An African gem

The City of Tshwane, which incorporates among other districts, Pretoria, is the administrative capital of South Africa which hosts 138 diplomatic corps, although government plays an import role in the city’s economy. The city is having six priority sectors of economic importance such as Aerospace, Agro-processing, Automotives, Creative industries, Tourism and Manufacturing. The City of Tshwane has adapted to globalisation remarkably well because of its competitive and comparative advantages, and has all the elements of a Smart City. It is:

• The home of the Automotive and Aerospace  industries with the new Centurion Aerospace village;

• Strategically situated to be accessible to South Africa and the SADC  market;

• It has a well-developed economic infrastructure  and communication network;

• A centre of 138 embassies, diplomatic corps and government in South Africa with all the national government departments located in it;

• It is part of Guateng Global Region, the wealthiest and fasted growing economic region on the African continent;

• The City is a national centre of research and learning with four major universities and seven of eight national Science Councils, i.e. CSIR (Council for Scientific and Industrial Research, HSRC (Human Science Research Council), ARC (Agricultural Research Council), NRF (National Research Foundation), MRI (Medical Research Institute), VRI (Veterinary Research Institute), and SABS (South African Bureau of Standards).

The City of Tshwane takes into account the broad economic and spatial strategies and goals of Gauteng Province, which include the re-alignment of the manufacturing sector away from traditional heavy industry input markets and low-value-added production towards sophisticated, high-value-added production, as well as the development of other high-value-added production activities in the Automotive, Aerospace, agricultural and mineral sectors.  Influenced by both global pressures and regional trends, the Gauteng Trade and Industry Strategy and the GDS identify six growth sectors and clusters for increased support and investment in the province, namely:
 
• “Smart” industries (including ICT, pharmaceuticals);

• Automotive Supplier Park;

• Centurion Aerospace Village;

• Trade and services (including finance and film);

• Tourism;

• Agriculture (agri-processing and bio-tech);

• Manufacturing (specifically of steel-related industries, automotive parts and components, beer and malt), and;

• Infrastructure expansion and investment.

Gauteng is the economic powerhouse of South Africa. The province covers 1.4 percent of the total area of South Africa, but is home to 17.1 percent of the country’s inhabitants. It is by far South Africa’s most densely populated province. Gauteng is highly urbanised. The adult literacy rate in the province (people 15 years and older who can read and write their home language) is 92.9 percent. Given the fact that the City of Tshwane falls within Gauteng, it enjoys the advantage of access to large urban markets and new technologies due to its relative proximity to well-developed nodes such as the Johannesburg CBD and Ekurhuleni. It is evident that the Finance and Business Services Sector (followed by the Manufacturing Sector) contributes proportionally the largest segment towards the economies of South Africa and Gauteng, revealing not only the strong nature of this sector, but also the economy’s dependence on finance and business activities. In Tshwane, however, the economy is dominated by the Government Services Sector, followed by the Finance and Business Services Sector.

Almost 30 percent of Tshwane’s economy is dependent on Government Services activities, followed by Finance and Business Services (22.6 percent), Manufacturing (15 percent), Wholesale and Retail (13.1 percent) and Transport and Communication (10 percent) activities. The relatively low level of diversification of the Tshwane economy has the potential to impact on economic growth rates, especially when sectors with high growth are not well represented in the area.

Innovation Hub
These assets are being used to speed up the city’s economic development strategy. One of the initiatives that is having a positive impact is the creation of The Innovation Hub, which contributes to the city’s positioning of itself as a “knowledge economy”. The Innovation Hub is South Africa’s first internationally accredited science park. It is located on a 60ha site in the eastern suburbs of the city. It is strategically located between the CSIR and the University of Pretoria – allowing synergistic interaction between these institutions and the Hub. For foreign companies entering South Africa, the hub offers a gateway to high-tech resources and new developments in the local market. It is also a transition zone – similar to “incubators” in the US – where investors can gain local knowledge and expertise. 

