Municipality: City of Cape Town Metropolitan Municipality

Description

South Africa’s second-largest city both in terms of population and economic gross value add (GVA), Cape Town is similar to most metropolitan cities in its large concentration of people, resources, services and infrastructure. However, it continues to face a number of physical constraints in terms of its spatial development.

Cape Town is home to two-thirds (66%) of the Western Cape’s population, generates 74% of the region’s gross value add (GVA) (2009), and contributes 11% to national gross domestic product (GDP) (R175 billion), making the city an important driver of regional, provincial and national development. 

It is the region’s major service centre for health care, education and shopping, and provides employment to people from across the province and beyond. The city is becoming increasingly linked to surrounding towns, resulting in higher levels of interdependence, but also placing greater pressure on the resources and infrastructure of those towns.

Economy

With a current annual turnover estimated at between R2,5 billion and R3,3 billion (approximately 20% of the national industry), Cape Town and the Western Cape’s BPO&O industry is fast becoming a major driver of the local economy.

Equipped with a well-established Information and Communications Technology (ICT) and contact centre industry, Cape Town and the Western Cape are well placed to attract international investors.

According to the FEM Research analysis (2010), which presents an overview of the BPO&O sector, the bulk of the region’s call centres are situated within Cape Town. This relates directly to the large-scale multinational organisations. The reasons for this are as follows:

  • Access to labour pools. A 1 400-seater call centre can employ more than 3 500 people working on a 24-hour basis.
  • Proximity – to feed into industries and their support centres.
  • Infrastructure. Office space is readily available, which means shorter set-up times.
  • Transportation networks. Due to the population who lives in the City of Cape Town area, transportation is well developed. This ensures that employees arrive at work on time, which is critical in a business that must liaise with other countries in different time zones.
  • Presence of a labour pool equipped with financial skills.

Cape Town is seen as one of the financial skills hubs of South Africa. This is primarily due to the fact that many financial houses and life insurers have their headquarters based in the Cape Town area.

According to the analysis, the BPO&O industry is a key driver of Cape Town’s local economy due to its high employment potential as well as links with the current ICT and financial sectors.

In 2008, approximately 28 000 people were employed by the provincial industry, 20 000 of whom were full-time equivalent (FTE) agents. Also in 2008, the BPO&O industry constituted 3,1% of total formal employment within the Cape Town metropolitan area – a 25,7% increase from the previous year.

Source: City of Cape Town IDP 2007 - 2012

Data  from Municipal Economic Review Outlook 2013

Critical infrastructure

Key strategic regional infrastructure is located in Cape Town, including Cape Town Port, which should see a new container stacking system and an upgraded container terminal handling system completed by May 2011. The five-year investment programme by Transnet will be capable of handling nearly double its existing cargo capacity.

Other major regional infrastructure in Cape Town includes Cape Town International Airport, which is strategically located in the centre of the metropolitan area. As the airport becomes busier, its traffic and environmental health implications may become cause for concern.

Airport in Cape Town

The extensive Cape Town International Airport upgrade project, completed in time for the hosting of the World Cup, has significantly enhanced the airport’s capacity. The longer-term development of a system of airports, and the ongoing servicing of increasing air travel needs, are also being discussed, and the feasibility of alternative sites is being investigated

Strengths

Renewable energy

A leader in the renewable-energy sector, the Western Cape was the first province to have a sustainable-energy strategy. In the City of Cape Town, an Energy and Climate Change Action Plan (ECAP) (including a Solar Water Heaters Policy) is driven and monitored by an Energy Committee.

Currently, the Province’s energy consumption is high, at around 3 500 MW a year. To ease this high consumption and general strain on energy demands, the Province has set itself renewable-energy targets of 15% of total energy by 2014. 

Via its ECAP, the City has promoted various energy-efficient initiatives, some looking at stimulating demand in the local solar water heater manufacturing sector.

