Glengory Road Mixed Use Market Study – March 2009
Regional Economic Assessment of the N3:
Keeversfontein to Warden (De Beers Pass)
MARKET RESEARCH FINDINGS
& RECOMMENDATIONS
December 2011
DEMACON Market Studies PO BOX 95530
WATERKLOOF 0145
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Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
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i Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
TABLE OF CONTENT
CHAPTER 1: INTRODUCTION ...... 5
1.1 BACKGROUND ...... 5 1.2 PROJECT BRIEF ...... 5 1.3 PROJECT METHODOLOGY ...... 7 1.4 LOCATION OF THE STUDY AREA...... 9 1.5 STRUCTURE OF THE REPORT ...... 9
CHAPTER 2: QUALITATIVE LOCATION ASSESSMENT ...... 11
2.1 STUDY AREA DELINEATION AND HISTORY ...... 11 2.1.1 WARDEN ...... 11 2.1.2 HARRISMITH ...... 11 2.1.3 SWINBURNE ...... 14 2.1.4 VAN REENEN ...... 15 2.2 REGIONAL CONTEXT ...... 15 2.2.1 THABO MOFUTSANAYANA DISTRICT MUNICIPAL AREA...... 15 2.2.2 UTHUKELA DISTRICT MUNICIPAL AREA ...... 18 2.3 SYNTHESIS ...... 24
CHAPTER 3: DEMOGRAPHIC PROFILE ...... 25
3.1 INTRODUCTION ...... 25 3.2 DEMOGRAPHIC PROFILE OF LOCAL ECONOMIES ...... 25 3.2.1 POPULATION, HOUSEHOLDS AND HOUSEHOLD SIZE ...... 25 3.2.1.1 LOCAL ECONOMY POPULATION ORDER SIZES ...... 25 3.2.1.2 MALUTI-A-PHOFUNG LOCAL ECONOMY ...... 26 3.2.1.2 PHUMELELA LOCAL ECONOMY ...... 27 3.2.1.3 OKHAHLAMBA LOCAL ECONOMY ...... 29 3.2.2 POPULATION AND HOUSEHOLD GROWTH ...... 32 3.2.3 IMPACT OF HIV / AIDS ...... 33 3.2.4 EMPLOYMENT STATUS ...... 34 3.2.4.1 MALUTI-A-PHOFUNG LOCAL ECONOMY ...... 34 3.2.4.2 PHUMELELA LOCAL ECONOMY ...... 35 3.2.4.3 OKHAHLAMBA LOCAL ECONOMY ...... 35 3.2.5 INCOME AND EXPENDITURE ...... 36 3.2.5.1 MALUTI-A-PHOFUNG LOCAL ECONOMY ...... 36 3.2.5.2 PHUMELELA LOCAL ECONOMY ...... 37 3.2.5.3 OKHAHLAMBA LOCAL ECONOMY ...... 38 3.3 SOCIO-ECONOMIC PROFILE OF STUDY AREA ...... 41 3.3.1 STUDY AREA SIZE ...... 41 3.3.2 SOCIO-ECONOMIC PROFILE ...... 43 3.4 SYNTHESIS ...... 46
CHAPTER 4: ECONOMIC TRENDS AND PERFORMANCE ...... 51
4.1 INTRODUCTION ...... 51 4.2 REGIONAL COMPETITIVENESS ...... 51 4.2.1 LOCAL ECONOMY ORDER SIZES ...... 51 4.2.2 SIZE OF MALUTI-A-PHOFUNG AND PHUMELELA LOCAL ECONOMIES ...... 52 4.2.3 SIZE OF OKHAHLAMBA LOCAL ECONOMY ...... 53 4.2.4 SIZE OF THE SELECTED TOWN ECONOMIES ...... 53
2 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.2.4.1 ORDER SIZE OF TOWN ECONOMIES, 2010 ...... 53 4.2.4.2 SIZE OF THE TOWNS WITH REFERENCE TO THE APPLICABLE LOCAL MUNICIPAL ECONOMIES, 2010 ...... 54 4.3 SECTORAL COMPOSITION AND LEVEL OF DIVERSITY ...... 56 4.4 SECTORAL PROFILE –GVA BASED ...... 57 4.4.1 MALUTI-A-PHOFUNG SECTORAL PROFILE (GVA CONTRIBUTION)...... 58 4.4.2 PHUMELELA SECTORAL PROFILE (GVA CONTRIBUTION) ...... 59 4.4.3 OKHAHLAMBA SECTORAL PROFILE (GVA CONTRIBUTION) ...... 60 4.4.4 SELECTED TOWNS SECTORAL PROFILE (GVA CONTRIBUTION) ...... 