ONE of the five pillars of the Inner City Urban Renewal Strategy is "Support economic sectors". I guess if you wanted to expand the heading it would read "Identify and support economic sectors". So why is this part of the strategy?
Well, as Keith Beavon points out in Johannesburg – The Making and Shaping of the City: "In general the fortunes and prospects of the city have waxed and waned on many occasions since its establishment as a mining camp in September 1886.
"Although its economic base was firmly linked to the gold deposits and mines in its immediate and near-vicinity for the best part of almost 90 years, Johannesburg today is a post industrial city, with almost 60 percent of its economy dominated by the service sector."
The fact is that although the city was founded on gold, the yellow metal is not what makes it hum anymore. By the end of the next decade, probably all visible traces of mining as we have known them – the mine dumps on our southern edge – will be gone. So what are the current and future economic forces that are at play in the city and the inner city, the area that encompassed the original mining camp, later the mining town, in particular?
In 2001 the percentage of people employed in the major economic sectors in the metropolitan city as a whole were:
- Wholesale and retail trade – 18,6 percent;
- Finance, insurance and business – 18,1 percent;
- Community and social services – 17 percent;
- Manufacturing – 12 percent;
- Construction – 5,9 percent; and
- Transport and communications – 5,6 percent.
Cross-border shopping
Start to unpack these further to determine the inner city component and one finds some interesting sub-sectors, such as design and fashion-related, jewellery manufacturing, healthcare, education and, in the wholesale and retail trade, as well as in tourism, transportation and accommodation, a sub-sector that we call cross-border shopping.
The City council's tourism and marketing department identified this sector some years ago and initiated a number of role-player and stakeholder meetings, as well as some basic research. As a result of internal changes in council, the focus on the sector was lost and re-initiated last year through a joint venture between two private sector consultants – Fanaroff Associates and ourselves, Urban Inc.
Our joint initiative received a major boost when the ComMark Trust became interested in the sector.
I have mentioned the ComMark Trust in previous Citichats in relation to research into accelerating growth in the tourism sector. It is an independent trust dedicated to reducing poverty in southern Africa. It aims to enhance the operation of a limited number of high-growth sectors that have strong pro-poor growth characteristics and to maximise the benefits that derive from this growth for poor people.
ComMark does this by dealing with the regulatory, policy, productivity and business service constraints in these sectors to make them work more inclusively and effectively for poor people – whether as workers, entrepreneurs or consumers.
Cross-border shopping suffers from a number of constraints, making it an ideal sector for ComMark's focus.
But first, some information about the sector itself: from research undertaken in 2003, African shoppers, namely those from Africa outside South Africa's borders, were spending an average of about R9-billion a year in South Africa. Of this amount, R6-billion was spent by middle to upper segment shoppers, namely by people who arrived in South Africa by air.
About 80 percent of this amount is spent in Johannesburg. There seems to be general agreement on the total number of African visitors to South Africa annually, at close to 4,5 million for 2002. Of this number, it was estimated that about 2,3 million stay in Johannesburg. The cross-border shopping sector probably accounts for one million visits.
Where do these visitors come from? Zimbabwe probably tops the list, closely followed by Mozambique and then substantial numbers from Swaziland, Botswana, Namibia and Lesotho and smaller numbers from Angola, Cameroon, Congo, Kenya, Malawi, Namibia, Nigeria and Zambia.
How do they come? The lower segment shoppers generally travel by rail, the middle segment by bus or taxi and the high segment by air.
Who are the shoppers? Generally they are the owners and operators of businesses varying from formal retail to hawkers.
Where do they shop? They shop in the centre city, Newtown, Fordsburg, Crown Mines, Woodmead, Benrose, Sandton, Eastgate.
What do they buy? The main items bought are clothes and apparel, food, personal care products, self-medication products, household goods and hardware.
City economy
Clearly from the above, this is an important contributor to the city's economy, but very little has been done historically to protect and nurture the sector. It has not been recognised previously as a major sector of importance to Joburg's economy except by the stores and other service providers who service it. We need to retain and ultimately increase the current market; extend the length of stay of the shoppers and make their stay productive and pleasant and encourage them to participate in a wider range of activities in the city so that we boost our economy.
This cannot be dealt with solely by the council but needs strong support from the private sector.
From our research it was clearly established that the sector suffers from a variety of threats. These include the safety and security of the shoppers while they are here – actual and perceived; a lack of appropriately priced accommodation and of storage facilities; poor transport to and from the city but particularly within the city; problems encountered with customs, visas, VAT and excise; a lack of reliable information for the shoppers; and, sadly, the South African syndrome of xenophobia.
We organised a role-player and stakeholder's workshop towards the latter part of last year. The objective was to establish the immediate needs of the sector, which emerged from the workshop as a representative body, information, safety and security, facilitating VAT refunds, facilitating good quality but low-cost accommodation, the provision of a viable banking and credit solution for shoppers, storage and dealing with transport constraints.
