DCoG Deputy Minister Andries NelSpeeches

Opening Remarks by Deputy Minister Andries Nel at the Integrated Urban Development Grant Seminar

 

OPENING REMARKS BY THE DEPUTY MINISTER OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, MR ANDRIES NEL, at the INTEGRATED URBAN DEVELOPMENT GRANT SEMINAR,

05 July 2018,

Boksburg

 

Programme Director,

Representatives from provincial Cogtas,

City Managers,

CFOs,

Heads of Planning and Engineering Services,

Ladies and Gentlemen,

 

Introduction

Good Afternoon,

I do apologise for not being there physically, as I had hoped to engage with you a bit more.

However, I have been urgently redeployed to another event, but nevertheless felt it necessary to make this recording so that you are fully aware of the importance of our work.

We are mere days away from celebrating the centenary of our former President Tata Nelson Mandela. The Nelson Mandela Foundation aims to build a values-based society that is rooted in the principle of Ubuntu – that ‘I am because we are.’ The call for action is to ‘Be the Legacy,’ to find the Mandela within ourselves and make the world a better place.

Today, I am also calling upon you, to ‘Be the Legacy.’ As cities take on a more important role in our society, our roles in our respective municipalities takes on greater significance. Our decisions affects thousands, it not millions of our residents within our cities. One legacy that we are called upon to dismantle is the apartheid spatial legacy, which remains with us to this day. A key element in this battle is the Integrated Urban Development Framework or IUDF as many of you know it. Emanating out of the IUDF is the Integrated Urban Development Grant, which will enhance the implementation of the IUDF and ensure that our national urbanization policy does come to fruition.

Ladies and Gentlemen,

URBANISATION

The world is urbanizing very rapidly. According to the UN, 54% of the world’s population lives in urban areas. By 2050 this will increase to 66%. This rate is quite alarming considering that in 1950 only three in ten (30%) people lived in urban areas. With the current trends, it is expected that the continuing population growth and urbanization another two-and-a-half billion people will join the world’s urban population by 2050. Ninety percent (90%) of this increase will be in Asia and Africa. Africa is expected to be the fastest urbanizing region between 2020 to 2050. By 2050 most of the world’s urban population will be concentrated in Asia (with fifty-two percent) and Africa (with twenty-one percent).

Currently 63% of South Africans already live in urban areas. This will rise to 71% by 2030, and by 2050 it is expected that 8 out of 10 people will live in urban areas. We therefore need to guide the growth and management of urban areas in ways that unleash the potential of our cities and towns and reverse the terrible legacy of apartheid spatial injustice. Ensuring that these most rapidly developing cities in the world develop sustainably, is of vital importance, not only for our continent, but for our planet.

Whilst the IUDF is a step in the right direction, unfortunately, most of cities are still highly spatially fragmented due to segregated and class-based colonial planning systems and apartheid planning policies. Policies that promote integrated and sustainable urban development are therefore critical, lest we continue to face the downsides of urbanization. It is imperative that we all strive implement national urban policies that indeed promote spatial transformation and thus forge a new economic and social landscape that is a clear departure from the past.

In April 2018, the World Bank released a Diagnostic Report on South Africa. This report reiterates the realities that we already know. It states that: “Many South Africans continue to live far away from job opportunities, in townships, informal settlements, and the former homelands. Where they are closer to opportunities, especially in urban areas, they still live on the outskirts. This makes commuting expensive”. That said, I cannot stress more the difficult road ahead of us in forging a new economic and social landscape. The World Bank report also pointed out another harsh truth that we need to confront – that is that the policies developed after 1994, though very good, did not  lead to the improvement in the quality of lives of our people, as much as we had hoped for. The IUDF is a tool will drive us closer to that outcome.

INTEGRATED URBAN DEVELOPMENT FRAMEWORK

To address the challenges I mentioned already, South Africa has adopted an Integrated Urban Development Framework (IUDF). Cabinet approved this important policy on 26 April 2016.

The IUDF marks a New Deal for South African cities and towns. It will steer urban growth towards a sustainable model of compact, connected and coordinated towns and cities. It provides a roadmap to implement the NDP’s vision for spatial transformation – creating liveable, inclusive and resilient towns and cities while reversing the apartheid spatial legacy.

The IUDF provides key principles and policy levers for creating better urban spaces. It seeks to strengthen rural-urban linkages, promote urban resilience, create safe urban spaces and ensure that the needs of the most vulnerable groups are addressed. The Framework recognizes that the country has different types of cities and towns with different roles and requirements. It is further recognized that urbanization is taking place across our rural-urban continuum, and thus how we stimulate local economies, provide basic services and plan for the future depends on differing intensities, differing needs and differing spatial locations.  Along this continuum, just over 35% of the South African population reside in rural areas, which are mainly anchored by small towns, many of which, nevertheless, demonstrate economic potential. Under the auspices of the IUDF, the Small Town Regeneration Project is being led by SALGA, and major pilots are being initiated in the greater Karoo region.

The Framework also proposes that jobs, housing and transport should be used to promote urban restructuring as outlined in the NDP. The objective is to transform urban spaces by:

  • Reducing travel costs and distances;
  • Preventing further development of housing in marginal places;
  • Increasing urban densities to reduce sprawl;
  • Improving public transport and the coordination between transport modes; and
  • Shifting jobs and investment towards dense peripheral townships.

