Western Cape economy is expected to grow despite ‘facing mountains’, says finance MEC

‘Over the years our province has faced drought, floods and fires, a global Covid-19 pandemic, national economic recession and an energy crisis. We have faced our fair share of mountains — some we have overcome, and some we are still overcoming,” said Western Cape MEC for Finance Deidré Baartman in the provincial legislature on Thursday when she tabled the province’s 2024 economic review.

Baartman, who took office in June, said data from the Provincial Economic Review and Outlook — an annual policy planning document — showed that, “Despite facing seemingly impossible tasks, despite not necessarily having the constitutional mandate, the capacity or the national budget, the Western Cape government has never refused to help its residents when they were in need.

“And as South Africa basks in the sunlight of the Government of National Unity (GNU) optimism, as represented in increasing investor confidence, that optimism now needs to translate into a freer, fairer society filled with opportunities for the people of South Africa… That is going to require hard work.”

Five key points from Baartman’s speech:

1. GNU brings confidence 

“Recent positive developments in South Africa’s growth outlook include improved investor sentiment and reduced long-term government borrowing costs, largely due to the announcement of the GNU,” she said.

This week, Daily Maverick reported that President Cyril Ramaphosa told the United Nations General Assembly that the 10 political parties that form the GNU came together for a “common agenda for economic growth, job creation, poverty eradication and sustainable development”.

Read more: ‘South Africa is in a new era; an era of great promise,’ Ramaphosa tells UN General Assembly

Baartman said improvements related to growth sentiments “are expected to have a positive impact in the second half of 2024 and into 2025. Key factors driving growth include improved sentiment, lower inflation, expected reduced borrowing costs, better energy availability and alleviation of rail and port disruptions.”

2. Western Cape outlook 

Baartman said economic expansion within the province was sluggish, but this was in sync with the national economy. At the same time, weak logistical networks and deteriorating public transport systems “undermine the full economic potential of the Western Cape economy”.

The Port of Cape Town, Baartman said, “deteriorated ever further in 2023, to the worst-performing port in the world, according to the global Container Port Performance Index”.

She said Prasa was trying to recover its rail services, which had been hamstrung by delays and broken infrastructure.

Read more: Five key signals that expose the mission ahead to get Prasa back on track 

“Railway transport was once the backbone of public transport, providing over 600,000 passenger trips daily. However, due to the years of national government underinvestment and vandalism, ridership declined to fewer than 50,000 trips per day in the province, while key rail lines are non-operational,” said Baartman.

She also touched on power, with Eskom’s scheduled power cuts suspended due to “steady ongoing improvement in the reliability of the generation fleet leading to sustained generation performance”.

She said solar panels delivering an estimated 535MW had been installed across the Western Cape by May, of which 220MW was registered as small-scale embedded generation in municipalities.

3. Tourism 

“Western Cape tourism has largely recovered from the restrictions imposed during the Covid-19 pandemic,” said Baartman.

“Between January 2021 to April 2024, international tourist arrivals have grown by 1,058%, peaking at 114,897 visitors in the month of February 2024.

“In 2023, the Western Cape witnessed a continuation of the remarkable surge in domestic tourism, recording 3.8 million trips — an impressive 330% increase from 2021,” she said.

Read more: Mother of a recovery – Cape Town wows the world as tourism numbers surge past pre-pandemic levels

4. Population growth

Rapid population growth was a significant trend, said Baartman.

“Between 2015 and 2024, the province has seen a 19.6% increase in its population size and over the next decade the Western Cape should look forward to accommodating an additional 1.196 million people,” she said.

While fertility rates had declined, the province’s population boom, said Baartman, was driven “substantially by immigration from other provinces across South Africa as well as abroad. It is estimated that between 2022 and 2026, net migration will account for 51.2% of the total population growth in the province.”

She said the uptick in migration could put a strain on the ability to deliver services.

“Citizens across the country recognise that they can find better opportunities in the form of jobs, education, quality healthcare and stable governance in the Western Cape. This, however, will also put pressure on the Western Cape to deliver services to an increasing population.”

5. Education 

“The fiscal environment in South Africa poses a major risk to the advancement of education in the Western Cape. Budget limitations hinder the Western Cape government’s efficacy in recruiting and retaining well-trained teachers, providing quality learning materials and delivering safe and conducive learning environments for learners,” said Baartman, who was the chairperson of the legislature’s education committee during the sixth administration.

The province has had to cut budgets, which has caused teacher posts to be unfunded, leading to the potential cutting of posts.

Read more: ‘We won’t stop soon’ — Education Crisis Committee say ‘no to budget cuts’ in Western Cape schools picketing

“However, in spite of the budgetary constraints and pressure on the education sector, the Western Cape Education Department’s engine is running tirelessly to get the learners and teachers of our province over the mountain,” said Baartman. DM