Will Johannesburg be the gateway to Africa?

When discussing the mandates of the Reserve Bank and the Treasury, interested parties should consider South Africa's and, in particular, Johannesburg's role in the African context.

Note that SA’s role as the gateway for foreign investment into Africa is not guaranteed, and even though it has an excellent platform it must not become complacent about its gateway status, global management consultancy Monitor Group, in a report Africa from the Bottom Up, has warned.

Chairman, Mark Fuller, said good gateways tended to have a systemic quality, with highly competitive cities. The opportunity was there for Johannesburg to be the gateway into Africa.
Gateway cities also had to do a lot of networking if they wanted to succeed. The Monitor study argues that cities are critical to economic development — and that the growth of Africa’s cities is one reason why the continent may finally be at a turning point.

Monitor argues that it is not countries, but cities, that compete globally, and economic policy makers must note that. But the subcontinent is not spending nearly enough to build the infrastructure needed to establish its cities firmly, and this undermines sustainable long-term growth.
Middle-income countries, such as SA, should be spending about 10% of GDP, while low-income countries should be spending as much as 20%. The report says public-private partnerships are “one of the most important models for governments struggling to close the infrastructure funding gap and improve productivity and services”. And it emphasises that foreign direct investment is crucial to finance infrastructure and develop competitive cities.

Fuller said Africa offered much better returns on foreign investment than did India or China, and that private sector flows to the region had surged in recent years. The region’s two largest economies, SA and Nigeria, together received more than half the investments studied. However, the report said what was striking was the fact that the quantity of foreign investment flowing into SA was so scanty given the country’s standing as sub-Saharan Africa’s most mature economy.

Perhaps economic policy makers such as the National Planning Commission, the Treasury and the Reserve Bank could develop a new national strategy for the financial system to enhance SA's and Johannesburg's competitiveness and economic growth through financial sector policy reforms which would expand the banking sector to the unbanked, increase employment, and reform monetary policy.