Municipality: Knysna Local Municipality


Knysna Knysna , Western Cape
South Africa
Phone: 044 302 6300
Fax: 044 302 6333
Western Cape ZA


The Knysna Local Municipality is located on the South Coast of the Western Cape Province. The local municipality is approximately 500 kilometres east of Cape Town and 267 kilometres west of Port Elizabeth. It forms part of the Eden District Municipality.

The Greater Knysna Municipal Area is renowned for its appealing natural resources such as the estuary, mountains, farm land, forests, valleys, lakes and beaches which attract domestic and international tourists to the area.

The Knysna Municipal Area covers a total of 1 059 km2 that stretches from Swartvlei in Sedgefield in the West to Harkerville in the east. The municipal area is bordered by the Outeniqua Mountains in the North and the Indian Ocean in the south. Knysna town is strategically located next to the N2 highway and estuary. The area enjoys a mild climate with an average annual rainfall of approximately 750mm and the temperature ranges from 8 degrees Celsius in winter to 28 degrees Celsius in summer making it a favourite holiday and retirement destination throughout the year.

The natural beauty of the surroundings has enticed artists of all disciplines, earning it the reputation of the artistic capital of the Garden Route. The regions’ flora includes the Afro-Montane or temperate rainforest which covers the hilly terrain. An abundance of unique Cape Fynbos (fine or delicate bush) grows throughout the region.

The Greater Knysna Municipal Area is made up of socially and racially diverse communities. Due to in migration the area has experienced a rapid growth of a predominantly poor population. Knysna and Sedgefield are the two primary urban settlements where the main retail and commercial activities are concentrated. On the plateau above the town lie the agricultural nodes of Karatara and Rheenendal.

The population of Knysna was estimated at 63 306 during 2010 which made up approximately 17 416 households. The largest portion of the population of Knysna is located in the areas north of the town generally known as the Northern Areas. Hornlee located on the east side of town is another suburb comprised of predominantly middle to low income families.

The economic downfall of 2008 left scars of poverty and unemployment in the Greater Knysna Municipal Area and poverty pockets are prevalent in areas such as Sizamile, the Northern Areas, Rheenendal, Karatara and Hornlee. Over half of the population in Knysna is impoverished and the population is bundled in relative poverty, a concept that is not different from absolute poverty, but should rather be seen as supplementary to the definition of absolute poverty. Relative poverty in the context of Knysna refers to people whose basic needs are met proportionately, but who in terms of their social environment, still experience disadvantages. 

Having identified poverty as being one of the most critical challenges in the Knysna municipality a poverty strategy was developed. The sectors with the most potential to alleviate poverty identified include agriculture, manufacturing, trade and tourism. A series of poverty relief programmes were also pioneered through Expanded Public Works Programmes, Greening Programmes, Working for Water and SMME development.

Local Economy

A variety of economic activities are prevalent within the Greater Knysna Municipal Area of which the biggest specified employment contributors in 2007 were wholesale and retail trade (20.4%), construction (15.4%), community; social and personal services (12.3%) and manufacturing (12.3%).

Knysna Municipality’s GVA and employment per industry illustrates the importance of the wholesale and retail trade, catering and accommodation to both the municipality’s GVA and employment. Finance, insurance, real estate and business services, and also manufacturing are also important industries with respect to both GVA and employment in the municipality. All of these industries were particularly hard hit by the economic decline, most particularly the tourism and related activities. In an attempt to mitigate against potential economic risks the municipality and its citizens will need to critically re-assess what industries must be targeted and incentivised for development.

Important sectors and industries


Tourism is not classified as an economic sector, because it is an industry which forms part of various economic sectors such as Wholesale and Retail, Finance and Business, Transport and Communication, etc. Knysna is traditionally seen as a “tourist town” and tourism is a large economic contributor in the Greater Knysna Municipal Area. According to the 2008 General Valuation and consequent supplementary changes (i.e. per the latest property rates billing for 2011/12) there are 689 guesthouses on our consumer database.

The industry has been very hard hit by the economic decline due to the increasing lack of disposable income locally and internationally. There is a need to deepen the tourism value chain, create a diversity of products, but also start to market Knysna as more than a place to come and play, and to diversify the options that the town offers. Concerted efforts must continue to be made to ensure that the town is welcoming and accessible to all tourists.

The Tourism industry of Knysna is largely driven by events taking place during the year inter alia The Pink Loerie Mardi Gras and Arts Festival, the Oyster Festival, and the Slow Town Festival. These events contribute significantly to the area’s economy and fill the town to capacity at regular intervals, and during off-peak season.

For example the July Oyster Festival attracted 58 000 bed night visitors in 2007, at the commencement of the economic downfall..

