Latest / Drive with John Perlman / Joburg Needs Faster Growth

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Joburg Needs Faster Growth · Drive with John Perlman

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  Speaker 1: You're with John Perlman on 702. Quarter past four on
• 0:06
  Speaker 1: 702 Drive. Well, around this time next week, some of
• 0:09
  Speaker 1: the election political dust will have settled. That doesn't mean
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  Speaker 1: there won't be plenty of noise and smoke going around
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  Speaker 1: as coalitions are put together, pulled apart and put together again.
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  Speaker 1: But when that process is done and dusted, whoever's going
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  Speaker 1: to run the city is going to have to sit
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  Speaker 1: down and stare this reality in the face. The economy
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  Speaker 1: of Johannesburg is not growing. That's a problem that has
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  Speaker 1: national implications. But if you just look at what this
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  Speaker 1: city needs, if the economic development does not move in
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  Speaker 1: a positive direction, a whole lot of other problems are
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  Speaker 1: not going to easily get solved. So to talk about this,
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  Speaker 1: we're joined now by Anne Bernstein, who's Executive Director at
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  Speaker 1: at the Center for Development and Enterprise. They've been running
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  Speaker 1: a series of documents based on a much longer period
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  Speaker 1: of research called Johannesburg Matters, Fixing South Africa's Growth Engine.
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  Speaker 1: And report number six in this particular project focuses on
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  Speaker 1: the need for economic growth. Anne Bernstein, welcome to 702 Drive.
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  Speaker 1: Johannesburg has obviously lots of advantages, but lots of problems.
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  Speaker 1: If we were to say that some of the clearly
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  Speaker 1: obvious stuff that needs doing gets done, in other words,
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  Speaker 1: roads need to work, water needs to be in reliable
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  Speaker 1: and affordable supply, the same with electricity, and you need
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  Speaker 1: decent city government.
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  Speaker 2: What next?
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  Speaker 1: I mean, does Johannesburg have competitive advantages, for example, and
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  Speaker 1: do we know what those are? Hello, John.
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  Speaker 2: It's good to be with you and your listeners. Johannesburg
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  Speaker 2: used to have a lot of competitive advantages. We have
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  Speaker 2: some still. It's actually remarkable what is holding. So we
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  Speaker 2: have some of the deepest financial markets in the developing world.
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  Speaker 2: We have key financial institutions. We have services, professional services
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  Speaker 2: that are world-class. and those are growing. We're getting some
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  Speaker 2: data centers as well, which means we're keeping up with technology.
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  Speaker 2: And we have a population that's eager to work, many
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  Speaker 2: of whom have some experience. So we have advantages. We
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  Speaker 2: have educational institutions. So we could list a number of
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  Speaker 2: advantages and assets that Johannesburg has. We're the headquarters of...
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  Speaker 2: over 70% of the country's large companies. So we have assets,
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  Speaker 2: but what we don't have is a well-thought-out strategy for
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  Speaker 2: economic growth. So on the one hand, as you pointed out,
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  Speaker 2: we have to fix what everyone's calling the basics.
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  Speaker 1: Yes.
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  Speaker 2: Very important. And if you do that, you will help
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  Speaker 2: growth as well. You know, having... At the moment, all
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  Speaker 2: the municipal dysfunction acts as a kind of tax. It
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  Speaker 2: makes doing business in Johannesburg more expensive, more difficult. So
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  Speaker 2: not just. Fixing those things, getting them on the right track,
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  Speaker 2: sending that positive signal, this will be good for growth
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  Speaker 2: and possible investors. But it's not sufficient because we're a
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  Speaker 2: sooty country. with a growing population in an urbanizing country.
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  Speaker 2: So Johannesburg has the worst unemployment rate of all eight metros,
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  Speaker 2: which is partly because of our attraction. We're the place
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  Speaker 2: of opportunity historically, but we're not delivering that opportunity for people.
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  Speaker 2: And so we have We have an unemployment rate that
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  Speaker 2: is higher than the terrible national unemployment rate. Just think
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  Speaker 2: about that. We desperately need growth and jobs.
