. municipalities have employed new staff to support performance management, sometimes at the However, a number of questions regarding the strategy process expense of this becoming part of ordinary have emerged. Is the IDP primarily the business plan of the city management responsibility. Some criticism administration or is it a multi-stakeholder strategic plan for city? suggests that an overly bureaucratic approach Or is it both? Is it long-term, medium-term or short-term? Or is predominates with an emphasis on compliance it all three simultaneously? Does it have a narrow strategic focus rather than on the substance. Other criticism or is it a comprehensive operational plan where all elements of suggests that the focus on individual performance the municipal operation are reflected? How do cities balance the bonuses has tended to incentivise individual effort conflict between legal compliance, which often produces a very and to weaken collective accountability. detailed and lengthy document, and usability? The absence, at this stage, of national benchmarks Most cities have distinguished between a long-term city also makes performance comparison across city development strategy and a five-year `operational' plan. municipalities very difficult. This will hopefully be Sometimes, both elements are contained within the IDP. In other an important area of development in the future. instances, a city development strategy distinct from an IDP has been produced. The City of Johannesburg devised Joburg 2030 The relationship with citizens and other as a new economy-focused, long-term plan. eThekwini and stakeholders Ekurhuleni have produced long-term development strategies as All the cities have undertaken extensive separate informants of their IDPs. Tshwane has a distinct City consultation processes regarding their IDPs as the Development Strategy. Buffalo City is also adopting this path. primary vehicle for stakeholder participation in setting the direction of the council. Mechanisms Most cities have produced readable citizen-friendly summaries have included public meetings, stakeholder of IDPs that complement the extensive documentation required forums and ward committee processes. These by compliance. have also been supplemented by meet-the-people initiatives such as `Mayor's Listening Campaigns' All cities have introduced performance management systems in in Buffalo City and Cape Town. compliance with the Systems Act and its regulations. The balanced scorecard is the most popular method used by almost all Ward committees, established in line with the cities but the alternative business excellence model is also used. Systems Act, have been another key participation STATE OF THE CITIES REPORT 2006 4 ­ 58 mechanism in all cities. Most have used a process of nominations lobby groups focused on urban policy has by sector to appoint the maximum ten members of the ward declined over the past decade. As a result there is committee. Mangaung used a formal election process. The a need to consider what the city can do to support effectiveness of ward committees has been variable with the re-emergence of a critically engaged civil indications that many ward committees across the cities have society that complements its development activity been ineffective or dysfunctional. Ward committees will require and provides critical external comment and new considerable nurturing and development if they are to be thinking. sustained as dynamic models of local democracy and catalysts for local action. In particular, sustained and meaningful There has been an emerging focus over the period involvement will require a deeper, more substantial vision of the on improving customer relations management ward committee role than currently exists. (CRM). Johannesburg has pioneered both an integrated call centre capacity ­ Joburg Connect ­ One innovation has been the use of the community-based and walk-in People's Centres as more accessible planning methodology as a way of developing a coherent ward and integrated service points for individual plan. The ward committee becomes the custodian of the plan. citizens. Most cities either have already This gives focus to its activities and establishes a meaningful established or are in the process of establishing long-term agenda. This approach was pioneered in Mangaung these services. and has also been introduced in eThekwini. The establishment of the call and contact centres City municipalities generally tried to establish on-going has gone hand in hand with big strides in building relationships with key stakeholders, especially the private sector. the e-government capability of the municipality ­ The Ekurhuleni Executive Mayor, for example, has a monthly the single integrated complaint logging forum with organised business. There are also examples of system being one important component of this partnerships with the tertiary academic sector. But there have growing capability. Most cities have also been very few concerted efforts to engage with marginal undertaken service satisfaction or quality-of-life groups, such as immigrant communities or disaffected youth, surveys. and bring them into the governance processes. Communication historically has enjoyed a low A number of factors inhibit the ability of external stakeholders to priority within South African municipalities and engage meaningfully with the municipality. Community has generally been weak and under-resourced. structures nationally are currently weak. There is also limited civil But most municipalities now see the strategic society capacity to engage effectively on policy issues, given that value of communication and there has been the range and capacity of non-governmental organisations and a significant increase in resources allocated Table 4-11: Slogans of some South African cities. to communication. Most municipalities now have communication departments and City Slogans communications and events budgets. Most municipalities have also adopted the brand Cape Town "This City Works for You" Ekurhuleni "A Partnership that Works" management approach and have revised their Joburg "A World Class African City" corporate logos and slogans in line with brand Mangaung "City on the Move" management principles (see table 4-11). Msunduzi "City of Choice" Nelson Mandela Bay "Working together for Ubuntu" Tshwane "We are the same" 4 ­ 59 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Comparing city budgets The largest metropolitan areas have very substantial budgets. Johannesburg is the largest, followed by eThekwini and Cape Town. Nelson Mandela Metropolitan Municipality is considerably smaller, while the budgets of the three aspirant metropolitan councils are each less than an eighth of the size of Johannesburg. The combined capital and operating expenditure of the nine SACN cities represents some 64% of the total expenditure of all South Africa's 284 municipalities (National Treasury website 2004/05 budgeted figures) Total operating and capital budgets for each of the SACN cities for 2006/07 Draft budgets of SACN cities 2006/07 Operating budget Capital budget Total R 000's R 000's R 000's Buffalo City 1 620 000 476 900 2 096 900 Cape Town 14 123 493 3 023 488 17 146 981 Ekurhuleni 10 237 735 1 222 512 11 460 247 eThekwini 11 289 433 2 847 033 14 136 466 Johannesburg 17 858 097 3 193 219 21 051 316 Nelson Mandela 3 151 723 1 374 173 4 525 896 Mangaung 1 542 775 541 148 2 083 923 Msunduzi 1 508 239 176 421 1 684 660 Tshwane 7 914 164 1 769 345 9 683 509 Total 69 245 659 14 624 239 83 869 898 Source Reports to various municipal councils There has also been a significant increase in brand advertisement · The strengthening of internal auditing spend. Ekurhuleni's high profile "Go East" campaign is an processes with stronger forensic capacity, example. All the city municipalities have web-sites and their stronger independence and better access to functionality and content has expanded considerably over the the city manager; period to 2006. · Monthly financial reporting as required by MFMA and the introduction of Generally Corporate governance, probity and financial management Accepted Municipal Accounting Practice The period 2000-2006 has seen considerable attention to (GAMAP) to improve transparency and account- improving corporate governance practices and general probity. ability within the accounting environment; This has partly been driven by legislation, particularly the · The introduction of public performance Municipal Systems Act and the MFMA. However, most cities reporting as required by the Systems Act. have also put additional effort into strengthening controls and governance practice. Considerable attention has been given to improving financial management. A consequence New practices include: of this has been a general improvement in the · The implementation of asset management as a strategy and financial indicators of almost all city municipalities a compliance requirement; over the five years: · The establishment of independently chaired audit · Steady improvement in collection rates committees; through improved systems and indigent STATE OF THE CITIES REPORT 2006 4 ­ 60 Spending and income patterns across the nine SACN municipalities Table A illustrates the operating and capital expenditure in the nine SACN cities and illustrates the importance of water and sanitation functions and electricity for city finances. These functions feature prominently in both the capital and operational expenditure of cities. Similarly there is a high share of finance and administration in both capital and operating spending. On the operating side this is partly explained by the fact that interest on external loans is included here. In terms of capital expenditure it reflects the impact of the massive institutional re-organisation that has taken place over the last five years, with its associated spending on items like the renovation of administrative buildings and new computer systems. Housing and road transport, on the other hand, are major capital expenditure items, while featuring far less on the operating side. Expenditure by function of the nine cities combined Operating expenditure Capital expenditure Function % % Executive and Council 2,4 0,6 Finance and administration 15,1 14,3 Planning and development 1,7 3,5 Health 2,2 0,9 Community and social services 2,2 4,3 Housing 2,9 12,5 Public safety 6,8 2,8 Sport and recreation 3,6 2,9 Environmental protection 0,3 0,3 Waste management 4,3 3,7 Road transport 6,4 17,5 Water and sanitation 23,7 20,0 Electricity 26,2 15,5 Other 2,2 1,2 Total 100,0 100,0 Table B shows a breakdown of costs across the nine cities. There are some differences in how costs are measured and categorised, which explain some of the differences across councils. Generally, however, the importance of both employee remuneration and bulk service charges is clearly evident. Repairs and maintenance costs are generally low across most councils, although this may be explained to a greater or lesser degree by the fact that some of this activity is incorporated under other expenditure items. Proportional breakdown of operating costs by economic classification across the nine cities Buffalo Cape Nelson City Town Ekurhuleni eThekwini Joburg Mangaung Msunduzi Mandela Tshwane Combined % % % % % % % % % % Employee costs 32,0 30,3 29,3 27,8 22,0 30,9 27,0 29,9 31,4 27,4 Remuneration of councillors 0,9 0,6 0,6 0,4 0,3 0,8 ­ 0,8 0,5 0,5 Bad debts 5,9 6,1 8,6 1,3 5,7 0,5 ­ 0,6 4,2 4,6 Depreciation 4,3 7,2 6,0 8,4 6,3 9,3 10,2 5,4 7,0 6,9 Repairs and maintenance 5,3 7,7 5,9 9,8 1,5 7,0 3,7 7,3 7,8 5,9 Interest external borrowings 4,2 3,9 2,8 5,6 4,6 0,2 ­ 1,3 3,5 3,9 Bulk purchases 20,4 19,3 33,1 23,3 21,6 27,8 29,7 18,9 24,4 23,5 Contracted services 0,2 5,0 4,2 4,2 9,0 1,8 ­ ­ ­ 4,7 General and other expenses 25,8 20,0 9,6 10,1 13,3 21,6 27,1 21,8 21,2 17,4 Contribution to/from provisions ­ ­ ­ (0,7) (1,0) ­ 7,4 ­ ­ (0,2) Internal transfers 1,0 ­ ­ 9,7 16,6 ­ (5,1) 14,0 ­ 7,2 4 ­ 61 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Spending and income patterns across the nine SACN municipalities continued Table C shows the importance of own revenues to the overall financing of the nine cities. There are some interesting patterns in the differences across the cities. eThekwini collects the greatest proportion of its revenue in property rates. This is partly because sanitation charges are effectively included in rates, and because it has, for historic reasons, collected relatively less in RSC levies (known as Joint Services Board levies in eThekwini). The importance of the RSC levies in the six metropolitan councils is evident in the table. Proportional breakdown of revenue sources across the nine cities Buffalo Cape Nelson City Town Ekurhuleni eThekwini Joburg Mangaung Msunduzi Mandela Tshwane Combined % % % % % % % % % % Rates and penalties on rates 16,5 27,7 19,8 29,6 21,5 13,6 26,5 18,6 20,0 23,2 Service charges ­ Electricity 25,0 25,4 30,9 29,1 24,5 31,1 34,9 32,4 33,6 28,4 Service charges ­ Water and Sanitation 16,1 14,6 14,4 12,8 20,5 14,0 15,0 12,2 14,3 15,6 Service charges ­ Refuse removal 5,4 4,2 3,6 0,9 2,0 4,9 2,7 2,4 2,9 2,7 Service charges ­ Other 0,1 2,1 0,5 1,0 2,3 ­ 7,6 ­ ­ 1,4 RSC levies ­ 9,1 7,2 5,4 12,2 ­ ­ 7,1 9,0 8,1 Rental of facilities and equipment 0,6 2,1 0,6 0,8 0,5 0,3 1,1 ­ 0,8 0,9 Interest earned on external investments 2,1 2,2 2,9 1,8 2,2 3,1 1,3 4,6 1,5 2,3 Interest earned on outstanding debtors 1,9 1,3 1,1 0,7 0,2 1,2 1,6 1,8 0,8 0,9 Fines, licences and permits 1,4 1,4 1,6 1,3 1,4 0,3 0,6 0,3 0,8 1,3 Operating grants and subsidies 17,0 4,9 5,6 6,1 5,5 15,8 8,0 6,4 4,9 6,1 Capital grants and subsidies 9,7 1,5 3,4 9,8 2,6 5,3 ­ 4,0 5,2 4,4 Other revenue 4,1 3,4 8,5 0,8 4,4 10,5 0,8 10,2 6,1 4,8 Total 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 100,0 policies. Generally, municipalities are collecting between generally replicated because other cities have 90% and 95% of income billed36, with the figures better for had access to cheap finance; electricity ­ which is more easily disconnected in cases of · Rates of capital spend have also generally non-payment ­ than rates or water; increased over the term of office (see table · There is clear, measurable, progress in dealing with bad debt 3 ­ 12). (see table 3 ­ 16); · The quality of Auditor General results has improved although These improvements have been supplemented by problems remain; the economic upturn and the rapid increase in · The uncovering of long-standing corruption in a number of property values nationally since 2003/4 which municipalities points to improved forensic oversight as much have had buoyant impact on municipal revenue. as it identifies control failures; · There has been a general improvement in credit ratings over the period (see table 3 ­ 11). Most municipalities have access to reasonably cheap finance through the banking system. The Johannesburg bond issue innovation has not been STATE OF THE CITIES REPORT 2006 4 ­ 62 However, a number of problems have emerged: All municipalities have put significant effort into · Few city municipalities have been able to consistently engaging with their national or provincial achieve unqualified audits as indicated in table 3 ­ 11; counterparts around key sector issues and · A number of municipalities have been rocked by allegations common projects. All cities can point to examples of fraud and corruption at different levels particularly around of joint projects with provincial or national the procurement process; government like the Blue IQ projects of Gauteng · Some of the cities have been included as priority and the city-province partnership to create and municipalities within the Project Consolidate, a national fund the Cape Town International Convention initiative to improve local government performance; Centre (see table 4-12). · Procurement processes, revised to comply with MFMA requirements, are still controversial in some cities and there However, there is concern that cities are not are many complaints about procurement inefficiencies. getting the level of inter-governmental attention that their strategic importance and complexity Inter-governmental relations requires. This is reflected by: There is a constitutional obligation on the different spheres of · The absence of any definitive national strategy government that their relationships should be characterised by regarding the urban centres; the principle of "co-operative governance". At the same time, · The variable and sometimes contradictory there has also been growing recognition that strong inter- agendas of different national departments governmental co-operation and co-ordination is essential for regarding the role of cities within the national effectively managing dynamic urban processes. Cities are inter- political economy. Are cities core focus areas governmental entities where national and provincial for national development strategy given that government departments and the state-owned enterprises they are points where both the opportunities (SOEs) are crucial role-players. for growth and deprivation are concentrated? Or are they relatively well-off and self-sufficient entities that require limited national investment? · The lack of major national investment in key urban infrastructure such as transport since Table 4-12: Examples of inter-governmental and related 1994; partnerships · Unresolved issues regarding unfunded mandates such as health. City Examples of inter-governmental projects Buffalo City Mdantsane Urban Renewal Programme There is also a general sense that city IDPs have Cape Town Presidential Urban Renewal Programme been produced with very limited national or Ekurhuleni Co-operative Industrial Hives Programme eThekwini Phoenix East Integrated Housing provincial input, despite significant efforts by Development Project most cities to involve them in the process. The Joburg The Development of Kliptown IDPs have essentially reflected the agenda of Mangaung Mangaung-University of the Free State Community Partnership Programme municipal government rather than being an inter- (MUCPP) governmental plan for the city. Similarly, the Msunduzi Acacia Park Housing Development provincial growth and development strategies Nelson Mandela Metro Coega Port and IDZ have generally been produced with limited Tshwane Mandela Development Corridor (DTI ­ Tshwane) reference to municipal plans or involvement of municipal leadership. The national and provincial 4 ­ 63 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued Unfunded mandates All nine network cities traditionally provided primary health clinics. Municipal health has been defined as referring only to Environmental Health. Yet in all nine cities continue to run primary health clinics and contribute significant amounts to this service. This can be considered an unfunded mandate. The following table compares the expenditure on health by the cities with the revenues received from provinces for implementing the functions. Health expenditure compared to provincial health subsidies for SACN cities Nelson Buffalo Cape Mandela Functions City Town Ekurhuleni eThekwini Joburg Mangaung Msunduzi Metro Tshwane Total Expenditure on health 39 655 304 881 275 239 217 009 188 794 31 117 33 138 173 904 163 464 1 327 201 Subsidy received 17 886 100 921 58 390 27 336 40 090 12 049 8 185 60 035 10 494 335 386 Deficit 21 769 203 960 216 849 189 673 148 704 19 068 24 953 13 869 152 970 991 815 evaluation of IDPs has also tended to focus on legal compliance already have established forums focused on the rather than the content of the strategy. But this is starting to city or city region. This reflects a shift in some change and there is recognition that the national 2005 IDP areas to adopt a more regional approach to the hearings and the new emerging evaluation framework represent planning and managing, involving the province, a more useful engagement with the substance of IDPs rather relevant national departments, the affected than simply their form. All cities have also noted a lack of metropolitan and city municipalities as well as engagement by some critical SOEs in the city development adjoining districts. The Gauteng Global City planning process. Region initiative is the most well-known example. Another is the inter-governmental initiative in There are some important shifts in establishing a stronger inter- early 2006 which produced a common agenda for governmental approach to the management of South Africa's action for the Cape Town functional region, urban centres. The implementation of the Inter-governmental enabling much stronger alignment of national, Relations Framework Act of 2005 should improve the level of provincial and municipal planning. engagement between the spheres of government. The Premiers inter-governmental forums, envisaged by the Act, can serve as important co-ordinating mechanisms. Some cities and Premiers STATE OF THE CITIES REPORT 2006 4 ­ 64 Endnotes 1 Cabinet has set up a special regulatory impact assessment 13Daily News, 2003: Flood flushes Durban informal mechanism and in 2005 National Treasury initiated a study to settlement, November 27, 2003, from examine the impact of various spheres of government on the costs http://www.iol.co.za 14 of doing business (Administered Prices Report by David Storer and See for example, Ekurhuleni Metropolitan Ethel Teljeur downloaded from http://www.treasury.gov.za/) Municipality 2005 2 15 