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.
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