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Spatial economic development Print E-mail
Identifying, planning and facilitating interventions in marginalised, declining and priority economic areas such as Soweto

THE spatial economic development unit is mainly responsible for the identification, planning and facilitation of interventions in marginalised, declining and priority economic areas in the city.

The key functional areas are:

  • Contact:
    Makhosazana Msezana
    Director: Spatial economic development
    Tel: 011 358 3869
    Fax: 011 358 3444
    Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it
    Identification of economic development needs, trends and levers within the city – for example, regional economic development planning;
  • Designing and promoting economic development area plans for prioritised and marginal areas – for example, Soweto, Cosmo City, deep south;
  • Stimulation of investment in declining nodes within the city – for example, central business districts;
  • Implementation of economic development interventions and incentives in priority areas;
  • Leveraging economic benefits from special initiatives in designated areas – for example, Urban Development Zone, Gautrain, 2010 FIFA World Cup™;
  • Development of nodal economic plans in areas such as Gautrain nodes and economic precinct plans; and
  • Managing the implementation of the City’s Better Buildings Programme,, which is aimed at refurbishing old, dilapidated buildings in the inner city and converting them into residential properties.

    In the news:

Easing the brakes on entrepreneurs

 

Siboniso Ndlovu
 
Under 18 years old and collateral – this reminds me of the 1990s song by the late singer, Aaliyah, Age Ain’t Nothing but a Number.

 

Unfortunately, in this context this means something different from Aaliyah’s track. When it comes to setting up a business in South Africa, age is more than just a number.

South Africa’s development finance institutions (DFIs) require that one has to reach the age of 18 to qualify for funding – institutions like Gauteng Enterprise Propeller, Khula Enterprise Finance and National Youth Development Agency.

Siboniso Ndlovu, assistant director: policy and programme integration, says policy needs to change so that younger entrepreneurs have access to funding.

Without a doubt, this tends to limit the ambition of the national government’s New Growth Plan to create a million jobs by 2020. To realise this jobs target by the deadline, remedial responses need to be put in place to reshape this policy principle of 18 years old.

Another policy requirement that exacerbates the low level of entrepreneurship among young South Africans, is the need for collateral. The development finance institutions and private banks insist that to get funding, the collateral requirement cannot be bridged.

One wonders where a person under the age of 18, or an impoverished unemployed person would be able to secure collateral. Where is a learner, dependent on social grants but with some entrepreneurial acumen, going to get collateral? Are we certain that by the time this pupil reaches 18, his or her entrepreneurial thinking will still be alive?

The New Growth Path clearly calls for each sector of the community to share the responsibility for reaching the jobs target. This does not exclude young potential entrepreneurs who can’t enter the business environment yet because of these limiting requirements.

Given these challenges, the City of Johannesburg, through its department of economic development, drew up the Young Entrepreneurship Policy and Strategy Framework in 2009. One of the strategic objectives of this policy is to increase the pool of sustainable new start-up business ventures by people under the age 18, thus propelling job creation.

At present, Johannesburg is holding a high school business plan competition. It creates a platform for the department to teach entrepreneurial thinking to participating learners through mentoring sessions. These aspiring young entrepreneurs will benefit from the support given after the competition, namely training, securing extra funding for the new ventures, and the registration of such new businesses.

The policy also calls for a long-term solution: to negotiate with the Department of Basic Education to include entrepreneurship in the school curriculum. Evidence tells us that the current education system mostly produces people who seek employment rather than employment creators. At school, chances currently are limited or non-existent of easily identifying and nurturing entrepreneurial acumen at school-going age.

Lastly, the White Paper on Local Government calls for all local authorities to always strive towards the creation of an enabling environment for economic development. The City of Johannesburg has responded with proposed long-term solutions or development finance institution mechanisms like Dirang Ba Bohle and Jozi Equity Fund, which are geared towards overcoming the challenges of being over 18 to get finance, and requiring collateral.

