The crucial challenge is to generate economic growth and jobs for a growing population. Without sustained economic growth, the region faces a bleak future.
In 1994 the East Rand comprised 22 local authorities, from Alberton to Kempton Park-Tembisa to Nigel‑Tsakane. It is home to 2,5 million people, has a formal sector economy worth R66‑billion and sustains 628 000 job opportunities largely provided by 33 000 registered employers. It is South Africa’s unknown metropolis.
The East Rand is South Africa’s historic workshop, the heart of South Africa’s manufacturing economy Most jobs are in manufacturing (metals production, metal working, chemicals, food and beverages, packaging). Just over half of its gross geographic product is from manufacturing compared with the country’s 24%. Manufacturing is complemented by the air transport, rail, warehousing and telecommunication sectors.
Unemployment is very high, some estimate 40%. A rapidly growing, often unskilled, population faces a shortage of jobs and a shrinking of the metals cluster which has provided upward mobility for generations of workers.
Today, the region faces two new challenges.
First, the Government’s new economic approach, GEAR, could lead away from manufacturing inland towards the coastal metropoles; second, other cities are better placed to compete for new investment. Many now have metropolitan wide economic strategies, more effective governance structures for co‑operation across the urban region and a better image with respect to crime, violence and general business climate.
Research indicates, despite stagnation, the economy of the region can be revived. It has shown signs of vigorous life. Steps towards the revival cannot be postponed indefinitely
If real opportunities for growth are to be grasped, the region will have to improve its low status and attractiveness as a place to do business. At present it fails short in several crucial areas.
The area is institutionally fragmented. Individual towns compete rather than co‑operate. Despite the integrated nature of the area’s manufacturing‑based economy, centred on clusters of competitive and interlinked companies, individual city governments do not seem to understand the advantages of cooperating. Such rivalry often inhibits a whole area’s ability to respond to challenges.
The local government elections held in 1995 have greatly changed the shape of the East Rand with far‑reaching consequences.
In one development Edenvale, Modderfontein; Kempton Park and Tembisa have chosen to hive off and create a new metropolitan area, the Iffiayalami Transitional Metropolitan Council. which stretches to Midrand and incorporates much of the most dynamic parts of the area’s economy
The other remaining towns have amalgamated with their associated townships, forming new transitional local authori‑
ties, falling under the Eastern Gauteng Services Council, which now also has jurisdiction over a large number of farflung rural councils.
The region is also socially divided, with enormous differences in social and economic conditions. Large‑scale infrastructural initiatives such as the Katorus Presidential Project, while helping improve social conditions, do little to address economic viability
The considerable public resources (R3‑billion) being put into this historically deprived area constitute a once‑off gift which must be used to maximum effect. Infrastructure development and service delivery must be viewed through the prism of economic growth if they are to provide sustainable steel ladders for the future.
Can the Katorus Presidential Project really be successful without an effective economic strategy for the region?
The East Rand lacks a cohesive business grouping concerned with its social, economic and political welfare. East Rand business leaders rarely comment on the economy or future of the area and do not seem to identify wholeheartedly with the East Rand.
Although some of the reasons for this are understandable, it is nonetheless puzzling. It is hard to envisage the sustained development of world class companies from a region in economic and social decline. Despite a few well‑meaning efforts, there is little strategic understanding of the East Rand’s economy, its place within the dynamics of the broader provincial, national and international economies and the area’s true sources of competitive advantage.
Ironically for an area economically based on what are distinctive clusters of manufacturing and distribution industries that cross municipal borders, there is absolutely no shared vision for the region.
Compounding this is a dearth of information and data, the lack of leadership from any quarter and a lack of social glue, the infrastructure for social collaboration.
Crime and violence, with social inequalities and poverty, form an interlocking spiral that seriously compromises the ability of the area to compete as a metropolitan economy. Consequently, the image of the East Rand (among investors, managers, the media) is negative. Positive factors are overshadowed by the negatives.
There are real opportunities on the East Rand. The area has under‑utilised physical infrastructure (think of its freeway system), plenty of vacant, industrially zoned land, and a trained industrial workforce, much of it in small and medium‑sized firms already linked to large companies.
Here exists much latent entrepreneurial possibility. As a place to live it has many positive characteristics: low housing prices, good recreational amenities, open spaces and good shopping facilities.
A new strategic vision for the East Rand is urgently required. This vision must be developed within the context of national and global competition, and could be built around the revival and strengthening of the area’s manufacturing based economy.
- Ann Bernstein is the executive director of the Centre for Development and Enterprise