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  Speaker 1: Yeah, so let's look at possible approaches to investment. Now,
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  Speaker 1: as part of the report that's just been released, you
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  Speaker 1: are very clearly critical as the CDE of the current
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  Speaker 1: Joburg administration growth strategy, and I'll quote here from your
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  Speaker 1: media release, quote, that looks to the state to reshape
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  Speaker 1: the economy via grand plans and expensive ribbon-cutting projects. And
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  Speaker 1: you refer to the projects, there are 30 of them,
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  Speaker 1: a huge convention center out in land Syria, a 2.14
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  Speaker 1: billion Rand film and clothing cluster, a million, 546 million
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  Speaker 1: Rand biodiesel production plant. Do these big projects have any
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  Speaker 1: role in a growth strategy? I mean, um, Your point
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  Speaker 1: taken that this idea that these are, you know, wonderful
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  Speaker 1: silver bullets that other people will pay for, and then,
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  Speaker 1: you know, suddenly the economy is moving in the right direction.
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  Speaker 1: But for example, if there was a biodiesel production plant,
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  Speaker 1: that strikes me as a much better idea than a
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  Speaker 1: convention center in Lanseria.
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  Speaker 2: Look, we're not dealing with the particular projects, which the
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  Speaker 2: city's economic strategy says, by the way, 98% of all
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  Speaker 2: of us All 30 projects will have to be paid
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  Speaker 2: for by the private sector. But you need a much
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  Speaker 2: more effective city, they say, in order to do all
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  Speaker 2: of this, to manage it, to make it happen. So
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  Speaker 2: this isn't really realistic at this point in the city's history.
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  Speaker 2: So we're saying we don't have magic answers. We're saying
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  Speaker 2: the following. Fix the basics. Get whatever growth you can
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  Speaker 2: get from that. You know, after all, you've got to
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  Speaker 2: stop falling before you can start rising again. So that's
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  Speaker 2: very important. There are other issues that we need to
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  Speaker 2: put on the priority list just as soon as we've
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  Speaker 2: got a functioning city. Transport's really important for all sorts
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  Speaker 2: of reasons and public transport for workers to get to jobs.
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  Speaker 2: But crime is very important. And then the many dimensions
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  Speaker 2: of the housing challenge, all important. and they're all obstacles
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  Speaker 2: to more effective growth and inclusion. But what we're then
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  Speaker 2: saying is, well, in a sense, the mayor is fixing
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  Speaker 2: the city or the new government of Joburg is fixing
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  Speaker 2: the city. Let's get a task force of civil society
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  Speaker 2: and business leaders with not a talk shop, but with
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  Speaker 2: a very clear mission.
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  Speaker 1: Can I just jump in there and say no task
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  Speaker 1: team or anything equivalent, whatever title they give it, has
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  Speaker 1: ever at the beginning said we are a talk shop.
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  Speaker 1: But a lot of them end up that way, not
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  Speaker 1: necessarily because they don't know what they're doing or they
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  Speaker 1: don't come up with good ideas. But the relationship between
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  Speaker 1: advisory structures like that and the real world of cutthroat competition,
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  Speaker 1: both economic and political, often doesn't lend itself to taking
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  Speaker 1: up good ideas.
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  Speaker 2: Well, there are examples in the country, never mind globally,
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  Speaker 2: where things have worked. Take WestGrow in Cape Town. This
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  Speaker 2: was an initiative paid for by the province and the city.
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  Speaker 2: And they came up with a game plan, which was,
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  Speaker 2: among many other things, let's go out and get more
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  Speaker 2: international airlines to see Cape Town as a place to
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  Speaker 2: come to. And they did that dramatically. And that's been
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  Speaker 2: part of why tourism has gone up so much in
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  Speaker 2: Cape Town. You're right. We can't guarantee anything. The first
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  Speaker 2: and most important thing is that the voters on Wednesday
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  Speaker 2: have to give us an effective government. That's the first
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  Speaker 2: thing for Johannesburg. If we can get that, we're saying
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  Speaker 2: the mayor should appoint a task force to look at
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  Speaker 2: economic growth for this. What is, you know, we were
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  Speaker 2: the city of gold. We were manufacturing came out of that.