Downloaded from Administered Prices Report by David Storer and Durban State of the Environment 2004 16 Ethel Teljeur www.treasury.gov.za Castells explains this duality by asserting that 3 Nel et al (2004) societies are increasingly structured around a 4 Porter, 2003: page 568 bipolar opposition between the Net (the new 5 A similar problem has faced the environment function in cities, organisational formations based on the pervasive despite its strategic relevance and the fact that it existed in many use of networked communication media) and the cities before local government reforms began. Self (the activities through which people try to 6 reaffirm their identities under the conditions of Although both Msunduzi and Mangaung recognise the economic structural change and instability flowing from these benefits from being located on major rail routes this does not new organisational forms). (Castells 1996 volume 1 translate into strategic thinking about public transport as the page 3). network is too poorly developed to fulfil this function or to have the 17A range of capital grants over the period now potential to fulfil this function. consolidated into Municipal Infrastructure Grant 7 Mercury Business Report, 10 April 2006 (MIG) 8 Ekurhuleni's research work into the local economy identified 18Via the Equitable Share inadequate and costly transport services as a major barrier to firms 19There are different approaches to credit control in a wishing to expand and to the unemployed in their search for work. context of free basic services ­ some municipalities 9 Overman and Venables (2005) page 8 have no evictions policy, others take stronger 10"Raise the real wage of workers by holding down their cost of living. enforcement. This needs to be undertaken to an extent consistent with efficiency 20Data on building plans passed is drawn from Stats objectives. Rising productivity in food staples and falling real food SA's annual statistical release: Selected building prices have been two of the most important contributors to raising statistics of the private sector as reported by real wages in many countries. Efficient investment in housing for local government institutions (2005) P 5041.3 poor families (including sites and services projects) can be important, 21National Treasury, Estimates of National although care must be taken that the spending not be directed Expenditure, 2006 toward middle-income groups. Subsidising low-cost urban 22The overview of housing strategies in Johannesburg, transportation, which is often desirable on efficiency and eThekwini and Ekurhuleni are a reflection of inputs environmental protection grounds, can have the added advantages at a special workshop on the implementation of the of keeping the cost of living down and increasing job access for the BNG strategy hosted by the National Department poor. If there is disguised unemployment in the sense that market of Housing and the SACN in June 2006. wages are above the social opportunity cost of labour, such subsidies 23Data on natural and non-natural deaths from can also be justified on economic efficiency grounds, helping to Statistics SA, Statistical Release P0309.3, Mortality overcome market imperfections." (USAID, 2004: page 14) and Causes of Death in SA 2003 and 2004, March 11Cited in Appleseed Inc 2003 in Wu, 2005: page 12 2006. Data on fatalities due to road accidents from 12Republic of South Africa, 2006: A Catalyst for Accelerated and Road Traffic Management Corporation Reports. Shared Growth in South Africa (ASGISA), Summary Data on number of murders from SA Police Service background document, September 2006 statistics. 4 ­ 65 STATE OF THE CITIES REPORT 2006 CITY STRATEGY continued 24Gareth Newham, Crime Quarterly No 15, 2006, Institute for Security Studies. 25No data was available for Buffalo City and Msunduzi on going to print. 26Gareth Newham, 2006; and Road Traffic Management Corporation, 2006 27Gareth Newham, 2006 28Gareth Newham, 2006 29Singh, G. (2005) Patterns of Migration, Settlement and Dynamics of HIV and AIDS in South Africa. Discussion document prepared for SACN 30Tomlinson, R and Mkhabela, I (2005) HIV and Aids and urban poverty. Discussion document prepared for SACN 31UN-Habitat 2004: The State of the World's Cities 2004/2005: Globalisation and Urban Culture 32http://www.capetown.gov.za/planning/dpp.asp 33Gevisser, M (2004) From the Ruins: Constitutional Hill Project in Public Culture, Vol. 16 No. 3, Duke University Press 34http://www.artsmart.co.za/music/archive/3170.html 35The city was awarded the highly prestigious Smithsonian prize for this achievement as the best IT project worldwide in the government and NGO sector in 2003 36The collection rates published by cities from time to time are somewhat contentious in that there are often subtle differences in definition which can produce figures which are not strictly comparable. STATE OF THE CITIES REPORT 2006 4 ­ 66 CHAPTER 5 CONTENTS EMERGING STRATEGIC AGENDAS Urban development agenda 5 ­ 2 Emerging urban policy in the national sphere 5 ­ 2 Grant funding for urban development 5 ­ 3 Other fiscal incentives for urban development 5 ­ 8 The new housing strategy: "Breaking New Ground" 5 ­ 8 Urban growth agenda 5 ­ 11 The Accelerated Shared Growth Initiative for South Africa 5 ­ 11 Urban fiscal agenda 5 ­ 14 The Municipal Finance Management Act 5 ­ 14 Abolition of Regional Services Council levies 5 ­ 15 The reform of property taxes 5 ­ 17 Asset management 5 ­ 18 Urban services agenda 5 ­ 18 Restructuring the electricity distribution industry 5 ­ 18 Water services 5 ­ 20 Urban governance agenda 5 ­ 22 Powers and functions 5 ­ 23 Funding flows associated with the built environment functions 5 ­ 23 The need to reallocate powers and functions 5 ­ 25 5 ­ 1 PAGE5 ­ 1 STATE OF THE CITIES REPORT 2006 EMERGING STRATEGIC AGENDAS 5 The preceding chapters reflect on the past performance of cities, The urban development examining what cities have done over the last five years. In agenda contrast, this chapter looks towards the future. It focuses on a This section addresses four issues. It provides a number of large-scale national plans which are beginning to broad overview of national government's emerge and which will profoundly affect cities over the next few attempts at developing a coherent urban policy; it years. It also examines the implications of devolution for cities. provides information about new grant funding for urban development projects; it outlines the new In some instances, national agendas might impede urban tax incentives for urban regeneration; and it functioning, necessitating strategic approaches to overcome explores how cities can engage with the new these constraints. In other instances, cities will be offered unique housing strategy emerging from the Department opportunities to harness new initiatives that have potential to of Housing. fundamentally improve urban performance. What is certain is that cities will have to respond creatively in the future, to both Emerging urban policy in the national sphere the challenges and opportunities presented by these new In 1997, the South African government initiatives. produced its first major discussion document on cities, the Urban Development Framework This chapter is divided into five sections exploring some of the (UDF). This was approved by Cabinet as a new plans and policies that will impact on cities: framework defining a future vision for urban · The urban development agenda; settlements in South Africa. The UDF did not · The urban growth agenda; gain wide currency for two reasons: · The urban fiscal agenda; · Produced within the Ministry of Housing, the · The urban services agenda; and UDF did not garner sufficient support across · The urban governance agenda. other government departments. This was CITIES WILL HAVE TO RESPOND CREATIVELY IN THE FUTURE TO NEW LARGE-SCALE NATIONAL PLANS WHICH ARE BEGINNING TO EMERGE The chapter concludes by suggesting that municipalities can be partly due to the absence of an urban most effective if they are able to exert meaningful control over development mandate in any single national all the built environment functions. This raises questions about government department, and partly due to current fragmentary governance arrangements which relate to the absence of a communications campaign the key urban development drivers ­ transport and housing. to raise awareness of the UDF. Although fundamental to the development of cities, some of the · In 1997 the South African Government was in main responsibilities linked to housing and transport functions the midst of tremendous change with new rest with national and provincial government. This undermines policies and programmes being announced the ability of a city to determine urban form, to target subsidies every month. As a result, the UDF was out-of- strategically and to finance key components of urban date almost before its print was dry. infrastructure. STATE OF THE CITIES REPORT 2006 5 ­ 2 Subsequent attempts to review the UDF did not progress There are many reasons why it difficult to define beyond initial research stages. an urban agenda in South Africa: · The historical inequities between urban and In 2003 the Presidency led an intensive process to define rural areas mean that a policy focus exclusive Spatial Guidelines for Infrastructure Investment and to urban areas remains unpalatable to many. Development. These guidelines had significant implications · The varied range of urban settlement types in for public investment in South Africa as a whole, not only in South Africa forces national policy-makers to cities. Cabinet approved the publication of the National limit policy objectives to those that apply to all Spatial Development Perspective as a discussion document these urban settlements, so undermining the defining the objectives that should guide public investment nuanced policy response that is required2. (see Chapter 2). · The complex intergovernmental relations around public funding for urban development In 2001, Cabinet agreed that the UDF should be reviewed results in a fragmented set of objectives. For and re-formulated as a national urban policy. The Minister of example, funding for subsidised public Provincial and Local Government was mandated to lead this transport is channelled through all three process which culminated in the Urban Development spheres of government with unintended Framework for the 2nd Decade of Democracy in South Africa in consequences such as competition for routes 2004. This was the outcome of a series of workshops held between bus operators funded by province with development specialists including representatives of and municipal bus services. government. The document sets out a strategic framework for · Unacknowledged contradictions in public government and its development partners in order to: policy objectives mitigate against developing · Increase the status of urban issues in public policy and policy consensus3. programmes. · Prevent institutional exclusion by fostering participatory, Urban decision-makers are waiting for the revised transparent and democratic urban administration. Urban Development Framework with much · Maximise the impact of government action in urban areas by anticipation, in the hope that the document will aligning policies, investment and enforcement. provide policy direction for cities in South Africa. · Introduce new instruments and incentives for urban reforms that meet social need, create economic opportunities and Grant funding for urban development protect the environment. Regardless of the national urban policy limitations, · Improve intelligence on urban dynamics to inform policy, there have been significant developments in planning and spending. allocating public funding for urban development. · Develop human capacity for urban management and co- operative governance1. Urban development funded through public investment in South Africa is driven largely by The framework outlines twenty primary actions where massive public grants for affordable housing and government ­ and its development partners ­ can make a municipal infrastructure. Over the next three difference in the second decade of democracy (see table 5-1). years, the national fiscus intends funding R68 billion worth of infrastructure, largely in Although much attention has been devoted to cities, South urban areas4. This includes R23 billion on the Africa, like most other countries in the world, remains without a integrated housing and human settlement grant, coherent national urban policy. R21,5 billion on the Municipal infrastructure 5 ­ 3 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Table 5-1: Activities to strengthen urban development in the second decade of democracy 1. Increase the status 2. Prevent institutional 3. Align policies, invest- 4. Instruments and 5. Urban intelligence, of urban issues exclusion among ment and enforce- incentives for urban monitoring and across government urban residents ment in urban areas reform evaluation a. Promote economic e. Roll out a social safety i. Institutionalise m.Financial incentives q. Define `urban' and integration zones and net to urban citizens NSDP/PGDS/IDP for urban `rural.' global city region and indigent support alignment. developments. concept for legal residents. b. Facilitate the global f. Register all informal j. Promote city safety n. Social cohesion r. Monitor and evaluate role of cities through and illegal urban and security, as well as incentives to promote government action at a national trade and dwellings. the principles of the race and class the urban scale. investment strategy. NSDP, NEMA and integration. BNG policies. c. Develop the role of g. Equitable protection k. Establish a special o. Make urban land s. Report at the urban secondary cities in for all urban residents Cabinet cluster to markets work for the scale on South Africa's the national urban from by-law application address urban issues. poor and foster the international hierarchy. and enforcement. secondary property commitments e.g. market. MDGs d. Foster the rural h. Foster youth and l. Develop an integrated p. Strategic economic t. Establish an Urban service role of towns. migrant inclusion into public asset manage- infrastructure Research Commission. urban opportunities. ment strategy, especially investment platform. for urban land. 6. Develop human capacity for urban management and co-operative governance Table 5-2: Summary of urban development items to be funded through the national fiscus National vote Item 2005/06 2006/07 2007/08 2008/09 Budgeted allocation (R'm) Housing Integrated housing and human settlement grant 4 843 6 350 7 937 8 721 Provincial and local government Municipal infrastructure grant 5 436 6 265 7 148 8 053 Transport Commuter rail infrastructure total 688 4 451 4 043 3 764 Of which: Transport Commuter rail infrastructure (SARCC) 688 1 210 1 892 2 028 Transport Commuter rail infrastructure (Gautrain) 3 241 2 151 1 736 Sport and Recreation World Cup 2010 stadium upgrading grant to DBSA 1 000 1 000 1 000 Transport Public transport infrastructure and systems grant 242 519 624 1 790 Minerals and Energy Electrification grant to ESKOM 783 893 932 1 059 National Treasury Neighbourhood development partnership grant 50 950 1 500 11 992 19 528 22 634 25 887 STATE OF THE CITIES REPORT 2006 5 ­ 4 The FIFA 2010 World Cup The FIFA 2010 Soccer World Cup is now less than four years away. As the host country, South Africa faces both a huge planning challenge ­ but if tackled strategically ­ a major development opportunity. How many visitors will come? It is hard to estimate the number of international visitors who will come for the World Cup. The experience of Germany 2006, where more international spectators arrived than expected, suggests that the appeal of the World Cup spectacle should not be underestimated. Yet as a long-haul destination, with fewer air connections, the number of European visitors is not expected to equal the 2-3 million who travelled to Germany. Around 350 000 international ticket holders are expected, who will attend an average of four matches. At least another 150 000 visiting supporters without match tickets, from other continents and from other African countries, might attend. Even if the tourism and hospitality sector manages to spread the peaks, international air arrivals in South Africa will double to over 25 000 daily passengers a day for about ten days. Border posts will also be under immense pressure dealing with the 10 000 visitors from other African countries who will arrive by road each day. How will people get around? With teams moving for each opening-round game there will be around 150 000 inter-venue movements of international visitors alone on the busiest World Cup days. On top of this, South African supporters travelling within the country will add another 40 000 trips. Domestic air services will potentially accommodate between a third and a half of this total, leaving road and rail services to transport the rest ­ even though sea travel between the coastal venues, is an option. A clear concept, creative ideas and fast action are needed, from both the public and private transport sectors to improve long-distance surface transport. What is the government going to do? The initial priority in planning for the event involves building and upgrading the stadiums where the official games will be played. The national fiscus will finance most of the capital works on these stadiums. But municipalities will be expected to play a key role in planning and co-ordination. Municipalities will also have to ensure that this public injection of funds levers significant private investment in the areas surrounding the stadiums in ways that benefit the city as a whole. Government will also be making major capital investments in public transport infrastructure. A Public Transport Infrastructure and Systems Grant was introduced by the National Department of Transport in 2005/06 with the intention of funding over R3 billion worth of public contributions to transport projects identified by municipalities. With an initial focus on the 2010 host cities, this grant has been allocated for projects like the development of road-based public transport corridors and interchanges, railway station upgrades, intelligent transport systems, and infrastructure that encourages non-motorised transport ­ walking and cycling. The ultimate objective is to improve the public transport experience. The provision of quality transport services to move large numbers of people safely and quickly around the country, and within host cities is a pre-requisite for a successful tournament. Getting transport right, and making sure that this has a lasting benefit for cities probably represents the most complex planning challenge. Beyond infrastructure provision, integrated operations between the most suitable transport modes for given corridors is the goal. Investment in quality vehicles, stops and stations, lines and dedicated ways, information, security, and ticketing and overall system management is crucial. The municipal planning challenge is to align these special event needs with the regular transport needs of ordinary citizens. 