Investment Potential and City Governance: Johannesburg and Cape Town

by Andres de Wet

At this juncture when Moody’s has downgraded our national credit rating, foreign investors question South Africa as a destination and Johannesburg and its governance woes are in the spotlight, it is fitting to look at what governance means. How governance impacts on a city economy, investor confidence, urban livability and cities’ future potential.

Politics has profound effects on how cities are governed and thus, impact on everything progressive urbanites hold dear.

The rhetoric of, Cape Town is like another country, is of great concern. It personifies what’s happening across the country and how urban economies are diverging. Cape Town is an urban economy that functions in public-space, Johannesburg is an urban economy that functions in private-space. This is almost completely due to governance.

In this southernmost city on the continent, activity happens in the public realm, buildings are erected on existing city blocks, people enjoy the city-maintained streets, investors flock to publicly managed business nodes and as pointed out by the Provincial Treasury, we reap a higher economic growth rate as a result. Businesses, property developers and residents are confident; confident of the city-government’s capability to look after what surrounds them, confident of its ability to maintain infrastructure, confident it will always be accurate in billing and fiscal responsibility.

In our nation’s economic hub, Johannesburg, all the aforementioned erodes. The urban economy thrives in private-space. The public realm destroys confidence. Residents seek out gated communities; businesses seek premises in office parks, or create their own corporate campuses, where they can conduct their operations behind guarded gates and gardens. Campus trees hide the potholes, broken traffic-lights and crumbling pavements just beyond. Johannesburg is a collection of private oases. Cape Town is fast becoming an integrated urban fabric. Where Johannesburg creates faux urban experiences in developments like Melrose Arch, most Capetonians seek every opportunity to flood real city streets.

It all comes down to one thing: governance. Cape Town’s CBD works because of a private-public partnership. Why are partnerships not as forthcoming in Gauteng? I postulate it is because their government is not seen as a partner, it’s seen as being above the citizenry and private business. Partnerships don’t work if the respective partners do not consider themselves as equals.

What would a futurist see as happening in the long-term if city-economies are held hostage to bad governance? Infrastructural decay, poor urban management and fiscal malaise can be tolerated for a significant length of time, especially in an economic primate city. The private sector begins to pick up the slack, for a while…

However, a catastrophic tipping point is eventually reached. The urban fabric literally rips apart and no amount of private funding or non-governmental initiative can keep it precariously sown together. The huge pull-factors that kept businesses based in this economic primate city, rips apart with the shredded urban fabric. The crumbling infrastructure and grossly mismanaged urban environment simply becomes too prohibitive to operate a business effectively or profitably. Even attracting quality staff to work for the business becomes a huge problem.

Does this happen quickly? Not at all, especially in a country where one city has so much financial and economic hegemony over the others. The pull-factors for business are incredibly strong and with a national carrier such as ours, international connectivity is monopolised by this city. The corporate culture of this city and laid-back nature of others makes them less attractive. The sheer difference in population size between Gauteng and regional cities weighs heavily in its favour.

Nevertheless, financial capitals can change. It takes time and numerous factors, but it does happen occasionally and has already happened in South Africa once before. It happened in our southern neighbour, Australia; shifting from Melbourne to Sydney. Disturbingly, this happened with fewer issues than Johannesburg finds itself confronted with today.

Can one foresee Johannesburg losing its status is the short-term? It is highly unlikely. This giant is simply too large and many more potholes and broken lights are needed to erode its status. However, Portside, 22-On-Breë, CTICC2, Touchstone House and Allan Gray are no accident! Given continued efforts by the City of Cape Town, Cape Town Partnership, Western Cape Economic Development Partnership and Accelerate Cape Town, the economic mountain of Johannesburg could be under threat. Although this threat is unlikely to be immediately tangible, if city-governance trajectories continue unchanged, this erosion will continue at its gradual pace. With erosion, change is slow and difficult to notice at any one point in time.

However, after a length of time, one turns around expecting to see a mountain and instead you see a hill.

Andres de Wet is passionate about all things urban, political and developmental. Having championed numerous projects, including the proposed Breede Valley Partnership, he managed the local chamber of commerce and is a general contributor to local tourism associations. He has also been intricately involved in rural empowerment and agricultural sustainability through FairTrade. He has previously worked in the USA as a lead architectural designer from 2006-2008. Although currently self-employed, he maintains a keen interest in the public realm and the Cape’s march towards excellence.