ANN BERNSTEIN | Joburg must stop falling before it can grow

Johannesburg is South Africa’s most important economic centre, home to the country’s largest concentration of businesses and financial institutions. What happens to Johannesburg matters not only for its residents but also for the whole country. Yet over the past decade the city’s decline has increasingly undermined its economic potential. Failures in municipal government have made Johannesburg an increasingly difficult place in which to do business, invest, find employment and build a secure family life.

Joburg residents are getting poorer. The city’s economy has barely grown for more than a decade. When population growth is taken into consideration average per capita GDP in the city has fallen from R99,858 in 2013 to R95,737 in 2023 (in real terms). By the second quarter of this year the city’s official unemployment rate had reached 35.9%, the highest of any metro and above the national rate of 33.6%. During the one-year period ending in June 2026, Johannesburg lost about 90,000 jobs while Cape Town added 57,000.

Johannesburg’s economy cannot grow while the city’s dysfunction continues and worsens. When roads deteriorate, transport costs rise and supply chains become less efficient. When electricity and water systems fail, firms incur additional costs to maintain operations and absorb production losses.

Municipal dysfunction therefore acts as an implicit tax on economic activity, raising costs while services deteriorate. In Selby, prolonged water shortages have left factories unable to operate and hundreds of factory workers without permanent or full-time work.

Johannesburg cannot expect to retain the businesses and entrepreneurs it has, let alone attract the investment and the skills it needs, while conditions continue to deteriorate. You have to stop falling before you can grow.

Yet rather than focusing on actions designed to attract private investment the present Johannesburg administration has proposed a growth strategy that looks to the state to reshape the economy via grand plans and expensive ribbon-cutting projects. Its recently approved economic growth strategy proposes almost 30 projects, with an estimated total cost of R111.47bn over five years. These include an R1.5bn international convention centre in Lanseria, a R2.14bn film and clothing cluster, and a R546m biodiesel production plant. The city expects private investors and donors to provide 98% of the funding.

Even if the money could be raised, these projects would require considerable capacity to plan, co-ordinate and oversee. Yet the strategy itself explicitly recognises that its ambitious programme of new economic development projects can only be successfully adopted by a city with substantially more resources and administrative capacity than Johannesburg presently possesses. It nevertheless presents its plans as realistic and implementable.

Similarly wrong-headed is the Johannesburg Township Economies By-Law, gazetted in late 2025. It requires township businesses to register with the city by January 17 2027. The stated aim is “to support township enterprises”, but the approach creates new red tape obstacles for the very businesses it is meant to help.

Johannesburg needs a different approach. There is no alternative but for the city to start by fixing the basics. Restoring reliable services, beginning to reduce the city’s enormous infrastructure backlog, rebuilding municipal institutions, combating corruption and stabilising its finances must be the priorities. Businesses and investors need a city that works.

Restoring reliable basic services would do more than prevent further economic decline. It would jump-start growth by allowing Johannesburg’s existing economy to become more productive and create new opportunities for businesses and workers. Instead of losing an average of 20.6 hours every three months to power outages, the equivalent of two and a half working days, businesses would be able to operate with fewer disruptions, increasing production and serving more customers.

Reliable services would make it easier to establish new businesses. Established companies may be able to afford to compensate for municipal failure, but the same is not true of smaller businesses and start-ups. Reliable electricity, water and roads would free up household income, with the benefits extending particularly to poorer households who cannot outsource municipal failure.

These improvements would reinforce one another. As businesses become more profitable and expand they create jobs, increase demand for goods and services, and generate opportunities for other businesses. This would encourage further investment, as businesses are more likely to invest in areas where others are already doing well. A focus on turning around municipal failure will therefore lead to an upward growth spiral.

Of course, Johannesburg has a number of other major challenges that also affect the city’s growth prospects, including crime, housing and public transport. But the hard truth is that important and pressing as these challenges are, they have to wait until Johannesburg has got the basics of city government working effectively. From the day after the November elections the new government must be ruthlessly focused on its top priorities.

South Africa has had to spend much of the past decade fixing what the ANC government broke. It has devoted far less energy to developing a realistic strategy for future growth, including for the role of large metros and, in particular, its most important city. Johannesburg must devote all its energies and resources to restoring its institutions, infrastructure and services. But the city also needs to consider how it will grow over the next decades.

What will drive future investment, employment and prosperity? How can the city build on its strengths through a growth strategy that encourages enterprise, attracts investments and opens up opportunities for everyone?

The new mayor should appoint a task force to develop an economic vision for the city, supported by practical proposals for implementation. The task force should be small ― five to eight leaders drawn from across society, supported by a small secretariat and funded from the city’s economic development allocation. It should report within one year. Its proposals need to be ambitious and inspiring enough to shape the future while realistic about resources, institutions and capabilities.

The task force will need to ask hard questions. What would have to change for Johannesburg to once again become a leading centre for mining, finance and technology? Can the city become the professional services hub for the continent? The country is making far too little progress on deregulating, eliminating the red tape that holds back growth. Why not start with Johannesburg? Why not let Johannesburg lead the way with more privately run special economic zones, some with exclusions from existing legal obligations on business, to test whether this would raise employment growth rates?

How can large companies interested in helping Johannesburg move from small projects to a more fundamental contribution? A possible model is the Columbus partnership in the US state of Ohio, which created a successful and stable business-government partnership at the city level. And if the city worked with the leading companies and business organisations headquartered in the city, could they together help push the national and provincial government to enact reforms more quickly?

The focus on fixing what is broken is the right and essential priority for Johannesburg’s next government. This challenging process ought to be accompanied by serious thinking about the city’s future and how to build a more dynamic economy that is an essential prerequisite for faster and more inclusive growth.

• Bernstein is executive director of the Centre for Development and Enterprise (CDE). This article is based on ‘Joburg needs faster growth’, the sixth report in Johannesburg Matters: Fixing South Africa’s Growth Engine, a new CDE series.