pre-feasibility assessment report - Innovationeasterncape.co.za

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African Development Economic ConsultantsADEC(labour force) is only 1,877,000 (4 th in the country) and its official unemploymentrate is 27.9%, highest out of all nine provinces. 2Key Sectors. Agriculture is critical to the wellbeing of Eastern Caperesidents, many of whom depend on subsistence farming for their own survival.The province is blessed with fertile land, especially within Langkloof Valley(fruit), Magwa (coffee, tea), Grahamstown (pineapples, chicory, dairy), Transkei(maize, sorghum), and elsewhere. There is also experimentation with olivesand other commercial products. Many residents are dependent on cattlefarming, which predominates in many rural areas throughout the province. Theprovince also has a number of sheep farms and is among the largest producersof wool and mohair. The Eastern Cape has kilometers of ocean access, andthe fishing industry generates catches of hake, line fish, and squid, amongothers. Overall, agriculture remains largely under-developed in the province.The automotive industry is also important to the Eastern Cape economy.Both Port Elizabeth and East London have large, established automotiveindustries. East London is home to a large DaimlerChrysler assembly plant.General Motors, Ford Motors, and Volkswagen have major assembly operationsin the Uitenhage area of Nelson Mandela Bay Metro. These global corporationshave been attracted in part by access to the major, deep-water port facilities inboth Port Elizabeth and East London. Assembly occurs near point of entry, fordistribution to Gauteng and throughout southern Africa.Billed as the largest single infrastructure project in Africa, Coega is anIndustrial Development Zone (IDZ) encompassing a new deep-water port(Ngqura), multi-modal transport hub, and industrial park infrastructure. Coegais located within Nelson Mandela Bay Metro, about 20 kilometres from thecentre of Port Elizabeth.Employment. In terms of employment, Eastern Cape has a surprisinglydiverse resident economic base. No single sector dominates, althoughCommunity Services does employ 22% of the province’s residents. CommunityServices includes employment in Government-funded public services, provincialand local administration, education, and health, among others. Thus, there issomewhat of a dependence on public sector funding for employment in theprovince.2 Statistics South Africa, Quarterly Labour Force Survey, Quarter 2, 2009.103 Algernon Road, Norwood (Johannesburg). Tel (011)728-1965 / 6690 Fax (011)728-8371Adec@ADEC1.com. Suite 131, Private Bag X5, Norwood 2117 SOUTH AFRICA 4
African Development Economic ConsultantsADECResident Employment by Sector, Eastern Cape Province, 2007Source: Statistics South Africa and ADECAgriculture13%11%1%MiningManufacturing22%10%4%14%17%7%1%UtilitiesConstructionTradeTransport/Comm.FIREComm. ServicesOtherHowever, Manufacturing also accounts for a substantial share of theprovince’s formal employment, with 17%. As noted previously, Port Elizabethand East London have a large automotive industry, supported by varioussuppliers throughout the region. Other key sectors include Wholesale and RetailTrade (14%), Agriculture (11%) and FIRE (Finance, Insurance, Real Estate andBusiness Services (10%). Together, these five sectors account for nearly threequarters of the Eastern Cape’s employment base. Construction, Transport andCommunications, Mining, Utilities, and other sectors account for the residual26% of total resident employment in the province.Employment Trends. Resident employment is growing in the EasternCape. Between 2001 and 2007, the province’s resident employment baseincreased by 207,600 or 31.4% (5.2% per year). This growth portends well forthe residents of the Eastern Cape, although unemployment remainsunacceptably high. The fastest-growing economic sectors within the EasternCape between 2001 and 2007 were FIRE (11.9%), Construction (11.6%), andManufacturing (10.6%). Manufacturing added the largest number of residentjobs, nearly 60,000 or 9,600 per year. This growth is important asmanufacturing offers relatively high wages and has significant spin-off benefitsfor the region’s economy. The size of the manufacturing sector, its rapid andsubstantial growth, and its potential for economic spin-off, all suggest theimportance of building linkages between R&D activity and the region’smanufacturing sector.Finance, Insurance, and Real Estate (FIRE) added the second largestnumber of resident jobs, 36,800, followed by “other” industries, Agriculture,Construction, and Trade. Some of the construction projects in the region arelinked to the 2010 World Cup tournament. The construction industry is expected103 Algernon Road, Norwood (Johannesburg). Tel (011)728-1965 / 6690 Fax (011)728-8371Adec@ADEC1.com. Suite 131, Private Bag X5, Norwood 2117 SOUTH AFRICA 5
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