Why Cape Town is the most productive South African City

Kevin Allan and Karen Heese

 

On the 17th October, Municipal IQ, at its launch in Johannesburg, released rankings on its Municipal Productivity Index (MPI)™, ranking Cape Town as South Africa’s most productive city.

 

The MPI™ calculates productivity by measuring five factors: the extent of poverty in a municipality and the municipality’s response; access to a minimum level of municipal services; economic activity and economic infrastructure; municipal financial governance, as suggested by expenditure patterns; and, occupancy rates in the municipal administration.

 

The findings have surprised some people, with Cape Town often seen as a little too laid back for its own good. In truth, this breaking of perceptions rests on a precarious pedestal! The top three cities are separated by a hair’s breadth of 1.5 points, and the top six cities are separated by only six points, suggesting that, in fact, levels of municipal productivity are very similar in our top cities. Cape Town, Johannesburg and Tshwane are ranked in that order as the best cities in which to live, work and invest. These are followed in a close range by eThekwini, Nelson Mandela and Ekurhuleni.

 

Why does CT do better than other cities? Looking beneath Cape Town’s overall score, its performance on three factors is quite telling. On a measure of poverty and the municipality’s response to poverty, through the provision of free basic services, it does significantly better than other large cities. This shows lower levels of poverty relative to other large cities (which, of course, is not to say that there is no poverty in Cape Town), and a better response to poverty at the municipal level.  On a measure of economic intelligence (access to economic infrastructure, employment levels, education levels, skills deployment, and Municipal Product – a measure of local economic activity) Cape Town does slightly better than other large cities. But in terms of a measure of financial governance and expenditure, Cape Town is only fifth behind Tshwane, Johannessburg, Ethekwini, and Nelson Mandela.

 

Cape Town’s performance on these three individual factors is intriguing. Both the extent of poverty and economic intelligence in all municipalities, are determined largely by the investment of public and private resources in a locality over an extended period of time. Compounding this, the levels of historical poverty in South African cities have been affected to a great extent by apartheid policies fifty years ago. An illustration of this is the impact of forced removals from the Cape Town area to the Transkei and Ciskei, which kept the levels of poor African migrants to Cape Town (and the Western Cape) far below the levels of other large South African cities. In other words, Cape Town’s score on the factors of poverty and economic activity is largely reflective of historically high levels of capacity and economic intelligence and relatively lower levels of poverty, although this would only be in a static sense. Cape Town’s greatest challenge lies in dealing with significant pockets of urban poverty exacerbated by high levels of in-migration.

 

Municipal IQ is able to measure how well Cape Town is able to meet this and other challenges in a more direct way than the broader extrapolations surrounding issues such as migration. This is done by assessing the city’s financial governance, i.e. how much the city is spending in the delivery of services to its people. The MPI measures actual expenditure on a number of issues over a five year period (the financial years 2002 – 2006). Here Cape Town has not fared so well, as indicated above only ranking fifth. Although it is difficult to comment unequivocally on the reasons for Cape Town’s relatively worse performance in financial governance (expenditure), there are some obvious areas of speculation. The political instability in the City of Cape Town has no doubt negatively impacted on expenditure levels, and Cape Town would probably be doing far better were it not for this institutional instability.

 

This, however, should not detract from the fact that Cape Town pips the other cities in an objective measure of municipal productivity and, no, the mountain didn’t count.

 

Ends.

 

Allan if the MD of Municipal IQ, and Heese, its economist. Productivity rankings for individual municipalities are available live on the Municipal IQ website – www.municipaliq.co.za.