Opportunity

A cursory survey of South African Township suggests that these are rapidly changing places not only in size and character but with emerging new opportunities despite the odds. Unlike the image of bed-room communities of the past, some of these townships are beginning to express themselves as significant bastions of culture, development and growth. These changes are bound to impact on their relationship to the “formal City” as we know it. The prospects for advancement are therefore real.

The demand for access to new products and services is going to require innovative response from both public and private sector. Finding strategies to retain spending power and promotion of local business opportunities is central to this open dialogue at the informal city exhibition.

The demand for improved access to transport networks, telecommunication, and basic services such as energy, water and electricity will require new innovations innovative responses from the public sector. Some of the opportunities cited for private sector range from financial services, home upgrading and repairs and a range of lifestyle services.
Panel members will be requested to assist in exploring these emerging opportunities and possible constraints. The following questions are proposed to trigger and guide the debate:

  • What are the characteristics of current township economic activities?
  • What are possible opportunities going forward?
  • What are the current challenges to these opportunities?
  • What recommendations can be made to both public and private sector?
  • How can these be best communicated?

Facilitator:

  • Nellie Lester, SA Cities Network

Speakers:

Slovo Park: the Innovation of an Economic Urbanism

 

Michael Hart, Michael Hart Architects & Urban Designers

1. Contextualising Urban Design practice

Overcoming human problems is the element common to all Urban Design approaches. Urban design puts people first.

For those from disenfranchised communities in South African cities, the difficulty is facing the many formal urban policies that don’t offer alternatives. The question is, how can people make a living on the fringes of formality without falling into contravention of urban laws, and walking into the web of exploitation by landlords and letting agents?

As Urban Design practitioners, it may be our role to offer an enabling framework that acknowledges the linkages between the formal economy and the informal economy. And, given that there are linkages between economies, there is a need for a more equitable relationship. It is interesting that there is a move from governments and employers to convert formal jobs to informal jobs – rather than the other way around (UN Department of Economic and Social Affairs USA www.un.org/desa/).

The relationship between formality and informality is symbiotic and often co-dependant. An example of this would be an informal street trader located in front of a store selling the goods for the store owner; or informal cooked food traders given pavement space in return for buying goods from the formal shops along the street. This relationship offers an alternative view in terms of zoning, land-use, and the kind of alternative services required.

The management of informal operators within the public transportation sector, the trading and manufacturing sector and the informal housing sector requires a different way of thinking about a supportive structure that allows for informality to operate within the realms of safety, hygiene, mutual respect for people, buildings and environment, and access to services and facilities.

2. Proposing a Hypothesis that Urban Design can offer an enabling framework for the creation of an economic urbanism.

Urban Design criteria for human development are universal in principle, outlining that development should be guided by wholesome attitudes towards spatial integration, connectivity, social and cultural inclusions, public space, “place making”, and long term social, economic and environmental sustainability.

In SA, housing projects are typically defined by their quantitative outcomes and political objectives, often resulting in anti-social environments. The short term delivery of housing should be transformed into long term neighbourhood developments with integrated enabling frameworks that allow for economic and socially integrated environments.

Urban design places the Public realm as one element that operates as a structuring principle. The ‘Capital Web’ (David Crane ‘The City Symbolic’ 1960) theory spoke of a network of linkages between major city installations and resulted in cities requiring advanced high speed transit and high capital input.

I am proposing an ‘Innovation Web’, a network that is organic and that can be developed by people on the ground. It is a bottom-up structure that allows innovation from individuals to contribute in a meaningful way. The Innovation Web delivers an infrastructure that supports social and community facilities, public space, trading and manufacturing facilities, service infrastructure that enables informal and formal economic activities; and it creates an environment that offers pride of place to its inhabitants.
Economic development and ecological urbanism are symbiotic. The ‘Innovation Web’ proposes walkability, densification and efficient land use, inclusion of social and cultural facilities, and the ability for local residents to support local business in the trading of goods and services, manufacture and urban agriculture. Under this model, infrastructure costs reduce as it is more efficient to service nodal developments versus servicing development sprawl. An example of this is a single family that runs a business from home thus reducing the duplication of service costs and the overall ecological footprint of growing cities.

