city of tshwane an overview of the economic landscape shaakira karolia chief economist: city of...
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City of Tshwane
An Overview of the Economic Landscape
Shaakira KaroliaChief Economist: City of Tshwane
Glossary of key terms• CoT City of Tshwane• DDS Democratic Developmental State• GDS Growth & Development Strategy• Gini co-efficient
• Value lies between 0 (absolute equality)and 1 (absolute inequality) and is a measure of income inequality that is comparable on a global scale
• GVA Gross Value Added• Can be thought of to be similar to GDP (Gross Domestic Product). GVA, however, holds increased
relevance for municipalities• HDI Human Development Index
• Value lies between 0 (least developed) to 1 (most developed) and is an indication of the overall level of human capital development within a nation
• ICT Information & Communications Technology• IDP Integrated Development Plan• IPAP Industrial Policy Action Plan• LED Local Economic Development• MEDS Metropolitan Economic Development Strategy• MTSF Medium Term Strategic Framework• NDP National Development Plan• NGP New Growth Path• R&D Research & Development• SERO Socio-economic Review & Outlook
• South Africa’s key challenges• Overview
• Selected macroeconomic data• Selected socioeconomic data• Improvements• Comparisons
• Challenges• Households and business• General to S.A.
• Policy options• National, provincial and local alignment
Outline
Widespread poverty
Extreme inequality
Poor education for the majority
Inadequate infrastructure
Unsustainable growth path
Spatial challenges
Ailing public health system
Uneven public service delivery
Widespread corruption
Weak state and civil society institutions
Skills and capital flight
Policy myopia
Fragmented state
Poor further marginalised
Glo
balisatio
n’s w
inn
ers and
losers
Unemployment
The international context
South Africa’s key challenges
• 283 municipalities in S.A.• Some socioeconomic conditions of S.A. metro’s
• A-type metro’s (6 in S.A.)• Number of households• Poverty rates• National GVA contributions• Per capita GVA• Zero distressed municipalities
Overview
• GVA and GVA growth rates
• Economic output• Tshwane’s position within the province and S.A.
• On average, the best performance amongst the three metro’s
• GVA• 27% provincially• CoT analogous to the City of Cape Town, in 2009, accounted for 9% of total S.A.
GVA, as compared to 14% for the CoJ.
2007 2008 2009 2010 20110
50000000000000
100000000000000
150000000000000
200000000000000
250000000000000
300000000000000
CoECoJCoT
2008 2009 2010 2011
-3-2.5
-2-1.5
-1-0.5
00.5
11.5
22.5
33.5
44.5
5
CoECoJCoT
Source: Global Insight
Overview
Source: State of the Cities Report (2011)
Source: CoT Socioeconomic Review and Outlook 2010/11
2004 – 2009
CoE CoJ CoT0
0.5
1
1.5
2
2.5
3
3.5 2008 – 2011
Source: Quantec
Overview: GVA averages
Per capita GVA, 2009
Source: State of the Cities Report 2011
Overview
International trade: Share of total S.A. Exports, 2009
• Low share but highest average export growth rate between 2004 and 2009, almost 30% as compared to just above 15% for CoJ
• Import growth rate is, however, amongst the smallest
Tshwane7%
Ekurhu-leni6%
Cape Town
7%eThekwini
6%Nelson
Mandela2%
Johannesburg47%
Rest of South Africa23%
Buffalo City1%
Msunduzi1%
TshwaneEkurhuleniCape TowneThekwiniNelson MandelaJohannesburgRest of South AfricaBuffalo CityMangaungMsunduzi
Source: Quantec
Overview
A service-driven economy: Sectoral contributions to GVA
2006 2007 2008 2009 2010 20110%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
16.1 15.6 15.3 13.8 13.3 13.3
4 4.4 5.1 5.4 5.2 5.1
13.5 13.1 13.4 13.4 13.7 13.7
11.3 10.5 10.5 10.1 9.8 10.1
23.4 25.1 24.1 23.9 23.8 23.8
28.7 28.3 28.3 29.8 30.4 30.5
Community servicesFinanceTransportTrade ConstructionElectricityManufacturingMiningAgriculture
Source: Global Insight
Overview
GVA share amongst major municipalities, 2009
Source: State of the Cities Report 2011
Overview
R&D investment, 2007/2008
• Tshwane’s R&D position
Gauteng53%
Western Cape20%
KZN11%
Free State6%
Eastern Cape4%
North-West2%
Mpumalanga2%
Limpopo1%
Northern Cape1%
GautengWestern CapeKZNFree StateEastern CapeNorth-WestMpumalangaLimpopoNorthern Cape
