municipal economic review and outlook - western cape · this is the fifth edition of the municipal...

Western Cape Government

Provincial Treasury

Municipal Economic Review and Outlook 2016

Provincial Treasury Local Government Budget Office Private Bag X9165 7 Wale Street Cape Town tel: +27 21 483 3386 fax: +27 21 483 4680 www.westerncape.gov.za Afrikaans and isiXhosa versions of this publication are available on request. Email: [email protected] PR298/2016 ISBN: 978-0-621-44870-2

Foreword This is the fifth edition of the Municipal Economic Review and Outlook (MERO) since its inception in 2012. The MERO continues to provide valuable evidenced-based research to municipalities within the Western Cape in support of enhanced planning for economic growth, job creation and socio-economic upliftment.

The MERO compliments the Provincial Economic Review and Outlook and as a toolkit it enables decision-making for municipalities, government departments, public entities, businesses as well as national and international organisations interested in investing in the Western Cape. The 2016 MERO will thus assist Executive Mayors, Councillors, Municipal Managers, officials, business chambers, IGR Forums, local stakeholder organisations and future investors in making informed decisions and to exercise policy choices that is backed up with evidence-based research.

Both these publications aim to improve our understanding of the Western Cape economy at a sub-regional level to facilitate provincial and municipal policy formulation, alignment, integrated planning and budgeting.

The municipal and provincial economic outlook remains fragile and is extremely vulnerable to any further international and domestic shocks. Stubbornly high unemployment rates, coupled with increasing population pressures linked to service delivery demands and socio-economic dynamics related to youth, gender and race remain key challenges in the Western Cape. Other domestic constraints impacting on the economic outlook relate to energy, water, food security, infrastructure and skills shortages; while outcomes related to education, health and broader social ills continue to impact on and are affected by the levels of economic development.

These economic pressures highlight the fundamental need for thorough integrated development planning, considered decision-making, active economic transformation and appropriate policy responses which will in turn stimulate economic and human development. The MERO’s research findings are therefore of particular relevance given that municipalities will adopt their fourth generation Integrated Development Plans in May 2017, which will be key to facilitate sustainability, ensure the effective use of resources, improved service delivery, attract additional funding, harness democratic values and to promote inter-governmental cooperation.


The detailed analysis and overview of the unique comparative advantages and opposing challenges faced by municipalities which are each differently influenced by external economic pressures emphasise the need for innovation and entrepreneurship to achieve inclusive growth.

Lastly, I wish to express a sincere word of appreciation to my colleagues and officials from the various provincial government sector departments, municipal officials and the research team for their valuable contributions and inputs. We will continue working with our partners and key stakeholders particularly those working on planning and budgeting in the municipal space to support evidence-based decision-making in the building of an environment conducive to economic growth and employment creation.

Dr Ivan Meyer Minister of Finance Western Cape Government 30 September 2016

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Contents SECTION A: BACKGROUND AND MACROECONOMIC CONTEXT 1

1. Introduction and background 1

2. Macroeconomic outlook 2

3. Background to main sub-sections 23

SECTION B: WESTERN CAPE REGIONS 45 City of Cape Town Metropolitan Municipality 47

Chapter 1: Regional economic review and outlook 47

Chapter 2: Sectoral growth, employment and skills per planning district 63

Chapter 3: Value chains 91

Chapter 4: Infrastructure spending - review and analysis 115

Chapter 5: Municipal socio-economic analysis 125 West Coast District 139


Chapter 2: Sectoral growth, employment and skills per municipal area 153



Chapter 5: Municipal socio-economic analysis 203 Cape Winelands District 219





Chapter 5: Municipal socio-economic analysis 283


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Overberg District 301





Chapter 5: Municipal socio-economic analysis 357 Eden District 373





Chapter 5: Municipal socio-economic analysis 457 Central Karoo District 475





Chapter 5: Municipal socio-economic analysis 523

References 539


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Acronyms

ABT Alternative Building Technology

AFASA African Farmers' Association of South Africa

AH Agri-Hub

AP Agri-park

ART Anti-Retroviral Treatment

ASA Animation South Africa

ASNAPP Agribusiness in Sustainable Natural African Plant Products

BBBEE Broad-Based Black Economic Empowerment

BER Bureau of Economic Research

BCI Business Confidence Index

BNG Breaking New Ground

BPO Business Process Outsourcing

BPO&O Business Process Outsourcing & Off Shoring

Casidra Cape Agency for Sustainable Integrated Development in Rural Areas

CASP Comprehensive Agricultural Support Programme

CBD Central Business District

CCA Customs Controlled Area

CCI Consumer Confidence Index

CCID Central City Improvement District

CFR Cape Floristic Region

CIPC Companies and Intellectual Property Commission

CIS Commonwealth of Independent States

COGTA Department of Cooperative Governance and Traditional Affairs

CPI Consumer Price Index

CRM Customer Relations Management

CSP Concentrated Solar Power

CT Cape Town

DAC Department of Arts and Culture

DAFF Department of Agriculture, Forestry and Fishing

DBSA Development Bank of South Africa

DEDAT Department of Economic Development and Tourism


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DRC Democratic Republic of Congo

the dti Department of Trade and Industry

ED Enterprise Development

EFTA European Free Trade Area

EIA Environmental Impact Assessment

EIFF Eden Independent Film Festival

EIP Enterprise Investment Programme

EPA Economic Partnership Agreement

ERM Enterprise Resource Management

ETI Employment Tax Incentive

EU European Union

FDI Foreign Direct Investment

FPSU Farmer Production Support Unit

FSA Food Safety Assessment

FSD Farmer Support and Development

GDP Gross Domestic Product

GDPe Expenditure on GDP

GDPp GDP Production

GDS Global Distribution Systems

GGP Gross Geographic Product

GIS Geographic Information System

GMO Genetically Modified Organism

GOSA Grain Handling Organisation of Southern Africa

GVA Gross Value Added

ha hectare

HDI Human Development Index

HRM Human Resource Management

ICT Information and Communications Technology

IDC Industrial Development Corporation

IDP Integrated Development Plan

IDZ Industrial Development Zone

IMF International Monetary Fund

IPW Integrated Production of Wine


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IRT Integrated Rapid Transit

ITO Information Technology Outsourcing

KPI Key Performance Area

KPO Knowledge Processing Outsourcing

LED Local Economic Development

LPO Legal Process Outsourcing

LSFB Light Steel Frame Building Construction Method

LQ Locational Quotient

MERO Municipal Economic Review and Outlook

MFMA Municipal Finance Management Act No. 56 of 2003

MIG Municipal Infrastructure Grant

MOU Memorandum of Understanding

NDP National Development Plan

NEO National Executive Officer

NHBRC National Home Builders’ Registration Council

OECD Organisation for Economic Co-operation and Development

PDO Protected Designation of Product of Origin

PGI Protected Geographic Indication

PMI Purchasing Managers Index

PV Photovoltaic

q-o-q Quarter-on-Quarter

QCTO Quality Council for Trade and Occupations

QMS Quality Management System

R&D Research and Development

REIPPPP Renewable Energy Independent Power Producer Procurement Programme

RUMC Rural Urban Marketing Centre

SA South Africa

SABS South African Bureau of Standards

SACU Southern African Customs Union

SADC Southern African Development Community

SALT Southern African Large Telescope

SAQA South African Qualifications Authority


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SARB South African Reserve Bank

SARETEC South African Renewable Energy Technology Centre

SARS South African Revenue Service

SATSA Southern Africa Tourism Services Association

SAWIS SA Wine Industry Information & Systems

SBIDZ Saldanha Bay Industrial Development Zone

SDF Spatial Development Plan

SEDA Small Enterprise Development Agency

SEZ Special Economic Zone

SIP Strategic Integrated Project

SKA Square Kilometre Array

SMME Small, Medium and Micro-Sized Enterprises

SPV Special Purpose Vehicle

Stats SA Statistics South Africa

SUDS Sustainable Urban Drainage System

SWH Solar Water Heating

TB Tuberculosis

TDCA Trade, Development and Co-operation Agreement

UK United Kingdom

USA United States of America

USD US Dollar

VAT Value Added Tax

WC Western Cape

WCBDC West Coast Business Development Centre

WCD West Coast District Municipality

WTB Wool Testing Bureau

WWTW Waste Water Treatment Works

YOY Year-on-Year

ZAR South African Rand

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1. Introduction and background

1.1 Introduction

District and local municipal entities have a role to play in economic development and economic performance in the areas under their jurisdiction. The 2016 Municipal Economic Review and Outlook (MERO) study is the 5th edition in a series of publications that seek to provide in-depth economic analysis at a metro, district and municipal level. The MERO research is however not intended to provide rigorous policy intervention but it may provide pointers for policy intervention.

1.2 Objective of the research

The main objective of the study is to generate economic intelligence at the municipal level, which can feed into municipal integrated development plans (IDPs) and local economic development strategies (LEDs) in the Western Cape Province. The economic analysis focuses on the identification of bottlenecks and constraints that may be hampering private sector growth and employment creation. Both the private and public sector can identify growth opportunities and risks and react upon them in the current challenging macroeconomic environment.

1.3 Report outline

The MERO 2016 study is structured as follows:

Section A: Background and Macroeconomic context - this section provides the introduction to the study and a broad overview of the macroeconomic outlook of South Africa and the Western Cape. This section also provides an overview of the background to main sub-sections in order to avoid duplication within Section B. This includes an overview of doing business in South Africa, Agri-parks, IDZs, SEZs, broadband connectivity, and an overview of SMMEs in the Western Cape.

SECTION A: BACKGROUND AND MACROECONOMIC CONTEXT


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Section B: Western Cape Regions - this section provides an economic review and outlook of the Cape Town Metropolitan Area and all five non-metro regions inclusive of the twenty-four local municipalities. This section provides an overview of each district in terms of:

Chapter 1: Regional economic review and outlook - provides a macroeconomic outlook on the district level, an overview of trends between 2004 - 2015 and an outlook in terms of GDP for 2016 - 2021. International trade is also considered in this section; as well as top companies by size and employment operating in the area.

Chapter 2: Sectoral growth, employment and skills per municipal area - provides a more in depth regional economic analysis by considering the trends in sector growth, skills, and employment per municipal area. This section also provides an overview of building plans passed and completed.

Chapter 3: Value chains - provides an overview of two value chains per district. District municipalities were consulted and two value chains were chosen for MERO 2016 (take note that other value chains will be added in the consecutive MEROs). The aim of the value chain is to understand the specific sector, and assess risks and opportunities.

Chapter 4: Infrastructure spending - review and analysis - provides the trends in municipal revenues and infrastructure spending. This section also looks at municipal backlogs and infrastructure planning for the next 3 years.

Chapter 5: Municipal socio-economic analysis - provides a socio-economic profile of the region, and shows the linkages between the sector growth profile of the region and the socio-economic outcome.

2. Macroeconomic outlook

2.1 Introduction

The regional economies of the Western Cape are linked to both the national economy and the global economy. All Western Cape districts are impacted by fluctuations in the national economy; therefore, each economy is open to global influences by both trade and financial channels. South Africa’s economy is very sensitive to the global business cycle developments as illustrated by international trade and financial linkages. Additionally, the shortfall between domestic aggregate expenditure and aggregate production makes South Africa vulnerable to shifts in international capital flows.

Section A: Background and Macroeconomic context

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Furthermore, South Africa’s stock of foreign financial assets and liabilities has increased dramatically since the financial re-integration with the world economy. South Africa has a shallow new foreign exchange reserve position juxtaposed with its deep and well-developed capital market. Both factors impact on a recipient economy’s sensitivity to fluctuations in international capital flows and financial stress in developed economies.

2.2 Global and SA economic outlook

Recent macroeconomic changes have affected the economic outlooks across countries and regions globally. These major macroeconomic changes include the slowdown and rebalancing in China; the further decline in commodity prices, i.e. crude oil, with sizable redistributive consequences across sectors and countries; a related slowdown in investment and trade; and declining capital flows to emerging market and developing economies (IMF, 2016). The prolonged drought in South Africa which started in 2015 is having an impact on the agriculture value chain and together with inflation is having a negative impact on the local economy. These changes, together with a host of non-economic factors, including geopolitical tensions are generating substantial uncertainty. In general, they are consistent with a subdued outlook for the world economy, but risks of much weaker global growth have also risen.

Table 1 contains the short-term outlook for global economic growth according to the IMF projections. Growth in the USA fell to 1.4 per cent at an adjusted annual rate in the fourth quarter of 2015 (BEA, 2016). While some of the reasons for this decline are likely temporary, the final domestic demand was weaker as well, with a decline in non-residential investment, including outside the energy sector (IMF, 2016). Labour markets still show strength despite signs that growth stumbled in the first quarter of 2016 (Mutikani, 2016). In particular, employment growth was very strong, labour force participation rebounded, and the unemployment rate continued its downward trend, with a 4.5 per cent reading in March 2016 (IMF, 2016).

The recovery in the Euro Zone in 2010 was more optimistic than projected in the 2015 MERO. According to IMF (2016), amongst Euro countries, growth was weaker than expected in Italy but offset because growth was stronger in Spain. Japan’s economic growth came out significantly lower than expected during the fourth quarter of 2015, reflecting in particular a sharp drop in private consumption (IMF, 2016). Whereas, economic activity in other Asian advanced economies closely integrated with China - such as Hong Kong Special Administrative Region and Taiwan Province of China - weakened sharply during the first half of 2015, owing in part to steep declines in exports (IMF, 2016).


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Table 1 World economic growth outlook 2016 - 2017f (%)

Country 2013 2014 2015 2016f 2017f

World Output 3.4 3.4 3.1 3.2 3.5

Advanced Economies 1.4 1.8 1.9 1.9 2

United States 2.2 2.4 2.4 2.4 2.5

Euro Area -0.7 -0.4 1.6 1.5 1.6

Japan 1.6 -0.1 0.5 0.5 -0.1

Emerging Market and Developing Economies 5.0 4.6 4.0 4.1 4.6

Commonwealth of Independent States (CIS) 2.2 1.0 -2.8 -1.1 1.3

Russia 1.3 0.6 -3.7 -1.8 0.8

Excluding Russia 4.2 1.9 -0.6 0.9 2.3

Emerging and Developing Asia 7.0 6.8 6.6 6.4 6.3

China 7.7 7.4 6.9 6.5 6.2

India 6.9 7.3 7.3 7.5 7.5

Latin America and the Caribbean 2.9 1.3 -0.1 -0.5 1.5

Brazil 2.7 0.1 -3.8 -3.8 0.0

Middle East, North Africa, Afghanistan, and Pakistan 2.4 1.3 2.5 3.1 3.5

Sub-Saharan Africa 5.5 5.0 3.4 3.0 4.0

South Africa 2.2 1.5 1.3 0.6 1.2

Source: IMF World Economic Outlook, April 2016 (f denotes forecast)

Economic growth increased by less than expected during the second half of 2015, as domestic demand remained subdued and the recovery in exports was relatively modest, reflecting resilient domestic demand, especially consumption. Robust growth in the services sector offset recent weakness in manufacturing activity (IMF, 2016). In Latin America, the economic downturn in Brazil was deeper than previously expected, while economic activity for the remainder of the region was in line with forecasts. Similarly, the recession in Russia (2015) was also in line with expectations, however conditions worsened in the former Soviet Union States’ (CIS) economies, displaying spill overs from the macroeconomic effects in Russia, as well as the adverse impact of lower oil prices on net oil-exporting countries (IMF, 2016).

Macroeconomic indicators suggest that economic activity in Sub-Saharan Africa and the Middle East also fell short of expectations, a result of the drop in oil prices, declines in other commodity prices, and geopolitical and domestic conflict in a few countries. Moreover, geopolitical tensions have not only domestically affected economies, but also the global economic outlook. Specifically, output contractions in 2013 were reflected by tensions in Ukraine, Libya, and Yemen and accounted for half a percentage point of global GDP, which subtracted 0.1 percentage point from global output during 2014 - 2015 (IMF, 2016). Additionally, the depression of investments worldwide - particularly in energy and mining - as well as the deceleration of China’s manufacturing activity has caused a weakness in investment. Thus, global industrial production, particularly of capital goods, remained subdued throughout 2015 (IMF, 2016).


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South Africa's trade relations and development co-operation with the European Union (EU) are currently governed by the Trade, Development, and Co-operation Agreement (TDCA). The TDCA has established a free trade area that covers 90 per cent of bilateral trade between the EU and South Africa. The liberalisation schedules were completed by 2012. In June 2016, South Africa signed EU - SADC Economic Partnership Agreement (EPA) together with 5 other Southern African countries (Botswana, Lesotho, Mozambique, Namibia, and Swaziland). Once ratified, the EPA will replace the TDCA (European Commission, 2016). The EU-SADC EPA entails (EU, 2016):

Under the SADC EPA, the EU will guarantee Botswana, Lesotho, Mozambique, Namibia, and Swaziland 100 per cent free access to its market. The EU has also fully or partially removed customs duties on 98.7 per cent of imports coming from South Africa. The SADC countries do not have to respond with the same level of market openness. Instead, they can keep tariffs on products sensitive to international competition.

The EPA contains a large number of "safeguards" or safety valves. EPA countries can activate these and increase the import duty in case imports from the EU increase so much or so quickly that they threaten to disrupt domestic production.

Make it much easier for SADC EPA countries to benefit from reduced EU customs duty rates for their textiles products using on imported fabric. This will benefit textile industry in countries such as South Africa or Lesotho.

Eliminates the possibility for the EU to use agricultural export subsidies.

South Africa’s vulnerable economy could be placed at greater risk of recession after the news on 24 June 2016 of Britain’s decision to exit the EU. A large current account deficit and negative economic growth mean that the South African economy can be tipped into a recession which would adversely affect jobs. There are four transmission channels through which the Brexit can hit South Africa (Rensburg, 2016):

1. Markets - whenever there is a global shock, investors move straight to the safest asset, which is a US bond. All that money flowing into the US bond market comes from somewhere – namely from emerging markets across the world. South Africa is particularly vulnerable to outflows because the country has a large current account deficit. If capital flight continues, interest rates could be raised.

2. Trade - the UK buys 10 per cent of South Africa’s exported wine, 10 per cent of exported citrus fruit, and 21 per cent of exported grapes. The UK will have two years to extricate itself from the EU, but the Brexit will ultimately completely upset numerous institutional setups around the world. The Brexit will also impact the new EU-SADC EPA trade deal. Treasury seems to be hoping for one particular option open to Britain: to join the existing European Free Trade Area (EFTA) for non-EU European states. This gives the UK back its access to the EU market, with South Africa also benefiting since the customs union already has an agreement with EFTA.


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3. The UK could also simply choose to pursue bilateral trade deals on its own - something it has not done for decades.

4. Currency - a more direct effect on South Africa’s economy comes from the British pound’s depreciation as has occurred on Friday 24 June 2016, when it fell 4 per cent against the rand. This means the British will pay more for everything they import, but theoretically increases the competitiveness of their exports.

Figure 1 indicates that global manufacturing growth during the first quarter of 2016 was the weakest since the second quarter of 2013, which followed a slowdown in the second half of 2015 (CME Group Inc, 2016). In advanced economies, the unexpected weakness in late 2015 was notable, especially in the United States, but even more so in Japan. Emerging market economies are quite diverse, emerging economies in Asia, including China, continue to sustain high growth. Global macroeconomic conditions have affected Brazil, Russia, and a number of other developing economies (IMF, 2016).

Figure 1 Global manufacturing Purchasing Manager’s Index slowdown (quarterly)

Source: Markit Economics and CME Group, 2016

The slowdown in global trade has contributed to recent falls in commodity prices. Although global trade has recovered since the sharp decline in the first half of 2015, world trade volumes grew by only 2 per cent, which is in line with very low outcomes in global GDP growth (Figure 2). Weakness of trade growth can be explained by low investment, and declines in commodity prices, however, recent weaknesses centred on Asia remains partly unexplained (OECD, 2016). The contraction of imports by major emerging market economies has contributed to weaker export demands for advanced economies with an estimated drag on OECD GDP growth of approximately half a percentage point in 2015.

48.5

49.0

49.5

50.0

50.5

51.0

51.5

52.0

52.5

53.0

53.5

2013 2014 2015 2016 Q1

Global Manufacturing PMI

2015 Slowdown


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Figure 2 Slowdown in global trade growth (annually)

Note: World trade is goods plus services trade volumes. World GDP growth is measured at purchasing

power parities.

Source: OECD Economic Outlook database, 2016

Along with global trade growth, commodity prices have fallen significantly. Oil prices have declined by more than one-third and are reaching their lowest level in USD terms since 2003. The price decline across commodities in recent months, along with the sharp decline in China’s commodity imports in the first quarter of 2016, after continued growth in 2015, suggests that weak demand has contributed to lower commodity prices. These price developments should support consumption of commodities in import economies; however, it may confine investments and cause financial pressures on firms and exporting countries (OECD, 2016). Coal and natural gas prices also declined, as the latter are linked to oil prices. Non-fuel commodity prices - metal and agricultural commodities - declined by 9 per cent and 4 per cent respectively.

Global inflation

Since the global financial crisis (2008), the headline inflation rate in advanced economies in 2015 was low at 0.3 per cent, on average, most likely due to the decline in commodity prices in the second part of 2015. The stable core global inflation rate at 1.6 - 1.7 per cent was below the central bank target (Figure 3). However, many emerging market and developing economies, lower prices in oil and other commodities have tended to reduce inflation (IMF, 2016). However, many countries, including Brazil, Columbia, and Russia, had large depreciations that have offset the global inflation and affected the lower commodity prices.

The strengthening in advanced economies’ currencies has caused commodity exporters with stagnant exchange rates to weaken further. The Japanese yen’s appreciation of 10 per cent was very sharp, while the US dollar and the Euro strengthened by about 3 per cent and 2 per cent respectively (IMF, 2016). However, the British pound depreciated by 7 per cent because of their exit from the European Union.

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-10

-5

0

5

10

15

2000 2002 2004 2006 2008 2010 2012 2014

World Trade World GDP


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Figure 3 Annual global inflation

Source: The World Bank, 2016

Emerging market currencies depreciated sharply recently, especially in South Africa, Mexico, Russia, and Columbia. The Chinese Renminbi depreciated by about 2 per cent, while the Indian Rupee remained stable. Similarly, the decline in demand for emerging market assets also reflects a slowdown in capital flows. This decline was steep during the second half of 2015 – the first time since the global financial crisis - with net sales on foreign investments lower in emerging markets (IMF, 2016).

The global quantity of economic production (global output) is estimated to have grown by 3.1 per cent in 2015, with 1.9 per cent growth for advanced economies and 4 per cent growth for emerging market and developing economies. For 2016 global growth is projected to remain modest at 3.2 per cent, before picking up to 3.5 per cent in 2017 (IMF, 2016). Emerging market and developing economies will account for a large share of the world growth rate, yet their growth rate is projected to only increase modestly in comparison to past decades. These growth projections are reflected by a combination of factors: weakness in oil-exporting countries; a moderate slowdown in China; and a weak outlook for exporters of non-oil commodities (Global Economic Prospects, 2016).

South African industry growth

In the first quarter of 2016 a sharp contraction in the mining industry tipped economic growth into negative territory (Statistics SA, 2016). The South African economy underperformed previous growth projections by shrinking 1.2 per cent, quarter-on-quarter (q-o-q), according to the latest GDP figures published by Stats SA. The mining industry (18.1 per cent contraction) was the largest contributor to the q-o-q contraction (Figure 4). During the first quarter of 2016 the lower production in mining of ‘other’ metal ores, primarily platinum and iron ore were the contributors to this decline. Mining aside, the economy experienced a growth rate of 0.5 per cent (Statistics SA, 2016).

0

1

2

3

4

5

6

7

8

9

10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Inflation Rate


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Due to the ongoing drought, the agricultural industry has fallen by 14 per cent since the last quarter of 2015. This slowdown, along with the lower production in mining affected the demand for energy, contracting by 2.8 per cent in the first quarter of 2016. According to Stats SA, the transportation industry recorded its second consecutive q-o-q fall, now joining agriculture in recession territory. Specifically, a fall in the demand for freight and passenger land transportation has contributed to the decline in the industry.

Figure 4 Industry growth in 2016 Q1

Source: Statistics SA, 2016

South Africa gross domestic product, supply and demand

The recessionary decline less than a decade into the 21st century has affected economic growth in South Africa over the last four years. The South African economy advanced by an annualised 0.4 per cent in the 4th quarter of 2015, compared to a 0.3 per cent growth in the previous quarter (Figure 5). According to Stats SA, the first quarter of 2016 reported a GDP growth rate of -1.2 per cent. This decline in economic growth is accompanied by the -18.1 per cent decline in mining and quarrying, -6.5 per cent decline in agriculture production, and the -2.8 per cent decline in the electricity, gas, and water employment sectors (Peyper, 2016). The macroeconomic indicators in the South African economy affect the GDP at market price percentage changes (Table 2).

1.9%

1.3%

1.1%

0.6%

0.6%

0.5%

-2.7%

-2.8%

-6.5%

-18.1%

-25% -20% -15% -10% -5% 0% 5% 10% 15% 20%

Finance

Trade

Government

Manufactuing

Personal Service

Construction

Transport

Electricity

Agriculture

Mining

Growth Rate


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Figure 5 GDP percentage change 2008 - 2017f

Source: Stats SA/Trading Economics, 2016 (f denotes forecast)

Table 2 Macroeconomic indicators

Current prices Per cent changes, volume ZAR billion (2010 prices)

Indicators 2012 2013 2014 2015 2016f 2017f

GDP at market price 3 254.7 2.3 1.7 1.3 0.7 1.4

Private consumption 1 983.6 2.0 0.7 1.8 0.9 1.2

Government consumption 658.7 3.8 1.8 0.2 1.0 0.7

Gross fixed capital formation 625.6 7.0 1.5 2.5 1.0 1.4

Final domestic demand 3 268.0 3.3 1.1 1.6 1.0 1.1

Stock building 34.0 -0.5 -0.6 0.2 -0.6 0.0

Total domestic demand 3 302.0 2.8 0.5 1.8 0.4 1.1

Exports of goods and services 967.2 3.6 3.3 3.8 3.9 4.0

Imports of goods and services 1 014.4 5.0 -0.5 5.3 2.5 3.1

Net exports -47.2 -0.5 1.1 -0.5 0.4 0.2

Memorandum Index

GDP deflator 6.6 5.8 3.9 5.7 5.4

Consumer price index 5.8 6.1 4.6 6.5 6.3

Private consumption deflator 6.0 5.8 4.1 4.9 5.4

General government financial balance -3.3 -4.1 -3.9 -3.3 -3.0

Current account balance -5.7 -5.4 -4.3 -4.4 -4.0

Source: OECD Economic Outlook, 2016 (f denotes forecast)

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-2

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6

2008 2009 2010 2011 2012 2013 2014 2015 2016f 2017f

GDP


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The headline growth rate reflected by the GDP production (GDPp) measures the supply side of the economy (the extent to which industries drive economic output by producing goods and services). This figure is reflected by -1.2 per cent during the first quarter of 2016, however, expenditure on GDP (GDPe) is reflective on measuring the demand side of the economy (Figure 6) (Statistics SA, 2016). GDPe measures the amount of money that is used to buy the goods and services that are produced. GDPe includes data on household and government spending, capital investment, and exports (minus imports). GDPe fell by 0.7 per cent q-o-q, therefore joining GDPp in negative territory.

Figure 6 Supply and Demand sides of the economy


The demand for goods and services declined for all components of the GDPe, with exception of the government consumption expenditure, which experienced a 1 per cent q-o-q increase in expenditure (Figure 7). Exports of goods and services declined by 7.1 per cent and contributed -2.2 percentage points to the overall decline of GDPe (Statistics SA, 2016).

Figure 7 GDPe growth rate for 2016 Q1


1.0%

-1.3%

-6.0%

-7.1%

-7.1%

-8% -7% -6% -5% -4% -3% -2% -1% 0% 1% 2%

Government Consumption Expenditure

Household Consumption Expenditure

Gross Fixed Capital Formation

Imports of Goods and Services

Exports of Goods and Services


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South African rand depreciation

Devaluation in currency occurs within a fixed exchange rate system and depreciation occurs within a floating exchange rate system. Both result in a fall in the value of the currency. South Africa’s rand (ZAR) has lost ground against the US dollar in recent months. In May 2016 the rand traded at R15.90 average to the USD, which was 11.3 per cent weaker than the previous month and 33.4 per cent weaker on an annual basis (Figure 8). The currency has been under escalating pressure amid a myriad of economic problems. The rand’s value plummeted against the greenback broadly due to the weak growth outlook and fears over a possible downgrade of the country’s credit rating. The rand is forecasted to depreciate to 16.45 ZAR to the USD by the end of 2016, with an average annual projection for 2017 at 16.71 ZAR to the USD.

Figure 8 Rand depreciation against the US Dollar 2006 - 2016 Q1

Source: Focus Economics, 2016

The effects of a devaluation results in exports becoming more competitive and this will increase the demand for exports. However, imports will become more expensive, thus reducing the demand for imports. A depreciation of the rand could cause higher economic growth. Part of aggregate demand (AD)1 is exports minus imports (X-M), therefore higher exports, and lower imports should increase AD (assuming demand is relatively elastic). Higher AD is likely to cause higher Real GDP and inflation is likely to occur following depreciation in currency because imports are more expensive causing a rise in the costs of production. With exports being cheaper manufacturers may have less incentive to cut costs and become more efficient. Therefore, over time, costs may increase.

1 The total demand for final goods and services in an economy at a given time, refers to the specific amount of goods and service that will be purchased at all possible price levels.

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Rand/USD


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Exports in South Africa have decreased by R3.02 billion or 3.2 per cent to R92.22 billion in April of 2016 from a downwardly revised R95.24 billion in March (Figure 9). From March 2016 to April 2016 lower shipments of chemical products (-13 per cent), precious metals and stones (-10 per cent), base metals (-6 per cent) and mineral product (-3 per cent) led to the decline in exports. However, in contrast, exports of vehicles and transportation equipment rose 9 per cent.

Figure 9 Exports compared to rand/US dollar exchange rate

Source: The World Bank, 2016

Major destinations for South African exports are to China (8.7 per cent), Germany (7.6 per cent), the United States (7.6 per cent), Namibia (5.1 per cent) and Botswana (4.9 per cent). In November of 2015 South African exports reached an all-time high of 93 133.20 ZAR million (OECD, 2016). The demand for South African products increases as the rand depreciates on the global market. This is because firms in other countries must enter into the South African market to buy the currency prior to purchasing the products; therefore, if the currency is lower international firms have more purchasing power on the South African market.

South African inflation

The monetary policy environment in South Africa is difficult with high inflation and weak growth. According to the June 2016 Developments in Individual OECD and Selected Non-Member Economies, inflation is partly driven by temporary factors, mainly rising food prices and the pass-through of past currency depreciation, but there are risks of second-round effects to restore margins and real wages (OECD, 2016). The purpose of monetary policy is to ensure that inflation does not exceed expectations anchored by the target band of the Reserve Bank, inflation between 3 per cent and 6 per cent (Figure 10).

0

2

4

6

8

10

12

14

16

2011 2012 2013 2014 2015 2016

ZAR to USD Export Data


14

Figure 10 South African inflation and repo rate 2006 - 2016 Q1

Source: South African Reserve Bank, 2016

Figure 10 indicates that the inflation rate has exceeded the anchored target band of the Reserve Bank. Also, because the consumer prices in South Africa increased by 6.2 per cent year-on-year (y-o-y) in April 2016, the inflation slowed down to 6.2 per cent from the previous month’s increase of 6.3 per cent. The marginal growth is lower than expected due to fuel cost falling. However, inflation is expected to rise in the third quarter of 2016, increasing to 7.6 per cent by August 2016 (South African Reserve Bank, 2016).

Business and consumer confidence in South Africa

The Business Confidence Index (BCI) is based on enterprises’ assessment of production, orders, and stocks, as well as its current position and expectations for the immediate future. Opinions compared to a “normal” state are collected and the difference between positive and negative answers provides a qualitative index on economic conditions (OECD, 2016). The BCI in South Africa was 36 in the first quarter of 2016, the lowest since the second quarter of 2010 for the second consecutive period (Figure 11) (South Africa Business Confidence, 2016). While sentiment recovered in four of the five sectors during the first quarter of 2016, improvements were small, reflecting an overall dissatisfaction with the outlook of the economy. Business Confidence in South Africa averaged 45.02 points from 1975 until 2016, reaching an all-time high of 91 in the third quarter of 1980 and a record low of 10.20 in the third quarter of 1985 (BEA, 2016).

1

3

5

7

9

11

13

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Inflation Rate Repo Rate


15

Figure 11 South Africa Business Confidence Index 2006 - 20162

Source: BEA/The World Bank, 2016

Figure 11 shows weaker trending business confidence levels in South Africa in recent years compared to that before the Great Recession. Such weaknesses in business confidence levels have not been experienced since the 1990s. The BCI in South Africa is estimated to average 35.88 in 2016 (South Africa Business Confidence, 2016). According to Trading Economics, the BCI is projected to trend around 45 in 2020 by using an autoregressive integrated moving average model calibrated using analysts’ expectations.

The Consumer Confidence Index (CCI) is based on household’s plan for major purchases and their economic situation, both currently and their expectations for the immediate future (OECD, 2016). Consumer confidence in South Africa increased to -9 in the first quarter of 2016 from -14 in the fourth quarter of 2015 (Figure 12). Consumer confidence in South Africa averaged 1.49 from 1982 until 2016, reaching an all-time high at 23 in the first quarter of 2007 and a record low of -33 in the second quarter of 1985 (BEA, 2016).

After recovering in the third quarter of 2015, the FNB/BER (CCI) collapsed back to close to multi-year lows in the final quarter of 2015. All three sub-indices lost some ground as a myriad of adverse economic forces continue to hammer the consumer ((BER), 2016). Moreover, the EY/BER Retail Survey results reflected a significant slowdown and disappointing retail sale growths during the festive season in 2015. Only 67.3 per cent of renters have been able to pay rent on time and in full in 2016 and there has been the third-largest decline ever recorded in Tenants in Good Standing, according to TPN’s latest Residential Rental Monitor (Property24, 2016).

2 It should be noted that in South Africa, the BER/BCI covers 1 400 business people in the building sector, 1 400 in the trade sector and 1 000 in manufacturing. The survey assesses the level of optimism that senior executives in the companies have about current and expected developments regarding sales, orders, employment, inventories and selling prices. The index varies on a scale of 0 to 100, where 0 indicates an extreme lack of confidence, 50 neutrality and 100 extreme confidence.

0

10

20

30

40

50

60

70

80

90

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2020

BCI


16

Figure 12 South Africa Consumer Confidence Index 2006 - 2016 Q1

Source: FNB/BER, 2016

South African structural reforms

Since 2011 labour productivity in South Africa has trended down. Currently, structural reforms are needed to boost the productivity and employment to raise incomes and living standards (OECD, 2016). Key measures to boost productivity and inclusion include ensuring more market competition, in particular in network sectors, strengthening management and investments of state-owned enterprises, encouraging the development of small and medium-sized businesses by reducing ‘red tape’ and access barriers, and improving the education system (Economic Performance Indicators for Cape Town (EPIC), 2015).

As structural weaknesses persist, growth remains subdued. Persistent electricity shortages and drought affected agricultural production growth in 2015, and the drought is ongoing in 2016. Similarly, the political uncertainties have reduced the confidence further, hurting investment and consumption. The depreciation of the rand supported exports, benefiting some manufacturing sub-sectors, and helped the mining sector deal with falling commodity prices (OECD, 2016). Aside from electricity shortages, inflation and financial market reactions are the main forces behind current economic development. As food prices rise, inflation is pushed above 6 per cent, higher than the limited band in 2016. Even though fuel prices have decreased, the depreciation of the rand has caused inflation to increase (OECD, 2016). Therefore, monetary policy can remain in a fairly supportive stance while being ready to counter a build-up of trend inflation.

-20

-15

-10

-5

0

5

10

15

20

25

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

CCI


17

As public debt continues to increase steadily in recent years, interest payments have also been increasing rapidly, prompting fiscal consolidation strategies. This consolidation pace should be gradual because of the weakness of the economy and investment needs. According to the government’s social returns, effectiveness of government spending and prioritised investment projects have improved (OECD, 2016). Implementing current consolidation plans and effectively controlling spending will help to increase fiscal credibility. Currently there is a need for structural reforms to boost the economy. Primarily, there is a need to remove hold-ups on production capacities (electricity and skill shortages). Also, increases in market competition in network sectors are also structural reforms needed to boost the economy. These reforms are crucial for economic growth, job creation, and reduction of the high unemployment rate, and would allow reform of social safety net policies in a way which stimulates economic activity and labour force participation (OECD, 2016).

There has been a decline in economic growth for the third year in a row, with cause for concern for financial markets, resulting in the rising public debt. However, improvements in electricity infrastructure are expected by the end of 2016. Until these infrastructural improvements are completed, confidence is however, likely to remain low, deterring investment and consumption. Economic growth is projected to pick up modestly in 2017; improvements in electricity capacity will remove production hold-ups, which are projected to bring back confidence and push up investment. Similarly, sustained job creation will increase household consumption and improvements in external demand, in particular the assumed stabilisation of commodity prices, will lift export markets (OECD, 2016). The national outlook remains fragile as electricity and water supply constraints are coupled with low commodity prices. A further tightening in fiscal policy is to be expected, probably in the form of increasing taxes rather than cutting government expenditure.

South Africa current standing

The rand has weakened nearly 20 per cent against the dollar in 2016 as looming rate hikes in the United States, the threat of a downgrade to "junk" status and diminished business and consumer activity locally weighed on its value. Headline inflation has been higher than the SARB’s upper target of 6 per cent since January, prompting it to lift lending rates by 200 basis points from early 2014 despite poor growth (Fin24, 2016).

The SARB forecasted that the Consumer Price Index (CPI) would peak at 7.3 per cent in the final quarter of 2016 before easing to an average 5.4 per cent in 2018. However, it projected that CPI would return to its 3 to 6 per cent target range by the third quarter (Q3) 2017 sooner than its earlier forecast of Q4. Fuel prices increased 7.5 per cent month-on-month and will drive annual CPI readings sharply higher once the base effect of a year ago comparative data falls away. Food price inflation is high and the seasonally adjusted annualised food price inflation will remain elevated as meat prices rise further in response to farmers rebuilding herds which were decimated during the drought (OAM, 2016).


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In addition, employment numbers from Statistics South Africa show that the economy shed a massive 355 000 jobs between the last quarter of 2015 and the first quarter of 2016. Correspondingly, the unemployment rate rose from 24.5 per cent to 26.7 per cent - the highest rate recorded since Stats SA commenced with the Labour Force Survey in 2008. The alarming increase in South Africa's unemployment rate and rapidly rising food inflation - and more recently also fuel prices - are now exacerbating the impact of pervasive income inequality on low income households. Low income households spend a proportionally larger share of their budgets on food and transport costs compared to higher income households and therefore typically bear the brunt of the impact of higher food and fuel prices (Fin24, SA Consumer Confidence Wanes As Economy is Hammered, 2016).

Global output is estimated to have grown by 3.1 per cent in 2015, with 1.9 per cent growth for advanced economies and 4 per cent growth for emerging market and developing economies (IMF, 2016). Emerging market and developing economies will account for a large share of the world growth rate, yet their growth rate is projected to only increase modestly in comparison to past decades. These growth projections are reflected by a combination of factors: weakness in oil-exporting countries; a moderate slowdown in China; and a weak outlook for exporters of non-oil commodities (Global Economic Prospects, 2016). A marginal growth increase is projected for advanced economies with the projected decline in Japan due to planned consumption tax increases. This decline is projected to offset the performance in most other advanced economies.

The South African economy is linked closely with the global economy, both via trade and financial channels. The diverse structure of the South African economy is a critical aspect of its historical and current growth performance. In 2015 drought and electricity constraints were slowing the economic growth in South Africa (OECD, 2016). During the first quarter of 2016 the lower production in mining of ‘other’ metal ores, primarily platinum and iron ore were the contributors to this decline. The South African economy contracted by 1.2 per cent (Statistics SA, 2016). Due to the drought, the agricultural industry has contracted by 14 per cent since the last quarter of 2015. In July 2016 the SARB revised downward the growth projection for 2016 to zero per cent, from the previous projection of 0.6 per cent (Mminele, 2016).

South Africa’s economy is in a “bad place” and this trend is likely to continue over the next five years (Nxedlana, 2016). Gross Domestic Product (GDP) growth between 2015 and 2019 is expected to be the lowest since the Second World War. It is critical, however, to appreciate that this weak growth is not only happening in SA. Countries like Brazil and Russia have been in deep recession for a few years (Smith, 2016).


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2.3 Western Cape economy

Western Cape Growth Geographic Product

The Western Cape economy accounts for around 15 per cent of the national GDP (2015), and is a strong influence in the national economy. Experiencing significantly higher growth rates since the recession in 2009 compared to the rest of the country. The growth rate of 0.4 per cent (q-o-q) in the last quarter of 2015 accounts for the effects of the drought and slowing manufacturing production (Figure 13). Y-o-y growth in the Western Cape economy grew in 2015 at 0.4 per cent, slightly faster than the national economy.

Figure 13 Real GGP (Growth Geographic Product) for the Western Cape

Source: Quantec Research, 2016

The Western Cape has not been significantly affected by decline in the primary sector but the province is strongly affected by the performance of the tertiary sector, which accounts for almost 73 per cent of the GDP (City of Cape Town, 2015). The largest decline in the provincial output came from the least two represented sectors, agriculture and mining, and the highest increase in production came from two sectors that are strongest represented in the Western Cape’s economy, wholesale and retail trade, and finance and business services. Table 3 indicates the annual average growth rates between 1995 and forecasted 2021 for selected economic indicators in the Western Cape.

-6

-4

-2

0

2

4

6

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2008 2009 2010 2011 2012 2013 2014 2015

Year on year Quarter on quarter


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Table 3 Annual average growth rates for selected economic indicators, Western Cape

Economic indicators

Annual average growth %

1995 - 2000 2000 - 2005 2005 - 2015 2016 - 2021

Durable goods 0.57 7.90 4.62 2.11

Semi-durable goods 5.99 9.53 4.84 3.26

Non-durable goods 0.94 2.97 1.83 1.49

Services 4.54 3.94 3.46 1.81

Government Consumption 1.39 4.74 3.43 0.95

Fixed Capital Stock 2.33 0.84 2.40 2.41

Gross Fixed Capital Formation 3.47 8.61 3.13 1.56

Exports 18.45 8.74 1.94 1.74

Imports 3.39 9.34 5.01 -2.60

Gross Value Added (GVA) 2.74 4.79 2.97 2.18

Employment 0.47 1.18 0.76 1.37

Source: BER, 2016

Table 3 indicates that the macroeconomic context for the provincial economy, as well as forecasted growth, is challenging. Poor demand for commodities and low GVA growth will have an impact on the whole provincial economy and is forecasted to be challenging until 2021.

Western Cape Sectoral growth

Table 4 indicates the contribution of each sector to the Western Cape economy and Table 5 indicates the forecasted growth of each sector.

Table 4 Western Cape GVA and GVA contribution, 2015 - 2016

Sector

GVA R-millions 2016 Contribution

(%) 2015 2016f

Agriculture, forestry and fishing 15 878 14 131 3.7

Mining and quarrying 1 062 1 073 0.3

Manufacturing 59 132 59 526 15.5

Electricity, gas and water 7 357 7 247 1.9

Construction 16 825 16 976 4.4

Wholesale and retail trade, catering and accommodation 62 042 62 706 16.3

Transport, storage and communication 39 977 39 677 10.3

Finance, insurance, real estate and business services 114 831 116 325 30.2

Community, social and personal services 25 720 25 823 6.7

General government 41 341 41 631 10.8

Total 384 166 385 114 100

Source: BER, 2016 (f denotes forecast)


21

Based on Table 4 the economic sectors that contributed the most to the Western Cape’s economy in 2016 includes the finance, insurance, real estate and business services sector (30.2 per cent); the wholesale and retail trade, catering and accommodation sector (16.3 per cent); and the manufacturing sector (15.5 per cent). Overall, GVA has increased between 2015 and 2016 by R948 million. The agriculture, forestry and fishing sector GVA continued to contract year-on-year by 5.5 per cent growth in 2015 and 11 per cent contraction in 2016 (Table 5). The electricity, gas and water sector and the transport, storage and communication sector are expected to shrink in 2016. The provincial growth performance by sector largely mirrors the trends of the national economy. The provincial economy is forecasted to start improving from 2018 with a 2.5 per cent GVA until 3.1 per cent in 2021.

Table 5 Western Cape GVA year-on-year increase per sector (%)

Sector GVA Yoy % Increase

2013 2014 2015 2016 2017 2018 2019 2020 2021

Agriculture, forestry and fishing

2.98 7.63 -5.50 -11.00 4.00 3.50 2.50 2.50 3.00

Mining and quarrying 2.85 6.94 4.93 1.00 0.60 0.60 0.80 0.80 1.00

Manufacturing 0.64 -0.23 1.41 0.67 1.24 1.95 2.05 2.27 2.15

Electricity, gas and water

-0.56 -1.09 -1.42 -1.50 1.67 1.93 2.08 2.15 2.10

Construction 4.96 3.63 1.90 0.90 1.10 2.80 2.90 3.50 3.80

Wholesale and retail trade, catering and accommodation

2.43 1.76 2.13 1.07 1.64 2.53 2.91 3.00 3.35

Transport, storage and communication

2.42 3.11 2.19 -0.75 0.35 2.63 3.32 3.52 3.29

Finance, insurance, real estate and business services

2.84 2.37 2.37 1.30 1.77 3.26 3.84 4.09 4.00

Community, social and personal services

2.29 1.56 1.00 0.40 1.90 1.93 2.03 2.11 2.40

General government 4.22 2.80 0.65 0.70 0.30 0.63 1.14 1.44 1.60

Total 2.51 2.15 1.45 0.25 1.42 2.46 2.82 3.04 3.10

Source: BER, 2016

Western Cape Business Confidence Index

The Business Confidence Index in the Western Cape has dropped since the beginning of 2016, accompanied by the decrease in the national GDP, provincial GGP, value of the rand, and decline in the agricultural sector. The civil contractor confidence in the Western Cape declined from 55 to 50 in the first quarter of 2016 (Figure 14). This lower confidence can largely be attributed to a slowdown in activity and lower profitability (Bureau for Economic Research, 2016).


22

Figure 14 Business Confidence Index in the Western Cape

Source: BER, 2016

Western Cape labour dynamics

The labour dynamics in the Western Cape are reflected in the changes in population since the local recession hit in the fourth quarter of 2008. In 2015, there were 4.3 million potential workers residing in the Western Cape. The Western Cape’s population was estimated at approximately 6.2 million according to the 2015 mid-year population estimates, 11.3 per cent of the national population. This population is represented with a working-age cohort of 67.7 per cent of the provincial population. In the second quarter of 2015, around 53 per cent of the working age provincial population (2.3 million people) were employed. This percentage is substantially higher than the national proportion of 43 (Meyer, 2015).

The youth aged 15 to 34 years of age-population are the key constituency in the labour market in South Africa. This representation in the Western Cape is 2.1 million people, 35.5 per cent of which are unemployed. Additionally, per annum there has been a 5.6 per cent increase in unemployment in the age group 25 - 34 years old. The youth unemployment rates are double that of adults unemployed (Meyer, 2015). Furthermore, there is a need for Provincial intervention to encourage an economic structure that supports the skillset of the growing market of unskilled/semi-skilled labour. Table 6 indicates the forecasted formal and informal employment numbers in the Western Cape.

0

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30

40

50

60

70

80

90

2012 2013 2014 2015 2016

Business Confidence Index


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Table 6 Western Cape formal and informal employment forecast, 2015 - 2021

Sector

Formal and informal employment (number)

Annual average

growth %

2015 2016 2017 2018 2019 2020 2021 2016 - 2021


159 692 139 809 144 407 149 066 153 314 157 975 145 391 -1.55

Mining and quarrying 3 943 3 889 3 928 3 953 3 971 3 992 3 153 -3.66

Manufacturing 240 829 242 650 247 090 252 358 257 464 263 486 256 246 1.04


6 628 6 670 6 820 6 979 7 140 7 314 6 990 0.89

Construction 117 018 119 147 123 185 128 394 133 722 139 663 130 623 1.85


452 016 456 653 464 001 477 879 493 002 509 396 501 168 1.74


91 575 92 220 93 920 96 820 100 018 103 726 98 696 1.26


388 431 395 741 406 031 421 064 438 044 457 183 452 297 2.57


296 944 298 545 303 267 310 864 318 442 326 707 321 549 1.34

General government

243 509 244 639 246 313 248 830 252 185 256 570 254 730 0.75

Total 2 000 584 1 999 964 2 038 962 2 096 207 2 157 302 2 226 013 2 170 843 1.37

Source: BER, 2016

Table 6 indicates that employment numbers in the Western Cape will grow by 1.37 per cent between 2016 and 2021. Jobs will be lost in the agriculture, forestry and fishery sector (-1.55 per cent) and the mining and quarrying sector (-3.66 per cent); but jobs will be created in all the other sectors within the Western Cape.

3. Background to main sub-sections

3.1 Introduction

This sub-section provides a background to main sub-sections in this study. This is aimed to provide additional information to the main sub-sections without creating repetition in Section B of this study.


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3.2 Agri-parks

Government intends to develop Agri-parks in each of the 44 district municipalities, with 27 of the poorest district municipalities being prioritised. Government launched the Agri-parks programme in 2015 as one of the cornerstones of rural economic transformation. Led by the Department of Rural Development and Land Reform, the programme provides communities with jobs, food security and opportunities to prosper. South Africa’s Agri-parks offer comprehensive services along the various commodity value chains (Khumalo, 2016).

The APs system is a relatively new concept to South Africa, but the idea draws from existing models both locally and abroad, which includes: educational/experimental farms, collective farming, farmer-incubator projects, agri-clusters, eco-villages, and urban-edge allotments, as well as market gardens. These models exist in both a public and private capacity, serving as transition or buffer zones between urban and agricultural uses. The focus of the AP is primarily on the processing of agricultural products, while the mix of ‘non-agricultural’ industries may be low or non-existent. Of prime importance is access to viable agricultural land, where a range of productive agri-horticultural enterprises may exist. The AP will be farmer-controlled with the model having a strong social mobilisation component so that black farmers and agri-business entrepreneurs are actively mobilised and organised to support this initiative.

As a network, it enables a market-driven combination and integration of various agricultural activities and rural transformation services. The AP contains three basic units:

Farmer Production Support Units (FPSU): Are centres (more than one per district) of agricultural input supplies, extension support, mechanization support, local logistics support, primary produce collection, and through-put to Agri-Hubs. The FPSUs have limited sorting, packaging, storage, and processing for local markets with through-put of excess products to Agri-Hub.

Agri-Hub (AH): AH are located in central places in a DM, preferably places with sufficient physical and social infrastructure to accommodate storage/warehousing facilities; agri-processing facilities; packaging facilities; logistics hubs; agricultural technology demonstration parks; accommodation for extension support training; housing and recreational facilities for labourers. AH receive primary inputs from FPSUs for processing, value adding and packaging, which is through-put into the Rural Urban Market Centres or exported directly to markets.

A Rural Urban Marketing Centre (RUMC): RUMCs are located on the periphery of large urban areas; these facilities provide market intelligence to assist farmers, processors in managing a nexus of contracts with large warehousing and cold storage facilities to enable market management. Both FPSUs and AH provide inputs to the RUMC. AP share RUMCs.

A visual representation of the information and produce flows within the AH system is provided in Figure 15.


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Figure 15 Agri-park Produce and Information flows

Source: Department of Rural Development and Land Reform, 2015

Figure 15 illustrates the strategic representation of the AP model. This model is to be duplicated in each district across the country, essentially creating a mega AP. Each AP however will be developed based on its own comparative advantages and its strength, in order to develop each district level economy. The FPSU is designed to have catchment areas of 30 km in low density areas and 10 km in high density areas, indicating that there will be several per district. The AH is designed to have catchment areas of 120 km in low density areas and 60 km in high density areas, indicating fewer AHs than FPSUs. The RUMC is designed to have the largest catchment areas of 250 km in low density areas and 150 km in high density areas. Table 7 provides the relevant detail of the proposed catchment of each component (FPSU, AH, RUMC).

Table 7 Norms and standards for Agri-parks

Component Proposed catchment area in

areas of low density population Proposed catchment area in

areas of high density population

FPSU 30 km 10 km

Agri-Hub 120 km 60 km

RUMC 250 km 150 km

Source: Department of Rural Development and Land Reform, 2015

Agri-parks

Small-Holder Farmers (SHF) Large-Scale Farmers (LSH)

Farmer Production Support Unit (FPSU)

Rural Urban Market Centre (RUMC)

Agri-Hub (AH)

Market

SHFs will be encouraged to use

the Agri-park process

established as depicted. It is

within this process that SHF will be

supported over the next ten years.

SHF will be able to move produce

from the FPSU to the RUMC without going through the

AH, if no further value-adding or

packaging is required.

LSF will be encouraged to

use the Agri-park process

established as depicted.

However, due to their existing

experience and product volumes they may choose

to enter the Agri-parks process at the AH, RUMC

or even go directly to the Market.

Info

rmat

ion Produce


26

The AP Programme seeks to achieve rural economic development through an all-inclusive approach to development by developing agricultural value chains that are linked nationally. The programme also aims to address issues of employment, skills development and productivity of land. It is viewed as a programme that will address issues of rural economic development. Government has previously intervened with various anti-poverty programmes, but with a lower impact than what was expected. The AP model, however, is expected to co-ordinate anti-poverty activities, providing an integrated package service that will match the local priorities. Table 8 indicates the proposed Agri-Hub locations.

Table 8 Proposed Agri-Hub locations

District municipality Proposed location of Agri-Hub

Cape Winelands Ceres

Central Karoo Beaufort West

Eden Oudtshoorn

Overberg Bredasdorp

West Coast District Vredendal

Source: WC Department of Agriculture, Agri-Hubs Identified by Province, 2015

There will be one Agri-park in each district (excluding the City of Cape Town).

3.3 IDZs and SEZs

Another two major economic development initiatives being undertaken in South Africa are Industrial Development Zones (IDZs) and Special Economic Zones (SEZs). An IDZ is a purpose built, industrial estate linked to an international air or sea port, which might contain one or multiple Customs Controlled Areas (CCA) tailored for manufacturing and storage of goods to boost beneficiation, investment, economic growth and, most importantly, the development of skills and employment in these regions. IDZs are intended to promote the competitiveness of the manufacturing sector and to encourage beneficiation of locally available resources. The support could either be a turn-about strategy to attract investment or be a national programme for economic development to increase exports and competitiveness of South African products (SARS, 2016). The key objectives of the IDZ programme include the following:

Attract foreign direct investment (FDI);

Attract advanced foreign production and technology methods in order to gain experience in global manufacturing and production networks;

Develop linkages between domestic and zone-based industries; and

Provide world-class industrial infrastructure.


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The SEZ Policy provides a clear framework for the development, operations and management of SEZs, including addressing challenges of the current IDZ Programme. SEZs may be sector-specific or multi-product and the following categories of SEZs have been defined as per the SEZ Act No. 16 of 2014 (the dti, 2016):

"Industrial Development Zone" means a purpose built industrial estate that leverages domestic and foreign fixed direct investment in value-added and export-oriented manufacturing industries and services;

"Free Port" means a duty free area adjacent to a port of entry where imported goods may be unloaded for value-adding activities within the SEZ for storage, repackaging or processing, subject to customs import procedures;

"Free Trade Zone" means a duty free area offering storage and distribution facilities for value-adding activities within the SEZ for subsequent export; and

"Sector Development Zone" means a zone focused on the development of a specific sector or industry through the facilitation of general or specific industrial infrastructure, incentives, technical and business services primarily for the export market.

Under the SEZ programme of the national Department of Trade and Industry (the dti) IDZs is a type of SEZ, with its focus being on industrial economic sectors. SEZs are areas designated to attract investment by promoting targeted economic activities, providing enabling infrastructure and a platform for the ease of doing business, with the objective of catalysing economic growth and sustainable job creation in line with the socio-economic development plans and policies of the South African Government. The recently promulgated SEZ Act, Act 16 of 2014, further enables SEZ operators to offer a suite of fiscal incentives to investors and continues to offer zone investors a special customs regime, such as a free trade zone or Freeport (SBIDZ, 2016).

The Saldanha Bay IDZ (SBIDZ) is located within the Saldanha Bay Municipality. It extends from the Port area in the south up to Regional Route 45 (R45) to the north, and includes land both east and west of the Sishen-Saldanha rail line which runs through the central part of the area in a north-south direction. It is the area around the present industrial area, i.e. around ArcelorMittal Saldanha Steel (Saldanha Steel), Duferco Steel Processing (Pty) Ltd (Duferco), Exxaro Namakwa Sands Smelter (Namakwa Sands) and other industries. The SBIDZ was officially designated as South Africa’s fifth SEZ on the 31st October 2013, with the Saldanha Bay IDZ Licencing SOC Ltd (SBIDZ-LC) as the official public entity licence holder and operator of the zone in the Port.

The SBIDZ is the first zone to be designated in a South African port (SBIDZ, 2016). The first phase of the medium-term infrastructure plan for the zone commenced in the 2014/15 financial year and since then priority has been given to committing the infrastructure budget for the initial development phases of bulk services and upgrading of relevant local infrastructure, in partnership with the Saldanha Bay Municipality, a trend which will continue over a 3 to 4-year period. Additionally, the SBIDZ-LC is also focused on undertaking skills and enterprise development programmes to equip the local communities for the potential opportunities arising from the SBIDZ. The SBIDZ-LC works


28

with many diverse partners in that regard. The CAPEX R-Value for the SBIDZ is approximately R442 million.

The SBIDZ’s targeted economic sector is that of upstream oil and gas and marine engineering and services, a targeted cluster of industries of the dti’s Industrial Policy Action Plan (IPAP). This cluster includes multinational and domestic companies in specialist vessel servicing and maintenance; marine repair; fabrication, and logistics capabilities that service the needs of Africa’s upstream oil and gas exploration and production industry in sub Saharan Africa. This cluster is primed to benefit from the Freeport or free trade zone customs regime, the ease of doing business platform and the natural advantages of the Port (SBIDZ, 2016).

The City of Cape Town also has an SEZ at Atlantis, the Atlantis GreenTech SEZ, which is one of the mechanisms in place to create an enabling environment for positive economic development (GreenCape, 2016). This particular SEZ has several incentives available, including:

Financial measures including an electricity tariff subsidy;

Exemption from land-use application fees; and

Non-financial measures such as assistance from the City of Cape Town for companies to obtain faster environmental authorisation from the Provincial Department of Environmental Affairs and Development Planning.

Situated about 40 km north of the Cape Town central business district (CBD), Atlantis has already been able to attract a R300 million wind-tower investment by Gestamp Wind Steel’s GRI Renewable Industries. The aim of the Atlantis SEZ is to attract not only large manufacturing firms but also engineering consultancies and small and medium-sized suppliers. Atlantis is seen as the ideal incubator for entrepreneurs with a vision of supplying into the green energy supply chain (Creamer, 2014).

3.4 Broadband connectivity

The way young people interact, engage and learn is changing, and therefore the importance of connectivity is vital in creating opportunity and opening up a world of knowledge for people of all ages. Most people and communities in rural, remote areas rely heavily on mobile phones to stay in touch and conduct business, and since mobile broadband costs are still unaffordable to many citizens, having Wi-Fi networks in place present them with options they would normally not have. Broadband connectivity is provided by private service providers, as well as free connectivity from government. On 16 March 2016 the Western Cape Provincial Government launched the first 50 wards (Map 3.1) of 384 planned public access Wi-Fi hotspots in partnership with Neotel (WCPG, 2016). These free Wi-Fi hotspots cater for stable, reliable and fast Wi-Fi of up to 300 MB (for the first month, thereafter it is 250 MB per month), as well as free access to government websites, and enables citizens to have opportunities to connect to information, tender opportunities, details about internships/bursaries, and so forth.


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Map 1 First 50 Wi-Fi hotspots in the Western Cape

Source: WCPG, 2016

The City of Cape Town also provides free 500 MB per month in 102 libraries across the municipal area (Mtyala, 2013) and the City is also rolling out fibre broadband access to all buildings in the central business district (CBD) as part of its investment into a municipal broadband network project (Alfreds, 2016). In April 2016, the City had connected 290 government buildings and an additional 49 private buildings. The City also plans to install so-called “last mile” infrastructure to every building in Cape Town on an open access network, which means that individuals can choose the internet service provider of their choice and by 2021, the city aims to connect 950 government and 2 500 private buildings across the metro (Alfreds, 2016).

Research by Swedish mobile brand Ericsson estimates that a country’s GDP can grow by 1 per cent for every 10 per cent increase in the number of people online. Doubling the broadband speeds was also connected to a 0.3 per cent increase in a country’s GDP (Makalima-Ngewana, 2014). According to the World Bank a 0 per cent increase in high speed broadband penetration in developing countries results in a 1.3 per cent increase in economic growth (Jooste, 2014).


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There are many private service providers of broadband from 3G, ADSL, to fibre, with 177 members currently listed under the Internet Service Providers' Association (ISPA) has (http://ispa.org.za/membership/list-of-members/). The 3G and LTE coverage of these private providers is widely available in the Western Cape except for areas in the Central Karoo District. In terms of fibre roll-out, Telkom has only rolled-out fibre in certain areas in Cape Town and George in the Western Cape.

3.5 SMME best practice

The informal sector is commonly understood to refer to the unregulated, non-formal portion of the market economy. Statistics SA (2015) uses an employment-based definition for the sector, defining it broadly as comprising of employees working in establishments employing less than five employees who do not pay income tax, as well as own-account workers whose businesses are not registered for either income tax or value-added tax (EPIC, 2015). A large number of people are working in and living off the informal economy, which makes it an important factor in considerations in reducing poverty and inequality. In reality the informal economy exists both together and co-dependently with the formal economy. Little is known with regards to the entire spectrum of informal activities. This is problematic for policy makers who, without knowing the range of informal economy enterprises cannot develop estimates of the scale of the sector, which in turn potentially belittles its importance and contribution to overall levels of employment and GDP (Petersen, 2015). Foreign traders form a significant component of the informal sector economic landscape in the Western Cape. However, there is a lack of data on trading activities and numbers of foreign traders.

Of all the informal economy enterprises identified in the census of township enterprises and rapid assessment of high street informal economy activity, the great majority occupy the category of retail trade - with this category being highly represented within informal trade as determined by the township census and observed in the trade database and field interviews. In this case, retail trade also represents the broadest division of informal economy activity, hosting by a wide variety of enterprises in sub categories from clothes, footwear, plastics, foods, and homewares. Also commonplace in terms of enterprise scope are financial services with all categories recognised both formally and informally, this includes money lenders, stokvels (savings clubs), life insurance, shack letting and sales, land brokering, the hiring of equipment. This division was bolstered through various formal businesses found to be employing or operating in ways appropriate for informal business (Petersen, 2015). Table 9 indicates the various types of SMMEs (according to the National Small Business Act).


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Table 9 Types of SMMEs

Category of SMME Description

Survivalist Enterprises Operates in the informal sector of the economy. Mainly undertaken by unemployed persons. Income generated below the poverty line, providing minimum means to keep the unemployed and their families alive. Little capital invested, not much assets. Not much training. Opportunities for growing the business very small.

Micro Enterprises Between one to five employees, usually the owner and family. Informal - no licence, formal business premises, labour legislation turnover below the VAT registration level of R300 000 per year. Basic business skills and training Potential to make the transition to a viable formal small business.

Very Small Enterprise Part of the formal economy, use technology. Less than 10 paid employees Include self-employed artisans (electricians, plumbers) and professionals.

Small Enterprise Less than 100 employees. More established than very small enterprises, formal and registered, fixed business premises. Owner managed, but more complex management structure.

Medium Enterprise Up to 200 employees. Still mainly owner managed, but decentralised management structure with division of labour Operates from fixed premises with all formal requirements.

Source: Entrepreneurs Toolkit, 2016

It is clear that Small, Medium and Micro-sized Enterprises (SMMEs) play a major role in the global economy. This is evident in the fact that SMMEs employ one third of the world’s labour force. In countries like China, SMMEs employ up to 80 per cent of the total labour force, thus making them an important economic phenomenon. It is further argued that the growth of SMMEs is an indicator of future economic growth and competitiveness. It is therefore telling to note that SMMEs comprise a higher segment of the economy and employ a much higher percentage of the workforce in OECD countries than in less developed countries, and this trend is more evident in the Asia Pacific region (Kushnir, Mirmulstein, & Ramalho, 2010). There are various other roles that SMMEs play in an economy, one of the most important is as a substitute for job creation. Many SMMEs have the potential to become the root of new and/or emerging industries and sectors due to their radical innovation tendencies and their ability to identify new markets through their export and expansion potential. These roles can be highly valuable, especially during times of economic downturn and/or market failures (unece.org, 2016).

Despite the recognition of their importance, SMMEs still face various challenges. One of the most prominent challenges is access to finance, especially for long term investments. Financial institutions are sceptical of investing in small businesses, especially start-ups due mainly to the uncertainty of return on investments. Another important challenge is lack of access to information. Reportedly many SMMEs in both OECD and developing countries cited a lack of linkage with technology and R&D institutions, lack of market knowledge sharing and collaboration amongst businesses. Other obstacles to the growth of SMMEs include the cost of bureaucratic red tape and an unstable business environment (unece.org, 2016). The following are challenges experienced by SMMEs:


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Financial constraints - many SMMEs lack working capital;

Market constraints - many SMMEs cited lack of access to markets as a key business impediment;

The use of policies and by-laws to exclude traders from profitable trading spaces;

Access to vendor lists and supplier databases - SMMEs highlighted challenges with getting registered on municipal supplier databases and vendor lists;

Information and opportunity constraints - lack of access to opportunities for SMMEs have been attributed to lack of resources, networks, training, and lack of proper consultation between City and traders and lack of information;

City of Cape Town plays a divide and rule game with the sector to prevent the sector from establishing a coherent structure that has enough muscle to bargain with the City;

Institutional constraints - many SMMEs need to develop organisational capacity to enhance marketing and business development, finance and operations;

Business premises and infrastructure - SMMEs tend to lack the essential business premises and supporting infrastructure;

Red Tape - strict adherence to crippling bureaucracy, laws, regulations, and administrative prescriptions have been identified as a major impediment for many SMMEs;

Equipment and technology - many SMMEs lack essential technology and equipment to increase visibility, efficiency and competitiveness;

Traders allege that they are victimised/abused/harassed by municipal officials and are not accorded the same treatment/respect as formal businesses;

Stringent government procurement regulations hinder local supplier development initiatives;

A lack of credit history the inability to produce an acceptable business plan according to financial institutions;

Poor market research and the absence of a viable business idea, and lack of access to vibrant markets;

SMMEs are not registered and makes it difficult to obtain funding to grow their businesses; and

Mentorships to grow SMME businesses.

To alleviate some of the challenges mentioned above various governments in the OECD has implemented strategies and policies from which best practices have been identified. One of which is government support for venture capital in which public entities assume some of the risk that venture capital undertakes in funding SMMEs. This would entail the public entity providing parts of the loans and/or investments to fund SMMEs in partnership with and finance institutions. The implementation of technology diffusion programs in which government aims to improve the innovative capacity and as well as to improve and control quality in small firms through the dissemination of information and the promotion of the creation of collaborative partnerships between small businesses.


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Another proven strategy is the promotion of the quality of management/owners of small businesses. This is done through the encouragement of training and providing consultancy and advisory services to businesses. Lastly, the focus of some government support entailed focusing on market access. Easing access to markets more often than not entailed a focus on international markets and ensuring that small enterprises are able to internationalise their operations in order to take advantage of offshore opportunities (unece.org, 2016). The following two boxes indicate case studies of where SMME strategies are working successfully.

Case Study 1: Japan’s SMME policy and strategies

SMMEs currently comprise 99.7 per cent of the Japanese economy, employing 70 per cent of the workforce and accounting for 50 per cent of value addition.. There is thus no doubt that SMMEs are an essential part of the Japanese economy. The Japanese government is therefore committed to the promotion and fostering of SMMEs, and have implemented various policies to increase the competitiveness of these enterprises.

There has been extensive changes in the policies for the promotion of SMMEs since 1940s post-war reconstruction period in Japan. During the post-war reconstruction period there was an emphasis on the breaking up of large monopolistic entities and preventing the concentration of economic power. The next phase, during rapid economic growth (1950s - 1970s), emphasis was placed on rectifying the disparities between large firms and SMMEs. During the transition period from 1989 to the present emphasis was on supporting and motivating capable and competitive SMMEs.

In promoting SMMEs the Japanese government has implemented various policies, some of which conforms to the best practices as outlined above. One of the most noteworthy is the financing measures undertaken to promote SMMEs. Government was willing to share the financial risks of loans provided by private institutions to SMMEs. Government was also able to play the role of arbitrator between larger firms and SMMEs especially in terms of contract disputes by providing regulations to prevent unfair business practices. Support to SMMEs have also been provided, especially in terms of the training and capacitation of management. Tax exception and breaks has also proven useful in alleviating some of the financial pressure on small companies. Financial support to SMMEs for R&D projects has also enabled them to remain innovative and competitive. Lastly, government has stimulated demand for products from SMME by including these in their procurement processes.

Case Study 2: Spice Mecca (Cape Town)

Spice Mecca is located in Cape Town and was started in 1994 as a family owned enterprise. The company imports spices and blends, and packages these to sell in its stores all over Cape Town. The company is currently seeking to expand in order to become a national enterprise and thereby take advantage of economies of scale. This business has received funding for its expansion goals from the National Department of Trade and Industry (the dti) and received further business support from the Small Enterprise Development Agency (SEDA). SEDA aided Spice Mecca with their marketing by creating an e-commerce platform through which the company marketed its products and sourced new clients. Through the use of this platform the company was able to build up a strong customer base outside of its traditional business area to the point of being able to expand into new geographic locations outside of the Western Cape. The business is now aiming to become the leading provider of spices nationally.

The biggest challenge is the access to export markets and opportunities. The business also cited the necessity to receive accreditation and certification such as the Food Safety Assessment (FSA) accreditation and Quality Management System (QMS) certification. Furthermore, access to financing is still a challenge for this business. The only other assistance needed is in terms of finance for expansion into other areas outside the Western Cape. Further marketing will also be needed, thus the e-commerce platform created by SEDA will gain in importance as the business grows and expands. Administrative aid by lower demands of ‘red tape’ for the fast tracking of certification and food licensing will also be needed as the business’ product range expands and new markets are being accessed.

Due to the assistance this business received from the dti and SEDA it was able to expand its market reach and improve on its business profile and image. Six months after the intervention by SEDA the business was able to increase the number of employees by six more people bringing the total number of employees to 67 persons. Furthermore, during that same timeframe turnover increased by 46 per cent compared to the six months prior to the intervention and profitability increased 550 per cent.


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These case studies indicate that when SMMEs work together and are supported by government (share the financial risks of loans, tax exemption, training and capacitation of management) it creates an enabling environment for SMMEs to thrive. A study of informal traders conducted by Sustainable Livelihoods Consultants in 2007 found that (SLC, 2007):

Informal sector businesses emerge through entrepreneurial risk-taking, a process that involves trial and error. Once trading, the business evolves but does not necessarily become formalised.

Informal business development is not contingent on direct institutional training or on enterprise development support.

Micro-businesses do not create employment, but instead provide a means for skills acquisition. They commonly feed opportunities downstream, facilitating growth in micro-enterprises.

Informal sector entrepreneurs start their business with seed capital derived mainly from employment or family loans.

They utilise accessible and affordable infrastructure/equipment, including their homes, and run their business on a cash basis.

Insufficient capital, shortage of qualified personnel, government policy, and high transport and power costs cause serious inefficiencies in the informal trade sector. The characteristics of this sector comprise a large of informal trader’s and breadwinner activities which include a wide range of legal and illegal activities outside the formal economy. Some of the characteristics of the informal sector include easy access to the business sector, utilisation of locally available raw materials, small scale processing of products, labour intensive activities, utilisation of appropriate technology; skills usually lie outside the formal educational systems, and operating in unregulated, uncontrolled and competitive markets. The informal sector usually has a growth potential and can be seen as the gateway to SMMEs. The rise of the informal sector is directly linked, in most cases, to the failure of businesses in the formal sector, particularly, the small businesses (A. Fundie, 2015). Studies show that economic growth of any country is closely linked with SMME development. There is a robust, positive relationship between the relative size of the SMME sector and economic growth. the dti suggests that in 2012 there were more than 800 000 SMMEs and had an estimated total economic output of 50 per cent of GDP and provided employment to about 60 per cent of the labour force. Two in three business owners operate their own businesses and do not have any employees. SMMEs tend to be labour rather than capital intensive (Ramukumba, 2014).

According to Ramukumba (2014) government recommendations for policy considerations include (Ramukumba, 2014):

The government should establish a National Small Business Council which will serve as an information hub for all SMMEs in the country.


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The country should develop a finance agency with the mandate to improve access to finance by the SMMEs; primarily through the provision of ‘wholesale finance’ or guarantees to retail financial intermediaries, which, in turn, finance the provision of ‘wholesale finance’ or guarantees to retail financial intermediaries, which, in turn, finance the SMME sector.

Establishment of a skills programme through which SMMEs are able to obtain assistance with two of the challenges that they face, i.e. a lack of management skills and developing relationships with customers. Improving skills leads to improved productivity and affectivity and therefore to a more stable organisation and increased profits.

Government need to provide support services to SMMEs through qualified service providers to allow for growth amongst SMMEs.

Banks could improve their limited focus on SMMEs by improving the in-house support it offers this sector through mentorship, monitoring and network opportunities. It was suggested that banks need to improve on their loan applications processes to make it user friendly and efficient. Banks were also advised not to adopt a “one size fits all” type of product, instead have tailor made products that are affordable and meets the needs of the SMME sector (Goslett, 2014). The Department of Economic Development and Tourism (DEDAT), under the Enterprise Development (ED) unit has initiated the Provincial Entrepreneurship Recognition Awards as the SMME support programme that will focus on encouraging a culture of entrepreneurship in the Western Cape. The awards promote entrepreneurial activities through identifying, showcasing and recognising innovative entrepreneurs who have displayed excellence in various areas. Judgement criteria include: innovation; industry relevance; sustainability; exceptional creativity; socio-economic impact; growth and jobs; and green. The following sub-sections highlight the SMME environment in each of the six regions in the Western Cape. This is based on information that is available therefore there are information gaps.

City of Cape Town

The predominant groups participating in the informal economy in Cape Town are African (49 per cent), male (60 per cent) and prime-aged (41.1 per cent). In terms of skills distribution among informal sector workers in Cape Town, and using years of completed education as a proxy, the largest group is those who have some secondary schooling but have not completed their matric, at 43 per cent. The second largest group (27 per cent) is made up of people with matric only. Together, these two groups account for 70 per cent of informal sector workers, which implies that work in the informal sector is relatively unskilled (EPIC, 2015).

The informal sector is probably more likely to absorb people who leave formal sector employment (24.8 per cent), either voluntarily or involuntarily, rather than to reduce the existing pool of the unemployed. Two barriers to growth most frequently cited by owners of informal businesses are access to better locations (41.4 per cent) and stifling government regulations (40.4 per cent), both of which have implications for how the


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City of Cape Town can best maximise the sector’s potential to help reduce unemployment and poverty (7.3 per cent) (EPIC, 2015). Table 10 indicates the statistics on how many SMMEs/informal traders have e-permit’s in the City of Cape Town.

Table 10 E-permit system statistics (City of Cape Town)

E-permit system statistics Percentage

District A 24.3%

District B 0%

District C 1.7%

District D 31.5%

District E 0%

District F 17.7%

District G 13.6%

District H 11.2%

Total (number) 7 727

Source: CCT 2016

There are 7 727 SMMEs/informal traders that have e-permit’s in the City of Cape Town. The majority are situated in Cape Town CBD, Bellville, and Mitchells Plain. According to the City of Cape Town (2016) there are ± 14 000 informal traders within the City of Cape Town and not all of the traders have e-permits. There are also ± 20 000 formal traders within the City of Cape Town. This is a total of approximately 33 000 informal/formal traders within the City of Cape Town. There are also 121 entrepreneurship development organisations located in City of Cape Town.

The City is working on reviewing the Business Support Policy in order to guide the City’s decisions and actions in relation to small business assistance or support including assistance to navigate the City and resolve red tape related matters. The Business Support Policy builds on the ‘whole organisation’ approach of coordinated action from all City departments in support of economic growth and business development. This entails (MERO Survey, 2016):

A focus on regulatory modernisation in support of the City’s competitiveness as a place to do business.

Business support through City procurement through partnerships and promotion of supplier development opportunities targeted at small businesses.

Encouraging innovation through promotion of outcome based procurement practices.

Promoting business incubation through periodically identifying opportunities for optimising underutilised Council assets for economic development.

Promoting economic inclusion programmes through identifying, packaging and delivering catalytic and high impact projects in partnership with the private sector for economic regeneration at prioritised nodes.


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Business Support Ecosystem Coordination through providing an industry forum for the various organs of state and private sector business support organisations that provide business support in one or other form.

The following support mechanisms are provided to informal businesses (MERO Survey, 2016):

Access to markets through e.g. supporting the Mayoral markets at various civic buildings or seasonal markets e.g. Cape Town Summer Market.

Security of tenure for informal traders through development of informal trading plans.

Provision of basic trading infrastructure.

Access to support and development agencies.

Access to business information and business and networking opportunities.

Consistent business improvement processes to improve the manner in which the City does business with informal businesses.

Lobbying other services to incorporate the informal sector as a legitimate stakeholder when planning or servicing urban spaces.

The following support mechanisms are provided to formal businesses (MERO Survey, 2016):

The [email protected] and Business Query Tracking System serves all businesses – formal and informal.

Implement and support Supplier Development projects.

Implement and support two Business Incubators - Renewable Energy and Wood Manufacturing Products.

Support the SEDA, WCG Department of Economic Development and Tourism initiatives in Cape Town along with promoting and supporting programmes and projects of more than 100 Public, Private, and Non-Profit Business Support Organisations in Cape Town.

Collect and distribute business intelligence that can help businesses make more informed decisions on their operations.

Implementing Business Retention and Expansion projects in identified areas with Area Partnerships.

In addition, the Trade and Investment Department (MERO Survey, 2016):

Administers the investment incentives policy.

Provides sector support through Special Purpose Vehicles (SPVs).

Provides development facilitation services throughout the City, as well as in Atlantis specifically in the form of the Atlantis Investment Facilitation Office.


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Provides support to inter-government catalytic projects, as well as partnerships with the private sector.

Provides up-to-date economic information and business intelligence relating to the Cape Town Economy.

Curates the City’s business brand and co-ordinated the investment narrative amongst the various organisations that undertake investment promotion activities in the City.

West Coast District

SMME information is limited in the West Coast District. According to the West Coast District Municipality there are an estimated 500 co-operatives in the municipal area. The biggest challenge that co-operatives experience is that there is no Western Cape Provincial Co-operative Development Strategy which means that there is no Provincial budget to support co-operatives. The tourism office has a database of BBBEE tourism SMMEs (Table 11).

Table 11 West Coast District BBBEE tourism SMMEs, 2016

BBBEE tourism SMMEs Number of SMMEs

Accommodation Establishments 22

Guiding/Shuttle Service/T.O. 2

Food and Beverages 5

Products/Activities/Attractions 7

Total 36

Source: West Coast District Municipality, Tourism Office, 2016

According to Table 11, there are 36 BBBEE tourism SMMEs operating in the West Coast District. According to a Business Climate Survey3 (2014) of the West Coast District, more than 60 per cent of businesses were within the retail, wholesale trade, catering and accommodation sectors. This was followed by the agricultural and mining sectors in the Bergrivier and Cederberg Municipalities and the finance and business sector for Matzikama and Saldanha Bay Municipalities.

Despite the above discussed challenges, there are some opportunities that have been identified for SMMEs in the West Coast District. This included Agri-parks currently being developed within the West Coast District which will result in opportunities for vegetable and crayfish farmers. The Small Enterprise Development Agency (SEDA) was also found to be offering assistance within the West Coast through providing business development support for SMMEs. There are also tourism opportunities within the West Coast in terms of small business offering cycling tours, opening up backpackers as well as transporting tourists to local communities to experience local life.

3 Unrepresentative sample of 400 businesses from Bergrivier, Cederberg, Matzikama and Saldanha Bay municipalities.


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Government can assist in the development of SMMEs in the District through creating incentives for foreign store owners to form partnerships with local store owners. This will assist in decreasing the tension between locals and foreigners as well as prevent local store owners from having to shut down their businesses. Additionally, through increasing access to information for SMMEs in the smaller areas and more remote areas, and not by simply making it available at municipalities which are inaccessible to most prospective SMMEs business owners because of lack of transport, but bringing information to the areas was identified as an important input from government (Klaase, 2016). Improved transportation connectivity between West Coast areas and the Saldanha Bay IDZ would provide opportunity for SMME growth in the District.

According to the West Coast Development Business Centre (Meyer, 2016) they have approximately 460 SMMEs registered on their database. SMMEs are located in the following municipalities: Saldanha Bay, Bergrivier, Cederberg and Matzikama. The SMMEs which are predominantly locally owned fall into the following business types, namely engineering, construction, earth moving plant and tippers, transport and logistics, accommodation, catering, security, manufacturing and information technology. Challenges identified for the West Coast District were the lack of funding, lack of capacity as well as the lack of training. Despite these challenges the West Coast Development Business Centre identified the following opportunity, namely that the number of developments in the West Coast District Municipality bring about numerous opportunities for the SMMEs. Government can assist in the development of SMMEs through the support of the West Coast Development Business Centre as they are there to develop and enhance SMMEs through the delivery of quality and cost-competitive service (West Coast Development Business Centre, 2016). The Bergrivier Municipality is currently finalising an MOU with the West Coast Business Development Centre to establish a full time office in Bergrivier. Bergrivier also has its own currency, the BRAND that enables the informal sector to trade with one another without using the conventional money. This enables informal sector to conduct business with one another and money stays in the local area.

Additionally, the Bergrivier Economic Development Forum was established on 5 November 2015 and is a shared platform for public and corporate private sector (MERO Survey, 2016). A number of projects have been identified to facilitate growth and the participation and active involvement of the private sector is commendable. The projects are in various stages of implementation. In terms of the Saldanha Bay IDZ there is a process that SMMEs need to follow to get onto their database. Firstly, you have to be compliant in your sector, if you are not compliant in your sector you will not be able to register on the database. Secondly, the SMME must have capacity as if they do not have the capacity they will not be able to deliver. The Saldanha Bay Municipality has a draft policy for informal trading and an implementation plan is in process. The Municipality also provides infrastructure support in the form of Beehives for SMMEs and stalls to informal traders to promote them from one stage to another. Strategies within the local municipalities to support SMMEs include the LED Strategies, creating an enabling environment, ensuring bulk infrastructure, and the dissemination of information.


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Eden District

George Municipality has identified approximately 500 SMMEs and strategies that are in place to assist informal businesses, include (MERO Survey, 2016):

Signing an MOU with ABSA Bank for Small Enterprise Development - Bridging Finance.

Mayoral Entrepreneurship Training.

Access to the economy, to create opportunities for vulnerable individuals to enter the local economy. A number of projects are being executed by the LED Office in this regard.

Formal businesses receive support through the revitalisation of the CBD, information sharing (i.e. Municipal By-Law’s, tendering opportunities, BEE certification, etc.), and resolving crime and the parking issue in the CBD.

There are 1 338 SMMEs in the Greater Knysna Area as confirmed by a business unit survey done in 2015. The following strategies have been put in place to assist informal businesses (MERO Survey, 2016):

An informal trade policy which is aimed specifically at the informal economy. The Municipality’s strategy includes small business development; skills development and training for both the formal and informal sector businesses.

Provision of micro managed workspaces.

Business Advisory Services.

Business mentoring programmes and enterprise training.

Business Incubator Programme.

Market days.

Community resource centres.

Promote buy local campaigns.

Skills and job placement programmes.

Support mechanisms in the Eden District Municipality for informal and formal businesses include (MERO Survey, 2016):

Informal trader’s certification.

Partnership and support facilitation.

Funding of cater care programme.

South Cape Business partnership and strategy formulation.

Knysna Municipality has an informal trade policy which is aimed specifically at the informal economy which caters for small business development, skills development,


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and training for both the formal and informal sector businesses. For formal businesses the Municipality has a strategy that includes business development as well as on-going support to businesses in relation to marketing opportunities, business advice, as well as clustering support within sectors such as timber, tourism, etc.

Cape Winelands District

Table 12 indicates the SMMEs located within the Cape Winelands District according to the Cape Winelands District Municipality’s supplier database 2016.

Table 12 Cape Winelands District Municipality SMMEs

Municipalities Number of SMMEs

Witzenberg 150

Drakenstein 471

Stellenbosch 439

Breede Valley 799

Langeberg 197

Cape Winelands District 2 056

Source: Cape Winelands District Municipality Supplier Database, 2016

The Cape Winelands District Municipality’s Supplier Database (2016) contains 2 056 SMMEs. According to Langeberg Municipality there are approximately 1 000 SMMEs operating in the municipal area and the Drakenstein Municipal area has approximately 2 500 SMMEs (based on a 2013/14 business survey). The Witzenberg Municipal area has approximately 150 SMMEs and the Breede Valley Municipality is currently conducting research into SMMEs data in the municipal area. Support mechanisms in the Cape Winelands District for informal and formal businesses include (MERO Survey, 2016):

The Cape Winelands District Municipality has recently facilitated that Drakenstein and Breede Valley Municipality’s informal traders to become part of the national Informal Traders Upliftment Project (in partnership with the W&R Seta as well as DSBD, which aims to train and equip informal traders with basic business skills and knowledge to assist them with sustaining and growing their respective businesses beyond the point of informality, towards the tiers associated with SMMEs).

Township Regeneration Strategy (Langeberg Municipality).

Informal Trading Policy (being reviewed in Langeberg Municipality).

Entrepreneurial Seed Fund Programme.

Training and Mentorship Programme.

Business Retention and Expansion Programme for Tourism Sector.

Tourism and Trade Exhibition Programme.

Investment Programme: developing tourism mobile apps for towns in the District.


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DEDAT/CWDM Red Tape Reduction.

At trade shows businesses are subsidised with trade space which provides a platform for the businesses to do business and market their products and services.

Facilitate access to business support programmes offered by other government departments and private sector entities.

The establishment of LIFE (Langeberg Investment Forum) which seeks to act as an agency that will look after the relationship with established business.

Reduced time on the approval of business licence applications, building plan applications, and land use applications.

The Langeberg Municipality suggests assisting SMMEs through negotiating with established business to outsource non-core functions to local SMMEs (supplier development), and on an annual basis bring all government departments for two days for informal sector to engage with them face to face these services become available. According to the Cape Winelands District Municipality there has been a strong call for the municipalities to review rates, service charges, levies and regulatory procedures so that SMMEs may overcome some of the difficulties that are inherent within the growth of small firms. However, municipalities just cannot afford to do this at this stage without assistance from province and national government.

As SMMEs are hit the hardest by poverty and market failures, the Western Cape Provincial Government must take a lead in the development of SMMEs with satellite offices in the municipalities. Provincial and local government must continually strive to create an enabling environment for business to grow the economy, and these include (MERO Survey, 2016):

Spatial and town planning that does not inhibit economic growth.

Provision of economic infrastructure (bulk infrastructure) that speaks to the needs of business and labour.

Investment promotion, attraction and retention (market access for exporting SMMEs).

Reducing red tape in all spheres of government.

Business retention and expansion programmes.

Conduct a skills audit by taking stock of what current skills are the labour market, investigating what skills are needed by business, and looking at whether universities and FETs are actually providing the type of training that business needs.

Technical learnerships and apprenticeships (i.e. artisan skills).

Better marketing of the DTI incentives to export-ready SMMEs.

Greater emphasis should be placed on the outputs/outcomes of training initiatives, instead of just the mere nature of the exercise.


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Central Karoo District

There are approximately 50 SMMEs operating within the Beaufort West Municipal area and approximately 41 SMMEs within the Laingsburg Municipal area. Support mechanisms in the Central Karoo District for informal and formal businesses include (MERO Survey, 2016):

Assistance with business registration and Construction Industry Development Board registration.

Assistance with the registration of co-operatives in conjunction with the local municipalities and district municipality.

Creating linkages with training institutions for businesses.

Platform to discuss economic development strategies.

Laingsburg Municipality SMME Development Plan.

Financial support for entrepreneurs (start-ups).

Training and capacity building.

There is a plan to assist the informal sector through a proper business hub that can be situated on the N1/Donkin Street in Beaufort West. The Beaufort West Municipality is aiming to get formal businesses involved in the Beaufort West Business Chamber so as to discuss growing the local economy (MERO Survey 2016).

Overberg District

In the Overberg District Municipality, a database of SMMEs is maintained on local level and the District assists in coordination (i.e. workshops). The last workshop contained 25 SMMEs. There are approximately 480 SMMEs registered on the Overstrand Municipality’s supplier database and approximately 180 registered in Theewaterskloof Municipality.

Support mechanisms in the Overberg District Municipality for informal and formal businesses include (MERO Survey 2016):

Joint Provincial Venture.

Preferential Procurement Initiative.

Building entrepreneurial communities by supporting the development of economic spaces as integrated development hubs.

Providing information and support for decision-making and partnering with other institutions for access to information and funding.

Ensure support by identifying spatial space for trading and reduce the cost of doing business.

Introduction of ease to do business through flexible taxes and rates.


44

Economic information management and dissemination.

Municipal to Business processes to ease the cost of doing business and reduce red tape.

Creating opportunities and tools to develop small businesses through procurement.

Identifying and releasing land for economic activities such as marine farming, markets, etc.

Establishment of a developer support task team.

Investment Facilitation SOP - pilot phase planned to go to Council.

Establishment of a Development Contribution Fund Policy.

Development of an Investment Incentives Policy.

Equipping through WRSETA.

Facilitation of emerging business workshops and courses.

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City of Cape Town Metropolitan Municipality

West Coast District


Overberg District

Eden District


SECTION B: WESTERN CAPE REGIONS

47


1

Regional economic review and outlook

1.1 Introduction

Cape Town is the only metropolitan area within the broader Western Cape Province economy, contributing 71 per cent to the GDP of the Western Cape in 2015, making it a major economic contributor.

The largest contributors to Cape Town’s economy are the manufacturing sector, the wholesale and retail trade, catering and accommodation sector, and the finance, insurance, real estate and business service sector.

Cape Town experienced an average GDP growth rate of 2.9 per cent between 2005 and


48

2015. The Planning Districts that experienced the highest annual average growth rates during this period were the Blaauwberg, Helderberg and Khayelitsha/Mitchell’s Plain.

Areas of concern in the Metro include the rising households with no income and income inequality, informal dwellers, increasing ART patient loads, substance abuse and crime, among others.

1.2 Growth in GDPR performance

1.2.1 GDPR performance per planning district

The Cape Metro area is the only metropolitan municipality within the broader Western Cape Province economy and in 2015 it contributed 71 per cent to the GDPR of the Western Cape. Figure 1.1 indicates the GDPR performance of the Cape Metro area and its Planning Districts between 2005 and 2015.

Figure 1.1 GDPR growth per planning district, 2005 - 2015


Figure 1.1 indicates that the Cape Metro area experienced an average GDPR growth rate of 2.9 per cent between 2005 and 2015. The Planning Districts that experienced the highest annual average growth rates during this period were Blaauwberg, Helderberg and Khayelitsha/Mitchell’s Plain which grew by rates of 4.4 per cent, 3.3 per cent and 3.3 per cent respectively. The district with the lowest growth during this period was the Tygerberg Planning District. The Southern Planning District is however one of the largest contributors to the GDPR accounting for 11.2 per cent of inputs. Notably, other than the Blaauwberg Planning District which had a contracted average growth rate of 0.4 per cent between 2008 and 2009, all of the Planning Districts contracted during this period. The decline in economic activity is largely attributed to the global

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Blaauwberg 9.3% 8.6% 5.1% 0.4% 4.3% 5.9% 3.9% 3.1% 2.3% 1.5% 4.4%

Cape Flats 4.4% 5.3% 2.6% -2.1% 1.9% 3.6% 2.5% 2.1% 1.8% 0.8% 2.3%

Helderberg 6.8% 6.6% 4.3% -1.1% 2.4% 4.1% 3.1% 2.7% 2.9% 1.2% 3.3%

Khayelitsha/Mitchell's Plain 6.9% 6.8% 3.7% -0.6% 2.3% 4.2% 2.9% 2.8% 3.2% 1.0% 3.3%

Northern 7.0% 6.4% 3.8% -2.0% 2.1% 4.5% 3.0% 2.4% 2.4% 1.2% 3.1%

Southern 3.8% 4.6% 2.5% -1.5% 1.7% 3.4% 2.3% 2.1% 1.0% 1.3% 2.1%

Table Bay 4.1% 5.8% 3.3% -1.1% 3.0% 4.1% 2.9% 2.7% 1.4% 1.5% 2.8%

Tygerberg 5.1% 5.3% 2.4% -2.6% 1.9% 3.6% 2.3% 2.0% 1.6% 0.6% 2.2%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%


49

recession which had implications on global export demand, investment spending and household spending power, thus impacting on multiple economic sectors.

The Tygerberg and Cape Flats Planning Districts contracted the most during this period by 2.6 per cent and 2.1 per cent respectively; year-on-year (Figure 1.1 2007 to 2008). The Cape Flats, Northern and Table Bay Planning Districts all increased by 4.1 per cent growth in the same period. The contraction and concurrent economic recuperation illustrates both the robustness of the Cape Metro area’s economy, but equally that it is sensitive to changes in the global economy. Table 1.1 provides the GDPR contribution and average growth rates for each planning District.

Table 1.1 GDPR contribution and average growth rates per planning district

Contribution to GDPR (%)

2015

Average GDPR growth (%)

Municipality Trend

2004 - 2015 Pre-recession

2004 - 2008 Recession 2008 - 2009

Recovery 2009 - 2015

Blaauwberg 10.0 4.4 7.6 0.4 3.5

Cape Flats 15.2 2.3 4.1 -2.1 2.1

Helderberg 6.7 3.3 5.9 -1.1 2.7

Khayelitsha/Mitchell’s Plain 15.2 3.3 5.8 -0.6 2.7

Northern 14.7 3.1 5.7 -2.0 2.6

Southern 11.2 2.1 3.7 -1.5 2.0

Table Bay 9.9 2.8 4.4 -1.1 2.6

Tygerberg 17.1 2.2 4.3 -2.6 2.0

Total Cape Metro area 100 2.9 5.2 -1.3 2.5

Western Cape Province - 3.3 5.5 -1.2 2.5


The Planning Districts which had the greatest contributions to the GDPR in 2015 includes the Tygerberg (17.1 per cent), Khayelitsha/Mitchell’s Plain (15.2 per cent), Cape Flats (15.2 per cent) and Northern (14.7 per cent) Planning Districts. Together, these Districts contributed to 58.7 per cent of the Cape Metro’s GDPR. The Blaauwberg Planning District has also experienced the greatest annual average growth rate between 2004 and 2015 of 4.4 per cent. As noted above, all Districts other than the Blaauwberg Planning District contracted during the recession between 2008 and 2009. The Blaauwberg, Helderberg, Khayelitsha/Mitchell’s Plain and Northern Planning Districts all had higher average growth rates than the total Cape Metro area average growth rate during this period.

Pre-recession growth was also strongest in the Blaauwberg Planning District (7.6 per cent). Overall, pre-recession growth rates in the Cape Metro were high, averaging 5.2 per cent. Although the Cape Metro has recovered from the recession it has not been able to achieve the pre-recession growth rates, however business and investments continue to grow throughout the metropolitan.


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1.2.2 GDPR performance per sector

Figure 1.2 indicates the GDPR contribution per main sector of the various Planning Districts. The tertiary sector contributed to 79.7 per cent of the economy in 2016. This is due to the large finance and business services sector, and wholesale and retail and trade economic sector. The secondary sector contributed to 18.5 per cent of the GDPR, whilst the primary sector contributed only 1.8 per cent. Notably, although the proportions differ across the Districts, the tertiary sector remains the dominant contributor to the GDPR.

Figure 1.2 GDPR contribution per main sector, 2015


Table 1.2 indicates the sectors that contribute the most to the Cape Metro area’s economy.

2% 2% 2% 3% 2% 3% 3% 2% 3%

19%25% 28% 22% 25% 24% 22%

16% 17%

80%73% 70%

75% 72% 73% 76%83% 81%

0%

20%

40%

60%

80%

100%

120%

Cape Townmetro

Tygerberg Blaauwberg Northern Khayelitsha/Mitchell's Plain

Helderberg Cape Flats Table Bay Southern

Primary Secondary Tertiary


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Table 1.2 Cape Metro area GDPR contribution per sector, 2015 (%)

Sector Cape Metro Tygerberg Blaauwberg Northern

Khayelitsha/ Mitchell’s

Plain Helderberg Cape Flats

Table Bay Southern


1.6 1.9 2.1 2.5 2.2 2.8 2.3 1.4 2.3

Mining and quarrying

0.2 0.2 0.3 0.2 0.2 0.3 0.2 0.2 0.2

Manufacturing 11.5 17.4 16.9 14.1 15.7 14.8 14.8 11.3 10.9


2.5 2.9 6.8 3.4 2.9 2.3 1.8 1.4 1.3

Construction 4.5 4.3 4.1 4.8 6.7 6.6 5.2 3.1 4.4


19.3 16.6 17.7 15.5 17.6 16.8 17.5 16.1 14.3


9.8 13.6 10.2 11.6 13.5 9.5 10.8 9.5 8.2


33.7 25.2 28.7 32.7 21.2 30.2 27.4 39.2 39.8


5.2 6.2 5.2 5.4 7.3 6.9 7.3 7.3 7.2

General government

11.7 11.7 7.9 9.7 12.7 9.8 12.9 10.5 11.3


The economic sectors that contributed the most to the Cape Metro area’s economy in 2015 were:

Finance, insurance, real estate and business services (33.7 per cent)

Wholesale and retail trade, catering and accommodation (19.3 per cent)

General government (11.7 per cent)

Manufacturing (11.5 per cent)

Transport, storage and communications (9.8 per cent)

The relatively large contribution of the tertiary sector can be contributed to the finance, insurance, real estate and business services sector which accounts for 33.7 per cent of inputs (Table 1.2). This sector makes up more than one third of the economy. Notably, there are numerous business hubs and commercial centres across the Cape Metro area which contribute to these significant economic inputs. Additionally, the real estate sector within the Cape Metro area continues to experience high value sales, chiefly in the luxury residential market. Real estate deals within the commercial sector are also prevalent. In terms of insurance and finance, a number of headquarters are located within the Cape Metro area, such as Allan Gray, Old Mutual, and Santam and Sanlam to name a few.


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The largest economic contributor to the secondary sector in the Cape Metro area is the manufacturing sector, accounting for 11.5 per cent of GDPR inputs during 2015. In terms of the primary economic sectors, unlike Gauteng and Mpumalanga, the mining within the Western Cape and specifically the Cape Metro area is very small-scale with only some limited quarrying and sand mining to support the construction sector. The primary sector is largely made-up of agriculture contributions which are grape production for wine manufacturing, chicken and piggery farming, vegetables and grains. The farming of grains is however small-scale when compared to Districts such as the West Coast. Table 1.3 indicates the Cape Metro area’s GDPR performance per sector.

Table 1.3 Cape Metro area GDPR performance per sector

Sector


Trend 2004 - 2015

Pre-recession 2004 - 2008

Recession 2008 - 2009


Agriculture, forestry and fishing 5.4 9.9 3.8 3.5

Mining and quarrying 0.1 -3.9 -2.2 2.6

Manufacturing 1.6 4.6 -9.3 1.9

Electricity, gas and water -0.6 -2.1 0.1 0.0

Construction 4.5 10.6 3.5 1.7


2.4 3.1 -1.9 2.8

Transport, storage and communication 2.7 4.3 0.2 2.3


3.6 6.7 -0.3 2.7


1.9 3.8 -1.6 1.5

General government 3.8 4.5 3.5 3.5

Total Cape Metro area 2.8 5.0 -1.5 2.5

Total Western Cape Province 3.3 5.5 -1.2 2.5


In the pre-recession period, the economy experienced an average growth rate of 5 per cent. Only half the sectors grew at a contracted rate during the recession however the Cape Metro area contracted by 1.5 per cent, with the largest contraction being in the manufacturing sector. The economy contracted in the pre-recession period (2004 - 2008) and has recovered since the recession (2009 and 2015), with an average growth rate of 2.5 per cent.

The relatively high growth rate of the construction sector during the recession may be attributed to the continued investment in commercial property. This is specifically with regard to the hospitality sector which saw hotel expansions and new developments in preparation for the 2010 FIFA World Cup. General road construction and the construction of the Cape Town Stadium also contributed to the positive growth in the construction sector. With regard to the agriculture sector, increased growth may potentially be due to the lower Rand value and associated export increases. In terms of general government, it is a trend that government generally provides additional employment opportunities to off-set a loss in other sectors during the recession. Job


53

losses were especially apparent in the manufacturing sector. Opportunities continue to be created in the metro, which will have an impact on GDPR growth such development of the new cruise liner terminal. Providing cruising holidays has become a big industry and now Cape Town will be better placed to gain a larger share of the business. And that, in turn, will create more jobs and more business opportunities (CapeChamber, 2016).

1.2.3 GDPR forecast per sector

Table 1.4 indicates the GDPR forecast per sector until 2021.

Table 1.4 GDPR forecast per sector, 2016 - 2021 (%)

Sector 2016 2017 2018 2019 2020 2021 Average

2016 - 2021


-10.4 5.5 5.0 4.0 4.0 4.4 2.1

Mining and quarrying 5.1 0.0 0.0 0.2 0.2 0.4 1.0

Manufacturing 2.9 1.2 1.9 2.0 2.3 2.1 2.1

Electricity, gas and water -2.0 1.5 1.8 2.0 2.0 2.0 1.2

Construction 3.3 0.3 2.0 2.1 2.7 3.0 2.2


1.3 1.4 2.3 2.7 2.8 3.2 2.3


0.7 0.2 2.4 3.2 3.3 3.1 2.2


0.7 1.4 2.9 3.5 3.7 3.6 2.6


0.6 0.3 0.7 1.2 1.5 1.6 1.0

General government 0.8 1.8 1.8 2.0 2.0 2.3 1.8

Total 0.9 1.2 2.3 2.7 2.9 2.9 2.2

Source: Quantec, Own calculations, 2016

In 2016, all economic sectors are expected to experience low growth rates (other than mining), with the agriculture sector and electricity, gas and water sector expected to contract. The agriculture sector will be particularly hard hit with a forecasted contraction of 10.4 per cent. This is significantly worse than the 2.7 per cent contraction experienced in 2015, and may largely be attributed to the drought which has had implications on the agriculture sector throughout the Province. Despite this contraction, 2017 is anticipated to see a positive growth of 5.5 per cent. This is a major turnaround for the sector and could be attributed to the possibility that the Cape Metro will recover faster than other non-metro areas. Overall, the average annual growth rates for all sectors between 2016 and 2021 are expected to be low, with none exceeding an average growth of 2.6 per cent.

Assuming the Cape Metro area can secure a productive mix of economic sectors, it might be possible for it to avert some of the economic slowdown by harnessing opportunities in key sectors. The tertiary sector was responsible for much of Cape Metro area’s economic growth in the past decade, and despite weakening consumer confidence, the sector is likely to continue to drive growth in the Cape Metro area, albeit at a more sedate pace. Although the finance and insurance and the retail and


54

wholesale trade sectors will be at the forefront of contributing to the Cape Metro area’s future growth (due to their large scale), a faster rate of economic growth for the Cape Metro Area could be achieved by realising the opportunities for above status quo growth in the following industries (MERO Municipal Survey, 2016):

• Business Services: Business Process Outsourcing (BPO) has been the leading creator of jobs in the Cape Metro area over the past few years. This has predominantly been driven by voice-related services, i.e. call centres. This segment of the industry has a clear, if still somewhat distant, ceiling. There is however, a major opportunity for South Africa to diversify from voice to web, in line with global technological developments, which are being aggressively pursued by some of the large international players operating in the Cape Metro area. The 2015 BPESA Key Indicators Report indicates that although telephone still dominates as a disruption channel (used by 97 per cent), 94 per cent of firms are also using email, 92 text messaging (sms) and 90 per cent internet.

• Renewable Energy: Recent government initiatives like the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) stimulated the South African renewable energy industry through incentivising private power producers. However, renewable energy will not need incentives as costs, driven by improved technology, continue to decline. The cost of solar energy, in particular, is expected to decrease to a fraction of the cost of fossil fuels in the next decade. This will be further aided by the increasing affordability of energy storage options. City of Cape Town is already undertaking a number of initiatives to capitalise on this opportunity, prominent among which is the green technology Special Economic Zone (SEZ) in Atlantis.

• Electronics: The electronics industry is highly dynamic and constantly evolving as new technologies such as 3-D printing, virtual reality and the internet disrupt the way we do things. Currently, the domestic market is overwhelmingly supplied by imported products, and there is a large opportunity for locally produced products to penetrate the market. This opportunity also extends beyond South Africa to the rest of sub-Saharan Africa. African markets currently account for 51 per cent of Cape Metro area’s electronic exports, and there is certainly opportunity to further grow exports in the region.

• Clothing and textiles: Having suffered for the last two decades under the spectre of cheap Chinese imports, the clothing and textiles sector in the Cape Metro area is beginning to shrug off its lethargy. The mini-revival in the clothing and textile industry in the Cape Metro area is not the weakening of competitors, but rather the shifting demand structure of the industry. Fast-fashion is the key trend here, with speed to market becoming a critical factor. Cape Metro area’s mix of retail head offices and large scale manufacturers means that the local clothing producers can offer a value proposition which is unmatched by producers in distant countries. Enhanced production techniques, being implemented in Cape Metro area factories are also leading to increased efficiencies which target turnaround time as much as cost. Sustained growth in the industry over the long-term will, however,


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require South African producers to utilise their locational advantage to tap into neighbouring markets.

• Agro-processing: The sustained growth of the global population will naturally lead to growing demand for food. As with the electronics sector the rise of the African middle class will increasingly lead to enhanced demand for a wider range of agri-products to support a more diverse palate. The exceptional growth of wine exports to Angola already points to some of the opportunities that Cape Metro area’s agribusinesses should look to tap into. In addition to a population effect, agribusinesses also need to be aware of the fact that consumers are increasingly well-informed. Greater access to information is driving demand for healthier food, and back-to-the-basics production. This will have profound implications for the way the agro-processing sector in the Cape Metro area operates and positions itself.

• Tourism: Having shed itself of the unnecessary encumbrances of onerous visa regulations, the tourism industry in Cape Metro area, benefitting from favourable exchange rates and increased air access, looks set to prosper. This is also in part due to Cape Metro area’s growing reputation as a must-visit global destination, with Cape Town being ranked 11th (the highest African destination) in the US News and World Report’s Best Places to visit list, as well as being voted the top Food Travel Destination by Conde Naste.

• Information Communication Technology (ICT): The sector is well established with the City of Cape Town having invested R544 million on broadband infrastructure to date as part of its broadband infrastructure project. The resultant benefits are already evident with the City having saved R3 million in internet costs between January and May 2015. Further, the City has also saved R39.3 million and R61.3 million in the 2013/14 and 2014/15 financial years, respectively, on telecommunication costs. This improvement of infrastructure, together with incentives and world-class ICT companies, sets the scene for further growth of this sector in the Western Cape particularly as the number of internet users are expected to reach 30.8 million and mobile subscriptions 78.4 million by 2018.

1.3 Growth in employment trends1

1.3.1 Employment per planning district

Table 1.5 indicates the trend in employment growth within each planning district in the Cape Metro area.

1 Employment reflects employment at place of residence, not place of employment.


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Table 1.5 Cape Metro area employment growth

Contribution to

employment (%)

2015

Number of jobs 2015

Employment (net change)

Sector Trend

2004 - 2015

Pre-recession

2004 - 2008 Recession 2008 - 2009


Tygerberg 17.8 278 273 37 716 25 676 -7 895 19 935

Blaauwberg 7.8 121 543 36 273 19 826 -806 17 253

Northern 10.7 167 958 3 566 6 635 -2 585 3 057

Khayelitsha/ Mitchell’s Plain

25.1 392 994 78 968 50 331 -9 413 38 050

Helderberg 6.6 102 559 26 175 14 510 -1 553 13 218

Cape Flats 17.3 271 505 31 354 22 092 -8 422 17 684

Table Bay 7.1 111 716 16 084 11 046 -2 749 7 787

Southern 7.6 118 917 16 788 10 455 -2 875 9 208

Total Cape Metro 100 1 565 465 246 924 160 571 -36 298 126 192

Total Western Cape Province

- 2 420 846 456 528 276 992 -61 240 240 776


All Planning Districts in the Cape Metro area shed jobs during the recession, with the majority lost in the Tygerberg, Khayelitsha/Mitchell’s Plan and Cape Flats Planning Districts. These districts have strong manufacturing sectors which was the cause for the majority of lost jobs. Overall however, the recovered job numbers from 2009 onwards exceed the numbers lost in 2008 in all planning districts. In 2015, there were over 1.5 million jobs in the Cape Metro area, equating to 65 per cent of all jobs in the Province.

