OECD Territorial Reviews: Cape Town, South Africa 2008

image of OECD Territorial Reviews: Cape Town, South Africa 2008

The Cape Town city-region, which is the second-largest area in South Africa (4 million inhabitants), reflects the national challenge of creating new economic opportunities while correcting past inequities. Since the end of the apartheid system, Cape Town has benefited from macroeconomic stabilisation and has outpaced the national average growth rate. It has both modernised its traditional strengths in port logistics and developed innovative sectors in tourism, agro-food processing, viticulture, financial and business services. However, 22% of the population is unemployed and 38% of residents live below the poverty line. This report identifies the key missing collective goods that could both create externalities for firms and foster a more equitable distribution. It provides a platform for the development of a forward-looking, cross-cutting regional development strategy and proposes new "second generation" governance reforms to consolidate previous achievements and respond to emerging obstacles.


Metropolitan Governance in Cape Town

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.


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