Inside South Africa - Municipality Analysis

Source: Laura Goodman and Sheny Medani


For the past fifteen or more years, Market Decisions has been providing demographic information to various players across all industries. This involves updating the census data on an annualised basis, creating the Shopping Centre Directory, compiling the regional economic analysis, and conducting various other types of specialised research, particularly in retail.

Since South Africa’s independence and the creation of a non-racial democracy, Statistics South Africa (StatsSA) has been the organisation responsible for the collection, production and dissemination of official and other statistics, which includes conducting the population census.
Statistics South Africa is similarly responsible for:

  • Co-ordinating producers of statistics
  • Establishing a Statistics Council and providing for its functions
  • Repeal certain legislation
  • Provide for connected matters. 

The StatsSA hierarchy of the country is demarcated into provincial, district municipalities, municipalities and wards.
The Municipal Demarcation Board (MDB) has been mandated to determine municipal boundaries independently.  From an apartheid created separation structure, the MDB demarcated just over 200 municipal entities, merging townships and towns. This resulted in an equitable system with regard to boundaries, though not from an income inequality point.

The Municipal Demarcation Board's status as an independent authority is also protected by section 3 of The Local Government Act and various judgments by the Constitutional Court.  In addition to the determinations and re-determinations of municipal boundaries, the MDB is also mandated by legislation to declare the district management areas; to delimit wards for local elections; and to assess the capacity of municipalities to perform their functions. Currently, there are 234 Municipalities in South Africa.

The Local Government Election of August 2016 have rendered the country on a new path because the people have voted for change. The implications for this is discussed in the conclusions.


The Standard Geographical Classification (SGC) is used by most countries to enable producing statistics for a geographical area. Census however, relies on data at all levels, but extends the municipalities into MAIN PLACE and SUB PLACE.  The coding system used by Statistics South Africa for the 2011 census is outlined below:

The Census 2011 has been a turning point for South Africa, because the municipalities have been demarcated, renamed, and allocated provincially for the past 20 years. Market Decisions has created a broad system of classifying the municipalities, according to infrastructure and function, into the following categories:

  • Metro
  • Large City
  • Medium City
  • Small City
  • Town

This classification ties in with international classifications, but the dilemma of understanding how the Metropolitan areas could ease the burden of rural-urban migration, international migration as well as inter-city migration resulted in seeking other means of classification to understand the direction for the future. It was therefore decided to create a set of data depicting each province and its relative hierarchy in the broad sense.

The World Bank’s Development Report 2010 argues that the concentration of economic activity through urbanisation is necessary for the economic growth of the country and that the Government should encourage development in marginal and dispersed locations.  In the South African context, urbanisation played a mixed role because of the separation of the Bantustans from the rest of South Africa. The post-apartheid Government therefore faced the challenge of understanding urbanisation within the World Bank guidelines. Professor Ivan Turok published a report titled “Does Density Drive Development?” This implies that a highly dense area drives economic development. However, the argument is a complicated one for South Africa because there is a lack of skills on the one hand and a severely stunted education system on the other.

Professor Turok’s report categorised municipalities by their economic base. This indicated their share of jobs in any of the following sectors:

  • Agriculture
  • Mining
  • Manufacturing
  • Community

The World Bank report is enlightening because it could lead to interesting economic and developmental opportunities for South Africa in conjunction with municipalities. Market Decisions overlaid the findings of this report onto our various databases to highlight what is possible in each province, within the current municipal boundaries.

Big Business has argued that job creation depends on the government’s providing education and creating the space for individuals who are entrepreneurial to grow their businesses as much as possible. This in turn would boost employment. Many municipalities seldom understand the importance of economic development opportunities and this has come to light when audits were conducted on municipalities across the country.


The graph below illustrates the type of settlement seen throughout South Africa. The metropoles are concentrated in Gauteng, Western Cape, Kwa-Zulu Natal and Eastern Cape. Mangaung (Bloemfontein) has recently been given metropolitan status for the Free State.

The type of employment by municipality shows the dominance of manufacturing jobs in metropolitan areas, as well as cities. Many municipalities have employment in the community/social sector, possibly with employment in the public Sector.