1.3.2 Employment per sector

Table 1.6 indicates the trend in employment growth within each economic sector in the Cape Metro area.

Table 1.6 Cape Metro area employment growth per sector


Sector Trend


2004 - 2008 Recession 2008 - 2009


Agriculture, forestry and fishing 8 370 -4 862 -3 762 16 994

Mining and quarrying -245 193 -239 -199

Manufacturing -32 226 -6 755 -13 788 -11 683

Electricity, gas and water 2 002 938 17 1 047

Construction 25 337 16 952 -8 708 17 093


90 420 61 333 -4 705 33 792

Transport, storage and communication 32 226 17 867 396 13 963


42 458 39 772 -14 771 17 457


50 955 27 096 1 718 22 141

General government 59 724 21 306 7 544 30 874

Total Cape Metro Area 279 021 173 840 -36 298 141 479



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Overall, between 2004 and 2015, a total of 279 021 jobs were created in the Cape Metro area. The most significant job losses during this period were experienced in the manufacturing sector, with a total net loss of over 32 226 jobs. This trend aligns with the economic performance of the sector. Importantly, although the manufacturing economic performance may not be illustrated as significantly as the number of jobs shed (13 788), the manufacturing sector is labour intensive, and thus more jobs are lost in the sector when impacted negatively.

During the recession, 36 298 jobs were shed. The greatest losses were in the manufacturing sector, as well as the finance, insurance, real estate and business services sector. A loss of jobs in the tertiary sector illustrates the vast impact that the recession had on the economy which is generally more robust than the primary and secondary sectors. The net jobs are however positive going forward, with an added 17 457 jobs being created between 2009 and 2015. Although a significant number of jobs were shed during the recession, which will have had multiple economic implications on the growth in other sectors due to a decline in purchasing power a total of 141 480 net jobs were created from 2009 onwards.

1.4 Comparative advantage2

Table 1.7 indicates the sectors where the Cape Metro area has a comparative advantage in the Western Cape Province in terms of GDPR and employment.

Table 1.7 Comparative advantage in terms of GDPR and employment, Cape Metro area, 2015

Sector In terms of

GDPR In terms of

employment

Agriculture, forestry and fishing 0.58 0.54

Mining and quarrying 1.03 1.05

Manufacturing 1.00 1.06

Electricity, gas and water 1.06 1.07

Construction 0.91 1.01

Wholesale and retail trade, catering and accommodation 0.97 0.99

Transport, storage and communication 1.03 1.05

Finance, insurance, real estate and business services 1.08 1.09

Community, social and personal services 0.96 1.00

General government 1.02 1.08


2 A comparative advantage indicates a relatively more competitive production function for a product or

service in a specific economy (regional or sub-regional) than in the aggregate economy (provincial or national). It therefore measures whether a specific economy produces a product or renders a service more efficiently than another. One way to measure the comparative advantage of a specific economy is by way of the location quotient. A location quotient as a tool, however, does not take into account external factors such as government policies, investment incentives, and proximity to markets, etc., which can influence the comparative advantage of an area. The Locational Quotient is used to calculate the comparative advantage of the relevant study areas. The location quotient is calculated ratios between two economies; in this case the province and metropolitan economies. This ratio is calculated for all industries to determine whether or not the district or local economy has a greater share or advantage of that industry. If an economy has a location quotient greater than 1, it means that economy enjoys a comparative advantage.


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The Cape Metro area has a comparative advantage in the Western Cape in all the economic sectors except for the agriculture, forestry and fishing sector, construction, wholesale and retail trade and community, social and personal services sectors. Manufacturing goods and services is closely linked with many economic sectors, as well as the Cape Town International Airport and the Cape Town Port. Table 1.8 indicates the economic contribution of the manufacturing sector in the Cape Metro area.

Table 1.8 Cape Metro Manufacturing GDPR contribution per sector, 2015 (%)

Sub-sector Cape Metro

area Tygerberg Blaauwberg Northern

Khayelitsha/ Mitchell’s

Plain Helderberg Cape Flats Table Bay Southern

Food, beverages and tobacco

27 26 24 33 28.7 32 26.4 21.7 21.8

Textiles, clothing and leather goods

4.2 5.2 3.5 2.2 4.8 2.4 5.0 5 4.2

Wood, paper, publishing and printing

13.2 13.5 12.1 10.6 13.4 11.0 13.3 17.6 15.2

Petroleum products, chemicals, rubber and plastic

20.9 19.6 26.6 20.9 17.1 19.7 21.4 22.5 22.5

Other non-metal mineral products

3.0 3.2 2.7 3.8 3.3 3.3 2.5 1.8 3.0

Metals, metal products, machinery and equipment

13.3 14.2 13.0 13.2 14.5 13.7 12.3 12.2 12.4

Electrical machinery and apparatus

1.2 1.0 1.8 1.1 1.2 0.7 1.4 0.7 1.5

Radio, TV, instruments, watches and clocks

1.6 1.3 1.8 1.6 1.0 1.3 1.6 2.3 3.2

Transport equipment

6.6 6.2 8.2 6.7 5.5 6.3 6.9 6.6 6.3

Furniture and other manufacturing

9.0 10.0 6.3 6.8 10.5 9.6 9.3 9.5 9.8


The manufacturing sub-sectors that contributed the most to the Cape Metro area’s GDPR in 2015 were:

Food, beverages and tobacco (27 per cent)

Petroleum products, chemicals, rubber and plastic (20.9 per cent)

Metals, metal products, machinery and equipment (13.3 per cent)

Wood, paper, publishing and printing (13.2 per cent)


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These are overall the largest manufacturing subsectors for all Planning Districts illustrating the sectoral focus within the Cape Metro area.

1.5 Top companies by size and employment

Table 1.9 indicates the top companies located in the Cape Metro area. This data was collated from the Western Cape Top300 Companies (based on criteria developed in partnership with the Cape Chamber of Commerce, the Western Cape Provincial Government, Accelerate and Wesgro) and Wesgro Fact Sheets for the Cape Metro area.

Table 1.9 Top companies (Cape Metro area)

Industry Number of companies

Manufacturing 33

Electricity, gas and water 10

Construction 12


71

Transport, storage and communication 24


109

Community, social and personal services 3

Total 262

Source: Topco, 2016 and Wesgro, Fact Sheets, 2013

It is estimated that there are about 262 companies that contribute significantly to employment and GDPR in the Cape Metro area. Some of these include the Power Group of Companies, Murray & Roberts Construction (Pty) Ltd, African Oxygen Limited (AFROX), Chevron South Africa (Pty) Ltd, Easigas (Pty) Ltd, PetroSA, Alexander Forbes Financial Services Holdings, Allan Gray (Pty) Limited, Aurecon South Africa (Pty) Ltd, Blue Label Telecoms, Broll Property Group (Pty) Ltd, Chass Everitt International Property Group, Cliffe Dekker Hofmeyr Incorporated, Deloitte, Grand West Casino & Entertainment World, Hosken Consolidated Investments Limited, KPMG (Pty) Ltd, Metropolitan Health Risk Management, Sanlam Limited, Microsoft, Cape Town Iron and Steel Works (Pty) Ltd, Pioneer Foods, Pareto Limited, Sea Harvest Corporation (Pty) Limited, South African Breweries Limited (SAB), DHL International (Pty) Ltd, Safmarine, and the major banks in South Africa. Some new companies have moved to the Cape Metro area since 2014, such as Xintong Steel (Pty) Ltd, Raw 4x4 Africa (Pty) Ltd, VVF Life Sciences South Africa (Pty) Ltd, Longyuan Engineering South Africa (Pty) Ltd, Grad Connection (Pty) Ltd.


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1.6 International trade

Of the total exports during 2015, 54 per cent included electricity, gas and water products; 25 per cent included mining and quarrying products; and 21 per cent included agriculture, forestry and fishing products. Of the total imports, 57 per cent included manufacturing products, 3 per cent agriculture, forestry and fishing products, and 40 per cent mining and quarrying products. Figure 1.3 indicates the Cape Metro area trade balance between 2005 and 2015.

Figure 1.3 Cape Metro area Trade Balance, 2005 - 2015


The regional trade balance has been negative since 2005, but this only indicates that the Cape Metro area has been importing more products than the exporting of products. This can be attributed to the fact that the Cape Metro area has an international airport and one of the largest ports in South Africa. The fact that imports have increased since 2013 could be due to a combination of the global recession, slowdown of Chinese manufacturing, the national drought, and the weakness of the commodity market due to currency fluctuations and inflation.

There are opportunities for Cape Metro area to rise above the general malaise of the South African economy by exploiting the potential of international export demand. For Cape Town to break from the anticipated slowdown which the IMF and Urban-Econ forecasts predicted for 2016 for the national economy, Cape Town should continue to aggressively attract foreign direct investment to facilitate export-orientated businesses to establish their activities in the Cape Metro area and expand therefrom. Through the pursuance of this, there is potential for the Cape Metro area’s export market to further expand to other regions in Africa in particular. The current weakness of the Rand also presents an opportunity for local firms to expand their exports and Cape Town’s manufacturing exporters should be encouraged (through cluster bodies as well as Wesgro) to take advantage thereof.

-160

-140

-120

-100

-80

-60

-40

-20

0

20

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

R b

illio

n

Agriculture, forestry and fishing Mining and quarrying Manufacturing Trade Balance


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1.7 Concluding remarks

The Cape Metro area’s economy is defined by the tertiary sector, accounting for 80 per cent of the economy. The largest contributor is the finance, real estate and business services sector which contributed 33.7 per cent of GDPR inputs in 2015. Although the tertiary sector is the largest contributor to the economy, the manufacturing sector is an important job creator and economic stimulus. The contraction of growth and job losses experienced as a consequence of the recession and continued slow growth has had implications on the economy. Importantly, although there is development in the industrial market, which is typically geared towards an increase in manufacturing activity, these new developments predominantly serve a growing distribution market.

For Cape Town to break from the anticipated slowdown predicted for 2016 for the national economy, Cape Town should continue to aggressively attract foreign direct investment to facilitate export-orientated businesses to establish their activities in the Cape Metro area and expand therefrom. There is thus potential to further leverage of the Cape Metro area as being a strategic export, import and distribution market and to further expand to other regions in Africa in particular.


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2

Sectoral growth, employment and skills per planning district

2.1 Introduction

This sub-section provides a macroeconomic outlook on the metropolitan level, an overview of trends between 2004 and 2015 and an outlook in terms of GDPR for 2016 - 2021. Employment is also considered in this section; as well as skills levels and building plans passed and completed.

2.2 Tygerberg Planning District

The Tygerberg Planning District contains a number of economic activity nodes. The District contains the largest number of industrial properties when compared to other Districts in the Cape Metro area. These include Epping Industrial (west of N7), Airport Industria, Sacks Circle, Bellville, Parow, Stikland and Elsies River industrial areas. Another notable area of economic activity includes the Voortrekker corridor which is earmarked by the City of Cape Town for regeneration and continued mixed use development.

2.2.1 GDPR performance

The economic profile of the Tygerberg Planning District is similar to the Cape Metro area. Specifically, with regard to the broad economic sectoral contributions and the primary, secondary and tertiary economic sectors make up similar proportions. In 2015, the tertiary sectors for both economies accounted for over 70 per cent of GDPR inputs, with the secondary and primary sectors accounting for more than 20 per cent and 2 per cent respectively. Importantly, manufacturing accounts for a greater proportion of economic inputs in the Tygerberg Planning Districts GDPR when compared to the other Cape Metro Planning Districts. This is likely considering that the largest number of industrial nodes are located within this district.


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A stronger tertiary sector means that these economies are less likely to be significantly impacted on from macroeconomic factors such as exchange fluctuations and import and export demand. Nevertheless, with a strong manufacturing sector which contributes to 17.4 per cent of GDPR inputs, the district is more susceptible to economic fluctuations compared to the Cape Metro area. Table 2.1 indicates the Tygerberg Planning District’s GDPR performance per sector.

Table 2.1 Tygerberg Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend

2004 - 2015Pre-recession

2004 - 2008 Recession 2008 - 2009



1.9 1 145 5.4 9.2 3.6 3.7

Mining and quarrying 0.2 126 -0.3 -4.5 -2.8 2.2

Manufacturing 17.4 10 518 1.3 4.1 -8.7 1.5


2.9 1 775 -0.8 -2.6 -0.5 0.0

Construction 4.3 2 629 3.8 9.5 2.8 1.1


16.6 10 070 2.0 2.4 -2.4 2.5


13.6 8 241 2.2 3.6 -0.3 2.0


25.2 15 267 2.7 6.2 -2.8 1.8


6.2 3 745 1.4 3.0 -2.2 1.3

General government 11.7 7 099 3.5 3.9 3.1 3.3

Total Tygerberg Planning District

100 60 615 2.2 4.3 -2.6 2.0


The sectors that contributed the most to Tygerberg Planning District’s GDPR in 2015 included:




Transport, storage and communication (13.6 per cent)

The finance, insurance, real estate and business services sector accounted for more than a quarter of GDPR inputs in 2015, and remains one of the more robust sectors. Despite being the greatest contributor to GDPR, during the recession, this sector contracted more than the Planning District as a whole, by 2.8 per cent. This sector however recovered after the recession with an average growth of 1.8 per cent indicating increased investment and business activity. Notably, the manufacturing sector contributed towards greater economic inputs compared to the wholesale and retail trade, catering and accommodation. This differs when compared to the majority


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of other planning districts within the Cape Metro area and emphasises the importance and prevalence of manufacturing activity within the Tygerberg Planning District. Equally, this highlights that the economy is largely more susceptible to economic challenges compared to other Districts. The manufacturing sector experienced the greatest contraction (8.7 per cent) during the recession and remains one of the slowest to recover.

With reference to the above, the two most robust sectors of the Tygerberg Planning District are the construction and agriculture, forestry and fishing sectors. Although these sectors are off a low base, accounting for 4.3 per cent and 1.9 per cent in 2015 respectively; they experienced the highest positive economic growth during the recession. Growth within the construction sector may be attributed to the expansion of a number of industrial nodes such as Airport Industrial and Elsies River. With regard to agriculture, the core areas of agriculture activities are based in the vicinity of Durbanville and Kuilsriver (Stellenbosch Farms). These areas are predominantly geared towards wine farming. Although Tygerberg’s economy contracted between 2008 and 2009, growing at a contracted 2.6 per cent between 2009 and 2015, it has experienced a positive annual average growth rate of 2 per cent.

2.2.2 Employment profile

Table 2.2 indicates the trend in employment growth within each economic sector in the Tygerberg Planning District.

Table 2.2 Tygerberg Planning District employment growth per sector

Contribution to employment (%)

2015

Number of jobs2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.2 8 945 1 746 -440 -501 2 687

Mining and quarrying 0.1 161 -36 35 -40 -31

Manufacturing 13.6 37 806 -8 855 -2 266 -3 317 -3 272


0.4 1 067 350 163 1 186

Construction 6.6 18 310 4 505 2 736 -1 190 2 959


25.4 70 688 15 816 11 096 -1 072 5 792


7.1 19 878 5 207 2 978 0 2 229


17.7 49 280 2 595 4 474 -3 089 1 210


11.9 33 146 6 153 3 302 14 2 837

General government 14.0 38 992 10 235 3 598 1 299 5 338

Total Tygerberg Planning District

100 278 273 37 716 25 676 -7 895 19 935



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In terms of employment, the sectors that contributed the most to Tygerberg Planning District’s employment in 2015 were:

Wholesale and retail trade, catering and accommodation accounting for 70 688 (25.4 per cent) of jobs

Finance, insurance, real estate and business services accounting for 49 280 jobs (17.7 per cent)

General government accounted for almost 39 992 jobs in 2015 (14 per cent)

Manufacturing accounted for 13 806 jobs in 2015 (13.6 per cent)

Overall, these sectors accounted for over 70 per cent of the employment opportunities within the Tygerberg Planning District. Other than general government which saw increased jobs between 2008 and 2009, the wholesale and retail trade, finance and business services, and the manufacturing sectors experienced a collective loss of almost 7 500 during the recession. The greatest losses were experienced in the manufacturing sector, which has continued to shed over 8 800 jobs during the ten-year growth period (2005 to 2015), with the greatest number of jobs lost were between 2008 and 2009.

The jobs created between 2005 and 2015 in the Tygerberg Planning District is due to growth within the wholesale and retail trade, catering and accommodation sector. General government has also been a source of employment opportunities during this period, implying that a greater number of the population rely on government benefits. This is a slightly greater proportion when compared to the total Cape Metro area’s employment profile.

2.2.3 Skills level

Table 2.3 indicates the skills levels of the Tygerberg Planning District.

Table 2.3 Tygerberg Planning District skills level

Formal employment by skill Skill level contribution (%)

2015 Average growth (%)

2004 - 2015 Number of jobs

2015

Skilled 30.0 0.5 63 509

Semi-skilled 52.1 0.2 110 172

Low skilled 17.8 -0.3 37 689

Total Tygerberg Planning District 100 0.17 211 370


Only formal employment numbers can be used to determine the skills level in the area. In Tygerberg Planning District, more than half of the formally employed are semi-skilled. The greater number of skilled people compared with low skilled means that overall, there are a greater number of people in higher paying jobs. Notably, the number of skilled jobs have increased at a rate of 0.5 per cent between 2004 and 2015, compared to the contraction of low skilled jobs during the same period.


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2.3 Blaauwberg Planning District

The Blaauwberg Planning District is an important expansion node for the Cape Metro area. Large tracks of potential urban development have been identified in the Planning Districts’ Spatial Development Framework. In line with this, extensive transport development and planning has commenced with the establishment of the MyCiti bus routes to connect economically marginalised areas such as Atlantis with the Cape Metro area’s service nodes and general CBD. The Planning District contains both affluent and poor income areas, as well as important commercial nodes which extend along Koeberg Road.


In the Blaauwberg Planning District the secondary economic sector accounts for 27.8 per cent of the economic inputs in 2015. The larger contribution when compared to the Cape Metro area is due to the high level of activity within the utilities sector, namely the Koeberg Nuclear Power Station which is situated within this Planning District. The tertiary sector accounts for less than 70 per cent of GDPR inputs (69.8 per cent). Nevertheless, the finance, insurance, real estate and business services sector contributed to 28.7 per cent of GDPR inputs, meaning that as with the overall Cape Metro area’s economy, there are strong levels of business activity within this Planning District. Table 2.4 indicates the Blaauwberg Planning District’s GDPR performance per sector.

Table 2.4 Blaauwberg Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



2.1 757 6.9 12.1 6.5 4.3

Mining and quarrying 0.3 93 1.6 -1.4 -0.1 3.3

Manufacturing 16.9 5 994 3.2 7.4 -7.1 2.9


6.8 2 407 -0.4 -1.3 -0.9 0.1

Construction 4.1 1 456 6.1 13.6 5.6 2.4


17.7 6 287 4.6 6.6 0.2 4.3


10.2 3 619 5.0 8.2 3.2 3.7


28.7 10 175 5.5 9.7 2.4 3.9


5.2 1 862 3.7 7.2 0.3 2.5


Total Blaauwberg Planning District

100 35 463 4.4 7.6 0.4 3.5



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The sectors that contributed the most to Blaauwberg Planning District’s GDPR in 2015 included:





Overall, the Blaauwberg Planning District has continued to experience an overall positive economic performance. This is apparent by the annual average growth rate of 4.4 per cent between 2004 and 2015, and the growth of 0.4 per cent during the recession. The Blaauwberg District was the only region in the Cape Metro area that did not contract during this period. Although the manufacturing sector contracted significantly between 2008 and 2009, from 2010 onwards the sector has experienced significant recovery. Following the recession, the increase from contracted -7.1 per cent between 2008 and 2009 in the manufacturing sector to 6.1 per cent growth between 2009 and 2010 illustrates the significant recovery. Recovery within the manufacturing sector may be partially attributed to the expansion of industrial activity within new industrial nodes, as well as the increased investment in the Atlantis Special Economic Zone. Continued development has had similar positive implications on the transport, storage and communications sector, which grew at an above average growth rate of 4.1 per cent during 2008 and 2009, and continues to grow at an average of 3.7 per cent. This is due to the extensive and continued expansion of the MyCiti bus routes.

The construction sector has, like the transport, storage and communications sector, continued to expand at a positive rate and has experienced the highest growth of all economic sectors in this Planning District, with an average growth rate of 6.1 per cent between 2005 and 2015. The Blaauwberg Planning District is a delineated expansion corridor, and continued mixed use and property development is occurring. Large-scale suburbs such as Sunningdale and Parklands have materialised in the past decade, and continue to develop. The growth of these suburbs is due to the high level of population growth and associated demand for accommodation. Equally, the robustness of the finance, insurance, real estate and business services sector and wholesale and retail trade, catering and accommodation sector is due to the location of one of the fastest growing business and economic mixed-use nodes (Century City) being situated in the Planning District. A large number of high-profile businesses have located themselves in this business node such as Aurecon and Phillip Norris. Additionally, one of the largest shopping centres in the Cape Metro is situated in Century City - Canal Walk.


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Table 2.5 indicates the trend in employment growth within each economic sector in the Blaauwberg Planning District.

Table 2.5 Blaauwberg Planning District employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.1 4 986 1 107 -171 -264 1542


Manufacturing 13.7 16 624 -916 602 -1 127 -391


1.1 1 283 501 232 14 255

Construction 6.7 8 179 2 958 1 587 -362 1 733


26.5 32 222 12 504 7 173 359 4 972


7.2 8 707 4 166 2 050 240 1 876


18.9 23 028 6 118 4 127 -594 2 585


11.7 14 220 4 954 2 379 349 2 226

General government 10.0 12 202 4 892 1 822 600 2 470


100 121 543 36 273 19 826 -806 17 253


In terms of employment, the sectors that contributed the most to Blaauwberg Planning District’s employment in 2015 were:




Community, social and personal services (11.7 per cent)

In line with the positive economic growth, 36 273 jobs were created between 2004 and 2015 in the Blaauwberg Planning District. The greatest numbers of jobs created during this period were as a result of growth within the wholesale and retail trade, catering and accommodation and finance, insurance, real estate and business services sectors. Importantly, other than mining, the only sector which experienced a contraction in jobs was in the manufacturing sector. Although overall 900 jobs were lost during this period, the greatest extent of job losses were during the recession of over 1 100 jobs. The manufacturing sector is a labour-intensive sector and thus economic losses generally results in employment lost.


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2.3.3 Skills level

Table 2.6 indicates the skills levels of the Blaauwberg Planning District.

Table 2.6 Blaauwberg Planning District skills level




2015

Skilled 33.3 2.4 30 149

Semi-skilled 48.4 2.6 43 856

Low skilled 18.3 1.4 16 540


100 2.31 90 545


In Blaauwberg Planning District, a third of formal employment is skilled, with 48.4 per cent making up semi-skilled employment. Notably, employment in skilled and semi-skilled positions have experienced higher average growth rates between 2004 and 2015 compared to low skilled employment.

2.4 Northern Planning District

The Northern Planning District is made up of large tracts of farming activity and agriculture land, and important business and service nodes such as Durbanville and Tygervalley business centres. Additionally, the suburbs within this Planning District are largely middle income and affluent households, which has implications on spending power and economic sectors such as wholesale and retail trade, catering and accommodation.


In the Northern Planning District, the tertiary sector accounts for two thirds of GDPR injections, with the finance, insurance, real estate and business services sector being the largest contributor of economic inputs (32.7 per cent). The secondary sector accounts for 22.3 per cent of inputs, with the manufacturing sector being the greatest contributor. A large proportion of the manufacturing sector activities may be attributed to agriculture processing activities, namely wine. Importantly, although the strong tertiary sector would imply that the economy would not have experienced significant contraction as a consequence of recessionary factors, important economic sectors such as wholesale, retail trade, catering and accommodation contracted during 2008 and 2009. Table 2.7 indicates the Northern Planning District’s GDPR performance per sector.


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Table 2.7 Northern Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.5 1 287 5.4 12.5 3.1 2.3


Manufacturing 14.1 7 330 2.1 5.7 -10.5 2.5


3.4 1 792 -0.5 -1.6 -0.7 0.1

Construction 4.8 2 526 6.2 12.4 5.7 3.2


15.5 8 100 3.0 4.1 -1.4 3.1


11.6 6 044 3.0 4.6 0.6 2.6


32.7 17 038 3.4 7.0 -1.8 2.5


5.4 2 834 2.2 4.4 -1.3 1.8


Total Northern Planning District

100 52 132 3.1 5.7 -2.0 2.6


The sectors that contributed the most to the Northern Planning District’s GDPR in 2015 included:





The large GDPR inputs resulting from the finance, insurance, real estate and business services sector may be attributed to the two large business nodes located within the Planning District, namely Tygervalley mixed use node and the Durbanville CBD. These nodes are important service centres (both retail and business services), supporting a large number of businesses within the area. Overall, the Northern Planning District’s economy grew at a positive growth rate between 2004 and 2015, at 3.1 per cent. Although growth between 2009 and 2015, was less at 2.6 per cent than the pre-recession growth of 5.7 per cent, it indicates that the planning district continues to recover from the recession slower at -2 per cent growth.

Notably, other than general government which had a growth rate of 3.7 per cent, the agriculture and construction sectors experienced the highest growth rates between 2008 and 2009 at 3.1 per cent and 5.7 per cent respectively. Growth in the construction sector was due to business development within the Tygervalley precinct, and the continued expansion of housing developments in the northern region of the Planning


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District. The high growth rate of the agriculture sector may potentially be attributed to a growth in wine exports as a consequence of the decreased Rand values. Wine is an important agriculture sector within the Cape Metro area, specifically the Northern Planning District, contributing towards tourism injections as well as manufacturing (agri-processing).


Table 2.8 indicates the trend in employment growth within each economic sector in the Northern Planning District.

Table 2.8 Northern Planning District employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



5.5 9 237 70 -338 -705 404


Manufacturing 9.4 15 785 -36 221 -857 -27


0.6 988 38 58 13 32

Construction 7.1 11 969 309 691 -625 274


23.5 39 414 1 180 2 451 -157 766


6.5 10 855 344 589 103 262


21.6 36 324 439 1 234 -1 519 368


12.0 20 178 509 840 282 381

General government 13.8 23 095 718 884 912 603

Total Northern Planning District

100 167 958 3 566 6 635 -2 585 3 057


In terms of employment, the sectors that contributed the most to Northern Planning District’s employment in 2015 were:

Wholesale and retail trade, catering and accommodation (39 414 jobs)

Finance, insurance, real estate and business services (36 324 jobs)

General government (23 095 jobs)

Community, social and personal services (20 178 jobs)

In 2015, the bulk of the 167 958 job opportunities in the Northern Planning District were generated by the tertiary sector, namely wholesale and retail trade, catering and accommodation and finance, insurance, real estate and business services sectors, which accounted for 23.5 per cent and 21.6 per cent of jobs respectively. This trend is


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aligned with the economic contributions of these sectors. Although the manufacturing sector contributed to 14.1 per cent of GDPR inputs, making it the third largest economic contributor, it only accounted for 9.4 per cent of the jobs. Like mining, it continues to shed jobs during the recovery period, meaning that activity within this sector has not yet recovered compared to the pre-recession period. Importantly, although job losses were experienced in some sectors, overall, more than 3 000 jobs have been created between 2009 and 2015. However, 2 585 were shed during the recession meaning that only 420 approximate additional jobs have been created.

2.4.3 Skills level

Table 2.9 indicates the skill levels of the Northern Planning District.

Table 2.9 Northern Planning District skills level




2015

Skilled 39.8 1.1 52 998

Semi-skilled 43.9 2.0 58 463

Low skilled 16.3 0.4 21 756

Total Northern Planning District 100 1.36 133 217


In the Northern Planning District, 21 756 jobs are low skilled, with the remaining 83.7 per cent accounting for the semi-skilled and skilled categories. There is almost an equal share of skilled and semi-skilled jobs within the Northern Planning District. Notably, semi-skilled jobs are growing at a faster rate than skilled positions.

2.5 Khayelitsha/Mitchell’s Plain Planning District

The Khayelitsha/Mitchell’s Plain Planning District contains largely low income households with the two core service centres being the Mitchell’s Plain town centre and Khayelitsha business node. There are growing nodes of industrial activity in Lansdowne road in Mitchell’s Plain, and in Blackheath and Eerste River Industrial areas.


Despite the low income residents within the Khayelitsha/Mitchell’s Plain Planning District, the District contributes towards 15.2 per cent of the Cape Town GDPR, which is greater than both the Blaauwberg and Northern Planning Districts GDPR contributions. Importantly, together with the Cape Flats Planning District, the Khayelitsha/Mitchell’s Plain Planning District is the second greatest GDPR contributor after the Tygerberg Planning District. The tertiary sector is the largest contributor to GDPR, whilst the secondary sectors contribute 25.3 per cent to the economy. There is minimal agriculture and mining activity in this Planning District, with these sectors accounting for only 2.5 per cent of GDPR inputs. Table 2.10 indicates the Khayelitsha/Mitchell’s Plain Planning District’s GDPR performance per sector.


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Table 2.10 Khayelitsha/Mitchell’s Plain Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.2 1 212 5.4 8.8 4.0 4.0

Mining and quarrying 0.2 113 3.6 1.9 1.9 4.8

Manufacturing 15.7 8 481 1.3 4.3 -9.3 1.6


2.9 1 540 0.4 -1.6 2.9 1.0

Construction 6.7 3 613 4.4 10.6 2.7 1.5


17.6 9 501 2.7 3.6 -1.5 3.0


13.5 7 269 2.1 3.5 -1.3 1.9


21.2 11 399 5.9 10.9 3.6 3.8


7.3 3 919 2.6 4.8 -0.5 2.0


Total Khayelitsha/ Mitchell’s Plain Planning District

100 53 894 3.3 5.8 -0.6 2.7


The sectors that contributed the most to Khayelitsha/Mitchell’s Plain Planning District’s GDPR in 2015 included:





Overall, the GDPR contributions in 2015 by the Khayelitsha/Mitchell’s Plain Planning District amounted to more than R53 million, and grew at an annual average growth rate of 3.3 per cent between 2004 and 2015. Importantly, the growth of this district economy during the recession was less constrained when compared to other districts which was relatively high despite a contraction of 0.6 per cent. Although the GDPR has recovered to 2.7 per cent between 2009 and 2015, it is not at its pre-recession high of 5.8 per cent. During the recession, the wholesale and retail trade, catering and accommodation sector contracted. This is expected as the large number of low income households would have been affected by the economic recession, specifically considering the low household income base. The manufacturing sector also experienced a decline in activity, experiencing a contracted growth of 9.3 per cent during this period. Although the manufacturing sector has recovered, its annual average growth rate remains low at 1.6 per cent (2009 – 2015).


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The construction sector which had a pre-recession growth rate of 10.6 per cent has not fully recovered to this height, as it has only been growing at an annual rate of 1.5 per cent since 2009. The sectors of significant value (proportionate GDPR inputs) that have shown recovery include the wholesale and retail trade, catering and accommodation, finance, insurance, real estate and business services and general government economic sectors. All these sectors have experienced an average growth rate exceeding 3 per cent between 2009 and 2015.


Table 2.11 indicates the trend in employment growth within each economic sector in the Khayelitsha/Mitchell’s Plain Planning District.

Table 2.11 Khayelitsha/Mitchell’s Plain Planning District employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.2 12 708 1 860 -1 037 -778 3 675


Manufacturing 9.6 37 891 -10 133 -2 943 -3 721 -3 469


0.3 1 251 377 181 -6 202

Construction 9.8 38 330 5 841 4 407 -3 111 4 545


23.9 94 015 21 058 14 902 -1 387 7 543


6.3 24 608 7 790 4 687 -65 3 168


17.8 69 898 17 866 14 714 -3 188 6 340


16.5 64 677 18 687 9 731 961 7 995


Total Khayelitsha/ Mitchell’s Plain Planning District

100 392 994 78 968 50 331 -9 413 38 050


The sectors that contributed the most to Khayelitsha/Mitchell’s Plain Planning District’s employment in 2015 were:




In 2015, there were 392 994 jobs as a consequence of economic activity in the Khayelitsha/Mitchell’s Plain Planning District. Notably, the majority of jobs were generated in the tertiary economic sectors, with the primary and secondary economic


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sectors accounting for only 23 per cent of all jobs. During 2008 and 2009, 9 413 jobs were shed in the planning district with all sectors other than general government and community and social services sectors shedding jobs. The majority of jobs shed resulted from contraction in the economies of the manufacturing sector, construction sector, wholesale and retail trade, catering and accommodation sector, and finance, insurance, real estate and business services sector. The manufacturing, construction and finance, insurance, real estate and business services sectors shed in excess of 3 000 jobs each.

Notably, there were increased job numbers generated in the community services and general government sectors were during this period, meaning that the public sector initiated employment opportunities to reduce the pressure of job losses on the economy. Since the recovery period, over 38 000 jobs have been created, however the manufacturing sector continues to shed jobs.

2.5.3 Skills level

Table 2.12 indicates the skill levels of the Khayelitsha/Mitchell’s Plain Planning District.

Table 2.12 Khayelitsha/Mitchell’s Plain Planning District skills level




2015

Skilled 18.2 2.5 50 921

Semi-skilled 52.1 0.5 145 477

Low skilled 29.7 0.2 82 856

Total Khayelitsha/Mitchell’s Plain Planning District

100 0.73 279 254


In the Khayelitsha/Mitchell’s Plain Planning District, the majority of skill level jobs exist within the semi-skilled and low skilled categories. This may be attributed to the lower education opportunities available to the majority of residents residing within the area. Importantly, the level of skilled positions has grown at an average rate of 2.5 per cent between 2004 and 2015 which is significantly greater than the growth in semi-skilled and low skilled positions. This implies that there are higher earning positions being made available in the district and that as the population becomes more skilled many opt to remain in the district.

2.6 Helderberg Planning District

The Helderberg Planning District includes a range of household income areas, with affluent areas such as Somerset West, and lower income areas such as Macassar. The main urban nodes include the Somerset West Shopping centre and business node, the Somerset West CBD, and the extensive business activity alongside the N2.


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The Helderberg Planning District contributes the smallest amount towards the City GDPR, accounting for only 6.7 per cent of inputs during 2015. The economic profile of the District is however similar to the City’s whereby the tertiary sectors dominates, accounting for 73.2 per cent of inputs, followed by the secondary sector (23.7 per cent) and primary sector (3.1 per cent). Table 2.13 indicates the Helderberg Planning District’s GDPR performance per sector.

Table 2.13 Helderberg Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.8 669 5.2 11.0 3.6 2.6

Mining and quarrying 0.3 60 2.1 -1.3 0.3 4.1

Manufacturing 14.8 3 517 1.3 4.8 -12.8 1.8


2.3 553 1.2 -0.9 3.6 1.9

Construction 6.6 1 565 5.4 12.1 4.0 2.3


16.8 3 984 3.1 4.3 -1.1 3.2


9.5 2 262 3.9 6.1 2.7 3.0


30.2 7 178 3.8 6.8 1.3 2.8


6.9 1 637 2.7 5.1 -0.7 2.1


Total Helderberg Planning District

100 23 759 3.3 5.9 -1.1 2.7


The sectors that contributed the most to the Helderberg Planning District’s GDPR in 2015 included:





Together, the top four performing economic sectors account for 71.6 per cent of the Planning District’s economy. The greatest performer is the finance, insurance, real estate and business services sector which contributed to almost a third of economic contributions. Overall, despite a slowed negative growth between 2008 and 2009, the Helderberg Planning Districts economy has stabilised with a post-recession average growth rate of 2.7 per cent. The sectors which contributed to the stabilisation of this growth include the general government sector, wholesale and retail trade, catering


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and accommodation sector, transport, storage and communications sector, and the finance, insurance, real estate and business services sector.

Notably, although overall growth between 2008 and 2009 was negative, all sectors continued to grow, other than the manufacturing, wholesale and retail trade, catering and accommodation and community services sectors which contracted. These sectors do however contribute towards more than 38 per cent of GDPR inputs in 2015, and thus contraction in these sectors was significant enough to slow the overall economy. None of these sectors have recovered to their pre-recession high.


Table 2.14 indicates the trend in employment growth within each economic sector in the Helderberg Planning District.

Table 2.14 Helderberg Planning District employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.3 4 366 204 -595 -339 1 138


Manufacturing 8.7 8 946 -537 269 -663 -143


0.3 329 126 58 3 65

Construction 11.3 11 618 3 086 1 681 -772 2 177


25.4 26 028 7 865 4 952 -53 2 966


5.5 5 688 2 503 1 264 104 1 135


16.7 17 097 4 015 2 798 -576 1 793


16.9 17 356 5 241 2 727 291 2 223



100 102 559 26 175 14 510 -1 553 13 218


In terms of employment, the sectors that contributed the most to Helderberg Planning District’s employment in 2015 were:




Construction (11 618 jobs)


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Although 1 553 jobs were lost in the recession, 13 218 net jobs that were created since then (between 2009 and 2015) far outstrip the number that were lost. The mining and manufacturing sectors however continues to shed jobs. It is interesting to note that the number of jobs in the community, social and personal services sector exceeds those in the finance, insurance, real estate and business services sector. This is specifically considering the fact that the finance, insurance, real estate and business services sector accounts for over 30 per cent of GDPR contributions. The fact that 27.7 per cent of jobs are within the general government and community, social and personal services sectors implies that a large number of households are reliant on government income.

2.6.3 Skills level

Table 2.15 indicates the skill levels of the Helderberg Planning District.

Table 2.15 Helderberg Planning District skills level




2015

Skilled 31.7 1.7 22 093

Semi-skilled 41.8 1.2 29 126

Low skilled 26.4 0.8 18 413


100 1.23 69 632


In the Helderberg Planning District, there are a high proportion of skilled jobs (31.7 per cent), and this category of job continues to grow at a higher average rate than semi-skilled and low skilled positions. Of the 69 632 formal jobs, just over a quarter are low skilled. Semi-skilled formal jobs makes up the bulk of the positions, accounting for 41.8 per cent.

2.7 Cape Flats Planning District

The Cape Flats contains one of the largest horticultural areas in the Cape Metro area (Philippi Horticultural Area). Other than the agricultural area, there are scattered areas of industrial and commercial activity amongst the residential areas. Commercial centres include Ottery, Gugulethu and Athlone.


The Cape Flats Planning District is one of the highest economic performers in the Cape Metro area, contributing 15.2 per cent towards GDPR inputs in 2015. The tertiary sector is the greatest contributor, accounting for 75.8 per cent of inputs. Although the agriculture sector is an important activity within the area, only 2.3 per cent of GDPR inputs may be attributed to agriculture activities. The secondary sector accounts for almost a quarter of all inputs, with the largest inputs resulting from activity within the


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manufacturing sector (14.8 per cent). Table 2.16 indicates the Cape Flats Planning District’s GDPR performance per sector.

Table 2.16 Cape Flats Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.3 1 221 5.8 9.9 3.5 4.1


Manufacturing 14.8 7 973 1.0 3.5 -9.1 1.5


1.8 947 -2.1 -5.1 -1.4 -0.7

Construction 5.2 2 803 3.3 8.6 2.0 0.9


17.5 9 446 1.5 1.5 -2.7 2.2


10.8 5 810 2.0 3.2 -0.7 1.9


27.4 14 771 3.4 6.7 -1.1 2.4


7.3 3 942 1.0 2.3 -2.8 0.9


Total Cape Flats Planning District

100 53 962 2.3 4.1 -2.1 2.1


The sectors that contributed the most the Cape Flats Planning District’s GDPR in 2015 included:





Overall, the Cape Flats Planning District GDPR inputs amounted to more than R53.9 billion in 2015, and the district has continued to grow at an average growth rate of 2.1 per cent since 2009. One of the largest economic sectors, the general government sector, was resilient during 2008 and 2009, and continues to grow at an above average growth rate of 3.3 per cent. In relation, the three strongest contributors experienced a contraction during 2008 and 2009, whereby the finance, insurance, real estate and business services sector had a contracted 1.1 per cent growth, manufacturing sector grew at a negative 9.1 per cent growth rate, and wholesale and retail trade, catering and accommodation at a contracted 2.7 per cent. Importantly, almost all these sectors have recovered since then. However, the manufacturing and finance, insurance, real estate and business services sector have not regained pre-recession growth levels.


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The high growth rate of the wholesale and retail trade, catering and accommodation sector which is greater than pre-recession years at 2.2 per cent may potentially be attributed to regeneration and investment in the retail sector in the Planning District. From 2010 onwards, the sectors with the highest growth are the agriculture sector and general government. Growth in the agriculture sector is important, however it is necessary to note that this is off a low base and is thus not comparable to higher earning sectors. Equally, although positive economic growth is preferred, increased economic activity in the general government sector is not always representative of a robust economy. Being the highest contributor to GDPR, continued growth in the finance, insurance, real estate and business services sector is positive. Activity within this sector continues to grow above the Planning District average at 3.4 per cent between 2004 and 2015, and 2.4 per cent in the past five years (2010 - 2015).


Table 2.17 indicates the trend in employment growth within each economic sector in the Cape Flats Planning District.

Table 2.17 Cape Flats Planning District employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.7 9 955 1 644 -658 -597 2 899


Manufacturing 10.4 28 107 -8 621 -2 818 -2 791 -3 012


0.2 623 99 53 -12 58

Construction 8.3 22 623 3 314 2 624 -1 786 2 476


24.8 67 329 11 130 8 543 -1 521 4 108


5.9 16 070 3 982 2 289 -42 1 735


17.8 48 405 4 456 5 289 -2 704 1 871


14.0 37 978 4 340 2 941 -333 1 732



100 271 505 31 354 22 092 -8 422 17 684


In terms of employment, the sectors that contributed the most to Cape Flats Planning District’s employment in 2015 were:






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Overall, 271 505 people were employed in the Cape Flats Planning District in 2015. Of these, the majority were employed in the tertiary sector which is aligned with the economic performance of the District. Although manufacturing was the third largest contributor to the GDPR in 2015, only 28 107 jobs (10.4 per cent of jobs) were contributed to by this sector. The sector shed the most jobs (-8 621) during the 2004 and 2015 period. However, following the recession, net jobs generated exceeded 17 600. The majority of these jobs were generated in the agriculture sector, construction sector, wholesale and retail trade, catering and accommodation sector, and general government sector.

2.7.3 Skills level

Table 2.18 indicates the skill levels of the Cape Flats Planning District.

Table 2.18 Cape Flats Planning District skills level




2015

Skilled 28.3 0.6 59 306

Semi-skilled 49.8 0.0 104 309

Low skilled 21.8 -0.6 45 664


100 0.00 209 279


In the Cape Flats Planning District, 209 279 formal jobs exist, whereby almost 50 per cent are semi-skilled, and a large 21.8 per cent are low skilled. Although the number of skilled positions is smaller than semi-skilled, it is experiencing a positive growth of 0.6 per cent between 2004 and 2015. This is when compared to the lesser number of low skilled positions being created in the District.

2.8 Table Bay Planning District

The Table Bay Planning District includes the Cape Town CBD and affluent areas within the City Bowl and surrounds. Major retail nodes such as the V&A Waterfront are located within this District, as well as growing mixed-use developments. Furthermore, the Epping and Paarden Eiland Industrial areas are also located within the boundary of the Table Bay Planning District.


Although significant economic activity occurs within the Table Bay Planning District, namely investment and business within the CBD and Foreshore business precincts, as well as industrial activity in Paarden Eiland, the Planning District only accounted for 9.9 per cent of GDPR inputs into the total city economy during 2015. Unlike the other Districts which have a similar economic profile to the broader Cape Metro area, the


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Table Bay Planning District economic profile differs whereby as more than 80 per cent of the economy is made up by the tertiary sector, with 15.8 per cent accounted for by the secondary sectors, and only 1.5 per cent by the primary sectors. This is largely due to the dominant finance and business activity central to the CBD, which accounts for 39.2 per cent of GDPR inputs. Table 2.19 indicates the Table Bay Planning District’s GDPR performance per sector.

Table 2.19 Table Bay Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


1.4 477 5.1 11.4 3.1 2.3

Mining and quarrying 0.2 57 -3.7 -8.8 -7.0 -0.5

Manufacturing 11.3 3 947 1.5 4.2 -8.5 1.8


1.4 495 -1.7 -3.8 -2.0 -0.6

Construction 3.1 1 086 3.6 9.2 2.8 1.0


16.1 5 641 2.0 2.3 -2.3 2.5


9.5 3 339 2.7 4.1 0.3 2.4


39.2 13 726 3.7 5.8 0.3 3.3


7.3 2 555 1.2 2.9 -2.5 1.0


Total Table Bay Planning District

100 35 013 2.8 4.4 -1.1 2.6


The sectors that contributed the most the Table Bay Planning District’s GDPR in 2015 included:





Overall, the Table Bay Planning District contributed over R35 million into the GDPR in 2015. The bulk of these inputs were derived from the top four economic sectors, which together accounting for 77.1 per cent of the GDPR. The predominant economic sector is the finance, insurance, real estate and business services sector, which contributed to almost 40 per cent of the economy. The CBD and Foreshore precinct hosts a large number of businesses and business headquarters. For example, retail organisations such as Woolworths and Truworths headquarters, and finance and law firms such as Bowman and Gilliam.


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Overall, the economy grew at a positive rate, experiencing an average 2.8 per cent growth between 2004 and 2015, and a more recent average growth of 2.6 per cent in the past five-year growth period (2009 – 2015). The Planning District however had a contracted growth of 1.1 per cent during the recession period, with manufacturing being the worst performer with a contracted 8.5 per cent. Unlike a large number of districts, the construction sector continued to grow throughout the period of assessment, by 3.6 per cent (2004 – 2015). Continued construction activity is apparent throughout the CBD, with major developments such as Portside, the CTICC expansion and new Christian Barnard Hospital Development. Additionally, the Foreshore and V&A Waterfront continue to develop, with the new Silo District almost reaching completion. Importantly, investment continues in this Planning District – specifically within the CBD, and slowed growth within the construction sector is not expected.


Table 2.20 indicates the trend in employment growth within each economic sector in the Table Bay Planning District.

Table 2.20 Table Bay Planning District employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



2.7 2 990 548 -180 -167 895


Manufacturing 8.8 9 830 -1 658 -245 -690 -723


0.2 265 72 34 0 38

Construction 4.4 4 893 731 647 -383 467


25.0 27 916 5 545 3 834 -424 2 135


7.7 8 647 2 542 1 430 9 1 103


24.6 27 530 2 550 2 883 -1 447 1 114


13.8 15 363 2 108 1 349 -116 875



100 111 716 16 084 11 046 -2 749 7 787


In terms of employment, the sectors that contributed the most to Table Bay Planning District’s employment in 2015 were:




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Almost 50 per cent of all employment was generated by the wholesale and retail trade, catering and accommodation sector and finance, insurance, real estate and business services sector in 2015. Together, these sectors accounted for over 55 400 jobs. Other than the two top job creating sectors, the community, social and personal service sector, and general government also accounted for 26.5 per cent of jobs. The large number of general government jobs may be expected in this planning district due to the number of municipal and province offices located within the Cape Town CBD. The greatest decline in jobs was as a result of contraction in the manufacturing sector, which experienced a total job loss of 690 jobs between 2008 and 2009. Although the rate of job shedding in this sector has declined, in the past five years, the net job change remains negative, at 723. In relation, the most significant job gains have been as a result of activity in the wholesale and retail trade, catering and accommodation sector.

2.8.3 Skills level

Table 2.21 indicates the skills levels of the Table Bay Planning District.

Table 2.21 Table Bay Planning District skills level




2015

Skilled 41.7 0.5 35 501

Semi-skilled 42.6 0.3 36 265

Low skilled 15.7 -1.2 13 380


100 0.13 85 146


In the Table Bay Planning District, a high number of skilled and semi-skilled job positions exist within the formal labour force. This may be attributed to the large size of the finance, insurance, real estate and business services sector. These skilled and semi-skilled positions continue to grow at a positive rate. In comparison, only 15.7 per cent of formal jobs are low skilled, and this number is reducing at a contracted 1.2 per growth between 2004 and 2015.

2.9 Southern Planning District

The Southern Planning District consists of largely affluent residential areas with pockets of informal and poorer areas. Business nodes such as Claremont, Newlands, Wynberg, Steenberg and Constantia service these areas. There are small light industrial nodes, as well as agriculture activity – largely consisting of grape and wine farming, with smalls-scale equestrian activities.


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The economic profile of the Southern Planning District is similar to the Table Bay Planning District whereby the dominant economic sector is the finance, insurance, real estate and business services sectors, which account for 39.8 per cent of GDPR inputs. Overall, the tertiary sectors account for 80.9 per cent of inputs, with the primary sector contributing 2.5 per cent, and the secondary sectors contributing 16.5 per cent. Table 2.22 indicates the Southern Planning District’s GDPR performance per sector.

Table 2.22 Southern Planning District GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.3 912 4.5 4.9 3.7 4.5


Manufacturing 10.9 4 317 1.2 3.8 -9.1 1.6


1.3 516 -1.6 -0.4 2.4 -2.9

Construction 4.4 1 737 4.9 10.6 4.2 2.1


14.3 5 699 1.4 1.7 -3.2 2.0


8.2 3 276 3.2 5.1 1.3 2.6


39.8 15 852 2.2 3.8 -0.9 1.9


7.2 2 881 1.8 3.7 -1.8 1.5


Total Southern Planning District

100 39 787 2.1 3.7 -1.5 2.0


The sectors that contributed the most to the Southern Planning District’s GDPR in 2015 included:





Overall, in 2015, the Southern Planning District contributed over R39.7 million to the Cape Metro area GDPR, making it one of the largest contributors to the total economy at 11.2 per cent. Almost 40 per cent of all GDPR inputs may be attributed to economic activity within the finance, insurance, real estate and business services sector. Major business nodes such as Claremont, Steenberg, Newlands and Wynberg house the majority of these business activities. These nodes also function as retail service nodes. This sector accounted for 39.8 per cent of GDPR inputs during 2015.


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Although in comparison to these sectors the manufacturing sector is small, activity contracted significantly (9.1 per cent) between 2008 and 2009. This sector has however been growing at a positive rate over the past five years with an average rate of 1.6 per cent. Like the manufacturing sector, the agriculture sector is also relatively small at 2.3 per cent of the GDPR. However, this sector is not only important for wine exports and local consumption, but it drives an important wine tourism economy within the District – specifically the Constantia wine valley. Overall, the Southern Planning District economy has grown at a positive 2 per cent average growth rate between 2009 and 2015, recovering from the contraction of 1.5 per cent in 2008.


Table 2.23 indicates the trend in employment growth within each economic sector in the Southern Planning District.

Table 2.23 Southern Planning District employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



5.3 6 246 558 -766 -411 1 735


Manufacturing 7.4 8 775 -1 150 -18 -622 -510


0.2 271 100 44 4 52

Construction 6.4 7 617 1 811 1 198 -479 1 092


21.0 25 023 4 707 3 479 -450 1 678


6.6 7 885 2 593 1 401 47 1 145


23.4 27 808 470 1 786 -1 654 338


15.0 17 815 4 384 2 148 270 1 966


Total Southern Planning District

100 118 917 16 788 10 455 -2 875 9 208


In terms of employment, the sectors that contributed the most to Southern Planning District’s employment in 2015 were:






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Overall, job opportunities within the planning district amounted to 118 917 in 2015. The majority of these jobs exist in the finance, insurance, real estate and business services sector and wholesale and retail trade, catering and accommodation sector which is aligned with these sectors’ economic performance. Notably, although positive economic growth has been experienced since 2009 in the finance, insurance, real estate and business services sector, job losses experienced during the recession have not been re-established to pre-recession levels.

The manufacturing and construction sectors also experienced notable job losses during the recession. The construction sector has since gained jobs unlike the manufacturing sector which continues to have a negative net employment change. Nevertheless, overall, total net employment change is positive for the Southern Planning District, with an additional 9 208 jobs generated between 2009 and 2015.

2.9.3 Skills level

Table 2.24 indicates the skills levels of the Southern Planning District.

Table 2.24 Southern Planning District skills level




2015

Skilled 42.7 -0.4 39 688

Semi-skilled 38.5 0.7 35 792

Low skilled 18.8 1.0 17 526

Total Southern Planning District 100 0.26 93 006


Of all planning districts within the Cape Metro area, the highest number of skilled formal employment positions are located within the Southern Planning District. In 2015, this amounted to almost 39 700 jobs. The number of skilled jobs is however declining at an average rate of negative 0.4 per cent when considering the 2005 to 2015 growth period. Only 18.8 per cent of all jobs are low skilled. Importantly, this is growing at a positive rate, greater than skilled and semi-skilled positions.

2.10 Building plans passed and completed

Building plans passed and completed can also provide a picture of the performance of an area. A growth in the number of building plans passed and completed is an indication of a growing economy – both in that building is a response to growth in demand variables, and a stimulant of further growth as an activity in and of itself. It also has implications for spatial development planning within the Cape Metro area. Figure 2.1 indicates the total square metres of building plans passed between 2006 and 2015 in the Cape Metro area.


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Figure 2.1 Cape Metro area building plans passed, 2006 - 2015

Source: Stats SA, 2016

In the Cape Metro area, a total of 11.6 million square metres of residential buildings plans have been passed in the last 10 years (2006 – 2015), 6.4 million square metres of non-residential buildings (majority in industrial space), and 10 million square metres of additions and alterations. More building plans were passed before the recession, however building activity has been slowly increasing since 2014. Figure 2.2 indicates the building plans passed and completed in the Cape Metro area between 2005 and 2015.

Figure 2.2 Cape Metro area building plans passed and completed, 2005 - 2015


Many building plans were passed in the Cape Metro area before 2008, with more building plans also being completed before the recession. The current CBD vacancy rate is 13.4 per cent. After the recession more building plans are being passed than completed.

0

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

7 000 000

8 000 000

9 000 000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sq

uar

e m

etre

s

Residential buildings Non-residential buildings Additions and alterations Total

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

er

Passed Completed


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The planning districts with the greatest contributions to the Cape Metro area’s GDPR in 2015 included the Tygerberg (17.1 per cent), Northern (14.7 per cent), Khayelitsha/ Mitchell’s Plain (15.2 per cent), and the Cape Flats (15.2 per cent) planning districts. Together, these Districts accounted for R221 billion worth of GDPR. Although the economies of all the Districts have recovered since the recession, overall growth is not at the previous highs experienced between 2004 and 2008. Nevertheless, greater GDPR contributions have occurred. Notably, the manufacturing sector remains low and continues to shed jobs.

The sectors with the greatest GDPR inputs include:

Manufacturing




General government

These sectors accounted for 72.2 per cent of contributions towards GDPR in 2015. Employment numbers have overall increased since the recession, however losses in manufacturing have largely not improved. Nevertheless, overall, a growth in skilled positions has resulted meaning that more high paying positions are available in the economy.


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3

Value chains

3.1 Introduction

The following sub-section focuses on two value chains found in the Cape Metro area. Based on research and discussions with the Cape Metro area the Green Economy and BPO value chains will be focused on in MERO 2016. Additional value chains will be added with each subsequent year. The aim of the value chains is to show the movement of goods and services for certain commodities, as well as the risks and opportunities.

3.2 Green Economy Chain

The green economy is complex, extremely diverse, relatively new, and fast evolving in many of its segments, particularly in the Western Cape. Both the Province and the Cape Town area have a stated aim to position the region as the green economy hub of Africa by creating an enabling environment for businesses specialising in green products and services. The City of Cape Town has commonly associated itself with the UNEP-based definition of the green economy, emphasising low carbon, resource efficient, socially inclusive solutions. However, more recently, the City’s Green Economy, Energy and Climate Change Working Group has refined the working definition of the green economy to mean expanded economic opportunities through the provision of goods and services and the use of production processes that are more resource efficient, enhance environmental resilience, optimise the use of natural assets and promote social inclusivity. The desired outcomes, among others, include identification of new economic opportunities, environmental risk-reduction, and job creation. The core sectors that make up the Cape Town area green economy are the construction sector focusing on green buildings, the transport sector focusing on sustainable transport infrastructure, sustainable waste management practices, renewable energy focused on solar and wind energy, and resource management (sustainable agricultural production and processing, and water management).


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The overarching focus of the Western Cape and Cape Town green economy is on energy generation, energy and resource efficiency, emissions and pollution control, the creation of green jobs and natural resource management. This focus impacts all aspects of the value chain. From the inputs used, production and processing approaches applied and output produced and consumed. As indicated in Figure 3.1, the Cape Metro area green economy value chain is circular and characterises an economy that possess interlinked activities. The value chain is made up of the following components:

• Inputs: Represent resources used in the production and processing of output.

• Production and processing: The processes used in the transformation of inputs into final goods and services.

• Output: Represents the various goods and services created through production and processing.

• End Users: Represents all those who locally and internationally consume or use outputs produced in the green economy.

Figure 3.1 Green Economy value chain

As indicated in the value chain above, the enabling environment consists of financing and funding, conducive regulation and the labour market which supports all activities within the value chain. The Provincial Government and the City of Cape Town have played a leading role in ensuring the growth of the green economy. This has been done through the implementation of various rules and regulations and projects. The majority are implemented within the Cape Metro area and have received substantial by-in from the private and public sector, individuals and households.


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Various associations and councils involved in the green economy are located within the Cape Metro area. These Include but are not limited to: The Green Building Council SA, The National Home Builders’ Registration Council (NHBRC), GreenCape, Plastics SA, and the Rose Foundation. These stakeholders have played a substantial role in encouraging the use of green technology materials, facilitating the production of energy efficient goods and services and applying sustainable production and consumption practices. South Africa does not report green jobs individually in any of its major surveys or statistics of employment, nor does it measure or report the size or growth of green industries. Table 3.1 below provides the estimated employment potential in the formal sector of the green economy as outlined in the IDC-DBSA-TIPS study.

Table 3.1 Estimated employment potential in the formal sector of the green economy

Type of Jobs Number

New direct jobs in the short term (2011 - 2012) 98 000

Medium term (2013 - 2017) 255 000

Employment opportunities or part-time jobs in the long term (2018 - 2025). 462 0000

Source: Montmasson-Clair, 2012, TIPS, 2013 and Hattingh, 2014

In total, 26 industries were covered including sectors such as manufacturing, construction energy generation, energy and resource efficiency, emission and pollution mitigation, and natural resource management (Montmasson-Clair, 2012), (TIPS, 2013) and (Hattingh, 2014). In the long term, almost 50 per cent of this job creation potential stems from natural resource management, i.e. activities associated with biodiversity conservation and ecosystem restoration, as well as soil and land management. Energy generation comes second with more than 130 000 employment opportunities (28 per cent of the total), growing rapidly from 13 500 (14 per cent) in the short term. Job creation in energy and resource efficiency is expected to double from 31 500 in the short term to 68 000 in the long term, accounting for under 15 per cent of the total. The potential of emission and pollution mitigation is more limited. The energy and resource efficiency sector should still result in about 32 000 jobs in the long run. the dti study however suggests that the recycling sector has large scale (mostly informal) employment potential of more than 350 000 people (Montmasson-Clair, 2012) (TIPS, 2013) and (Hattingh, 2014).

To date, investments of more than R17 billion has been made in renewable energy projects in the Western Cape over the past five years, creating in excess of 2 000 jobs (Cassidy, 2016). Available data suggests that in general, renewable energy projects and energy efficiency measures are more labour-intensive than generating electricity in coal- or gas-fired power plants. This is true both in terms of short-term jobs created during the construction phase and for jobs available for the entire lifetime of a project, although there are marked differences between the various green technologies. For instance, wind power requires relatively less labour-intensive than energy efficiency and solar power (News24, 2016).


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Renewable energy consists of various energy types, sourced from various natural resources. In terms of the bulk generation of renewable energy, the Western Cape is particularly suited to wind and solar power technologies. Amongst South African cities, the Cape Metro area has been a pioneer in local government taking an active role in developing and managing sustainable energy strategies. The Cape Metro area’s green economy consists predominantly of the following sectors each of which will be discussed below:

• Renewable energy

• Green buildings/Construction

• Transport

• Resource Management (water, waste and the agricultural sector)

3.2.1 Renewable energy

Inputs

Wind resources in the Western Cape are substantial – among the best in the country with the average wind speed as measured across the Province is 6 m/s. Assessments show it will be possible to generate 2 800 MW of wind energy in the province and almost half of the planned energy projects are planned for wind projects (Wesgro, 2016). Thus, the wind speeds in the WC are consistently high enough to harness. Three large turbine based wind energy facilities are of relevance in the Western Cape. These include the Klipheuwel demonstration wind farm, Darling demonstration wind farm and the proposed commercial scale Sere Wind Farm at Koekenaap. The renewable energy sector requires human capital composing of various skills levels. Currently highly skilled human capital within this sector is sourced from overseas and medium to low skilled labour is sourced locally. The Western Cape Provincial Government has engaged in various initiatives to assist in the skills development required within this sector.

The Western Cape Provincial Government has forged a partnership with a local technology tertiary institution to send local students to China for training in solar panel manufacture and maintenance (South Africa Info, 2014). Furthermore, the South African Renewable Energy Technology Centre (SARETEC) is the first National Renewable Energy Technology Centre in South Africa, offering specialised industry-related training for the renewable energy sector. Two courses have been accredited so far. Situated at Cape Peninsula University of Technology’s Bellville campus, the SARETEC facility is fully equipped with state of the art workshops for wind and solar training, as well as laboratories for hydraulic, electric-solar, and composite material. Currently, SARETEC offers various short courses on solar and wind energy, and the centre has already developed its “Wind Turbine Service Technician Qualification” and “Solar PV Technician Qualification”. These qualifications are recognised by the South African Qualifications Authority (SAQA) and the Quality Council for Trade and Occupations (QCTO). The region’s other universities (University of Cape Town, Stellenbosch University, and University of the Western Cape) also have comprehensive


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research and development capabilities and dedicated green economy skills programmes (GreenCape, 2015).

Production and processing

There has been growth in local manufacturing of renewable energy components in South Africa. The Cape Metro area is considered a cost-competitive location for solar panel manufacturing a typical 150-person Solar Panel Manufacturing Plant will cost approximately USD 4 million per annum to operate in Cape Town. There are various solar energy comprises of different categories with in the Cape Metro area. The most well-known being Solar Photovoltaic (PV), Concentrated Solar Power (CSP) and Solar Water Heating (SWH). The wind energy industry in South Africa is currently dominated by international companies. Such dominance is predominantly in wind turbine supply, construction, operations, and ownership of wind projects. The wind turbines used for wind energy are currently being imported from Denmark and powered by Nacelle Technology (Coetzee, n.d.). Wind turbine towers have mainly been sourced from Chinese and other Asian manufacturing companies.

Over all in the renewable energy sector, there are now three solar PV modules manufacturers, three inverter manufacturers and two wind turbine tower manufacturers in Cape Town. As mentioned earlier, international companies dominate the South African renewable energy sector. Even though this is the case the renewable energy sector in the Western Cape is inclusive of a mix of locally grown companies and leading international original equipment manufacturers, including Gestamp Renewable Industries (GRI) (Atlantis Industrial Area), Jinko Solar (Epping), SMA (Diep River), and SunPower (Airport Industria). These international companies, have set up facilities within the Western Cape. Investments in these facilities have exceeded R540 million, and resulted in over 600 new jobs (Rice, 2015). Some of the companies in the Western Cape that play an active role in the renewable energy manufacturing sector are as follows: Tenesol/ SunPower; SolaireDirect; AEG/3W Power South Africa; Jinko Solar; MLT Drives; ZNSHINE; SMA Solar Technology; Gefran; Enertronica; LM Wind Power; Acciona SA; DCD Group; Nordex; Powertech Transformers; and CA Components.

The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) launched in August 2011 is aimed at supporting the development of a local industry for renewable technologies, in particular wind and solar. The plan is to maintain a stable roll-out programme that provides an opportunity for localisation. Projects and manufacturing plants may qualify for several incentives by the dti. The REIPPPP has been designed to introduce renewables into the country’s energy system through a bidding process. The roll-out of the REIPPPP thus allocates a portion of new generation capacity to private enterprises for the first time in South Africa. It is projected that renewable energy will comprise 42 per cent of all new power generation added by 2030 (Wesgro, 2013).

For most of these companies, setting up local manufacturing facilities is conditional and dependent on the local market commitments, that is, whether they will be able to get their projects awarded. In order for the companies to set up a viable local tower


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manufacturing facility, they would need to produce and sell a minimum of around 100 to 150 units of towers every year or rather be awarded a long-term commitment of developing at least 400 MW worth of turbine towers a year (Urban-Econ and EScience Associates, 2015). All in all, it is envisaged that the commissioning of Gestamp’s Atlantis tower manufacturing facility will further boost the country’s overall tower manufacturing industry both in terms of production capacity and employment.

Atlantis Industrial Area Green Technology Special Economic Zone The Atlantis Industrial Area has not yet been declared as a Green Technology Special Economic Zone (SEZ). It is the Western Cape’s first potential Green Technology SEZ and provides sites for renewable and green industry manufacturing businesses looking to locate in the Western Cape. It will offer competitive lease arrangements, excellent existing infrastructure and accessibility, proximity to skilled labour and a strong existing business presence. Seventy per cent of REIPPPP developers are based in the Western Cape (Wesgro, 2013). This makes the Western Cape the preferred location for the green and renewable energy industry in South Africa. The industrial park will provide suitable sites for those businesses looking to capitalise on the projected growth in renewable energy projects. For instance, companies such as Gestamp Renewable Industries (GRI) initially investment of R300 million and invested further for the expansion of its wind tower manufacturing facility.

More than 300 direct jobs have been created in Atlantis in the last two years, which has had a significant impact on the local community. A wind tower internals manufacturer, Resolux Africa, has set office at Atlantis. It manufactures internals such as LED lights, stepladders, cables and fasteners to supply GRI and others in the renewable energy space. Resolux Africa is a 51 per cent Black women owned company. The wind tower internal manufacturing facility in Atlantis has added an additional R25 million to the investment pot. It’s estimated that every rand invested by national government returns R250 in GDPR, R34 in tax income and R60 in foreign exchange (Rabothata, 2016).

End Users

The City of Cape Town progressively allows customers to produce their own solar and will buy the extra energy they produce [at the low tariff of 50 c/kWh] (Steyn, 2015). The Cape Metro area has been a pilot site for the application of renewable energy-embedded generation. The first projects took off in 2014. Since then, 18 commercial customers, including the V&A Waterfront, the Black River Park office complex and Bayside Mall, as well as 43 residential homes in Cape Town, are connected to the grid. The Western Cape is leading the solar PV installation race with the most installed and listed privately owned PV system capacity at 10 212 kWp followed by Gauteng at 8 196 kWp; and KwaZulu-Natal comes in at third place with 3 241 kWp (PQRS, 2015). Currently in South Africa, more than 10 per cent of solar PV installations are in the agriculture sector (GreenCape, 2016). The Western Cape has experienced a rise in large-scale solar installations on farms.

3.2.2 Green buildings

Inputs

The construction sector is very diverse and links to the green economy through the increased investment and development of green buildings for both the public and private sector within the Cape Metro area. Green buildings are segmented into two categories: (1) new buildings and (2) the addition, extension or refurbishment of existing buildings. The market for improved energy efficiency interventions and resource


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efficient building materials such as alternative building technologies (ABTs), light steel frame building construction methods (LSFBs) is growing steadily within the South African construction sector (GreenCape, 2015). The Cape Metro area has experienced a steady increase in the adoption of technologies and energy efficient design practices within the Cape Metro’s construction sector. Approximately 26 per cent of the large Cape Metro area’s buildings have been retrofitted to improve their energy efficiency. The investment of R45 million in green buildings is expected to result in a saving of 1 373 MWh of electricity, 1 259 tons of carbon, and R2.4 million per annum (Western Cape Government Environmental Affairs and Development Planning, 2015).

There are currently a number of green materials and technologies used within the Cape Metro construction sector (GreenCape, 2015). These materials represent efficient use of resources. For instance, Cape Brick in Salt River manufactures recycled reinforced concrete bricks and a range of SABS-approved concrete products from building material recovered at demolition sites in and around Cape Town CBD. As indicated in Table 3.2 there are a number of suppliers situated within the Western Cape which supply the green materials and technologies for the construction sector.

Table 3.2 Suppliers of materials and technologies in the Western Cape

Technology and Materials Number of suppliers in the WC Green Building Sector

Insulation 13

Fenestration 19

Modular technologies 9

Walling 13

Coating 5

Source: GreenCape, 2015

These suppliers are predominantly located within the Cape Metro area. The construction of green buildings requires the inputs of services from cross cutting service providers. About 16 per cent of architects, engineers, contractors, building owners, and building consultants in South Africa focused on sustainable design and construction by doing at least 60 per cent of their projects green in 2012. There are currently about 38 such registered cross cutting service providers listed under the Green Building Council Membership located in the Western Cape.


Green buildings are segmented into two categories new buildings and the addition, extension or refurbishment of existing buildings. Over 210 projects have been registered for Green Star SA green building certification. In the Western Cape, 67 buildings have been registered for the Green Star SA green building certification. Many of the certified buildings are located within the City and are private sector buildings. Steps have been taken by the City of Cape Town in the construction of green public buildings. For instance, the City of Cape Town has incorporated green procurement in the development of its Manenberg Housing Centre, Bloemhof Electricity Building, and the Water Services Head Office. The City has also promoted the implementation of green procurement in other organisations and homes through, for example, the solar water


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heater accreditation programme and the Commercial Users’ Energy Efficiency Forum (Western Cape Government Environmental Affairs and Development Planning, 2015). Table 3.3 below is inclusive of the various aspects in the green building sector within the Cape Metro area. Building aspects are inclusive but are not limited to the list below.

Table 3.3 Aspects of the development and construction of green buildings

Aspect Description

Built Environment Professional Services

These professionals are inclusive of architects and designers, quantity Surveyors, engineers and consultants, environmentally sustainable design practitioners, property developers and managers, project managers and construction companies.

Renewable Energy Technologies Are inclusive of: Solar Water Heater (SWH) Market, water collector technologies, PV market.

Energy Storage and Exchange This includes geothermal heat sinks and rock store technology.

Smart Urban Waste Management Waste management in the green building sector is focused on waste separation and recycling and on site waste conversion. For instance, the conversation of rubble into bricks and the use of sand bags in the construction of public housing.

Sustainable Resource Management Compromises of various components that are focused on the efficient use of inputs used in the building of green buildings. Such as efficient water and energy usage, energy efficient ventilation and roofing system.

End Users

Both the private and public sector are in use of green buildings. As green buildings range from public builds such as sustainable housing and government buildings such as the City of Cape Town’s newly completed Electricity Services Head Office in Bellville. To private builds located across the Cape Metro area such as the Aurecon office building in Century City.

3.2.3 Transport

Inputs

Transportation is a key economic sector in the Western Cape economy that also enables all other economic sectors – it constitutes around 10 per cent of provincial GGP (Western Cape Government , 2015). This sector is inclusive of public and private transport service providers such as taxi’s, buses, and trains. The current transportation configuration in the Cape Metro area is extremely inefficient from a cost, energy, emission and lifestyle perspectives. Thus the City of Cape Town has taken measures to improve various aspects of the cities transport infrastructure. For the purpose of this sub-section the measures taken with regard to the development of the MyCiTi Integrated Rapid Transit (IRT) system will be reviewed. Note that the City of Cape Town has also taken steps to increase the use of non-motorised transport options such bicycles.

Busmark is a supplier of buses, and bus services and products and supplies the City of Cape with the MyCiTi buses. The inputs used in the assembling of MyCiTi buses are sourced from Optare PLC, in the form of assembling kits that are imported from Leeds, in the UK, as they are not available locally. For other bus components, Busmark


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(located at Blackheath) source their inputs from approximately 40 local suppliers (McKenzie, 2012). Busmark sources inputs such as tyres, batteries, windscreens, paint, and seats and as many other parts as possible from local suppliers, indirectly boosting other local businesses. As required by the Preferential Procurement Policy Framework Act Busmark needs to meet the minimum threshold of 80 per cent local content and production.

Production and processing – transport

The MyCiTi buses are assembled locally by Busmark. Busmark is based in Randfontein, and has set up the Elsies River factory. Busmark also assembles Scania 4×2 raised floor rear engine MyCiTi busses, which are being manufactured in Busmark’s facility in Randfontein (City of Cape Town Transport Authority, 2015). The Elsies River factory employed up to 180 local personnel initially. In late 2014, Busmark built a factory in Blackheath, Cape Town to assemble the MyCiTi Express buses employing approximately 240 people. Busmark hires various labour such as spray painters, mechanics, body shapers, and welders (which many are unskilled and semi-skilled workers). The buses are stored in three depots within the Cape Metro area (MyCiTi Business Plan, 2015).

The Elsies River factory has supplied components to Optare PLC. This indicates a possibility for Busmark to export components back to the UK, if these components can be produced at competitive prices. Busmark’s other clients are those located across South Africa and Africa. These clients include Golden Arrow Bus Service, eThekwini Municipality, the Tanzanian Government, and the Maputo Municipality. It also produced the feeder buses for the Gautrain service. By 2015, MyCiTi provided a rapid bus service with more than 317 buses in operation (MyCiti, 2015). In November 2015 approximately 60 000 daily passenger journeys were made on the MyCiTi service, on 36 routes, using 42 bus stations and more than 600 bus stops (City of Cape Town Transport Authority, 2015).

3.2.4 Resource Management

Inputs

Resource management within the Cape Metro area’s green economy focuses on the efficient use of land with regards to agricultural processing and production, the use of waste as a resource and water management. The inputs considered in this part of the Cape Metro area’s green economy are dominantly sourced locally. These inputs are inclusive of water collected in various ways, land with a specific focus on agricultural land and various waste streams, which consist of general waste and hazardous waste.


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Resource management is a very vast and diverse part of the green economy as it entails various elements and plays a role in all sectors, such as the waste sector, construction sector, agricultural sector, and the energy sector. Resource management is focused on but not limited to services provided by various sector specific and cross cutting service providers. The most important aspect of resource management for the Cape Town area’s green economy is the sustainable and efficient production, processing, treatment, and use of resources. Ensuring the sustainable and efficient extraction of the most value from resources.

The largest volumes of waste in the Western Cape are generated in the Cape Metro area. This is due to the fact that the largest number of households are based within the metropolitan area, as well as the greatest number of businesses and thus economic activities. The most prominent waste generated within these centres is municipal solid waste. Municipal solid waste largely consists of dry recyclables, food and green waste, and construction and demolition waste. These waste streams are the largest due to households and businesses producing significant amounts of post-consumer waste, as well as the greater level of construction activities compared to rural areas.

Waste management is focused on ensuring that all waste within the Cape Metro area is processed and treated according to the waste hierarchy. Thus, value is extracted from various waste streams with the aim of creating a resource from waste. Both the private sector and the City of Cape Town have undertaken projects and initiatives aimed at ensuring that waste within the Cape Metro area is treated and disposed of according to the waste hierarchy. For instance, there are currently over 250 City of Cape Town buildings that are actively engaging in recycling, with between 10 and 15 tons of paper and cardboard being recycled each month. Table 3.4 below provides a list of waste management facilities within the Western Cape.

Table 3.4 Operational waste management facilities in the Western Cape, 2016

Facilities Cape Metro

area Overberg District


West Coast District

Central Karoo District Eden District Total

Drop-off facility 19 3 0 1 0 4 27

Transfer stations 1 3 1 0 0 4 9

Material Recovery Facilities

25 0 1 2 1 3 32

Total Facilities 45 6 2 3 1 11 68

Source: Western Cape Department of Environmental Affairs and Development Planning, 2016

With reference to the above table, there are 68 operational waste management facilities in the Western Cape Province (this number excludes waste disposal sites and composting facilities). The majority of this infrastructure is situated in the Cape Metro area, the Overberg District and Eden District; accounting for 62 facilities. The most prevalent facilities are drop-off facilities and Municipal Recovery Facilities (MRFs). Importantly, these facilities are privately owned, or owned by the local municipalities in which they are situated. There are eight core processes in which waste is treated. These represent both end-user markets and treatment processes. Notably, the principles of the waste hierarchy apply to this component which involves the re-use,


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recycling and composting, the recovery of energy and the disposal of waste. The eight core markets or treatment processes are as follows:

1. Manufacturers (raw material inputs)

2. Organic matter processors

3. Second-hand dealerships

4. Product-to-product manufacturers

5. Re-manufacturers and refurbishment

6. Energy recovery producers and markets

7. Recyclers

8. Disposal (landfill and incineration)

Agriculture production and processing within the Cape Metro green economy is based on sustainable farming practices. Table 3.5 illustrates the core aspects of agriculture practices in the green economy and what those elements entail. These agricultural practices are with regard to efficient resource management in the agricultural sector. These practices are applied by some agricultural sectors such as the wine industry in the Western Cape.

Table 3.5 Agriculture practices and processing within the Cape Metro area green economy

Type Description

Sustainable farming practices

Sustainable farming planning, the responsible design of irrigation systems, and machinery sourcing.

Wastewater has emerged as an alternative source of water. Since the agricultural sector remains the largest water user. Wastewater is treated and reused where feasible, and by-products are composted/chipped/recovered.

Value-sharing and reverse logistics3 are practiced to maximise transport and distribution costs, as well as maximise economic opportunities in value sharing.

General solid waste which is generated is sorted and reused, remanufactured or recycled on-site; or transported to end-use markets or waste recovery facilities.

Energy and water beneficiation

Alternative energy sources and energy efficiency technologies such as solar photovoltaic (PV) and biogas are becoming more affordable and more necessary in the Cape Metro area’s agricultural sector.

Use of efficiency technologies in irrigation address water scarcity and saves electricity used to pump water.

Waste beneficiation An important waste stream within the agriculture sector is water. It is equally one of the fundamental inputs which drives and enables agriculture activity. Consequently, water has been identified by Provincial Government as a game-changer to the industry, specifically to agro-processing (Arendse, 2015). Therefore, the efficient use and reuse of water by the agriculture sector is important for the overall economy.

3 Reverse logistics is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal.


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With relation to the green economy, the focus on water is dominantly on the efficient and sustainable use of water in the agricultural and the construction sector. Ensuring the use of sustainable and efficient technologies and water management practices. The use of water as a resource in green infrastructure is a growing trend within the Cape Metro area. Green infrastructure solutions, relevant for water resource management are listed below:

• Permeable paving: The Cape Town Grand Parade was the first major permeable paving scheme in the Western Cape. Permeable paving refers to the use of a range of sustainable materials and techniques for permeable pavements with a base and sub-base that allow the movement of storm water through the surface. In addition to reducing runoff, this efficiently traps suspended solids and filters pollutants from the water. There are currently only a handful of suppliers manufacturing these products in South Africa. These suppliers include but are not limited to: Bobcrete (Pty) Ltd (Bellville); Inca Concrete Products (Blackheath); Lafarge Industries SA (Pty) Ltd (Paarden Eiland); PPC Cement (Pty) Ltd (Montague Gardens); and Prima Ready Mix Cement (Killarney Gardens).

• Green roofs: Vegetated roofs that act as excellent source of water controls. They are relatively easy to retrofit onto commercial buildings in high-density areas, where other sustainable urban drainage systems (SUDS) options would be inappropriate. Retrofit projects that have been undertaken are the Western Cape Department of Environmental Affairs and Development Planning Green Roof in Cape Town.

• The Century City wetlands: Collect storm water runoff from the Century City and neighbouring Summer Greens developments, and channels it into the adjoining Tygerhof detention pond. The Wingfield outfall, located at the north-eastern end of Century City’s bounds, is the storm water outfall for the development.

In the agricultural sector, the use of efficiency technologies in irrigation address water scarcity and saves electricity used to pump water. The development of resource recovery technologies from wastewater is a growing trend in South Africa. The Cape Metro area is fast becoming active in the resource recovery market (GreenCape, 2016). Currently, the treated effluent from key plants is recovered for irrigation/ industrial/golf estate use, and the majority of the sludge (biosolids) is applied to agricultural land. While the application of sludge onto farmlands has been ongoing for the past 12 years, the intention of the city going forward is to beneficiate the biosolids and recover energy/resources from these biosolids.

End User

Sustainable and efficient use of land, water, and waste results in the efficient and sustainable production, processing, and treatment of such inputs into products and services which are used by municipalities, individuals and households and the private sector within the Cape Metro area.


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3.2.5 Green economy risks

The Cape Metro area’s green economy value chain is faced with some limitations and risks. These include:

General

- Availablity and up to date data on the number of current green jobs available and potential green jobs within the Cape Metro area.

- There is a lack of awareness surrounding the importance and benefits of sustainable production and what is available (in terms of advice and technologies).

Renewable energy

- The potential for establishing partial manufacturing of components and assembly of the nacelle manufacturing facilities in South Africa is limited by the complexity of the process that requires highly specialised labour and concerns over quality and high inputs costs. At this stage, manufacturing of component units in South Africa is perceived by many to be unfeasible (Wesgro, 2013).

Resource Management

- A lack of funding for R&D is another barrier to the growth of green agriculture. As an international benchmark, R&D expenditure as a percentage of GDPR should be 1 per cent and is currently less than 0.8 per cent.

- There is skills shortages and lack of expertise in agricultural irrigation technologies and applications are still considerable barriers for the local market growth of irrigation solution and product providers (GreenCape, 2016).

- About 80 per cent of municipal waste in the Western Cape goes to landfills compared with less than 20 per cent in best practice regions (Western Cape Government, 2013).

3.2.6 Green economy opportunities

There are a number of opportunities for growth of the green economy value chain:

Renewable Energy

- The Province has several competitive advantages with regard to renewable energy and showcases further growth within this sector. Amongst South African cities, the City of Cape Town has been a pioneer in local government, taking an active role in developing and managing sustainable energy strategies. International companies dominate the supply and manufacturing of components used within the renewable energy and transport sectors. The local manufacturing, assembling and insulation of components in the sector, has however experienced growth. Resulting in the creation of jobs within the Cape Metro. The growth in the local manufacturing, assembling, and insulation of components for the renewable energy sector provides the opportunity for continued local job creation within the Cape Metro area.


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- The Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) and existing capacity and potential capacity development supports the case for an increase in local content thresholds. Encouraging further private investment opportunities. The REIPPPP’s local content requirements present a significant investment opportunity of R65 billion for both local and international players (GreenCape, 2016). This means that the country will capture an estimated 45 per cent of money spent on the construction and operation of renewable energy infrastructure. Furthermore, a wind localisation study (GreenCape, 2016) commissioned by the dti indicates that there is potential to localise wind energy technology, which could result in the setting up of: between one and five wind tower manufacturing facilities. Two of these wind tower facilities have been established, with one facility manufacturing blades and the other assembling nacelles and hubs.

- There is potential in Cape Metro area to encourage renewable energy use and generation as some large solar plants currently have a feedback scheme in place such as Black River Park in Observatory. There is, however, no infrastructure on a smaller scale to cater for household electricity generation and grid feedback. The City of Cape Town already has a feed-back scheme in place where anyone can apply to be an independent power producer in Cape Town (Luyt, 2015). This, is however an expensive venture, although uptake of this opportunity remains limited. This provides an opportunity for both private and public investment into the undertaking of the promotion and implementation of renewable energy.

Green Buildings

- The private sector within the Cape Metro area has played a noteworthy role in implementing green building practices into new or existing buildings. The new requirements in the latest National Building Regulations requires improved design efficiencies and materials used for both private and public facilities (Department of Transport and Public Works, Western Cape Government), 2014). As green building practices increase within the Cape Metro area, the demand for retrofitting components and green technologies has increased. Industry suppliers have indicated that the demand for green materials has been on the rise due to the implementation of the SANS 10400 XA compliance regulation. Indicating an opportunity for existing suppliers to expand their operations or for new suppliers to enter the market.


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Resource Management

- The use of waste as a resource in the Cape Metro area has and will continue to provide growth opportunities for both the informal and formal waste collection sector, transport, and disposal sector. As well as the development of new sustainable products and the implementation of green technologies, treatment methods and processes.

- Infrastructure represents a key foundation to drive actions within the network of value-adding activities in the waste economy. Enabling infrastructure refers to all physical networks and structures which are necessary for the functioning of the waste economy. The types of infrastructure required for an economy to operate are numerous, and includes all infrastructure such as power generation infrastructure and telecommunications. The provision of enabling infrastructure will provide a core foundation from which the waste economy within the Cape Metro area may optimally grow. More waste recovery infrastructure is required in the Cape Metro area, offering an investment opportunity for both the private and public sector.

- Efficient and sustainable use of water within the Cape Metro area will assist in the sustainable growth of the agricultural and construction sector. Furthermore, opportunities exist for the private sector including manufacturing, selling, and installing household and office rooftop rainwater harvesting systems (GreenCape, 2016).

- Opportunities exist on farms to convert vegetation mass into compost, biochar and biofuel. This creates a range of new economic opportunities in the development of machinery, new technologies that increase the efficiencies of the beneficiation processes and new product markets.

3.3 BPO value chain

Business Process Outsourcing (BPO) can be defined as the process of contracting third-party service providers to undertake the operations and responsibilities of a specific business process. It is associated with firms outsourcing segments of their supply chain. The different value adding activities and processes taking place in the BPO industry in the Western Cape are identified and discussed below. Figure 3.2 Illustrates the BPO value chain for the Western Cape Province.


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Figure 3.2 Western Cape BPO value chain

Source: Urban-Econ, 2016

The Western Cape BPO’s value chain consist of the following activities, which is discussed in detail in the rest of the section:

• Inputs and inbound logistics – these BPO activities include the design and management of networks that facilitate operations that convert inputs, such as human capital, to final products (e.g. engineering consultation services). They also include the management of various inputs and their warehousing and storage.

• Operations to convert inputs to finished services – these include the handling, analysing and processing inputs (largely data) into final BPO outputs or products, such as legal advice or business plans (produced by Knowledge Processing Outsourcing BPOs). This also includes training of human capital to deliver cognitive professional outsourced tasks such as legal advice.

• Outbound logistics – these value chain processes include activities required for the distribution of BPO services to end users, such as mailing services and digital distribution of BPO services to end users. These require specialised inputs such as local post office, private postal service providers such as DHL and UPS and security measures for digital services (being sent to end users) such data encryption.

• Marketing and Sales – these processes within the BPO value chain include strategies to attract potential customers to use BPO operations. In the Western Cape these include programs that encourage offshore investment in the country.


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• After care services – these include activities such as end user rating of BPO services rendered.

• Supporting services to activities – include procumbent, technological development, HR management and company infrastructure. These are cross cutting support inputs to all the BPO activities within the value chain.

3.3.1 Inputs

The Province has an abundance of readily available appropriate human capital and skills base to supply the operation of BPO units locally. This is due to the fact that the Province is host to two of the country’s top universities; the University of Cape Town and the University of Stellenbosch, FET colleges, such as the False Bay College. As such student and newly graduates supply a skilled employee pool for the Provinces’ BPO units and 60.7 per cent of BPO employees in the Province are between the ages of 18 and 25 and 33.9 per cent are between 26 and 30, typical graduate and higher education student age (BPESA, 2015). It is evident that this is particularly so for lower value adding BPO services such as call centres and telesales and marketing that do not require specialist training. It is also evident that the labour supply for BPOs is largely available in areas with higher education institutions in the Province.

Ninety-nine per cent of BPO services in the Western Cape are conducted in English, followed by German (4.1 per cent) (BPESA, 2015), as such the BPO value chain requires English proficiency as an input. In the BPOs in the Cape Metro area, there is strong cultural affinity with the UK, Australian, North American and other European geography, locally. This coupled with the Western Cape's large talent pool of accent-neutral English-speaking people provides the required communication skills to supply the BPO value chain (WNS SA, 2016). This is another input to the abundant pool of appropriately skilled labour for local BPOs businesses. As such, BPOs source labour locally from South African and foreign nations currently residing in the Province who largely provide cheaper labour than locals and are concentrated in low value addition BPOs (52.9 per cent) such as call centres (BPESA, 2015). The availability of this input is therefore of particular importance because the Western Cape mostly supplies BPO business originating from international predominantly English speaking countries, such as the US and the UK, further detailed below.

The BPO value chain in the Western Cape has an input of (employs) approximately 45 400 employees, of the national labour total (215 000) inputted (employed) into the industry (BPESA, 2015). Although Gauteng has the highest number of labour input (139 100 employees), as the leading destination for local BPO business location, the Western Cape has the second largest labour input into BPO when comparing BPO value chains nationally (BPESA, 2015). The offshore market in South Africa is responsible for approximately 26 700 jobs (of the national total 215 000 people) 59.9 per cent of which have been created since 2010, and of which 16 000 of these (offshore market BPO) jobs are in the Western Cape (BPESA, 2015).


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Foreign businesses provide the majority share of capital expenditure into the Province’s BPO value chain. This is derived from the fact that, unlike Gauteng where most BPOs are located, the Western Cape ranking 2nd as a destination for BPO businesses, the Western Cape experiences more establishment of international BPO units and their intrinsically linked FDI. The Western Cape is the largest region for international BPO business and the source markets are the UK and the US (BPESA, 2015). UK investment accounts for 62 per cent of BPO business in the Western Cape, a 1.3 per cent increase in investment from 2014, followed by the US at 12.9 per cent, which also increase to 1.4 per cent in 2015 and Australia at 10.8 per cent, up 1.4 per cent over the same period (BPESA, 2015).

As a result of this investment, the Province’s BPO outsourced market has experienced a 4.2 per cent increase, from 50 per cent in 2014 to 54.2 per cent in 2015 and currently holds 59.9 per cent of the BPO market share in the country, followed by KwaZulu-Natal with 20.2 per cent and Gauteng with 19.9 per cent (BPESA, 2015). As such the Province specialises as a destination for international BPO investment. It is estimated that the BPO industry generates approximately R7.9 billion per annum in the Western Cape, making it a key contributor to the GDPR (Wesgro, 2015). The Cape Metro area also benefits from the supply of associated infrastructure, which ranges from ICT, fibre, telecommunications, roads, and appropriate property for BPO operations. The availability and ease of access to the above are important inputs into the Cape Metro area’s BPO value chain. Value is added to the above discussed inputs through inbound logistics. The inbound logistics include design and management of networks, management of communication and transport, warehousing and storage facilities, for both actual goods and virtual ones for data collected. These logistics facilitate operations that convert the above identified inputs, such as human capital into final products.

3.3.2 Enabling environment: Regulatory environment and cost of doing business

South Africa is rated as one of the top three emerging BPO offshore locations by the Everest Consultancy Survey (Wesgro, 2015) and the second most important offshoring destination of choice, compared to countries such as India, the Philippines, Poland, Northern Ireland, Malaysia, Morocco, Sri Lanka, Egypt and Kenya, by the London School of Economics (LSE) (BPESA, 2015). This reflects the extent of the enabling environment for BPO operation in South Africa.

In the Province the regulatory environment has provided an attractive environment for BPO businesses through creating an enabling environment. The national Department of Trade and Industry has launched two incentive schemes in support of the BPO sector (Wesgro, 2015a). These schemes are the Sector Specific Assistance Scheme and the BPO&O Investment Incentive and Training Scheme (Wesgro, 2015). The new incentives are expected to decrease operational costs by a further 20 per cent, placing South Africa on par with Malaysia and Egypt (BPeSA, 2013) in the cost of BPO operation.


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Within the Cape Metro area, the regional-based incentive, the BPeSA (Business Process Enabling South Africa) Western Cape Telecoms Incentive, provides free connectivity for voice and data services during the first six months of operation (Wesgro, 2015). In addition to this, past incentive schemes put in place by the Department of Trade and Industry paid investors up to R112 000 for each job created and maintained over a three-year period (CCT, 2012) are inputs that continue to create an enabling environment for BPO business growth in the Cape Metro area, as well as the Province. This is in addition to supporting business services and entities geared towards maintaining a business friendly environment, e.g. the Central City Improvement District (CCID) and the newly designated Saldhana Bay IDZ (Wesgro, 2015).

The Western Cape BPO value chain also has a comparative advantage in the cost of doing business. This is because, nationally, the cost-savings of between 50 per cent and 60 per cent compared to UK onshore operations are offered, while also supplying a skills pool that is comparable that to the UK (Wesgro, 2015). This makes it significantly cheaper for international BPOs to operate in the Province than in the equivalent level of skills in London, and competitive LPS locations such as Scotland, Wales, and even the Philippines (BPESA, 2015). As such, the Province continues to be the leader in attracting international BPO investment.

3.3.3 Processing and outputs

It is estimated that there are about 215 contact centres and BPO operations in the Western Cape (BPeSA, n.d.). The major BPOs in the Province are listed in Table 3.6 below, and it also shows where in the Western Cape they are located, with 89 per cent located in Cape Town and 11 per cent in George. It also illustrates the type of BPO operations (explained in this section) they conduct. Most of these are BPO companies that have established offshore operations in Cape Town with BPeSA Western Cape’s help. These include, Teleperformance (700 seats), ASDA (700 seats), Lufthansa (450 seats), TeleTech (1 200 seats) and Shell (400 seats) (BPeSA, n.d.). These are concentrated in telecommunications and technical support, retail and financial services (BPeSA, n.d.).

Although not as dominant as the aforementioned BPOs, there are other types of BPO operating in the Province. These different types are discussed below, major companies proving them and their location in the in the Province is also listed in Table 3.6 below:

• Enterprise Resource Management (ERM) BPOs – mostly commonly found in the Western Cape are those that provide accounting and finance services; procurement, logistics and supply chain management for the industries in the Western cape, that largely deal with industries and cargo to service the harbours in the Province, and content management for companies that deal with large volumes of data. Of the total major BPOs in the province 22 per cent provide ERM services.


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• Human Resource Management (HRM) BPOs – include those that provide recruitment services for firms, training on certain operations on behalf of businesses, talent management particularly in for Cape Town’s film and entertainment industry and Payroll management for big companies. Of the total major BPOs in the Province, 18.5 per cent provide HRM services.

• Customer Relations Management (CRM) BPOs – these consist of in-bound and outbound voice operation services and provide marketing and sales and Call Centre services. The call centre and BPO sector in the Western Cape is one of the fastest growing sectors in the Province (Wesgro, 2016). Inbound customer service interactions account for the largest component of business at 52.9 per cent (BPESA, 2015). Therefore, making CRM the dominant BPO services in the Province However, despite contributing the largest portion of business in the province, the amount of inbound customer service in the region decreased by 10.1 per cent in 2014 (to now accounts for 52.9 per cent of all business in the region) (BPESA, 2015). Of the total major BPOs in the Province 52 per cent provide CRM services.

• Knowledge Processing Outsourcing (KPO) BPOs – these include Business consulting and Analytics services, Market intelligence and Legal Process Outsourcing (LPO). Of the total major BPOs in the province 29.6 per cent provide KPO services.

• Engineering and Development BPOs – includes engineering design for civil works, building and building components, ship building, and electronics. Of the total major BPO in the Province 14 per cent provide Engineering and Development services.

• Information Technology Outsourcing (ITO) – in the Western Cape, BPOs largely provide software support to business and government in form of IT Consulting, installation and maintenance, education and training of system software, middleware and application software and Software R&D. Of the total major BPO in the province 22 per cent provide ITO services.

These major BPO operating in the Province are listed in Table 3.6 below. The clustering of BPOs to these particular locations in the Province is due to a number of opportunities these cities present, which are discussed in detail later in the opportunities sub-section. Table 3.6 illustrates the location of the major BPOs operating in the Western Cape and the services they provide as identified by Wesgro’s latest (2015) investment opportunity guide for the Province (Wesgro, 2015), that identifies BPOs as an area of prime investment in the Province.


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Table 3.6 Major BPOs service providers in the Western Cape Province

Company BPO services provided Location Source market

Amazon Customer Relations Management Cape Metro area US

Bloomberg Knowledge Processing Outsourcing Cape Metro area US

Buongiorno Information Technology Outsourcing Cape Metro area Spain

Capita Human Resource Management, Customer Relations Management, Knowledge Processing Outsourcing, Engineering and Development and Information Technology Outsourcing

Cape Metro area UK

Merchants – Asda, iinet, EE

Customer Relations Management George UK

Lufthansa Global Telesales

Customer Relations Management Cape Metro area

WNS Human Resource Management, Customer Relations Management and Knowledge Processing Outsourcing

Cape Metro area UK

Pixelfaerie Business Services

Human Resource Management/back house services

Cape Metro area RSA

Serco Enterprise Resource Management (supply chain management)

Cape Metro area UK

Mindpearl Customer Relations Management Cape Metro area UK

Exigent Knowledge Processing Outsourcing (specialising in LPO)

Cape Metro area UK

Sanclare Financial Customer Relations Management and Enterprise Resource Management

Cape Metro area UK

Ambition 24 Hour Human Resource Management (Medical Staffing)

Cape Metro area RSA

Solluco Customer Relations Management (and supply chain management services)

George UK

Oakhurst Insurance

Knowledge Processing Outsourcing George RSA

Microsoft Customer Relations Management Cape Metro area US

British Gas Customer Relations Management Cape Metro area UK

JP Morgan Knowledge Processing Outsourcing Cape Metro area US

Dimenson Data Information Technology Outsourcing, Enterprise Resource Management and Knowledge Processing Outsourcing

Cape Metro area US

Shell Global Customer Relations Management Cape Metro area UK

Teleperformance Customer Relations Management Cape Metro area France

Wonga Customer Relations Management Cape Metro area UK

Chase Response Customer Relations Management, Information Technology Outsourcing (Applications development) and Knowledge Processing Outsourcing

Cape Metro area UK and USA

CSC Information Technology Outsourcing Cape Metro area US

ForwardSLASH/ DigiOutsource

Human Resource Management Enterprise Resource Management and Information Technology Outsourcing

Cape Metro area RSA

Kleinwort Benson Enterprise Resource Management Cape Metro area UK

State Street Enterprise Resource Management Cape Metro area US

Source: Adapted from Wesgro, 2015


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The Cape Metro area plays host to a number of leading global BPO brands including Amazon, ASDA, Bloomberg, British Gas, iiNet, Shell, Shop Direct and T-Mobile (CCT, Cape Town is Top Business Processing Outsourcing Loaction, 2016). Second to the Cape Metro area, the George Local Municipality, in the Eden District is the most important market for BPO growth and investment (Wesgro, 2015). Another output of the BPO’s value chain activities is the stimulation of activities in related sectors in the Provincial economy, and vice versa.

Although not a sector on its own, BPO is significant to the Western Cape economy because the majority of its activities take place in the service sectors of the economy, including transport and communication, finance, trade and retail and IT sectors. These sectors also lead economic growth for the Western Cape (as discussed in Chapter Two). Therefore, due to BPO interlinkages to the major growth sectors of the Province, the industry has gained importance as an income and employment generator for the Province and as a result has realised significant growth in the Province. End users for BPOs located in the Western Cape are public sector bodies, private businesses, individual households. These users are not limited to South Africa, but a significant share of these users is from the UK and US, in line with the dominant offshore BPOs in the province.

3.3.4 Risks

The Cape Metro area BPO value chain is faced with a number of risks. These include the remoteness, size, fragmentation, transport logistics and weaker capacity to use financial and other services, of certain municipalities in the Province, which restricts their activity in the Provincial BPO value chain. Markets in these districts are smaller and more fragile. Further to these challenges, weak infrastructure, a low entrepreneurial base and lack of support at national and regional level further barricades productivity. This undermines the expansion of the BPO value chain beyond the Cape Metro area and the George area (OECD et. al, 2014).

The quality of service is an increasingly important aspect of service provider choice, and operators who can provide and assure this have a competitive edge. This is especially important for voice-based services (Naidoo and Neville, n.d.). There is therefore always the risk of globally clients experiencing problems with BPO vendors who are not delivering their promises, this is a particular eminent risk for the Western Cape because of its large share of international investors in BPO services in the province (Naidoo and Neville, n.d.). Companies offshoring their processes need to be confident that their customers’ personal data is as secure, and that their own IP will be protected from misappropriation (Naidoo and Neville, n.d.). This is the risk area of most concern to investors in South Africa (Naidoo and Neville, n.d.) because significant perception issues exist around personal security and crime rates.


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3.3.5 Opportunities

There are a number of opportunities for growth of the BPO value chain. One of the emergent main opportunities is the roll out of fibre optic broadband in the Western Cape. This will create efficiencies in the BPO value chain, which will in turn boost competitive advantage of BPO in the Province. Continued assurances of data security is also a prominent opportunity to ensure that BPO clients continue to invest in South African BPO.


The green economy value chain is well established in the Cape Metro area but there are many opportunities still available within the various sub-sectors of the green economy which currently still entails importing skills and manufactured equipment/parts. In terms of the BPO value chain, the Cape Metro area is able to offer significant cost savings, coupled with high quality service delivery. It is a niche provider of offshore BPO locations, for the UK and the US, in line with the concentration of value chain inputs. This has resulted in the limited existence of BPOs businesses in the rest of the Province. A significant number of risks have been identified for the Province, however, there is opportunity for the expansion of BPO service provision with the roll out of Fibre optic broadband, growing appropriate skills set and lowered costs of doing business.


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4

Infrastructure spending - review and analysis

4.1 Introduction

This Chapter looks at municipal infrastructure spending by the City of Cape Town in terms of the City’s Integrated Development Plan (IDP, 2012 - 2017), Built Environment Performance Plan (BEPP: 2016/17) and national and provincial policy directives and key performance areas.

4.2 Infrastructure and economic Development

Infrastructure investment is a catalyst for economic and social development. Quality infrastructure that is well managed and maintained, provides major benefits to both households and enterprises through opening up opportunities for the poor and supporting growth in economic output (DBSA. 2011). Within the Cape Metro the following infrastructure projects have been identified as key drivers of development.

4.2.1 Cape Town International Convention Centre (CTICC) Expansion

The City of Cape Town will expand the convention and conference area by 10 000 m² and will add additional mixed-use development equating to 25 000 m². These planned development types include a new hospital (relocation of the Chris Barnard Hospital from the city centre), retail facilities, a hotel, and office space. The expansion of the conference facility is designed to be the highest Green Star rated convention centre in the Southern Hemisphere (6 star), and will double the current conference capacity. The CTICC expansion project is nearing completion and should be finished near the end of 2016. The total capital expenditure amounts for the CTICC expansion is approximately R832 million.


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4.2.2 Dark Fibre Broadband infrastructure

Dark Fibre aims to provide the Cape Metro with broadband infrastructure, in the form of passive ducts, manholes, optic fibre and switching centres, and to self-provide the Metro with a high-speed telecommunication service (including data, voice and video). The purpose of which is to improve the City and the province's telecommunication services, to reduce telecommunication costs and contribute towards economic growth. The Dark Fibre Broadband Infrastructure project is a 7-year project which commenced in 2014 and will be finalised in 2021. The total capital expenditure amounts for this project is approximately R1.7 billion.

4.2.3 Expansion of City of Cape Town International Airport

The Cape Town International Airport will be undergoing major expansion to both its domestic and international terminals as well as a realignment of its runway. There is an official proposal to realign the primary runway and construct parallel and rapid exit taxiway, additionally, infrastructure such as aircraft isolation pad, compass calibration pad and an aircraft run up area, and security facilities will be developed. Currently focus is on the Environmental Impact Assessment and its finalisation. Construction should commence late 2017. The total capital expenditure amounts for the expansion of City of Cape Town International Airport is approximately R7.7 billion.

4.2.4 Atlantis Green Technology Industrial Park

Atlantis has been identified as the preferred Green Hub for renewable and green industry manufacturing businesses. The site is desirable due to competitive lease arrangements and financial incentives, existing infrastructure and accessibility, proximity to skilled labour and a strong existing business presence. The initiative is being driven forward by the city, GreenCape and DEDAT officials. To date, a wind turbine manufacturer (GRI Wind Steel SA) has established itself, additionally, a downstream linkage has been created with the opening of a component manufacturer in 2016 to supply GRI. The Atlantis Green Technology Industrial Park does not have a specific timeline as development is ongoing.

4.2.5 Control Centre Project

The control systems are for monitoring and controlling MyCiTi bus movements and operations. The Control Centre project is an 11-year project which began in 2010 and will be finalised in 2021. The total capital expenditure amounts for the Control Centre project is approximately R401.6 million.

4.2.6 Disaster Management Integrated Contact Centre

The proposed system will ensure an inclusive functioning of all planning and management of crime and emergency incidents and disasters, ensure effective utilisation, deployment and management of resources and assets, enhanced collaboration for stakeholder coordination and capabilities, and to ensure effective


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and efficient recovery and reconstruction following a catastrophic event with a particular focus on risk reduction. The Disaster Management Centre project is a 3-year project which began in 2016 and will be finalised in 2019. The total capital expenditure amounts for the Disaster Management Centre project is approximately R127.1 million.

4.2.7 Digital Inclusion Project

This project provides Wi-Fi access to the Internet to the public at selected locations across Cape Town lacking fixed line communications infrastructure. Locations include Khayelitsha, Mitchell's Plain, Atlantis and selected areas without fixed line communications infrastructure. The Digital Inclusion Project is a 3-year project which began in 2014 and will be finalised in 2017. The total capital expenditure amounts for the Digital Inclusion project is approximately R103.4 million.

4.2.8 Phase 2A Wetton-Lansdowne Corridor Project

This project includes the provision of bus rapid transport infrastructure from Khayelitsha/Mitchell’s Plain to Claremont/Wynberg. The Phase 2A Wetton-Lansdowne Corridor Project is an 8-year project which began in 2015 and will be finalised in 2023. The total capital expenditure amounts for the phase 2A Wetton-Lansdowne Corridor Project is approximately R4.8 billion.

4.2.9 Inner City Public Transport Hub

The Inner City: Public Transport Hub will focus on improved taxi, bus, trading, pedestrian walkways, pedestrian bridges and toilet facilities at Cape Town Station Deck and linking to Civic Centre MyCiTi station and Grand Parade bus station. Inner City Public Transport Hub is an 8-year project which began in 2012 and will be finalised in 2020. The total capital expenditure amounts for the Inner City Public Transport Hub is approximately R219.03 million.

4.2.10 Cape Town Harbour Expansion

The Cape Town Harbour is undergoing multiple expansion projects as follows:

• The upgrading of fire fighting capacity at the tanker basin and eastern mole is approximately 78 per cent complete and is set to be completed in 2016. The total capital expenditure amounts for upgrading of Fire Fighting Capacity at the Tanker Basin and Eastern Mole is approximately R245 million.

• The construction of a liquid bulk terminal facility at the Eastern Mole (Burgan Cape Terminals (Pty) Ltd) is in its construction phase and is set to be completed in 2017. The total capital expenditure amounts for the construction of a liquid bulk terminal facility at the Eastern Mole (Burgan Cape Terminals (Pty) Ltd) is approximately R650 million.

• The Container Terminal Expansion to 1.4 m TEUs (Terminal Capacity) is in its planning phase. Phase 1 to increase capacity to 1.4 m TEUs is required to be completed


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2021. The total capital expenditure amounts for the Container Terminal Expansion to 1.4 m TEUs (Terminal Capacity) is still to be determined.

• The Cape Royal Yacht Club basin infill to expand capacity for ship repair facilities pre-feasibility study is set to start in 2017/18. The completion date for this project is 2025 as per Port Development Framework. The total capital expenditure amounts for the Cape Royal Yacht Club basin infill to expand capacity for ship repair facilities is still to be determined.

• The construction of a Cruise Terminal Facility at E Berth is in its planning phase and is set to be completed in 2017. The total capital expenditure amounts for the construction of a Cruise Terminal Facility at E Berth is approximately R178 million.

However, economic infrastructure on its own does not create economic potential, it only develops potential where appropriate conditions for economic development already exist. In line with this economic logic, the City determined that despite considerable investment in economic infrastructure in localised economic centres, only marginal economic impact can be expected, and concluded that the economic development of Cape Town will be driven by growth in existing industrial and commercial districts. For this reason, capital budgets would prioritise areas where the necessary conditions to unlock private sector investment are in place, coupled with job creation at scale, and commensurate with the cost of public investment (BEP 2015/16). This will be balanced with infrastructure investment that seeks to achieve universal access to services.

Figure 4.1 shows capital expenditure in the Cape Metro area and economic growth over the same period. The data shows that capital expenditure has been counter cyclical, meaning that when economic growth was down capital expenditure was on the incline.

Figure 4.1 Economic growth and infrastructure investment

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4.3 Overview of municipal capital expenditure trends in the Cape Metro

Given the stated importance of infrastructure development for economic growth and broader development, it is essential to track how municipalities make provision for and prioritize infrastructure investment in their budgets. The City’s expenditure on electricity services increased from 20 to 25 per cent of total capital expenditure between 2012/13 and 2013/14, then drops to 16 per cent in 2015/16, before a projected increase to 23 per cent in 2016/17 and dropping to 19 per cent in 2018/19 (see Table 4.1). Expenditure on water services progressively increases from 5 per cent in 2012/13 to a projected 14 per cent in 2018/19.