61 4.4.4.1 HARRISMITH SECTOR PROFILE (GVA CONTRIBUTION) ...... 61 4.4.4.2 WARDEN SECTOR PROFILE (GVA CONTRIBUTION) ...... 62 4.4.4.3 VAN REENEN SECTOR PROFILE (GVA CONTRIBUTION) ...... 63 4.5 REGIONAL GROWTH TRENDS ...... 72 4.5.1 MALUTI-A-PHOFUNG AND PHUMELELA ECONOMIC GROWTH TRENDS...... 72 4.5.2 OKHAHLAMBA AND PHUMELELA ECONOMIC GROWTH TRENDS ...... 72 4.6 LABOUR AND EMPLOYMENT ...... 74 4.6.1.1 LOCAL ECONOMY ORDER SIZE – FORMAL AND INFORMAL EMPLOYMENT, 2010 75 4.6.1.2 MALUTI-A-PHOFUNG AND PHUMELELA LABOUR CONTRIBUTIONS TO DISTRICT ECONOMY, 2010 ...... 76 4.6.1.3 OKHAHLAMBA LABOUR CONTRIBUTIONS TO DISTRICT ECONOMY, 2010 .. 77 4.6.2 SIZE OF THE SELECTED TOWN ECONOMIES IN TERMS OF TOTAL EMPLOYMENT ...... 78 4.6.2.1 ORDER SIZE OF TOWN ECONOMIES – TOTAL EMPLOYMENT, 2010 ...... 78 4.6.2.2 SIZE OF THE TOWNS WITH REFERENCE TO THE APPLICABLE LOCAL MUNICIPAL ECONOMIES IN TERMS OF TOTAL EMPLOYMENT, 2010 ...... 78 4.7 SECTORAL PROFILE - EMPLOYMENT...... 79 4.7.1 MALUTI-A-PHOFUNG EMPLOYMENT SECTORAL PROFILE ...... 80 4.7.2 PHUMELELA EMPLOYMENT SECTORAL PROFILE ...... 81 4.7.3 OKHAHLAMBA EMPLOYMENT SECTORAL PROFILE ...... 82 4.7.4 SELECTED TOWNS SECTORAL PROFILE (TOTAL EMPLOYMENT CONTRIBUTION) ...... 83 4.7.4.1 HARRISMITH SECTOR PROFILE (TOTAL EMPLOYMENT CONTRIBUTION)... 83 4.7.4.2 WARDEN SECTOR PROFILE (TOTAL EMPLOYMENT CONTRIBUTION) ...... 83 4.7.4.3 VAN REENEN SECTOR PROFILE (TOTAL EMPLOYMENT CONTRIBUTION) .. 84 4.8 LABOUR FORCE GROWTH TRENDS ...... 84 4.9 SKILLS BASE AND GROWTH TRENDS ...... 85 4.9.1 MALUTI-A-PHOFUNG SKILLS BASE AND GROWTH ...... 86 4.9.2 PHUMELELA SKILLS BASE AND GROWTH ...... 87 4.9.3 OKHAHLAMBA SKILLS BASE AND GROWTH ...... 88 4.10 SECTORAL GVA AND EMPLOYMENT GROWTH TRENDS ...... 88 4.11 COMPETITIVE AND COMPARATIVE ADVANTAGE ANALYSIS ...... 89 4.12 SYNTHESIS ...... 95
CHAPTER 5: CORRIDOR TARGET BUSINESSESS ...... 101
5.1 INTRODUCTION ...... 101 5.2 CORRIDOR NODES TO BE AFFECTED BY N3 REALIGNMENT ...... 101 5.3 SYNTHESIS ...... 117
CHAPTER 6: CASE STUDY ANALYSIS AND ECONOMIC IMPACT ANALYSIS ...... 120
6.1 INTRODUCTION ...... 120 6.2 CASE STUDY ANALYSIS ...... 120 6.2.1 ECONOMIC CONTRIBUTION - GROSS VALUE ADDING ...... 121 6.2.2 EMPLOYMENT CONTRIBUTION – FORMAL AND INFORMAL ...... 124 6.2.3 GVA/ CAPITA AND INCOME/ CAPITA ...... 125
3 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 6.2.4 DEVELOPMENT IMPLICATIONS: ...... 126 6.3 IMPACT ASSESSMENT APPROACH ...... 128 6.1 MACRO LEVEL ...... 128 6.2 MESO LEVEL ...... 129 6.3 MICRO-ECONOMIC LEVEL ...... 131 6.3.1 HARRISMITH ...... 132 6.3.2 WARDEN AND VAN REENEN: ...... 135 6.4 SYNTHESIS ...... 137
CHAPTER 7: DETAILED IMPLICATIONS AND RECOMMENDATIONS ...... 138
7.1 INTRODUCTION ...... 138 7.2 IMPACT ACCORDING TO A RATING SCALE ...... 138 7.3 MITIGATION ACTIONS ...... 140
