Big businesses were conglomerated in the city centres, which is where the money and the power were.

Thousands of small businesses complemented the big corporations.

Together, they provided an influx of money that safeguarded the financial wellbeing of South Africa's cities.

Neighbourhoods on the verges of the CBDs also prospered, and residential areas such as Hillbrow and Yeoville, in Johannesburg, and Sunnyside, in Tshwane - today infamous as hubs of crime and poverty - were sought-after places to live.

However, beneath the apparent glossy veneer of inner-city life, South African cities, and the people dynamics that made them work, were deeply divided along racial lines.

In addition, the country's cities, which were synonymous with employment opportunities, could never fulfil the demand for jobs by the masses of people who streamed in from rural areas, particularly when the stranglehold of apartheid started to weaken in the early 1990s.

Rooted in worsening socioeconomic conditions, crime invaded the CBDs, prompting many businesses to move out and find safety in the refuge of the suburbs.

In the process, many of South Africa's cities lost their appeal to business altogether.

Crime and urban decay rapidly ate away at the prosperity created in the country's CBDs.

The reinvention of South Africa's cities

In 2000, after the first democratic elections for local government, plans to regenerate South Africa's cities started in all earnest.

A firm commitment from the government to transform society, coupled with new capital investments of billions of rands, is currently reviving the country's cities.

Areas that were once prime examples of urban degeneration in South Africa's largest cities - Johannesburg, Cape Town, eThekwini (Durban), Tshwane (Pretoria), Bloemfontein, Buffalo City (East London) and Port Elizabeth - are the targets of multimillion-rand investments.

Signs of the urban-regeneration drive are changing the landscapes of these cities and are attracting many well-heeled property buyers.

In Johannesburg, the Nelson Mandela Bridge and Newtown cultural precinct have given downtown areas such as Braamfontein a new lease of life.

And many of the city's famous old buildings, dating from South Africa's golden era of mining, such as the Corner House, are being revamped into executive dwellings or even corporate headquarters, in the case of Turbine Hall, which will become AngloGold Ashanti's new base.

Buyers believe that downtown Johannesburg has the potential to soon be mentioned in the same league as uptown Manhattan, London or Tokyo.

Elsewhere in Johannesburg, inner-city residential schemes, such as Brickfields, aim to attract tenants from all income groups and serve as an example of the complete integration of South African society.

Large corporations and private investors are also being encouraged to give downtown Johannesburg a second look.

In October last year, the national Treasury announced the launch of the urban-renewal tax incentive scheme, based on the Revenue Laws Amendment Act of 2003,to stimulate investment in the country's urban areas.

The incentive is an accelerated depreciation allowance to promote and stimulate development within the CBDs of 16 large South African cities.

It encourages the refurbishment and construction of commercial and residential buildings in designated decaying inner-city areas within selected municipalities.

The government hopes that such investment will return the inner cities to their former glory as vibrant city centres and attract more and more people to live, work and be entertained in these areas.

It is expected that the incentive will also enhance broader growth and job creation, in particular.

According to the national Treasury, the incentive offers a great opportunity to investors - companies and individuals alike - to participate in the renewal and development of the inner cities.

The urban-renewal tax incentive was first implemented in the urban-development zones (UDZs) of Johannesburg and Cape Town in October last year.

On December 10, Minister of Finance Trevor Manuel demarcated a further seven UDZs in the municipalities of eThekwini, Tshwane, Emfuleni (Vaal Triangle), Sol Plaatje (Kimberley), Mangaung (Bloemfontein), Buffalo City (East London) and Mbombela (Nelspruit).

On June 8, the minister announced the approval of another four UDZ applications for the municipalities of Polokwane (Pietersburg), Nelson Mandela (Port Elizabeth), Msunduzi (Maritzburg) and Ekurhuleni (East Rand).

Each of the municipalities has chosen the demarcated areas for their specific UDZs, which were approved by their respective councils.

With 13 of the 16 municipalities already approved, it is expected that the three remaining municipalities - Mafikeng, Matjhabeng (Welkom) and Emalahleni (Witbank) - will be announced shortly.

According to the Treasury, the incentive supports other initiatives, such as policies to write off existing bad debt from particular buildings in the inner cities in order to allow the buildings to be sold, restored and refurbished.

The incentive also supports the objectives of the Department of Housing's plan for the development of sustainable human settlements by encouraging private investment in affordable rental housing in the inner city.

The national Treasury adds that it further provides a possible catalyst for public-private partnerships in mixed-use developments that provide social facilities that are integrated into new commercial and residential developments.

The Treasury explains that the incentive translates into consider-able financial benefits for investors, particularly concerning the refurbishment of existing buildings.

For development projects, the incentive entails a 20% tax deduction in the first year and an annual depreciation of 20% over four years.

Concerning new developments, it offers a tax deduction of 20% in the first year and an annual depreciation of 5% for the next 16 years.

Hence, the identification of UDZs countrywide clears the way for inner-city developers to benefit from large tax breaks.

