Finance and Economic Opportunities
In respect of the recently launched Western Cape Growth for Jobs Strategy 2035:
- (a) How will this strategy be (i) implemented, (ii) funded and (iii) evaluated, (b) what are the details of the specific timelines and milestones for implementation and (c) how will the government measure its success in achieving the goals of the strategy;
- (a) how will the strategy transform the structure of the Western Cape economy and lead to shared economic growth that addresses past injustices, (b) what are the specific goals for changing the structure of the economy and (c) how will it address the issue of racial inequality in the province;
- (a) how will the strategy address the spatial inequality in the province, which is characterised by a concentration of poverty and unemployment in the poor working-class communities where the black (coloured, black and Indian) majority resides and (b) how will this strategy support the (i) informal economy and (ii) township economy and (c) what specific interventions are planned to help these sectors grow and create jobs?
I am informed of the following:
1 (a & b)
The final chapter of the Growth for Jobs Strategy (G4J) sets out that the strategy will be implemented over a period of 12 years, split over three-time horizons namely Horizon 1: 2023 to 2026, Horizon 2: 2027 to 2030 and Horizon 3: 2031 to 2035.
The first seven Priority Focus Areas (PFAs) have been identified for the short and medium term and these will be revisited periodically over the 12 years. Each of these PFAs have a theory of change underpinning the challenges to be addressed and outlines a picture of success as well as an objective and a goal to be achieved.
Each PFA has been assigned a Ministerial Champion, a Head of Department Lead (HOD Lead) and a Technical Lead, to coordinate and drive delivery within the respective areas. The strategy has been deliberately developed to encompass transversal, as well as departmental delivery areas, requiring leads to plan, engage and execute cross-functionally to ensure that efforts and impact is maximised.
The Strategy was adopted by Provincial Cabinet in April 2023. The Strategy recognises that it is not possible to implement all the interventions immediately, and that the interventions will need to be categorised for delivery according to the different time horizons for applicable sequencing and operationalisation. Work on this planning is currently being finalised.
The implementation plan will be a dynamic document where projects will be revised annually during the MTEC budget processes and in line with the Strategy. Furthermore, the Growth for Jobs Strategy identifies that partnerships with the private sector will be pursued as a key mechanism for co-delivering projects.
1 (c)
The G4J Strategy is based on seven PFAs, each with a strategic goal, as outlined in Question 10 (2)(b).
2(a)
The G4J Strategy finds that “Long-term growth is the result of an economy accumulating new sources of productive capacity (e.g., human and physical capital, new technologies, entrepreneurial capabilities) and increasing capabilities to deploy those productive capabilities in more efficient ways”. The G4J Strategy seeks to address challenges within the economy by increasing its productive capacity, through its 7 PFAs, to enable the growth of the private sector, which includes formal, informal and township-based businesses, to grow the economy to ensure redress. In addition, it includes strategies like increased diversification of Western Cape exports so that they are high value adding, creating more jobs and income for the people of the Western Cape.
The G4J Strategy makes clear that redress, which is needed to correct the wrongs of the past, is achieved by pulling more people into the economy, by stimulating competition, improving skills and productivity, raising investment, reducing poverty, and increasing employment. PFA 7, Improved access to economic opportunities, in particular, focuses on addressing shared economic growth by creating pathways for citizens to improve their opportunities to become economically active, and by reducing or removing barriers that confront them. The G4J Strategy also aims to improve the economic mobility of citizens, by supporting better alignment between supply and demand for human capital. It will focus on education and workplace training as well as on creating an environment for entrepreneurs to thrive, with emphasis on township businesses. This would, amongst others, increase the opportunities for township entrepreneurs to participate more favourably in industry value chains. By allowing increased participation of informal businesses, they will not only contribute to break-out economic growth but benefit from it as well. These interventions will help make formal and informal township businesses more vibrant and provide support for sustainable livelihoods.
2(b)
The G4J Strategy has specific goals which will support the change in the structure of the economy, as outlined below:
Priority Focus Area | Goal Statement | Comment |
PFA 1: Driving Growth Opportunities through Investment | Private-sector investment will be 20% of regional GDP (translating to R200-billion) by 2035.