ANNEXURE A: SECTORAL GVA AND EMPLOYMENT GROWTH TRENDS ...... 141 A. SECTORAL GVA AND EMPLOYMENT GROWTH TRENDS ...... 141 B COMPETITIVE AND COMPARATIVE ADVANTAGE ANALYSIS ...... 154
4 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 1: INTRODUCTION
1.1 BACKGROUND
Chapter one provides an introduction and concise roadmap of the Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass). The chapter also provides concise background to the project, a study area description as well as a report outline.
1.2 PROJECT BRIEF
N3TC, on 23 July 2010 submitted an EIA Application to the National Department of Environmental Affairs (DEA) for the construction of the National Road 3: Keeversfontein to Warden (De Beers Pass Section). Demacon Market Studies were commissioned by N3TC to undertake a comprehensive economic impact assessment as part of the overall EIA process.
The route alignment alternatives which are included in this EIA process are:
De Beers Pass Route De Beers Pass Route: Alternative A De Beers Pass Route: Alternative C – N3 Upgrade.
De Beers Pass Route (DBPR): This proclaimed DBPR runs from Keeversfontein (Tugela Toll Plaza) via the De Beers Pass area to Warden. The route branches off the current N3 just north of the Tugela Toll Plaza. The route reaches the top of the KwaZulu-Natal escarpment where it passes through a tunnel approximately 500m in length and then goes around the top edge of a gorge before entering the Free State. A wetland associated with the Wilge River is crossed and the alignment then runs close to the Wilge River before the road climbs to the more even plateau of the Free State Highveld. The Wilge, Meul and Cornelis Rivers are crossed before the DBPR re-joins the existing N3 just north of Warden, where a Toll Plaza is proposed. The total length of this route is approximately 97, 7 km.
De Beers Pass Route: Alternative A: This route up the escarpment starts just north of the Tugela Toll Plaza and runs for a short distance almost parallel to and east of the existing N3 Van Reenen’s Pass. The route then follows the landform ridges and reaches the crest of the escarpment through a saddle immediately south of Van Reenen Village. Just north of Van Reenen village an interchange will connect with the existing N3. The route continues in a north westerly direction to intersect the N3 in the Swinburne area. The route will then deviate to the north and connects with the existing N3 at an interchange before continuing across the slopes of Platberg Mountain to an interchange north of Harrismith near 42nd Hill. From this point the route will follow the existing N3 closely to Warden, where a Toll Plaza is proposed. The Wilge River is crossed at Swinburne and the Meul and Cornelis Rivers will be crossed at the same points they are crossed by the existing N3. The detailed design will determine to which side the existing road is widened. The total length of this route is approximately 107 km.