The 16 municipalities under the scheme have welcomed the intervention as a significant contribution to the future of South Africa's city centres.

The incentive boosts efforts by municipalities to develop strategic plans that influence demographic and urban development and secure their long-term tax income by encouraging middle- and upper-class residents to move back to towns and stem the exodus of business to the suburbs. It also improves the attractiveness of city centres to investors. Investment is the key to improving the competitiveness of South Africa's cities in the world economy.

Networking for success

South Africa's six metros - City of Cape Town, Ekurhuleni, eThekwini, City of Johannesburg, Nelson Mandela and City of Tshwane - and the three largest local municipalities - Buffalo City, Mangaung and Msunduzi - account for about 70% of the country's GDP.

The nine cities also receive more than 60% of local government expenditure in South Africa's 284 municipalities, as they account for the largest concentration of local services and infrastructure.

In 2002, the Department of Provincial and Local Government (DPLG), which looks after local government matters, established the South African Cities Network (SACN) which comprises South African cities and partners andencourages the exchange of information, experience and best practices on urban development and city management.

The country's nine largest cities are SACN partners.

SACN CEO Sithole Mbanga says that the DPLG realises that knowledge and capacity-building are critical to propelling South Africa's cities forward.

"South Africa's economy, like that of many developed and fast-developing nations, is now essentially an urban economy. This means that it is ever more dependent on whether the economies of its large cities work well," Mbanga explains.

Last year, SACN published the first State of South African Cities report, which took a hard look at the forces that have transformed the country's cities since 1994, and asked whether cities can expect positive or negative things to come if the current trends continue.

The five areas of knowledge-sharing that the report covered included whether the cities are productive, inclusive, sustainable and well governed, and analysed complex city growth trends.

The report collected a wealth of information, which stakeholders such as the cities themselves and the DPLG use to inform their policies.

One of the key findings of the report is that cities grew particularly rapidly after apartheid ended, with population increases of about 4% between 1991 and 2001.

It also found that not all of the nine SACN cities are growing at the same rate. Four are growing at 1,4% a year, while some are growing at 8% a year and others are depopulating at -3% a year.

Mbanga says that current growth trends can be explained by migration but, surprisingly, permanent migration to the cities has been relatively small and is balanced by migration from urban to rural areas.

At the same time, city-to-city migration is increasing.

Certain challenges face cities and rural areas, such as the fact that there has been a steady long-term decline in employment opportunities in the manufacturing sector.

Unemployment rates vary between the cities but, while unemployment is, on average, 3,1% lower in the cities compared to the national average, some cities reflect unemployment rates far higher than in rural areas.

Some of the challenges facing all South African cities are the provision of services, the management of informal settlements, the implementation of poverty-reduction strategies, the improvement of public transport, the mitigation of environmental-health risks and investment in bulk infrastructure capacity.

Mbanga says it is important to take into account the fact that local government, in its present form, only came into being after the first democratic local government elections in December 2000.

Hence, he believes that the much-publicised challenges that this sphere of government is facing, including a lack of capacity to deliver new projects, are not being viewed in their proper context. This is because local government in the new South Afria is only starting to find its feet.

Since 2000, the legislature has passed three new laws that laid the foundation for local government - the Municipal Demarcation Act, the Municipal Systems Act and the Municipal Structures Act.

These laws do not only support initiatives such as the improved management of cities and urban regeneration, but also promote a dispensation that enables South Africa's cities to support the needs of rural communities.

Mbanga says that the government's overarching vision for South Africa's cities is that they should provide a bridge between the first and second economies and function to benefit the country's urban and rural populations. "Each of the cities is different, and have their own strategies such as urban-regeneration projects in place to ensure their long-term prosperity and economic viability.

"For us, it is critical that the cities should be sustainable and not create a buffer between their own development and that of people living outside their boundaries.

"They play an important part in transforming South Africa, in line with the spirit of the constitution," he says.

Urban rejuvenation also has a broader focus

Besides the emphasis that is being placed on inner-city regeneration projects, initiatives are also being carried out to effect urban renewal outside the CBDs.

Many of the suburbs and townships that historically got the short end of the stick when it came to investment in infrastructure and services are being targeted for regeneration.

University of the Witwatersrand School of Architecture and Planning senior lecturer Dr Daniel Irurah says that the Urban Renewal Programme (URP) and the Integrated Sustainable Rural Development Strategy, which were launched by President Thabo Mbeki in his State of the Nation address in 2001, are making great strides to tackle poverty and underinvestment in these areas.

The URP has been launched in Alexandra township, in Gauteng, and in Inanda, Ntuzuma and KwaMashu, in Kwazulu-Natal.

Soweto, in Gauteng, Cato Manor, in Kwazulu-Natal and Duncan Village, in the Eastern Cape, are some of the areas that are already benefiting from large-scale inte-grated development initiatives.

Plans are also on the drawing board for other areas, such as Cape Town, where the N2 Gateway project will focus on rejuvenating large parts of the city's townships.