Abstract
Despite Johannesburg’s importance in urban Africa, the city is relatively neglected by urban researchers. Within the global network of cities, Johannesburg assumes a critical role of linking city and articulating the development of the capitalist economy of Southern Africa. Johannesburg’s future will be associated with addressing the multiple challenges of urban growth, management, and absorption. Arguably, the most important single challenge is that of achieving sustained economic growth as well as the creation of new employment and livelihood opportunities for the city’s growing population. Johannesburg’s economic prospects are inseparable from those of South Africa as a whole. Over the past 5 years, in response to the global crisis, the national government has launched a number of long-term development plans that seek to unlock South Africa’s economic constraints in the form of the New Growth Path, initiatives for reindustrialization, and the National Development Plan 2030. It is contended that the economic contours of Johannesburg 2030, to a large extent, will be determined by its role as linking city and by the impacts of these large-scale strategic policy interventions as mediated through metropolitan-level policy.
Johannesburg is the most economically powerful urban center in Sub-Saharan Africa. The Johannesburg metropolis contains an estimated population of 3.9 million, and the extended metropolitan region contains between 6 and 7 million people (Murray, 2011; OECD, 2011; Todes, 2012a). This dynamic yet gritty, harsh, and unequal metropolis is one of Africa’s largest urban concentrations and since the demise of apartheid “has affirmed its position as the leading city in southern Africa and perhaps all of Africa south of the Sahara” (Surborg, 2011, p. 116). The city is a magnet for local and international migrants, particularly from elsewhere in Sub-Saharan Africa (Landau & Gindrey, 2008), and between 2001 and 2007, Johannesburg recorded an annual population growth rate of 3.2% (Todes, 2012a, 2012b). Continued population expansion is anticipated with UN-Habitat projections for the city-region expected to reach more than 9 million inhabitants by 2025 as a result of both natural growth and in-migration flow (Turok, 2013b).
In common with several other African cities, therefore, Johannesburg’s future necessarily must be associated with addressing the multiple challenges of urban growth, management, and absorption. Arguably, the most important single challenge is that of achieving sustained economic growth and the creation of new employment and livelihood opportunities for the city’s expanding population. Moreover, the city’s future policy agenda must incorporate issues such as sustainability, food security, resilience, and environmental pressures that include vulnerabilities to climate change (Bremner, 2013; Rudolph, Kroll, Ruysenaar, & Dlamini, 2012). These are all pressing matters and many of them, particularly related to food resilience, vulnerability, and adaptation to climate change, are already being addressed by Johannesburg policymakers and planners (City of Johannesburg, 2011; Gauteng Province, 2012; Liphoto, 2007; Phalatse, 2011). Nonetheless, Johannesburg remains encumbered by a set of alternative policy issues that is a legacy of the city’s racially divided past. Murray (2011, p. xi) reminds us that “perhaps no other city in South Africa bears the spatial scars of white minority rule as profoundly and self-consciously as Johannesburg.” During the past two decades, “city officials in Johannesburg have tried to shed the odious burden of the shameful past,” albeit with only partial success (Murray, 2001, p. 329).
Johannesburg’s future economic prospects are inseparable from those of South Africa as a whole. Following the democratic elections of 1994, South Africa made considerable economic progress with annual growth averaging 3.3% over 20 years. Nevertheless, after the 2008 global financial crisis, South Africa’s growth rate trailed both the performance of other so-called emerging market economies and that of much of the rest of Sub-Saharan Africa because of tense industrial relations, weak consumer confidence, and anemic levels of private investment. This situation aggravated long-standing high levels of unemployment estimated to be 25% nationally or 34% including discouraged workers (International Monetary Fund [IMF], 2013). By 2013, the nation was experiencing a phase of reduced economic growth, marked by a downturn in global competitiveness and stagnating levels of external and domestic investment. This trend of “subdued growth” was accompanied by high rates of structural unemployment, rising economic inequalities, and mounting social stress (IMF, 2013, p. 4). South Africa’s national economic growth challenges, particularly job creation, are writ large in the evolving economic and social landscape of Johannesburg and of the extended Gauteng city-region (OECD, 2011).
Over the past 5 years, the central government has launched a number of long-term development plans that seek to unlock South Africa’s economic constraints and more specifically to catalyze new employment opportunities (Centre for Development and Enterprise [CDE], 2013a, 2013b; Department of Economic Development [DED], 2010; Department of Trade and Industry [DTI], 2012; National Planning Commission, 2012). It is against the backdrop of these government responses to global crisis—in the form of launching the New Growth Path (NGP), initiatives for reindustrialization and the implementation of the National Development Plan 2030—that this study interrogates the challenges that face Johannesburg concerning economic growth and restructuring toward 2030.
