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Gauteng’s metros are driving growth and investment

Gauteng is not just an important centre of economic activity, it is also an important launching pad for local and international businesses to enter the African market.

A regional overview of Gauteng

By John Young

Gauteng province covers just 1.4% of South Africa’s land mass but it produces about a third of South Africa’s gross domestic product (GDP), and a remarkable 10% of that of the African continent. Whereas mining used to account for Gauteng’s dominance of the regional economy, the province is now a leader in a wide range of other sectors: finance, manufacturing, commerce, IT and media among them.

The Bureau of Market Research (BMR) has shown that Gauteng accounts for 35% of total household consumption in South Africa.

The leading economic sectors are finance, real estate and business (21% of provincial GDP), manufacturing (16.5%), government services (16.3%) and wholesale, retail, motor trade and accommodation (12.8%). The so-called creative industries (including advertising and the film sector) employ upwards of 180 000 people and contribute more than
R3.3-billion to the provincial economy. The provincial government’s Economic Development Plan sees this sector as one of the key drivers of future growth.

In the provincial capital, Johannesburg, financial services and commerce predominate. The JSE, Africa’s largest stock exchange, is situated in the heart of Johannesburg’s business district, Sandton.

Tshwane (which includes Pretoria) is home to many government services and is the base of the automotive industry and many research institutions. The Ekurhuleni metropole has the largest concentration of manufacturing concerns, ranging from heavy to light industry, in the country. The western part of the province is concerned mainly with mining and agriculture, while the south has a combination of maize farming, tobacco production and the heavy industrial work associated with steel and iron-ore workings.

Gauteng is not just an important centre of economic activity, it is also an important launching pad for local and international businesses to enter the African market. The country’s biggest airport, OR Tambo International Airport, is at the core of the province’s logistical network. Other airports include Rand Airport (Germiston), Wonderboom (Pretoria) Lanseria and Grand Central (Midrand).

OR Tambo International Airport

The Ekurhuleni Metropolitan Municipality plans on building an “aerotropolis” in partnership with the provincial government and private investors. The intention is to link the airports of OR Tambo and Lanseria and expand logistics capabilities.

The Gauteng Division of the High Court of South Africa (which has seats in Pretoria and Johannesburg) is a superior court with general jurisdiction over the province. Johannesburg is also home to the Constitutional Court, South Africa’s highest court, and to a branch of the Labour Court and the Labour Appeal Court.

The province has several outstanding universities, and the majority of South Africa’s research takes place at well-regarded institutions such as the Council for Scientific and Industrial Research (CSIR), the South African Bureau of Standards (SABS), Mintek, the South African Nuclear Energy Corporation (NECSA), the Human Sciences Research Council (HSRC) and several sites where the work of the Agricultural Research Council (ARC) is done.

Geography

The province is located in the Highveld region of South Africa, approximately 1 700 metres above sea-level. It is a landlocked province, surrounded by four other provinces.

The Vaal River forms a natural border with the Free State, which lies south of Gauteng, while the North West province is located to the west, Limpopo to the north and Mpumalanga to the east. The geography of Gauteng includes low parallel ridges, mountain ranges and undulating hills.

A regional map of Gauteng Province

Johannesburg is the capital of the Gauteng province, while Pretoria is the administrative capital of South Africa. Other major urban areas include Roodepoort and Krugersdorp to the west of Johannesburg; and Germiston, Springs, Benoni and Brakpan to the east. Soweto, renowned as a focal point in the struggle against apartheid and home to more than two-million people, is situated south of Johannesburg.

Investment

Gauteng is a national leader in attracting foreign direct investment (FDI). In the period 2014-16, the province attracted R66-billion. The Gauteng Growth and Development Agency (GGDA) has a specialised subsidiary, the Gauteng Investment Centre, which acts as a “one-stop shop” for potential investors looking for advice and support.

Efforts are also being made to improve the regional economy by identifying blockages and shortcomings. Researchers from the universities of Johannesburg and Pretoria (through the Gordon Institute of Business Sciences) are examining employment rates, empowerment policies and the export value chain. At the same time, the Gauteng Innovation Hub is leading a process to bring innovation and research to the fore in economic policy-making and planning. Partners include the Council for Scientific and Industrial Research (CSIR), the University of the Witwatersrand and the Vaal University of Technology.

Gauteng City Region

Provincial planning is increasingly being done along “Gauteng City Region” lines, whereby the primacy of economies of the cities and towns of the province is acknowledged.

In June 2016, the Gauteng City Region Economic Indaba was attended by all the mayors of the region, the national Minister of Finance and was addressed the South African Deputy President. Gauteng Premier David Makhura gave notice of “how we can unlock, jump-start and reignite a sustainable and inclusive growth trajectory for key sectors of our provincial economy”.

Individually, the biggest Gauteng cities contribute to the national GDP as follows: Johannesburg (15%), Tshwane (9%) and Ekurhuleni (7%).

