The majority of the South African literature on participatory development has suggested that the ANC government's approach to participation actually restricts citizens' ability to influence development. While scholars have exposed some of the dominant trends which are associated with the government's approach to participation, this article argues that they have not sufficiently considered what can be called the more 'hidden' terms within which reformed participation in development may occur. It suggests that reforms in the government's approach to participation, which enable certain residents to affect important decision-making processes, can co-exist with broader neoliberal politics. While neoliberalism has many implications for development, this article focuses on the way in which neoliberal policies limit development possibilities through fiscal austerity. It draws from Cornwall's (2002, 2004) concept of 'invited' participatory spaces and Cooke and Kothari's (2001) notion of participation as 'the new tyranny' to provide insight into the politics behind the Alexandra Development Forum (ADF) and its relationship to the Alexandra Renewal Project (ARP), a R1.3 billion flagship project undertaken by the South African government. The article illustrates that the key policy change which resulted from the partnership between the ADF and the ARP led to the reprioritisation of resources from one poor group to another and thereby does not contribute significantly towards the improvement of people's lives. Far from enabling residents to transform development, participatory spaces like the ADF largely remain a managerial tool in the hands of the ANC, with fundamental similarities to those spaces adopted by the World Bank.