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  Speaker 2: These are both in terrible decline because national policy has
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  Speaker 2: made them completely uncompetitive. We're now a services economy, which
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  Speaker 2: is great, you know, and more of that would be good,
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  Speaker 2: but it's not going to produce the kind of jobs,
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  Speaker 2: the number of jobs for the population that we have.
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  Speaker 1: Isn't it the hard truth, though, about all of this? Yes,
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  Speaker 1: you can create enabling environments online, Ms. Bernstein, and you
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  Speaker 1: can get some big ideas that provide a framework for
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  Speaker 1: the better execution of small ideas. But isn't, isn't, the
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  Speaker 1: real challenge that in, in this is a game of,
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  Speaker 1: of inches. And sometimes it's a game of 12 or
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  Speaker 1: 24 inches at a time. And sometimes it's one or two.
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  Speaker 1: And what I mean by that is someone might come
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  Speaker 1: up with what starts as a small business, but as
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  Speaker 1: it replicates, because it is scalable, it becomes a decent
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  Speaker 1: sized business. And, you know, business food chains, for example,
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  Speaker 1: strike me as an example of that. But in the end,
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  Speaker 1: Shouldn't government just be staying out of this, make sure
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  Speaker 1: that everything works, and then let the market do the rest?
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  Speaker 2: Well, John, it's unusual for you to be the free
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  Speaker 2: marketeer and me to say I think it's a bit
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  Speaker 2: more complicated than that. So, you know, look at Johannesburg.
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  Speaker 2: What would have to change for us to become a
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  Speaker 2: mining centre, a global mining centre again? Let's think about that.
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  Speaker 2: What would have to change for us to move our
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  Speaker 2: manufacturing percentage of the Joburg economy from around 12% to
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  Speaker 2: maybe 15%, 16%? What has to change? So we're saying
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  Speaker 2: that this taskforce... needs to ask some very fundamental questions,
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  Speaker 2: interrogate them carefully, and come up with action plans. How
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  Speaker 2: do you turn the inner city into an investable opportunity?
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  Speaker 2: Who must do what? What is the role of the
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  Speaker 2: local government? What is the role of private capital? What
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  Speaker 2: must we change to get out of this terrible situation?
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  Speaker 2: What did they do in New York, which is a
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  Speaker 2: much more for sort of Times Square area, which was
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  Speaker 2: a terrible place and then became this incredible sort of
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  Speaker 2: tourist attraction with millions of people and all sorts of
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  Speaker 2: things and high buildings and so on. What do we
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  Speaker 2: learn from that? So we're saying they're very important issues.
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  Speaker 2: We're also saying this is the business city of South Africa.
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  Speaker 2: Maybe we can lead in our quest for economic growth
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  Speaker 2: and build try out experiments here that perhaps the rest
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  Speaker 2: of the country is not ready for. Let us lead.
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  Speaker 2: Let's experiment. So we're posing some very tough challenges for
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  Speaker 2: this task force, which are very action-oriented, but also look
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  Speaker 2: not just for growth, but how we're going to get
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  Speaker 2: more inclusive growth. So how do we continue being at
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  Speaker 2: the cutting edge of technology and the kind of firms,
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  Speaker 2: you know, startups and companies all sorts of great firms, great.
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  Speaker 2: But how do we also have economic activities that provide
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  Speaker 2: jobs for people who, through no fault of their own,
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  Speaker 2: don't have skills or experience?
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  Speaker 1: Thanks so much. Yeah, lots to think about. Joburg needs
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  Speaker 1: faster growth. This is the sixth report of a project
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  Speaker 1: under the umbrella of the Centre for Development and Enterprise,
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  Speaker 1: and that project is called Johannesburg Matters, Fixing South Africa's
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  Speaker 1: growth engine. Very interesting series of reports. Pick it up
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  Speaker 1: on the website. Just Google CDE, Center for Development and Enterprise,
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  Speaker 1: and you can start reading your way through reports. They're
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  Speaker 1: not huge, long, long things written very readably as well.
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  Speaker 1: Anne Bernstein, CDE Executive Director, thank you for your time.
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  Speaker 1: 27 minutes past four.