Summary of Northern Cape Province

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This is a document compiled by the Development Bank of South Africa (DBSA). It gives a summary of socio-economic profile of the Northern Cape Province in South Africa.

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  • DEMOGRAPHIC AND HEALTH PROFILE

    The Northern Cape is the biggest province in geographic size but has the smallest provincial population size in South Africa. This makes the

    province the most sparsely populated in the country. In 2010 the province had a population density of only 3 people per square kilometer. The

    province also has one of the oldest populations in the country, with 6.2% of its population aged 65 years and above and a median age of 25

    years in 2010. Northern Cape is a net out-migrating province. In the period 2006-2011 the province lost approximately 20,000 people to other

    provinces. The Northern Cape has among the lowest HIV prevalence rates, with an estimated figure of 6,6% in 2010. The province, however,

    bears a relatively heavy burden of TB. In 2010, for every 100 000 people that went through the health care system in the province about 930

    were captured as new TB cases.

    Figure 1: Characteristics of Northern Cape population Figure 2: Health status

    Source: Stats SA, HST, DBSA Information Analysis Unit calculations

    ECONOMIC AND LABOUR PROFILE

    According to figure 3, the GDP growth rate of the Northern Cape has been volatile over the years resulting in the economy growing by an

    annual average rate of 2.1% between 1996 and 2010. The economy grew from 3% in 1996 to -1.7% in 2001 as a result of the decline in

    mining activity. The impact of the 2008/09 global recession also led to GDP growing by -3.2% in 2009. However GDP receded to 1.9% in

    2010, a pleasant recovery from the previous year.

    Figure 4 illustrates a relatively diversified economy. Mining accounts for the largest portion while construction has the lowest share. Finance,

    government services and the wholesale trade sectors have a significant share in the economy both accounting 14.4% of provincial GDP

    output. The growth in 2010 was a result of mining contributing 1.1 percentage points relative to the other economic sectors which jointly

    contributed a 0.7 percentage points.

    Figure 3: GDP growth rate Figure 4: Composition of GDP (2010) Figure 5: Sectoral contribution to GDP growth (2010)

    Source: Stats SA, DBSA Information Analysis Unit calculations

    Agric, 5.7%

    Mining, 20.7%

    Manuf, 3.5%

    Elec, 1.8%

    Const, 1.6%

    Wholesale, 10.4% Trans,

    9.1%

    Fin, 13.4%

    Pers services,

    9.0%

    Gvt services,

    13.4%

    0.0%

    1.1%

    0.3%

    0.0%

    -0.1%

    0.2% 0.1%

    0.2%

    -0.3%

    0.3%

    -0.4%

    -0.2%

    0.0%

    0.2%

    0.4%

    0.6%

    0.8%

    1.0%

    1.2%

    Agr

    ic

    Min

    ing

    Man

    uf

    Elec

    Co

    nst

    Wh

    ole

    sale

    Tran

    s

    Fin

    Pe

    rs s

    ervi

    ces

    Gvt

    ser

    vice

    s

    3.0%

    4.0%

    1.7%

    2.6%

    1.9%

    -1.7%

    1.3%

    3.6%

    2.5%

    3.6% 4.1% 3.9%

    1.7%

    -3.2%

    1.9%

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    Median age: 25 years

    HIV prevalance rate: 6.6%

    Net-out- migration:

    20,000 people

    NORTHERN CAPE PROFILE SUMMARY REPORT

    Heavy burden of TB

    Lowest HIV prevalence rate

  • According to figure 6, the largest employer in the province is the community services industry which accounts just more than 30% of the labour

    market. Wholesale & trade, agriculture and private households (domestic workers) are also significant employers. A large proportion of the

    youth is employed in the community services industry while some are employed in the wholesale & trade and the agriculture industries. A

    similar trend is observed in the 35-64 age cohort as shown in figure 7.

    Unemployment rate in the province grew by an annual average rate of 25.2% in the past decade. According to figure 8, the unemployment

    rate reached its peak in 2003 with unemployment rate reaching 28% from 18.4% in 2000. From 2004 onwards ,he unemployment rate has

    remained relatively constant on an average rate of 26.3% The province has not been able to reduce its rate of unemployment rate in line with

    the governments objective of halving unemployment and poverty by 2014.