5 ­ 5 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) The FIFA 2010 World Cup (continued) Private transport companies can help Scheduled public transport will not meet all visitors' needs. A large market share will be serviced through: · chartered operations ­ quality small buses and minibuses · on-demand services ­ metered taxi as well as some quality minibus-taxis; and · car-hire companies. Given that these private entities can offer flexibility and rapid response to the transport challenge, it is vital that cities support the contribution of this transport segment in the run up to the event and beyond. grant, and R12 billion on commuter rail infrastructure, the 2010 FIFA Soccer World Cup, public including the development of the new Grautrain Rapid Rail Link transport infrastructure projects in municipalities, between Tshwane, Johannesburg and Ekurhuleni at a cost of particularly 2010 host cities, and for delivering just more that R7 billion to the national fiscus, a contribution to community facilities and amenities in townships the capital costs of the project which totals R21 billion and other under-served neighbourhoods. Finally, almost R3 billion will be spent on the (see figure 5-1). continuing electrification programme being implemented by Eskom (see table 5-2). In addition to the `big ticket' items, there are three major new grants for upgrading the soccer stadiums in the host cities for STATE OF THE CITIES REPORT 2006 5 ­ 6 The FIFA 2010 World Cup (continued) What does the FIFA World Cup mean for cities? Of the venue cities, Johannesburg and Tshwane when combined will together host the greatest number of World Cup matches and international visitors. It is expected that at the peak of the World Cup up to 40% of all international visitors, or 200 000 could be in Gauteng at any one time. Up to 15-20% (75 000 to 100 000) could be in either Cape Town or Ethekwini, and 8%-10% in Nelson Mandela (40 000 to 50 000). The attraction of the smaller inland venues cities will be boosted if significant additional accommodation is accredited, including university residences and Bed & Breakfast establishments. Table A compares the impact of the 2010 World Cup on the host cities. Regular Number Proximity Accommo- tourism Regional of to other dation visitor transport matches venues availability Population numbers connections Gauteng (Johannesburg and Tshwane) ***** ***** ***** ***** ***** ***** eThekwini **** ** **** **** ***** *** Cape Town **** * ***** **** ***** **** Nelson Mandela Bay *** ** *** *** *** ** Mangaung ** *** * ** * ** Rustenburg ** *** * * ** * Mbombela (Nelspruit) ** *** * * ** * Polokwane ** *** * * * * * low impact or capacity ***** high impact or capacity Even though matches will only be hosted in nine venue cities, the effects will be felt nationwide in all urban centres. Many international visitors will visit and seek accommodation outside of the venue cities. Non-host towns and cities can host special events and erect public viewing facilities to attract visitors. The total allocation for infrastructure supporting urban specific sectoral needs and delivery targets. The development is set to rise by a staggering average of 29% per second involves a shift towards promoting year over the next three years. This is undoubtedly a positive infrastructure partnership projects over those development for cities. However, additional expertise and funded exclusively through public grants. The capacity will be needed to spend this money. The South African Neighbourhood Development Partnership Grant, Institute of Civil Engineers has already warned of the limitations the upgrading of the soccer stadiums, and the of the existing civil engineering industry5. Gautrain Rapid Rail Link are all driven by public- private partnership arrangements. Even the Two striking shifts have emerged in the public grant additional funding announced for the housing environment. The first is that despite significant attempts to grant (R3,5 billion over the next three years) is consolidate all capital grants to municipalities under the largely for social housing (affordable rental umbrella of the municipal infrastructure grant (MIG), there are a housing) and credit-linked subsidies, encouraging number of new sectoral municipal grants. It is possible that the partnerships with private landlords and lenders in one-size-fits-all approach taken in the MIG has failed to satisfy the delivery of affordable housing. 5 ­ 7 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Other fiscal incentives for urban development recognition of the programme's success and the Another incentive not reflected as a direct cost to the fiscus is the continuing need for affordable housing, in 2000 urban development zone tax incentive introduced in the 2004 the United States government expanded the budget. The UDZ tax incentive is aimed at encouraging inner amount of credits available by 40%. city renewal across South Africa. Any taxpaying, property owning, individual or entity may claim the tax benefits of the South Africa's National Treasury and the national UDZ incentive. The incentive takes the form of a tax allowance Department of Housing are exploring the covering an accelerated depreciation of investment in either feasibility of a housing tax incentive scheme to refurbishment of existing property (5 year depreciation) or the supplement the current grant arrangements. creation of new developments (17 year depreciation) within a designated zone in any of the 16 cities and towns earmarked for The new housing strategy: "Breaking New the incentive. By May 2006, 13 of the qualifying municipalities Ground" had received approval for a designated zone, including the nine The Breaking New Ground (BNG) strategy of SACN cities. It is still too early to measure take-up of the tax the Ministry of Housing has the potential to be a incentive, but the level of interest amongst developers is a clear key driver of public investment in cities. One of indication that the incentive will change private sector the primary objectives underpinning the BNG investment patterns in the cities. strategy ­ the development of sustainable human settlements ­ encourages housing officials to go Figure 5-1: Allocation of funding for urban development beyond providing only housing, and think infrastructure from the national fiscus (2006/07- more holistically about neighbourhoods that 2008/09) include social facilities and amenities. But, it is clear from the discussion in Chapter 4 that there is still confusion over municipal roles and responsibilities in housing delivery and administration, the status of the accreditation process for municipalities, and the level of skill and capacity required to manage area-based developments funded from multiple sources. There are a few forward-looking responses that Integrated Housing and Human Settlement Grant 34% will be needed from municipalities. Municipal Infrastructure Grant 32% Commuter rail infrastructure total 18% World Cup 2010 stadium upgrading grant to DBSA 4% Developing a city-level understanding of the housing Public Transport Infrastructure and Systems Grant 4% market Electrification grant to Eskom 4% Most public housing development strategies in Neighbourhood Development Partnership Grant 4% South Africa have been built around analyses of housing backlogs rather than an understanding of Tax credits have been used successfully in the United States since local affordable housing markets. The Housing 1986 to create affordable housing, emerging as that country's Minister and Provincial Housing MECs approve most successful housing subsidy programme. The system grants to provinces on the basis of a formula attracts $7-8 billion from private investors for affordable housing weighted heavily towards housing needs ­ each year, equity that is leveraged with another $7-8 billion of defined by the number of people living in debt financing from largely private sector sources. About inadequate housing, population growth, and the 1,5 million homes have been built using the credit. In number of poor households. STATE OF THE CITIES REPORT 2006 5 ­ 8 Figure 5-2: Map of Johannesburg's urban development supply-side aspects such as gaps in the housing zone defined by the city council and approved product range, the capacity of the local housing by the Minister of Finance for the urban supply industry, and the supply inefficiencies due renewal tax incentive to municipal regulation and administration (particularly land-use management regulations and building plan approvals). Strengthening municipal housing units Municipalities already play multiple roles in planning and managing public housing delivery and regulating residential property development across the board. However, the accreditation of municipalities as housing providers will create additional responsibilities for administering public housing subsidies. Similarly, the new emphasis on building housing through partnerships will demand new skills to nurture relationships and manage complex property developments with multiple There are at least three reasons why this approach to housing funding sources. While the accreditation process delivery needs to be rethought. Firstly, while there are `free' houses accommodates an incremental approach to building that are fully subsidised there will always be a housing waiting list. the required administrative skills in municipal As a result, the demand for subsidised housing will remain inflated housing units, cities will have to consider how best to until every person eligible for a subsidy has received it. Secondly, a build project and partnership management capacity mono-dimensional analysis of housing need ignores the sliding to deliver on the BNG principles. scale of affordability. This results in standardised housing products that limit the development of a functioning housing market. Ensuring appropriate sequencing of the housing Thirdly, this approach can give rise to the belief that informal process settlements can be eradicated if enough affordable houses are The move to demand-led delivery as proposed by delivered. The reality is that there are complex social and economic the BNG strategy is interpreted differently by the reasons that underpin the choice to live in an informal settlement various parties in the housing delivery chain. For or backyard shack6. Figure 5-3 illustrates the spread of housing in example, the Ministry of Housing suggests that the South Africa by type, tenure, and income. Based on 2001 census construction of housing stock should be separated figures, this provides a conceptual representation of the complexity from housing allocation processes. Others believe of the housing market7. that this will result in a dislocation between the demand for land and the demand for housing8. Cities clearly need to reconsider the notion of housing demand and develop a deeper understanding of the whole housing There is another disconnect between rigorous market within their jurisdiction. Cities should look at demand- feasibility studies for affordable housing projects side aspects such as population growth at the neighbourhood and the development of municipal and provincial level, market indicators of demand such as property prices and housing development plans. Most housing projects rents, affordability constraints (both capital and limited access to are identified on the basis of perceived needs and loans), and housing use patterns that define the willingness to designed on principles of equity and minimum invest in housing as an asset. Cities should also understand standards for adequacy ­ or political acceptability. 5 ­ 9 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Figure 5-3: Housing affordability profile Deemed Household Proportion of households (South Africa) affordability Product income Tenure and housing type (% income price (R/month) (Percentage of all households ­ Census, 2001 estimate) and R/month) (R total) 8 Very high Max >R10 001 Min R10 001 25%/+R2 500,25/m R308 767 7 High Max R10 000 22,5%/ to R2 250/m R259 062 Min R7 001 R181 369 6 High­middle Max R7 000 20%/ to R1 400/m R140 196 Min R7 001 R100 160 5 Middle Max R5 000 17,5%/ to R875/m R87 623 Min R3 501 R61 353 4 Low­middle Max R3 500 15%/ to 525/m R76 923 Min R2 501 R66 152 3 Low income Max R2 500 12,5%/ to R312,5/m R53 235 Min R1 501 R47 622 2 Very low income Max R1 500 7,5%/ to R12,5/m R38 630 Min R801 R37 735 1 Special needs Max R800 0%/ to R0/m R36 708 Min R0 R36 708 (27,2%) Ex-council SHI Co. Tribal Private (7,6%) (15,2%) Subsidy (7,6%) Council (11,5%) Private (11,4%) Informal (12,3%) Squat (0,5%) (1,6%) Squatting Ownership (51,1%) Rental (35,5%) (12,3%) To strengthen housing development plans, municipalities should projects which unify and mix housing types, undertake feasibility studies for neighbourhoods where housing incomes, and land uses. This will mean assembling needs are greatest to inform forward planning, project design instruments at local level to replicate those projects and perhaps even attract private investors or lenders as housing which have an urban renewal logic to development partners. communities9. Cities are also in a position to change spatial dynamics and urban forms through Supporting innovative city-level incentives for appropriate private assertive use of the land use management and housing delivery building plan regulation systems. The benefits resulting from the recent gains in the property market in South Africa have not been spread broadly across the Devising innovative funding mechanisms to address property market. There are indications that only high-income the shortfall between subsidy amounts and actual households are reaping significant gains. But municipalities are in costs a position to adjust the property rating system to redress this The cost of new housing provision is significantly inequity to some extent by supporting those urban renewal higher in big cities than in small towns. In small STATE OF THE CITIES REPORT 2006 5 ­ 10 towns it is feasible to build single residential dwellings with · Halving poverty from about one third of relatively low levels of service on the outskirts of urban areas. But households in 2004 to less than one sixth of for the bigger metropolitan areas, the challenge is to create households by 2014; and housing for lower-income households in accessible locations. · Halving unemployment from about 30% in This often translates into the development of social housing 2004 to lower than 15% by 2014. projects that provide affordable rental in inner city locations. Not only is land more expensive, but building costs per unit are In order to achieve this, National Treasury and the significantly higher at the higher densities required, which often Presidency had calculated that the country would require three or four story units. High service levels are then also require growth averaging over 5% between 2004 unavoidable. and 2014. A target was set for growth averaging 4,5% and above until 2009, and 6% and above The cost of these units ranges between R80 000 and R180 000, after 2010. significantly more that the R38 000 subsidy and the extra 15% allowed for special local conditions. While there are various It has been emphasised that this does not constitute mechanisms to increase this subsidy, cities are often forced to a new economic policy. Rather, it is an initiative to top up the grant in order to make the housing development sustain higher and shared growth within the feasible, and cannot always recover the additional costs in the existing economic framework established by the form of rental. These financial pressures can be contained if the adoption of the Growth, Employment and number of social housing units is limited. But there are Redistribution strategy (GEAR) in 1996. increasing pressures on cities to roll-out more social housing. This will place considerable strain on municipal finances. Supporting documentation for Asgi-SA issued by the Presidency argues that there are two threats There are indications that other forms of low-income housing which tend to unbalance the South African also cost more than the subsidy allocation from national economy and which will prevent the country from government. attaining these targets: · The "hollowing out" of the economy related The urban growth agenda to growing trade deficits driven by a strong Current statistics about urban productivity reveal that cities are rand underpinned by the global commodity growing at faster than the national average. This suggests that boom; and cities will play a crucial role in the national government initiative · The fact that one third of the people in South to accelerate growth to an average of 5% over the next eight Africa remain marginalised from the economy years. The following section looks at the Accelerated Shared and continue to be trapped in poverty. Growth Initiative for South Africa, the role that national government envisages for cities, and how cities might respond In response to these twin challenges, the initiative to these new responsibilities. identified a number of constraints which need urgent attention: The Accelerated Shared Growth Initiative for South Africa · The volatility and level of the currency; The Accelerated Shared Growth Initiative for South Africa · The cost, efficiency and capacity of the (Asgi-SA) was announced by President Thabo Mbeki in his national logistics system; opening of parliament speech in 2006. In his speech President · Shortage of suitably skilled labour and the cost Mbeki described the purpose behind the initiative as enabling effects on labour of apartheid spatial patterns; the country to meet its commitments to the Millennium · Barriers to entry, limits to competition and Development Goals, including: limited new investment opportunities; 5 ­ 11 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) · A regulatory environment which burdens small and medium · Work with role players such as the businesses; and Development Bank of South Africa (DBSA) to · Deficiencies in state organisation, capacity and leadership upgrade technical and managerial skills in key municipal service delivery departments; All of these issues, except for the volatility of the Rand, are · Play a more meaningful role in the relevant to city-level governments. Publicity surrounding the development of small business and black launch of the initiative was accompanied by sharp criticism of economic empowerment through enhancing under-investment in economic development related LED programmes; infrastructure by cities and their role in raising the costs of doing · Enlarge existing EPWP interventions; business. · Work with stakeholders to improve governance and public administration aspects In responding to these constraints, Asgi-SA proposed a of local government, for example through programme of priority initiatives organised around the following Project Consolidate; categories: · Work with the Department of Trade and · Macroeconomic issues Industry (DTI) to improve local delivery of · Infrastructure programmes economic services; · Sector investment strategies, or industrial strategies · Simplify bureaucratic processes and · Skills and education initiatives procedures to aid business growth · Second economy interventions (particularly around EIAs). · Public administration and governance issues. The Asgi-SA documentation outlines that, "The The Presidency and Treasury also made a series of medium-term three spheres of government are responsible for budgetary commitments to underpin Asgi-SA, amounting to about half of the total public sector capital additional spending of around R370 billion. This marked a investment over the period through a range of significant shift in South Africa's fiscal approach away from programmes at national department level. Projects relatively conservative restraint in public sector spending to a are distributed to provincial and local government more expansionary mode. At the heart of the initiative is a through the municipal and provincial infrastructure programme across the country's major parastatals to upgrade grant programmes, while provinces and most infrastructure. Eskom, the national electricity generator, is to municipalities have funds collected from their own receive R84 billion and Transnet, the national transport group is revenue sources for capital expenditure. Key areas to get R47 billion. Together with these commitments, the first of expenditure, incorporating all these spheres of budget influenced by Asgi-SA showed continued growth in government are provincial and local roads, bulk allocation to social services, housing and basic services water infrastructure and water supply networks, programmes. energy distribution, housing, schools and clinics, business centres, sports facilities, and multipurpose A perspective from Asgi-SA on the role of cities government service centres, including police The official Asgi-SA documentation makes particular mention of stations, courts and correctional facilities10." the role of local government under the categories of infrastructure, skills, second economy interventions and issues Challenges of Asgi-SA for cities and national around governance and public administration. The key focus government areas for urban regions are to: It is widely recognised that reaching higher levels · Improve the efficacy and scale of existing basic needs of sustained growth in the country as a whole will infrastructure spending; require that South Africa's cities grow at rates STATE OF THE CITIES REPORT 2006 5 ­ 12 above the Asgi-SA targets. Is this possible? The most recent data have been unable to finance the restructuring presented in this report suggests that only some cities will be able processes related to them. For instance, the to reach these targets. But the data also reveals that cities are Metropolitan Transport Authority in eThekwini has facing some real constraints in scaling up their activities and in struggled to find funding for coherent public increasing budgetary allocations to capital programmes. The one transportation systems within the municipality or Asgi-SA target that is immanently achievable is increased local from other spheres of government. government provision of basic services. This objective accords with existing trends reflected in the data and certainly enables Most significantly, the Asgi-SA documentation cities to contribute to the "shared" elements of the initiative. suggests that there needs to be a closer working arrangement between the Department of Trade However, cities have struggled to maintain infrastructure which and Industry, the Department of Provincial and serves economic purposes, such as roads. This is particularly Local Government and the municipalities in evident in areas experiencing high levels of economic growth delivering economic services, including various where traffic congestion is conspicuous, and electricity supply business support initiatives. This is a worthwhile has been overwhelmed by demand. Pressure to improve area of focus. The DTI has been actively infrastructure will increase and cities will have to raise additional developing customised sector plans in support of amounts of capital. the priority sectors identified in Micro-economic Reform Strategy and repeated in Asgi-SA. To The tendency in Asgi-SA is to view local governments through ensure that these sector plans translate into the traditional prism ­ as providers of basic services. But this effective local action it is important to look at perspective needs to be greatly expanded. Cities will need to regional differentiation in the priority sectors and work with national and provincial governments to ensure that to identify decentralised action plans for different strategic responses are developed. These responses must contexts. Previous national strategy frameworks confront constraints to public and private investment by ensuring produced by the DTI have tended to ignore the that cities can meet both basic needs and new economic varying complexities within regional economies demands. The tax incentives to support urban regeneration will and have failed to enhance local capabilities provide some stimuli to the private sector but will not cover all around industrial policy interventions. the costs of transforming declining neighbourhoods into quality environments. There is also an increasing need, identified by The Asgi-SA documentation is characterised by a cities and the private sector, for a greater attention to the urban tendency to associate local authorities with business environment which incorporates issues of logistics second-economy programmes. This implies that efficiency, ICT infrastructure and the like. cities have little to offer the formal economy other than adequate infrastructure and quality services. Asgi-SA also presents challenges to the long-term sustainability This is not necessarily true. While cities of cities. Rapid urban economic growth will escalate urban acknowledge the need to support informal sprawl and place increasing demands on cities' natural assets. businesses, many city strategies identify complex While the fragmented urban form inherited from apartheid will linkages between activities in the economy that require consolidation of the traditional urban core, the more are traditionally seen as `formal' and `informal'. peripheral nodes will also experience new development These local level strategies have moved beyond a pressures. This, in turn, will increase the challenge of rolling out simplistic dualism of `first' and `second' expanded infrastructure networks and providing effective and economies. The challenge for cities is to enhance affordable public transportation. To date many of the cities have both the formal and less formal components of shied away from urban processes that enhance sustainability or various economic value- and supply-chains. 