This article is organized into four sections. First, the position of Johannesburg is “located” in the international economy within the network of world cities. Second, a brief overview of research on Johannesburg is provided to highlight the somewhat limited academic attention on the city’s pressing economic considerations. Third, the trajectory of Johannesburg’s economy in the postapartheid era is analyzed to disclose the central dynamics and issues that surround urban economic restructuring. The final section takes a forward look. The key directions and imperatives of national economic and development planning are detailed. It is argued that the economic contours of Johannesburg 2030, to a large extent, will be determined by its role as a linking city in the global economy and by the impacts of these large-scale strategic policy interventions as mediated through the metropolitan prism. The potential importance of the latter as a change agent has recently been elevated, because the central government is in the process of devolving certain additional planning responsibilities to city governments for managing the future challenges of urban expansion in South Africa (Turok, 2013b).
Locating Johannesburg Globally
For Taylor and Walker (2001, p. 42), Johannesburg stands out as “the most isolated world city” in that “it has a continent to itself and no clear similarities with other world cities.” It is South Africa’s economic command center, home to 74% of the country’s corporate headquarters, and 55% of total national office space, and also accounts for 13.7% of national output (Surborg, 2011; Todes, 2012a). Mbembe and Nuttall (2008, p. 1) consider that Johannesburg is both “the premier African metropolis, the symbol par excellence of the African modern,” and one of the critical nodes of Southern Hemispheric capitalism and globalization.
Since 1994, unshackled from the sanctions of apartheid and emboldened by the rise of the new South Africa, Johannesburg has reasserted itself as a globally linked economic hub with a core responsibility for hosting large corporations with trade and investment connections spread across Sub-Saharan Africa (Murray, 2011). Accompanying the strengthening role of Johannesburg were a number of initiatives for reimaging the city, place marketing, as well as the development of a number of prestige projects, part the process of creating a world-class city (C. M. Rogerson, 1996). The beginnings of this economic reinvention predate the fall of apartheid. With a watershed event being the 1991 appointment of Johannesburg’s first director of commerce and industry, who was given the mandate of launching an economic “comeback trail” and attracting foreign direct investment (C. M. Rogerson, 2004a). Among several examples of the building of prestige projects in the postapartheid era, the establishment of the Sandton Convention Center, which hosted the World Summit on Sustainable Development in 2002, was highly influential as it became the anchor for Johannesburg as a locus for business tourism as well as reconstructing a positive image for the city (C. M. Rogerson, 2002). By 2010, this “infamous pariah city that epitomized apartheid rule” (Murray, 2011, p. 3) had been recast anew as the showcase for democratic South Africa and was the lead host city for that year’s FIFA World Cup. The international connectedness of Johannesburg is not only evidenced by its role as a key location for foreign investors (C. M. Rogerson, 2005a, 2009), but also by its long acknowledged position as an investment springboard for Africa. Of special significance is Johannesburg’s role as primary control point for mineral resources that usually merits it a ranking in the lower tier of world city league tables (Surborg, 2011).
Informed by world city research, Surborg’s (2011) seminal analysis of Johannesburg’s position in the global economy underscored the city’s functioning as a satellite or subsidiary city to higher ranking world cities, especially London. It is argued that Johannesburg’s positionality in relationship to London as well as to the mining sector accords it “the status of a gateway or linking city” (Surborg, 2011, p. 117). In particular, Surborg (2011) points to evidence from the platinum production sector of a spatial division of control between strategic control residing in London and operational control based in Johannesburg. The characterization of Johannesburg is therefore as a “linking city” within a complex, multinodal network of world cities that is globally dispersed, operates 24 hours a day, and extracts surplus from the territories around its nodes (Surborg, 2011). More especially, linking cities such as Johannesburg “cannot be considered as being in sole control, but crucial in facilitating the extraction of surplus value” (Surborg, 2011, p. 129). Overall, it is concluded that:
Johannesburg is part of the world city network, even if it is only a minor node. The city is the administrative center that facilitates the efficient resource extraction for much of Southern Africa. Whereas considerable degree of ownership of the resource industry is concentrated in Johannesburg, the city also functions as a node through which surplus is channelled to distant shareholders. (Surborg, 2011, p. 131)
In accounting for Johannesburg’s current ambiguous position in the world city network, Surborg (2011, p. 154) stresses the essential role played by the postapartheid state and argues that the city has been shaped “as a neo-liberal city more by national policy than by its own endeavours.” The neo-liberal macroeconomic policies introduced by the African National Congress–led government since 1994 have necessitated the existence of a major business center to link international and local investors to investment opportunities both within South Africa and across the wider region of Southern Africa. Johannesburg has clearly assumed that role as the nexus of control and linkage, organizing the capitalist economy of South Africa and the wider region (Surborg, 2011).
