Johannesburg – A world class African city?

Out of 30 cities ranked as ‘cities of opportunity’ by global auditing firm PwC, Johannesburg comes in at 23rd place. Put another way, Johannesburg comes 8th last out of 30 cities, half of which are classified as mature and half as emerging.

The PwC report assesses how well-balanced a city is in terms of forward-looking issues such as education and technology; the quality of life that makes cities healthy, happy and sustainable; and the ability to pay for it all.

“London claims first place by a clear margin, with New York and Singapore close behind,” says PwC. “Two other cities renowned for their exceptional quality of life, Toronto and San Francisco, rank fourth and fifth.”

In the overall rankings, Johannesburg is placed just behind Moscow and Mexico City, but is ahead of Buenos Aires, Istanbul, São Paulo, Rio de Janeiro, Mumbai, Jakarta and Nairobi.

The city may not have decent broadband, it is lacking in acceptable public transport systems, air pollution is bad, no one can do equations and fractions, and crime levels are sky high. But it has impeccable on-time flight departures (based on Acsa information), the weather is enviable, and Joburg is apparently a very cheap place in which to conduct business.

PwC’s 2014 ‘Cities of Opportunity 6’ report reflects a wide range of factors which contribute to successful cities and resilient urban communities. The survey is based on 59 variables, organised into ten indicator groups, using many information sources.

Cost

Johannesburg performs particularly well in terms of the cost indicator, boasting third top place, ahead of every city except Los Angeles and Chicago. There is value for money here in terms of variables such as corporate tax rates, cost of business occupancy and cost of living measurements (excluding accommodation). However its rankings on purchasing power and how many working hours it takes to buy an iPhone, are average.

Cost of living is highest in Sydney, but the exceptionally well-paid Australians take top spot when it comes to strong purchasing power. New Yorkers can afford their electronic gadgets the quickest. Labour in Jakarta has the lowest purchasing power and has to work the most hours in order to buy their phones.

Demographics and livability

This is one of Johannesburg’s ‘better’ rankings, at 12th from bottom. Drilling down into the detail, it ranks at 9th bottom on cultural vibrancy in terms of its ‘Zeitgeist’ or spirit; and quality of living, which looks at factors such as socio-political stability, natural environment, and culture, is 8th bottom.

Paradoxically, traffic congestion is not considered to be a problem at all, but the commute to and from work is viewed as a challenge. The ‘ease of commute’ variable was in fact voted on by PwC staff, so getting to Sunninghill offices must be a morning mission. PwC staff across the world were also interviewed on where they would most like to relocate, out of all cities in this report, and Jhb was ranked 9th bottom, lacking relocation appeal.

City gateway

Joburg is low on this indicator, in 10th place from the bottom. It ranks exceptionally badly on variables such as hotel room count, international tourist arrivals and passenger flows. But our airport-to-CBD access is ranked close to the best, thanks to the Gautrain phenomenon, with only Dubai, Madrid and Beijing beating us on this direct rail link connection. Joburg airports are also respectably ranked – and it comes in first place for on-time flight departures.

Intellectual capital and innovation

Joburg ranks 7th from the bottom on this indicator group, which looks at variables such as maths and science skills, public libraries, literacy, higher education levels, and university rankings. Granted, many of these variables are driven by country-wide policy. On maths and science skills attainment, Joburg comes in stone cold last, with Shanghai ranked best on this issue. Joburg is second from the bottom when it comes to percentage of the population with higher education, literacy is poor, and its local universities are not that well ranked in global terms.

Positively, its intellectual property protection mechanisms are very strong, ahead of the four US cities included in the report.

Technology readiness

Joburg ranks 7th from the bottom on this indicator, which evaluates schools’ internet access, broadband quality and ICT infrastructure. Again, these are mostly countrywide problems. It is in last position on schools’ internet access where Singapore is the best, and 8th last on quality of broadband, where Seoul takes first place.

Health, safety, and security

Joburg is ranked 9th bottom out of the 30 cities on this indicator group. On health system performance, it is very bottom of the pile. It is second last on crime, with Rio being even more dangerous, and the Far East cities of Hong Kong, Singapore and Tokyo being most safe.

Sustainability and natural environment

At a ranking of 6th from the bottom, this is disappointing considering that Joburg’s weather and humidity levels are ideal. It ties with Sydney on this ‘thermal comfort’ measurement, and only Mexico City, Nairobi and LA have better climates. A detractor for Joburg is that way too much municipal waste is going into landfill.

Its air pollution is high, at 8th from the bottom, with Sydney having the cleanest air, and Mumbai and Beijing being most polluted. Interestingly, Joburg’s natural disaster risk is also ranked quite highly, considering that Joburgers do not live in fear of hurricanes, earthquakes, landslides and volcanic eruptions. Berliners are best at recycling and Stockholm has best public parking.

Economic clout

This is a weak ranking, at 4th bottom, behind most of its emerging market peers. There is not much foreign direct investment into the city, and its productivity levels are poor. Rather, the world is investing in Shanghai, Singapore, London, Dubai and Hong Kong.

Joburg’s rate of real GDP growth for the period covered by the report is average and it understandably beats most of the developed cities of Europe and North America, but its emerging market compatriots leave it behind in terms of their dynamic economies.

Ease of doing business

Joburg is in the middle of the pack on this indicator when it comes to ease of starting a business and employee regulations. On the variable of operational risks, which looks at factors such as political stability, government effectiveness and labour markets, Joburg is ranked at 12th from bottom. It is presently very well ranked on ‘ease of entry’ which looks at the number of nationalities that can enter a country for tourist or business purposes without a visa.

Transportation and infrastructure

This is Joburg’s worst placement, coming in 2nd from bottom, just ahead of Nairobi in last place. It does not have enough efficient, safe and reliable public transport systems; and mass transit coverage is minimal. It is in last position on major construction activity, and many Joburgers will confirm they have yet to see evidence of government’s huge national infrastructure spend in their home city.

“Given Johannesburg’s history and deeply rooted challenges, the city is to be commended for climbing five places since our last report to rank #23 overall” says PwC. The firm points out that the city “would benefit generally from improvements in transport and infrastructure, sustainability and the natural environment, and health, safety and security. Areas that require particular attention are healthcare system performance (last place), crime (second last), the public transport system (third last), and recycling (near the bottom).”

“Making progress in these variables will not only enhance the quality of life of the city’s residents, but boost Johannesburg’s competitive credentials and economic development—which will, in turn, increase its economic clout, which, at #27 overall (4th from bottom), can also be improved.”

As PwC’s data for this report was collected mostly in the second half of 2013, Joburg is at risk of deteriorating on a number of counts. South Africa’s very stormy, strike-afflicted H1 2014 will surely impact on factors such as operational risk, and the Q1 contraction detracts from our economic clout.

And the recent and controversial changes to our immigration laws and border controls will undoubtedly jeopardise our ability to interact with the rest of the world.

Johannesburg – A world class African city?