Table of Contents

  • The socio-economic conditions in the Cape Town city-region are in many ways more favourable now than at any time since apartheid was abolished fourteen years ago. As one of the most economically powerful metropolitan areas on the continent, Cape Town, with its 4 million inhabitants, has benefited from South Africa’s macroeconomic stabilisation and its re-entrance into international markets. After a sluggish period in the 1990s, its average annual growth rate reached 5.5% in 2005. The region has modernised its traditional strengths in port logistics and trans-shipment and has developed innovative sectors in tourism, agro-food processing, viticulture and finance. The regional GDP per capita is USD 15 250, or 40% more than the national average, roughly equal to that of OECD city-regions like Naples or Mexico City. Though the Johannesburg-Gauteng city-region still dominates the overall national economy (with 31% of the national population and 33% of national GDP), Cape Town has been the only major city-region to increase its share of national output. The tenfold growth of population over the past 50 years is testament to its draw as the secondrichest economy in South Africa, with the lowest unemployment rate and the best standards of health, education and housing in the country.

  • After having achieved relative macroeconomic stability, South Africa’s government is now spearheading efforts to drive economic growth and reduce poverty. Prudent fiscal, trade and monetary policy stabilisation programmes, such as the Growth, Employment and Redistribution (GEAR) strategy, have normalised the economic and investment environment. As a result, the national economy is doing well: the national budget is relatively healthy, and inflation rates and interest rates have been relatively low since 2000. After a decade of sluggish performance, growth has followed a more stable path, above the average OECD rate. However, despite democratisation and improved economic performance, South Africa faces significant unemployment, poverty and inequality. To reverse this situation, the central government launched the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) in 2006. AsgiSA was a result of the recognition that despite substantial economic achievements since the end of apartheid, the fruits of those successes were not widely shared. It focuses on unlocking binding constraints to higher economic growth and ensuring a wider distribution of growth yields, particularly with respect to increased job creation.

  • Since the birth of democratic South Africa in 1994, the nation has witnessed a dramatic institutional transformation. Impressive efforts to reform and strengthen existing institutions of governance accompanied the transition from apartheid to a non-racial liberal democracy. At the same time, completely new social, legal, economic and institutional frameworks were built to address complex imperatives of economic growth, redistribution, social welfare and nation building. This overhaul period was marked by a sweeping reorganisation and demarcation of local authorities in 2000, when the number of local authorities was reduced from over 1 300 to 283 nationwide. The effects of this transformation were legion: over a short time local governments administered larger jurisdictions, collected revenue for the first time, deracialised public service provision, and instituted democratic, non-racial elections at the local and national levels. Few international precedents exist for such rapid institutional change. In Cape Town, the institutional reform gave rise to a large metropolitan municipality that collapsed 61 racially segregated entities into one “unicity” charged with pro-poor service delivery, as well as the standardisation of a range of different land use legislation, computer systems, accounting standards and contracts. The concomitant creation of the Western Cape Province established a vehicle for regional delivery of health services and education and inter-municipal co-ordination. Cumulatively, these reforms prepared regional and local governments to play a more prominent role in economic development.