Similarly, there is a progressive increase in expenditure from 5 per cent in 2012/13 to a projected 15 per cent on waste water management in 2018/19. Waste management sees a marginal increase from 4 per cent in 2012/13 to a projected 6 per cent in 2018/19. Municipal roads saw a significant decrease as a percentage of total capital expenditure from 42 per cent in 2012/13 to 25 per cent in 2015/16, before a projected continued decrease to 21 per cent in 2016/17 and marginally increasing to 24 per cent in 2018/19. Housing increased from 10 per cent in 2012/13 to 18 per cent in 2014/15 before significantly decreasing to 6 per cent in 2015/16, and is projected to increase marginally to 8 per cent as total capital expenditure in 2018/19.

Table 4.1 Services expenditure as percentage of total capital expenditure

City of Cape Town 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 20 25 17 16 23 19 19

Water 5 10 10 12 13 13 14

Waste Water Management 5 8 9 11 12 15 15

Waste Management 4 3 4 4 4 6 6

Municipal Roads 42 25 23 25 21 24 24

Housing 10 12 18 6 7 8 8

Other 14 16 19 25 20 16 13

Total 100 100 100 100 100 100 100

R-Value (R’000) 5 898 137 4 543 552 5 334 151 6 186 653 6 774 256 5 556 200 5 926 157

Source: Western Cape Government, 2016

Despite a downward trend, transport retains the largest share of capital investment, followed by utilities (water and sanitation), then human settlements. This is in line with the City’s Built Environment Performance Plan (BEPP: 2016/17). Water and waste water management services increased its share of the capital budget, reflecting the prioritisation of water and sanitation infrastructure.


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4.4 Access to Basic services

With access to basic services a constitutionally guaranteed right of every South African citizen, and with municipalities legislatively compelled to provide these services, access to basic services within a municipal area is a key indicator of performance of a municipality.

According to national legislative standards, the City of Cape Town (CCT) is complying with National Guidelines and is providing adequate water and sanitation services to all informal settlements and formal households. The City however aspires to provide water and sanitation services at a level higher than the national norm. In line herewith, efforts to provide increasing and improved access to basic services in informal settlements are continuing unabated. Certain localised service delivery challenges exist where informal settlements are, for example, not on City property, or where new informal settlements develop unexpectedly. The challenges are however addressed as they arise. In addition, due to rapid urbanisation, service delivery remains a constant moving target. A dedicated capital provision is made to address the challenges mentioned above, as well as for service delivery improvement in line with the City’s internal higher standards. In addition, there are no households below the minimum service level for refuse removal.

According to the 2016 Non-Financial Census of Municipalities (NFCM), the City offered, amongst others, the following services (as at the end of June 2015):

Sanitation - Flush toilets connected to public sewerage system as by far the major

component of service delivery to all customers (including informal settlements).

Water - 155 015 informal settlement households with access to a water service point

within at least 200 m.

Electricity - 855 081consumer units received electricity services.

Solid waste management - 781 290 consumer units received refuse removal

services.

Solid waste management has substantial infrastructure spending plans, namely: Investment in the establishment of a new Regional Landfill site, development of strategic landfill airspace capacity and construction of waste transfer stations, whilst huge investment in the replacement of the waste management fleet commenced. Solid waste management intends to assess and invest significantly towards alternative waste technologies and establishing PPP’s over the next number of years to support waste management within the City.


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4.5 Western Cape Government infrastructure spending in the Cape Metro

In addition to infrastructure expenditure by the City of Cape Town, the Western Cape Government with its education, health, human settlements and transport and public works mandates, makes significant investments in infrastructure in the Cape Metropolitan area. According to the 2016 – 2019 WCG budget, the largest share of planned infrastructure expenditure will be on transport and public works projects, followed by human settlements (housing), education and health infrastructure projects (see Figure 4.2). This provincial infrastructure investment will contribute to developing the economic infrastructure of the City of Cape Town through the investment of transport and public works, and to social infrastructure, through the investment in education, health and human settlements.

Figure 4.2 Western Cape Government forecast infrastructure expenditure, 2016/17 to 2018/19


4.6 Municipal funding and revenue

Figure 4.3 provides an overview of funding sources for capital expenditure by the City. Most capital funding comes primarily from borrowing, National Government and internally generated funds. Whilst National Government capital funding has been on the decline, borrowing and internally generated funds have increased since 2012. In addition, the Provincial Government is projected to decrease its contributions to the City in the next few years.

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Figure 4.3 Capital funding by funding source City of Cape Town, 2012/13 - 2018/19

Source: City of Cape Town A-Schedules, 2016/17

4.7 Spatial budget mix

The City has four primary sources of capital funding, namely grants, the Capital Replacement Reserve (CRR), the External Financing Fund (EFF) and Revenue. Grant funding constitutes 43 per cent of total capital funding for the period 2015/16 - 2017/18. Capital Grants allocated to the City via the Division of Revenue Act are:

• Public Transport Network Grant (PTNG): The fund is managed by Transport for Cape Town (TCT).

• Urban Settlements Development Grant (USDG): The fund is managed by Human Settlement Directorate.

• Human Settlements Development Grant (HSDG): The fund is managed by the Western Cape Department of Human Settlements.

• Integrated City Development Grant (ICDG): The fund is managed by the Department of Spatial Planning and Urban Design (SPUD).

• Neighbourhood Development Partnership Grant (NDPG): The fund is managed by the Department of Spatial Planning and Urban Design (SPUD); Integrated National Electrification Programme Grant (INEPG). The fund is managed by the Utilities Directorate (BEPP 2016). Housing and transport constitutes the bulk of infrastructure investment with the Urban Settlements Development Grant (USDG) and the Public Transport Network/Infrastructure Grants (PTIG/PTNG) constituting 90 per cent of the grant funding available over the Medium Term Revenue and Expenditure Framework (MTREF).

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The above review and analysis of infrastructure spending by the City of Cape Town, reflects the City’s commitment to infrastructure development as a facilitator of economic growth and broader development, as articulated in the IDP and the National Development Plan. This commitment is actualised in the balancing of economic and basic services infrastructure in past and forecast expenditure, with utilities and transport representing approximately 75 per cent of the total capital budget. The key challenge for the city is seeking to address the significant water, electricity and sanitation demands within a capital funding context of reduced national transfers and increased reliance on borrowings.


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5

Municipal socio-economic analysis

5.1 Introduction

This Chapter investigates the impact of recent economic performance on social conditions of households within various districts in the Cape Metro area. Latest results from Statistics South Africa’s Community Survey 2016 and the 2016 Non-Financial Census of Municipalities are among the key sources of data used in this chapter, but data from Quantec and administrative data from government sector departments is also used in the analysis. The extent of social development within a community can have positive or negative future financial implications for municipalities. For instance, a growing economy can result in more employment creation and higher incomes for households within a municipality as well as better education, health and access to basic services. In contrast, a declining economy can lead to increasing unemployment and poverty, weak education, poor health, and low basic service access levels. The most recent socio-economic indicators including the Human Development Index (HDI) and the Gini Coefficient are used to demonstrate the current living standards of communities within the Cape Metro area.


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5.2 Human development4

Figure 5.1 shows an upward trend in the HDI levels for the Cape Metro area, from 0.720 in 2011 to 0.747 in 2015; which is higher than the Western Cape Province’s recording of 0.730 for 2015. In contrast, although the Cape Metro area’s economic growth rate has remained in positive territory over the last five years, it has been moving in a downward trend, having dropped from 4.1 per cent in 2011 to 1.1 per cent growth. Should this downward trend continue it could put brakes on the increasing trend of the Cape Metro area’s HDI level.

Figure 5.1 Cape Metro area Human Development Index, 2011 - 2015

Source: Western Cape Department of Economic Development & Tourism; IHS Global Insight, 2016

Various social indicators related to human development in the Cape Metro are discussed below as follows: population, households, indigent households, household income, income inequality, and poverty, access to basic services, education levels and health matters at districts within the Cape Metro area.

5.3 Population and households

This section looks at recent population changes in the Cape Metro and compares these to recent economic growth data in order to show any changes in the living standards in the region. The standard of living among communities in municipalities within the Cape Metro area can be estimated by analysing economic performance and population data at a given period of time. GDPR per capita, which is calculated by dividing the total value of economic activity within a municipality by the total

4 The Human Development Index (HDI) is a key measure used by the United Nations to assess the relative level of socio-economic development in countries. It is a measure of peoples' ability to live a long and healthy life, to communicate, participate in the community and to have sufficient means to be able to afford a decent living. The HDI is thus a composite of factors reflecting longevity, economic prosperity, and schooling. It is represented by a number between 0 and 1 where 1 indicates a high level of human development and 0 represents no human development.

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population, is the indicator used to estimate the average annual incomes of households within a specific area. An improvement in the standard of living among communities can be attained when economic growth is faster/higher than population growth.

The total population of the Cape Metro increased by 7.08 per cent from 3 740 026 in 2011 to 4 004 793 in 2016, according to findings of the recent Community Survey by Stats SA. Figure 5.2 shows that there has been population growth across all Districts within the Cape Metro, with the Khayelitsha/Mitchell’s Plain district having the largest population and the highest growth rates. Economic migration, lower property prices, and lower rentals could be among many reasons for the population increases in the Khayelitsha/Mitchell’s Plain District. The Cape Flats and Tygerberg Districts also have high populations which have been growing fast between 2006 and 2015. Southern Suburbs, Table Bay and Helderberg had the smallest population increases during the review period.

Figure 5.2 Population trends in the Cape Metro Districts, 2006 - 2015

Source: Quantec Research/Urban-Econ calculations 2016

Projections by the Department of Social Development indicate that population in the Cape Metro is set to continue expanding over the next five years. Figure 5.3 shows that the planning districts that will grow fast between 2017 and 2020 are Khayelitsha (6.3 per cent), Mitchell’s Plain (4.7 per cent), Eastern Suburbs (3.9 per cent) and Tygerberg (3.7 per cent). The populations of the Southern, Northern, Western Suburbs and Klipfontein districts are also projected to grow albeit not as faster.

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Figure 5.3 Cape Metro area population projections, 2017 - 2021

Source: Department of Social Development 2015

Table 5.1 shows that there has been a significant increase in the number of households across the province between 2011 and 2016, with the West Coast District recording the highest increase (21.6 per cent), followed by Overberg District (19.1 per cent), Cape Winelands District (19 per cent). Households in the Cape Metro have increased by 18.3 per cent from 2011 to 2016. However, according to the latest Non-Financial Census of Municipalities released by Stats SA the number of indigent households within the Cape Metro decreased by 19.7 per cent between 2014 and 2015. A number of reasons could be attributed to the decrease in indigents, including improving household income and economic migration to neighbouring districts like the West Coast or Cape Winelands. The section below discusses household incomes within the Cape Metro.

Table 5.1 Number of households per municipality in Western Cape Regions

Western Cape Regions Census

2011 Community Survey

2016 % change

Cape Metro area 1 068 573 1 262 849 18.3

West Coast District 106 781 129 862 21.6

Cape Winelands District 198 265 236 006 19.0

Overberg District 77 196 91 835 19.1

Eden District 164 110 189 345 15.4

Central Karoo District 19 706 21 980 11.5

Western Cape 1 634 000 1 933 876 18.4

Source: Statistics South Africa Census 2011 and Community Survey 2016

Eastern Khayelitsha KlipfonteinMitchell's

PlainNorthern Southern Tygerberg Western

2017 545 693 439 985 407 174 556 054 382 285 538 604 638 976 505 994

2018 551 402 447 340 410 889 563 093 384 907 541 760 645 281 510 908

2019 556 919 454 444 414 447 569 861 387 342 544 716 651 354 515 501

2020 562 237 461 292 417 841 576 354 389 591 547 461 657 177 519 768

2021 567 359 467 889 421 072 582 580 391 658 549 985 662 741 523 715

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5.4 Household income

The annual household income for districts within the Cape Metro is presented in Table 5.2 and this shows the proportion of people that fall within the low, middle and high income brackets. An increase in living standards can be evidenced by a rising number of households entering the middle and high income brackets. From Table 5.2 it can be seen that Tygerberg has the highest proportion of households (46.1 per cent) that fall in the middle income bracket, followed by Table Bay (43.5 per cent), and Helderberg (40.6 per cent). Khayelitsha has the lowest proportion (33.7 per cent) of people falling under the middle income bracket.

Table 5.2 Annual household income for planning districts within the Cape Metro (%)

2016 Tygerberg Blaauwberg Northern

Khayelitsha/ Mitchell's

Plain Helderberg Cape Flats Table Bay Southern

No income 11.5 13.1 12.1 16.5 13.8 13.8 12.2 12.3

Low Income

R1 - R6 327 2.1 2.3 1.8 4.4 2.0 2.8 1.8 1.3

R6 328 - R12 653 3.3 3.1 2.5 6.3 3.4 3.9 2.3 1.8

R12 654 - R25 306 9.6 7.6 6.3 14.2 10.1 13.1 7.4 5.8

R25 307 - R50 613 15.1 13.2 9.7 21.6 15.8 17.5 10.9 9.3

R50 614 - R101 225 16.8 12.9 9.5 16.2 14.4 15.5 12.5 10.2 Middle Income R101 226 - R202 450 16.0 13.0 12.8 10.9 13.6 12.8 14.9 13.2

R202 451 - R404 901 13.3 14.1 17.7 6.6 12.6 10.7 16.1 16.6

R404 902 - R809 802 8.8 12.8 17.2 2.7 9.0 6.8 13.0 16.0 High Income R809 203 - R1 619 604 2.8 5.9 7.9 0.4 3.7 2.3 6.1 9.3

R1 619 605 - R3 239 208 0.5 1.4 1.8 0.1 1.0 0.5 1.8 3.0

R3 239 207 or more 0.3 0.7 0.8 0.1 0.6 0.3 1.0 1.3

Source: Quantec Research/Urban-Econ calculations, 2016

The Khayelitsha/Mitchell’s Plain district still has the highest proportion of households without any income (16.5 per cent), followed by the Cape Flats (13.8 per cent), Helderberg (13.8 per cent) and Blaauwberg (13.1 per cent). These statistics can suggest that living standards and human development for some people living in these areas is likely to be low. Expenditure patterns on various goods and services can also show the standard of living since affluent households are expected to purchase more durable goods than non-durable goods. Table 5.3 shows that the Cape Metro has the highest proportion of people (32.9 per cent) that spend on non-durable goods and the second lowest proportion of people (32.7 per cent) that spend on services.

Table 5.3 Western Cape districts’ expenditure on goods and services, 2016

Goods and services

West Coast District Central Karoo Cape Winelands Eden Overberg City of Cape Town

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Durable goods 1 051.33 12.6 139.07 13.0 - 12.5 - 11.8 - 11.8 - 11.8

Semi-durable goods

902.03 10.8 135.24 12.7 2 524.88 10.9 1 792.33 9.3 722.90 9.6 16 529.17 11.5

Non-durable goods

2 641.62 31.5 342.82 32.1 7 212.08 31.2 5 851.82 30.3 2 252.72 30.0 47 445.85 32.9

Services 3 777.85 45.1 451.80 42.3 10 506.77 45.4 9 412.82 48.7 3 645.26 48.5 61 667.34 42.7

Total 8 372.83 100 1 068.93 100 23 124.30 100 19 342.89 100 7 509.36 100 144 343.10 100



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The improvements in economic performance within the Cape Metro area will ensure that households spend on goods and services that enhance human development.

5.5 Income inequality5

In Figure 5.4 it can be seen that income inequality has risen somewhat from 2011 to 2015. Income inequality in the Cape Metro is much higher than the provincial average in all the years in the review period. Data on the Gini coefficients broken down per district in the Cape Metro is not available, but income inequalities can be deduced from the annual household income in Table 5.3 above.

Figure 5.4 Gini coefficients for the Cape Metro area, 2006 - 2015


There are currently various national, provincial and local government policies and initiatives to reduce income inequalities but the effectiveness of these should be seen through improvements in socio-economic indicators such as the Gini coefficient and the information on household incomes.

5 In this Section the most recent data on the Gini coefficients for the Cape Metro is analysed against performance by the Western Cape Province. The Gini coefficient measures the levels of income inequality among households within a community. The coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation's residents, varying between 0, which represents complete equality and 1, which represents complete inequality.

0.59

0.59

0.60

0.60

0.61

0.61

0.62

0.62

0.63

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

COCT WC


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5.6 Poverty6

Results from Statistics South Africa’s Community Survey 2016 shows that the intensity of poverty in the Western Cape declined to 40.1 per cent in 2016 from 42.6 per cent in 2011 as indicated in Table 5.4. Although this is a lower poverty intensity level compared to 2011, the figure of 40.1 per cent indicates that there are still a significant number of poor people in the Western Cape Province whose income is below the poverty line. The recent low rate of economic growth in the Western Cape has resulted in a small reduction in the intensity of poverty among households living within the province.

Table 5.4 Poverty headcount and poverty intensity at Western Cape districts, 2011 and 2016 (%)

Poverty headcount Poverty intensity

Municipality 2011 2016 2011 2016

City of Cape Town 3.9 2.6 42.8 39.3

Cape Winelands District 2.5 3.1 42.0 41.3

Overberg District 3.7 2.6 42.2 40.3

Eden District 3.9 2.2 42.2 40.5

Central Karoo District 2.4 3.1 40.6 41.1

West Coast District 2.0 2.9 41.9 44.5

Western Cape 3.6 2.7 42.6 40.1

Source: Stats SA Community Survey, 2016

Both poverty intensity and poverty headcount within the Cape Metro area decreased significantly between 2011 and 2016, following a sluggish economic growth rate since after the 2008 recession. Poverty intensity dropped by 3.5 percentage points while the poverty headcount decreased by 1.3 percentage points between the two review periods. It can be concluded that the low economic growth has made an impact on poverty to a certain extent, but there is still a big percentage of the poor that earn below the poverty line. Table 5.4 shows that the Cape Metro both has marginally lower poverty intensity and headcount levels (39.3 per cent and 2.6 per cent respectively) than the average levels for the Western Cape Province as a whole (40.1 per cent and 2.7 per cent).

6 The intensity of poverty as well as the poverty headcount of municipalities within the Cape Metro is analysed in this section as the presence of poverty in an area implies low levels of human development. The intensity of poverty is measured by calculating the Poverty Gap Index, which is the average poverty gap in the population as a proportion of the poverty line. The Poverty Gap Index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. The Poverty Gap Index is a percentage between 0 and 100 per cent. A theoretical value of zero implies that no one in the population is below the poverty line. Individuals whose income is above the poverty line have a gap of zero while individuals whose income is below the poverty line would have a gap ranging from 1 per cent to 100 per cent, with a theoretical value of 100 per cent implying that everyone in the population has an income that is below the poverty line or zero. A higher poverty gap index means that poverty is more severe.


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5.7 Human dwellings and access to basic services

The extent of human development within a municipality is to a large extent influenced by access to housing as well as basic services such as water, electricity, sanitation and refuse removal, with high access levels implying better human development and vice versa. Table 5.5 shows recent statistics relating to the provision of housing within the Cape Metro.

Table 5.5 Dwelling type within the Cape Metro, 2016

Cape Metro

Dwelling type Number

2016 % of the

total

House or brick structure on a separate stand or yard 671 948 55.7

Traditional dwelling/hut/structure made of traditional materials 3 664 0.3

Flat in a block of flats 120 401 10.0

Town/cluster/semi-detached house (simplex, duplex or triplex) 116 801 9.7

House/flat/room, in backyard 17 796 1.5

Informal dwelling/shack, in backyard 89 071 7.4

Informal dwelling/shack, NOT in backyard, e.g. in an informal/squatter settlement

165 506 13.7

Room/flatlet not in backyard but on a shared property 11 686 1.0

Other/unspecified/NA 8 774 0.7

Total 1 205 647 100


Informal settlements are an indication of poor levels of human development and hence government programs to provide proper housing for all households in the country. Table 5.5 indicates that over 20 per cent of households in the Cape Metro currently live in informal or squatter settlements, with an estimated 254 577 households living in informal dwellings in informal settlements and backyards. According to the Community Survey 2016 informal dwellings have increased in the Cape Metro between 2011 and 2016, from an estimated 218 780 dwellings in 2011 to 222 920 dwellings in 2016. A growing economy is likely to provide more households with income and increase some incomes further thereby making it possible to have decent living conditions and reducing squatter settlements. Table 5.5 shows that almost 80 per cent of households in the Cape Metro currently live in formal settlements. Access to decent housing is one step towards human development. Human settlements need to be provided with basic services such as water, electricity, sanitation and refuse removal in order for households to be rendered well developed. Figure 5.5 provides recent data on basic service access levels within the Cape Metro area as reported by Statistics South Africa in the latest non-financial census of municipalities and the Community Survey.


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Figure 5.5 Domestic and non-domestic consumers receiving free basic services within the Cape Metro, 2014 - 2015

Source: Non-Financial Census of Municipalities, Stats SA 2016

According to the most recent Non-Financial Census of Municipalities (2015), the Cape Metro experienced increased access levels to free basic water and sewerage services between 2014 and 2015. The non-financial census further indicates that there was a decrease experienced in free basic electricity and refuse removal services, the former which may be attributed to increasing usage of alternative energy sources such as gas and solar power in recent times.

The above data on current access to basic services within the Cape Metro is mixed, showing increases in access to water and sewerage and decreases in access to electricity and refuse removal. This presents a mixed picture of living conditions for households and therefore mixed implications for human and economic development in the Cape Metro. It is important for municipalities to ensure that there are high access levels for refuse removal as refuse can be a hazard to health, which could put a strain on a municipality’s finances.

Water Electricity Sewerage Refuse removal

2014 745 810 411 402 632 063 503 880

2015 784 808 386 415 645 863 438 197

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

Nu

mb

er o

f co

nsu

mer

s


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5.8 Education

Table 5.6 shows recent estimations of education levels of persons living within various districts within the Cape Metro.

Table 5.6 Education levels of households within districts in the Cape Metro, 2016

Cape Metro Tygerberg Blaauwberg Ctn Northern Khayelitsha/

Mitchell's Plain Helderberg Cape Flats Table Bay Southern

Education Level

00: Grade 0/No schooling 25 301 8 670 16 227 66 060 11 081 38 313 9 073 9 205

01: Grade 1/Sub A 16 874 4 496 7 297 34 743 5 114 20 865 4 633 4 998

02: Grade 2/Sub B 11 426 3 235 5 250 24 510 3 880 13 585 3 124 3 227

03: Grade 3/Standard 1 15 081 4 042 6 660 31 121 5 127 18 156 3 960 3 668

04: Grade 4/Standard 2 18 137 4 981 7 653 36 822 5 960 22 209 4 721 4 392

05: Grade 5/Standard 3 20 239 5 516 7 839 39 540 6 517 24 809 5 057 4 552

06: Grade 6/Standard 4 25 188 6 236 8 969 48 479 7 253 30 852 6 696 5 728

07: Grade 7/Standard 5 36 798 8 823 11 268 68 465 10 364 45 391 8 933 7 359

08: Grade 8/ Standard 6/Form 1

51 692 11 685 14 764 87 352 12 900 61 321 14 448 11 396

09: Grade 9/ Standard 7/Form 2

43 710 9 624 12 580 81 162 11 643 52 949 11 780 9 137

10: Grade 10/Standard 8/ Form 3/NTC1

66 693 14 697 23 514 92 277 15 450 72 569 19 590 17 863

11: Grade 11/Standard 9/ Form 4/NTC11

27 823 8 045 10 463 67 114 8 886 40 789 11 224 8 709

12: Grade 12/Standard 10/ Form 5/Matric/NTC111

118 300 34 564 60 589 133 648 35 055 115 592 50 981 53 484

13: Less than matric and certif/dip

3 221 1 146 2 127 2 736 1 387 3 477 1 878 2 168

15: Certificate with Grade 12 8 593 3 527 5 606 7 741 2 977 9 474 5 402 6 003

16: Diploma with Grade 12 21 800 9 004 19 481 12 606 8 561 17 723 13 858 18 368

17: Bachelor's Degree 7 433 3 665 8 354 3 516 4 476 7 835 8 707 10 772

18: Bachelor's Degree and Diploma

3 510 1 671 3 724 1 654 2 478 3 776 4 342 5 019

19: Honours degree 2 947 1 438 4 138 916 1 878 3 580 4 511 5 473

20: Higher Degree (Master's, Doctorate)

2 602 1 468 4 322 601 2 452 3 401 5 684 6 144

21: Other/Unspecified/NA 58 545 18 397 27 030 120 691 19 284 71 112 19 443 18 265

Total 585 912 164 929 267 854 961 755 182 724 677 778 218 045 215 929


Primary school education is important as it is a foundation for human development and therefore the existence of individuals without any form of schooling is a concern to decision-makers at local, provincial and national government. In Table 5.6 it can be seen that the Khayelitsha and Mitchell’s Plain district in the Cape Metro have the largest number of people without any schooling (66 060), followed by the Cape Flats (38 313) and Tygerberg (25 301). Unemployment levels are likely to be higher in areas where there are large numbers of people without any schooling and vice versa. Economic growth within the Cape Metro should translate to jobs and better education for people living in Khayelitsha, Mitchell’s Plain, Cape Flats and Tygerberg. Blaauwberg has the lowest number of people without any schooling (8 670), followed by Table Bay (9 073).


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Unemployment is likely to be lower in areas where there are large numbers of people with a Grade 12 certificate and higher educational achievements as these people will either be semi-skilled or skilled. Of the eight districts in the Cape Metro, Southern Suburbs have the largest number of people (51 779) that have a Grade 12 certificate or higher, followed by Tygerberg (46 885), Cape Flats (45 789), Northern Suburbs (45 625) and Table Bay (42 504). Unemployment levels are likely to be low in the Southern and Northern suburbs as well as Table Bay but for the Cape Flats the high levels of crime in the area are in contradiction with educational attainments.

5.9 Health

Health indicators analysed in this section to measure the extent of human development include the child and maternal health as well as ART and TB patient loads. These indicators can provide indicators for life expectancy within an economy. South Africa’s life expectancy dropped to 50.4 years in 2010 from 61.7 years in 1995. However, more recent information from Statistics South Africa shows improvements in life expectancy within the Western Cape from 2011 to 2015 (Statistical release P0302, 2015). The decline in life expectancy over the years has been largely attributed to the high prevalence of HIV/AIDS and Tuberculosis (TB) in the country. The HIV and TB patient load for the Cape Metro is shown in Table 5.7.

Table 5.7 ART and TB patient loads in the Cape Metro, 2013 - 2015

HIV - Antiretroviral treatment Tuberculosis

Municipality

ART patient

load March 2013

ART patient

load March 2014

ART patient

load March 2015

Mother-to-child

transmission rate

Numberof ART clinics/

treatment sites 2015

Number of TB

patients2012/13

Number of TB

patients 2013/14

Number of TB

patients 2014/15

Number of TB clinics/ treatment

sites 2015

Cape Metro 99 223 116 421 131 177 1.3% 80 27 510 26 305 26 320 118

West Coast 4 561 5 553 6 521 1.4% 41 3 508 3 573 3 593 73

Cape Winelands 14 170 17 463 19 615 1.7% 44 7 213 7 327 7 382 94

Overberg 4 907 6 182 7 233 1.3% 19 2 175 2 103 2 120 43

Eden 10 402 12 788 14 805 1.6% 64 4 825 4 909 4 935 83

Central Karoo 949 1 174 1 418 3.4% 11 621 590 644 22

Western Cape 134 212 159 581 180 769 1.4% 259 45 852 44 807 44 994 433

Source: Western Cape Department of Health, 2015

Table 5.7 shows an increase in the ART patient load in the Cape Metro from 99 223 people in March 2013 to 131 177 in March 2015. The increasing HIV/AIDS patient loads can be caused by either an increase in the number of people with HIV/AIDS or an increase in the number of existing patients now using ARVs. An increase in ART patient loads can be positive as it indicates that a lot more people are economically active. On the other hand, there was a slight increase in the number of TB patients within the Cape Metro from 26 305 in 2013/14 to 26 320 in 2014/15, although this remains lower than the 27 510 patients reported in 2012/13. A poor or deteriorating state of health among communities can have a negative impact on economic productivity.


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A look at recent child health data shows a very high rate of full immunisation coverage for children less than 1 year and minor cases of severe malnutrition within the Cape Metro. Of concern is the neonatal mortality rate which is slightly higher than the Provincial average, as well as the maternal mortality ratio which is also slightly above the Provincial average as shown in Table 5.8 below. Compared to the rest of the province, the Cape Metro has the highest percentage of pregnancy termination and consequently the smallest percentage of delivery by teenage women. This data can be an indicator that a growing economy does improve the health conditions of a majority of its citizens.

Table 5.8 Child and maternal health in Western Cape

Child health Maternal health

Municipality

Full immunisation

coverage under 1 year

Severely malnutrition rate under

5 years

Neonatal mortality

rate Low birth

weight

Maternal mortality

ratio

Delivery rate to women

under 18 years

Termination of pregnancy

rate

City of Cape Town 97% 1.94 6.3 14% 58.0 5.2% 22.8%

West Coast 74% 3.14 4.3 14% 75.6 9.1% 4.0%

Cape Winelands 79% 2.94 4.9 15% 20.8 7.3% 9.4%

Overberg 80% 1.54 7.7 14% 0.0 8.0% 7.0%

Eden 85% 3.79 7.2 16% 62.9 7.4% 7.4%

Central Karoo 77% 10.78 14.8 21% 371.1 9.2% 0.0%

Western Cape 90% 2.43 6.2 15% 55.4 6.1% 16.8%


A higher economic performance in the Cape Metro can further improve these health indicators.


This chapter analysed the impact of economic performance on socio-economic conditions of households living within the Cape Metro, using 16 key indicators, namely; poverty headcount, poverty intensity, informal dwelling, access to water, access to electricity, access to sanitation, access to refuse removal, persons with no schooling, persons with grade 12 certificate and higher, ART patient load, TB patient load, immunisation coverage, birth weight, teenage pregnancies, households with no income and the Gini coefficient. The data presented in this chapter shows mixed signs of the impact of the recent economic performance of the Cape Metro to the socio-economic conditions of households in the various districts of the Metro, with positive economic performance leading some indicators to move in a positive direction while others have remained unchanged or deteriorated.


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Between 2011 and 2016 the Cape Metro recorded a 7.0 per cent population growth rate while economic growth averaged 3.1 per cent per annum between 2005 and 2015, implying a general decline in the GDPR per capita, which is a measure of estimated income per household. Blaauwberg experienced the fastest economic growth in the review period (4.9 per cent), while the Southern Suburbs grew the least (2.3 per cent). Khayelitsha and Mitchell’s Plain District experienced the largest population growth (10.2 per cent). Although the Metro’s HDI has been rising since 2011, it weakened slightly between 2014 and 2015, weighed down by lower HDIs across all districts within the Metro.

Social indicators moving in positive territory could be a result of positive economic performance within the region, and vice versa. Social indicators that have moved in a positive direction for the Cape Metro include an increase in the access to basic services such as water, electricity, sanitation and waste management, among others. In addition, the Cape Metro has reported a decrease in indigent households as well as a decrease in the number of TB patients. Areas of concern in the Cape Metro include the rising households with no income and income inequality, informal dwellers, increasing ART patient loads, substance abuse and crime, among others. A growing economy should have a positive impact on these indicators instead of a negative impact. Decision-makers will have to bear in mind the negative socio-economic indicators when planning and budgeting for their activities.

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West Coast District

1


1.1 Introduction

The West Coast District economy is the 3rd largest non-metro district within the broader Western Cape Province economy, contributing 5.5 per cent to the GVA of the Western Cape in 2015, making it a relatively minor contributor.

The economic sectors that contributed the most to the West Coast District’s economy in 2015 were agriculture, forestry and fishing; manufacturing; wholesale and retail trade, catering and accommodation. The District has a comparative advantage in agriculture over other districts in the region. Some of the major projects being implemented in the District include the Saldanha Bay Industrial


140

Development Zone, Operation Phakisa/Oil & Gas, Iron Ore (Tippler 3 and Associated Bulk Services), and the N7 Development Corridor. Areas of concern include the rising population and rising indigent households in certain municipalities, households with no income, informal dwellers, teenage pregnancies, ART and TB patient loads and lower immunisation coverage, among others.

This sub-section provides a macroeconomic outlook on the West Coast District level, an overview of trends between 2005 - 2015 and an outlook in terms of GDPR for 2016 - 2021. International trade is also considered in this sub-section as well as top companies by size and employment operating in the area.


1.2.1 GDPR performance per municipal area

The West Coast District (WCD) economy is the third largest non-metro district within the broader Western Cape Province economy, contributing 4.4 per cent to the GDPR of the Western Cape in 2015. Figure 1.1 indicates the GDPR performance for the WCD municipalities between 2005 and 2015.

Figure 1.1 GDPR growth per municipality, 2005 - 2015


The WCD experienced an average GDPR growth rate of 3.9 per cent between 2005 and 2015 (average over this time period). The Cederberg municipal area recorded the highest average growth rate (5.1 per cent) during the review period, followed by Bergrivier (4.4 per cent). Saldanha Bay had the lowest average GDPR growth (3.1 per cent) between 2005 and 2015. The negative GDPR performance from 2008 - 2009 is attributed to the severe global economic recession. Economic performance in most

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Bergrivier 8.1% 4.4% 7.0% 12.8% 0.9% 1.4% 3.4% 3.4% 3.2% 5.4% -1.1%

Cederberg 9.1% 6.2% 8.5% 8.4% 1.2% 3.7% 5.3% 3.6% 4.1% 4.6% 1.2%

Matzikama 6.5% 2.7% 5.1% 9.5% -0.8% 0.7% 3.5% 3.3% 3.0% 5.6% -0.8%

Saldanha Bay 6.0% 4.6% 5.5% 3.6% -2.2% 1.7% 5.9% 3.0% 2.6% 3.1% 0.1%

Swartland 7.8% 5.3% 7.6% 9.6% 0.8% 3.0% 3.5% 3.6% 3.2% 4.6% -0.2%

West Coast District 7.2% 4.6% 6.6% 8.1% -0.3% 2.1% 4.4% 3.4% 3.1% 4.4% -0.2%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

West Coast District

141

municipal areas in 2015 was negative, with the exception of Cederberg that recorded a positive growth rate of 1.2 per cent.

Apart from the subdued commodity prices, a number of challenges impact on the district economy, including the drought (causing increases in domestic food prices), the rand depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy). Table 1.1 indicates the average GDPR contribution and growth rates within the various municipal areas.

Table 1.1 GDPR contribution and average growth rates per municipal area


2015


Municipal area Trend1

2004 – 2015 Pre-recession

2004 - 2008 Recession 2008 - 2009


Matzikama 15 3.5 6 -0.8 2.6

Cederberg 12 5.1 8.1 1.2 3.8

Bergrivier 15 4.4 8.1 0.9 2.6

Saldanha Bay 29 3.1 5.0 -2.2 2.8

Swartland 28 4.4 7.6 0.8 2.9

Total West Coast District 100 3.9 6.6 -0.3 2.9



Saldanha Bay contributed the most to GDPR (29 per cent) in the WCD in 2015, followed by Swartland (28 per cent). These two municipal areas made up 57 per cent of the WCD’s GDPR contribution in 2015. All the municipal areas have shown subdued GDPR growth between 2009 and 2015 (compared to pre-recession rates) which could be attributed to the slowdown in China and the decrease in demand for commodities.


Figure 1.2 indicates the GDPR contribution per main sector for the various municipal Areas. In the WCD the primary sector contributed 21.4 per cent to the GDPR of the District in 2015, the secondary sector 26.4 per cent and the tertiary sector 52.1 per cent. Saldanha Bay has a larger tertiary sector than the other municipal areas in the WCD. It is therefore more in line with the Western Cape economy, which is dominated by the tertiary sector and overall has a much smaller primary sector compared to the West Coast.

1 The GDPR trend is based on 2004 to 2015 data, because 2005 reflects the growth rate between 2004 and 2005.


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The relatively large contribution of the primary sector to the WCD GDPR can be attributed to the presence of agriculture in the region as well as the mining of titanium, zirconium, phosphate and limestone, sandstone, salt and diamonds. The secondary sector (i.e. manufacturing, construction and electricity, gas and water) contributions for both the District and the local municipal areas weigh relatively the same, and the sector consists of manufacturing closely linked with agriculture (i.e. agri-processing) and activities in the Saldanha Port and related Saldanha IDZ implementation. The tertiary sector presence, which consists of activities such as the wholesale and retail trade, catering and accommodation, transport and communication, finance and business services, and activities related to the iron-ore, steel and Saldanha Port and IDZ also remains relatively important. Table 1.2 indicates the sectors that contribute the most to the WCD’s economy.

Table 1.2 West Coast District GDPR contribution per sector, 2015 (%)

Sector West Coast

District Bergrivier Cederberg Matzikama Saldanha Bay Swartland


20.9 31.9 22.3 29.7 12.2 18.7

Mining and quarrying 0.5 0.1 0.2 2.9 0.2 0.0

Manufacturing 19.7 20.3 19.4 12.5 20.7 22.5


1.5 1.3 2.0 2.0 1.2 1.5

Construction 5.2 3.9 5.6 5.2 5.5 5.3


15.3 12.0 13.9 15.3 16.1 16.9


7.8 5.1 13.0 5.9 8.7 7.1


12.3 10.9 9.5 9.6 17.9 10.0


6.3 5.7 5.6 6.6 6.3 6.8

General government 10.4 8.6 8.5 10.4 11.4 11.3


4.0%

21.4%32.0%

22.5%32.6%

12.4% 18.7%22.7%

26.4%

25.6%

27.0%19.7%

27.3%29.2%

73.3%

52.1%42.4%

50.5% 47.7%60.3%

52.1%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Western Cape West Coast Bergrivier Cederberg Matzikama Saldanha Bay Swartland

Primary Sector Secondary Sector Tertiary Sector

West Coast District

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The economic sectors that contributed the most to the WCD’s economy in 2015 included:

Agriculture, forestry and fishing (20.9 per cent)



Table 1.3 indicates the WCD’s GDPR performance per sector.

Table 1.3 West Coast District GDPR performance per sector

Sector


Trend 2004 - 2015





Mining and quarrying -0.1 -6.4 1.5 3.7


Electricity, gas and water -1.7 -3.1 -1.1 -0.8

Construction 7.1 14 5.5 2.7


4.4 6.5 -0.1 3.7

Transport, storage and communication 1.3 2.6 -3.6 1.2


5.1 8.4 2.3 3.4


3.2 6.2 0.2 1.7


Total West Coast District 3.9 6.6 -0.3 2.9


Between 2004 and 2015 two sectors in the WCD contracted, namely the mining and quarrying sector (-0.1 per cent) and the electricity, gas and water sector (-1.7 per cent). It is evident that the 2015 drought also impacted negatively on the agriculture sector where growth since pre-recession figures, is recovering very slowly. The electricity, gas and water sector did not recover between 2009 - 2015 and the transport, storage and communication sector also showed very low growth during the review period. Sectors that had strong GDPR growth between 2004 and 2015 included the construction sector, finance, real estate and business services sector, and the wholesale, retail trade, catering and accommodation sector.


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Sector 2016 2017 2018 2019 2020 2021 Average

2016 - 2021


0.5 1.0 0.8 0.9 1.1 1.2 0.9


Manufacturing 1.8 2.1 2.1 2.7 2.6 1.6 2.2

Electricity, gas and water 1.3 1.3 1.4 2.0 2.4 0.0 1.4

Construction 2.7 4.6 4.8 4.7 5.0 3.6 4.2


2.1 3.0 3.1 3.7 3.7 3.1 3.1


2.4 3.8 4.0 4.0 4.1 2.7 3.5


2.9 3.8 3.8 3.9 4.4 6.1 4.1


1.6 2.4 2.5 2.4 2.5 2.7 2.4


Total 1.9 2.7 2.8 3.0 3.2 3.3 2.8


The WCD is forecasted to grow by 2.8 per cent on average between 2016 and 2021. GDPR growth is set to show significant improvements from 2019 onwards. Sectors that are projected to grow the fastest in the forecasted period are construction (4.2 per cent), transport and storage (3.5 per cent); wholesale and retail trade (3.1 per cent). Growth in the agriculture, forestry and fishing sector is expected to range between 0.5 per cent in 2016 to 1.2 in 2021, translating into a 0.9 per cent growth rate across the forecast period. Mining and quarrying; electricity, gas and water; and general government will all grow by less than 2 per cent in the forecast period.

West Coast District

145

1.3 Growth in employment trends

1.3.1 Employment per municipal area

Table 1.5 indicates the trend in employment growth within each municipal area in the WCD.

Table 1.5 West Coast District employment growth


2015


Municipal area Trend


2004 - 2008 Recession 2008 - 2009


Matzikama 17.2 3 249 191 -1 435 4 493

Cederberg 13.9 3 270 8 -814 4 076

Bergrivier 17.5 1 261 -1 659 -1 675 4 595

Saldanha Bay 23.2 2 165 988 -1 849 3 026

Swartland 28.2 9 057 2 869 -1 436 7 624

Total West Coast District 100 19 002 2 397 -7 209 23 814

Western Cape Province - 456 528 276 992 61 240 240 776


Similar to GDPR contribution, in 2015 the Saldanha Bay and the Swartland municipal areas collectively employed 51.4 per cent of individuals in the WCD. During the recession (2008 - 2009) every local municipal area in the WCD was shedding jobs, but after the recession between 2009 - 2015 every municipal area regained more jobs than were lost during the recession. The Bergrivier municipal area was shedding jobs before the recession started (2004 - 2008) while phenomenal growth in employment was reported for Cederberg in the recovery years (2009 – 2015).


Table 1.6 indicates the trend in employment growth within each economic sector in the WCD.

Table 1.6 West Coast District employment growth per sector


Sector Trend


2004 - 2008 Recession 2008 - 2009


Agriculture, forestry and fishing -10 989 -16 943 -6 235 12 189

Mining and quarrying -277 -54 -108 -115

Manufacturing 787 1 137 -650 300

Electricity, gas and water 106 59 -8 55

Construction 2 121 1 841 -593 873


11 489 7 676 -39 3 852

Transport, storage and communication 1 226 901 -75 400


4 151 2 846 -371 1 676

Community, social and personal services 4 333 2 479 189 1 665

General government 6 055 2 455 681 2 919

Total West Coast District 19 002 2 397 -7 209 23 814



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Every economic sector in the WCD shed jobs during the recession except for the general government sector and the community, social and personal services sector. The agriculture, forestry and fishing sector and the mining and quarrying sector were shedding jobs before the recession (2004 - 2008). All the sectors except for the mining and quarrying sector had no job losses between 2009 - 2015, but were not regaining the amount of jobs at the levels of pre-recession (2004 - 2008).


Table 1.7 indicates the sectors where the WCD has a comparative advantage over other districts in the Western Cape Province in terms of GDPR and employment.

Table 1.7 Comparative advantage in terms of GDPR and employment, West Coast District, 2015

Sector In terms of

GDPR In terms of

employment












The figures in Table 1.7 above indicate the location quotients of various sectors of the WCD in 2015. The location quotient is calculated by dividing the GDPR growth rate of a sector in the WCD, with the GDPR growth rate of the same sector in the Province. If the result is 1 and above, that sector in the WCD has a comparative advantage. From the table above, it can be seen that the agriculture, forestry and fishing sector’s location quotient of 5.59, i.e., the sector’s growth is 5 times faster than that of the Province. Other sectors in WCD with a location quotient greater than 1 are mining and quarrying and manufacturing. This correlates with the economic sectors that contributed most to the WCD’s economy in 2015, namely:


Manufacturing

2 A comparative advantage indicates a relatively more competitive production function for a product or service in a specific economy (regional or sub-regional) than in the aggregate economy (provincial or national). It therefore measures whether a specific economy produces a product or renders a service more efficiently than another. One way to measure the comparative advantage of a specific economy is by way of the location quotient. A location quotient as a tool, however, does not take into account external factors such as government policies, investment incentives, and proximity to markets, etc., which can influence the comparative advantage of an area.

West Coast District

147

For sectors with a location close to 1, e.g. construction (0.96), general government (0.96), community, social and personal services (0.92), the WCD does not have a comparative advantage but there exists opportunities in these sectors.

Table 1.8 indicates the number and rand value of the procurement contracts undertaken in the WCD Municipality during the 2014/15 financial year. The aim of this section is to indicate sectors where the WCDM contributed and the amounts spent by the WCDM in those sectors.

Table 1.8 West Coast District procurement contracts, 2014/15

Procurement contracts

Sector Number R-value

Business services 8 12 730 668

Construction 11 67 321 286

Financial services 4 2 758 924

Manufacturing 4 1 253 506

Transport and communication 10 4 839 409

Wholesale and retail trade 5 12 351 069

Total 42 101 254 862

Source: Municipal Annual Reports 2014/15

A total of 42 procurement contracts were undertaken in the WCD during the 2014/15 financial year to the value of approximately R101 million. The majority (26 per cent) were in the construction industry, 24 per cent in the transport and communication industry, 19 per cent in the business services sector, 12 per cent in the wholesale and retail trade sector, and 10 per cent each in the manufacturing and financial services sector.

Table 1.9 indicates the main agriculture activities in the WCD per percentage contribution to the Western Cape Province’s overall agriculture contribution.


148

Table 1.9 West Coast District agriculture as per contribution to Western Cape agriculture, 2015 (%)

Sub-sector West Coast

District Matzikama Cederberg Bergrivier Saldanha

Bay Swartland

Crops (as % of Western Cape)

Wine Grapes 22.4 9.8 12.6

Table Grapes 8.1 8.1

Lucerne 19.9 3.6 2.8 13.5

Canola 14.9 8 6.9

Small Grain Grazing 71.8 14.3 12.7 20.5 4.4 19.9

Planted Pastures Perennial 53.4 14.8 15.3 12.3 4.4 6.6

Natural grazing 53.2 4.4 15.3 22.2 4.2 7.1

Fallow 56.7 7.4 14.8 16.6 9.3 8.6

Stubble 21.2 21.2

Wheat 48.9 0.4 15.2 5.6 27.7

Lupine 70.5 30 14.7 25.8

Triticale 85.6 23.2 44.4 18

Rooibos 93.2 16.3 76.9

Oranges 82.2 82.2

Potatoes 57.5 57.5

Oats 27.7 27.7

Planted Pastures 10.9 0.8 10.1

Weeds 60.4 8.4 37.6 13.2 1.2

Top Livestock (as % of Western Cape)

Cattle 20.5 0.3 0.6 2.8 1.6 15.2

Goats 4.5 1.8 0.3 0.8 0.9 0.7

Horses 14.0 0.4 0.4 5.3 1.6 6.3

Ostriches 1.9 0 0 0 0.4 1.5

Pigs 36.2 0.1 0.2 1.3 2.6 32

Sheep 22.5 3.8 1.5 5 2.4 9.8

Source: WC Department of Agriculture and Western Cape AgriStats, 2013

In 2015 the biggest contributors to agriculture in the WCD were:

1. Rooibos (which accounted for 93.2 per cent of the Rooibos grown in the Western Cape)

2. Triticale (type of wheat) (85.6 per cent of the Western Cape)

3. Oranges (82.2 per cent of the Western Cape)

4. Small grain grazing (71.8 per cent of the Western Cape)

5. Lupine (flowering plants in the legume family) (70.5 per cent of the Western Cape)

Manufacturing is closely linked with the agriculture sector in the WCD, as is indicated by the dominance of the food and beverage sector. Table 1.10 indicates the economic contribution of the manufacturing sub-sectors in the WCD. Other linkages include the mining activity in the area (as reflected by the importance of the metals, metal products, machinery and equipment sub-sector) of titanium, zirconium, phosphate and limestone, sandstone, salt and diamonds as well as the importance of industries such as Saldanha Steel and the IDZ, as well as activities at Saldanha Port.

West Coast District

149

Table 1.10 West Coast District manufacturing GDPR contribution per sub-sector, 2015 (%)

Sub-sector West Coast

District Matzikama Cederberg Bergrivier Saldanha Bay Swartland


65.4 49.1 61.6 72.1 60.7 73.5


1.8 1.0 1.4 1.2 2.5 1.9


5.1 4.3 2.2 6.5 6.8 4.0


8.3 9.9 10.2 7.3 10.0 5.7


4.5 12.6 2.9 3.6 4.0 3.5


8.5 10.9 15.5 5.3 10.1 4.9


0.2 0.0 0.3 0.2 0.2 0.1


0.6 0.5 0.0 0.0 0.7 0.9

Transport equipment

2.1 1.7 1.9 2.2 2.2 2.2


3.6 10.0 4.0 1.6 2.7 3.2


Table 1.10 indicates that the manufacturing sub-sectors that contributed the most to the WCD’s GDPR in 2015 were:

Food, beverages and tobacco (65.4 per cent)




150


Table 1.11 indicates the top companies located in the WCD. This data was collated from the Western Cape Top 300 Companies (based on criteria developed in partnership with the Cape Chamber of Commerce, the Western Cape Provincial Government, Accelerate and Wesgro) and Wesgro Fact Sheets for the WCD.

Table 1.11 Top companies, West Coast District

Industry Number of companies Employment numbers

Manufacturing 7 ± 17 200*

Agriculture, forestry and fishing 5 ± 10 439*

Tourism 4 ± 5 436*

Construction 3 ± 188 461*

Transport, storage and communication 2 ± 260 100*

Total 21 ± 481 636*

* This includes employment for the whole company (all branches, not just West Coast District branches).


There are 21 dominant companies in terms of employment and contribution to GDPR in the WCD, employing approximately 482 000 employees in total. Some of these include companies such as Kaap Agri (Pty) Ltd, Sea Harvest, Oceana Group, Pretoria Portland Cement Company, Foodcorp Consumer Brands, Saldanha Steel, Duferco, ArcelorMittal South Africa, Namakwa Sands, Club Mykonos, Tronox, Sunrise Energy, Cerebos, Bokomo, and the West Coast National Park.


Of the total exports in the WCD in 2015, 83 per cent were manufacturing products, 17 per cent agriculture, forestry and fishing products, and 0.03 per cent mining and quarrying products. Of the total imports in the WCD in 2015, 87 per cent were manufacturing products, 4 per cent in agriculture, forestry and fishing products, and 10 per cent mining and quarrying products. Figure 1.3 indicates the WCD trade balance between 2005 and 2015.

West Coast District

151

Figure 1.3 West Coast District Trade Balance, 2005 - 2015


The regional trade balance in the WCD has been positive for the period between 2005 and 2015 due to a steady increase in trade from R3.7 billion in 2005 to R5.7 billion in 2015. During this period imports stood at R1.5 billion in 2005 and grew to R5.3 billion in 2015. There has been a continuous trade deficit in the mining and quarrying sector since 2007, which could have been a combination of the global recession, slowdown of Chinese manufacturing, and the weakness of the commodity market due to currency fluctuations and inflation. The trade balance has decreased from 2014 (R2.2 billion) to 2015 (R374 million) which could be attributed to the volatile world economy.


The West Coast District experienced an average GDP growth rate of 3.9 per cent between 2004 and 2015. Apart from the challenges brought about by subdued commodity prices, a number of challenges are having an impact on the economy, which is reflected in the trade balance of the West Coast District, which has decreased since 2014. Similar to the GDP contribution in 2015, Saldanha Bay and Swartland employs 51.4 per cent of individuals in the West Coast District, but after the recession between 2009 - 2015 every municipal area regained more jobs than were lost during the recession. Bergrivier municipal area however was shedding jobs before the recession started (2004 - 2008).

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

R b

illio

n



152

The primary sector contributed an average of 18 per cent to the GDP of the District in 2015. This sector consists of agriculture (i.e. rooibos, wheat, lupine, sheep, potatoes, wine grapes, oranges and grazing) and mining and quarrying (i.e. titanium, zirconium, phosphate and limestone, sandstone, salt and diamonds). The secondary sector contributed an average of 20 per cent to the GDP of the District in 2015, and it consists of the manufacturing, construction and electricity, gas and water sectors (i.e. food, beverages and tobacco sub-sectors and the metals, metal products, machinery and equipment sub-sectors). The tertiary sector contributed an average of 62 per cent to the GDP of the District in 2015, and it consists of industries such as wholesale, retail trade, catering, accommodation, transport, finance and real estate. Some of the top companies in the West Coast District include Kaap Agri (Pty) Ltd, Sea Harvest, Oceana Group, Pretoria Portland Cement Company, Foodcorp Consumer Brands, Saldanha Steel, Duferco, ArcelorMittel South Africa, Namakwa Sands, Club Mykonos and West Coast National Park.

West Coast District

153

2

Sectoral growth, employment and skills per municipal area

2.1 Introduction

This sub-section provides a macroeconomic outlook on the municipal level, an overview of trends between 2004 - 2015 and an outlook in terms of GDPR for 2016 - 2021. Employment is also considered in this section; as well as skills levels and building plans passed and completed.

2.2 Saldanha Bay Municipal area


In Saldanha Bay, the primary sector contributed 12.4 per cent to the GDPR of the area, compared to 21.4 per cent of the WCD in 2015. The secondary sector contributed 27.3 per cent to the GDPR of the area, compared to 26.4 per cent in the WCD in 2015; while the tertiary sector contributed 60.4 per cent to Saldanha Bay compared to 52.1 per cent in the District. This indicates that the secondary and tertiary sector is stronger in the Saldanha Bay compared to the WCD. This could be attributed to the strong presence of manufacturing and tertiary activities such as Saldanha Steel, Namakwa Sands, Saldanha Port, and IDZ activities. Table 2.1 indicates the Saldanha Bay’s GDPR performance per sector.


154

Table 2.1 Saldanha Bay GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



12.2 972.0 3.7 2.5 -1.4 5.4

Mining and quarrying 0.2 13.3 -6.9 -9.1 -11.7 -4.7

Manufacturing 20.7 1 644.9 0.9 3.4 -11 1.3


1.2 95.7 1.3 2 -1.2 0.7

Construction 5.5 434.8 6.3 12.7 4.6 2.4


16.1 1 281.1 4.5 6.8 -0.2 3.7


8.7 691.3 -0.2 0.3 -5.4 0.3


17.9 1 425.4 5.7 9.1 3 3.9


6.3 498.1 2.7 6.9 0.6 0.2


Total Saldanha Bay 100 7 962.0 3.1 5 -2.2 2.8


The manufacturing sector (20.7 per cent); the finance, insurance, real estate and business services sector (17.9 per cent); the wholesale and retail trade, catering and accommodation sector (16.1 per cent); and the agriculture, forestry and fishing sector (12.2 per cent) contributed most to Saldanha Bay. Between 2004 and 2015, almost every economic sector in Saldanha Bay grew positively in terms of GDPR except for the mining and quarrying industry and the transport, storage and communication sector. All the economic sectors were showing positive recovery after the recession (2009 - 2015) with the agriculture, forestry and fishing sector showing the highest recovery at 5.4 per cent.


Table 2.2 indicates the trend in employment growth within each economic sector in the Saldanha Bay.

West Coast District

155

Table 2.2 Saldanha Bay employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



19.7 7 814 -5 520 -4 108 -1 414 2

Mining and quarrying 0.0 19 -42 -10 -14 -18

Manufacturing 12.0 4 770 -483 -94 -271 -118


0.2 70 31 15 1 15

Construction 5.5 2 169 427 423 -191 195


21.5 8 543 3 072 2 092 -23 1 003


3.7 1 460 135 230 -75 -20


13.0 5 143 1 432 1 002 -146 576


11.9 4 731 1 423 772 86 565

General government 12.5 4 944 1 690 666 198 826

Total Saldanha Bay 100 39 663 2 165 988 -1 849 3 026


The wholesale and retail trade, catering and accommodation sector (21.5 per cent); the agriculture, forestry and fishing sector (19.7 per cent); and the finance, insurance, real estate and business services sector (13 per cent) employed the most citizens. Between 2004 and 2015, almost every economic sector created jobs except for the agriculture, forestry and fishing sector, manufacturing sector; and mining and quarrying sector. Almost every economic sector was showing positive job creation after the recession, except for the mining and quarrying sector, the manufacturing sector, and transport storage and communication sector. Compared to GDPR, the employment per sector is recovering a lot slower than the GDPR per sector.

2.2.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. A skilled population does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.3 indicates the skills levels of Saldanha Bay.


156

Table 2.3 Saldanha Bay skills level




2015

Skilled 20.1 1.7 6 161

Semi-skilled 36.2 -2.3 11 068

Low skilled 43.7 -0.1 13 364

Total Saldanha Bay 100 -0.7 30 593


Only formal employment numbers can be used to determine the skills level in the area. In Saldanha Bay there were 30 593 formally employed individuals, indicating that 9 070 individuals were informally employed in 2015.

The majority of Saldanha Bay’s formally employed individuals (43.7 per cent) are low skilled, compared to 36.2 per cent semi-skilled and 20.1 per cent skilled. Skilled formal employees have been increasing positively between 2004 and 2015, while the semi- and low skilled formal employees have been decreasing between 2004 and 2015. This could be due to up-skilling in Saldanha Bay through either better access to education as well as up-skilling opportunities through employers.

2.3 Swartland Municipal area


In 2015, the primary sector contributed 18.7 per cent to the GDPR of Swartland, compared to 21.4 per cent in the WCD. The secondary sector contributed 29.2 per cent to the GDPR of the area, compared to 26.4 per cent in the West Coast District in 2015; while the tertiary sector contributed 52.1 per cent to Swartland as well as the District. This indicates that the secondary sector is stronger in Swartland compared to the WCD. This could be attributed to the strong presence of agriculture and agri-processing in Swartland. Table 2.4 indicates Swartland’s GDPR performance per sector.

West Coast District

157

Table 2.4 Swartland GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery 2009- 2015


18.7 1 444.1 5.9 12.5 0.7 2.4

Mining and quarrying 0.0 2.5 -8.1 -12 -11.7 -4.9

Manufacturing 22.5 1 742.6 4.2 6.8 -0.8 3.4


1.5 113.0 -2.6 -4.2 -2.8 -1.5

Construction 5.3 407.2 5.8 12.4 4.7 1.7


16.9 1 310.5 5.1 7.6 0.8 4.2


7.1 548.3 1.9 3.4 -2.4 1.6


10.0 771.3 4.3 7.5 1.5 2.7


6.8 528.1 3.2 5.6 -0.3 2.2


Total Swartland Municipal area

100 7 738.9 4.4 7.6 0.8 2.9


The sectors that contributed the most to Swartland’s GDPR in 2015 included manufacturing (22.5 per cent); agriculture, forestry and fishing (18.7 per cent); and wholesale and retail trade, catering and accommodation (16.9 per cent). Overall, between 2004 and 2015, every economic sector in Swartland grew positively in terms of GDPR, except for the mining and quarrying sector and the electricity, gas and water sector. All the economic sectors were showing positive recovery after the recession.


Table 2.5 indicates the trend in employment growth within each economic sector in Swartland.


158

Table 2.5 Swartland employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



32.2 15 558 -915 -3 207 -1 349 3 641


Manufacturing 10.5 5 054 553 425 -151 279


0.2 96 25 17 -5 13

Construction 4.7 2 276 480 477 -196 199


20.0 9 663 4 062 2 591 63 1 408


2.5 1 198 488 279 16 193


8.0 3 856 1 284 830 -68 522


10.5 5 053 642 446 -19 215


Total Swartland 100 48 255 9 057 2 869 -1 436 7 624


In terms of employment, the sectors that contributed the most to Swartland’s employment in 2015 were agriculture, forestry and fishing (32.2 per cent); the wholesale and retail trade, catering and accommodation sector (20 per cent); and the general government sector (11.4 per cent). Overall, between 2004 and 2015, only two sectors shed jobs, namely the agriculture, forestry and fishing sector and the mining and quarrying sector. The agriculture, forestry and fishing sector shed jobs before and during the recession but has been regaining these losses at a very slow rate between 2009 and 2015.

2.3.3 Skills level

Table 2.6 indicates the skills levels of Swartland.

Table 2.6 Swartland skills level




2015

Skilled 14.2 2.2 5 403

Semi-skilled 31.8 0.9 12 082

Low skilled 54.0 0.8 20 515

Total Swartland 100 1.02 38 000


West Coast District

159

In Swartland there were 38 000 formally employed individuals, indicating that 10 255 individuals were informally employed in 2015). The majority of the Swartland’s formally employed individuals (54 per cent) are low skilled, compared to 31.8 per cent semi-skilled and 14.2 per cent skilled. Skilled formal employees have been increasing positively (2.2 per cent) between 2004 and 2015, while the semi- and low skilled formal employee have been increasing slowly between 2004 and 2015.

2.4 Matzikama Municipal area


In 2015, the primary sector contributed 32.6 per cent to the GDPR of Matzikama, compared to 21.4 per cent in the WCD. The secondary sector contributed 19.7 per cent to the GDPR of the area, compared to 26.4 per cent in the WCD in 2015; while the tertiary sector contributed 47.7 per cent to Matzikama compared to 52.1 per cent in the District. This indicates that the primary and secondary sectors are stronger in Matzikama compared to the WCD. This could be attributed to the strong presence of manufacturing and tertiary activities such as Namakwa Sands. Table 2.7 indicates Matzikama’s GDPR performance per sector.

Table 2.7 Matzikama GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


29.7 1 228.8 6.4 13.1 1.4 2.8

Mining and quarrying 2.9 118.0 2.1 -4.8 5.9 6.0

Manufacturing 12.5 516.2 2.7 5.9 -9.1 2.5


2.0 81.5 -5.8 -10 -3.7 -3.2

Construction 5.2 216.0 8.1 15.7 5.6 3.5


15.3 632.3 3.2 4.7 -1.5 3.0


5.9 242.3 -2.5 -2.0 -8.5 -1.8


9.6 398.5 4.3 7.3 0.8 2.8


6.6 272.4 3.2 5.4 -0.2 2.3


Total Matzikama 100 4 134.6 3.5 6.0 -0.8 2.6



160

The sectors that contributed the most to Matzikama’s GDPR in 2015, included the agriculture, forestry and fishery sector (29.7 per cent); the wholesale and retail trade, catering and accommodation sector (15.3 per cent); and the manufacturing sector (12.5 per cent). Overall, between 2004 and 2015, only two economic sectors in Matzikama contracted in terms of GDPR, namely: Electricity, gas and water sector and the transport, storage and communication sector. These two sectors have also not recovered since the recession between 2009 and 2015. The mining and quarrying sector has performed the best during 2009 and 2015 with a GDP growth rate of 6 per cent.


Table 2.8 indicates the trend in employment growth within each economic sector in Matzikama.

Table 2.8 Matzikama employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



43.9 12 946 -652 -2 644 -1 101 3 093


Manufacturing 5.8 1 712 194 287 -123 30


0.3 80 -6 -2 -5 1

Construction 4.2 1 241 384 324 -88 148


17.5 5 158 1 613 1 173 -57 497


2.0 598 31 63 -28 -4


5.9 1 728 222 222 -91 91


10.4 3 064 722 418 28 276


Total Matzikama 100 29 476 3 249 191 -1 435 4 493


West Coast District

161

In terms of employment, the sectors that contributed the most to Matzikama’s employment in 2015 were the agriculture, forestry and fishing sector (43.9 per cent); the wholesale and retail trade, catering and accommodation (17.5 per cent); and the community, social and personal services sector (10.4 per cent). Overall, between 2004 and 2015, almost every sector showed increased job creation except for the mining and quarrying sector; and the electricity, gas and water sector.

2.4.3 Skills level

Table 2.9 indicates the skills levels of Matzikama.

Table 2.9 Matzikama skills level




2015

Skilled 13.7 1.7 3 148

Semi-skilled 30.3 0.3 6 987

Low skilled 56.0 0.1 12 891

Total Matzikama 100 0.28 23 026


In Matzikama, there were 23 026 formally employed individuals, indicating that 6 450 individuals were informally employed in 2015. The majority of the Matzikama’s formally employed individuals (56 per cent) are low skilled, compared to 30.3 per cent semi-skilled and 13.7 per cent skilled. Skilled employees have been increasing positively between 2004 and 2015, while the semi-skilled and low skilled formal employees have been increasing but at a slower rate.

2.5 Bergrivier Municipal area


In 2015, the primary sector contributed 32 per cent to the GDPR of Bergrivier, compared to 21.4 per cent in the WCD. The secondary sector contributed 25.6 per cent to the GDPR of the area, compared to 26.4 per cent in the WCD in 2015, while the tertiary sector contributed 42.4 per cent to Bergrivier compared to 52.1 per cent in the District. This indicates that the primary sector is strong in Bergrivier similar to the WCD. Table 2.10 indicates Bergrivier’s GDPR performance per sector.


162

Table 2.10 Bergrivier GDPR performance per sector


2015

R million value 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



31.9 1 326.8 6.2 12.8 1.7 2.6

Mining and quarrying 0.1 4.3 -15.4 -12.9 -19.3 -16.5

Manufacturing 20.3 845.5 4.5 8.2 0.3 2.8


1.3 56.0 -0.8 -1.3 -0.7 -0.5

Construction 3.9 161.2 7.7 14.6 6.0 3.4


12.0 499.8 3.1 4.4 -1.5 2.9


5.1 213.4 2.6 4.2 -2.2 2.3


10.9 453.6 5.7 9.6 3.3 3.5


5.7 238.3 4.5 7.5 1.3 3.1


Total Bergrivier 100 4 155.3 4.4 8.1 0.9 2.6


The sectors that contributed the most to Bergrivier’s GDPR in 2015 included the agriculture, forestry and fishing sector (31.9 per cent); the manufacturing sector (20.3 per cent); and the wholesale and retail trade, catering and accommodation sector (12 per cent). Overall, between 2004 and 2015, only two economic sectors in Bergrivier contracted in terms of GDPR, namely the mining and quarrying sector and the electricity, gas and water sector. These two sectors were also growing negatively after the recession. The agriculture, forestry and fishing sector was growing at a very high rate before the recession (12.8 per cent) but growth has significantly lowered since the recession.


Table 2.11 indicates the trend in employment growth within each economic sector in Bergrivier.

West Coast District

163

Table 2.11 Bergrivier employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



53.6 16 013 -1 553 -3 670 -1 472 3 589


Manufacturing 7.2 2 154 82 164 -77 -5


0.2 56 22 12 -1 11

Construction 2.8 831 182 186 -72 68


13.0 3 870 1 021 788 -65 298


1.5 448 108 71 -1 38


5.7 1 715 502 335 -38 205


8.3 2 469 847 453 61 333


Total Bergrivier 100 29 878 1 261 -1 659 -1 675 4 595


In terms of employment, the sectors that contributed the most to Bergrivier’s employment in 2015, were the agriculture, forestry and fishing (53.6 per cent); the wholesale and retail trade, catering and accommodation sector (13 per cent); and the community, social and personal services sector (8.3 per cent). Overall, between 2004 and 2015, only two sectors were showing job losses, namely the agriculture, forestry and fishing sector and the mining and quarrying sector. After the recession the mining and quarrying sector, as well as the manufacturing sector, continued to shed jobs. Job recovery in the other economic sectors has been positive yet slow.

2.5.3 Skills level

Table 2.12 indicates the skills levels of Bergrivier.

Table 2.12 Bergrivier skills level




2015

Skilled 12.6 2.1 3 033

Semi-skilled 28.7 -0.4 6 905

Low skilled 58.6 -0.4 14 084

Total Bergrivier 100 -0.16 24 022



164

In Bergrivier, there were 24 022 formally employed individuals, indicating that 5 856 individuals were informally employed in 2015. The majority of Bergrivier’s formally employed individuals (58.6 per cent) are low skilled, compared to 28.7 per cent semi-skilled and 12.6 per cent skilled. Skilled formal employees have been growing between 2004 and 2015; while semi- and low skilled formal employees have been dropping between 2004 and 2015, which could be indicating the semi- and low skilled employees in Bergrivier are up-skilling.

2.6 Cederberg Municipal area


In 2015, the primary sector contributed 22.5 per cent towards the GDPR of Cederberg Municipality, compared to 21.4 per cent in the WCD. The secondary sector contributed 27 per cent to the GDPR of the municipal area, compared to 26.4 per cent in the WCD in 2015; while the tertiary sector contributed 50.5 per cent to Cederberg compared to 52.1 per cent in the District. This indicates that Cederberg’s economic structure is similar to the WCD. Table 2.13 indicates Cederberg’s GDPR performance per sector.

Table 2.13 Cederberg GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



22.3 762.3 5.1 -1.1 3.1 5.1

Mining and quarrying 0.2 8.0 -0.5 21.4 3.5 -0.5

Manufacturing 19.4 663.1 11.7 -0.1 4.4 11.7


2.0 69.0 10.4 4.0 1.7 10.4

Construction 5.6 192.9 20.1 9.0 4.7 20.1


13.9 474.2 7.7 1.6 4.6 7.7


13.0 445.1 12.4 1.6 4.0 12.4


9.5 326.8 7.6 2.1 3.5 7.6


5.6 190.1 5.3 -0.1 2.3 5.3


Total Cederberg 100 3 422.9 8.1 1.2 8.8 8.1


West Coast District

165

The sectors that contributed the most to Cederberg’s GDPR in 2015, included the agriculture, forestry and fishing sector (22.3 per cent); the manufacturing sector (19.4 per cent); and the wholesale and retail trade, catering and accommodation sector (13.9 per cent). Between 2004 and 2015, every economic sector in Cederberg grew positively in terms of GDPR, except for the mining and quarrying sector. All the economic sectors also showed positive recovery after the recession, except for the mining and quarrying sector. Some of the sectors showed very high economic growth rates between 2009 and 2015, namely the construction sector (20.1 per cent); the transport, storage and communication sector (12.4 per cent); the manufacturing sector (11.7 per cent); and the electricity, gas and water sector (10.4 per cent).


Table 2.14 indicates the trend in employment growth within each economic sector in Cederberg.

Table 2.14 Cederberg employment growth per sector


2015

Number of jobs2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



36.9 8 757 -2 349 -3 314 -899 1 864


Manufacturing 8.8 2 097 441 355 -28 114


0.2 59 34 17 2 15

Construction 5.5 1 309 648 431 -46 263


16.9 4 009 1 721 1 032 43 646


4.0 949 464 258 13 193


7.7 1 814 711 457 -28 282


10.8 2 559 699 390 33 276


Total Cederberg 100 23 700 3 270 8 -814 4 076


In terms of employment, the sectors that contributed the most to Cederberg’s employment in 2015 were the agriculture, forestry and fishing sector (36.9 per cent); the wholesale and retail trade, catering and accommodation sector (16.9 per cent); and the community, social and personal services sector (10.8 per cent). Between 2004 and 2015, every sector showed job creation except for the agriculture, forestry and fishing sector and the mining and quarrying sector. The agriculture, forestry and fishing sector shed jobs before and during the recession, but started regaining jobs after the recession.


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2.6.3 Skills level

Table 2.15 indicates the skills levels of Cederberg.

Table 2.15 Cederberg skills level




2015

Skilled 12.6 2.5 2 347


Low skilled 51.1 -0.8 9 520

Total Cederberg 100 0.47 18 635


In Cederberg there were 18 635 formally employed individuals, indicating that 5 065 individuals were informally employed in 2015. The majority of Cederberg’s formally employed individuals (51.1 per cent) are low skilled, compared to 36.3 per cent semi-skilled and 12.6 per cent skilled. Skilled and semi-skilled formal employees have been increasing positively between 2004 and 2015, while the low skilled formal employees have been decreasing between 2004 and 2015. This could be indicating up-skilling in Cederberg.


Building plans can provide a picture of the performance of an economy. A growth in the number of building plans passed and completed is an indication of a growing economy - both in that, a building plan is a response to growth in demand variables, and a stimulant of further growth as an activity in and of itself. It also has implications for spatial development planning within the WCD region. Figure 2.1 indicates the total square metres of building plans passed between 2005 and 2015 in Saldanha Bay.

Figure 2.1 Saldanha Bay: Building plans passed, 2005 - 2015


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In Saldanha Bay, a total of 725 096 square metres of residential buildings have been passed in the last 10 years (2005 - 2015), 132 030 square metres of non-residential buildings (majority in industrial space), and 231 912 square metres of additions and alterations. There were many building plans passed before the recession and building activity has been increasing since 2013. A significant gap between building plans passed and building plans completed would require further investigation as it could indicate any of a number of trends such as land-banking, or a retraction of interest in the area. Figure 2.2 indicates the building plans passed and completed in Saldanha Bay between 2004 and 2015.

Figure 2.2 Saldanha Bay: Building plans passed and completed, 2004 - 2015


Many building plans were passed in Saldanha Bay before 2008, with more building plans being completed in 2004 than any other year. Very few building plans were being completed during and after the recession. Figure 2.3 indicates the total square metres of building plans passed between 2005 and 2015 in Swartland.

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Figure 2.3 Swartland: Building plans passed, 2005 - 2015


In Swartland, a total of 487 212 square metres of residential buildings have been passed in the last 10 years (2005 - 2015), 330 641 square metres of non-residential buildings (majority in industrial space), and 308 561 square metres of additions and alterations. There has been a similar amount of building plans passed for non-residential space and additions/alterations over the last 10 years, with a spike in 2005 and again in 2013. Many residential building plans were passed between 2005 and 2007, and thereafter showed similar trends as the non-residential and additions/alterations building plans passed.

Figure 2.4 indicates the building plans passed and completed in Swartland between 2004 and 2015.

Figure 2.4 Swartland: Building plans passed and completed, 2004 - 2015


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Many building plans were passed in Swartland before 2008, with more building plans being completed in 2007 than any other year. The number of building plans passed remained steady after the recession and started to increase in 2015, but the number of building plans completed remained low after the recession.


In all the local municipal areas within the WCD, the following sectors contributed the most to GDPR and employment in the District:


General government

Manufacturing




Compared to GDPR, the employment per sector is recovering at a slower pace than the GDPR per sector in all the local municipal areas with the District. The reliance on primary, secondary and tertiary sectors can be a direct reflection on the main industries found in each local municipal area, with the dominance of the tertiary sector in Saldanha Bay, compared to the dominance of the primary sector in Matzikama. In general, the skills levels in all the local municipal areas in the District are improving, indicating either better access to education or up-skilling by employers.

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3

Value chains

3.1 Introduction

The following sub-section focuses on two value chains found in the WCD. Based on research and discussions with the District Municipality, the wheat and tourism value chains are covered in detail in MERO 2016. Additional value chains will be added with each subsequent year. The aim of the value chains is to show the movement of goods and services for certain commodities, as well as the risks and opportunities for local communities in the WCD.

3.2 Wheat value chain

Wheat is the second most important grain crop produced in South Africa. Most of the wheat produced in South Africa is bread wheat, with small quantities of durum wheat being produced in certain areas (which is used to produce pasta). In South Africa, wheat is mainly used for human consumption (bread, biscuits, breakfast cereals, rusks, etc.) with the remaining wheat being used as seed and animal feed. Approximately 19 per cent of the total area planted wheat in South Africa is cultivated under irrigation and over 80 per cent under dry land conditions (which is dependent on rain). The Western Cape, is the largest producer of wheat in South Africa accounting for about 51 per cent of the country’s total wheat production and in 2014, 899 000 tons were produced (SADOA, 2015).

Triticale is a hybrid cereal created by crossing two species (wheat and rye) using traditional plant breed techniques, giving triticale the advantages of wheat with its high yield potential and nutritional value, and that of rye with its disease and environmental resilient nature. According to the 2013 Western Cape Department of Agriculture’s Agricultural Commodity and Infrastructure Census, the WCD farmed a total of 8 959 hectares of triticale and has 25 silos and 40 silo bags located in the District (Table 3.1).


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Table 3.1 Total hectares of triticale, West Coast, 2013

Municipal area Total hectares planted Number of silos Number of silo bags

Bergrivier 4 125.89 9 27

Cederberg 2 152.57 2 0

Matzikama 360.75 0 0

Saldanha Bay 1 674.31 3 1

Swartland 645.68 11 12

Total 8 959.20 25 40

Source: WCDOA, Western Cape AgriStats, 2013

Figure 3.1 indicates the value chain for wheat.

Figure 3.1 Wheat value chain

3.2.1 Inputs

Input suppliers provide seeds, fertilizer, pesticides, fuel, etc. to farmers that grow wheat. In 2008, 86 per cent of the market share in terms of revenue in the fertiliser industry was shared between only three companies – Sasol (fertiliser plant in Secunda and distributed to cooperatives and retailers), Omnia (fertiliser plant in Sasolburg and distributed to retailers) and Yara (global company with a sales office in Paarl) (GrainSA, 2011). An increasing concern for local consumers of fertiliser is that according to statistics of the International Fertiliser Association (2010), South Africa is becoming more and more dependent on imports to satisfy the local fertiliser demand. In 1990, less than 20 per cent of fertiliser needs was imported. In 1999, 40 per cent of the demand was imported; and in 2008, over 65 per cent of South Africa’s nutritional fertiliser needs was imported (GrainSA, 2011). Between irrigation and harvesting, there is the ongoing activities of pest, disease and weed control. Table 3.2 indicates the input cost of wheat production (Rands per hectare 2013/14).

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Table 3.2 Variable input cost of wheat production, 2013/14

Planned yield (Tons/ha)

0.8 1.3 1.8 2.3 2.8 3.3

Variable cost (R/ha)

Seed 401.30 401.30 401.30 401.30 401.30 401.30

Fertilisers 1 740 1 740 1 740 1 740 1 740 1 740

Lime 75 75 75 75 75 75

Fuel 611.90 636.80 661.70 686.50 711.40 736.30

Repairs 481.30 484.30 487.4 490.50 493.50 496.60

Herbicides 319.80 319.80 319.80 319.80 319.80 319.80

Pesticides 220.20 220.20 220.20 220.20 220.20 220.20

Input Insurance 62.40 101.40 140.40 179.40 218.50 257.50

Grain Price Hedging 335 368.10 381.20 394.30 407.40 420.60

Crop Insurance 137.90 224.10 310.30 396.50 482.70 568.90

Air Services 100 100 100 100 100 100

Packing and Packaging Material 0 0 0 0 0 0

Production Credit Interest (R/ha) 315.30 327 338.60 350.20 361.90 373.50

Total Variable (R/ha) 4 820 4 997.90 5 175.70 5 353.60 5 531.50 5 709.40

Source: Bester M., 2014

It is evident that the cost of fertilisers, fuel, and pesticides has the largest impact on input costs. According to Bester (2014), production input costs have increased during the past few years due to substantial increases in the cost of fertilisers and fuel. The South African fertiliser industry is a deregulated environment and is fully exposed to world market forces with no import tariffs or government sponsored measures (Bester M., 2014).

3.2.2 Storage

The wheat is harvested and stored in numerous storage facilities, including imported wheat. Farmers will either sell the wheat to a silo owner or commodity trader (i.e. Bester Feed & Grain (Pty) Ltd), or store the wheat at a silo under that farmer’s name to be sold off at a later stage. BKB Grain Storage has depots throughout South Africa’s summer and winter grain producing areas. The company stores and manages more than 500 000 tons of grain and lucerne annually. BKB Grain Storage was the first to import silo bags in South Africa and currently the company stores grain in silo bags, bunker facilities and conventional silos. In the Western Cape, BKB Grain Storage is located in Koringberg, Moorreesburg, Riebeek Kasteel, and Porterville.

During the marketing year 2014/15, the wheat production volume of South Africa was about 1.78 million tons while the consumption amounted to about 3.28 million tons. This has left a deficit of about 1.5 million tons of wheat. During the same year (2014/15), the production of wheat declined by 5.32 per cent compared to what was produced in the preceding year (2013/14) (SADOA, 2015). There are 25 silos located in the WCD (Table 3.1) and Map 3.1 indicates the location of the silos in the West Coast District, as well as in the rest of the Western Cape. Up to 85 per cent of silo capacity in South Africa is owned by 22 silo owners. In fact, a total of just over 70 per cent is owned by a mere


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three co-operatives; namely Senwes Limited (Klerksdorp), Afgri (Centurion) and Noordwes (Potchefstroom) (Bester M., 2014)

Map 3.1 Location of silos in the Western Cape

Source: Western Cape Department of Agriculture, 2016

There are a number of entities within the Western Cape Department of Agriculture that are involved in small farmer support. The two main institutions are the farmer support and development (FSD) unit and Casidra (Cape Agency of the Department of Agriculture). The FSD unit provides extension, support and facilitation of training to farmers, with special emphasis on developing emerging farmers, implementation of land reform programmes and agricultural rural development projects (Shange, 2014). The FSD programme is also responsible for the administration of the following grants: (1) Comprehensive Agricultural Support Programme (CASP) - to expand the provision of agricultural support services, promote and facilitate agricultural development by targeting smallholder farmers; and (2) ILIMA LETSEMA grants - to assist targeted vulnerable South African farming communities to increase agricultural production and improve farming skills (Shange, 2014).

The core services of Casidra can be grouped into four areas: (1) Corporate services (provide an internal and external communication service, render an effective financial administrative service, deliver an effective legal administrative service and human resource service); (2) Manage government farms and provide farmer support and development through government funding; (3) To assist vulnerable communities and households with means to produce own food and to ensure that farmers and communities in need of skills development are capacitated and equipped through

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training and development; and (4) Run substance abuse and awareness campaigns and provide interventions that enhances business growth in rural areas (Shange, 2014).

There are also five key farmer support organisations in the Western Cape: Agri-mega (Paarl), Phuhlisani (Cape Town), AFASA (African Farmers' Association of South Africa), ASNAPP (Agribusiness in Sustainable Natural African Plant Products) and Abalimi (Harvest of Hope) (Shange, 2014). The Western Cape Department of Agriculture has experimental farms in various locations around the Western Cape that assist with knowledge gathering and knowledge sharing. Langgewens Experimental Farm in the WCD has a crop rotation project (since 1996) with the support from industry (local business players) through the Winter Cereal Trust. The project consists of 8 crop rotation systems, which include four cash crop and four cash crop/annual pasture rotation systems. This work assists local farmers with knowledge about crop rotation systems and which systems are the most cost effective.

In terms of agriculture financing, there are a few providers, namely:

Land Bank of South Africa (head office in Centurion, provincial office in Durbanville, and satellite offices in George, Beaufort West, and Worcester)

Zeder Investments (office in Stellenbosch)

Agri-Vie (office in Bellville)

Capital Harvest (office in Stellenbosch)

Farmsecure (office in Tygervalley, Cape Town)

In order to bridge the gap between producers and processors more efficiently, agricultural marketing companies offer both marketing and logistical services towards wheat producers. These companies are also actively involved in the trading of future contracts which enable them to fund the input costs of producers and in doing so, encourage a sustainable production. Farmers who want to hedge their price risk against market uncertainty (SAFEX Agricultural Trading, 2013) use future contracts. Producers or traders can also register a derivative trading account through agricultural marketing companies and are able to call on experienced derivative traders for assistance in constructing sensible and effective hedging strategies (Bester M., 2014). Traders may offer a complete logistical service that includes local and cross-border transport, clearing and forwarding, warehousing, and delivery to clients' premises when dealing with international and domestic wheat (Bester Feed & Grain, 2013B).

In order for wheat to be graded and delivered to the milling industry, it needs to be inspected to ensure that all seeds of wheat are free from toxins, chemicals and other substances that render it unsuitable for commercial purposes (Department of Agriculture, Forestry and Fisheries, 2010B). Sorting is done while wheat is in storage. The cost of wheat transport in South Africa is calculated by a location differential system. Differentials are annually announced by SAFEX. Location differentials are applied to registered silos across South Africa (Bester M., 2014).


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3.2.3 Processing and beneficiation

Both harvested and imported wheat are stored before delivery to milling companies that mill it into wheat flour, bran and meal. The milled flour is used for baking (e.g. bread, rolls, frozen dough) and wheat-based products (e.g. biscuits, pasta, cereals). A small amount of poorer quality wheat is used to manufacture animal feed (farm feeds, pet foods). The milling industry in South Africa is dominated by four major milling companies, including Tiger Milling Company (Bryanston), Pioneer Foods (Paarl and Tygervalley), Foodcorp (Pretoria) and Premier Foods (Midrand), previously known as Genfoods (Bester M., 2014). The baking industry is integrated with the milling industry.

The major product of the baking industry is bread and 70 - 80 per cent of all wheat flour produced is used for bread baking. National bread consumption is estimated at 2.8 billion loaves per annum or approximately 62 loaves per person per annum. In the Western Cape 76 per cent of all bread eaten is white bread (SADOA, 2015). In South Africa, there are currently an estimated 600 in-store bakeries in the major supermarket groups, 250 franchise bakeries and 3 500 to 4 500 small independent bakeries and in-store café bakeries. Most of the major millers in South Africa, have vertically integrated with bakeries. Tiger Brands, for example, has a controlling interest in the Spar retail group as well as interests in grain milling. Due to difficulties in accessing finance, wheat imports and the hedge on SAFEX, most small-scale millers in South Africa, are unable to vertically integrate with bakers (Bester M., 2014).

3.2.4 Transport

The wheat is transported from the farmers to the silo owner, from the silo owner to the miller and from the intermediaries to the retailers and consumers. Historically, rail transport dominated the wheat market. Since the early 1990s, deregulation and the development of a free market system have led to a shift from rail to road transport (WWF, 2016). Road transport also consists of many competitors therefore, it is more cost effective to transport via road than rail. The majority of the logistical functions in the supply chain of wheat in South Africa are governed by Grain Handling Organisation of Southern Africa (GOSA) (Bester M., 2014).

The cost of transporting wheat in South Africa from storage to the market (milling industry) is determined by a location differential system when dealing with SAFEX future contacts. Each grain-producing area in South Africa has a location differential based on the cost of transporting wheat to a reference delivery point. Farmers in the Western Cape and Northern Cape, based the furthest from the reference delivery point of Randfontein, have been the biggest critics of the location differential system (Bester M., 2014). According to some studies, the location differential system has the advantage of increasing transparency among producers and buyers when calculating the value of wheat at point of delivery and consumption.

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3.2.5 Imports and exports

The value of wheat exports regained during 2008, when about 148 000 tons of wheat were exported to the value of just above R1.04 billion and this was attributed to improved price levels in global markets. The lowest volumes of wheat exports were recorded in 2006 while the highest export volumes were attained in 2014 (326 000 tons). South Africa’s wheat flour exports are mainly destined for SACU and SADC countries such as the Democratic Republic of Congo, Zambia, Zimbabwe and Mozambique. The greatest share of South Africa’s wheat exports is destined for Zimbabwe and Mozambique (SADOA, 2015).

South Africa is not a major producer of wheat and therefore imports wheat to supplement domestic production. The major producers of wheat in the world are China, EU countries, USA, India, Canada, and Eastern European countries, Turkey, Australia and Argentina. These countries produce almost 90 per cent of the world production. The top countries where South Africa imports wheat from include Ukraine, Russian Federation, Australia, Brazil, Uruguay, Germany and the USA (SADOA, 2015). Between 2002 and 2012, wheat imports averaged 1.18 million tonnes per annum, rising to a high of 1.7 million tonnes in 2012 at a value of R4 billion. In 2013, sufficient national wheat stocks led to a decrease in imports to about 1.4 million tonnes but at a similar value of R4 billion (WWF, 2016).

3.2.6 Risks

One of the risks is high input costs/land value ratio as a result of sharp increases in variable costs of production resulting in greater production risks (SADOA, 2015). The prices of ammonia, natural gas, Brent Crude oil, Sulphur, Phosphate rock and the available stocks of the different fertiliser products can all be considered as supply side drivers and impact on fertiliser prices (GrainSA, 2011) & (Bester M., 2014). Added to this, over 65 per cent of South Africa’s nutritional fertiliser needs are imported, which presents a considerable risk for the agricultural industry (in particular the grain crop sub-sector) in that it could cause (1) more and higher price volatility spill over effects onto the South African market for fertilisers and (2) possible shortages as a result of unforeseen global events that could affect global fertiliser availability (GrainSA, 2011).

It is important to note that with wheat being an internationally tradable commodity, the local producer prices are heavily influenced by wheat prices in the international markets (SADOA, 2015). Despite a decline in international wheat prices, the average SAFEX wheat price is projected to rise above R3 800 per ton in 2015, an increase of almost 6 per cent from 2014 levels (BFAP, 2015 - 2024). The drop in the value of the rand leads to higher costs of imported wheat and affects poor consumers’ ability to afford wheat-based products (WWF, 2016). Over the longer term, the area of wheat planted in the winter rainfall areas (Western Cape Province) is projected to decline by approximately 40 000 hectares, as producers progressively incorporate canola, in what is considered to be a more sustainable crop rotation system (BFAP, 2015 - 2024). When the same herbicides are used continuously, weeds develop tolerance or resistance to the active ingredients in the chemical. By alternating herbicides with crop rotations,


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the effective period of herbicides can be extended and the gene pool of tolerant and resistant weed seed can be reduced during the rotation crop phase (Knott, 2015).

3.2.7 Opportunities

The crop rotation systems that are used by farmers, but that are not tested at Langgewens, should be incorporated into Langgewens in order to test whether yields could be improved or if new cultivars of wheat should be considered (which have higher yields or a shorter growing period). With the recent drought (2015/16) and the effects of climate change, drought-resistant crops should be investigated within wheat crop-rotation systems. More cost effective alternatives for chemical control is a large opportunity considering the increases of input costs.

The following feasibility studies could be conducted: (1) a calculation of the demand required for agricultural railway lines to run efficiently; (2) an investigation into the cost of using an on-farm storage system, including comparing the fixed cost of constructing an on-farm storage system compared to the variable cost of using a centralised storage facility; and (3) an analysis of the impact of import restrictions on the market price of wheat in South Africa (Bester M., 2014).

The majority of the wheat value chain is outside the West Coast District. Although the majority of wheat is grown in the West Coast District all the processing and beneficiation takes place in the rest of South Africa with a few companies (Tiger Milling Company, Pioneer Foods, Foodcorp and Premier Foods).

3.3 Tourism value chain

This sub-section will provide an overview of current components in the West Coast Tourism Value Chain. It will first discuss the suppliers to the West Coast’s tourism value chain. This will be followed by the distribution mechanisms and intermediaries available in the area and a profile of the type of tourists attracted to the District. The sub-section will then conclude with identifying risks and opportunities for growth for tourism in the area.

The tourism industry forms part of other sectors especially the trade, transport and finance sectors. Tourism is not an economic sector on its own. However, due to its increasing importance as an income and employment generator, it is believed that this sector should be discussed separately from the other sectors. Stretching from Blaauwberg in the south to Namaqualand in the north, the West Coast region comprises 44 small towns along the south western coast of South Africa within the Western Cape. Tourism is the third biggest economic driver on the West Coast and every 21 visitors to an area result in one permanent job and every 8 visitors to an area result in one temporary job (WCDM, 2015). Figure 3.2 indicates the tourism value chain.

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Figure 3.2 Tourism value chain

The tourism value chain consists of:

Suppliers: Including accommodation establishments, car hire, tour and trip operators and attractions.

Distribution: Including global distribution systems, destination management services, central reservation offices and supplier websites.

Intermediaries: Including tour wholesalers and travel agents.

Customers: Including foreign, domestic, business and leisure.

3.3.1 Suppliers

This subsection provides an overview of the supply component of the WCD’s value chain. It will discuss the availability of accommodation and business facilities, identify local attractions and events, as well as the supply of tour operators in the area. Table 3.3 indicates the number of accommodation facilities in the WCD Municipal area, including number of rooms and average prices (based on an audit conducted in 2013).

Table 3.3 West Coast District accommodation facilities

Accommodation type Number in West Coast District Number of rooms Average price per night

B&B 20 441 R150 - R3 500

Hotel 13 359 R200 - R1 500

Self-Catering 30 3 979 R100 - R5 800

Guesthouse 21 466 R125 - R2 200

Caravan/Camping 15 1 530 R44 - R650

Backpackers 3 17 R120 - R250

Source: Urban-Econ Tourism Accommodation Audit, 2013


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There were a total of 102 accommodation facilities in the WCD in 2013, offering 6 792 rooms. As can be seen the price ranges for the various establishments vary considerably. This can be attributed to the Star Grading of the establishment and the types of facilities on offer. An establishment with a low Star Grading accompanied by limited facilities will be much cheaper than an establishment with a high Star Grading accompanied by numerous facilities. There are 95 conference facilities located in the WCD, that are able to accommodate 6 993 delegates. There are also small conference venues in the WCD that cater for 20 - 50 delegates and there are larger conference venues that cater for 130 - 190 delegates. The bigger conference venues do not have enough beds for delegates, if the majority of the delegates wanted to stay over at the same accommodation facility.

According to Wesgro (2014), the main activities undertaken by visitors in the Western Cape in 2014 were: Scenic drives (17 per cent), culture/heritage (15 per cent), outdoor activities (15 per cent), gourmet restaurants (14 per cent) and wine tasting (8 per cent). The latter three categories emphasise the strong link between the agricultural/ agri-processing sectors and the tourism industry. According to the Western Cape Department of Agriculture’s agriculture statistics, the Western Cape has a total of 1 957 working farms that offer accommodation facilities (WCGPT, 2015). Table 3.4 indicates agri-tourism attractions available in the WCD, derived from the agri-tourism audit conducted by the Western Cape Department of Agriculture in 2013.

Table 3.4 Agri-tourism attractions in the West Coast District municipal areas, 2013

Agri-tourism attractions Bergrivier Cederberg Matzikama Saldanha Bay Swartland

4x4 12 26 7 5 10

Accommodation 50 105 31 52 48

Birding 18 8 5 3 3

Camping 19 29 8 8 3

Cellars 8 9 16 1 41

Conference/Function Venue 11 2 6 7 18

Ecotourism 7 21 2 4 16

Fishing 10 5 2 3 4

Farm Market 0 1 1 2 0

Farm Stall 6 11 2 2 6

Hiking 31 12 8 4 5

Horse Riding 7 3 1 4 1

Mountain Biking 13 13 6 3 5

Ostrich 0 0 0 0 0

Picnic 3 0 2 0 4

Quad Biking 2 0 0 1 1

Restaurant 22 18 7 17 33

Source: Department of Agriculture, 2016

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There are many agri-tourism attractions in the WCD, the most popular being accommodation, eco-tourism attractions and restaurants. Another tourism initiative in the WCD is the “West Coast Way” which consists of fauna, flora, culture, adventure routes and trails, based on showcasing the Biodiversity Corridor of the West Coast. Figure 3.3 indicates the different routes offered by West Coast Way.

Figure 3.3 West Coast Way Routes, 2016

Source: WestCoastWay, 2016

The establishment of these routes make the small towns in these areas viable tourist attractions and contributing to job creation (WestCoastWay, 2016). The West Coast National Park is one of the region’s most prominent eco-attractions, drawing over 200 000 visitors per annum. When compared to the number of visitors recorded in 2009 (157 793), the park has achieved 44 per cent more visitors in 2014 (227 654), portraying strong growth potential for the park (Wesgro, 2014). In total, all the attractions in the West Coast, drew many visitor’s year-on-year, with 64 000 visitors to the WCD in 2013, 91 000 in 2014, and 113 000 in 2015 (SA Tourism 2016). Additional to all the attractions and tourism routes the WCD, also hosts 114 events throughout the year, that have a significant impact on attracting local tourism. Distribution and intermediaries

International airline carriers, cruise lines, global tour operators, and multinational hotel brands are the leading firms in the tourism global value chain. These firms from developed countries play a key role in shaping tourism trends through strong marketing campaigns and close contact with the consumer. They cater to the travel preferences of consumers from high end to budget travel, and create transnational “linkages” with tourism destinations in a variety of ownership, alliances, and outsourcing strategies (Christian, 2011).


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Global distribution systems (GDS), such as Sabre and Travelport, have become essential. These systems provide a shared platform for information regarding airline, hotel and tour scheduling, and prices; and travel agents can reserve and book directly in real time. Being listed on these GDS platforms is a key step for countries to gain access to the global tourism market. In 1996, Microsoft joined forces with WorldSpan, one of Travelport’s brands, to create Expedia.com. Travelocity, Expedia, and hotel-owned Orbitz are now emerging as new virtual middlemen between outbound tourists and destinations (Christian, 2011). Travel agents and tour operators are the main distribution intermediaries. Commonly, travel agents act as the retail outlet for tourism products (transportation, lodging, and excursions), and tour operators are wholesalers. Table 3.5 below illustrates the main local distribution intermediaries in the WCD. These local intermediaries are linked to Global Distribution Systems (GDS).

Table 3.5 Registered local tour suppliers in the West Coast District

Name of Tour Operator Location

Above and Beyond Darling

Brian's Tours Langebaan

Desert Rose Travel (Tour Operator) St Helena Bay

Farr Out-OnTour Paternoster

Firefly Tours St Helena Bay

Horus Tours Riebeek Kasteel

Johan Nel Velddrif

Kayak Paternoster cc Paternoster

Namakwa Toere Vanrhynsdorp

Ocean Pearl Travel Enterprises CC Langebaan

Quando Tours St Helena Bay

Sarie Vlotman Darling

West Coast Link Shuttle and Charter Service Langebaan

West Coast Safari's and Quads Lamberts Bay

Source: West Coast District Municipality, 2015b

There are 14 tour operators operating in the WCD. Additional to this, there are international and national tour operators that are registered with SATSA (Southern Africa Tourism Services Association) as well as about 1 000 tour operators in South Africa listed on YelloSA and 560 listed on Safari Bookings.

3.3.2 Customers

A total of 8.9 million tourists visited South Africa in 2015 and of these 1.3 million visited the Western Cape (SA Tourism, 2016). The WCD tourism statistics for 2014, indicated that 77.3 per cent of tourists were domestic tourists and 21.4 per cent consisted of international visitors. The domestic visitors were mainly from the Western Cape (59.6 per cent), followed by Gauteng (18.5 per cent) and KwaZulu-Natal (5.2 per cent); and the international visitors were mainly from Germany (30.7 per cent), the United Kingdom (28.5 per cent) and the Netherlands (10.1 per cent) (Wesgro, 2014).

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The majority of visitors travelled to the WCD for holiday/leisure purposes (91.6 per cent), while 5.3 per cent travelled for business and 1.7 per cent travelled to visit friends and family. The most common age groups of visitors were ages 51 - 70 (42.3 per cent) and ages 36 - 50 (26.5 per cent); and the majority (54.5 per cent) travelled in pairs and 19.6 per cent travelled alone. The majority of these tourists stayed in the WCD for 1 night (42.1 per cent), while 30.2 per cent stayed for two nights, and 11.2 per cent for 3 nights (Wesgro, 2014).

The majority of visitors to the WCD (43.4 per cent) stayed in self-catering accommodation and 18.2 per cent stayed in guesthouses. In terms of taking part in activities, 25 per cent of visitors did scenic drives, around 14 per cent took part in cultural/outdoor activities, and 11 per cent visited gourmet restaurants or the wild flowers (Wesgro, 2014). Table 3.6 indicates the foot count of visitors per town in the WCD.

Table 3.6 West Coast District visitor foot count, 2015

Town October 2014 - March 2015 April 2015 - September 2015

Langebaan 505 383

Paternoster 377 307

St Helena Bay 317 271

Velddrif 253 159

Clanwilliam 168 139

Vanrhynsdorp 99 577

Yzerfontein 91 27

Piketberg 74 139

Hopefield 62 200

Vredendal 53 96

Darling No Data 447

Moorreesburg No Data 3

Saldanha Bay 8 No Data

Total 2 007 2 748

Source: Wesgro, 2015

The foot count includes all visitors that walked into a tourism office and therefore excludes all tourists that did not visit a tourism office during their stay. The majority of visitors to the WCD (77.3 per cent) were domestic visitors, which include many visitors that do not necessarily make use of tourism offices.

3.3.3 Risks

Table 3.7 illustrates the exogenous risks to the WCD tourism value chain.


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Table 3.7 Risks limiting value addition to the West Coast District tourism value chain

Risk category Description West Coast District

Nature Natural disaster

Weather and climatic conditions

Environmental factors

Sand-dune migration is a slow onset hazard that faces a number of areas in the West Coast.

Loss of beach area also poses a risk to the District. More than 50 meters of beach has been lost in the past five years in the Province (WCDM W.C., 2012a). The aggressive erosion has resulted in damage to seafront properties. It causes major problems for landowners inland from the original dune system as sand covers roads, property or farming land. Similarly, they can limit access and recreation (WCDM W.C., 2012a).

Drought is also a major risk for the West Coast District due to the significant presence of Agri-tourism activities in the area.

Crime and Safety

Fraud and crime

Acts of hijacking

According to SAPS, drug-related crime is the most prevalent within the West Coast District.

Political factors Social Unrest

Political instability and reputational risk

Although not specific to the West Coast, recent social unrest incidents in the country linked to xenophobia and local elections, have a significant impact on diminishing the attractiveness of the district among international tourists who due to lack of information perceive such unrest to be national.

The negative publicity reduces South Africa’s appeal as a tourist and business events destination; and risks the loss of its tourism brand position (Department of Tourism, 2015).

Economic factors

Lack of funding

Exchange rates

Rising prices

Economic recession

Financial crises

Transport

Although the lowered exchange rate has boosted international tourism, stabilisation of the Rand risks lowering the number of international tourism. A factor that will lower the already limited number (21%) of international tourists that visit the district (discussed in detail in the next section).

Currently, the increased costs of doing business abroad have resulted in reduced marketing budgets for areas as overhead costs increase.

Technology Information technology (IT)

Reservation systems

The lagging IT roll out in West Coast towns when compared to other areas in the Western Cape such as the City of Cape Town, limits the platform in which the district can advertise its available tourism resources.

Source: Shaw et al, 2012, Department of Tourism, 2015 and WCDM W.C., 2012a

Internal risks faced by the West Coast Tourism Value chain include:

Lack of the appropriately skilled labour, locally, to service the industry. This is despite the job growth that has been experienced by sectors related to tourism, such as catering and accommodation services (Section 1 and 2).

Due to the predominantly local tourist client of the West Coast, as discussed above, tourism related businesses are highly susceptible to local changes in disposable income. Meaning that during down season or in recession tourism related business in the district experience very little footfall.

3.3.4 Opportunities

As discussed above, tourism in the Western Cape is also characterised by strong links to the agricultural/agri-processing sectors. This provides an opportunity for the development of unique high-quality West Coast products, from which niche markets could flourish, closely linked with tourism and agricultural produce in the WCD. Examples of these include lifestyle-linked goods, such as essential oils from wheat (e.g. wheat germ oil), cosmetics and high-end wines and brandy, which can be linked to services extended in the tourism industry (WCGPT, 2015).

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Further to this, discussions with tourism offices in the area, there is a need for large conference facilities that have enough accommodation for the delegates to sleep over. The Department of Trade and Industry has identified business tourism as a niche tourism segment with growth potential. Business tourism is different from business travel:

Business travel is undertaken for the purpose of conducting commercial or formal transactions or activities that are related to one’s job, for example visiting a client, signing deals or negotiating a contract (including import/export).

Business tourism is a trip that is undertaken with the purpose of attending a conference, meeting, exhibition or event, or as part of an incentive trip.

Business tourism also has lucrative spinoffs for the leisure tourism industry. Business travellers often book tours to explore the region they are visiting, either before or after conferences. Many return to South Africa in subsequent years for holidays with friends and family.

Projected growth in sectors related to the tourism industry, illustrates the opportunity for increased related business operations and job growth that the WCD can harness. Although Quantec forecast does not estimate tourism separately due to its intricate links with the rest of the economy and the difficulty of separating the tourism industry from other sectors. The catering and accommodation subsector is expected to continue to outpace the average provincial growth rate. The sub-sector is forecast to grow by an average of 3.2 per cent from 2015 to 2020, compared to the 2.7 per cent growth rate forecast for the Western Cape economy. Job growth in the subsector is forecast to accelerate from 0.6 per cent during 2005 - 2014 to 2.0 per cent during 2015 - 2020 (WCGPT, 2015). Therefore, with improvements in the distribution and intermediary’s components of the Districts’ value chain; there is opportunity to capture some of this future growth to the district.


The wheat and tourism value chain in the West Coast is a major contributor to the economy (GDPR) and employment, and therefore any drastic changes in these two commodities would have a negative impact on the economy of not just WCD but also South Africa. The wheat value chain is well established and further opportunities need to be investigated in terms of drought-resistant crops and investigating more cost-effective alternatives to the inputs of farming (i.e. chemicals, fertilisers, etc.). It is evident that there are significant suppliers to the District’s tourism value chain, in the form of accommodation facilities, attractions, events and local tour operators. However, the WCD has limited destination management services and faces a significant number of risks (i.e. changes in disposable income of domestic visitors, and lack of the appropriately skilled labour).

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4


4.1 Introduction

This chapter looks at municipal infrastructure spending in the WCD in terms of the West Coast Integrated Development Plan (IDP, 2012 - 2017), and national and provincial policy directives and key performance areas. Infrastructure and economic development

Infrastructure investment is a catalyst for economic growth and social development. Quality infrastructure that is well managed and maintained, provides major benefits to both households and enterprises through opening up opportunities for the poor and supporting growth in economic output (DBSA 2011). Within the WCD, the following infrastructure projects have been identified as key drivers of development.

4.2.1 Saldanha Bay Industrial Development Zone

The Saldanha Bay Industrial Development Zone (SBIDZ) was designated as South Africa’s fifth Special Economic Zone (SEZ), with the Saldanha Bay IDZ Licencing SOC Ltd (SBIDZ-LC) as the official public entity licence holder and operator of the zone in the port. The mission of the SBIDZ-LC is to make use of enabling legislation to attract foreign and domestic investment through four levers that support the development of the Oil and Gas services, and Marine Repair and Fabrication cluster. The four levers are an ease of doing business model that reduces administrative processes, developing a competitive local business and skills environment, infrastructure support, and a Freeport. The targeted economic sectors of the SBIDZ-LC are upstream Oil and Gas services, and Marine Repair and Fabrication, which is a targeted cluster of industries of the dti’s Industrial Policy Action Plan (IPAP). The typical activities of these sectors are focused around five areas, namely repairs and maintenance, ancillary services,


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exploration and production support, logistics and marine/subsea engineering and fabrication.

The SBIDZ-LC was awarded an operator’s licence in 2013. The first phase of the medium-term infrastructure plan for the zone commenced in the 2014/15 financial year and since then, priority has been given to committing the infrastructure budget for the initial development phases of bulk services and upgrading of relevant local infrastructure, in partnership with the Saldanha Bay Municipality, a trend which will continue over a 3 to 4-year period. Additionally, the SBIDZ-LC is also focused on undertaking skills and enterprise development programmes too ready the local communities for the potential opportunities arising from the SBIDZ. The SBIDZ-LC works with many diverse partners in that regard. The capital expenditure R-Value for the SBIDZ is approximately R442 million.

4.2.2 Operation Phakisa/Oil and Gas

The Port of Saldanha has been identified to become a support hub for the Offshore Oil and Gas Industry as part of the Operation Phakisa Initiative. The Saldanha Bay Industrial Development Zone was promulgated in 2013 and this will supplement the port’s strategy. The initiative comprises a number of infrastructure developments in the Port and the IDZ and will enable South Africa to gain a larger footprint in the global oil and gas market. The Port Projects are phased as follows:

Phase 1: Establishment of an Offshore Oil and Gas Supply Base (OSSB)

Phase 2: Provision of a dedicated berth for repair and maintenance of Oil rigs

Phase 3: Construction of a 500 m long jetty aimed at ship repair activities

The Operation Phakisa/Oil and Gas project commenced in 2015 and will be finalised in 2021. The total capital expenditure R-Value for the Operation Phakisa/Oil and Gas project is approximately R7.3 billion.

4.2.3 Iron Ore (Tippler 3 and associated bulk services)

Transnet has awarded a tender for the installation of a third tippler and supporting infrastructure for the export of iron ore through the Port of Saldanha. Tippler 1 has reached the end of its design life and needs to be replaced. Tippler 2 also needs a midlife refurbishment. The project comprises of the following components:

Mechanical, electrical and instrumentation installations

Tippler building (incl. tippler drum, vault, tunnel, operational and dust removal systems)

New conveyor between Tippler 3 and the port (incl. transfer towers)

New rail lines between the Salkor Yard and Tippler 3

New security facilities

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The Iron Ore project commenced in 2016 and will be finalised in 2019. The total capital expenditure R-Value for the Iron Ore project is approximately R2.3 billion.

4.2.4 N7 Development Corridor

Sections of the N7 highway that extends through the Swartland, Bergrivier, Cederberg and Matzikama municipalities are being upgraded into dual carriageways. The upgrading of the national highway will increase safety, improve travel efficiency and speed. These upgrades are improving connectivity between major service centres such as Malmesbury and Cape Town. The upgrades will also improve the connectivity for the province to external trade markets such as Namibia and Angola. Thus, increased trade opportunities are facilitated and the route is identified as a development and growth corridor. The completion date for the N7 Development Corridor is 2018. The capital expenditure R-Value for the N7 Development Corridor between Cape Town and Malmesbury is approximately R1.6 billion.

4.2 West Coast District

4.2.1 Capital expenditure

Given the stated importance of infrastructure development for economic growth and broader development, it is essential to track how municipalities make provision for and prioritize infrastructure investment in their budgets. The district maintains provincial roads on agency basis and are mainly reflected as operating expenditure. There was a significant investment of R43.126 million in water infrastructure in 2012/13, which constituted 94 per cent of the total capital expenditure for that year. This percentage share decreases to 71 per cent in 2014/15 and is projected to increase to 100 per cent of total capital expenditure in 2018/19, although the rand value decreases to R4.720 million (A-Schedule). Investment will be in new water supply and reticulation projects in the district and the Swartland, Saldanha Bay and Bergrivier municipalities.

