Cities to play a critical role in national economic recovery - David Masondo

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Deputy Finance Minister David Masondo.
Deputy Finance Minister David Masondo.
Ziyaad Douglas, Gallo Images
  • The country's metros have not been spared from the economic downturn of 2020, says deputy finance minister David Masondo.
  • Supporting the country's national recovery requires harnessing the potential of cities and addressing structural impediments to growth, Masondo highlighted.
  • On Tuesday, the deputy finance minister spoke at the launch of the City Economic Development Managers' Forum publication.

South Africa in 2020 suffered a historic economic downturn, having contracted by 7%. While on the road to recovery, it is essential to harness cities' potential for economic growth, said Deputy Finance Minister David Masondo.

Masondo was speaking during a virtual launch of the City Economic Development Managers' Forum Publication on Tuesday.

The publication covers work undertaken over the past year to consider how eight metropolitan municipalities and secondary cities can drive the national economic recovery. The forum allows for cities to engage with other spheres of government as well as the private sector and civil society, on their plans and reforms. Its work is still ongoing. 

The SA economy suffered its second-largest annual contraction in 100 years during 2020, the SA Reserve Bank's records show. However, the bank sees growth rebounding to 3.8% in 2021. National Treasury expects growth to bounce to 3.3%, and the World Bank and IMF have priced in growth of 3% and 3.1%, respectively.

Metros have not been spared of the 2020 economic downturn, Masondo said.

During his address, Masondo pointed out that the country's economy was already in a technical recession before the Covid-19 pandemic hitting SA shores. The country was also confronted with credit rating downgrades, persistent structural challenges and "increasing vulnerabilities" of poor and marginalised communities, he said.

He put forward two preconditions for SA to recover from the historic economic downturn.

Potential of cities

"The first precondition is that the country must harness the potential of its cities. Cities have been and will increasingly be the major contributors of economic growth and development," Masondo said.

Cities can become productive, integrated and sustainable spaces for economic activities to flourish and to benefit citizens, he explained.

Cities should build cooperative partnerships to support economic recovery and have "instruments" available to them to support such an initiative, Masondo added.

These instruments include land use, planning and management, as well as resilience infrastructure, investment and management. Urban management and integrated human settlements is another instrument that can be leveraged, as is public transport planning, Masondo said.

"All this provides you with power to maximise impact and yield greatest economic, social and spatial and transformation returns," he said.

Structural impediments

The second precondition for economic recovery involves addressing structural impediments to growth.

Operation Vulindlela, Treasury and the Presidency are working on reforms in network sectors such as energy, water, telecommunications and transport.

Its goals include stabilising the supply of electricity, reducing the cost and improving the quality of digital communications, ensuring sustainable water supply, ensuring competitive and efficient freight transport, and putting in place a visa regime to attract skills and grow tourism, Masondo said.

These structural reforms are meant to increase the country's economic growth, and such growth will also be primarily felt in metros and cities, added Masondo.

Commenting on the forum, Masondo said it acknowledges the centrality of cities to future prosperity. He encouraged relevant stakeholders to continue using the platform to collaboratively address challenges. 

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