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The city may be hit by the worldwide
recession in the short term, but the long-term outlook is positive, a business
breakfast has heard.
Joburg is the country's primary business city, says the mayoral committee member for finance and economic development, Parks Tau
JOHANNESBURG was 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."
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