Economic growth in the Eastern Cape outstripped population growth over the past six years with the average real annual economic growth rate 2,1% between 1996 and 2002 as against a population growth of one per cent.

But Eastern Cape Development Corporation (ECDC) CEO Mcebisi Jonas stresses in the corporation’s annual report that while this reflects the work of government and agencies such as ECDC in “building an environment that encourages development and growth” the structural legacies of the apartheid past remain and “have even worsened”.

Jonas points out that development and income is “severely skewed” across regions and between urban and rural areas and the “over-riding task is to integrate the `two economies’ of the Eastern Cape; the sophisticated urban-based economy with the impoverished economy of the rural areas.

It is the need to address this gross imbalance that has driven the 10-year Provincial Growth and Development Plan (PGDP) with which ECDC is tightly involved with government and the whole gamut of stakeholders.

The PGDP seeks to:

• Systematically eradicate poverty through a “holistic, integrated and multi-dimensional approach to pro-poor programming
• Transform the agrarian economy and strengthen household food security
• Consolidate, develop and diversify manufacturing and tourism
• Develop infrastructure
• Develop human resources, and
• Bring about public sector and institutional reform.

Examining specific areas of the provincial economy, Jonas says that the existence of the “two economies” can be seen “most starkly” in agriculture.

On the one hand, he notes, there are the highly developed, technology intensive, commercial farms. They employ 267 000 permanent, seasonal and contract workers and have placed the Eastern Cape on the “agricultural map” producing 70 per cent of South Africa’s pineapples and the total crop of chicory.

On the other - the larger part of the agricultural sector – are the small-scale subsistence farmers in the former Transkei and Ciskei homelands, employing four times as many people but with 64 per cent of them unpaid family members. Less than five per cent of rural households are self-sufficient for more than half the year.

Jonas states that challenge is “to close the gaps between these two vastly different worlds” and this is why transforming the agrarian economy and strengthening household food security is a core objective of the PGDP.

ECDC, he adds, particularly through its Project Development Unit, is establishing projects that “stimulate activity at grassroots levels – from harvesting and processing of aloe ferox to facilitating the establishment of flax production and processing. This unit, Jonas points out, is funding agriculture-based projects that are expected to attract investment of some R140 million and create some 7 000 jobs.

The drive to integrate the “two economies” has resulted in innovative interventions in the motor industry where the three original equipment manufacturers (OEMs) in the Eastern Cape - General Motors, Volkswagen and DaimlerChrysler – provided 42 per cent of South Africa’s vehicle output.

One example of this, Jonas says, is the current investigation that is underway into the establishment of a vegetable fibre cluster that could feasibly supply processed fibre to automotive assemblers planning to incorporate vegetable fibre dashboards in new-generation vehicles.

“This is an opportunity growing out of ECDC’s facilitation of cotton and flax production and processing, and its intention to become more involved in sisal, hemp and agave projects.

“It is through interventions such as these that a core PGDP objective, diversifying beyond the auto industry, is advanced.”

The CEO says that infrastructure is another critical area in addressing the unequal development in the Eastern Cape economy “largely through building links between manufacturers and the agrarian economy of the former homelands”.

He points to the R663 Kei Rail Project that is “literally providing a bridge between the province’s sophisticated manufacturing base and the agricultural and agro-forestry potential in the former Transkei”.

Jonas says that essentially the success of ECDC initiatives and those of other stakeholders will be judged by the degree to which the “two economies” in the Eastern Cape are integrated.

To achieve this, he says, looking ahead, ECDC will “broaden the spread and reach of our interventions in the form of targeted `outreach’ initiatives, rooted in the `second’ economy of our province.”

In addition, Jonas says, ECDC will strengthen and improve coordination initiatives for entrepreneurs, such as those that open access to finance and skills development, and facilitate “dynamic partnerships” between private sector entrepreneurs, organized communities, the various spheres of government and parastatals.