A new sector body called GreenCape was launched by the Provincial Government of the Western Cape and CCT in November 2010 with the aim of unlocking the manufacturing and employment potential in the Green Economy in the Western Cape and coordinating industry development on the renewable-energy subsectors of wind, solar and others.

Creative industries

Activities related to film, crafts, music, performing arts, visual arts and cultural tourism constitute the creative industry sector, aimed at attracting foreign and local investors, and merging international trends with local creative culture.

Cape Town is currently competing to become the World Design Capital in 2014. Numerous competitive advantages, such as a range of excellent and varied locations, affordable production costs, world-class technology and post-production facilities, experienced technicians and set crews, good telecommunications infrastructure, the biggest visual effects studio in South Africa, and facilities for PAL/NTSC television system conversions and bulk duplication, make Cape Town an ideal destination in this respect. 

The injection of R430 million into the building of a world-class film studio in Cape Town has further boosted the Western Cape’s capacity to host and produce films and commercials. A location film and television production incentive offers 15% rebate to foreign productions.

Information communications technology (ICT)

Diversity, niche segments and a variety of role-players best characterise the Western Cape ICT industry. With approximately 3 000 companies – most of these being micro and small businesses – it is estimated that the market will grow by 15% – 20% over the next five years.
 
With quality levels similar to those of Europe and other destinations around the world, Cape Town offers investors a cost-competitive ICT location. The geographic coverage ranges from software developers in the city centre and eastern precinct, to other neighbouring municipalities, such as Stellenbosch, where the Silicon Cape initiative was launched.

Tourism

When it comes to tourism, Cape Town’s economic value has increased in recent years. The 2009 Grant Thornton study reports that an estimated 23 000 permanent employees and around 10 200 temporary employees are employed in the Cape Town tourism industry Tourism, construction, wine exports and call centres should be relatively immune to the current economic crisis, although this does not take into account electricity increases implemented during 2010.

Cape Town continues to be a preferred destination for tourists and investors, as well as a competitive choice for international and national events. However, international arrivals at Cape Town International Airport (excluding passengers that disembark in Johannesburg and arrive in Cape Town on domestic
flights) have declined recently, and reflect the influence of the world economic downturn on long-haul flights.
 
 
Environment
 
Cape Town’s environmental and cultural heritage wealth is the foundation of the City’s economy, and underpins its future. However, much evidence points to an environment that is under increasing pressure, with a steady decline and erosion in our natural and heritage base.
 
Rich in natural assets, diverse ecosystems, landscapes, heritage, cultural and social diversity, Cape Town represents the global challenge of the need to find a sustainable balance between environmental protection and the ongoing economic and social development needs of its growing population.

Unless steps are taken to reverse the current environmental decline and resource consumption patterns, the City recognises that the social and economic cost and risk to Cape Town and its citizens will increase dramatically.

Therefore, in recognition of the value and importance of Cape Town’s natural and heritage assets, the City aims to enhance, manage, utilise and protect these assets, so as to grow the economy, extend social opportunity, develop its communities and build a more equitable and resilient society.

Weaknesses

Unemployment

Unemployment has decreased only very slightly in Cape Town since 2001, when 29,2% unemployment was reported in the national census (Stats SA, 2001). During the period 2004 to 2006,
unemployment decreased from 23,4% to 15,1%. However, since 2006, there has been a steady rise in unemployment, with joblessness reaching over 20% from 2008 (Quantec, 2004; Stats SA, 2001 – 2010).

In 2010, 24,2% of the labour force7 in Cape Town was unemployed. This is an increase from 20,04% in 2009 and 19,89% in 2008. The unemployment rate for Cape Town is currently higher than that for the Western Cape, where unemployment increased from 18,36% in 2009 to 20,34% in 2010. The number of unemployed people in Cape Town increased by just over 56 000, while the number employed declined by 113 000 from 2009 to 2010. In 2010, almost 10 500 people were discouraged work seekers,8 an increase from 2009 (Stats SA, 2010).

