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 government’s 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 DBSA’s (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

DBSA’s 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 DBSA’s 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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