What of the Economy?

Words: Kirsten Harrison

Public investment in Soweto is significant, but is matched by only selective private sector input, notably in retail and housing. Soweto still lacks robust commercial and industrial sectors 

In 2006, Amos Masondo, the former mayor of Johannesburg, declared that Soweto “needed to be normalised” and function like “other settlements with malls and places of leisure”. If recent government and some media reports are to be believed, that outcome has been achieved. Soweto, the largest township in South Africa with a population of over 1,3 million residents, is said to be experiencing a renaissance.

As the epicentre of the anti-apartheid movement in the 1970s and 1980s, and from its iconic position within national politics, it is understandable that a new post apartheid Soweto would be an important symbol of transformation for the City of Johannesburg. With 40% of its metropolitan-area population currently residing in Soweto, the progressive transformation of Soweto from a dormitory-style township to a set of sustainable neighbourhoods would represent a triumph for new approaches to development. In a chapter Philip Harrison and I authored on Soweto for a forthcoming edited volume on Johannesburg, we however argue that urban development in Soweto remains highly differentiated and that the effects of public investment are more ambiguous than sometimes suggested.

The City of Johannesburg has invested considerable amounts of public money into Soweto. One of the most impressive public projects was the gravelling of 314 km of roads, a two-year project completed in 2007. Simultaneously, the city began an active campaign of greening Soweto which resulted in the planting of 120,000 additional trees by 2010. There has also been the rehabilitation of existing public spaces such as Thokoza Park, the introduction of the Bus Rapid Transit (BRT), construction of the Soweto Theatre, and development of the Baralink transport interchange project and World Cup soccer venues. There have been catalytic projects too, selected to smooth the way for private sector investment, including Orlando eKhaya and the establishment of the Soweto Empowerment Zone (SEZ). Currently the city is investing billions of rands in “corridors of freedom” with transit-oriented development at its core. However, most of these projects have focused on a specific set of areas in Soweto, leaving many other neighbourhoods marginalised and excluded. So how far has Soweto really come? The transformation of Soweto into a “vibrant centre of economic activity,” as its boosters suggest, has not as yet materialised. This is partly because Soweto’s development is, and continues to be driven by state- housing developments and public infrastructure investment. While public investment is important, it cannot unilaterally build a more diverse economic base, which is vital to addressing issues such as local unemployment. The city needs the private sector’s involvement to realise this. The current discourse suggests that partnership approaches are optimum for development, but in truth the private sector remains wary. The private sector’s most significant investment is in the retail sector. Given the restriction on retail development in Soweto under apartheid this was an obvious  investment choice. A 2003 economic analysis of Soweto by the City of Johannesburg estimated that 80% of Soweto’s disposable income was spent outside of the township. The implication of this was that there was massive scope for retail growth. A follow-up retail strategy report published in 2005 suggested that there was enormous demand for retail space in Soweto.

The publicly funded development projects in Soweto have certainly helped to change the landscape in a positive way. But the structural problems with the local economy remain

It was during this period that Soweto’s numerous malls were constructed, notably the Protea Gardens Shopping Centre (2005), Jabulani and Bara malls (both 2006) and 65 000m2 Maponya Mall (2007). Further retail developments have followed, notably with Protea Glen Mall and Diepkloof Square, both opened in 2012. But questions have been raised about the viability of so many malls in the long term, especially in the absence of other forms of investment. The effect of the malls on small businesses and Soweto’s survivalist informal traders—a crucial part of the economy and integral to local economic development—is also an area of concern.

Another economic area that has seen some growth in private sector investment is the development of private housing estates. Responding to the needs of an “aspirant middle class”, private developers began building new mixed-use housing on the fringes of Soweto post-1994. Major new developments in areas such as Naturena and Devland provided new housing stock for these first-time buyers. Affordable housing company, Calgro M3, has been successful in developing mixed-use affordable housing in Soweto. Their latest offering includes 4,000 new residential units in the Jabulani CBD.

As happened with the retail market, there was a great deal of hype around the performance of the residential property market in Soweto in the mid-2000s. Real performance has, however, been subdued. Work done by the Affordable Land and Housing Data Centre (AL+HDC) demonstrates that in almost all of Soweto’s 27 housing neighbourhoods, the average annual turnover of properties through formal sales (referred to by housing industry specialists as “the churn”) is less than 2%. The only noteworthy activity is in the new aspirational middle-class suburbs. Protea Glen, Devland and Naturena have performed best, reporting churns of 4.9%, 3.4% and 3.1% respectively between April 2011 and March 2012. In the period 2004-11, 57% of all Soweto house sales came from Protea Glen, Devland and Naturena, with 38% from Protea Glen alone.

In the poorer parts of Soweto there were very few formal transactions,  but even in more established areas, such as Orlando, Meadowlands and Dube, the turnover of properties remains low. The number of overall property transactions in Soweto has also dropped over the past five years, most likely consistent with national property market trends. Soweto lacks robust commercial and industrial sectors. The city did attempt to support local business through the SEZ, which was intended to be an incubator for small, medium and micro enterprises. To date, however, there has been limited success and take- up. In general there is only a modest manufacturing sector and a very small demand for commercial private office space. Some private offices are being developed as part of the Jabulani CBD project, a precinct which is already experiencing investment and has the benefit of being deemed Soweto’s urban heart. Orlando eKhaya, an impressive mixed-use development plan, has to date not yet constructed its retail development in the disused Orlando Power Station, nor its commercial spaces. Overall it may be more appropriate to consider Soweto’s transformation a qualified success. The publicly funded development projects in Soweto have certainly helped to change the landscape in a positive way, but structural problems within the local economy remain. The city’s executive has conceptualized big projects to court private sector investment but with little leverage.

So what now? Certainly the projects focused on building sustainable local neighbourhoods are critical but so too is investing meaningfully in areas of Soweto that remain marginalised and have not been the recipients of the government or private sector resources.

Adapted from a chapter on Soweto from the forthcoming book, Changing Space: Johannesburg in its City Region (Wits University Press provisional title). 


2 Responses to What of the Economy?

  1. Avatar
    Zak May 9, 2014 at 10:11 am #

    Great factual piece. I wish you could understand the dynamics a little bit more with regards to the community that resides in Soweto. Due to historical reasons townships are the only places in South Africa where there is a cross section of classes that reside in them. It is the only place where in the same street you will find a millionaire living next to a house where the family can barely afford a loaf of bread. This has impact on how the development of areas such as Soweto should be addressed.

    For example, on the surface it seems very impressive to build a world class theatre in soweto. But a closer look, when the supposed beneficiaries dont have a culture of watching plays, then the “community entertaiment centre” is useless and becomes a white elephant.

  2. Avatar
    Dotg May 10, 2016 at 12:01 pm #

    what about the tourism statistics –
    visitor numbers

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