A victim of its own success

The Western Cape province is a victim of its own success. Blessed with scenic beauty and an upwardly mobile economy (the growth rate last year was 5,3% compared to the national average of 4,5%), it is perceived as a “rich province” and is a drawcard for many.

The wealthy, both locals and foreigners, are flocking to buy wine estates and multimillion-rand seafront homes, while the poor from other provinces migrate to the region in search of better health and social welfare services.

Leading indicators of its growth last year included a 40% increase in tractor sales, a 4,4% (or R137,6-million) increase in the value of submitted building plans and the purchase of additional cranes at the Cape Town container harbour.

But, with the economic success generated mainly in Cape Town, the provincial capital, and in the southern Cape — where much of the growth is linked to the construction of lifestyle estates — infrastructure and services are being stretched.

According to a recent report by the Western Cape treasury, key challenges are unemployment and pressure on social infrastructure, such as education, health and policing.

The Provincial Economic Review and Outlook 2006 says unemployment had increased to 26,3% by 2004 — well below the national average of 41,1%.
But, the report warns, while there were just 218 000 discouraged work seekers in 2004, the figure is double that of four years earlier.

Joblessness among youth, despite the top matriculation rate, remains acute at 52% among those aged 15 to 18. Of this percentage, 44% of the province’s black residents are unemployed, compared to 25,3% of coloureds and 6,6% of whites.

A key factor in these statistics is the move from un- and semi-skilled employment to skilled sectors such as financial services and business product outsourcing (BPO).

The BPO and call centre sector last year attracted investment of R527-million, according to Wesgro, the provincial business promotion agency. Since January 2004, Wesgro has secured investment valued at more than R3-billion, leading to the creation of 10 000 jobs.

“The skills gap is a phenomenon of the growing economy. It’s a real challenge, if we are serious about increasing growth and employment,” says Bulelwa Boqwana, an economist at the Western Cape treasury.

She maintains that a crucial focus must be on youth -— from encouraging them into the business and small-, medium- and micro-enterprise sectors to an educational development and mentorship programme to reverse the high school drop-out rate before matric.

“Now we need to plan and create an enabling environment. Youth need role models,” Boqwana says.

The Western Cape’s growth and development strategy, iKapa Elihlumayo (Growing Sharing Cape), wants to strike a balance between economic growth and social equity so that benefits do not only accrue to the few. Strategic planning is integrated into each department. The provincial administration has drafted detailed development plans for about 20 sectors ranging from oil and gas exploration to the film industry and also sponsors an iKapa study loan for enrolment at further education and training colleges.

“Institutional arrangements and interventions that promote a culture change and entrepreneurship among the youth have a potential to change the unintended consequences of poverty and unemployment that include domestic violence, crime and substance abuse,” according to a recent statement by provincial finance minister Lynne Brown.

Growth, equity, empowerment and sustainability remain the key pillars of iKapa Elihlumayo for the 2006/07 financial year. It is intrinsically linked to the Home for All policy, which seeks to heal the deep divisions among Western Cape communities.

“It is inequality between people, the unequal access to assets, resources and opportunities that make it so difficult for citizens to see each other without mistrust and suspicion, always believing that the other racial, religious or language group has preferential access,” Premier Ebrahim Rasool cautioned during his state of the province address in February.

The provincial government has enjoyed two years of stability under the leadership of Rasool’s African National Congress, but political turmoil has affected the recently elected Democratic Alliance-led Cape Town council. As the province’s largest municipality, which with its R18-billion budget is also among the country’s top three councils, continuing instability during the finalisation of the budget by June 1 could carry a high cost.

Cape Town generates two-thirds of the province’s R138,9-billion output. But the development challenges of Cape Town are daunting: road congestion, the use of night soil buckets in several of the city’s informal settlements and a housing backlog of 265 000 units. According to the treasury report, the city also needs 156 schools, 100 clinics and 34 additional police stations.

An additional, if temporary, concern is power cuts. Regular outages are expected to occur throughout most of the wet winter while the Koeberg nuclear power station repairs a generator damaged by a bolt late last year and completes the compulsory maintenance shut-down for a second unit.

Rolling power cuts during March have cost Cape Town businesses about R6-billion (or 2,5%) of the provincial annual gross domestic product, according to a survey by the Cape Regional Chamber of Commerce and Industry. The survey of the chamber’s 255 members also showed that another R3,3-billion was being spent on measures such as generators to minimise the impact of future power cuts.

On the job front, Rasool’s administration has tabled a five-point “battle plan” for growth. It aims to create 232 000 new jobs by 2015 by promoting five sectors — call centres, tourism, IT, oil and gas and agriculture — while special attention is also given to skills development and infrastructure investment, particularly in transport corridors and schools to meet the challenges of the Western Cape.

The province at a glance

  • The Western Cape is home to 4,9-million people, two-thirds of whom live in Cape Town. Afrikaans is the most widely spoken language, followed by English and isiXhosa; all three are official languages of the province.
  • The provincial economy grew by 5,3% in the 2004/05 financial year, largely on the back of the booming construction, retail and financial services sectors. This growth rate is slightly above the national average of 4,5%. It contributed 16%, or R139-billion, to the national gross domestic product in 2004.
  • The annual migration of about 48 000 people to the province has meant that despite job creation, the level of unemployment has increased by 9,2% annually between 2000 and 2004. The number of discouraged work seekers has increased from 107 000 to 218 000. Between 2000 and 2004, about 188 000 jobs were created at a rate of 3,6% a year, well above the national rate of 1,4%.
  • The city of Cape Town is home to almost three million people, with more than 265 000 families on the housing list. While 95% of households have access to piped water and 87% to electricity, maintenance backlogs of R1,4-billion for sewerage still exist, while 6 000 electricity substations need upgrading.
  • Power cuts cost Cape Town businesses nearly R10-billion: R5,6-billion in direct losses and R3,3-billion on generators and related items to minimise the impact of further cuts, according to a survey by the Cape Regional Chamber of Commerce.
  • The Western Cape is home to the national Parliament, three universities (the University of Cape Town, University of the Western Cape and University of Stellenbosch) and the Cape Peninsula University of Technology (formerly the Peninsula and Cape technikons).
  • Table Mountain remains South Africa’s most recognised symbol internationally. The V&A Waterfront shopping centre ranks among the top tourist attractions, along with Robben Island and the winelands.
  • Sources: Western Cape 2006 Budget, South African Yearbook 2005, Census2001, Cape Town Integrated Development Plan

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