Researching Johannesburg
Notwithstanding the internationally high profile of the city and its aspirations for world-class status, a recent overview of scholarship on urban South Africa drew attention to the fact that “relative to its size and socio-economic importance Johannesburg is under-researched” (Visser, 2013, p. 85). In particular, as compared to Cape Town, a popular research focus for foreign scholars, because it is perceived as safe, quieter, and less threatening, Johannesburg is deemed less agreeable to Northern “sensitivities and sensibilities” (Visser, 2013). Undoubtedly, this investigatory oversight is also because Johannesburg is perceived as “a tremendously complex city” (Mosselson, 2013, p. 1862). The relative academic neglect of Johannesburg clearly emerged in Visser’s (2013) overview of urban research published in academic journals on South Africa between 2000 and 2010. The notable shift toward Cape Town as the major locus of geographical and planning work on urban South Africa is further underscored by an analysis of the first 25 years of studies published in the journal Urban Forum, the flagship outlet for urban research debates on South Africa and Sub-Saharan Africa more generally (Visser & Rogerson, 2014). Here the marked unevenness of South African urban scholarship was confirmed by an expanding corpus of research on Cape Town, particularly after 2000, with contributions emanating from both domestic and international urban scholars. By contrast, the urban dynamics of South Africa’s economic heartland, Gauteng Province, with Johannesburg at its core, remains only “weakly represented” (Visser & Rogerson, 2014).
In common with urban research trends on South Africa as a whole, the dominant themes investigated vis-à-vis the development trajectory of postapartheid Johannesburg relate to inter alia, housing, citizenship, migration, crime and security, governance, the deracialization of space, and poverty alleviation, including service delivery implications (see, e.g., Beall, Crankshaw, & Parnell, 2002; Bremner, 2000; Crankshaw, Gilbert, & Morris, 2000; Dirsuweit, 2002; Winkler, 2006; Landau & Gindrey, 2008; Vidal, 2010; Narsiah, 2011; Todes, 2012a). Furthermore, Landau and Gindrey (2008) confirm that Johannesburg is a primary destination for international migrants and refugees particularly from elsewhere in Sub-Saharan Africa. Poverty-related themes have captured much of the imagination and energy of Johannesburg scholars (Visser, 2013). Not surprisingly, however, several dimensions of Johannesburg’s city visioning and of its aspirations to become Africa’s premier world-class city have come under critical scrutiny (Murray, 2011; Surborg, 2011; Parnell & Robinson, 2006; Pirie, 2010; C. M. Rogerson, 2004a, 2005a). For example, the policy discourse/tensions between economic growth and development around addressing Johannesburg’s distinctive and diverse planning challenges from “accommodating cutting-edge global economic activities to supporting basic service delivery in informal settlements” are successfully extracted by Parnell and Robinson (2006, p. 337).
One of the best-documented aspects of postapartheid Johannesburg is the relationship between urban growth, rising economic inequality, and strategic planning (Todes, 2012a, 2012b). It is observed that if “any city illustrates the role capital plays in the formation and shaping of cities then Johannesburg is that city” (Mosselson, 2013, p. 1862). Murray (2011, p. xv) shows that:
the metamorphosis of Johannesburg from the exemplary apartheid city at the apex of white minority rule to the dominant metropolis of the new South Africa has gone hand in hand with the emergence of new patterns of spatial unevenness and new kinds of social exclusion.
More specifically, as he styles Johannesburg “the city of extremes,” these interwoven trends are considered
the result of city-building efforts that have effectively partitioned the urban landscape into fortified renaissance sites of privatized luxury, where affluent urban residents work and play, and impoverished spaces of confinement, where the haphazardly employed, the poor, the socially excluded and the homeless are forced to survive. (Murray, 2011, p. xv)
In many respects, therefore, the Johannesburg story is emblematic of urban South Africa. Among others, Pieterse (2009) draws attention to the persistence of cleavages in postapartheid urban geographies. He maintains unequivocally that despite two decades of concerted government initiatives to extend development opportunities to the urban poor, “South African cities have remained profoundly divided, segregated and unequal” (Pieterse, 2009, p. 1). Although the work of Todes (2012a) confirms that racial divisions in contemporary Johannesburg are still manifest spatially, a blurring of such cleavages is now taking place. Indeed, it is significant that a large proportion of the new residents of Johannesburg’s secured gated communities are drawn from the burgeoning Black middle class, the main beneficiaries of democratic change (Mosselson, 2013).
The details of the spatial distortions in the urban geography of postapartheid Johannesburg have received much academic attention (Murray, 2011; Todes, 2012a, 2012b). Importantly, it is shown that a geographical disconnect exists between areas of new employment growth and private investment taking place in and around affluent Sandton, Rosebank, and Midrand, on the one hand, and the ring of low-income settlements, particularly at Orange Farm, on the other (Figure 1). Moreover, township areas (most notably Soweto and Alexandra) until recently have attracted meager private investment (Turok, 2012a). The post-1980 hollowing out of Johannesburg’s inner city, the corresponding flight of commercial and retail capital to dispersed nodes in the northern suburbs, and especially the rise of Sandton as the new financial capital of South Africa, are critical themes that have been scrutinized by a number of investigators (C. M. Rogerson, 2000a; J. M. Rogerson, 1995; C. M. Rogerson & Rogerson, 1995, 1997a, 1997b, 1999; Murray, 2011). Todes (2012a) tracks the emerging initiatives to synergize strategic spatial planning and infrastructure development to address persistent sociospatial inequalities. In addition, policy efforts to reinvigorate, reinvent, and revive the inner city, including through the use of fashion districts, creative industries, and tourist facilities, are parallel research themes associated with the polarized character of urban development (Dirsuweit, 1999; C. M. Rogerson, 2004b; C. M. Rogerson & Kaplan, 2005; C. M. Rogerson, 2006; Murray, 2011).