5 ­ 13 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Advancing Asgi-SA In order to advance the widely accepted aims of the Asgi-SA Understanding the shifts in the property programme, it will be necessary for cities to actively engage with rates system provincial and national government partners and vice-versa. This engagement should relate to both city specifics as well strategic Suppose a municipality consists of only two medium- and long-term strategies that will help cities shift their properties. The site value of each property is R200 000. However, the improvements value of economic platform ­ and therefore the economic platform of Property A is R1 000 000, while the the nation ­ onto a more equitable and higher growth path. improvements value of Property B is R200 000. Thus the total value of Property A is The urban fiscal agenda R1 200 000 and the total value of Property B Considerable financial responsibilities have been devolved to the is R400 000. local level, placing enormous responsibilities on cities to collect their own revenues and manage their own finances. This section Suppose the total tax imposed by the provides a broad overview of the urban fiscal agenda. It municipality is R1000. examines four aspects of municipal finance. In a system based only on site values, each property will pay the same tax, R500. But in a Firstly it looks at how cities are rising to the challenges of the system based on the total value ­ site plus Municipal Finance Management Act. improvements ­ Property A will pay more. In this case it will pay R750, while Property B will Secondly it examines the how the abolition of Regional Services pay R250. Council levies will impact on municipal revenue. These levies played a significant role in the metropolitan areas as a buoyant There has been no change in the total amount second general revenue source alongside property tax. While of tax collected by the municipality, but in shifting from a system based on only site values National Treasury has expressed a commitment to replace them to one based on the full value of property, the with other more suitable sources, the details of this remain incidence has shifted significantly. unclear. As an interim measure they are being replaced with grants from national government, representing a marked The actual extent of the shifts in incidence are reduction in local revenue autonomy. unlikely in most cases to be as marked as this model suggests, but could nevertheless become Thirdly, the section examines the new property tax legislation. contentious if not well managed. While this has been passed, it has not yet been implemented at Property A Property B local level. For some cities it will lead to very significant shifts in tax incidence across ratepayers, a process which has proven Improvement notoriously difficult to manage internationally. value R1 000 000 R200 000 Land value R200 000 R200 000 Finally the section looks at strategic asset management and at the dire consequences that will confront cities if existing electricity, Total value R1200 000 R400 000 water and road infrastructure is not adequately maintained. Assuming a total tax take of R1 000, on a site The Municipal Finance Management Act only system each property will pay R500. On a While the Constitution devolves significant power to the local system based on total value Property A will pay sphere, it provides for national legislation to create standard R750 and Property B will pay R250. administrative processes underpinning a coherent governance framework. From a financial administration and governance perspective this has found expression in the new Local STATE OF THE CITIES REPORT 2006 5 ­ 14 Government: Municipal Finance Management Act (Act 56 of implications, disposal of capital assets, contract 2003), which came into effect from 1st July 2004. management, and public-private partnerships. Some of the key provisions of the Act include: In terms of planning, the MFMA stipulates the · Delineation of the role of mayors to provide political need for Service Delivery and Budget governance and oversight over fiscal and financial matters, Implementation Plans (SDBIPs). The SDBIP is a and the appointment of a municipal manager to act as the management, implementation and monitoring accounting officer responsible for financial management; tool, promoting the concept of ward-based · The definition of common accounting and reporting information and planning through end-of-year standards; service delivery targets stipulated in the budget · Defined responsibilities of the chief financial officer; and IDP. SDBIPs are meant therefore to provide a · Annual reports, including consolidated annual financial practical link between the strategic direction set statements, and audit reports for the municipality and by council and the services provided to the municipal entities within timeframes prescribed by the community, as articulated in the budget. Minister of Finance; Implementation of the Act has required the · Requirements to address issues raised by the Auditor- development of a complex skills-set and in some General; cases has been extremely demanding. The lack of · Approval of annual budgets before the commencement of familiarity with the new procedures, combined financial years, with capital budgets covering a period of up with provision for onerous sanctions in cases of to three years, within the framework of IDPs; misconduct has sometimes led to slow decision- · Avoidance of the financing of recurrent expenditure through making and other institutional challenges. These borrowing, except for short `bridging' periods; are diminishing with time, although the full · Processes for addressing financial emergency and bankruptcy implications are still unfolding. It is possible that in municipalities through `financial recovery' plans; some provisions of the regulations issued in terms · Reporting requirements, including monthly and mid-year of the Act will have to be altered. On the other reports to council by the accounting officer; hand, the Act is driving a remarkable improvement · The establishment of a budget and treasury office by every in overall transparency and financial governance. municipality; · The establishment of a primary bank account for each Abolition of Regional Services Council levies municipality; One of the most significant and potentially · Supply-chain management specifications; worrying recent developments within the urban · Specifications for the establishment of municipal entities. fiscal environment has been the abolition of Regional Services Council/ Joint Services Board The MFMA has had significant ramifications for SACN cities, (RSC/ JSB) levies as from 30th June 2006. The including the need to: decision on how replace these levies represents a · Restructure audit committees, procurement procedures and very important financial issue for municipalities ­ municipal entities to exclude councillors; and may well determine the long-term position of · Implement extensive new reporting requirements, including the local government sphere within the inter- detailed annual reports; governmental system. · Have much more formal and open processes in the development of budgets, including consultation with the Regional Services Council (RSC) levies were public and other spheres of government, and the business taxes, consisting of a small levy on incorporation of the views of ward committees; turnover (the `Establishment levy') and on the · Publish intentions and invite public comment on a range of payroll (the `Services levy'), and were introduced issues including contracts having future budgetary in 198511 in the context of the racially-based 5 ­ 15 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Table 5-3: Share by municipal category of total budgeted issues stand out. Firstly it is clear how important the RSC levy income for 2003/04 levies have been as a second general source of tax revenues alongside property taxes. Apart from Percentage share by category of eThekwini, which for historical reasons is a special Category of municipality municipality of total RSC levy income case, income from RSC levies is equivalent to Metropolitan 67,6% between 41% and 56% of property tax. Secondly, Local (Category B) 0,0% the table shows how buoyant the RSC levies have District (Category C) 32,4% been: revenues from the levies rose between 10% Total 100% and 27% across the six metros between 2003/04 and 2004/05. separation of urban areas into different local authorities. They were introduced mainly as a mechanism to distribute fiscal In the national budget for 2006/07 the Minister of resources from wealthier areas ­ largely the former white local Finance announced that R24 billion is to be authorities ­ to those within the same local region where there appropriated to replace the levies on an interim were infrastructure backlogs ­ largely the former black local basis for the next three years until new revenue authority areas. With the reconfiguration of the system after sources are introduced. apartheid the six metropolitan municipalities and 47 district councils (referred to as Category C councils) collected the levies. National Treasury has published a discussion They were not payable to the three aspirant metropolitan document on its website explaining the abolition of councils or any of the other Category B municipalities, which were intended to benefit indirectly through the districts. the levy and listing possible alternatives. These include: Table 5-3 indicates that the six metropolitan authorities · Zero-rating property taxes accounted for about two thirds of all levies collected the · A local business tax 2003/04 year, while the 47 districts accounted for the remaining · A business licence fee third. · A surcharge on municipal services, such as electricity and water Table 5-4 shows the total property tax and RSC/ JSB revenues for · Tax sharing of an existing revenue base, such the six metropolitan councils in 2003/04 and 2005/05. Two key as fuel levies or property transfer taxes. Table 5-4: Key tax revenue sources for the six metropolitan councils Levies Increase Increase collected as a in rates in RSC levy RSC/JSB RSC/JSB proportion of revenue revenue Property tax levies Property tax levies rates accrued 03/04 03/04 2003/04 2003/04 2004/05 2004/05 04/05 to 04/05 to 04/05 (R million) (R million) (R million) (R million) (Percentage) (Percentage) (Percentage) Cape Town 2 075 780 2 122 899 42 2 15 Ekurhuleni 1 261 551 1 468 608 41 16 10 eThekwini 2 367 435 2 686 506 19 13 16 Johannesburg 2 416 1 321 2 698 1 508 56 12 14 Nelson Mandela 419 194 466 226 48 11 17 Tshwane 1 363 494 1 386 628 45 2 27 STATE OF THE CITIES REPORT 2006 5 ­ 16 Of the alternatives, the local business tax or a share of the fuel burden on the cities through re-organising the levy would be the most appropriate for local government ­ or RSC levies. even a combination of the two: · The local business tax is a form of local VAT which would be Reform of property taxes administered by South African Revenue Services and would The new Municipal Property Rates Act took effect be payable, more or less, for enterprises which are registered from 2nd July 2005. All the nine SACN cities are for VAT. A local business tax of approximately 1% levied on a currently completing general valuations on which similar base to the current VAT would raise the same revenue new property taxes will be levied. nationally as the current RSC levies. · There is currently a general fuel levy, levied and collected There are a few key challenges in implementing nationally, of R1,16c on each litre of petrol and R1,00 on this new legislation. Firstly, the new legislation each litre of diesel sold. This generated just over R20 billion requires that the tax be based on the full market in 2005/06. Some of this could be devolved to replace the value of property. Up until now key cities have new temporary grants provided for in the national budget, levied rates based either solely ­ like Johannesburg obviating the need for a new tax. A fuel levy would also be ­ or largely ­ like eThekwini ­ on land values only. appropriate given the extent to which municipalities are Even if the introduction of the new system is not increasingly responsible for roads and public transport. associated with any increase in the total rates levied, it will lead in some cases to significant Zero-rating of property taxes is being implemented from 1st July shifts in how properties are taxed. 2006, and will simplify municipal VAT administration, but will only offset a small part of the loss. It is also unlikely that an Taxation based on only the site value favours additional surcharge on municipal services will raise significant properties where the value of the land is relatively revenue. Municipalities already generate surpluses on electricity low in relation to the value of improvements. With and water, but there are pressures to reduce these ­ to provide the introduction of the new legislation, and for better maintenance of the networks ­ rather than increase assuming no change in the total amount of them. Business licence fees will also only generate small property tax levied over the whole city, the tax on amounts. These are intended as a complementary measure to these properties will increase while the tax on tax those not falling into the VAT net. They would also add an properties which have a high land value relative to administrative burden to small businesses in particular. Property the whole property will reduce. Managing these transfer fees could be lucrative, but are highly volatile and shifts in incidence will be challenging. generally not regarded internationally as a desirable tax. The second challenge relates to the power given It is critical that the interim grants are not treated as a long-term by the new legislation to the Minister of Finance mechanism for replacing the RSC levies for two reasons: to set regulations on the relative tax rates that can · Firstly, a local tax enhances local accountability, especially if be charged to different categories of property. In the municipality has the power to vary the rate, even if this effect, the Minister is able to limit what has until is within a band set by national government. now been termed the `residential rebate'. The · Secondly, it is likely that there will be pressure to redistribute residential rebates in some cities are high, with the grant to poorer parts of the country to the detriment of Johannesburg amongst the highest with a rebate key growth-supporting urban areas where the RSC levies of 58% for residential property owners. It is have been generated in the past. While redistribution to poor probable that any new regulations will result in rural areas is required, this should be financed from the many the differential having to be reduced. This will also significant national tax sources which currently exist, such as lead to a different set of incidence shifts which income tax, VAT or company tax, rather than placing the may be difficult to manage. 5 ­ 17 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) The third set of challenges could arise because the legislation is for strong, autonomous cities. But it has not been new and untested. Not only is it complex to introduce new possible to realise the vision of decentralisation. methods of valuation and rating, but there are likely to be While small rural municipalities have struggled unforeseen legal issues which arise and make implementation with their mandate, more capable urban more problematic. municipalities have often found legislative, policy and fiscal limitations on their ability to fully Asset management address the needs of their citizens. There is There are indications in all cities that not enough money is being increasing consensus that the decentralisation spent on maintaining existing infrastructure. This is illustrated by programme, for infrastructural services in the experience of Joburg Power's planned and unplanned particular, requires asymmetric treatment and a outages and the serious disruptions to electricity supply in Cape different dispensation for cities. Town due to rapidly deteriorating electricity network infrastructure. These risks are often under-appreciated for water This section examines key aspects of the strategic services, as infrastructure lies underground and the water urban service delivery agenda and analyses its services network is reasonably tolerant of under investment until implications for cities. Urban services range from it is too late. Similarly there are signs of neglect in extensive road basic services such as water, sanitation, housing, networks in the nine SACN cities. These roads, and the electricity, healthcare and education to higher associated stormwater systems are expensive to build and level services such as telecommunications, maintain. Ongoing maintenance of roads is crucial to preserving libraries and heritage services, freight and the asset and reducing long-term costs. shipping, broadcasting, banking and financial services. It is acknowledged that urban services The Municipal Services Finance Model developed for the are broader than the set provided by national Municipal Infrastructure Investment Framework, allows municipalities. Telecommunications, for example, a rough national benchmark to be established for different sub- has a profound impact on the urban landscape. categories of municipality, with specific attention to metros. An The licensing of a second national landline expenditure figure of R65 per household per month (excluding operator, for example, has the potential to capital charges) in indicated as appropriate. The three Gauteng enhance growth by: improving the number of metros are currently budgeting to spend R1,02 billion a year on telephone and internet connection points; roads and stormwater operations and maintenance. improving connectivity speed and bandwidth; This amounts to approximately R45 per household per month. and reducing telecommunication costs. City This indicates that these cities (and probably the others) are governments, however, do not have significant underspending and that not enough money is being allocated control over the delivery of these services. to maintain the existing road system. This section focuses on those infrastructural While rolling out access to basic services is rightly an important services that are the subject of new thinking at focus for government, it has been prioritised to the exclusion national government level and examines their of adequately investing in the rehabilitation and maintenance of impacts on cities: existing infrastructure. This presents a threat to the sustainable · electricity distribution, looking at the delivery of acceptable quality services to all, but is also a threat proposed restructuring of the sector; and to the municipal fiscus as the high costs of maintenance become · water and sanitation services. increasingly unaffordable. Restructuring the electricity distribution Urban services agenda industry The delivery of infrastructural services has been substantially South Africa's electricity