Towards an Understanding of the Economy of Johannesburg: Industrial Nodes Report

Abstract

The character of economic activity in Johannesburg has been shifting over time; away from primary and secondary sectors and towards services. Economic activity is very unevenly spread across the city and not well aligned with areas where the majority of the population lives. There is a need to increase competitive local production as a basis for exports, jobs, and sustainable services growth. This research, which forms part of a project commissioned by the City of Johannesburg, is aimed at better understanding the nature of economic activity in industrial areas of Johannesburg and the challenges being faced by firms in these areas.A survey of firms in two industrial areas of Johannesburg was conducted, which generated data on firm performance and competitiveness, challenges faced, the advantages and disadvantages of the area from a business perspective, and areas where intervention by the City would be most fruitful. Finally, in order to gather more detailed information on firm experiences and to probe into some of the responses given to the survey in more depth, 10 firm interviews were conducted in each area.This working paper presents the findings of the firm survey and interviews and provides insight into the nature of economic activity and the difficulties currently being faced by firms operating in industrial areas in Johannesburg. It seems that firms are facing a broad range of challenges and economic conditions are generally not favorable. A major concern for firms in both areas is the poor quality of infrastructure. The paper goes on to discuss policy interventions which could be effective in stimulating greater economic activity and employment creation in Johannesburg, focusing particularly on areas where the City can influence outcomes and encourage agglomeration economies which can improve efficiency and lower firms' costs.