On Wednesday, the Gauteng department of economic development hosted a seminar for prospective Johannesburg shareholders — targeted specifically at black, female investors — to promote public participation in inner-city regeneration.
One focus of the seminar was the urban development zone’s (UDZ) tax incentive for renovators looking to invest in the city.
This incentive works in the form of accelerated depreciation on the costs incurred when erecting, renovating or purchasing designated sites or structures in the inner city, and is aimed at making investment in the inner city more attractive.
“These narrowly targeted capital allowances are used to attract development to areas where interest would otherwise be lacking,” said the department’s Lebo Ramoreboli on Wednesday.
“These incentives give investors greater control over their bottom line and overall business success, which in turn allows the city to deliver on its rejuvenation mandate, allowing investors from various backgrounds to take part,” Ramoreboli said.
Ramoreboli said that since 2004 the department has been engaged in about 130 rejuvenation projects in the inner city, but of these only 2% have come from black economic empowerment (BEE) investors.
She said factors such as access to adequate financing are a great hindrance to previously disadvantaged individuals. “There are still challenges inhibiting BEE investors,” she said.
State initiatives such as the Better Buildings Programme (BBP), run by the Johannesburg Property Company, were also under discussion. The BBP is one programme that allows redevelopers to take over inner-city buildings that have run up huge utility bills, in exchange for a rates rebate.
It was criticised by one seminar participant who called it “hostile” to BEE investors. However Ramoreboli refuted this, saying: “I don’t think that has been the case. It’s just that there are very stringent regulations to offloading some of the city’s properties … Because of building hijackings and things like that, the requirements became very stringent, and that may have affected BEE investors.”
Ramoreboli added that the BBP will have to reassess its participation requirements to ensure that more BEE investors are included.
However, councillor Parks Tau, a member of the Johannesburg mayoral committee, added that there still needs to be “objective criteria” when assessing people for projects like the BBP. “It does not constitute a viable approach to open it up to everyone … we must create opportunities [for more investors] but there needs to be a reasonable base of success,” he said.
Tau agreed that there is a need to “stimulate” projects like the BBP. He said the government and private sector need to work together to achieve this, and emphasised the need for women, youth and BEE parties to get involved.
Beefing up the city
Douglas Cohen of the department’s information and communications technology (ICT)support programme further discussed the creation of an effective business investment zone within the city.
He noted that by 2009 there will be an estimated 600 000 new jobs in Johannesburg. Cohen said the CBD offers the best value to potential investors as it is the home of banking powerhouses, and it offers world-class expertise in financial services and products. It is also a geographical focus area, and it provides access to a huge labour market.
Increased investment will bring more people into the city, making Johannesburg a 24-hour hub that will need to provide for the people it attracts. He identified six critical areas of concern: property, ICT/connectivity, skills development, transport, safety and security, and amenities.
To attract investors and businesses, Cohen said the city will need to offer services such as large and open-plan spaces at reasonable rentals; effective, safe and reliable (24-hour) transportation; internationally accredited certifications and an available competitive labour pool; a highly technical ICT environment, including reliable and affordable power supplies and connectivity; visible policing; and basic needs facilities, as well as those for entertainment and well-being.
“The CBD is already well set-up to accommodate day-shift and after-hour requirements, but will need to beef up [to attract more business investment],” Cohen said.
“We hope that this investment trend will continue and that we will see the emergence of investment opportunities as South African and foreign direct investment flows into the heart of the City of Gold to help transform our city into a world-class African city by 2030,” Tau emphasised.