distribution industry is devolved to the local level. This process has recognised the need highly fragmented, with electricity being provided STATE OF THE CITIES REPORT 2006 5 ­ 18 by Eskom and 187 local authorities. There are at least 200 tariff implications of this process are likely to differ regimes, leading to great inequality and inefficiency in the substantially depending on whether the six or the provision of electricity across South Africa. The municipal `six plus one' RED option is adopted. distribution system is not homogenous, with the twelve largest municipalities accounting for about 75% of all electricity sold in The six REDs model the municipal sector. Work on the `six REDs' model has already begun with the establishment of Electricity Distribution The sector is confronted by asset depletion as a result of under- Industry (EDI) Holdings in 2003 and the launch of investment; high administrative costs due to duplication; the first RED in Cape Town in 2005. Apart from uneven distribution of electricity, with the poor being worst these achievements, progress in establishing the affected; high staff turnover; and an inability to attract highly six REDs has been slow with the most significant skilled professionals due to low wages. Some metros report challenge relating to the constitutionally vacancies as high as 43% in their electricity departments. Along allocated authority over the electricity reticulation with skills shortages, further problems include insufficient function. The South African Constitution allocates investment in infrastructure as well as the depreciation and executive and legislative authority for electricity deterioration of equipment. reticulation to local government. Consequently, compliance with the restructuring initiative In the face of these problems, government has identified the cannot be enforced and is entirely voluntary for need to address the widespread inefficiency and poor financial municipalities. Municipalities, however, have viability observed in the sector, through a major restructuring been slow to volunteer because of perceived exercise. Restructuring is intended to ensure that decision- financial disincentives and uncertainty about making is directed at achieving the best interests of the subsidisation. electricity sector as a whole, something which has generally been overshadowed by the individual interests of municipalities The establishment of REDs has direct implications responsible for electricity reticulation. It is envisaged that sector- for the financial viability and financial focused decision-making will attract greater investment arrangements of the municipalities. For many local and skills. municipalities and metros alike, the sale of electricity generates large amounts of revenue, The form that restructuring will take has not been finalised. often used to cross-subsidise other departments in There is uncertainty about whether to establish six wall-to-wall the municipality. The establishment of REDs would Regional Electricity Distributors (REDs), each covering a metro involve ring-fencing electricity sales and stopping and surrounding local municipalities, as originally recommended the intra-municipality flow of revenue. This could in the Blueprint Report and consequently agreed upon by compromise the financial viability of some cities. Cabinet12, or the more recently proposed `six plus one' RED To offset these risks, current policy allows option. While the originally planned six REDs would each municipalities to charge a levy to cover the cost of incorporate a metro and a number of surrounding local transition to the RED system in the first few years. municipalities, the `six plus one' option refers to the six metro REDs with the exclusion of surrounding local municipalities, all Despite the Blueprint Report's conclusion that of which would then fall under the belt of a seventh national consolidating the industry into six REDs is RED that covers all of the remaining local areas13. Either option financially viable and likely to lead to greater will see Eskom and the electricity distributing municipalities operational efficiency, there is a perception that transfer their electricity reticulation functions and thus all their restructuring will place a particular burden on the assets, liabilities, obligations and staff to the REDs. But, the metros. The metros would need to subsidise the 5 ­ 19 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) smaller local municipalities included within the six REDs model, are capable of running their own operations a prospect which has, understandably, not received much effectively and would prefer to retain their support. However, some argue that even without restructuring, electricity reticulation function. Again, cities are indirectly subsidising local municipal electricity government has no means to compel these supplied by Eskom. This is because Eskom sells electricity at municipalities to join the metro RED. Under the higher rates to metros than to poorer rural and urban locations. proposed seventh RED, category B municipalities will be given the opportunity to choose between Research suggests that the six REDs model has the potential to joining the metro RED or fall under the national bring about wider efficiency gains across the country as a whole, seventh RED. The former option is arguably more particularly as far as economies of scale and equitable appealing than the latter. distribution is concerned. The six REDs model has received wide support from independent industry parties given its potential to Hard choices address some of the industry's key objectives like increasing The proposal to establish the seventh RED supply of electricity to the poor, improving the reliability of highlights the tension between the need for electricity reticulation and operating in a financially sound and national improvements in electrification and the cost-effective way. interests of the metros. While the six REDs option is likely to have wider benefits, see greater With restructuring still a voluntary process, there is little that EDI economies of scale and arguably benefit more Holdings can do to move ahead with implementation. The people, the seven REDs model has narrower industry is left with two options: either to change to the appeal, targeted at providing a more attractive Constitution to allocate the reticulation function to a national option to the metros and accelerating the authority or to make restructuring more appealing so as to establishment of REDs. accelerate voluntary participation. The ultimate vision and driving force that must The `six plus one` model direct the restructuring process is to secure the It is not clear what informed Cabinet's decision to probe the provision of effective and efficient electricity for all possible seventh RED14. This will consist of six metro REDs and a South Africans. single national RED, made up almost entirely of smaller, poorly resourced municipalities characterised by weak infrastructure Water services and under-capacity. The `six plus one' model is driven less by Water and sanitation service provision is a key economies of scale than the need to accelerate implementation function of local government and great effort has of metro REDs. The process of establishing the metro REDs is been made to fully devolve this function to the likely to be less complex with the exclusion of the smaller local local sphere. The ability of local government to municipalities from the process. Indeed, removing the poorly integrate the water provision function with other resourced local municipalities from the equation presents a far functions is important in order to achieve more appealing prospect for the metros, as they are unlikely to overarching efficiency in service delivery. perform any direct subsidisation function. Water services risk being undervalued until the The initiative may also provide a transitional arrangement for day the tap runs dry or people die because the certain category B municipalities to join metro REDs if they are water supplied is not safe to drink. The effective ready and willing to do so. Under the initial six REDs option, a and sustainable provision of water and sanitation number of well-resourced and efficient category B cities would services is not an optional choice, but a basic fall within a metro RED. However, many of these secondary cities necessity. STATE OF THE CITIES REPORT 2006 5 ­ 20 In the urban areas of South Africa, a typical provider manages Failure to address these two key risks could have some 500 000 customer connections with annual revenue of catastrophic consequences in the future. more than R1 billion and a staff of a few thousand people. The replacement value of assets may be more than R10 billion. The Available studies show that the current rates of ratio of asset value to revenue is high, suggesting a very capital- investment in rehabilitation and maintenance are intensive business, much more so than electricity. Consequently, not adequate. If investment in rehabilitation and paying attention to both operational and investment efficiencies maintenance of assets is inadequate, the is very important. performance of the assets will slowly decline reaching a critical point when the supply of water The Strategic Framework for Water Services, approved by Cabinet will be unreliable and sporadic, the water will not in September 2003 sets out the policy framework for water be safe to drink, and there will be serious loss of services in South Africa and covers three aspects: institutional water because of broken pipes. It is more reform, regulation and support. To date, the national institutional expensive to remedy the situation retrospectively, reform strategy has focused on regional infrastructure which rather than to undertake timely maintenance and crosses water services authority boundaries and on regional water rehabilitation. services institutions, primarily water boards. The scope of the reform strategy is currently being extended to include all water High level professional skills and adequate services institutions. The regulation strategy places significant capacity are necessary to manage and operate emphasis on drinking water quality, economic regulation and the water services. The technology to treat drinking importance of strategic asset management to ensure the water consistently to the necessary standards and sustainability of services. The support strategy is currently being the processes to manage risks to acceptable levels developed. It is likely to stress the critical importance of leadership are complex. In addition, sophisticated planning and management to ensure good performance. and project management skills are necessary to ensure that the right investments are made at the Urban sanitation remains a major challenge. Rapid urbanisation right time. Failure to plan and implement capital and the increase in the number of households living in informal projects appropriately in the water sector could settlements pose a major challenge for the provision of safe and have disastrous consequences, resulting in water adequate sanitation services. While an ideal, medium- to long- shortages and rationing. term solution may lie in developing permanent housing with waterborne sewerage, in the interim, informal households must The most significant challenge facing the water be provided with services which safeguard their health, safety services in the major cities in South Africa is the and dignity. The upgrading of settlements through the provision sustainability of the service. Inadequate of water and sanitation is complex and beset by many obstacles investment and loss of skilled staff are key risks to including land ownership, densities and location. However these sustainability. Providing safe and adequate are issues that have been tackled in cities across the country, and sanitation services to informal urban settlements is there is substantial expertise and experience in such upgrading. also a major task. National government will require water services providers to properly The primary risks facing the water services sector in both the account for the financial sustainability of the metropolitan areas and secondary cities are to: service. Greater transparency in reporting · ensure adequate investment in rehabilitation and together with more rigorous benchmarking will maintenance of infrastructure; and reveal true performance with respect to managing · attract and retain the necessary skills to manage, operate and water services assets. Strategic leadership is key to maintain this infrastructure adequately. improved performance. This needs to be 5 ­ 21 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) complemented with an enabling environment. Institutional various spaces, and the differences in capacity reform may be necessary to ensure managerial autonomy and between relatively well-resourced urban create the environment where the necessary competencies can municipalities and impoverished small towns. be retained. While small towns may indeed need considerable support from provincial government, well The urban governance agenda capacitated municipalities in the bigger cities Notwithstanding the different conditions that exist in big cities, might best be left to manage their own affairs. It small towns and rural areas, the assignment of functions has been argued, in the case of the bigger cities in between the national, provincial and local spheres of particular, that the role of local government government is uniform across the country. This system fails to should be enhanced, because very often the local distinguish between the unique challenges that exist in these sphere is better suited than the provincial or Table 5-5: Division of powers and functions Sphere Security Social services Built environment Business support National Security Services (SA Police Payment of social security Strategic infrastructure International trade. Service and National grants (SASSA). (including large dams, ports, Revenue administration, Defence Force) National health services public transport projects, Public expenditure planning, National disaster such as laboratories and presidential lead projects, Public finance management management mortuaries. etc.). and fiscal policy Agricultural services and National roads. management. veterinary services. Railways (freight, long Funding and oversight of Tertiary education and early distance and commuter science councils. childhood education. rail services). Telecommunication Land restitution and deeds Electrification. infrastructure. registration. International marketing. National parks and conservation Provincial Road traffic law enforcement Sports and culture. Housing provision. Economic development Social development. Provincial roads, subsidised planning. School education. bus services. Regional marketing. Public health services. PT operating license Environmental regulation. Provincial parks and regulation and vehicle and conservation. driver licensing. Local Metropolicing. Municipal health clinics. Electricity distribution, Municipal property rating. Safety by-law enforcement. Environmental health reticulation, billing and Urban renewal. by-law enforcement. administration. Local economic development. Libraries Municipal roads. Municipal bus services. Public transport interchanges and ranks. Water services. Sanitation. Waste management. Land use planning and management. Municipal housing administration. STATE OF THE CITIES REPORT 2006 5 ­ 22 national sphere to carry out certain roles. This will empower consultations should be communicated. cities to deal with large, complex urban environments in a Regardless of the improved intergovernmental co- holistic way15. ordination processes, there is still a need to rationalise the assignment of functions between Powers and functions the spheres of government. The distribution of functions as set out in the Constitution allocates different responsibilities to different spheres of The devolution debate is central to rationalising government. National government is responsible for high level government powers and functions and there are economic regulation, social development and security functions. strong arguments for decentralising all the Provinces are responsible for livelihoods, regional economic functions which help local government meet its planning and human development. Local government is also developmental agenda ­ particularly that of responsible for livelihoods contextualised within the framework creating viable human settlements. This implies of built environment functions: Municipalities are responsible for expanding the role of local government to basic service provision and the creation of an enabling incorporate those housing and transport functions environment for the growth of business enterprises. Table 5-5 that have not yet been devolved. This should not illustrates that the assignment of functions to the three spheres be too difficult as the appropriate legal of government across most of the sectors is complex. The built instruments to make this happen are already in environment, in particular, while primarily the responsibility of place. The Constitution, for example, states: "156(4) The national government and local government, is often dependant on both the provincial provincial governments must assign to a and national spheres. This gives rise to fragmentation, potential municipality, by agreement and subject to duplication and confusion about responsibilities. any conditions, the administration of a matter listed in Part A of Schedule 4 or Part Given the current division of powers and functions, it is clear A of Schedule 5 which necessarily relates to that co-operative relations between the three spheres of local government if government are crucial to successfully delivering on the safety, ­ That matter would most effectively be and human and economic development mandates. The absence administered locally; and of intergovernmental co-ordination is regularly blamed for ­ the municipality has the capacity to hampering efficient implementation of public policy and administer it". programmes. Other Acts would also enable this devolution In response to the co-ordination challenge, the national response, including the Municipal Systems Act, government passed the Intergovernmental Relations Framework the National Land Transport Transition Act and (IGRF) Act (13 of 2005). The Act provides a framework for a the Housing Act. It is the application of these series of structures designed to promote intergovernmental co- instruments which needs to be advanced. operation and settle intergovernmental disputes with a President's Co-ordinating Council and various Premiers' Co- The funding flows associated with built ordinating Councils as the primary structures. However, the environment functions reliance of the Act on representation by selected sector At present the built environment-related services are representatives and organised local government means that the responsibility of various spheres of government. there is a need to strengthen communication within the spheres Built environment related services include: of government and across the sectors. The Act provides for · `Plot-based' services like water supply, technical support (provided by the Minister or MEC for Local sanitation, electricity, municipal solid waste Government) for meetings of intergovernmental committees. and roads, which are the direct responsibility But the legislation is silent on how the outcomes of these of municipalities in terms of the constitution; 5 ­ 23 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Table 5-6: Summary of current subsidy schemes Amount to be Name of transferred in subsidy scheme Sector and type of finance Purpose 2006/07 Equitable share Unconditional transfer but Allocations to local government are calculated on the assumption R18 billion (ES) typically intended to cover that the ES is used for providing free basic services to the poor operating expenditure. which services include water supply, sanitation, electricity and municipal solid waste. There is a small provision for governance, administration, planning and development (GAPD) facilitation function grant and, recently, for municipal health. But municipalities have liberally applied the concept of un-conditionality and used the funds for other purposes, primarily GAPD. Municipal Conditional transfer to local MIG is transferred to local government based on a formula. It is used R6,3 billion infrastructure government for capital works for water supply, sanitation, roads, landfill sites, municipal public grant (MIG) required to provide basic services and, to a limited extent, for infrastructure for business infrastructure to the poor. properties. MIG can be used for public transport infrastructure but there are limits due to the amount allocated in the formula and due to the constraint of being for the poor. Public A new, conditional grant Funds transferred based on application by municipalities for R519 million transport intended for capital works specific projects. infrastructure associated with public transport No track record yet but projects included in funding applications and systems infrastructure and systems. to date include modal interchanges, public transport lanes and grant Local government and provinces? a range of other capital works and systems. Housing and Conditional grant to provinces Funds paid out on a `per poor household' basis to developers, R6.3 billion human for housing, intended to cover both in the municipal and private sectors. Subsidy intended settlement capital cost of providing housing for land, internal infrastructure associated with housing subsidy and associated community developments, and `top structure'. infrastructure. Bus subsidy Grant transferred to provinces for Funds paid out to private bus operators based on a set of R2.3 billion onward payment to bus operators rules which differ by province. There is a trend towards approximately to cover part of their operational being more equitable towards bus operators and bus routes. costs. Commuter rail Amount paid annually to SARCC Subsidy paid to SARCC which uses part of it to cover capital R2.7 billion subsidy to cover large proportion of costs expenditure on infrastructure and rolling stock. Substantial approximately of the national commuter rail proportion paid on to Metrorail to cover operational system. expenditure. Gautrain Rapid Transport National Government contribution to the Gauteng Provincial R3.24 billion Rail Link Government for the construction of the Gautrain Rapid Rail link. National Department Minerals and To implement the NEP by providing capital subsidies to Eskom to R977 million Electrification Energy: Electricity sector address electrification backlogs of permanently occupied residential Programme (NEP) dwellings, the installation of bulk infrastructure and rehabilitation of electrification infrastructure. 