Similarly, non-motorised transport and the increased use of public transport for longer distances will reduce the building of high specification roads and reduce CO2 emissions. And placing an emphasis on innovation and empowering inhabitants to create their own employment will reduce the drain on the state by lowering social grants and improving human capital.

The Slovo Park project was seen as a case study for proposing ideas that deliver 2000 housing units into a neighbourhood development that integrates the concept of the ‘Innovation Web’.

Previous layout plans depicted a loose arrangement of a typical housing block repeated and placed in an unstructured manner, with internal roadways and vast parking lots. This was turned down by the City of Johannesburg planning department, which created an opportunity for an alternative approach.

The starting point was acknowledging the site’s contextual relationships and broader urban design frameworks that identified Slovo Park as an element within a larger corridor. It was evident that the project is an opportunity to connect neighbouring suburbs. Numerous linkages would encourage urban integration and the development of a high street allowing greater mobility, choice and mixed use functions.

This connectivity became the core to proposing a public realm network consisting of a pedestrianised activity spine that links the high order transportation network and its related commercial core with the community core of public spaces, community and religious buildings.

The activity spine offers informal and formal trading facilities, defined public space, landscaping, public seating and shade structures. The idea is that the pedestrian spine is a convenient linking device and will be well frequented by residents and visitors creating a desirable environment for business to flourish.
The vision of an economic urbanism is to implement an enabling environment that attracts future growth.

3. Resilience (inspired by Resilientcity.org)

The definition of Resilience: A reservoir of renewable resources and the ability to cope with adversity which includes creative problem solving and the ability to adapt to change.
Urban design principles for resilience reinforce the logic of neighbourhood design :

  • Density, Diversity and Mixed-use
  • Prioritise walking and non motorised travel
  • Supportive efficient public transportation
  • Place Making
  • Complete Communities and Complete Streets
  • Integrate natural systems and manage climatic responses
  • Integrate technical and industrial systems with environmental concerns of complementary energy disposal and bi-product recycling
  • Community engagement
  • Design for emergency services and long term maintenance
  • Prioritize infill development within existing serviced nodes reducing the need to increase the urban footprint

Conclusion

The role of the built environment professional must contribute to the flexibility of the regulatory framework that determines use. Zoning and town planning schemes should offer more flexibility. The adaptive re-use of land and buildings and the sharing of facilities for different uses must be encouraged. We need the supportive systems of a clean, healthy and safe environment with an emphasis on the human quality that will ensure liveability and opportunity.

The Informal/Formal Interface of Investment in Township Areas

Rob McGaffin (research courtesy of Urban Landmark)

In this presentation, the three following examples will be used to explore the informal/formal interface of investment in the township areas:

  • Roll-out of retail centres in the township areas
  • Roll-out of transport infrastructure in township areas
  • Household investment in township areas

RETAIL CENTRES

Relative Scale of Development – Amount of formal shopping centre space developed in township and rural areas relative to the total.

…..Mixed Reactions to ‘mall’ developments:

Pan Africa Mall in Alexandra:

‘Spokesperson of the Greater Alexandra Chamber of Commerce and Industry’s youth wing, John Makgoka, said the body would embark on a protest this week to discourage consumers from shopping at the mall until it was “fully owned” by locals. “The people of Alexandra will fight for what belongs to them. We will cripple the tenants until they leave.” (Soweton, 15 June 2009)

Tebogo Mogashoa of Pan Africa Development Company says, “Pan Africa Shopping Centre represents the dreams and aspirations of the Alexandra people. We developed it for them.” (Eprop, 18 August 2009)

