Inequality and Economic Inclusion

Strengthening the Impacts of Economic Development Strategies on Urban Poverty

  • Year: 2008
  • Organisation: TIPS
  • Publication Author(s): Glen Robbins For Urban LandMark
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South Africa is continuing to urbanise, perhaps not as rapidly as some developing countries but certainly at a rate which has generated a considerable degree of policy anguish over its accompanying rising levels of urban poverty. The Presidency of the Republic of South Africa expressed concern that there is an apparent and emerging disconnect between the urban poor and other urban residents participating in networks of economic activity within these growing urban spaces. Statements from government sources describe circumstances in which many urban residents remain substantially marginalised from the engines of growth as are outlined in the National Spatial Development Framework (Presidency, 2007), and, as such, the intended poverty-reduction benefits have been minimal. Those who experience this marginalisation are said to be part of the “second economy”. While this paper will not engage directly with the “second economy” concept, it will seek to explore the scope of urban development programmes’ – primarily those originating within cities but including those originating in other spheres of government – contributions to urban poverty reduction in a meaningful manner. Although urban economic initiatives are the paper’s focus, it is the case that all urban programmes have an economic impact of some sort; that means that the discussion which follows will stray from the narrow confines of what are considered generally to be urban economic development programmes.

Since the start of the local government transition in the early 1990s, South African cities have been urged to find ways to respond to their economic circumstances. At that time, those circumstances were characterised generally by low levels of growth, high unemployment and deepening poverty (UNDP, 2005; Adelzadeh, 2007). For some years now, governing structures of major urban centres have committed to economic development interventions within either their Integrated Development Plans (IDPs) or their standalone economic development strategies (Nel and Binns, 2003). At a national level, policy signals, such as those related to the National Spatial Development Plan (NSDP), have also acknowledged increasingly the centrality of a number of urban centres to the country’s economic prospects, and have suggested an appropriate level of focus on these centres from national and provincial governmental departments.

To a large extent, these processes have centred on the local state’s role in mobilising urban actors to collaborate in interventions supporting economic growth (Nel and Rogerson, 2005). Two objectives motivated that. In the first instance, there is a widespread belief that this growth has the potential to generate employment and incomes which will benefit increasingly a growing number of households in terms of direct opportunity. Such thinking is partly derived from policy signals from the national government via its frameworks such as the Growth, Employment and Redistribution Strategy or GEAR (Government of South Africa, 1996). In the second instance, a case was made that a growing local economy will support a more robust revenue flow into local government’s coffers and, therefore, would secure resources for upgraded urban living environments. Many of those endeavours were accompanied by processes with varying levels of redistributive intent, such as those encompassing small business development and broad based black economic empowerment (BBBEE). A variety of assessments of such endeavours have suggested, despite often laudable goals, that efforts were often been erratic, fragmented and lacking in sustainability (Nel and Rogerson, 2005; Rogerson, 2006). Furthermore, many urban residents living in the former townships or informal settlements have not witnessed the gains accruing from such processes; the rising levels of urban inequality suggest that the so-called “pro-poor” orientation of such agendas has been lacking and underemphasised (UNDP, 2005).

National endeavours, as well as particular provincial ones, to boost local economic circumstances have, as of yet, not demonstrated a significant degree of success in supporting directly and at scale the urban poor’s livelihood prospects. Initiatives such as Spatial Development Initiatives and Blue IQ, among others, have lacked an informed urban perspective and while, in some cases, they have responded to critical investment imperatives, they have also left the bulk of the urban poor little better off in immediate terms than might have been suggested in some of their motivating documentation.

In response to the persistence of high levels of urban poverty and the apparent shortcomings in the policy and delivery frameworks guiding different spheres of the state, this paper argues that the urban agenda in South Africa needs to give particular attention to:

  • National urban economic development funding (with both capital and operating provisions); 
  • Public works and poverty-linked cash transfers; 
  • Public space investment and management; and 
  • Decentralising nationally-driven economic development initiatives.

This paper’s discussion opens with some key conceptual issues and follows that with a short discussion of the experience of cities in other regions of the world. After that, the particular experiences of South African major cities are highlighted, both in relation to their own commitments and how they might have been impacted by initiatives of other spheres of government. In the conclusion, some possible fields for policy attention in South Africa are identified.