De Beers Pass Route: Alternative C – N3 Upgrade: This route up the escarpment starts just north of the Tugela Toll Plaza and runs along the existing N3 up van Reenen’s Pass to Harrismith but with considerable widening of the existing servitude to accommodate the re- alignment of the existing route between the Tugela Toll Plaza and Harrismith (400 m between Tugela Toll Plaza and van Reenen and 200 m between van Reenen and Harrismith versus 80 m along the DBPR route and north of Harrismith on Alternate C). On the rise just north of Harrismith the road will be cut further into the hillside. From this point the route will follow the existing N3 closely to Warden, where a Toll Plaza is proposed. The Wilge River is crossed at Swinburne and the Meul and Cornelis Rivers will be crossed at the same points they are crossed by the existing N3. The design envisages widening the road between Harrismith and Warden to the east. The total length of this route is approximately 110 km.
5 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 1.1: Route Alternatives
The current N3 alignment is reaching optimum capacity and something dynamically should be done in order to address this traffic problem in order to ensure transport efficiency along the route.
6 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Given the study brief the economic input should focus on the following components:
Describe the economic status quo of each town (Van Reenen, Swinburne, Harrismith, Warden). Assess the potential economic impact of the two route alternatives on each of the abovementioned towns. Assess the net economic (transport) impact of each route alignment on each of the abovementioned towns and on the national economy. Assess any potential impacts on the businesses of each of the abovementioned towns that may result from the two route alternatives. Summarise the findings as they apply to each town and each alternative route alignment. Assess the possible economic effect that each route may have on a logistics hub in Harrismith if it is established prior to and after the construction of each route alternative. Identify mitigation measures to limit negative economic impacts and discuss the effectiveness of these measures.
1.3 PROJECT METHODOLOGY
It is generally presumed (rightfully or wrongfully) by some schools of thought that national road realignment impacts on local economic activity of towns situated along the original route alignment. Although certain studies have shown that selected businesses with an original freeway location rationale may be affected, no research could be traced which assessed the nature and extent of these presumed impacts – and in so doing in fact, establish whether such impacts are real and sustained; short lived; or whether it merely translates into a displacement effect (with hardly any noticeable economic impact). Most case studies focus on route realignments in other countries, with routes that fulfil a vastly different role and function to the matter at hand. In addition, these case studies do not quantify economic impacts per se, but merely allude to perceptions regarding the impact of route realignment on certain types of businesses – as opposed to the local economy itself.
In the context of the above and based on previous research in this regard, we have formulated the following hypothesis with regard to the N3 realignment.
The hypothesis tested in this study
The economic impact of national road realignment creates displacement effects. These displacements affect selected business enterprises and not the economy at large. The economic impact appears to be offset by a displacement effect, following the creation of limited new business opportunities along the new alignment. In short, the impact of route alignment does not effect negative long term structural economic changes. A short term construction benefit can typically be observed. Following route realignment, local economies reveal a similar and normalised growth trend, comparable with the local economy’s established long term growth trend.
In terms of the study brief, the economic input focused on describing / quantifying the economic status of the affected local economies (and underlying towns) and establish the most likely economic impacts that might arise due to the realignment of the N3.
In order to address all the components listed within the terms of reference, the following research methodology was employed. Each of the steps in the project methodology is briefly outlined below.
7 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Diagram 1.1: Project Methodology
Detailed Inception and Base Profile and Local Case Study Economic Impact Implications and Document Review Trend Analysis Analysis Assessment Recommendations
Step 1: Inception and Document Review - This step included the refinement of the scope of the project brief and collection of relevant documents. It also entailed an assessment of the report titled “Economic Impact Assessment of the N3 realignment on the Local Economy” compiled by Urban Econ in 2008, as well as the “Harrismith Freight Logistics Hub – Feasibility Study” compiled by Transport Research Services CC in March 2006.