4.2.2 Western Cape Government infrastructure spending in the West Coast District

In addition to the infrastructure expenditure by the WCD Municipality, the Western Cape Government with its education, environment, health, human settlements and transport and public works mandates, makes important investments in infrastructure in the WCD. According to the 2016 – 2019 WCG Budget, the largest share of planned infrastructure expenditure will be on transport and public works projects, followed by human settlement (housing), education, health infrastructure and environmental projects (CapeNature) projects (see Figure 4.1). Investments in transport and road infrastructure is mostly in support of the Industrial Development Zone initiative taking place in the district and is thus able to attract National and Provincial investments. This provincial infrastructure investment will contribute to developing the economic infrastructure of the WCD through the investment in roads by the Department of


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Transport and Public Works, and in social infrastructure, through the investment by the Departments of Education, Health and Human Settlements.



According to Figure 4.1, Transport and Public Works receives the highest amount of infrastructure expenditure in the WCD, this trend is projected to persist and grow through the 2017/18 and 2018/19 financial years, as investments in supporting infrastructure is increased in order to promote socio-economic development in the district. The next highest infrastructure expenditure is demanded by Human Settlements for the provision of housing and housing infrastructure. The Western Cape Government’s expenditure will supplement the municipalities’ investment in economic infrastructure such as roads and social infrastructure through investment in human settlements (housing), and reflects the alignment of provincial infrastructure investment with the National Development Plan.

4.3 Bergrivier Municipality


Table 4.1 shows that basic services constitute a significant share of total capital expenditure within Bergrivier. Electricity increased from 2 per cent as a percentage of total capital expenditure in 2012/13 to a projected 17 per cent in 2018/19 as investments in supply and distribution infrastructure increases. In 2012/13 waste water management constituted the bulk of capital investment at 59 per cent before decreasing to 11 per cent in 2015/16 as waste water management demand is now on par with supply. Water increased from 8 per cent in 2012/13 to 37 per cent in 2015/16 and is projected to taper off to 4 per cent in 2018/19 as the water supply problems is reduced as the El Nino phenomenon comes to an end.

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Table 4.1 Total capital expenditure for Bergrivier Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 2 2 12 16 11 15 17

Water 8 1 5 37 20 11 4



Municipal Roads 10 6 27 12 10 18 14

Housing 22

Others 15 10 16 22 28 16 20

Total 100 100 100 100 100 100 100

Source: Bergrivier Municipality A-Schedules, 2016/17

4.3.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no sanitation backlogs and water services backlogs. There were no electricity and refuse removal backlogs (Bergrivier Municipality 2014/15 Annual Report). According to the Bergrivier Municipality’s IDP (2012 - 2017), infrastructure and bulk services are exceeding design capacity. This shortage of capacity means the Municipality is unable to respond to development opportunities.

It is estimated that the cost of bringing bulk and service infrastructure to a standard that will support economic growth is R160 million which can be broken down as follows, Piketberg (R81 million), Porterville (R30 million) and Velddrif (R49 million). Bulk water supply is the most critical and ranks high on all the priority lists of the towns in the municipality. Key projects in the IDP are:

Water: Increasing Porterville’s water resources, upgrading of the Piketberg purification works (Phase 2), construction of the Katrivier Pipeline to improve water provision to Eendekuil, and construction of a new reservoir at Velddrif.

Sanitation: Upgrading of the Velddrif Waste Water Treatment Works, replacement of septic tanks at the low cost houses in Redelinghuys, electricity, upgrading of the Porterville network, and upgrading of the Piketberg network (central business area).

Roads and Stormwater: Upgrading of the storm water system in Piketberg which is estimated to cost more than R11 million, and upgrading and maintenance of the Porterville, Velddrif and Noordhoekstorm water systems.

Solid Waste: Landfill sites: rehabilitation of solid waste disposal sites, and implementation of recycling.


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4.3.3 Funding and revenue sources

National funding is the chief source of capital funding for the Bergrivier Municipality. Internally generated funds and borrowing is projected to make up an increasing percentage of capital funding, as public contributions and other types of grants and transfers tapers off.

Figure 4.2 Bergrivier Municipality capital funding by source, 2012 - 2019

Source: West Coast District Municipality A-Schedules, 2016/17

National Government capital funding and internally generated funding are the most important sources of capital funding for the Bergrivier Local Municipality. The share of borrowings as a source of capital funding is projected to increase from 2015/16 financial year and will remain constant from the 2016/17 to 2017/18 financial years and then decrease during the 2018/19 financial years as the Municipality will have to make up for the decrease in the Provincial Government funding source.

4.4 Cederberg Municipality


Table 4.2 shows that basic services constitute a significant share of total capital expenditure. Investment in water services infrastructure constituted 40 per cent of total capital expenditure in 2012/13 and increased to 45 per cent in 2013/14 before dropping to 13 per cent in 2014/15 as new water supply and distribution infrastructure comes online. Although rising to 37 per cent of total capital expenditure in 2016/17, it is projected that there will be no investment in water infrastructure in 2018/19. Investment in waste management constituted between zero and 3 per cent of total capital investment for the entire reporting period as the demand for waste management services (and subsequently waste management infrastructure) remains constant.

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Table 4.2 Total capital expenditure for Cederberg Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 9 13 6 6 7 7 16

Water 40 45 13 11 37 18 0




Housing 15 32

Others 8 12 28 24 4 6 26

Total 100 100 100 100 100 100 100

Source: Cederberg Municipality A-Schedules, 2016/17

4.4.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no sanitation, water, electricity and refuse removal backlogs (Cederberg Municipality 2014/15 Annual Report). The Cederberg Municipality’s IDP (2012 - 2017) identified the following key projects:

Water: Additional reservoirs, pump upgrades, bulk water (boreholes), and chlorination plant.

Sanitation: Pump station upgrades, upgrade oxidation ponds, sanitation (network upgrading), and provision of sewer network and oxidation dams.

Electricity: Replacement of transformer and starter, upgrading of Newland sub station, building of new Bulk Switching Station, upgrade of bulk intake switching station, and electrification of housing projects.


National funding is the primary source of capital funding for the Cederberg municipality with Provincial government projected to make a significant contribution in 2017/18 and other sources making only marginal contributions (Figure 4.3).


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Figure 4.3 Cederberg Municipality capital funding by source, 2012 - 2019


Capital funding is projected to decrease during the 2017/18 and 2018/19 financial years in the Cederberg Municipality. The percentage of revenue derived from borrowing, provincial capital funding and public contributions has significantly decreased while capital funding from National Government has increased in order to make up the shortfall. Furthermore, revenue from Provincial Government capital funding is projected to increase for the 2017/18 financial year but will drop again to zero during the 2018/19 financial year as the provincially funded project/s comes to fruition. Matzikama Municipality.

4.5 Matzikama Municipality


In 2012/13 financial year, electricity constituted 3 per cent and waste water management constituted 38 per cent of total capital expenditure, with municipal roads at 11 per cent and housing at 45 per cent (see Table 4.3). Investment in water increases from zero in 2012/13 to a projected 15 per cent of total capital expenditure in 2018/19. Investment in waste water infrastructure remains relatively constant from 38 per cent in 2012/13 to 36 per cent in 2014/15, before dropping to 15 per cent in 2015/16. Investment is projected to increase to 27 per cent in 2016/17 before dipping to zero in 2017/18, before increasing to 15 per cent in 2018/19.

Very little investment is going into waste management with only 1 per cent of total capital expenditure in 2014/15 rising to 7 per cent in 2015/16 then dropping to a projected 1 per cent in 2018/19, this may be evident of the fact that demand for waste management services are low, especially in urban areas whereas in rural areas a large amount of waste is managed by the household. For the reporting period, investment in municipal roads make up the lion’s share of capital investment, climbing to 34 per cent in 2013/14 and progressively increasing to 54 per cent of projected capital

0

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expenditure in 2018/19, this is mainly due to the maintenances and improvement of the road and transport network in the Municipality (which also forms part of the district strategy of the improvement of transport infrastructure).

Table 4.3 Total capital expenditure for Matzikama Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 3 7 4 11 13 10 13

Water 0 2 15 30 2 33 15


Waste Management 1 7 2 1

Municipal Roads 11 34 19 28 47 47 54

Housing 45 1

Others 3 22 25 9 9 10 2

Total 100 100 100 100 100 100 100

Source: Matzikama Municipality A-Schedules, 2016/17

4.5.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no sanitation and water services backlogs. There were also no electricity and refuse removal backlogs (Matzikama Municipality 2014/15 Annual Report). The Matzikama Municipality’s IDP (2012 - 2017) identified the following important infrastructure initiatives: urban and rural backlogs, surfacing of roads, and compiling an infrastructure plan.


National funding is the chief source of capital funding for the Matzikama Municipality, with a significant contribution from Provincial Government in 2012/13 and public contributions and donations in 2014/15.

Figure 4.4 Matzikama Municipality capital funding by source, 2012 - 2019


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It is evident from Figure 4.4, that revenue from capital funding sources are projected to decline. The biggest decrease is public contributions and donations while revenue from National Government remains the same. It is also interesting to note the projected decrease and subsequent disappearance of revenue from Provincial Government during the 2016/17, 2017/18 and 2018/19 financial years, this may be attributed to a maturation of a provincial government funded infrastructure projects in the municipality.

4.6 Saldanha Bay Municipality


For the reporting period, investment in electricity infrastructure increased from 9 per cent as a percentage of total capital investment to a projected 19 per cent in 2018/19 (See Table 4.4). Waste water investment decreased from 22 per cent in 2012/13 to a projected 8 per cent in 2018/19 and infrastructure was brought up to par with the demand for waste water management. For the reporting period, investment in municipal roads make up the lion’s share of capital investment from 24 per cent in 2012/13 to 36 per cent in 2013/14, dropping to 27 per cent in 2014/15 and decreasing to a projected share of 14 per cent in 2018/19 this is due to increased investment in supporting infrastructure such as roads in support of the Industrial Development Zone in Saldanha Bay.

Table 4.4 Total capital expenditure for Saldanha Bay Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 9 10 9 10 12 19 19

Water 8 15 11 3 1 13 29

Waste Water Management

22 13 10 14 25 15 8


Municipal Roads 24 36 27 25 17 26 14

Housing 6 0 0 0 0 0 0

Others 21 20 23 45 38 23 18

Total 100 100 100 100 100 100 100

Source: Saldanha Bay Municipality A-Schedules, 2016/17

4.6.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had 1 500 sanitation backlogs but no water services backlogs. There were 558 electricity backlogs and no refuse removal backlogs (Saldanha Bay Municipality 2014/15 Annual Report). However, according to the 2016 municipal survey, various water infrastructure backlogs, such as bulk water, have been identified as part of the municipalities master planning.

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4.6.3 Challenges

Water: The biggest challenge faced by the municipality is the cost for the construction of a new desalination plant or obtaining a larger allocation out of the Berg River supply. For 2016/17 financial year, no water related projects have been identified, only sanitation projects. Funding is needed for the desalination plant, as well as new bulk reservoirs and bulk supply lines.

Electricity: The Municipality is concerned that with the IDZ, new business developments and housing projects in the area there will be a challenge with capacity availability from Eskom. Current electricity supply capacity in the Saldanha Bay Municipality is 60 MWA of which 50 MWA is being used. During 2016/17 a fourth 10 MVA 66 kV transformer will be installed at the Vredenburg substation.

Waste water: The Municipality currently operates 7 waste water treatment works and a network of sewer bulk and distribution pump stations in the municipal area. Critical upgrades have been done to various sewer pump stations, distribution lines and treatment works. During 2016/17, the Langebaan main sewer pump station and the Langebaan sewer rising mains will be upgraded. Large amounts of capital will be required to meet the infrastructure upgrade requirements at the respective treatment plants. Re-use of treated effluent generated from the Langebaan treatment plant during winter also needs to be addressed. Studies are underway to determine the best possible solutions for the re-use of effluent.

Solid waste: The Vredenburg Landfill has landfill airspace available until 2019. Langebaan Landfill is in the process of closure with a valid closure license and will be replaced with a transfer station. The refuse removal fleet is adequate enough to ensure weekly door to door services. The Vredenburg Recovery facility and garden waste chipping facility is operational and diverts waste from the landfill. During 2016/17 financial year, Saldanha Bay Municipality will construct the Langebaan transfer station and a new refuse compactor truck will be purchased. Hopefield transfer station will also be upgraded. Litter pickers at landfill sites remain a challenge.

Housing: There is a focus on upgrading informal settlements and BNG projects. A Social Housing Strategy has also been adopted to diversify the housing portfolio for non-qualifying individuals for the full housing subsidy. This is a collaborative effort between the Western Cape Department of Human Settlements and Saldanha Bay Municipality.


Internally generated funds are the main source of capital funding for the Saldanha Bay Municipality, followed by Provincial Government contributions and marginal contributions from National Government (Figure 4.5). In 2015/16, borrowing made up for the drop in funding from internally generated funds with borrowing projected to constitute more than 50 per cent of total capital funding in 2018/19. Furthermore, it is projected that internally generated revenue is to drop during the 2016/17, 2017/18 and 2018/19 financial years.


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Figure 4.5 Saldanha Bay Municipality capital funding by source, 2012 - 2019

Source: Saldanha Bay Municipality A-Schedules, 2016/17

4.7 Swartland Municipality


Investment in electricity infrastructure remains relatively constant starting at 19 per cent as a percentage of total capital expenditure then levelling out at a projected 13 per cent in 2018/19 (see Table 4.5). Investment in water services increases from a relatively small share in 2012/13 to a projected 55 per cent of total capital expenditure in 2018/19.

Waste water infrastructure has significant shares of capital expenditure in 2013/14 and 2014/15 at 41 per cent and 44 per cent, before dropping to 6 per cent in 2015/16 and gradually climbing to a projected 14 per cent in 2018/19. In 2012/13, waste capital investment had the majority share of total capital investment at 40 per cent, before dropping to 6 per cent the following year, and having very low levels of projected investment from zero in 2015/16 to a projected 2 per cent in 2018/19, this may be due to the maturing of infrastructure project and as new infrastructure is made available.

Table 4.5 Total capital expenditure for Swartland Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 19 15 19 13 11 10 13

Water 7 3 4 9 13 21 55




Housing 8 20 14 39 4

Others 7 5 5 9 33 31 9

Total 100 100 100 100 100 100 100

Source: Swartland Municipality A-Schedules, 2016/17

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4.7.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no water and sanitation backlogs. The Municipality’s 2014/15 Annual Report states that a total of 649 and 6 994 households respectively received electricity and refuse removal services below the minimum standard. An analysis of the backlogs and the past and projected capital expenditure, based on the annual report suggest that the level of investment in basic services should be able to address the backlogs in the forecast period.

The Swartland Municipality’s IDP (2012 - 2017) identified the following infrastructure projects:

Water: Upgrade various sections of the water reticulation system that are obsolete, implement secondary chlorination at reservoirs, increase reservoir/storage capacity to accommodate further developments, and upgrade Ongegund reservoir and pump station.

Sanitation: Upgrade Waste Water Treatment Works at different locations, extend sanitation network, upgrade treatment capacity, and extend water borne sewage to the industrial area.

Electricity: Replace obsolete infrastructure including switchgear, mini-substations and low voltage networks, and upgrade supply capacity.

Roads: Resealing of certain roads, and upgrading of roads and intersections.

4.7.3 Challenges

The 2016 municipal survey identified the following challenges:

Electricity: The electricity bulk capacity in Malmesbury, Moorreesburg and Darling is adequate for planned developments up to 2019/20. However, Yzerfontein does not have adequate capacity and will be addressed in 2016/17 financial year, through the bulk supply upgrade by Eskom.

New bulk Eskom supply is also required by 2019/20 south of Malmesbury, to allow planned low cost housing developments to proceed. Upfront financing will represent a major constraint.

Waste water: The bulk sewerage capacity in Malmesbury and Abbotsdale is adequate up to 2025. In Darling, Moorreesburg, Chatsworth and Riverlands the sewerage infrastructure is adequate up to 2018, and in Riebeek Valley up until 2025. Kalbaskraal and Koringberg make use of oxidation ponds and currently no pollution of the environment is taking place. During 2016/17 financial year, there will be planning for new bulk sewerage infrastructure for low cost housing and the telemetry system will be upgraded to monitor the reservoirs capacity. Waste water treatment works in Moorreesburg, Chatsworth and Darling will also be upgraded.


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Solid waste: All the landfills in the municipality are licenced and the main landfill site, Highlands, has capacity until 2050. A major challenge in the waste management activities of the municipality is keeping green waste out of landfills. Funding is needed to adhere to licence requirements and for closure of certain sites.

Roads: There are 391 km of roads, of which 25 per cent are gravel roads, in the Swartland municipal area. Funds have been allocated to ensure that these gravel roads are reduced by 6 per cent per annum. Two major inhibitors preventing construction and maintenance of roads are shortage of scarce skills in the technical field, and funding.


Internally generated funds are the main source of capital funding for the Swartland Municipality, followed by significant contributions by National and Provincial Government.

Figure 4.6 Swartland Municipality capital funding by source, 2012 - 2019


Internally generated funds are the main source of capital funding and is mostly constant throughout the 2012/13 to 2018/19 financial period. This may be attributed to the revenue accrued from service charges and other internal sources of revenue. It is interesting to note the increase of borrowings as a share of the capital funding sources. This may be in order to make up the shortfall from the decrease in the Provincial Government capital funding source in the Swartland Municipality.

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4.8 Growth potential

Infrastructure investment, human capital formation and innovation are essential for the promotion of economic growth within a municipality (OECD, 2009). The extent to which infrastructure investment influences economic growth within the municipalities in the Western Cape is evaluated using the Growth Potential Index (GPI) included in the Growth Potential Study of Towns undertaken by the Department of Environmental Affairs and Development Planning. The index provides an analysis of the economic viability of infrastructure investments (as opposed to political, environmental, social and fiscal viability). The potential for economic development that comes about from investment in an infrastructure project is among the most important criteria on which the investment decision should be based. The GPI in Figure 4.7 provides an indication of the municipalities in which infrastructure investment has the greatest potential for being translated into increased production and employment creation. The GPI is evaluated within the context of municipal capital expenditure (both past and projected).

Figure 4.7 Growth Potential Index, 2014 and CAPEX, 2009 - 2019

Source: DEADP, Growth Potential Study 2014; Municipal A-schedules

Bergrivier, Saldanha Bay and Swartland recorded the highest GPI in the District at 46, 75 and 63 respectively. These municipalities also displayed the largest growth in capital expenditure over the period 2009 – 2016, with capital expenditure in Bergrivier, Saldanha Bay and Swartland increasing by 18.4, 17.1 and 14.6 per cent per annum on average. Economic theory dictates that regions that experience large increase in capital stock experience large increases in GDP. The level of, and investment in infrastructure in these municipalities over this period may have facilitated relatively more favourable growth in these regions.

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Matzikama Cederberg Bergrivier Saldanha Bay Swartland

GPI CAPEX Growth 2009 - 2016 Projected CAPEX Growth 2017 - 2019


202

Capital expenditure in Swartland is projected to grow at a much faster rate of 22.3 per cent per annum on average over the period 2017 - 2019 compared to the rest of the District. Given Swartland’s relatively high GPI, these capital investments may significantly improve economic performance in the region. Capital expenditure in Bergrivier is projected to grow at a 2.32 per cent per annum on average. The municipality experienced below average GDP growth over the period 2010 - 2015, and given the municipalities GPI, increased capital investment may improve the municipality’s economic performance.

While Saldanha Bay recorded the highest GPI in the District, the municipality’s capital expenditure is projected to contract by 17.2 per cent per annum on average over the period 2017 – 2019. Given that the potential for capital investment to be translated into tangible economic growth is highest in Saldanha, it is encouraged that municipal capital expenditure increases.

Matzikama and Cederberg reported the slowest growth in capital expenditure over the period 2009 – 2016 (4.8 and 9.8 per cent per annum on average respectively). These municipalities also recorded the lowest GPIs in the District. The projected capital expenditure in Matzikama and Cederberg contracts by 2.6 and 20.6 per cent per annum on average over the period 2017 – 2019. The existing levels of infrastructure stock may have informed the relatively low GPIs of these municipalities. In order to advance the growth potential of infrastructure investments within these municipalities, it is encouraged that existing stock levels are improved through further investments such that the returns on municipal capital investments may be enhanced.


A review and analysis of the infrastructure spending in the WCD suggest that both the district and local municipalities prioritised investment and development of basic services infrastructure, in line with core municipal mandates and National imperatives, as articulated in the National Development Plan and other sector strategies. However, increased access to basic services - through more households connecting to municipal services – translates into higher expenditures required by municipalities to operate and maintain service levels in line with prescribed service standards. This raises the issue of sustainability of service levels, i.e. specifically, whether municipalities have the requisite funding sources to maintain service levels.

West Coast District

203

5


5.1 Introduction

This chapter investigates the impact of recent economic performance on social conditions of households within WCD municipalities. Latest results from Statistics South Africa’s Community Survey 2016 and the 2016 Non-Financial Census of Municipalities are among the key sources of data used in this chapter, but data from Quantec and administrative data from government sector departments is also used in the analysis. The extent of social development within a community can have positive or negative future financial implications for municipalities.

For instance, a growing economy can result in more employment creation and higher incomes for households within a municipality as well as better education, health and access to basic services. In contrast, a declining economy can lead to increasing unemployment and poverty, weak education, poor health, and low basic service access levels. The most recent socio-economic indicators including the Human Development Index (HDI), GDPR per capita and the Gini coefficient are used to show the current living standards of communities within the WCD.


204

5.2 Human Development3

Figure 5.1 below shows a slight decline in the HDI levels for the WCD, from 0.70 in 2014 to 0.69 in 2015, which is lower than the Western Cape Province HDI level of 0.73 for 2015.

Figure 5.1 West Coast District Human Development Index, 2011 - 2015

Source: Western Cape Department of Economic Development and Tourism; IHS Global Insight, 2016

The WCD’s human development has been weighed down by decreases recorded for Swartland and Matzikama municipalities between 2014 and 2015. There were no changes experienced in Cederberg, Bergrivier and Saldanha Bay between 2014 and 2015.

3 The Human Development Index (HDI) is a key measure used by the United Nations to assess the relative level of socio-economic development in countries. It is a measure of peoples' ability to live a long and healthy life, to communicate, participate in the community and to have sufficient means to be able to afford a decent living. The HDI is thus a composite of factors reflecting longevity, economic prosperity, and schooling. It is represented by a number between 0 and 1 where 1 indicates a high level of human development and 0 represents no human development.

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

0.64

0.65

0.66

0.67

0.68

0.69

0.70

0.71

2011 2012 2013 2014 2015

HDI GDPR Growth

West Coast District

205

Figure 5.2 Human Development Index across municipalities, West Coast District, 2011 - 2015


Various social indicators related to human development in the WCD are discussed below as follows: population, households, indigent households, household income, income inequality, poverty, access to basic services, education levels and health matters at municipalities within the WCD.


The standard of living among communities in municipalities within the WCD can be estimated by analysing economic performance and population data at a given period of time. An improvement in the standard of living among communities can be attained when economic growth is faster/higher than population growth. GDPR per capita, which is calculated by dividing the total value of economic activity within a municipality by the total population, is the indicator used to estimate the average annual incomes of households within a specific area.

5.3.1 Population

The total population of people within the WCD increased significantly between 2011 and 2016, according to official data from Statistics South Africa. Swartland’s population increased the most during this period, followed by Saldanha Bay. Figure 5.3 shows that Swartland’s population increased by a significant 17.6 per cent between 2011 and 2016, followed by Saldanha Bay (12.1 per cent) and Bergrivier (9 per cent). There were increases in Cederberg and Matzikama’s populations between the Census 2011 and the Community Survey 2016, but not as high as that experienced by the other three municipalities. Migration due to employment prospects as well as better access to basic services could be one of the reasons for the population increases mainly in Swartland, Saldanha Bay and Bergrivier.

0.56

0.58

0.60

0.62

0.64

0.66

0.68

0.70

0.72

0.74


2011 2012 2013 2014 2015


206

Figure 5.3 Population trends in the West Coast District

Source: Stats SA Census 2011; Community Survey 2016

Projections by the Department of Social Development indicate that population is set to continue expanding over the next five years. Figure 5.4 shows that the population of Saldanha Bay is projected to grow faster than that of other municipalities in the district between 2017 and 2020, with an annual growth rate estimated to be 1.73 per cent during the period. Bergrivier is projected to have an annual population growth rate of 1.4 per cent), Swartland (1.2 per cent) and Matzikama and Cederberg each 1.05 per cent.

Figure 5.4 West Coast District population projections, 2015 - 2020



Census 2011 67 147 49 768 61 897 99 193 113 762

Community Survey 2016 71 050 52 950 67 470 111 200 133 800

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

Po

pu

lati

on

Matzikama Cederberg Berg Rivier Saldanha Bay Swartland

2015 70 274 52 198 65 874 107 366 120 314

2016 71 047 52 782 66 847 109 355 121 898

2017 71 813 53 355 67 807 111 315 123 452

2018 72 569 53 917 68 754 113 238 124 970

2019 73 315 54 464 69 686 115 124 126 448

2020 74 049 54 999 70 600 116 972 127 884

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

West Coast District

207

5.3.2 Household numbers

The number of households per municipality within the WCD has also increased between 2011 and 2016 as shown in Table 5.1. It can be seen in the Table 5.1 that 6.7 per cent of households in the province live in the WCD.

Table 5.1 Number of households per municipality in the West Coast District

West Coast District Census


2016

Matzikama 18 835 20 821

Cederberg 13 513 15 279

Bergrivier 16 275 19 072

Saldanha Bay 28 835 35 550

Swartland 29 324 39 139

West Coast District 106 781 129 862

% of Western Cape 6.5 6.7


5.3.3 Indigent households

According to the recent Non-Financial Census of Municipalities in the WCD, Swartland had the highest increase in indigent households (53.7 per cent) between 2014 and 2015. There were decreases in indigent households in Bergrivier and Matzikama.

Table 5.2 Indigent households in the West Coast District, 2015

West Coast District municipalities 2014 2015 % change

Matzikama 2 374 2 281 -3.92

Cederberg 2 004 2 104 4.99

Bergrivier 1 946 1 798 -7.61

Saldanha Bay 7 553 7 727 2.30

Swartland 5 317 8 173 53.71

Source: Stats SA Non-Financial Census of Municipalities


The annual household income for municipalities within the WCD is presented in Table 5.3 and this shows proportion of people that fall within low, middle and high income brackets. An increase in living standards can be evidenced by a rising number of households entering the middle and high income brackets. From Table 5.3 it can be seen that the majority of households (51.4 per cent) in the WCD fall within the low income brackets, but there is a significant proportion falling within the middle income bracket (41.8 per cent) and high income bracket (6.9 per cent).


208

Table 5.3 Annual household income for West Coast District municipalities, 2016 (%)

Income

West Coast

District Matzikama Cederberg BergrivierSaldanha

Bay Swartland

No income 10.7 8.1 9.6 9.4 14.1 10.4

Low Income

R1 - R6 327 1.8 1.8 1.6 1.5 2.3 1.4

R6 328 - R12 653 3.1 3.3 3.3 1.9 3.9 2.9

R12 654 - R25 306 14.0 17.3 18.3 13.7 10.9 13.1

R25 307 - R50 613 21.8 24.9 25.2 22.4 17.4 22.1

R50 614 - R101 225 19.2 18.3 20.7 21.8 16.6 20.1

Middle Income R101 226 - R202 450 13.2 11.6 10.4 14.0 15.2 13.0

R202 451 - R404 901 9.4 8.5 6.5 9.1 11.5 9.5

R404 902 - R809 802 4.9 4.4 3.2 4.5 5.7 5.3

High Income R809 203 - R1 619 604 1.3 1.1 0.7 0.8 1.7 1.6

R1 619 605 - R3 239 208 0.4 0.5 0.2 0.4 0.5 0.3

R3 239 207 or more 0.3 0.3 0.1 0.4 0.3 0.2

Source: Quantec/Urban-Econ calculations, 2016

The majority of households in Saldanha Bay, Bergrivier and Swartland earn middle and high income. Bergrivier has the highest proportion of middle income earners (44.9 per cent), followed by Saldanha Bay (43.3 per cent) and Swartland (42.6 per cent) whereas Saldanha Bay has the highest proportion of high income earners (8.2 per cent), followed by Swartland (7.4 per cent) and Bergrivier (6.1 per cent). The above statistics indicate that the standard of living and human development is likely to be high in Saldanha Bay, Swartland and Bergrivier.

For Cederberg and Matzikama more than half of the households earn low income (58 per cent and 55.4 per cent respectively). This entails there is scope for human development in these municipalities in the WCD. Table 5.4 below shows that the combined spending on services and non-durable goods comprises over 70 per cent of total expenditure across all municipalities in the West Coast District. Households within Matzikama spend the most on durable goods (13.1 per cent of total expenditure) and Cederberg spends the least (11.6 per cent). Not surprisingly, households in Cederberg tend to spend the most on non-durable goods (34.9 per cent).

Table 5.4 West Coast District expenditure on goods and services, 2016

West Coast

District Matzikama Cederberg Bergrivier Saldanha Bay Swartland

Good and services

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Durable goods

1 051.33 12.6 134.85 13.1 86.84 11.6 158.28 12.6 378.12 12.5 293.23 12.7

Semi-durable goods

902.03 10.8 101.56 9.9 72.33 9.6 114.99 9.1 342.11 11.3 271.04 11.8

Non-durable goods

2 641.62 31.5 316.91 30.8 262.22 34.9 400.35 31.8 954.37 31.5 707.77 30.8

Services 3 777.85 45.1 475.97 46.2 329.70 43.9 586.32 46.5 1 357.85 44.8 1 028.01 44.7

Total 8 372.83 100 1 029.29 100 751.10 100 1 259.94 100 3 032.45 100 2 300.05 100

Source: Quantec/Urban-Econ, 2016

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209


In this section, the most recent data on the Gini coefficients for municipalities within the WCD are analysed. In Figure 5.5 it can be seen that income inequality remains high in the WCD, with Saldanha Bay recording the highest levels of inequality. Although inequality levels are comparatively lower in Bergrivier, the trend is upward between 2014 and 2015. The latest Gini coefficients of WCD municipalities are consistent with the annual income analysis done in Section 5.3, as they show that inequality levels are highest in Saldanha Bay and Swartland, which were shown to have high proportions of middle to high income earners. Surprisingly, Bergrivier has comparatively lower inequality levels although the municipality also has high proportions of middle to high income earners.

Figure 5.5 Gini coefficients for municipalities in the West Coast District, 2013 - 2015


Only Swartland showed an improvement in income inequality between 2014 and 2015. The increasing income inequality in Cederberg, Bergrivier and Saldanha Bay indicates that not everyone is enjoying the fruits of economic growth in the respective municipalities. Human development tends to be weak in poor low income earning communities.

4 The Gini coefficient measures the levels of income inequality among households within a community. The coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation's residents, varying between 0, which represents complete equality and 1, which represents complete inequality.

0.53

0.54

0.55

0.56

0.57

0.58

0.59

0.60


2013 2014 2015


210

5.6 Poverty5

Results from Statistics South Africa’s Community Survey 2016, shows that the intensity of poverty in the Western Cape declined to 40.1 per cent in 2016 from 42.6 per cent in 2011 as indicated in Table 5.5. Although this is a lower poverty intensity level compared to 2011, the figure of 40.1 per cent indicates that there are still a significant number of poor people in the Western Cape Province whose income is below the poverty line. The recent low rate of economic growth in the Western Cape Province has had a positive but very small change in the intensity of poverty among households.

Table 5.5 Poverty headcount and poverty intensity at West Coast District municipalities, 2011 and 2016 (%)


Municipality 2011 2016 2011 2016

Matzikama 3.4 0.8 42.4 42.5

Cederberg 2.8 3.6 42.9 45.7

Bergrivier 1.0 1.6 43.7 41.5

Saldanha Bay 2.2 6.7 41.0 45.4

Swartland 1.0 0.9 40.6 39.9

West Coast District 2.0 2.9 41.9 44.5

Western Cape 3.6 2.7 42.6 40.1

Source: Stats SA Community Survey 2016

The sluggish economic growth rate in the WCD has had a negative impact on poverty as shown in Table 5.5 above, where the intensity of poverty increased from 41.9 per cent in 2011 to 44.5 per cent in 2016. From Table 5.5, the following observations are made regarding municipal specific poverty intensity levels in 2016: In Matzikama poverty intensity increased marginally, by 0.1 percentage points between 2011 and 2016. Of the three municipalities which experienced increases in poverty intensity between 2011 and 2016 Matzikama had the smallest increase. Matzikama’s GDPR growth during 2005 - 2013 was the lowest (1.0 per cent) in the WCD, and therefore it can be concluded that this low economic growth has not made an impact on poverty.

In Cederberg poverty intensity increased by 2.8 percentage points between 2011 and 2016, which is the second highest increase in poverty intensity out of the three municipalities which experienced increases in the District. Cederberg currently has the highest poverty intensity levels in the WCD (45.7 per cent). The Municipality’s GDPR growth rate during 2005 - 2013 (1.6 per cent) was the second lowest in the District, and it can be concluded that this low economic growth has not made an impact on

5 The intensity of poverty as well as the poverty headcount of municipalities within the WCD is analysed in this section since poverty results in poor human development. The intensity of poverty is measured by calculating the Poverty Gap Index, which is the average poverty gap in the population as a proportion of the poverty line. The Poverty Gap Index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. The Poverty Gap Index is a percentage between 0 and 100 per cent. A theoretical value of zero implies that no one in the population is below the poverty line. Individuals whose income is above the poverty line have a gap of zero while individuals whose income is below the poverty line would have a gap ranging from 1 per cent to 100 per cent, with a theoretical value of 100 per cent implying that everyone in the population has an income that is below the poverty line or zero. A higher poverty gap index means that poverty is more severe.

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211

poverty as indicated by the worsening poverty intensity levels. There are positive signs of poverty reduction at Bergrivier as shown by the 2.2 percentage point decrease in poverty intensity between 2011 and 2016. The Municipality’s GDPR growth rate during 2005 - 2013 (2.2 per cent) was the third highest in the District, and it can be concluded that the economic growth may have contributed to the improvement in the poverty intensity levels.

Poverty remains high at Saldanha Bay despite the high GDPR growth rates (4.1 per cent) reported during 2005 to 2013. Saldanha Bay had the highest increase in poverty intensity (4.4 percentage points) between 2011 and 2016, and it can be argued that the high economic growth has not made an impact on poverty as indicated by the worsening poverty intensity levels. The poverty intensity level at Swartland has reduced by 0.7 percentage points between 2011 and 2016, making it the second municipality, after Bergrivier, where the severity of poverty has decreased. It can be concluded that Swartland’s GDPR growth rate of 3.7 per cent during 2005 - 2013 had a positive impact on the municipality’s poverty levels, albeit marginal.

Table 5.5 also shows another common method of measuring and reporting poverty, the headcount ratio, which is the percentage of population that is below the poverty line. One of the undesirable features of the headcount ratio is that it simply counts all the people below a poverty line, in a given population, and considers them equally poor and thereby ignores the depth of poverty; if the poor become poorer, the headcount index does not change. In Table 5.5 it can be seen that the poverty headcount has decreased by 0.9 percentage points between 2011 and 2016 while that of the WCD has increased by 0.9 percentage points. In terms of municipalities within the WCD Saldanha Bay has the highest increase in the poverty headcount (4.5 percentage points) between 2011 and 2016, followed by Cederberg (0.8 percentage points) and Bergrivier (0.6 percentage points). It is important to note that while the severity of poverty has improved significantly at Bergrivier, there is a small increase in the total number of people whose income is below the poverty line. Matzikama has experienced the highest reduction (2.6 percentage points) in the poverty headcount followed by Swartland (0.1 percentage points). The following section looks at access to housing and basic services by households within the WCD.


The extent of human development within a municipality is to a large extent influenced by access to housing as well as basic services such as water, electricity, sanitation and refuse removal, with high access levels implying better human development and vice versa. Table 5.6 shows recent statistics relating to the provision of housing within the WCD.


212

Table 5.6 Dwelling type per municipality within the West Coast District, 2016

Dwelling type

West Coast District Matzikama Cederberg Bergrivier Saldanha Bay Swartland

Number 2016

% of total

Number 2016

% of total

Number2016

% of total

Number2016

% of total

Number2016

% of total

Number 2016

% of total

House or brick structure on a separate stand or yard

94 728 78.9 16 196 77.4 11 987 79.4 14 443 79.5 25 260 77.0 26 841 81.0

Traditional dwelling/hut/ structure made of traditional materials

640 0.5 89 0.4 125 0.8 186 1.0 141 0.4 98 0.3

Flat in a block of flats

2 272 1.9 475 2.3 311 2.1 375 2.1 399 1.2 712 2.1

Town/cluster/ semi-detached house (simplex, duplex or triplex)

5 252 4.4 1 334 6.4 541 3.6 1 231 6.8 424 1.3 1 722 5.2

House/flat/ room, in backyard

1 658 1.4 337 1.6 148 1.0 418 2.3 273 0.8 482 1.5

Informal dwelling/shack, in backyard

5 615 4.7 618 3.0 493 3.3 488 2.7 1 758 5.4 2 258 6.8

Informal dwelling/shack, NOT in backyard, e.g. in an informal/ squatter settlement

7 601 6.3 1 473 7.0 1 278 8.5 178 1.0 4 189 12.8 484 1.5

Room/flatlet not in backyard but on a shared property

991 0.8 111 0.5 65 0.4 509 2.8 138 0.4 168 0.5

Other/ unspecified/NA

1 367 1.1 286 1.4 150 1.0 332 1.8 221 0.7 378 1.1

Total 120 124 100 20 919 100 15 099 100 18 160 100 32 804 100 33 142 100


Informal settlements are an indication of poor levels of human development and hence government programs to provide proper housing for all households in the country. Table 5.6 indicates that Saldanha Bay has the highest number of households living either in informal shacks or squatter settlements (5 947 households or 18.2 per cent) followed by Cederberg (1 771 households or 11.8 per cent). The smallest number of households living in informal settlements in the WCD is found within Bergrivier (666 households or 3.7 per cent). These figures differ to some extent with the Community Survey 2016 figures that indicate the informal dwellers in the WCD to be as follows: Saldanha Bay (7 855 households), Cederberg (3 065 households), Matzikama (2 300 households), Swartland (1 592 households) and Bergrivier (1 072 households). A good economic performance can provide households with necessary income required to afford decent living conditions and therefore reduce or eliminate the squatter settlements. Access to decent housing is one step towards human development. Households need to be provided with basic services such as water, electricity, sanitation and refuse removal in order to be rendered well developed. Table 5.7 provides recent data on basic service access levels within the WCD as reported by Statistics South Africa in the latest non-financial census of municipalities.

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213

Table 5.7 Domestic and non-domestic consumers receiving basic services, West Coast District

Water Electricity Sanitation Refuse

Municipality 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change

Matzikama 9 546 10 268 7.6 11 900 13 055 8.8 9 311 9 686 3.9 9 601 9 693 1.0

Cederberg 8 407 8 645 2.8 8 820 9 227 4.4 8 504 8 899 4.4 8 407 8 642 2.8

Bergrivier 8 453 8 728 3.3 8 548 9 008 5.1 8 815 8 950 1.5 8 748 8 941 2.2

Saldanha Bay

24 821 27 220 9.7 23 662 26 833 11.8 24 821 27 220 8.8 22 468 22 468 0.0

Swartland 19 801 20 351 2.8 15 859 16 930 6.3 18 392 19 466 5.5 18 346 18 713 2.0


Table 5.7, shows that access levels for water, electricity, sanitation and refuse removal within municipalities in the WCD increased between 2014 and 2015. This implies that there is an improvement in the living conditions for households and therefore positive implications for human and economic development in the region. In Matzikama, access to electricity increased the most (1 155 consumers or 9.7 per cent) followed by access to water (722 consumers or 7.6 per cent). Consumers with access to refuse removal services in Matzikama increased the least. In Cederberg, access to electricity and sanitation both increased by 4.4 per cent while access to water and refuse removal both increased by 2.8 per cent. In Bergrivier access to electricity increased the most (460 consumers or 5.4 per cent) while access to sanitation increased the least (135 consumers or 1.5 per cent).

Saldanha Bay had the highest percentage increases in access to electricity (3 171 consumers or 13.4 per cent) while access to water and sanitation also both increased by a significant 9.7 per cent each. However, no changes were reported in the access levels for refuse removal in Saldanha Bay. Swartland had the highest percentage increases in access levels for electricity (1 071 consumers or 6.7 per cent) and sanitation (1 074 consumers or 9.7 per cent). Overall, it is clear that access to electricity increased the most in all municipalities within the WCD, which is positive for both human and economic development. However, access levels to refuse removal registered the lowest increases across all municipalities in the District. It is important for municipalities to ensure that there are high access levels for refuse removal as refuse can be a hazard to health, which could put a strain on a municipality’s finances. Table 5.8 shows that the number of households connected to the electricity grid, have access to piped water and flush toilets has further increased in 2016, according to the Community Survey findings.


214

Table 5.8 Access to basic services, 2016

Piped water Flush/chemical toilet

Connected to electricity

Municipality 2011 2016 % change 2011 2016 % change 2016

Matzikama 18 318 20 461 11.7 13 238 19 822 49.7 20 232

Cederberg 13 387 14 030 4.8 11 182 13 511 20.8 14 100

Bergrivier 16 169 18 484 14.3 14 594 18 666 27.9 18 628

Saldanha Bay 28 660 32 063 11.9 27 766 30 496 9.8 30 745

Swartland 29 176 36 210 24.1 26 679 37 660 41.2 38 501

West Coast District 105 710 121 247 14.7 93 459 120 155 28.6 122 205


Swartland has experienced the largest increase in the number of households with access to piped water between 2011 and 2016, followed by Saldanha Bay and Matzikama. Matzikama has also experienced the largest increase in the number of households with a flush or chemical toilet (49.7 per cent), followed by Swartland (41.2 per cent).

5.8 Education

Table 5.9, shows recent estimations of education levels of persons living within municipalities in the WCD.

Table 5.9 Education levels of households in the West Coast District, 2016

Municipality

West Coast District


Education Level

(Number) 2016

% of the total adult population

Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


No schooling 11 894 4.1 2 174 4.6 2 219 6.1 2 228 5.1 1 390 1.7 3 883 4.6

Some primary 41 371 14.1 7 876 16.5 6 820 18.8 7 316 16.8 7 209 9.0 12 149 14.2

Complete primary

20 465 7.0 3 875 8.1 3 279 9.0 3 657 8.4 3 939 4.9 5 716 6.7

Some secondary

115 879 39.6 19 777 41.5 14 307 39.4 15 855 36.5 33 985 42.6 31 955 37.5

Grade 12/ Std 10

77 146 26.4 10 329 21.7 8 098 22.3 10 660 24.5 25 255 31.7 22 804 26.7

Higher 25 729 8.8 3 602 7.6 1 588 4.4 3 755 8.6 7 974 10.0 8 810 10.3

Total 292 484 100 47 633 100 36 310 100 43 472 100 79 752 100 85 317 100


Primary school education is important as it is a foundation for human development and therefore the existence of individuals without any form of schooling is a concern to decision-makers at local, provincial and national government. In Table 5.9 above it can be seen that Swartland has the largest number of people without any form of schooling (3 883), followed by Bergrivier (2 228), Cederberg (2 219), Matzikama (2 174) and Saldanha Bay has the least number (1 390). Table 5.9 also shows that Saldanha Bay has the largest proportion of adults with Grade 12 or higher (84.3 per cent), followed by Swartland (74.5 per cent), Matzikama (70.8 per cent), Bergrivier (69.6 per

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215

cent), and Cederberg (66.1 per cent). Saldanha Bay’s proportion of adults with Grade 12 or higher is higher than the WCD average.

5.9 Health

Health indicators analysed in this section to measure the extent of human development include the child and maternal health as well as ART and TB patient loads. These indicators can provide pointers for life expectancy within an economy. South Africa’s life expectancy dropped to 50.4 years in 2010 from 61.7 years in 1995. However, more recent information from Statistics South Africa shows improvements in life expectancy within the Western Cape from 2011 to 2015 (Statistical release P0302, 2015). The decline in life expectancy over the years has been largely attributed to the high prevalence of HIV/AIDS and Tuberculosis (TB) in the country. The HIV and TB patient load in each municipality within the WCD is shown in Table 5.10 below.

Table 5.10 ART and TB patient loads in the West Coast District, 2013 - 2015


Municipality

ART patient

load March 2013

ART patient

load March 2014

ART patient

load March 2015

Mother-to-child

transmission rate

Number of ART clinics/


Number of TB

patients2012/13

Numberof TB

patients 2013/14

Number of TB

patients 2014/15


sites 2015

Matzikama 569 812 901 3.0% 8 1 004 1 015 950 21

Cederberg 880 1 063 1 295 1.2% 5 5 557 599 612 11

Bergrivier 466 601 726 0.0% 9 395 425 452 12

Saldanha Bay 1 435 1 779 2 054 0,5% 6 852 867 748 11

Swartland 1 211 1 298 1 545 3.2% 13 700 667 831 18

Total West Coast District

4 561 5 553 6 521 1.4% 41 3 508 3 573 3 593 73

Western Cape 9 122 11 106 13 042 1.4% 259 7 016 7 146 7 186 146


Table 5.10 shows an increase in the ART patient load in the Western Cape Province between March 2013 and March 2015. The increasing HIV/AIDS patient loads can adversely affect economic activity within the province, its districts and local municipalities. In the WCD, only Matzikama and Saldanha Bay experienced decreasing numbers of TB patients. The percentage of children born with a low birth weight in the WCD is slightly lower (14 per cent) than the average for the Province (15 per cent) although Bergrivier, Matzikama and Cederberg have percentages higher than the provincial average (Table 5.11). The full immunisation coverage for children under 1 year old in the WCD is much lower than the provincial average. Table 5.11 also shows a higher delivery rate percentage of women less than 18 years in Cederberg, Matzikama and Bergrivier as well as a low pregnancy termination rates compared to the Western Cape average. Maternal mortality ratio for Bergrivier and Saldanha Bay are significantly higher than the District and the provincial averages.


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Table 5.11 Child and maternal health in West Coast District municipalities


Municipality

Full immunisation



5 years

Neonatal mortality

rate Low birth

weight

Maternal mortality

ratio


under 18 years


rate

Matzikama 78% 1.1 8.9 19% 0.0 10.4% 4.5%

Cederberg 83% 4.7 1.4 18% 0.0 12.2% 5.8%

Bergrivier 65% 1.1 7.4 20% 3 71.7 10.1% 1.7%

Saldanha Bay 72% 5.9 4.5 9% 1 12.3 7.4% 4.2%

Swartland 75% 2.2 1.5 13% 0.0 8.2% 3.9%

West Coast District 74% 3.1 4.3 14% 75.6 9.1% 4.0%

Western Cape 90% 2.43 6.2 15% 55.4 6.1% 16.8%



This section explored the impact of economic performance on the socio-economic conditions of communities living in municipalities within the WCD using a selected number of indicators. Table 5.12 is a summary of the recent trends in some social and economic indicators at different municipalities.

Table 5.12 Summary of recent changes in various social indicators in the West Coast District

Indicator West Coast District Matzikama Cederberg Saldanha Bay Bergrivier Swartland

GDPR growth

Human Development Index

Decrease Decrease Unchanged Decrease Increase Decrease

Population Increase Increase Increase Increase Increase Increase

Indigent households Increase Decrease Increase Increase Decrease Increase

Households with no income

10.7% of total Below WCD average

Below WCD average

Above WCD average

Below WCD average

Below WCD average

Gini coefficient Increase Decrease Increase Increase Increase Decrease

Poverty headcount Increase Decrease Increase Increase Increase Decrease

Poverty intensity Increase Increase Increase Increase Decrease Decrease

Informal dwelling 11% of total dwellings

Below WCD average

Above WCD average

Above WCD average

Below WCD average

Below WCD average

Access to water Increase Increase Increase Increase Increase Increase

Access to electricity Increase Increase Increase Increase Increase Increase

Access to sanitation Increase Increase Increase Increase Increase Increase

Access to refuse removal

Increase Increase Increase Increase Increase Increase

No schooling 4.1% of total population

Above WCD average

Above WCD average

Below WCD average

Above WCD average

Above WCD average

Grade 12 or higher certificate

35.2% of total population

Below WCD average

Below WCD average

Above WCD average

Below WCD average

Above WCD average

ART patient load Increase Increase Increase Increase Increase Increase

No. of TB patients Increase Decrease Increase Decrease Increase Increase

Immunisation coverage

Below WC average

Above WCD average

Above WCD average

Below WCD average

Below WCD average

Above WCD average

Birth weight Below WC average

Above WCD average

Above WCD average

Below WCD average

Above WCD average

Below WCD average

Teenage pregnancies Above WC average

Above WCD average

Above WCD average

Below WCD average

Above WCD average

Below WCD average

West Coast District

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Table 5.12 above shows the positive or negative movement of selected social and economic indicators in municipalities within the WCD from 2011. Indicators moving in positive territory could be a result of positive economic performance, and vice versa. Indicators that have moved in a positive direction for the WCD include an increase in the access to water, electricity, sanitation and waste management, among others. All municipalities in the District have experienced increases in these basic services. Areas of concern in the District include the rising population and rising indigent households, households with no income, informal dwellers, teenage pregnancies, ART and TB patient loads and lower immunisation coverage.

In Matzikama, indicators moving in a positive direction include the increasing access to basic services, decreasing income inequality, decreasing indigent households, decreasing poverty headcount, decreasing TB patients as well as informal dwellers that are below the district average. Indicators that remain a concern include the increasing population, poverty intensity, ART patient load and teenage pregnancies, among others. In Cederberg, indicators moving in a positive direction include the increasing access to basic services and high immunization coverage. Indicators that are of concern include the increasing population, rising indigent households, poverty headcount and intensity levels, informal dwellers, TB and ART patient loads, as well as high teenage pregnancies.

In Saldanha Bay, indicators moving in a positive direction include the increasing access to basic services, decreasing TB patients, a high proportion of people with Grade 12 or higher qualifications, and teenage pregnancies below the district average. Indicators that are of concern include the increasing population, increasing indigent households, households without income, poverty intensity and informal dwellers. In Bergrivier, indicators moving in a positive direction include the increasing access to basic services, decreasing indigents, decreasing poverty intensity and informal dwellers below the district average. Indicators that are of concern include the increasing population, increasing indigent households, households without income, poverty intensity and informal dwellers. In Swartland, indicators moving in a positive direction include the increasing access to basic services, decreasing poverty headcount and intensity levels, decreasing income inequality, and informal dwellers and teenage pregnancies that are below the district average. Indicators that remain a concern include the increasing population, increasing indigent households, households without income, and informal dwellers.

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1


1.1 Introduction

The Cape Winelands District economy is the largest non-metro district within the broader Western Cape Province economy. It contributes 11.7 per cent to Provincial GDP and 14.2 per cent to Provincial employment in 2015. The economic sectors that contributed the most to the Cape Winelands District’s economy in 2015 were the finance, insurance, real estate and business services sector; the manufacturing sector; and the wholesale and retail trade, catering and accommodation sector. The agriculture, forestry and fishing sector will continue to grow negatively in 2016 with an estimated average GDPR growth rate of -13.3 per cent. Some of the major projects being


220

implemented in the Cape Winelands District include: Water and Sanitation Subsidy to Farmers Programme; Small Town Regeneration Programme; Development of the Nkqubela Community Commercial Node; Paarl CBD Upgrade; Paarl Waterfront Development; and Drakenstein Waste to Energy Project. Areas of concern in the District include the rising population and rising indigent households in certain municipalities, households with no income, informal dwellers, teenage pregnancies, increasing ART and TB patient loads and lower immunisation coverage, among others.

This sub-section provides a macro-economic outlook on the district level for the Cape Winelands District (CWD), an overview of trends between 2004 and 2015 and an outlook in terms of GDPR for 2016 - 2021. International trade is also considered in this section; as well as top companies by size and employment operating in the area.


1.2.1 GDPR performance per municipality

The CWD economy is the largest non-metro district within the broader Western Cape Province economy. It contributed 11.7 per cent towards provincial GDPR and 14.2 per cent to provincial employment in 2015. Figure 1.1 indicates the GDPR performance per CWD municipal area between 2004 and 2015.

Figure 1.1 GDPR growth per municipal area, 2005 - 2015


The CWD experienced an average GDPR growth rate of 3.6 per cent between 2004 and 2015. Witzenberg (average 5.9 per cent) has been performing higher than the other municipalities in the CWD. Stellenbosch had the lowest average GDPR growth between 2004 and 2015 with 2.8 per cent.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cape Winelands District 6.3% 5.5% 6.6% 5.3% -1.0% 2.4% 4.1% 3.3% 2.9% 3.1% 1.1%

Breede Valley 6.6% 5.6% 6.9% 5.6% 0.0% 2.4% 4.3% 3.2% 3.1% 3.4% 1.5%

Drakenstein 5.2% 5.0% 6.0% 4.5% -2.1% 1.8% 3.8% 3.0% 2.8% 3.1% 1.0%

Langeberg 7.5% 5.6% 6.9% 6.4% -0.4% 2.9% 3.8% 3.1% 3.0% 2.8% 1.1%

Stellenbosch 5.4% 4.9% 5.4% 3.4% -2.3% 2.3% 3.5% 2.8% 2.3% 2.2% 0.9%

Witzenberg 10.7% 8.0% 9.7% 10.3% 3.0% 3.5% 5.4% 4.8% 4.2% 4.8% 0.9%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%


221

Apart from the challenges brought about by subdued commodity prices, a number of other challenges impact on the economy, such as the drought (causing increases in domestic food prices) and the currency depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy). Table 1.1 indicates the average GDPR contribution and growth rates between the various municipal areas.

Table 1.1 GDPR contribution and average growth rates per municipal area


2015


Municipality Trend1

2004 - 2015 Pre-recession 2004 – 2008



Witzenberg 14.3 5.9 9.7 3.0 3.9

Drakenstein 33.3 3.1 5.2 -2.1 2.6

Stellenbosch 23.9 2.8 4.8 -2.3 2.3

Breede Valley 18.9 3.9 6.2 0.0 3.0

Langeberg 9.6 3.9 6.6 -0.4 2.8

Total Cape Winelands District

100 3.6 5.9 -1.0 2.8



Drakenstein contributed the most to GDPR (33.3 per cent) in the CWD in 2015, followed by Stellenbosch (23.9 per cent). These two municipal areas collectively contributed 57.2 per cent to the CWD’s GDPR in 2015 and showed higher average GDPR growth rates before the recession (2004 - 2008). Drakenstein and the Stellenbosch area’s GDPR contracted by approximately 2 per cent during the recession (2008 - 2009) but showed positive GDPR growth rates during the recovery period (2009 - 2015).


In 2015, the primary sector contributed 5.5 per cent to the GDPR of the District while the secondary and tertiary sectors contributed 23 per cent and 71 per cent respectively to the GDBR of the District. Figure 1.2 indicates the GDPR contribution per main sector of the various municipal areas.

1 The GDPR trend is based on 2004 to 2015 data, because 2005 reflects the growth rate between 2004 and 2005.


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Witzenberg has the largest primary sector contribution (13.7 per cent) compared to the other municipalities which primary sectors’ contributions are below 6.0 per cent.

The secondary sector (i.e. manufacturing, construction and electricity, gas and water) contributions for the District was on average 23.0 per cent, with Langeberg and Witzenberg having the highest contribution to the District with 24.0 per cent and 25.7 per cent, respectively, in 2015. The CWD consists of manufacturing closely linked with wine processing (i.e. agro-processing) and therefore the drought and the decrease in demand for commodities will have an impact on these local economies.

The tertiary sector presence also remains relatively important, given its average weight of 71.5 per cent across the District and local municipal areas. Activities such as the wholesale of agricultural produce and activities related to the wine preproduction and tourism have contributed towards this sector. Table 1.2 indicates the sectors that contribute the most to CWD economy.

5.5% 4.1% 5.4% 3.6% 2.5%13.7%

23.0% 21.5% 23.5% 24.0% 21.6%

25.7%

71.5% 74.4% 71.1% 72.4% 75.9%

60.6%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Cape WinelandsDistrict

Breede Valley Drakenstein Langeberg Stellenbosch Witzenberg

Primary Sector Secondary Sector Tertiary Sector


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Table 1.2 Cape Winelands District GDPR contribution per sector, 2015 (%)

Sector

Cape Winelands

District Breede Valley Drakenstein Langeberg Stellenbosch Witzenberg


5.4 4.0 5.3 3.5 2.3 13.7

Mining and quarrying 0.1 0.1 0.2 0.1 0.2 0.0

Manufacturing 13.6 13.2 12.6 16.0 14.5 13.2


2.2 1.7 2.7 2.0 1.4 3.3

Construction 7.2 6.5 8.1 6.0 5.7 9.2


19.7 19.7 18.5 22.4 21.4 17.4


10.3 11.3 8.9 13.6 12.1 7.1


23.0 25.1 24.3 19.2 24.2 17.6


8.1 8.4 8.6 8.5 7.2 7.4



The economic sectors that contributed the most to the CWD’s economy in 2015 were:

Finance, insurance, real estate and business services (23 per cent)



Table 1.3 indicates the CWD’s GDPR performance per sector.

Table 1.3 Cape Winelands District GDPR performance per sector

Sector


Trend 2004 - 2015




Agriculture, forestry and fishing -1.2 1.7 -6.9 -2.1

Mining and quarrying -0.2 -2.1 -3.8 1.6

Manufacturing -0.5 0.9 -12.6 0.6

Electricity, gas and water 2.4 1.7 6.9 2.1



5.3 8.2 0.9 4.2



6.2 10.1 3.5 4.1


3.5 5.9 0.1 2.5


Total Cape Winelands District 3.6 5.9 -1.0 2.8



224

Between 2004 and 2015, the CWD had an average GDPR growth rate of 3.6 per cent, with a high average growth rate of 5.9 per cent being reflected before the recession (2004 - 2008). The economy contracted by 1.0 per cent during the recession, but recovered to 2.8 per cent after the recession (2009 - 2015). The agriculture, forestry and fishing sector and the manufacturing sector have been affected the worst in the District by the worsening economic conditions.

1.2.3 GDPR Performance Per Sector forecast (Outlook)



Sector 2016 2017 2018 2019 2020 2021 Average

2016 - 2021


-13.3 1.9 1.4 0.3 0.3 0.7 -1.5

Mining and quarrying 4.8 -0.4 -0.4 -0.2 -0.2 0.0 0.6

Manufacturing 2.4 0.7 1.4 1.4 1.6 1.5 1.5


Construction 5.1 2.3 4.0 4.1 4.7 5.0 4.2


3.0 2.3 3.2 3.6 3.7 4.0 3.3


-2.9 1.1 3.4 4.0 4.2 4.0 2.3


2.5 3.1 4.6 5.1 5.4 5.3 4.3


0.5 0.2 0.6 1.1 1.4 1.5 0.9


Total 0.9 1.9 2.9 3.3 3.5 3.6 2.7

Source: Quantec, own calculations, 2016

The agriculture, forestry and fishing sector will shrink by 13.3 per cent in 2016, whereas the manufacturing sector is expected to recover slightly with an average 2.4 per cent GDPR growth rate. High growth rates are expected to continue in the construction sector for the next 5 years, as well as the finance, insurance, real estate and business services sector. CWD is expected to have an average GDPR growth rate of 2.7 per cent over the next 5 years.


1.3.1 Employment per municipality

Table 1.5 indicates the trend in employment growth within each municipal area in the CWD.


225

Table 1.5 Cape Winelands District employment growth


2015


Municipality Trend


2004 - 2008 Recession 2008 - 2009


Witzenberg 17.14 9 550 1 747 -1 466 9 269

Drakenstein 29.33 16 879 8 977 -2 613 10 515

Stellenbosch 20.32 13 802 8 281 -1 545 7 066

Breede Valley 20.26 10 306 4 187 -1 708 7 827

Langeberg 12.95 10 691 4 638 -709 6 762

Total Cape Winelands District 100 61 228 27 830 -8 041 41 439

Western Cape Province - 456 528 276 992 -6 1240 240 776


In 2015, Drakenstein (29.33 per cent), Stellenbosch (20.32 per cent) and Breede Valley (20.26 per cent) collectively employed 69.9 per cent of individuals in the CWD. During the recession every local municipality in the District shed jobs. All municipalities did however regain jobs in the post-recession period. Drakenstein shed the most jobs during the recession, and Langeberg the least. The CWD has been recovering positively in terms of regaining the amount of jobs lost during the recession.


Table 1.6 indicates the trend in employment growth within each economic sector in the CWD.

Table 1.6 Cape Winelands District employment growth per sector


Sector Trend


2004 - 2008 Recession 2008 - 2009


Agriculture, forestry and fishing -53 737 -42 377 -7 927 -3 433


Manufacturing -3 666 988 -2 446 -2 208

Electricity, gas and water 468 238 8 222

Construction 13 135 8 400 -1 106 5 841


40 998 26 298 902 13 798



21 537 13 135 -609 9 011


18 929 10 049 1 207 7 673

General government 11 744 4 592 1 369 5 783

Total Cape Winelands District 61 228 27 830 -8 041 41 439


The agriculture, forestry and fishing sector; the mining and quarrying sector; and the manufacturing sector all shed jobs over the 10-year period between 2004 and 2015. The agriculture, forestry and fishing sector shed 42 377 jobs before the recession


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(2004 - 2008); 7 927 jobs shed during the recession (2008 - 2009); and was still shedding jobs after the recession (2009 - 2015). This indicates that it has not only been the recession and drought that has had an impact on the agriculture, forestry, and fishing sector, but the fact that the global financial recession started from 2007 which could have impacted local exports.

1.4 Comparative advantage

Table 1.7 indicates the sectors where CWD has a comparative advantage2 in the Western Cape Province in terms of GDPR and employment.

Table 1.7 Comparative advantage in terms of GDPR and employment, Cape Winelands District, 2015

Sector In terms of

GDPR In terms of

employment












Within the Western Cape, the Cape Winelands District has a comparative advantage in the agriculture, forestry and fishing, construction, wholesale and retail trade, catering and accommodation and community, social and personal services sectors. The District’s economic sectors also benefit from niche economic activities that are positive externalities of the agro-processing activity in the District. These include wine tourism, the branding of the District as the “Foodie Capital” of South Africa due to the food processing happening locally, as well as the housing of internationally acclaimed restaurants. These niche activities predominantly situated in the Stellenbosch, Paarl and Franschhoek areas of the District are discussed in detail in the value chain sections.

Table 1.8 indicates the number and Rand value of the procurement contracts undertaken by the CWD Municipality during the 2014/15 financial year.

2 A comparative advantage indicates a relatively more competitive production function for a product or service in a specific economy (regional or sub-regional) than in the aggregate economy (provincial or national). It therefore measures whether a specific economy produces a product or renders a service more efficiently than another. One way to measure the comparative advantage of a specific economy is by way of the location quotient. A location quotient as a tool, however, does not take into account external factors such as government policies, investment incentives, and proximity to markets, etc., which can influence the comparative advantage of an area.


227

Table 1.8 Cape Winelands District procurement contracts 2014/15

Sector


Number R-value

Construction 15 506 713 346.55

Electricity 4 10 965 030.19

Financial services 2 8 745 007.44

Wholesale and retail trade 4 29 507 646.26

Total 25 555 931 030.44


A total of 25 procurement contracts were undertaken by the Municipality during the 2014/15 financial year to the value of approximately R555 million. The majority (60 per cent) were in the construction sector; 16 per cent in the electricity, gas and water sector; 16 per cent in the wholesale and retail trade sector; and 8 per cent in the financial services sector.

Table 1.9 Cape Winelands District agriculture as per contribution of Western Cape agriculture, 2013

Sub-sector Witzenberg Drakenstein Stellenbosch Breede Valley Langeberg CWDM

Top 10 Crops (as % of Western Cape)

Wine Grapes 5.1 14.3 15.1 15.9 15.4 65.8

Table Grapes - 15.9 - 44.1 - 60

Lucerne 2.4 1.7 0.3 0.5 1.6 6.5

Canola - 2.1 - - - 2.1

Small Grain Grazing 4.5 1.8 0.1 1.0 2.4 9.8

Planted Pastures Perennial

2.2 2.5 0.8 0.8 3.4 9.7

Weeds - - - - - -

Natural grazing 5.7 3.1 1.1 1.1 3.8 14.8

Fallow 3.9 - 0.4 1.1 2.6 13.4

Stubble - - - 9.3 - 9.3

Wheat 1.4 3.4 - 0.3 0.4 5.5

Olives 22.3 5.1 - - 27.4

Peaches 36.4 - - - 33.0 69.4

Apricots - - - - 50.1 50.1

Plums - - 14.0 - - 14.0

Pears 60.1 - 1.5 - - 61.6

Apples 33.1 - - - - 33.1

Planted Pastures - 3.2 - - - 3.2

Proteas - - 8.0 - - 8.0

Weeds - - - 5.2 9.1 14.3

Top Livestock - - - - - -

Cattle 1.9 1.4 0.9 2.2 4.1 10.5

Goats 0.6 0.3 0.5 0.0 0.8 2.2

Horses 3.5 4.9 7.3 0.6 20.2 36.5

Ostriches 1.8 0.0 0.1 0.2 1.4 3.5

Pigs 0.4 3.7 14.2 1.2 14.2 33.7

Sheep 1.7 0.8 0.1 0.2 2.1 4.9

Source: WC Department of Agriculture, Western Cape AgriStats, 2013


228

As mentioned previously, the CWD Municipality has a high comparative advantage within the agriculture sector. Table 1.9 indicates the main agriculture activities for 2013 in the CWD as per the percentage contribution to the Western Cape Province’s overall agriculture contribution.

In 2013 the main crops and livestock in the CWD were:

1. Peaches (69.4 per cent of the Western Cape)

2. Wine Grapes (65.8 per cent of the Western Cape)

3. Pears (61.6 per cent of the Western Cape)

4. Table Grapes (60 per cent of the Western Cape)

Table 1.10, indicates the economic contribution of the manufacturing sector in the CWD.

Table 1.10 Cape Winelands District manufacturing GDPR contribution per sector, 2015 (%)

Sub-sector Cape Winelands

District Witzenberg Drakenstein Stellenbosch Breede Valley Langeberg


32.0 40.9 31.2 26.5 32.1 35.7


5.0 3.0 3.5 7.2 5.3 5.9


13.9 11.9 15.2 15.4 13.1 10.7


16.2 20.8 13.0 17.3 16.4 16.7


3.5 3.8 4.2 3.1 3.3 2.7


11.5 6.5 12.3 11.6 13.0 12.5


0.7 0.2 1.1 0.9 0.4 0.3

Radio, TV. Instruments, watches and clocks

1.2 0.4 1.3 1.8 1.1 0.7

Transport equipment

5.5 2.6 6.6 6.7 6.1 2.8


10.4 9.8 11.6 9.4 9.1 12.0



229

Table 1.11, indicates that the manufacturing sectors that contributed most to the CWD’s GDPR in 2015 were:

Food, beverages and tobacco (32 per cent)



From Table 1.9 and Table 1.10, it is clear that the agriculture sector is dominated by, peaches, wine grapes, pears and table grapes. This correlates with the dominating ago-processing sub-sector of the CWD which is concentrated on processing grapes and fruit into wine, juice, brandy, as well as dried and tinned fruit products to manufacture food, beverages and tobacco (32 per cent to GDPR in 2015). Dairy manufacturing, rose farming and thoroughbred horses are also present in the region.


Table 1.11 reflects the top companies located in the CWD. This data was collated from the Western Cape Top 300 Companies (based on criteria developed in partnership with the Cape Chamber of Commerce, the Western Cape Provincial Government, Accelerate and Wesgro) and Wesgro Fact Sheets for the CWD.

Table 1.11 Top companies, Cape Winelands District


Construction 2 ± 2 220*

Finance and business services 11 ± 66 757*

Manufacturing 19 ± 63 318*

Wholesale and retail trade, catering and accommodation 7 ± 41 600*

Total 39 ± 173 895*

* This includes employment for the whole company (all branches, not just Cape Winelands District office branches).


There are 39 top companies in terms of employment and contribution to GDPR in the CWD. These include well-known brands such as KWV Holdings (Pty) Ltd, Parmalat, SASKO, KWV, Distell Limited, Parmalat Group, Rainbow Chicken, Coca-cola, Spier Wines (Pty) Ltd, Pioneer Foods; Tigerbrands, Rhodes Food; Ceres Fruit Juice; Ceres Food Growers; Ashton Canning, Spier Wines (Pty) Ltd, and Remgro Limited. Paarl Media has downscaled their operations within the CWD and have moved to Montague Gardens in Cape Town. Pioneer Foods have also downscaled their head office activities in Paarl and have located to Tygervalley.


Of the total exports in the CWD in 2015, 67 per cent included manufacturing products and 33 per cent included agriculture, forestry and fishing products. Of total imports in 2015, 68 per cent included mining and quarrying products, 25 per cent manufacturing


230

products, and 8 per cent agriculture, forestry and fishing products. Figure 1.3 indicates the CWD trade balance between 2005 and 2015.

Figure 1.3 Cape Winelands District Trade Balance (2005 - 2015)


Agro-processing and agriculture are key sectors of the district economy. Collectively, products derived from these sectors account for 93.2 per cent of the top exports values. One of the fastest growing exports from the District is wine. There is extensive processing throughout the District that stimulates downstream manufacturing activities that support these products such as label design and bottle manufacturing. However, the regional trade balance in the CWD has been negative since 2005, mainly due to increases in trade imports from R17.7 billion in 2005 to R31.6 billion in 2015.

There has been a continuous trade deficit in the mining and quarrying sector since 2005, which could be attributed to a combination of the global recession, slowdown of Chinese manufacturing, and the weakness of the commodity market due to currency fluctuations and inflation. The trade deficit has also decreased from 2013 (-R27.4 billion) to 2015 (-R4.6 billion) which could be attributed to the volatile world economy and the fact that South Africa could face another recession in 2017 if the economy does not improve.


The CWD experienced an average GDPR growth rate of 3.6 per cent between 2004 and 2015. Apart from the challenges brought about by subdued commodity prices, a number of other challenges are having an impact on the economy, such as drought which subsequently causes increases in domestic food prices, and the currency depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy). This can be seen in the trade balance within the CWD which has been negative since 2005.

-55-50

-45-40-35-30

-25-20-15-10

-5

05

101520

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

R b

illio

n



231

In 2015, Drakenstein (29.33 per cent), Stellenbosch (20.32 per cent) and Breede Valley (20.26 per cent) collectively employed 69.9 per cent of individuals in CWD. During the recession, every local municipality in the District was shedding jobs. All of these municipalities however regained jobs after the recession.

The primary sector contributed an average of 5.5 per cent towards the GDPR of the District in 2015, which predominately consists of agriculture (i.e. peaches, pears, apples and cattle). In turn the secondary and tertiary sectors contributed 23. 2 per cent and 71 per cent respectively of the GDPR of the district in 2015. Some of the top companies in the CWD include KWV Holdings (Pty) Ltd, Parmalat, SASKO, Distell Limited, British American Tobacco South Africa, Rainbow Chicken, Coca-cola, Spier Wines (Pty) Ltd, and Remgro Limited.


233

2


2.1 Introduction

This sub-section provides a macroeconomic outlook on the municipal level, an overview of trends between 2004 – 2015 and an outlook in terms of GDPR for 2016 - 2021. Employment is also considered in this section; as well as skills levels and building plans passed and completed.

2.2 Witzenberg


The primary sector in the Witzenberg municipal area contributed 13.7 per cent towards the District GDPR performance in 2015 while the secondary and tertiary sectors contributed 25.7 per cent and 60.6 per cent respectively towards the GDPR of the municipal area. Table 2.1 indicates the Witzenberg Municipal area’s GDPR performance per sector.


234

Table 2.1 Witzenberg GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



13.7 1 144 2.0 5.9 -2.6 0.3


Manufacturing 13.2 1 106 4.4 7.2 -3.6 3.8


3.3 279 6.3 6.6 21.6 3.5

Construction 9.2 772 12.6 22.9 11.7 5.8


17.4 1 456 6.4 9.9 2.0 4.8


7.1 598 5.5 8.7 1.2 4.0


17.6 1 475 9.8 16.4 8.8 5.5


7.4 624 6.3 10.6 3.4 4.0

General government 11.0 922 6.4 8.3 6.7 5.1

Total Witzenberg 100 8 377 5.9 9.7 3.0 3.9


The sectors that contributed the most to Witzenberg’s GDPR in 2015 was the finance, insurance, real estate and business services sector (17.6 per cent); the wholesale and retail trade, catering and accommodation sector (17.4 per cent); and the agriculture, forestry and fishing sector (13.7 per cent). The economic sectors that contributed the least to GDPR included the mining and quarrying sector and the electricity, gas and water sector. During the recession only two economic sectors experienced a contraction namely the agriculture, forestry and fishing industry and the manufacturing industry. Overall, Witzenberg grew by an average of 5.9 per cent over the last 10 years.


Table 2.2 indicates the trend in employment growth within each economic sector in the Witzenberg municipal area.


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Table 2.2 Witzenberg employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



22.2 13 076 -12 448 -10 903 -2 343 798

Mining and quarrying 0.0 3 0 1 0 -1

Manufacturing 6.3 3 722 508 539 -143 112


0.4 241 145 72 9 64

Construction 8.4 4 969 2 911 1 940 -75 1 046


22.0 12 982 6 563 3 955 238 2 370


3.2 1 884 1 046 578 57 411


10.7 6 304 3 078 1 863 28 1 187


14.4 8 467 3 923 2 109 339 1 475


Total Witzenberg 100 58 884 9 550 1 747 -1 466 9 269


There were approximately 59 800 residents employed within Witzenberg area in 2015. The sectors that employed the most residents included the agriculture, forestry and fishing sector (22.2 per cent); the wholesale and retail trade, catering and accommodation sector (22 per cent); and the community, social and personal services sector (14.4 per cent). In Witzenberg, only three economic sectors shed jobs during the recession namely, the agriculture, forestry and fishing sector (-2 343); the manufacturing sector (-143); and the construction sector (-75). After the recession, these sectors regained jobs and only the mining and quarrying sector has continued to shed jobs. The agriculture, forestry and fishing sector has shed jobs continuously from 2004, with the majority losses occurring when the global recession started internationally.

2.2.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.3 indicates the skills levels in Witzenberg municipal area.


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Table 2.3 Witzenberg skills level




2015

Skilled 15.5 4.0 7 335

Semi-skilled 37.6 3.2 17 865

Low skilled 46.9 -1.3 22 261

Total Witzenberg 100 0.8 47 461


Only formal employment numbers can be used to determine the skills level in the area. In Witzenberg there were 47 461 formally employed individuals and 11 423 informally employed individuals. The majority of Witzenberg’s formally employed individuals (46.9 per cent) are low skilled, compared to 37.6 per cent semi-skilled and 15.5 per cent skilled. Skilled and semi-skilled formal employees have been increasing positively between 2004 and 2015 (4 per cent and 3.2 per cent respectively), while the low skilled formal employees have been decreasing between 2004 and 2015 (-1.3 per cent). This could be indicating up-skilling in the Witzenberg municipal area through either better access to education as well as up-skilling opportunities through employers.

2.3 Drakenstein


In the Drakenstein municipal area, the primary sector contributed 5.5 per cent to the GDPR of the area, while the secondary sector contributed 23.4 per cent, and the tertiary sector 71.0 per cent. Table 2.4 indicates Drakenstein’s GDPR performance per sector.


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Table 2.4 Drakenstein GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



5.3 1 024 1.6 5.4 -3.1 -0.1


Manufacturing 12.6 2 461 -3.1 -2.2 -18.6 -1.2


2.7 521 3.2 3.5 6.2 2.4

Construction 8.1 1 585 8.8 16.7 7.7 3.8


18.5 3 611 5.1 7.8 0.6 4.0


8.9 1 735 3.2 5.0 -0.8 2.6


24.3 4 737 5.8 9.5 3.1 3.8


8.6 1 667 4.0 6.8 0.7 2.7


Total Drakenstein 100 19 471 3.1 5.2 -2.1 2.6


The sectors that contributed the most to Drakenstein’s GDPR in 2015 was the finance, insurance, real estate and business services sector (24.3 per cent); the wholesale and retail trade, catering and accommodation sector (18.5 per cent); and the manufacturing sector (12.6 per cent). Four economic sectors had negative GDPR growth rates during the recession namely the agriculture, forestry and fishing sector; the mining and quarrying sector; the manufacturing sector; and the transport, storage and communication sector. After the recession (2009 - 2015) the agriculture, forestry and fishing sector and the manufacturing sector continued to experience negative GDPR growth rates. Overall, Drakenstein grew by 3.1 per cent over the last 10 years.


Table 2.5 indicates the trend in employment growth within each economic sector in the Drakenstein municipal area.


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Table 2.5 Drakenstein employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



8.0 8 061 -10 132 -8 379 -1 711 -42


Manufacturing 8.0 8 051 -3 206 -987 -996 -1 223


0.4 360 163 82 5 76

Construction 9.0 9 094 3 628 2 586 -454 1 496


25.2 25 410 10 284 6 809 85 3 390


5.1 5 103 2 438 1 404 83 951


15.9 16 019 4 599 3 087 -396 1 908


16.5 16 624 5 628 3 017 378 2 233


Total Drakenstein Municipality

8.0 100 779 16 879 8 977 -2 613 10 515


Drakenstein employed 100 779 people in 2015 and the economic sectors that contributed the most to this employment included the wholesale and retail trade, catering and accommodation sector (25.2 per cent); the community, social and personal services sector (16.5 per cent); and the finance, insurance, real estate and business services (15.9 per cent). Half of the economic sectors listed above shed jobs during the recession (2008 - 2009) and three of these sectors (agriculture, manufacturing and mining) continued to shed jobs after the recession (2009 - 2015). The agriculture, forestry and fishing sector has been shedding jobs throughout the different reporting cycles indicating that the global recession and current drought has been impacting the agriculture sector for the past several years.

2.3.3 Skills level

Table 2.6 indicates the skills levels of Drakenstein.

Table 2.6 Drakenstein skills level




2015

Skilled 24.5 2.2 18 326

Semi-skilled 39.8 0.6 29 839

Low skilled 35.7 -1.3 26 744

Total Drakenstein 100 0.21 74 909



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In the Drakenstein municipal area, there were 74 909 formally employed individuals, indicating that 25 870 individuals were informally employed in 2015. The majority of Drakenstein’s formally employed individuals are semi- and un-skilled (39.8 per cent), compared to 35.7 per cent low skilled and 24.5 per cent skilled. Skilled and semi-skilled formal employees have been increasing positively between 2004 and 2015, while the semi- and un-skilled formal employee have been decreasing between 2004 and 2015. This could be indicating up-skilling in Drakenstein municipal area.

2.4 Stellenbosch


In the Stellenbosch municipal area, the primary sector contributed 2.5 per cent to the GDPR of the area whereas the secondary and the tertiary sectors contributed 21.6 per cent and 75.8 per cent respectively. This indicates that the tertiary sector is the strongest in the Stellenbosch area. Table 2.7 indicates Stellenbosch area’s GDPR performance per sector.

Table 2.7 Stellenbosch GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.3 326 -5.3 -2.8 -11.5 -5.9


Manufacturing 14.5 2 031 -0.9 0.5 -13.6 0.3


1.4 201 1.9 1.7 4.6 1.6

Construction 5.7 790 6.8 13.9 5.3 2.4


21.4 2 993 4.9 7.6 0.5 3.9


12.1 1 695 7.3 12.3 4.5 4.5


24.2 3 377 3.8 6.2 -0.1 2.7


7.2 1 009 1.8 3.4 -2.0 1.4


Total Stellenbosch 100 13 971 2.8 4.8 -2.3 2.3


Stellenbosch grew by an average of 2.8 per cent between 2004 and 2015. The sectors that grew the most during this time period included the construction sector (6.8 per cent); the transport, storage and communication sector (7.3 per cent); and the wholesale and retail trade, catering and accommodation sector (4.9 per cent). The agriculture, forestry and fishing and manufacturing sectors contracted between 2004 and 2015.


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In 2015, the sectors that contributed the most to the economy of the Stellenbosch area included the finance, insurance, real estate and business services sector (24.2 per cent); the wholesale and retail trade, catering and accommodation sector (21.4 per cent); and the manufacturing sector (14.5 per cent).


Table 2.8 indicates the trend in employment growth within each economic sector in Stellenbosch.

Table 2.8 Stellenbosch employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.3 2 327 -7 090 -53 56 -915 -819


Manufacturing 10.5 7 307 -992 402 -658 -736


0.2 163 73 35 2 36

Construction 7.0 4 853 1 783 1 210 -293 866


30.3 21 177 8 768 5 795 130 2 843


7.3 5 118 3 100 1 684 171 1 245


17.1 11 943 3 782 2 450 -281 1 613


13.3 9 305 2 351 1 282 66 1 003

General government 10.9 7 581 2 030 767 241 1 022

Total Stellenbosch Municipality

100 69 808 13 802 8 281 -1 545 7 066


Stellenbosch employed almost 70 000 people in 2015. The economic sectors that contributed the most to Stellenbosch’s employment in 2015 included the wholesale and retail trade, catering and accommodation (30.3 per cent); the finance, insurance, real estate and business services sector (17.1 per cent); and the community, social and personal services sector (13.3 per cent). The agriculture, forestry and fishing and mining and quarrying sectors and the manufacturing sector continued to shed jobs after the recession (2009 - 2015).


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2.4.3 Skills level

Table 2.9 indicates the skills levels of Stellenbosch.

Table 2.9 Stellenbosch skills level




2015

Skilled 25.3 1.2 11 990

Semi-skilled 47.0 1.5 22 284

Low skilled 27.7 -2.8 13 107

Total Stellenbosch 100 -0.03 47 381


In the Stellenbosch municipal area, there were 47 381 formally employed individuals, indicating that 22 427 individuals were informally employed in 2015. The majority of Stellenbosch’s formally employed individuals are semi-skilled (47 per cent), 27.7 per cent were low skilled, and 25.3 per cent skilled. Skilled employees have been increasing positively between 2004 and 2015 (1.2 per cent) as well as the semi-skilled employees (1.5 per cent). The low skilled formal employees have been decreasing between 2004 and 2015 (-2.8 per cent).

2.5 Breede Valley


In the Breede Valley municipal area, the primary sector contributed 4.1 per cent to the GDPR of the area. In turn the secondary and tertiary sectors contributed 21.5 per cent, and 74.4 respectively to the GDPR of the municipality. Table 2.10 indicates the Breede Valley’s GDPR performance per sector.


242

Table 2.10 Breede Valley GDPR performance per sector


2015

R million value 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.0 439 -5.0 -2.6 -12.5 -5.3


Manufacturing 13.2 1 459 3.1 6.2 -5.6 2.4


1.7 189 -2.4 -4.9 -1.4 -0.9

Construction 6.5 722 9.5 17.6 8.1 4.3


19.7 2 175 5.0 7.5 0.7 4.0


11.3 1 241 3.2 5.2 -0.7 2.6


25.1 2 765 8.2 13.2 5.9 5.2


8.4 930 2.4 4.2 -1.2 1.7


Total Breede Valley 100 11 025 3.9 6.2 0.0 3.0


Breede Valley had an average growth rate of 3.9 per cent during 2004 and 2015 and the economy generated R11 billion in 2015. The sectors that contributed the most to the area’s GDPR included the finance, insurance, real estate and business services sector (25.1 per cent); the wholesale and retail trade, catering and accommodation sector (19.7 per cent); and the manufacturing sector (13.2 per cent). Although most economic sectors contracted during the recession (2008 - 2009), the majority turned into positive territory during 2009 - 2015 except for the agriculture, forestry and fishing sector, which contracted (-5.3 per cent) and the electricity, gas and water sector (-0.9 per cent). The construction sector and the finance, insurance, real estate and business services sector performed at high growth rates in the last 10 years.


Table 2.11 indicates the trend in employment growth within each economic sector in Breede Valley municipal area.


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Table 2.11 Breede Valley employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



5.7 3 979 -14 265 -10 612 -1 794 -1 859


Manufacturing 8.2 5 708 197 623 -326 -100


0.2 164 37 23 -5 19

Construction 8.0 5 566 2 990 1 680 -147 1 457


26.1 18 158 7 638 4 913 131 2 594


6.5 4 520 2 529 1 399 109 1 021


18.9 13 140 6 454 3 795 -3 2 662


16.9 11 748 3 553 1 978 183 1 392


Total Breede Valley 100 69 613 10 306 4 187 -1 708 7 827


Breede Valley employed almost 70 000 people in 2015 and the sectors that contributed most to this employment included the wholesale and retail trade, catering and accommodation sector (26.1 per cent); the finance, insurance, real estate and business services sector (18.9 per cent); and the community, social and personal services sector (16.9 per cent). The agriculture, forestry and fishing and the mining and quarrying sectors as well as the manufacturing sector continued to shed jobs after the recession (2009 - 2015). The amount of jobs created after the recession was much higher than the amount of jobs created before the recession (2004 - 2008), which is positive for economic growth in the region.

2.5.3 Skills level

Table 2.12 indicates the skills levels in Breede Valley.

Table 2.12 Breede Valley Skills Level




2015

Skilled 20.7 2.1 10 214

Semi-skilled 44.5 1.3 21 894

Low skilled 34.8 -3.1 17 126

Total Breede Valley 100 -0.42 49 234



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In Breede Valley, there were 49 234 formally employed individuals, indicating that 20 379 individuals were informally employed in 2015. The majority of Breede Valley’s formally employed individuals (44.5 per cent) are semi-skilled, compared to 34.8 per cent low skilled and 20.7 per cent skilled. Skilled and semi-skilled formal employees have been growing positively between 2004 and 2015; while the low skilled employees have been decreasing.

2.6 Langeberg


In Langeberg, the primary sector contributed 3.6 per cent to the GDPR of the area whilst the secondary and tertiary sectors contributed 24 per cent and 72.5 per cent respectively to the GDPR of the municipality. Table 2.13 indicates Langeberg’s GDPR performance per sector.

Table 2.13 Langeberg GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.5 195 -7.7 -3.9 -15.3 -9.0


Manufacturing 16.0 900 -0.1 1.6 -8.0 0.1


2.0 113 3.2 2.5 2.0 3.9

Construction 6.0 339 7.7 15.3 6.1 2.9


22.4 1 263 6.4 10.0 2.0 4.7


13.6 763 8.5 14.5 5.2 5.1


19.2 1 081 8.7 14.7 6.1 5.1


8.5 477 4.8 7.9 1.7 3.2


Total Langeberg 100 5 629 3.9 6.6 -0.4 2.8


Langeberg grew by an average of 3.9 per cent between 2004 and 2015 and generated R5.6 billion in 2015. The sectors that contributed the most to the area included the wholesale and retail trade, catering and accommodation sector (22.4 per cent); the finance, insurance, real estate and business services sector (19.2 per cent); and the manufacturing sector (16 per cent). During the recession only the agriculture, forestry and fishing sector; the mining and quarrying sector; and the manufacturing sector contracted. After the recession all the economic sectors grew positively except for the agriculture, forestry and fishing sector.


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Table 2.14 indicates the trend in employment growth within each economic sector in Langeberg.

Table 2.14 Langeberg employment growth per sector


2015

Number of jobs2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.1 1 808 -9 802 -7 127 -1 164 -1 511


Manufacturing 9.5 4 231 -173 411 -323 -261


0.2 96 50 26 -3 27

Construction 8.2 3 645 1 823 984 -137 976


32.3 14 380 7 745 4 826 318 2 601


8.6 3 833 2 785 1 431 182 1 172


14.1 6 286 3 624 1 940 43 1 641


15.4 6 854 3 474 1 663 241 1 570


Total Langeberg 4.1 44 501 10 691 4 638 -709 6 762


Langeberg municipal area employed 44 501 people in 2015 and the sectors that employed the majority of these people included the wholesale and retail trade, catering and accommodation sector (32.3 per cent); the community, social and personal services sector (15.4 per cent); and the finance, insurance, real estate and business services sector (14.1 per cent). The primary and secondary sectors shed jobs during the recession. After the recession only the agriculture, forestry and fishing sector; the mining and quarrying sector; and the manufacturing sector were still shedding jobs.

2.6.3 Skills level

Table 2.15 indicates the skills levels of Langeberg.

Table 2.15 Langeberg skills level




2015

Skilled 20.6 3.1 4 849

Semi-skilled 46.9 2.0 11 020

Low skilled 32.5 -5.5 7 651

Total Langeberg 100 -1.15 23 520



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In the Langeberg municipal area, there were 23 520 formally employed individuals, indicating that 20 981 individuals were informally employed in 2015. The majority of the Langeberg’s formally employed individuals (46.9 per cent) are semi-skilled, compared to 32.5 per cent low skilled and 20.6 per cent skilled. Skilled and semi-skilled formal employees have been increasing positively between 2004 and 2015, while the low skilled formal employees have been decreasing between 2004 and 2015.

2.7 Building plans passed and completed3

Building plans can also provide a picture of the performance of an economy. A growth in the number of building plans passed and completed is an indication of a growing economy - both in that building plans is a response to growth in demand variables, and a stimulant of further growth as an activity in and of itself. It also has implications for spatial development planning within the CWD region.

Figure 2.1 Stellenbosch building plans passed, 2004 - 2015


Figure 2.1 indicates the total square metres of building plans passed between 2004 and 2015 in the Stellenbosch municipal area. In Stellenbosch a total of 757 465 square metres of residential buildings have been passed in the last 10 years (2004 - 2015), 192 137 square metres of non-residential buildings (majority in industrial space), and 306 042 square metres of additions and alterations. There were many building plans passed before the recession and building activity has been increasing since 2013. There was a significant gap between building plans passed and building plans completed in 2011.

3 ‘Only selected municipalities’ building plans are available.

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sq

uar

e m

etre

s



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Figure 2.2 Stellenbosch building plans passed and completed, 2004 - 2015


Figure 2.2 indicates the building plans passed and completed in the Stellenbosch municipal area between 2004 and 2015. Many building plans were passed in Stellenbosch before 2012, with more building plans being completed in 2011 than any other year, as well as the high number of building plans that were passed. Very few building plans were being passed in 2014 and 2015.

Figure 2.3 indicates the total square metres of building plans passed between 2004 and 2015 in Breede Valley.

Figure 2.3 Breede Valley building plans passed, 2004 - 2015


In Breede Valley, a total of 224 510 square metres of residential buildings have been passed in the last 10 years (2004 - 2015), 163 059 square metres of non-residential buildings (majority in industrial space), and 438 737 square metres of additions and

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

500

1 000

1 500

2 000

2 500

3 000

3 500

Passed Completed

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sq

uar

e m

etre

s



248

alterations. There has been a similar amount of building plans passed for non-residential space and additions/alterations over the last 10 years, with a spike in 2005 and again in 2011. Many residential building plans were passed between 2004 and 2005 and thereafter showed similar trends as the non-residential and additions/alterations building plans passed.

Figure 2.4 Breede Valley building plans passed and completed, 2004 - 2015


Figure 2.4 indicates the building plans passed and completed in Breede Valley between 2004 and 2015. Many building plans were passed in Breede Valley before 2012, with more building plans being completed in 2011 than any other year. The number of building plans passed remained steady after the recession, but the number of building plans completed remained low after 2011 and were lowest in 2015. When more building plans are passed than completed it could indicate that there was a lot of interest in development in the area, but very few building plans were actually completed which could mean a number of different things, such as land banking, or market conditions due to the recession, or a decline in demand in the market between planning and intended construction commencement.


In all the local municipalities within the CWD the following sectors contributed the most to GDPR and employment in the District:

Finance, insurance, real estate and business services sector

Wholesale and retail trade, catering and accommodation sector

Manufacturing sector

Agriculture, forestry and fishing sector

0

200

400

600

800

1 000

1 200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

er

Passed Completed


249

Compared to GDPR, the employment per sector is recovering a lot slower in most of the local municipalities within the District. The reliance on either primary, secondary or tertiary sectors is a reflection on the main industries located in each local municipal area, with the dominance of the tertiary sector in Stellenbosch compared to the dominance of the primary sector in Witzenberg. In general, the skills levels in all the local municipalities in the District are improving, indicating either better access to education or up-skilling by employers.

The research and innovation at Stellenbosch Technopark and its close relationship with the Stellenbosch University has made Stellenbosch the most important contributor to the science and technology sector in the District. Growth potential has been identified for the electronics industry such as industrial and process automation. Stellenbosch is positioning itself to become the Innovation Capital of South Africa. Data costs remains a high cost not only for business but consumers as well (MERO Municipal Survey, 2016).


251

3

Value chains

3.1 Introduction

The following sub-section focuses on two value chains found in the CWD. Based on research and discussions with the District the wine and table grapes and stone fruits value chains will be focused on in MERO 2016. Additional value chains will be added with each subsequent year. The aim of the value chains is to show the movement of goods and services for certain commodities, as well as the risks and opportunities.

3.2 Wine and Table Grapes value chain

Grapes are cultivated in the Western Cape Province primarily for the production of wine. The various value adding activities from cultivation to the production of end products currently taking place in the Province are illustrated in Figure 3.1 and further discussed in the sub-sections to follow.


252

Figure 3.1 Grape value chain

Source: DAFF, 2015


253

3.2.1 Inputs

This section provides an overview of the land, labour and skills inputs that feed into the Provinces’ grape value chain. Grape cultivation in the Western Cape is concentrated in the CWD. The District currently inputs over 71 199 hectares of land for the cultivation of grapes (WCDA, 2012). The cultivating activities are concentrated in the Stellenbosch, Paarl, Breedekloof and Robertson areas. These grape growing areas in the Province are also known as the wine regions and their productivity is illustrated in Table 3.1 below. Although not as high as the CWD, the West Coast also cultivates a significant share of grapes in the Province, with over 26 407 hectares of land being employed for grape production (WCDA, 2012). Table 3.1 illustrates the location of grape growing in the Province for the purpose of wine production, the hectares employed, the number of vines and the share of total production.

Table 3.1 Location of grape production in the Province

Region Number of vines % of total vines Area in hectares % of total hectares

Stellenbosch 48 574 810 16.45 16 037 16.12

Paarl 47 522 923 16.09 15 835 15.92

Robertson 49 484 133 16.75 14 652 14.73

Swartland 34 427 310 11.66 13 591 13.66

Breedekloof 41 693 355 14.12 13 022 13.09

Olifants River 27 499 146 9.31 10 149 10.20

Worcester 28 091 196 9.51 8 858 8.91

Klein Karoo 8 155 319 2.76 2 660 2.67

Total 295 346 914 100 99 463 100

Source: DAFF, 2015 and SAWIS, 2014

The distribution of vineyards amongst the wine producing regions is fairly even, with 15.9 per cent, of grapes cultivated in Paarl, 16.1 per cent in Stellenbosch, 13.7 per cent in Swartland and 14.4 per cent in Robertson (DAFF, 2015). Collectively these areas accounted for 60 per cent of the total national area planted for grapes in 2014 (DAFF, 2015). The Western Cape has various types of grape growers, these consist of (DAFF, 2015):

Independent growers that do not have wine-making facilities or are not members or shareholders of a cellar.

Those that are part of cooperative or shareholding companies.

Vineyards that are owned by private cellars (which may also form part of a vertically integrated producer-wholesaler configuration.

These various grape growers are concentrated in varied locations in the province. Growers that are members of cooperatives (or shareholders of companies that are ex-cooperatives) are concentrated in Paarl, Stellenbosch and Robertson. While independent growers and cellars largely operate in Stellenbosch and Paarl, both towns contain independent as well as cooperative grape growers and cellars (DAFF, 2015). Labour input into grape production and further processing into wine in the Western


254

Cape is considerably large. According to the macroeconomic study commissioned by SAWiS, the Province inputs over 19 427 skilled, 48 392 semi-skilled and 100 283 unskilled employees, who are directly and indirectly involved in the value adding activities to grapes (SAWiS, 2015). This illustrates that these various value adding activities to grapes are important for unskilled and semi-skilled labour absorption in the wine growing regions of the Province.

3.2.2 Processing

This section provides an overview of the processing of grapes in the Province and discusses in detail wine production which is the majority output of grape processing in the Province. Currently, SAWIS counts 560 wine cellars in the country (DAFF, 2015):

481 private cellars, which dominate small to medium scale production.

50 producer cellars (cooperatives and ex-cooperatives).

20 cellars owned by producer wholesalers (buying bulk wine from other cellars as well), which collectively with producer cellars dominating large scale production; crush approximately 73 per cent of all grapes used for wine making locally.

Of the national total, over 95 per cent are located in the Western Cape Province, in the Paarl, Stellenbosch and Robertson areas (SAWiS, 2016). A more detailed distribution of these wine processors in the Province is illustrated in Table 3.2 below. This is followed by identification of the top companies involved, in Table 3.3 in the next paragraph. Table 3.2 illustrates the number and location of the producer cellars and private cellars in the Western Cape in 2015.

Table 3.2 Number of wine processors in the Western Cape, 2015

Location Producer cellars Private

Olifants River 3 12

Swartland 1 32

Klein-Karoo 4 23

Paarl 7 12

Robertson 9 57

Stellenbosch 2 169

Worcester 8 49

Breedekloof 11 17

Total 48 494

Source: SAWis, 2016

As illustrated by Table 3.2, the Western Cape houses 94 per cent (45 cellars of the national total of 48) of producer cellars and 97 per cent (480 of the national total of 494) of private wine cellars in the country (SAWiS, 2016). The Stellenbosch and Worcester regions specialise as locations for private wine processors and Breedekloof houses the highest number of producer cellars.


255

Table 3.3 illustrates the top wine processing companies in the Western Cape Province as per designated by the latest South African Wine Index (SAWi) ranking. These are also the top wine processing companies in the country.

Table 3.3 Top wine processing companies in the Western Cape

National ranking Cellar (Processing Company Name) Location

1 Saronsberg Cellar Witzenberg

2 Bouchard Finlayson Overstrand

3 Jordan Wine Estate Stellenbosch

4 Hamilton Russell Vineyards Overstrand

5 KWV Mentors Range Drakenstein

6 Rustenberg Wines Stellenbosch

7 Rijks Private Cellar Witzenberg

8 Groot Constantia Estate City of Cape Town

9 Constantia Glen City of Cape Town

10 Spier Stellenbosch

Source: BusinessTech, 2015

As illustrated by Table 3.3, the Province, specifically the CWD boast as a niche location for grape processing for the purpose of wine production in the country. This can be attributed to the clustering of wine producers and processors in the Province, which enables them to benefit from economies of scale and competitive pricing (DAFF, 2015). As such this can be identified as the Province’s comparative advantage within the wine value chain.

3.2.3 Outputs and End Users

As discussed in the previous section the majority of grape processing in the country is conducted in the Western Cape. The outputs of grape processing in the Province is not limited to wine. A range of other products were produced in 2015. These are listed below, with the quantities for the year (SAWiS, 2016).

Natural wine makes up the majority output of grape processing with 968.4 million litres of wine produced in 2015.

Wine for brandy; accounted for 41.8 million litres of grapes processed.

Distilled wine; accounted for 112.9 million litres of grapes processed.

Grape juice concentrate; accounted for 30.9 million litres processed grapes.

The varieties and volumes of wine produced in the major grape producing areas in the Western Cape are illustrated in Table 3.4.


256

Table 3.4 Varieties of wine produced in the Western Cape as % of the total Provincial production

Wine Variety Olifants River

(tons) Swartland

(tons) Klein Karoo

(tons) Paarl (tons)

Robertson (tons)

Stellenbosch (tons)

Worcester (tons)

Breedekloof (tons)

Chenin blanc 33.0 21.8 26.8 20.9 15.2 7.8 27.5 27.0

Colombar(d) 31.9 2.0 41.8 2.8 19.6 0.5 15.2 17.6

Sauvignon blanc

4.4 7.7 1.4 6.8 11.6 18.7 6.9 7.3

Chardonnay 2.3 5.7 3.5 7.6 12.2 7.1 5.4 5.5

Muscat d'Alexandrie

4.0 2.3 3.9 1.2 0.5 0.1 2.1 6.1

Sémillon 0.5 0.7 0.0 0.7 0.5 1.3 1.2 3.3

Muscat de Frontignan (Muscadel)

0.5 0.2 1.7 0.1 3.4 0.1 1.1 0.1

Viognier 0.2 0.9 0.7 1.7 0.6 1.2 0.9 0.5

Other white varieties

2.3 1.6 2.7 2.3 3.9 2.3 4.4 2.6

Table grapes 2.2 5.7 0.7 1.6 0.2 - 6.5 0.1

Total white varieties

81.2 48.8 83.3 45.6 67.7 39.3 71.1 70.3

Shiraz 5.0 13.8 2.9 13.7 6.5 14.5 5.2 5.8

Cabernet Sauvignon

2.9 10.7 1.2 11.9 6.6 15.0 2.9 3.5

Merlot 2.3 5.6 2.3 6.4 3.5 12.9 2.3 3.8

Pinotage 4.9 11.6 1.6 9.0 5.6 8.9 4.0 5.7

Ruby Cabernet

2.5 0.6 3.7 1.0 5.1 0.1 1.9 3.3

Cinsaut 0.1 2.2 0.0 4.1 1.0 0.8 1.2 5.5

Petit Verdot 0.1 0.4 0.1 1.1 0.5 1.3 0.5 0.5

Cabernet Franc

0.1 0.5 0.0 0.7 0.1 2.1 0.4 0.2

Other red varieties

0.9 4.9 4.4 4.5 3.2 5.0 1.6 1.1

Table grapes 0.0 0.7 0.5 2.0 0.0 0.0 9.0 0.3

Total red varieties

18.8 51.2 16.7 54.4 32.3 60.7 28.9 29.7

Total white and red

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Total tons 235 960 136 481 40 833 144 696 235 439 125 733 170 971 257 387

Source: SAWIs, 2016

As illustrated in Table 3.4, the wine regions in the Province produced over 1 347 500 tons of wine, with the different regions specialising in either white or red wine production (SAWiS, 2016). In South Africa, of the total output, 421.8 million litres of wine were sold to the domestic market, while 420 million litres were exported in 2015 (SAWiS, 2016).


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3.2.4 End Users

End users of wine produced and processed in the Province are both local and international. Individual end users within the domestic market are distributed by supermarkets, that purchase approximately 35 per cent of all wine sold locally (DAFF, 2015). These distributors are dominated by four major supermarket chains, namely, Pick n Pay, Shoprite/Checkers, Spar and Woolworths (DAFF, 2015). Pick n Pay, Shoprite/Checkers, and Spar sell already branded wines. This activity of branding is performed by various wine processors in the Province. Woolworths, on the other hand, an upper-segment chain focusing on its own private labels, creates its own wine blends, which are produced exclusively for the company (DAFF, 2015). As such packaging value adding activities are not exclusive to processors in the Western Cape, but are also undertaken by retailers that further diversify wine blends.

Over the past decade, the Western Cape Province commanded the greatest share of wines of fresh grapes exported from South Africa to the rest of the world with 95.9 per cent (DAFF, 2015). In 2014 the Province exported approximately R8.1 billion worth of wine from fresh grapes. As such the Province’s wine value chain also consists of international, individual and wholesale users. The high export values of wines of fresh grapes from the Western Cape Province were mainly from the CWD (84.4 per cent) and the major export market for wines of fresh grapes from South Africa is the UK and Germany (DAFF, 2015).

In 2014, 28.9 per cent of the total volume of wine exports from South Africa went to the United Kingdom (UK), three quarters of which was in bottles and the rest was in bulk (DAFF, 2015). Germany was the second destination with 10.9 per cent of total exports (34 per cent of which was bottled and 66 per cent was in bulk), followed by Sweden with 4.2 per cent (all packaged, much of it ‘Bag-in-box’) and Russia and the United States of America with 8 per cent (54 per cent of which was bottled and 46 per cent was in bulk) during the period under scrutiny (DAFF, 2015). Together, these five destinations account for 52 per cent of the volume of wine exports, and over 10 million litres of bulk wine (4 per cent of exports) end up in countries like Netherlands, Canada and Denmark for blending with local wines (DAFF, 2015). It is also evident that there is a considerable amount of packaging activities taking place in the Province’s wine value chain.

3.2.5 Risks

The growth of the Province’s wine value chain faces number of challenges. This includes competitions from fellow Southern hemisphere countries like Chile, Australia, and New Zealand (DAFF, 2015). Which is contributed to by that fact that South Africa does not have strong brands for mid-range quality wines sold over €7/£5, which is the fastest growing segment of wine sales and one with healthier margins compared to other price bands (DAFF, 2015). As such the lack of production of wines within this price band in the Province limits profitability and expansion of the value chain within this category of wines. In Stellenbosch two of every three producers are just breaking-even or making a loss, of the one third making a profit only 8 per cent are making a reasonable profit. (PWC, 2015). This has contributed to a lack of investment in the


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industry due to small margins (DAFF, 2015), as fewer than one in five wine producers in South Africa are making a reasonable profit and one in three is running at a loss (March, 2016).

The production phase in the value chain faces high unit costs, which renders the wine industry increasingly marginal, a “price taker” and economically unstable (DAFF, 2015). This acts as a deterrent for potential investors looking to enter into wine production in the Province. As illustrated in Table 3.4, a large share of producers in the Province produce in small quantities (DAFF, 2015), this creates an increasingly fragmented production to processing chain, which limits the capturing of economies of scale for wine processors in the Province. The processing and inbound logistic activities within the Provinces’ wine value chain face high input costs, from inputs such as electricity, fuel, packaging and transport, this contributes to lowering the profitability of wine producers (Maree, 2016). Combined with the constant upgrading of machinery, farming techniques and technology to remain competitive, it has added to higher input costs and the need for more skilled and flexible labour. Climate change effects, particularly rising temperatures and continuing drought, impose a significant risk to lowering grape production yields in the Province. This impacts the quantity and quality of grapes processed for wine production locally, as well as investor confidence in wine activities taking place in the Province.

3.2.6 Opportunities

There are a number of opportunities for growth within the Province’s value chain. These include the increase in existing market demand for wine and development of new markets, both locally and internationally (DAFF, 2015). The Western Cape Provincial government has set out, as one of their goals in the Provinces’ growth plan, under Project Khulisa, to double local wine exports to Angola and China. This has been identified by the plan as an opportunity to increase the consumer pool for South African wines. The most significant increasing market for the Western Cape has been the development of wine tourism, another output of the Provinces wine value chain. Although not discussed extensively in this chapter because it has been discussed in the tourism value chain, wine processing within the wine regions has stimulated organized wine routes. These wine routes offer wine cellars open to the public and have resulted in the designation of Cape Town in the Great Capitals wine network, (a global network of renowned wine producers). Currently there are approximately forty-four wine farms that also have restaurants for tourism purposes (DAFF, 2015). Furthermore, the actual volume of wine sales through direct cellar door sales is not likely to be very significant in absolute terms – with the exception of some flagship properties such as Vergelegen, Boschendal or Constantia based cellar farms (DAFF, 2015). As its significance, currently, is it creates an opportunity for further marketing of Western Cape wines, both locally and internationally.


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As indicated in the 2015 South African wine industry insights survey conducted by PWC, some wine producers are making use of government support (PWC, 2015). However, a large portion of wine producers surveyed indicated that they are unaware of government support currently being offered such as the Enterprise Investment Programme (EIP), Manufacturing Competitiveness enhancement programme, Export support, Jobs fund, Employment Tax Incentive (ETI) and Section 12L energy efficiency (PWC, 2015). Engaging service providers to assist with this could provide organisations with an opportunity to make use of the available programmes. Additionally, environmental sustainability assurance has been formally marketed through the Sustainable Wines South Africa seal, recognised by all Integrated Production of Wine (IPW) accredited producers. The continued participation by accredited producers in the integrated production of wine schemes indicates the industries commitment to an environmentally sustainable industry and provides an opportunity for further environmentally sustainable practices to be applied in the production of wine.

3.3 Stone Fruits value chain

The Western Cape is a major producer of stone fruits in South Africa, the province currently has a total of 27 818 hectares of land cultivated with stone fruits and exports, which accounts for just under 92 per cent of the country’s apricots, 93 per cent of peaches, 92 per cent of pears and 96 per cent of plums. Thus making the province the biggest producer of this type of crop in the country. It has been estimated that the total value of plum exports for South Africa is approximately R867 million, pear exports was approximately R2 billion, peach exports was just over R356 million and apricot exports totalled R83 million. The majority of stone fruit exports are destined for markets in Europe and Asia with the European Union countries (such as the Netherlands) dominating the European markets along with the UK.

The South African stone fruit industry mostly exports fresh fruits to Europe and Asia, however a significant amount of processed (such as canned) fruit is also exported to these regions. A small amount of stone fruits (especially peaches) is also imported from Spain. Furthermore, the majority of the local produce is absorbed by the processing (up to 72 per cent for apricots) industry. This industry produces goods such as canned fruits, jams, juices and ciders of which a significant amount are exported. Figure 3.2 illustrates the value chain of the stone fruit industry and will be discussed further in the following sections (Department of Agriculture, Forestry and Fisheries, 2015).