Source: Quantec
Overview
Investment in buildings
2004 2005 2006 2007 2008 20090
2000000000
4000000000
6000000000
8000000000
10000000000
12000000000
14000000000
16000000000
Johannesburg
Moving average (Johannesburg)
Tshwane
Moving average (Tshwane)
Ekurhuleni
Cape Town
Moving average (Cape Town)
eThekwini
Source: StatsSA
Overview
• Socioeconomic variables• Employment profile• CoT: total population marginally below 2.5 million• Tshwane has the lowest unemployment rate
2006 2007 2008 2009 20100.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
CoTMoving average (CoT)CoEMoving average (CoE)CoJMoving average (CoJ)
Source: Global Insight
Overview
Unemployment by population race group
2006 2007 2008 2009 20100.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
African
Moving average (African)
White
Moving average (White)
Coloured
Moving average (Coloured)
Asian
Moving average (Asian)
Source: Global Insight
Overview
2007 2008 2009 2010
African unem-ployment growth rate
-5.7471264367816 -1.82926829268293 6.83229813664595 8.13953488372095
White unem-ployment growth rate
-10 -7.4074074074074 20 13.3333333333333
Coloured unem-ployment growth rate
-7.60869565217391 -4.70588235294118 8.64197530864196 9.0909090909091
Asian unem-ployment growth rate
-11.1111111111111 7.49999999999999 16.2790697674419 10
-12.5
-7.5
-2.5
2.5
7.5
12.5
17.5
22.5
African unem-ployment growth rate
White unem-ployment growth rate
Coloured unem-ployment growth rate
Asian unem-ployment growth rate
Unemployment growth rates by population race group
Source: Global Insight
Overview
Source: State of the Cities Report 2011
Employment share by sector, 2009
Overview
• Poverty levels• Lowest poverty rates within the province• Reduced by approximately 2% in the last four years; significant
considering population absolutes.• 2010 poverty estimate at 20.5%, lower than the S.A. rate
• Income inequality• The largest Gini co-efficient globally• CoT has the lowest Gini co-efficient within Gauteng
• Also lower than the country average
• Household income by group has improved• Alarming trend concerning number of people without income
• Tshwane exhibits the highest HDI factor within Gauteng• Higher than the SA average. • Decreased from 0.7 in 2006 to 0.67 in 2010.
Welfare and development
Welfare measures
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Poverty rate (%)
0.176
0.2 0.216
0.231
0.23
0.246
0.262
0.263
0.264
0.238
0.224
0.211
0.218
0.214
0.205
HDI
0.695
0.677000000000001
0.695
0.699
0.699
0.703
0.702
0.7 0.7 0.703
0.698
0.692
0.691
0.688
0.669000000000001
Gini co-efficient
0.581
0.599
0.605
0.603
0.604
0.615
0.622
0.629
0.629
0.625
0.624
0.621
0.618
0.612
0.607
2.50%
7.50%
12.50%
17.50%
22.50%
27.50%
-0.02499999999999960.07500000000000040.1750.2750.3750.4750.5750.675
Poverty rate (%)HDIGini co-efficient
Source: Global Insight
Welfare and development
Source: State of the Cities Report 2011
People with unmet basic needs, 2008
Welfare and development
Average travel to work time, 2003
Source: State of the Cities Report 2011
Welfare and development
Education profile
Post-graduate degree
University degree
Technikon diploma/degree
Further education and training
Matric
Some high school
Grade 7
Some primary school
Primary school
No schooling
0% 5% 10% 15% 20% 25% 30% 35%
4.20%
8.60%
8.20%
8.00%
29.10%
27.40%
4.20%
6.10%
0.40%
3.90%
Source: BMR Household Survey Results (2012)
Distribution of institutional population household members by education
Welfare and development
Distribution of household access to services and amenities
Water Electricity Telephone line Refuse/waste collection Sanitation0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Source: BMR Household Survey Results (2012)
Welfare and development
• Despite progress, challenges remain• It’s about the basics• Local government at the forefront• Socioeconomic ills can be overcome by:
• The Democratic Developmental State (DDS) having the requisite capacity and capability to drive the transformation agenda determined by:
• The policy environment• Institutional capacity of the DDS• DDS able to direct resources• Purposefulness and cohesion of government policy
• Long-term developmental trajectory • The East
• Anomalies with this comparison• Gauteng Vision 2055