The Eastern Cape has two metropolitan areas, Nelson Mandela Bay and Buffalo City. Buffalo City has attracted residents from the adjacent municipality, with many working in the manufacturing sector. Umtata, which should have developed as a strong secondary node to the two metropolitan areas has not done so. In fact economic development in the municipality remains non-strategic. The Eastern Cape has a vast potential for developing renewable energy in the area, and efforts should be made to expand this sector. These two metropolitan municipalities do not have a strong set of skills in manufacturing or tourism, the two potential economic growth areas. The Eastern Cape has the tourism potential to be exploited as a marine destination. There are three universities in the area, with the Nelson Mandela University attracting a large number of foreign students. Fort Hare should become a disseminator of history because of its past and the fact that many political leaders came from here. In terms of the economy, there is a decline of 7.2% for manufacturing as a contributor to GDP when compared with 2003, with finance and agriculture declining by 1.5% each. The increase in contribution to GDP came from retail, trade and wholesale (4.8%).


The judicial capital of South Africa is Bloemfontein, in the Mangaung Metropole. Harrismith and Phuthaditjiba had manufacturing capabilities in the past, but this has declined over the past few years. Of concern however, is the decline of mining in the Goldfields, where unemployment is very high. The Free State should have three nodes to sustain employment, create new avenues for the semi-skilled mining force and expand employment for semi-skilled workers who have been displaced from the farms to RDP settlements in small towns. The easiest areas to start this would be the Mangaung Metro, the Goldfields and the Lesotho Corridor either at Harrismith, which connects to KZN, or Ladybrand/Bethlehem. For the Free State there has been a decline of personal services of 4.1% and manufacturing of 2.9%. Increases to GDP contribution remained with wholesale, retail & trade of 2.7% and general government services of 1.8%.


The economic hub of South Africa, where all roads lead to, is Gauteng. The first stop for most foreign migrants from Africa is Johannesburg Central and in particular, Hillbrow/ Berea. For most local migrants, the first stop is Alexandra, Soweto if they are from the North, or East Rand if they are from KZN. The main issues with Gauteng relate to infrastructure and the provision of RDP housing for people who rent them out and continue to live in shacks. Most of the new housing developments since 1994, especially for low income or lower middle income residents, do not have proper schools, community facilities and work opportunities.

Existing CBD’s, which are in decline, have been turned into residential areas but with limited community facilities. In a recent survey conducted by Market Decisions, residents who live in the re-generated apartments in Johannesburg Central bemoan the fact that hygiene is non-existent, it is unsafe, and many foreign flat dwellers continue to throw litter out of high rise windows. Gauteng has experienced a decline of GDP contribution in manufacturing of 6.5%, wholesale, retail & trade of 1.5%. The increase in GDP contribution came from finance, real estate & business services at 3.4% and government services at 1.3%. This is problematical as Gauteng is considered the business and trade hub of the country.


According to past municipal surveys, Limpopo Province has the most potential for economic growth because of its strategic location, and the fact that is has good agricultural land. Many new mines were opened in the province. Unfortunately, according to reports it also has the highest levels of corruption and the inability to dispense development funds strategically. There are three major nodes that could be expanded significantly from an economic point: Polokwane, Thohoyandou/ Makhado, and Thabazimbi/ Lephalale. All of these should operate as Trade, Agriculture and Mining respectively. This province has not unleashed its tourism potential even though it has Mapungubwe, Tzaneen and Northern Kruger within its boundaries.

Most of the population is employed in the already overstretched public sector. This area could produce food and food by-products on a large scale because of the large varieties of fruit and vegetables that are currently grown in the area. In terms of contribution to GDP, there has been a decline in finance, real estate & business services with 3.5% and transport of 2.8%. Increases came from mining at 3.7% and electricity, gas & water of 1.6%. While mining has surged, the development could have been better managed due to the negative environmental impact and the ground water contamination.


The KwaZulu-Natal province is quite unique: It has a homogeneous population of predominantly Zulu speaking inhabitants. It is culturally diverse in that it also has the largest Indian population outside of the sub-continent of India, brought by the British who needed labourers for the sugar plantations. These plantation labourers were later joined by the merchant class who immigrated to South Africa from India. It also has a large English speaking population, many with direct links to the United Kingdom. Many wars were fought in the province, and it is historically significant to both the British and the Zulus.

KwaZulu-Natal is densely populated, and negatively, it has the highest rate of HIV infection in the country. The high HIV infection rate has created a population imbalance as it has erased the middle generation, leaving the elderly to care for grandchildren. This has had a significant impact on the human capital of economic growth.