Impact of Centres

The study ‘Taking Stock: the development of retail centres in emerging economy areas’, conducted by Urban LandMark1 in 2011, examined 6 centres to better understand the impact of this type of development on local consumers, local businesses and the local economy. The results of the survey showed:

1Demacon Market Studies (2010) The impact of the development of formal retail centres in 'emerging economy' areas in South Africa

1.0 Impact on Consumers:

1.1. Impact of shopping patterns:

  • Decrease in external shopping from 55% to 38%
  • 71% of formal shopping done at new centre
  • 31% said they shopped less frequently outside the area
  • 66% said that local expenditure had increased
  • Shopping at local businesses dropped from about 23% to 20%

1.2. Impact on time and travel costs:

  • Travel time to formal centres dropped by 57%
  • Travel time to small businesses dropped by 25%
  • Travel costs to formal centres dropped by 36%
  • Travel costs to small businesses dropped by 21%

2.0 Impact on Small Businesses:

2.1. Impact of centre in terms of location:

  • Safety & security – 54% (same), 32% (incr)
  • Visibility – 39% (same), 41% (incr)
  • Transport interchanges – 36% (same), 51% (incr)
  • Banking – 50% (same), 41% (incr)
  • Foot-traffic – 30% (same), 48% (incr)

2.2. Impact on business performance

  • 75% saw growth of 5-10%, 25% saw a decline of 5-10%
  • Employment – 64% (same), 14% (incr)
  • Profit – 40% (same), 31% (incr)
  • Turn-over – 42% (same), 29% (incr)
  • Supply - 13% of stock bought from the centre

2.3. Factors stopping the relocation to the centre:

  • Lack of customers
  • Lack of funding
  • High rentals
  • Low profits
  • Competition from nationals
    ....50/50 split between those businesses wanting to (and not) relocate to the centre

    2008 research of retail development in Soweto by Professor Andre Lighthelm, Research Director of the Bureau of Market Research at UNISA, similarly found that that the impact of shopping mall development on existing small businesses could not be explained uni-dimensionally, purely portraying a decline in small business activity.

    “While some small businesses expect to close their doors, several small businesses were established due to mall development. This is particularly true of street vendors with their ability to intercept large numbers of township consumers at the new malls.”

    “A third of the respondents surveyed in Soweto predict an expansion of their business turnover, while another third expects a contraction. Some regard the newly developed malls as their main competitor, while others experience stiff competition from fellow small businesses.”
    (Small business sustainability on a changed trade environment: the Soweto case, 2009)

    Opportunities & Challenges

    One of the main challenges is to manage the relationship between the formal and informal activities such that a positive interface between the two is created. If this is done, opportunities exist for formal retail to act as a magnet to create a larger customer base for the smaller interprises, which can enhance their growth and viability. By increasing the customer base, turn-overs and gross profits of the smaller businesses can be increased, which in turn enables some of them (where appropriate) to pay market rentals for, albeit smaller, formal spaces (e.g. Johannesburg CBD traders).

    In addition, a positive informal/formal retail development in a township area can create an obvious focal point for investment and therefore act as a strong catalyst for nodal development. The creation of such focal points are important considering that many of these township areas were developed as dormitory towns and often lacked an economic logic with respect to locations that lent themselves to viable investment.

    INFRASTRUCTURE

    Context

    Infrastructure similarly has the potential to set up an economic logic in a township, and a location for investment in areas previously designed as dormitories.

    However, the large infrastructure roll-out programme is occuring in a context of:

    • Increasing pressure on finances across the different spheres of government
    • Increasing pressure to increase inclusionary development, especially housing

    The challenge is how one facilitates access by the poor to the well located sites generated by the infrastructure i.e. how do we increase the bidding power of the poor for these key sites?