Step 2: Base Profile and Trend Analysis – This step included a demographic and economic profile; firstly, of the local municipal areas forming part of the study area and secondly of the identified “to be” affected towns. Three local municipal areas form part of the study area – Phumelela Local Municipality, Maluti-a-Phofung Local Municipality and Okhahlamba Local Municipality. The size, development and growth trends of each of these local municipal areas are illustrated in terms of demographics, Gross Value Adding (GVA) and total employment. The gross of the data are illustrated in terms of time series data for the period 1995 to 2010. The actual size of the affected town economies are then illustrated based on meso-level economic and demographic data sets – providing information on the size of these entities in terms of GVA and employment, its contribution to the respective local municipal economies, as well as its sub-sectoral profiles. The deliverable of this step is the quantification of the town economies to be impacted by the proposed realignment – to be utilised as base data to estimate the economic impact of the various alignment scenarios.
Step 3: Local Case Study Analysis – This step included a local case study analysis of towns affected by the realignment of the R101 to the N1 between Pretoria and Polokwane. The initial route alignment passed directly through a number of small town CBD’s / central business districts, for example Bela Bela, Nylstroom, Potgietersrus (Mokopane). The new realignment resulted in the development of a double lane highway bypassing all of these small towns (at various distances). However, the original route remained operational as will be the case with the existing N3 alignment. The case study analysis assessed trends in terms of a number of variables in time series format for these local economies before, during and after road construction. These findings illustrate the most sensible anticipated effects / impacts national road realignment may have on small towns and cities.
Step 4: Economic Impact Assessment – The information of the afore-mentioned steps were applied to the local municipal and town context, from which the impacts of each of the proposed route alignments are derived. This reflects on the potential net losses or net gains to be induced on each of the towns by the various development scenarios.
8 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Step 5: Detailed Implications and Recommendations – The findings of the economic impact assessment are illustrated in tabular and graphic format, supported by a set of mitigation measures to address the anticipated impacts associated with the route realignment.
1.4 LOCATION OF THE STUDY AREA
The study area identified for the project includes the existing N3 corridor with emphasis on the towns along the current route – Warden, Harrismith, Swinburne and Van Reenen.
These towns forms part of a number of local municipal areas including:
Phumelela Local Municipal Area – within Thabo Mofutsanyana District Municipality; Maluti-a-Phofung Local Municipal Area – within Thabo Mofutsanayana District Municipality; Okhahlamba Local Municipal Area – within Uthukela District Municipality.
These municipal areas represent the local economies to be impacted on by the N3 realignment and will represent the dominant emphasis of the analysis, with a specific focus towards the anticipated impact on the afore-mentioned towns.
Map 1.2 indicates the location of the study area with emphasis on the identified towns.
1.5 STRUCTURE OF THE REPORT
The remainder of the report is structured in terms of the following chapters:
Chapter 2: Qualitative Location Assessment Chapter 3: Demographic Profile Chapter 4: Economic Trends and Performance Chapter 5: Corridor Scenarios and Economic Impact Assessment Chapter 6: Detailed Implications and Recommendations.
9 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 1.2: Study Area Delineation
10 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 2: QUALITATIVE LOCATION ASSESSMENT
The study area form part of three local municipal areas, two within the Free State Province and one within the KwaZulu Natal Province. The Chapter aims to provide contextual background to the study area and an overview of general development trends.
2.1 STUDY AREA DELINEATION AND HISTORY
As mentioned previously the focus of the study is on the towns currently located along the N3 between Warden and Van Reenen. Therefore the built up areas include Warden, Harrismith, Swinburne and Van Reenen.
