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Economic Impact Assessment of Stellenbosch University on the Local Municipal Area

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Economic Impact Assessment of Stellenbosch University on the Local Municipal Area Economic impact assessment of Stellenbosch University on the local municipal area February 2018 2014Q1 | 12 March 2014 Please refer to the glossary on the BER’s website for explanations of technical terms. Executive summary of the Economic Impact Assessment results The objective of this study is to give a credible assessment and measurement of the economic contribution of Stellenbosch University (SU) to the economy of the Stellenbosch Municipal area1. In order to quantify the economic impact of SU on the local economy, an Economic Impact Assessment (EIA) was done using the university’s operating and capital expenditure as well as spending by staff and students as an estimate of the initial impact of SU. An EIA is a quantitative tool to calculate the region for both local residents as well as staff and economy-wide benefit of SU, as the initial students residing outside of the region. spending by SU is only the tip of the iceberg of the total economic impact. A so-called economy-wide For university expenditure, the location of the impact (or total economic impact) of an institution supplier also had to be determined in order to includes the direct, indirect and induced impacts, exclude suppliers from outside the region. The which are trigged by the initial spending of the spending occurring outside of the region institution. The EIA provides estimates for the undoubtedly has a significant positive economic impact on output (which is the broadest measure impact on the Western Cape, and even South of economic activity and measures all sales and Africa as a whole, but the analysis was restricted transactions that were triggered by the initial to the local impact. injection of demand), gross domestic product at The results of the EIA show that the total basic prices (GDP, which measures the value economic impact of SU on output is estimated to added to the local economy and only includes the be R5 112 million in 2016 – this measures all sales value of final goods and services), labour and transactions that were triggered by the initial remuneration and employment (total, highly injection of demand. The majority of this comes skilled, skilled, unskilled and informal). from student expenditure (61%), followed by staff Importantly, because the purpose is to estimate expenditure (23%), creditor payments (14%) and the impact on the local economy, the study had to diverse payments (2.5%). The economy-wide estimate the local proportion of student and staff impact on Stellenbosch’s GDP is a significant as well as university spending. For staff and R2 688 million – this measures the value of final students, surveys were employed to determine the goods and services. The presence of SU also total expenditure and to estimate the proportion of generates R1 108 million in labour remuneration the expenditure occurring within the Stellenbosch and sustains 13 406 jobs in the local economy. 1 The study was commissioned by the vice-chancellor and chief operating officer (COO) of SU and conducted by the Bureau for Economic Research (BER) during the second half of 2017. The research was completed in February 2018. Stellenbosch University EIA, February 2018 Please refer to the glossary on the BER’s website for explanations of technical terms. To put the magnitude of the impact of SU in This is a very conservative estimate in the sense perspective, the table below compares some of the that it does not include expenditures made by key outcomes with economic data available for the visitors, spin-off companies or local businesses Stellenbosch municipal area. that are related to the university. Although not quantifiable in monetary terms, the SU serves as a As a result of multiplier effects, the total economic so called anchor institution, which stimulates impact of the university community stretches far additional benefits in the region. Examples for beyond its initial expenditure in the local economy. these include research centre STIAS, Innovus and Indeed, SU has a significant impact on the Maties Sport. Stellenbosch economy. In fact, SU contributes more than 15% to the total of production (or output) generated in the region, close to 19% of gross value added, as well as more than 20% to total formal employment. Total economic impact of SU on the Stellenbosch economy in perspective Economy-wide Stellenbosch Share (%) Indicator impact of SU Municipality 2 Output 5 112 868 640 32 896 947 000 15.5 3 GDP at basic prices 2 688 175 857 14 497 245 000 18.5 Employment – formal 11 510 54 601 21.1 Employment – informal 1 896 21 694 8.7 Source: BER calculations, Quantec Research 2 Nominal output at basic prices in 2016 (Quantec Research, 2017). This is an estimate, because regional national account data for 2016 was not yet available at the time of writing. 3 Nominal gross value added at basic prices in 2016 (Quantec Research, 2017). This is an estimate, because regional national account data for 2016 was not yet available at the time of writing. ii Contents 1. Objective of the study ........................................................................................................... 1 2. Overview of comparable studies ............................................................................................. 2 Studies estimating the demand-side impact ................................................................................. 3 Studies estimating the supply-side impact.................................................................................... 7 3. Stellenbosch Municipality in context ...................................................................................... 12 Economic profile ..................................................................................................................... 12 Socio economic profile ............................................................................................................. 18 4. Size and structure of SU ...................................................................................................... 21 Staff ........................................................................................................................................ 22 Place of residence of staff ........................................................................................................ 24 Students .................................................................................................................................. 25 Student residence ................................................................................................................... 27 5. Methodology ...................................................................................................................... 30 Economic impact assessment...................................................................................................... 30 Quantifying demand-side effects ................................................................................................. 31 Student and staff expenditure .................................................................................................. 31 University expenditure ............................................................................................................. 45 6. Economic impact of SU on Stellenbosch ................................................................................ 50 Economy-wide impact of student, staff and university expenditure .................................................. 50 Student expenditure ................................................................................................................ 50 Staff expenditure .................................................................................................................... 55 University expenditure ............................................................................................................. 58 Total impact ........................................................................................................................... 61 Visitor spend: SU as an anchor institution .................................................................................... 64 Innovus ................................................................................................................................. 65 STIAS .................................................................................................................................... 67 Maties Sport ........................................................................................................................... 69 Maties Community Service (MGD) ............................................................................................. 70 Cultural community: arts, culture and heritage ........................................................................... 71 7. Concluding remarks ............................................................................................................ 74 Stellenbosch University EIA, February 2018 iii 8. References ........................................................................................................................ 75 Appendix 1: literature review summary table ................................................................................... 79 Appendix 2: survey questionnaires ................................................................................................. 82 Stellenbosch University impact study: staff survey .......................................................................
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