The Johannesburg metropolitan area.
With the restoration of South Africa into the international tourism economy, the city’s “nontraditional” tourism base has become increasingly important for urban regeneration (C. M. Rogerson, 2013). Johannesburg’s competitive strengths are in the sectors of business tourism, heritage tourism, shopping tourism, and so-called “slum tourism,” which is rooted in the townships of the apartheid struggle (Frenzel, 2013; McKay, 2013; C. M. Rogerson, 2002, 2003, 2008, 2011; Van der Merwe, 2013). However, the unevenness or “spottiness” of successful policy interventions designed to resuscitate parts of Johannesburg’s decaying inner city are clearly exposed by Winkler’s (2013) examination of Hillbrow as a new gateway for international migrants to the city. Overall, inner-city Johannesburg exhibits a complex geography, both as a zone of confinement and exclusion and also as “a destination of choice for many who want to access the opportunities this central location provides, particularly in contrast to the disconnected townships and informal settlements on the city’s outskirts” (Mosselson, 2013, p. 1863).
In contrast to questions of spatial change, the economic restructuring of South Africa’s leading city has been less well understood and articulated by researchers, local or international. On the whole, Turok (2010a, p. 18) observes that scholarship “on the economy of African cities has been seriously neglected for at least the past decade.” In particular, “further research is required on African economies and the effects of spatial agglomeration” (Turok, 2012b, p. 1). Arguably, despite the enormous significance of Africa’s recent economic turnaround and the looming challenges that confront its cities, “there has been almost no systematic research on urban economic issues over the last decade” (Turok, 2013c, p. 139). This especially applies to Johannesburg where most economic analyses focus on chronicles about local economic development planning (C. M. Rogerson, 1996, 2005b). Nevertheless, some research has emerged to illuminate the changing business environment for private sector investment and shifting patterns of foreign direct investment (C. M. Rogerson, 2009; C. M. Rogerson & Rogerson, 2010). Although investors from 34 countries are now represented in Johannesburg, the leading 10 investor countries, headed by the United States, Germany, and the United Kingdom, account for 85% of total investments. Reasons given by foreign investors for selecting Johannesburg as an investment destination largely mirror the international experience of locational decision making by overseas investors. Johannesburg is the preferred choice for business operations both in South Africa and the broader region because of several agglomeration factors associated with the city’s position as the leading economic hub, financial complex, and core market of Southern Africa (C. M. Rogerson, 2009).
Research on Johannesburg’s economic role also focuses on the survivalist informal economy, understanding the activities of small-scale entrepreneurs, and the changing complexion of the informal economy, including the role of international migrant entrepreneurs (Grant, 2010, 2013; Peberdy & Rogerson, 2003; C. M. Rogerson, 1997, 1998, 2000b; Tissington, 2009; C. M. Rogerson & Rogerson, 1997a). A central concern of debate has been the operation of the ubiquitous informal retail economy and of the escalating struggles to gain space for street traders in Johannesburg’s inner city amidst an often unpromising, unsupportive, and sometimes hostile policy environment (Callaghan 2012; Callaghan & Venter, 2011; C. M. Rogerson, 2000b; Tissington, 2009). Beyond the street hawkers and the activities of international cross-border traders, other recent work has uncovered aspects of the world of small-scale production enterprises (C. M. Rogerson, 1998). For instance, in Soweto it was discovered that “informal production entrepreneurs act in the ‘do-it-yourself economy,’ embedding their firms within their township localities and linking beyond whenever possible” (Grant, 2013, p. 104).
It is acknowledged that the forging of an inclusive development path for Johannesburg requires a range of interventions, including issues of housing, labor market policies, improved mobilities by enhanced transport and growth management, support for the informal economy, and the integration of immigrants into the economy (OECD, 2011; Todes, 2012a). On the one hand, the unpromising prospects for achieving inclusive development were highlighted by Harrison, Charlton, and Zack (2013), who rightly condemned the City of Johannesburg’s Operation Clean Sweep (November 2013) in which 4,000 street traders were evicted from trading space in central Johannesburg in the name of the aspirations for a world-class African city. On the other, a number of positive moves toward inclusive development involved recent devolutionary initiatives to allow city governments to plan and manage housing and transportation improvements to launch the process of integrating the current fractured built environment more effectively (Turok, 2013a, 2013b). It is evident that the fragmented urban landscape of metropolitan Johannesburg, with its pronounced separation between residential and employment nodes, requires unreasonably high levels of movement (Todes, 2012a). Overall, as Turok (2012a) asserts, there is a compelling case for efficient public transport connections to overcome the spatial divide between the largest low-income settlements, mainly in the south of the city, and the areas of employment growth and private investment, which are predominantly located in the northern parts of the metropolitan area. The welcome launch of the Rea Vaya Rapid Bus Transport system in late 2013 seeks to achieve this goal (Greve, 2013). Arguably, the prospects for more inclusive development can be enhanced as improved connectivity should strengthen the city-region’s agglomeration potential, thereby increasing labor-market efficiency as well as relieving traffic congestion (Turok, 2012a, 2012b).