2.1.1 Warden
Warden is a town situated in the Free State Province of South Africa on the N3 highway between Johannesburg and Durban. The town has one of the largest Dutch Reformed Churches in South Africa, with seating for 1,750. Warden was named after the former Harrismith magistrate Charles Warden.
The town, located on the N3 between Johannesburg and Durban, was named after a former magistrate of Harrismith. Warden is home to the largest church in the Free State, the magnificent sandstone Dutch Reformed Church. The church has a steeple 45 m high and a seating capacity of 1750. bushmen paintings are found at various sites in the region.
General Information: How to get there - Bethlehem 84 km, Harrismith 53 km, Villiers, Heidelberg, Johannesburg, Durban Average Rainfall – 100 mm per annum Average Temperatures – Summer 14°c – 32°c’ Winter 4°c – 22°c Banks – Absa, FNB, Standard Dams – Sterkfontein Dam Mountains – Cornelius, Wilge.
Historical View: Dutch Reformed Church - It is the largest sandstone church in the southern hemisphere. The church has a steeple 45 m high and can accommodate 1750 people completed in 1924. Granite Target - Used by the Boers during the Anglo Boer War for target practice San Rock Art - On the farm Goedgegeven Sterkfontein Dam - Situated near Harrismith. The dam offers excellent water sport activities. Vaalbank – Paul Steyn’s farm Cave where horses were hidden during the Anglo Boer War, approximately 12 km on the road to Verkykerskop.
2.1.2 Harrismith
Harrismith, named after Sir Harry Smith,[1] is a large town in the Free State province of South Africa, situated on the N3 highway approximately midway between Johannesburg, about 300 km north-east, and Durban. The town is at the junction with the N5 highway, which continues west towards the provincial capital Bloemfontein, around 340 km south-west. This important crossroads in South Africa's land trade routes is surrounded by mesas and buttes and located at base of one of these called Platberg.
11 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The town was founded in 1849 and named after British Governor Harry Smith, who tried to persuade the disillusioned Voortrekkers not to abandon Natal. The town was initially laid out by Robert Moffat about 25 km from the present location, in present day Aberfeldy on the Elands River. This site unfortunately proved to be deficient in water and Harrismith was shifted to its present site in January 1850. Twenty-four years later it became a municipality and during the diamond rush at Kimberley, the town became a busy staging post on the Natal transport route. As a direct result of this, hotels, stores and public buildings sprang up. Harrismith was a major base during the South African (Anglo-Boer) War and visitors can see the several blockhouses, engineering works and a military cemetery that are evidence of this.
The town's main street, Warden Street, is named after Major Henry D. Warden, at that time a British resident in Bloemfontein. The town is around 90 kilometers west from Ladysmith, a town named after Sir Harry Smith's wife that is located in the KwaZulu-Natal province. It is a similar distance east of Bethlehem. The small nearby hamlet of Swinburne is named after Sir Johan Swinburne, a gold prospector.
