City capabilities

Powers and incentives

Using the fiscal, legislative and persuasive power of government to create change

City governments have wide powers to influence the way people and businesses operate on a daily basis, and these behaviours affect a wide-range of city outcomes.

The power of government can be thought of as a spectrum (see table). At one end are measures which are less intrusive, easier to implement and often less costly. At the other are penalties and laws which impede rights and require legislation - often by higher levels of government.

Some problems can only be solved with complex legislative solutions, or significant spending - roads must be built and land use controlled by law. But good outcomes can often be achieved in other ways: Flexible working can ease rush hour traffic; city-improvement districts incentivise regeneration.

We find that cities often conclude that problems are too hard to solve because they require legislation they cannot pass, or funds they cannot find. Bigger change does not always require more power.

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Digital city

Embracing innovation in technology, in the workplace, and in the way the city does business

“Smart Cities”, “Digital”, “e-Government” - for cities trying to provide better services than the day before under increasing pressures, what does it all mean? While the jargon can be hard to define, the benefits available to cities are very real.

First, cities should ensure that their digital strategies are aligned to their overall strategies. Digital can help achieve efficiencies, improve engagement, gain trust and build new economic activity – which are most important in your city?

Next, cities should understand the digital solutions that are available and relevant to them – drones may sound cool – but nano-drones that fix leaking water pipes are worth looking in to.

Traditionally cities have bought technology like any other asset, but doing digital business is different. Government’s role as a buyer will decrease and cities must find the right balance between procurement, collaboration, regulation and incentives to ensure a public-private digital environment that provides the best outcomes for citizens.

Finally, cities should go digital themselves – embracing not only solutions but new ways of working and thinking, to become productive, innovative organisations.

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Infrastructure and transport

Integrating growing cities

Cities are already home to more than half of the world’s population.This rapid urbanisation is placing huge demands on infrastructure, services, job creation, climate and environment.

Increasingly our governments and communities understand that a fundamental shift to how we plan is needed to be able to address our citizens’ needs and provide adequate access to available opportunities.

Alongside this, the current reality for commuters is long and unpredictable travel times and for the most vulnerable, this wasted time leads to loss of valuable income and, potentially, employment.

It is vital to find ways to assist and encourage city planners to make transport systems sustainable and able to move more people. This includes ensuring the equitable sharing of land development costs and benefits in order to meet both financial and broader socio-economic goals. Only by ensuring that developers are incentivized to minimize the amount of required travel using an appropriate mix of developments will allow for future cities begin to move and grow sustainably.

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Urban intelligence

Collecting and analysing big city data to solve big city problems

The information explosion due to digitisation is revolutionising city planning and management. To operate effectively in a rapidly changing environment, cities need to make data-driven decisions quicker and smarter than ever before. Insights generated by data and analytics are empowering cities to deliver intelligence in the moment, turning disruptive megatrends into opportunities for differentiation.

Smart cities around the globe are increasingly seeing data and analytics as a strategic enabler to deliver on their promise to their citizens. They are using the insights from analytics to improve the quality of their decision making, management of their risks, the efficiency of their operations and finances, and performance of their people.

Analytics solutions are helping cities successfully tackle the myriad complex challenges they face, from alleviating traffic congestion, to improving service delivery, increasing safety and developing future-fit infrastructure for a growing population.

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Data-led delivery

Ensuring progress by measuring results and driving improvement

City strategies and 5 year plans often fail to set out the specific metrics against which their success should be measured – and what gets measured gets done. The resulting failures erode trust in government. Instead, cities should back up their goals and objectives with rigorous data collection and analysis.

This can be benchmarked against other cities, departments or even the private sector to highlight weaknesses and best practice. Making city data ‘open’ can encourage third parties to uncover unknown points of concern.

Many national and city governments have adopted ‘Central Delivery Units’ that actively drive the delivery of signature policies – though care should be taken to avoid rolling out top-down targets that demotivate staff.

And successful delivery is about more than just data:

How do you define city success? Economic growth? More green spaces? Less income inequality? These answers will differ to different people in different places. Politics and funding constraints will play a part, and city leadership will be key - change will not stick without the right culture, which must be driven from the top.

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Urban finance

Putting taxpayers’ money to work

Government finance affects all other areas of city operations, often in ways that do not apply to the private sector. Fiscal dependence (on national government) has political ramifications and, because cities raise finance from the markets and encourage investors to invest in their town, the City CFO must be a diplomat as well as an accountant.

But they often don’t perform well at the basics

•       Revenue management (debt collection) – levels of bad debtors in local government is typically much higher than that in the private sector. This failure to utilise working capital represents a distribution of city resources towards those that don’t pay their debts

•       Cash management – likewise, there is rarely any attempt made to use cash productively - cities often have large bank balances

•       Balance sheet – cities have enormous balance sheets, but rarely leverage this, even in the face of large infrastructure deficits

Why?

•       Skills – cities can rarely afford to employ the best and brightest finance staff

•       Regulations - some cities are heavily restricted in how much they can borrow or spend

•       Conflicts of responsibility – Cities have an interest in not forcing citizens to pay debt if they cannot afford to, as the ultimate cost will be borne by the city (in poor citizen outcomes, crime etc.)

•       Uncontrollable factors – cities are mandated to pay more housing benefits if homelessness increases, and will receive less electricity revenue if the national grid experiences outages

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People and culture

Cities are people

Cities are often the biggest employers in town, with tens of thousands of staff, many of whom interact personally with citizens. But cities are monopolies - knowing that a customer (citizen) can’t go anywhere else is a recipe for complacency and bad service.

City departments traditionally do not work well together - or with other levels of government or the private sector - to achieve the best outcomes. Such collaboration requires the right culture.

Strong leadership is one of the most important determinants of good culture - but city leaders are often chosen not because of their leadership ability, but because of politics

Many city competences are highly skilled – from the traditional (finance and infrastructure) to the modern (digital, data analytics). Finding and retaining people with these skills is important, but often difficult as public sector work is either seen as boring, overly bureaucratic or poorly paying.

And the world of work is changing. New trends such as flexible working and virtual teams require good laptops and good connectivity. Automation and robots have been transforming private sector jobs for many years. Digital cities are next…

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Contact us

Jon Williams

City and Urbanisation Leader, PwC South Africa

Tel: +27 (0) 21 529 2000

Kalane Rampai

Government and Public Services - Advisory Leader, PwC South Africa

Tel: +27 (0) 11 797 5395

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