Development Corridors

At the indaba, the following development corridors of the City Region were identified, each with its own industries and comparative advantages:

  • City of Johannesburg, Central Development Corridor: provincial capital, finance, services, ICT and pharmaceutical industries, green and blue economy.
  • City of Ekurhuleni, Eastern Development Corridor: manufacturing, logistics and transport hub.
  • City of Tshwane, Northern Development Corridor: national administrative capital, automotive sector, research, development, innovation and knowledge-based economy, tourism, agri-processing.
  • West Rand District, Western Development Corridor: transitioning mining economy. A new diverse economy to be created around tourism (Maropeng World Heritage Site), agriculture and agri-processing, Lanseria Airport City, renewable energy industries.
  • Sedibeng District, Southern Development Corridor: steel industry in decline. A new economy to be based on entertainment and tourism (Vaal River City), logistics, agri-processing and urban agriculture.

Opportunities for the private sector were mentioned in connection with several aspects of the City Region indaba, not least of which was the necessity for infrastructure investment. Neither the central government nor provincial and local government has sufficient resources to cover what the provincial government has estimated is needed in the Gauteng province in the 15 years to 2030 – R1.3-trillion.

A 15-year Gauteng Infrastructure Master Plan has been adopted but it is hoped that multiple sources of funding will see the plan succeed in areas such as the provision of water, broadband connectivity, public transport, energy and the reshaping of cities to accommodate citizens in a better way than was the case under apartheid.

A World Bank report has shown that a 10% increase in infrastructure spending results in a 1% growth in GDP.

The City of Ekurhuleni – Eastern Development Corridor

City of Ekurhuleni

Ekurhuleni is putting considerable resources into infrastructure improvement. With a corridor-based masterplan, the aim is to promote industrial activity. The corridors (and focus areas) are:

  • Thami Mnyele: transport, BRT, M&T Development and Plumbago Industrial Park
  • OR Tambo Aerotropolis: creative sector, technology, research and development, logistics
  • Thelle Mogoerane: logistics, Carnival Junction, OR Tambo inland port, Prasa rolling stock manufacturing facility (Prasa has signed a R51-billion contract with Gibela consortium to deliver 600 trains).

The city budget for 2016/17 has allocated R45-million for the revamping of four industrial parks in Labore and Wadeville. Other projects and investments include:

  • Riverfields mixed use estate
  • Green Reef Innovation District
  • Badenhorst Estate
  • Recapitalisation of the Springs Fresh Produce Market (R110-million)
  • Infrastructure to support agri-processing and distribution of agricultural products (R80-million)
  • R269-million over three years to Township Economy Strategy.

The nine towns of Ekurhuleni are being connected by the new Bus Rapid Transit system (Harambee).

Explore a range of Strategic Urban Developments in the City of Ekurhuleni here.

City of Johannesburg

The City of Johannesburg’s good credit record allowed it to borrow R3.3-billion for infrastructure expenditure in 2016. In 2014/15 a surplus of R3.9-billion was achieved and the city spent 94% of its capital budget, or R10.8-billion. In 10 years Johannesburg has raised more than R100-billion for infrastructure.

City of Tshwane

Tshwane is planning a series of transformative infrastructure and property developments, including expanding the Bus Rapid Transport System, Government Boulevard, Tshwane House, Times Square, the Nelson Mandela Development Corridor, the West Capital project and the African Gateway.

Artist’s impression of the Hazeldean development in Tshwane

Explore a range of catalytic and strategic investment projects in the City of Tshwane here.

Together with the three large metropolitan municipalities, Gauteng also has two district municipalities.

Sedibeng District Municipality

Towns: Sebokeng, Heidelberg, Sharpeville, Vereeniging, Vanderbijlpark

Local municipalities are Emfuleni, Midvaal and Lesedi. The Vaal University of Technology and the North-West University’s Vaal campus are located in Sedibeng. The Emfuleni Local Municipality (including Evaton, Sharpeville, Vanderbijlpark and Vlakplaas) is at the core of the Vaal Triangle, which in turn is at the heart of South Africa’s iron and steel industry. Metal products, machinery and equipment are made here. ArcelorMittal has been a major employer in Vanderbijlpark since 1947.

Heidelberg produces bacon and tobacco: Eskort and British American Tobacco are the two major companies in the area. The Midvaal area has agriculture and tourism as its two main economic activities and the city of Meyerton is the site of newly built, multi-million-rand Heineken brewery. The Klip River at Henley-on-Klip and the Vaal Dam are major tourist attractions, while ecotourism opportunities have the potential to grow. The Suikerbosrand Nature Reserve is a prime regional asset.

West Rand District Municipality

Towns: Randfontein, Roodepoort, Krugersdorp, Westonaria

Local municipalities are Merafong City, Mogale City and West Rand City. Both the N12 and N14 highways pass through this area which allows for a great deal of commuter traffic into the Johannesburg CBD.

The West Rand is the area of Gauteng where mining has retained its strongest presence. Large-scale commercial farming also takes place. Randfontein Local Municipality is where the world’s deepest gold mine was dug. To the south, mining contributes 75% to Westonaria Local Municipality’s economy. An industrial park is planned to assist in the process of diversifying the economy.

Mogale City Local Municipality is very much the economic driver of the district, including as it does the town of Krugersdorp. Krugersdorp has considerable manufacturing capacity and has a motor-sports racing track that attracts international drag-racing events. Tourism in the district is mostly located within the surrounds of Mogale City. Significant tourist attractions include the Cradle of Humankind, the Magalies Meander, the Sterkfontein caves and the Krugersdorp Game Reserve.

The Cullinan Diamond Mine in Gauteng Province, South Africa (photo credit: Petra Diamonds)
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