Johannesburg Economic Restructuring, 1994 to 2013
One of the key factors inhibiting research on Johannesburg’s formal economy is the weak quality of spatial economic data in South Africa. In many respects, the availability of local-level data has markedly deteriorated in South Africa since 1994, hampering the interpretation of urban economic trends. In sectors such as manufacturing, the quality of available spatial data has declined since the democratic transition with certain regular data series (such as the manufacturing census) being abandoned. For South Africa’s priority economic sectors—including tourism, creative industries, and the green economy—almost no spatially disaggregated data exist from government sources to monitor restructuring and its important local economic impacts. Therefore, in the absence of a solid base of evidence anchored by information sources, reliance must be placed on data collated and analyzed by the private sector. Among the most important data sets that inform the understanding of urban economic change are those that can be accessed from Quantec and Global Insight. In this section, material from these organizations is drawn on and combined with available academic sources to chart the broad directions of Johannesburg’s shifting economy in the postapartheid era.
Historically, during the early years of apartheid, strong growth was recorded in most sectors of Johannesburg’s economic sectors, including manufacturing (C. M. Rogerson & Rogerson, 1995). The only exception was that of gold mining, the traditional cornerstone sector of the acronym the “City of Gold,” which had accounted for as much as 23% of the city’s employment in 1946. By the beginning of democratic rule, a half century later, however, mining claimed only 1% of total employment (Beall et al., 2002, p. 33). Most observers agree that a major restructuring of Johannesburg’s economic base had occurred since 1980. The key shifts involved relative decline in the importance of the city’s manufacturing economy, with the squeezing out of many labor-intensive sectors to decentralized outlying growth nodes and the relocation of other still growing manufacturing activities to parts of what would become the extended metropolitan region where facilities and space for business expansion could be secured (C. M. Rogerson, 2005; C. M. Rogerson & Rogerson, 1997b, 1999). Along with the relative demise of the city’s manufacturing base, there has been a remarkable growth spurt of the service sector. Beall et al. (2002) have chronicled the rise of Johannesburg’s economy of financial services, insurance, real estate, and business services since 1990—an expansion reinforcing the role of Johannesburg as South Africa’s primary cluster of corporate headquarters (Murray, 2011).
These service-led growth trends have accelerated since the onset of the democratic transition. The essential shift taking place in Johannesburg’s formal economy is displayed in Table 1, which breaks down gross value added (GVA) by sector. During the 20 years of democratic rule, Johannesburg has continued its transition from a manufacturing-led to a service-based economy, a transformation that parallels the city’s positioning as a linking city in the global network of flows (Surborg, 2011). Expansion of total GVA occurred at an annual rate of 5.41% between 1995 and 2001. Across different sectors, however, growth was uneven. Between 1995 and 2001, the tertiary sector expanded its proportion of GVA to an annual average by 7.29%, compared to growth in the secondary sector of 1.91% per annum and a net contraction of 4.34% yearly for the primary sector. From 2001 to 2011, the GVA growth rate in Johannesburg recorded an annual gain of 5.39%. The latter includes the onset of global financial crisis in 2008 and South Africa’s hosting of the FIFA World Cup in 2010. Growth was recorded across all economic categories, with the secondary sector expanding at 4.10% per annum, the primary sector 4.60%, and the tertiary sector 5.83%.
The Changing Structure of Johannesburg’s Economy: Gross Value Added, 1995 to 2011.
Note. GVA = gross value added.
Source. Unpublished Quantec data.
More details on the shifting economic base of Johannesburg are shown in Table 2, which provides a more detailed perspective on economic restructuring trends from 1995 to 2011. Looking at the early period of postapartheid transition (1995-2001), a marked unevenness is evident in the performance of different segments of the city’s economy, and several segments show evidence of absolute or relative decline. Indicators of absolute decline in GVA are recorded for the traditional economic base of mining and perhaps more significantly in the contraction of several production sectors, notably textiles, other nonmetallic minerals, and instruments. Among segments of the economy in relative decline were most forms of manufacturing activity (including food, wood, electrical machinery, and furniture), electricity, water, and construction. The best performing sectors were mainly service or tertiary sector activities led by communication (25.87%), finance and insurance (17.11%), and business services (11.44%). As Johannesburg evolved into Sub-Saharan Africa’s shopping mecca, a surge in wholesale and retail activities in the urban economy occurred. It is also worth noting that the decline of manufacturing was not taking place across all segments because healthy expansion was recorded for the 1995 to 2001 period in both the chemicals and transport equipment sectors.
The Changing Structure of Johannesburg’s Economy: Gross Value Added, 1995 to 2011.
Source. Unpublished Quantec data.