Durban harbour is the busiest port in Africa, and has a good railway network that links the city to other areas of Southern Africa. The capital and seat of power is in Pietermaritzburg. The province is fertile and therefore has an advantage over other provinces for agricultural land and production opportunities. The dominant agricultural industry is sugar refining. Sheep, cattle, dairy, fruit, maize, corn, sorghum and cotton are the main agricultural products, while textile, clothing, chemicals, rubber, fertiliser, paper, vehicle assembly, food-processing plants, tanneries, and oil refineries also assist in the creation of jobs and economic activity. Although known as the second most important tourism province after the Western Cape, KwaZulu-Natal has yet to continue its expansion as a strong competitor for tourism. The province has to create strong manufacturing entities in order to provide employment for the large numbers of unemployed youth. In terms of contribution to GDP, there has been a decline in manufacturing (6.4%) and agriculture (1.3%) while there has been an increase in construction (2.1%) and government services (2.0%)


Historically, Mpumalanga is associated with tourism, game parks, and coal mining. Although coal is vital for our high carbon economy, coal mining and the dependence on a finite resource contributes to the degradation of the environment and negatively affects the provision of basic services to the community. The quality of water, soil and eco-systems is a major problem in the province.

In the past, Mpumalanga was surrounded by the “Bantustans” in the East and KaNgwane, KwaNdebele and Venda in the North. After 1994, many of the residents in these areas began to gravitate toward the major urban nodes in the province to seek employment opportunities. The area remains a challenge because working class rural residents in the area also have second homes in Gauteng. Mpumalanga’s eastern areas should be the gateway to the Indian Ocean islands, and seek to maintain a healthy trading partnership with Mozambique and export through its ports. The Highveld area is both a weekend bolt-hole and a retirement home for up country residents. The province does not have a university but there is an agricultural college that is average. Most of the students in the area study at a remote campus in the province that is affiliated to Universities in Gauteng. The preferred subjects are Public Relations and Marketing when a stronger focus should be given to agricultural studies.

As with other provinces in the country, manufacturing has declined by 7% from 2003 to 2013. The economic contribution to GDP shows mining has increased by 3.9% and so has electricity, gas & water at 2.6%.


The North West Province is associated with Platinum mining, the Sun City casino complex and the Bafokeng community. Yet, despite this, the province has limited jewellery making capabilities, when in fact it boasted that it was going to become the platinum jewellery capital of South Africa. Tourists no longer see Sun City as the ‘Las Vegas’ of Africa perhaps due to limited multi-dimensional entertainment or facilities.

The seat of government moved from Mahikeng to the Klerksdorp/Potchefstroom area, resulting in existing world class facilities that are in Mahikeng being under-utilised. Agriculture and mining are two of the main economic contributors, followed by transport. Surprising, transport as a contributor to GDP has declined by 2.6% and manufacturing by 2.6%. Mining has increased by 5.7% but the negative publicity surrounding Marikana has created a poor image for South Africa and North West Province in particular.

The province shares a border with Botswana, Limpopo, Northern Cape and Gauteng. The North West Province is not adequately encouraging cross border trade. There is a decline in cross border shopping, due to the shopping facilities in Botswana. Residents living in areas close to the Gauteng boundary work and spend in Gauteng.


The Northern Cape could have developed as the solar arm of the country. It could supply renewable solar energy through developing solar farms, but the Government at both the national and provincial levels are moving a slower than expected pace. The area is an important tourism area, especially with the Kgalagadi Reserve, Augrabies Falls and a growing cross border trade & tourism focus. In the same way as Seattle became the home of Microsoft, the Northern Cape could become the home of the Spanish and Danish solar companies currently wanting to do business with South Africa. Instead, some of these companies have settled on Botswana and Namibia, both of which are already developing solar parks. Education in this province is of a very poor quality, and while there are pockets of excellence, it would require an overhaul of the current education system towards one focusing on technical education at a higher level.

Surprisingly, there is a 4.7% decline in finance, real estate & business services as a contributor to the GDP. Government services and transport shows an increased contribution to the GDP of 4.3% and 2% respectively.


The Western Cape has historically been an agricultural exporter, an important tourism contributor to the South African economy and a city that is instantly recognisable because of Table Mountain. It is the seat of the Legislature, with the Administrative capital situated in Pretoria. South Africa has seen a decline in agriculture as a contributing sector to the GDP over the past ten years and this has affected the Western Cape as well. Agriculture has declined by 1.2% from 2003 to 2013.  In 1995, manufacturing contributed 21.3% to GDP, in 2003, this figure dropped to 17.8% which is a 3.5% decrease and by 2013 there was a further 4.1% decrease. This is a major concern and one which the province has to address in order to boost employment. Most of the informal settlements are occupied by non-working residents. The Western Cape is highly effective in managing the core metro area but needs to boost employment in the regions of the Southern Cape, the Karoo and the West Coast.


