Joburg aims for 9% growth by 2014

Posted On Thursday, 02 April 2009 02:00 Published by
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Johannesburg is aiming for a 9 percent economic growth rate by 2014, said the mayoral committee member for finance and economic development, Parks Tau

"We believe that if we are to take Johannesburg to greater economic heights - which we define as a 9 percent economic growth rate by 2014 - we have to develop and evolve partnerships with all relevant economic stakeholders and role players in the city," Tau said at a business breakfast on Wednesday, 11 March in Sandton.

The breakfast was aimed at the international business community, represented by various embassy and consulate diplomats.

Tau said the City's long-term vision involved seeing Joburg as continuing to be South Africa's primary business city, a "dynamic centre of production, innovation, trade, finance and services".

"This will be a city of opportunity, where the benefits of balanced economic growth will be shared in a way that enables all residents to gain access to the ladder of prosperity, and where the poor, vulnerable and excluded will be supported out of poverty to realise upward social mobility."

In this city, everyone would be able to enjoy "decent accommodation, excellent services, the highest standards of health and safety, access to participatory governance, and quality community life".

Economist Mike Schussler, the director of economists.co.za, said Joburg's growth rate, at 5 percent, was higher than that of South Africa, at 3,6 percent.

"You could call Joburg the financial capital of Africa. It's also the communications capital of Africa, and the African shopping centre."

He stressed that although Joburg was founded on mining, it was no longer a mining city. In 2007, mining was estimated to contribute just 1 percent to the city's growth, while financial and business services contributed 36 percent, with trade at 18 percent, manufacturing at 14 percent, and construction at 4 percent.

Six core principles
Tau said that the City's vision was based on six core principles, taken from its Growth and Development Strategy: pro-active absorption of the poor; balanced and shared growth; social mobility and equality; settlement restructuring; sustainability and environmental justice; and innovative governance solutions.

He spoke of offering a market to investors which had Africa's best telecommunications, excellent road and transport infrastructure, world-class banking and financial services, and a country with a top rating in terms of ease of doing business.

Over 70 percent of South African companies have their headquarters in Joburg. The city's economic output was R203-billion in 2006, and R216-billion in 2007, with a current growth rate of 4,7 percent annually. With a population of 3,5 million, it has an annual per capita output of about $5 600 (about R56 600).

Clean audit:
For the 2006-07 financial year, Joburg received its first clean audit. This was obtained by overhauling the City's financial management systems, in the process quadrupling its capital budget and boosting its credit rating. It now has an A+ rating, according to Fitch Ratings and CA Ratings.

This has been boosted by the five municipal bonds that have been successfully issued by the City since April 2004.

"This adds great credibility to any entity doing business in our city, especially those with international linkages," Tau said.

He referred to the recent electricity supply challenges, saying they were likely to remain until 2013, when new capacity became available. The City has, over the past four years, spent more than R1,65-billion in capital expenditure on the power grid. This means that it has about 120MW in standby capacity. And the electricity facility, City Power, recently issued a tender for 300 000 solar water heaters.

"This initiative by the City of Johannesburg is the latest attempt to create a sustainable and more environmentally friendly solution to our electricity challenges," he said. The City was also endeavouring to abide by the 10 percent cut in electricity consumption requested by the national government.

Safe and secure environment
Tau also talked about the need to provide a safe and secure business environment. A CCTV camera system has significantly reduced the crime rate in the inner city; by 2010 the metro police force will be increased to 4 000 officers, which will complement the expanding South Africa Police Service.

Joburg has also worked hard at regenerating the inner city through the Urban Development Zone Tax Incentive, which has attracted investments into the area of R4-billion. "We are reclaiming the inner city as a future residential, business and entertainment hub of Gauteng."

The Joburg economy is based on mining, trade, information and communication technology, and high value manufacturing, but efforts are being made to create more opportunities in business process outsourcing, tourism, the hospitality sector, financial services, property development, and the public transport infrastructure.

In this regard the City is constructing the Bus Rapid Transit system, the first stage of which will open in May. This will be supplemented by the Gautrain, a rapid train link connecting Joburg with Tshwane and OR Tambo International Airport. The major highways between the two cities are receiving a multi-billion rand makeover as well.

Positive long-term outlook
Schussler said the city's long-term outlook was positive, although poor in the short term, as a result of the world recession.

Communication between the City and the business community was ongoing, through the Johannesburg Business Forum. This helped both sectors to air issues, ask questions, and to fix things, as well as promoted the City, he said.

"I am very proud of the business forum. It is one of the strengths of the City. Some of the combined ideas make a lot of sense and help us to move forward."

Source: Joburg
www.joburg.org.za


Publisher: eProp
Source: SA Cities Network
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