Since 2006, the City’s economic development programmes have created over 40 000 job opportunities, with 8 246 direct opportunities provided in the 2009/10 period, mainly within informal markets, small-business support facilities, Wesgro and the Cape Film Commission.

Jobs created by Cape Town’s Expanded Public Works Programme (EPWP) have almost tripled since 2006. Althoug, the City continues to be a net importer of migrant labour, the skilled work pool continues to decline with out-migration of skilled workers and reducing graduate numbers. This
negatively affects the capacity of local business as well as the City as an organisation.
Cape Town received R1,01 billion in total foreign spend in 2009. Of this amount, R94,2 million was secured by Wesgro (the City of Cape Town’s primary direct investment promotion partner) and other sector organisations. The decrease in foreign direct spend in Cape Town has been attributed to the
recent recession, which affected global foreign direct spend.

Facilitating local economic development (LED) is part of the City’s job creation objective, which includes a range of projects land programmes, such as the urban agriculture programme; small, medium and micro-sized enterprise (SMME) business support; and prioritising skills development based on local requirements (Wesgro, 2010; FDI Intelligence, 2010).

The number of employment opportunities could be increased in the longer term through the promotion of entrepreneurship, and incentives for import and export activities. These therefore need to form part of any strategic plans aimed at alleviating unemployment in the city Skills mismatch in terms of the required qualifications and the

limited number of employees with those required technical and academic abilities is an important consideration. This is exacerbated by the growth of the knowledge economy, and requires a coordinated and integrated plan involving the City, the Province and Cape Town-based academic institutions.
 
If Cape Town is to blaze a trail as a knowledge and innovation centre, the city needs the backing of a workforce that is prepared for an ever-growing services sector and a hightechnology workplace.
 
A seamless strategic partnership between the City and the Province is important to help ensure that workers are properly equipped with appropriate language, technical and managerial skills – from the early childhood development (ECD) system, which is the City’s responsibility, to the tertiary education system. Infrastructure, facilities and systems need to be aligned in order to optimise these strategies.
 
Housing
 
The City’s current population estimate of 3,7 million people (according to 2010 figures) exceeds what was anticipated by much earlier projections for 2010. Housing demand in Cape Town currently outstrips the available supply, despite all the City’s best efforts. According to the Housing Directorate’s housing database, 386 590 households are waiting for a housing opportunity. It is also estimated that a further 187 392 households have not registered their names on the database. This estimate is based on the assumption that 54,1% of Cape Town’s total households of 1 060 964 (2010) live on a monthly household income of less than R7 000, which makes them financially reliant on the state for their housing needs.
 
 
Service delivery
 
Catching up on service backlogs in a sustainable and inclusive manner remains a challenge and a priority for the City. High levels of access to basic services have been attained for water supply, solid waste services and cleaning, and refuse removal. 
 
However, the provision of adequate sanitation and electricity still lags behind household target service levels in informal areas. A small percentage of the city’s increasing population still does not have access to basic services. This must be addressed amidst the challenges of limited resources, population growth, increasing densities and decreasing land availability.

In particular, Cape Town faces a challenge in dealing with solid waste in the future, as its landfill capacity is not sufficient for likely waste increases in the medium term (five years). Sources predict current landfill capacity will be depleted by 2012. Although landfill space is available, new landfill sites for additional capacity have not yet been built. A key challenge to waste management is the major impact of any further delay in the issuing of a record of decision for the establishment of a new landfill site to replace existing landfill sites that are nearing capacity.

The existing landfills will not be able to cope with the increasing waste volumes expected over the next five years and beyond. Therefore, the construction and commissioning of a new northern-region landfill site by 2012/13 is a key project for the City.

Various interventions and programmes, some of which are already under way, aim to deal with the waste site issue, such as landfill/dump rehabilitation, new landfill sites, multipurpose transfer stations, the completion of mini-material recovery facilities and waste collection vehicle replacement.
 
In informal areas, area cleaning and waste collection services through community-based organisations (CBOs) will continue. In addition, education and awareness programmes on waste management and minimisation will also still be implemented in disadvantaged communities.