Knysna Municipality has entered into a service level agreement into Knysna Tourism, wherein Council supports the entity financially. Council is represented on the Board by two Councillors; the municipal manager and three community members who are knowledgeable and active in the tourism field. At the time of drafting the IDP, Knysna Tourism was busy compiling its three year strategy.


The sector contributes to the overall economic growth of the area, but has shown a decline with an  average negative growth of 1.3%.The primary activity within this sector historically is timber. The timber industry nationally and locally has declined in the past decade for various reasons. Nationally, Cabinet resolved to divest the State of many of its assets related to the timber industry as part of an initiative to re-structure the industry.

This had a direct affect on industries related to the timber industry. Locally, the town’s sawmill moved to George and resulted in loss of a significant number of jobs. Finally the costs of transporting timber are increasingly prohibitive.

Other reasons for the decline in the sector include the area’s poor soil, erratic rainfalls and lack of secure water.

There has been a dramatic increase in land prices which makes it almost impossible to buy land for commercial farms which resulted in farms being sub-divided into smaller farms, with “hobby farming” as the main agricultural activity.


Between 1995 and 2004, the manufacturing sector was the third largest driver of the Knysna output.

However the size of the sector declined during 2008 showing vulnerability in the automotive, textile, wood and paper manufacturing industries.


For a significant period before the economic fallout the construction industry was thriving. The large scale, highend residential developments in the area boosted the industry. However, as investors and developers were required to down-scale activities dramatically, it resulted in large-scale job losses. The construction sector is dependent on interest rates which influence land and building costs. The economic assumption is when land prices are too high, fewer people buy land to build on and when building costs raise no one will build. Since 2006 the municipality experienced a decrease in building plans being submitted for approval, as well as a decline in the number of major land use applications.

Wholesale and Retail

Wholesale and retail is a main contributor to the economy linked to the tourism activities. In 2001 there were approximately 671 businesses in Knysna, Sedgefield, and surrounding areas, which contributes nearly 31% of the Knysna GGP. The business economic hubs in the CBDs are all well positioned and contribute to tourism activities.

Transportation and Communication

Transportation and communication contributes 11.2% to the municipal area’s overall GGP and is divided into two sections namely transportation (76.9%) and communication (23.1%).

Knysna is situated on the N2, which traverses through both primary towns. The net effect of the heavy vehicle traffic on the main roads in both towns is a high repair and maintenance requirement. The main road in Knysna by the Municipality is maintained in terms of an agency agreement with the Provincial Department of Roads and Transport, albeit that the grant to undertake this work is hopelessly inadequate. The Provincial Department has indicated that it is committed to a major refurbishment of the portion on the N2 running through Knysna and the planning for this is progressing well. Two other critical and strategic transport issues are the demise of the Choo-Tjoe, an icon of Knysna and efforts to resurrect the line whether for tourist, industrial or commuter purposes. The second is the N2 By-pass which is situated to the north of the town. At the time of writing the Environmental Impact Assessment for the project was being considered by the Department of Environmental Affairs. The outcome of these considerations will impact upon the IDP Reviews in the years ahead.

Knysna is one of the few municipalities which provide a free wireless communication service. This infrastructure is critical and has the potential to attract new businesses to the area.

Financial and Business Services

This sector includes inter alia financial intermediation, insurance and pension funding, real estate activities, rental or transport equipment, information technology and related activities as well as research and development, legal services, accounting, bookkeeping, engineering and other technical and businesses activities not classified elsewhere.

A Business Chamber has been established in Knysna and the municipality has built a relationship with the Chamber to share experiences and economic related knowledge. The Municipality has also financially supported the Business Chamber. Work still needs to be done by the municipality and the Chamber to attract private sector investment and strengthen the second economy.

Knysna Economic Development Agency (KEDA)

The Knysna Economic Development Agency (Keda) was officially launched in July 2010. The long road from that decision to launching Keda involved an application for assistance to the Industrial Development Corporation (IDC) and a business plan with specific reference to the agency’s focus that was approved by council, after which IDC approval was received. More information about the agency can be obtained here.

Source Knysna website and IDP 2012 - 2017

Critical infrastructure

Knysna Municipality has a national road running through the two major towns and this has a significant impact on traffic and the maintenance of the roads in these towns. A by-pass has been proposed as an alternative route to relieve the traffic congestions caused by the N2 running through Knysna and Sedgefield. SANRAL indicated that the Knysna N2 by-pass environmental impact assessment is complete and is now awaiting the ROD from the Department of Environmental Affairs in Pretoria.

Many roads in the informal settlement such as Dam se Bos, Edameni, Hlalani, Sizamile, and Ethembeni are poor and relatively inaccessible, especially for medical and rescue services. The Municipality has made provision for resealing, graveling and rehabilitation of roads in some of the more seriously affected areas, but these efforts are greatly hampered by budgetary constraints.