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Figure 3.2 Stone Fruit Value Chain

3.3.1 Inputs

Inputs in the stone fruits industry is identical to that of the entire agriculture sector. Inputs include fertilizer, farming equipment, pesticide and insecticide as well as water and labour. South Africa is currently a net importer of fertilizer and other agricultural chemicals such as pesticide as over half is sourced from imports. Fertiliser is mostly sourced from Middle Eastern countries like Qatar and Saudi Arabia, and European Union countries such as Germany and the Netherlands (Mostert, 2013). Local suppliers and producers of fertilizer and other agricultural chemicals in the Winelands district are mostly located near the towns of Paarl and Wellington.

The most notable suppliers of agricultural chemicals are Agrimark and Eco Green Agri, both located in Paarl. Agri-Organics is one of the biggest producers of agricultural chemicals in the Winelands District and is located in Strand near Cape Town. Another influential producer and supplier of agricultural chemicals in the Winelands District is Triomf who supplies distributors such as Agrimark amongst others in the District. Other


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input materials such as plant stems and seeds are procured locally from either a local nursery or equipment retailer. Equipment retailers are mostly located in and around urban centres such as Cape Town, Stellenbosch and Wellington. Nurseries on the other hand are located near more rural areas close to towns such as Stellenbosch, Tulbagh and Paarl in the Cape Winelands.

3.3.2 Production

Map 3.3 below illustrates the density (in hectares) of land cultivated with stone fruits in the Western Cape. From Map 3.1 it is clear that the majority stone fruits are produced in the CWD (WCDOA, 2016).

Map 3.1 Stone Fruits in the Western Cape

Source: WCDOA, 2016

Input costs are borne by producers. Producers of stone fruits are mostly located in the Western Cape Province as the majority of these fruits are produced here. The Cape Winelands is the biggest exporter of stone fruits in the Western Cape, producing just over 59 per cent of apricots, 66 per cent of peaches, 42 per cent of pears and 63 per cent of plums in the Province (Elsenberg.com, 2016). Producers in the CWD of the Western Cape are located around the towns of Wolseley and Tulbagh, Ceres, Stellenbosch, Franschhoek and Villiersdorp and are mostly located in the local municipal areas of Witzenberg (5 388 hectares cultivated), Langeberg (5 277 hectares cultivated) and Drakenstein (1 454 hectares cultivated) (Department of Agriculture, Forestry and Fisheries , 2015). It is important to note that harvesting of fruits is seasonal, this has ramifications for labour and the fluctuation in supply of fruits to the market (Department of Agriculture, Forestry and Fisheries, 2015).


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3.3.3 Storage

Harvested fruits are stored in cold storage facilities in order to maintain the freshness and the quality thereof. Most producers reportedly have storage facilities available on their farms, a small number of farms do make use of an export agency or another private entity’s storage facilities (Department of Agriculture, Forestry and Fisheries, 2015). In total there are 20 agency storage facilities in the CWD, nine of which are located in Witzenberg, nine are located in Langeberg and two are located in Drakenstein. Further cold storage is also necessary during the transportation phase of the value chain. This creates the need and use of cold containers on trucks to transport fruit on the road and cold terminals and depots and shipping ports and airports (Elsenberg.com, 2016).

3.3.4 Transport

Fresh fruits are mainly transported from the farm/storage facility via road to processing facilities, airports and shipping ports for export or directly to a retailer/wholesaler for packaging and further distribution. It was reported that sea transport is cheaper than air freight but will take longer to arrive at the destination market (Department of Agriculture, Forestry and Fisheries, 2015). This will have an impact on the quality of the product and the subsequent value thereof. It is argued that if products fetch a high enough price in overseas markets farmers will be less reluctant to bear the transport costs. It is interesting to note that the nearest seaport to the CWD is in Cape Town. Furthermore, there is only one regional airport in this district located in the town of Robertson (ourairports.com, 2016).

3.3.5 Exports

Stone fruits in the Western Cape Province are mostly exported via the services of either an agent or a private export cooperative who will establish business relationships between producers and importers in their home countries. Export companies and agents operating in the CWD include Delecta Fruit (located in Paarl), Green Marketing international (located in Simondium near Paarl) and Banhoek Fruit (located in Stellenbosch). Most agents in the Western Cape are however located in and around Cape Town and other metropoles as this affords them easier access to transport modes such as airports and harbours (Fresh Produce Exporters Forum, 2015).

These agencies function on a commission basis and will cost up to 3 per cent of export value. It is estimated that up to 40 per cent of stone fruits are exported from South Africa to the rest of the world. Most stone fruits are exported to Europe (mostly the European Union) and Asia (mostly the Middle East). The United Kingdom and the Netherlands are the biggest drivers of South African exports in Europe with Qatar and Saudi Arabia in the Middle East being the biggest drivers of exports in Asia (Department of Agriculture, Forestry and Fisheries, 2015).


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3.3.6 Imports

An insignificant amount (below 10 per cent) of stone fruits are also imported, most notably from Latin American countries such as Brazil and Chile, however fruits are generally not imported if there is no shortage of fresh fruits locally. All imported fruits are absorbed by the processing sector who produces secondary products such as juices, canned fruit and pulp and purees. The only other import goods in the stone fruits value chain is fertilizer and other agricultural chemicals such as pesticides and herbicides.

3.3.7 Processing/Value addition

The biggest producer of juice in the CWD is Cape Fruit Processors (Pty) Ltd located in the town of Paarl who makes use of plums to produce concentrate juice at its agri-processing plants in the towns of Stellenbosch and Paarl. This company then supplies secondary processors or distributors located in and around Paarl, Stellenbosch and Tulbagh who would then use the concentrate to produce final products such as fruit juice and distribute the product to retailers/wholesalers. Dried fruit is also produced in the Western Cape. One of the most notable companies supplying dried fruit in the CWD is Tulbagh Dried Fruit in the town of Tulbagh. This company sources its products from local farms surrounding the town of Tulbagh and would then process the raw products before selling the processed product to distributors located mostly in Cape Town who would then package and distribute the product to retailers/wholesalers.

The biggest producer of canned fruits in the Cape Winelands is the Rhodes Food Group located in the town of Paarl. This company processes stone fruits such as apricots, peaches and plums and produces products such as canned fruits, juices, pulps and purees. Furthermore, the company has 12 processing facilities around South Africa, two of which are located in the Cape Winelands District, towns of Paarl and Wellington. This company has various suppliers throughout South Africa but makes use of fresh fruits suppliers in the Winelands district to supply its processing facilities in the Western Cape.

3.3.8 Point of purchase

The last step in the value chain before the product reaches the consumer is the retailer/wholesaler or fresh produce market from whom informal markets and stalls procure their products. The biggest local retailers are Pick n Pay, Shoprite and other large retail chains. Retailers are more often than not located in or near densely populated urban centres/nodes (Department of Agriculture, Forestry and Fisheries, 2015).

3.3.9 Risks

The stone fruits industry is a subset of the agricultural industry and is therefore subject to the same risks as the agricultural industry. One of the most prominent risks are climate related. The availability of water and fluctuation in temperature are important factors that contribute to the success of production in this industry and plays a major role in the supply and quality of fresh fruits (Department of Agriculture, Forestry and Fisheries,


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2015). Another important risk is economic related. This industry is largely dependent on exports and is therefore heavily affected by the exchange rate and global market trends. The fact that the South African producers mostly supply a very small amount of similar countries can be a cause for concern. Markets are thus not very well diversified and could become vulnerable to demand shocks in the long term (Department of Agriculture, Forestry and Fisheries, 2015).

Regulation, both local and national, is another significant challenge in this industry. It is important to note that exporters are subject to immense quality and legal requirements. These requirements include labelling, fair trade (in terms of social responsibility) and environmental (sustainability) best practices. Furthermore, the preference (demand) for fair trade and environmentally friendly products is steadily rising in some of the biggest export destinations such as Germany and the Netherlands, it would therefore be important for local producers to take cognisance of these trends if their products are to remain relevant. (Department of Agriculture, Forestry and Fisheries , 2015). Other challenges and risks include a shortage in labour, especially skilled labour. It is argued that due to the low wages producers will struggle to attract the necessary skilled labour. There are also infrastructure challenges in terms of storage, a case in point is the lack of cold storage facilities at the Cape Town harbour (through which a significant amount of stone fruits are exported) (Department of Agriculture, Forestry and Fisheries , 2015).

3.3.10 Opportunities

There are two main opportunities in the stone fruit industry. The first is the promotion of sustainable and social responsible agricultural practices due to the legal requirements of the European Union and North American Trade Organisation countries. There is an increasing trend in the international cash crop and agricultural export industry in the demand for fair trade and sustainably (environmentally friendly) produced goods. The second is the opportunity to diversify the export market and increase the local consumption of stone fruits. It is believed that the export market is still fairly underdeveloped as most exports are destined for a small number of countries clustered in either Europe or the Middle East. There is a major opportunity in increasing exports to other African, including Southern African, and Asian countries due to the lack of production of stone fruits in those countries (Department of Agriculture, Forestry and Fisheries, 2015).

The main opportunities for government to get involved is in terms of financing of processors. Finance, especially in terms of access to finance by processing and exporting companies has been cited as a major challenge in the industry in the CWD. It was also argued that the gap in financing for agri-processors in the stone fruits industry can be filled by government actors such as the Department of Trade and Industry. Government can also assist in the provision of infrastructure, especially cold storage facilities at the main points of export such as the harbour in Cape Town. Another important opportunity lies in the fact that the export demand is said to be increasing, especially in countries such as Britain and Israel. Processors are willing to expand, yet finance challenges constrain expansion in the Cape Winelands District.


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The grape value chain is very extensive for the purpose of the production of wine in the Province and because of this, it is the largest wine producer in the country. These production and processing value adding activities are concentrated in the Olifants River, Swartland, Klein-Karoo, Paarl, Robertson, Stellenbosch, Worcester and Breedekloof wine producing regions of the Province. However, despite the significant share of the output distributed internationally and locally to supermarkets, the wine industry still faces profitability problems, high input costs and fragmentation of smaller wine producers which hinders distribution synergies. The growth of wine tourism however, provides the Province with a niche opportunity for marketing of its wine production, which has positive benefit for increasing marketability of the product. The stone fruits value chain is well established in the CWD, from growing and harvesting, to processing. The majority stone fruits that are produced in the Western Cape are produced in the CWD. The cold storage facilities are also located within the CWD while the exported fruit is via the services of either an agent or a private export cooperative who will establish business relationships between producers and importers in their home countries.


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4


4.1 Introduction

This chapter looks at municipal infrastructure spending in the CWD in terms of the Cape Winelands Integrated Development Plan (IDP, 2012 - 2017), local municipal IDPs, and national and provincial policy directives and key performance areas.

Infrastructure investment is a catalyst for economic and social development. Quality infrastructure that is well managed and maintained, provides major benefits to both households and enterprises through opening up opportunities for the poor and supporting growth in economic output (DBSA 2011). Within the Cape Winelands the following infrastructure projects have been identified as key drivers of development.

4.1.1 Water and Sanitation Subsidy to Farmers Programme

This is an innovative programme implemented within the Municipal Health Services Division, of the CWD Municipality, which has attracted national commendation. The subsidy scheme serves as an incentive to farmers for improving the water and sanitation services for farm workers. A maximum of R45 000 per farm is given for this purpose. Education in the form of health guidance is also provided to the beneficiary communities.

Subsidies are provided for the following:

Running water over kitchen sinks; and

Bathrooms with flush toilets in houses.


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The CWD Municipality through this project also intervenes directly in Hot Spot areas through the provision of dry sanitation systems on farms and the rehabilitation of toilet facilities.

4.1.2 Small Town Regeneration Programme

This programme will be rolled out in Ceres, Wolseley and Tulbagh. The community will identify projects and will be assisted in getting funding for the projects. Included in the initiative is the EPWP job creation programme and various skills development programmes which will also be rolled-out.

4.1.3 Development of the Nkqubela Community Commercial Node

This development will attract investment in the community by creating infrastructure that foster a critical mass of community/commercial activity to bring investment to the townships economy. The project is envisaged to start April 2017.

4.1.4 Free Internet: Free Wi-Fi Hotspot

The goal of the free Wi-Fi hotspot project is to provide free internet (Wi-Fi hotspots) to promote learning and communication for residents in the municipality. Essentially the provision of access to the internet will “bridge” the digital divide and identified Stellenbosch as the first town in South Africa to provide free internet. The project involves the distribution of free Wi-Fi hotspots throughout the Stellenbosch Municipality. The areas include the town, as well as the lower income communities situated on the outskirts of the location. No funding structure currently exists for the free internet: free Wi-Fi hotspot project.

4.1.5 Paarl CBD Upgrade

Paarl is the economic centre of the Drakenstein Municipality and is home to at least four major international companies namely Pioneer Foods, Nampak, Imperial Logistics and Distell. As a result, the relocation of businesses to the CBD and upgrade of the central town have been identified as an important project and economic opportunity. The Municipality entered into a Public Private Partnership Agreement with a consortium of property owners in the Paarl CBD in 2010. The first phase of the Agreement included upgrades to parking facilities and pavements in the area. The second phase of the Paarl CBD regeneration includes upgrades to Wamakers Square which currently house Pick n Pay and Woolworths as anchor tenants. Structural changes are planned with landscaping and beautification in the surrounding areas. The CAPEX R-Value is estimated at R100 million.

4.1.6 Paarl Waterfront Development

Identified as a key catalytic project which will boost the tourism sector. The project consists of mixed use developments (including a hotel, restaurants, office blocks, sport science institute, etc.) located on the Berg River. This project is in the form of a PPP and


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the zoning of the land has been as a luxury mixed use waterfront lifestyle development. This project has been put on hold. The Land Use Rights are in place and the ROD was transferred back to the Municipality. The Municipality envisages issuing a tender for development proposals with all of the rights in place during the next 18 to 24 months. Total capital expenditure for the project will be approximately between 40 and 60 million rand for the sale of the land. This excludes any other infrastructural services. The anticipated total capex investment could be between R500 million and R1 billion.

4.1.7 Drakenstein Waste to Energy Project

Municipality utilises the waste created by the area to generate electricity. The project will also extend the lifespan of the landfills site. The project has resulted in a number of awards and recognitions of the municipality, winning the “Greenest Municipality” award in two consecutive years. The Municipality’s Public Private Partnership (PPP) Waste to Energy (WTE) project has progressed over a number of years following a rigorous consultative process. This consultative process included a Feasibility Study which indicated the necessity of the WTE project. The project also received positive recommendations from National Treasury. The Feasibility study was approved by the Municipal Council on 16 April 2014 which enabled the lead department to commence with the statutory authorisation processes by Interwaste (the Municipality’s private partner). The Municipality is currently busy with the EIA approval processes. The total capex for this project amounts to approximately R1 billion.

4.2 Cape Winelands District

4.2.1 Western Cape Government Infrastructure Spending in the Cape Winelands

In addition to the infrastructure expenditure by the CWD Municipality, the Western Cape Government with its education, environment, health, human settlements and transport and public works mandates, makes important investments in infrastructure in the CWD. According to the 2016 – 2019 WCG budget, the largest share of planned infrastructure expenditure will be on transport and public works projects, followed by human settlement (housing), education, health infrastructure and environmental projects (CapeNature) projects (see Figure 4.1). This provincial infrastructure investment will contribute to developing the economic infrastructure of the CWD through the investment in roads by the Department of Transport and Public Works, and in social infrastructure, through the investment by the Departments of Education, Health and Human Settlements.


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Figure 4.1 Western Cape Government forecast infrastructure expenditure 2016/17 to 2018/19


The Western Cape Government’s expenditure will supplement the municipalities’ investment in economic infrastructure such as roads and social infrastructure through investment in human settlements (housing), and reflects the alignment of provincial infrastructure investment with the National Development Plan.

4.3 Breede Valley Municipality

4.3.1 Capital Expenditure

Table 4.1 shows that basic services constitute a significant share of total capital expenditure. Water increased from 37 per cent as a percentage of total capital expenditure in 2012/13 to a projected 44 per cent in 2018/19. In 2012/13 waste water management constituted 22 per cent before increasing to 25 per cent in 2018/19. Electricity decreased from 24 per cent in 2012/13 to 4 per cent in 2018/19.

Table 4.1 Total capital expenditure for Breede Valley Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 24 7 14 13 4 4 4

Water 37 45 22 20 20 31 44




Housing 1 0 0 0 0 0 0

Others 9 24 18 34 33 10 10

Total 100 100 100 100 100 100 100

Source: Breede Valley Municipality A-Schedules, 2016/17

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

800 000

900 000

2016/17 2017/18 2018/19

R'0

00

CapeNature Education Health Human Settlements Transport and Public Works


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4.3.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had 3 800 sanitation backlogs and 985 water services backlogs. There were also no electricity and refuse removal backlogs (Breede Valley Municipality 2014/15 Annual Report).

4.3.3 Challenges

According to the 2016 municipal survey and IDP, the municipality identified the following challenges and developments:

Water - The wall of the Stettynskloof dam is to be augmented to increase water availability with a third of the dam’s capacity.

Electricity - The increase in municipal tariffs are fuelling inflation.

Waste water - Sludge handling need to be provided for in future budgets.

Solid waste - Landfill sites will only last another two years.

Housing - Land availability and the ability to initiate transit camps to regulate number of new informal settlements.

Roads - 36 kilometers of municipal roads needs to be urgently tarred.

4.3.4 Funding sources

Figure 4.2 shows that between 2012/13 and 2014/15, the bulk of capital funding in Breede Valley Municipality came from national government. Other significant capital funding sources during this period came from borrowing, internally generated funds and provincial government. A decrease in capital funding from national government is projected from 2015/16 to 2018/19 with funding increases projected from provincial government during this period.


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Figure 4.2 Breede Valley Municipality capital funding by source 2012 - 2019

Source: Breede Valley Municipality A-Schedules, 2016/17

4.4 Drakenstein Municipality


Table 4.2 shows that basic services constitute a significant share of total capital expenditure. Water increased from 16 per cent as a percentage of total capital expenditure in 2012/13 to a projected 20 per cent in 2018/19. Similarly, electricity increased from 13 per cent in 2012/13 to peak at 25 per cent in 2016/17 and then dipped to a projected 19 per cent in 2018/19. In 2012/13 waste water management constituted 40 per cent before dropping to 20 per cent in 2014/15, rising again to 43 per cent in 2017/18 and then decreasing to a projected 27 per cent in 2018/19. Municipal roads gradually increased to 24 per cent in 2014/15 and then dropped to 19 per cent in 2018/19.

Table 4.2 Total capital expenditure for Drakenstein Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 13 10 8 14 25 16 19

Water 16 20 25 19 17 15 20




Housing 3 0 2 2 0 0 0

Others 19 22 18 19 10 10 13

Total 100 100 100 100 100 100 100

Source: Drakenstein Municipality A-Schedules, 2016/17

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00



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4.4.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had 4 252 sanitation backlogs but no water services backlogs. There were also 15 095 electricity and no refuse removal backlogs (Drakenstein Municipality 2014/15 Annual Report).

4.4.3 Challenges

According to the 2016 municipal survey and the IDP, the Municipality identified the following challenges and developments:

Waste water - The wastewater treatment plants is currently being upgraded from 6 MI/d to 16 MI/d and the Paarl WWTW has been upgraded from 20 MI/d to 35 MI/d with the current inflow to Paarl being 22 MI/d. There is also a lack of grant funding and qualified process controllers and technical staff.

Roads - There is a lack of maintenance personnel and provision of adequate funding.


Figure 4.3 below shows that borrowing is a significant source of capital funding in the Municipality and substantially increases from 2015 onwards. National government and internally generated funds are minor additional revenue sources, with funding from national government tapering off in 2016.

Figure 4.3 Drakenstein Municipality capital funding by source 2012 - 2019

Source: Drakenstein Municipality A-Schedules, 2016/17

0

100 000

200 000

300 000

400 000

500 000

600 000

700 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00



274

4.5 Langeberg Municipality


Table 4.3 shows that waste management and roads increased from 10 per cent and 7 per cent respectively to a projected 31 and 46 per cent in 2018/19. Water increased from 23 per cent in 2012/13 to 40 per cent in 2014/15, slumped to 2.0 per cent in 2015/16 before rising to 40 per cent in 2017/18 and then dipping to 2 per cent in 2018/19. Waste water dropped sharply from 20 to 2 per cent from 2012/13 to 2014/15, spiked to 39 per cent in 2015/16, and then dropping to 17 per cent in 2016/17. Electricity increased from 15 per cent in 2012/13 to 23 per cent in 2014/5 but then dropped to 7 per cent in 2018/19.

Table 4.3 Total capital expenditure for Langeberg Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 15 15 23 12 9 8 7

Water 23 32 40 2 14 40 2




Housing 7 16 6 3 0 0 0

Others 19 18 18 15 44 23 13

Total 100 100 100 100 100 100 100

Source: Langeberg Municipality A-Schedules, 2016/17

4.5.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the municipality had no sanitation backlogs and water services backlogs. There were also 1 565 electricity and 6 927 refuse removal backlogs (Langeberg Municipality 2014/15 Annual Report).

4.5.3 Challenges


Water - The Montagu source capacity is reaching its limit in 2017. Planned upgrades include construction of a 3 Ml reservoir at Nkqubela, Robertson and 4 new filters at Bonnievale.

Electricity - Electricity substations are reaching their maximum capacity and the notified maximum demand need to be increased.

Waste water - Two drying beds in Ashton and an outfall sewer in Robertson is planned for 2016/17.


275

Roads - Roads are starting to deteriorate and a R1 million upgrading of gravel roads to paved, is planned for 2016/17.

Solid waste - There are no unlicensed disposal facilities in the Langeberg Municipality. All operational disposal sites are access controlled and the incoming waste monitored.

Housing - Only one project in McGregor is currently underway. Installation of all infrastructure has been completed and the municipality will start with the construction of top structures in the near future. The municipality cannot continue with its housing pipeline due to insufficient bulk infrastructure.


Figure 4.4 below shows that the significant sources of capital funding in Langeberg Municipality are internally generated funds and capital funding from national government. Internally generated funds is set to peak in 2017/18 with funding from national government tapering off in 2016 but remaining stable from 2017 onward.

Figure 4.4 Langeberg Municipality capital funding by source, 2012 - 2019

Source: Langeberg Municipality A-Schedules, 2016/17

4.6 Stellenbosch Municipality


Table 4.4 shows that basic services constitute a significant share of total capital expenditure. Table 4.4 also shows that water increases from 10 per cent of total capital expenditure in 2012/13 to a projected 28 per cent in 2018/19. Waste water management increased from 29 to 43 per cent from 2012/13 to 2016/17 and then dropping to a projected 18 per cent in 2018/19. Electricity increased from 12 to 17 per cent in 2014/15, dipping to 11 per cent in 2016/17, rising to 18 per cent in 2017/18 and

0

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2012/13 2013/14 2014/15 2015/16Forecast

2016/17 2017/18 2018/19

R'0

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dropping again to 12 per cent in 2018/19/. Water dropped from a peak of 27 per cent in 2014/15 to 13 per cent in 2016/17, rising to 28 per cent in 2018/19. Municipal roads declined from 21 to 9 per cent between 2012/13 and 2015/16 and then rise to 15 per cent in 2018/19. Expenditure on waste management was consistently below 3 per cent from 2012/13 to 2016/17 but is project to increase to 7 per cent in 2017/18.

Table 4.4 Total capital expenditure for Stellenbosch Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 12 17 17 12 11 18 12

Water 10 22 27 15 13 31 28




Housing 17 7 8 8 8 7 12

Others 9 16 12 14 11 13 11

Total 100 100 100 100 100 100 100

Source: Stellenbosch Municipality A-Schedules, 2016/17

Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had 218 sanitation backlogs but no water services backlogs. There were also 6 707 electricity and 3 888 refuse removal backlogs (Stellenbosch Municipality 2014/15 Annual Report).

4.6.2 Challenges


Water - Current and planned upgrades include bulk sewer pipe replacements, supply pipelines, water treatment works and sewer outfall upgrades.

Electricity - The status of the electricity infrastructure can be explained as ‘reasonable,’ with the focus now being on replacement of old infrastructure such as switchgear, cables, etc.

Waste water - Capacities of wastewater treatment plants are currently being upgraded to meet development demands.

Solid waste - Landfill sites will only last another two years. There is a current landfill capacity 600 000 m2 of which 280 000 m2 remains. Also, alternative methods and areas for possible dumping of building material will be investigated.


277

Housing - There is an ever-increasing housing backlog due to the slow pace of housing relief afforded by government, natural population growth and rapid urbanisation. Lack of bulk services capacity also limits the ability of the Municipality to plan for more human settlement developments. There is no approved Restructuring Zones for the accommodation of the Social Housing rental market.

Roads - Overall condition of road network improved by implementing annual rehabilitation and reseal programs. Implementing the 2016 - 2019 rehabilitation program which includes resurfacing 7 per cent gravel roads (Mooiwater).


Figure 4.5 below shows that the significant source of capital funding in Stellenbosch Municipality is from internally generated funds. Borrowing also significantly increased from 2014/15 onwards and is expected to taper off in 2017/18. National Government capital funding is also a less significant source of funding.

Figure 4.5 Stellenbosch Municipality capital funding by source 2012 - 2019

Source: Stellenbosch Municipality A-Schedules, 2016/17

4.7 Witzenberg Municipality


Table 4.5 shows that municipal roads constitute a significant share of total capital expenditure. Municipal roads are projected to account for 52 per cent of total capital expenditure in 2018/19. Other significant capital expenditure items include electricity which was 2 per cent in 2012/13 is projected to increase to 25 per cent in 2018/19. Water increased from 17 to 45 per cent from 2013/14 to 2017/18, with no provision in 2018/19. Waste water management increased from 25 to 35 per cent from 2012/13 to 2015/16 and then dipping to a projected 14 per cent in 2018/19.

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00



278

Table 4.5 Total capital expenditure for Witzenberg Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 2 5 6 9 11 23 25

Water 29 17 25 24 42 45 0




Housing 0 0 0 0 0 1 0

Others 13 33 15 16 9 10 9

Total 100 100 100 100 100 100 100

Source: Witzenberg Municipality A-Schedules, 2016/17

4.7.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no sanitation backlogs and water services backlogs. There were also 8 electricity and no refuse removal backlogs (Witzenberg Municipality 2014/15 Annual Report).

4.7.3 Challenges

According to the 2016 municipal survey and the IDP the Municipality identified the following challenges and developments:

Water - The following challenges have been identified: Insufficient bulk storage capacity (Tulbagh); bulk supply needs upgrading (Wolseley); networks old needs replacement (Ceres and Prince Alfred Hamlet); and insufficient reservoir storage capacity (Op Die Berg). Planned upgrades in 2016/17 entail construction of raw storage dam (R27 million) in Tulbagh.

Electricity - Electricity substations are 90 per cent of notified maximum demand (NMD) in Wolseley and more than 73 per cent of NMD in Ceres. Planned upgrades include new switchgear at Wolseley and upgrade of bulk supply to Schoonvlei and Nduli in Ceres. There is also insufficient bulk supply from Eskom.

Waste water - The waste water treatment works need upgrade and the upgrade of bulk sanitation from Bella Vista and Nduli/Vredebes is planned for 2016/17.

Roads - The Witzenberg area network condition is fair too poor and will cost approximately R100 million to repair.

Solid waste - There is insufficient storage space.

Housing - There is a problem with informal settlements and insufficient funding for bulk services.


279


Figure 4.6 shows that the significant source of capital funding in Witzenberg Municipality is from national government. Funds that are internally generated and those coming from provincial government fluctuates and are expected to decrease.

Figure 4.6 Witzenberg Municipality capital funding by source, 2012 - 2019

Source: Witzenberg Municipality A-Schedules, 2016/17


Infrastructure investment, human capital formation and innovation are essential for the promotion of economic growth within a municipality (OECD, 2009). The extent to which infrastructure investment influences economic growth within the municipalities in the Western Cape is evaluated using the Growth Potential Index (GPI) included in the Growth Potential Study of Towns undertaken by the Department of Environmental Affairs and Development Planning. The index provides an analysis of the economic viability of infrastructure investments (as opposed to political, environmental, social and fiscal viability). The potential for economic development that comes about from investment in an infrastructure project is among the most important criteria on which the investment decision should be based.

The GPIs in Figure 4.7 provides an indication of the municipalities in which infrastructure investment has the greatest potential for being translated into increased production and employment creation. The GPI is evaluated within the context of municipal capital expenditure (both past and projected).

0

10 000

20 000

30 000

40 000

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90 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

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Figure 4.7 Growth Potential Index (2014) and CAPEX (2009 - 2019)


Municipal capital expenditure in Stellenbosch increased by 59.4 per cent on average year-on-year over the period 2009 - 2016. The Municipality also recorded the highest GPI in the District (a GPI of 99, which is defined as very high growth potential). Municipal infrastructure investment is thus expected to have a substantial impact on the region’s economic performance in terms of both production and employment creation. Capital expenditure is nevertheless projected to contract by 11.4 per cent per annum on average over the period 2017 - 2019. Stellenbosch’s GDP growth averaged 2.3 per cent per annum over the period 2010 - 2015 (which was below District’s growth of 2.8 per cent per annum over this period). Given the Municipality’s high GPI, further infrastructure investment is encouraged in order to stimulate further economic growth.

Municipal capital expenditure in Drakenstein increased by 21 per cent per annum on average over the period 2009 - 2016. The Municipality recorded the 2nd highest GPI in the District (a GPI of 95). Municipal infrastructure investment is thus expected to have a substantial impact on the region’s economic performance. Capital expenditure is however projected to contract by 5.9 per cent per annum on average over the period 2017 - 2019. Drakenstein’s GDP growth averaged 2.6 per cent per annum over the period 2010 - 2015 (which was slightly below the District average). Given the high growth potential extant within the municipality, increased municipal infrastructure investment is one strategy the municipality should consider in order to improve GDP growth.

Breede Valley and Langeberg municipal areas, recorded a GPI of 45 and 33 respectively (which is defined as having medium growth potential. Capital expenditure in these two municipalities has been increasing steadily between 2009 - 2016 (at rates of 15.3 and 6.6 per cent per annum on average respectively). These increased municipal capital investments bode well for economic growth. Capital expenditure is nevertheless projected to decrease by an average of 2.7 per cent per annum in Langeberg and 45.1 per cent per annum in Breede Valley. Further increases in municipal infrastructure investments would contribute to GDP growth directly adding to the stock of infrastructure in the municipality and may improve the growth potential within the municipalities.

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

0.0

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40.0

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80.0

100.0

120.0

Witzenberg Drakenstein Stellenbosch Breede Valley Langeberg



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Witzenberg recorded a GPI of 14 (which is defined as having low growth potential), the lowest GPI in the District, despite recording 13.5 per cent growth per annum in capital expenditure over the period 2009 - 2016. This may be as a result of a number of other factors (such as the existing levels of infrastructure, the physical environment and economic trends) extant in the municipality negatively influencing the growth potential in the region. In order to improve the growth potential within the District, the municipality should investigate where its shortcomings lie in this regard. Municipal capital expenditure is projected to increase by 26.3 per cent per annum over the period 2017 - 2019. Increasing municipal infrastructure is one mechanism through which the growth potential of infrastructure investments within Witzenberg could be advanced and overall economic performance be improved.


A review and analysis of the infrastructure spending in the CWD suggest that both the district and local municipalities prioritised investment and development of basic services infrastructure, in line with core municipal mandates and National imperatives, as articulated in the National Development Plan and other sector strategies. However, there are still services backlogs, capacity and resource constraints. Key themes emerging from the review and analysis are:

1. Water and sanitation infrastructure are aging and reaching capacity constraints that struggle to cope with increasing social and economic demand.

2. Electricity infrastructure needs upgrading and extension, and is inextricably linked to infrastructure investment made by Eskom.

3. Landfill sites have reached, or will soon reach capacity, creating the need for additional sites and funding.

4. Housing demand outstrips supply, with the gap between demand and supply increasing. Housing delivery is impacted on by land availability, bulk services, and is characterised by increased competition for housing.

5. An over-arching theme cutting across all basic infrastructure and services, is the shortage of skilled technical expertise.


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5


5.1 Introduction

This chapter investigates the impact of recent economic performance on social conditions of households within the municipalities of the CWD. Latest results from Statistics South Africa’s Community Survey 2016 and the 2016 Non-Financial Census of Municipalities are among the key sources of data used in this chapter to describe social conditions of communities. Data from Quantec and administrative data from government sector departments is also used in the analysis. The extent of social development within a community can have positive or negative future financial implications for municipalities. For instance, a growing economy can result in more employment creation and higher incomes for households within a municipality as well as better education, health and access to basic services. In contrast, a declining economy can lead to increasing unemployment and poverty, weak education, poor health, and low basic service access levels. The most recent social indicators including the Human Development Index (HDI), Poverty intensity and Gini coefficient are used to show the current living standards of communities within the CWD.


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5.2 Human Development

Figure 5.1 shows a slight decline in the HDI4 level for the CWD, from 0.70 in 2014 to 0.69 in 2015, which is lower than the Western Cape Province HDI level of 0.73 for 2015. The CWD economy slowed to 1.1 per cent in 2015, from 3.1 per cent in 2014. However, the average economic growth rate for the period between 2005 and 2015 was 3.6 per cent.

Figure 5.1 Cape Winelands District Human Development Index 2011 - 2015


Human development in the CWD declined slightly between 2014 and 2015 weighed down by decreases recorded for Stellenbosch and Drakenstein. Figure 5.2 below shows that Stellenbosch’s HDI dropped from 0.720 in 2014 to 0.718 in 2015 while that of Drakenstein dropped from 0.713 in 2014 to 0.708 in 2015. These decreases could have been caused by a slowdown in economic growth in Stellenbosch, which dropped to 0.9 per cent in 2015 from 2.2 per cent in 2014 and Drakenstein also experienced a decline in economic growth from 3.1 per cent in 2014 to 1.0 per cent in 2015. Insignificant changes in the HDI were observed for Witzenberg between 2014 and 2015 as shown in Figure 5.2 below.

4 The HDI is a key measure used by the United Nations to assess the relative level of socio-economic development in countries. It is a measure of peoples' ability to live a long and healthy life, to communicate, participate in the community and to have sufficient means to be able to afford a decent living. The HDI is thus a composite of factors reflecting schooling, economic prosperity and longevity. It is represented by a number between 0 and 1 where 1 indicates a high level of human development and 0 represents no human development

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0.65

0.66

0.67

0.68

0.69

0.70

2011 2012 2013 2014 2015

HDI GDPR Growth


285

Increases in the HDI were noted for Breede Valley and Langeberg between 2014 and 2015. Breede Valley’s economy grew by 1.5 per cent in 2015, down from 3.4 per cent in 2014 while Langeberg grew by 1.0 per cent in 2015 from 2.8 per cent growth in 2014. Various social indicators related to human development in the CWD are discussed below, including population, households, indigent households, household income, income inequality, poverty, access to basic services, education levels and health matters at municipalities within the CWD.

Figure 5.2 Human Development Index across municipalities in the Cape Winelands District 2011 - 2015



This section looks at recent population changes in the CWD and compares these to recent economic growth data in order to show any changes in the living standards in the region. GDPR per capita, which is calculated by dividing the total value of economic activity within a municipality by the total population, is the indicator used to estimate the average annual incomes of households within a specific area. An improvement in the standard of living among communities can be attained when economic growth is faster/higher than population growth. For the CWD population growth is estimated at 10 per cent between 2011 and 2016 while economic growth averaged 2.9 per cent from 2011 to 2015, implying a decrease in GDPR per capita since economic growth was much slower than population growth in the District.

0.56

0.58

0.60

0.62

0.64

0.66

0.68

0.70

0.72

0.74


2011 2012 2013 2014 2015


286

Figure 5.3 Population trends in the Cape Winelands District


Total population within the CWD increased significantly between 2011 and 2016 according to official data from Statistics South Africa. Witzenberg’s population increased the most during this period, followed by Drakenstein and Stellenbosch. Figure 5.3 above shows that Witzenberg’s population increased by a significant 12.59 per cent between 2011 and 2016, followed by Drakenstein (11.52 per cent) and Stellenbosch (11.36 per cent). There were notable increases in Langeberg and Breede Valley’s populations between the Census 2011 and the Community Survey 2016. Migration due to employment prospects as well as better access to basic services could be one of the reasons for the population increases mainly in Witzenberg, Drakenstein and Stellenbosch.

Figure 5.4 Cape Winelands District population projections 2015 - 2020


Witzenberg Drakenstein Stellenbosch Breede Valley LangebergCape

Winelands

Census 2011 115 946 251 262 155 733 166 825 97 724 787 490

Community Survey 2016 130 548 280 195 173 419 176 578 105 483 866 223

0

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Po

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2015 124 492 263 912 167 572 174 198 101 543

2016 126 573 267 013 170 572 176 008 102 472

2017 128 614 270 070 173 557 177 793 103 389

2018 130 605 273 068 176 519 179 548 104 287

2019 132 546 275 984 179 463 181 262 105 160

2020 134 440 278 794 182 373 182 938 106 016

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Projections by the Department of Social Development indicate that population in the CWD is set to continuously increase over the next five years. The population of Drakenstein is set to increase by 4.3 per cent from 267 103 in 2016 to 278 794 in 2020 while that of Stellenbosch is projected to increase by 6.9 per cent from 170 572 in 2016 to 182 373 in 2020. Witzenberg is set to increase by 6.2 per cent from 126 573 in 2016 to 134 440 in 2020.

Table 5.1 Number of households per municipality in the Cape Winelands District

Cape Winelands District Census


2016 Percentage

increase

Witzenberg 27 419 35 976 74%

Drakenstein 59 774 71 686 76%

Stellenbosch 43 420 52 374 76%

Breede Valley 42 527 47 569 78%

Langeberg 25 125 28 401 77%

Cape Winelands District 198 265 236 006 76%

% of City of Cape Town 18.6 18.7 0.1

% of Western Cape 12.1 12.2 0.1


The number of households per municipality within the CWD has also increased between 2011 and 2016 as shown in Table 5.2 below. It can be seen in Table 5.1 that 12.2 per cent of households in the province live in the CWD. Witzenberg has experienced the largest (31.2 per cent) increase in the number of households, followed by Stellenbosch (20.6 per cent), Drakenstein (19.9 per cent), Langeberg (13.0 per cent) and Breede Valley (11.9 per cent). An increase in the number of households implies an increase in the demand for municipal services.

Table 5.2 Indigent households in the Cape Winelands District, 2015

Cape Winelands 2014 2015 % change

Breede Valley 9 208 7 593 -17.5

Drakenstein 13 300 15 095 13.5

Witzenberg 4 450 2 794 -37.2

Langeberg 7 168 7 495 4.6

Stellenbosch 5 242 5 757 9.8

Source: Stats SA, Non-Financial Census of Municipalities

According to the recent Non-Financial Census of Municipalities in the CWD, Drakenstein had the highest increase in indigent households (13.5 per cent) between 2014 and 2015. Increases in indigent households can be attributed to either an increasing population or decreasing economic activity. Drakenstein and Stellenbosch contribute the most to the region’s economy and people migrate to these towns lured by better employment prospects. Poor economic performance post-recession and particularly in 2015 may have left more households without employment or stable income. Drakenstein’s economic growth weakened to 1.0 per cent in 2015 and Stellenbosch grew by 0.9 per cent in 2015. On the upside there were decreases in indigent households in Breede Valley and Witzenberg probably as a result of people


288

moving to Stellenbosch, Drakenstein or elsewhere in the province where there are opportunities. Improvements in economic performance and household income could be another reason for decreasing indigents in Breede Valley and Witzenberg.


The annual household income for municipalities within the CWD is presented in Table 5.3 reflects the proportion of people that fall within low, middle and high income brackets. An increase in living standards can be evidenced by a rising number of households entering the middle and high income brackets. From Table 5.3 it can be seen that the majority of households (52 per cent) in the CWD fall within the low income brackets, and there is a significant proportion falling within the middle income bracket (39.5 per cent) and high income bracket (8.6 per cent).

Table 5.3 Annual household income for Cape Winelands District municipalities, 2016 (%)

Income

Cape Winelands

District Witzenberg Drakenstein Stellenbosch Breede Valley Langeberg

No income 13.1 6.4 12.8 20.4 12.0 10.0

Low Income

R1 - R6 327 1.9 1.7 1.8 2.0 1.7 2.5

R6 328 - R12 653 3.5 4.0 3.2 3.5 3.1 4.3

R12 654 - R25 306 13.4 18.7 10.7 10.6 15.2 15.8

R25 307 - R50 613 20.1 25.8 17.1 16.6 21.8 24.3

R50 614 - R101 225 18.4 20.6 18.7 15.5 18.6 19.8

Middle Income R101 226 - R202 450 12.3 10.6 13.9 11.6 12.7 10.8

R202 451 - R404 901 8.8 6.8 10.7 8.5 8.5 7.3

R404 902 - R809 802 5.7 3.9 7.6 6.5 4.7 3.6

High Income R809 203 - R1 619 604 2.0 1.1 2.5 3.3 1.0 1.0

R1 619 605 - R3 239 208 0.5 0.3 0.6 1.0 0.3 0.2

R3 239 207 or more 0.4 0.2 0.4 0.7 0.3 0.2


The majority of households in Witzenberg (56.6 per cent), Stellenbosch (53.1 per cent), Breede Valley (53.8 per cent) and Langeberg (56.9 per cent) fall under the low income brackets, with Stellenbosch having the largest proportion of people with no income. Living standards and human development are likely to be higher for people falling under the middle to upper income brackets. Drakenstein has the largest (43.3 per cent) proportion of people in the middle income earning range, followed by Breede Valley (39.8 per cent), Witzenberg (38 per cent), Langeberg (37.9 per cent) and Stellenbosch (35.6 per cent). Stellenbosch and Drakenstein municipalities have the largest proportion of high income earners at 11.5 per cent and 11.1 per cent respectively.


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Table 5.4 Cape Winelands District expenditure on goods and services, 2016

Cape Winelands District Witzenberg Drakenstein Stellenbosch Breede Valley Langeberg

Good and services

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Durable goods

2 880.58 12.5 205.81 11.9 800.36 12.9 1 126.76 12.6 362.71 12.5 384.93 11.5

Semi-durable goods

2 524.88 10.9 189.06 10.9 733.67 11.8 925.37 10.4 333.73 11.5 343.04 10.2

Non-durable goods

7 212.08 31.2 589.54 34.1 1 965.33 31.7 2 605.69 29.2 974.19 33.5 1 077.33 32.1

Services 10 506.77 45.4 746.54 43.1 2 701.28 43.6 4 274.38 47.9 1 238.02 42.6 1 546.54 46.1

Total 23 124.30 100.0 1 730.96 100.0 6 200.64 100.0 8 932.21 100.0 2 908.64 100.0 3 351.85 100.0


The type of goods purchased by households indicates the income bracket they fall under and inherently the extent of a household’s human development. Table 5.4 shows that the combined spending on services and non-durable goods comprises over 70 per cent of total expenditure across all municipalities in the CWD. As expected, households in Drakenstein and Stellenbosch spend the most on durable and non-durable goods.

5.5 Income inequality

In this section the most recent data on the Gini coefficients for municipalities within the CWD are analysed.

Figure 5.5 shows an increasing trend in income inequality at Witzenberg, Breede Valley and Langeberg and a decreasing trend in Stellenbosch and Drakenstein, where income inequality is highest (Stellenbosch 0.624 and Drakenstein 0.593 in 2015). The latest Gini coefficients of CWD municipalities are consistent with the annual income analysis done in Section 5.3 above as they show that inequality levels are highest in Stellenbosch and Drakenstein, which were shown to have high proportions of middle to high income earners.


290

Figure 5.5 Gini coefficients5 for municipalities in the Cape Winelands District, 2013 - 2015


Inequality intensified the most in Breede Valley between 2014 and 2015 with an increase in the Gini coefficient from 0.570 in 2014 to 0.581 in 2015. In the coefficient rose from 0.570 to 0.577 and in it climbed from 0.572 to 0.575. These inequalities in income indicate that economic growth is not benefiting everyone in the respective municipalities, something which has led to costly protests and disruptive behaviour among communities.

5.6 Poverty

Results from Statistics South Africa’s Community Survey 2016 shows that the intensity of poverty in the Western Cape declined to 40.1 per cent in 2016 from 42.6 per cent in 2011 as indicated in Table 5.5 below. Although this is a lower poverty intensity level compared to 2011, the figure of 40.1 per cent indicates that there are still a significant number of poor people in the Western Cape Province whose income is below the poverty line. The recent low rate of economic growth in the Western Cape Province has had a positive but very small change in the intensity of poverty among households.

5 The Gini coefficient measures the levels of income inequality among households within a community. The coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation's residents, varying between 0, which represents complete equality and 1, which represents complete inequality

0.52

0.54

0.56

0.58

0.60

0.62

0.64


2013 2014 2015


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Table 5.5 Poverty6 headcount and poverty intensity at Cape Winelands District municipalities 2011 and 2016 (%)


Municipality 2011 2016 2011 2016

Witzenberg 1.8 2.5 40.6 40.8

Drakenstein 2.1 2.5 42.5 42.7

Stellenbosch 3.8 6.1 42.1 39.8

Breede Valley 2.8 2.4 41.8 44.3

Langeberg 1.7 1.0 42.4 39.8

Cape Winelands District 2.5 3.1 42.0 41.3

Western Cape 3.6 2.7 42.6 40.1


There was an increase in the number of poor people in the CWD from 2.5 per cent to 3.1 per cent between 2011 and 2016 which suggests that the weak economic growth rate in the region post the recession may have had a negative impact on poverty. In Witzenberg, the poverty headcount increased to 2.5 per cent in 2016 and poverty intensity also increased marginally to 40.8 per cent in 2016. In Drakenstein, the poverty headcount and poverty intensity levels have increased.

In Stellenbosch, there has been a significant increase in the poverty headcount, from 3.8 per cent of the population in 2011 to 6.1 per cent in 2016. Poverty intensity has however decreased in Stellenbosch between 2011 and 2016 despite sluggish economic growth post the recession. In Breede Valley poverty headcount dropped while intensity increased between 2011 and 2016. Langeberg is the only municipality in the CWD that experienced a decrease in both the poverty headcount and poverty intensity levels, following a pattern similar to that of the Province as a whole. The depth of poverty can also be explained by looking at household’s access levels to basic services such as housing, water, electricity, sanitation and refuse removal.


The extent of human development within a municipality is to a large extent influenced by access to housing as well as basic services such as water, electricity, sanitation and refuse removal, with high access levels implying better human development and vice versa. Table 5.6 shows recent statistics relating to the provision of housing within the CWD.

6 The intensity of poverty as well as the poverty headcount of municipalities within the CWD is analysed in this section since poverty results in poor human development. The intensity of poverty is measured by calculating the Poverty Gap Index, which is the average poverty gap in the population as a proportion of the poverty line. The Poverty Gap Index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. The Poverty Gap Index is a percentage between 0 and 100 per cent. A theoretical value of zero implies that no one in the population is below the poverty line. Individuals whose income is above the poverty line have a gap of zero while individuals whose income is below the poverty line would have a gap ranging from 1 per cent to 100 per cent, with a theoretical value of 100 per cent implying that everyone in the population has an income that is below the poverty line or zero. A higher poverty gap index means that poverty is more severe.


292

Table 5.6 Dwelling type per municipality within the Cape Winelands District, 2016

Dwelling type

Cape Winelands District Witzenberg Drakenstein Stellenbosch Breede Valley Langeberg

Number 2016

% of total

Number 2016

% of total

Number2016

% of total

Number2016

% of total

Number2016

% of total

Number 2016

% of total


152 039 68.1 24 067 77.7 47 196 70.3 27 846 56.6 29 269 61.2 23 662 84.5


1 235 0.6 224 0.7 330 0.5 265 0.5 315 0.7 100 0.4


12 624 5.7 388 1.3 4 310 6.4 4 801 9.8 2 734 5.7 391 1.4


13 661 6.1 1 815 5.9 4 131 6.1 3 073 6.2 3 718 7.8 924 3.3

Informal dwelling/ shack, in backyard

13 854 6.2 1 140 3.7 5 292 7.9 2 896 5.9 2 772 5.8 1 753 6.3

Informal dwelling/ shack, NOT in backyard, e.g. in an informal/ squatter settlement

23 257 10.4 2 589 8.4 3 736 5.6 8 996 18.3 7 327 15.3 610 2.2


1 437 0.6 182 0.6 609 0.9 304 0.6 272 0.6 69 0.2


2 358 1.1 373 1.2 591 0.9 547 1.1 616 1.3 231 0.8

Total 223 134 100 30 964 100 67 175 100 49 199 100 47 794 100 28 003 100


Informal settlements are an indication of poor levels of human development and hence government programs to provide proper housing for all households in the country. Stellenbosch has the highest number of households living either in informal shacks or squatter settlements (11 892 households of 24.2 per cent) followed by Breede Valley (10 099 households or 21.1 per cent) and Drakenstein (9 028 households or 13.5 per cent). The smallest number of households living in informal settlements in the CWD is found within Langeberg (2 363 households or 8.5 per cent). Improved economic performance can provide households with necessary income required to afford decent living conditions and therefore reduce or eliminate the squatter settlements. Access to decent housing is one step towards human development. Human settlements need to be provided with basic services such as water, electricity, sanitation and refuse removal in order for households to be rendered well developed.


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Table 5.7 Domestic and non-domestic consumers receiving basic services within the Cape Winelands District



change 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change

Witzenberg 14 152 14 492 2.4 12 973 13 372 3.1 14 116 14 413 2.1 13 266 13 920 4.9

Drakenstein 42 158 43 711 3.7 56 000 56 809 1.4 50 982 51 227 0.5 40 413 41 515 2.7

Stellenbosch 34 752 37 846 8.9 31 382 40 353 28.6 21 097 21 097 0.0 29 971 29 971 0.0

Breede Valley 25 715 25 715 0.0 24 333 25 049 2.9 23 927 24 415 2.0 18 689 19 558 4.6

Langeberg 16 194 16 605 2.5 17 022 17 758 4.3 15 866 16 062 1.2 14 876 15 074 1.3


Table 5.7 provides recent data on basic service access levels within the CWD as reported by Statistics South Africa in the latest non-financial census of municipalities. Access levels for water, electricity, sanitation and refuse removal within municipalities in the CWD increased between 2014 and 2015. This implies that there is an improvement in the living conditions for households and therefore positive implications for human and economic development in the region. In Witzenberg, access levels for refuse removal increased the most (654 consumers or 4.9 per cent) followed by access to electricity (399 consumers or 3.1 per cent), water (340 consumers or 2.4 per cent) and sanitation (297 consumers or 2.1 per cent). In Drakenstein, access to water increased the most (1 553 consumers or 3.7 per cent) between 2014 and 2015, followed by access to refuse removal (1 102 households or 2.7 per cent), access to electricity (809 households or 1.4 per cent) and sanitation (245 households or 0.5 per cent).

In Stellenbosch, there was a sharp increase (8 971 consumers or 28.6 per cent) in the access levels for electricity between 2014 and 2015, followed by access to water (3 094 consumers or 8.9 per cent). There were no changes in the access levels for sanitation and refuse removal between 2014 and 2015) which is a concern given the higher number of informal dwellings in Stellenbosch. In Breede Valley, access to refuse removal increased the most between 2014 and 2015 (869 households or 4.6 per cent), followed by access to electricity (716 consumers or 2.9 per cent) and sanitation (488 consumers or 2.0 per cent). There were no changes in the access to water in Breede Valley. Langeberg had the highest percentage increase in the access level for electricity (736 consumers or 4.3 per cent), followed by access to water (411 consumers or 2.5 per cent), refuse removal (198 households or 1.3 per cent) and sanitation (196 consumers or 1.2 per cent). It is important for municipalities to ensure that there are high access levels for refuse removal as refuse can be a hazard to health, which could put a strain on a municipality’s finances.


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Table 5.8 Access to basic services in the Cape Winelands District, 2016


Connected toelectricity


Witzenberg 27 292 35 168 28.9 25 275 34 734 37.4 34 017

Drakenstein 59 409 70 081 18.0 55 984 70 529 26.0 67 736

Stellenbosch 43 015 49 673 15.5 39 834 51 386 29.0 47 594

Breede Valley 41 912 43 373 3.5 37 880 45 105 19.1 42 848

Langeberg 24 975 27 640 10.7 22 445 26 896 19.8 26 288

Cape Winelands District 196 603 225 934 14.9 181 418 228 650 26.0 218 483


Table 5.8 shows that the number of households connected to the electricity grid, have access to piped water and flush toilets has further increased in 2016, according to the Community Survey findings. Witzenberg experienced the largest increase in the number of households with access to piped water between 2011 and 2016 (28.9 per cent), followed by Drakenstein (18.0 per cent), Stellenbosch (15.5 per cent) and Langeberg (10.7 per cent). Witzenberg also recorded the largest increase in the number of households with a flush or chemical toilet (37.4 per cent), followed by Stellenbosch (29.0 per cent). There were significant increases in the number of households with flush toilets across all municipalities in the CWD.

5.8 Education

Table 5.9 shows recent estimations of education levels of persons living within municipalities in the CWD.

Table 5.9 Education levels of households in the Cape Winelands District, 2016

Municipality

Cape Winelands District Witzenberg Drakenstein Stellenbosh Breede Valley Langeberg

Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


No schooling 17 905 3.2 4 240 4.7 4 376 2.4 2 588 2.3 3 918 3.5 2 782 4.1

Some primary 72 048 12.7 15 079 16.7 19 782 10.7 12 904 11.4 12 734 11.5 11 549 17.0

Complete primary

35 070 6.2 7 312 8.1 9 853 5.3 6 285 5.5 6 562 5.9 5 058 7.4

Some secondary

226 523 39.9 39 439 43.7 70 248 37.9 41 363 36.5 47 374 42.8 28 099 41.3

Grade 12/ Std 10

152 071 26.8 18 940 21.0 56 472 30.5 30 723 27.1 29 521 26.7 16 413 24.1

Higher 64 126 11.3 5 291 5.9 24 637 13.3 19 540 17.2 10 473 9.5 4 186 6.1

Total 567 743 100 90 302 100 185 367 100 113 404 100 110 582 100 68 087 100


It can be seen that Witzenberg has the largest proportion of the population (4.7 per cent or 4 240 people) without any form of schooling, followed by Langeberg (4.1 per cent or 2 782 people), Drakenstein (2.4 per cent or 4 376 people) and Stellenbosch (2.3 per cent or 2 588 people. In Table 5.9, it can be seen that Stellenbosch and Drakenstein have the largest proportion of adults with Grade 12 or higher, 44.3 per cent


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and 43.8 per cent respectively. Witzenberg has the lowest proportion (26.9 per cent) in the region of people with a Grade 12 or higher certificate.

5.9 Health

Health indicators analysed in this section to measure the extent of human development include the child and maternal health as well as ART and TB patient loads. These indicators can provide pointers for life expectancy within an economy. South Africa’s life expectancy dropped to 50.4 years in 2010 from 61.7 years in 1995. However, more recent information from Statistics South Africa shows improvements in life expectancy within the Western Cape from 2011 to 2015 (Statistical release P0302, 2015). The decline in life expectancy over the years has been largely attributed to the high prevalence of HIV/AIDS and Tuberculosis (TB) in the country. The HIV and TB patient load in each municipality within the CWD is shown in Table 5.10 below.

Table 5.10 ART and TB patient loads in the Cape Winelands District, 2013 - 2015


Municipality

ART patient

load March 2013

ART patient

load March 2014

ART patient

load March 2015

Mother-to-child

transmission rate

Numberof ART clinics/


Number of TB

patients2012/13

Number of TB

patients 2013/14

Number of TB

patients 2014/15


sites 2015

Witzenberg 2 008 2 786 3 250 3.2% 5 1 066 1 112 1 035 19

Drakenstein 4 627 5 276 5 902 1.1% 15 2 208 2 137 2 067 27

Stellenbosch 2 940 3 574 4 021 2.6% 9 1 100 1 215 1 191 15

Breede Valley 3 358 4 248 4 584 1.2% 8 1 833 1 865 2 050 17

Langeberg 1 237 1 579 1 858 0.0% 7 1 006 998 1 039 16

Cape Winelands

14 170 17 463 19 615 1.7% 44 7 213 7 327 7 382 94

Western Cape 28 340 34 926 39 230 1.4% 259 14 426 14 654 14 764 188


Table 5.10 shows a 38.4 per cent increase in the ART patient load in the Western Cape Province from 28 340 patients in March 2013 and to 39 230 patients in March 2015. The increasing HIV/AIDS patient loads are positive in as far as it implies that HIV/AIDS patients are available for work. Drakenstein had the highest number of HIV/AIDS patients (5 902) in 2015, followed by Breede Valley (4 584), Stellenbosch (4 021), Witzenberg (3 250) and Langeberg (1 858). The figures above show that 50 per cent of HIV/AIDS patients live within the CWD, something which is a concern and should be noted and addressed by local, provincial and national government authorities. In terms of TB patients, the drop in the number of patients between 2014 and 2015 in Witzenberg, Drakenstein and Stellenbosch is a positive result of effective interventions. Increases in TB patients in Breede Valley and Langeberg remain a concern. Table 5.11 provides latest data on child and maternal health across municipalities in the CWD. The data shows that full immunisation coverage for children under 1 is lowest in Witzenberg (69 per cent), followed by Langeberg (73 per cent) and Drakenstein (78 per cent). Witzenberg and Drakenstein also have high percentages of children under 5 with severe malnutrition. The Neonatal mortality rate for Witzenberg (11.6) and Langeberg (10.8) is higher than both the CWD average (4.9) and the Western Cape


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average (6.2). Another area of health concern is the teenage pregnancy rates which are above the district and provincial average rates in Langeberg (9.8 per cent), Witzenberg (9.6 per cent) and Breede Valley (7.9 per cent). From the health data presented in this section it must be emphasized that prevention is better and less costly than cure.

Table 5.11 Child and maternal health in Cape Winelands District


Municipality

Full immunisation



5 years

Neonatal mortality

rate Low birth

weight

Maternal mortality

ratio


under 18 years


rate

Witzenberg 69% 3.64 11.6 16% 0.0 9.6% 1.1%

Drakenstein 78% 3.65 0.7 14% 35.8 6.7% 15.4%

Stellenbosch 86% 1.76 4.0 10% 0.0 4.8% 8.0%

Breede Valley 86% 2.60 6.8 19% 27.0 7.9% 10.7%

Langeberg 73% 2.62 10.8 16% 0.0 9.8% 2.9%


79% 2.94 4.9 15% 20.8 7.3% 9.4%

Western Cape 90% 2.43 6.2 15% 55.4 6.1% 16.8%


It can be argued from the analysis that the CWD experienced challenges with respect to ART and TB patient loads, higher teenage pregnancies and lower immunisation.

5.10 Summary and conclusion

This section explored the impact of economic performance on the socio-economic conditions of communities living in municipalities within the CWD using a selected number of indicators. Between 2011 and 2016, the District recorded a 9.9 per cent population growth rate while economic growth averaged 3.6 per cent per annum between 2004 and 2015, implying a general decline in the GDPR per capita, which is the income per household. Although the District HDI has been rising since 2011, it weakened slightly between 2014 and 2015, weighed down by lower HDIs in Stellenbosch and Drakenstein. Table 5.12 provides is a summary of recent trends in selected social indicators at different municipalities within the CWD.


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Table 5.12 Summary of Recent Changes in Various Social Indicators in the Cape Winelands District

Indicator

Cape Winelands District Witzenberg Drakenstein Stellenbosch

Breede Valley Langeberg

GDP growth (2005 - 2015)

3.6% 5.9% 3.1% 2.8% 3.9% 3.9%

Population Growth (2011 - 2016)

10% 12.6% 11.5% 11.4% 5.9% 7.9%

HDI (2011 - 2015) Increase Increase Increase Increase Increase Increase

Indigent Households (2014 - 2015)

Increase Decrease Increase Increase Decrease Increase

Households with no income (2016)

13.1% of total Below CWD average

Below CWD average

Above CWD average

Below CWD average

Below CWD average

Gini coefficient (2013 - 2015)

Increase Increase Decrease Decrease Increase Increase

Poverty headcount (2011 - 2016)

Increase Increase Increase Increase Decrease Decrease

Poverty intensity (2011 - 2016)

Decrease Increase Increase Decrease Increase Decrease

Informal dwelling (2016)

16.6% of total dwellings

Below CWD average

Below CWD average

Above CWD average

Above CWD average

Below CWD average

Access to water (2011 - 2016)


Access to electricity (2011 - 2016)


Access to sanitation (2011 - 2016)


Access to refuse removal (2011 - 2016)


No schooling (2016)


Above CWD average

Below CWD average

Below CWD average

Below CWD average

Above CWD average

Grade 12 or higher certificate (2016)


Below CWD average

Above CWD average

Above CWD average

Above CWD average

Below CWD average

ART patient load (2013 - 2015)


No of TB patients (2013 - 2015)

Increase Decrease Decrease Decrease Increase Increase

Immunisation coverage (2013 - 2015)

Below WC average

Below CWD average

Below CWD average

Above CWD average

Above CWD average

Below CWD average

Birth weight (2013 - 2015)

Equal WC average

Above CWD average

Below CWD average

Below CWD average

Above CWD average

Above CWD average

Teenage pregnancies (2013 - 2015)

Above WC average

Above CWD average

Below CWD average

Below CWD average

Above CWD average

Below CWD average

Indicators moving in positive territory could be a result of positive economic performance within the District, and vice-versa. Indicators that have moved in a positive direction for the CWD include an increase in the access to water, electricity, sanitation and waste management, among others. All municipalities in the district have experienced increases in the access to basic services. The HDI has also been rising since 2011 and the poverty is less intense. Areas of concern in the district include the rising population and rising indigent households in certain municipalities, households with no income, informal dwellers, teenage pregnancies, increasing ART and TB patient loads and lower immunisation coverage, among others.


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Witzenberg’s economy grew by 5.9 per cent on average between 2004 and 2015. The municipality’s population grew by 12.6 per cent between 2011 and 2016, and the HDI has risen from 0.618 in 2011 to 0.655 in 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigent households, decreasing TB patients as well as informal dwellers below the district average. Indicators that remain a concern include the rapid population growth, income inequality, rising poverty headcount and intensity.

Lower education achievements, ART patient load, lower immunisation levels, and teenage pregnancies, among others. Drakenstein grew by 3.1 per cent on average between 2005 and 2015 while population growth was 11.5 per cent between 2011 and 2016. Although the HDI has risen from 0.681 in 2011 to 0.708 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing income inequality, below district average informal dwellers, good education achievements, and below district average birth weight and teenage pregnancies. Indicators that are of concern include the increasing indigent households, rising poverty headcount and intensity levels, lower immunisation coverage and high ART patient loads, among others.

Stellenbosch’s economy grew by 2.8 per cent on average between 2004 and 2015 while the population grew much faster than the economy at 11.4 per cent between 2011 and 2016. Although the HDI has risen from 0.699 in 2011 to 0.718 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing income inequality, decreasing poverty intensity, good educational achievements, high immunisation levels and lower teenage pregnancies, among others. Social indicators that are of concern include the rapid population growth, increasing indigent households.

Households without income, increasing poverty headcount, informal dwellers, and ART patient load. Breede Valley Municipality’s growth is estimated to be 3.9 per cent on average between 2004 and 2015 while the population has grown faster than the economy at 5.9 per cent between 2011 and 2016. The HDI for the municipality has risen year-on-year from 0.652 in 2011 to 0.690 in 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigents, increasing HDI, decreasing poverty headcount, good education achievements, and high immunisation coverage. Indicators that are of concern include income inequality, poverty intensity, increasing ART and TB patients, informal dwellers, and teenage pregnancies, among others.


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Langeberg grew by 3.9 per cent on average between 2005 and 2015 while the population growth was faster than the economy at 7.9 per cent between 2011 and 2016. The HDI has risen year-on-year from 0.632 in 2011 to 0.670 in 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing poverty headcount and intensity levels, lower households without income, fewer informal dwellers and lower teenage pregnancies. Indicators that remain a concern include the increasing population, increasing indigent households, increasing income inequality, below average education achievements, rising ART and TB patients loads, and lower immunisation coverage, among others.

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Overberg District

1


1.1 Introduction

The Overberg District is the Western Cape’s 4th largest non-metro economy and contributes 3.5 per cent to the GDP of the Western Cape in 2015, making it a relatively minor contributor. The finance, insurance, real estate and business services sector; the wholesale and retail trade, catering and accommodation sector; and the transport, storage and communications sector were the top three economic sectors that contributed the most to the GDP of Overberg District. Some of the major projects being implemented in Overberg District include the proposed Aquaculture SEZ; expansion of Abagold; Stony Point Eco-Centre; Theewaterskloof


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Municipal Support Development Team; Middle Income Housing Development; and Flight Park. Areas of concern include the rising indigent households, rising income inequality, informal dwellers, people with no schooling, increasing ART patient loads, high teenage pregnancies.

This sub-section provides a macroeconomic outlook for the Overberg District (OBD), an overview of trends between 2004 and 2015 and an outlook in terms of GDPR between 2016 and 2021. International trade is also considered in this section; as well as top companies by size and employment that are operating in the area.



The OBD is the Western Cape’s second smallest economy and it contributed only 3.5 per cent to the GDPR of the Western Cape in 2015, making it a relatively minor contributor. Figure 1.1 indicates the GDPR performance per municipality in the OBD between 2004 and 2015.



The OBD experienced an average GDPR growth rate of 4.6 per cent between 2004 and 2015. Swellendam (average 4.9 per cent) and Theewaterskloof (4.5 per cent) have been performing better than the other municipal areas in the OBD. Overstrand had the lowest average GDPR growth between 2004 and 2015 with 3.2 per cent. The contraction in GDPR between 2008 and 2009 can be attributed to the global economic recession.

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cape Agulhas 6.9% 5.8% 6.0% 4.4% -1.5% 2.0% 3.7% 2.8% 2.5% 2.5% 0.9%

Overberg 7.3% 6.4% 7.0% 5.4% -0.2% 2.1% 4.0% 3.2% 2.9% 3.3% 1.3%

Overstrand 6.4% 6.2% 6.0% 3.4% -0.7% 2.0% 3.4% 2.6% 2.4% 2.4% 0.8%

Swellendam 8.5% 7.4% 8.4% 8.2% 1.3% 2.3% 4.6% 3.7% 3.4% 4.5% 2.1%

Theewaterskloof 7.9% 6.5% 7.9% 6.8% 0.5% 2.3% 4.4% 3.7% 3.4% 4.0% 1.5%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Overberg District

303

Apart from the challenges brought about by subdued commodity prices, a number of other challenges are having an impact on the economy, such as the drought, causing increases in domestic food prices, and the currency depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy). Table 1.1 indicates the average GDPR contribution and growth rates between the various municipalities.

Table 1.1 GDPR contribution and average growth rates per municipality


2015


Municipality Trend


2004 - 2008 Recession 2008 - 2009


Theewaterskloof 39.1 4.5 7.4 3.6 3.2

Overstrand 33.1 3.2 6.2 1.3 2.3

Cape Agulhas 15.1 3.3 6.2 1.4 2.4

Swellendam 12.7 4.9 8.1 4.8 3.4

Total Overberg District 100 4.6 5.7 4.2 3.4



Theewaterskloof contributed the most in 2015 to GDPR (39.1 per cent) in the OBD, followed by Overstrand (33.1 per cent). These two municipal areas made up 72.2 per cent of the OBD’s GDPR contribution in 2015. All the municipalities have experienced a lower rate in GDPR growth during the recovery phase after the recession between 2009 and 2015 than before the recession which could be attributed to the slowdown in China and the decrease in demand for commodities. The OBD has also been performing better than the Western Cape’s average growth.


Figure 1.2 indicates the GDPR contribution per main sector of the various municipalities. In the OBD in 2015, the primary sector contributed 3.0 per cent to the GDPR of the District, the secondary sector 24.5 per cent and the tertiary sector 72.5 per cent. The OBD, just as the Western Cape economy, is dominated by the tertiary sector and has a much smaller primary sector overall.


304



The contribution of the primary sector can be attributed to the presence of agricultural activities such as aquaculture and the prominence of the stone fruits industry in the OBD. The secondary sector in the OBD consists of manufacturing closely linked with agriculture (i.e. agri-processing) activities in the district. The tertiary sector’s presence remains relatively important, and consists of activities such as the wholesale of agricultural produce, transport of commodities, and activities related to agri-processing. Table 1.2 indicates the sectors that contribute the most to the OBD’s economy.

Table 1.2 Overberg District GDPR contribution per sector, 2015 (%)

Sector Overberg District Theewaterskloof Overstrand Cape Agulhas Swellendam


2.9 3.2 2.7 3.1 2.3

Mining and quarrying 0.1 0.1 0.1 0.1 0.0

Manufacturing 14.5 14.9 15.3 14.5 10.7


2.3 2.8 2.1 2.0 1.9

Construction 7.7 8.9 6.6 6.8 8.1


21.1 19.8 21.2 23.7 22.0


12.2 12.3 12.7 12.1 11.0


22.1 21.7 23.2 21.4 21.4


7.7 7.5 7.3 6.9 10.2

General government 9.4 8.9 8.8 9.5 12.3


3.0% 3.2% 2.8% 2.4% 3.2%

24.5% 23.2% 24.0% 20.7%26.6%

72.5% 73.6% 73.2% 77.0%70.1%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Overberg District Cape Agulhas Overstrand Swellendam Theewaterskloof


Overberg District

305

The finance, insurance, real estate and business services sector (22.1 per cent), the wholesale and retail trade, catering and accommodation sector (21.1 per cent), and the manufacturing sector (14.5 per cent) were the top three economic sectors that contributed the most to the GDPR of OBD. Table 1.3 indicates the OBD’s GDPR performance per sector.

Table 1.3 Overberg District GDPR performance per sector

Sector


Trend 2004 - 2015




Agriculture, forestry and fishing -7.1 -3.8 -13.8 -8.2






5.1 7.9 0.7 4.0


5.9 10.1 2.1 3.7


4.7 7.4 2.8 3.3


3.2 5.9 -2.1 2.4


Total Overberg District 3.9 6.5 -0.2 2.8


Between 2004 and 2015 two sectors in the OBD’s GDPR contracted, namely the agriculture, forestry and fishing sector (-7.1 per cent) and the mining the quarrying sector (-0.1 per cent). It is evident that the 2015 drought has had an impact on the agriculture sector where growth has decreased consistently. Sectors that had strong GDPR growth between 2004 and 2015 included the manufacturing sector (5.4 per cent), the construction sector (6.8 per cent) and the transport, storage and communication sector (5.9 per cent).




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Table 1.4 GDPR forecast per sector (%)

Sector 2016 2017 2018 2019 2020 2021 Average

2016 - 2021


-18.5 -4.4 -5.6 -7.4 -8.5 -9.3 -9.0

Mining and quarrying 4.3 -0.9 -0.9 -0.8 -0.8 -0.6 0.0

Manufacturing 3.5 2.3 3.0 3.1 3.3 3.1 3.0


Construction 5.8 2.8 4.5 4.6 5.2 5.5 4.7


2.6 2.2 3.1 3.5 3.6 3.9 3.1


-5.0 1.1 3.4 4.0 4.2 3.9 1.9


3.1 3.4 4.9 5.5 5.7 5.6 4.7


0.3 0.1 0.4 0.9 1.2 1.4 0.7


Total 1.1 2.1 3.1 3.5 3.7 3.8 2.9


It is estimated that the OBD’s GDPR will grow by an average of 2.9 per cent over the next 5 years. All the economic sectors in OBD are forecasted to have a low average GDPR growth rate between 2016 and 2021, except for the finance, insurance, real estate and business services sector (4.7 per cent); the construction sector (4.7 per cent); the wholesale, retail trade, catering and accommodation sector (3.1 per cent); and the manufacturing sector (3.0 per cent). It is predicted that the agriculture, forestry, and fishing sector will not recover from the 2015 growth figures. This can be contributed to the prolonged drought that started in 2015 and which will have a continued effect on the industry until 2021. The mining and quarrying sector is also predicted to not recover from 2015 growth figures.



Table 1.5 indicates the trend in employment growth within each municipality in the OBD.

Table 1.5 Overberg District employment growth


2015


Municipality Trend


2004 - 2008 Recession 2008 - 2009


Theewaterskloof 42.8 6 334 2 142 -1 316 5 508

Overstrand 30.9 8 726 5 596 -779 3 909

Cape Agulhas 13.0 2 703 1 727 -384 1 360

Swellendam 13.3 3 564 1 625 -183 2 122

Total Overberg District 100 21 327 11 090 -2 662 12 899

Western Cape Province - 456 528 276 992 -61 240 240 776


Overberg District

307

Similar to GDPR contribution, in 2015 Theewaterskloof and Overstrand employed the majority (73.7 per cent) of individuals in OBD. Prior to the recession (2004 - 2008) all the municipalities experienced positive employment growth, but during the recession (2008 - 2009) all municipalities shed jobs, with Theewaterskloof shedding the highest number of jobs (1 316 overall). All the municipal area’s gained jobs between 2009 - 2015 but at a slower rate than before the 2008 - 2009 recession with the exception of the Theewaterskloof.


Table 1.6 indicates the trend in employment growth within each economic sector in the OBD.

Table 1.6 Overberg District employment growth per sector


Sector Trend


2004 - 2008 Recession 2008 - 2009


Agriculture, forestry and fishing -19 624 -14 301 -2 450 -2 873


Manufacturing 2 378 2 240 -410 548


Construction 3 803 2 660 -646 1 789


13 513 8 859 212 4 442



8 776 5 197 -148 3 727


4 874 2 675 214 1 985


Total Overberg District 21 327 11 090 -2 662 12 899



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Overall, between 2004 and 2015 only the primary sector shed jobs overall in the agriculture, forestry and fishing sector and the mining and quarrying sector. Six out of 10 economic sectors however shed jobs overall during the recession (2008 - 2009), but after the recession all the economic sectors began gaining jobs except for the primary sectors. The agriculture, forestry and fishing sector has been continuously shedding jobs since 2004 which shows trends that the sector was negatively impacted by the start of the global recession internationally and continued to be impacted through the local recession (2008 - 2009) and the 2015 ongoing drought.


Table 1.7 indicates the sectors where the OBD has a comparative advantage in the Western Cape Province in terms of GDPR and employment.

Table 1.7 Comparative advantage in terms of GDPR and employment, Overberg District, 2015

Sector In terms of

GDPR In terms of

employment












The OBD has a comparative advantage in the construction sector; wholesale and retail trade, catering and accommodation sector; the transport, storage and communication sector; and the community, social and personal services sector. Table 1.8 indicates the number and Rand value of the procurement contracts undertaken in OBD Municipality during the 2014/15 financial year. The aim of this was to have an indication as to which sectors the ODM procurement contracts were focused on.

1 A comparative advantage indicates a relatively more competitive production function for a product or service in a specific economy (regional or sub-regional) than in the aggregate economy (provincial or national). It therefore measures whether a specific economy produces a product or renders a service more efficiently than another. One way to measure the comparative advantage of a specific economy is by way of the location quotient. A location quotient as a tool, however, does not take into account external factors such as government policies, investment incentives, and proximity to markets, etc., which can influence the comparative advantage of an area. The Locational Quotient is used to calculate the comparative advantage of the relevant study areas. The location quotient is calculated ratios between two economies; in this case the province and district economies. This ratio is calculated for all industries to determine whether or not the district or local economy has a greater share or advantage of that industry. If an economy has a location quotient greater than 1, it means that economy enjoys a comparative advantage.

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Table 1.8 Overberg District Procurement Contracts 2014/15

Procurement Contracts

Sector Number R-value

Business Services 4 12 539 665.42

Community Services 6 16 242 318.68


Finance 4 11 015 911.00

Retail Trade 1 6 243 554.41

Transport and Communication 2 4 404 410.00

Total 31 89 810 793.49


A total of 31 procurement contracts were undertaken in the OBD during the 2014/15 financial year to the value of ± R89 million. The majority (45 per cent) were in the construction industry, 19 per cent in the community and social services sector, and 13 per cent each in the business services sector and financial services sector.

The agriculture and agri-processing sector is well established in OBD (i.e. apples are grown in the region and Appletiser is also located in the region). Table 1.9 indicates the main agriculture activities in the OBD as per the percentage contribution to the Western Cape Province’s overall agriculture contribution.

Table 1.9 Overberg agriculture as per contribution of Western Cape Agriculture, 2013, (%)

Sub-sector Theewaterskloof Overstrand Cape Agulhas Swellendam

Crops (as % of Western Cape)

Wine Grapes 0.8

Lucerne 10.6 2.0 13.8 13.2

Canola 16.0 0.6 15.1 18.9

Small Grain Grazing 2.6 0.3 0.4 1.1

Planted Pastures Perennial 2.2 0.4 2.6

Natural grazing 2.0 4.2 3.9

Fallow 6.2 8.0

Stubble 6.5 9.8

Wheat 11.6 0.2 10.9 8.5

Olives 2.4

Barley 17.4 1.1 31.8 28.9

Lupine 8.2 8.6

Pears 22.1

Apples 53.2

Planted Pastures 6.7 15.3 13.4

Proteas 17.9

Cattle 5.0 1.1 5.2 10.4

Goats 0.2 0.0 0.0 0.8

Horses 1.0 4.6 1.0 3.9

Ostriches 0.0 0.0 0.0 0.5

Pigs 2.6 1.1 1.2 2.1

Sheep 5.6 0.2 7.6 12.9



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In 2013 the main crops and livestock produced in the OBD included:

1. Barley (79.2 per cent of the Western Cape)

2. Apples (53.2 per cent of the Western Cape)

3. Canola (50.6 per cent of the Western Cape)

4. Lucerne (39.6 per cent of the Western Cape)

5. Planted Pastures (35.4 per cent of the Western Cape)

6. Wheat (31.2 per cent of the Western Cape)

7. Sheep (26.3 per cent of the Western Cape)

8. Pears (22.10 per cent of the Western Cape)

9. Proteas (17.9 per cent of the Western Cape)

Table 1.10 indicates the economic contribution of the manufacturing sector in OBD.

Table 1.10 Overberg District manufacturing GDPR contribution per sector, 2015 (%)

Sub-sector Overberg District Theewaterskloof Overstrand Cape Agulhas Swellendam


33.2 33.8 30.8 30.9 43.2


4.8 4.6 4.9 5.4 4.6


12.6 11.1 14.0 13.2 13.3


14.9 14.7 16.3 12.9 13.5


3.9 4.9 3.0 3.0 4.7


13.4 13.7 14.3 14.3 7.6


0.4 0.2 0.4 1.3 0.0


0.5 0.0 0.8 1.3 0.0

Transport equipment 5.3 4.5 5.5 7.1 4.6


11.0 12.6 10.0 10.6 8.5


Table 1.10 indicates that the manufacturing sectors that contributed most to OBD’s GDPR in 2015 were:





Furniture and other manufacturing (11 per cent)

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From Table 1.9 and Table 1.10 it is clear that the agriculture sector is dominated by barley, apples, canola, planted pastures, wheat, pears and proteas. Economic activities in OBD are centred around agricultural, viticultural and aquaculture production. This correlates with the dominating manufacturing sub-sector of the OBD which is food, beverages and tobacco (33.2 per cent to GDPR in 2015). The other dominant manufacturing sub-sector is the petroleum products, chemicals, rubber and plastic (14.9 per cent) sub-sector which correlates with the beneficiation activities in the area and industry such as Southern Oil (Pty) Ltd, Kromko concrete works, etc.


Table 1.11 indicates the top companies located in OBD. This data was collated from the Western Cape Top 300 Companies (based on criteria developed in partnership with the Cape Chamber of Commerce, the Western Cape Provincial Government, Accelerate and Wesgro) and Wesgro Fact Sheets for the OBD.

Table 1.11 Top companies, Overberg District


Manufacturing 3 No data

Agriculture, forestry and fishing 6 ± 485*

Tourism 5 No data

Food Processing 1 No data

Wholesale and retail trade 1 No data

Total 16 ± 485*

* This includes employment for the whole company (all branches, not just Overberg District branches).


There are 16 top companies in terms of employment and contribution to GDPR in the OBD, however data regarding employment are very limited. Some of the companies include Southern Oil (Pty) Ltd, De Dam Resort, Arabella Resort, Caledon Casino, Alzein Industries, HIK Abalone Farm, Kromko, Overberg Concrete Works, Optima Bricks, Appletiser SA (Pty) Ltd, SA Breweries, SA Maltings, Elgin Free Range Poultry, and Misty Waves Hotels.


Of the total exports in the OBD in 2015, 28 per cent included manufacturing products and 72 per cent included agriculture, forestry and fishing products. Of the total imports in the OBD in 2015, 86 per cent included manufacturing products, 14 per cent included agriculture, forestry and fishing products. Figure 1.3 indicates the OBD trade balance between 2005 and 2015.


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Figure 1.3 Overberg District Trade Balance, 2005 - 2015


The regional trade balance in the OBD has been positive since 2005 due to a steady increase in trade from R664.9 million in 2005 to R1.99 billion in 2015. During this time imports stood at R1 billion in 2005 and R3.1 billion in 2015. There was a continuous trade deficit in the mining and quarrying sector between 2005 and 2007 with a contraction in 2009, which could have been a combination of the global recession, slowdown of Chinese manufacturing, and the weakness of the commodity market due to currency fluctuations and inflation. The trade balance has also decreased from R2 billion to R1.9 billion between 2014 and 2015 which could be attributed to the volatile world economy and the fact that South Africa could face another recession in 2017 if the economy does not improve.


In the OBD, the primary sector contributed an average of 3 per cent to the GDPR of the District in 2015, which consists predominantly of agriculture (i.e. barley, apples, canola, planted pastures). The secondary sector contributed an average of 24.5 per cent to the GDPR which consists of manufacturing, construction and electricity, gas and water sectors (i.e. food, beverages and tobacco sub-sectors and the petroleum products, chemicals, rubber and plastic sub-sectors). The Overberg economy is defined by the tertiary sector, accounting for 72.5 per cent of the economy and consists of industries such as wholesale and retail trade, catering, accommodation, transport, finance, and real estate (which is strongest in the Swellendam Municipality).

-0.5

0

0.5

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1.5

2

2.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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The services sector has shown great success and assisted in covering losses experienced in agriculture. The construction sector is improving along with the manufacturing sector while all tourism related sectors have shown resilience by taking advantage of the weak currency which promotes travelling by international tourists. Adventure tourism is on the rise in the area and making a significant contribution on related industries.

Prior to the recession (2004 - 2008) every local municipality in the OBD overall experienced job growth. During the recession (2008 - 2009) every local municipality in the OBD shed jobs overall and in the recovery after the recession (2009 - 2015) all the local municipalities experienced job growth, except for the agriculture, forestry and fishing sector and the mining and quarrying sector. The contraction of growth and job losses experienced as a consequence of the recession and continued slow growth has had implications on the economy. The Overstrand Municipality indicated that the services sector has shown great success and assisted in covering losses experienced in agriculture (MERO Municipal Survey, 2016).

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2


2.1 Introduction

This sub-section provides a macroeconomic outlook on the municipal level, an overview of trends during 2004 - 2015 and an outlook in terms of GDPR for 2016 - 2021. Employment is also considered in this section; as well as skills levels and building plans passed and completed.

2.2 Theewaterskloof


In Theewaterskloof, the primary sector contributed 3.3 per cent to GDPR compared to 3 per cent to the OBD in 2015. The secondary sector contributed 26.6 per cent to the GDPR of the area, compared to 24.5 per cent in the OBD; while the tertiary sector contributed 70.1 per cent to Theewaterskloof compared to 72.5 per cent in the District. This indicates the secondary sectors is slightly stronger in Theewaterskloof compared to the OBD. This could be attributed a slightly stronger presence of manufacturing activities in the local municipality. Table 2.1 indicates the Theewaterskloof GDPR performance per sector.


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Table 2.1 Theewaterskloof GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


3.2 220 -9.5 -5.2 -16.2 -11.2

Mining and quarrying 0.1 3 1.5 0.4 -1.7 2.8

Manufacturing 14.9 1 030 6.0 11.1 -3.5 4.2


2.8 192 0.2 -1.2 2.5 0.7

Construction 8.9 613 9.5 17.1 8.5 4.7


19.8 1 366 5.9 9.0 1.6 4.5


12.3 846 4.9 8.3 0.3 3.3


21.7 1 492 8.8 14.0 7.5 5.5


7.5 516 3.5 6.0 0.2 2.5


Total Theewaterskloof 100 6 890 4.5 7.3 0.5 3.2


Alongside the secondary sector, the tertiary sector has made a significant contribution towards the Theewaterskloof’s GDPR. The sectors that contributed the most to the Theewaterskloof GDPR in 2015 included:

Finance, insurance, real estate, and business services (21.7 per cent)



Between 2004 and 2015 almost every economic sector in Theewaterskloof grew in terms of GDPR and all the economic sectors showed positive growth rates after the recession with the exception of the agriculture, forestry and fishing sector. The finance, insurance, real estate, and business services sector showed the highest growth at 5.5 per cent (2009 - 2015). Although Theewaterskloof’s economy experienced low levels of growth between 2008 and 2009, it grew by an average of 3.2 per cent between 2009 and 2015. The two most robust sectors of Theewaterskloof are the construction sector and finance, insurance, real estate and business services sector. These sectors have experienced the highest economic growth during the recession. Both experienced positive growth with the construction sector growing at an average growth rate of 8.5 per cent, and transport, storage, and communication sector, which grew at 7.5 per cent.

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Table 2.2 indicates the trend in employment growth within each economic sector in Theewaterskloof.

Table 2.2 Theewaterskloof employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.8 2 295 -13 355 -9 627 -1 583 -2 145


Manufacturing 9.3 4 451 1 254 1 081 -141 314


0.4 170 61 30 0 31

Construction 11.4 5 493 2 789 1 662 -118 1 245


25.8 12 375 5 850 3 630 178 2 042


6.1 2 914 1 707 929 85 693


17.8 8 569 4 386 2 606 -6 1 786


15.5 7 455 2 287 1 275 112 900


Total Theewaterskloof 100 48 022 6 334 2 142 -1 316 5 508


In terms of employment, the sectors that contributed the most to Theewaterskloof employment in 2015 were:

Wholesale and retail trade, catering and accommodation (25. 8 per cent)



Overall, these sectors accounted for over 59.1 per cent of the employment opportunities within Theewaterskloof. The wholesale and retail trade, catering and accommodation sector saw the highest job growth between 2008 and 2009. The primary sector, the manufacturing sector, the construction sector and the finance, insurance, real estate and business services sector experienced a collective job loss amounting to 1 850 during the recession. Between 2004 and 2015, all economic sectors with the exception of the primary sector showed overall job creation. The greatest number of jobs created between 2005 and 2015 in Theewaterskloof has been due to growth within tertiary sector industries. This indicates that the tertiary sector has been a major source of opportunities for employment during this period.


318

2.2.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.3 indicates the skills levels in Theewaterskloof.

Table 2.3 Theewaterskloof skills level




2015

Skilled 15.1 2.4 5 054

Semi-skilled 47.3 1.9 15 866

Low skilled 37.6 -3.8 12 631

Total Theewaterskloof 100 -0.69 33 551


Only formal employment numbers can be used to determine the skills level in the area. In Theewaterskloof there were 33 551 formally employed individuals, indicating that 14 471 individuals were informally employed in 2015. The majority of Theewaterskloof’s formally employed individuals (47.3 per cent) are semi-skilled, compared to 37.6 per cent low skilled and 15.1 per cent skilled. Skilled and semi-skilled formal employees have been increasing positively between 2004 and 2015, while the low skilled formal employees have been decreasing between 2004 and 2015. This could be indicating up-skilling in Theewaterskloof through either better access to education as well as up-skilling opportunities through employers.

2.3 Overstrand


In 2015, the primary sector contributed 2.8 per cent to the GDPR of Overstrand, compared to 3 per cent in the OBD. The secondary sector contributed 24 per cent to the GDPR of the area, compared to 24.5 per cent in the OBD; whilst the tertiary sector contributed 73.2 per cent to the Overberg economy compared to 72.5 per cent in the District. This indicates that the tertiary sector is slightly stronger in Overstrand compared to the OBD, with the secondary sector being very similar and the primary sector less dominant compared to the District. Table 2.4 indicates the Overstrand GDPR performance per sector.

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Table 2.4 Overstrand GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.7 157 -3.9 -3.0 -8.0 -3.8


Manufacturing 15.3 895 4.9 9.7 -4.7 3.3


2.1 122 3.8 6.7 3.4 1.9

Construction 6.6 385 3.2 8.9 0.6 -0.2


21.2 1 237 4.6 7.1 0.0 3.7


12.7 743 7.4 12.9 4.1 4.4


23.2 1 357 1.3 2.3 -1.2 1.0


7.3 425 2.9 5.2 -0.6 2.0


Total Overstrand 100 5 841 3.2 5.5 -0.7 2.3


The sectors that contributed the most to the Overstrand GDPR in 2015 included:

Finance, insurance, real estate, and business (23.2 per cent)



Between 2004 and 2015 almost every economic sector in Overstrand grew positively in terms of GDPR, except for the agriculture, forestry, and fishing sector and mining and quarrying sector. Almost all the economic sectors are showing positive growth after the recession, except for the agriculture, forestry and fishing sector and the construction sector. The transport, storage, and communication sector showed the highest recovery at 4.4 per cent (2009 - 2015). Although the Overstrand’s economy experienced a contraction between 2008 and 2009, it has experienced a positive average growth rate of 2.3 per cent between 2009 and 2015. The most robust sector in Overstrand is the transport, storage, and communication sector, which experienced the highest economic growth during the recession, averaging at 4.1 per cent.


320


Table 2.5 indicates the trend in employment growth within each economic sector in Overstrand.

Table 2.5 Overstrand employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.6 1 265 -2 290 -1 689 -362 -239


Manufacturing 9.8 3 395 661 693 -152 120


0.3 98 56 28 1 27

Construction 8.8 3 060 139 389 -382 132


31.2 10 829 4461 3070 32 1 359


7.8 2 697 1 699 926 91 682


16.3 5 654 1795 1085 -146 856


13.6 4 732 1311 721 37 553


Total Overstrand 100 34 696 8 726 5 596 -779 3 909


In terms of employment, the sectors that contributed the most to Overstrand’s employment in 2015 were:

Wholesale and retail trade, catering, and accommodation (31. 2 per cent)



These three sectors accounted for over 61.1 per cent of the employment opportunities within the Overstrand economy. Other than the general government sector which recorded the highest job growth between 2008 and 2009, the agriculture, forestry, and fishing sector, the mining and quarrying sector, the manufacturing sector, the construction sector and the finance, insurance, real estate and business services sector experienced a collective job loss amounting to 1 044 during the recession. Between 2004 and 2015, almost every sector showed job creation except for the agriculture, forestry, and fishing sector and the mining and quarrying sector. The greatest number of jobs created between 2004 and 2015 in Overstrand has been due to growth within the wholesale and retail trade, catering and accommodation and the finance, insurance, real estate, and business services sector. This indicates that the tertiary sector has been a source of employment opportunities during this period.

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2.3.3 Skills level

Table 2.6 indicates the skills levels of Overstrand.

Table 2.6 Overstrand skills level




2015

Skilled 22.1 0.9 4 605


Low skilled 31.3 -1.0 6 531

Total Overstrand 100 0.09 20 874


In Overstrand there were 20 874 formally employed individuals, indicating that 13 822 individuals were informally employed in 2015. The majority of the Overstrand’s formally employed individuals (46.7 per cent) are semi-skilled, compared to 31.3 per cent low skilled and 22.1 per cent skilled. Skilled formal employees (0.9 per cent) and semi-skilled formal employees (0.5 per cent) have experienced positive growth between 2004 and 2015.

2.4 The Cape Agulhas area


In the Cape Agulhas area, the primary sector contributed 3.2 per cent to the GDPR, compared to 3.0 per cent in the OBD in 2015. The secondary sector contributed 23.2 per cent to the GDPR of the area, compared to 24.5 per cent in the OBD whilst the tertiary sector contributed 73.6 per cent to the Cape Agulhas area compared to 72.5 per cent in the District. This indicates that the tertiary sector of the area is stronger compared to the OBD. Table 2.7 indicates the Cape Agulhas area’s GDPR performance per sector.


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Table 2.7 Cape Agulhas area GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2005 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


3.1 82 -3.9 -2.1 -9.9 -4.0

Mining and quarrying 0.1 2 -1.3 4.5 -10.1 -3.6

Manufacturing 14.5 385 4.5 8.5 -3.5 3.1


2.0 54 -0.6 -0.7 -0.9 -0.4

Construction 6.8 180 5.4 11.4 3.9 1.6


23.7 632 4.3 6.6 -0.2 3.5


12.1 321 5.8 9.9 3.2 3.6


21.4 570 4.3 7.2 1.3 2.8


6.9 183 1.7 5.5 -14.2 1.7

General government 9.5 254 0.3 -0.5 -0.8 1.1

Total Cape Agulhas 100 2 664 3.3 5.8 -1.5 2.4


The sectors that contributed the most to Cape Agulhas area’s GDPR in 2015 included:

Wholesale and retail trade, catering, and accommodation (23.7 per cent)



Between 2004 and 2015 the following economic sectors in the Cape Agulhas area contracted, the agriculture, forestry, and fishing sector; the mining and quarrying sector; and the electricity, gas, and water sector. Although the area’s economy contracted between 2008 and 2009, growing at a negative 1.5 per cent, between 2009 and 2015, it has experienced a positive annual average growth rate of 2.4 per cent. The two most robust sectors of the area are the construction sector and the transport, storage, and communication sector, which grew by 3.9 per cent, and 3.2 per cent respectively during 2008-2009.

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Table 2.8 indicates the trend in employment growth within each economic sector in the Cape Agulhas area.

Table 2.8 Cape Agulhas employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.8 695 -1 222 -989 -176 -57


Manufacturing 10.2 1 489 237 267 -85 55


0.3 44 16 9 0 7

Construction 8.2 1 188 180 236 -117 61


30.2 4 392 1 419 1 021 -33 431


7.5 1 092 547 321 18 208


16.6 2 415 978 584 -20 414


12.5 1 822 368 215 12 141


Total Cape Agulhas 100 14 563 2 703 1 727 -384 1 360


In terms of employment, the sectors that contributed the most to Cape Agulhas area’s employment in 2015 were:




These three sectors accounted for over 59.3 per cent of the employment opportunities within the Cape Agulhas area. Other than general government, community, social and personal services, and transport, storage and communication which recorded the highest job growth between 2008 and 2009, all other sectors experienced job losses during the recession. Between 2004 and 2015, almost every sector showed job creation except for the primary sector. The greatest number of jobs created between 2004 and 2015 in the Cape Agulhas area has been due to growth within the wholesale and retail trade, catering and accommodation and the finance, insurance, real estate, and business services sector.


324

2.4.3 Skills level

Table 2.9 indicates the skills levels of the Cape Agulhas area.

Table 2.9 Cape Agulhas area skills level




2015

Skilled 22.0 1.8 2 366


Low skilled 30.9 -1.1 3 316

Total Cape Agulhas 100 0.37 10 740


In the Cape Agulhas area there were 10 740 formally employed individuals, indicating that 3 823 individuals were informally employed in 2015. The majority of the Cape Agulhas area’s formally employed individuals (47.1 per cent) are semi-skilled, compared to 30.9 per cent low skilled and 22.0 per cent skilled. Skilled and semi-skilled employees have been increasing positively between 2004 and 2015, while low skilled formal employees have been decreasing.

2.5 Swellendam


Table 2.10 illustrates that in the Swellendam area, the primary sector contributed 2.3 per cent to the GDPR, compared to 3 per cent in the OBD in 2015. The secondary sector contributed 20.7 per cent to the GDPR of the area, compared to 24.5 per cent in the OBD in 2015; while the tertiary sector contributed 77 per cent to the Swellendam area compared to 72.5 per cent in the District. Table 2.10 indicates the Swellendam area’s GDPR performance per sector.

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Table 2.10 Swellendam GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.3 52 -7.5 0.1 -16.5 -11.0


Manufacturing 10.7 238 6.4 11.2 -1.1 4.4


1.9 42 -3.5 -5.8 -2.9 -2.0

Construction 8.1 181 10.4 17.6 8.9 5.8


22.0 491 5.6 8.7 1.1 4.4


11.0 246 5.2 8.8 1.0 3.5


21.4 479 7.8 12.7 6.0 4.8


10.2 228 4.7 7.8 1.6 3.2


Total Swellendam 100 2 234 4.9 8.1 1.3 3.4


The sectors that contributed the most to Swellendam area’s GDPR in 2015 included:

Wholesale and retail trade, catering, and accommodation (22 per cent)



Between 2004 and 2015 almost every economic sector in the Swellendam area grew positively in terms of GDPR, except for the agriculture, forestry, and fishing sector and the electricity, gas, and water sector. Although the area’s economy experienced low levels of growth between 2008 and 2009, it has experienced a higher positive average growth rate of 3.4 per cent. The most robust sector in the area is the construction sector, which experienced the highest economic growth during the recession, averaging at 8.9 per cent. All the economic sectors are showing positive recovery after the recession (2009 – 2015), except for the agriculture, forestry, and fishing sector and the electricity, gas and water sector.


326


Table 2.11 indicates the trend in employment growth within each economic sector in the Swellendam area.

Table 2.11 Swellendam area employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.4 511 -2 757 -1 996 -329 -432

Mining and quarrying 0.0 1 -1 0 0 -1

Manufacturing 6.1 905 226 199 -32 59


0.3 41 4 3 -2 3

Construction 9.5 1 415 695 373 -29 351


27.4 4 073 1 783 1 138 35 610


5.3 790 436 241 20 175


19.7 2 929 1 617 922 24 671


17.0 2 525 908 464 53 391


Total Swellendam 100 14 885 3 564 1 625 -183 2 122


In terms of employment, the sectors that contributed the most to the Swellendam area’s employment in 2015 were:


Finance, insurance, real estate, and business services sector (19.7 per cent)

Community, social and personal services sector (17 per cent)

These three sectors accounted for over 64.1 per cent of the employment opportunities within the Swellendam area. Other than the general government sector which saw the highest job growth between 2008 and 2009, the agriculture, forestry, and fishing sector, manufacturing sector and the construction sector experienced collective job loss amounting to 392 during the recession. However, only the agriculture, forestry, and fishing sector and mining and quarrying sectors continued to shed jobs after the recession but at a higher rate. The greatest number of jobs created between 2004 and 2015 in the Swellendam area has been due to growth within the wholesale and retail trade, catering and accommodation and the finance, insurance, real estate, and business services sector. This indicates that the tertiary sector has been a source of employment opportunities during this period.

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2.5.3 Skills level

Table 2.12 indicates the skills levels of the Swellendam area.

Table 2.12 Swellendam area skills level




2015

Skilled 22.3 3.5 2 251


Low skilled 30.9 -3.2 3 115

Total Swellendam 100 0.36 10 078


In the Swellendam area there were 10 078 formally employed individuals, indicating that 4 807 individuals were informally employed. The majority of the Swellendam area’s formally employed individuals (46.8 per cent) are semi-skilled, compared to 30.9 per cent low skilled and 22.3 per cent skilled. Skilled and semi-skilled formal employees have been increasing positively between 2004 and 2015 (3.5 per cent and 2.4 per cent respectively), while the low skilled formal employees have been decreasing between 2004 and 2015.


Building plans can also provide a picture of the performance of an economy. A growth in the number of building plans passed and completed is an indication of a growing economy – both in that building is a response to growth in demand variables, and a stimulant of further growth as an activity in and of itself. It also has implications for spatial development planning within Overstrand area. A significant gap between building plans passed and building plans completed would require further investigation as it could indicate any of a number of trends such as land-banking, or a retraction of interest in the area. Figure 2.1 indicates the building plans passed and completed in Overstrand area between 2004 and 2015.


328

Figure 2.1 Overstrand building plans passed and completed, 2004 - 2015


Many building plans were passed in Overstrand before 2008, with more building plans being completed in 2005 than any other year. The amount of building plans being completed has been at steady levels between 2004 and 2015. Overstrand Municipality and Theewaterskloof Municipality indicated that there is a challenge with the scarcity of industrial land and the maintenance of town outlook as a tourist destination (MERO Survey Questionnaire, 2016).


In all the local municipalities within the OBD the following sectors contributed the most to GDPR and employment in the District:


General government

Manufacturing



Compared to GDPR, the employment per sector is recovering a lot slower than the GDPR per sector in all the local municipalities. The reliance on the secondary and tertiary sectors directly reflects the main industries found in each local municipal area. In general, the skills levels in all the local municipalities in the District are improving, indicating either better access to education or up-skilling by employers.

0

500

1 000

1 500

2 000

2 500

3 000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

er

Passed Completed

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3

Value chains

3.1 Introduction The following sub-section focuses on two value chains found in the OBD. Based on research and discussions with the District the canola and wildflower harvesting value chains will be focused on in MERO 2016. Additional value chains will be added with each subsequent year. The aim of the value chains is to show the movement of goods and services for certain commodities, as well as the risks and opportunities.

3.2 Canola value chain Canola (also known as rapeseed) is an oilseed crop that is mainly grown as a winter crop in the wheat producing areas of the South Western Cape, primarily in the OBD. The average annual production of canola in South Africa is 60 000 tons which is usually higher than local consumption patterns. Figure 3.1 shows the total area in South Africa planted to canola and the local production volumes for the past ten years.


330

Figure 3.1 Area planted to canola vs production, 2015

Source: DAFF, 2015

Figure 3.2 in turn shows that the Western Cape is by far the largest supplier of canola in South Africa contributing approximately 99.7 per cent of the national total supply of canola in 2014 (Hancock, 2015).

Figure 3.2 Provincial producer deliveries for canola, 2015

Source: DAFF, 2015

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The South Western Cape is regarded as the commercial production area for canola seed crop because a high capacity of canola supply originates from there. Figure 3.3 illustrates the total hectares planted with canola in the Western Cape.

Figure 3.3 Total hectares of top canola farming municipalities in the Western Cape, 2013


Figure 3.3 illustrates that canola production in the Western Cape constitutes approximately two thirds of all canola produced in South Africa in 2013. According to the 2013 Western Cape Department of Agriculture’s agricultural commodity and infrastructure census the top canola farming areas in the Western Cape are Hessequa (18 914 hectares), Swellendam (13 593 hectares), Theewaterskloof (11 492 hectares), Cape Agulhas (10 870 hectares), Bergrivier (5 729 hectares) and Swartland (4 944 hectares). Smaller scale canola farms are located in areas such as the Eastern Cape, North West and Limpopo Provinces. The canola value chain is represented in Figure 3.4. The value chain represents the various products and by-products that can be or are derived from Canola seed.

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Figure 3.4 Canola value chain

Source: Adapted from DAFF, 2015

The canola industry has experienced some fluctuations in producer prices for the past ten years due to limited production in the country and less supply in the market. The local production for canola is however, generally sufficient to meet the local demand. On average, the production of canola has been slightly above consumption volumes. An average of about 57 000 tons of canola is processed for various purposes in the local market every year while the local production sits at around 60 000 tons per annum (Department of Agriculture Forestry and Fisheries, 2015).

3.2.1 Cultivation and harvesting

Canola is mainly grown in the Western Cape Province as a winter crop. The planting of canola in Swartland in the Western Cape has also been increasing steadily over the past few years, as more farmers recognise the benefits of including canola as a viable cash crop in rotation with wheat and other grain crops (Erasmus, 2014). South Africa imports canola/rapeseed mainly from Europe and Oceania. Europe’s competitive advantage rests on the fact that Europe is the biggest producing continent for canola in the world (Department of Agriculture Forestry and Fisheries, 2015). South Africa’s canola imports from Europe originate mainly from the European Union countries mainly from Netherlands, France and Denmark. Canola imports from Oceania are mainly from Australia and New Zealand (Department of Agriculture Forestry and Fisheries, 2015).

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The cultivation practices included soil preparation, planting, fertilisation. Input suppliers provide seeds, fertiliser, pesticides, fuel, etc. to farmers that grow canola. In 2008, 86 per cent of the market share in terms of revenue in the fertiliser industry was shared between only three companies – at the time Sasol, Omnia and Yara (GrainSA, 2011). An increasing concern for local consumers of fertiliser is that according to statistics of the International Fertiliser Association (2010), South Africa is becoming more and more dependent on imports to satisfy the local fertiliser demand. In 1990, less than 20 per cent of fertiliser needs was imported; in 1999, 40 per cent of the demand was imported; and in 2008, over 65 per cent of South Africa’s nutritional fertiliser needs was imported (GrainSA, 2011). A key challenge for local farmers of canola is that all seeds for canola are imported from Australia. Between irrigation and harvesting there is the ongoing activities of pest, disease and weed control which require specialised products (spraying, etc.) and services.

3.2.2 Post harvesting, storage and processing

Canola is relatively new in South Africa. Currently there is only one canola oil press in South Africa, and it is owned by Southern Oil (Pty) Ltd (SOILL) located in Swellendam (Kok, 2015). Southern Oil (Pty) Ltd utilises only locally grown canola seed in the production of its canola oil products (Oil, 2016) and it procured 100 per cent of the Western Cape canola crop. Southern Oil Pty Ltd thus sources the canola used in its production process from approximately 200 to 220 producers located within Overberg and surrounding areas depending on their production capacity per year (Le Roux, 2016). Southern Oil have more or less 300 employees and is a major provider of jobs in Swellendam. Most of the equipment used such as tractors, sprayers, harvesters etc. within the production process are imported. However, all the planters used are manufactured locally in Cape Town or Albertinia (Le Roux, 2016).

Southern Oil store a big percentage of their seed in silos located in Swellendam, but also have two storage locations at Klipdale and Krige in Overberg. After harvesting, which typically starts in October/November canola is transported to the regional silos where the canola is quality tested, before being stored in these silos. Canola is also stored in the depots of Sentraal Suid Kooperasie (SSK) at Ashton, Swellendam, Karringmelksrivier and Protem in the Overberg area. The canola is either crushed or processed to extract the oil, leaving behind an oil cake by-product that is used as livestock feed. The final product is bottled and branded and distributed to various retail outlets. Although some of the cultivar in North America is genetically modified, local crop contains no genetically modified materials (GMOs). Bottling, labelling and packing of canola oil also takes place at the facility in Swellendam. Canola oil is then transported to retailers and manufacturers who use it in the production of different products.


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3.2.3 Utilisation

Canola is primarily used for the manufacturing of canola oil and oil cake. The production of canola in South Africa, which on average is 60 000 tons per annum, is usually higher than the demand and the local consumption requirements for canola is around 48 992 tons per year, with the favourable prices being achieved (Department of Agriculture Forestry and Fisheries, 2015). Canola is a good source of protein in animal feed and large quantities of protein for animal feeds have to be imported every year. Due to lower levels of local canola production, South Africa has been a net importer. Thus resulting in South Africa exporting an average of 15.05 tons of canola per annum for the past ten years and imported 87.80 tons annually (Department of Agriculture Forestry and Fisheries, 2015).

As shown in the value chain, canola has many uses, both edible and inedible. It can be utilised for human consumption as canola oil, or blended with other vegetable oils for the production of various solid and liquid cooking oils and salad dressing. Canola meal, which is a good source of protein, can be used in animal feed and is recommended for up to 20 per cent of the ration for chickens, dairy and beef animals. The meal is also a high-quality organic fertiliser that can be used by commercial organic farmers. In addition, canola is grown as a biofuel. Most of the oil cake produced by Southern Oil is sold within the Western Cape with a fair share going to farmers in the Overberg region. There are also feed manufacturers in the Overberg that take a small percentage. The rest is mainly sold to farmers in Worcester, Paarl, and Malmesbury.

3.2.4 Transport

The canola is transported from the farmers to the silo owners, from the silo owners to the processing factory in Swellendam, and from there to other manufacturers, retailers and outlets. Approximately 50 per cent of transport is outsourced with many transport companies backhauling canola after delivering wheat to Cape Town.

3.2.5 Output/Exports

South Africa is by far the largest producer of canola in Africa. South Africa thus exports canola mainly to two continents, Europe and Africa. The volumes of canola exported to Europe and Africa are less than 45 tons per year (Department of Agriculture Forestry and Fisheries, 2015). Most canola exports from South Africa are destined for the market in other African countries while exports to Europe remained at lower levels throughout the period under analysis. The SADC region has been the major recipient of South African canola. In the African continent, South Africa exports most of its canola to other SADC countries such as Mozambique, Zimbabwe, Zambia, DRC and Malawi.

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Even though the WC is the largest producer of canola in the country, for the period 2005 to 2014, Gauteng has been the greatest exporters of canola in South Africa followed by Western Cape and KwaZulu-Natal. However, the Western Cape Province has emerged to become the greatest exporter of this product over the past several years. Cape Town Metro and the Eden District were the major exporters of canola in the province in 2014. In 2015, South Africa exported canola mainly to Congo (68.4 per cent) and Zimbabwe (26.3 per cent).

