“ Transformation and development towards a fully inclusive society and economy in the City of Johannesburg , South Africa ”

This paper analyzes the state of economic growth and development in the City of Johannesburg (COJ) South Africa as by the year 2016 and presents a case for transformation and development of the City towards a fully inclusive economy and society. The research reveals that faster and sustainable economic growth in addition to proactive pro-equity policies are a sine qua non for inclusive growth and participation in the City, where the triple challenges of poverty, inequality and unemployment persist more than 20 years into the democratic dispensation. During the last 17 years the City economy has grown at almost the same pace as the national South African economy with a trend reflective of major world economic events. Going forward, the South African economy is projected to grow at less 2% annually in the next 3 years. In terms of the City, the prognosis is that the City will either continue to trace the national economic growth rate or decline from 2% in 2016 to 1% in 2018. In order to achieve the objectives and goals of the Johannesburg 2040 Growth and Development Strategy in the long term and the City Integrated Development Plan in the medium term, the City leadership and administration will need to begin by not only addressing factors that inhibit economic efficiency including crime and corruption, but also the provision of a critical pipeline of skills required by industry in order to attract local and international investment. The increase in investment is expected to broaden the revenue base and to strengthen the financial capacity of the City to roll out services to the previously disadvantaged communities so as to bring them into the mainstream of economic empowerment and social transformation.


Introduction
Cities are engines of national and global growth.Urban areas account for half the world's population, but generate around 80% of global Gross Domestic Product (GDP) (Floater, 2014).According to the McKinsey's cities report (2012), cities have been the world's economic engines for centuries, attracting skilled workers and productive businesses and benefitting from economies of scale.Urbanization and per capita GDP tend to move in close synch, as countries develop, but what is different about today's wave of mass urbanization is its unprecedented speed and scale.The increasing size and power of cities in emerging markets have tangible and dramatic economic benefits that translate into rising incomes.
It is estimated that 80 percent of South Africa's population will be living in cities by 2050.The challenge for the metropolitan councils like the City of Johannesburg during this period of time is going to be sustainable transformation to bring about inclusive economic participation for all citizens through skills development, increased productivity and strong employment equity programmes in order to ensure broad based financial freedom.
Paul Kibuuka, 2017.Paul Kibuuka, Associate Professor at University of South Africa (UNISA), South Africa.This is an Open Access article, distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International license, which permits re-use, distribution, and reproduction, provided the materials aren't used for commercial purposes and the original work is properly cited.Therefore, national, provincial and local governments, as well as businesses need to manage the consumption and investment boom effectively, because the urban planning and infrastructure investment choices made today will determine how well cities are prepared for sustained growth and equitable distribution of resources when the expansive urbanization wave passes.

Theoretical model for inclusive economic growth
Development economics is witnessing a paradigm shift from Pro Poor Growth to inclusive growth.A typical theoretical model of inclusive growth in a given region, as reflected in Figure 1, exhibits 8 key drivers.First and foremost, faster and sustainable economic growth is a pre requisite for inclusive growth and participation.Perhaps this best explains why the emerging economies like Brazil, China and India focused more on accelerated economic growth in the last couple of decades.Economic growth results in increased revenues for government in order to provide basic socioeconomic amenities in the form of food for all, health for all, education for all, electricity for all, access to all weather-good roads and safe drinking water.Government at all spheres should achieve administrative efficiency and should guarantee gender and employment equity so that the trickle-down effect of the growth will actually materialize.Good governance, gender and employment equity will enhance the human capabilities.Followed by economic growth, productive employment is the key driver of inclusive economic growth, since jobless growth is as dangerous as stagnation.Productive     5 provide an indication of the performance against the City's commitment and journey towards implementing this goal.This structure replicates the South African national economic structure.

