Public invited to comment on draft Inclusive Economic Growth

As we face an unprecedented health crisis, lives and livelihoods are at risk. The COVID-19 pandemic has exacerbated pre-existing economic and social challenges facing Cape Town as well as South Africa as a whole. Our approach as a City to addressing these challenges must be to use the mechanisms within our control to address the immediate challenges brought about by the pandemic, while also addressing long term economic challenges. This must be balanced with the need to ensure health and safety precautions are maintained for as long as necessary. It is therefore within the context of this worsening economic and social crisis, and the need for meaningful partnerships between spheres of government, businesses, civil society and residents, that the City’s draft Inclusive Economic Growth Strategy (IEGS) will be available for public comment from tomorrow, Friday 14 August to 14 October 2020. Read more below:

The new draft Inclusive Economic Growth Strategy (IEGS) aims to provide a road map to a more inclusive Cape Town economy over the next five years, for both the formal and informal economy.

Accordingly, the City’s vision is that: ‘By coordinated action between all sectors of society and spheres of government, a business-friendly environment will be forged that will enable firms to grow and create jobs, while adapting to market changes and empowering individuals to be economically active and socially mobile. The City will ensure it plays its role in creating shared and greater prosperity.

‘The previous Economic Growth Strategy, which has been in place since 2013, allowed the City to take numerous steps to make Cape Town a more attractive place for economic activity. A dedicated Enterprise and Investment Department has been established with a mandate to attract investment and support commercial activity through sector and entrepreneurial support, and business retention and expansion,’ said the City’s Mayoral Committee Member for Economic Opportunities and Asset Management, Alderman James Vos.

The following has been achieved thus far:

• Development of the City’s Investment Incentive Policy to assist businesses in key sectors;
• Partnering with the Cape Town Air Access Programme for the addition of over 750 000 new inbound seats to the Cape Town International Airport;
• Partnering with Special Purpose Vehicles (SPVs) to facilitate investment worth R8 billion, resulting in the creation of 6 583 direct jobs;
• Partnering with SPVs to facilitate training for 2 127 beneficiaries in various sectors including the green economy, Information and Communication Technology (ICT) and Business Process Outsourcing (BPO);
• Broadening of the Expanded Public Works Programme (EPWP);
• Increased investment in broadband infrastructure for increased coverage
• The establishment of the Business Hub as one-stop shop serving small business in the city
• The implementation of the Development Application Management System (DAMS) which means that land use applications and building plan applications can be submitted online from anywhere in the world.

‘The City has also continued to maintain and expand its infrastructure offering, building on an excellent foundation of road, electricity and bulk service provision networks that seek to ensure connectivity for residents. Various other initiatives have been pursued with great success, resulting in Cape Town’s economy historically reflecting stronger growth rates than other metros.

‘However, the national and local economic landscapes have changed drastically since the previous strategy was approved, necessitating a new approach.

‘Cape Town is not immune to the economic crisis being felt across South Africa, characterised by declining economic growth, widespread unemployment, and inequality. While the COVID-19 pandemic and national lockdown has served only to exacerbate these pre-existing factors, our city’s recovery from the drought has shown our resilience in the face of a crisis, if we work together,’ said Alderman Vos.

The City has identified the following key, interrelated challenges within its mandate that must be addressed  in order to move towards a more viable, competitive and inclusive economy that provides for as many livelihoods as possible:

• Inefficiencies faced by firms;
• Lack of access to the economy;
• Skills deficiencies;
• Declining private investment;
• Inadequate public investment;
• Stagnant township economies;
• Comparatively small informal sector;
• Climate change and unsustainable, unequal resource use;
• Safety and security vulnerabilities;
• Inadequate levels of economic collaboration; and
• Loss of productivity due to ill health

‘Each of these challenges pre-dates the COVID-19 pandemic, but have been exacerbated by it to one degree or another. As such, while this strategy does seek to mitigate the severe, immediate impacts of the pandemic and lockdown on the local economy, it must be seen in the context of deeper, long-term issues that need to be addressed.

‘The conceptual framework underpinning this new proposed economic strategy places core City services at the heart of inclusive economic growth, to ensure that initiatives aimed at supporting sectors, firms, household or individual growth is meaningful and sustainable. The framework acknowledges the need for support of the labour market and for stimulation of investment through various channels, and notes that allocation of resources between these areas of intervention will change over time depending on context.

‘This strategy therefore aims to provide a road map to a more inclusive Cape Town economy over the next five years, for both the formal and informal economy,’ said Alderman Vos.

To realise the City’s vision (mentioned above), four key areas of intervention have been established:

1. Quality service provision

Stability and reliability of basic services is a governmental responsibility, particularly in the context of significant uncertainties about the future. The recent drought, energy shortages and global pandemic experienced in South Africa illustrate that nothing can be taken for granted, and it is incumbent on the City to take active steps to provide a foundation with as much certainty and predictability as possible for individuals and firms.

1. Business facilitation, retention and expansion

Interventions are needed at a firm, sector or area-specific level that address challenges faced in the expansion, retention and overall efficiency of individuals or firms already operating in Cape Town. Addressing these areas speaks to the competitiveness of Cape Town’s current local economy, and the need for the City to play a more strategic supporting role for economic stakeholders at every level.

1. Labour market support

This area of intervention speaks to the supply-side of the economy, specifically in the form of human capital. Firms of all sizes, particularly at the higher end of the skill spectrum, struggle to retain individuals with sought after skills, who are increasingly attracted to overseas markets. Replacing these individuals is problematic due to inadequate skills pipelines. On the lower end of the skill spectrum, many local job-seekers reportedly struggle to locate opportunities despite having suitable qualifications, resulting in further employment inefficiencies and inequalities.

1. Stimulating investment

Destination marketing is a key element that globally competitive cities of the world rely upon in order to attract investment and tourism to their region so as to enhance economic growth and job creation. It relies on successful and integrated place-making to create an authentic sense of a location’s character that people from all over the city, region and world can be drawn to. The IEGS proposes ways in which these elements can be enhanced while also showing how they fit together in presenting a holistic international offering. This is all the more important for Cape Town following the pandemic.

‘The economy is everyone’s business. In times of crisis, the disadvantaged feel the brunt, particularly women, the youth and the poor for whom unemployment is significantly worse than other demographics. This strategy is a proposal and will take input from all corners of the metro as well as national partners to make it responsive to the economic realities faced by our residents.

‘Remaining vigilant and working together to contain further outbreaks is one of the most important things we can do to enable economic recovery for as long as necessary.

‘I encourage residents, stakeholders, private sector to make their voice heard and to contribute to the development of our strategy and action plans.

‘The City has chosen to extend the public participation timeframe over two months to give as many people as possible the opportunity to engage with the contents,’ said Alderman Vos.

Visit the City’s Have Your Say page from Friday 14 August to view the draft Inclusive Economic Growth Strategy. Submissions can also be made on the Have Your Say page or via email to iegs@capetown.gov.za