3.2.6 Risks

The canola industry is still a new industry. Little research and development has been conducted in order to find ways in which the industry can grow. An industry stake holder has indicated that support from government regarding research and development on the agricultural aspects of canola would be of great value. Only certified seeds of which the seed vigor, purity and quality are guaranteed should be planted. The use of own seed or “farm seed” from co-producers is not recommended. Own or “farm seed” can germinate more weakly, therefore giving rise to lower yields and even a product with a poorer quality that is not acceptable to the buyers. Since canola is 20 – 30 per cent cross-pollinated, it can happen that cultivar purity declines rapidly. Own seed also poses the threat of contamination with weeds such as wild mustard, since their seeds do not differ much. Canola cultivars in South Africa are registered under the Plant Breeders’ Rights Act, which prohibits the sale of own seed and subjects it to penalties. Thus South Africa does not have any canola cultivars of its own, and all cultivars are imported from Australia. Canola producers are also faced with challenges related to weed, disease and pest control as well as environmental and climate related concerns, reliable an affordable power supply and the fuel price. This has resulted in increasing input and operational costs of addressing such challenges.

3.2.7 Opportunities

Since canola seedlings can be damaged by a variety of fungal diseases and insects, chemical treatment of the seed with fungicides and insecticides could be beneficial thus providing an opportunity for the local development of cultivars. The Geographic Information System (GIS) technology was used in 2014 to determine the land potentially available for canola in Swartland and Southern Cape. The results indicated that there is potential growth for the farming of canola within the Western Cape. This provides the opportunity for investment of new stakeholders into the industry and for those who wish to expand. Southern Oil (Pty) Ltd (SOILL), located in Swellendam is the only canola crushing plant in South Africa and is expanding its processing capacity, adding further incentive for canola expansion (Burea for Food and Agricultural Policy, 2015). Potential further increase in canola production may result in other oil crushers taking interest in the market. Furthermore, the increase in canola meal will provide increased production opportunities for the manufactures of animal feed.


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A lucrative future application for canola will be biofuel. The potential legislation mandating the blending of biofuels into motor fuel in South Africa has resulted in the potential construction of a R5 billion plant to convert canola oil into diesel, as soon as government passes legislation. The plant will be built by PhytoEnergy at the Coega Industrial Development Zone in the Eastern Cape and produce 400 000 metric tons of biodiesel per year, of which the first output could start by the third quarter of 2017 (Kok, 2015). Estimates by Grain SA propose that the plant would need 1.1 million tons of canola per year, bumping required local canola production up by some 500 000 hectares. Biofuel development is still in it’s infancy in South Africa. Its development however provides potential development for South Africa’s canola growers. (Kok, 2015). The Phytoenergy canola fuel plant will be located in the industrial development zone at Coega in the Eastern Cape. The use of canola in the potential production of biofuel creates a food versus fuel dilemma. To have biofuel plants running and a sustainable supply of biofuel, a significant fraction of the national annual crop production should be apportioned for fuel production. This dilemma provides Canola producers within the Western Cape the opportunity to supply the potential demand for canola which is primarily produced for the production of biofuel and does not compete with food crops for land use. South Africa is in close proximity to SADC countries, the SADC Free Trade Agreement as well as the fact that South Africa is the only major producer of canola in the SADC gives South Africa an advantage as a supplier of canola in SADC.

3.3 Wildflower harvesting value chain The Cape Floristic Region (CFR) is mostly located in the Western Cape and is considered one of the richest biodiversity hotspots in the world with 9 000 variants of plant species, 69 per cent of which only grow in the Cape region of the Western Cape (Blokker, Bek, & Binns, 2015 ). Thus the importance of the conservation of plant species in the area dominates the environmental decision making of government and non-profit actors in the Western Cape. It is hoped that development of industries based on this natural resource such as the wildflower industry will contribute and create awareness of the need for conservation and protection of plant species in this region and thereby stimulate the provincial green economy (sanbi.org , 2009).

Wild flowers or ‘fynbos’ is the main type of vegetation in the Cape Floristic region. The Wild flower industry of the Western Cape is mostly concentrated in the Southern parts of the province where the majority of cultivators are located, a case in point is the Cape Agulhas plains in the southern parts of the Western Cape with just under 1 000 hectares of cultivated land in the Cape region. There are three main types of wildflowers harvested in the Western Cape, these are Protea, Leucospermum and Greens, these flowers are also harvested in the OBD of the Western Cape. According to Cape Flora SA, over 460 000 bunches of Protea bouquets, over 217 000 Leucospermum and over 144 000 Greens have been exported from the Western Cape Province in the 2015/16 financial year, the majority of which came from the OBD (conservation.org, 2016). This is evident in the fact that the district has approximately 897 (32.9 per cent of Western Cape) hectares of land under flower cultivation, thus making it the biggest producer of wildflowers in the province and produces indigenous flowers such as proteas, Leucospermum and pincushions. The industry is dominated by

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exporters, the biggest of which are Cape Mountain Flora, located in the town of Stellenbosch in the Cape Winelands District, Fynbloem who is located near the Riviersonderend Nature Reserve in the OBD, and Bergflora located in Cape Town. Figure 3.5 illustrates the total area of cultivated fynbos pleased for the period 2012 - 2014.

Figure 3.5 Fynbos total area planted (ha)

Source: Cape Flora AGM, 2015

This industry is a subset of the cut-flower industry of which South Africa currently has a 0.3 per cent of the world market and is in competition with countries such as Australia and New Zealand (Sekhran & Richardson, 2008). There are thus significant room for this industry to grow, especially considering the uniqueness of the Cape Floral products (wwf.org, 2014). Figure 3.6 illustrates the value chain of and the flow of goods and services in the wildflower industry of the Western Cape.

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Figure 3.6 Wildflower value chain

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3.3.1 Inputs

Flower pickers either harvest fynbos from the veld or from flower orchards (Flower Valley Trust). Cultivators include small to large farms, mostly located in the southern parts of the Western Cape such as the Cape Agulhas plains which has just over 238 hectares of land cultivated with flowers in the area. Harvesters on the other hand are smaller enterprises, very labour intensive and is usually very much localised. It is mostly cultivators who are subjected to input costs in order to increase their economies of scale. Input costs can vary depending on the type of flower being cultivated as some flowers such as the various protea species are subjected to a higher export demand than other species. Cultivators make use of stems to grow their plants, these stems are obtained from local nurseries. Fynbos and wildflower nurseries are widely dispersed in the Western Cape and are mostly found near urban centres such as Caledon, Swellendam, Gansbaai and Hermanus in the OBD. Harvesters on the other hand, who obtain flowers directly from their natural habitats are not subjected to as much input costs as the cultivators. The biggest input cost for harvesters are their labour and storage costs.

3.3.2 Cultivators and harvesters

Cultivators and harvesters as discussed above are the primary actors in the wildflower value chain in the Western Cape. There are two types of flowers cultivated and harvested, these are filling plants, which are mostly greens included in a bouquet, and focal plants which consist of the actual flowers in a bouquet. Interestingly 67 per cent of focal plants are produced by cultivators while the other 33 per cent are produced by harvesters. Harvesters also produce 42 per cent of filing plants while cultivators produce 58 per cent. Thus cultivators have approximately 62.5 per cent of the entire wildflower market with harvesters only having 37.5 per cent of the market (Conradie & Knoesen, Circa 2008). According to Cape Flora 996 hectares of land were cultivated with wildflowers in the Western Cape for the year 2014, the majority (just under 33 per cent of the total for the Western Cape) of which were located in the OBD. It is important to note that this figure only represents registered farms and may not include the informal market and land informally earmarked by harvesters for the harvesting of wildflowers. Furthermore, this figure is a 1 per cent decline in total cultivated land down from 1 009 hectares in the Western Cape for 2013 (Conradie & Knoesen, Circa 2008). Government and various other actors such as industry bodies like the Flower Valley Conservation Trust located in the town of Bredasdorp with two conservation farms near the town of Gansbaai, both in the OBD, recognises that primary sector industries like the wildflower industry have the potential to be a driver for both job creation and the conservation of indigenous floral species.


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3.3.3 Storage

After harvesting, fresh flowers are taken to pack-houses where they are inspected, sorted and packed into bouquets. The majority of cultivators have access to their own storage facilities/sheds on their farms and does not register storage as a business cost. Many harvesters and some small scale cultivators make use of an agency such as Fynbloem’ storage facility. Agency storage facilities are usually either managed by a trust organisation or industry body institution such as Fynbloem (on their farm near Riviersonderend in the OBD) or the Flower Valley Conservation Trust in Bredasdorp and others who have on site storage facilities near the towns of Bredasdorp, Gansbaai, Swellendam and Hermanus in the OBD. Reportedly 86 per cent of industry actors make use of their own storage facility while 14 per cent make use of an agency pack shed (Conradie & Knoesen, Circa 2008). Interestingly, storage is mostly short term with industry actors stating that they store their harvested flowers for a maximum of four to five hours after harvesting before it is transported to their clients.

3.3.4 Transportation

Primary transportation take place from the farm to the secondary actors at the airports, shipping ports or directly to the supermarket via the road. It is the secondary actors who sells directly to the public with some harvesters also selling directly to the public. It has been revealed however that the overwhelming majority (92 per cent) of wildflowers are being exported to countries such as the UK, USA and European Union Countries, such as the Netherlands (Conradie & Knoesen, Circa 2008). Reportedly the highest transport costs is air fright followed by shipping. Products are also transported by road to local secondary actors such as supermarkets and florists.

3.3.5 Beneficiation/Value addition

There is a small amount of value addition in this industry taking place in the Western Cape Province. This mostly entails the arrangement of bouquets and the production of dry flowers. It was reported that wildflowers are exclusively used for decorative purposes in both the local and international markets. There are currently only two businesses who produce bouquets for the export market in the OBD. These businesses are located in and around urban areas such as Hermanus and Bredasdorp. It was also reported that local beneficiation/value addition in the flower industry is small with only 10 per cent of value addition taking place in the OBD. Further value addition in the form of bouquet arrangements also take place in overseas markets in supermarket stores such as the Marks & Spencer stores. There are currently only three registered producers of dried flowers in the OBD, two of which is located in Bredasdorp (Bredaflor Pty ltd and Floraland) and one on a farm near Hermanus (Honingklip Dryflowers).

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3.3.6 Secondary actors/Points of purchase

Ninety-two per cent of wildflowers produced in the Western Cape (by cultivators mostly) are exported to international markets and ends in supermarkets such as Marks & Spencer in the UK as well as supermarkets in the USA and EU countries. These supermarkets and florists will then sell directly to the public and institutional clients. Seven per cent of wildflowers are sold and consumed in the local market. Three per cent of wildflowers are sold directly to florists 2 per cent to supermarkets, 2 per cent to stalls and only 1 per cent is sold directly from the cultivator/harvester to the public (Conradie & Knoesen, Circa 2008). The international market is the driver of demand for local wildflowers as wildflowers are able to fetch a much higher price on the international markets then what they do in the local markets. Local actors that sell directly to consumers include Pick n Pay, Shoprite and various florists in and around major urban nodes. Furthermore, informal and formal stalls near shopping centres also comprise a significant segment of the local market and has a similar market size as local supermarkets.

3.3.7 Risks

There are various risks in this industry, one of the most obvious is climatic factors such as rainfall decline, alien invasive species, wildfire that burn out of control and colder temperatures. These climatic and environmental factors can hamper the growth and procreation of floral species in the Western Cape, further endangering many endemic species (flowervalley.org, 2015). The regulatory authorities that are under resourced and a lack of communication amongst stakeholders is another risk. The regulation of input materials such as fertiliser and pesticide reportedly lowers the crop yield on farms as farmers are not adequately able to protect their plants from some fauna species such as local bird species whose natural diet is made up of the nectar and fruits of wildflowers. It is believed that agricultural chemicals such as pesticides are harmful to endangered local animal species. Exporters reported that the major risk to their businesses are the exchange rate and global economic trends. This has an impact not only on the prices of their products but also on the demand for these products. Economic policies as purported by government has also been cited as a risk, especially in terms of export tariffs and localisation policies which aims to localise the production and beneficiation of exported and imported goods.

3.3.8 Opportunities

One of the most prominent opportunities in this industry is the potential for job creation as wildflower harvesting and cultivation is labour intensive and is mostly reliant on low skilled labour (conservation.org, 2016). The potential for promoting conservation and the sustainable use of fynbos can also be realised through the use of better marketing strategies and the promotion of best practices in terms of cultivation and harvesting (sanbi.org, 2009). Sustainable Harvesting Programme (SHP) was implemented by the Flower Valley Conservation Trust and could be extended to include a broader base of participants on all levels. The SHP seeks to protect both fynbos and the jobs of individuals in the Sustainable Harvesting Programme.


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The demand for indigenous flower species in the international market is seen as an opportunity, especially for cultivators as this drives up the price for wildflowers and the subsequent profit margins for cultivators. There are further opportunities in the beneficiation/value addition of wildflower products in the Western Cape (most notably the OBD) as there are currently only two business supplying dried flowers and two providing bouquets to the export market, it was thus revealed that more of these type of businesses can be developed in the area as the demand for the export of wildflowers are fairly high on the international markets due to the uniqueness of the floral products. The need for better facilities at points of export, most notably the Cape Town harbour was also articulated. It is believed that this will improve on the quality and quantity of flowers that are exported, thus contributing to the value of the end product.

The need for government support has also been identified. Support is mostly needed in the provision of marketing assistance. It is believed that due to the uniqueness of the South African floral product further demand can be stimulated, especially in European markets, if marketing was to receive better resourcing and becomes more focused. Further assistance in terms of infrastructure provision such as better storage and export facilities as articulated in the previous paragraph can be seen as another opportunity for government involvement in this industry. It has also been recognised that there are gaps in research and that more research is needed in terms of improving the effectiveness of production on farm as well as post-harvest care of the product, especially in terms of storage and transport.

3.4 Concluding remarks Both the canola and the wild flower value chain show opportunities for growth in the Western Cape. Both value chains are performing well but have opportunities for development and expansion. SA is a net importer of Canola and there are opportunities to therefore increase output and wild flower exports have the opportunity to grow.

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4


4.1 Introduction

This chapter looks at municipal infrastructure spending in the OBD in terms of the Overberg Integrated Development Plan (IDP, 2012 - 2017), local municipal IDPs and national and provincial policy directives and key performance areas.

4.2 Infrastructure and economic development

Infrastructure investment is a catalyst for economic and social development. Quality infrastructure that is well managed and maintained, provides major benefits to both households and enterprises through opening up opportunities for the poor and supporting growth in economic output (DBSA 2011). Within the OBD the following infrastructure project have been identified as key driver of development.

4.2.1 Proposed aquaculture SEZ

The Western Cape Government is in the process of establishing aquaculture SEZs in the Gansbaai and Hermanus area, as these are ideal locations for farming. Aquaculture in the area is already extensive – abalone farming, and expansions of farming capacity is underway. The proposed Aquaculture SEZ is in its planning phase. No CAPEX R-Value has been assigned to the Aquaculture SEZ project yet.

4.2.2 Expansion of Abagold

One of the largest abalone farms globally, Abagold is in the process of expanding their production capacity. The company’s production is set to double from the current capacity to 475 tons per annum. The fourth site, Salumanzi, is currently in the process of


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development. The extensive development will require potential downstream support activities such as the provision of food (kelp fronds). The expansion of Abagold started in 2010 and is ongoing project. A total of 12 units were planned – to date 9 units have been built. As we secure funding, we will complete the remaining 3 units. To date the CAPEX R-Value for the Sulamanzi site is approximately R79 million.

4.2.3 Stony Point Eco-Centre

Stony Point is a popular tourist attraction in the Overberg as it serves as a land based lookout point for Southern Right and Humpback Whales during calving ad nursing season; as well as to view the Jackass Penguin colony. The Hangklip Whaling Station located at Stony Point in Betty’s Bay is thus identified as a prime opportunity for development. The facility will serve as an interpretation centre focussed on the abundance of eco-tourism activities in the area, a Hangklip tourism satellite office and will offer retail/restaurant. The Hangklip Whaling Station upgrade began in 2011 and was finalised in 2015. The CAPEX R-Value was approximately R8.5 million.

4.2.4 Theewaterskloof Municipal Support Development Team

A team of municipal officials from various departments form a collective group to assist and support developers. The goal is to ensure that there are no unnecessary delays as well as to create and promote and enabling business environment. The Theewaterskloof Municipal Support Development Team was formed in 2015 and is an ongoing project. There is no CAPEX R-Value for the Theewaterskloof Municipal Support Development Team.

4.2.5 Middle Income Housing Development

The town of Caledon is experiencing growth and relocation of major businesses into the town. As a result, the necessity of middle income housing to support this growth has been identified. Extensive municipal land has been made available for these housing projects. Phase 1 of the project is complete. Currently 112 walk-up properties (phase 1a) and 97 town house (phase 1b) are being developed. Phase 2 and 3 which consists of higher income housing will commence once phases 1a and 1b have been finalised. The CAPEX R-Value for the Middle Income Housing Development is approximately R150 million.

4.2.6 Flight Park

The Flight Park is a combination of commercial aviation and residential components. Residents would land their plane at the landing strip located at Caledon’s current landing strip, have their plane taxied to the hanger and then be transferred from the hanger to their residential unit. The Flight Park is still in its planning phase, the project began its 2006 and is expected to be finalised in 2021. The start-up capital for the Flight Park is approximately R50 million.

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4.3 Overberg District

4.3.1 Overview of Municipal Capital Expenditure by the Overberg District Municipality

The OBD Municipality spent R119 000 on road transport in 2013/14.

4.3.2 Western Cape Government Infrastructure Spending in the Overberg

In addition to the infrastructure expenditure by the district and local municipalities, the Western Cape Government with its education, environment, health, human settlements and transport and public works mandates, makes significant investments in infrastructure in the OBD. According to the 2016 – 2019 WCG budget, the largest share of planned infrastructure expenditure will be on transport and public works projects, followed by human settlement (housing), education, environmental projects (CapeNature) projects and health infrastructure (see Figure 4.1).

Figure 4.1 WCG Forecast Infrastructure Expenditure 2016/17 to 2018/19

This provincial infrastructure investment will contribute to developing the economic infrastructure of the OBD through the investment in roads by the Department of Transport and Public Works, and in social infrastructure, through the investment by the Departments of Education, Health, Human Settlements, and Environmental Affairs and Development Planning.

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4.3.3 Capital funding by funding sources

Overberg District capital funding comes from internally generated funds (see Figure 4.2).

Figure 4.2 Overberg Municipality capital funding by source, 2012 - 2019

4.4 Overstrand Municipality

4.4.1 Overview of municipal capital expenditure by the Overstrand Municipality

Table 4.1 shows that electricity as a percentage of total capital expenditure slightly increased from nineteen per cent in 2012/13 to 25 per cent in 2016/17, before dipping to 19 per cent in 2018/19. Water decreased from 35 per cent in 2012/13 to 16 per cent in 2018/19 and housing increasing from zero in 2012/13 to 35 per cent in 2018/19.

Table 4.1 Expenditure as % of the total capital expenditure for Overstrand Municipality

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 19 28 13 22 25 15 19

Water 35 18 15 16 17 14 16




Housing 0 8 30 25 15 40 35

Others 11 23 16 13 9 11 4

Total 100 100 100 100 100 100 100

Source: Western Cape Government 2016

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4.4.2 Basic services backlogs and access

According to the 2015 Non-Financial Census of Municipalities (NFCM) and the Overstrand Municipality 2014/15 Annual Report there were no basic services backlogs. According to the 2016 municipal survey and IDP, the municipality the current status of service delivery infrastructure in the municipal area can be summarised as follows:

• Water - The Municipality has 8 water schemes with total treatment capacity of 56 Ml/day which is sufficient capacity in the short term. Upgrading of pre-treatment facility at Pearly Beach and the bulk water pipeline from Kleinbaai to Gansbaai, is planned for 2016/17.

• Electricity - Internal upgrading as per the electricity master plan.

• Sewerage - The municipality has 5 waste water schemes, with total treatment capacity of 18 Ml/day. Treatment capacity constraints exists only at Stanford. The following interventions are planned for 2016/17: sewerage reticulation systems to be installed or completed in Stanford, Gansbaai, Kleinmond, Pearly Beach, Bettys Bay, Pringle Bay and Rooi Els; upgrading of the Stanford Waste Water Treatment Works will commence; sewerage reticulation system will be completed in Stanford; and several sewerage pump stations will be upgraded in Hermanus.

• Refuse - Approximately 3 years of landfill air space remain available at Karwyderskraal. A key challenge is for the OBD Municipality, Overstrand and Theewaterskloof Municipalities to create additional landfill capacity at Karwyderskraal.

• Roads - The road network is well developed with 494.5 km paved roads and 154.7 km gravel roads. Road upgrades are planned in the vicinity of the new Whale Coast Mall (under construction) in Sandbaai.

The Overstrand municipality identified the following major constraints:

• Bulk Water - Of the 8 water schemes within the municipality, only the Greater Hermanus system will need augmentation of raw water sources within the next 5 years. Expansion of groundwater abstraction capacity and re-use of waste water will be pursued as 1st and 2nd priorities.

• Electricity - Eskom national shortage & Load shedding.

• Landfill Sites - Sufficient capacity exists at the Gansbaai landfill site. The Karwyderskraal landfill site is operated by Overstrand Municipality on behalf of the Overberg District Municipality (ODM). Less than 3 years of air space is left in the cell, and a new cell needs to be developed urgently by the ODM.

• Waste Water Treatment - The Stanford WWTW is being operated at its design capacity. Budget provision and ACIP grant funding were secured for an upgrade to commence during 2016/17. The sewer network extension needs to be enhanced (Stanford, Gansbaai, Kleinmond, Bettys Bay, Pringle Bay, Rooi Els and Pearly Beach) to eliminate the tanker truck service. Ageing sewer pipelines need to be refurbished and/or upgraded, e.g. Zwelihle and Kleinmond bulk main.


348

• Roads - Constraints on the Provincial Road (MR12/R43/R44), the link between Onrus and Sandbaai requires upgrading. Doubling of the bridge over the Onrus River and/or the provision of a second bridge, the Sandbaai intersection, the Hermanus – Stanford – Gansbaai roads needs upgrading, the planning for the Hermanus by-pass must be completed, funding constraints to upgrade the 154.7 km of gravel roads, and funding constraints to install and upgrade adequate storm water systems.

• Human Settlements – Provincial housing demand database not always credible, potential beneficiaries tend to also provide incorrect information on subsidy applications, application of +40 year principle for approval of subsidies, especially with the implementation of upgrading of Informal Settlements Programme, the National Housing Programme cannot keep up with the demand for low cost housing, GAP housing and rental housing, and a major constraint is finding land for low cost housing developments, especially in Kleinmond and Hermanus.


Figure 4.3 below shows that the municipality received most of its capital funding from borrowing, provincial and national government.

Figure 4.3 Overstrand Municipality capital funding by source, 2012 - 2019

0

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4.5 Theewaterskloof Municipality

4.5.1 Overview of municipal capital expenditure by the Theewaterskloof Municipality

Table 4.2 shows that electricity as a percentage of total capital expenditure increased from 9 per cent in 2012/13 to 20 per cent in 2016/17, before dipping to 14 per cent in 2018/19. Water increased from 10 per cent in 2012/13 to 15 per cent in 2016/17 before decreasing to zero in 2018/19. Housing decreased from 37 per cent in 2012/13 to 19 per cent in 2018/19.

Table 4.2 Expenditure as per % of the total capital expenditure for Theewaterskloof Municipality

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 9 5 10 17 20 16 14

Water 10 13 3 13 15 1 0




Housing 37 26 40 15 12 24 19

Others 10 17 19 19 8 2 2

Total 100 100 100 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM) and the Theewaterskloof Municipality 2014/15 Annual Report there were no basic services backlogs. The Theewaterskloof IDP identified the following challenges and priority areas for intervention:

• Water - reticulation network replacement and upgrading bulk water supply network.

• Waste water - sewer network replacement, sewer network replacement, upgrading of Waste Water Treatment Plant, and eradication of septic tank system.

• Electricity - replace conventional meters with prepayment meters, upgrading of substation, upgrading of electrical network, and electrification of waterworks.

• Storm water - upgrading of storm water network.


Figure 4.4 below shows that the municipality received most of its capital funding from national and provincial government. The provincial government contribution decreases progressively over the reporting period.


350

Figure 4.4 Theewaterskloof Municipality capital funding by source, 2012 - 2019

4.6 Cape Agulhas Municipality

4.6.1 Overview of municipal capital expenditure by the Cape Agulhas Municipality

Table 4.3 shows that electricity as a percentage of total capital expenditure increased from 4 per cent in 2012/13 to 17 per cent in 2018/19. Water decreased from 19 per cent in 2012/13 to 3 per cent in 2018/19. Roads remained consistently high as a percentage of capital expenditure, increasing from 19 per cent in 2012/13 to 32 per cent in 2018/19. There was no capital spending on housing for the entire reporting period, except for 1 per cent in 2015/16.

Table 4.3 Expenditure as per % of the total capital expenditure for Cape Agulhas Municipality

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 4 13 5 18 15 11 17

Water 19 0 1 2 15 14 3



Municipal Roads 19 29 17 22 33 31 32

Housing 0 0 0 1 0 0 0

Others 12 27 15 40 34 23 18

Total 100 100 100 100 100 100 100


0

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40 000

60 000

80 000

100 000

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

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00


Overberg District

351


According to the 2015 Non-Financial Census of Municipalities (NFCM) the Municipality had no water services backlogs but 635 sanitation backlogs. There were no electricity and refuse removal backlogs (Cape Agulhus Municipality 2014/15 Annual Report). The Cape Agulhus IDP identified the following challenges and priority areas for intervention:

Electricity - replace overhead lines, upgrading of low voltage lines, provide electricity to low voltage pumps, replace mini-substations, replace high voltage cables, and provide transformers at low pressure pumps.

Sanitation - the sewerage purification works in Bredasdorp needs to be upgraded to accommodate new developments.

Refuse - the Municipality applied to expand the existing landfill site at Bredasdorp.


Figure 4.5 below shows that national government and internally generated funds are the main sources of capital funding, with internally generated funds decreasing in the second half of the reporting period, and increased borrowing.

Figure 4.5 Cape Agulhas Municipality capital funding by source, 2012 - 2019

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4.7 Swellendam Municipality

4.7.1 Overview of municipal capital expenditure by the Swellendam Municipality

Table 4.4 shows that electricity as a percentage of total capital expenditure increased from 0 per cent in 2012/13 to 24 per cent in 2018/19. Water increased from 0 per cent in 2012/13 to 35 per cent in 2015/16 before dropping 10 per cent in 2018/19. Waste water management dropped from being 93 per cent of total capital expenditure in 2012/13 to 1 per cent in 2018/19. Roads increased from 0 per cent in 2012/13 to 23 per cent in 2018/19. There was no capital spending on housing for the entire reporting period.

Table 4.4 Expenditure as % of the total capital expenditure for Swellendam Municipality

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 0 1 0 18 9 18 24

Water 0 34 18 35 29 11 10




Housing 0 0 0 0 0 0 0

Others 7 7 9 15 36 17 15

Total 100 100 100 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM) the Municipality had no water services backlogs and sanitation backlogs. There were no electricity and refuse removal backlogs (Swellendam) Municipality 2014/15 Annual Report). The Swellendam IDP identified the following challenges and priority areas for intervention:

Water - capacity constraints for water purification and standards for water purification and infrastructure outdated.

Sanitation - sewerage works inadequate and waste water treatment works requires upgrading.

Refuse - current transfer facilities do not comply to set standards, establish transfer stations for refuse services in Infanta, Malgas and Barrydale, and old landfill sites are situated on private land and illegally used by community. These old sites must be properly closed in terms of legislation.

Storm water - lack of proper maintenance over the past 14 years, infrastructure has been damaged over years because of floods caused by climate changes, and repair to infrastructure still need to be done and risk mitigation methods to prohibit re-occurrences must be implemented.

Overberg District

353

Electricity - economic growth and migration of people require additional housing and infrastructure. Electricity demand exceeds supply which restricts development, economic growth and creation of job opportunities and the electricity network requires urgent maintenance and upgrading to comply to demand and safety standards.


Figure 4.6 below shows that the municipality received most of its capital funding from national government.

Figure 4.6 Swellendam Municipality capital funding by source, 2012 - 2019


Infrastructure investment, human capital formation and innovation are essential for the promotion of economic growth within a municipality (OECD, 2009). The extent to which infrastructure investment influences economic growth within the municipalities in the Western Cape is evaluated using the Growth Potential Index (GPI) included in the Growth Potential Study of Towns undertaken by the Department of Environmental Affairs and Development Planning. The index provides an analysis of the economic viability of infrastructure investments (as opposed to political, environmental, social and fiscal viability). The potential for economic development that comes about from investment in an infrastructure project is among the most important criteria on which the investment decision should be based. The GPIs in Figure 4.8 provides an indication of the municipalities in which infrastructure investment has the greatest potential for being translated into increased production and employment creation. The GPI is evaluated within the context of municipal capital expenditure (both past and projected).

0

10 000

20 000

30 000

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50 000

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

R'0

00

National Government Provincial GovernmentDistrict Government Other transfers and grantsPublic contributions and Donation BorrowingInternally generated funds


354


Source: DEADP, Growth Potential Study 2014; Municipal A-Schedules

Overstrand, with a GPI of 81, recorded the highest GPI in the District. Capital expenditure in the municipality has nevertheless decreased by 5.3 per cent per annum on average over the period 2009 - 2016. The growth potential of an area is influenced by a number of factors including infrastructure levels in that region. The extent of retail and services sector, size of the economy and past growth trends are among the factors which inform the GPI, and may account for the relatively high GPI in the face of declining past municipal infrastructure investment. Municipal capital expenditure is nevertheless projected to increase by 1.98 per cent per annum on average over the period 2017 - 2019, and given the growth potential extant in the municipality, these investments may bode well for economic performance within the region.

Theewaterskloof recorded a GPI of 65 (the second largest in the District). Regions that experience large increases in capital stock experience large increases in GDP, and as such, the relatively fast growth in municipal capital investment (8 per cent per annum on average) over the period 2009 - 2016 may have contributed to the municipality’s growth potential. While the municipality recorded the 2nd highest GPI in the District, the municipality’s capital expenditure is projected to contract by 21.5 per cent per annum on average over the period 2017 - 2019. Given that the potential for capital investment to be translated into tangible economic growth is high in Theewaterskloof, it is encouraged that municipal capital expenditure grows such that the municipality’s economic performance be further improved.

Swellendam recorded a GPI 39 (which is defined as having medium growth potential). Swellendam has the lowest GPI in the District despite recording the fastest growth in capital expenditure over the period 2009 – 2016 (11.98 per cent per annum on average). This may be as a result of a number of other factors (such as the existing levels of infrastructure, the physical environment and economic trends) extant in the municipality negatively influencing the growth potential in the region. In order to improve the growth potential within the District, the municipality should investigate where its shortcomings lie in this regard. Municipal capital expenditure is projected to

-25.0%

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-15.0%

-10.0%

-5.0%

0.0%

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15.0%

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Theewaterskloof Overstrand Cape Agulhas Swellendam


Overberg District

355

increase by 1.4 per cent over the period 2017 - 2019. Increased capital investment will add to the existing infrastructure stock and improve the growth potential in the municipality.

Cape Agulhas recorded a GPI of 41 (defined as having medium growth potential). Capital expenditure has been increasing slowly over the period 2009 - 2016 (1.3 per cent per annum on average). Capital expenditure is projected to decrease by 2.2 per cent per annum on average over the period 2017 - 2019. Increased infrastructure investment will add to the existing capital stock within the municipality and may thus improve the growth potential in Cape Agulhas.


A review and analysis of the infrastructure spending in the OBD suggest that both the district and local municipalities prioritised investment and development of basic services infrastructure, in line with core municipal mandates and National imperatives, as articulated in the National Development Plan and other sector strategies. However, there are still capacity and resource constraints. Reported backlogs for all local municipalities across water, sanitation, electricity and refuse removal services for 2014 amounted to 1 753. National government is the major source of capital funding in the OBD, almost exclusively funding all capital infrastructure in the Swellendam area. Almost all municipalities have infrastructure investment and maintenance plans with the key challenge being finding innovative mechanisms to fund infrastructure development in a sluggish economic environment.

Overberg District

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5


5.1 Introduction

This chapter investigates the impact of recent economic performance on social conditions of households within OBD. Latest results from Statistics South Africa’s Community Survey 2016 and the 2016 Non-Financial Census of Municipalities are among the key sources of data used in this chapter, in addition data from Quantec and administrative data from government sector departments is also used in the analysis. The most recent socio-economic indicators including the Human Development Index (HDI), GDPR per capita and the Gini coefficient are used to show the current living standards of communities within the OBD.

5.2 Human development2

Figure 5.1 shows that human development decreased marginally in the OBD, from 0.704 in 2014 to 0.700 in 2015, and it remains lower than the 0.73 level recorded for the Western Cape Province for 2015.

2 The Human Development Index (HDI) is a key measure used by the United Nations to assess the relative level of socio-economic development in countries. It is a measure of peoples' ability to live a long and healthy life, to communicate, participate in the community and to have sufficient means to be able to afford a decent living. The HDI is thus a composite of factors reflecting longevity, economic prosperity, and schooling. It is represented by a number between 0 and 1 where 1 indicates a high level of human development and 0 represents no human development


358

Figure 5.1 Overberg District Human Development Index 2011 - 2015


Although there is an increasing trend in human development across all local municipalities in the OBD between 2011 and 2015, Figure 5.2 shows that all local municipalities experienced a drop between 2014 and 2015.

Figure 5.2 Human Development Index across municipalities in the Overberg District, 2011 - 2015


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0.65

0.66

0.67

0.68

0.69

0.70

0.71

2011 2012 2013 2014 2015

HDI GDPR Growth

0.58

0.60

0.62

0.64

0.66

0.68

0.70

0.72

0.74

0.76


2011 2012 2013 2014 2015

Overberg District

359


The standard of living among communities in local municipalities within the OBD can be estimated by analysing economic performance and population data at a given period of time. An improvement in the standard of living among communities can be attained when economic growth is faster/higher than population growth. GDPR per capita, which is calculated by dividing the total value of economic activity within a local municipality by the total population, is the indicator used to estimate the average annual incomes of households within a specific area.

5.3.1 Population

The total population of people living within the OBD increased by approximately 11 per cent from 2011 to 2016 according to official data from Statistics South Africa. Figure 5.3 shows that Overstrand had the largest population increase (16.2 per cent) between 2011 and 2016, followed by Swellendam (11.9 per cent), while Theewaterskloof experienced the lowest population growth in the district (7.6 per cent). Migration due to employment prospects in the Overstrand and the Swellendam area could be one of the reasons for the population increases as well as better access to basic services.

Figure 5.3 Population trends in the Overberg District


Projections by the Department of Social Development indicate that population is set to continue expanding over the next five years. Figure 5.4 shows that Overstrand’s population is projected to grow faster than that of other areas in the District between 2015 and 2020, with expected growth of 1.63 per cent per annum, followed by Theewaterskloof, Swellendam and the Cape Agulhas area who are projected to grow at 1.18 per cent, 1.00 per cent and 0.89 per cent respectively.

Swellendam Theewaterskloof Overstrand Cape Agulhas Overberg District

Census 2011 35 916 108 790 80 432 33 038 258 176

Community Survey 2016 40 211 117 109 93 466 36 000 286 786

0

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on


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Figure 5.4 Overberg District population projections, 2015 - 2020

Source: Western Cape Department of Social Development, 2015


The number of households per area within the OBD has also increased between 2011 and 2016 as shown in Table 5.1 below. It can be seen that 4.8 per cent of households in the province live in the OBD in 2016, which is slightly higher than what it was in 2011, which is indicative of a stable rate of household growth relative to the other Districts in the province.

Table 5.1 Number of households per municipality in the Overberg District

Overberg District Census


2016

Swellendam 10 139 11 678

Theewaterskloof 28 884 33 076

Overstrand 28 010 35 739

Cape Agulhas 10 162 11 321

Overberg District 77 196 91 913

% of City of Cape Town 7.2 7.3


Sources: Statistics South Africa Census 2011 and Community Survey, 2016

The trends above are apparent when analysing the indigent populations within each respective municipality. The Swellendam area identified 2 018 indigent households in 2015 (which is significantly higher than the 1 754 households which had been identified in 2014). Overstrand and the Cape Agulhas area experienced relatively slower growth in the number of indigent households extant within the area. Theewaterskloof was the only area in the District to experience a reduction in the number of indigent households

Swellendam Theewaterskloof Overstrand Cape Agulhas

2015 37 531 114 780 86 711 34 373

2016 37 926 116 231 88 232 34 698

2017 38 316 117 657 89 726 35 017

2018 38 700 119 052 91 190 35 331

2019 39 078 120 413 92 624 35 637

2020 39 449 121 739 94 028 35 934

0

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40 000

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Overberg District

361

from 2014 to 2015, as the number of indigent household in the area decreased by 2 652 households.

Table 5.2 Indigent households in the Overberg District, 2015

Overberg District 2014 2015 % change

Swellendam Local Municipality 1 754 2 018 15

Theewaterskloof Local Municipality 6 313 3 661 -42

Overstrand Local Municipality 6 543 6 923 6

Cape Agulhas Local Municipality 3 400 3 429 1

Sources: Community Survey 2016


The annual household income for municipalities within the OBD is presented in Table 5.3 below and this shows proportion of people that fall within low, middle and high income brackets. Human development is influenced to a great extent by the income earned by households annually. An increase in living standards can be evidenced by a rising number of households entering the middle and high income brackets. From Table 5.3 below it can be seen that the majority of households (54.2 per cent) in the OBD fall within the low income brackets, but there is a significant proportion falling within the middle income bracket (39.7 per cent) and high income bracket (6.1 per cent).

Table 5.3 Annual household income for Overberg District municipalities, 2016 (%)

Income Overberg District Theewaterskloof Overstrand Cape Agulhas Swellendam

No income 12.6 11.8 15.9 9.8 8.1

Low Income

R1 - R6 327 2.2 2.0 2.9 1.4 1.4

R6 328 - R12 653 3.6 3.4 4.2 2.8 3.0

R12 654 - R25 306 14.6 17.3 12.4 12.9 14.5

R25 307 - R50 613 21.2 23.1 17.3 22.2 25.7

R50 614 - R101 225 18.0 19.4 15.2 19.6 20.3

Middle Income R101 226 - R202 450 12.8 11.6 13.9 14.1 12.3

R202 451 - R404 901 8.9 6.8 10.4 10.7 8.8

R404 902 - R809 802 4.3 3.3 5.1 4.6 4.4

High Income R809 203 - R1 619 604 1.3 0.9 1.8 1.3 0.8

R1 619 605 - R3 239 208 0.3 0.1 0.4 0.3 0.4

R3 239 207 or more 0.2 0.2 0.3 0.1 0.4


Theewaterskloof has the largest proportion of households that earn low income (57.6 per cent), followed by the Swellendam area (52.7 per cent), Overstrand (52.7 per cent) and the Cape Agulhas area (49.1 per cent). A rapid growth in the economies of these areas is likely to reduce the proportion of households falling within the low income bracket. Theewaterskloof also has the lowest proportion of households falling within the middle income bracket (37.8 per cent) and high income bracket (4.5 per cent). Middle income earners are more in the Cape Agulhas area (44.4 per cent), followed by the Swellendam area (41.4 per cent) while Overstrand has the highest proportion of high


362

income earners (7.6 per cent), followed by the Cape Agulhas area (6.3 per cent) and the Swellendam area (6 per cent).

Table 5.4 below shows households in the OBD spend most of their income on services (48.5 per cent), followed by non-durable goods (30 per cent).

Table 5.4 Overberg District expenditure on goods and services, 2016

Goods and services

Overberg District Theewaterskloof Overstrand Cape Agulhas Swellendam Rand

millions 2016

% of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Durable goods 888.48 11.8 272.88 12.4 338.22 11.3 166.66 11.9 110.72 12.3

Semi-durable goods 722.90 9.6 259.29 11.8 231.82 7.7 134.24 9.5 97.54 10.8

Non-durable goods 2 252.72 30.0 705.95 32.1 869.08 28.9 407.86 29.0 269.83 30.0

Services 3 645.26 48.5 962.28 43.7 1 563.95 52.1 697.15 49.6 421.88 46.9

Total 7 509.36 100 2 200.41 100 3 003.07 100.0 1 405.91 100 899.97 100

Source: Quantec/Urban-Econ 2016

In Table 5.4, it can be seen that Overstrand has the largest proportion of households that spend their income on services (52.1 per cent), followed by the Cape Agulhas area (49.6 per cent), the Swellendam area (46.9 per cent) and Theewaterskloof (43.7 per cent). Theewaterskloof has the largest proportion of households that spend on non-durables (32.1 per cent), followed by Swellendam (30 per cent). Surprisingly the proportion of households spending on durable goods is almost similar across all municipalities within the OBD, with Theewaterskloof taking a lead (12.4 per cent), followed by the Swellendam area (12.3 per cent), the Cape Agulhas area (11.9 per cent) and Overstrand (11.3 per cent).


In Figure 5.5 it can be seen that income inequality decreased in Theewaterskloof, the Cape Agulhas area and the Swellendam area between 2014 and 2015 but increased slightly in Overstrand. The increasing income inequality indicates that not everyone is enjoying the fruits of economic growth in the respective municipalities. Overstrand recorded the highest Gini coefficient (0.60) in 2015 while the Cape Agulhas area recorded the lowest Gini coefficient (0.55) in 2015.

3 In this Section the most recent data on the Gini coefficients for municipalities within the OBD are analysed. The Gini coefficient measures the levels of income inequality among households within a community. The Coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation's residents, varying between 0, which represents complete equality and 1, which represents complete inequality.

Overberg District

363

Figure 5.5 Gini coefficients for municipalities in the Overberg District, 2013 - 2015


5.6 Poverty4

Results from Statistics South Africa’s Community Survey 2016 show that the intensity of poverty in the Western Cape declined to 40.1 per cent in 2016 from 42.6 per cent in 2011 as indicated in Table 5.5 below. Although this is a lower poverty intensity level compared to 2011, the figure of 40.1 per cent indicates that there are still a significant number of poor people in the Western Cape Province whose income is below the poverty line. The recent low rate of economic growth in the Western Cape Province has had a positive but very small change in the intensity of poverty among households.

4 The intensity of poverty as well as the poverty headcount of municipalities within the OBD is analysed in this section since poverty results in poor human development. The intensity of poverty is measured by calculating the Poverty Gap Index, which is the average poverty gap in the population as a proportion of the poverty line. The Poverty Gap Index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. The Poverty Gap Index is a percentage between 0 and 100 per cent. A theoretical value of zero implies that no one in the population is below the poverty line. Individuals whose income is above the poverty line have a gap of zero while individuals whose income is below the poverty line would have a gap ranging from 1 per cent to 100 per cent, with a theoretical value of 100 per cent implying that everyone in the population has an income that is below the poverty line or zero. A higher poverty gap index means that poverty is more severe.

0.52

0.53

0.54

0.55

0.56

0.57

0.58

0.59

0.60

0.61

0.62


2013 2014 2015


364

Table 5.5 Poverty headcount and poverty intensity at Overberg District municipalities, 2011 and 2016 (%)


Municipality 2011 2016 2011 2016

Swellendam 3.4 0.8 42.4 42.5

Theewaterskloof 2.8 3.6 42.9 45.7

Overstrand 1.0 1.6 43.7 41.5

Cape Agulhas 2.2 6.7 41.0 45.4

Overberg District 3.7 2.6 42.2 40.3

Western Cape 3.6 2.7 42.6 40.1


Both the poverty headcount and poverty intensity decreased in the OBD between 2011 and 2016 as indicated in Table 5.5, with the district’s headcount in 2016 (2.6 per cent) slightly lower than the provincial average (2.7 per cent). Poverty intensity levels increased in three areas, namely Theewaterskloof, the Cape Agulhas area and the Swellendam area while Overstrand has seen a decreased in poverty intensity levels. Theewaterskloof has the highest poverty intensity level (45.7 per cent), followed by the Cape Agulhas area (45.4 per cent).

Table 5.5 also shows another common method of measuring and reporting poverty, the headcount ratio, which is the percentage of population that is below the poverty line5. In Table 5.5 it can be seen that Swellendam recorded a significant decrease in the poverty headcount while the Cape Agulhas area, Theewaterskloof and Overstrand have all experienced increases in the number of people that are poor. In the Cape Agulhas area the poverty headcount spiked up to 6.7 per cent in 2016, from 2.2 per cent in 2011. This is a concern in light of the marked increase in the economic growth rate during the period under review. The following section looks at access to housing and basic services by households within the OBD.


The extent of human development within a municipality is to a large extent influenced by access to housing as well as basic services such as water, electricity, sanitation and refuse removal, with high access levels implying better human development and vice versa. Table 5.6 shows recent statistics relating to the provision of housing within the OBD.

5 One of the undesirable features of the headcount ratio is that it simply counts all the people below a poverty line, in a given population, and considers them equally poor and thereby ignores the depth of poverty; if the poor become poorer, the headcount index does not change.

Overberg District

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Table 5.6 Dwelling type per municipality within the Overberg District, 2016

Dwelling type

Overberg District Theewaterskloof Overstrand Cape Agulhas Swellendam

Number 2016

% of total

Number2016

% of total

Number2016

% of total

Number2016

% of total

Number 2016

% of total


50 052 75.2 23 143 71.3 9 005 79.2 8 898 78.5 9 005 79.2


720 1.1 532 1.6 60 0.5 69 0.6 60 0.5


1 420 2.1 1 081 3.3 83 0.7 173 1.5 83 0.7


3 100 4.7 1 285 4.0 786 6.9 242 2.1 786 6.9

House/flat/ room, in backyard

723 1.1 410 1.3 72 0.6 171 1.5 72 0.6

Informal dwelling/shack, in backyard

2 524 3.8 1 520 4.7 418 3.7 169 1.5 418 3.7

Informal dwelling/shack, NOT in backyard, e.g. in an informal/ squatter settlement

6 512 9.8 3 640 11.2 745 6.5 1 383 12.2 745 6.5


389 0.6 132 0.4 92 0.8 74 0.7 92 0.8


1 107 1.7 727 2.2 111 1.0 157 1.4 111 1.0

Total 66 547 100 32 469 100 11 372 100 11 335 100 11 372 100


Informal settlements are an indication of poor levels of human development and that is why government programs aim to eliminate informal settlements by providing proper housing for all households in the country. Theewaterskloof has the highest number of households living either in informal shacks or squatter settlements (51 602 households or 15.9 per cent) followed by the Cape Agulhas area (1 552 households or 13.7 per cent). Both Swellendam and Overstrand also have a significant number of households living in informal settlements. A good economic performance can provide households with necessary income required to afford decent living conditions and therefore reduce or eliminate the squatter settlements. Access to decent housing is one step towards human development. Households need to be provided with basic services such as water, electricity, sanitation and refuse removal in order for them to be rendered well developed. Table 5.7 provides recent data on basic service access levels within the OBD as reported by Statistics South Africa in the latest Non-Financial Census of Municipalities.


366

Table 5.7 Domestic and non-domestic consumers receiving basic services within the Overberg District, 2014 - 2015



change 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change

Swellendam 6 206 6 336 2.1 5 701 6 049 6.1 6 668 7 110 6.6 5 564 5 758 3.5

Theewaterskloof 18 099 18 581 2.7 19 706 20 622 4.6 18 139 21 507 18.6 17 394 18 050 3.8

Overstrand 28 357 28 460 0.4 23 594 23 736 0.6 29 357 29 878 1.8 27 345 27 713 1.3

Cape Agulhas 9 581 9 828 2.6 9 091 9 536 4.9 10 180 10 242 0.6 9 323 9 475 1.6


Access levels for water, electricity, sanitation and refuse removal have all increased within municipalities in the OBD between 2014 and 2015. This implies that there is an improvement in the living conditions for households and therefore positive implications for human and economic development in the region. Swellendam had the highest increase in access to electricity (6.1 per cent) followed by the Cape Agulhas area (4.9 per cent) and Theewaterskloof (4.6 per cent). In terms of sanitation, Theewaterskloof had the highest increase in access levels (18.6 per cent) followed by Swellendam (6.6 per cent). For access to refuse removal, Theewaterskloof and Swellendam had the highest increases in the access levels (3.8 per cent and 3.5 per cent) respectively.

Table 5.8 below shows that the number of households that have access to piped water and flush toilets has further increased in 2016, according to the Community Survey findings.

Table 5.8 Access to basic services according to the 2016 Community Survey




Swellendam 9 988 11 254 12.7 8 699 11 311 30.0 11 397

Theewaterskloof 28 648 31 386 9.6 25 117 30 726 22.3 29 807

Overstrand 27 880 35 261 26.5 26 244 35 461 35.1 34 632

Cape Agulhas 10 093 10 275 1.8 9 213 10 411 13.0 11 054

Overberg District 76 609 88 176 15.1 69 274 87 910 26.9 86 890

Source: Stats SA, Census 2011, Community Survey 2016

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367

5.8 Education

Table 5.9 shows recent estimations of education levels of persons living within municipalities in the OBD.

Table 5.9 Education levels in the Overberg District, 2016

Municipality

Overberg District Theewaterskloof Overstrand Cape Agulhas Swellendam

Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


No schooling 5 776 3.0 2 765 3.7 1 203 1.8 742 2.9 1 066 4.1

Some primary 25 446 13.0 11 101 14.7 5 716 8.4 3 530 13.8 5 098 19.4

Complete primary

13 121 6.7 6 201 8.2 2 992 4.4 2 026 7.9 1 903 7.2

Some secondary

77 792 39.8 31 772 42.2 26 916 39.3 9 706 37.9 9 398 35.8

Grade 12/ Std 10

47 835 24.5 16 926 22.5 18 901 27.6 6 238 24.3 5 771 22.0

Higher 25 641 13.1 6 534 8.7 12 681 18.5 3 388 13.2 3 039 11.6

Total 195 611 100 75 298 100 68 409 100 25 629 100 26 275 100


Swellendam has the highest percentage of the total population without any form of schooling (4.1 per cent or 1 066 people), followed by Theewaterskloof (3.7 per cent or 2 765 people). Overstrand has the lowest percentage of the total population without any form of schooling (1.8 per cent or 1 203 people).

As stated above an economy’s performance can be influenced by the availability of a skilled and qualified workforce. Overstrand has the largest proportion of adults with Grade 12 or higher (46.1 per cent or 31 582 people), followed by the Cape Agulhas area (37.5 per cent or 9 626 people). Although the percentage of people with high education is comparatively low at Theewaterskloof, the actual number of people (23 460) is higher than the Cape Agulhas area (9 626 people) and Swellendam (8 810 people).

5.9 Health

Health indicators analysed in this section to measure the extent of human development include the child and maternal health as well as ART and TB patient loads. These indicators can provide pointers for life expectancy within an economy. South Africa’s life expectancy dropped to 50.4 years in 2010 from 61.7 years in 1995. However, more recent information from Statistics South Africa shows improvements in life expectancy within the Western Cape from 2011 to 2015 (Statistical release P0302, 2015). The decline in life expectancy over the years has been largely attributed to the high prevalence of HIV/AIDS and Tuberculosis (TB) in the country. The HIV and TB patient load in each municipality within the OBD is shown in Table 5.10.


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Table 5.10 ART and TB patient loads in the Overberg District, 2013 - 2015


Municipality

ART patient

load March 2013

ART patient

load March 2014

ART patient

load March 2015

Mother-to-child

transmission rate



Number of TB

patients2012/13

Number of TB

patients 2013/14

Number of TB

patients 2014/15


sites 2015

Theewaterskloof 2 150 2 757 3 202 0.9% 7 1 076 1 065 1 105 19

Overstrand 2 034 2 506 2 948 2.1% 4 605 602 551 8

Cape Agulhas 299 372 464 0.0% 3 207 182 207 7

Swellendam 424 547 619 0.0% 5 287 254 257 9

Overberg District 4 907 6 182 7 233 1.3% 19 2 175 2 103 2 120 43

Western Cape 9 814 12 364 14 466 1.4% 259 4 350 4 206 4 240 86


Table 5.10 shows a significant increase in the ART patient load in the Western Cape Province between March 2013 and March 2015. Theewaterskloof and Overstrand have the largest numbers of people receiving ART. An increase in the number of people receiving ARV treatment is positive in the sense that those patients can still be economically active and therefore contribute in growing the economy although the spread of HIV/AIDS remains a threat in most communities. The increasing number of TB patients within Theewaterskloof, Swellendam and the Cape Agulhas area is a concern that must be addressed urgently as this is opposite to the decreasing trends for the District and the Province.

Swellendam has the lowest level of full immunisation coverage for children under 1 year old (72 per cent), followed by the Cape Agulhas area (77 per cent); these are lower than both the District and Provincial average. Above average teenage pregnancies in Theewaterskloof, Swellendam and the Cape Agulhas area are also evident. In Overstrand the rate of pregnancy termination is the highest in the District, which results in fewer teenage mothers. Unemployed teenage mothers can increase the number of indigents in municipalities. Table 5.11 below shows various child and maternal health indicators for municipalities in the OBD.

Table 5.11 Child and maternal health in Overberg District municipalities, 2015


Municipality

Full immunisation



5 years

Neonatal mortality

rate Low birth

weight

Maternal mortality

ratio


under 18 years


rate

Theewaterskloof 82% 1.65 10.1 15% 0.0 9.5% 5.1%

Overstrand 81% 1.87 6.9 12% 0.0 6.0% 12.4%

Cape Agulhas 77% 0.72 12.0 14% 0.0 8.3% 3.2%

Swellendam 72% 1.17 0.0 13% 0.0 9.0% 4.5%

Overberg District 80% 1.54 7.7 14% 0.0 8.0% 7.0%

Western Cape 90% 2.43 6.2 15% 55.4 6.1% 16.8%


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5.10 Summary and conclusion

Between 2011 and 2016 the OBD recorded an 11 per cent population growth while economic growth averaged 3.6 per cent per annum between 2011 and 2015, implying a general decline in the GDPR per capita, which is the income per household. Although the District HDI has been rising since 2011, it weakened slightly between 2014 and 2015, weighed down by lower HDIs across all municipalities in the District. Table 5.12 is a summary of recent trends in selected social indicators at different municipalities within the OBD.

Table 5.12 A summary of recent changes in various social indicators in the Overberg District

Indicator Overberg District

Cape Agulhas Overstrand Theewaterskloof Swellendam

GDP growth (2005 - 2015)

3.6% 5.9% 3.1% 2.8% 3.9%

Population Growth (2011 - 2016)

11% 9.0% 16.2% 7.7% 12.0%

HDI (2011 - 2015) Increase Increase Increase Increase Increase

Indigent Households (2014 - 2015)

Increase Increase Increase Decrease Increase


12.6% of total Below ODM average

Above ODM average

Below ODM average

Below ODM average


Increase Decrease Increase Increase Decrease


Decrease Increase Increase Increase Decrease


Decrease Increase Decrease Increase Increase



Above ODM average

Below ODM average

Above ODM average

Below ODM average


Increase Increase Increase increase increase


Increase Increase Increase Increase Increase





No schooling (2016)


Below ODM average

Below ODM average

Above ODM average

Above ODM average



Below ODM average

Above ODM average

Below ODM average

Below ODM average

ART Patient load (2013 - 2015)


No. of TB patients (2013 - 2015)

Decrease Increase Decrease Increase Decrease


Below WC average

Below ODM average

Above ODM average

Above ODM average

Below ODM average


Below WC average

Equal WC average

Below ODM average

Above ODM average

Above CWD average


Above WC average

Above ODM average

Below ODM average

Above ODM average

Above ODM average


370

Indicators moving in positive territory could be a result of positive economic performance within the District, and vice-versa. Indicators that have moved in a positive direction for the OBD include an increase in the access to basic services such as water, electricity, sanitation and waste management. The HDI has also been rising since 2011 and poverty intensity and headcount have both decreased. The District has a significant proportion of the population in possession of Grade 12 Certificate or higher. In terms of health, the number of TB patients has also dropped. Areas of concern include the rising indigent households, rising income inequality, informal dwellers, people with no schooling, increasing ART patient loads, high teenage pregnancies.

In the Cape Agulhas area, the economy grew by 5.9 per cent on average between 2005 and 2015. The area’s population grew much faster by 9.0 per cent between 2011 and 2016, and the HDI has risen from 0.682 in 2011 to 0.705 in 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing income inequality, and fewer people without schooling. Indicators that remain a concern include the rapid population growth, increasing indigent households, rising poverty headcount and intensity, informal dwellers, below average people with higher education achievements, lower immunisation levels, and teenage pregnancies, among others.

In Overstrand, the economy grew by 3.1 per cent on average between 2005 and 2015 while population growth was 16.2 per cent between 2011 and 2016. Although the HDI has risen from 0.714 in 2011 to 0.739 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing poverty intensity, below district average informal dwellers, good education achievements, decreasing TB patients, and lower teenage pregnancies, among others. Indicators that are of concern include the increasing indigent households, high proportion of people without income, increasing income inequality, rising poverty headcount, and high ART patient loads, among others.

In Theewaterskloof, the economy grew by 2.8 per cent on average between 2005 and 2015 while the population grew much faster than the economy at 7.7 per cent between 2011 and 2016. Although the HDI has risen from 0.634 in 2011 to 0.672 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigent households, below district average households with no income and high immunisation coverage, among others. Social indicators that are of concern include the rapid population growth, increasing income inequality, increasing poverty headcount and poverty intensity, below average people with high education achievements, informal dwellers, increasing TB and ART patient loads and high teenage pregnancies, among others.

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In Swellendam, the economy grew by 3.9 per cent on average between 2005 and 2015 while the population growth was faster than the economy at 12.0 per cent between 2011 and 2016. Although the HDI has risen year on year from 0.647 in 2011 to 0.673 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing poverty headcount, decreasing income inequality, lower households without income, fewer informal dwellers and decreasing TB patients. Indicators that remain a concern include the increasing population, increasing indigent households, rising poverty intensity, below average education achievements, rising ART patient load, lower immunisation coverage, and high teenage pregnancies, among others.

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Eden District

1


1.1 Introduction

The Eden District economy is the 2nd largest non-metro district within the broader Western Cape Province economy, contributing an average of 8 per cent to the GDP of the Western Cape in 2015. The economic sectors that contributed most to the Eden District’s economy in 2015 were the manufacturing sector; the wholesale and retail trade, catering and accommodation sector; the finance, insurance, real estate and business services sector; and the general government sector. Some of the major projects being implemented in Eden District include: Youth Café/Youth Business Centre; Used Oil Recycling Initiative; Knysna Broadband Upgrades; Mossel Bay


374

Poultry Value Chain/Chicken Farming; Mossel Bay CBD Upgrades and Revitalisation; Blue Economy Manufacturing and Go George. Areas of concern in the District include the rising population and rising indigent households in certain municipalities, households with no income and rising income inequality, informal dwellers, teenage pregnancies, increasing ART and TB patient loads, lower immunisation coverage, and teenage pregnancies.

This sub-section provides a macroeconomic outlook on the Eden District level, an overview of trends between 2004 and 2015 and an outlook in terms of GDPR between 2016 and 2021. International trade is also considered in this section; as well as top companies by size and employment operating in the area.



The Eden District is the second largest non-metro district within the broader Western Cape Province economy, contributing an average of 8 per cent to the GDPR of the Western Cape in 2015. Figure 1.1 indicates the GDPR performance per Eden District Municipality between 2006 and 2015.



2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Eden District 6.2% 6.5% 4.4% -0.4% 2.3% 4.1% 2.8% 2.7% 2.5% 1.2%

Bitou 6.6% 5.8% 3.9% -0.1% 0.8% 3.5% 2.6% 2.7% 3.9% 1.1%

George 7.4% 7.6% 5.3% -0.2% 3.1% 4.7% 2.9% 3.0% 2.5% 1.4%

Hessequa 5.0% 6.0% 4.7% -0.8% 1.9% 4.2% 2.5% 2.3% 1.0% 0.8%

Kannaland 2.7% 5.1% 5.7% -1.3% 0.7% 2.9% 2.3% 1.1% 3.5% 0.9%

Knysna 4.5% 4.6% 3.0% -0.7% 0.6% 2.6% 2.4% 2.3% 2.9% 1.2%

Mossel Bay 5.6% 5.5% 2.4% -0.8% 2.4% 4.0% 2.8% 2.5% 1.6% 1.1%

Oudtshoorn 6.0% 7.3% 5.5% -0.4% 2.5% 4.1% 3.0% 2.9% 3.4% 0.8%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Eden District

375

The Eden District experienced an average GDPR growth rate of 3.5 per cent between 2005 and 2015. George (average 4.2 per cent) and Oudtshoorn (average 3.8 per cent) have been outperforming the other municipalities in the Eden District. Knysna and Kannaland experienced the lowest average GDPR growth between 2004 and 2015 with 2.6 per cent each. The slump in GDPR growth during 2008 and 2009 can be attributed to the global economic recession. Apart from the challenges brought about by subdued commodity prices, a number of other challenges is having an impact on the economy. Table 1.1 indicates the average GDPR contribution and growth rates between the various municipal areas.

Table 1.1 GDPR contribution and average growth rates per municipality (%)


2015


Municipality Trend


2004 - 2008 Recession 2008 - 2009


George 40.8 4.2 7.1 -0.2 2.9

Mossel Bay 17.2 3.0 4.9 -0.8 2.4

Knysna 11.2 2.6 4.3 -0.7 2.0

Oudtshoorn 12.8 3.8 6.4 -0.4 2.8

Bitou 7.6 3.4 5.8 -0.1 2.4

Hessequa 8.0 3.1 5.6 -0.8 2.1

Kannaland 2.3 2.6 4.6 -1.3 1.9

Total Eden District 100 3.5 6.0 -0.4 2.6



George contributed the most to GDPR (40.8 per cent) in the Eden District in 2015, followed by Mossel Bay (17.2 per cent). These two municipalities made up 58 per cent of the Eden District’s GDPR contribution in 2015, and showed higher than average GDPR growth rates before and during the recession which is indicative of a vibrant local economy and may be due to the concentration of local industries in the urban nodes of the district. Kannaland had the lowest GDPR growth rate during the recession but showed better GDPR growth rates during the recovery period.


In the Western Cape, the primary sector contributed 4 per cent to the GDPR of the Province in 2015, the secondary sector 22.7 per cent and the tertiary sector 73.3 per cent, whereas in the Eden District the primary sector contributed 3.2 per cent to the GDPR of the District, the secondary sector 22.2 per cent and the tertiary sector 74.6 per cent. This indicates that the economy of the Eden District is similarly structured as the Western Cape as a whole. Figure 1.2 indicates the GDPR contribution per main sector of the various municipalities in the Eden District.


376



The relatively lower contribution (3.2 per cent) of the primary sector compared to the Western Cape Province primary sector contribution of 4 per cent, can be attributed to the increasing strength of the tertiary sector activities such as business services and finance, and a continuous decline in primary sector activities such as agriculture and mining in the Eden District, thus lowering the district’s reliance on the primary sector.

The secondary sector (i.e. manufacturing, construction and electricity, gas and water) contributions for the District and the local municipalities weigh relatively similar with an average of 22.2 per cent in 2015. The Eden District consists of manufacturing closely linked with agriculture (i.e. agri-processing) and activities in the Mossel Bay Port. The tertiary sector presence also remains relatively important, given its average weight of 74.6 per cent across the District and local municipalities, which consists of activities such as the wholesale of agricultural produce, transport of commodities, and activities related to agri-processing, Business Processing Outsourcing (BPO) and the Mossel Bay Port. Table 1.2 indicates the sectors that contribute the most to the Eden District’s economy.

3.2% 5.9% 2.9% 3.0% 2.5% 3.9% 1.9% 4.2%

22.2%22.0%

21.9% 22.0% 23.4% 22.2%18.2%

28.5%

74.6% 72.1% 75.2% 75.0% 74.1% 73.9%79.9%

67.3%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Eden District Bitou George Hessequa Kannaland Knysna Mossel Bay Oudtshoorn


Eden District

377

Table 1.2 Eden District GDPR contribution per sector, 2015

Sector Eden District Bitou George Hessequa Kannaland Knysna Mossel Bay Oudtshoorn


3.1 5.8 2.8 2.9 2.5 3.7 1.7 4.2

Mining and quarrying 0.1 0.1 0.1 0.1 0 0.2 0.2 0.0

Manufacturing 13.5 8.8 13.9 14.5 10.8 11.5 12.4 17.8


2.8 0.9 3.0 2.0 5.2 1.6 1.7 5.6

Construction 6.0 12.2 5.0 5.5 7.3 9.1 4.1 5.1


18.0 18.6 17.9 21.3 19.0 17.4 18.0 16.5


10.6 6.8 12.1 13.3 13.3 8.0 10.8 7.8


28.5 26.7 30.1 24.0 23.4 27.2 33.3 23.3


7.3 8.7 6.6 7.0 8.2 9.5 7.3 6.9

General government 10.1 11.4 8.6 9.4 10.2 11.8 10.4 12.8


The economic sectors that contributed most to the Eden District’s economy in 2015 was:


Wholesale and retail trade, catering and accommodation (18 per cent)



Table 1.3 indicates the Eden District’s GDPR performance per sector.


378

Table 1.3 Eden District GDPR performance per sector (%)

Sector


Trend 2004 - 2015




Agriculture, forestry and fishing -2.0 1.4 -4.9 -3.9



Electricity, gas and water -0.1 -0.4 0.3 0.1



3.5 5.3 -1.4 3.1



5.4 8.4 2.7 3.9


2.5 4.6 -0.8 1.7


Total Eden District 3.5 6.0 -0.4 2.6


Between 2004 and 2015, agriculture, forestry and fishing, mining and quarrying and electricity, gas and water sectors had shrunk. In terms of the sectors that contributed the most to the Eden District’s economy the following can be noted:

Construction showed a positive growth rate overall (4.2 per cent), and recorded a high growth rate before the recession (10.2 per cent), but after the recession was growing at a significantly lower growth rate than before (0.6 per cent), this may be due to the cyclical nature of the construction industry as new stock/buildings becomes available and construction activities decline in line with market trends.

Transport, storage and communication showed a positive growth rate overall (5.0 per cent), 8.4 per cent prior to the recession, 1.7 per cent during the recession, with a slight rise to 3.3 per cent after the recession.

Wholesale and retail trade, catering and accommodation showed a positive growth rate overall (3.5 per cent), but contracted during the recession (-1.4 per cent). The sector recovered after the recession and grew by 3.1 per cent, which could indicate a resilient commercial industry in the Eden District.

Finance, insurance, real estate and business services showed positive growth rates throughout the period 2004 and 2015 with 5.4 per cent, but plummeted to 2.7 per cent during the recession. After the recession the sector was growing at a lower rate than before at 3.9 per cent, which could indicate a delay in the effects of the recession as well as signs of a robust finance sector in the Eden District.

Eden District

379




Sector 2016 2017 2018 2019 2020 2021 Average

2016 - 2021

Agriculture, forestry and fishing -14.5 0.5 -0.1 -1.2 -1.3 -1.0 -2.9

Mining and quarrying 3.8 -1.3 -1.3 -1.2 -1.2 -1.1 -0.4

Manufacturing 2.2 1.3 1.9 2.0 2.2 2.1 2.0


Construction 3.2 0.4 2.1 2.1 2.7 3.0 2.3


2.7 1.7 2.5 2.9 3.0 3.3 2.7


1.5 1.0 3.3 4.0 4.2 4.0 3.0


1.8 2.5 4.1 4.6 4.9 4.8 3.8


0.2 -0.1 0.3 0.8 1.1 1.2 0.6


Total 1.1 1.5 2.6 3.0 3.2 3.3 2.4

Source: Quantec, own calculations, 2016

It is projected that primary sector activities such as agriculture and mining and quarrying will markedly decline during the 2016 to 2021 period. All secondary and tertiary sectors are projected to grow positively during the same period with the biggest growth in the secondary sector emanating from the construction industry (average 2.3 per cent) whilst the finance, real estate and business services (average 3.8 per cent) will experience the biggest growth in the tertiary sector.



Table 1.5 indicates the trend in employment growth within each municipality in the Eden District.


380

Table 1.5 Eden District employment growth


2015


Municipality Trend


2004 - 2008 Recession 2008 - 2009


George 36.7 15 694 10 008 -1 868 7 554

Mossel Bay 15.6 4 886 3 795 -1 132 2 223

Knysna 11.8 3 641 2 570 -902 1 973

Oudtshoorn 12.8 2 884 1 662 -871 2 093

Bitou 9.5 5 372 3 412 -498 2 458

Hessequa 10.2 3 192 1 955 -769 2 006

Kannaland 3.4 249 -200 -276 725

Total Eden District 100 35 918 23 202 -6 316 19 032

Western Cape Province - 25 152 128 301 -11 841 -10 468


Similar to GDPR contribution in 2015, George and Mossel Bay employed just over 52.3 per cent of individuals in the Eden District. Prior to the recession (2004 - 2008) Kannaland was the only municipal area in the Eden District to shed jobs. During the recession (2008 - 2009) all local municipal areas in the Eden District shed jobs and in the recovery after the recession (2009 - 2015) none of the municipal areas shed jobs. It is interesting to note that the George municipal area experienced the biggest employment growth in the District, which correlates with the GDPR data, which shows that the area also experienced the highest GDPR growth (4.2 per cent) in the district as higher growth demands more labour.


Table 1.6 indicates the trend in employment growth within each economic sector in the Eden District.

Table 1.6 Eden District employment growth per sector


Sector Trend


2004 - 2008 Recession 2008 - 2009


Agriculture, forestry and fishing -15 850 -12 727 -2 603 -520

Mining and quarrying -70 -15 -25 -30

Manufacturing -272 1 619 -1 402 -489


Construction 2 065 2 896 -1 928 1 097


18 219 13 539 -553 5 233



12 374 7 599 -700 5 475


6 995 3 926 156 2 913


Total Eden District 35 918 23 202 -6 316 19 032


Eden District

381

Overall between 2004 and 2015, only the agriculture, forestry and fishing sector, the mining and quarrying sector and manufacturing sectors were shedding jobs. In terms of the sectors that contributed the most to the Eden District’s economy the following can be noted:

Construction created 2 065 jobs during the period 2004 and 2015, showing positive growth before the recession (2 896 jobs), shedding 1 928 jobs during the recession but creating 1 097 jobs after the recession. This is in line with the sectors GDPR growth rate after the recession and during the 2009 to 2015 period as the sector experienced a fall in its growth rate and a low positive growth rate after the recession.

Wholesale and retail trade, catering and accommodation created 18 219 jobs over the period 2004 to 2015, with most jobs being created before and after the recession.

Transport, storage and communication created 7 286 jobs during the period 2004 to 2015, creating most jobs prior to the recession (4 354 jobs) and creating jobs after the recession (2 743 jobs).

Finance, insurance, real estate and business services created 12 374 jobs over the period 2004 and 2015, with most of the jobs being created before the recession (7 599). During the recession 700 jobs were lost and thereafter 5 475 jobs were created.


A comparative advantage indicates a relatively more competitive production function for a product or service in a specific economy (regional or sub-regional) than in the aggregate economy (provincial or national). It therefore measures whether a specific economy produces a product or renders a service more efficiently than another. One way to measure the comparative advantage of a specific economy is by way of the location quotient. A location quotient as a tool however, does not take into account external factors such as government policies, investment incentives, and proximity to markets, etc., which can influence the comparative advantage of an area. The Locational Quotient is used to calculate the comparative advantage of the relevant study areas. The location quotient is calculated ratios between two economies; in this case the provincial and district economies. This ratio is calculated for all industries to determine whether or not the district or local economy has a greater share or advantage of that industry. If an economy has a location quotient greater than 1, it means that economy enjoys a comparative advantage.

Table 1.7 indicates the sectors where the Eden District has a comparative advantage in the Western Cape Province in terms of GDPR and employment.


382

Table 1.7 Comparative advantage in terms of GDPR and employment, 2015

Sector In terms of

GDPR In terms of

employment












The Eden District has a comparative advantage in the Western Cape in the:

Electricity, gas and water in terms of GDPR and employment

Construction in terms of GDPR and employment

Wholesale and retail trade, catering and accommodation in terms of GDPR and employment

Community, social and personal services sector in terms of GDPR and employment


Table 1.8 indicates the number and Rand value of the procurement contracts undertaken in the Eden District Municipality during the 2014/15 financial year. The aim of this was to have an indication as to which sectors the Eden District procurement contracts were focused in.

Table 1.8 Eden District procurement contracts 2014/15

Sector

Procurement Contracts

Number R-Value

Community services 8 5 215 243.21


Electricity 8 21 951 884.26

Environmental affairs 2 11 660 524.02

Financial services 20 29 729 016.12

Manufacturing 2 27 472 517.32

Services 4 8 332 313.52

Technical 8 11 591 036.75

Transport and communication 3 2 366 918.60

Wholesale and Retail Trade 10 16 164 513.53

Total 128 467 038 780.70

Source: Municipal Annual Reports, 2014/15

Eden District

383

A total of 128 procurement contracts were undertaken in the Eden District during the 2014/15 financial year to the value of approximately R467 million. The majority (49 per cent) were in the construction industry, 16 per cent in the financial services sector, and 8 per cent in the wholesale and retail trade sector.

Table 1.9 indicates the main agriculture activities in the Eden District as per the percentage contribution to the Western Cape Province’s overall agriculture contribution.

Table 1.9 Eden District agriculture as per contribution of Western Cape agriculture, 2013 (%)

Sector Kannaland Hessequa Mossel Bay George Oudtshoorn Bitou Knysna Total

Top Crops (as % of Western Cape)

Wine Grapes 0.9 0.2 1.1

Table Grapes 0.1 0.1

Lucerne 1.8 18.4 4.8 1.9 2.8 0.1 0.7 30.5

Canola 26.3 1.1 27.4

Small Grain Grazing 0.2 5.9 1.4 2.3 2.2 0.1 0.2 12.3

Planted Pastures Perennial

0.3 2 6.3 15 2.2 1.7 0.7 28.2

Natural grazing 0.5 11.9 4.1 1.3 0.2 0.6 0.2 18.8

Fallow 0.8 8.5 1 2.9 1.3 0.1 14.6

Stubble 9.4 9.4

Wheat 10.1 0.6 0.2 0.1 11

Honey bush 12.1 12.1

Nuts 19.2 2.7 21.9

Onions 7.4 8.3 11.1 26.8

Barley 17.5 0.2 17.7

Peaches 3.7 3.7

Apricots 20.3 20.3

Plums 5.1 5.1

Apples 7.2 7.2

Oranges 0.2 0.2

Brussel Sprouts 41 41

Planted Pastures 22.4 5.9 4 2.8 0.1 35.2

Weeds 6.1 2.2 0.1 8.4

Top Livestock (as % of Western Cape)

Cattle 1.8 10.2 6.1 6.9 2.2 0.7 1.4 29.3

Goats 6.3 0.6 1.8 13 14 0 0 35.7

Horses 1.7 3.9 2.1 3.5 1 0.1 0.2 12.5

Ostriches 12 15.1 4.3 16.1 40.4 0 0 87.9

Pigs 1 1.1 0.9 10.5 0.9 0.3 0.3 15

Sheep 0.9 12 2.9 2.2 1.4 0 0 19.4

Source: WCDOA, Western Cape AgriStats, 2013


384

In 2013 the main crops and livestock farmed in the Eden District were:

1. Ostriches (87.9 per cent of the Western Cape)

2. Brussel sprouts (41 per cent of the Western Cape)

3. Goats (35.7 per cent of the Western Cape)

4. Planted Pastures Perennial (35.2 per cent of the Western Cape)

5. Lucerne (30.5 per cent of the Western Cape)

6. Cattle (29 per cent of the Western Cape)

7. Canola (27.4 per cent of the Western Cape)

8. Onions (26.8 per cent of the Western Cape)

9. Nuts (21.9 per cent of the Western Cape)

10. Apricots (20.3 per cent of the Western Cape)

11. Sheep (19.4 per cent of the Western Cape)

12. Barley (17.7 per cent of the Western Cape)

Table 1.10 indicates the economic contribution of the manufacturing sector in the Eden District.

Table 1.10 Eden District manufacturing GDPR contribution per sector, 2015 (%)

Sub-sector Eden Kannaland Hessequa Mossel Bay George Oudtshoorn Bitou Knysna


29.4 50.4 28.5 27.5 31.9 30.1 16.6 21.3


4.3 6.3 6.8 5.0 3.3 6.8 2.7 1.7


15.7 11.1 13.6 16.6 11.8 10.9 33.1 28.7


16.2 3.1 17.2 16.5 18.2 15.9 9.8 6.2


3.4 0.0 2.8 2.7 3.3 2.3 13.4 6


12.4 15.4 12.5 10.9 14.4 12.2 7.3 11


0.7 0 0.2 0.7 1.1 0.4 0.2 1.1


1.2 0 0.9 1.6 1.7 0.4 0.3 1.4

Transport equipment 5.6 0.0 2.4 6.7 5.8 6.5 4.0 11.6


11.0 13.8 15.3 11.9 8.5 14.4 12.4 10.9


Eden District

385

Table 1.10 indicates that the manufacturing sectors that contributed most to the Eden District’s GDPR in 2015 were:





From Table 1.9 and Table 1.10, it is clear that the agriculture sector is dominated by ostriches, brussel sprouts, goats, Lucerne, cattle, canola, onions, and planted pastures perennial. This correlates with the dominating manufacturing sub-sector of the Eden District which is food, beverages and tobacco (29.4 per cent to GDPR in 2015). The other dominant manufacturing sub-sector is the petroleum products, chemicals, rubber and plastic sub-sector which correlates with the energy and gas activity in the area (oil refinery in Mossel Bay, various oil rigs of the coast and gas to liquid refinery) and activities at Mossel Bay Port.


Table 1.11 indicates the top companies located in the Eden District. This data was collated from the Western Cape Top 300 Companies (based on criteria developed in partnership with the Cape Chamber of Commerce, the Western Cape Provincial Government, Accelerate and Wesgro) and Wesgro Fact Sheets for the Eden District.

Table 1.11 Top companies, Eden District



Agro-processing 4 No data

Agriculture, forestry and fishing 2 ± 120*

Tourism 1 No data

Services 3 ± 17 000*

Diversified Industries 1 ± 51 000*

Transport, storage and communication 1 ± 260 100*

Total 19 ± 328 100*

* This includes employment for the whole company (all branches, not just Eden District office branches).



386

There are 19 top companies in terms of employment and contribution to GDPR in the Eden District. Some of these include companies such as Petro SA, SA Home Loans (Pty) Ltd, Alcare Aloe, Mazars South Africa, Tradelink, Travelstar, Mc Cain, Oakhurst Insurance Company, Rheebok Bricks, Cape Pine, Robbeberg Fine Foods, Imperial Holdings Company, Stuttaford Van Lines (Pty) Ltd, Harvey Yacht Company, and Safari Ostrich Farm. Recently the McCain processing facility in George closed its doors. It is a big loss for any economy when such a strong company closes down after many decades. This however, just highlights the growing importance of small scale vegetable production and the market access needs that this presents. There is a growing “market culture” in George, with residents choosing to support local producers of good quality produce, this trend could offer significant entrepreneurial opportunities in future.


Of the total exports from the Eden District in 2015, 56 per cent included manufacturing products, 42 per cent included agriculture, forestry and fishing products, and 2 per cent included mining and quarrying products. Of the total imports in the Eden District in 2015, 77 per cent included manufacturing products, 23 per cent included agriculture, forestry and fishing products, and 0.03 per cent included mining and quarrying products. Figure 1.3 indicates the Eden District trade balance between 2005 and 2015.

Figure 1.3 Eden District Trade Balance, 2005 - 2015

Source: Quantec, 2016

The regional trade balance in the Eden District has been positive since 2005 due a steady increase in trade from R809 million in 2005 to R1.28 billion in 2015. During this time imports stood at R233 million in 2005 and R1.34 billion in 2015. The trade balance has also increased from 2014 (R1.09 billion) to 2015 (R1.3 billion) which could be attributed to the District’s strong and growing agriculture, forestry and fishing sector. The trade balance in the manufacturing sector has been declining since 2010, imports increased steadily from 2005 until 2015, while exports increased until 2010 before decreasing and only increasing to 2008 levels again from 2014.

-0.2

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

R b

illio

n


Eden District

387


The Eden District experienced an average GDPR growth rate of 3.5 per cent between 2004 and 2015. Apart from the challenges brought about by subdued commodity prices, a number of other challenges are having an impact on the economy, such as the drought, causing increases in domestic food prices, and the currency depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy). This can be seen in the trade balance within the Eden District which has grown at a slower rate since 2014. Similar to GDPR contribution in 2015, the George and Mossel Bay municipal areas employed 53 per cent of individuals in the Eden District. Prior to the recession (2004 - 2008) only Kannaland in the Eden District was shedding jobs. During the recession (2008 to 2009) all local municipalities in the Eden District shed jobs and in the recovery after the recession (2009 to 2015) all local municipal areas created jobs.

When looking at the local municipalities within the Eden District, the primary sector contributed an average of 3.2 per cent to the GDPR of the District in 2015, which consists of agriculture (i.e. canola, nuts, onions and grazing) and mining and quarrying (i.e. Andalusite, Aragonite, Quarts, Calcite, Mica and gold). The secondary sector contributed an average of 22.2 per cent to the GDPR of the District in 2015, which consists of manufacturing, construction and electricity, gas and water sectors. The tertiary sector contributed an average of 74.6 per cent to the GDPR of the District in 2015, which consists of industries such as wholesale, retail trade, catering, accommodation, transport, finance, and real estate.

Going forward, Knysna municipality expects that the tourism industry will continue to support the economy on the back of the weaker exchange rate due to SA’s inflation profile and investor confidence outlook. The tourism industry will also continue to impact favourably on the trade sector as well as the Catering and Accommodation sub-sector. These sectors are highly competitive and are able to outperform their counterparts at a district level as Knysna attracts approximately 33 per cent of all tourists visiting the Eden District which is more than Mossel Bay, George and Wilderness together (Expedia, 2015).

Eden District

389

2


2.1 Introduction

This sub-section provides a macroeconomic outlook on the municipal level, an overview of trends during 2004 - 2015 and an outlook in terms of GDPR for 2016 - 2021. Employment is also considered in this section; as well as skills levels and building plans passed and completed.

2.2 George


The primary sector contributed 2.9 per cent to the overall GDPR of the George municipal area in 2015, compared to 3.2 per cent in the Eden District. The secondary sector contributed 21.9 per cent to the GDPR of George, compared to 22.2 per cent of the Eden District overall. While the tertiary sector contributed 75.3 per cent to overall GDPR compared to 74.6 per cent in the District. This indicates that George’s economic structure is very similar to the Eden District economy as a whole, this is due to the fact that the George municipal area is the largest local municipality in the Eden District. Table 2.1 indicates George’s GDPR performance per sector.


390

Table 2.1 George GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.8 454 -0.8 4.5 -2.6 -4.0


Manufacturing 13.9 2 270 3.5 7.3 -6.9 2.7


3.0 490 -0.6 -1.3 -0.8 -0.2

Construction 5.0 821 4.3 10.2 2.3 0.6


17.9 2 922 3.7 5.7 -1.3 3.1


12.1 1 976 5.7 9.5 3.0 3.7


30.1 4 914 6.3 10.1 2.4 4.4


6.6 1 071 2.7 4.6 -0.9 1.9


Total George 100 16 341 4.2 7.1 -0.2 2.9


The sectors that contributed the most to George’s GDPR in 2015 included:

Manufacturing (13.9 per cent) - the average growth during the period 2004 - 2015 was 3.5 per cent, with positive growth before the recession (7.3 per cent), contraction during the recession (-6.9 per cent) and positive growth after the recession (2.7 per cent).

Wholesale and retail trade, catering and accommodation (17.9 per cent) - the average growth during 2004 and 2015 was 3.7 per cent, with positive growth before the recession (5.7 per cent), contracted growth during the recession (-1.3 per cent), but a positive recovery (3.1 per cent) after the recession (2010 - 2015).

Transport, storage and communication (12.1 per cent) - the average growth during 2004 and 2015 was 5.7 per cent, with a positive growth rate before, during and after the recession (9.5 per cent, 3 per cent, 3.7 per cent respectively). This is indicative of a resilient transport sector in George municipal area.

Finance, insurance, real estate and business services (30.1 per cent) - the average growth during 2004 and 2015 was 6.3 per cent, with a high growth rate (10.1 per cent) before the recession (2004 to 2008), a positive, but slower growth rate (2.4 per cent) during the recession (2008 to 2009) and an increased positive growth rate (4.4 per cent) after the recession (2009 to 2015). This is due to the fact that the George municipal area has a strong and resilient financial and business services sector.

Eden District

391

Overall between 2004 and 2015, every economic sector in George grew positively in terms of GDPR, except the agriculture, forestry and fishing and the electricity, gas and water sectors. All the economic sectors are showing positive recovery after the recession except the aforementioned sectors. The finance, insurance, real estate and business services sector showing the highest recovery at 4.4 per cent (2009 - 2015).


Table 2.2 indicates the trend in employment growth within each economic sector in George.

Table 2.2 George employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



5.1 3 926 -4 295 -3 639 -767 111


Manufacturing 9.4 7 215 43 648 -449 -156


0.5 364 147 79 -2 70

Construction 7.2 5 528 850 995 -534 389


27.7 21 345 6 533 5 020 -276 1 789


7.8 6 027 3 111 1 714 133 1 264


20.0 15 429 5 566 3 394 -200 2 372


12.5 9 611 1 989 1 080 28 881


Total George 100 77 086 15 694 10 008 -1 868 7 554


In terms of employment, the sectors that contributed the most to George municipal area employment in 2015 were:

Wholesale and retail trade, catering and accommodation (27.7 per cent), the industry showed job creation throughout 2004 and 2015 (6 533 jobs), with 5 020 jobs created before the recession, and 276 jobs shed during the recession. Job creation improved again after the recession with 1 789 jobs created between 2009 and 2015.

Finance, insurance, real estate and business services (20 per cent) - the industry showed job creation throughout 2004 and 2015 (5 566 jobs) but with a lower amount of jobs being created after the recession (2 372 jobs) compared to before the recession (3 394 jobs). Community, social and personal services (12.5 per cent) - the industry showed job creation before the recession (1 080 jobs) during the recession (28 jobs), after the recession (881 jobs).


392

General government (9.9 per cent) - the industry showed job creation throughout 2004 and 2015 (1 751 jobs) but with a smaller amount of jobs being created after the recession (838 jobs) compared to before the recession (708 jobs).

Overall between 2004 and 2015, almost every sector showed job creation except for the agriculture, forestry, and fishing and the mining and quarrying sector. Almost every economic sector was showing positive job creation after the recession, except for the manufacturing sector and mining and quarrying sector. Compared to GDPR, the employment per sector is recovering on par with the GDPR per sector.

2.2.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area, while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.3 indicates the skills levels of the George area.

Table 2.3 George skills level




2015

Skilled 34.8 3.0 18 750

Semi-skilled 40.1 0.0 21 625

Low skilled 25.1 -2.0 13 550

Total George Area 100 0.3 53 925


Only formal employment numbers can be used to determine the skills level in the area. In George, there were 53 925 formally employed individuals, indicating that 23 161 individuals were informally employed in 2015. The majority of the formally employed individuals (40.1 per cent) in the George municipal area are semi-skilled, compared to 25.1 per cent low skilled and a significant percentage is skilled (34.8 per cent). Skilled employment has been increasing positively between 2004 and 2015, while the low skilled employment has been decreasing between 2004 and 2015 and the semi-skilled employment has remained stable. This could be indicative of up-skilling in the George area, through either better access to education or up-skilling opportunities in the workplace.

Eden District

393

2.3 Mossel Bay


The primary sector contributed 1.9 per cent towards the GDPR of the Mossel Bay municipal area, compared to 3.2 per cent in the Eden District in 2015. The secondary sector contributed 18.2 per cent to the GDPR of the municipal area, compared to 22.2 per cent in the Eden District in 2015; while the tertiary sector contributed 79.9 per cent to Mossel Bay compared to 74.6 per cent in the District. This indicates that the tertiary sector is slightly stronger in Mossel Bay compared to the Eden District, with the secondary sector slightly less dominant than in the District. This could be attributed to the strong presence of business services activities in Mossel Bay. Table 2.4 indicates Mossel Bay’s GDPR performance per sector.

Table 2.4 Mossel Bay GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2009 Recession 2008 - 2009

Recovery2009 - 2015


1.7 117 -5.6 -3.6 -8.3 -6.5


Manufacturing 12.4 850 -0.3 1.7 -9.5 -0.1


1.7 119 -3.2 -4.9 -3.8 -1.9

Construction 4.1 282 -0.2 5.9 -3.6 -3.8


18.0 1 239 3.8 6.0 -1.0 3.1


10.8 743 4.6 7.5 1.4 3.1


33.3 2 290 5.7 8.6 3.2 4.3


7.3 505 2.3 3.5 -0.7 2.0


Total Mossel Bay 100 6 871 3.0 4.9 -0.8 2.4


The sectors that contributed the most to Mossel Bay’s GDPR in 2015 included:

Manufacturing (12.4 per cent) – the sector shrunk by 0.3 per cent during 2004 and 2015, with positive growth before the recession (1.7 per cent) and contraction during the recession (-9.5 per cent), and less severe contraction (-0.1 per cent) after the recession (2009 - 2015).

Wholesale and retail trade, catering and accommodation (18 per cent) - the average growth during 2004 and 2015 was 3.8 per cent, with positive growth before the recession (6 per cent), shrinking by 1 per cent during the recession, and a positive recovery (3.1 per cent) after the recession (2009 to 2015).


394

Transport, storage and communication (10.8 per cent) - the average growth during 2004 and 2015 was 4.6 per cent, with positive growth before (7.5 per cent), during (1.4 per cent) and after the recession (3.1 per cent) (2009 to- 2015). This trend indicates a strong and resilient transport and storage industry in Mossel Bay.

Finance, insurance, real estate and business services (33.3 per cent) - the average growth during 2004 and 2015 was 5.7 per cent, with positive growth before (8.6 per cent), during (3.2 per cent) and after the recession (4.3 per cent). This trend indicates a strong and robust business services industry in Mossel Bay.

Overall between 2004 and 2015 only the tertiary sector in Mossel Bay grew positively in terms of GDPR, whilst the primary and secondary sectors contracted during the same period. The same trend was observed after the recession, with the finance, insurance, real estate, and business services sector showing the highest recovery at 4.3 per cent (2009 - 2015).


Table 2.5 indicates the trend in employment growth within each economic sector in Mossel Bay.

Table 2.5 Mossel Bay employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



2.7 875 -2 152 -1 543 -315 -294


Manufacturing 8.7 2 853 -443 39 -246 -236


0.3 91 13 9 -5 9

Construction 6.2 2 031 -829 -38 -446 -345


28.8 9 412 3 106 2 295 -79 890


8.1 2 661 1 320 812 31 477


20.4 6 687 2 013 1 296 -169 886


13.8 4 510 1 020 587 1 432


Total Mossel Bay 100 32 735 4 886 3 795 -1 132 2 223


Eden District

395

In terms of employment, sectors that contributed the most to Mossel Bay’s employment in 2015 included:

Wholesale and retail trade, catering and accommodation (28.8 per cent) - the industry showed job creation throughout 2004 and 2015 (3 106 jobs), with 2 295 jobs created before the recession, and 79 jobs shed during the recession. Job creation did not improve much after the recession with only 890 jobs created between 2009 and 2015.

Finance, insurance, real estate and business services (20.4 per cent) - the industry showed job creation throughout 2004 and 2015, (2 013 jobs) but with a significantly lower amount of jobs being created after the recession (886 jobs) compared to before the recession (1 296 jobs).

Community, social and personal services (13.8 per cent) - the industry showed job creation before the recession (587 jobs), limited creation during the recession (1 job), and after the recession (432 jobs). This trend is on par with the trends in the GDPR as GDPR grew positively before the recession and returned to pre-recession levels during recovery.

General government (11 per cent) - the industry showed job creation throughout 2004 and 2015 (888 jobs), with 363 jobs created before the recession, 106 jobs created during the recession, and 419 created after the recession (2009 to 2015).

Overall between 2004 and 2015, most economic sectors in Mossel Bay showed a positive growth in job creation except for the agriculture, forestry, and fishing, mining, and quarrying sector, manufacturing sector and construction sector. Compared to GDPR, the employment per sector is recovering on par with GDPR per sector.

2.3.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.6 indicates the skills levels of Mossel Bay.

Table 2.6 Mossel Bay skills level




2015

Skilled 36.5 2.5 7 865

Semi-skilled 40.3 -1.6 8 698

Low skilled 23.2 -2.5 5 014

Total Mossel Bay Area 100 -0.6 21 577



396

Only formal employment numbers can be used to determine the skills level in the area. In Mossel Bay there were 21 577 formally employed individuals, indicating that 11 158 individuals were informally employed in 2015. The majority of Mossel Bay’s formally employed individuals are semi-skilled (40.3 per cent), compared to 23.2 per cent low skilled and a significant percentage is skilled (36.5 per cent). Skilled formal employees have been increasing positively between 2004 and 2015, while the semi- and low skilled formal employees have decreased between 2004 and 2015. This could be indicating up-skilling in the Mossel Bay area through either better access to education as well as up-skilling opportunities through employers.

2.4 Knysna


The primary sector contributed 3.9 per cent towards the GDPR of the Knysna municipal area compared to 3.2 per cent in the Eden District in 2015. The secondary sector contributed 22.2 per cent to the GDPR of the municipal area, which was the same as the 22.2 per cent in the Eden District in 2015; while the tertiary sector contributed 73.9 per cent to Knysna compared to 74.6 per cent in the District. This indicates that the secondary sector is very similar in Knysna to that of the Eden District. Table 2.7 indicates Knysna’s GDPR performance per sector.

Table 2.7 Knysna GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2007 Recession 2008 - 2009

Recovery2009 - 2015


3.7 166 -0.4 2.7 1.3 -2.7


Manufacturing 11.5 519 2.4 4.6 -10.2 3.1


1.6 71 1.6 1.1 6.7 1.0

Construction 9.1 411 5.1 10.8 2.5 1.7


17.4 784 1.9 2.9 -3.2 2.1


8.0 359 3.0 6.2 -1.6 1.6


27.2 1 225 2.4 3.5 1.2 1.9


9.5 426 3.2 5.5 -0.4 2.2


Total Knysna 100 4 502 2.6 4.3 -0.7 2.0


The sectors that contributed the most to Knysna’s GDPR in 2015 included:

Eden District

397

Manufacturing (11.5 per cent) - the average growth during 2004 and 2015 was 2.4 per cent, with positive growth before the recession (4.6 per cent), and contraction during the recession (-10.2 per cent), but positive growth (3.1 per cent) after the recession (2004 - 2015).

Wholesale and retail trade, catering and accommodation (17.4 per cent) - the average growth during 2004 and 2015 was 1.9 per cent, with positive growth before the recession (2.9 per cent), contraction during the recession (-3.2 per cent) and a recovery to positive growth after the recession (2.1 per cent).

Finance, insurance, real estate and business services (27.2 per cent) - the average growth during 2004 and 2015 was 2.4 per cent, with positive growth before the recession (3.5 per cent), during the recession (1.2 per cent) and again after the recession (1.9 per cent).

General government (11.8 per cent) - the average growth during 2004 and 2015 was 3.9 per cent, with positive growth before the recession (4.5 per cent), during the recession (3.7 per cent), and after the recession (3.6 per cent).

Overall between 2004 and 2015, all economic sectors in Knysna grew positively in terms of GDPR, except in the agriculture, forestry and fishing sector. Likewise, all the economic sectors were showing positive recovery after the recession, except the agriculture, forestry and fishing sector.


Table 2.8 indicates the trend in employment growth within each economic sector in Knysna.

Table 2.8 Knysna employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



5.5 1 364 -976 -891 -220 135

Mining and quarrying 0.0 12 4 6 -1 -1

Manufacturing 7.2 1 784 -422 -17 -237 -168


0.3 63 24 11 1 12

Construction 12.7 3 140 691 608 -288 371


26.0 6 457 1 230 1 077 -155 308


5.1 1 253 328 291 -35 72


13.7 3 394 592 423 -143 312


18.4 4 550 1 330 733 83 514


Total Knysna 100 24 788 3 641 2 570 -902 1 973



398

In terms of employment, sectors that contributed the most to Knysna’s employment in 2015 were:

Construction (12.7 per cent) - the industry showed job creation before the recession (608 jobs) but showed job losses during the recession (-288 jobs), which then recovered after the recession (371 jobs).

Wholesale and retail trade, catering and accommodation (26 per cent) - the sector created 1 230 jobs between 2004 and 2015, with 1 077 jobs created before the recession, 155 jobs shed during the recession and 308 jobs created after the recession (between 2009 and 2015).

Finance, insurance, real estate and business services (13.7 per cent) - the industry showed job creation throughout 2004 and 2015 (592 jobs), with jobs created before the recession (423 jobs), jobs shed during the recession (-143 jobs) and jobs created after the recession (312 jobs). This trend is on par with the GDPR data which showed positive growth throughout the period 2004 - 2015, however growth after the recession was just over half the pre-recession growth rate.

Community, social and personal services (18.4 per cent) - the industry created 1 330 jobs between 2004 and 2015, with most of the jobs being created before the recession (733 jobs) and after the recession (514 jobs) with a significantly low number of job creation recorded during the recession (83 jobs).

Overall between 2004 and 2015, almost every sector showed job creation except for the agriculture, forestry and fishing sector and manufacturing sector. Almost every economic sector was showing positive job creation after the recession, except for the mining and quarrying sector and manufacturing sector.

2.4.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.9 indicates the skills levels of Knysna.

Table 2.9 Knysna skills level




2015

Skilled 23.2 0.7 4 071

Semi-skilled 42.5 -0.7 7 454

Low skilled 34.3 -0.1 6 014

Total Knysna 100 -0.2 17 539


Eden District

399

Only formal employment numbers can be used to determine the skills level in the area. In Knysna there were 17 539 formally employed individuals, indicating that 7 249 individuals were informally employed in 2015. The majority of Knysna’s formally employed individuals are semi-skilled (42.5 per cent), compared to 34.3 per cent low skilled and 23.2 per cent skilled. Skilled employees have been increasing positively between 2004 and 2015 by merely 0.7 per cent, while the semi- and low skilled formal employees have been decreasing between 2004 and 2015.

2.5 Oudtshoorn


The primary sector contributed 4.2 per cent towards the GDPR of the Oudtshoorn municipal area, which was similar to the 3.2 per cent in the Eden District in 2015. The secondary sector contributed 28.5 per cent to the GDPR of the municipal area, compared to 22.2 per cent in the Eden District; while the tertiary sector contributed 67.3 per cent to Oudtshoorn compared to 74.6 per cent in the District. This indicates that the secondary sector is stronger in Oudtshoorn than the Eden District. This could be attributed to the strong presence of manufacturing activities in the municipal area. Table 2.10 indicates Oudtshoorn’s GDPR performance per sector.

Table 2.10 Oudtshoorn GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


4.2 216 0.4 4.2 -5.5 -1.1


Manufacturing 17.8 917 4.1 9.4 -5.8 2.3


5.6 287 3.5 5.8 4.3 1.8

Construction 5.1 263 7.0 14.1 5.1 2.6


16.5 849 3.3 4.8 -1.3 3.1


7.8 399 4.3 7.1 0.6 3.0


23.3 1201 7.5 11.5 5.0 5.2


6.9 354 1.1 2.3 -2.6 0.9

General government 12.8 656 1.0 0.4 -0.1 1.5

Total Oudtshoorn 100 5143 3.8 6.4 -0.4 2.8


The sectors that contributed the most to Oudtshoorn’s GDPR in 2015 included:

Manufacturing (17.8 per cent) - contraction during 2004 and 2015 by -4.1 per cent, with positive growth before the recession (9.4 per cent) and contraction during the


400

recession (-5.8 per cent). After the recession growth increased positively again, but at much lower rates (2.3 per cent)).

Wholesale and retail trade, catering and accommodation (16.5 per cent) - the average growth during 2004 and 2015 was 3.3 per cent, with positive growth before the recession (4.8 per cent), and contraction during the recession (-1.3 per cent), and positive growth again after the recession (3.1 per cent).

Finance, insurance, real estate and business services (23.3 per cent) - the average growth during 2004 and 2015 was 7.5 per cent, with positive growth before the recession (11.5 per cent), during the recession (5 per cent) and after the recession (5.2 per cent).

General government (12.8 per cent) -the average growth during 2004 and 2015 was 1 per cent, with positive growth before the recession (0.4 per cent), contraction during the recession (-0.1 per cent) and again positive growth after the recession (1.5 per cent).

Overall between 2004 and 2015, all economic sectors in Oudtshoorn grew positively in terms of GDPR, except the mining and quarrying sector. All the economic sectors were showing positive recovery after the recession (2009 - 2015) except for the agriculture, forestry and fishing sector.


Table 2.11 indicates the trend in employment growth within each economic sector in Oudtshoorn.

Table 2.11 Oudtshoorn employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



8.9 2 409 -2 018 -1 819 -399 200


Manufacturing 13.0 3 499 517 520 -133 130


0.8 211 122 59 5 58

Construction 6.5 1 746 505 381 -127 251


24.1 6 516 1 724 1 298 -98 524


5.2 1 407 658 381 21 256


13.7 3 688 1 148 742 -83 489


14.1 3 798 189 184 -67 72

General government 13.8 3 724 42 -84 11 115

Total Oudtshoorn 100 27 001 2 884 1 662 -871 2 093


Eden District

401

In terms of employment, sectors that contributed the most to Oudtshoorn’s employment in 2015 were:

Wholesale and retail trade, catering and accommodation (24.1 per cent) - the industry showed job creation throughout 2004 - 2015 (1 724 jobs), with 1 298 jobs created before the recession, 98 jobs shed during the recession and positive job creation after the recession, albeit less than half the pre-recession numbers (524 jobs).

Finance, insurance, real estate and business services (13.7 per cent) - the industry showed positive job creation before the recession (742 jobs), job losses during the recession (-83 jobs), and job creation again after the recession (489 jobs).

Community, social and personal services (14.1 per cent) -the industry showed job creation throughout 2004 and 2015 (189 jobs), with 184 jobs created before the recession, 67 jobs shed during the recession and 72 jobs created after the recession.

General government (13.8 per cent) -the industry showed job creation throughout 2004 and 2015 (42 jobs), with 84 job losses before the recession, 11 jobs created during the recession, and 115 jobs created after the recession.

Overall between 2004 and 2015, almost every sector showed job creation except for the primary sectors. All of the economic sectors showed positive job creation after the recession except the mining and quarrying sector. Compared to GDPR, the employment per sector is recovering more or less on par with the GDPR per sector.

2.5.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.12 indicates the skills levels of Oudtshoorn.

Table 2.12 Oudtshoorn skills level




2015

Skilled 28.2 1.9 5 671

Semi-skilled 40.3 -0.5 8 105

Low skilled 31.5 -2.0 6 347

Total Oudtshoorn 100 -0.4 20 123


Only formal employment numbers can be used to determine the skills level in the area. In Oudtshoorn, there were 20 123 formally employed individuals, indicating that 6 878 individuals were informally employed in 2015. The majority of employed


402

individuals in Oudtshoorn are semi-skilled (40.3 per cent), compared to 31.5 per cent low skilled and 28.2 per cent skilled. Skilled formal employees have been growing positively between 2004 and 2015, which could be indicating the semi- and un-skilled employees in Oudtshoorn are up-skilling through either better access to education as well as up-skilling opportunities through employers. There has also been a decrease in semi- and low skilled formal employees.

2.6 Bitou


The primary sector contributed 5.9 per cent to the GDPR of the Bitou municipal area in 2015, compared to 3.2 per cent in the Eden District. The secondary sector contributed 21.9 per cent to the GDPR of the municipal area, compared to 22.2 per cent in the Eden District; whilst the tertiary sector contributed 72.2 per cent to Bitou compared to 74.6 per cent in the District. This indicates that the primary sector is stronger in Bitou than in the Eden District whilst the secondary sector is more or less on par with the Eden District. This indicates a strong presence of manufacturing and possible agro-processing and agricultural activities. Table 2.13 indicates Bitou’s GDPR performance per sector.

Table 2.13 Bitou GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


5.8 176 3.1 7.0 1.6 0.8

Mining and quarrying 0.1 4 3.4 4.5 -0.7 3.5

Manufacturing 8.8 270 3.2 6.4 -12.4 3.6


0.9 29 3.4 7.9 1.1 0.9

Construction 12.2 373 6.6 12.7 4.3 3.0


18.6 566 3.4 5.3 -1.6 3.0


6.8 206 1.7 3.8 -2.4 1.0


26.7 814 2.5 4.0 1.1 1.6


8.7 264 3.7 6.6 0.2 2.4


Total Bitou Municipality

100 3 051 3.4 5.8 -0.1 2.4


The sectors that contributed the most to Bitou’s GDPR in 2015 included:

Construction (12.2 per cent) -the average growth during 2004 and 2015 was 6.6 per cent, with positive growth before the recession (12.7 per cent), during the recession,

Eden District

403

albeit at less than half the pre-recession rate (4.3 per cent) and an even lower positive growth rate (3 per cent) after the recession (2009 - 2015). This indicates that the construction industry may be in decline in Bitou.

Wholesale and retail trade, catering and accommodation (18.6 per cent) - the average growth during 2004 and 2015 was 3.4 per cent, with positive growth before the recession (5.3 per cent), contraction during the recession (-1.6 per cent), and the economy recovering positively (3 per cent) after the recession (2009 - 2015).

Finance, insurance, real estate and business services (26.7 per cent) -the average growth during 2004 and 2015 was 2.5 per cent, with positive growth before the recession (4.0 per cent), during the recession (1.1 per cent) and after the recession (1.6 per cent), but at a lower rate (2009 to 2015). This indicates a robust and resilient financial and business services sector in the Bitou Municipality.

General government (11.4 per cent) - the average growth during 2004 and 2015 was 5.7 per cent, with positive growth before the recession (7.1 per cent), during the recession (5.9 per cent), and after the recession (4.8 per cent) (2009 to 2015). This indicates a robust government sector in Bitou.

Overall between 2004 and 2015, every economic sector in Bitou grew positively in terms of GDPR. Furthermore, all the economic sectors are showing positive recovery after the recession.


Table 2.14 indicates the trend in employment growth within each economic sector in Bitou.

Table 2.14 Bitou employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



7.7 1 531 -374 -492 -172 290


Manufacturing 5.1 1 018 -124 103 -161 -66


0.1 19 8 5 -1 4

Construction 14.2 2 823 798 695 -207 310


23.7 4 713 1 708 1 140 13 555


5.5 1 103 381 314 -26 93


15.3 3 044 835 572 -113 376


19.3 3 848 1 306 736 79 491


Total Bitou 100 19 926 5 372 3 412 -498 2 458



404

In terms of employment, sectors that contributed the most to Bitou’s employment in 2015 were:

Construction (14.2 per cent) - the industry showed positive job creation throughout 2004 and 2015 (798 jobs), as well as before the recession (695 jobs). The area experienced job losses during the recession (-207 jobs), however 310 jobs were created after the recession.

Wholesale and retail trade, catering and accommodation (23.7 per cent) - the industry showed job creation between 2004 and 2015 (1 708 jobs), with 1 140 jobs created before the recession, a limited amount of 13 jobs during the recession, and 555 jobs created after the recession (2009 and 2015). This trend is not on par with the GDPR data in that GDPR is recovering faster than job creation for this sector.

Finance, insurance, real estate and business services (15.3 per cent) - the industry showed job creation between 2004 and 2015 (835 jobs), with 572 jobs created before the recession (2004 - 2008), 113 jobs shed during the recession (2008 and 2009), and 376 jobs again created after the recession (2009 to 2015).

Community, social and personal services (19.3 per cent) - the industry showed job creation between 2004 and 2015 (1 306 jobs), with 736 jobs created before the recession, during the recession (79 jobs) after the recession (491 jobs) (2009 to 2015).

Overall between 2004 and 2015, almost every sector showed job creation except for the agriculture, forestry and fishing sector, mining and quarrying and manufacturing sectors. The latter two sectors were the only sectors that recorded job losses after the recession.

2.6.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.15 indicates the skills levels of Bitou.

Table 2.15 Bitou skills level




2015

Skilled 21.2 2.1 2 906


Low skilled 36.2 1.2 4 968

Total Bitou 100 1.1 13 710


Eden District

405

Only formal employment numbers can be used to determine the skills level in the area. In Bitou, there were 13 710 formally employed individuals, indicating that 6 216 individuals were informally employed in 2015. The majority of Bitou’s formally employed individuals are semi-skilled (42.6 per cent) compared to 36.2 per cent of low skilled, and 21.2 per cent skilled. Skill levels of formal employees have been increasing positively between 2004 and 2015, and skilled employees have increased at the highest rate of 2.1 per cent during the same period. This could be indicating up-skilling in Bitou through either better access to education as well as up-skilling opportunities through employers.

2.7 Hessequa


The primary sector contributed 3 per cent towards the GDPR of the Hessequa municipal area in 2015, the secondary sector 22 per cent, while the tertiary sector contributed 75 per cent. This corresponds broadly to the economic structure of Eden District. Table 2.16 indicates Hessequa’s GDPR performance per sector.