Challenges
• Fiscal sustainability• Responsiveness, e.g. BRIC economies
• State capacity challenges• Poor co-ordination and fragmented decision-making
• Welfarism versus developmentalism• Critical importance of effective and efficient institutions• Education, science and technology – R&D and
innovation• The financial sector and financialisation• Governance• Need for dramatically increased levels of policy certainty
and greater transparency
Challenges
• The major challenge is for the state is to efficiently manage the delicate balance of correcting the injustices of the past, which have resulted in many socioeconomic ills, whilst simultaneously encouraging investment and growth. • Assumed to be a trade-off in this regard• 18 years on: a new generation• Confidence in building an economy in which the state,
the private sector and other stakeholders operate in a complimentary manner• However, conditional upon a number of factors
Challenges
• Gauteng Vision 2055• New Growth Path• National Development Plan
Major National and Provincial Measures
• National (derived from NGP, IPAP, MTSF etc)• Long-term focus• Inclusive growth the overarching factor• Fixed investment• Private-public partnerships• Local manufacturing• Industrial base diversification• Reliable and affordable transport infrastructure• Mobilisation of communities• Labour-absorption• Labour market• Growth of the second economy• Skills development• Employment• Business regulations• BB-BEE• Infrastructure• Exports and comparative advantage• Economic and social policy• Industrial financing• Modernisation
Some policy options
• Provincial (derived from GDS, Vision 2055, MTSF)• Long-term focus• Inclusive growth• Strategic economic infrastructure• Industry and sector development• Transport infrastructure is of critical importance
• Decent employment • Youth employability
• Labour-absorbing industrial policy• SMMEs, co-operatives and LED
• Skills development and training• Knowledge-based economy• Green economy
• Infrastructure investment• Tourism
Some policy options
• Local (derived from Tshwane IDP, GDS, SERO, Tshwane NGP etc)• Long-term focus
• Sustained expansion
• Urgent need to address structural imbalances• Skills, economic structure, size of businesses and those required for enhanced employment
• Basic service provision• Transport infrastructure: efficiency and effectiveness
• Provision of economic infrastructure• Increased investment• Sectoral diversification• Business support
• Sustainable communities• Social security
• Participatory Democracy and Batho Pele• Governance• Financial sustainability• Economic profile and greater intelligence• Infrastructure maintenance and development• Consistent service delivery• Industrial innovation• Export growth• Human capital development
• A very significant variable
• Link between long-term economic growth, job creation, social cohesion and
environmental protection
Some policy options
Local continued:
• A vital economy and a prosperous community. Future quality will depend on the collaboration of various stakeholders to collaborate
• Global competitiveness• Overarching aims
• Economic growth and development, job creation, deracialisation, reduced poverty and inequality
• MEDS• Lack of education correlated to unemployment, poverty, low levels of entrepreneurship,
dependency, low standards of living
• MEDS: the seven pillars• Transforming the Tshwane economy• Sustainable employment creation• Economic transformation ito ownership
• Equity
• Human capital development• Sustainable communities and social cohesion• Good governance• Innovation
Some policy options
• A “mixed economy”:• Mix of private, state, co-operative and other forms of ownership
• Optimal sectoral mix
• Deracialisation of ownership and control of wealth• Land and agrarian reform and rural development• Comprehensive social security system
• Free basic services
• Labour law• “decent jobs”
• State-of-the-art ICT• Labour absorbing industrial policy
• strategy to build high levels of manufacturing capability and competitiveness
• The Asian experience has sought to challenge traditional neoliberal thinking
• A more active state; different means of intervention• A global phenomenon
Economic trajectory
?