COJ labor market. 2.3.1. Employment trends in COJ.
Data for the year 2014 indicate that the biggest formal employment sectors in the economy of the City of Johannesburg are finance, followed by trade, community services, manufacturing and households amongst others.Total formal employment in the 9 broad economic sectors stood at 1 734 358 in 2014.The growth in employment (2.8%) is not adequate to meet the NDP target of 5.4% per annum.According to the World Economic Forum Global Competitiveness Report (2016) rankings, for South Africa, worrisome are health (128th) and the quality of education (120th), where higher secondary enrollment rates are projected not be sufficient to create the skills needed for a competitive economy.
As reflected in Figure 6, manufacturing in the City of Johannesburg declined from the second largest employer in 1996 to the fourth in 2014.The sector levels of employment slowed down from 1996 year on year stabilizing in 2013 and 2014.Finance is the largest employer with over 500 000 people in 2014.Trade is the second largest employer followed by community services.It is evident from the graph that community services have experienced steep growth since 1997 overtaking manufacturing in 2001, significantly narrowing the gap and threatening to overtake trade in 2014.Based on the analysis conducted during this study, it emerges that the total primary sector contribution to employment in the City of Johannesburg is small and shrinking in both actual and relative terms.The decline is equitable both in terms of mining and quarrying, as well as agriculture, forestry and fishing.Given the rate of population growth and high structural unemployment, faster economic growth alone will not be enough, the pattern of economic activity will have to support a higher aggregate rate of labor absorption than currently the case.This implies a multi-dimensional strategy, which targets the support, development and growth of the entire spectrum of business enterprise in the City ranging from the informal sector and micro enterprise to multi-national corporations.The aim should be to broaden economic participation and inclusivity in order to improve household incomes in the City with a view to increase consumption of both goods and services resulting in higher revenues and operating surplus for the metropolitan government to fund the delivery of social services.
Employment contribution by the secondary sector has increased in actual terms year on year, but exhibited a declining trend in relative terms.Construction has experienced a rise in job numbers mainly due to public sector driven infrastructure projects and labor intensive methods.In relative terms, manufacturing contribution to employment has declined due to higher input costs, constrained demand and increased global competition.
As a result, the City Economic Development Strategy (2015) expresses the need to stimulate economic activity and progressively empower the poor to participate in the economy.In this regard the economic strategy has targeted a number of practical objectives: positioning the City as a regional commercial hub for Southern Africa: attracting and retaining enterprise investment in the City as a necessary condition for economic development and growth: reclaiming and revitalising low or non-revenue generating parts of the city such as vacant land, underperforming industrial land and areas of the inner city subject to decay; pursuing a 'return on investment' approach to City capital investments, meaning greater alignment of City infrastructure development and capital expenditure programs with economic development thrusts; promoting development of sectors and City services that will lead to productivity improvements such as ICT and transport logistics networks, thus, making the City more attractive as a business location; developing small to medium sized enterprises; prioritizing provision of economically empowering infrastructure such as ICT hotspots to poor communities with latent economic potential; promoting incremental advancement along a viable economic development route to an inclusive economy.
In terms of the tertiary sector, all subsectors have experienced job growth with finance, trade and community services being the largest subsectors.Trade, in particular, comes number 3 in terms of contribution two GVA, but leaps to number 2 after finance in terms of providing the largest number of jobs.