| GDP is a macroeconomic measure of the value of economic output, and investment is a key component of the GDP formula. Therefore, this PFA forms a core building block of the overall Growth for Jobs Strategy and focuses on private-sector investment as a component of GFCF as a percentage of GDP. It is understood that achieving the 20% target occurs from a low base and that, by 2035, the economic benefits of the goal statement will make an annual contribution of R200-billion to provincial GDP and support 210 620 jobs. |
PFA 2: Stimulating Market Growth through Exports and Domestic Markets | The value of Western Cape exports of goods and services (inclusive of tourism) will triple by 2035. | Economic growth is strengthened by a positive and increasing difference between export demand and imports. Export demand enables businesses to have a market reach that is larger than the domestic need (and obtain economies of scale), while imports signify domestic consumption of products that local businesses are not able to supply competitively. Based on the current value of the Western Cape’s exports, by 2035 exports will reach R498-billion, adding R99.154-billion to GDP and the employment of 366 596 people. |
PFA 3: Energy Resilience and Transition to Net Zero Carbon | Reduce reliance of energy from Eskom of between 1 800 – 5700MW by 2035, estimated to attract between R21.6-billion and R68.4-billion in related investment. | Energy resilience is a binding constraint of the regional economy. The provision of sufficient energy supply is a critical horizontal enabler to meet the R1-trillion goal, while energy itself can also contribute to the overall target. |
PFA 4: Water Security and Resilience | Double the amount of water available for secondary and tertiary economic sectors (primarily from non-productive use) by 2035 and honour existing allocations to agriculture. | Water is a fundamental requirement for citizens and businesses, without which the economy and society will collapse. This goal will be achieved through a wide range of supply and demand interventions that will need to be deployed collectively to increase the overall quantity of water supplied and to redirect water use away from non-productive uses (e.g., urban domestic users, system losses, etc.), thereby increasing water already available within the system for productive use. Achieving this goal will contribute R82-billion to GDP and create 112 884 jobs. |
PFA 5: Technology and Innovation | By 2035, research and development (R&D) expenditure will increase by 300% in real terms, reaching R35-billion and venture capital deals will total R20-billion
| Innovation and technology are the critical components of Total Factor Productivity and fundamental for catalysing the targeted 4−6% overall growth rate. Increasing R&D expenditure by 300% (in real terms) will result in R35-billion being spent and bring economic benefits of an additional R27-billion, growing the economy and adding 32 869 jobs. The inclusion of venture capital in the goal demonstrates that R&D has been commercialised and is ready for scaling. |
PFA 6: Infrastructure and Connected Economy | By 2035, the Western Cape economy will have the infrastructure required to support and enable a R1-trillion economy and public sector capital investment in the Western Cape will be 10% of regional GDP. | A competitive economy cannot materialise without the necessary infrastructure, which is the facilitator and enabler for the mobility of labour, capital, and other inputs to production. It provides for efficient resource allocation and economies of scale, with research showing that a 10% increase in infrastructure assets increases GDP per capita by 0.7−1%. The Infrastructure and the Connected Economy Priority Focus Area is, therefore, a critical contributor towards realising the Growth for Jobs target of 4−6% GDP growth. In fulfilling this goal, government’s GFCF contribution to GDP will increase from 4% to 10% by 2035, with infrastructure investment generating annual economic benefits of R100-billion in GDP growth and an additional 105 310 jobs in 2035. |
PFA 7: Improved Access to Economic Opportunities and Employability | All citizens who want to be economically active have improved access to economic opportunities and employability through at least one pathway, with pathways comprising improved employability assets (knowledge, skills, experience, and/or competencies), career management skills, workplace-ready capabilities and skills, economic opportunities more accessible to communities, and entrepreneurship. | Improved accessibility to economic activity, skills, and competency upskilling to meet business requirements, together with stimulating entrepreneurship, will underpin improved productivity, enhanced earnings and facilitate inclusive growth within the Growth for Jobs Strategy. The economic benefits of achieving this goal would result in additional GDP Growth of R35-billion and additional employment of 110 252 people. In addition, this will considerably improve the lives of citizens, especially youth, women and the unemployed. |
2(c)
A key principle of the G4J Strategy is horizontal enablement of the private sector, including formal, informal and township-based businesses, in order to bring about positive change across the economy and for all economic stakeholders. In addition, one of the principles of the G4J Strategy is redress through economic participation.
3(a)
South Africa, as well as the Province, still struggles with the spatial legacy of apartheid, which creates significant economic inefficiencies and hardship. While the issues of spatial inequality and unemployment will be addressed through the implementation of all the PFAs within the G4J Strategy, the PFAs most aligned with spatial development and redress is PFA 7: Improved access to economic opportunities and employability and PFA 6: Infrastructure and Connected Economy.
There are some key factors, among others contributing to the entrenchment of structural and spatial unemployment in the province, and which PFA 6 and 7 seek to address meaningfully:
- The significant distances between peoples’ homes and their jobs, especially for poorer households. These households must therefore pay more for transport over long distances.