    Youth unemployment rate in the province has remained consistently high over the years, higher than the aggregate unemployment rate in the

    province. This is an indication of the inability of the labor market to create sufficient jobs that will absorb the youth looking for employment.

    Figure 6: Industry employment (2010) Figure 7: Industry employment by age (2010) Figure 8: Unemployment rate

    Source: Stats SA, DBSA Information Analysis Unit calculations

    ACCESS TO BASIC SERVICES

    The standard of living and quality of life for the people in the Northern Cape Province is largely influenced by improved access to basic

    services. Backlog figures indicated in figure 9 below highlights that refuse backlogs in 2007 were the highest while water and sanitation had

    the least backlog figures than electricity in 2011. During 2011, the percentage of households without access to electricity was estimated at

    19% that is 53923 households without access. Figure 9 below implies that the province is still bearing the burden of refuse services in

    general, while the number of households with access to water and sanitation has increased significantly, hence less water and sanitation

    backlogs.

    Figure 9: Number of households without access to services

    Source: DWA, DME, Stats SA

    19%

    2%

    2%

    28%

    Electricity (2011)

    Water (2011)

    Sanitation (2011)

    Refuse Removal (2007)

    Percentage of households without access to services

    0.0%

    5.0%

    10.0%

    15.0%

    20.0%

    25.0%

    30.0%

    35.0%

    40.0%

    45.0%

    50.0%

    2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

    Unemployment rate

    Youth unemployment rate

    0.0% 2.0% 4.0% 6.0% 8.0%

    Agric

    Mining

    Manuf

    Elect

    Const

    Whol

    Trans

    Fin

    Com Serv

    Pvt Households

    35-64 yrs

    15-34 yrs

    Agric , 15.7%

    Mining , 3.8%

    Manuf, 4.3%

    Elect, 0.4%

    Const, 6.6%

    Whol, 15.8%

    Trans, 3.6%

    Fin, 8.1%

    Com Serv,

    30.7%

    Pvt Househol

    ds , 10.9%

  • DBSA SUPPORT TO THE NORTHERN CAPE PROVINCE

    In terms of the support rendered by the DBSA to the province, the Siyenza Manje program assigned Deployees to under-resourced

    municipalities in the province as shown in figure 10. These include technical and planning experts. The Deployees helped to facilitate projects

    worth over R557.5 million. A bulk of the loans was allocated to the energy sector as shown in figure 11.

    Figure 10: Deployees to the province Figure 11: Distribution of loans per sector

    Source: DBSA South African Operations Division

    During the period 2006/07 to 2010/11 financial years, the total value of loans disbursed was over R183.5 million. The bulk of the

    disbursements were allocated to social infrastructure as depicted in figure 13. Of the total amount of loans disbursed, 91% of the projects were

    completed and the remaining 9% were in the implementation stages. Most of the completed projects were in Gamagara and Sol Plaatjie

    municipalities. These projects were mainly in energy and social infrastructure sectors.

    Figure 12: Proportion of sector disbursements (2010) Figure 13: Completed projects

    Source: DBSA South African Operations Division

    Energy , 57.8%

    Residential facilities , 1.0%

    Roads & infrastructure ,

    0.2%

    Sanitation , 6.4%

    Social infrastructure ,

    25.1%

    Transport , 4.2%

    Water , 5.3%

    Energy , 11.0%

    Roads & infrastructure ,

    0.7%

    Sanitation , 1.7%

    Social infrastructure ,

    68.9%

    Transport , 11.1%

    Water , 6.7%

  • MACROECONOMIC IMPACT OF DBSA SUPPORT TO NORTHERN CAPE

    The Social Accounting Matrix (SAM) model was used to calculate the impact of the DBSAs (SA Operations Division) funding during the

    2010/11 financial year. The approved funding portfolio together with the signed agreements are said to have potential impact which comes

    into effect once the funds are actually disbursed. Only the disbursed funding portfolio has an actual development impact on the province. The

    DBSAs disbursement to projects in the province was R49 million and an estimated 110 employment opportunities were created.