Present Day:
Harrismith is well known as a convenient refueling stop for trucks, vehicles and people but it has much more to offer. Beyond the highway is a tidy town with many elegant late 19th century buildings made of hewn sandstone. There are numerous Bed & Breakfast places catering to visitors. Located near the scenic eastern escarpment border with KwaZulu-Natal Province, it is the best access point to the Northernmost Drakensberg including Tugela Falls and Mont-Aux- Sources (accessed via the Sentinel Hiking Trail, in the QwaQwa region of the Free State, 80 km South of Harrismith on the R57), Sterkfontein Dam Nature Reserve (20 km southeast of town on the R74), Royal Natal Park and the uKhahlamba / Drakensberg Park World Heritage Site (66km southeast via Oliviershoek Pass beyond Sterkfontein Dam) and the spectacular Golden Gate Highlands National Park 50 km south of town on the R712. Harrismith is the centre of one of the five wool producing districts in Southern Africa. The town is also home to the largest truck stop in the Southern Hemisphere, Highway Junction
General Information: How to get there - Bethlehem 57 km, Bloemfontein 317 km, Cape Town 1330 km, Durban 315 km, Golden Gate National Park 121 km, Johannesburg 314 km, Ladybrand 255 km, Ladysmith 47 km, Port Elizabeth 961 km, Senekal 161 km Banks – ABSA, FNB, Standard Dams – Sterkfontein Rivers – Wilge
Historical View: 78 Warden Street - The British influence is still discernable in the architectural styles in town. The oldest house in town. Blockhouse - Built by the British near the Botanical Garden Debora Retief Garden - A 250 million year old, 33 m fossilised tree lies in this garden next to the town hall. Memorials honour those who fought in the Anglo Boer War and the First World War. Of particular interest is a memorial to the Scots Guards and Grenadier Guards. Kerkenberg - The Voortrekkers camped in the area, whilst their leader, Piet Retief, negotiated with the Zulu leader Dingane. After receiving reports of what the Voortrekkers interpreted as successful negotiations Retief’s daughter wrote his name, and the date, which was also his birthday, on a rock where they held a church service. This is a national monument Museum - The town’s people are developing a small community museum in the Market Hall at the back of the Town Hall. The Studio - Ramshackle artistic historic home
12 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Town Hall - A graceful sandstone and brick building built in 1907, and a national monument. Opposite are the Deborah Retief Gardens. See a hitching post, war memorials, a water pump, a red Orange River Colony post box, naval guns (ex Basotho wars and a 250 million year old fossilised tree. Nature: Harrismith Wildflower Gardens - Founded in 1967 as a botanical garden these contain about 20 % of the Drakensberg region’s flora. Located around two dams fed by mountain springs these gardens also contain an Anglo Boer War blockhouse, built to protect the town’s water during its occupation. Platberg - The 9 km, 2394 m high ‘flat mountain’ is Harrismith’s landmark. A famous road race, claimed by some to be one of the toughest in South Africa, if not the world, is run annually up, along and back down the mountains. A British schoolteacher, stationed in Harrismith during the Anglo Boer War disparagingly referred to the mountain as ‘that small hill of yours’. Locals challenged him to reach the summit in under an hour. He did, but only just, and the race was born. Sterkfontein Dam Nature Reserve - Rugged, steep krantzes silhouetted against the skyline, mountain slopes snugly, covered with a grass blanket, deep lushly vegetated kloofs and a crystal clear lake are facets of the beauty of this reserve, which covers 180 000 ha. Oribi, reedbuck, and grey rhebuck inhabitat this mountain reserve. The Bald Ibis, the Blue and the Whitebellied Korhaan are conspicuous on the grassy slopes while Buffstreaked Chat, Ground Woodpecker and Sentinel and Cape Rock Thrushes can be seen on rocky outcrops. Bearded and Cape Vultures as well as the Black and Martial Eagles and Secretary bird are found here. The yellowwood, wild peach, koko tree, silky bark, black bark and bush guarri flourish in the sheltered kloofs. Wild grapes has twined into the tree tops where they form a dense leafy canopy that protects ferns and mosses below. Fungi and lichen nestle against living and rotting tree trunks. The mountain slopes are decorated with wild myrtle, sugarbush and the scarce tree fern. Location, Accommodation and Facilities - The nature reserve is situated approximately 23 km from Harrismith on the Harrismith / Bergville road (R74). The fully equipped chalets all have a breath-taking view of the lake and the mountains beyond. There are 360 camping sites along the shores of the dam. The caravan park is equipped with modern ablution facilities and power points. Slipways and boathouses have been built for boating enthusiasts. A recreation hall with bar and kitchen may be rented. Recreation - The prevailing winds at Sterkfontein dam make it ideal for sailing and it has become a mecca for water sports. The reserve is also a popular spot for camping, angling, game viewing, biking and hiking. A two day hiking trail has been established. No one wanting to relax and savour the great outdoor sensation and the beauty of the mountain will be disappointed. Climate - The weather is very variable, so visitors should always be prepared for unexpected cold spells. The summers are mild, the winters cold. The annual rainfall varies from 750 mm to 1400 mm.