The restructuring of Johannesburg’s economy since 2000 should be viewed in relation to city’s economic development initiatives in an era of urban entrepreneurialism. In 2002, the city launched Johannesburg 2030, an economic development framework strongly influenced by research produced by the World Bank. The 2030 framework set forth a vision and long-term strategy for Johannesburg over the next three decades. It sought to elevate Johannesburg into the ranks of world cities boosting investment by addressing the two major obstacles: skills shortages and crime (City of Johannesburg, 2002). Planning for Johannesburg 2030 was seen to require a shift toward high-value-added manufacturing and a stronger service economy, enabling the city to emerge as an export-oriented hub, closely integrated into the global economy with an emphasis on trade, transport, information, communications, and technology (ICT), finance, business services, and tourism. Targeted or selected sectoral interventions were endorsed by city leaders to strengthen localization economies. To reduce the high level of joblessness, additional interventions were endorsed to support or attract labor-intensive activities such as call centers, construction, recycling, and urban agriculture.
During the 2000s, the main story was the strengthening role of the tertiary sector as both manufacturing and primary sector activities declined. Nonetheless, all segments of the economy expanded in their contribution to GVA. The decade’s fastest expanding sector was construction, which recorded an annual average growth rate of 13.7%, propelled by massive infrastructure projects such as the building of Gautrain, the construction (or renovation) of facilities for the FIFA World Cup, and highway improvements. Moreover, Johannesburg’s construction sector was further galvanized by massive private sector property developments, including shopping malls, casino entertainment complexes, and hotel development (Fu & Murray, 2013; Hall & Bombardella, 2005; J. M. Rogerson, 2013a, 2013b, 2013c, 2013d). Also performing well during this period were communication, finance and insurance, business services, catering and accommodation, and manufacturing, led by the resuscitation of the instruments sector. By contrast, the decade’s poorest performing economic sectors were related to the production of furniture, wood products, other nonmetallic mineral products, and chemicals.
To understand the restructuring of Johannesburg’s economy between 1995 and 2011, it is also worth examining relative shifts in the contribution of various sectors to total GVA. Not surprisingly, as a continuation of trends dating back to the 1960s and 1970s, the decline of mining in the Johannesburg economy has continued. In addition, across all sectors of manufacturing as well as of water and electricity, there is again a decline in the relative contribution of these segments to total GVA. Within the secondary sector as a whole, the only exception is construction, which enlarged its contribution to GVA from 3.2% in 1995 to 4.1% by 2011. The most fundamental shifts in the restructured Johannesburg economy during the study period involve services. The strongest advances were recorded for finance and insurance, business services, and communication. Taken together with wholesaling and retailing, these four segments account for over 52% of GVA in 2011. An additional 13.7% share in 2011 is recorded by government, but significantly marks a sharp contraction in government’s share in the Johannesburg economy (down from 18.5% in 1995).
Tourism is the economic sector that is hidden in this analysis of the changing formal economy of Johannesburg. Since the democratic transition, however, tourism has emerged as one of the new growth drivers of the city’s economy. With no official data available from government sources to monitor the economic contribution of tourism at the city level, data provided by Global Insight must be relied on. These data confirm Johannesburg’s significant position within the tourism space economy of South Africa (Table 3). By 2010, Johannesburg accounted for an estimated 11.8% share of national tourism spending, just behind that of Cape Town, which emerged as an iconic international tourism destination after South Africa’s reentry into the global economy. Johannesburg, overwhelmingly South Africa’s most significant business tourism destination, is now a rising domestic leisure tourism destination (J. M. Rogerson, 2010, 2013a, 2013b, 2013d). In terms of international trips to Johannesburg, the leading source is Sub-Saharan Africa, particularly cross-border shopper/traders from Zimbabwe, Mozambique, Lesotho, Swaziland, Zambia, and Malawi (C. M. Rogerson, 2011, 2013). Long-haul international tourists from Europe or the United States spend shorter periods in Johannesburg compared to Cape Town. For international long-haul visitors to Johannesburg, township tours are increasingly a professionalized business and a regular add-on to tourist itineraries (C. M. Rogerson, 2008). Nevertheless, it should be observed that one of the most celebrated destinations for “poverty tours” is Soweto, which in 2013 boasted new shopping malls, an adventure tourism bungee jump, the World Cup soccer stadium, an annual wine festival, and a four-star luxury hotel (C. M. Rogerson, 2013).
The Importance of Johannesburg as a Tourism Destination.
Source. Calculated from unpublished Global Insight data.
Toward 2030: The Key Determinants
In work conducted for UN-Habitat, Turok (2013a) provided projections which suggest that Johannesburg is among a select group of African cities expected to achieve the largest absolute increases in prosperity over the next 15 years. Alongside Luanda, Tripoli, and Tunis, Johannesburg is on an anticipated trajectory whereby “strong urbanization is expected to be accompanied by reasonable economic growth and rising living standards” (Turok, 2013b, p. 39). The potential for managing urban growth and absorption in Johannesburg is reflected in projections that whereas in 2007 the city records $10,000 GDP per capita, by 2025 this figure is projected to reach $25,000 GDP per capita, and likely to be surpassed in Africa only by the oil-fuelled growth of Tripoli and Luanda.
