Alfred Nzo District Municipality borders on Lesotho in the north of the Eastern Cape and includes the local municipalities of Matatiele and Umzimvubu. It consists of a high plateau extending up to the Drakensberg, with a central plateau to the south. Rainfall deceases away from the mountains.
The district is the poorest in the Eastern Cape and is characterised by unemployment and a lack of emplyment opportunities; low income levels; low education levels (55% are considered illiterate); low business growth with poor markets for local products; and problems in accessing finance by small businesses. Infant mortality is high, with diarrhoea one of the main causes. This exacerbated by backlogs in the provisionof service infrastructure and inadequate social infrastructure; lack of water and poor sanitation result in poor hygiene.
The district is predominantly rural and most agriculture is at subsistence level. Agriculture input costs are high and potential to develop the local economy through agriculture (cattle, goats, sheep; sorghum, maize, lucerne,, vegetables, tropical fruit and nuts, pineapples and chicory), tourism (arts and crafts, scenery, wildlife, wetlands and cultural heritage), fishing, (in the dams and rivers) and forestry.
The economy is declining, in part because the lack of infrastructure deters potential investors. The main contributers to the district GDP are the public sector (education, health and public services) at 68% and agriculture and forestry at 11%. Many households are dependent on state pensions.
Many residents are furthermore employed in the informal sector, often in the trading of fruit and vegetables. Others run small scale informal businesses such as beauty salons and spaza shops. These people lack financial support and training. Most households in the district own livestock, and many have arable land.All these activities generate some wealth and income which is not included in official statistics.