Table 2.16 Hessequa GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.9 93 -8.1 -5.6 -14.0 -8.8


Manufacturing 14.5 466 5.3 10.2 -3.4 3.6


2.0 65 -4.0 -6.2 -4.6 -2.4

Construction 5.5 175 1.6 8.4 -1.8 -2.3


21.3 682 4.1 6.4 -0.4 3.4


13.3 428 5.9 10.0 1.7 3.9


24.0 771 4.5 7.3 2.4 3.0


7.0 226 2.5 6.2 0.5 0.4


Total Hessequa Municipality

100 3 210 3.1 5.6 -0.8 2.1


The sectors that contributed the most to the Hessequa’s GDPR in 2015 included:

Manufacturing (14.5 per cent) - the average growth during 2004 and 2015 was 5.3 per cent, with a positive growth rate before the recession (10.2 per cent), contraction during the recession (-3.4 per cent) and a positive recovery (3.6 per


406

cent) after the recession, albeit at a significantly lower rate than the pre-recession rate.

Wholesale and retail trade, catering and accommodation (21.3 per cent) - the average growth during 2004 and 2015 was 4.1 per cent, with positive growth before the recession (6.4 per cent), contraction during the recession (-0.4 per cent), and positive recovery (3.4 per cent) after the recession (2009 to 2015).

Transport, storage and communication (13.3 per cent) - the average growth during 2004 and 2015 was 5.9 per cent, with positive growth before the recession (10 per cent), during the recession (1.7 per cent) after the recession (3.9 per cent). This trend is indicative of a robust and resilient transport and communications industry in Hessequa.

Finance, insurance, real estate and business services (24 per cent) - the average growth during 2004 and 2015 was 4.5 per cent, with positive growth before the recession (7.3 per cent), during the recession (2.4 per cent) and after the recession (3 per cent).

Overall between 2004 and 2015, most economic sectors in Hessequa grew positively in terms of GDPR, except in the primary sectors and the electricity, gas and water sector. All the economic sectors are showing positive recovery after the recession except for the primary sectors, the construction sector, and the electricity, gas and water sector.


Table 2.17 indicates the trend in employment growth within each economic sector in Hessequa.

Table 2.17 Hessequa employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



4.2 891 -3 477 -2 523 -445 -509


Manufacturing 9.7 2 088 329 381 -125 73


0.2 51 6 6 -7 7

Construction 7.8 1 669 -306 73 -299 -80


33.1 7 084 2 915 2 045 16 854


8.2 1 757 1 056 614 42 400


15.5 3 322 1 586 833 -2 755


12.9 2 759 707 378 11 318


Total Hessequa 100 21 425 3 192 1 955 -769 2 006


Eden District

407

In terms of employment, sectors that contributed the most to Hessequa’s employment in 2015 were:

Manufacturing (9.7 per cent) -the sector created jobs between the 2004 and 2015 period (329 jobs), with 381 jobs created before the recession, 125 jobs shed during the recession and 73 jobs created after the recession (2009 - 2015).

Wholesale and retail trade, catering and accommodation (33.1 per cent) - the industry created jobs between 2004 and 2015 (2 915 jobs), with 2 045 jobs created before the recession, 16 jobs created during the recession, and 854 jobs created after the recession (2009 - 2015). Interestingly job creation after the recession is slower than GDPR growth.

Finance, insurance, real estate and business services (15.5 per cent) - the sector created jobs throughout the 2004 and 2015 period (1 586 jobs), with 833 jobs created before the recession, 2 job losses during the recession and 755 jobs created after the recession (2009 and 2015).

Community, social and personal services (12.9 per cent) - the sector showed job creation between 2004 and 2015 (707 jobs), with 378 jobs created before the recession, 11 jobs created during the recession, and 318 jobs created after the recession (2009 - 2015).

Overall between 2004 and 2015, most of the economic sector showed job creation except for the primary sectors and the construction sector. This trend was also evident after the recession.

2.7.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.18 indicates the skills levels of Hessequa.

Table 2.18 Hessequa skills level




2015

Skilled 26.0 2.8 3 075

Semi-skilled 44.3 -0.6 5 230

Low skilled 29.7 -4.9 3 510

Total Hessequa 100 -1.5 11 815


Only formal employment numbers can be used to determine the skills level in the area. In Hessequa, there were 11 815 formally employed individuals, indicating that


408

9 610 individuals were informally employed in 2015. The majority of Hessequa’s formally employed individuals are semi-skilled (44.3 per cent), compared to 29.7 per cent low skilled and 26 per cent skilled. Semi- and low skilled skills levels have been in decline between 2004 and 2015, with the skilled employees growing at 2.8 per cent during the same period. This could be indicating up skilling by employers or outmigration of workers from Hessequa due to better employment prospects elsewhere.

2.8 Kannaland


The primary sector contributed 2.5 per cent to the GDPR of the Kannaland municipal area in 2015, compared to 3.2 per cent in the Eden District. The secondary sector contributed 23.4 per cent to the GDPR of the municipal area, compared to 22.2 per cent in the Eden District; while the tertiary sector contributed 74.2 per cent to Kannaland compared to 74.6 per cent in the District. This indicates that the secondary sector is slightly stronger in Kannaland than in the Eden District where the tertiary sector contributes the most to GDPR. Table 2.19 indicates Kannaland’s GDPR performance per sector.

Table 2.19 Kannaland GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


2.5 24 -13.2 -6.8 -19.9 -16.4

Mining and quarrying 0.0 0 0,0 0,0 0,0 0,0

Manufacturing 10.8 101 -2.3 -1.6 -7.9 -1.9


5.2 49 1.9 3.0 2.1 1.1

Construction 7.3 68 8.9 18.0 6.8 3.2


19.0 177 4.5 6.7 0.4 3.7


13.3 125 8.8 14.5 4.7 5.6


23.4 219 11.8 19.8 7.8 7.1


8.2 77 1.9 6.1 -0.2 -0.5

General government 10.2 95 -0.1 -1.0 -1.3 0.7

Total Kannaland 100 936 2.6 4.6 -1.3 1.9


The sectors that contributed the most to Kannaland’s GDPR in 2015 included:

Manufacturing (10.8 per cent) - which contracted by 2.3 per cent between 2004 and 2015, this contraction trend occurred before the recession (-1.6 per cent), during the recession (-7.9 per cent), and after the recession (-1.9 per cent). This is indicative of a declining manufacturing sector in Kannaland.

Eden District

409

Wholesale and retail trade, catering and accommodation (19 per cent) - the average growth between 2004 and 2015 was 4.5 per cent, with high positive growth before the recession (6.7 per cent), low growth during the recession (0.4 per cent), and a positive recovery (3.7 per cent) after the recession (2009 to 2015).

Finance, insurance, real estate and business services (23.4 per cent) - the average growth between 2004 and 2015 was 11.8 per cent, with high growth before the recession (19.8 per cent), during the recession (7.8 per cent) and after the recession growth (7.1 per cent). This is indicative of a strong and resilient tertiary sector in Kannaland.

Transport, storage and communication (13.3 per cent) - average growth between 2004 and 2015 was 8.8 per cent, with high positive growth before the recession (14.5 per cent), strong growth during (4.7 per cent) and after (5.6 per cent) the recession.

Overall between 2004 and 2015 every economic sector in Kannaland grew positively in terms of GDPR except the agriculture, forestry and fishing; manufacturing, and general government services sectors. All the economic sectors are showing positive recovery after the recession except for the agriculture, forestry and fishing sector, the manufacturing sector, and the community, social and personal services sector.


Table 2.20 indicates the trend in employment growth within each economic sector in Kannaland.

Table 2.20 Kannaland employment growth per sector


2015

Numberof jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



3.4 243 -2 558 -1 820 -285 -453

Mining and quarrying 0.0 0 0 0 0 0

Manufacturing 6.6 475 -172 -55 -51 -66


0.6 40 17 9 -2 10

Construction 9.6 694 356 182 -27 201


29.7 2 145 1 003 664 26 313


8.5 611 432 228 23 181


15.3 1 103 634 339 10 285


17.2 1243 454 228 21 205

General government 9.2 668 83 25 9 49

Total Kannaland 100 7 222 249 -200 -276 725



410

In terms of employment, sectors that contributed the most to Kannaland’s employment in 2015 were:

Construction (9.6 per cent) - the sector showed job creation between 2004 and 2015 (356 jobs), with 182 jobs created before the recession, 27 jobs shed during the recession and 201 jobs created after the recession.

Wholesale and retail trade, catering and accommodation (29.7 per cent) - the industry showed job creation between 2004 and 2015 (1 003 jobs), with 664 jobs created before the recession, 26 jobs created during the recession, and 313 jobs created after the recession (2009 to 2015).

Finance, insurance, real estate and business services (15.3 per cent) - the industry showed job creation between the 2004 and 2015 period (634 jobs), with 339 created before the recession, 10 jobs created during the recession and 285 jobs created after the recession (2009 - 2015).

Community, social and personal services (17.2 per cent) - the industry showed job creation between 2004 and 2015 (454 jobs), with 228 jobs created before the recession, 21 jobs created during the recession, and 205 jobs created after the recession (2009 to 2015).

Overall between 2004 and 2015, almost every sector showed job creation except for the agriculture, forestry and fishing and manufacturing sectors. These sectors were also the only sectors which still showed job losses after the recession.

2.8.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.21 indicates the skills levels of Kannaland.

Table 2.21 Kannaland skills level




2015

Skilled 24.8 1.8 932

Semi-skilled 44.1 -0.6 1 656

Low skilled 31.1 -8.4 1 166

Total Kannaland 100 -3.6 3 754


Eden District

411

Only formal employment numbers can be used to determine the skills level in the area. In Kannaland, there were 3 754 formally employed individuals, indicating that 3 468 individuals were informally employed in 2015. The majority of the Kannaland’s formally employed individuals are semi-skilled (44.1 per cent), compared to 31.1 per cent low skilled and 24.8 per cent skilled. Skilled formal employees have been increasing positively between 2004 and 2015, while the semi- and low skilled formal employees have been decreasing between 2004 and 2015. This could be indicating up-skilling in Kannaland through either better access to education as well as up-skilling opportunities through employers.


Building plans can provide a picture of the performance of an economy. Growth in the number of building plans passed and completed is an indication of a growing economy – both in that building plans is a response to growth in demand variables, and a stimulant of further growth as an activity in and of itself. It also has implications for spatial development planning within the Eden District region.

Figure 2.1 indicates the total square metres of building plans passed between 2005 and 2015 in the Bitou.

Figure 2.1 Bitou building plans passed, 2005 - 2015


In Bitou, a total of 508 045 square metres of residential buildings have been passed in the last 10 years (2005 to 2015), 22 488 square metres of non-residential buildings (majority in industrial space), and 220 511 square metres of additions and alterations. There were many building plans passed before the recession and building activity has been slowly increasing since 2013.

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sq

uar

e m

etre

s



412

A significant gap between building plans passed and building plans completed would require further investigation as it could indicate any of a number of trends such as land-banking, or a retraction of interest in the area. Figure 2.2 indicates the building plans passed and completed in Bitou between 2004 and 2015.

Figure 2.2 Bitou Municipality building plans passed and completed, 2004 - 2015


Many building plans were passed in Bitou before 2008, with more building plans being completed in 2007 than any other year. Very few building plans were being completed during and after the recession, and even though more building plans were being passed in 2014 and 2015 the number of plans being completed stayed at low levels.

Figure 2.3 indicates the total square metres of building plans passed between 2005 and 2015 in George.

Figure 2.3 George building plans passed, 2005 - 2015


0

200

400

600

800

1 000

1 200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Passed Completed

0

50 000

100 000

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sq

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Eden District

413

In George, a total of 929 118 square metres of residential buildings have been passed in the last 10 years (2005 to 2015), 318 538 square metres of non-residential buildings (majority in industrial space), and 589 344 square metres of additions and alterations. There have been a similar amount of building plans passed for non-residential space and additions/alterations over the last 10 years, with a spike in 2005 and again in 2013. Many residential building plans were passed between 2005 and 2007 and thereafter showed similar trends as the non-residential and additions/alterations building plans passed.

A significant gap between building plans passed and building plans completed would require further investigation as it could indicate any of a number of trends such as land-banking, or a retraction of interest in the area. Figure 2.4 indicates the building plans passed and completed in George between 2004 and 2015.

Figure 2.4 George building plans passed and completed, 2004 - 2015


Many building plans were passed in George before 2008, with more building plans being completed in 2007 than any other year. The number of building plans passed remained steady after the recession and started to increase in 2015, but the number of building plans completed remained low after the recession.

Figure 2.5 indicates the total square metres of building plans passed between 2005 and 2015 in Mossel Bay.

0

500

1 000

1 500

2 000

2 500

3 000

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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414

Figure 2.5 Mossel Bay building plans passed, 2005 - 2015


In Mossel Bay, a total of 1.1 million square metres of residential buildings have been passed in the last 10 years (2005 to 2015), 243 171 square metres of non-residential buildings (majority in industrial space), and 564 721 square metres of additions and alterations. There were many building plans passed before the recession and building activity has been slowly increasing since 2013.

A significant gap between building plans passed and building plans completed would require further investigation as it could indicate any of a number of trends such as land-banking, or a retraction of interest in the area. Figure 2.6 indicates the building plans passed and completed in Mossel Bay between 2004 and 2015.

Figure 2.6 Mossel Bay building plans passed and completed, 2004 - 2015


0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Sq

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0

500

1 000

1 500

2 000

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nu

mb

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Passed Completed

Eden District

415

Many building plans have been passed every year in Mossel Bay with more building plans being completed in 2006 than any other year. Very few building plans were being completed in 2013 and 2014, and even though more building plans were being passed in 2014 and 2015 the number of plans being completed stayed at low levels.

Figure 2.7 indicates the total square metres of building plans passed between 2005 and 2015 in Oudtshoorn.

Figure 2.7 Oudtshoorn building plans passed, 2005 - 2015


In Oudtshoorn, a total of 108 750 square metres of residential buildings have been passed in the last 10 years (2005 to 2015), 44 622 square metres of non-residential buildings (majority in industrial space), and 177 957 square metres of additions and alterations. There has been a similar amount of building plans passed for residential space and additions/alterations over the last 10 years, with a spike in 2008. Many residential building plans were passed between 2006 and 2008 and thereafter showed similar trends as the non-residential and additions/alterations building plans passed.

A significant gap between building plans passed and building plans completed would require further investigation as it could indicate any of a number of trends such as land-banking, or a retraction of interest in the area. Figure 2.8 indicates the building plans passed and completed in Oudtshoorn between 2004 and 2015.

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

90 000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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416

Figure 2.8 Oudtshoorn building plans passed and completed, 2004 - 2015


Many building plans were passed in Oudtshoorn before 2009, with more building plans being completed in 2011 than any other year. The number of building plans passed remained steady after the recession, but the number of building plans completed remained low after the recession and almost non-existent between 2013 and 2015. When more building plans are passed than completed it could indicate that there was a lot of interest in development in the area, but very few building plans were actually completed which could mean a number of different things, such as land banking, or market conditions due to the recession, or a decline in demand in the market between planning and intended construction commencement.


In all the local municipalities within the Eden District, the following sectors contributed the most to GDPR and employment in the District:





Compared to GDPR, the employment per sector is recovering a lot slower than the GDPR per sector in all the local municipalities within the District. The reliance on primary, secondary and tertiary sectors can be a direct reflection on the main sectors found in each local municipal area, with the dominance of the tertiary sector in Mossel Bay similar to the dominance of the secondary sector in Oudtshoorn. In general, the skills levels in all the local municipalities in the District are improving, indicating either better access to education or up-skilling by employers are taking place.

0

200

400

600

800

1 000

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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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Passed Completed

Eden District

417

3

Value chains

3.1 Introduction

The following sub-section focuses on two value chains found in the Eden District Municipality. Based on research and discussions with the Eden District officials the honeybush and film industry value chains will be focused on in MERO 2016. Additional value chains will be added with each subsequent year. The aim of the value chains is to show the movement of goods and services for certain commodities, as well as the risks and opportunities.

3.2 Honeybush value chain

Honeybush, scientifically called Cyclopia, in the Western Cape Province is currently used for the production of herbal tea. The regular consumption of this tea is associated with several long-term and short-term health benefits, as it is a natural source of many antioxidants, including major phenolic compounds. Some of these benefits include strengthening the immune system, reducing inflammation, preventing the development of chronic inflammatory diseases and relieving menopausal symptoms in women. The different value adding activities from its cultivation to its end users is illustrated in Figure 3.1 and further discussed in the sub-sections to follow.


418

Figure 3.1 Honeybush value chain

Source: Adapted from DAFF, 2015

3.2.1 Inputs

Honeybush tea is produced exclusively in the Western Cape and Eastern Cape, along the narrow region along the coast; bounded by the Cederberg Mountains in the North, the Cape Peninsula in the South and Port Elizabeth to the East (SAHTA, 2011). In the Western Cape, Honeybush tea is largely grown in the Langkloof area. In this area over 78 hectares (ha) of land is cultivated for the production of Honeybush tea making it the largest Honeybush producing area in the Province. The Hessequa municipal area is also the location of the Haarlem Honeybush Tea Nursery, one of only two Honeybush nurseries in South Africa. The other nursery (The Heights Tea Estate) is located in the Eastern Cape.

Eden District

419

Table 3.1 Hectares of Honeybush tea produced in the Eden District

Location Hectares (ha)

Bitou 17.43

George 12.74

Hessequa 78.23

Kannaland 0

Knysna 0

Mossel Bay 9.17

Oudtshoorn 0

Total Eden District 117.57

Source: WCDA, 2012

Nationally, the area under cultivation for Honeybush tea production exceeded 200 ha between 2014 and 2015 (DAFF, 2015). Most of this cultivation takes place in the Western Cape, with total land area employed for the cultivation of Honeybush tea approximately 143.75 ha (WCDA, 2012). As illustrated in Table 3.1 above, most of the Provinces’ Honeybush tea is cultivated in the Eden district in, in Hessequa (78.23 ha). This is followed by production in Bitou (17.43 ha), George (12.74 ha) and Mossel Bay (9.17 ha) municipalities.

Although there is significant land utilised for the cultivation of Honeybush Tea in the Province, compared to the National total (200 ha), most of the Honeybush Tea in South Africa, 70 per cent (approximately 30 000 ha), is harvested in the wild, from natural mountainous veld and processed at on-farm processing facilities (DAFF, 2015). As such it is unclear as to how much of this tea is harvested in the wild in the Western Cape. However, areas where it predominantly grows and is harvested in the wild in the Province can be identified as, Tsitsikamma, Langeberg and the Swartberg mountain ranges (DAFF, 2015).

Although there is significant land utilised for the cultivation of Honeybush Tea in the Province compared to the National total (200 ha), most of the Honeybush Tea in South Africa, 70 per cent (approximately 30 000 ha), is harvested in the wild, from natural mountainous veld and processed at on-farm processing facilities (DAFF, 2015). As such it is unclear as to how much of this tea is harvested in the wild in the Western Cape. However, areas where it predominantly grows and is harvested in the wild in the Province can be identified as, Tsitsikamma, Langeberg and the Swartberg mountain ranges (DAFF, 2015).

Three species of Honeybush tea are mainly harvested and used commercially by the industry, namely Cyclopia intermedia (“Bergtee”), Cyclopia genistoides (“Kustee”) and Cyclopa subternata (“Vleitee”). Of these, Cyclopia intermedia contributes the largest market share, but is also almost exclusively harvested from the wild, making Cyclopia subternata and Cyclopia genistoides the main cultivated species (SAHTA, 2011). Therefore, the 143 ha of land employed for the production of Honeybush Tea produces largely Cyclopia subternata and Cyclopia genistoides which as smaller market share. This means that most of the Provinces’ Honeybush with higher market share is derived from the wild, in the above mentioned areas (including Langeberg mountain), where


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it is subject to limited to no monitoring, in terms of agricultural practises, such as overharvesting of the plant without replantation.

The Province has an abundance of labour to supply Honeybush tea production in the area. Labour inputs for Honeybush tea production fluctuate considerably and differ from area to area depending on the harvest and the skills of people. According to DAFF (2015), to establish a honey bush tea plantation between 5 and 10 people are required per hectare for a period of 2 to 3 days; while harvesting requires between 5 and 10 people per hectare per day (DAFF, 2015). Therefore, based on the above, of the 143.75 hectares cultivated in the Western Cape, labour inputs into the Honeybush value chain for the Province are as follows:

During the planation phase between 719 to 1 438 temporal labour is inputted into the production of Honeybush Tea in the Province.

During harvesting 719 to 1 438 labourers are also employed during this stage.

This employment is concentrated in the Eden District, where 117.57 hectares employs between 588 and 1 176 people for each stage. In particular, Honeybush production in the Hessequa area employs between 390 and 782 people, during plantation and with a similar amount of labour inputted during harvesting. Which is predominantly supplied by local families in the areas (DAFF, 2015). For example, cultivated Honeybush tea employs 100 families in the Ericaville, Groendal, Genadendal and Haarlem communities. DAFF estimated that with wild harvesting each person can harvest between 30 and 100 kilograms of Honeybush tea per day (DAFF, 2015).

3.2.2 Processing and outputs

Most harvesting and first level processing occurs on farms within the producing areas, with the exception of one on-farm processor in Riversdale (DAFF, 2015). South Africa produces about 300 tons of Honeybush tea per year and the demand exceeds the supply. This total may be divided into 50 tons packed for local consumption comprising of an approximate value of R1.2 million (20 g = R10.00) and 250 tons for export with an approximate bulk loose tea value of (R25/kg), R3.8 million (DOA, 2015).

This initial level of processing includes the chopping and oxidisation of the green unfermented Honeybush tea into red brown tea. Most on-farm processors utilise tobacco-cutters or equivalent to cut the plant material into small pieces. Recent advances in the industry have included the utilisation of speed-controlled conveyor belts that feeds a three-bladed rotating cutter, which cuts the plant material into fine particles without breaking the structure of the plant (DAFF, 2015). The second- and tertiary level processing and marketing largely occurs in Mossel Bay and Cape Town, in the Western Cape (DAFF, 2015), as illustrated in Table 3.2. It includes steaming; pasteurisation of the tea; sieving and dust extraction. The plant material is “fermented” for approximately 24 hours at a temperature of 85°C, or for 60 hours at 70°C, depending on the species. Stainless steel rotating drum fermenters are used, which in some cases also served as driers. Alternatively, the tea is dried in the sun. Final moisture content after drying is less than 10 per cent (DAFF, 2015).

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Currently, Honeybush tea is produced on a limited commercial basis; consisting of 10 commercial producers nationally who contribute 30 per cent of the annual production. Of these 6 commercial processors are located in the Western Cape Province (DAFF, 2015). Companies involved in the processing of Honeybush tea in the Province are listed in Table 3.2, which also lists the Provinces’ only Honeybush nursery.

Table 3.2 Companies processing Honeybush tea in the Western Cape

Company Location Processes

Afriple Drakenstein Pack Unfermented Honeybush

Agulhas Honeybush Tea Cape Agulhas Fermented Honeybush Tea and Green Honeybush Tea

The Cape Honeybush Tea Company Mossel Bay Process and package

Cape Natural Tea Products Cape Town Processing and Packaging

Coetzee & Coetzee Cape Town Processing and Packaging

Defynne Nursery Cape Town Nursery

Khoisan Tea Cape Town Process and Package


From the Honeybush tea processed in the Province, approximately five brands of packed Honeybush tea and/or blends are distributed nationally in retail outlets by National Brands, namely Unifoods and Trophy Distributors (DAFF, 2015). These companies conduct tertiary level processing which involves the retailing contracting and in-house packaging of Honeybush tea. This level of processing involves the production of instant teas, cool method green tea processing, pharmaceutical extracts, novel product development such as ice teas, cosmetics, liqueurs, chocolates, liquid concentrates, and Honeybush blends with other indigenous plants (DAFF, 2015).

3.2.3 End Users

The Honeybush tea is available at retail level in the form of loose tea and tea bags. Locally the Honeybush tea is distributed to farm stalls and local supermarkets, including Spar and Woolworths which were the first supermarket chains to launch their in-house Honeybush brands (DAFF, 2015). End users of Honeybush tea produced in the Western Cape are mostly international. Most of the commercial crop (1 390.01 kg) is exported (Table 3.3). Multinational and local companies such as Lipton, Freshpak and Five Roses have launched Honeybush under their own brand names. Table 3.3 illustrates the export market of Honeybush tea, including the volume of Honeybush (in kilograms (kg)), tea exported, the source country of these international users as well as the share of local tea supplied to these users.


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Table 3.3 Honeybush tea international market

Country Conventional (kg) Organic (kg) Green Tea (kg) Total Percentage

Germany 1 884 093 157 190 59 335 2 100 618 40%

United Kingdom 566 685 136 804 16 002 719 491 14%

Netherlands 570 095 72 019 37 095 679 209 13%

USA 198 883 167 070 22 802 388 755 7%

Japan 176 047 197 005 8 528 381 580 7%

Belgium 111 600 37 960 2475 152 035 3%

Zimbabwe 115 145 92 18 115 255 2%

Australia 49 915 61 253 252 111420 2%

Sri Lanka 66 834 9 395 0.00 76 229 1%

France 52 047 19 493 18 71 558 1%

India 38 304 23 380 0.00 61 684 1%

Russia 50 058 8 550 594 59 202 1%

Poland 54 000 0 0.00 54 000 1%

Total 234 083 301 1 584.97 3.04 1 390.01 100%

Source: DAFF, 2015

As illustrated in Table 3.3, 40 per cent of exports went to Germany (which is the world’s largest importer of herbal ingredients) during the 2014 marketing season, followed by the UK at 14 per cent and Netherlands at 13 per cent, respectively. Most of the tea is exported in bulk and then repackaged under various brand names (DAFF, 2015). The average producer price of fresh Honeybush tea, between 2014/15, was between R6.00 to R8.00 per kilogram and R40.00 to R50.00 for processed tea (DAFF, 2015). For export purposes it is currently priced at approximately R58 - R76 per export kilogram, and demand considerably outstrips the supply (WWF, Honeybush for World Markets, 2016). This therefore illustrates the value addition of processing activities of Honeybush in the Province and their international marketability.

3.2.4 Risks

The Western Cape Honeybush tea value chain is faced with a number of limitations and risks. Currently, the biggest risk is that wild Honeybush tea reserves are under pressure due to continued unmonitored wild harvesting which in the long-run may result in the loss of these wild reserves, which currently makes up the majority of Honeybush tea harvesting. Further value addition to Honeybush tea in the Province is also limited by the proximity of production areas to factories where the fresh tea is proceeded and packaged. This increases input costs for further value addition of the tea and as such limits growth in of the value chain in the Province. In the Province this limitation was found to be most prevalent to the Honeybush producers in the Langkloof area, who have no near pasteurisation, refining or tertiary value adding facilities in close proximity and as such producers are faced with costs of transporting the tea 600 km to Cape Town for further processing (DAFF, 2015).

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There is competition between small scale and commercial farmers, who incur lower input costs than farmers who cultivate, and suppliers who are able to offer a lower unit price of this wild cultivar has been identified as a threat to the growth of producers who actually cultivate Honeybush tea. There is also a lack of resources, capital and skills to do end product value added marketing because the industry is perceived as too small by funding institutions such as the Innovation Fund and precluded from accessing funds (DAFF, 2015). As such there is limited investment, and financial aid for potential Honeybush producers, which limits entry into the industry locally for a lot of farmers and growth of production and processing outside the already involved companies and farmers.

3.2.5 Opportunities

There are a number of opportunities for growth of the Honeybush value chain. These include the fact that, although Honeybush is exclusively produced in South Africa, it is not listed as a Protected Designation of Product of Origin (PDO) or under Protected Geographic Indication (PGI). The designation of Honeybush under these would give it legal protection against imitation in other countries and have the added benefit of raising product awareness and associated increased demand (DAFF, 2015).

The high international demand for Honeybush tea is a positive sign of the indigenous tea industry’s future prospects. There is potential for further value addition, through retail packaging locally, as more than 90 per cent of Honeybush tea traded internationally from the country is sold in bulk, as opposed to retail packaged (DAFF, 2015). New value added products such as Honeybush green tea, ice tea, cosmetics, neutraceutical products and medicinal extracts for specific medicinal indications, have also been identified as an opportunity, particularly for the existing Asian Pacific market, that has a large healthy drinks market (DAFF, 2015).

Honeybush production in the Province also benefits from low-set up costs and the tea’s suitability (for plantation) on marginalised mountainous and low rainfall land, such as the Langeberg Mountains and the little Karoo. The significance of this being that is opportunity to use this readily available and underutilised land for production of Honeybush tea, which would further add value to it. Additionally, Honeybush tea production has been identified by DAFF as an ideal tool for black economic empowerment for rural population in Honeybush Producing areas as well as having potential to provide entrepreneurial opportunities for pickers in wild reserves (DAFF, 2015).

3.3 Film industry value chain

The film industry is broadly defined as film production, documentary production, television, commercials, stills photography, and contemporary new media platforms such as animation and gaming (Wesgro, 2013). The film industry is a high-risk, globally competitive market and occurs in some form in almost every country (Cuff, 2014). The widespread participation in the industry is due to not only the global demand for entertainment and its commercial value, but because it has been acknowledged by


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numerous governments that it has extensive direct and cumulative social and economic impacts on an area during production. Figure 3.2 indicates the value chain for the film industry.

Figure 3.2 Film industry value chain

Source: Oraka, 2014

3.3.1 Inputs

The wide-ranging segments are inclusive of suppliers, general support services, labour, education and training institutions, government and other organisations, supporting industries (e.g. tourism), and film studios. In most cases these segments can function independently of the film industry, specifically supporting services and industries, government, education and suppliers. The infrastructure used for filmmaking most commonly found at film studios include backlots, stages, workshops, storage, and office space, cast accommodation and other supporting facilities and spaces. Film studios therefore function as a “stage” for film production and filmmaking and in some cases drives the entire project. Additional supportive activities are located within a film studio which serves to provide support to the core film studio activities. These may include catering services, accommodation, retail, testing facilities, etc. Studios such as the Cape Town Film Studios (rated as one of the top 10 studios globally) do not compete with Hollywood studios on the global platform, but rather function as satellite production spaces participating in co-productions. These film studios are theoretically described as “independent” service providers (Finney, 2010).

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One of the key parts of the filmmaking process is deciding on a film location. This forms a part of the development and/or pre-production phase of filmmaking, and comprises of a cost-benefit analysis whereby a number of factors are considered, such as:

Commercially competitive (value for money)

Having an established film industry

Efficient, synergic and inter-related service delivery (pre-production, production and post-production)

A variety of locations and landscapes

Good infrastructure in terms of connectivity and logistics

Government support for the industry

South Africa’s favourable exchange rate, makes it up to 40 per cent cheaper to make a movie than in Europe or the US and up to 20 per cent cheaper than in Australia (Wesgro, 2013). The Western Cape also remains the most preferred location for film shooting in terms of co-production projects from 2010 to 2012. Numerous industry festivals are hosted in Cape Town, Cape Town International Film Festival and Winelands International Film Festival, the Loeries, Shnit Short Film Festival1, the 48-Hour Film project, and the city hosted the semi-finals of the Emmy’s (2012 - 2013) (Wesgro, 2013).

Although South Africa’s animation industry is relatively small, it is significantly developed. According to Paul Meyer, CEO of Luma Animation Studios, the local animation industry has experienced substantial growth in recent years. This has partially been achieved through the growth in the live film and commercials market. Essentially, by attracting major film productions to South Africa, the local film market has contributed to the exposure of foreign markets to the local animation sector and VFX abilities (Wilson, 2013). Importantly, there are South African animators that are internationally renowned for their abilities, not only as being able to successfully produce local films such as Khumba; but through the use of local facilities and production crews by the foreign film industry, the South African film industry in general is increasingly under the global spotlight. Coupled with improvements in connectivity, the decreasing cost of hardware and software, increasing number of animators and quality of work, the local animation industry is growing modestly.

In 2006, an estimated 60 animation companies were operating nationally and in 2014 (Collins, 2006), 120 companies were listed, this showing some relative growth in animated demand. The companies are mostly based in Johannesburg and Cape Town, followed by Tshwane and Durban. This clustering is aligned with nodes dedicated to the general film industry. There is a small conglomeration of companies operating from the East London and Port Elizabeth (BizCommunity, 2014). Some of the key industry players in South Africa’s animation industry include:

1 Now in its eleventh global year, and its fourth in Cape Town, the Shnit International Short film festival continues to grow in size. It involves one festival held simultaneously in many cities and it showcases the art of the short film.


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Triggerfish Studios (Cape Town)

Sea Monster (Cape Town)

Pollen (Johannesburg)

Luma (Johannesburg)

Mike Scott (Plettenburg Bay)

Mind’s Eye Creative (Johannesburg)

Sunrise Animation Studios (Cape Town)

BugBox Animation (Johannesburg)

Shy the Sun (Cape Town)

In comparison to major markets such as China, India, Canada and the USA, South Africa’s animation industry is relatively small. This growth is impeded by current incentives, the non-existence of a working collaborative model, and directed applicable funding. Nevertheless, the local animation industry competes in the global market-place as it is considerably developed with respect to the number of highly skilled individuals, the extent of government support, the growing international acclaim, and the increasing extent of high-quality content being produced by South African animators (Stakeholders, 2014).

The Eden District Independent Film Festival, a first for George, took place in George in the Western Cape, from 30 October to 1 November 2015. The festival, which was organised by the Cape Film Commission, is supported by the National Lotteries Commission, and the City of George which recently signed a Memorandum of Agreement with the Cape Film Commission to assist in developing the film industry in George and the Eden District. The festival is designed to bring local and international films to the region, and through a series of workshops, engage with the local film community on how to generate more film prospects for the region (CFC, 2015). The Plett Food Film Festival is the first event of its kind in South Africa - now in its third year, the festival celebrates cinema, food and wine culture. The festival took place from 11th to 13th July 2016, in the town of Plettenberg Bay. The Eden Independent Film Festival (EIFF) was developed in conjunction with the Eden District and its municipalities, with support from the local film industry. The festival included workshops and screenings, and featured discussions around the development of local and international TV programmes and animation (Callsheet, 2016).

In 2014, the filming industry in the Eden District grew with an increase in the number of enquiries from local and international film and TV producers. These requests range from enquiries relating to the Avengers sequel (which was being filmed in 2014) to the new version of Dracula, many reality TV series, natural history documentaries as well as commercials (GLM, 2014). The film, animation and gaming sub-sectors also has a few successful local studios, for example, to name a few:

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Triggerfish Animation Studios (Dreyersdal, Cape Town)

Sunrise (Tokai, Cape Town)

Strika Entertainment (Woodstock, Cape Town)

Zeropoint Studios (Kalk Bay, Cape Town)

Spier Films (25 Commercial Street, Cape Town)

Oakhurst George Arts Theatre (York Street, George)

TH Films (George)

The Eden District region has seen the establishment of professional film companies. Ntabeni Productions is responsible for regional programming for e-TV and KykNet, but also compiles advertisements, corporate videos and training videos. Actor, producer and director Clyde Berning has set up Ember Films and the iKasi Culture Film Initiative in Plettenberg Bay. The company also writes for film and theatre (EDM, n.d.). One example of support received for the film industry in Eden District is the relatively large “Film and Television Production Rebate scheme” which provides feature films, documentaries, tele-movies and television drama series production support. Projects which are assisted under the scheme are rebated a sum totalling 15 per cent for foreign production in qualifying South African expenditure (QSAPE) or 25 per cent for qualifying South African productions, including official co-productions where the applicant has spent R10 million to attract an optimum number of productions (EDM, n.d.).

3.3.2 Processing and distribution

In 2011, the top ten international film producing countries were India, USA, China, Japan, UK, France, Republic of Korea, Germany, Spain, and Italy; and between 2005 and 2011, these countries collectively accounted for approximately 78 per cent of global film production (UNESCO Institute for Statistics, 2013). Although the film industry is dominated by these major markets, cross-border production and co-production is showing exponential growth. Combined with cheaper production costs, experience and top rate technology, this growth is assisted by co-production treaties, making co-production with countries that are historically less competitive film markets - such as South Africa - financially favourable (Cuff, 2014). Additionally, film markets that previously struggled to access finance for big budget productions are able to access finance from different funding entities other than from their own regions. Table 3.4 indicates the annual direct and indirect GDPR contribution of the film industry in South Africa.


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Table 3.4 Annual GDPR contribution of the film industry (South Africa)

Indicator Amount

Direct earnings towards the GDPR R670 million

Total GDPR contribution (direct and indirect spend) R3.5 billion

FTE jobs 25 175

Number of direct service providers 2 500

Economic multiplier* 2.89

* The economic multiplier shows that for every R1 spent within the industry, another R1.89 was generated within the South African economy.

Source: Deloitte, 2013

The annual direct and indirect GDPR contribution of the South African film industry was approximately R3.5 billion in 2013, but 2014 estimates put the national value of the film industry total at R8 billion (Cuff, 2014). The top exports of cinematographic and television related goods from South Africa in 2012 were parts for radio and TV transmission and receiver equipment (R745 million), television receivers (R707 million) and radio and TV transmitters (R360 million). Exports of television receivers, video monitors, projectors increased by 114 per cent in 2012, while exports of photographic plate, film, not rolls, exposed, paper increased by 110 per cent. The top imports of cinematographic and television related goods to South Africa in 2012 were prepared, unrecorded sound recording media (R4.3 billion), parts for radio, TV transmission, receiver equipment (R3 billion) and radio and TV transmission and receiver equipment (R2.4 billion), television receivers, video monitors and projectors (R2.2 billion). It must be noted that imports of parts for radio, TV transmission and receiver equipment increased by 26 per cent in 2012 (Wesgro, 2013).

The production process is inclusive of pre-production, production and post-production:

Pre-production: The entire process of the filming is planned and prepared. This involves the selection of crew, cast, and location. The construction of sets begins during this phase. Dependent on the definition, pre-production can include the financing and development phases of the filmmaking process. Given the nature of the production process and lack of economies of scale in the animation industry, there are very few opportunities available for firms to reduce production costs without also reducing quality. Some repetitive tasks can be automated with scripts, and animators become more efficient with experience, but in general, cost savings are difficult to achieve. This is why there is much interest in the global industry for the possibility of outsourcing work to developing countries where wage rates are much lower. In Canada’s animation industry, an operational challenge that has emerged is that because of the lack of large firms in some provinces, it is very difficult to have extremely large projects come to a particular province. Most activities take place in Quebec (Montreal), Vancouver (British Columbia) and Ontario (Toronto). This can be a challenge that could be experienced in Eden as well.

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Production: The raw film is shot. Dependent on the type of film and technology applied, this process generally requires the most inputs of labour and finances. The production stage of animation involves three phases: (1) Modelling, which involves forming the shape of an object or character; (2) Layout and animation: In this stage objects are placed in the scene and their movements are created. Lighting is one of the most difficult stages particularly in the 3‐D animation production process; (3) 3‐D Rendering: If 3D technology is adopted, in this final stage, all of the components of the scene are combined to create the final image that will appear on screen. Many features of the scene (lighting, shadows, reflections, depth of field, textures, motion blur, etc.) are manipulated to create the look desired by the animator. Although there is focus on 3-D, rendering is not limited to 3-D only; and (4) Texturing: Writing shaders and painting textures as per the scene requirements.

Post-production: The images and visual and audio effects of the raw material are edited and consolidated into the end-product. Countries part of the co-production treaties transfer information between one another for post-production activities mostly in an electric format. Due to the fact that animation projects are generally massive, hard drives are usually couriered. This is not a favourable option because it may cause delays and other risks. There are studios with access to direct high speed connections which are able to send information to clients who also have access to the same connections. The USA, Kenya, Japan and Germany are just a few countries with well-established broadband infrastructure and some of the world’s highest speed connectivity.

Role-players and activities included here are: construction crew; actors and supporting cast; technical crew and director; film editor; creative crew (make-up, wardrobe, etc.); equipment hire; transport; catering and hospitality; and audio and visual effects technicians. Tertiary services include security, tour operators, freight services, laundry, and so forth. The major centres for film activity in South Africa are the Gauteng and Western Cape Provinces. The Western Cape is the main centre for foreign film production whilst Gauteng services the majority of local television content and the bigger proportion of local film productions. Though there are many small enterprises that participate in the film industry, the local production industry is dominated by 15 companies (which command over 90 per cent of feature films and television production) (Wesgro, 2013). There are approximately 150 active registered production companies which make up the biggest sector of the local industry. The Eden District has a growing film, TV and commercial industry, with local and international producers and filmmakers recognising the region for its talent as a filming hub. Patrick Walton, producer of The Bachelor Finland said, “The best thing about shooting in the Eden District is the proximity of locations. We’re coming back for season two. It’s the best place to be for film. I have never received the kind of support I have received here” (Callsheet, 2016). Knysna has also been used as a venue to shoot Dalene Matthee's books, the recent movie Knysna, and various other adverts.


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The City of Cape Town does not charge for permits or location fees. It should be noted that charges are applicable for traffic officials where partial or full road closures are required, dedicated parking and for 'basecamp' area. Fees are based on the size of the shoot as classified (micro to very large scale). The City has a minimum 48-hour turnaround time (2 working days) however traffic department requires minimum 5 days notice. Other entities have different timescales e.g. SANParks. The City of Cape Town also has an extensive Filming By-Law but this is rather difficult to implement and extremely technical. Ilse van Schalkwyk (Manager: Economic Development) from Knysna Municipality also briefly explained the permitting process, which is grouped and managed as one process with event applications. A positive aspect of the Knysna process is that there is one central contact point for all applications. Officials are then tasked with internal approval processes, thus limiting the burden on the external party to obtain multiple approvals from e.g. traffic, electrical department, etc. All applications are assessed by an evaluation panel, and if all requirements have been complied with the permits are issued immediately (GLM&CFC, 2014).

3.3.3 Outputs/End Users

Marketing and distribution are the final phases and include the product release whereby the end-product is/isn’t marketed to broadcasters and media centres for distribution. The film can be released through a number of media platforms like cinemas, and/or directly to consumer media and/or to online platforms. Distributors traditionally determine whether a film is made (distributors are often approached during the development phase of a film and form important funding bodies – co-investors), and/or marketed and/or distributed (Finney, 2010). The internet and growing online media platforms is changing this model. South Africa has 750 screens available in over 125 cinemas nationwide.

Animation for 3G cell phones may appear in the form of short films, cell phone ‘wallpapers’, ‘mobi sodes’ and ‘mobi promos’. Cinema distribution is limited to commercials and VFX for feature films. Nu Metro and Ster Kinekor cinemas continue to dominate box office revenues in South Africa. Between January 2012 and April 2012, Nu Metro and Ster Kinekor accounted for 74 per cent of the total films distributed in South African cinemas. A similar fraction of animation produced consists of educational content for distribution via DVD or CD, graphics for games via game consoles (Wesgro, 2013).

3.3.4 Risks

The main reasons for lack of commercial competitiveness internationally (film) include the following:

Other than the Afrikaans local film niche market, there is a limited demand for locally developed and produced films. This impacts on capital investment and general industry development.

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The local industry is still predominantly reliant on local government and foreign support funding and production incentives to finance films (this finance is in most cases not sufficient to produce big budget features).

The South African private sector still views local films as too high risk to be attractive investment choices.

Although the South African film industry offers extensive expertise, there are certain segments of the industry that are poor and are slowing the development of the local market. Script writing is the most cited area that needs development2.

Although the industry is relatively small, there is limited support from government bodies such as the DTI and the DAC; regional film commissions such as Gauteng Film Commission (GFC) and Durban Film Commission (DFC) as well as the National Film and Video Foundation (NFVF), Animation South Africa (ASA) and Wesgro Film Division. However, challenges evolve through a lack of overall collaboration amongst these stakeholders and investors, an overall strategic approach, and a comprehensive understanding of the needs of the industry. This is additionally with respect to the national broadcaster (SABC) which does not include significant focus on animation within their approach to local industry content. Consequently, due to the misdirected local support and financial restraints experienced by the industry because of poorly directed funding, the industry is still finding it difficult to evolve.

3.3.5 Opportunities

Manufacturing opportunities include set-building, textile- (costume) related work, as well as potential import-substitution on cinematographic equipment. There are also a number of opportunities in the legal and finances sector to provide specialist services to the film industry, specifically on the legal and financial contracting work on co-production agreements involving a mixture of local and foreign companies, as well as the support of various film funds and the dti incentives.

In the Eden District, businesses can become more “film friendly” and embrace a barter system (goods for exposure) during the early stages of development of the industry locally. Business should not be overhasty and drive up prices too soon (KnysnaNews, 2016). One of the biggest challenges faced by the George Municipality, is the speed and not getting things done fast enough for filmmakers (KnysnaNews, 2016). Local government supports the sector by providing easier and more efficient access to film permits and traffic support.

With regards to co-production, South Africa’s scope is limited. South Africa has co-production agreements with international industry players e.g. Canada and France, but there is a possibility to partner with other animation experts e.g. Japan, India and China. Furthermore, there is a need for infrastructure development that supports co-production. For example, co-production with the UK only works for film and

2 In 2014, Urban-Econ conducted extensive surveys with industry players for a film-related project funded by the NFVF. One of the questions was to indicate what area of skills was the least developed within the local film industry and to provide reasons for this. Script writing was the most cited.


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not television. Limited scope in co-production is a barrier that prevents access to international markets.

In Eden District Municipality, the following opportunities have been identified (GLM&CFC, 2014):

Monthly networking sessions

Establishment of a local film forum

A local (Eden) film festival and workshops

Creation of a local Cape Film Commission office

A database of local industry role-players

Specialised training to persons in the industry (i.e. how to access funding, how to market, etc.)

A mentorship programme (i.e. getting retired or experienced film makers to mentor local talent)

Encourage the implementation of a video referenced database (i.e. where local role-players can introduce their work)

A focused marketing strategy

Conduct a locations audit and guidelines for space usage

Create a local online forum


There is potential for further growth of the Honeybush value chain in the Province due to its international marketability and the Province’s natural advantage as one of two areas that are able to produce the tea. However, most of the Honeybush exported is sourced from wild reserves that are in danger of extinction due to their continued unmonitored harvesting. The lack of monitoring therefore imposes unfair competition to producers that cultivate Honeybush tea, as such current practises are unsustainable and endanger growth of the value chain. South Africa’s favourable exchange rate, makes it up to 40 per cent cheaper to make a movie than in Europe or the US and up to 20 per cent cheaper than in Australia. The film and animation companies are mostly based in Johannesburg and Cape Town, followed by Tshwane and Durban. This clustering is aligned with nodes dedicated to the general film industry. There is a small conglomeration of companies operating from the East London and Port Elizabeth. The Eden Independent Film Festival (EIFF) was developed in conjunction with the Eden District and its municipalities, with support from the local film industry. In 2014 the filming industry in the Eden District grew with an increase in the number of enquiries from local and international film and TV producers.

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4


4.1 Introduction

This chapter looks at municipal infrastructure spending in the Eden District in terms of the Eden Integrated Development Plan (IDP, 2012 - 2017), local municipal IDPs and national and provincial policy directives and key performance areas.


Infrastructure investment is a catalyst for economic and social development. Quality infrastructure that is well managed and maintained, provides major benefits to both households and enterprises through opening up opportunities for the poor and supporting growth in economic output (DBSA 2011). Within the Eden District the following infrastructure projects have been identified as key driver of development.

4.2.1 Integrated Public Transport Plan

With assistance of the province, the George Municipality is rolling out a mobility strategy, making city living accessible to all within the municipality and extended across the district. It will be bus-based public transport that will connect all key service nodes to the CBD. A mix of land uses are promoted along these transport routes and identified as development opportunities. In relation, nodes within the municipality have been identified for urban renewal. Each area has been identified for provisioning for specific development types and special allowances by the municipality. The Integrated Public Transport Plan has been approved. It consists of six phases, the first three have been finalised, while the remaining three should be finalised by the end of 2017. The total capital expenditure budget prior to 1 July 2016 is unknown. From the 1st July 2016 till the 30th June 2017 the capital expenditure is approximately R52 million.


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4.2.2 Youth Café/Youth Business Centre

Land has been identified for the planned Youth Business Centre to be located in Mossel Bay. The centre will provide youth with the support and space to develop business knowledge and growth in knowledge-sharing environment. The centre will be a Wi-Fi hotspot and thus concurrently create a space for the disadvantaged to have access to economic activity. The implementation of the Youth Café will be realised through a joint venture between the Municipality, Petro SA and the Department of Social Development. The completion of the Youth Café is set to be completed in November 2016. The capital expenditure for the Youth Café is R6.5 million.

4.2.3 Used Oil Recycling Initiative

All municipalities within the Eden District have embarked on a strategy to ensure the responsible collection of oil and recycling thereof. The initiatives are in conjunction with ROSE Foundation and NORA-SA. The strategy involves the development of a storage facility. Containers (ENVIRO Centre Facilities) have been placed in all municipalities and are available to households and informal businesses to dispose of the used oils and oil filters. Mossel Bay is identified as the bulking depot where the facility is developed. The used oil recycling initiative started in 2013 and is an on-going project. The total capital expenditure for the used oil recycling initiative is approximately R924 000.

4.2.4 Knysna Broadband Upgrades

Investment into high speed broadband is underway in Knysna town. This roll-out is geared to provide fast and reliable internet to businesses in the area. The speed is being updated to 10 Megabytes. The Knysna Broadband Project is a 10-year project. The project is currently in year 1 and has commenced phase 1, whereby construction of fibre has begun in the Knysna CBD and industrial zone. The capital expenditure for the Knysna Broadband Project is R150 million.

4.2.5 Mossel Bay Poultry Value Chain/Chicken Farming

The Department of Rural Development and Land Reform (DRDLR) identified rural poverty nodes within the Mossel Bay municipal jurisdiction for strategic investment in economic and social infrastructure. The concept proposes an integrated poultry value chain development which would be funded by the DRDLR and implemented by the Agricultural Research Council (ARC). The concept proposes that there will be five components, namely the feed mill, the egg layer/producers, the hatchery, the broiler for rearing and the abattoir and sales outlet. The capital expenditure for the Mossel Bay Poultry Value Chain/Chicken Farming is R6.3 million.

4.2.6 Mossel Bay CBD Upgrades and Revitalisation

The public sector is in the process of collaborating with private property owners to upgrade and rejuvenate the old town centre. The centre is connected to the port and therefore will align with the planned port upgrades. The Mossel Bay CBD has gone

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through various stages of development since the adoption of the five-year IDP in 2012. Planned activities for 2015/16 include further upgrading of pavements in the CBD. The total capital expenditure for the Mossel Bay CBD Upgrades and Revitalisation is approximately R8.1 million.

4.2.7 Blue Economy Manufacturing

The aim of the Blue Economy Manufacturing project is to position the Knysna Industrial Area as a premier investment destination for manufacturing businesses involved in Blue and Green economies, while simultaneously seeking to lower the waste generated by the municipality on an annual basis. The Blue Economy Manufacturing project is a 7-year project beginning in 2015 and finalisation of the project occurring in 2021. The multifaceted nature of the project will necessitate a budget allocation per project objective. The cost of the incentive programme would need to be determined as part of the business case, but it is estimated it would cost approximately R10 million per annum. Feasibility studies are likely to cost approximately R250 000 per study.

4.2.8 Go George

As part of its plan to create an integrated transport system for George, the municipality has undertaken a project to create a scheduled, reliable public transport system. Central to the George Integrated Public Transport Network (GIPTN) initiative is the introduction of an integrated modern bus system. Such a system will comprise local services within the built urban and the surrounding areas of George. It will also introduce a shuttle link with the George Airport, and future inter-town services to better link George with Oudtshoorn, Mossel Bay and Knysna. George Municipality has enlisted the support of the George taxi industry in this regard. The process of formalising the existing taxi industry into an operator company is well underway. George is partnering with the National and Western Cape Departments of Transport, which will be providing the support, required implementing the project through financial assistance and capacity-building over a number of years.

In spite of the many energy saving measures implemented, the purchase of kWh from Eskom has begun to increase, indicating that the electricity sales that have been declining for a number of years should begin to increase due to economic growth. The George Municipality has implemented the first 3 phases of the George Public Transport Network (GIPTN) providing a subsidised public bus service that provides improved access to employment opportunities. A formal public transport system provides a 2.5 to 5 economic multiplier. The national and provincial grant investment in this new municipal service will be R2 billion+ over a twelve-year period. The infrastructure investment and development provides employment opportunities over the project duration, with auxiliary operations contracts providing additional local opportunities, skills development and training and new short, medium and longer term employment opportunities.


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4.3 Eden District Municipality

4.3.1 Overview of municipal capital expenditure by the Eden District Municipality

Given the stated importance of infrastructure development for economic growth and broader development, it is essential to track how municipalities make provision for and prioritise infrastructure investment in their budgets. The Eden District Municipality had no past or projected expenditure on electricity, water, waste water management, municipal roads or housing for the period 2012 - 2013 to 2018 - 2019. There was an insignificant R9 000 spent on waste management compared to a total capital expenditure of R3.6 million in 2012 - 2013. In 2014 - 2015, expenditure on waste management increased to R5.7 million out of a total capital expenditure of R8.8 million – an increase of sixty-five per cent. There are no projections to 2018/19 (Eden District Municipality, 2016/17 MTREF A-Schedules).

4.3.2 Western Cape Government infrastructure spending in the Eden District

The Western Cape Government makes significant investments in infrastructure in the Eden District. According to the 2016 – 2019 WCG budget, the largest share of planned infrastructure expenditure will be on transport and public works projects, followed by human settlements (housing), education, health infrastructure and environmental projects (CapeNature) projects (see Figure 4.1). This provincial infrastructure investment will contribute to developing the economic infrastructure of the Eden District through the investment in roads by the Department of Transport and Public Works, and in social infrastructure, through the investment by the Departments of Education, Health, Human Settlements, and Environmental Affairs and Development Planning.

Figure 4.1 Western Cape Government Forecast infrastructure expenditure 2016/17 to 2018/19


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All Eden District capital funding originates from internally generated funds, which increased from R3 675 000 in 2012/13 to R8 851 000 in 2014/15, and is projected to drop steeply to R791 000 in 2018/19 (see Figure 4.2).

Figure 4.2 Eden District Municipality capital funding by source, 2012 - 2019

4.3.4 Infrastructure status quo

The current status of service delivery infrastructure in the District can be summarised as follows:

Water - The District Municipality completed a feasibility study for the Knysna/Bitou cross border water storage facility. Applications have been submitted to the Department of Water and Sanitation for feasibility studies of the Swartberg and Kamanasie dams. Implementation of the Knysna/Bitou cross border water depends on the B-municipalities to proceed with any identified projects flowing from the feasibility study.

Electricity - The District Municipality wants to reduce electricity demand from Eskom and seeks to achieve this through the generation of alternative energy sources and to adopt energy efficiency measures through its energy savings project. An amount of R5.4 million was made available from the Department of Energy to implement energy saving measures in the Eden District Municipality. The project commenced in January 2015. Planned interventions includes incorporating solar energy generation to supplement the energy drawn from the George municipal grid. The municipal parking bays will be used to generate solar energy and load onto the George grid. The Eden district is commencing with the implementation phase.

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Refuse - The Eden District Municipality is to construct a 200 hectare District Landfill facility in Mossel Bay with a lifetime of approximately fifty years. The construction of the facility started in July 2016. The aim is to complete the project by August 2017. This includes the completion of both a domestic and hazardous cell.

Roads - In addition to construction of new roads, there will also be resealing, gravelling and ongoing maintenance.

4.3.5 Challenges

The Eden district identified the following major constraints:

Bulk Water - Inadequate water conservation and demand management initiatives at municipal level; inadequate ground water resources; inadequate re-use of waste water effluent as a standard practice; ageing water treatment infrastructure; limited funding availability to implement cross border water storage facilities after successful completion of an elaborate feasibility study (Knysna - Bitou cross border project).

Electricity - Inadequate introduction of natural gas processing infrastructure to use gas as a transition fuel; lack of promotion of development of renewable energy plants and associated manufacturing capabilities; Inadequate waste recycling conversion technologies and projects in preparation for the construction of the landfill facility.

Landfill Sites - Financial capacity and collaboration to commence with the implementation phase of the Landfill facility. Long overdue expired dates of landfill facilities in the district. Disasters as a result of no landfill capacity or facilities in municipal areas. B-municipal support for project implementation; consumer readiness and funding availability to decrease public burden on looming municipal refuse tariff increases.

Waste Water Treatment - Ageing infrastructure.

Roads - B-municipalities to update their municipal transport plans.

4.4 Bitou Municipality

4.4.1 Overview of municipal capital expenditure by the Bitou Municipality

Table 4.1 shows that basic services constitute a significant share of total capital expenditure. The proportion of expenditure on electricity significantly increased from 7 per cent to 28 per cent between 2012/13 and 2014/15 before decreasing to 12 per cent during 2018/19. Waste water management expenditure was constant at 27 per cent between 2012/13 and 2013/14 before significantly dropping to 14 per cent and 12 per cent in 2015/16 and rising to 23 per cent in 2018/19. Water dropped from 17 to 11 per cent from 2012/13 to 2015/16 and is projected to increase to 21 per cent in 2018/19.

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Municipal roads, although outweighing all other expenditure in 2012/13 (46 per cent), decreased to 10 per cent in 2013/14, before increasing to a projected 41 per cent in 2016/17. Thereafter, it is projected to decrease to 36 per cent of total capital expenditure in 2017/18, before increasing to 41 per cent in 2018/19. Expenditure on housing increased from 0 per cent in 2012/13 to 28 per cent of total capital expenditure in 2013/14 and dropped to 0 per cent in 2014/15, from where it increases marginally to 3 per cent in 2016/17 and 1 per cent in 2018/19.

Table 4.1 Expenditure as per percentage of the total capital expenditure for Bitou Municipality

Bitou Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 7 8 28 21 12 15 12

Water 17 11 12 11 12 19 21



Municipal Roads 46 10 19 30 41 36 41

Housing 0 28 0 1 3 2 1

Others 3 11 12 14 15 5 3

Total 100 100 100 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM), the municipality had no water services backlogs and sanitation backlogs. There were also no electricity and refuse removal backlogs (Bitou Municipality 2014/15 Annual Report). The 2015/16 reviewed IDP of Bitou municipality, identified the following challenges and priority areas for intervention:

Water – storage capacity, water pressure, water losses, funding for upgrading/ maintenance, climate change, water shortages, and sabotage of infrastructure.

Sanitation – inadequate toilet facilities in informal areas, cleanliness and maintenance of toilet facilities in informal areas, non-payment for services of clearing septic and conservancy tanks, maintenance of the sewer network and sewer pump stations, and upgrading of sewer treatment works.

Electricity – illegal connections, insufficient capacity of Eskom, infrastructure ageing (funding), electricity losses, renewable energy, tariff setting (no control), load management system (new houses), Eskom supply area, purchase points of electricity, and street lighting.

Waste removal – landfill facility reached maximum capacity and the municipality is looking at the possibility of developing a waste transfer station to transport waste to PetroSA. Currently the land that has been identified for the Transfer station still belong to the Provincial government. Also illegal dumping, lack of builder’s rubble and garden waste facility, and environmental process to obtain approval of transfer station.


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Figure 4.4 below shows that Bitou Municipality received most of its capital funding from national government, provincial government and borrowing.

Figure 4.4 Bitou Municipality capital funding by source, 2012 - 2019

4.5 Knysna Municipality

4.5.1 Overview of municipal capital expenditure by the Knysna Municipality

Table 4.2 shows that basic services constitute a significant share of total capital expenditure. Electricity expenditure increased from 18 per cent to 27 per cent between 2012/13 and 2013/14, then declined the following years and it is projected to continue with this trend to 7 per cent in 2018/19. Expenditure on water increased to 29 per cent in 2014/15 and although it is projected to decrease in 2016/17, it is expected to further increase significantly to 63 per cent in 2018/19. Waste water management dropped sharply from 28 to 3 per cent from 2012/13 to 2013/14, but then gradually increases to reach 15 per cent in 2018/19. Expenditure on municipal roads is also expected to fluctuate between 2 - 6 six per cent of total capital expenditure.

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Table 4.2 Expenditure as per percentage of the total capital expenditure for Knysna Municipality

Knysna Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 18 27 19 20 12 13 7

Water 16 17 29 22 19 48 63




Housing 22 9 16 18 33 0 0

Others 10 39 25 17 18 21 8

Total 100 100 100 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no water services backlogs but 4 092 sanitation backlogs. There were also 2 748 electricity and 1 647 refuse removal backlogs (WCG A-Schedules). According to the 2016 municipal survey and 2015/6 reviewed IDP, the Municipality identified the following developments.

Water - The Municipality can only supply 9.9 Ml/day out of river although it has the right to extract 23 Ml/day out of the Knysna River. The current peak demand is approximately 12.7 Ml/day which leaves a deficit of 2.8 Ml/day. The new water scheme needs to be implemented as soon as possible. The Municipality received R20 million to proceed with the upgrading of infrastructure.

Electricity - Since the electrical load growth has generally been low (in some years negative at the Eskom bulk supply points) and there has been a significant investment in upgrading the infrastructure, the system is not under pressure and there is adequate spare capacity to meet the demand for the next 5 years and beyond. Approximately R12 million has been budgeted for upgrading work to commence at the Electro technical Workshop and Eastford Substations in Knysna, the Sedgefield East Substation in Sedgefield and the installation of a Medium Voltage cable between the Main Intake Substation and Cemetery Substation in Knysna.

Sewerage - The Municipality is close to the current capacity of 8.2 Ml per day, and need to investigate various schemes that will be able to supply the Knysna and Sedgefield area over the long term (approximately 30 years) in relation to sewerage treatment. The Sedgefield sewerage works have been upgraded recently to meet the current capacity but this has not created any additional capacity for treating more sewerage due to population growth which is worrisome since Knysna and Sedgefield are tourism nodes and there are peak periods with additional visitors which impacts the demand on the infrastructure throughout the year.


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Refuse - A tender has been approved to upgrade the Waste by Rail Transfer Station in the 2016/17 Capital budget. Work will commence in August 2016. A regional landfill site for green waste has been approved by the Department of Environmental Offices in the Wilderness area.

Roads - There are 226 km of tarred roads within the greater Knysna with over 74 per cent in a poor condition. There is over 70 km of gravel roads.

The municipality identified the following major constraints:

Bulk Water - Knysna Municipality faces numerous challenges in terms of sustainable provision of water which puts significant pressure on the limited bulk raw water infrastructure available. These challenges include intermittent rainfall patterns, ageing infrastructure and limited human resources. The Municipality needs a new bulk scheme which include 500 mm diameter pipe over 7 km and a new storage dam.

Electricity - The Municipality has adequate capacity to deliver bulk electricity services for any current or future residential or commercial developments in the area. Electricity distribution losses remains a problem for the municipality. The bulk meters have been inspected to ensure correct reading and a process of visiting all pre-paid meters is in process.

Landfill Sites - Given the environmental limitations in the creation of landfill sites, a regional waste site is required within Eden to accommodate for future waste. Environmental Authorisation has been received for a new landfill site near PetroSA and is currently under construction. The landfill site became operational in 2016 and has an expected lifespan of approximately 35 years. The Knysna Municipal Council has in the meantime introduced waste reduction, reuse and recycling measures to reduce waste generation and extend airspace in existing and future waste sites.

Waste Water Treatment - Knysna has 7 waste water treatment facilities which all need upgrading to the more stringent license condition. Due to the rapid low cost housing development and ABS projects these facilities are under severe pressure. Knysna needs a long term facility. The current upgrades will only give capacity until 2018. The situation is similar for the Sedgefield area. In the other small towns no housing developments can proceed until the different works have been upgraded.

Roads - A lack of financial resources resulted in the deterioration of road infrastructure. The Municipality has to maintain approximately 70 km of gravel roads within its area in addition to the 170 km tarred road of which 54 per cent is in a poor condition. It is estimated that it would cost R6 million per annum, over a period of 30 years to upgrade the gravel roads, alone, to a permanent surface level. The Pavement Management System will address this backlog through a system of prioritisation for the upgrade and regular maintenance of strategic roads.

Human Settlements - The lack of available land impedes Knysna Municipality to focus on green field projects.

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Figure 4.5 shows that Knysna Municipality received most of its capital funding from national government and internally generated funds. A significant percentage of capital funding for 2016/17 will also come from provincial government.

Figure 4.5 Knysna Municipality capital funding by source, 2012 - 2019

4.6 George Municipality

4.6.1 Overview of municipal capital expenditure by the George Municipality

Although expenditure on electricity declined from fifteen to 6 per cent during 2012/13 and 2013/14, it increased to 14 per cent in 2015/16 and it is expected to further increase to 22 per cent of total capital expenditure in 2018/19. Water expenditure was 26 per cent in 2012/13 before significantly dropping to 2 per cent in 2014/15 and then increase to 25 per cent in 2018/19. Expenditure on waste water management was at 31 per cent in 2012/13, declined to 14 per cent in 2013/14 and then increased to 28 per cent in 2014/15, dropped again to 14 per cent in 2015/16 and then increase to 26 per cent in 2018/19. The proportion of municipal road expenditure to total capital expenditure was highest during 2013/14 (66 per cent) and then drop to 12 per cent in 2018/19.

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Table 4.3 Expenditure as per percentage of the total capital expenditure for George Municipality

George Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 15 6 12 14 9 15 22

Water 26 3 2 7 24 23 25



Municipal Roads 20 66 43 49 32 19 12

Housing 1 1 0 1 1 6 4

Others 8 9 8 13 14 9 7

Total 100 100 100 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no water services backlogs and sanitation backlogs. There were also 4 937 electricity and no refuse removal backlogs (George Municipality 2014/15 Annual Report). According to the 2016 municipal survey and the IDP, the current status of service delivery infrastructure in the municipality can be summarised as follows:

Water - The water is treated according to SANS 241: 2011 at the Old and New George Water Treatment Works (WTW), Wilderness WTW, Uniondale WTW and Haarlem WTW. The water distribution systems consists of 865 km of pipeline (varying from 50 mm to 1 000 mm in diameter), 28 water pump stations, 40 reservoirs and 3 water towers. The municipal reservoir capacity is at 56 Ml and the Water Treatment Works at 50 Ml/d. The following are in the planning stages: raising the Garden Route Dam, extension of waterworks, upgrades (additional 12.5 Ml), planned upgrade (20 Ml/d), telemetry and loggers, and water network rehabilitation.

Electricity - The bulk supply from Eskom and notified maximum demand was upgraded and has sufficient capacity for current consumption and medium term growth. However, DoE grant funding for electrification of formalised areas and to address the bulk supply to Thembalethu to accommodate electrification projects is required. Bridging funds that were used to fast-track electrification projects must be paid back while more funds are required for new electrification projects. The municipality is still waiting for NERSA approval of 2016/17 tariffs. Normal maintenance can only be done if tariffs are approved. Some redundant 66 kV switchgear will be replaced, the new 66/11 kV transformer at George substation will be completed, and the municipality will continue with its replacement program of redundant 11 kV equipment and power lines as well as the low voltage network.

Sewerage - Planned upgrade of Waste Water Treatment Works.

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Refuse - All households (± 55 000, including rural areas) receive a weekly refuse removal service. A new refuse transfer station for Uniondale is being planned, and the municipality will participate in the proposed regional landfill site planned in Mossel Bay by Eden District Municipality.

Roads - Roads are in a very good condition. The main challenges to overcome, which will significantly improve service delivery, are the difficulty in procurement of services and adequate funding. Planned upgrade/resealing of various municipal roads i.e. reseal tar road surface and paving of streets.

The Municipality identified the following major constraints:

Bulk Water - 12 000 additional low cost houses, coupled with a 17 000 housing unit backlog and high growth rate puts pressure on the bulk water supply.

Electricity - The Municipality requires more Department of Energy grant funding for electrification and bulk services. Loss of revenue due to reduction in electricity sales caused by energy efficiency measures and to a lesser extent renewable energy projects. The municipality must become less reliant on the surplus generated on income from the sale of electricity.

Landfill Sites - Too strict requirements for the establishment of a new landfill site and permit requirements for existing landfill site. The astronomical costs to replace the existing landfill site for green waste and builder’s rubble with a compost and builder’s rubble recycling facility.

Waste Water Treatment - 12 000 additional low cost houses, coupled with a 17 000 housing unit backlog and high growth rate puts pressure on the waste water treatment works.

Roads - The Municipality experience the following constraints with regard to roads: getting all stakeholders to understand design standards relating to Universal Accessible Infrastructure and funding. Widening of N2/Thembalethu Bridge required. Rebuilding, resealing, maintenance of roads infrastructure. NMT - required to address universal accessibility.

Storm water - Particularly in low cost housing settlements.

Human Settlements - The lack of sufficient funding for the installation of infrastructure for bulk and link services as well as the lack of suitable land for development purposes are major constraints. The municipality provides ablution facilities in informal settlements on a 1:4 ratio, above the prescribed national norm of 1:5. The vision is to gradually improve this to a ratio of 1:3 and eventually 1:1. The elderly and disabled are already receiving these services on a 1:1 ratio.


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Figure 4.6 shows that national is a significant source of capital funding in the municipality with an increasing reliance on borrowing in the latter years of the period under review.

Figure 4.6 George Municipality capital funding by source, 2012 - 2019

4.7 Hessequa Municipality

4.7.1 Overview of municipal capital expenditure by the Hessequa Municipality

Expenditure on electricity showed an increasing trend with 2015/16 having the highest record of 34 per cent. The projected expenditures for electricity are however significantly lower, ranging from 4 per cent to 8 per cent for the next three years. Water expenditure declined from 20 per cent to 2 per cent between 2012/13 and 2014/15 before increasing again to 10 per cent during 2015/16. The projected expenditure on water shows an increasing trend from 8 per cent to 19 per cent of total capital expenditure between 2016/17 to 2018/19.

Expenditure on waste water management also reflects an increasing trend from 6 per cent to 25 per cent from 2012/13 to 2015/16. It is however expected to drop to 13 per cent, increase to 21 per cent, and eventually declining to 11 per cent from 2016/17 to 2018/19. Waste management expenditure was recorded at 4 per cent to 3 per cent between 2014/15 and 2015/16 and it projected to be 6 per cent and then 3 per cent for 2017/18 and 2018/19. Municipal roads was 49 per cent of total capital expenditure in 2012/13 but however declined to 15 per cent in 2014/15. It is projected to be 68 per cent in 2016/17, drop to 37 per cent and increase again to 48 per cent for 2017/18 and 2018/19 respectively.

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Table 4.4 Expenditure as per percentage of the total capital expenditure for Hessequa Municipality

Hessequa Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 15 20 27 34 4 8 6

Water 20 15 2 10 8 17 19



Municipal Roads 49 25 15 20 68 37 48

Housing 0 0 0 0 0 0 0

Others 11 24 29 7 7 10 12

Total 100 100 100 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had 30 water services backlogs and 981 sanitation backlogs. There were no electricity and refuse removal backlogs (Hessequa Municipality 2014/15 Annual Report). The Hessequa IDP identified the following challenges and priority areas for intervention:

Water

o Investigation into whom the service providers are going to be:

- Firstly for bulk water, and secondly for the internal distribution of

- Water to consumers (Section 78 Transfer Process).

o Investigation into possible new water sources.

o Extension and upgrading to the water treatment capacity.

o Treatment of water to a standard that complies with the SANS 241: 2005 Edition 6.

o Elimination of the backlog in water - especially in the rural areas.

o Update of the Water Master Plan and Water Services Development

o Plan (WSDP) on a continuous basis.

o Draft maintenance plan.

o Maintenance of all water-related infrastructure and assets.

Sewerage

o Elimination of the sanitation backlog in the area - concentrating firstly on the eradication of the bucket system.

o Extension and upgrading to the waste water treatment capacity.

o Treatment of waste water to comply, at all times, with the permit conditions as laid down by the Department of Water Affairs and Forestry.


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o Updating of the Sewer Master Plan on a continuous basis.

o Maintenance of all sewage-related infrastructure and assets.

Roads and Transport

o Maintenance of the road network as described in the Pavement Management Systems.

o Compilation of a road master plan for the area.

o Implement the Integrated Transport Plan.

Storm water

o Complete the storm water master plan.

o Compile storm water management plans for the different catchments in the urban areas.

o The implementing of the findings of the management plan

o Draft maintenance plan.

o Regular maintenance of storm water related infrastructure and assets.

Electricity

o Investigate alternative energy sources

o Explore new methods in generating electricity

o Complete electricity infrastructure master plans

o Draft maintenance plan

o Maintain electricity infrastructure.

Solid Waste

o Implement recommendations proposed in the Integrated Waste Management Plan (completed by Kwezi V3 in 2005).

Housing

o Housing projects in towns, will be done on infill/densification and vacant land i.e. the urban edge. Bulk infrastructure will first be implemented (1st year), and will be followed by construction (2nd – 3rd year).


Figure 4.7 shows that borrowing is a significant source of capital funding in the municipality and that there is a substantial contribution to capital funding by national government in 2016/17.

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Figure 4.7 Hessequa Municipality capital funding by source, 2012 - 2019

4.8 Oudtshoorn Municipality

4.8.1 Overview of municipal capital expenditure by the Oudtshoorn Municipality

Electricity was 4 per cent of total capital expenditure in 2012/13 before significantly increasing to 32 per cent in 2014/15 dropped to 21 per cent in 2015/16, increase to 26 per cent in 2017/18 but declining to 15 per cent in 2018/19. Water increased from 23 per cent to 48 per cent of total capital expenditure between 2012/13 and 2013/14, before declining to 25 per cent in 2015/16. It is however projected to increase from 38 per cent to 61 per cent between 2016/17 and 2018/19. Waste water management has been increasing between 8 per cent to 30 per cent between 2012/13 and 2015/16 and it projected to decline to 7 per cent for 2018/19. Waste management was 1 per cent and 3 per cent for 2014/15 and 2015/16, and is expected to increase to 9 per cent for 2016/17 and then drop to 4 per cent during 2018/19. Municipal roads increase from 15 to 20 per cent from 2012/13 to 2014/15 but then drops to 9 per cent in 2016/17, and remain flat at that level till 2018/19.

Table 4.5 Expenditure as per percentage of the total capital expenditure for Oudtshoorn Municipality

Oudtshoorn Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 4 6 32 21 25 26 15

Water 23 48 34 25 38 46 61




Housing 0 0 0 0 0 0 0

Others 51 12 3 11 8 5 4

Total 100 100 100 100 100 100 100


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According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had 250 water services backlogs but no sanitation backlogs. There were 23 887 refuse removal and no electricity backlogs (Oudtshoorn Municipality 2014/15 Annual Report).


Figure 4.8 shows that the municipality gets almost all its capital funding from National Government.

Figure 4.8 Oudtshoorn Municipality capital funding by source, 2012 - 2019

4.9 Kannaland Municipality

4.9.1 Overview of municipal capital expenditure by the Kannaland Municipality

In 2015/16, electricity was 7 per cent of total capital expenditure and projected to be 29 per cent in 2016/17 and then drops to 17 per cent in 2018/19. In 2015/16, at 65 per cent, water had the largest share of total capital expenditure. This is expected to drop to 35 per cent in 2016/17. Waste water management increase from 8 to 64 per cent from 2015/16 to 2018/19. Municipal roads range from 11 to 19 per cent between 2015/16 to 2018/19.

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Table 4.6 Expenditure as per percentage of the total capital expenditure for Kannaland Municipality

Kannaland Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 7 29 19 17

Water 65 35 38 0

Waste Water Management 8 18 29 64

Waste Management 0 0 0 0

Municipal Roads 11 17 14 19

Housing 0 0 0 0

Others 8 0 0 0

Total 100 100 100 100



According to the 2015 Non-Financial Census of Municipalities (NFCM), the municipality had no water services but 328 sanitation backlogs. There were 240 refuse removal and no electricity backlogs (Kannaland Municipality 2014/15 Annual Report). The Kannaland IDP identified the following challenges and priority areas for intervention:

Water

o Water leaks in old networks and faulty meter readings

o Install and improve domestic and commercial water meters

o Develop Swartberg dam project at an estimated cost of R300 million which will allow for much more stability in local water supply. This will stimulate expansion of existing industrial developments and allowing new housing developments to proceed in line with the pipeline of projects described in the Housing Development Masterplan, which in turn lead to a potential increase in revenue.

Sanitation

o The Ladismith Waste Water Treatment Works (WWTW) is currently overloaded, which is preventing any further housing developments in Ladismith. Incorporate septic tanks & French drains into the sanitation reticulation network.

Refuse

o Rehabilitate 4 landfill sites at an estimated cost of R30.6 million.

o There is the potential of establishing a Recycling Plant at the main landfill site in Ladismith. The recycling plant could also contribute to SMME development and local job creation.


Figure 4.9 shows that the municipality gets almost all its capital funding from National Government with transfers making up more than 50 per cent of capital funding in 2015/16.


452

Figure 4.9 Kannaland Municipality capital funding by source, 2012 - 2019

4.10 Mossel Bay Municipality

4.10.1 Overview of municipal capital expenditure by the Mossel Bay Municipality

Table 4.7 shows that electricity as a percentage of total capital expenditure slightly increased to 19 per cent in 2014/15 and although it decreased to 13 per cent in 2015/16, it is expected to increase again and range between 16 per cent to 19 per cent during the next three periods. Water steadily increased over the years increasing from 7 per cent to 21 per cent in 2012/13 and 2016/17 and then drops to 16 per cent in 2018/19. Waste water management shows an increasing trend from 13 per cent to 24 per cent from 2012/13 to 2017/18. Waste management has the smallest share of total capital expenditure and ranges between 0 per cent to 3 per cent over the entire period. Municipal roads decline from 29 to 12 per cent from 2013/14 to 2018/19.

Table 4.7 Expenditure as per percentage of the total capital expenditure for Mossel Bay Municipality

Mossel Bay Municipality 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 17 19 19 13 20 16 19

Water 7 9 16 11 21 17 16



Municipal Roads 20 29 21 16 18 11 12

Housing 19 8 11 28 4 19 20

Others 22 17 7 12 12 12 13

Total 100 100 100 100 100 100 100


0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

80 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00


Eden District

453


According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no water services but 220 sanitation backlogs. There were 2 400 refuse removal and 5 980 electricity backlogs (Mossel Bay Municipality 2014/15 Annual Report). The Mossel Bay IDP identified the following challenges and priority areas for intervention:

Water

o Enlarge Water Treatment Plant

o Rehabilitate sand filters and inlet pipework

o New network pipe lines as per master plan, connections, water pipes, pipelines, bulk line, pump station

o Water meter replacement programme

o Upgrade network

Sanitation

o New Waste pumps Old sludge pump stations

o Upgrade Pump stations Replace old model pumps with new ones

o Replace Sewer Network

o Replace Septic Tanks with Pump stations

o Enlarge Sewer lines

Refuse

o Ageing fleet which results in high breakdown rate

o Lack of staff especially over high seasons

o Rapid expansion of the town

o Landfill site under Petro SA control – early closure of the site remains problematic as drivers are unable to offload the last round of refuse collection

o NEMA Act 59 of 2008 makes municipalities responsible to embark on waste minimisation initiatives. There is at present a Blue Bag System in place but this need to be improved

o Public buy-in: There is still a large sector of the community who do not view a clean town as being a priority

o Illegal dumping in certain areas

o Entrepreneurs under the Cleaning Project do not cover the whole of the Greater Mossel Bay as yet due to the lack of funding

Transport

o Improve and provide transport infrastructure based on identified needs

o Upgrade and maintain all existing transport infrastructure


454


Figure 4.10 shows that the municipality gets more than half of its capital funding from internally generated funds, with the rest coming mostly from national and provincial government.

Figure 4.10 Mossel Bay Municipality capital funding by source, 2012 - 2019


Infrastructure investment, human capital formation and innovation are essential for the promotion of economic growth within a municipality (OECD, 2009). The extent to which infrastructure investment influences economic growth within the municipalities in the Western Cape is evaluated using the Growth Potential Index (GPI) included in the Growth Potential Study of Towns undertaken by the Department of Environmental Affairs and Development Planning. The index provides an analysis of the economic viability of infrastructure investments (as opposed to political, environmental, social and fiscal viability).

The potential for economic development that comes about from investment in an infrastructure project is among the most important criteria on which the investment decision should be based. The GPIs in Figure 4.11, provides an indication of the municipalities in which infrastructure investment has the greatest potential for being translated into increased production and employment creation. The GPI is evaluated within the context of municipal capital expenditure (both past and projected).

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

200 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00

National Government Provincial Government

District Municipality Other transfers and grants

Public contributions and donations Borrowing

Internally generated funds

Eden District

455



Municipal capital expenditure in Knysna increased by 11.5 per cent on average year on year over the period 2009 – 2016. The municipality also recorded the highest GPI in the Province (a GPI of 100, which is defined as very high growth potential). Municipal infrastructure investment is thus expected to have a substantial impact on the region’s economic performance. Knysna experienced GDP growth of 2 per cent per annum over the period 2010 – 2015 (which was below the District average of 2.6 per cent). Municipal capital expenditure is nevertheless projected to increase by 23.7 per cent per annum over the period 2017 – 2019, and given the municipality’s high growth potential, the increasing municipal capital investment should produce favourable returns with regard to increased production and employment creation and improve economic growth in the Municipality.

George, Mossel Bay and Bitou municipalities recorded a GPI of 88, 87 and 80 respectively (with George and Mossel Bay defined as having very high growth potential and Bitou classified as having high growth potential). Capital expenditure in these three municipalities have been increasing between 2009 – 2016 (at rates of 26.2 per cent per annum on average in Mossel Bay 16.7 per cent in Bitou and 3.8 per cent in George). The potential for these investments to be translated into economic growth is high within these municipalities. Capital expenditure is nevertheless projected to decrease by an average of 7.1 per cent per annum in George, 2.9 per cent in Mossel Bay and 0.4 per cent in Bitou. Given the high growth potential extant within the municipality, increased municipal infrastructure investment is one strategy the municipality should consider in order to enhance GDP growth.

Hessequa recorded a GPI of 51 (which is defined as having medium growth potential). Capital expenditure in the municipality has been increasing at a rate of 15.4 per cent per annum on average over the period 2009 – 2016. This increased in municipal capital investments bode well for economic growth. Municipal capital expenditure is projected to increase by 5.4 per cent per annum over the period 2017 – 2019.

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

Kannaland Hessequa Mossel Bay George Oudtshoorn Bitou Knysna



456

Increased capital investment will add to the existing infrastructure stock and may improve the growth potential in the municipality.

Despite capital expenditure growth of 20.6 per cent per annum in Oudtshoorn and 17.1 per cent in Kannaland over the period 2009 – 2016, Oudtshoorn recorded a low GPI of 26 and Kannaland a very low GPI of 0. This growth nevertheless stems from a relatively small base, and the low GPIs may be as a result of a number of other factors (such as the existing levels of infrastructure, the physical environment and economic trends) extant in the municipality. It is important to note that the GPI measures only the economic viability of infrastructure investments. The GPI of 0 in Kannaland should thus not preclude the municipality from making further capital investments as a number of other (important) considerations such the socioeconomic needs of the municipality need to be taken into account. Furthermore, increased capital investment would add to the existing levels of infrastructure within the municipality and may thus improve the growth potential in the region, and as such, the projected increase in capital expenditure of 17.8 per cent per annum in Oudtshoorn and 10.7 per cent per annum in Kannaland over the period 2017 – 2019 bodes well for future economic performance within these municipalities.

4.12 Conclusion

A review and analysis of the infrastructure spending in the Eden District suggest that both the district and local municipalities prioritised investment and development of basic services infrastructure, in line with core municipal mandates and National imperatives, as articulated in the National Development Plan and other sector strategies. However, there are still services backlogs, capacity and resource constraints. National government is the major source of capital funding in the Eden District, almost exclusively funding all capital infrastructure in the Kannaland and Oudtshoorn municipalities. Almost all municipalities have infrastructure investment and maintenance plans with the key challenge being finding innovative mechanisms to fund infrastructure development in a sluggish economic environment. An over-arching theme cutting across all basic infrastructure and services, is the shortage of skilled technical expertise.

Eden District

457

5


5.1 Introduction

This chapter investigates the impact of recent economic performance on the social conditions of the households within the Eden District. The latest results from Statistics South Africa’s Community Survey 2016 and the 2016 Non-Financial Census of Municipalities are among the key sources of data used in this chapter, but data from Quantec and administrative data from government sector departments are also used in the analysis. The extent of social development within a community can have positive or negative future financial implications for municipalities. For instance, a growing economy can result in more employment creation and higher incomes for households within a municipality as well as improved levels of education, healthcare and access to basic services. In contrast, declining levels of economic activity can lead to increasing unemployment and poverty, lower levels of education, poor health, and low basic service access levels. The most recent socio-economic indicators including the Human Development Index (HDI) and the Gini coefficient are used to demonstrate the current living standards of the communities within the Eden District.

5.2 Human development

The Human Development Index (HDI) is a key measure used by the United Nations to assess the relative level of socio-economic development in countries. It is a measure of peoples' ability to live a long and healthy life, to communicate and participate in the community and to have sufficient means to be able to afford a decent living. The HDI is thus a composite of factors reflecting longevity, economic prosperity and schooling. It is represented by a number between 0 and 1, where 1 is indicative of a high level of human development and 0 represents no human development. Figure 5.1 reports a measured increase in the HDI levels for the Eden District, from 0.68 in 2011 to 0.71 in


458

2014. The District’s HDI nevertheless fell to 0.7 in 2015. The Eden District consistently displays the highest level of human development among the District Municipalities in the Province, yet remained below the provincial average of 0.73 in 2015.

Figure 5.1 Eden District Human Development Index 2011 - 2015


Human development in the Eden District declined slightly between 2014 and 2015 as a result of decreases recorded for Kannaland, Hessequa, George, Oudtshoorn and Bitou. As shown in Figure 5.2, no significant changes have been observed in Knysna, while Mossel Bay was the only municipal area in the District to experience an increase in HDI between 2014 and 2015. Various social indicators related to human development in the Eden District are discussed below as follows: population, households, indigent households, household income, income inequality, poverty, access to basic services, education levels and health matters at respective municipalities within the District.

Figure 5.2 Human Development Index across municipalities in the Eden District 2011 - 2015


0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

0.66

0.67

0.68

0.69

0.70

0.71

2011 2012 2013 2014 2015

HDI GDPR Growth

0.54

0.56

0.58

0.60

0.62

0.64

0.66

0.68

0.70

0.72

0.74


2011 2012 2013 2014 2015

Eden District

459


The standard of living among communities in municipalities within the Eden District can be estimated by analysing economic performance and population data over a given period of time. An improvement in the standard of living among communities can be attained when economic growth is faster/higher than population growth. GDPR per capita, which is calculated by dividing the total value of economic activity within a municipality by the total population, is the indicator used to estimate the average annual incomes of households within a specific area.

The total population within the Eden District increased significantly between 2011 and 2016. This increase was concentrated within George. Figure 5.3 shows that George’s population increased by 14 565 inhabitants between 2011 and 2016, which was the largest increase in the District. Bitou, Knysna and Mossel Bay also experienced relatively large increases in its population, with the populations in the respective municipalities increasing by 9 995, 5 176 and 4 705 inhabitants. These were among the fastest growing municipalities in the District in terms of GDPR performance, and consequently experienced the largest net increase in employment.

The increase in the population of these municipalities may thus have come as a result of migration due to the seemingly more appealing employment prospects within these municipalities. Hessequa and Oudtshoorn experienced relatively slower population growth, with the populations in these municipal areas increasing by 1 595 and 1 576 inhabitants respectively. Kannaland, who experienced the smallest increase in net employment and was among the municipalities with the slowest GDPR growth over the period 2004 - 2015 in the District, was the only municipality in the District to experience a reduction in its population.

Figure 5.3 Population trends in the Eden District


Kannaland Hessequa Mossel Bay GeorgeOudtshoor

nBitou Knysna

Census 2011 24 767 52 642 89 430 193 672 95 933 49 162 68 659

Community Survey 2016 24 168 54 237 94 135 208 237 97 509 59 157 73 835

0

50 000

100 000

150 000

200 000

250 000

Po

pu

lati

on


460

Projections by the Department of Social Development indicate that population is set to continue expanding over the next five years. Figure 5.4 shows that Bitou’s population is projected to grow faster than any other municipalities in the District between 2015 and 2020, with expected growth of 1.8 per cent per annum. The populations in Mossel Bay, George and Knysna are projected to grow by 1.37 per cent, 1.21 per cent and 1.07 per cent respectively. Hessequa and Kannaland are expected to grow at slightly slower rates of 0.71 per cent and 0.32 per cent respectively. The population in Oudtshoorn is expected to remain relatively unchanged, decreasing by 0.04 per cent per annum.

Figure 5.4 Eden District population projections, 2015 - 2020

Source: Department of Social Development, 2015

The number of households per municipality within the Eden has also increased between 2011 and 2016 as shown in Table 5.1 below. It can be seen that 9.8 per cent of households in the province live in the Eden District in 2016, which is slightly lower than what it was in 2011, indicating the household growth might be relatively slower in the Eden District compared to the other Districts.

Table 5.1 Number of households per municipality in the Eden District

Eden District Census


2016

Kannaland 6 212 6 333

Hessequa 15 873 17 345

Mossel Bay 28 025 31 766

George 53 551 62 722

Oudtshoorn 21 910 23 362

Bitou 16 645 21 914

Knysna 21 893 25 866

Eden District 164 110 189 309





2015 25 094 54 351 95 222 204 383 95 945 53 387 72 169

2016 25 176 54 761 96 615 206 999 95 926 54 413 73 002

2017 25 258 55 164 97 981 209 581 95 899 55 425 73 815

2018 25 340 55 559 99 319 212 120 95 859 56 422 74 606

2019 25 420 55 945 100 626 214 613 95 807 57 404 75 372

2020 25 500 56 322 101 903 217 057 95 741 58 369 76 113

0

50 000

100 000

150 000

200 000

250 000

Eden District

461

The trends above are apparent when analysing the indigent populations within each respective municipality. Bitou identified 3 843 indigent households in 2015 (which is a reduction from the 3 939 households which had been identified in 2014). George experienced a substantial decrease as the number of indigent households reduced from 16 365 in 2014 to 10 245 in 2015. The number of indigent households in Hessequa decreased from 5 387 in 2014 to 4 943 in 2015, while the number of indigents in Oudtshoorn decreased from 5 709 to 5 395 over the same period. Kannaland identified 1 880 indigent households (which is slightly larger than what had been recorded in 2014).

Knysna and Mossel Bay (two of the largest municipalities in the District as measured by contribution to overall GDPR) recorded substantial increases in the number of indigent households residing within its borders. The number of indigent households in Mossel Bay increased from 6 463 to 7 480 from 2014 to 2015, while the number of indigent households in Knysna increased from 1 720 to 10 436 over the same period. Given the relatively favourable economic and employment indicators for Knysna and Mossel Bay, it appears as though indigent households form the other municipalities may have moved to Knysna and Mossel Bay in search of employment opportunities.

Table 5.2 Indigent households in the Eden District, 2015

Eden District 2014 2015 % change

Kannaland 1 774 1 880 6

Hessequa 5 387 4 943 -8

Mossel Bay 6 463 7 480 16

George 16 365 10 245 -37

Oudtshoorn 5 709 5 395 -6

Bitou 3 939 3 843 -2

Knysna 1 720 10 436 507

Source: Stats SA Non-Financial Census of Municipalities


The annual household income for municipalities within the Eden District is presented in Table 5.3 and this shows proportion of people that fall within low, middle and high income brackets. From Table 5.3 it can be seen that the majority of households in the Eden District (54.7 per cent) fall within the low income brackets, with only 7.4 per cent falling within the high income bracket.


462

Table 5.3 Annual household income for Eden District municipalities, 2016 (%)

Income Eden District Kannaland Hessequa Mossel Bay George Oudtshoorn Bitou Knysna

No income 13.4 8.7 7.9 18.0 12.5 9.0 17.7 16.3

Low Income

R1 - R6 327 2.8 2.1 1.5 2.9 2.6 2.3 4.5 3.3

R6 328 - R12 653 4.4 4.1 3.0 4.2 4.4 4.9 5.7 4.6

R12 654 - R25 306 14.3 21.1 14.2 12.6 13.1 16.1 16.3 14.0

R25 307 - R50 613 19.8 27.8 22.9 15.1 19.4 23.5 19.4 18.9

R50 614 - R101 225 16.9 17.4 21.5 15.6 17.3 18.6 14.0 14.6

Middle Income

R101 226 - R202 450 12.0 9.2 14.8 13.1 12.6 11.1 9.1 11.1

R202 451 - R404 901 9.0 6.5 9.2 10.5 9.7 8.4 6.5 8.5

R404 902 - R809 802 5.1 2.1 3.4 5.2 6.0 4.6 4.3 5.9

High Income

R809 203 - R1 619 604 1.5 0.7 1.0 1.8 1.7 0.8 1.6 1.7

R1 619 605 - R3 239 208 0.5 0.2 0.3 0.6 0.5 0.3 0.4 0.6

R3 239 207 or more 0.3 0.2 0.2 0.4 0.3 0.2 0.5 0.5

Source: Quantec/Urban-Econ calculations, 2016)

Approximately half the households in Hessequa earn middle and high income (50.4 per cent). Kannaland and Bitou have the largest proportion of low-income earners in the District (63.8 per cent and 63.6 per cent respectively), whereas Knysna has the highest proportion of high-income earners in the District (8.7 per cent) followed by George (8.5 per cent) and Mossel Bay (8.1 per cent). Bitou has the lowest proportion of middle-income earners, which points to high levels of income inequality in the municipality. There exists scope for human development through more equitable income distribution in the Eden District.

Table 5.4 shows that the combined spending on services and non-durable goods comprises over 70 per cent of total expenditure across all municipalities in the Eden District. Compared to the other municipalities in the District, households in Hessequa, George and Oudtshoorn spend the most on durable goods relative to other categories of goods, whereas Mossel Bay and Bitou spend the most on services relative to other categories of goods.

Table 5.4 Eden District expenditure on Goods and services, 2016

Goods and services

Eden District Kannaland Hessequa Mossel Bay George Oudtshoorn Bitou Knysna

Rands millions

2016 % of total

Rands millions

2016 % of total

Rands millions

2016 % of total

Rands millions

2016 % of total

Rands millions

2016 % of total

Rands millions

2016 % of total

Rands millions

2016 % of total

Rands millions

2016 % of total

Durable goods

2 285.91 11.8 78.47 11.8 89.60 12.3 675.29 10.8 631.79 12.8 259.23 12.2 238.49 11.8 313.04 11.8

Semi-durable goods

1 792.33 9.3 76.33 11.5 61.39 8.4 523.82 8.4 481.53 9.8 241.96 11.4 169.05 8.4 238.25 9.0

Non-durable goods

5 851.82 30.3 203.85 30.6 226.98 31.1 1 832.66 29.4 1 511.71 30.7 712.78 33.5 577.77 28.6 786.07 29.7

Services 9 412.82 48.7 307.66 46.2 352.98 48.3 3 192.91 51.3 2 301.94 46.7 913.25 42.9 1 035.79 51.2 1 308.28 49.5

Total 19 342.89 100 666.32 100 730.96 100 6 224.68 100 4 926.97 100 2 127.21 100 2 021.11 100 2 645.64 100


Eden District

463

5.5 Income inequality

In this Section the most recent data on the Gini coefficients for municipalities within the Eden District are analysed. The Gini-coefficient measures the levels of income inequality among households within a community. The Coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation's residents, varying between 0, which represents complete equality and 1, which represents complete inequality. In Figure 5.5 it can be seen that income inequality remains high in the Eden District, with Bitou Municipality recording the highest levels of inequality.

Although inequality levels are comparatively lower in Kannaland, Hessequa and Mossel Bay, the trend is upward between 2013 and 2015. The latest Gini Coefficients of Eden District Municipalities are consistent with the annual income analysis done in Section 5.4 above as they show that inequality levels are highest in Bitou and Knysna, which were shown to have low proportions of middle-income earners and a disproportionately large proportion of low-income earners.

Figure 5.5 Gini coefficients for municipalities in the Eden District, 2013 - 2015


Only Oudtshoorn and Bitou showed an improvement in the levels of income inequality between 2013 and 2015, while income inequality in George and Knysna remains unchanged. The level of income inequality in the District overall indicates that not everyone is enjoying the fruits of economic growth in the respective municipalities. Human development tends to be weak in poor low income earning communities.

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70


2013 2014 2015


464

5.6 Poverty

The extent of poverty within the municipalities in the Eden District is analysed below.

Table 5.5 Poverty headcount and poverty intensity at Eden District municipalities 2011 and 2016 (%)

Poverty headcount Poverty Intensity

Municipality 2011 2016 2011 2016

Kannaland 2.5 1.2 38.5 36.3

Hessequa 1.5 1.2 39.4 39.6

Mossel Bay 3.2 2.1 43.5 43.0

George 3.3 1.5 42.6 40.4

Oudtshoorn 3.9 2.2 41.2 43.2

Bitou 6.3 4.2 41.8 37.9

Knysna 6.2 3.3 42.9 40.2

Eden District 3.9 2.2 42.2 40.5

Western Cape 3.6 2.7 42.6 40.1


Table 5.5 shows the poverty headcount ratio, which is the percentage of population that is below the poverty line. It can be seen that the poverty headcount for the province as a whole has decreased by 0.9 percentage points between 2011 and 2016 while that of the Eden District has decreased by 1.7 percentage points. In terms of municipalities within the Eden District, Bitou and Knysna experienced the largest decrease in the poverty headcount (2.1 and 2.9 percentage points respectively) between 2011 and 2016; the poverty headcount in these municipalities nevertheless remain the highest in the District.

Hessequa managed to attain only a marginal decrease of 0.3 percentage points in its poverty headcount, but nevertheless, along with Kannaland (whose poverty headcount decreased by 1.2 percentage points), reports the lowest poverty headcount in the District (at 1.2 per cent). The trend in Oudtshoorn (the second largest municipality by population size) mirrored that of the District overall, recording a decrease of 1.7 percentage points in its poverty headcount from 3.9 per cent to 2.2 per cent over the period under review. George reported a noteworthy decrease of 1.8 percentage points and its poverty headcount remains below the District and Provincial averages.

One of the undesirable features of the headcount ratio is that it simply counts all the people below a poverty line, in a given population and considers them equally poor and thereby ignores the depth of poverty; if the poor become poorer, the headcount index does not change. The intensity of poverty is measured by calculating the Poverty Gap Index, which is the average poverty gap in the population as a proportion of the poverty line. The Poverty Gap Index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line.

Eden District

465

The Poverty Gap Index is a percentage between 0 per cent and 100 per cent. Individuals whose income is above the poverty line have a gap of zero while individuals whose income is below the poverty line would have a gap ranging from 1 per cent to 100 per cent (with a theoretical value of 100 per cent implying that the individual earns zero income). Analogously, an overall value of zero implies that no one in the population is below the poverty line, while an overall value of 100 per cent implies that everyone in the population earns zero income. A higher poverty gap index thus means that poverty is more severe.

Results from Statistics South Africa’s Community Survey of 2016, shows that the intensity of poverty in the Western Cape declined to 40.1 per cent in 2016 from 42.6 per cent in 2011. This nevertheless remains indicative of a substantial number of poor people in the Western Cape whose income is significantly below the poverty line. The recent, albeit low, rate of economic growth in the Western Cape has resulted in a positive but very small change in the intensity of poverty among households in the Province. The Eden District economy is among the fastest growing districts in the Western Cape, growing by 3.5 per cent per annum over the past decade. The relatively favourable economic growth rate in the Eden District has had an encouraging impact on poverty as shown in Table 5.5 where the intensity of poverty decreased from 42.2 per cent in 2011 to 40.5 per cent in 2016.

From Table 5.5, the following observations are made regarding municipal specific poverty intensity levels in 2016: Oudtshoorn and Hessequa were the only municipalities to experience an increase in poverty intensity. The significant economic growth in Bitou (which attained a GDPR growth rate of 2.4 per cent per annum over the period 2010 - 2015) was complemented by a substantial decrease in poverty intensity (a decrease of 3.9 percentage points, the leading decrease in the district).

Mossel Bay’s economy grew by 2.4 per cent per annum in the post recessionary period 2010 - 2015 but this growth has not reached the poor in a substantial manner as the poverty intensity in the municipality decreased by only 0.5 per cent. George Municipality attained a GDPR growth rate of 2.9 per cent over the period 2010 - 2015 (which was above the District average of 2.6 per cent). This economic growth in George has filtered down to the poorer population as poverty intensity in the municipality is now below the District average (as compared to 2011 when poverty intensity in George was more severe than the overall District). Poverty intensity in Kannaland is relatively less severe than the level of poverty intensity in the District overall.


The extent of human development within a municipality is to a large extent influenced by access to housing as well as basic services such as water, electricity, sanitation and refuse removal, with high access levels implying better human development and vice versa. Table 5.6 shows recent statistics relating to the provision of housing within the Eden District.


466

Table 5.6 Dwelling type per municipality within the Eden District, 2016 (%)

Dwelling per type


2011 2016 2011 2016 2011 2016 2011 2016 2011 2016 2011 2016 2011 2016 2011 2016


75.8 75.2 94.9 94.9 90.0 89.9 73.6 73.2 75.9 75.4 78.1 77.5 67.4 66.3 65.9 65.0


0.7 0.6 0.4 0.4 0.8 0.7 0.6 0.6 0.6 0.5 0.7 0.6 1.1 1.1 0.6 0.5


2.4 2.3 0.7 0.6 1.7 1.6 2.8 2.7 2.7 2.7 2.1 2.1 1.6 1.5 2.9 2.8


3.6 3.7 0.5 0.5 0.7 0.7 7.0 7.0 2.7 2.7 6.0 6.5 1.3 1.2 3.7 3.7

House/flat/room in backyard

1.5 1.5 0.4 0.3 1.0 1.0 1.2 1.2 2.1 2.0 1.7 1.7 0.8 0.7 1.5 1.5

Informal dwelling/ shack in backyard

5.5 6.0 1.1 1.1 2.5 2.6 4.9 5.4 6.9 7.4 4.5 4.6 8.3 9.1 5.7 6.2

Informal dwelling/ shack NOT in backyard, e.g. in an informal/ squatter settlement

8.6 8.9 1.2 1.4 2.1 2.2 7.2 7.4 7.5 7.6 5.5 5.6 16.3 16.9 17.8 18.3


0.7 0.7 0.1 0.1 0.4 0.4 1.4 1.4 0.7 0.7 0.5 0.5 0.6 0.6 0.5 0.5

Other/unspecified/ N/A

1.2 1.2 0.7 0.7 0.8 0.8 1.2 1.2 1.0 1.0 0.9 0.9 2.7 2.6 1.5 1.4

Total 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100


Informal settlements are an indication of poor levels of human development. Table 5.6 is indicative of insufficient progress having been made regarding the eradication of informal dwellings in the Eden District, as the proportion of the population residing in these structures increased by 0.8 percentage points since 2011. The proportion of household who reside in informal dwellings in Bitou increased by 1.4 percentage points (the largest increase relative to the other municipalities in the District). More than a quarter of the households in Bitou reside in an informal dwelling. George, Mossel Bay and Knysna are the three largest municipalities in terms of number of households. George and Mossel Bay experienced a 0.7 percentage point increase in the proportion of households who reside in informal dwellings, while Knysna experienced a 1.0 percentage point increase in the proportion of household who reside in informal dwellings. This growth is particularly troublesome in larger municipalities such as these.

A relatively small percentage of households in Hessequa, Kannaland and Oudtshoorn reside in informal dwellings. These municipalities also experienced relatively low growth in the proportion of its households inhabiting these dwellings. Favourable economic performance can provide households with necessary income required to afford decent living conditions and therefore reduce or eliminate the squatter settlements. Favourable economic performance may however induce immigration into the municipality which may add to the population of households residing in informal dwellings. Human settlements need to be provided with basic services such as water,

Eden District

467

electricity, sanitation and refuse removal in order for households to develop. Table 5.7 provides recent data on basic service access levels within the Eden District as reported by Statistics South Africa in the latest non-financial census of municipalities.

Table 5.7 Domestic and non-domestic consumers receiving basic services within the Eden District



change 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change

Kannaland 5 790 5 970 3.1 5 060 5 060 0.0 5 680 5 680 0.0 5 000 5 572 11.4

Hessequa 11 825 13 748 16.3 14 119 14 557 3.1 13 327 15 165 13.8 14 601 15 873 8.7

Mossel Bay 35 604 36 798 3.4 31 085 31 291 0.7 34 254 36 862 7.6 31 389 32 642 4.0

George 34 731 35 036 0.9 43 099 44 920 4.2 34 731 35 036 0.9 43 000 53 200 23.7

Oudtshoorn 15 477 19 093 23.4 17 400 17 461 0.4 15 477 15 969 3.2 14 474 17 461 20.6

Bitou 14 800 15 491 4.7 14 230 15 034 5.7 14 614 14 959 2.4 16 655 17 427 4.6

Knysna 20 510 21 923 6.9 20 231 20 381 0.7 22 829 24 729 8.3 14 460 14 724 1.8


Table 5.7 shows that access levels for water, electricity, sanitation and refuse removal increased between 2014 and 2015 for most of the municipalities in the Eden District. This implies an improvement in the living conditions for households, which carry positive implications for human and economic development in the region. The levels of access to electricity and sanitation in Kannaland remained unchanged. Access to electricity and sanitation in Kannaland in 2014 was at levels below the District average. Knysna experienced the smallest improvement in access to refuse relative to the other municipalities in the District. Knysna nevertheless displayed the highest level of access to refuse relative to the other municipalities in the District in 2014.

George experienced the smallest improvement in access to water relative to the other municipalities in the District. Access to water in George was below the Provincial and District average in 2014. Access to electricity grew the slowest across the District. The District experienced relatively low access to electricity in 2014 as compared to the Provincial average. In absolute terms, access water showed the least improvement in the District. The District experienced below average levels of access to water as compared the Province overall. It is essential that access to electricity and water increase at a rate commensurate with growth in the population such that improvements in human development may be sustained and economic growth promoted.




change 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change

Kannaland 5 790 5 970 3.1 5 060 5 060 0.0 5 680 5 680 0.0 5 000 5 572 11.4

Hessequa 11 825 13 748 16.3 14 119 14 557 3.1 13 327 15 165 13.8 14 601 15 873 8.7

Mossel Bay 35 604 36 798 3.4 31 085 31 291 0.7 34 254 36 862 7.6 31 389 32 642 4.0

George 34 731 35 036 0.9 43 099 44 920 4.2 34 731 35 036 0.9 43 000 53 200 23.7

Oudtshoorn 15 477 19 093 23.4 17 400 17 461 0.4 15 477 15 969 3.2 14 474 17 461 20.6

Bitou 14 800 15 491 4.7 14 230 15 034 5.7 14 614 14 959 2.4 16 655 17 427 4.6

Knysna 20 510 21 923 6.9 20 231 20 381 0.7 22 829 24 729 8.3 14 460 14 724 1.8



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5.8 Education

Education plays a key role in the development of an individual as well as a community, and therefore a community with a high number of educated persons is likely to be more developed and more prosperous than one with less educated individuals. Higher levels of education generally lead to higher paying jobs and vice versa. South Africa has a large supply of unskilled labour, but also a large demand for skilled labour, thus resulting in high levels of unemployment amongst unskilled individuals. Table 5.9 shows recent estimations of education levels of persons living within municipalities in the Eden District.

Table 5.9 Education levels of households in the Eden District, 2016


Municipality

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

Education Level

(Number) 2016

% of the

total

No schooling

10 814 2.5 710 4.4 1 325 3.4 1 472 2.1 3 794 2.6 1 854 2.9 560 1.3 1 100 2.1

Some primary

53 105 12.4 3 344 20.8 6 264 15.9 7 288 10.3 16 272 11.3 10 053 15.7 4 236 9.9 5 650 10.8

Complete primary

25 100 5.8 1 430 8.9 2 949 7.5 3 369 4.8 7 364 5.1 5 473 8.6 2 148 5.0 2 367 4.5

Some secondary

158 837 37.0 6 491 40.5 14 597 37.1 23 427 33.2 52 253 36.3 24 599 38.5 17 890 41.8 19 580 37.3

Grade 12/ Std 10

132 679 30.9 3 383 21.1 10 149 25.8 25 587 36.3 46 274 32.1 17 706 27.7 12 765 29.8 16 814 32.0

Higher 48 603 11.3 682 4.3 4 021 10.2 9 375 13.3 18 164 12.6 4 214 6.6 5 177 12.1 6 969 13.3

Total 429 137 100 16 040 100 39 306 100 70 517 100 144 120 100 63 898 100 42 776 100 52 480 100


Primary school education is important as it is a foundation for human development and therefore the existence of individuals without any form of schooling is a concern to decision makers at local, provincial and national government. Approximately 15 per cent of the adult population in the Eden District have not completed primary education. More than one third of the adult population without any form of schooling in the Eden District resides in the George municipal area, whereas Bitou contains the least amount of individuals without any form of schooling as compared to the other municipalities in the District.

Advancements in the levels of educational attainment can be expected as economic performance in the various municipalities in the District improves. The highest level of education reached by the majority of the population in the District is some form of secondary education (37 per cent for the District overall). Mossel Bay was the only municipality in which the highest level of education for the majority of the population was grade 12. Mossel Bay contains the largest number of persons having attended higher education in the District. The proportion of adults with Grade 12 or higher in Mossel Bay, George and Knsyna is greater than the Eden District average.