    The question therefore is whether the provision of transport infrastructure can generate sufficient additional (incremental) value to either:

    • Fund or partially fund the infrastructure over a reasonable pay-back period
      or
    • Generate enough surplus returns such that inclusionary development can be incorporated into a project without reducing the rates of return required to induce the investment in the first place.

    3 case studies

    In order to answer this, Urban LandMark commissioned a study on the impact of transport infrastructure on property values1. The study looked at three case-studies consisting of different types of transport infrastructure, namely a BRT station (Mooki Street, Soweto), a major road interchange (PWV9 near Diepsloot) and a metrorail station (Khayelitsha, Cape Town). The aim of the study was to assess the degree to which such infrastructure impacts upon property values and the possible mechanisms that could be used to capture any increased value that could be used to cross-subsidise the poor or pay for the infrastructure itself.

    Using a number of residual and comparative methods, the study found that assuming the development conditions were in place, the infrastructure could generate surplus property values. The study suggests that this value increase will differ by the different types of transport infrastructure but due to the limited number of case-studies, this would need to be verified with further research.

    2 ADEC (2011)Value Capture from Transit –orientated development and other transport interchanges.

    Value Capture Mechanisms

    “Value-capture” is a term used to describe the process of extracting (in different ways) the additional value that accrues to a property as a result of some public investment such as the provision of public transport or a school. It is the extraction of the value over and above the value that the property would have if the public investment had not taken place. It is usually argued that as the additional value was created as a result of the state’s actions and not the owner, it is justifiable for the state to lay claim to this value through various mechanisms for some public purpose such as paying for public transport.

    Drawing on local and international evidence, the Urban LandMark study identified a number of mechanisms as potential ways to capture some or all of the increased value that occurs as a result of the provision of tranport infrastructure. There are two broad categories of value-capture mechanisms, although the distinguishing line can be blurred from time to time and some mechanisms can exhibit qualities from both categories.

    The first category includes those mechanisms that try to use the increased value to bring about, or facilitate, a broader planning outcome (“use or social/spatial restructuring outcome”) such as densification and inclusionary housing. The second category includes those mechanisms that extract income in the guise of a tax or a tariff from the increment value to finance the infrastructure or some other development (“income or cost recovery outcome”). Examples of value capture mechanisms include:

    Use Mechanisms:

    • Land Banking
    • Zoning Tools
    • Air Rights
    • Business Improvement District

    Income Mechanisms:

    • Development Contributions
    • Land Value Increment Taxes
    • Land Increment Financing

    Opportunities & Challenges

    Value Capture can offer many opportunities such as increasing the revenue collection by municipalities and allowing greater flexibility in local expenditure. It can also create the potential for cross-subsidisation for developmental purposes to occur and the improved infrastructure provision can improve the access of the poor to the City. This provision includes not only the roads and railway lines but also the the quantity and quality of the rolling stock that runs on these roads and lines. The quote below highlights the daily challenges of the poor in trying to access the work and other opportunities offered in a city.

    “A concerned city woman has told of how she witnessed a mother being forced from an overcrowded train and separated from her child.
    On Monday, while waiting at Bellville station for her regular 5.50pm train to Strand, Gloria Solomons, 60, was horrified when she saw the woman forced out of a packed carriage.
    …..people were hanging out of the carriage.”
    (IOLNEWS, 22/06/2011)

    However, there are also a number of associated challenges in that certain development conditions need to be in place to maximise value creation and these conditions may change over time. Value creation is also more likely to occur in developed parts of the City, therefore introducing the danger of reinforcing current inequitable and inefficient city structures. In addition, there is a need to gain control of sites before the value increase is factored into the land price and value capture mechansims need to be applied in a manner that does not deter development in the first place. Lastly, value-capture is often seen as a panacea for all development problems and therefore often results in conflicting policies being imposed.

