| The last decade has seen a number of
forces combining to fundamentally change the economic development of the CMA. Key among
these has been the growth in the tourism industry and strong foreign investor interest.
The CMA is the primary economic centre of the Western Cape Province, with a 75% share in
the provincial Gross Geographic Product (GGP) and more than 10% share in the national
Gross Domestic Product (GDP). The growth in the GGP is estimated to be 3.8% for 1996,
exhibiting an upward trend from the growth performance of the metropolitan economy during
the early nineties (CMC, 1998). |
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| Contents of CONTEXTUAL INFO on the
Economy: |
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| The spatial structure of the metropolitan economy is characterised by
developed nodes and corridors and underdeveloped areas. The economically underdeveloped
areas are mostly focused in disadvantaged areas of the south-east sector of the CMA.
Spatial disparities exist in the provision of infrastructure and quality of living and
work environments. Although the metropolitan economy has performed relatively well
nationally, its global positioning and international competitiveness needs to be enhanced. There are three major nodes in the metropolitan
area, namely Cape Town CBD, Bellville and Claremont. The most important existing activity
corridors are Main Road, running from Cape Town CBD to the southern suburbs, Voortrekker
Road, stretching from Woodstock to the northern suburbs, and a newly developing business
spine off Voortrekker Road along Durban Road and Willie van Schoor Drive to the
Tygervalley Shopping Centre. Century City, a large-scale mixed landuse development along
the N1, is likely to have a significant impact on surrounding nodes. Developers plan to
incorporate retail, office, hotel, residential and recreational facilities over the next
ten years.
The economy of the CMA consists of the
formal and informal sectors.
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| The formal sector of the economy refers to
business activities registered for taxation. The CMA has a range of activities within its
formal economy, supported by a well-developed infrastructure of telecommunications,
international air-linkages, port facilities and financial and business services. The main
sectors are manufacturing, trade and catering and services with 28%, 21% and 19% share
respectively. The formal economy showed a 2.5% average annual growth rate in real output for
the CMA for the period between 1991 and 1996. However, this average annual growth rate has
decreased in recent years due in part to global dynamics. The Gross Geographic Product was
nominally estimated at R56 billion in 1997 (CMC, 1998). Figure 1 shows
the sectors that make up the formal economy in the CMA and their respective contribution to
total output. |
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| Figure
2 |
| Sector share in total
employment in the CMA in the formal sector (1996) (source: CMC, 1998) |
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| Figure
1 |
| Formal sector
contribution to total output of the Cape Metropolitan Area economy (1996) (Source:
CMC, 1998) |
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| Significant growth sectors within the
metropole include manufacturing sub-sectors, mining & quarrying (although the sector
contributed less than 0.2% to the total 1996 output), trade & catering, as well as finance
& real estate. Tourism is viewed as the most significant growth sector of the provincial
economy, currently contributing an estimated R 7,7 billion or 10% to the gross regional
(provincial) product. The tourism industry is a major growth sector as far as investment,
employment and the diversification of services is concerned.
In 1996, more than 900 000 people were employed
in the metropolitan area in the formal sector (CMC, 1998). An estimated 30 000 to 40 000
persons are added to the labour force per annum in the CMA. The formal sector currently
provides an additional 16 000 formal employment opportunities annually (CMC, 1998). Most of
the formal employment opportunities in the economy are presently found in the manufacturing
sector, followed by services and the trade and catering sector. |
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| The South African property cycle, according to Rode & Associates
(1997), is entering a long-run (20 - 25 year) upswing phase, with residential construction
expected to expand in both the lower and the upper income categories. An increase in
commercial properties has been significant over the past year, with many of these being
hotel developments. Compared to other major metropolitan areas in South Africa, CMA
properties are highly sought after. Table 1 indicates property
appreciation in the CMA (1994 - 1997). |
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| Area |
Year |
| 1994 |
1995 |
1996 |
1997 |
| Atlantic
seaboard |
Avg.
price (R) |
667888 |
808958 |
921447 |
1238316 |
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Index |
100.0 |
120.8 |
138.0 |
185.4 |
| City
bowl |
Avg.
price (R) |
303497 |
391614 |
421222 |
483863 |
|
Index |
100.0 |
129.0 |
138.8 |
159.4 |
| Southern
suburbs |
Avg.
price (R) |
220932 |
239362 |
251092 |
280135 |
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Index |
100.0 |
108.3 |
113.7 |
126.8 |
| Bellville |
Avg.
price (R) |
252095 |
264470 |
267859 |
332545 |
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Index |
100.0 |
104.9 |
106.3 |
131.9 |
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(Source: Rode and Associates, 1997) |
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| The informal sector refers to business activities not registered for
taxation or any other official purpose. The employment capacity of the informal sector in
the metropolitan area is estimated to be 18% of the labour force, or approximately 245 000
people (CMC, 1998). It is estimated that the informal economy contributed R3,6 billion to
the economy of the CMA during 1997 (or roughly 7%) (Wesgro, 1997). About half of the value of the informal sector can
be attributed to trade activities, including hawkers, street vendors, corner (spaza)
shops, shabeens, flea markets and tuck shops. Other activities include personal services,
transport and construction, as well as a small share stemming from manufacturing.
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| More than half of the labour force in the
CMA is skilled, while 45% of the metropolitan labour force are semi- or low- skilled (Figure 3). Such low levels of skills in the labour force present an
obstacle to the expansion of economic activity. There is a crucial need for skills
training, adult education and applied research. Increasing the skills level of the labour
force could also contribute to much needed entrepreneurial development and greater
participation in the metropolitan economy. Particular attention needs to be given to
skills training in the potential growth industries of the CMA. |
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| Figure
3 |
| Skill levels of the
labour force in the Cape Metropolitan Area (1996) (source: CMC, 1998) |
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| Serious income disparities exist in the CMA, with the average annual
earning per household for whites being twice as much as for coloureds, and up to three
times more than that of black households (Bureau for Market Research, 1997). However,
average annual household earnings do not give an indication of the size of households in
the various income categories. Table 2 shows individual monthly income within the CMA. The proportion
of blacks (59%) in the CMA who earn under R800 per month is considerably higher than the
other groups and higher than the national proportion of 55%. |
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| |
Blacks |
Coloureds |
Indians |
Whites |
CMA |
South Africa |
| R0 – R800 |
59 |
36 |
20 |
11 |
37 |
55 |
| R801 – R1
070 |
12 |
8 |
7 |
4 |
9 |
6 |
| R1 071 – R2
500 |
20 |
43 |
44 |
29 |
34 |
23 |
| R2 501 – R3
500 |
5 |
8 |
12 |
13 |
8 |
6 |
| R3 501 – R5
000 |
2 |
3 |
14 |
21 |
6 |
5 |
| R5 001 – R8
000 |
2 |
1 |
4 |
14 |
4 |
3 |
| 0ver R8 000 |
1 |
1 |
0 |
10 |
2 |
2 |
| Total |
100 |
100 |
100 |
100 |
100 |
100 |
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| NOTE: Weighted analysis of the 1995
October Household Survey. For many households there is only one income,
especially in female headed households poverty is often associated with having only a
single not dual income. |
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(Source: Central for Statistical Services, 1996 as cited in CMC,
1999a) |
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| The percentage distribution of households
in income categories per annum for 1997 is given by Figure 4.
From the 1991 census, it was estimated that in 1997, 30% of households (225 000)
earn less than R 800 per month with the average monthly per capita income being R 1 375. |
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| Figure
4 |
| Percentage Households
in Income per annum Categories (1991) (source: CMC, 1998) |
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