Unemployment in the City of Johannesburg.
The not economically active population of the City of Johannesburg is the main contributing factor to the drop in the percentage of those unemployed.Figure 7 presents the unemployment rates of the eight South African metros.Five of the eight metros manifested out right declining trends in unemployment rates during the four quarters of 2015.The rest of the three metros including the City of Johannesburg reported increasing trends in the unemployment rates of their populations.Nelson Mandela Bay reported the highest increase in unemployment rate followed by Ekurhuleni trailed in third place by the City of Johannesburg.The City of Johannesburg has the third highest proportion of the unemployed amongst the eight metros, but the second lowest percentage of the discouraged work seekers after the City of Cape Town.This statistic implies that the growth in young people entering the world of work is not yet being absorbed by the labor force.Second, local improvements will not only advance the standing of one location as compared to another within South Africa, but also they can make a significant difference on the global scale, as illustrated by the distance to frontier (DTF) score.This score shows the distance between a city's performance and the "frontier," defined as the best performance globally across 189 economies.12.
The City being a net exporter makes it highly vulnerable to both the monetary and fiscal policy of the country.For instance, high inflation increases input costs making the City export products more expensive and, hence, less competitive in international markets.While a reasonably weak rand makes the City export products cheaper, therefore, more affordable and attractive to the City trading partners.
In this regard, it is important for the City to assess and address the factors that led to the decline in export volumes in the year 2014 and ensure a net trade surplus going forward.Two fundamental, but practical outcomes were proposed for the City's economic development strategy before and I believe are still relevant for the future: faster growth of the city economy, leading to higher employment, output and incomes, higher city revenues in order to fund ongoing city service delivery and social and economic transformation and development initiatives: economic empowerment of the poor and disadvantaged, which supports further transformation towards a fully inclusive society and economy.Given the rate of population growth and high structural unemployment, faster economic growth alone will not be enough, the pattern of economic activity will have to support a higher aggregate rate of labor absorption than currently the case.This implies a multi-dimensional strategy, which targets the support, development and growth of the entire spectrum of business enterprise in the city ranging from the informal sector and micro enterprise to multi-national corporations.The strategy needs to stimulate economic activity and progressively empower the poor to participate in the economy.
The research also touched on the fragility of economic recovery and geopolitical turbulence, the analysis demonstrated the importance of competitiveness, understood as the drivers of higher productivity in supporting growth and economic resilience.The historic proportions of the economic crisis and the relative performance of economies have shed light on how structural weaknesses can exacerbate shocks and make an economy illequipped to respond.The crisis is a forceful reminder that competitiveness matters: regions and countries that were more competitive at the onset of the crisis are those that have weathered the crisis much better.In this context, productivity-enhancing reforms become a critical way forward.
In this regard, the city should consider a strategy that affords the council opportunity to implement and strengthen a mix of developmental objectives that are key for factor driven economies: institutions, infrastructure, microeconomic environment, health and primary education; Efficiency driven economies: higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness and market size; innovation driven economies: business sophistication and innovation.As indicated earlier on, the aim should be to broaden economic participation and inclusivity in order to improve household incomes in the city with a view to increase consumption of both goods and services resulting in higher revenues and operating surplus for the metropolitan government to fund the delivery of social services.

Conclusion
The socio-economic structure of the City of Johannesburg has been and continues to be significantly unequal.The structure is a result of a dual economy characterized by a well-developed modern sector and a second economy each at different levels of development, technology and patterns of demand.These differentials have spelt social and economic exclusion for the majority of the residents of the City due to the lack of access to quality education, employment opportunities and a sustainable urban environment.The metropolitan council is faced with the daunting task of bridging the gap by creating conducive conditions for equitable growth through addressing both supply and demand side factors that are key to economic growth and redistribution.This will include amongst others rolling out social and economic infrastructure, skills and entrepreneurial development, building consumer and business confidence, attracting investment, providing employment opportunities and increasing municipal revenue thereby broadening economic participation and inclusivity.
Fig. 3 adapted from Gl sector gro rg 2030 Stra n the City w nications infra tion and with iggest proble f the City, ho er: crime and mand and lab that in the gs, the City w l investment there will b overty and un ct to econom
The total Gross Domestic Product of the City in 2014 amounted to R412, 1 billion in 2010 constant prices.The services sector now accounts for 78% of the City's economy.As indicated in the previous section, the main sectors of the City's economy are finance, community services, trade and transport.The City of Johannesburg is a two speed economy dominated by the tertiary sector.The second outcome of the Johannesburg 2040 Growth and Development Strategy commits the City to provide a resilient, owth of all econ HS (2015).

Table 1 .
Doing business in Johannesburg in comparison to other South African metros The City of Johannesburg has been a net exporter since 2004, with the trend beginning to reverse in 2014 after 10 years to record a small trade deficit, as reflected in Figure