Access to affordable and suitable accommodation remains one of the greatest challenges facing the Greater Knysna Municipal Area. While the provisioning of housing is the Constitutional mandate of Provincial and National Government, by virtue of the structure and location of Local Government, this function is undertaken by Knysna Municipality on an agency basis.

From the figure below it is apparent that the majority of households in Knysna Municipality live in formal dwellings (houses and flats). However, a large percentage of households (31%) live in informal or traditional dwellings, which would form part of a housing backlog.

Land reform and land redistribution

Natural resources such as land and water are scarce resources in Knysna and they need to be used in a prudent and sustainable manner.

At time of writing there are no rural development or land reform projects activated by the Department of Rural Development and Land Reform and this may be ascribed to the lack, and purported high cost of, commercial farms which the Department requires for its primary programs. There is however an initiative to acquire State land in the vicinity of Karatara for emerging farmers. The Department is also investigating the option of developing a Comprehensive Rural Development Program in Karatara. The municipality will embark on a process of collaboration amongst key stakeholders to vigorously align development plans in this regard. We can report that the Department of Rural Development and Land Reform recently held public hearings on the green paper. The Department has also rolled out the Narysec programme to local youth. 


Economic Development

Defining the economy: The economy is about how wealth is created, distributed and consumed. It concerns the ways in which a country produces, distributes and consumes the tangible, material commodities of life. It is also about how the proceeds or income from these activities are distributed amongst those that contribute towards them: businesses, workers, the state and the whole of society. Every person affects the economy in some way and we are all affected by it.

Economics attempts to answer questions such as:

  • What is produced and how?
  • Why does a particular country produce particular goods and services?
  • How are the natural resources used?
  • How does a country earn and spend its money?
  • How are its people employed, and what technology do they use in their work?
  • What is the relationship between these things and the wealth and poverty of different communities?

From the preceding, ED as a development approach is based on the central idea of local stakeholder mobilisation, building the competitive advantages of the locality and enabling local role-players to capture and exploit market opportunities.

Throughout the world, local governments are being confronted by an increasingly competitive global economy that is rapidly embracing market-oriented economic systems. At the same time, local governments are experiencing democratic reforms and greater decentralization passed down from higher levels of government. This means that local governments and communities now have greater opportunity, and growing responsibility, to take control of their future.

Economic Development (ED) is an approach to sustainable economic development that encourages residents of local communities to work together to stimulate local economic activity that will result in, inter alia, an improvement in the quality of life for all in the local community.

The purpose of ED is to build up the economic capacity of a local area i.e. Knysna Municipal area to improve its economic future and the quality of life for all. It is a process by which public, business and nongovernmental sector partners work collectively to create better conditions for economic growth and employment generation.

Economic Development in Knysna: The next decade represents a critical period of change for the Knysna economy. Increasingly, we will be affected by major long-term global trends including: intensified competition from emerging economies like China and India; rising energy costs; ICT-driven disruptive innovations; and demographic changes, especially ageing and the pace of population growth.

The community, industry and governments, together, face a range of opportunities and challenges – only by working more closely together can we most effectively address them. Knysna Municipality is dedicated to ensure that a conducive environment is created to promote economic growth and development of all residents and businesses. This key objective will be lead by the Economic Development Department who focuses on promoting economic growth, job creation, reducing poverty and monitoring inequalities. The department does this through a number of projects and programmes, such as Investment Promotion, Entrepreneurship Development Programmes, Sector Development Strategies, informal trading and business support facilities framework and specific ED interventions such as the timber cluster initiative and the Comprehensive Rural development Programme in Karatara and Rheenendal amongst others.

Currently the Knysna Local Economic Strategy is being revised as part of the Integrated Strategic Development Framework (ISDF) conceptualisation. This strategic working document will provide a roadmap to enable economic development taking into consideration the natural environment and its challenges and resources as well as the spat ial implications thereof. The focus will be on ensuring that Knysna has a economic future and that investments are made in human capital, physical infrastructure and leading and emerging enterprises.

ED offers Knysna Municipality, the businesses in Knysna and the local communities the opportunity to work together to improve the local economy. It focuses on enhancing competitiveness, increasing sustainable growth and ensuring that growth is inclusive.

ED encompasses a range of disciplines including physical planning, economics and marketing. It also incorporates many local government and private sector functions including environmental planning, business development, infrastructure provision, real estate development and finance. The vision for ED in Knysna is that of robust and inclusive local economy that will take advantage of local opportunities, address local needs and contribute to national development objectives such as economic growth and poverty eradication.

More information is available on the Knysna LM website, please click here.