During its short history, Johannesburg’s economy has changed rapidly. Its current economic strengths are clear: it is the financial centre of the country. It has a rapidly growing information technology industry, which complements the financial and banking sectors. Its stock exchange is one of the strongest in any emerging market. Two thirds of major companies in South Africa have their headquarters in Johannesburg. The ‘business buzz’ is evident, and there is a network of related services, companies, and customers in nearly all sectors.
Johannesburg is southern and central Africa’s only plausible candidate for world city status – that is almost entirely what its comparative advantages consist of. World cities are the few basing-points for global investment. Even in its leadership in the R & D and IT sectors, for example, its strengths lie in its critical mass and global connections. It has lifestyle-based competitors, such as Cape Town, but scale, agglomeration economies, and global linkages are what is keeping Johannesburg ahead. Johannesburg is a unique city – very different from Cape Town or Durban. It is the hub of South Africa’s and the subcontinent’s linkages to the global economy, and needs to be actively cultivated as such.
However, Johannesburg’s ranking in global terms is slipping. It is important to appreciate what this means. Despite its apartheid politics and discriminatory lifestyle, Johannesburg has been a competitive world city. Why? It has been a city where profits could be made, wealth created, companies run, jobs created, and where managers, skilled workers, and owners were keen to live. Its attractive suburbs, wonderful climate, and world-class urban facilities could be enjoyed very cheaply. For certain groups of people (very important to the economy), Johannesburg used to be a safe city offering a world-class quality of life.
This competitive edge has been blunted. Instead of the ‘rule by law’ and obedience to the law prevalent in the former ‘white’ or middle-class areas being extended to the poorer, primarily black, areas of the city, the disrespect for the law cultivated by the apartheid regime has spread from the latter areas to the former.
Johannesburg – newly expanded in population, size, and complexity – has seen a breakdown in authority in respect of all forms of policing, from the most serious crimes to more minor infringements. This has a huge impact on the perceptions of potential investors, as well as residents’ confidence in the city and its future.
Most people leaving South Africa are city dwellers, and Johannesburg has taken the brunt of this exodus. A country and city that loses its most promising young people (it should be emphasized that these emigrants are no longer only white), and whose most prosperous citizens are doubtful about the future, cannot continue to succeed. South Africa’s leaders have to face this reality, as do Johannesburg’s ‘city fathers’, and a public debate that does not deal with these issues will not contribute to turning Johannesburg around.
People are dying of aids in Africa’s richest city, and unless its residents and others have confidence in the capacity of the country and city to manage this epidemic, it will affect the future of both.
Johannesburg therefore faces serious challenges: its crime levels, municipal finances, human capital, quality of governance, urban environment, transportation systems, and information technology infrastructure are not globally competitive, with some of these slipping in comparative national context. While current initiatives by the city’s government are commendable in many respects, they do not go far enough in facing up to the consequences of Johannesburg’s new economic, physical/spatial, and political reality. Johannesburg’s government does not have the constitutional or political power, status, or authority to resolve many of the most critical issues facing the city. Most important, the city faces an enormous problem of unemployment, the single most critical factor locking people into lives of hopelessness and poverty.
While Johannesburg has been moving away from its apartheid political past, global competition has increased. Other cities have positioned themselves as attractive places. The new global dynamics can accelerate a city’s development, but they can also hasten a downward spiral. A city’s reputation and global competitiveness take years to build up, and a far shorter period to decline. But reports of Johannesburg’s demise are much exaggerated.
Strengths and advantages
In itemising Johannesburg’s slipping competitiveness, it is important to appreciate that Johannesburg still has many strengths and advantages. It is Africa’s only world city with many assets cities all over the world would be proud of. Nonetheless the trends indicate that Johannesburg is slipping to the bottom of the list of secondary world cities in terms of a number of important indicators. Its deterioration would be perceived as reflecting a nation in serious trouble. A failing Johannesburg means a failing South Africa. Those responsible for managing the city and planning its future therefore bear an enormous responsibility for maintaining its ranking as a world city.
Although Johannesburg is unique, this does not mean that local government alone can necessarily appreciate its uniqueness, or ensure that the city fully assumes its national and regional economic leadership role. Johannesburg requires national support but government and business have not given Johannesburg the attention it requires.
The national government and senior business leaders have not seriously engaged with the new role of cities in a global economy – let alone the specific challenges of Johannesburg as a global city. What energy organised business has put into Johannesburg has mainly been concentrated on the inner city, rather than the metropolis as a whole. Few senior business leaders ever talk publicly about Johannesburg or its role as the core location for South Africa’s engagement with the global economy. Can we have a successful world city without business champions?
South African corporate leaders have a profound interest in the future of Johannesburg. Local and international experience indicates that business involvement is often critical in helping to determine and shape the future of a city. Given South African circumstances it is essential for business to become involved in one of the key national economic priorities for the country.
How to maintain Johannesburg as a competitive world city and effective environment from which to run world class companies?