Joburg needs business licences

THE introduction of a broader business licensing framework in Johannesburg will bring with it many advantages, not least of which will better planning possibilities, says Bonolo Mahlaela from the policy and programme integration unit.

A case can be made for the introduction of a broader business licencing framework in the City of Joburg.

At present, not all businesses need licences to operate, which means the City does not have a complete database of economic activity within its boundaries.

Motivation
A business licence is a form of legal authorisation to operate a business. It gives a business owner the right to conduct entrepreneurial activities as set forth in the licence application. In most cases, a fee is charged to get a business licence.

The City of Johannesburg is investigating the feasibility of introducing an all-encompassing business licensing system because, at present, only a few sectors are regulated at City level. The City is left with little or no control over the non-regulated sectors.

There is no formal database of active businesses and related economic activities in Johannesburg, currently, and small businesses open simply by identifying a market and a location. They also close when they are deemed unprofitable.

Furthermore, if there are no environmental considerations associated with a business – which means they do not have to get business licences and/or certificates – they can operate without the municipality’s knowledge of their existence. This has a negative implication in that the City cannot plan properly for future economic growth or contraction.

Advantages of regulation
Licensing businesses as a requirement has several benefits:

• Appropriate regulation is important for economic development and job creation, by way of encouraging trade and investment, making an economy more competitive;
• It serves as an essential component of good governance;
• Business licensing protects consumers, workers, owners, investors, creditors and the environment;
• It can help control the functioning of certain industries and markets; and
• It can be used to gather information of business activities for a database, which will help the municipality with spatial planning, as well as help to preventmarket saturation and overtrading in a given region or industry.

Challenges
As withmany regulatory requirements, issuing business licences is not without its challenges, which can be seen in its advantages and disadvantages.

Many cities have complex business licensing and fee systems that are meant to control and collect revenue for the city. Business licensing can be a good instrument to influence and direct economic development, but it can simultaneously be an economic hindrance.

Business licensing can also been seen as a stumbling block towards the economic emancipation of small businesses. It can also push up the cost of doing business in a given city which, in turn, defeats the efforts of attracting foreign direct investment.

In South Africa, the regulatory and developmental roles of local government are defined by the Constitution and the law. Municipalities create and administer their own regulations –by-laws – within the parameters set down by the national or provincial government. Local government can also enforce regulations on behalf of those spheres.

Metropolitan and local municipalities are mandated to regulate business and provide licensing at various levels, depending on the nature of the business.However, the general competency of dealing with licensing lies with the Companies and Intellectual Property Commission (CIPC) at national level, leaving municipalities to deal with the operational licensing of businesses such as food sellers’ permits as well as health and safety certificates.

This in turn limits the scope of the metros to use the issuing of licences to influence any type of business development or economic development within their jurisdiction, because business licensing is only applied as an instrument to enforce a by-law at a municipal level.

Way forward
Legislation should only be used to intervene when necessary, and it should be used with caution. Regulatory solutions must be proportionate to the perceived problem and justify the compliance costs imposed. It is therefore worthwhile for the City to think about how it can make its regulatory framework more dynamic to match the dynamic nature of its sectors.

As the most lucrative metropolitan municipality in South Africa, Johannesburg has to have an advanced and comprehensive regulatory regime that responds sufficiently and efficiently to its key economic sectors. Its endeavours should avoid overregulation, and understand the costs and benefits associated with regulation. They should also ensure that regulation supports the government’s long-term development goals of reducing poverty and creating decent jobs for all its residents.

In aspiring to be a world-class African city, Johannesburg needs to constantly assess its legislative frameworks, including policies and by-laws, to create and sustain a conducive economic environment where business can thrive, and in the long-term to attract foreign direct investment.

It is equally critical that the department of economic development as a command centre for economic development, maintains strategic influence and some level of control over the type of business activity that shapes the city’s economy. 

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