Following the workshop, a section 21 company, the Joburg Cross-Border Shopping Association was registered – with support from ComMark – and an approach was made to the council to determine where it could assist in meeting the needs expressed and what issues it was contemplating in the future that would further positively affect these. Two immediate interventions were highlighted and activated by the council through its Johannesburg Tourism Company, both relating to the supply of information.
The first is the establishment of a Visitor Centre at Park Station aimed primarily at disseminating relevant information to shoppers, and the second is the development of a "cross-border shopping map" of Johannesburg highlighting key shopping hubs and a safe route to get to them. Both interventions are well advanced and will come on stream shortly.
Members of the Joburg Cross-Border Shopping Association will have access to these facilities, which will be valuable marketing tools for organisations wanting to tap into the cross-border shopping sector.
Cross-Border Retail Distribution System
Other council projects include an investigation into the feasibility of a Cross-Border Retail Distribution System and the development of a Transportation Hub for regional travel in the Park Station-Joubert Park area.
This latter initiative, known as the International Transport and Shopping Centre comes within the City's 2030 vision of providing "a safe and efficient transportation system, with a public transport focus, that will support a world-class city; connecting businesses, people and places in a sustainable and cost effective manner and through this, improve the standard of living and quality of life of all the city's inhabitants and the overall competitiveness and growth of the city's economy".
A second workshop held within the past fortnight, hosted by the Gauteng Tourism Authority, confirmed strong support for the section 21 company and concluded with the appointment of an interim board and funding for the entity as well as clear support for the information initiatives that have been activated.
It is really gratifying that this project has brought about a strong, single focus by public and private sectors on one of the Inner City Urban Renewal Strategy's focuses, supporting economic sectors. From the public sector, the City's economic development unit, through its Sector Support Programme and tourism department, has and is playing strategic roles, while the department of transportation planning and management's Transportation Hub plan is critical.
The Johannesburg Development Agency is involved in the public environment issues that the Transport Hub will require. The Johannesburg Tourism Company and the Gauteng Tourism Authority have strong interests, the former providing the much-needed Visitor's Centre and special map.
The metro police will have to become involved, as well as South African Revenue Services, Customs, and so forth.
On the private sector side, the main role-players are the wholesale and retail outlets and the transportation and accommodation sectors – now all co-ordinated through a representative section 21 body.
ComMark Trust, through its role as development facilitator, has and will be working in partnership with the relevant stakeholders from private and public sectors to accelerate the changes needed and to overcome barriers to pro-poor growth through market-orientated activities. Its vision for this initiative is to accelerate the growth of cross-border retail over the next five years, adding at least R2-billion to Joburg's economy by increasing the rate of growth of numbers of visitors a year from 3 percent to 4,5 percent, and increasing the average spend per visitor by 5 percent to 10 percent within five years.
What all of this will lead to is a substantial boost to investment and job creation, which is what supporting economic sectors is all about.
Dubai
Much of the economy of places like Hong Kong, Singapore, Dubai and, increasingly in the African sub-continent, Nigeria, centres on just this kind of trade. Hong Kong attracted 21,8 million visitors in 2005, Singapore attracted just short of 9 million visitors last yea – not bad for a city-state whose population is only 4,4 million. Nigeria has developed a large free-trade zone attracting many African shoppers. However, it also suffers from major negative perceptions.
But it is Dubai that we need to have in our sights as a model for the development of this sector. Like Hong Kong and Singapore, it is a tiny country or city-state, 3 885 square kilometres in size, with a population of only 1,5 million people – of whom 80 percent are expatriates. Dubai now has about 300 hotels, including the world's only six-star hotel, the Burj al Arab, 30 shopping malls and gets more than 5 million foreign visitors a year.
This is set to grow to 40 million a year by 2015. The annual growth rate in visitors to Dubai is between 10 percent and 15 percent. Its revenues from tourism reached the equivalent of 20 percent of gross domestic product by 2000.
Dubai has experienced extraordinary economic growth. More then any other place in the Middle East it has benefited from instability in other countries by creating a stable society that is welcoming to all nationalities and tolerant of their cultural norms. The government of Dubai is committed to liberal, free market policies and to the creation of a business environment conducive to commercial activity.
This has resulted in Dubai becoming a hub for a number of free zone areas offering investors the options of setting up business in a secure and hassle-free environment. There are at least 15 free zone areas in Dubai, including Dubai Internet City, Media City, Knowledge Village, Textile City and International Financial Centre.
If Dubai, which once was a sleepy fishing village, can transform itself into the business centre of the Middle East, why can't Joburg do that for southern Africa? Jobai – it has a ring to it.
Cheers, Neil |