“Tshwane has established itself as a seat of government and a preferred residential location in the province. The future lies in growing, in parallel, a thriving business community with a strong knowledge economy base.” says Dr Gwen Ramokgopa, the Executive Mayor of the City of Tshwane. The rapid growth in the uptake of a number of hi-tech companies in the Innovation Hub’s Enterprise Building has confirmed that there is significant potential for the city of Tshwane to become an active player in the knowledge economy.

The City is also playing a critical role in enhancing itself as a smart city by providing infrastructure required. In particular, connectivity and specifically communication is vital. The City of Tshwane manages a vast electrical grid and an Information and Communication Technology (ICT) network infrastructure. This technology as presently deployed can fruitfully be applied to render additional communication services. It will generate revenue for the City whilst at the same time bringing about many cost savings for business and support the quest of “bridging the digital divide” in the city generally.

Tshwane owes its healthy local economy mainly to the strong presence of service industries in the central business district and manufacturing industries in the Rosslyn and Silverton industrial areas.

 “Tshwane offers unequalled business opportunities and a well-developed, dynamic infrastructure that allows all types of businesses to prosper and grow.”

A strong entrepreneurial spirit is also evident in the city – more than 50 percent of the economically active population are privately employed. It is also encouraging to note that knowledge-based service industries that have international links are gaining prominence, with technological innovation forming the cornerstone of their programmes.

Interesting trends have emerged regarding employment patterns, decoupling and decentralising functions and increasing importance being given to the second economy, which includes hawking, home crafts and activities in manufacturing, services and trade. The city has been adapting to these changes through local development planning that has resulted in the City Development Strategy. It is also promoting public-private partnerships and developing small, medium and micro enterprises by identifying linkages, niches and outsourcing opportunities.

Entrepreneurial Culture
The city is creating an even stronger entrepreneurial culture through its many initiatives and links with business and development institutions, the Council for Scientific and Industrial Research, the University of Pretoria, the Tshwane University of Technology and the University of South Africa.

“Tshwane does not have the sea like Cape Town, nor gold like Johannesburg to attract visitors and investors, but it does have the highest concentration of intellectual property in the country.”

Local economic development not only promotes economic growth and employment, but also increases the tax base of the city. Tshwane’s corporately inclined residents and its good, dependable workforce are meeting the challenges of globalisation head-on. The greatest challenge in the future lies, however, in ensuring further innovative and creative development so that the creation of jobs keeps pace with the population growth of the city. This can only be achieved by investing in the city’s economic development programmes, which offer investors ample opportunities in the trade and manufacturing industries.

Although the City of Tshwane is the Capital of South Africa and has therefore traditionally been an administrative city, a number of research and academic institutions have been established in the city during its history. A number of strategic investments have also been made in the city by both the public and private sectors. In 1925 ISCOR was established as a public entity to produce steel.  Although steel production has stopped in the city, its presence stimulated the investment of other manufacturers. These include a number of multinational corporations such as Ford, BMW, Nissan, TATA, Mahindra etc.  The city has therefore had a long history of working very closely with both SMEs and multinational corporations. 

The automotive and aerospace sectors are two of the sectors driving the city’s growth (7.8 percent in 2006). Both these sectors are well linked to the global value chain and many finished products are exported to discerning consumers across the globe. The ICT sector, although small by global standards is growing and finding its niche. Government has recognised the value of these sectors and has created specific infrastructure to meet their competitive goals. An Aerospace village is being developed adjacent to Waterkloof air force base.

This will enhance the competitiveness particularly of Aerosud which is a first tier supplier to both Boeing and Airbus. The Tshwane Auto Supplier Park has not only contributed to BMW’s success of the three series and also Nissan, but has also caught the eye of Tata and other Auto companies that are in the process of negotiating with the city. Tshwane’s location and infrastructure make it an ideal location to support the African Market, particularly SADC.

There are a number of high value added products that make up the City’s export basket. These include various service exports, automotive products, food and beverages, defence products, aerospace, ICT and Bio-Tech products (particularly veterinary products). A number of leading Multinational Corporations have made their base in the City of Tshwane not only because of the positive environment, but also because of the availability of critical inputs including a highly skilled workforce, and the access it provides to key markets.