Intermediate Cities as destinations for investment

This dialogue focuses on the infrastructure needs and investment opportunities present in cities outside of the major metropolitan regions.

The urgency of raising South Africa’s growth rate has raised the prominence of large cities as ‘engines of growth’ as a result small cities tend to be neglected. Intermediate cities (a term explained below) have been observed as critical in how well a developing country like South Africa can manage and exploit major social/demographic transitions such as urbanisation and its associated “urbanisation dividend”. That dividend is certainly not guaranteed. Whilst a significant proportion of secondary cities are thriving, many are non-competitive, have weak leadership, weak strategic planning, poor infrastructure, weak access to fiscal capital and poor liveability (especially in respect of attracting stronger human capital (COGTA 2017). Mishandled, urbanisation will merely urbanise poverty.

Intermediate cities are attracting interest because the Integrated Urban Development Framework (IUDF) has drawn attention to their importance. A new Integrated Urban Development Grant will be introduced in 2019 to fund infrastructure for these cities. Finally, many intermediate cities are the very places that South Africa’s heavy industry exists so what becomes of them touches on the shape and direction of our industrialised economy.

The IUDF acknowledges that there is a spectrum of urban municipalities with metropolitan municipalities at one end and municipalities that are approaching a rural spatial form at the other. The term Intermediate City Municipalities has been introduced to refer to the group of municipalities that sit adjacent to metropolitan municipalities on the urban spectrum. An ICM is in essence a municipality which is of intermediate size and is defined as predominantly urban (via density criteria) that nevertheless incorporates both urban and rural components. 39 municipalities have been identified as Intermediate City Municipalities based on an assessment of population density and economic strength.

In 2015, 39 ICM’s housed 14,78 million people (or 27% of national population). In comparison the 8 Metropolitan Municipalities have a total population of 21,8 million (40% of national population). The Metro’s accounted for 52% of formal employment in 2011 whilst ICMs produced 25% of the country’s jobs. The Rest of South Africa (outside of the Metro’s and ICMs) accounts for 37% of total population and 22% of formal employment (Census 2011). Amongst the 39 ICM’s there is considerable variation in the economic base and proficiency of the local municipality. See table of economic types below.

This dialogue is intended to communicate some of the common themes and strategies that national government is working to apply to all the ICMs. It will then dive into the specifics of business and municipal cooperation in an intermediate city local municipality. We aim to hear how stakeholders from business and government are trying to both preserve what jobs exist at the same time as widening access to new jobs and extending infrastructure coverage.

As always, the Dialogue’s goal is to use shared information and facilitated discussion to achieve: an improved climate for policy and decision-making; strengthened cooperation within the infrastructure sector; and specifically, ideas that participants may be able to take forward or apply through their respective areas of responsibility and influence.

List of Intermediate City Municipalities by Economic type

Large Semi-Diversified Mining Manufacturing Service Centre Low GVA/High Pop/High Density
Emfuleni Rustenburg Mogale City Matlosana Bushbuckridge
Msunduzi Matjhabeng Newcastle Maluti a Phofung Makhado
Mbombela Emalahleni Govan Mbeki Nkomazi Greater Tzaneen
Polokwane Madibeng uMhlathuze Thulamela Mafikeng
Rand West Drakenstein Sol Plaatjie Enoch Mgijima
Steve Tshwete KwaDukuza Mogalakwena King Sabata Dalindyebo
Merafong Alfred Duma Ventersdorp/Tlokwe
Greater Tubatse/Fetakgomo Metsimaholo George
Ba-Phalaborwa Stellenbosch Greater Giyani
Lephalale Ray Nkonyeni


To view the presentation click here: Intermediate Cities as Destinations for Investment – 17 May 2018

To view the report from this dialogue click here: 20180517 ID_47 Intermediate Cities_final report REVISED



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