HSRC Integrated Annual Report 2018/2019

Research Highlights The Economies of City-Regions The EPD Programme has led the HSRC’s flagship initiative on city-region economies, which seeks to understand the factors and forces that promote and inhibit inclusive growth in cities. It also analyses why some cities are more successful than others, and what policies and practices can improve conditions on the ground. An important project on tradable services, funded by the Gauteng Province and UNU-Wider, examined the distinctive economic strengths of South Africa’s major cities. Specialisation in tradable sectors and know-how raises productivity, boosts exports and generates multiplier effects elsewhere in the local economy. Mining and manufacturing have driven the growth of South African cities in the past. There are opportunities now for tradable services to grow because of digital technologies, cheaper air travel and burgeoning urbanisation elsewhere in Africa. These sectors range from tourism to knowledge- intensive sectors such as engineering, real estate, accountancy andmanagement consultancy. However, South African cities have not as yet developed internationally-significant strengths in any of these sectors, beyond tourism and finance. Most of the growth in jobs has been in local services, such as retailing, construction and public services. More could be done to enable particular clusters of advanced services to gain critical mass and develop the capabilities and ambition to serve wider markets. A second project on rural-urban migration looked at whether residents of rural areas are advantaged if they move to cities in search of superior economic opportunities. Unique longitudinal data for a sample of over 5 000 people was analysed over the period 2008 to 2017. It revealed that rural-urban migrants are much more likely to progress out of poverty than people who choose to remain in the countryside. In fact, migration was associated with a drastic cut in poverty from about 80% to 30% of the relevant individuals. Grossing up the sample, an estimated 835 000 South African citizens were lifted out of poverty during this period, simply as a result of moving to cities and finding some kind of job or livelihood. This is an extremely important finding in the context of a very sluggish economy and limited upward social mobility in the country over the last decade. A third project on backyard housing, funded by the Western Cape Province, looked at the response of the urban housing system to rural-urban migration. A poor-performing housing market and a sharp slowdown in the delivery of state Reconstruction and Development Programme (RDP)/Breaking New Ground (BNG) housing, has resulted in backyarding becoming one of the fastest growing forms of housing in South Africa. Most backyard structures are shacks, but a new phenomenon of robust rental units has emerged in some townships. These provide a regular income to the homeowner/ landlord, many of whom are unemployed. They also provide a vital source of decent, affordable rental accommodation to young adults, white collar workers and professionals with jobs in the city who do not want, or cannot afford, to own their own homes. The current policy vacuum surrounding backyard rental housing needs to be filled with a more positive response that tries to regularise the process, upgrade basic services in affected areas, and improve access to low cost finance and building advice for small-scale developers. Township economies have gained the attention of many sectors. A joint project with the Economic Development Partnership of the Western Cape in this regard, developed a framework for analysing township economies and benchmarking their performance to assist with designing appropriate policy interventions. It stressed the importance of three dimensions: (i) productive place-making to ensure that the land, infrastructure and regulatory environment support local business activity; (ii) resilient social fabric to strengthen the level of community organisation, networks and assets to underpin township businesses, and (iii) building capable enterprises with the competencies, access to markets and enabling conditions to succeed. Farmland Size and Smallholder Productivity Land reform has risen up the political agenda recently. EPD is undertaking a project funded by the United Nations Development Programme (UNDP) to investigate the viability of small farms. This is vital to decisions about expropriating and allocating land to meet the needs of smallholder farmers. There is some evidence that small farms are more productive in using land than large farms. However, smallholders need technical and financial assistance to achieve this. Without adequate support to new HSRC INTEGRATED ANNUAL REPORT 2018/19 / 21