    HOUSEHOLD INVESTMENT

    Research3 in places like Du Noon in Cape Town shows evidence of significant household investment in township areas. Substantial, multi-storey houses and shops have been built by households without the use of formal loans or government assistance. Instead people have used savings and income generated through business and residential rentals to develop, often ironically through quite informal means, very formal structures.

    Opportunities & Challenges

    This investment is however not ubiquitous in all township areas and the Du Noon case seems to suggest that certain investment conditions need to exist to induce households to invest their savings and income in particular locations. The opportunity for household investment appears to occur when a location is characterized by having good access to jobs and city services. This proximity generates a high demand for space and consequently relatively high rentals (rate per m2) can be charged to justify the investment in the first place. However, due to the affordability constraints in these areas, tenants are only able to rent a small amount of space at these rates. The challenge therefore lies in providing such compact space in a manner that is efficient and avoids the ills of over-crowding.

    Conclusion

    The above examples show that there is significant investment occuring in township areas. These examples also suggest that there is not a defining line between the formal and informal worlds but that they rather represent points on a continuum of market activity in these areas. Furthermore, it is important to recognise that these worlds interface with each other and often exist in response to the other. It is in the management of this interface that some of the greatest opportunities and challenges lie in maximising the level of needed investment in these areas.

    3This section draws on work undertaken by Heinrich Wolfe and UCT Honours Students

The Peoples' Economy

Edmund Elias, the South African National Traders’ Retail Alliance (SANTRA)

The Peoples' Economy is a massive functional entity that operates as a component of the entire economy. Its activities are undocumented and usually function below the "developmental radar level".

This component of the economy provides opportunity for millions of people who have not been absorbed into structured economic activity for various reasons. In essence ordinary people, for reasons of survival, have been compelled to move ahead of systems that have effectively not provided for their basic needs. In many instances their activities have in fact been labelled as "illegal".

For example, thousands of Johannesburg street traders operating in 61 precincts and suburbs that have been declared prohibited trading districts, as well as those conducting economic activity from homes in areas governed by the 1979 town planning scheme, are all "illegal".

Street Trading

Street trading is the single most important point of entry into the economy for unskilled and semi-skilled, as well as retrenched people. It requires no real capital, qualifications or the kind of track record needed to obtain formal trading premises. It has not been embraced as an important entity but, due to its unmanaged status, it has in fact been branded as an obstructive, unsightly nuisance.

In certain instances, such as in parts of the Johannesburg CBD where corporate sector management is in place, this form of economic activity adds value to the areas in question by providing a "people’s vibe", as well as opportunity for convenience shopping for small items. The perceived conflict of interest between street traders and other stakeholders does not exist in these managed areas. These areas do not have vacant shops, for example.

And formal stores in the Fordsburg, Johannesburg, area are open at night on weekends because of the managed street market in that area. The micro-traders bring extra people and business to the area.

We at SANTRA propose that the concept of street trading be embraced by both formal business and Government as a key "weapon" in the fight against unemployment and the resultant poverty. This concept of self-help could reduce the growing dependence on the "welfare state".

Management holds the key

For management to be sustainable it needs to be financially viable. Subsidised management models such as the Johannesburg Metropolitan Trading Company have failed. Management needs to be locally driven, and partnerships with local authorities and formal business are options.

A multitude of managed trading markets on the sidewalks of our towns and cities would unquestionably impact positively on the unemployment situation. The facilitation of such a process needs a champion.

The developmental/management model that we suggest provides for:

  • The identification of potentially lucrative areas
  • The demarcation of non-obstructive sites
  • Provision of aesthetically acceptable trading facilities
  • Payment of a market related management fee by traders
  • Employment of monitors, security and cleaners
  • Provision of a "start-up grant" for individual traders
  • Access to funding
  • Social security benefits.

The most practical way forward is to identify an area suitable for a pilot project. At this stage the Yeoville area, given its present unmanaged street trading status and its diversity, has been earmarked as a possible area for such a pilot project, and a coalition between stakeholders and trader representatives has already been established.