According to a new report, the smaller cities that link South Africa’s rural and metropolitan centres face serious economic problems.
Cities such as Polokwane, Rustenburg, Emalahleni and Mahikeng are home to 15% of South Africa’s population. Responsible for nearly a third of South Africa’s gross domestic product, they also provide schools, hospitals, sport facilities, banks and other services to rural homes beyond their demarcated boundaries. Up to one in every five people in South Africa depends on these services.
But according to a new South African Cities Network (SACN) report released on 26 July, these intermediate cities are on a precarious economic footing.
South Africa’s economic growth in the wake of the 2008 financial crisis conceals a more worrying story of the sluggish economies in the country’s intermediate cities. While the national economy has grown at slightly over 1.5% since 2011, and those of the major cities at 2%, growth in intermediate cities has been a paltry 1%.
According to the SACN, this is partly because intermediate economies are “vulnerable to policy and programme decisions taken by national government”.
Mangaung is one example. The city’s textile industry was dealt a crippling blow in the 1990s when the national government opened South African markets to global competition and Transnet’s decision to outsource the manufacture of rolling stock offshore devastated a well-established manufacturing capacity in the Free State capital.
No country for old economies
The economies in intermediate cities are often also overly dependent on single sectors, such as manufacturing in Emfuleni, or mining in Sol Plaatje and Rustenburg.
“Such mono-economic links render these places more vulnerable to global economic crises than metropolitan areas, which generally have multiple global links,” the report says.
In the case of Rustenburg, the centre of the country’s platinum industry, the economy is overwhelmingly dependent on a platinum price determined by global market forces beyond the control of the municipality.
The same commitment to reduced carbon dioxide emissions, which saw Rustenburg rise so rapidly as one of the capitals of global mining, is now likely to trigger its decline. While reducing emissions from motor vehicles in the 1990s relied on catalytic converters made from platinum, future reductions will rely on electric cars.
For the better part of two decades after South Africa’s transition to formal democracy, Rustenburg boasted one of the country’s fastest-growing economies. Since 2011, however, it has shrunk by 1.6% every year.
Capital flight and ‘planned failure’
While layoffs on the platinum belt have been comparatively low, they appear inevitable. More than 12,000 jobs are in the process of being shed at mines previously owned by Lonmin (the company was acquired by Sibanye Stillwater on 10 June, after years of losses).
Examples of the devastation wreaked on intermediate cities by the flight of mining capital in South Africa are not difficult to find.
Around 150,000 migrant workers lost their jobs in the Matjhabeng district as the Free State goldfields collapsed, says Lochner Marais, professor of development studies at the University of the Free State, who is also the report’s principal investigator.
The De Beers Mining Company left Sol Plaatje shattered when it moved its head offices out of the city in the mid-1990s and sold all mining rights there in 2015. Were it not for the establishment of Sol Plaatje as the Northern Cape capital and the opening of the Sol Plaatje University, the city would be little more than “a dying mining town”.
One of the SACN report’s more alarming findings is the delusional, outdated or plain nonexistent municipal economic plans in intermediate cities.
These plans often include hypermodern renderings of developments that would look more in place in Dubai than in Drakenstein, and “consist largely of wish lists born out of grandiose thinking by consultants, local economic development officials or politicians”.
Plans regularly become obsolete, and out of touch with economic realities facing intermediate cities. The Economic Development Directorate in Rustenburg’s local economic development “Master Plan” dates back to 2006, and envisages 5% annual growth, despite the fact that the city’s economy has been in recession for half a decade now.
Now 15 years old, Mangaung’s economic strategy is more outdated than Rustenburg’s. And no economic development strategy plan exists at all in Sol Plaatje.
This article was first published by New Frame.