Creating Equilibrium in Development for the future

South Africa is a young democracy. There was always one dominant party, The African National Congress.  Historically this was a party that promised a non-racial democracy, power to the people, but over the years, managing the country and controlling the various municipalities have proved challenging.

Stats South Africa classifies the country as Main and Sub Place. It is very difficult to have this type of classification because the definition of a Main Place can be a rural village.  The first step is to understand the types of urban settlements in the country.  The section below dissects this by province, in alphabetical order:


Eastern Cape

The area is concentrated with villages of various sizes and the main Metropole is Nelson Mandela Metropolitan area. Buffalo City was created later, but it is quite dispersed between urban, semi-urban and rural.  The lead will be from the NMA because it has changed hands following years of mismanagement.  It is always good to focus on the little things before moving to the strategic direction.  The university in this area should have a faculty for mechanical engineering, to align itself to the motor manufacturing base.  The leather could be tanned here, and because the harbour is nearby, this could be a major exporter of SA Wool, Motor Cars, Fruit and expertise on early and modern art.  Graaff Reinet has strong historical roots which needs to be exposed to new tourists.  There should also be a school to develop future environmentalist to nurture the remarkable beauty this province has to offer.  The NMMU metro is now run by the Democratic Alliance.

Of course, developing sustaining housing will be important. The interior has as much to offer as the metros, but in planning for this, several areas stand out:

  • Port Elizabeth as the start of the garden route
  • The Addo and interior for big game sustainability and education
  • Buffalo City for the wild ocean sustainability through to Coffee Bay
  • The birthplace of Nelson Mandela which should have an indigenous garden that draws visitors to a multi-level experience
  • Umtata as a centre of learning for history that could draw a two-way partnership with West Africa, the US and South America.


Free State

Large parts of the Free State comprise agricultural land. It is well known as the bread basket of the country, with maize fields covering the land.  However, the drought has affected this area very badly.  The Free State is the home of the Judiciary and there is a lot of traffic between the airport and both Cape Town and Johannesburg.  Several towns lend themselves to development, namely: Bethlehem and Clarens for weekend getaways, Ficksburg and Fouriesberg as the winter playground and the spring cherry blossoms, and a strategy for the mining towns.

The area should compete for market share for the Ukhahlamba Drakensberg Park Mountains. In addition, there is an urgent need for job creation along 42nd Hill and Harrismith. Harrismith could be a designated area for a link between Kwa-Zulu Natal and Free State.

Mining companies who for years have created problems with the water system needs to be part of the rehabilitation.

One of the main issues remain Bloemfontein and its future. It could be academic, military or training for the miners who need to be re-skilled.



The economic hub of the country is likely to experience major changes following the Municipal Elections of 2016. Tshwane and City of Johannesburg are likely to be DA municipalities, but what does this mean in practice?

The map above shows the various types of residential settlement patterns within the metro, according to the Main Place Classification.  Heidelberg for example, has a rural element, then a small town element and then little village alongside the main town.  It would have been nice to have a classification system that looks at an area holistically, and plans according to transport routes, travel points, etc. This would mean that the southern corridor needs to work for the unemployment rate to go down, but the CBD of Johannesburg has not been a success. In actual fact, neither has the northern belt of Tshwane and its relation to the city centre core, because the development is south east of the city.  The city centre of Tshwane should have been a showcase for the Republic of South Africa as its capital. Again, the urban decay cannot be contained.

Sunnyside is to the CBD of Tshwane what Hillbrow is to the CBD of Johannesburg. Unless both areas have a strong development plan and focus, things will continue to fall apart.

Two metros in the region are now a coalition, and this may bode well for the future of Gauteng.


Kwa Zulu-Natal

Kwa Zulu-Natal is characterized by the legacy of apartheid, with the separation of the Kwa Zulu portion separate from the apartheid South Africa portion.  This has been a major downfall for the province.

The map above shows the various types of residential settlement patterns within the province, according to the Main Place Classification.  The metro of eThekwini is similarly surrounded by settlements, while the new airport location to the north of the city will create a new city for the region.  The areas for development should have been:

  • eThekwini/Umhlanga/Kwa Dukuza
  • Pietermaritzburg
  • Richard’s Bay/Empangeni
  • Newcastle
  • Vryheid
  • Port Shepstone/Isipingo
  • Ladysmith/Bergville/Drakensberg

A development focus on these areas would not have resulted in a massive rural-urban drift and in fact would have contained development and made the province a successful one.