The Promise of a Thriving Economy – Our Municipal Building Blocks of Growth

Today, the provincial Minister of Finance and Economic Opportunities, Mireille Wenger, tabled the Municipal Economic Review and Outlook 2023/24 (MERO) in the Western Cape Provincial Parliament, titled ‘The Promise of a Thriving Economy – Our Municipal Building Blocks of Growth’.

Opening her address, Minister Wenger said, “I am extremely proud to share the invaluable insights contained in MERO, which drills down into key trends in our municipalities. This year’s MERO has truly surpassed its previous editions, incorporating new and previously unavailable data, to give us granular socio-economic details, providing the evidence we need to fully realise the many opportunities in the Western Cape.”

“This data is so important precisely because our municipalities are our building blocks for economic growth. By understanding the various trends in each district, each local municipality, and the metro, we are empowered with the information and evidence we need to deliver a better future, in which we create many more jobs and, with those jobs, hope for our residents,” continued Minister Wenger.

The insights and analysis shared in the MERO is a core part of our commitment to the Western Cape’s ‘Growth For Jobs’ strategy and to govern with purpose for towards productive and meaningful economic growth.

“The MERO tells us that we are going in the right direction on our mission to grow jobs. In spite of a challenged post-COVID 19 global economy, we continue to see job creation and growth improve, reflecting the province’s adaptability and resilience in the face of changing economic paradigms. We saw great momentum in our post-COVID 19 provincial economy last year (2022), and the MERO details our expectation that our Provincial Gross Domestic Product (GDP) will slow across the districts in 2023. But, by 2024, forecasts reflect that economic expansion will exceed pre-COVID levels (from 2015 to 2019) in all regions outside of the Cape Metro, giving a clear indication of just how valuable municipalities are as our building blocks of growth” shared Minister Wenger.

Key insights from the MERO include:

Economic growth

• Gross Domestic Product per Region (GDPR) performance is normalising to pre-COVID 19 levels, and all districts outside of the Cape Metro have grown and increased their contribution to GDPR in 2022. The same is true for the contribution to employment.
• In 2022, the three municipalities that contributed the most to GDPR growth were the Cape Metro, George and Drakenstein, with Langeberg, Kannaland and the Breede Valley exhibiting the highest GDPR growth in the province.
• By 2022, GDP in all districts and the metro had fully recovered the economic losses due to the Covid-19 pandemic. This is very welcome news and I congratulate each of these regions.

Jobs and employment

• In every single district across the province, and the Cape Metro, both labour force participation and labour absorption rates increased between 2021 and 2022, showing that more people are available and looking for work, and are also finding work in the Western Cape.
• The low rural unemployment rates are encouraging. Four out of six regions have unemployment rates below 20%, and the Cape Winelands and Overberg Districts are under 15%.

Population dynamics

• Projections for population growth indicate an upturn in the growth rate during 2023, which will settle at this higher level over the medium-term.
• Population growth must be factored into planning and budgeting of all spheres of government because this growth will have an impact on service delivery, especially in frontline services and housing demand.

Trade

• Perennial crop production accounts for 5.6% of all provincial fixed term employment opportunities, or more than 101 000 jobs.
• Our world-class agricultural goods are sought after globally and leveraging this sector will contribute even more to economic growth and job creation.
• The optimal functioning of the Port of Cape Town is vital, and precisely why it is high time Transnet urgently invests in port infrastructure and equipment needed to support the current and future expansion of our world-renowned, in-demand agricultural produce.

Tourism

• We have seen the very impressive recovery of the tourism sector overall, contributing greatly to economic growth and job creation.
• Tourist spending as a proportion of GDPR is increasing in all districts and the Cape Metro, with the exception of the Central Karoo district.

Infrastructure

• As much as we believe that it’s the private sector that creates jobs, we know that government has a vital role to play to support and enable that growth.
• Public sector infrastructure spend is a central pillar of economic development, a key measure of the health of an economy, as well as the commitment of a government to supporting the future growth of an area.
• Overall, and over the Medium-Term Expenditure Framework, our district and metro municipalities will be collectively allocating R56.1 billion to infrastructure, including wastewater management, energy sources and water management, human settlements, transport, and public works.

Well-being

HDI and Gini Co-efficient

• Income inequality in the Cape Metro, measured by the Gini co-efficient, is on par with the Province at 0.601 in 2022, and better than that of South Africa, which sits at 0.618, indicating that there is less inequality in the Western Cape than in the country as a whole.
• Looking at longer term trends, it is encouraging to see that the Gini co-efficient declined in the Cape Metro area and the Province between 2019 and 2022.
• The Human Development Index or HDI, which measures health, education, and standard of living, of the Cape Metro at 0.734 exceeds that of the Province at 0.722 and the rest of the country at 0.654, indicating that residents are better off in the Cape Metro area.

Education

• Improvements in learner-to-teacher ratios across the province – despite the rapid increase in learner numbers – are commendable and welcomed along with the improvements in retention rates across the province.
• The Cape Metro, West Coast and Cape Winelands districts recorded an improvement in their learner-teacher ratio, which is admirable considering all three recorded an increase in learners in 2022.
• Other positive education outcomes include the Grade 10 to 12 learner retention rate in the Western Cape, which increased from 67.8% in 2020 to 75.3% in 2022. This means our children are staying in school, for longer.

Health

• In the Western Cape as a whole, delivery rates of females between the ages of 10 and 19 remained stable at 11.5% in the 2021/22 and 2022/23 years, and we welcome the news that in each of the Cape Winelands, Overberg, Garden Route, and Central Karoo districts, teenage pregnancy has decreased. However, teenage pregnancy remains concerning in the West Coast District, Witzenberg, and the Cape Winelands, which had the highest proportion of teenage births in the district in 2022.
• The Cape Metro area recorded an increase in the low-birth-weight rate and an increase in the number of children affected by severe acute malnutrition, which is aligned with the elevated levels of food poverty prevalent in the Cape Metro area.
• In the West Coast District, all municipal areas recorded a reduction in the number of children with severe acute malnutrition, except the Matzikama municipal area.

Safety

• The rise in the incidence of crime in the Western Cape remains a concern because we know that it impacts the quality of life of our communities and compromises economic growth.
• Nonetheless, MERO shows that inroads are being made to reduce some categories of crime, and in 2022/23, the crime rate in the Cape Metro remained 2.9% lower than that of pre-pandemic levels.
• However, a cause for significant concern is the fact that drug-related crime has increased in almost all municipalities across the Western Cape between 2021 and 2022.

Concluding her address, Minister Wenger stated that, “the MERO provides us with the evidence we need to determine how we can better grow jobs and further improve safety and wellbeing. We have very real and present opportunities, and only by growing our economies at all levels through our municipalities as our building blocks can we help lift more people out of poverty, and into work and hope.”