Western Cape Economy: Leading the Way

Posted On Tuesday, 18 December 2012 08:48 Published by eProp@News
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The Western Cape, South Africa’s fourth largest province, continues to outstrip the rest of the country in terms of economic performance and growth prospects. 

At the same time, Cape Town, the "Mother City", remains one of the top destinations in the world, attracting both capital investment and intellectual capital.

In September this year, the provincial Minister for Finance, Economic Development and Tourism, Alan Winde, presented to the legislature his review of the current and future state of the province's economy, stating, "As was the case in 2011, our economy is expected to grow faster than the national economy. Overall, economic growth in the Western Cape is forecast to average 3.9% between 2012 and 2017."

This year's growth, however, is expected to ease in line with the national economy which has slowed during the year and is now showing signs of further strain due to the on-going effect of wildcat strikes, massive wage agreements and downgrading by international rating agencies. There is a steady stream of "migration" to the province from other areas of South Africa – not surprising given the more favourable socioeconomic conditions to be enjoyed. According to Census 2011, there are 5,8 million people resident in the province. The population grew by 29% between 1996 and 2011, the highest rate of growth in South Africa. Runner-up is Gauteng.

Most new Western Cape residents came from the impoverished Eastern Cape, whose share of the national population has fallen from 15,1% in 1996 to 12,7% last year. The flow from the Eastern Cape is one of the largest migration streams in South Africa. 

In his address Winde points out that the average annual income per person in the Western Cape is R42 155, slightly more than that of Gauteng and far ahead of the national average of R25 000 per annum. Economic activity and service delivery have developed to higher levels than in other provinces. Says Winde; "Indeed, largely due to the efforts of the DA government in the City of Cape Town and in the Western Cape government, over 80% of households have access to basic services, including water, sanitation, refuse removal and electricity." He adds: "The Western Cape offers the best quality education in South Africa, by far."

At 70%, the services sector now dominates the province's economy. Real estate, finance, insurance, business services, tourism, retail and wholesale, catering and accommodation, transport and communication services have shown rapid growth in the last decade. The communications industry (including call centres) is expected to be the fastest-growing sub-sector – with real value added growth forecast at 8.5% per annum. Overall, the services sector is leading the growth charge. Services' sub-sectors performing well include business services and the finance and insurance sector.

The services sector is expected to return real growth of 4.1% . Services sub-sectors expected to do well include business, catering and accommodation and the finance and insurance sector. Tourist activity is growing.

Pressure is on the province to further improve its export production. The Western Cape's dominant trading partner is the European Union, the second being neighbouring African states, namely Angola, Mozambique, Zambia and Zimbabwe. The export of Western Cape goods has grown from R25.1 billion in 2001 to R54.7 billion last year – a growth rate considerably greater than South Africa as a whole. Unemployment, however, as with the rest of the country, remains a challenge.

Official figures show the number of unemployed increased by 550 000 during the first quarter of this year.

The goal of job-creation, says Alan Winde, has been incorporated in Future Cape, a strategy development process with Western Cape leaders from all sectors aimed at formulating a plan to
drive down unemployment.

A major development this year has been the launching of the Economic Development Partnership.

This cross-sector partnership, incorporated as a non-profit company, aims to address the problems of persistent poverty, inequality and unemployment. In spite of the province's ongoing socio-economic problems, the Western Cape leads the country in the sphere of education – by a number of educational assessments, both national and international. Winde comments: "The Western Cape's performance lies between 1.5 and 2 standard deviations above the South African average, and is well above that of any other province in every single one of these tests.

 Source: Pam Golding Property Group

Last modified on Tuesday, 18 December 2012 08:54

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