inlsa

Economies, whether local, regional or national, need the characteristic of a spider web to grow. They need to keep as much money as possible within the boundaries of the area.

Townships often suffer a loss of wealth as people spend their money elsewhere. They shop in the central parts of the city, or in malls, and the money does not circulate within the communities where they live.

Nations, like ours, that import too much, send their money to other countries, thereby inhibiting domestic growth.

In order to compensate for this loss, foreign investment is promoted. Townships and rural areas try in vain to attract investment from outside. What is also true, regrettably, is that prosperity achieved in other areas does not generally find its way into these deprived areas. Reliance on “trickle down” has proved to be wishful thinking.

Cities, too, must attract money, and, having done so, must find ways of managing this so that the citizenry, including the poor, benefit from the windfalls.

I am not sure that we are very good at this. The benefits that accrue from tourism, for example, go directly to hotels and other businesses within the hospitality sector, but the route along which they must travel if the city, in the broader sense, is to enjoy them, is a lot more circuitous.

Among the elements that are important, but often not clearly understood, are job creation, an increase in property values, enhanced rates income as a result of this, additional income from the sale of services and the somewhat mystical matter of economic impetus.

Development stimulates development and tourism stimulates tourism. The important legacies of events such as the COP17 climate change conference and the 2010 soccer World Cup to Durban are to be found in how many people who would otherwise not have thought of visiting the city, will do so, or, perhaps, speak well enough of their experience to persuade others to visit. It is impossible, therefore, to quantify the benefit of these events.

People who live in cities are oblivious, for the most part, of the highly competitive terrain in which the world’s cities compete with one another to capture the imagination and commitment of investors and tourists. They spend millions on marketing and the establishment of institutional structures to manage the business of raising their profiles.

There is nothing quite as valuable in this environment as exposure on the television screens of the world, especially if the audience rises to several hundred million. Among these, there are large numbers – surely a majority – who had not heard of Durban before the World Cup or COP17.

Some may question whether international exposure of this magnitude is worth all the fuss, but its validity is proven by the prevalence of investment in television marketing – investments made by companies, cities and countries. They do not pay for advertisements; they support events that provide the content for insatiable TV channels.

Top Gear is one of the most watched television shows in the world. It will be staged in Durban and will be seen by at least 350 million fans around the world. This, in my view, is almost priceless.

The city has decided to make the investment. In due course, a full spectrum of information will put the city’s offering into perspective. Hitherto, the objectors have heard just a small part of the whole story.

Money will pour into the city, testing the strength of its spider web, and testing its capacity to manage the distribution of prosperity so that the benefits do not accrue to just one economic sector, or to wealthy people alone. At the same time, it is salutary to remember that events of this nature occur too infrequently to sustain the economic growth that we need.

They are invaluable as injections of new money and spurts of economic activity, but they do not represent true endogenous growth born and nurtured within the city. This is at the very heart of a spider web economy.

It is important, therefore, that the city not confine its efforts to “buying” economic growth, but works systematically to improve its business and economic environments to encourage investment and growth from within.