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Inside Regional - Regional Analysis

South Africa has nine provinces. The performance of the provinces differs in the delivery of economic output, regional development and the all too important aspect: Development.

GROSS DOMESTIC PRODUCT BY PROVINCE
South Africa’s Gross Domestic Product currently stands at approximately USD 329 billion.  The country has been experience poor GDP growth and this has affected the provinces. Gauteng remains the powerhouse for the country, with Kwa Zulu Natal and the Western Cape Following.

The lacklustre performance of the South African economy in 2015 is solely attributed to a lack of both business and consumer confidence levels.  The exchange rate fluctuations has stabilised since the Municipal Elections, but only just.  There are severe effects following the country wide drought conditions. 

Mining, which as a strong contributor to the economy, has experienced a major decline, beginning in the period since the rolling blackouts and at the labour disputes.  The country cannot be regarded as a nation of savers, as the national saving ratio has decreased significantly in 2015.



The Western Cape is largely focused on tertiary industries, and there has been a decline in agricultural output.  Northern Cape’s contribution is strong in mining with a small agricultural base, but the focus is also on tertiary industries.  If South Africa wants to expand its manufacturing base, there is a need for a spread of activities in the five provinces that is lacking in these industries.




Construction and Building by Province

Building plans are often used to monitor the state of the economy and the formulation of economic policy.  Private Sector uses the information to understand the growth, plan new developments and provide guidance on areas which are struggling. Municipalities pass building plans as provided by residents/businesses living in the municipalities.  Not all the buildings passed end up being built.  The table below displays the number of plans passed and the number of houses built in each province. The narrower the distance between the two, the greater the stability in the planning process.

There is a downward trend in residential units completed overall.  This is evident in the following two graphs.


 


Retail growth mimics the growth in buildings completed.  Looking at the graph below, one can see that the years just before 2010 had seen a spurt in retail space for Gauteng province. The reasons for this could be due to preparation for 2010 Soccer World Cup.  More recently, there is a growth due to new centres being opened or older ones being revamped.



Possible Solutions For the Future

As a company looking at the major economic problems in the country, some of the solutions could be:

  • The collapse of the para-statals is a serious threat to the economy, and to the perception that the country is on a declining economic trajectory. It is important to maintain the agencies that are controlled or supported by the government and create a public-private partnership.  Eskom is continuing to pose a problem for the economy going forward.
  • On-going labour disputes makes this a difficult country in which to employ staff. Companies would do well to ensure that staff are rewarded for their loyalty, and have a market related wage to avoid disputes. A minimum wage by sector may be an option.
  • South Africa should be a major player in the delivery of Solar Energy.  The western half of Limpopo and North West province, as well as Northern Cape and Eastern Cape have massive opportunities for Solar Plants, instead of Nuclear Energy Plants
  • We have mines, but we export the raw materials, with no thought of the creating avenues for the end product. Already Mining is on a decline and there is a need to re-habilitate these areas. This requires learning new skills for the workers on the mine. 
  • The manufacturing sector has all but died over the past 20 years. In our quest to trade with China, to whom we export raw materials, we end up importing durables and semi-durables, to the detriment of our own economy.  Until South Africa, and even Africa is able to create a strong manufacturing base, it will continue to lose out. If South Africa is not able to compete in textiles for the mass market, there are definitely gaps for the artisanal products globally.
  • Each province can deliver something unique in terms of its resources, its unique history and its place within the geographical context of the country.
  • Education in sectors where the region is a high contributor to GDP is vital. This would be agricultural colleges in Limpopo and Mpumalanga. Water rehabilitation in areas where mining has decimated the water supply. Manufacturing along key zones for export, etc.