It has been well reported that the tourism sector was arguably the hardest hit of all thanks to Covid, lockdowns and subsequent travel restrictions. South Africa received over 2 million international tourist arrivals in 2020, which was a decrease of -72.6% from 2019. The Western Cape, which contributes 25.1% to national tourism inflows certainly bore the brunt of the pandemic but has shown remarkable resilience with pundits realising that the region is more than sunshine, sandy beaches, epic views and wine farms, and does not rely on tourism alone.
The economy of the Western Cape in South Africa is dominated by the city of Cape Town which accounts for 72% of the Western Cape’s economic activity and the Western Cape’s GDP is growing at higher rates than the national average. According to Wesgro’s recent ‘Global Priorities for the Cape Report’ real GDP increased by 1.2% in the 4th quarter of 2021, buoying the annual growth rate to 4.9% for 2021, a 6.4% improvement on the decline recorded in 2020.
Treasury’s Provincial Economic Review and Outlook anticipates that the economy will grow by 3% this year in the Western Cape alone, this in contrast to the economic outlook for South Africa with growth forecasted at only 1.9 percent.
“We know that much of this growth and bounce-back can be attributed to the gradual reopening of the national and global economy but the Western Cape’s broader offering is a big contributing factor for the regions recovery, investor confidence and sustained growth,” says Quintin Rossi, CEO of Cape-based Spear REIT, a JSE-listed, real estate investment business that exclusively focusses on owning high quality assets within the Western Cape.
The Western Cape Government and its respective municipalities endeavour to ensure that the province has the required infrastructure and technology to support the many businesses setting up shop in Cape Town. Furthermore the City of Cape Town plans to ramp up spending in the coming years as it aims to significantly reduce congestion – R1 billion is earmarked towards preventing peak-hour traffic jams.
The City’s efforts to make doing business easy is exactly why this metro is fast becoming the main hub for corporate and financial services, information technology, manufacturing, green energy and agriculture.
Financial services
The latest Global Financial Centres Index shows that Cape Town is one step away from claiming Africa’s number one ranking as the continent’s top financial centre. This can be largely attributed to its improved Fintech innovations and the fact that Covid also speeded up the adoption of digital financial processes.
“Venture capital firms have cottoned on and our home grown fintech companies have garnered significant funding from offshore investors further driving the economy and strongly encouraging investment into the country,” says Rossi.
BPO industry
The business process outsourcing sector, commonly referred to as the call centre sector is a priority industry for employment creation in Cape Town and with international interest at an all-time high will help to bolster the country’s economic reconstruction and continue to channel revenue into the City’s GDP.
In 2021 Cape Town’s BPO created almost 5500 international jobs, contributing approximately R14 billion to the metro’s economy according to reports from the City of Cape Town. “Low labour costs aside another reason for Cape Town having one of the largest call centre industries in South Africa which is attractive to outbound clients, is that the accents of Capetonians is understood all over the world,” adds Rossi.
In total more than 69 000 people now work in call centres in Cape Town.
Agriculture
Not only is the Agri-economy a major contributor to GDP in the Western Cape but it also provides 18% of employment opportunities in the Province. The agricultural sector contributes significantly to South Africa’s total export earnings – citrus, wine, table grapes, corn and wool accounting for the largest exports in terms of value.
South Africa also exports nuts, sugar, mohair, snails, apples and pears and the Western Cape is a major exporter of blueberries signing massive offtake agreements with international retailers like Waitrose and Marks & Spencer and of course local retailers like Pick ‘n Pay, Spar and Checkers.
The green economy
Cape Town has the sea, the sun and wind, all of which is being put to good use through renewable energy projects and initiatives.
Like the rest of the country Cape Town is experiencing load shedding which is severely impacting business and bottom lines. By harnessing the wind to make electricity using wind turbines, is part of the City’s plan to ‘get off the grid’. Not only is wind power a domestic source of energy but it is a clean fuel source, is cost-effective and sustainable.
The Western Cape also has a large solar presence and plans are underway for Cape Town to become the first “load shedding-free city” in the country by partnering with Independent Power Producers (IPPs) to supply stable and secure electricity to support and sustain the metro’s growing economy and business presence.
Furthermore, the recent announcement of the Atlantis Special Economic Zone (ASEZ) which will become a primary focus for investment in green technologies benefiting local business and residents, will boost the renewable energy sector and further contribute to the city’s economic recovery plan.
What is obvious is that the Western Cape is not resting on its laurels, or relying on its ‘good looks’ but rather working hard every day to improve infrastructure and service delivery, sustain jobs, build the economy, create business opportunities and promote investment into the region. And, as traveller confidence improves and the tourism industry regains its traction, will see the numbers soaring back up to pre-Covid highs. “Who wouldn’t want to build a business or career here, invest here or make a life here?” adds Rossi.
Other sources: 2019/21 State of Tourism Highlights