Whether these optimistic scenarios for Johannesburg can be accomplished will ultimately depend on the achievement of the objectives prescribed for South Africa’s long-term economic planning and conditioned by the context of a fluid global business environment. The two most significant “grand plans” (Omar, 2013) involving national economic programs and strategic planning initiatives relate to the New Growth Strategy (and associated industrial plans) and the National Development Plan. Although there is some overlap between these programs, particularly regarding their central focus on job creation, there are also significant differences in their characterizations of the trajectory of the South African economy, its binding constraints, and in the identification of categories of economic activities that have potential for job creation (CDE, 2013a, 2013b). This section examines the contours of these strategic initiatives that will profoundly affect the economic fortunes and health of Johannesburg 2030.
New Growth Strategy
In 2009, the Zuma administration launched the NGP, devised by the Ministry of Economic Development, with its ambitious vision to create 5 million jobs by 2020 and focusing on a new, more inclusive, labor-absorbing development path (Department of Economic Development [DED], 2010). The NGP document released in late 2010 aims to address the structural problems inherent in South Africa’s economy, and to launch a set of strategies aimed at fighting poverty, reducing inequality, and addressing rural development, all part of the overriding effort to create better jobs (Nattrass, 2011). In many respects, the NGP is South Africa’s response to changing technological production systems as well as the 2008 global economic downturn. Specifically, it represents a national response to the insufficient levels of job growth during the 2000s and “the need to accelerate employment creation, income growth and a decline in poverty” (DED, 2010, p. 11).
In terms of Johannesburg’s future, the DED enunciates six core organizing principles for the NGP, which include, inter alia, improving the labor-absorption capacity of the economy both in absolute numbers of employment opportunities created as well as in the labor intensity of economic growth; rebuilding the productive capacity of the economy; integrating green considerations in economic growth by decreasing the carbon emissions of economic activities and identifying new opportunities for greening the economy; focusing on the industrial opportunities and supporting logistics elsewhere in Africa that could strengthen the country’s employment base and economic development; enhance the coherence and linkages between sectors, by fostering, for example, new infrastructure development and the expansion of local manufacturing capacity; and promoting partnerships between business, labor, and government as critical instruments to propel the job-creation process (DED, 2012). One distinguishing element of the NGP is that it is not focused on the existing growth path toward new job creation. Rather, as Nattrass (2011) points out, it seeks to forge a new more labor-absorbing path through the judicious use of government policy to reverse some of the structural shifts of the early 2000s, most important, employment decline in South Africa’s manufacturing sector. Nattrass (2011, pp. 1-2) views the NGP as advocating a “developmental state” to support and build new productive activities, especially in light manufacturing, the mining and agricultural supply chains, and in a range of knowledge-intensive and/or skill-intensive activities as well as green technology.
Overall, the NGP prioritizes efforts to grow employment in several key sectors, including public investment in infrastructure, development of the agricultural and mining value chains, targeting sectors of manufacturing, the green economy, tourism, and certain high-level services, such as business services, finance, and communications (DED, 2010). The reindustrialization of South Africa is one of the cornerstones of the NGP, and emerged as the centerpiece of much of the parallel policy interventions recently undertaken by the DTI. In its Medium Term Strategic Plan for 2011 to 2014, the DTI identified both falling levels of employment and slow growth of manufacturing value added as a deep-rooted structural problem and of key concern given that the manufacturing sector is regarded as one able to absorb low-skilled labor (DTI, 2011). The performance of the country’s manufacturing sector was considered as especially poor when benchmarked against the record of China, India, and Brazil. This lag was seen as an outcome of “the policies these countries followed before the recession, which focused on production sectors, and significant interventions to counteract the effects of the extended recession” (DTI, 2012, p. 22).
Since 2008, South Africa has been engaged in a wide-ranging set of industrial policy interventions through the Industrial Policy Action Plan (IPAP) within a framework of continuous improvements and upscaling of industrial development interventions. Among core objectives are to facilitate economic diversification, ensure the long-term intensification of South Africa’s industrial output, and galvanize an intensified labor-absorbing industrialization path toward a knowledge economy. Thus, IPAP was identified as a pillar of the NGP (DED, 2010; DTI, 2012), representing an array and mix of policies deemed as critical for upscaling industrial policy and reconfiguring “a shift towards the productive side of the economy” (DTI, 2012, p. 29). The first IPAP was produced in 2008, and the most current version for 2012-2013 to 2013-2014 is the fourth iteration. It contains a broad range of actions and interventions. In the drive for reindustrialization in South Africa, two issues of special significance with potential impact for Johannesburg futures are those relating to support for localization and job creation in the green economy (Borel-Saladin & Turok, 2013). In the long run, however, to attain its desired economic objectives the state must support capital-intensive, knowledge-based activities for which Johannesburg is well positioned.
