ABOUT THE EASTERN CAPE | The economy

 

Economy

The Eastern Cape economy is increasingly modern and export oriented, with great potential for growth of existing industry and establishment of new industry.

Its geographic location, quality sea and air ports, abundance of natural resources and world-class infrastructure bodes particularly well for the growth of export-oriented industry.

The province is committed to providing high-value goods to the world rather than cheap raw materials.

The majority of Eastern Cape’s exports are manufactured goods.

The province is using innovative ways to draw rural people, who survive mostly on subsistence agriculture, migrant labour and welfare grants, into the mainstream economy.

One of the most important of these interventions is the Provincial Development Plan formulated by the provincial government and its social partners in line with the national policy framework for socio-economic planning at provincial level.

 

Growth rate

In 2014, the province’s growth rate stood at 1.1% in comparison to the national growth rate of 2.6%.

Growth in the two metropoles - Nelson Mandela Bay and Buffalo City - slowed to 1.2% and 0.8% in 2014, the result of falling exports which ended on R33.2bn in 2013, down from R44.4 bn in 2008, amongst others.

However, community and social services created 133,000 more jobs for the period 2009 to 2013.

By the end of the third quarter of 2015, a total of 1,37 million people were employed in the province.

Construction followed closely with another 40,000 jobs for the period. What is particularly encouraging about this sector is that job growth has been consistent, largely due to the public infrastructure projects. And what’s more, this spend is likely to continue, albeit with some fluctuations.

Even agriculture, a laggard in its sector contribution to the provincial economy, also created 20,000 more than jobs than 2012, albeit off a low base.

Consumption by rural districts like the OR Tambo District is up while the services sector grew the most by 1.3%, reflecting a thriving retail and wholesale sector.

The annual contribution of the retail and wholesale sector is valued at R40 bn while the construction sector is valued at close to R10bn.

And while these numbers are encouraging, more is needed. For example, our province needs to create 576,000 jobs to provide jobs for all the unemployed; or simply put, for every three jobs we have, another needs to be created.

Poverty remains at a high level of nearly 70% of people in the Eastern Cape. This is much higher than the national average of 55% or the Western Cape of only 40%.

 

Strategic investment destination

The availability of transport infrastructure, land, labour, government incentives, and raw materials, make the province a strategic investment destination for high-potential economic sectors such as agriculture, mining and energy, manufacturing tourism, construction and knowledge-based services.

Within manufacturing, the Eastern Cape is targeted nine industries:

  • Maritime
  • Pharmaceutical
  • Green/renewables
  • Agro-processing
  • Materials
  • Light manufacturing
  • Automotive
  • Petro-chemicals
  • Capital goods.

 

The IDZ programme

The Eastern Cape government is working closely with the dti to transform our IDZs into SEZs to develop the necessary back-of-infrastructure and incentives to support export manufacturing.

Notwitstanding this major change to industrial development, the East London IDZ the East London IDZ has attracted 38 investors which investments totalling R4.4 billion worth of investment to the region.

Coega has brought 31 operational investors, with a combined investment value of R6.44-billion, and a total investment portfolio in excess of R181 billion to the Eastern Cape. One such strategic investment within the IDZ is the Dedisa Peaking Power Plant – a R3,5 billion, liquid fuel open cycle gas turbine with a 342-megawatt (MW) generation capacity, which became operational in 2015.

 

Industrial parks

The province has several industrial parks which include amongst others:

  • Queendustria in Queenstown
  • Vulindlela Heights in Mthatha
  • Fort Jackson in East London
  • Dimbaza in East London
  • Wilsonia in East London
  • Uitenhage-Despatch Development Initiative in the Nelson Mandela Metropolitan Municipality.

 

Agricultural potential

The Eastern Cape is abundantly rich in natural resources, from grazing land to forests, marine life to rich farming soils, water to wilderness.

With all seven of South Africa’s ecological zones, the province’s climate allows for the production of a wide range of crops.

Crops as diverse as pineapples, tea, tomatoes and chicory are successfully cultivated.

Pondoland, in the east of the province, holds some of the richest soils in the country and has significant agricultural production potential.

In order to leverage this resource, the Eastern Cape government is rolling out a number of agri-parks across the province, as well as establishing,, the Wild Coast SEZ.

In February 2012, the government announced it is to build a dam using the Mzimvubu River in the eastern part of the province as the source in order to expand agricultural production.

Feasibility studies for this project have been conducted, a clear indication that it is soon to move to implementation.

The province is also making its mark in areas of new production such as berries, essential oils as well as cassava and pineapple.

Its coastal and inland water resources have also made the province attractive to industries such as aquaculture and mariculture.

One of the goals of the province is also to become known as the “green province” now that it is being seen as leader in renewable energy.

Further opportunities exist and can be found in the provincial industrial development strategy documents.

 

Renewable energy

The Eastern Cape has solidified its position as an important producer of renewable energy and the country’s leader in wind energy following South Africa’s fourth rounds of the bids in the renewable energy independent power producer procurement programme.

Second only to the renewable energy supremo, the Northern Cape, which has outstanding sunshine throughout the year, the Eastern Cape is the wind energy leader, having secured a further three wind projects.

Our share in the last round translates into 429MW of the total proposed contracted capacity. All are in the onshore wind category.

The latest winning projects take the province’s tally of renewable energy projects, wind and solar, to 16.

Furthermore, Thyspunt in Jeffrey’s Bay has passed all its environmental impact assessments as a potential site for nuclear energy.