    According to Table 1, the share of Northern Cape during the 2010/11 financial year ranged between 2% and 7% in the funding portfolio of

    provinces. The DBSA funding is relatively not in line with the socio-economic challenges experienced by the province. This is a reflection of

    the relative scarcity of appropriate investment opportunities in the province rather than the funding strategy of the Bank.

    Table 1 further depicts how a R1 million investment in the tourism sector is estimated to have an impact on GDP of R1.01 million. The lowest

    impact on GDP is estimated to be in the energy sector. Similarly, an investment of R1 million in entrepreneurial will contribute to the creation of

    7.79 employment opportunities. By directing more investment to more sectors a larger impact can be achieved to address the challenges that

    the province faces such as unemployment, inequality and poverty.

    Table 1: Actual impact of DBSAs disbursements on GDP and employment

    Source: DBSA South African Operations Division, Information Analysis Unit

    The impact on GDP is relatively significant in the infrastructure sectors as shown in figure 14. The impact on employment however is low in

    the infrastructure sectors which fall within the DBSA funding mandate include water, roads, drainage and energy. Investment in these

    sectors is enabling and creates opportunities for private sector investment.

    Figure 14: Impact on GDP per R1 mil investment Figure 15: Impact on Employment per R1 mil investment

    Source: DBSA Information Analysis Unit

    INDICATORS STRENGTH CHALLENGES

    Socio-economic indicators

    Economy is relatively diversified.

    Mining the largest contributor to GDP growth.

    Volatile economic growth.

    Community services sector largest employer High unemployment especially amongst the youth. Limited DBSA impact on socio-economic challenges due to

    relative scarcity of appropriate investment opportunities in the province.

    Access to basic services

    Improvement in access to basic services of water and

    sanitation.

    The province has the lowest HIV prevalence rates.

    The province has one of the oldest populations in the country.

    Hugely burdened with provision of refuse removal services

    and to a lesser extent electricity.

    5.34 7.79

    1.94 7.70

    1.41 7.72

    1.24 0.92

    1.75 1.24

    1.71 7.30

    1.95 1.13 1.24 1.17 1.24

    - 5.00 10.00

    Agriculture Entrepreneurial, Fund & Manufacturing

    Mining Tourism

    Communication Education- Formal, Recreational & Residence

    Education- Non-Formal & Vocational Energy

    Data, Research & Information Analysis Institution Building

    Policy Residential Facilities- Formal & Non-Formal

    Roads & Drainage Sanitation

    Social Infrastructure Transportation

    Water

    Employment (number)

    0.49 0.97

    0.68 1.01

    0.48 0.55

    0.36 0.29

    0.58 0.36

    0.57 0.52

    0.41 0.44

    0.36 0.37

    0.48

    - 0.20 0.40 0.60 0.80 1.00 1.20

    Agriculture Entrepreneurial, Fund & Manufacturing

    Mining Tourism

    Communication Education- Formal, Recreational & Residence

    Education- Non-Formal & Vocational Energy

    Data, Research & Information Analysis Institution Building

    Policy Residential Facilities- Formal & Non-Formal

    Roads & Drainage Sanitation

    Social Infrastructure Transportation

    Water

    GDP (R mil)

    Approved DBSA & Co-Funders (R mil)

    Total Funds Approved (R mil)

    Signed

    Agreements (Rmil)

    Funds Disbursed (R mil)

    Impact on GDP per R1 mil investment

    Impact on Employment per R1 mil investments

    R266 R265 R265 R49 Highest impact Lowest impact Highest impact Lowest impact

    (3%) (3%) (7%) (2%)

    Tourism (1.15)

    Energy (0.31)

    Tourism (10.35)

    Energy (1.03)

    Percentage share of Northern Cape in DBSA

    Funding

    STRENGTH AND CHALLENGES IN THE PROVINCE

  • Produced by Information Analysis Unit Development Planning Division Development Bank of Southern Africa PO Box 1234 Halfway House 1685 South Africa

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