2010 world cup NT/DBSA To find capital works in rebuilding or constructing stadiums R1 billion stadium upgrades for 2010 soccer world cup games Subsidy figures in table as stated in Division of Revenue Act 2006 (www.treasury.gov.za) · Municipal public services for all residents, funded through There are also a wide range of subsidy schemes payments of property rates and other general sources of applied by national government. These involve revenue available to municipalities, including the former transferring funds from the national fiscus to: RSC levies; · National public entities (for example the · Housing; and SA Rail Commuter Corporation and Eskom). · Public transport16. STATE OF THE CITIES REPORT 2006 5 ­ 24 · Provincial government which, typically, passes these subsidies need to be some revision of where and how on to municipalities or private sector developers or service certain functions are assigned. In particular it is providers (including bus subsidies and housing subsidies). argued that the role of local government should be · Local government, mostly for application to their own enhanced, as very often the local context is better services but sometimes passed on to external service suited than the provincial or national one to carry providers (particularly the Municipal Infrastructure Grant and out certain roles18. equitable share allocation17). There is a clear argument that housing and public Table 5-6 gives a summary of the more important funding flows, transport subsidy allocations, in particular, should involving a transfer of greater than R2 billion over the medium be managed local government. Devolution of term. responsibility and funding for these functions will improve municipal control over all built The extent of fragmentation is evident in the way subsidies are environment functions and will ensure that public allocated, particularly in relation to public transport. Money for transport and housing can be delivered more public transport infrastructure and public transport operators effectively in urban areas. This will strengthen flows through four separate and different subsidy routes, South African cities, giving them greater autonomy involving all three spheres of government (see figure 5-4). to deliver services efficiently and mobilise their own resources ­ within an enabling and supportive The need to re-allocate powers and functions policy, legislative and fiscal framework. Since the adoption of the Constitution, which sets out the assignment of functions, experience has shown that there may Figure 5-4: Current subsidy flows National Fiscus DPLG DoH NDoT ES MIG PTISG SARCC Prov DLG Prov DoH Prov DoT Municipality Housing Scrapping Bus Rail subsidies allowance subsidies subsidies Operating Private Private Capital Taxis Rail developers buses 5 ­ 25 STATE OF THE CITIES REPORT 2006 PEOPLE BUILDING THE CITY LONG AND COSTLY COMMUTES COMPROMISE VUSI PHAILANE'S PRODUCTIVITY AS HE MOVES ACROSS EKURHULENI In order to move up in the world, Vusi Phailane must first move "The trains are not very reliable, sometimes there sideways. With a bursary from one of South Africa's most are breakdowns on the lines, or electricity failures, illustrious architecture firms and only one year before he or strikes or the trains get cancelled. The train also graduates as an architect, there is no doubt that Phailane is takes longer." This is one of the many calculations moving ahead. But every day he must travel ­ east to west and that Phailane performs in the course of his long west to east ­ between his home in kwaThema, in the south-east commute, weighing up cost, time and of Ekurhuleni and his studies at the University of the convenience. Witwatersrand in central Johannesburg. The journey consumes about four hours of his every working day and costs about R800 a By now the sun has started to rise, silhouetting the month ­ almost half his R2000 stipend from the architecture firm. smokestacks and furnaces of the New Era industrial area against the sky. At 6:43 am the train screams Vusi's day starts at 5:45 in the morning, when he leaves his into the station and small knots of passengers mother's modest house in Tolashe Street. On a chilly autumn lining the platform rush towards the carriages at morning, the sun has yet to rise, and the streets are empty. He the back, where there is more chance of finding a makes his way by foot to the nearest main road, a five-minute seat. Inside the carriage an informal church service walk. Here he encounters other commuters. "People going to the is in progress. Almost everyone has joined in the taxi rank are waiting for an isichebe or an amaphela ­ a singing of hymns. The woman leading the service `cockroach'", says Phailane, "but those of us who want to take explains that her neighbour has died and passes the train must use an AmaVenture because the station is outside around a small plastic bag to collect money for the the township." `Cockroaches', named for their darting motion family, to which most passengers contribute: and short hops, are ordinary sedan cars that ferry up to four Ubuntu in motion. passengers on local trips within kwaThema; AmaVentures, a type of Toyota, carry nine passengers and travel further afield. The train pulls into Brakpan station. A man selling cellphone-accessories gets on; so does another Countless `cockroaches' go by. After a ten-minute wait, an selling crisps and keys. There is no longer enough AmaVenture pulls up. Other than the driver's girlfriend who is seating space and Phailane relinquishes his seat to sitting up front, there are only two other passengers. Kwaito an old lady. The sun is now up. music fills the silence as the Toyota Venture weaves its way looking for more passengers. The driver is in no hurry to reach Another passenger gets up to preach. Women the station. The more circuitous the route, the more likely he will have deviated from their biblical role, he says, pick up people on the way. But it is getting late for Phailane. which is to "obey their husbands and look after the children, not to do work outside the house." The Eventually the driver concedes defeat and heads off to the sermon is long enough for the train to pass station. through Apex, Range View, Dunswart, Boksburg, Angelo, Germiston, President, Driehoek, Phailane has missed not only the 6:00 am express, but also the Geldenhuys and Cleveland, traversing rusting 6:15 am local. The next train is at 6:40 am. Even if the train is on industrial areas, mining land, informal settlements, time, Phailane will be late for his first lecture at 8:15 am. Phailane vacant buffer zones, declining business nodes, takes the train because it is cheaper than a taxi, but it is a risk. leafy white suburbs... "A prototypical cross-section STATE OF THE CITIES REPORT 2006 5 ­ 26 through your average South African city," according to Phailane, which passengers pass money back and forth whose academic training and township childhood affords him a between themselves giving change until the driver unique understanding of the South African system. is satisfied that everyone has paid. At Cleveland station, a woman feels compelled to refute the After 45 minutes the nightmare drive ends and the argument of her predecessor, quoting biblical precedent and taxi pulls into the kwaThema rank. waving a bible in the air for affect. She says she must work to support her children. As the train approaches Park Station, the Vusi must now catch a `cockroach' to drop him off last stop for most passengers, she leads the carriage in song, near his home. When he finally walks through his accompanied by two elderly women drumming on the walls of front door it is 4:25 pm, about an hour and a half the carriage. Many passengers join her dancing in the aisle. since leaving Wits. It is now 7:49 am. Phailane must decide whether it will be quicker Add together the morning and evening commutes to walk from the station to the university or catch a bus. He opts and Vusi has spent more than four and half hours for a Joburg Metrobus, not one which is waiting just outside the in transit, time that he would rather have spent station that costs R5,10, but another, three blocks away, that studying. Vusi has been thinking of finding a room costs only R3,60. Even though he doesn't have to wait very long, in Braamfontein, near the university. He has seen he only reaches campus at 8:30 am. Vusi has been on the road one, barely big enough to accommodate his bed for two and three quarter hours. He has spent R17,60, has only and drawing board. But he is doing another one of covered half the journey, and he is 15 minutes late. those calculations, weighing up the cost of rent ­ IN ORDER TO MOVE UP IN THE WORLD, VUSI PHAILANE MUST FIRST MOVE SIDEWAYS At 3:00 pm, it is time for the ride home. Vusi prefers to take a taxi for the return journey. Even though it's more expensive it will get him home quicker so long as he can catch one before the evening rush. That means taking a short-cut through Park Station to the taxi-rank in Noord Street ­ a 25-minute walk. Within minutes, he catches a combi-taxi that will take him non-stop at a cost of R12,00 to the taxi rank in kwaThema. Unfortunately Vusi happens to have chosen a taxi driver from a whopping R1 500 per month ­ against transport hell. He is rude and abrasive, abusing an elderly passenger costs of R800 and the inconvenience of losing four who taking too much time climbing into the combi, and he to five hours of productive working time each day. drives aggressively. He speeds, hoots at cars in his path and overtakes in the face of incoming traffic. All fifteen passengers He says he would really like to leave kwaThema for stare grimly ahead while trying not to look at the road. No one that reason. But he is also planning to do his final talks. "There is a system," says Vusi. "The driver is in charge year thesis there: he wants to design a new taxi because the taxi is his home. He is the king of the taxi. You have rank in the old town centre. to be obedient." The only social activity is a complex ritual in 5 ­ 27 STATE OF THE CITIES REPORT 2006 PEOPLE BUILDING THE CITY DR TOMMA PROVIDES AFFORDABLE ACCOMMODATION IN JOHANNESBURG'S UPMARKET NORTHERN SUBURBS Dr Giorgio Tomma, a businessman living in an upmarket suburb trees on the site helping to determine the location in the far north of Johannesburg, accommodates 500 people on of the courtyards. At all times, the exterior walls of his plot. Dr Tomma, a voluble Italian, realised that there was a the outer rooms had no windows. In this way Dr desperate need for well located housing ten years ago when the Tomma's neighbours remained blissfully unaware manager at the Randpark Ridge Pick 'n Pay approached him for that people were living behind what appeared to help. At that stage the manager and his wife slept in their car be a large garden wall. While this strategy may outside the shopping centre ­ even though they had their own have effectively fooled the neighbours and house in Soweto. Their problem was that their house was too far enhanced the security of the tenants living inside, away from their work. The manager could not afford the time it has compromised cross ventilation in the rooms. and the money to drive into work each day ­ a distance of This fact and the higgledy-piggledy layout are 35 km. He still intended to carry on sleeping in his car but only some of the reasons that have made Dr wanted to park his car on Dr Tomma's property. Tomma's residence a building inspector's nightmare. And so Dr Tomma decided to develop some housing on his small-holding, once an asparagus farm, but now in the midst of Conditions in Dr Tomma's residences are by no suburbia, surrounded by townhouses and shopping malls. He means ideal. Many of the rooms do not have started out by adding some toilets to the existing "boys' rooms" adequate light. The floor level of some rooms is behind his house and then rented out these rooms to tenants below the level of the ground outside which could very much like the local Pick 'n Pay manager. Then housewives allow the entry of rain water into the rooms ­ in the neighbourhood started approaching Dr Tomma to even though there is no evidence of this at accommodate their domestic workers. Soon Dr Tomma realised present. Often too many tenants are forced to he was on to a good thing and as time went by he added more share ablutions. The electrical wiring is a tangled and more rooms. spaghetti-like mess. Fire is a constant risk ­ and there are no fire escapes. The rents at R240 per The rooms in Dr Tomma's residences are small, ranging from person per month are relatively high. Dr Tomma seven square metres to nine square metres and are intended to also has a number of house rules that are very accommodate two people. Ablution facilities are communal, but harsh. He will not allow children who are old people tend to cook in their own rooms. Five or six rooms are enough to walk to stay in his rooms. He says that grouped together and cluster around a courtyard. Most they have a tendency to put their fingers in the courtyards have trees, washing lines and wash troughs, and in electrical plug holes, and he does not want to be the evening when Dr Tomma's tenants return from work, they responsible for the consequences. Dr Tomma has gather in the yards to chat. An intricate arrangement of passages also upset his neighbours who accuse him of link one courtyard to the next, and if you do not know your way lowering the value of their properties. The local around it is very easy to get lost. The picturesque organic layout council says that Dr Tomma's residences are arose out of an incremental building process whereby Dr illegal. Tomma added groups of rooms as the need arose, with existing STATE OF THE CITIES REPORT 2006 5 ­ 28 At the moment Dr Tomma is trying to legalise his residences. He has employed an engineer to submit drawings to the council, and has undertaken to provide some fire escapes. Even if he carries out these improvements he has no guarantees that the council or his neighbours will be any more tolerant. In the meantime, he continues ­ outside of the law ­ to provide well located, high density accommodation to people seeking out single room occupancy. Notwithstanding the large demand for this type of accommodation ­ manifest from the long list of people waiting for a room in Dr Tomma's residences ­ there are no legal mechanisms or policies that facilitate housing of this nature. Until policies for this type of accommodation are formulated, the fine line between slum-lording and filling a gap in the market will remain undefined. At present, Dr Tomma has no desire to have a slum in his own backyard, but other landlords, who live at some distance from their tenants might be less tractable. NOTWITHSTANDING THE LARGE DEMAND FOR ROOMS THERE ARE NO POLICIES FOR THIS KIND OF HOUSING 5 ­ 29 STATE OF THE CITIES REPORT 2006 EMERGING CITY AGENDAS (continued) Endnotes 1 Office of the Presidency (2006) Draft Urban Development namely: Johannesburg, Tshwane (Pretoria), Framework for the 2nd Decade of Democracy in South Africa Ekurhuleni (East Rand), eThekwini (Durban), 2 Alan Mabin, an urban thinker, writes that policy "has been Nelson Mandela Metro (Port Elizabeth) and Cape developed by people with an extremely broad view of urban Town. problems, and thus it fails to connect with the dynamics of social 13In some cases, category B municipalities (secondary and economic life. The solutions and policy directions which have cities) may fall under a Metro RED. emerged fail to grapple with the circumstances of most people, and 14The Government Communication and Information have a tendency to entrench problems of the city ­ providing no Service (GCIS) communiqué after a Cabinet means of escape for informal tenants, throwing resources at meeting held on 14 September 2005 relayed densification whilst suburbanisation drives on, funding the Cabinet's decision to explore the possibility of a continued location of `displaced' communities and diverting limited seventh national or local RED. public finance from the most efficient uses. Mabin, A. (2000) Urban 15This summary is based on the report: `Current Policy: Presences and Absences, background paper for Urban Policy distribution of powers and functions and impact of Lekgotla hosted by SA Cities Network devolution to local government sphere with strategy 3 Mabin has questioned whether integration of our cities (in social, for management of this process', by PDG, Feb 2006 racial, economic and cultural terms) is compatible with with contributions from Philip van Ryneveld. redistribution of power in the economy: "We proceed on the 16Urban planning and land administration also have assumption that the many laudable goals of urban change are a major impact on the functioning of built compatible with one another, but small and large examples suggest environment but these functions do not have major that in some cases they are not. Thus compactness, centre financial implications and are therefore not regeneration, integration of towns and townships may not be specifically discussed here. compatible with one another, let alone with the questions in the 17For the purpose of this discussion the `equitable political economy ­ with real redistribution of economic power and share' allocations to local government are included simultaneous economic growth, not to mention eradication of in the `subsidy' category even though the term urban poverty. Mabin op cit `subsidy' may not be strictly relevant to this flow of 4 National Treasury (2006) Estimates of National Expenditure finance. 5 Lawless, A. (2005) Numbers and Needs, published by SAICE 18This summary is based on the report: `Current 6 Rust, K., Bertoldi, A. and Gardner D (2005) Opinion piece for the distribution of powers and functions and impact of City of Johannesburg devolution to local government sphere with strategy 7 Gardner, D. (2004) NURCHA ­ Rental Housing Market Review for management of this process', by PDG, 8 Many of these points were raised at a special workshop on the Feb 2006. implementation of the BNG strategy, co-hosted by the National Department of Housing and the SACN, June 2006. 