Insights
Building a city resilient against state failure: Cape Town Mayor’s progress update
After almost four years as Mayor of the City of Cape Town, Geordin Hill-Lewis has turned Cape Town into something of a South African success story, making significant progress towards achieving his goal of making the city "resilient against state failure," and laying the foundations to support the city’s big ambitions.
Hill-Lewis shared his vision for the city at a recent Stonehage Fleming client event: “Our strategy here is to build a resilient city, a city that closes the gap where there are failures and that takes on problems that others are not solving, if they are essential to the future success and the lifeblood of the city.”
Ramping up infrastructure spending
Hill-Lewis inherited a city spending R4 to R6 billion annually on infrastructure, not nearly enough to keep up with Cape Town's growing population. His solution was simple: spend more. A lot more. The city now invests between R12 billion and R15 billion every year, with a commitment of R40 billion over the next three years.
To put that in perspective, Cape Town now spends more on infrastructure than Johannesburg, Tshwane, and Ekurhuleni combined. "We celebrate it from a Cape Town perspective because we get very competitive about these things," Hill-Lewis admits. However, he's quick to note this isn't really something to celebrate - it just shows how little other cities are investing.
But throwing money at problems doesn't automatically solve them. The city first had to build capacity, investing R100 million in new engineers and project managers. They've been recruiting talent from other South African cities and even luring engineers back from Dubai and Canada. The results speak for themselves: Cape Town went from struggling to get a single major project off the ground to having broken ground on every infrastructure project in the pipeline.
The projects are impressive too - the world's largest water reuse plant, desalination facilities, and massive upgrades to wastewater treatment. When domestic borrowing proved too expensive at 11.5% interest rates, the city got creative, securing better deals with German and British development banks. They're even in talks with the World Bank for opening the way for raising direct city loans - something usually reserved for national governments.
Taking over the provision of essential services
Hill-Lewis realised early that some essential services, controlled by the national government, were holding Cape Town back. So he decided to fight for them. Through what he calls "sheer bloody-mindedness," the city has made remarkable progress on three fronts that seemed impossible just a few years ago.
Cape Town's port is now included in Transnet's privatisation plans. It wasn't even on the agenda when Hill-Lewis started pushing. The presidency has committed to passenger rail devolution, and the city has secured a written agreement to take over investigative policing powers (though they're still waiting for signatures).
These efforts are backed by a serious investment in 700 additional Metro Police officers, which represents the largest safety investment since 2009. The message is clear: if national institutions can't deliver, Cape Town will step in.
The city applied the same approach to homelessness. Rather than engaging in endless debates about whose responsibility it is, they got on with it. Seven major homeless encampments have been cleared, transforming a city that "couldn't win a contested parking ticket" five years ago into one that now wins every eviction case through carefully crafted legal strategies.
The economic and regulatory successes
While the rest of South Africa hasn't recovered to pre-COVID tourism levels, Cape Town has well exceeded them. Emirates just announced three daily flights, and United Airlines moved from three weekly flights to a daily service. More importantly, Cape Town is the only South African city actually creating jobs while others are shedding them - no small feat in a country with 40% unemployment.
The city created its own Ease of Doing Business Index after the World Bank scrapped its own index due to concerns about China manipulating its data. Over 500 Cape Town businesses now rate the city annually on key challenges, creating public accountability for performance.
A major regulatory overhaul of building plan approvals is scheduled for July, which is aimed at reducing the number of applications by 20% to 30% in an overwhelmed system. It's part of Hill-Lewis's philosophy that systems should be designed for 3% to 5% economic growth, not for a failing economy.
The cost of progress
All this progress comes with a price tag, and that is the reason for the significant increase in rates proposed by the local government for multi-million dollar property owners. These haven’t been greeted favourably by the ratepayer base, with affected property owners raising concerns about their affordability. Hill-Lewis explains that the city structured rate increases to protect lower-value properties while imposing heavier rate increases on higher-end homes. However, he has agreed to modify the rate increases in the R3-7 million property range, recognising that people falling into this category are relatively wealthy but not necessarily cash-rich.
Hill-Lewis notes that Cape Town still has the lowest municipal rates in the country while delivering the most ambitious infrastructure program. Additionally, he emphasises that Cape Town relies almost entirely on its ratepayer base to fund the programmes needed to boost economic growth to a level that aligns with its substantial population growth.
Building the foundations to achieve breakout growth
Cape Town's population of 5 million is growing at a rate of 2.8% annually, resulting in exponential infrastructure demands. Hill-Lewis acknowledges the city needs what he calls "breakout growth". The city has consistently outpaced national economic growth by approximately 50 basis points, but this margin doesn’t keep pace with population growth.
Addressing the shortage of human capital required to support the Mayor’s growth ambitions presents a significant challenge. While senior engineers are flocking to Cape Town from other cities, young professionals, including many black professionals, continue leaving for Dubai, Canada, and elsewhere. The city has restarted university bursary programmes with five-year service requirements, hoping exciting projects will convince graduates to stay.
Hill-Lewis has transformed Cape Town through massive infrastructure investment, creative problem-solving, and taking on responsibilities typically handled by the national government. The city has successfully attracted investment, created jobs, and delivered services, while other South African cities have struggled. But he acknowledges that even with these successes, it will be difficult to achieve his future ambitions for Cape Town if the other South African municipalities continue to struggle to meet the needs of their constituencies.