National Development Plan
As compared to the NGP’s emphasis, the “developmental state,” the National Development Plan (NDP) 2030, released in 2012 by the National Planning Commission (2012), evinces a more neoliberal outlook. The report suggests that South Africa is caught in a “middle income trap,” unable to compete at the lower end with low-income countries yet unable to break into the production of high-value goods dominated by the high-income countries (CDE, 2013a, 2013b). Four major constraints are identified as impeding efforts to grow the economy at a faster pace: inadequate savings, which makes the country reliant on foreign capital inflows; lack of competition in goods and services, which stifles innovation and the entry of new firms; skills shortages; and uncompetitive labor markets that keep new entrants out (CDE, 2013a). This analysis and neoliberal orientation has generated considerable controversy, especially attacks from the political left. The wide-ranging NDP identified 12 areas of development and nation building associated with 18 targets.
In terms of the economy, NDP 2030 emphasizes building a more inclusive, dynamic economy in which benefits are shared more equitably. The NDP builds on the core proposals of the NGP for creating new jobs by providing a supportive environment for growth and development while promoting a more labor-absorbing economy. It ambitiously proposes the creation of 11 million jobs by 2030 and targets reducing unemployment to 6% by 2030, with the manufacturing sector growing by 50% consistent with the lines envisaged in the IPAP and NGP. More specifically, the NDP proposals for job creation are to be based on the following: achieving an environment for sustainable employment and inclusive economic growth; promoting employment in labor-intensive sectors; raising exports and competitiveness; strengthening government’s capacity to provide leadership for economic development; and mobilizing every sector of society around a national vision.
In an important break from the NGP, the NDP envisages that most employment growth—90%—will be generated by small, labor-intensive service, firms largely attuned to the domestic market. As noted by the CDE (2013b, p. 5), “these are not high-technology firms, but are composed largely of semi-skilled and low-skilled workers.” Indeed, the analytical thrust of the NDP is that the greatest share of employment expansion will be accomplished through a substantial increase in new firms rather than the growth of existing enterprises. Within the NDP there is a reduced commitment to reindustrializing the economy, and by stressing Small, Medium and Micro-Enterprise (SMMEs) and exports, it has come under attack from the political left for providing too many low-quality and unsustainable jobs as opposed to the NGP in which there is a commitment to “decent work” (Omar, 2013). Concerning policy, the NDP offers several labor-market proposals, including a youth wage subsidy; in terms of sector support, it advocates both protection for the long-term as well as short-term support for industries affected by cyclical downturns.
For Johannesburg’s economic future, the NDP critically identifies the metropolitan financial sector as one of South Africa’s key competitive advantages. The NDP recognizes that the country has not maximized the potential of its sophisticated financial services sector, heavily concentrated in Johannesburg’s northern suburbs—to drive growth and create employment. It also highlights the importance of supporting business services as well as the role of the retail sector in job expansion (National Planning Commission, 2012).
Conclusion
As Mosselson (2013, p. 1863) contends, Johannesburg is not simply a metropolis of extremes but more correctly should be looked at as “a still emerging city of paradoxes, contradictions, possibilities and ambiguities,” and not least in reference to its economic fortunes. One of the paradoxes of Johannesburg is that despite its significance for South Africa and the wider region of Southern Africa, the city is inadequately researched by scholars especially when compared to Cape Town. In particular, the paucity of research on the restructuring of the formal economy marks a critical oversight and, in certain respects, even the condition of the small-scale enterprise economy, including the informal economy, is better understood.
In situating Johannesburg, it was argued that the city is the leading metropolis in Sub-Saharan Africa, and that within the global urban network Johannesburg merits the ambiguous position of a linking city (Surborg, 2011). The core function of postapartheid Johannesburg as neoliberal city has been partly shaped by global forces, but also to a large extent by the macroeconomic policies introduced by South Africa’s first democratically elected governments. The neoliberal economic policies enacted by the African National Congress since 1994 demanded the production of a leading urban business center that could function in an intermediary manner as a conduit to link international and local investors to investment opportunities within South Africa as well as the rest of Sub-Saharan Africa. Throughout the post-1994 period, Johannesburg has filled that role in coordinating the capitalist economy of the nation and the wider region.
The linking role played by metropolitan Johannesburg has accelerated the trajectory established as far back as the 1980s, toward an increasingly service-led urban economy. Nonetheless, the manufacturing economy of Johannesburg is far from moribund. Despite a phase of relative decline, GVA data for 2013 suggest that the metropolis almost matches neighboring Ekurhuleni for the status of South Africa’s leading manufacturing complex. Looking forward, Johannesburg is well positioned to capture a share of the new high-value-added industrial development (particularly among green industries) that will emerge from the current drive toward localization and reindustrialization. In terms of the tertiary sector, and more especially financial and business services, the primary role of Johannesburg is unchallenged. It was shown that the vital role played by the financial sector is acknowledged by the designers of both the NGP and the National Development Plan. Therefore, the economic functioning of the metropolis as a linking city in the global economy between now and 2030 will be determined by the health of Johannesburg’s service economy (including tourism) and the changing composition of its manufacturing base.
Footnotes
Acknowledgements
Thanks are due to Wendy Job for the preparation of the Map.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) declared receipt of the following financial support for the research, authorship, and/or publication of this article: The University of Johannesburg provided research funding support.