9 Special workshop on the implementation of the BNG strategy 10Asgi-SA op cit 11Known as Joint Services Board levies in KwaZulu-Natal 12The Blue Print Report was produced by the appointed consultant, PriceWaterhouseCoopers and concluded that the maximum number of financially viable and independent REDs feasible in South Africa is six. This total of six REDs was agreed upon and in 2003, the Electricity Distribution Industry (EDI) Holdings was established to conceptualise, implement and monitor these metro-based REDs, STATE OF THE CITIES REPORT 2006 5 ­ 30 CHAPTER 6 CONTENTS CONCLUSIONS Challenge 1: Thinking in new ways about the urban space economy 6 ­ 2 Challenge 2: Managing urban population dynamics 6 ­ 3 Challenge 3: Promoting economic growth while ensuring that economic benefits are more equitably distributed 6 ­ 4 Challenge 4: Enhancing urban transport 6 ­ 6 Challenge 5: Overcoming the sustainability constraints of apartheid urban form 6 ­ 7 Challenge 6: Delivering urban services to promote productivity, inclusivity and sustainability 6 ­ 7 Challenge 7: Taking sustainability seriously 6 ­ 8 Challenge 8: Building urban citizenship 6 ­ 9 Challenge 9: Streamlining urban governance 6 ­ 10 Challenge 10: Mainstreaming innovation 6 ­ 11 6 ­ 1 PAGE6 ­ 1 STATE OF THE CITIES REPORT 2006 6 CONCLUSIONS The period 2000-2005 was a time of far-reaching change for below the minimum living level. This suggests South Africa's cities. Cities are generally much better off than in that strategic investment in cities can 2000, and a firm foundation has been established for improved simultaneously achieve two important national performance over the next term. But this should not encourage objectives: growing South Africa's economy and complacency. Even though much has been achieved, old developing some of South Africa's poorest problems remain unsolved and new issues continually present residents. themselves. But cities are not isolated islands. There are This chapter presents a ten-point programme for collective complex interrelationships between the different action by municipalities. Although this focuses narrowly on what cities; between cities and towns; and between the municipalities should do, it also recognises that cities are cities and rural hinterlands. Cities continue to more than their local authorities ­ they are spaces shared by attract migrants suggesting a web of social business, communities, residents and other spheres of interactions between rural and urban areas government. Municipalities, however, play a critical role in throughout the country. There are also a range of determining the success ­ or failure ­ of cities. economic relationships that operate at a regional scale. These consist of intricate networks of The ten-point programme is not intended to be a prescriptive economic activity, together with large, set of recommendations. South Africa's cities are too diverse to multifaceted local labour markets. The flows of imagine that a single set of answers will suit all cities. Some people, goods, services and capital pay little challenges will loom large in particular cities, others will seem respect to municipal boundaries. less important. But the ten-point plan presents a variety of strategic responses that each city can finesse and tailor to suit its This suggests the need to move beyond collective own unique circumstances. action in nine cities, to look at how other municipalities, provincial governments, national CITIES ARE MORE THAN THEIR LOCAL AUTHORITIES ­ THEY ARE SPACES SHARED BY BUSINESS, COMMUNITIES, RESIDENTS AND OTHER SPHERES OF GOVERNMENT Challenge 1: Thinking in new ways departments and the private sector can develop a about the urban space economy shared understanding of the role of South Africa's This report reiterates the importance of cities. Cities are engines urban space economy ­ its cities and their of economic growth and provide spaces for social interaction. In hinterlands and emerging key urban areas. This the modern world, urban areas are the keys to a country's will require a regional planning perspective that success in the global marketplace. looks beyond the jurisdictional boundaries of individual municipalities: Urban decision-makers Cities play an equally important role in the national context. In will need to start thinking about city regions. South Africa, 21 key urban regions, occupying only 2% of the land, produce almost 70% of national GVA ­ but also The key challenge for developing these city- accommodate almost a quarter of South African residents living regions is to ensure effective, cooperative STATE OF THE CITIES REPORT 2006 6 ­ 2 decision-making among disparate groups to overcome wasteful new urban residents are unable to fully access the competition between the cities and towns in the city-region benefits of urban life, and urban governments system. This acknowledges that major development projects remain unresponsive to their needs. must be coordinated effectively for the benefit of the city-region as a whole through meaningful partnerships between all three This suggests that cities need to respond in two spheres of government, business and civil society. The urban ways to dynamic population shifts. visions that have been crafted by municipalities so far still remain · Cities need to develop a more nuanced the exclusive property of local government. They are not owned understanding of migration patterns. Cities by all city stakeholders. A future challenge for cities will be to need a clearer picture of who is moving and ensure that all stakeholders direct their efforts to achieving a why, and an understanding of migrant's long- shared vision of urban progress. term plans. Cities can then target their responses more strategically, focusing for To date, wasteful competition between cities and poorly example on rental accommodation if new coordinated planning between different spheres of government urban residents are only in cities for a short has inhibited the emergence of regional thinking and action. time, or on education if new urban residents These issues will have to be addressed if the urban space have skills that are inappropriate for urban life. economy is to become increasingly productive. · Cities will also need to target informal settlements, because these are areas where a Challenge 2: Managing urban majority of new urban residents are often population dynamics accommodated on arrival. Informal Over the last five years South Africa's urban population has settlements exclude residents from the urban increased faster than the national population. But the most system. Residents living in informal recent statistics reveal that South African city populations are settlements often have no formal addresses, growing more slowly than expected. Despite relatively slow are located far from economic opportunities population growth, the number of households has continued to and lead precarious and impoverished lives. increase. This is because household size continues to decline, This prevents new urban residents from resulting in increasing demand for houses and services. forming long-term attachments to cities and investing in them. Informal settlements are The relatively low population growth rates are not because also heavily implicated in the HIV/Aids migration has slowed, but because of changing patterns of pandemic. But they the areas least able to fertility and mortality. Rising levels of HIV/Aids have also affected offer urban residents with full-blown Aids the demographic patterns and also impose particular challenges for quality housing, clean water and readily- municipalities. available energy that they need to mitigate the opportunistic infections associated with late Although quantitative data exists to explain these shifts, the stages of the disease. Concerted efforts by indicators are rudimentary, telling urban managers little about municipalities to improve conditions in the precise breakdown of who is moving in and out of cities and informal settlements will assist in transforming why. This means that urban managers have little understanding urban migrants into urban citizens: residents of how they can best respond to the needs of their residents. who are more likely to commit to urban life, Urban managers also need to know what contributions these can lead healthy and productive urban lives, new urban settlers can make in cities, what their aspirations are, participate in urban activities and invest in if they want to stay or if they want to move on. At present many urban spaces. 6 ­ 3 STATE OF THE CITIES REPORT 2006 CONCLUSIONS continued Challenge 3: Promoting economic growth while ensuring that economic The strategic issues flow benefits are more equitably Strategic issues mapping is a useful tool for distributed mapping important strategic issues and for Economic growth accelerated in the 2001-2004 period, driven understanding the flow of these issues over time. Figure A suggests that issues typically particularly by the consumer and property booms. follow a path of initially coming on to the Manufacturing also continued to grow. Both exports and agenda as "horizon issues" when their imports increased, placing additional demands on ports. On the importance is unclear and where there is low positive side, growth has been associated with declining levels of management control over them (in the sense unemployment and rises in rates of employment. that there is no coherent strategy for responding to the challenge). Some of these "horizon" issues then increase in importance But employment growth has been slower than economic growth and become the "vital" agenda ­ issues that and absolute numbers of unemployed residents have not declined are critically important but over which there is in all cities. Employment in the informal sector accounts for a large no control yet. Once a coherent response to the share of employment growth. Within the formal economy, issue has been conceived and control over the employment growth in the skilled and highly skilled occupations issue has been achieved, the response needs to has outstripped job creation for unskilled and semi-skilled workers. be operationalised. Once the response is operationalised, it becomes much less strategically important and becomes a matter Patterns of growth continue to produce high levels of inequality, for routine maintenance. although levels of income inequality have reduced slightly. There are indications of growing polarisation, with a declining Figure A: Strategic issues mapping proportion of households in the middle living standards. High control Over the last five years SACN cities have played an active role in Operationalise Maintain building economic development capacity, which was very limited before 2000, and have worked at devising economic development strategies. However, urban productivity strategies High Low importance importance have focused on the return on public investment around municipal service provision. There has been little explicit consideration of how municipal choices impact on broader Vital Horizon notions of urban productivity such as the costs of doing business and costs of living. Low control In an urban environment where up to a third of working-age Strategic management is focused on the high people are unemployed there is an imperative for cities to importance issues (the vital and operationalise quadrants). If an issue remains in the "vital" understand the economic, and therefore urban productivity, quadrant for a long time, it would point to a ramifications for households of land-use planning, leadership failure in developing a coherent transportation and the provision of municipal services. strategy. Similarly, an inability to successfully operationalise a response would point to Cities have also tried to engage more intensively with `second implementation weaknesses or might indicate economy' support although this has generally been an area of that the strategic response was incorrect. weakness. The debate between pro-poor and pro-growth STATE OF THE CITIES REPORT 2006 6 ­ 4 strategies remains unresolved. In most SACN cities, there has been an acknowledgement that there is an overlap between first The strategic issues flow continued and second economy interventions. Figure B is a rough status assessment of a range of the different priority issues that have The national Accelerated Shared Growth Initiative (Asgi-SA) emerged through the period 2000-2006 as places cities in a different national strategic perspective than reflected in this report. It implies that many before. As the most important concentration points of growth, important priority issues of the last period have cities will need to become key areas of focus of national and been effectively addressed and are now routine provincial attention. Many of the major constraints to growth in maintenance issues. It points to many areas cities relate to national and provincial responsibilities and the where an approach has been developed and where cities are grappling with operationalising solutions will tend to be intergovernmental in character. this. It suggests that there is still a number of Unfortunately Asgi-SA does not provide much direction crucial challenges where adequate policy regarding what needs to happen at city level to generate frameworks have not yet been developed, such competitiveness and shared growth. The approach to human as urban infrastructure, particularly transport. and social capital development and the role of municipalities in On the horizon are far-reaching emerging issues such as the creation of a single public service promoting these also remains loose and unfocused. also incorporating local government staff and the consequences of "oil peak". But there is much that cities can do. · Cities should not assume that economic development will Note that this list is indicative and does not occur by itself. Economic development needs to be nurtured. seek to be comprehensive. This means that cities will have to commit considerably more Figure B: Strategic issues map for South resources to local and regional economic development and African cities 2006 build the capacity of economic development units within High control municipalities. In this way, cities can start matching their · HIV/Aids · Free basic services strategic objectives of growing the economy with well- · Area management · Systems modernisation resourced economic development programmes. Cities can · Safety and security · Amalgamation · REDs then function as key entry points for localising national · Sustainability · Ward committees growth policies. · IGR · Basic services provision High Low · Cities can reduce the cost of doing business by streamlining importance importance · Urban infrastructure · eGovernment business applications and ensuring that municipal tax and · Housing settlement · Single public service service charges are affordable. At the same time cities must · Second economy · "Oil peak" · Regulatory reform work at reducing the cost of living while simultaneously · Social development improving residents' quality of life. Low control · Cities can enhance the skills base of the local labour force, in Source: partnership with national and provincial government. This Based on model developed by Human and Zaaiman (1995) increases factor productivity as well as having strong Source: Based on model developed by Human and distributional benefits in urban societies. Zaaiman (1995) · Cities should reevaluate land-use legislation to identify restrictive conditions, particularly those inhibiting less formal economic activities. · Cities must look at creative mechanisms to · Cities can work proactively with informal entrepreneurs to enhance their business platforms by providing enhance their businesses and help them become more good transport infrastructure to move both competitive. people and goods, high quality spaces in 6 ­ 5 STATE OF THE CITIES REPORT 2006 CONCLUSIONS continued which to conduct business, reliable urban services and good But the fragmented distribution of the housing telecommunications access. and transportation functions across all three · Given that many of these functions fall outside of municipal spheres of government has prevented cities from mandates, cities will have to improve communication with planning strategically and allocating subsidies other spheres of government, parastatals and the private appropriately. sector. On the positive side, the 2010 Soccer World Cup Challenge 4: Enhancing urban has accelerated city transportation planning in the transport prospective host cities. This event offers cities a Public transport use has increased in South African cities ­ as a unique opportunity to radically transform and share and in absolute terms. But there are different trends for the significantly upgrade public transport infra- different modes. The use of rail has remained proportionately the structure. But cities will have to work hard to same, but with variations across cities, bus use has declined and make sure that the exceptional investments to use of taxis has increased. This suggests a shift from buses to taxis, meet World Cup commitments will serve the city with taxis increasingly dominant as a form of public transport. long after the event itself. Transport infrastructure designed to serve apartheid spatial form, There are a number of ways in which cities can combined with low levels of investment in roads and public tackle the transport challenge: transport has undermined the efficiency of South African cities · Metropolitan municipalities can continue to and had a devastating impact on the urban poor. Bad transport lobby for metropolitan transport authorities. increases the cost of doing business and the cost of living. These authorities have the potential to ensure greater measures of coordination over urban Many city strategy documents and business plans recognise that transportation. effective transport investments can contribute to spatial · In the face of a fragmented transportation transformation, greater urban productivity and have positive sector, cities should engage regularly with sustainability impacts. However, despite some common threads, provincial and national transport entities ­ responses to the strategic transport challenges remain uneven. including the Transnet parastatals ­ to Ineffective systems operating on poor infrastructure platforms promote better coordination of transport mean that the cities cannot offer a productive environment for infrastructure. firms ­ or provide points of access to the urban poor where they · Cities need to seriously reevaluate their might find income generating prospects. operational spend on road maintenance so that existing irreplaceable assets do not The ongoing disjuncture between housing and work places deteriorate any further. huge pressure on the urban transport system. This exacerbates · Cities need to upgrade existing freight urban poverty and involves the poorest urban residents in long transportation infrastructure. and costly commutes, often using unsubsidised forms of public · Those cities hosting the Soccer World Cup will transport. It also involves significant costs for municipalities who need to plan carefully so that new are obliged to subsidise bus transport which attracts fewer and transportation infrastructure developed for fewer passengers, and maintain extensive road networks for the 2010 continues to serve these cities in the increasing number of private cars. long-term. Freight transportation is also an acknowledged weakness in cities. STATE OF THE CITIES REPORT 2006 6 ­ 6 Challenge 5: Overcoming the 1994 continues to loom large. But cities can do sustainability constraints of apartheid much to address the spatial challenges of ongoing urban form segregation, fragmentation and sprawl: · Cities can ensure that broad spatial Over the past decade, housing and service delivery interventions development frameworks are translated into for the poor have continued to perpetuate apartheid urban practical local level plans. form. This has resulted in the creation of large dormitory · Cities will need to actively seek out well- settlements of low-cost mass housing on the urban periphery located land parcels to accommodate new where the price of land is cheap. These areas are typically far housing settlements. These should be close to from economic opportunity and have limited and expensive economic opportunities and urban amenities transport access. They also tend to reinforce the segregation of and should be well connected to the urban the city along racial and income lines. This is likely to trap people system by means of efficient and affordable in poverty and impose long-term social costs. public transport. · Cities should redirect public and private Strategic spatial planning has been seen both as a tool to investment to those processes that enhance transform apartheid-based spatial relations and to make cities urban productivity such as densification and more environmentally sustainable. As a result municipalities regeneration. have prioritised notions of spatial efficiency and spatial equity. · Cities must use new strategies aligned with Cities have also placed an emphasis on densification and BNG principles as a catalyst for rethinking compaction. This is intended to counteract sprawl and avoid its housing delivery. sustainability pitfalls. · Cities must share innovative thinking about housing practice. The focus on backyard In an attempt to address the ongoing challenge of apartheid rental, small landlords and new housing urban form, municipalities are placing an increasing emphasis on typologies being pioneered in some of the "integrated human settlement" in the approach to housing the cities can be widely disseminated. poor. These efforts are focused on facilitating denser, better- · Cities will need to critically examine land-use located, mixed-income, environmentally sustainable government- management, zoning schemes and local by- assisted housing in line with the Breaking New Ground strategy. laws to ensure that they do not contradict the But there is still considerable work to be done in developing the spatial objectives of densification and policy, regulatory and financial instruments required for this integration. approach to be implemented at a meaningful scale. Challenge 6: Delivering urban It is generally acknowledged that the policy instruments and services to promote the financial frameworks required for a coherent and implementable approach to integrated human settlements productivity, inclusivity and remain undeveloped and require concerted inter-governmental sustainability attention. This will include the processes for making public and Data for the 2000-2005 period has revealed that other land available for purposes of settlement, adjustments to access to services and housing has generally land-use and development regulations, better financial improved, although there are variations between instruments, and other mechanisms for facilitating private