Joburg's status as the economic powerhouse of Africa has been confirmed in the first MasterCard Emerging Markets Index, which places it at 11 out of 65 emerging market cities.

JOHANNESBURG has emerged as the 11th most important city among emerging market countries, in a new study done by MasterCard. Cape Town and Durban were placed 33rd and 37th, respectively.

"South Africa's status as an emerging regional economic powerhouse was confirmed today by the findings of the first MasterCard Worldwide Centres of Commerce™: Emerging Markets Index," reads a press statement from MasterCard. The results were presented at a breakfast at the Westcliff Hotel on Wednesday, 19 November.

Other African countries on the list are Tunis, in Tunisia at 40th; Cairo, in Egypt at 44th; Casablanca, in Morocco at 53rd; Nairobi, in Kenya at 63rd; and Dakar, in Senegal at 65th position. "The index provides valuable insights into the 65 leading cities driving growth within more than 30 emerging markets," says MasterCard.

Top of the table were two Chinese cities: Shanghai and Beijing. Third was Budapest, in Hungary; next was Kuala Lumpur, in Malaysia; 5th was Santiago, in Chile; followed by Guangzhou, in China; and Mexico City, in Mexico; 8th was Warsaw, in Poland; and then Bangkok, in Thailand; and Shenzhen, in China. In all, China had eight cities placed in the top 20.

Mayoral committee member for community development, Nandi Mayathula-Khoza, opened the morning's presentation.

Stable environment
"Johannesburg is indeed honoured to be named so high up on the list," she said. "We regard it as due recognition of the efforts of the city over the past decade to create a stable environment that can attract business, investment and trade both from inside South Africa and from abroad."

She spoke of the demands of "rapid social and economic transformation" from an apartheid city to an inclusive city. Much had been achieved, with the city this year showing a 6,4 percent growth rate over the past year.

"Within this environment, Johannesburg aims to develop the city's economy as the key economic hub on the continent, and a national economic growth leader by ensuring sustainable shared growth that benefits all."

The City's transport plans, like Rea Vaya, with its connections to the Gautrain and Metrorail, would measurably improve life for its citizens, as well as boost the economic growth of Johannesburg. Preparations for the 2010 World Cup were also a focused injection of capital and infrastructure into the city.

"Given current developments in the city, we are confident that Johannesburg will, in future years, rise in the index as a number of projects that are currently under way become fully operational."

Global importance
The fact that three South African cities appear on the index indicates "the African continent's growing importance in the global economy", reads the report.

"Given the current economic climate, MasterCard is focused on providing valuable insights that assist our customers in identifying new market opportunities for the future. The Emerging Markets Index is key to that commitment," said Anthony West, the general manager of MasterCard Africa. "By evaluating 65 emerging market cities and their increasingly important roles in global commerce, the index offers companies a roadmap for where commerce is headed next."

The Emerging Markets Index is an offshoot of the MasterCard Worldwide Centres of Commerce, which is a larger effort to understand the role of cities in the global economy.

The index was developed by a panel of nine independent experts from the fields of economics, sociology and urban studies from top academic and research institutions around the world.

Cities are leading indicators
Cities are generally considered to be leading indicators for national economies and global economic trends, particularly growth potential.

Economist Mike Schussler, who presented a breakdown of the study, said that worldwide there had been a big move to cities over the last 200 years, which now averaged some six million people. This density of population brought with it economic benefits, economic reach and an impact at the global, regional and national level. "Cities rule the world. The power lies in the cities."

Schussler said that developing nations now constituted 40 percent of the world's 50 largest economies, and more than 50 percent of the 50 fastest growing economies. China, with 15 cities included in the ranking, outshone the other 32 countries covered by the index.

On the other hand, India, with eight cities included in the index, dominated South Asia, while Brazil had five of its cities included in the index, making it the dominant country in Latin America. Russia, with four cities listed, dominated emerging Europe. South Africa had three of its cities included, underscoring its regional dominance, said Schussler.

Emerging markets were growing faster than developed world markets; and the richest place in Africa was Gauteng. "This means it is a very big magnet to drawing people here. It is an island of wealth in a sea of poverty."