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469

5.9 Health

The health status of households living within a municipal area is important as healthy communities are likely to make a positive contribution to economic activity. Good health has been found to have a positive and sizable effect on aggregate output in the economy largely because healthier workers are mentally and physically more energetic and robust, more productive and less likely to stay absent due to sickness and disability (Bloom et al., 2004). Communities living in developed economies are exposed to good health systems and therefore tend to be healthier than those living in developing economies.

Health indicators analysed in this section to measure the extent of human development include the child and maternal health as well as ART and TB patient loads. These indicators can provide pointers for life expectancy within an economy. South Africa’s life expectancy dropped to 50.4 years in 2010 from 61.7 years in 1995. However, more recent information from Statistics South Africa shows improvements in life expectancy within the Western Cape from 2011 to 2015 (Statistical release P0302, 2015). The decline in life expectancy over the years has been largely attributed to the high prevalence of HIV/AIDS and Tuberculosis (TB) in the country. The HIV and TB patient load in each municipality within the Eden District is shown in Table 5.10.

Table 5.10 ART and TB patient loads in the Eden District, 2013 - 2015


Municipality

ART patient

load March 2013

ART patient

load March 2014

ART patient

load March 2015

Mother-to-child

transmission rate



Number of TB

patients2012/13

Number of TB

patients 2013/14

Number of TB

patients 2014/15


sites 2015

Kannaland 100 273 260 0.0% 5 221 258 206 7

Hessequa 364 482 552 6.9% 5 343 333 291 9

Mossel Bay 2 117 2 490 2 966 0.6% 17 823 853 761 15

George 3 886 4 534 5 461 2.0% 18 1 730 1 742 1 807 24

Oudtshoorn 740 1 109 1 239 1.3% 6 774 893 911 12

Bitou 1 578 1 640 1 837 0.8% 7 443 344 395 6

Knysna 1 617 2 260 2 490 1.6% 6 491 486 564 10

Eden District 10 402 12 788 14 805 1.6% 64 4 825 4 909 4 935 83

Western Cape 134 212 159 581 180 769 1.4% 259 45 852 44 807 44 994 433


Table 5.10 shows a significant increase in the ART patient load in the Western Cape Province between March 2013 and March 2015. The increasing HIV/AIDS patient loads can adversely affect economic activity within the province, its districts and local municipalities. In the Eden District, only Kannaland, Hessequa, Mossel Bay and Bitou experienced decreasing numbers of TB patients.

Regarding child health, the percentage of children born with a low birth weight in the Eden District (16 per cent) is slightly higher than the average for the Province (15 per cent), although Kannaland and George recorded percentages significantly higher than the province overall. The full immunisation coverage for children under 1-year-old in the Eden District is lower than the provincial average. Regarding maternal heath, the incidence of teenage pregnancy is highest in Hessequa and Oudtshoorn, whereas


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George and Knysna reported the highest incidence of abortions in the District. The maternal mortality ratio for the District exceeds that of the Province overall, and this is mostly driven by the significantly large maternal mortality ratio in George Municipality.

Table 5.11 Child and maternal health in Eden District municipalities


Municipality

Full immunisation



5 years

Neonatal mortality

rate Low birth

weight

Maternal mortality

ratio


under 18 years


rate

Kannaland 84% 3.51 14.2 23% 0.0 8.8% 0.0%

Hessequa 81% 0.99 5.6 17% 0.0 11.3% 0.1%

Mossel Bay 91% 4.69 9.5 13% 0.0 6.6% 9.5%

George 88% 2.40 8.7 19% 109.0 6.5% 12.6%

Oudtshoorn 84% 9.78 8.5 18% 56.7 9.6% 2.0%

Bitou 80% 0.46 0.0 0% 0.0 0.0% 0.0%

Knysna 78% 2.47 0.6 12% 58.3 6.4% 10.7%

Eden District 85% 3.79 7.2 16% 62.9 7.4% 7.4%

Western Cape 90% 2.43 6.2 15% 55.4 6.1% 16.8%


It can be argued from the analysis above that the relatively sluggish post-recessionary economic performance in the Eden District in the recent past has not improved the health status of communities within the region. Improved economic performance in the District could lead to significant improvement in these health indicators.


This section explored the impact of economic performance on the socio-economic conditions of communities living in municipalities within the Eden District using a selected number of indicators. Between 2011 and 2016 the Eden District recorded a 6.0 per cent population growth rate while economic growth averaged 3.5 per cent per annum between 2004 and 2015, implying a general decline in the GDPR per capita, which is the income per household. Although the District HDI has been rising since 2011, it weakened slightly between 2014 and 2015, weighed down by lower HDIs across all municipalities in the region. Table 5.12 is a summary of recent trends in selected social indicators at different municipalities within the Eden District.

Eden District

471

Table 5.12 A summary of recent changes in various social indicators in the Eden District

Indicator Eden District Kannaland Hessequa Mossel Bay George Oudtshoorn Bitou Knysna

GDP growth (2004 - 2015)

3.5% 2.6% 3.1% 3.0% 4.2% 3.8% 3.4% 2.6%

Population growth (2011 - 2016)

6% -2.4% 3.0% 5.3% 7.5% 1.6% 20.3% 7.5%

HDI (2011 - 2015) Increase Increase Increase Increase Increase Increase Increase Increase

Indigent households (2014 - 2015)

Increase Increase Decrease Increase Decrease Decrease Decrease Decrease


13.4% of total

Below ED average

Below ED average

Above ED average

Below ED average

Below ED average

Above ED average

Above ED average


Increase Increase Increase Increase Increase Decrease Decrease Increase

Poverty headcount (2011-16)

Decrease Decrease Decrease Decrease Decrease Decrease Decrease Decrease


Decrease Decrease Increase Decrease Decrease Increase Decrease Decrease



Below ED average

Below ED average

Below ED average

Above ED average

Below ED average

Above ED average

Above ED average


Increase Increase Increase Increase Increase Increase Increase Increase

Access to electricity (2011-16)






No schooling (2016)


Above ED average

Above ED average

Above ED average

Above ED average

Above ED average

Equal ED average

Above ED average



Below ED average

Above ED average

Above ED average

Above ED average

Below ED average

Equal ED average

Above ED average




Increase Decrease Decrease Decrease Increase Increase Increase Increase


Below WC average

Below ED average

Below ED average

Above ED average

Above ED average

Below ED average

Below ED average

Below ED average


Above WC average

Above ED average

Above ED average

Below ED average

Above ED average

Above ED average

Below ED average

Below ED average


Above WC average

Above ED average

Above ED average

Below ED average

Below ED average

Above ED average

Below ED average

Below ED average

Table 5.12 shows the positive or negative movement of selected social and economic indicators in municipalities within the Eden District in the recent past. Indicators moving in positive territory could be a result of positive economic performance within the District, and vice versa. Indicators that have moved in a positive direction for the Eden District include an increase in the access basic services such as water, electricity, sanitation and waste management, among others. The district has experienced decreases in both poverty headcount and intensity levels and a significant proportion of people have high education achievements. Areas of concern in the district include the rising population and rising indigent households in certain municipalities, households with no income and rising income inequality, informal dwellers, teenage


472

pregnancies, increasing ART and TB patient loads, lower immunisation coverage, and teenage pregnancies, substance abuse and crime, among others.

In Kannaland, the economy grew by 2.6 per cent on average between 2004 and 2015 while the population shrunk by -2.4 per cent between 2011 and 2016. Although the HDI has risen from 0.607 in 2011 to 0.650 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing poverty headcount and intensity levels, fewer informal dwellers and decreasing TB patients, among others. Indicators that remain a concern include the rising income inequality, lower education achievements, rising ART patient load, lower immunisation levels, and teenage pregnancies, among others.

In Hessequa, the economy grew by 3.1 per cent on average between 2004 and 2015 while population growth was 3.0 per cent between 2011 and 2016. Although the HDI has risen from 0.669 in 2011 to 0.701 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigent households, decreasing poverty headcount, households without income below district average, informal dwellers below district average, good education achievements, and decreasing TB patients. Social indicators that are of concern include the increasing income inequality, rising poverty intensity levels, people without schooling, high ART patient loads, lower immunisation coverage, and teenage pregnancies, among others.

In Mossel Bay, the economy grew by 3.0 per cent on average between 2004 and 2015 while the population grew faster than the economy at 5.3 per cent between 2011 and 2016. Although the HDI has risen from 0.700 in 2011 to 0.720 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing poverty headcount and intensity levels, fewer informal dwellers, good educational achievements, high immunisation levels and lower teenage pregnancies, among others. Social indicators that are of concern include the increasing indigent households, households without income and income inequality, and the increasing ART patient load.

In George, economic growth was 4.2 per cent on average between 2004 and 2015 while the population grew faster than the economy at 7.5 per cent between 2011 and 2016. Although the HDI for the municipality has risen year on year from 0.683 in 2011 to 0.716 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigents, decreasing poverty headcount and intensity levels, good education achievements, and high immunisation coverage and lower teenage pregnancies, among others. Indicators that are of concern include income inequality, increasing ART and TB patients, informal dwellers, among others.

Eden District

473

In Oudtshoorn, the economy grew by 3.8 per cent on average between 2004 and 2015 while the population growth was much slower at 1.6 per cent between 2011 and 2016. Although the HDI has risen year-on-year from 0.632 in 2011 to 0.655 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigents, decreasing poverty headcount, lower households without income and decreasing income inequality, and fewer informal dwellers. Indicators that remain a concern include the increasing poverty intensity, below average education achievements, rising ART and TB patient loads, lower immunisation coverage, and teenage pregnancies, among others.

In Bitou, the economy grew by 3.4 per cent on average between 2004 and 2015 while the population growth was much faster at 20.33 per cent between 2011 and 2016. Although the HDI has risen year on year from 0.684 in 2011 to 0.703 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigents, decreasing poverty headcount and intensity levels, fewer teenage pregnancies, among others. Indicators that remain a concern include the households without income, informal dwellers, rising ART and TB patient loads, and lower immunisation coverage, among others.

In Knysna, the economy grew by 2.6 per cent on average between 2004 and 2015 while the population growth was much faster at 7.54 per cent between 2011 and 2016. Although the HDI has risen year on year from 0.696 in 2011 to 0.718 in 2015, it weakened slightly between 2014 and 2015. Social indicators that have moved in a positive direction include the increasing access to basic services, decreasing indigents, decreasing poverty headcount and poverty intensity levels, good education achievements, fewer teenage pregnancies, among others. Indicators that remain a concern include the households without income and income inequality, informal dwellers, rising ART and TB patient loads, and lower immunisation coverage, among others.

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1


1.1 Introduction

The District contributed 0.6 per cent to the Provincial GDP in 2015 thus it contributes the least to the Western Cape’s economy. The largest economic sectors across the three local municipal areas are the agriculture, forestry and fishery sector and the general government sector. Agriculture accounts for 18.4 per cent of the District’s economic inputs, largely consisting of pitted fruit and livestock farming (namely goats and sheep). The Central Karoo District economy is predicted to grow by an average of 2.1 per cent per annum over the next 10 years. Some of the major projects being implemented in Central Karoo District include the development of specialised Skills for


476

Gas Exploration and the Central Karoo Economic Development Agency. Areas of concern in the District include the rising indigent households in certain municipalities, households with no income and income inequality, informal dwellers, increasing ART and TB patient loads, lower immunisation coverage, and teenage pregnancies, among others.

This sub-section provides a macroeconomic outlook on the Central Karoo District (CKD) level, an overview of trends between 2005 and 2015 and an outlook in terms of GDPR between 2016 and 2021. International trade is also considered in this section; as well as top companies by size and employment operating in the area.


1.2.1 GDPR performance per municipal area

Figure 1.1 reflects the GDPR performance of the municipal areas with the Central Karoo District between 2005 and 2015.

Figure 1.1 GDPR growth per municipal area , 2005 - 2015


2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009 2009 - 2010 2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015

Central Karoo 3.4% 5.6% 8.1% -0.5% -0.3% 3.4% 2.9% 2.9% 4.8% -0.01%

Beaufort West 3.1% 5.0% 6.0% -0.9% -0.5% 3.2% 2.6% 2.7% 4.3% 0.0%

Laingsburg 3.1% 6.3% 10.1% 0.1% -0.6% 3.4% 3.1% 3.1% 5.9% 0.0%

Prince Albert 5.3% 8.1% 15.9% 0.8% 0.7% 4.0% 3.9% 3.7% 5.7% 0.1%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%


477

The Central Karoo District (CKD) experienced an average GDPR growth rate of 3 per cent between 2004 and 2015. The Prince Albert area economy recorded the highest average growth rate of 4.8 per cent. Laingsburg and Beaufort West area economies during this period also experienced positive high growth rates of 3.5 per cent and 2.5 per cent respectively. Of all three areas, only the Beaufort West area experienced a contracted GDPR between 2008 and 2009 (negative 0.9 per cent). All areas have experienced positive growth between 2009 and 2015.

Apart from the challenges brought about by subdued commodity prices, a number of other challenges are having an impact on the economy, for example, the drought that causes increases in domestic food prices, and the currency depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy).

Table 1.1 GDPR contribution and average growth rates per municipal area (%)


2015




2004 - 2008 Recession 2008 - 2009


Laingsburg 14.2 3.5 6.5 0.1 2.5

Prince Albert 17.2 4.8 9.8 0.8 3.0

Beaufort West 68.6 2.5 4.7 -0.9 2.0

Total Central Karoo District 100 3 5.7 -0.5 2.3

Western Cape Province 0.6 3 5.3 -1.2 2.5


Table 1.1 indicates the average GDPR contribution and growth rates between the various municipal areas. Beaufort West contributed the most to GDPR (68.6 per cent) in the CKD in 2015, followed by Prince Albert (17.2 per cent). These two municipal areas collectively contributed almost 86 per cent of the CKD’s GDPR in 2015. The CKD GDPR inputs into the Western Cape Province economy in 2015 accounted for 0.6 per cent of total inputs. This makes the District the smallest overall contributor to the provincial economy. The CKD has however shown higher growth in the pre-recession period compared to the Province, with an average growth rate of 5.7 per cent compared to provincial average of 5.3 per cent between 2004 and 2015.


The tertiary sector accounts for 73.3 per cent of GDPR inputs in the Province, and 70.5 per cent in the District. There are however significant differences in terms of the primary and secondary sectors. It is apparent that the proportionate GDPR contribution of the agriculture sector is greater in the District compared to the Province. In turn, there is a greater proportion of inputs of the secondary sector in the Province.


478



Figure 1.2 indicates the GDPR contribution per main sector of the various municipalities. Overall, the relatively large contribution of the tertiary sector to the District GDPR, can be attributed to the presence of the finance and insurance industry, with the tertiary sector dominated by business services and general government. Its secondary and primary sectors are mostly accounted for by construction and agricultural activity. Currently the livestock industry remains the economic backbone of the Karoo, with other forms of agriculture established in areas where irrigation is possible, such as apricot cultivation in Prince Albert area. Lately, game farms and tourism have also started to make an economic impact.

The secondary sector contributions for both the District and municipal areas range from 9 to 24 per cent. Manufacturing is an important value-adding economic activity and occurs to a small extent in the District, accounting for inputs to the value of R65 million. The largest manufacturing subsectors in the CKD consists of food and beverages; metals, metal products; and equipment, electrical machinery and apparatus.

12.9%21.8% 24.9%

18.4%4.0%

12.2%

23.7%9.4%

11.0%

22.7%

74.8%

54.5%65.7% 70.5% 73.3%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

Beaufort West Laingsburg Prince Albert Central KarooDistrict

Western Cape



479

Table 1.2 Central Karoo District GDPR contribution per sector, 2015 (%)

Sector Central Karoo

District Beaufort West Laingsburg Prince Albert


Mining and quarrying 0.0 0.0 0.0 0.2

Manufacturing 2.3 10.5 6.2 7.6




13.3 16.8 14.6 17.3


12.3 3.3 3.0 14.4


13.4 19.9 30.0 25.7


9.7 4.6 4.7 6.9



Table 1.2 illustrates the well performing sectors in CKD in 2015.

The economic sectors that contributed most to the CKD’s economy in 2015 were:


Agriculture, forestry and fishing (18.4 per cent)



Transport, storage and communication sector (12.3 per cent)

Considering the local municipal areas, the proportionate value add of each sector differs. This may be attributed to the fact that the economies are relatively small, and thus different or changed economic activities will have significant implications on the proportionate breakdown of the economy. Therefore, the District’s economy will differ in terms of the proportionate breakdown of each sector.


480

Table 1.3 Central Karoo District GDPR performance per sector (%)

Sector


Trend 2004 - 2015




Agriculture, forestry and fishing 3.2 10.4 -3.1 0.6

Mining and quarrying 4.7 3.6 3.4 5.5





1.8 1.9 -3.3 2.6

Transport, storage and communication 0.2 0.6 -4.5 0.8


5.3 11.2 2.2 2.8


2.4 4.5 -1.0 1.9


Total Central Karoo 3.0 5.7 -0.5 2.3


Table 1.3 indicates the CKD’s GDPR performance per sector.

Considering the growth period between 2004 and 2015, the CKD performed well, achieving an annual average growth rate of 3 per cent. Notably, no sectors contracted during this period. Likewise, a positive growth rate for all sectors was achieved in the years prior to the recession (2004 and 2008), as well as in the years following the recession. Mining and quarrying shows a 5.5 per cent growth between 2009 and 2015. It should however be noted that this comes off a very low base with only 0.2 per cent as mining and quarrying mostly takes place in Prince Albert. There are large deposits of uranium in Beaufort West but this is not mined. Production of uranium has mainly been a by-product of gold or copper mining in South Africa, so its economics depend (to some extent) on the world gold and copper markets. Uranium is difficult to mine and large amounts of rocks are mined for few returns in uranium. Uranium is usually a by-product of gold and copper mining because the mines are already there and rock is already being extracted.

Importantly, since the recession an overall average growth rate of 2.3 per cent has been achieved in the CKD which follows a contraction of 0.5 per cent during the recession period. This negative economic performance was due to a contraction in strong performing sectors such as the agriculture sector, wholesale and retail trade, catering and accommodation sector, and transport, storage and communication sector. Additionally, although the manufacturing sector only accounts for 2.1 per cent of the economy, the significant decline in growth have a negative effect on the overall growth on the District economy. The manufacturing sector contracted by 8.4 per cent during this period. Notably, the majority of sectors maintain positive growth rates during the recession years. The construction and general government sectors performed particularly well during this period.


481


Table 1.4 indicates the GDPR forecast per sector for the period 2016 to 2021.


Sector 2016 2017 2018 2019 2020 2021 Average

2016 - 2021


-11.6 3.3 2.8 1.8 1.8 2.3 0.1


Manufacturing -1.8 1.5 2.3 2.4 2.6 2.5 1.6


Construction 14.6 10.6 11.6 11.0 11.1 10.9 11.6


3.6 1.2 2.0 2.4 2.4 2.8 2.4


-7.7 -0.3 1.9 2.5 2.7 2.4 0.2


3.9 3.7 5.1 5.7 5.9 5.8 5.0


1.1 0.8 1.1 1.6 1.9 2.1 1.4


Total -1.1 2.3 3.0 3.2 3.4 3.6 2.4

Source: Quantec, Own calculations, 2016

The sectors expected to have the highest average growth rates in the next 5 years are the construction sector (11 per cent) and finance, insurance, real estate and business services sector (5.0 per cent). Importantly, there are planned investments expected in the District which due to the low base, will result in these high growth rates.

Considering the importance of the agriculture sector to CKD, an expected contraction of 11.6 per cent in 2016, and overall growth of 0.1 per cent will have significant implications on the economy. The large-scale contraction in the agriculture sector is due to the wide-scale drought which has had similar implications on a number of the District’s within the Province. The contraction of the agriculture sector is expected to have spin-offs onto other sectors (this is specifically considering the number of jobs that are likely to be lost, and the concurrent reduced spending power of households).


1.3.1 Employment per municipal area

Table 1.5 indicates the trend in employment growth within each municipal area in the CKD.


482

Table 1.5 Central Karoo District employment growth


2015




2004 - 2008 Recession 2008 - 2009


Laingsburg 15 460 79 -88 469

Prince Albert 20 534 104 -126 556

Beaufort West 65 1 033 445 -500 1 088

Total Central Karoo District 100 2 027 628 -714 2 113

Western Cape Province - 25 152 128 301 -11 841 -10 468


The largest number of individuals employed within the CKD are located within the Beaufort West area, accounting for 65 per cent of employment. The lowest number of employed individuals are located in Laingsburg. This is however aligned with relative population numbers. All three local municipal areas shed jobs in 2008, which equated to a total of 714 jobs shed in the CKD. The majority of jobs lost were as a consequence of contraction in the agriculture and wholesale and retail trade, accommodation and catering sectors. Despite the loss of jobs, the net job change following the recession was positive at 2 113, meaning that job opportunities increased. The majority of additional jobs were in the Beaufort West municipal area.


Table 1.6 indicates the trend in employment growth within each economic sector in CKD.

Table 1.6 Central Karoo District employment growth per sector


Sector Trend


2004 - 2008 Recession 2008 - 2009


Agriculture, forestry and fishing -593 -1 052 -484 943

Mining and quarrying 0 1 -1 0

Manufacturing -76 -17 -40 -19

Electricity, gas and water 55 22 1 32

Construction 137 118 -90 109


685 549 -103 239

Transport, storage and communication 176 168 -32 40


193 234 -90 49


292 210 -17 99

General government 1 158 395 142 621

Total Central Karoo 2 027 628 -714 2 113



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It is apparent that between 2004 and 2015, the net job change in CKD was 2 027 job opportunities. This means that more jobs were created than lost. Although overall a positive net change was achieved, both the agriculture and manufacturing sectors lost more jobs than were created in the same period. The largest employment losses were experienced in the agriculture sector whereby, with the exception of the recovery period, each assessment period has a negative job change. Prior to the recession, there were 1 052 job losses in agriculture, and 482 job losses during the recession. Since the recession jobs in the agriculture have exceeded the losses however the projected limited growth in the sector is likely to impact on employment, resulting in further losses. During the recession, the only sector which had a positive net change was general government.


A comparative advantage indicates a relatively more competitive production function for a product or service in a specific economy (regional or sub-regional) than in the aggregate economy (provincial or national). It therefore measures whether a specific economy produces a product or renders a service more efficiently than another.

Table 1.7 Locational quotient interpretation

Locational quotient Classification Interpretation

Less than 0.75 Low Regional needs are probably not being met by the sector resulting in an import of goods and services in this sector.

0.75 to 1.24 Medium Most local needs are being met by the sector. The region will probably be both importing and exporting goods and services in this sector.

1.25 to 4.99 High The sector is serving needs beyond the border, exporting goods and services in this sector to other regions or provinces.

More than 5.00 Very High This is indicative of a very high level of local dependence on the sector, typically in a “single-industry” community.


One way to measure the comparative advantage of a specific economy is by way of the location quotient. A location quotient as a tool, however, does not take into account external factors such as government policies, investment incentives, and proximity to markets, etc., which can influence the comparative advantage of an area. The Locational Quotient is used to calculate the comparative advantage of the relevant study areas. The location quotient is calculated ratios between two economies; in this case the metropolitan and local economies. This ratio is calculated for all industries to determine whether or not the district or local economy has a greater share or advantage of that industry. If an economy has a location quotient greater than 1, it means that economy enjoys a comparative advantage. The interpretation of the locational quotient is illustrated in Table 1.7.


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Table 1.8 Comparative advantage in terms of GDPR and employment, 2015

Sector In terms of

GDPR In terms of

employment












Table 1.8 indicates the sectors where the CKD has a comparative advantage over other districts in the Western Cape Province in terms of GDPR and employment.

The CKD has a comparative advantage in the Western Cape in the:

Agriculture, forestry and fishery sector in terms of GDPR and employment

Electricity, gas and water in terms of GDPR and employment

General government sector in terms of GDPR

Community, social and personal services sector in terms of GDPR

Construction


Table 1.9 indicates the number and rand value of the procurement contracts undertaken in the CKD Municipality during the 2014/15 financial year. The aim of this section is to indicate sectors where the CKDM contributed and the amounts spent by the CKDM in those sectors.

The aim of this was two have an indication as to which sectors the CKD procurement contracts were focused in.

Table 1.9 Central Karoo District procurement contracts, 2014/15

Sector


Number R-value

Transport and communication 1 333 218.00


Wholesale and retail trade 1 137 928.00

Total 5 5 037 495.00

Source: Municipal Annual Reports, 2014/15


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A total of 5 procurement contracts were undertaken in the CKD during the 2014/15 financial year to the approximate value of ± R5 million. The majority (60 per cent) were in the construction industry, 20 per cent in the transport and communication industry, and 20 per cent in wholesale and retail trade sector.

Table 1.10 Central Karoo District agriculture as per contribution of Western Cape agriculture, 2013

Sub-sector Laingsburg Prince Albert Beaufort West

Top 14 Crops (as % of Western Cape)

Wine Grapes 0.1

Lucerne 0.2 0.4 0.6

Small Grain Grazing 0.1

Planted Pastures Perennial 0.2 1.0

Natural grazing 0.4 0.2 0.5

Fallow 0.4 0.4 1.4

Olives 0.9 4.6 1.5

Peaches 0.8

Apricots 3.4 1.7

Onions 5.9 1.7

Planted Pastures 0.1 0.7

Weeds 2.9 1.0 0.2

Crops unknown 96.3

Fruit unknown 6.7

Top Livestock

Cattle 0.5 0.5 1.9

Goats 4.8 1.7 34.7

Horses 1.4 1.8 6.7

Ostriches 0.1 2.7 2.6

Pigs 0.5 0.6 0.4

Sheep 5.6 4.6 15.2


The agriculture sector has a high comparative advantage in the CKD and contributed significantly to the GDPR of the CKD; to this extent, Table 1.10 above indicates the main agriculture activities in the CKD per percentage contribution to the Western Cape Province’s overall agriculture contribution.

Table 1.11 indicates the economic contribution of the manufacturing sector in the CKD.


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Table 1.11 Central Karroo District manufacturing GDPR contribution per sector, 2015 (%)

Sub-sector Central Karoo District Laingsburg Prince Albert Beaufort West


53.1 33.2 80.7 49.0


0.5 0.0 0.0 0.6


4.3 33.3 7.1 3.1


9.0 0.0 0.0 10.7


12.0 0.0 0.0 14.4


4.7 0.0 12.2 3.5


0.0 0.0 0.0 0.0


1.5 0.0 0.0 1.7

Transport equipment 3.7 0.0 0.0 4.4


11.3 33.5 0.0 12.7


Table 1.11 indicates that the manufacturing sub-sectors that contributed most to the CKD’s GDPR in 2015 were:


Other non-metal mineral products (12 per cent)

Furniture and other manufacturing (11.3 per cent)

From Table 1.10 one can deduce that the agriculture sector is dominated by olives, apricots, onions, and crops unknown. Crop rotation is widely practiced in the CKD. This correlates with the dominating manufacturing sub-sector (Table 1.11) of the CKD which is food, beverages and tobacco (2 per cent to District GDPR in 2015). The other dominant manufacturing sub-sector is the other non-metal mineral products sub-sector and the metals, metal products, machinery and equipment sub-sector.


Table 1.12 indicates the top companies located in the CKD. This data was collated from the Western Cape Top 300 Companies (based on criteria developed in partnership with the Cape Chamber of Commerce, the Western Cape Provincial Government, Accelerate and Wesgro) and Wesgro Fact Sheets for the CKD.


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Table 1.12 Top companies, Central Karoo District

Industry Number of companies Employment


Agriculture, forestry and fishing 3 No data

Tourism 3 No data

Transport, storage and communication 1 No data

Total 8 No data


There are 8 top companies in terms of employment and contribution to GDPR in the CKD. These companies include: Prince Albert Abattoir, Laingsburg Abattoir, Prince Albert Tannery, SV Transport, Toyota Group, Karoo National Park (data for entire National Park group), Prince Albert Game Farm, and Beaufort West Game Farm. There is, however no data available for employment numbers at these companies.


All imports into the CKD in 2015 were manufactured products. Figure 1.3 indicates the CKD trade balance between 2005 and 2015.

Figure 1.3 Central Karoo District Trade Balance, 2005 - 2015


The regional trade balance in the Central Karoo District prior to 2012 has been negative thereafter, the Central Karoo has experienced a positive growth from R5.1 billion in 2011 to R22.3 billion in 2015. There was however a continuous trade deficit in the manufacturing sector prior to 2014, which could have resulted from a combination of the variables such as the global recession, and the weakness of the commodity market due to currency fluctuations and inflation.

-0.02

-0.015

-0.01

-0.005

0

0.005

0.01

0.015

0.02

0.025

0.03

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

R b

illio

n



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The trade balance has however decreased from 2014 to 2015 due to an increase in the exports of manufactured goods which could be attributed to the slowdown of Chinese manufacturing. Imports in the Central Karoo decreased by 67 per cent and exports increased by 320 per cent in 2013. In 2013, the Comoros was the top export destination for all Central Karoo exports, with 59.53 per cent share of total exports (R1.44 million) (Wesgro, 2014). In 2013, the only source market for Central Karoo imports was the United States (R0.134 million), who sourced unwrought or semi-manufactured silver powder. Milk and cream were the largest exports (R0.61 million), followed by bird’s eggs (R0.50 million) and grape wines (R0.49 million) (Wesgro, 2014).


The CKD experienced an average GDPR growth rate of 3 per cent between 2005 and 2015. Apart from the challenges brought about by subdued commodity prices, a number other challenges are having an impact on the economy, such as the drought, causing increases in domestic food prices, and the currency depreciation, high inflation, and uncertainty in international markets (i.e. Brexit and the slowing down of the Chinese economy). Despite these trends, the trade balance within the CKD has stayed positive which can be attributed to the manufacturing sector.

When looking at the local municipal areas within CKD, the primary sector contributed an average of 18.4 per cent to the GDPR of the District in 2015, which predominantly consists of agriculture (i.e. wine grapes, lucerne, small grain grazing, natural grazing, olives, peaches, apricots, and onions). The secondary sector contributed an average of 11 per cent to the GDPR of the District in 2015, which consists of manufacturing, construction and electricity, gas and water sectors (i.e. food, beverages and tobacco sub-sectors and the metals, metal products, machinery and equipment sub-sectors). The tertiary sector contributed an average of 70.5 per cent to the GDPR of the District in 2015, which consists of industries such as wholesale and retail trade, catering and accommodation, transport, finance, and real estate.


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2


2.1 Introduction

This sub-section provides a macroeconomic outlook on the municipal level, an overview of trends between 2004 and 2015 and an outlook in terms of GDPR for 2016 and 2021. Employment is also considered in this section; as well as skills levels and building plans passed and completed.

2.2 Beaufort West


The primary sector contributed 12.9 per cent towards the GDPR of the Beaufort West municipal area in 2015. This was predominantly due to the agricultural activities, implying that the economy is susceptible to outlying economic disturbances and other exogenous factors. The secondary sector contributed similar value to the GDPR at 12.2 per cent, whilst the tertiary sector was the strongest, accounting for 74.8 per cent. Table 2.1 indicates Beaufort West’s GDPR performance per sector.


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Table 2.1 Beaufort West GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



12.9 252 3.0 9.4 -2.4 0.7


Manufacturing 2.8 55 2.4 4.3 -9.2 3.4


4.8 94 1.4 1.9 1.5 1.2

Construction 4.6 90 6.0 13.1 3.9 2.9


14.3 279 1.6 1.4 -2.9 2.4


15.9 311 -0.3 -0.1 -5.4 0.4


14.0 274 4.7 10.2 1.5 2.5


9.3 182 1.7 3.2 -1.9 1.6


Total Beaufort West 100 1 954 2.5 4.7 -0.9 2.0


Overall, in 2015, Beaufort West contributed approximately R1.9 billion to the CKD GDPR. The largest economic sector was general government, accounting for 21.3 per cent. Although the District offices are located in Beaufort West, this is very high and is not representative of a strong diversified economy. In comparison, the finance, insurance, real estate and business services sector only accounted for 14 per cent of the economy. In most municipalities within the Province, this sector is generally the largest economic contributor. Notably, it remained strong within the CKD before the recession (10.2 per cent) as well as during the recession (1.5 per cent), with 2.5 per cent growth in the recovery period and an overall growth of 4.7 per cent.

Agriculture is an important sector in Beaufort West, and largely consists of sheep and goat farming. Game farming is increasing in popularity in Beaufort West as famers attempt to diversify farming practices and limit the problems experienced with stock theft. This is due to the vegetation and general environmental factors. Importantly, although the agriculture sector has recovered from a contraction of 2.4 per cent in the 2008 to 2009 period, growth remains slow at 0.7 per cent between 2009 and 2015. In conjunction, although the manufacturing sector is small in the area, (it only accounts for 2.8 per cent of GDPR inputs), it has one of the highest average growth rates between 2009 and 2015, at 5.5 per cent. The transport, storage and communication sector remained weak in Beaufort West with an overall contraction of 0.3 per cent between 2004 and 2015.


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Table 2.2 indicates the trend in employment growth within each economic sector in Beaufort West.

Table 2.2 Beaufort West employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery 2009- 2015


22.1 2 656 -160 -498 -252 590

Mining and quarrying 0.0 1 0 1 -1 0

Manufacturing 1.9 232 -64 -13 -36 -15


0.5 64 28 13 -1 16

Construction 4.8 572 17 37 -59 39


24.4 2 927 462 398 -79 143


5.8 695 102 123 -32 11


8.5 1 021 13 129 -89 -27


12.7 1 520 -77 16 -39 -54


Total Beaufort West 100 12 004 1 033 445 -500 1 088


In terms of employment, sectors that contributed the most to Beaufort West’s employment in 2015 were agriculture, forestry and fishery (2 656 jobs), wholesale and retail trade, catering and accommodation (2 927 jobs), and general government (2 316 jobs). There were a total of 12 004 jobs in Beaufort West in 2015. These three sectors are the core contributors to employment, accounting for 65.8 per cent of all jobs. The largest sector for jobs is the wholesale and retail trade, catering and accommodation sector accounting for almost a quarter of employment (24.4 per cent).

During the recession (2008 to 2009), the net job change was a loss of 500 jobs. Therefore, despite the increase of 88 jobs in the general government sector, greater losses were experienced overall. The sector experiencing the greatest net loss was the agriculture sector, with a loss of 252 jobs. Despite this loss, the greatest number of jobs have been retained by the agriculture sector following the recession, with 590 additional jobs between 2009 and 2015. Overall, almost 1 100 net jobs have been generated since 2009.


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2.2.2 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Only formal employment numbers can be used to determine the skills level in the area. Table 2.3 indicates the skills levels of Beaufort West.

Table 2.3 Beaufort West skills level




2015

Skilled 20.2 1.4 1 811

Semi-skilled 44.5 -0.3 3 996

Low skilled 35.3 -1.4 3 171

Total Beaufort West 100 -0.40 8 978


In Beaufort West there were 8 978 formally employed individuals, indicating that 3 026 individuals were informally employed in 2015. The majority of the Beaufort West’s formally employed individuals (44.5 per cent) are semi-skilled, compared to 20.2 per cent skilled and 35.3 per cent low skilled.

Skilled formal employees have been increasing positively between 2004 and 2015, while the semi- and low skilled formal employees have been decreasing between 2004 and 2015. This could be indicative of up-skilling in the Beaufort West through either better access to education as well as up-skilling opportunities through employers. Furthermore, the decreased employment can be attributed to the decrease in the GDPR of the primary sector (especially agriculture) in Beaufort West.

2.3 Prince Albert


The primary sector contributed to 24.9 per cent of the GDPR of Prince Albert in 2015. This could be attributed to the strong presence of agriculture in the Prince Albert municipal area. In comparison, the secondary sector only accounted for 9.4 per cent of contributions, whilst the tertiary sector accounted for 65.7 per cent of inputs. Although the tertiary sector is the largest overall sector, the greatest inputs derived from a single economic subsector are those derived from agriculture, forestry and fishery. Table 2.4 indicates the Prince Albert area’s GDPR performance per sector.


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Table 2.4 Prince Albert GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



24.9 95 5.1 15.8 -3.1 1.1

Mining and quarrying 0.0 - 0 0 0 0

Manufacturing 1.7 6 0.6 0.8 -4.6 1.3


1.7 7 5.2 8.4 3.7 3.8

Construction 6.0 23 7.3 15.7 4.7 3.6


12.1 46 1.8 2.7 -6.2 2.7


8.2 31 4.9 7.8 2.9 3.7


11.1 42 8.6 17.4 5.9 4.7


10.9 42 3.6 7.3 1.0 2.2


Total Prince Albert 100 381 4.8 9.8 0.8 3.0


The largest contributors to the economy are the agriculture and general government sectors, together accounting for approximately 48.1 per cent of GDPR inputs. This is not representative of a strong and diversified economy. Although activity within the agriculture sector is positive, the economy is susceptible to environmental and economic exogenous factors. Growth in the wholesale and retail trade, catering and accommodation sector and finance, insurance, real estate and business services sector will have more positive implications for long term economic stability.

Notably, the economy did not contract during the recession (2008 to 2009). The positive 0.8 per cent growth may be attributed to strong growth in the construction sector, finance, insurance, real estate and business services sector and general government sectors. During this period, these sectors had growth rates of 4.7 per cent, 5.9 per cent and 6.9 per cent respectively. Although the average growth rates of these sectors between 2009 and 2015 have since declined, they still remain strong. Despite its reliance on the agriculture and general government sectors, the economy continues to grow at a positive average rate of 3 per cent (2009 to 2015). This is however coming off a low base of R381 million.


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Table 2.5 indicates the trend in employment growth within each economic sector in the Prince Albert area.

Table 2.5 Prince Albert employment growth per sector


2015

Number of jobs 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009



29.6 1 077 -276 -327 -131 182


Manufacturing 1.1 39 -9 -2 -4 -3


0.3 11 6 2 -1 5

Construction 7.8 285 37 29 -25 33


18.7 681 182 120 -7 69


3.4 123 49 32 -1 18


5.9 214 108 60 0 48


16.7 610 195 106 12 77


Total Prince Albert 100 3 642 534 104 -126 556


In line with the economic performance of sectors, the largest contributors to jobs in 2015 in the Prince Albert municipal area includes: agriculture, forestry and fishery (1 077 jobs), wholesale and retail trade, catering and accommodation (681 jobs), community, social and personal services (610 jobs), and general government (602 jobs). Overall, in 2015, 3 642 jobs existed within Prince Albert area. Although the majority of individuals were employed in the tertiary sector, the single greatest employer was the agriculture sector, accounting for over 1 000 jobs. The net job change within this sector however indicates that between 2004 and 2015, there are less overall jobs. During the recession, the net job change was a loss in 126 jobs. The greatest number of jobs lost were in agriculture, however, job gains from 2009 onwards exceed 550 meaning that the jobs lost have been re-gained.


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2.3.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.6 indicates the skills levels of the Prince Albert area.

Table 2.6 Prince Albert skills level




2015

Skilled 19.5 3.3 543


Low skilled 35.9 -2.6 999

Total Prince Albert 100 0.21 2 785


Only formal employment numbers can be used to determine the skills level in the area. In the Prince Albert municipal area there were 2 785 formally employed individuals, indicating that 857 individuals were informally employed in 2015. The majority of the formally employed individuals are in semi-skilled positions (44.6 per cent), whereas only 19.5 per cent are employed as skilled labour. The low skilled positions make up more than a third of the formally employed (35.9 per cent). Nevertheless, although there are a large percentage of low skilled positions, there is a fast rate of growth in skilled and semi-skilled positions, illustrating investment in education and or up-skilling of employees.

2.4 Laingsburg


The primary sector contributed 21.8 per cent to the GDPR of the Municipality, compared to 15.8 per cent in the CKD in 2015. The secondary sector contributed 23.7 per cent to the GDPR of the area, compared to 13.8 per cent in the CKD in 2015; while the tertiary sector contributed 54.5 per cent to Laingsburg compared to 70.4 per cent in the District. This indicates that the primary and secondary sector is stronger in Laingsburg compared to the CKD.


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Table 2.7 Laingsburg GDPR performance per sector


2015

R millionvalue 2015


Sector Trend


2004 - 2008 Recession 2008 - 2009

Recovery2009 - 2015


21.8 88 1.8 7.7 -5.1 0.0

Mining and quarrying 0.0 - 0 0 0 0

Manufacturing 0.4 1 -1.0 -7.2 1.7 1.6


11.9 48 2.1 3.0 3.1 1.5

Construction 11.5 46 14.4 29.0 13.1 7.3


13.1 53 2.9 3.5 -2.0 3.4


9.4 38 0.3 0.6 -4.3 1.0


3.4 14 6.8 14.2 3.7 3.6


9.0 36 4.3 7.8 1.4 3.1


Total Laingsburg 100 404 3.5 6.5 0.1 2.5


Table 2.7 indicates Laingsburg’s GDPR performance per sector.

The sectors that contributed the most to Laingsburg’s GDPR in 2015 included agriculture, forestry and fisheries (21.8 per cent), wholesale and retail trade, catering and accommodation (13.1 per cent), and general government (19.6 per cent). Overall, the GDPR contributions to Laingsburg was R404 million in 2015. The largest proportions of inputs were derived from the three top performing sectors listed above, and equated to 54.5 per cent of inputs. The electricity, gas and water sector and construction sector also contributed significant proportions to the GDPR, accounting for 11.9 per cent and 11.5 per cent respectively. Although this is a high percentage when considering the Western Cape Province as a whole, the value for each sector does not exceed R50 million.

Notably, during the recession period of 2008 to 2009, Laingsburg’s economy did not contract. However, the economy slumped from an average growth rate of 6.5 per cent in the pre-recessionary period (2004 to 2008), to 0.1 per cent growth during 2008. The agricultural sector experienced the worst contraction (5.1 per cent). Notably, despite the sector being of significance to the economy, it appears to have stagnated when considering the zero average growth between 2009 and 2015.


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Table 2.8 indicates the trend in employment growth within each economic sector in Laingsburg.

Table 2.8 Laingsburg employment growth per sector


2015

Number of jobs 2015


Sector Trend


2005 - 2008 Recession 2008 - 2009



31.7 896 -157 -227 -101 171


Manufacturing 0.3 9 -3 -2 0 -1


1.4 40 21 7 3 11

Construction 7.6 214 83 52 -6 37


17.6 497 41 31 -17 27


2.5 70 25 13 1 11


5.4 152 72 45 -1 28


16.1 456 174 88 10 76


Total Laingsburg Municipality

100 2 829 460 79 -88 469


In terms of employment, sectors that contributed the most to Laingsburg’s employment in 2015 were agriculture, forestry and fishing (896 jobs), wholesale and retail trade, catering and accommodation (497 jobs), general government (495 jobs), and community, social and personal services (456 jobs). Just as the agriculture sector contributes the greatest value of inputs into the GDPR, the largest number of jobs are derived from this sector. In 2015, the agriculture sector accounted for 31.7 per cent of all jobs in Laingsburg. Importantly, although the net job change between 2009 and 2015 was 171, overall between 2004 and 2015, more jobs have been lost than gained. During the recession, the largest source of jobs originated from the general government sector which remains the largest net job creator of all sectors between 2004 and 2015.

2.4.3 Skills level

Education levels in any given market area will influence economic and human development. It is clear that low education levels lead to a low skills base in an area while high education levels have the opposite effect, producing a skilled or highly skilled population. There is also no doubt that household and personal income levels are either positively or adversely affected by education levels. Also, a population that is skilled does not necessarily aspire to employment but to entrepreneurship, which will


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add businesses to the area, increase economic activity and consequently increase the number of jobs available. Table 2.9 indicates the skills levels of Laingsburg.

Table 2.9 Laingsburg skills level




2015

Skilled 17.5 2.9 417


Low skilled 32.4 0.3 771

Total Laingsburg 100 0.78 2 381


Only formal employment numbers can be used to determine the skills level in the area. In Laingsburg there were 2 381 formally employed individuals, indicating that 448 individuals were informally employed in 2015. The majority of Laingsburg’s formally employed individuals (50.1 per cent) are in semi-skilled positions. Importantly, low skilled positions make up 32.4 per cent of positions. Only 17.5 per cent of positions are skilled however, these positions have continued to grow at an average annual rate of 2.9 per cent since 2004. This could be indicating up-skilling in Laingsburg through either better access to education as well as up-skilling opportunities through employers.


All three municipal areas within the CKD have large agricultural sectors. The agriculture sector accounts for 12.9 per cent of GDPR inputs into the Beaufort West area, and in excess of 20 per cent for both the Prince Albert and Laingsburg municipal areas. Agriculture is therefore not only an important source of value for the economy, but is also an important job creator. All three municipal areas are equally reliant on GDPR inputs and employment from the general government sector. More growth in animal product manufacturing and processing to boost the manufacturing sector should be emphasised as opposed to employment and stimulation in the general government sector.

Overall, only the Beaufort West area contracted in terms of GDPR during the recession, although on an economic sector level all the municipal areas experienced some contraction in certain economic sectors even though overall GDPR did not contract, particularly in the agriculture and wholesale and retail trade sector. Overall, although there are large numbers of low skilled and semi-skilled formal job positions in the economies of all three municipal areas, the high growth rates of skilled positions indicates that investment into education or up-skilling in the workspace is taking place.


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3

Value chains

3.1 Introduction

The following sub-section focuses on two value chains found in the CKD. Based on research, as well as, discussions with the CKDM, the sheep and tourism value chains are focused on in MERO 2016. Additional value chains will be added with each subsequent year. The section aims to show the movement of goods and services for certain commodities, as well as the risks and opportunities.

3.2 Sheep value chain

There are approximately 8 000 commercial sheep farms (employing ± 35 000 workers) throughout South Africa and about 5 800 communal farmers. The estimated number of sheep in South Africa is 24.3 million (2014). Sheep farmers are represented by organisations with the Dorper Sheep Breeders’ Society of South Africa and the Merino SA being the most prominent. The most important organisations are the Wool Forum (the official policy-making body of the industry); and Cape Wool SA (Port Elizabeth); and National Wool Growers Association (Port Elizabeth). Other important organisations that provide support to the industry are the Wool Testing Bureau of South Africa (WTB) (Port Elizabeth), the Agricultural Research Council (ARC) (Pretoria), BKB (Beaufort West), Mohair South African (Port Elizabeth), the National Textile Bargaining Council (Durban), the National Wool Trust (Port Elizabeth), and the Red Meat Producers Organisation (Pretoria).


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One of the biggest sheep farming districts in the Western Cape is the CKD, with 25.5 per cent of sheep livestock in the province. The CKD currently has 417 210 livestock and the main agricultural products in the CKD are wool, mohair, mutton and skins. The wool and mohair is exported and very little local value addition takes place. The CKD is responsible for the largest wool production in South Africa, while meat production makes the second largest contribution to the economy of the region (CKDM, 2010). In the CKD, the dominating enterprises are the Dorper sheep (72 per cent) (used for meat), Merinos (12.5 per cent) (used for wool), and Afrino/crossbreed (8.7 per cent) (used for meat). Dorper sheep are farmed by 80 per cent of the farms, Afrino/crossbreeds by 27 per cent of the farms, Angoras by 27 per cent and Merinos by 6.7 per cent (Jordaan&Grobler, 2011).

Table 3.1 Number of sheep, Central Karoo District

Municipality Number of sheep

Laingsburg 92 604

Prince Albert 76 112

Beaufort West 248 494

Total 417 210


Table 3.1 indicates that the majority of the sheep in the CKD are located in Beaufort West. Real Karoo lamb comes from sheep pastured on the veld among at least two of the six fragrant indigenous shrubs (Karoo Space, 2015). The grazing of the sheep plays a role in the Karoo lamb and mutton having a distinct taste. Figure 3.1 indicates the sheep value chain.


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Figure 3.1 Sheep value chain

Source: Adapted by DAFF 2015

3.2.1 Inputs

The sheep graze among grasses, fragrant bushes and fragrant shrubs and has been scientifically proven to affect the flavour of the meat. The sheep are farmed for both meat and wool. The agricultural inputs that farmers have are feed, seed, manure, chemicals and equipment. The farmers purchase the agricultural inputs from suppliers such as BKB in Beaufort West. BKB offers services such as financial services, advice, auctions, logistics, warehousing, grain storage, trading, and brokers.

3.2.2 Processing of wool

The factors that contribute to the price of wool are the generic quality of the sheep, lambing percentage of the sheep, feed quality, grazing quantity and grazing quality and these factors contribute to the total income that a wool producer receives for wool. For the farmers in the Central Karoo to get high returns for wool there will have to


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be a strict adherence to these standards. On average wool is three times more expensive than other commodities such as cotton and nylon.

Wool is processed in the following stages (Blackberry Ridge Woolen Mill, n.d.):

Fleece – sheep are sheared on the farm and this results in grease wool

Washing of wool – before wool can be made into yard the grease wool needs to be washed. Approximately 20 litres of water is required to wash 1 kg of wool.

Picking – the washed wool is then dried “picked” or “teased” and this begins the process of opening up the locks of wool and transforming it into a consistent web. The wool is then put through a picker which opens the locks and the fluffy wool is blown into a room.

Carding – this is done with machine driven drums that are covered with “card cloth” and that combs the wool multiple times by transferring it back and forth from one drum to the other as it is passed through the series of drums.

Roving – the final stage of the carding process divides the web into small strips which are called pencil roving’s. At the end of the cart these are collected on large spools. These spools of pencil roving are placed on the spinning frame to make a yarn. Pencil roving cannot be handled much because it is too delicate, so when processing fibre for hand spinners the roving is removed from the machines earlier and wound into balls.

Spinning – when the roving comes off the card, it has no twist. The oil and the natural hooks that exist on the surface of the wool fibres hold it together. The spinning frame puts the actual twist on the rover turning it into yarn. Wooden bobbins are used to collect this.

Wind and/or skeining – when the wooden bobbins are full of yarn they are placed on a cone winder. The yarn is then transferred to paper cones for use in knitting machines and weaving.

Finishing – there are different ways of finishing the yarn. It is sometimes essential to remove the lubricant by washing, which also “sets the twist” which enables the fibres to open up, fluff out and make a loftier yarn.

This indicates that the processing of wool uses a lot of water and requires many different stages of processing. Some processing takes place in Port Elizabeth, however, the majority takes place in China, the Czech Republic, India, and other countries, as a result of increasing factor prices, labour costs and unfavourable trading conditions into South Africa that most of domestic wool washing facilities were unable to reduce their volumes and remain economically viable. Furthermore, wool is exported through the South African Wool and Mohair Buyers Association (SAWAMBA) via the South African Wool Exchange. Approximately 60 – 70 per cent of exported wool is semi-processed before being exported.


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BKB is then responsible for transporting the wool from different farms in the Central Karoo to the auction in Port Elizabeth. There are 2 400 different types of wool grades and this gets sorted in Port Elizabeth. Sorting this large amount of wool grades in the Central Karoo would not be feasible as large quantities are collected from a wide market area and auctioned. The Central Karoo is not well spatially located as transport costs would significantly increase due to the high travel distances. Different quality bales are auctioned and bales in each lot are sold to the highest bidder. After the auction, the wool is destined for export from three major ports, e.g. Durban, Cape Town and Port Elizabeth. The majority of wool (95 per cent) is exported predominantly to China (36 per cent), the Czech Republic (26 per cent) and India (18 per cent).

The main wool buyers/processors in South Africa include Chargeurs Wool SA (Port Elizabeth, head office: France); H Dawson Sons & Co (Pty) Ltd (Port Elizabeth, head office: United Kingdom); Lempriere SA (Port Elizabeth, head office: Australia); Modiano (Port Elizabeth, head office: London); Standard Wool SA; New England Wool SA (Port Elizabeth); Stucken & Co (Port Elizabeth); and Segard Masurel SA (Port Elizabeth, head office: France). Most of the wool buyers are part of multinational textile companies. The wool processing industry currently has two processors active in the early stage of wool processing, namely (1) Gubb and Ings Ltd (part of the Stucken Group), and (2) Cape of Good Hope (owned by Segard Masurel). The decline in processing can be partly attributed to the rise in demand for greasy wool (untreated wool) in world markets. A number of processors have closed down and or moved to China where production costs are lower.

The average quantity of wool per Merino sheep shear is 4 - 5 kg. Currently the wool price for clean wool is R110.17 per kg (BKB, 2014). Sheep farming also provides an income from the skin. Sheep skins are produced from both main breeds, Merino and Dorper (DAFF, 2012). After about five to six years of shearing the sheep are sold directly to feedlot (small number) or abattoir; or sold through auctions. Live sheep and lambs can be imported by the farmer or the feedlot or the abattoir (DOA, 2014). Cape Town is the largest exporter of mutton in the Western Cape owing to the volumes passing through the harbour and international airport. The value of imports is substantially more than the value of exports, confirming the imbalance in supply and demand.

3.2.3 Abattoir

Sheep and lamb are slaughtered in abattoirs that are distributed all over South Africa. Slaughtering outside the abattoirs is not easy to record. Most of the mutton produced in South Africa is consumed locally. South Africa will still remain a net importer of mutton to satisfy the local demand (DOA, 2014). The abattoir industry can be divided into the following: (1) Abattoirs which are linked to feedlot sector, the wholesale sector or are owned by municipalities; and (2) abattoirs that are mainly owned by farmers and SMMEs. The former abattoirs are predominantly class A and B abattoirs while the latter are usually classified as C, D and E class abattoirs. In most cases the A and B class abattoirs comply with statutory measures while it is questionable if the majority of the C, D and E class abattoirs comply with the statutory measures (Davidson 2003). Map 3.1 indicates the location of abattoirs in the Western Cape.


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Map 3.1 Location of abattoirs, Western Cape

Source: WC Department of Agriculture, Cape Farm Mapper, 2016

There are 7 operational abattoirs in the CKD. Most of the abattoirs slaughter sheep, goats, cattle and game. Sheep and goats slaughtered outside of an abattoir are difficult to record. Some farmers in Prince Albert send their sheep and goats to abattoirs in George and meat from George has to be transported back to wholesalers in the Central Karoo. Some farmers in Murraysburg make use of abattoirs in Graaff Reinet. This indicates that processes such as cutting of meat and the packaging of produce takes place outside of the originating town and is then sent back to the originating town to be sold off at higher prices due to the added beneficiation and transport costs.

Abattoirs that seek to export meat must have a veterinary approved meat establishment with an export (ZA number) number that is granted through an application process by the NEO (National Executive Officer) at the Department of Agriculture. The abattoirs in the CKD are C, D and E class abattoirs. None of the abattoirs in the CKD have a ZA certification with a ZA number and that limits the scope of the market to be local. Thus in order to increase the market share of the local sheep farming industry (especially in terms of exports) it will be necessary to put in place the needed steps to acquire the ZA certification for abattoirs in the CKD. There has been a continuous increase in the price of mutton from 2004 to 2012 mainly as a result of the inflation factor, insufficient supply and consumer lifestyle. There was a large decrease in the price of mutton in 2013. The price of mutton in 2004 was R20.13/kg, however in 2014 it was R41.59/kg. In a period of 10 years the increase was R21.46/kg (Department of Agriculture, 2014).


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Most of the hides and skins commonly are bought from abattoirs and there is less dependence on reptiles and wild animals (Department of Agriculture, 2014). Table 3.2 indicates the prices of skins, hides and leather.

Table 3.2 Prices of Skins, Hides and Leather, 2013

Types of skins, hides and leather Prices per skin

Merino dry sheep skin R15.00 - R20.00/skin

Short wool skin R10.00 - R15.00/skin

Sheared wool skin R25.00 - R30.00/skin

Cattle dry skin R7.00 - R8.50 per kilogram

Ostrich skins R1 000 - R1 500 per kilogram

Goat dry skin R15.00 - R20.00/skin

Goat skin after tanning R40.00/skin

Impala (Grade 1) R15.00 - R20.00/skin

Bless Bok/Springbok (Grade 1) R15.00 - R20.00/skin

Source: DAFF, 2014

Goat skin after tanning and sheared wool skin have a higher market value (with the exception of ostrich skin) than other skins, hides and leather which makes it more profitable for abattoir owners in the CKD as most of the livestock slaughtered is sheep and goats. The tanneries that are the biggest role players in the industry are African Hides (situated in PE), PPC (situated in PE) and Richard Kane (situated in Cape Town). There is only one small tannery in Prince Albert and this is the only one in the CKD. The abattoirs put some salt on the skins and hides, the tanneries collect the hides and skins either every week or second week (depending on the arrangement with the individual abattoir) and transport them to either Cape Town or PE. The skins, hides and leather industry export leather and tanned leather and are also an important earner of foreign exchange. Approximately 95 per cent of the tanned leather is exported. The industry mainly exports to Asia (China, Hong Kong and the Republic of Korea) and Europe (Germany, United Kingdom, Greece and Italy) (DAFF, 2014).

Approximately 10 litres or more water is used to soak and wash one cow hide and approximately 5 litres of water is used to soak and wash one sheep skin. To have a tannery on a large scale in the CKD would need excessive water that the District Municipality would not be able to provide on in large volumes. A tannery requires water and needs to be done on a large scale to be profitable. The well-established tanneries in PE and Cape Town have an extensive network in SA and the CKD has the current abattoirs in the area supplying skins and hides (with a tannery in Prince Albert). These well-established tanneries can wash the skins in high volumes and are also situated in areas where water shortage is not a challenge such as in the CKD. Bearing in mind that 95 per cent of the skins and hides are destined to be shipped overseas the coastal towns are well located.


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3.2.4 End Users

South African mutton is mainly exported to Angola and Mozambique in SADC. Angola commanded the highest exports from 2004 to 2006 and Mozambique took over the first position from 2007 to 2013. Democratic Republic of Congo (DRC) became the second highest commander of mutton from South Africa during 2008 to 2010, 2012 and in 2013 (DOA, 2014). Nigeria and Gabon competed for the highest importer of mutton from South Africa. Nigeria commanded the greatest shares of South African mutton during the periods 2004; 2007 to 2009 and 2011 while Gabon was the greatest in 2005 – 2006 and in 2010. The largest importers of South African mutton is Ghana, Gabon and Nigeria, of whom the biggest on average is Nigeria who commanded 19 549 kg of mutton per annum in the last 10 years. Ghana commanded the greatest shares in 2012 and 2013. Averagely Nigeria commanded 19 549 kg per annum of mutton from South Africa during the past decade followed by Gabon by 17.764 kg (DOA, 2014). The majority of wool (95 per cent) is exported predominantly to China (36 per cent), Czech Republic (26 per cent) and India (18 per cent). The garments made from the wool are made in different countries all over the world.

The Department of Trade and Industry is currently working on an agreement on Geographical Indicators (GIs) and that includes the protection of the “Karoo Lamb” brand by setting out clear criteria of the geographic area and food that sheep must eat to be branded as “Karoo Lamb". There are also perceived differences between Karoo and non-Karoo lamb among consumers. According to a study by Tessa Weissnar from the University of Pretoria (Weissnar, n.d.) Karoo lamb is generally preferred by consumers because its brand signifies confidence in local produce, its taste and consequent perceived higher quality. Currently the price difference margin between non-Karoo and Karoo lamb is willingness to purchase is not very large. There is evidence that that proves that consumers are willing to pay a higher price for origin status compared to a quality that comes from an unknown brand. This supports the protection of Karoo Lamb and that for which consumers are prepared to pay premium rates. This will potentially increase the profits of farmers that want their meat branded as “Karoo Lamb”.

3.2.5 Risks

Since the economy of the CKD is predominantly dependant on agriculture, the risks climate change poses to the agricultural productions is of serious concern. The commonly predicted characteristics of climate change are the long term rise in temperature, changes in the precipitation patterns, variability in precipitation, changes in the growing season etc. According to the Climate Change Strategy for the Western Cape (2008) it is projected that the Western Cape will become dryer and hotter. These variables will have adverse implications on the availability of water for both rain fed and irrigated agricultural production. The temperature also impacts on crop activities it results in crop burn, increased heat stress on livestock, pests (such as fruit fly quantify) and microbes which result in yield reductions and decrease in the rural livelihoods.


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Declining sheep numbers and rapid population growth in South Africa have led to an increase in demand and subsequent shortages in the supply of mutton. The declining of sheep numbers is mainly through the predation and stock theft (DOA, 2014). There are several risks to the sheep farming industry in the CKD due to (1) farmers replacing sheep farming with other types of livestock farming; (2) farmers selling farms which are bought as lifestyle or holiday farms; and (3) decreased capacity from emerging farmers. Also, in order to increase sheep farming the problem with predators needs to be addressed and animal feed needs to be subsidised. According to the Department of Agriculture there are risks and challenges to the sheep industry which include: competition both nationally and internationally, climatic conditions, non-compliance in abattoirs, corrupt livestock agents, stock theft, and predators (DOA, 2014). Access to markets is also a possible risk as well as fashion trends.

3.2.6 Opportunities

There are opportunities to provide training for abattoir managers to obtain certificates with a ZA number. This will extend the market of the Karoo meat as it can be exported and grow the Karoo lamb internationally. The CKD also produces high quality Karoo Lamb and there could be possibilities to produce niche products like organic Karoo Lamb. Information dissemination is also needed in terms of providing the farmers with the knowledge of the minimum requirements needed in order for their produce to be labelled with the “Karoo Lamb” brand which is a third party point of origin certification scheme. The scheme also requires certain standards to be met which include animal welfare and point of origin mapping of the entire value chain of a product. This contributes to the marketing image of the final product as it guarantees an authentic and ethically produced product. There is also the need for more qualified block mans to the meat processing sector.

3.3 Tourism value chain

The tourism industry forms part of other sectors especially the trade, transport and finance sectors. Tourism is not an economic sector on its own but rather it is a combination of various sectors. However, due to its increasing importance as an income and employment generator, it is believed that this sector should be discussed separately from the other sectors. In the Central Karoo there has been an increase in tourism facilities, especially around farm stays and on game farms as well due to attractions such as the natural landscapes and scenery and flora and fauna. The research indicates that new through-routes are providing alternatives to the N1, which in turn are offering opportunities for regions such as the “Green Kalahari Route” and the Cape Town/Graaff Reinet to the Eastern Cape interior. Opportunities also exist to capture the weekend market. Figure 3.2 indicates the tourism value chain.


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Figure 3.2 Tourism value chain

Source: Urban-Econ 2016

The tourism value chain consists of:

Suppliers: Including accommodation establishments, car hire, tour and trip operators and attractions.

Distribution: Including global distribution systems, destination management services, central reservation offices and supplier websites.

Intermediaries: Including tour wholesalers and travel agents.

Customers: Including foreign, domestic, business and leisure.

3.3.1 Suppliers

In terms of supply, the Central Karoo has many existing tourist facilities (see Table 3.3).

Table 3.3 Central Karoo District tourism facilities in 2015

Type and number of infrastructure Laingsburg Prince Albert Beaufort West

4x4 18 2 18

Accommodation 33 43 63

Birding 15 0 19

Camping 11 6 8

Cellars 0 4 0

Conference/Function venue 2 0 11

Ecotourism 6 6 13

Fishing 2 0 5

Farm Market 0 1 0

Farm Stall 1 3 3


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Type and number of infrastructure Laingsburg Prince Albert Beaufort West

Hiking 19 6 27

Horse Riding 2 0 12

Mountain Biking 18 3 14

Ostrich 0 0 0

Picnic 0 0 7

Quad Biking 1 0 6

Restaurant 1 2 6


3.3.2 Distribution and intermediaries

Distribution services are created by global distribution systems, destination management services, central reservation offices and supplier websites. Intermediaries in the tourism industry include tour wholesalers and travel agents. The CKD has limited intermediaries but have tourism information offices and very good tourism websites. The issue is that the various tourism offices inside the District and outside the District (in other Karoo areas) do not work together in providing tourism linkages that would encourage tourists to stay longer in the Karoo.

From a tourism perspective, competitive advantages in the CKD include:

Laingsburg Karoo lamb and Karoo food

N1 running through town and close proximity to the newly established R62 tour route that passes through the Klein Karoo to Oudtshoorn

Peaceful ambiance

Rich geology (Water scorpion)

Culture of hospitality

Beautiful starlit skies

Farm stays, unique flora

Swartberg Pass and Gamkaskloof Pass

Fossil sites throughout the region

The following protection and conservation areas are present within the CKD (CKDMSDF, 2014):

Karoo National Park (in Beaufort West)

Steenbokkie Private Nature Reserve (near Beaufort West)

Towerkop Nature Reserve (near Laingsburg)

Anysberg Nature Reserve (near Matjiesfontein)

Gamkapoort Nature Reserve (near Prince Albert)


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Gamkaskloof Nature Reserve (near Prince Albert)

Groot Swartberg Nature Reserve (near Prince Albert)

Swartberg East Nature Reserve (near Prince Albert)

Wolwekraal Nature Reserve (near Prince Albert)

The Karoo Highways Tourism Project consists of six Karoo routes, namely: (1) The Great Karoo Route; (2) The Little Karoo Route; (3) The Camdeboo Route; (4) The Sundays River Route; (5) The Hantam Route; and (6) The Green Kalahari Route. These projects will be implemented by the Karoo Development Foundation (KDF).

The CKD also has linkages to other towns which include the following: (1) SKA in Carnarvon, (2) SALT in Sutherland, (3) Karoo booktown and festivals in Richmond, (4) cuisine in Prince Albert, (5) architecture in Victoria West, and (6) a wide range of attractions in Graaff Reinet. Prince Albert was awarded the winners in the 2012 Western Cape “Town of the year” competition, hosted by the television program Kwêla. Furthermore, the new reality cooking program Kokkedoor is also filmed in Prince Albert with local competitors (PALMSDF, 2014). The Karoo Highlands Route is situated in the north-eastern part of the Western Cape and southern part of the Northern Cape in South Africa. The route includes the small Karoo towns of Matjiesfontein, Sutherland, Fraserburg, Williston, Carnarvon, Loxton, Victoria West and Beaufort West and is also commonly referred to as the Great Karoo (OpenAfrica, 2015)

Table 3.4 Tourism characteristics of each municipal area

Municipality Heritage and Architecture Natural and Environment Crafts, Cuisine and Other

Laingsburg Laingsburg flood history and Karoo architecture

Star-gazing, nature reserves, and Floriskraal Dam

Craft shopping and overnight accommodation

Prince Albert Cape Dutch, Karoo and Victorian Architecture

Die Hel (Gamkaskloof), Swartberg Pass, Mountains and Reserve, Seweweekspoort and Meiringspoort

Craft-making and shopping, chef school, agricultural activities (olive, wine and fruit farms) and art galleries

Beaufort West Chris Barnard Museum, Block Houses, and Khoi-San rock art (Nelspoort)

Karoo National Park, Game hunting and game farms

Karoo cuisine, overnight accommodation, crafts shopping and conferencing

Source: AECOM, 2013

Table 3.4 indicates the current tourism character of each municipal area. Travel agents and tour operators are the main distribution intermediaries. Commonly, travel agents act as the retail outlet for tourism products (transportation, lodging, and excursions), and tour operators are wholesalers. Table 3.5 illustrates the main local distribution intermediaries in the CKD.


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Table 3.5 Registered local tour suppliers in the Central Karoo District

Name of Tour Operator Location

African Kombi Tours Beaufort West

Karoo Birding Safaris Beaufort West

Karoo Reisen Beaufort West

Mandlenkosi Bicycle Tours Beaufort West

Mbongolo Donkey Tours & Transport Beaufort West

Source, BWT, 2016

There are 5 tour operators registered in the CKD and they are all located in Beaufort West.

3.3.3 Customers

The highest source of visitors in 2015 were from the domestic market (92.4 per cent) compared to 6.6 per cent overseas visitors (a similar trend that can be seen in previous years). The majority of visitors to the Cape Karoo were day visitors (74.1 per cent) compared to 25.9 per cent who were overnight visitors (Wesgro, Cape Karoo Annual Regional Tourism Visitor Trends 2015, 2015). Therefore, it can be seen that the Cape Karoo is regarded predominantly as a day visitor destination most likely to visit family and friends or for popular events such as the Karoo Marathon which is a very popular event amongst visitors.

Visitors to the Cape Karoo predominantly came for holiday/leisure purposes (92.4 per cent) and mostly travelled in pairs (36.9 per cent). The domestic visitors were predominately from the Western Cape (36.9 per cent), Gauteng (28.9 per cent), and Northern Cape (7.6 per cent). The overseas visitors were predominately from Germany (21.5 per cent), United Kingdom (15.4 per cent), and Netherlands/Belgium (12.3 per cent) (Wesgro, Cape Karoo Anual Regional Tourism Visitor Trends 2015, 2015). The main activities undertaken were culture and heritage (± 45 per cent), scenic drives (± 12 per cent), national parks (4 per cent), and gourmet restaurants (4 per cent). During 2015 the Karoo National Park received 40 578 visitors in 2013, growing by 7.5 per cent from 2014. The Beaufort West Museum received 4 503 visitors and the Fransie Pienaar Museum received 3 812 visitors in 2015 (Wesgro, Central Karoo Destination Sector Fact Sheet, 2014).

3.3.4 Risks

Tourists’ length of stay and expenditure is low as the Central Karoo is viewed as a stop en route to other destinations, although the area has significant potential to develop this sector as the nearest tourist destinations, the Cape Winelands District is approximately 240 kilometres away and Hermanus (a popular whale watching destination) is approximately 279 kilometres away.


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3.3.5 Opportunities

Central Karoo has the potential to develop cultural tourism which may be linked to the selling of arts and crafts. The development of eco-tourism and agri-tourism holds significant potential. These various types of tourism offerings should be investigated within the CKD and outside the District to create linkages and routes that link these various offerings into a product that would attract tourists. Beaufort West could position itself as a conference location for national events, given its dominance as a town in the region and its strategic central location. The low level of population density in the Karoo makes this area an ideal site for astronomical observation, constituted the basis of South Africa’s bid to host the Square Kilometre Array (SKA) in Carnarvon.

Other opportunities include tourism infrastructure (transport, signage, basic services, information centres and databases), marketing, developing and improving facilities and human capital (CKDMRDP, 2013). There are also very few wellness retreats in the Karoo, unlike those clustered around the big commercial centres. The Karoo itself is a wellness centre for the soul, and the “well of psychic wellness” is a big asset of the Karoo. Silence, solitude and space is the big asset of this region. The nothingness is the Karoo’s most valuable commodity (Taylor, 2008). A director of the Central Karoo SANPark expressed a vision to create a new “National SANPark Air Safari Route”, linking several SANParks via air services. This marketing initiative will be geared towards foreign tourists, who are “cash rich and time poor”. Experience in other African countries, such as Kenya and Australia, show the growing popularity of air safaris, as it saves time between destinations (Atkinson, 2013).


The sheep value chain is well established in the CKD. One of the biggest sheep farming districts in the Western Cape is the CKD (with 25.5 per cent of sheep livestock in the Western Cape). The CKD currently has 417 210 livestock and the main agricultural products in the CKD are wool, mohair, mutton and skins. The wool and mohair is exported and very little local value addition takes place. The CKD is responsible for the largest wool production in South Africa, while meat production makes the second largest contribution to the economy of the region. Even though some processing takes place in Port Elizabeth, the majority takes place in China, the Czech Republic, India, and other countries. This is because of increasing factor prices, labour costs and unfavourable trading conditions into South Africa that most of domestic wool washing facilities were unable to reduce their volumes and remain economically viable. Despite this there are opportunities in the value chain. The Central Karoo value chain is well established but facilities and tours are sparsely located. Central Karoo has the potential to develop cultural tourism and this may be linked to the selling of arts and crafts. The development of eco-tourism and agri-tourism holds significant potential. These various types of tourism offerings should be investigated within the CKD and outside the District to create linkages and routes that link these various offerings into a product that would attract tourists.


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4


4.1 Introduction

This chapter looks at municipal infrastructure spending in the CKD in terms of the Central Karoo Integrated Development Plan (IDP, 2012 - 2017), local municipal IDPs, national and provincial policy directives and key performance areas.


Infrastructure investment is a catalyst for economic and social development. Quality infrastructure that is well managed and maintained, provides major benefits to both households and enterprises through opening up opportunities for the poor and supporting growth in economic output (DBSA 2011). Within the Central Karoo the following infrastructure projects have been identified as key drivers of development.

4.2.1 Development of specialised skills for gas exploration

The moratorium of hydraulic investigations into shale gas in the Central Karoo have been lifted by Government, therefore indicating the support for investigations into the extent thereof. The existence of shale gas has been identified within the CKD in close proximity to the town of Beaufort West. Amongst others, PetroSA have applications for explorations. This opportunity has as a result led to the establishment of a school of excellence by PetroSA which will focus on mathematics and science and the development of industry-related artisans and specialists in the Central Karoo. Talks on the development of specialised skills for gas exploration project have been put on hold due to the issue in identifying a suitable venue for the project. It is envisaged that by September 2017 the development of specialised skills for gas exploration project will be completed with training commencing in 2018. The total capital investment for the


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development of specialised skills for gas exploration project has not been discussed yet.

4.3 Central Karoo District

4.3.1 GDPR growth

Figure 4.1 maps capital expenditure and economic growth in the Central Karoo for the period 2013 - 2019. The data shows that capital expenditure has been counter cyclical, meaning that when economic growth was down capital expenditure was on the incline.

Figure 4.1 Central Karoo District capital expenditure and economic growth, 2013 - 2019


4.3.2 Western Cape Government infrastructure spending in the CKD

In addition to the infrastructure expenditure by the local municipalities in the district, the Western Cape Government with its health, human settlements and transport and public works mandates, makes important investments in infrastructure in the CKD. According to the WCG 2016/17 MTEF budget, the largest share of planned infrastructure expenditure will be on transport and public works projects, followed by human settlement (housing) and health infrastructure (see Figure 4.2). This provincial infrastructure investment will contribute to developing the economic infrastructure of the CKD through the investment in roads by the Department of Transport and Public Works, and in social infrastructure, through the investment by the Departments of Health and Human Settlements.

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The Western Cape Government’s expenditure will supplement the municipalities’ investment in economic infrastructure such as roads and social infrastructure through investment in human settlements (housing), and reflects the alignment of provincial infrastructure investment with the National Development Plan.


Figure 4.3 shows that internally generated funding forms the backbone of the CKD Municipality’s capital funding strategy.

Figure 4.3 Central Karoo District Municipality capital funding by source, 2012 - 2019

Source: Central Karoo District Municipality A-Schedules, 2016/17

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4.4 Beaufort West Municipality


Electricity decreased from 24 per cent as a percentage of total capital expenditure in 2012/13 to a projected 19 per cent in 2018/19. In 2012/13 waste water management constituted 1 per cent before increasing to a projected 18 per cent in 2018/19. Municipal roads are a key component of capital expenditure, even though it decreased from 65 per cent of total capital expenditure in 2012/13 to 32 per cent in 2018/19.

Table 4.1 Total capital expenditure for Beaufort West Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 24 31 14 27 19 14 19

Water 7 15 2 13 0 9 7




Housing 0 0 0 0 0 0 0

Others 2 8 59 15 43 35 23

Total 100 100 100 100 100 100 100

Source: Beaufort West Municipality A-Schedules, 2016/17

4.4.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), the Municipality had no sanitation backlogs and water services backlogs. There were no electricity and refuse removal backlogs (Beaufort West Municipality 2014/15 Annual Report).

4.4.3 Challenges

According to Stats SA’s 2016 municipal survey and the 2015/16 reviewed IDP of Beaufort West, the Municipality identified the following challenges, constraints and developments:

Bulk water - A key constraint is funding for the extention of the existing bulk water network (drought, storage capacity).

Electricity - there is insufficient funding for upgrading of the existing network, although the upgrading of the following electrical infrastructure is planned for 2016/17; main substation, L. Smit substation, Nelspoort and Murraysburg infrastructure.


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Waste water - The upgrade of Murraysburg Waste Water Treatment Works is planned for 2016/17 to ensure that the final effluent meets set standards.

Solid waste - There is limited airspace in the Vaalkoppies landfill site, less cover material and insufficient machinery and equipment on site.

Housing - Suitable vacant land for housing is usually privately owned and expensive. Also, backlogs in housing cannot be addressed given that the increasing demand far outstrip the delivery of housing units.


Figure 4.4 shows that the main source of capital funding for Beaufort West Municipality comes from national government. A significant spike in capital funding from public contributions and donations was observed in 2014/15. National funding is projected to decrease by 2018/19.

Figure 4.4 Beaufort West Municipality capital funding by source, 2012 - 2019

Source: Beaufort West Municipality A-Schedules, 2016/17

4.5 Laingsburg Municipality


Electricity increased from 3 per cent as a percentage of total capital expenditure in 2012/13 to a projected 23 per cent in 2018/19. In 2012/13 water constituted 15 per cent before increasing to a projected 74 per cent in 2018/19. Waste water management declined from 70 to 2 per cent over this period.

0

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Table 4.2 Total capital expenditure for Laingsburg Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 3 1 9 22 14 36 23

Water 15 2 3 3 43 46 74




Housing 2 0 39 53 1 0 0

Others 5 20 11 7 18 2 1

Total 100 100 100 100 100 100 100

Source: Laingsburg Municipality A-Schedules, 2016/17

4.5.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), and the Laingsburg Municipality 2014/15 Annual Report, the municipality had no services backlogs.

4.5.3 Challenges

According to the 2016 municipal survey and the 2015/16 reviewed IDP, the municipality identified the following challenges, constraints and developments:

Water - Infrastructure needs to be upgraded to supply sufficient water to new housing areas. Planned upgrades include the installation of an elevated tank and main pipe line before December 2016.

Electricity - New Switchgear substation has been built to upgrade the infrastructure and provide electricity to the new housing area. Phase two of the switchgear substation to be completed during 2016/17.

Waste water - There is a lack of infrastructure to re-use the treated water for irrigation for sports facilities and trees. Upgrading of waste water treatment works are underway and the construction of sludge dry beds is planned for 2016/17.

Refuse - The Municipality is seeking funding for the expansion of the existing landfill site at Laingsburg. The Department of Environmental Affairs is currently erected an entrance control building, upgraded the recycling centre and built a composting facility.

Roads - The surfacing of tarred roads and tarring of gravel Provincial Roads in municipal area is a key challenge.

Housing - There is competition for the few houses being built, between people on the farms and people living within the municipal area. There is also the pressure of back-yard dwellers on existing infrastructure.


519


Figure 4.5 shows that the main source of capital funding in Laingsburg Municipality comes from national government. A significant spike in capital funding from national government was observed in 2014/15. National funding is projected to decrease by 2018/19.

Figure 4.5 Laingsburg Municipality capital funding by source, 2012 - 2019

Source: Laingsburg Municipality A-Schedules, 2016/17

4.6 Prince Albert Municipality


Electricity increased from 14 per cent as a percentage of total capital expenditure in 2014/15 to a projected 29 per cent in 2018/19. In 2012/13 water constituted 17 per cent before increasing to a projected 34 per cent in 2018/19. Municipal roads are a key component of capital expenditure, even though it decreased from 32 per cent of total capital expenditure in 2012/13 to 30 per cent in 2018/19.

Table 4.3 Total capital expenditure for Prince Albert Municipality (%)

Classification 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Electricity 0 0 14 8 11 36 29

Water 17 30 51 18 10 8 34




Housing 0 0 14 0 0 0 0

Others 50 1 15 29 31 16 8

Total 100 100 100 100 100 100 100


0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00



520

4.6.2 Backlogs

According to the 2015 Non-Financial Census of Municipalities (NFCM), and the Prince Albert Municipality 2014/15 Annual Report, the municipality had no services backlogs.

4.6.3 Challenges

The reviewed municipal IDP of 2015/16 identified the following challenges, constraints and developments:

Bulk and internal network losses are unknown.

Water treatment works does not meet Blue & Green Drop compliance requirements.

Reticulation network has insufficient capacity to cater for future developments.

Quantity and quality of water discharged from the waste water treatment works is not known.

The development and implementation of a monitoring system for flow in the Dorps River, water abstracted, quality and water levels of boreholes, water losses, and treated waste water volumes and quality.


Figure 4.6 shows that the main source of capital funding in Prince Albert Municipality comes from national government. A significant spike in capital funding from provincial government and public contributions and donations was observed in 2015/16.

Figure 4.6 Prince Albert Municipality capital funding by source, 2012 - 2019

Source: Prince Albert Municipality A-Schedules, 2016/17

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

2012/13 2013/14 2014/15 2015/16Unaudited

2016/17 2017/18 2018/19

R'0

00



521


Infrastructure investment, human capital formation and innovation are essential for the promotion of economic growth within a municipality (OECD, 2009). The extent to which infrastructure investment influences economic growth within the municipalities in the Western Cape is evaluated using the Growth Potential Index (GPI) included in the Growth Potential Study of Towns undertaken by the Department of Environmental Affairs and Development Planning. The index provides an analysis of the economic viability of infrastructure investments (as opposed to political, environmental, social and fiscal viability). The potential for economic development that comes about from investment in an infrastructure project is among the most important criteria on which the investment decision should be based. The GPIs in Figure 4.7 provides an indication of the municipalities in which infrastructure investment has the greatest potential for being translated into increased production and employment creation. The GPI is evaluated within the context of municipal capital expenditure (both past and projected).


Source: DEADP, Growth Potential Study 2014; Municipal A-Schedules

Beaufort West recorded a GPI of 11, and whilst this was the highest in the District, it was nevertheless among the lowest in the Province, i.e. the municipal area has a very low growth potential. Laingsburg and Prince Albert recorded a GPI of 1 and 4 (among the three lowest in the Province) and was classified as having very low growth potential.

The municipalities in the Central Karoo District recorded low growth potential despite significant growth in municipal capital investment - capital expenditure in Laingsburg grew by 53.2 per cent, Prince Albert by 44.2 per cent and Beaufort West by 12.3 per cent per annum on average. This growth nevertheless stems from a small base as municipal capital expenditure in the municipalities from the Central Karoo District remains substantially below that of the local municipalities in the other districts.

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Laingsburg Prince Albert Beaufort West



522

The growth potential of an area is influenced by a number of factors including infrastructure levels in that region. The standard of infrastructure in the Central Karoo District is low. The extent of retail and services sector, size of the economy and past growth trends are among the factors which inform the GPI. Growth potential within the municipalities in the Central Karoo District will expand as these factors (among others) are improved. Municipal capital expenditure is projected to contact by 34.8 per cent per annum on average in Laingsburg, 18 per cent in Prince Albert and 18.4 per cent in Beaufort West. In order to advance the growth potential of infrastructure investments within these municipalities it is encouraged that existing stock levels are improved through further investments such that the returns on municipal capital investments may be enhanced and economic performance be improved.


A review and analysis of the infrastructure spending in the CKD suggest that provincial departments and the CKD municipalities prioritised investment and development of basic services infrastructure, in line with core municipal mandates and National imperatives, as articulated in the National Development Plan and other sector strategies.

However, sparse populations and low densities in the Central Karoo pose unique challenges in terms of cost and provision of basic infrastructure and services. Insufficient funding is the key constraint that negatively impacts delivery of across all services ranging from upgrading and extending water and sanitation networks, or expanding electricity and solid waste management capacity. The main source of capital funding in the CKD is national and provincial infrastructure investment.


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5


5.1 Introduction This chapter investigates the impact of recent economic performance on social conditions of households within the CKD municipalities. Latest results from Statistics South Africa’s Community Survey 2016 and the 2016 Non-Financial Census of Municipalities are among the key sources of data used in this chapter, but data from Quantec and administrative data from government sector departments are also used in the analysis. The extent of social development within a community can have positive or negative future financial implications for municipalities. For instance, a growing economy can result in more employment creation and higher incomes for households within a municipality as well as better education, health and access to basic services. In contrast, a declining economy can lead to increasing unemployment and poverty, weak education, poor health, and low basic service access levels. The most recent socio-economic indicators including the Human Development Index (HDI), GDPR per capita and the Gini coefficient are used to show the current living standards of communities within the CKD.

5.2 Human development The Human Development Index (HDI) is a key measure used by the United Nations to assess the relative level of socio-economic development in countries. It is a measure of peoples' ability to live a long and healthy life, to communicate, participate in the community and to have sufficient means to be able to afford a decent living. The HDI is thus a composite of factors reflecting longevity, economic prosperity, and schooling. It is represented by a number between 0 and 1 where 1 indicates a high level of human development and 0 represents no human development


524

Figure 5.1 Central Karoo District Human Development Index 2011 - 2015


Figure 5.1 shows a measured increase in the HDI levels for the CKD, from 0.62 in 2011 to 0.67 in 2015, showing an improvement in the last 4 years. The CKD displays the lowest level of human development among the Districts in the Province, and consequently remains well below the provincial average of 0.73.

Figure 5.2 Human Development Index across municipalities in the Central Karoo District, 2011 - 2015

As shown in Figure 5.2, the HDI has been consistently increasing in all three municipalities in the District. Laingsburg displayed the highest HDI in 2015 (0.67), followed by Prince Albert (0.67) and Beaufort West (0.66).

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

0.60

0.61

0.62

0.63

0.64

0.65

0.66

0.67

2011 2012 2013 2014 2015

HDI GDPR Growth

0.59

0.60

0.61

0.62

0.63

0.64

0.65

0.66

0.67

0.68


2011 2012 2013 2014 2015


525

Various social indicators related to human development in the CKD are discussed below, including population, households, indigent households, household income, income inequality, poverty, access to basic services, education levels and health matters at respective municipalities within the District.

5.3 Population and households The standard of living among communities in municipalities within the CKD can be estimated by analysing economic performance and population data over a given period of time. An improvement in the standard of living among communities can be attained when economic growth is faster/higher than population growth. GDPR per capita, which is calculated by dividing the total value of economic activity within a municipality by the total population, is the indicator used to estimate the average annual incomes of households within a specific area.

5.3.1 Population

Figure 5.3 shows that Beaufort West’s population increased by 1 494 inhabitants between 2011 and 2016, which was the largest increase in the District. Laingsburg experienced the smallest increase in population in the District with its population growing by 606 inhabitants. Beaufort West was the only municipality in the District to experience growth in employment over the period 2005 - 2013, and the increase in its population may be due to migration due to the seemingly more appealing employment prospects in the municipality.

Figure 5.3 Population trends in the Central Karoo District


Projections by the Department of Social Development indicate that population is set to continue expanding over the next five years.


Census 2011 8 289 13 136 49 586

Community Survey 2016 8 895 14 272 51 080

0

10 000

20 000

30 000

40 000

50 000

60 000

Po

pu

lati

on


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Figure 5.4 Central Karoo District population projections, 2015 - 2020

Source: Department of Social Development, 2015.

Figure 5.4 shows that Beaufort West’s population is projected to grow faster than that of other municipalities in the District between 2015 and 2020, with expected growth of 0.99 per cent per annum. The populations in Prince Albert and Laingsburg are projected to grow by 0.96 per cent and 0.16 per cent per annum respectively.


The number of households per municipal area within the CKD has also increased between 2011 and 2016 as shown in Table 5.1.

Table 5.1 Number of households per municipality in the Central Karoo District

Central Karoo District Census


2016

Laingsburg 2 408 2 862

Prince Albert 3 578 4 183

Beaufort West 13 089 14 935

Central Karoo District 19 706 21 980



Sources: Statistics South Africa Census 2011 and Community Survey 2016

A total of 1.8 per cent of households in the province live in the CKD in 2016, which is slightly lower than what it was in 2011, indicating the household growth might be relatively slower in the CKD compared to the other Districts.

Beaufort West Prince Albert Laingsburg

2015 51 620 13 684 8 383

2016 52 133 13 820 8 401

2017 52 649 13 956 8 416

2018 53 168 14 091 8 430

2019 53 689 14 224 8 441

2020 54 213 14 357 8 450

0

10 000

20 000

30 000

40 000

50 000

60 000


527

5.3.3 Indigent households

The trends above are apparent when analysing the indigent populations within each respective municipality.

Table 5.2 Indigent households in the Central Karoo District, 2015

Central Karoo District 2014 2015 % change

Laingsburg 518 530 2.32

Prince Albert 783 687 -12.26

Beaufort West 5 293 6 144 16.08

Laingsburg identified 530 indigent households in 2015 (which is slightly higher than the 518 households which had been identified in 2014). Prince Albert experienced a substantial decrease as the number of indigent households reduced from 783 in 2014 to 687 in 2015. Beaufort West recorded substantial increases in the number of indigent households residing within its borders, as the number of indigent households in the municipality increased from 5 293 to 6 144 from 2014 to 2015.

5.4 Household income The annual household income for municipalities within the CKD is presented in Table 5.3 and this shows proportion of people that fall within low, middle and high income brackets. From Table 5.3 it can be seen that the majority of households in the CKD (62.8 per cent) fall within the low income brackets, with only 4.7 per cent falling within the high income bracket (6.9 per cent).

Table 5.3 Annual household income for Central Karoo District municipalities, 2016 (%)

Income Central Karoo

District Laingsburg Prince Albert Beaufort West

No income 8.5 5.2 6.7 9.6

Low Income

R1 - R6 327 3.1 1.9 3.2 3.2

R6 328 - R12 653 5.4 2.9 5.7 5.8

R12 654 - R25 306 21.5 21.0 20.5 21.8

R25 307 - R50 613 24.4 26.0 26.4 23.5

R50 614 - R101 225 16.3 21.0 16.6 15.3

Middle Income R101 226 - R202 450 9.9 11.3 9.8 9.6

R202 451 - R404 901 6.3 5.9 5.6 6.6

R404 902 - R809 802 3.3 3.3 4.0 3.2

High Income R809 203 - R1 619 604 0.8 1.1 0.7 0.8

R1 619 605 - R3 239 208 0.3 0.5 0.4 0.3

R3 239 207 or more 0.2 0.0 0.3 0.2



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The majority of households in Laingsburg, Prince Albert and Beaufort West fall within the low and middle income brackets. Laingsburg has the largest population of middle-income earners in the District, which may point to improving standards of living as more of the population moves from the low-income to middle-income group. Prince Albert has the highest proportion of high income earners (5.4 per cent). For all three municipalities in the District, more than half of the households fall within the low income bracket. There is thus scope for human development in the CKD.

Table 5.4 Central Karoo District expenditure on Goods and services, 2016

Central Karoo

District Laingsburg Prince Albert Beaufort West

Good and services

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Rand millions

2016 % of total

Durable goods 139.07 13.0 11.29 12.1 16.96 12.2 110.82 13.2

Semi-durable goods 135.24 12.7 10.66 11.5 16.90 12.2 107.67 12.9

Non-durable goods 342.82 32.1 30.39 32.7 47.20 34.1 265.22 31.7

Services 451.80 42.3 40.58 43.7 57.50 41.5 353.72 42.2

Total 1 068.93 100 92.92 100 138.56 100 837.44 100


Table 5.4 shows that the combined spending on services and non-durable goods comprises over 70 per cent of total expenditure across all municipalities in the CKD. Households within Beaufort West spend the most on durable goods (13.2 per cent of total expenditure) whilst those in Laingsburg spend the least (12.1 per cent). This may be indicative of the levels of poverty in the District (and particularly Laingsburg municipality) as the majority of household income is spent on the purchase of necessities.

5.5 Income inequality In this section the Gini coefficients for municipal areas within the CKD are analysed. The Gini coefficient measures the levels of income inequality among households within a community. The Coefficient is a measure of statistical dispersion intended to represent the income distribution of a nation's residents, varying between 0, which represents complete equality and 1, which represents complete inequality. In Figure 5.5 it can be seen that income inequality remains high in the CKD, with Prince Albert and Beaufort West recording the highest levels of inequality (with an index of 0.58 each). Although inequality levels are comparatively lower in Laingsburg, the trend is upward between 2013 and 2015. The latest Gini coefficients of CKD municipalities are consistent with the annual income analysis done in Section 5.3 above as they show that inequality levels are highest in Prince Albert, which was shown to have high proportions of high income earners.


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Figure 5.5 Gini coefficients for municipalities in the Central Karoo District, 2013 - 2015


The increasing income inequality in Laingsburg, Prince Albert and Beaufort West indicates that not everyone is enjoying the fruits of economic growth in the respective municipalities. Human development tends to be weak in low income earning communities.

5.6 Poverty The extent of poverty within the municipalities in the CKD is analysed below.

Table 5.5 Poverty headcount and poverty intensity at Central Karoo District municipalities, 2011 and 2016 (%)


Municipality 2011 2016 2011 2016

Laingsburg 1.5 4.2 37.3 37.4

Prince Albert 2.5 2.9 42.4 40.5

Beaufort West 2.5 3.0 40.5 42.3

Central Karoo District 2.4 3.1 40.6 41.1

Western Cape 3.6 2.7 42.6 40.1


Table 5.5 shows the poverty headcount ratio, which is the percentage of population that is below the poverty line. In Table 5.5 it can be seen that the poverty headcount for the province as a whole has decreased by 0.9 percentage points between 2011 and 2016 while that of the CKD has increased by 0.7 percentage points. In terms of municipalities within the CKD, Laingsburg experienced the largest increase in the poverty headcount (2.7 percentage points) between 2011 and 2016, followed by Beaufort West (0.5 percentage points) and Prince Albert (0.4 percentage points). One of the undesirable features of the headcount ratio is that it simply counts all the people below a poverty line, in a given population, and considers them equally poor and

0.52

0.53

0.54

0.55

0.56

0.57

0.58

0.59


2013 2014 2015


530

thereby ignores the depth of poverty; if the poor become poorer, the headcount index does not change.

The intensity of poverty is measured by calculating the Poverty Gap Index, which is the average poverty gap in the population as a proportion of the poverty line. The Poverty Gap Index estimates the depth of poverty by considering how far, on the average, the poor are from that poverty line. The Poverty Gap Index is a percentage between 0 per cent and 100 per cent. Individuals whose income is above the poverty line have a gap of zero while individuals whose income is below the poverty line would have a gap ranging from 1 per cent to 100 per cent (with a theoretical value of 100 per cent implying that the individual earns zero income). An overall value of zero implies that no one in the population is below the poverty line, while an overall value of 100 per cent implies that everyone in the population earns zero income. A higher poverty gap index thus means that poverty is more severe.

Results from Statistics South Africa’s Community Survey 2016 shows that the intensity of poverty in the Western Cape declined to 40.1 per cent in 2016 from 42.6 per cent in 2011 as indicated in Table 5.5. This nevertheless remains indicative of a substantial number of poor people in the Western Cape whose income is significantly below the poverty line. The recent, albeit low, rate of economic growth in the Western Cape has resulted in a positive but very small change in the intensity of poverty among households in the Province. The sluggish economic growth rate in the CKD has had a negative impact on poverty as shown in Table 5.5 where the intensity of poverty increased marginally from 40.6 per cent in 2011 to 41.1 per cent in 2016. From Table 5.5, the following observations are made regarding municipal specific poverty intensity levels in 2016: in Laingsburg, poverty intensity increased marginally, by 0.1 percentage points between 2011 and 2016. Beaufort West experienced the largest increase in poverty intensity, with the index increasing by 1.8 percentage points from 2011 to 2016. Of the three municipalities in the District, Prince Albert was the only municipality to experience a reduction in poverty intensity.

The trends above are apparent when analysing the indigent populations within each respective municipality. Beaufort West has identified 6 144 indigent households (which is significantly more than the 5 293 household which had been identified in 2014). Laingsburg experienced a relatively smaller increase as the number of indigent households in the municipality increased from 518 in 2014 to 530. Prince Albert was the only municipality in the District to report a decrease in the number of indigent households from 783 in 2014 to 687 in 2015. The following section looks at access to housing and basic services by households within the CKD.

5.7 Human dwellings and access to basic services The extent of human development within a municipality is fundamentally influenced by access to housing as well as basic services such as water, electricity, sanitation and refuse removal, with high access levels implying better human development and vice versa. Table 5.6 shows recent statistics relating to the provision of housing within the CKD.


531

Table 5.6 Dwelling type per municipality within the Central Karoo District, 2016

Dwelling type

Central Karoo District Laingsburg Prince Albert Beaufort West

Number 2016

% of total

Number2016

% of total

Number2016

% of total

Number 2016

% of total


86.0 85.2 78.0 76.1 91.0 90.8 86.1 85.3


0.4 0.4 1.0 0.9 0.6 0.5 0.3 0.2


0.8 0.8 0.3 0.3 0.3 0.3 1.0 1.0

Town/cluster/semi-detached house (simplex, duplex or triplex)

7.9 8.6 14.9 16.5 1.2 1.3 8.5 9.2

House/flat/room in backyard

1.9 2.1 1.8 2.0 0.9 0.9 2.2 2.4

Informal dwelling/ shack, in backyard

0.9 0.9 1.0 1.0 1.4 1.5 0.7 0.7

Informal dwelling/ shack NOT in backyard, e.g. in an informal/squatter settlement

0.9 0.9 0.3 0.3 2.7 2.9 0.5 0.5


0.4 0.4 1.4 1.5 0.9 1.0 0.1 0.1

Other/unspecified/ N/A

0.7 0.7 1.3 1.4 1.0 1.0 0.5 0.5

Total 100 100 100 100 100 100 100 100


Informal settlements are an indication of poor levels of human development. Table 5.6 indicates that little progress has been made in terms of eradicating informal dwellings in the CKD as the proportion of the population residing in these structures have remained at 1.8 per cent since 2011. The situation slightly worsened in Prince Albert, who maintains the largest proportion of total households living either in informal shacks or squatter settlements relative to Beaufort West and Laingsburg. Prince Albert nevertheless also has the largest proportion of its households residing in a house or brick structure. The proportion of households in the CKD residing in a house or brick structure has declined from 86.0 per cent in 2011 to 85.2 per cent in 2016.

Human settlements need to be provided with basic services such as water, electricity, sanitation and refuse removal in order for households to develop. Table 5.7 provides recent data on basic service access levels within the CKD as reported by Statistics South Africa in the latest non-financial census of municipalities.


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Table 5.7 Domestic and non-domestic consumers receiving basic services within the Central Karoo District



change 2014 2015 %

change 2014 2015 %

change 2014 2015 %

change

Laingsburg 1 281 1 281 0.0 1 278 1 278 0.0 1 366 1 366 0.0 1 222 1 260 3.1

Prince Albert 2 325 2 585 11.2 2 325 2 511 8.0 2 325 2 511 8.0 2 325 2 511 8.0

Beaufort West 13 864 14 889 7.4 12 924 13 169 1.9 13 384 14 525 8.5 13 456 13 916 3.4


Table 5.7 shows that access levels for water, electricity, sanitation and refuse removal increased between 2014 and 2015 for most of the municipalities in the CKD. This implies that there is an improvement in the living conditions for households and which carry positive implications for human and economic development in the region. Prince Albert experienced the largest increase in access to water and electricity in the District (obtaining an increase of 11.2 per cent and 8 per cent respectively). Access to sanitation and refuse removal in Prince Albert also increased by 8 per cent. In Beaufort West, access to sanitation increased by 8.5 per cent (the largest increase in the district), while access to water increased by 7.4 per cent. Access to electricity and refuse increased by 1.9 per cent and 3.4 per cent respectively.

No changes were reported in the access levels for water, electricity and sanitation in Laingsburg, whilst access to refuse removal increased by only 0.1 per cent. Overall, the District regressed with regard to improving access to electricity. Access levels to refuse removal in Laingsburg registered the second lowest increase in the District overall. It is important for municipalities to ensure that there are high access levels for refuse removal as refuse can be a hazard to health, which could put a strain on a municipality’s finances.





Laingsburg 2 393 2 520 5.3 2 017 2 795 38.6 2 505

Prince Albert 3 554 4 095 15.2 2 921 4 000 36.9 4 049

Beaufort West 13 016 14 189 9.0 12 137 14 550 19.9 14 425

Central Karoo District 18 963 20 805 9.7 17 075 21 345 25.0 20 979


Table 5.8 shows that the number of households that have access to piped water and flush toilets has further increased in 2016, according to the Community Survey findings.


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5.8 Education Education plays a key role in the development of an individual as well as a community, and therefore a community with a high number of educated persons is likely to be more developed and more prosperous than one with less educated individuals. Higher levels of education generally lead to higher paying jobs and vice versa. South Africa has a large supply of unskilled labour, but also a large demand for skilled labour, thus resulting in high levels of unemployment amongst unskilled individuals. Table 5.9 shows recent estimations of the levels of education obtained by the inhabitants within the municipalities in the CKD.

Table 5.9 Education levels of households in the Central Karoo District, 2016

Municipality

Central Karoo District Laingsburg Prince Albert Beaufort West

Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


Education Level

(Number) 2016


No schooling 3 549 7.6 517 8.8 594 6.3 2 439 7.7

Some primary 7 872 16.9 1 069 18.2 1 860 19.9 4 944 15.7

Complete primary

3 259 7.0 339 5.8 758 8.1 2 163 6.9

Some secondary

16 619 35.6 2 278 38.8 3 230 34.5 11 111 35.3

Grade 12/ Std 10

11 888 25.5 1 051 17.9 2 019 21.6 8 818 28.0

Higher 3 504 7.5 613 10.5 897 9.6 1 993 6.3

Total 46 691 100 5 866 100 9 358 100 31 467 100


Approximately a quarter of the adult population in the CKD have not completed primary education. The majority of the adult population without any form of schooling in the CKD resides in Beaufort West. Laingsburg contains the least amount of individuals without any form of schooling, but given the municipality’s relatively small population, it has the largest proportion of individuals without any form of schooling compared to Prince Albert and Beaufort West.

Advancements in the levels of educational attainment can be expected as economic performance in the various municipalities in the District improves. The highest level of education reached by the majority of the population in Laingsburg and Prince Albert is some form of secondary education (38.8 per cent and 34.5 per cent respectively), whilst the highest level of education for the majority of the population in Beaufort West was Grade 12. An economy’s performance can be influenced by the availability of a skilled and qualified workforce. Given the overall population size in the municipalities, Laingsburg contains the largest share of its population having attended higher education. However, in terms of absolute values, the majority of the population in Central Karoo with higher education resides in Beaufort West.


534

5.9 Health The health status of households living within a municipal area is important as healthy communities are likely to make a positive contribution to economic activity. Good health has been found to have a positive and sizable effect on aggregate output in the economy largely because healthier workers are mentally and physically more energetic and robust, more productive and less likely to stay absent due to sickness and disability (Bloom et al., 2004). Communities living in developed economies are exposed to good health systems and therefore tend to be healthier than those living in developing economies.

The health indicators analysed in this section measure the extent of human development and include indicators relating to child and maternal health as well as ART and TB patient loads. These indicators can provide pointers for life expectancy within an economy. South Africa’s life expectancy dropped to 50.4 years in 2010 from 61.7 years in 1995. However, more recent information from Statistics South Africa shows improvements in life expectancy within the Western Cape from 2011 to 2015 (Statistical release P0302, 2015). The decline in life expectancy over the years has been largely attributed to the high prevalence of HIV/AIDS and Tuberculosis (TB) in the country. The HIV and TB patient load in each municipality within the CKD is shown in Table 5.10.

Table 5.10 ART and TB patient loads in the Central Karoo District, 2013 - 2015


Municipality

ART patient

load March 2013

ART patient

load March 2014

ART patient

load March 2015

Mother-to-child

transmission rate



Number of TB

patients2012/13

Number of TB

patients 2013/14

Number of TB

patients 2014/15


sites 2015

Laingsburg 78 119 117 0.0% 1 61 52 73 3

Prince Albert 131 151 242 0.0% 3 130 119 124 6

Beaufort West 740 904 1 059 3.7% 7 430 419 447 13


949 1 174 1 418 3.4% 11 621 590 644 22

Western cape 134 212 159 581 180 769 1.4% 259 45 852 44 807 44 994 433


Table 5.10 shows a considerable increase in the ART patient load in the Western Cape Province between March 2013 and March 2015. The increasing number of HIV/AIDS infected persons receiving treatment has contributed to the improvement in the life expectancy within the province. Given the municipality’s relatively large population, Beaufort West provides treatment to a significantly larger portion of the district’s population than Prince Albert and Laingsburg.

People living with HIV are a lot more susceptible to TB infection. It is tougher to cure TB in an individual infected with HIV/AIDS, and TB is consequently responsible for a third of all deaths in HIV-infected people. The number of TB-infected persons receiving treatment in the CKD increased by 1.84 per cent per annum on average from 2013 to 2015. Given that the majority of the districts population resides in Beaufort West, the trend in Beaufort West mirrors that of the District as the TB patient load increased by 1.84 per cent on average over the period under review. The TB patient load in both


535

Laingsburg and Beaufort West decreased from 2013 to 2014, but increased again in 2015. Prince Albert was the only municipality in the district to consistently experience a reduction in the TB-patient load from 2013 to 2015.

Table 5.11 Child and maternal health in Central Karoo District municipalities, 2015


Municipality

Full immunisation



5 years

Neonatal mortality

rate Low birth

weight

Maternal mortality

ratio


under 18 years


rate

Laingsburg 72% 0.00 30.9 25% 1 030.9 10.2% 0.0%

Prince Albert 76% 16.25 7.8 31% 781.3 14.3% 0.0%

Beaufort West 78% 11.05 14.1 19% 234.5 8.4% 0.0%

Central Karoo 77% 10.78 14.8 21% 371.1 9.2% 0.0%

Western Cape 90% 2.43 6.2 15% 55.4 6.1% 16.8%


As per Table 5.11, child and maternal health in the CKD is a concern. The percentage of children born with a low birth weight in the CKD (21 per cent) significantly exceeds the provincial average (15 per cent), and the full immunisation coverage for children under 1-year-old in the CKD (77 per cent) is much lower than that of the province overall. More than 10 per cent of all children in the District are severely malnourished- the majority of whom reside in Prince Albert and Beaufort West. There were no malnourished children in Laingsburg in 2015; however, the neonatal mortality rate (30.9 per cent) was nearly five times larger than the overall provincial rate (6.2 per cent). Table 5.11 shows a higher delivery rate among women younger than 18 years in Laingsburg, Prince Albert and Beaufort West compared to the average in the Western Cape. The maternal mortality ratio for Laingsburg and Prince Albert are significantly higher than the district and provincial averages. The data shows that there have been no pregnancies terminated in the District in 2015.

The state of the economy of the CKD may have contributed both directly and indirectly to the increasing ART and TB patient loads and the poor performance of the indicators above relative to the Province. Improved economic performance in the CKD can make a positive and big improvement to these health indicators.

5.10 Summary and conclusion Overall, the level of human development in the CKD (as measured by the Human Development Index) is inferior to that of the Province. Improvement in the HDI between 2011 and 2015 has been relatively sluggish and there remain high levels of inequality among the different population groups in the region. There exists significant scope to translate economic growth into social development within the CKD. The key indicators for the Municipalities in the CKD are summarised below.


536

Table 5.12 A summary of recent changes in various social indicators in the Central Karoo District

Indicator Central Karoo District Laingsburg Prince Albert Beaufort West

GDP growth (2005 - 2015)

3.3% 3.8% 5.1% 2.8%

Population growth (2011 - 2016)

5% 7.3% 8.7% 3.0%

HDI (2011 - 2015) Increase Increase Increase Increase

Indigent households (2014 - 2015)

Increase Increase Decrease Increase


8.5% of total Below CKD average

Below CKD average

Above CKD average


Increase Increase Increase Increase




Increase Increase Decrease Increase



Below CKD average

Above CKD average

Below CKD average









No schooling (2016)


Equal CKD average

Above CKD average

Above CKD average



Below CKD average

Above CKD average

Above CKD average






Below WC average

Below CKD average

Below CKD average

Above CKD average


Above WC average

Above CKD average

Above CKD average

Below CKD average


Above WC average

Above CKD average

Above CKD average

Below CKD average

Table 5.12 shows the positive or negative movement of selected social and economic indicators in municipalities within the CKD from 2011. Indicators moving in positive territory could be a result of positive economic performance, and vice versa.

Indicators that have moved in a positive direction for the CKD include an increase in the access to water, electricity, sanitation and waste management, among others. All municipalities in the district have experienced at least increases in these basic services. Areas of concern in the District include the rising population and rising indigent households, the proportion of households residing in informal dwellings, teenage pregnancies, ART and TB patient loads and lower immunisation coverage.


537

In Laingsburg, indicators moving in a positive direction include the increasing access to basic services and below average proportion of households earning no income and residing in informal dwellings. Indicators that remain a concern include increasing poverty headcount and intensity, the increasing indigent population, increasing levels of income inequality, low levels of education, increasing ART and TB patient load and high incidence of teenage pregnancy among others.

In Beaufort West, indicators moving in a positive direction include the increasing access to electricity, water, waste and refuse removal, below average proportion of households residing in informal dwellings, relatively higher levels of education and favourable health indicators as compared to the province overall. Indicators that remain a concern include increasing poverty headcount and intensity, the increasing indigent population, increasing levels of income inequality, the relatively high proportion of adults without any education and increasing ART and TB patient loads.

In Prince Albert, indicators moving in a positive direction include the decreasing levels of income inequality, the increasing access to electricity, water, waste and refuse removal, below average proportion of households earning no income and decreasing poverty headcount and intensity levels. Indicators that remain a concern include increasing population, increasing levels of income inequality, above average proportion of households residing in informal dwellings, relatively low levels of education, increasing ART and TB patient load and high incidence of teenage pregnancy among others.

539

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municipal economic review and outlook - western cape · this is the fifth edition of the municipal...

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