sector cities for individual services. Residents are also engagement. relatively satisfied with service delivery in cities. The perpetuation of apartheid spatial form is a serious But there has been a significant lack of investment outstanding issue for cities, and the challenge articulated in in core urban infrastructure over the past twenty 6 ­ 7 STATE OF THE CITIES REPORT 2006 CONCLUSIONS continued years, which now represents a major obstacle to productivity · Cities will need to seriously reevaluate and inclusivity. The most obvious and critical area of neglect has maintenance spend on existing infrastructure been in transport infrastructure. Other gaps include the in order to preserve valuable urban assets and underinvestment in the capacity and maintenance of energy and prevent excessive expenditure in the future. water supply and reticulation infrastructure. The urban service sector is also compromised by the lack of reliable and cheap ICT Challenge 7: Taking access including broadband. These urban infrastructure sustainability seriously investments also need to address the growing sustainability The data for the last five years indicates that there challenges of cities and need to help reduce the ecological is some progress towards sustainability, but the footprint of cities. overall trend is that cities are becoming less and less sustainable. Improving levels of service and On the positive side, South Africa's cities have established a housing provision increases sustainability, but the sound and tested framework for delivering municipal large numbers of households still without water infrastructure services. Cities have adopted an approach of and adequate sanitation, the poor quality of providing an equitable package of basic services to all residents housing and rising house prices are negative including a defined quantum of free services to the poor. sustainability trends. Townhouse development Fortunately financial support for the free basic services via has continued as a growing trend. Paradoxically municipal infrastructure grants and equitable share grants has this form of densification contributes to sprawl limited the subsidy burden on the municipal fiscus. and to social polarisation. The infrastructure focused services have also established ways of In the last five years, municipalities have been working more effectively with poor communities using in-situ increasingly involved in environmental upgrade and labour-intensive construction and maintenance in management and sustainability planning. The line with Expanded Public Works Programme principles. The use idea of a sustainable city has shaped policy in the of business improvement districts and other area-based areas of service delivery, such as water, waste partnerships to provide top-up services in commercial and management and electricity provision. There have industrial areas and other areas of strategic importance is also also been some improvements in the resource now a well established means for providing enhanced urban efficiency of cities, largely driven by financial services where required. concerns. There are a number of ways that cities can transform urban The translation of sustainability strategies into service delivery: practice has, however, been variable. The · Cities will need to investigate mechanisms to extend roll-of challenges of increasing resource scarcity and the out of basic services to all urban residents ­ including long-term threats of climate change will hopefully households have not yet been able to benefit from this mobilise cities into mainstreaming sustainability package. This includes households in informal settlements, issues. inner city-flat blocks and backyard rooms. · Cities should consider alternative service delivery approaches In order to raise the profile of sustainability issues, including alternative public transport options, small-scale cities will need to: sewage treatment plants; renewable energy sources; and · Improve the information base upon which water-efficient appliances. These measures can help to make cities make decisions by regularly updating a urban services more affordable as well as reduce the common set of performance targets and environmental impact of cities. indicators. STATE OF THE CITIES REPORT 2006 6 ­ 8 · Prioritise and take ownership of the many innovative sustain- Cities have made some efforts to address ongoing ability programmes in cities currently being driven by outside exclusion through the EPWP, concerted efforts at funding agencies, to make them central municipal concerns. tackling crime, some innovative HIV/Aids · Investigate alternative service delivery approaches that use programmes, by using events to foster a common appropriate technologies at scale. urban culture ­ or celebrate urban diversity. There · Develop approaches to working with other national and has been less success in enhancing urban provincial bodies that are also involved in environmental residents' skills or utilising ward committees as regulation. important meeting grounds for residents and their political representatives. Challenge 8: Building urban citizenship Building urban citizenship is likely to be a long- term process: it will take more than a generation The dynamic nature of cities, with their diverse populations, for South African residents to slough off identities means that they are potentially centres of vibrancy, innovation imposed by apartheid. There are signs that today's and cross-cultural celebration. Many cities demonstrate these urban youth are already carving out a new urban qualities. However, cities are also areas of deep inequality, culture that is more inclusive. segregation, and exclusion. As a result large numbers of urban residents remain marginalised from city life and separate from However, there is much that cities can do. each other. This is compounded by ongoing migrancy, xenophobia, increasing insecurity in the face of rising crime, Areas of development for municipalities include: poor location, inadequate transport, low levels of skill and · A stronger focus on building cohesive self- alienation from the political processes of the city, illustrated by reliant communities with an emphasis on relatively low levels of voter turn-out. vulnerable groupings, youth and women. · Developing a more decentralised and complex All cities have put an emphasis on the social development organisation with new capabilities, including a aspects of inclusion and poverty reduction efforts. There is an broader language capability and greater staff explicit recognition in all the IDPs that the development of social diversity, able to respond to complex social and human capital is a crucial part of the development process. issues. · Establishing the necessary partnerships to But this remains an area of conceptual weakness and most cities coordinate social services like health, education lack any integrated strategy for building social and human and welfare. Although these services fall capital. City programmes have generally focused on symptoms outside the mandate of local government they and relief but have no clear strategies or sustained programmes. are central to building urban citizenship. Municipalities will need to proactively devise Overall, the infrastructure service emphasis has predominated partnerships with other spheres of government over the `softer' social services. Part of the reason for neglecting to ensure that appropriate social services can human capital issues has been the relatively unclear definition of be used to build social capital in cities. local government's role regarding social development. Social · Transforming negative attitudes about urban functions such as education, welfare, policing are either newcomers by focusing on their contributions provincial or national functions. Other social functions represent to the city. shared mandates with major problems related to unfunded · Celebrating the diverse range of cultures that mandates and poor intergovernmental coordination. Health, exist in cities, but at the same time investing in libraries and support for arts and culture are the most notable the places that all urban residents share ­ parks, examples. public squares and transport interchanges. 6 ­ 9 STATE OF THE CITIES REPORT 2006 CONCLUSIONS continued · Strengthening citizen participation in all urban activities from The further restructuring of specific sectors such planning to ward committees to urban events and festivals. as the anticipated transformation of the electricity · Fostering pride in the city that transcends parochial loyalties distribution industry into REDs and the to particular neighbourhoods. establishment of transport authorities will now · Improving the skills of urban residents to give them greater occur within the context of city government with leverage in the job market. This can only be achieved by an enhanced ability to oversee municipal entities. pursuing partnerships with provincial education departments, private colleges and tertiary educational institutions. The restructuring of South Africa's cities has been accompanied by major efforts to modernise the Challenge 9: Streamlining urban management and operations of the new governance municipalities including annual updating of Analysis of governance indicators suggests that there are strategic plans through the IDPs; the introduction problems in the governance environment of several cities, while of comprehensive performance management others are performing well. Some municipalities have been able systems linking strategy, organisational to spend close to their budget, but underspending is a serious performance and individual appraisal; the problem in others. The high number of qualified audits or upgrading of financial management systems disclaimers, and the number of city managers suspended over including the introduction of improved control the last six years are worrying. The `acid test ratio' ­ a measure mechanisms as part of implementing the MFMA of financial prudence ­ suggests that only a few municipalities and the new accounting practice; upgrading of are close to the desired situation. Voter turnout in 2006 was less ICT systems; the introduction of communication than 50% in most cities. Surveys of residents' perceptions of and marketing technologies; and improvements government suggest significant differences in levels of in the interface with individual citizens and confidence in government between cities, and illustrate great customers. Most cities either have already variations within cities, depending on the specific indicators established or are in the process of establishing being considered. call centre and/or customer service centres capable of addressing a range of typical municipal On the positive side, South Africa's city municipalities have service needs at the point of first contact. successfully reorganised as powerful single tier city-scale municipalities with capacity to manage dynamic and complex There is acknowledgement within the cities that conurbations in a competitive and globalised world. This will these initiatives have required a major investment support the urban restructuring required to overcome the of money and management resources and that it apartheid legacy and help to position cities in an era of often takes longer than planned for new increasing global competition. approaches to be embraced. However, there is anecdotal evidence that this investment is starting It can be argued that the intentions of the Municipal Structures to pay off with noticeable improvements in Act to create strong metropolitan authorities has been municipal performance. vindicated. This is supported by the emergence of some high- profile executive mayors who have provided a focal point for But a number of problems have begun to emerge: leadership. There are now stronger corporate planning and · There is an acknowledgement that the management units and effective city-scale service delivery national skills deficit is also reflected with the entities in all cities. All the SACN cities have or are currently city administrations. working on developing long-term development strategies for · Some of the current reporting and procedural their city, typically with a strong spatial element. requirements imposed on cities by the MFMA STATE OF THE CITIES REPORT 2006 6 ­ 10 and the Systems Act are unduly restrictive and impede city Challenge 10: Mainstreaming government's ability to ensure efficient delivery and to engage innovation in effective partnerships. Asgi-SA also acknowledges that the There are many innovative programmes and inefficiencies of government processes and the cumbersome projects that address the development and service regulatory environment are obstacles to growth. challenges of the cities. Areas of innovation · Some essential urban functions, like transport and housing, include HIV/Aids treatment, social housing, urban remain largely outside of the control of cities. If cities are to renewal, inner city regeneration, carbon credit fulfil their mandate of controlling the built environment schemes, solar energy pilots, broadband provision functions, the urban governance agenda will need to be via electricity infrastructure. Many of these rethought. projects have not yet been mainstreamed and · Functional silos remain the predominant service delivery drivers and much of the `developmental local government' some may not even be effective. But they provide ethos needs to be mainstreamed in these service entities, not a rich set of experiences rooted in practice. only isolated within specialist units. It is acknowledged that much municipal culture and practice is too bureaucratic and This innovation is being supported by a greater internally focused to support effective engagement with emphasis on knowledge management and the communities. sharing of good practice. A number of cities have established dedicated knowledge management In order to streamline urban governance, cities should: sections. The SACN itself represents a partnership · Define the respective roles of executive councillors and non- project to generate and share knowledge about executive councillors. urban management practice. · Ensure stable relationships between political leadership and top management based on mutual accountability and However, there is a general lack of evidence-based understanding of roles. policy research and evaluation of the medium and · Balance the strong metropolitan management orientation long impacts of key development interventions. that has emerged with an ability to respond dynamically to This also points to a lack of reliable and regularly the requirements of local areas and neighbourhoods. This updated data that could be used to inform urban means that urban managers will require both a high-level decision-makers about city performance. Official understanding of how their cities operate as well as detailed population and economic statistics at a municipal knowledge of local conditions. level are not updated regularly enough for cities · Improve intergovernmental planning and action. This is to track changing demographic patterns. There is particularly important given the fragmentation of functions also an absence of statistics to measure city-scale in social services, transport, and housing ­ all essential to the economic growth, municipal governance and effective operation of cities. urban sustainability. · Ensure that the policy development process becomes more cooperative and makes more use of well constructed policy Cities are well placed to build on innovations that development pilot projects in order to properly test new approaches before prescribing them in law. they have pioneered by: · Upgrade staff skills at all levels. · Sharing experiences with other cities ­ about · Devise incentive systems to support a more developmental both successes and failures. agenda. · Consolidating and improving their data · Transform the overly bureaucratic approach to performance collection capacity. management in order to emphasise substance rather than · Incentivising innovation and rewarding narrow compliance innovation when it succeeds. 6 ­ 11 STATE OF THE CITIES REPORT 2006 CONCLUSIONS continued · Investigating how successful small projects can be scaled up and rolled out across the city. This is a long list of challenges, and an even longer list of actions. But cities have shown themselves in the last five years to be capable of tackling significant change. This should help equip them for the road ahead. STATE OF THE CITIES REPORT 2006 6 ­ 12 GLOSSARY Acsa Airports Company of South Africa GEAR Growth, Employment and Redistribution strategy AMPS All Media Products Survey GCR Global City-region Asgi-SA Accelerated and Shared Growth Initiative for South Africa GDP Gross Domestic Product AU African Union GGP Gross Geographic Product BBBEE Broad-based Black Economic Empowerment GHS General Household Survey BMR Bureau of Market Research GIS Geographic Information Systems BNG Breaking New Ground Strategy ­ the Ministry of Housing's Comprehensive Plan for the GVA Geographic Value Added Development of Sustainable Human HDI Human Development Index Settlements HIV and Aids Human Immuno-deficiency CCTV Closed Circuit Television Virus and Acquired Immune CDM Clean Development Mechanism Deficiency Syndrome CETA Construction Education and Training Authority HR Human Resources CID City Improvement District HSRC Human Sciences Research Council CRM Customer Relations Management ICC International Convention Centre CSIR Centre for Scientific and Industrial Research ICT Information and Danida Danish International Development Assistance Communication Technology DEAT Department of Environmental Affairs and IDP Integrated Development Plan Tourism IDZ Industrial Development Zone DBSA Development Bank of Southern Africa IGRFA Intergovernmental Relations DM District Municipality Framework Act DME Department of Minerals and Energy ITP Integrated Transport Plan DPE Department of Public Enterprises JSB Joint Services Board DPLG Department of Provincial and Local LED Local Economic Development Government LFS Labour Force Survey DTI Department of Trade and Industry LM Local Municipality EDI Electricity Distribution Industry [Holdings] LSM Living Standard Measure EIA Environmental Impact Assessment Mayco Mayoral Committee EPWP Expanded Public Works Programme MDGs Millennium Development Goals ESPON European Spatial Planning Observation MEC Member of the Executive Network Council EU European Union MFMA Municipal Finance Management FUA Functional Urban Area Act GAMAP Generally Accepted Municipal Accounting MIG Municipal Infrastructure Grant Practice MIIF Municipal Infrastructure GAWC Globalisation and World Cities Study Group Investment Framework G ­ 1 PAGE6 ­ 1 STATE OF THE CITIES REPORT 2006 GLOSSARY OF TERMS continued MLL Minimum Living Level SDBIP Service Delivery Budget Implementation Plan MM Metropolitan Municipality SDF Strategic Development MPD Metropolitan Police Department Framework MStructuresA Municipal Structures Act Seta Sector Education and Training MSystemsA Municipal Systems Act Authority MTA Metropolitan Transport Authority Sida Swedish International Development Assistance MTEF Medium Term Expenditure Framework SMME Small, Medium and Micro MTSF Medium Term Strategic Framework Enterprise NDPG Neighbourhood Development Partnership SOE State-owned Enterprise Grant SOER State of the Environment Report NGO Non-governmental Organisation SOCR State of the Cities Report NHTS National Household Travel Survey StatsSA Statistics South Africa NLTTA National Land Transport Transition Act UDF Urban Development Framework NPA National Ports Authority UDZ Urban Development Zone NSDP National Spatial Development Perspective UNDP United Nations Development NSSD National Strategy for Sustainable Programme Development UN-Habitat United Nations Human PFMA Public Finance Management Act Settlements Programme PHP Peoples' Housing Process (self-build housing USAID United States Agency for delivery process) International Development PIG Provincial Infrastructure Grant VAT Value-added Tax PPP Public-Private Partnership VIP Ventilated Improved Pit [Latrine] RDP Reconstruction and Development Programme WSSD World Summit on Sustainable RED Regional Electricity Distributor Development, Johannesburg RSC Regional Services Council 2002 SAA South African Airways WTO World Trade Organisation SAARF South African Advertising Research Foundation SACN South African Cities Network SADC Southern African Development Community Salga South African Local Government Association SAMWU South African Municipal Workers' Union SAPS South African Police Service SARCC South African Rail Commuter Corporation SARS South African Revenue Service SASAS South African Social Attitudes Survey STATE OF THE CITIES REPORT 2006 G ­ 2 This report has been prepared and published by South African Cities Network (SACN). Data and information is drawn from a wide range of referenced sources and while every step was taken to verify accuracy and currency, the SACN makes no guarantee, assurance, representation and/or warranty as to the accuracy of the information contained in this report and will not be held liable for any reliance placed on the information contained in this report. G R A P H I C O R 3 4 1 8 2 B PO Box 32160 Braamfontein 2017 Tel: +27 11 407 6471 Fax: +27 11 403 5230 www.sacities.net