 SECONDARY CITIES

The IUDF recognizes that intermediate (or secondary) cities are an integral part of the national settlement system, and a key concern for national spatial development.

The populations in large urban centres outside of the metropolitan areas are growing at a similar rate to the metros (23% over the period 2001 to 2011 as compared to 26% for the metros and 10% for the rest of the country).  Elsewhere in the developing world secondary cities are even growing faster than megacities.

This rapid urbanization is accompanied by economic benefits as well. In the period between 2001 and 2011, employment growth in intermediate cities kept pace with the metros and exceeded that of the rest of the country.

Whilst incomes in intermediate cities are well below those in metros, they are growing at a substantially faster rate. The IUDF was developed to equip our cities and towns to prepare for and to be able to respond better to challenges that come with urbanization.

 ICM SUPPORT PROGRAMME

As part of the implementation of the IUDF, the Intermediate City Municipalities Support programme was introduced last year and as part of the inception phase, the City of Polokwane and City of uMhlathuze, were selected as pilots. The purpose of the ICMs support programme is to help translate IUDF policy into practical programmes of action in the ICMs. In so doing the initiative aims to give impetus to achieve the main IUDF goals.

These goals include forging new integrated forms of spatial development; ensuring that people have access to social economic services, opportunities and choices; harnessing urban dynamism to achieve inclusive and sustainable growth; and enhancing the governance capacity of the state and citizens in ICMs to work together to achieve spatial and social integration.

The support offered by the Intermediate City Municipality Support Programme is of three types.

  • The first type of support is IUDF implementation capacity support.
  • The second type is enabling environment support (via legislation, regulations, national and provincial policy, IGR facilitation etc.).
  • The third type of support is access to a more flexible infrastructure grant (the Integrated Urban Development Grant) which is linked to the City’s Capital Expenditure Framework and which supports IUDF implementation.

INTEGRATED URBAN DEVELOPMENT GRANT

As we implement the IUDF pursuing our all-important goal of transforming our spatial form, we made some efforts to become innovative. We have introduced the Integrated Urban Development Grant. This grant is our incentive component to the implementation of the IUDF in the intermediary cities in order to ensure that our infrastructure implementation programmes in these cities are linked to our spatial development framework, which is our spatial transformation tool. The main purpose of the IUDG is to provide funding for public investment in infrastructure for the poor and to promote increased access to municipal own sources of capital finance in order to increase funding for investment in economic infrastructure, with the ultimate goal of ensuring that these public investments are spatially aligned and to promote the sound management of the assets delivered by cities. In essence the IUDG aims to achieve three main outcomes:

  • Improved access to municipal infrastructure,
  • Improved quality of municipal services through infrastructure that is in a better condition, and
  • Improved spatial integration.

We firmly believe that infrastructure investment that is informed by a sound spatial rationale is key to transforming space and unlocking inclusive economic growth. The IUDG is our tool to provide funding for public investment in infrastructure for the urban poor. The IUDG also promotes increased access to municipal own sources of capital finance in order to increase funding for public investment in economic infrastructure. This will be done through the use of a performance-based allocation component in the grant. Lastly the IUDG will assist to promote sound asset management in order to ensure that infrastructure remains functional and that public investment in infrastructure does in fact result in functional urban environments on a sustainable basis.

While the intentions of the IUDG are clear, it is worth noting that the IUDG is currently a consolidation of existing government grants with a 10% incentive portion. It is also important to indicate that the consolidation of the grants into the IUDG is going to be implemented progressively over time, based on negotiations with key national sector departments. This is work that we are currently pursuing with National Treasury.

In addition to this, we are in a process of exploring partnerships that will increase the incentive portion of the IUDG. As part of this process, we aim to mobilize additional grant funding that will allow qualifying ICMs that will meet the agreed criteria to access these additional grants. In essence, these grants will serve as a top up and ensure that the incentive portion of the IUDG is larger.

Another area of work we are exploring with our partners in the IUDF family relates to exposing our intermediate cities to credit ratings. These credit ratings will be a tool that will encourage sound financial discipline and give our ICMs a sense of what they need to do to access additional funding. The credit ratings we are hoping to introduce to our municipalities will also be helpful to prospective lenders. In order to start this process, tomorrow one of our partners USAID under the Water, Sanitation and Hygiene Finance (WASH-FIN) project will be talking to you about the importance of long term investment planning, diversified funding sources, credit ratings – the process, benefits, etc.

We firmly believe that better spatial planning cannot on its own transform space – it requires strong and sustained leadership over a long period of time. It also requires an ability to raise funds needed to budget for long term change and co-ordinate investment across different government agencies. Sustained partnerships with the private sector and citizens are also required. In other words, achieving spatial change requires impact in a variety of areas including governance, sound financial management, fiscal leveraging, service delivery etc.

CONCLUSION

There is no doubt that we have developed an excellent national urban policy ahead of the rest. However, we must implement it, and this is the challenging part. I believe that the introduction and rolling out the IUDG is a critical step to enable our IUDF implementation plan to succeed. Together, taking advantage of the spirit of the New Dawn, giving true meaning collaborative action, channeling our infrastructure investment in our cities in the right places, we will see our spaces transform in a manner that integrates our communities across race and the class divides.

The IUDF, through the Infrastructure Urban Development Grant, gives us the opportunity to ‘Be the Legacy,’ in the local government space. Let us utilize that opportunity to the fullest.

I wish you well and trust you will have fruitful engagements over the next day and a half.

I thank you!