- The high costs of accommodation in areas with high job density impedes poorer households from moving up in the housing ladder.
PFA 6 and 7 aims to use several levers, tools, and developmental policies to tackle spatial and racial inequalities, such as (1) Developing the spatial economy through urban and rural planning to unlock growth, and (2) Strengthening geographic synergies by increasing the mobility of goods and people and making access to opportunities more equitable.
3(b)(i)
The G4J Strategy recognises that the informal sector, including township-based businesses, play a critical role in growth, inclusion, and opportunity creation. This is particularly important in developing countries where informal self-employment and entrepreneurship bridges the gap when the economy is not generating sufficient employment. Therefore, the G4J Strategy and PFAs 5, 6, and especially 7 seeks to support creating an enabling environment for entrepreneurs in economically marginalised locations. The G4J implementation plan will see the spatial application of the Strategy, consolidating investment, both to improve the places where people are living and to capitalise on spatially and economically vibrant growth points; clustering investment and government activities, including more affordable opportunities for people to live in these areas; and especially connecting places through better linkages between areas.
3(b)(ii)
In addition to the information above in 10.3(b)(i), the G4J Strategy focuses on strengthening the capabilities and resilience of township businesses and creating an enabling regulatory environment. Secondly, it focuses on creating a spatial environment conducive for businesses to flourish and connect. PFAs 5, 6, and especially 7 are again the main areas tackling spatial challenges in township economies.
3(c)
The G4J Strategy will address spatial imbalances in the province. PFA 6, focuses on improving infrastructure and it has valuable approaches aimed at improving township and informal economies. For example, driving spatial transformation and economic accessibility by identifying private-sector and community-led models for business infrastructure (commercial, retail, and light industrial) in townships. PFA 5, which focuses on technology and innovation also has relevance in terms of addressing the digital divide and ensuring citizens have digital skills.
PFA 7 has specific interventions which illustrates the intent in these areas, some of which are captured below:
- Improved education-based and competency-based pathways
- Education on career options and the development of work-readiness skills will be promoted. Special attention will be given to the poorest 40% of schools so that these learners will have better access to careers that interest them.
- Encouraging learning and discouraging dropping-out by expanding after-school programmes.
- Revising the curriculum to maximise its relevance to the workplace; this plan will include educating teachers about important private-sector skills.
- Increasing the frequency and scale of focus schools (catering for learners with special talents across a range of professions).
- Rolling out an online blended school for those who want to complete or improve their schooling.
- Improved post-school and tertiary education pathways.
- Expanding the number and capacity of TVET colleges and universities/colleges – especially near spatially disadvantaged communities.
- Enhancing the through-put rates of tertiary education.
- Improved work-place skills and productivity pathways such as developing experiential learning (‘learning by doing’).
- Bringing economic pathways and opportunities closer to citizens and communities and vice versa
- Overcoming the digital divide between spatial communities (also relevant to PFA 5).
- Developing mixed-use, high density, and compact settlements to promote sustainability and competitiveness.
- Developing more functional housing markets, as well as the land assembly pipeline, to promote more affordable, better located, and more integrated housing opportunities and the opportunity to progress throughout the housing ladder.
- Working with municipalities to support small-scale development especially those driven by homeowners; pertaining specifically to well-located townships, this strategy aims to assist townships with regulatory, technical, legal, and financial training to develop high quality additional dwellings.
- Improving public transport to reduce commuting times and investigate models which allow job seekers to access public transport at a reduced rate (also relevant to PFA 6).
- Developing Western Cape and township action plans to identify growth opportunities in which key needs of the communities are identified, prioritised, and eventually met through public-private partnerships.
- Considering whether Western Cape Government’s Year Beyond and Expanded Public Works Programme can assist in skills-transfer into township-based growth opportunities.
- Improve urban management in townships to facilitate and support investment so that these opportunities can be enabled in the communities where they matter.
- Enhancing entrepreneurship pathways
- Leveraging digital entrepreneurship platforms to support new start-ups and expansions.
- Developing microbusiness support for women and enabling people to work with a sense that their children are safe and well cared for.
- Identifying and addressing challenges to the ease of doing business, especially pertaining to crime and safety, to create an environment conducive to success.
- Promoting entrepreneurship and microbusiness campaigns.
- Strategic coordination and strengthened ecosystems.
- Increasing economic IQ about learning, schools, entrepreneurship, and microbusiness. Provide open data sets for transparency.
- Reducing the skills mismatch by strengthening the learning ecosystem and supporting relevant learning.