Eight dimensions
The study measured countries' performance on eight emerging market dimensions:

1 Economic and commercial environment
Joburg, Cape Town and Durban were scored equally in fifth position on this measurement, which computes the time and costs involved in building a standard warehouse, registering a property, and exporting and importing cargo. Corruption and foreign bond ratings are included in this dimension. The three top cities were Santiago, Kuala Lumpur and Budapest.

2 Economic growth and development
This measurement is made on the basis of a number of factors: gross domestic product (GDP) growth; GDP per capita; exchange rate volatility; inflation rate; foreign direct investment inward; direct investment abroad; exports of goods and services; total trade of goods and services; urban population growth rate; and city/metropolis population as a percentage of total population. Five Chinese cities took the top five positions. South African cities scored badly on this measure, with Joburg coming in at 59th, Cape Town at 62nd and Durban at 64th.

3 Business environment
This dimension was judged the most significant by the research panel, with Cape Town, Durban and Joburg being placed together in first position. The criteria here are shareholder protection laws and corporate tax burdens.

4 Financial services environment
There are six indicators on this measurement: total value of equities trading; total value of bond trading; total number of derivative contracts; total number of commodities contracts; financial services network; and measurements of banking services and currency exchange regulations. Joburg, which reported the highest total bond-trading value, was placed third in this category, behind Mumbai and Shanghai. Cape Town was listed 39th and Durban 50th.

5 Commercial connectivity
This dimension measures the connectivity of a city to other world and regional commercial centres by air; airline passenger volumes; the presence of foreign consulates and embassies, and international hotels and convention facilities; and international trade. Johannesburg was placed 18th, Cape Town was 48th, and Durban 59th. Top of the list was Shanghai, Bangkok and Beijing.

6 Education and IT connectivity
Chinese cities scored high on this measurement, with Joburg slipping to 56th position, behind Cape Town at 51st and Durban at 55th. This dimension measures the intensity of education activities, as well as national levels of internet and telecommunications connectivity. Cities low on the scale were affected by a lack of medical schools, a low number of internet users, and low numbers of broadband subscribers.

7 Quality of urban life
The criteria of measurement on this dimension are the limitations on personal freedom and media and censorship; medical and health considerations; public services and transport; and recreation and culture, in addition to climate; mortality; and the presence of world heritage sites. Latin American and Eastern European cities were the top performers here. South African cities were hampered by the infant mortality rate and life expectancy at birth indicators, with Cape Town coming in at 10th position, Durban at 12th, and Joburg at 15th. The three cities did "extremely well" on media freedom, medical and health conditions, recreation and culture, and climate indicators.

8 Risk and security
Personal freedom and "personal physical city" are the criteria by which this dimension is measured. Budapest and Warsaw were the top two performers, with Cape Town falling into 5th position, Durban at 6th and Joburg at 11th position. While the South African cities scored highly on the democracy index, with travel warnings and a record of natural disasters indicators, they didn't score well on crime and law enforcement indicators.

Commercial exchanges
Schussler said that the JSE was the 22nd most-traded stock exchange in the world, and the biggest stock exchange in Africa. It would, therefore, be a good idea to get other African countries to list their companies on the JSE. In the same vein, Joburg had a huge fresh produce market, and was a major exporter of metals, so setting up commercial exchanges in produce and metals would be a great boost to the market.

"Joburg could make the fresh produce market prices electronic and encourage more commodity trading."

However, he expressed concern about the high cost of internet and telephone services, including downtimes. The cost of importing and exporting was also high, with high transport costs like constraints in the harbours, customs delays, rail and traffic congestion adding to business costs.

His biggest concern was education - he indicated that although we spent 5,4 percent of GDP on education, above the world average of 4,7 percent, we still had a lot of pupils dropping out of school between grades 10 and 12.

"Ghana and Botswana beat us on education. We don't need more money; we need a better system."

Finally, the study refers to the rapid rise of influence of the BRIC nations - Brazil, Russia, India and China - and asks whether South Africa is "a new BRIC in the making".

"South Africa is clearly on the move and worth watching. South African cities serve as important gateways to other African markets and will grow in value as Africa becomes more open to Western companies and products."

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