Attractions: Annual Events: The Farmer’s Dance Harrismith Gliding Competition – January Catamaran Championships – February Yellowfish Fishing Competition – March Verkykerskop Marathon Annual Agricultural Show
13 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Northern Natal Polo Crosse Tournament – April Polo Championships – May Sterkfontein Dam Race – June Harrismith Eastern Free State Stud Stock Sale Jagersfontein Bicycle Fun Ride Polo Championship – August Polo Tournament – September Platberg Spring Festival Standard Bank / Harrismith Mountain Race – October Platberg Nature Reserve Orienteering Prince Arthur’s Bowling Shield. Golf Open Sterkfontein Sailing – November Gliding Tournament – December Crafts - Distinctive southern African curios and arty things are available at Marqwahouse in Harrismith and Bira Crafts in Swinburne Petrified Tree - 30 m long and estimated to be 250 million years old. It can be viewed at the Town Hall President Brand Park - A picnic area along the tranquil banks of the Wilge River Township Tours - Self-drive day tours or overnight stays enable visitors to experience what was described in the dark days of the early 1990’s as a township which was a haven of peace.
General Activities: Outdoors - Fishing, Hiking Trails, Watersport, Sterkfontein Dam Sport Golf - The 18 hole course is the third oldest in South Africa.
2.1.3 Swinburne
Perched on the edge of the Drakensberg escarpment, the hamlet of Swinburne is the last (or first), town in the Free State before you enter (or leave) Natal. Conveniently situated just off the N3, the national road linking Durban and Gauteng, Swinburne lies 20 kilometres east of Harrismith towards the seaside town of Durban 2.5 hours away.
This is magnificent mountain country offering the usual mountain pursuits of rambles, hikes and rock climbing or scenic drives to view bushman paintings in secluded caves.
Swinburne’s proximity to Harrismith allows visitors to take advantage of all the amenities and activities available here, including access to the 18 hole golf course which is the third oldest course in the country.
The Sterkfontein Dam, a short drive from Swinburne, offers a variety of water sports and excellent fishing opportunities, while The Spioenkop Dam and Nature Reserve offer nature lovers the chance to view Rhino, Giraffe and numerous species of Buck in their natural surroundings.
With the historic town of Ladysmith situated less than an hour’s drive away, Swinburne travellers can relive history by visiting the battle sites which abound on The Natal Battlefields Route.
14 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 2.1.4 Van Reenen
Van Reenen is located at the border between KwaZulu-Natal and the Free State on the main N3. The Van Reenen Pass is the main access from the Free State into KwaZulu Natal. The little village of Van Reenen is famous for having the Llandaff Oratory and the smallest church in the world - capable of a full house of 8 people. The church was built by a father in memory of his son who died in a mining accident a lovely little tea garden is now next to the little church.
Situated on the 1680 m high summit of the Van Reenen Pass, the village forms the major gateway into KwaZulu Natal. The N3 from the Free State closely follows the old pass route as it descends down the escarpment into KwaZulu Natal. The view site at Windy Corner, (turn off 2,5 km from Van Reenen) offers sweeping views of the Drakensberg. Van Reenen is famous for having the smallest church in the world. The Llandaff Oratory which seats eight people, was built as a father’s memorial to a son who died in a mining accident. The church is open to visitors and there is a small curio shop.
2.2 REGIONAL CONTEXT
2.2.1 Thabo Mofutsanayana District Municipal Area
Thabo Mofutsanyana District forms the north eastern part of the Free State Province and is one of five district municipalities in the Free State. With the exception of Xhariep district municipality, it is bordered by three other district municipalities of the province namely, Motheo in the south, Lejweleputswa in the west and Fezile Dabi in the north. Other borders include Lesotho in the south east, Kwa-Zulu Natal in the East and Mpumalanga in the north east.
Thabo Mofutsanyana has been divided into five local municipal areas, with Setsoto forming the south western section, Dihlabeng the south middle section, Nketoana the north middle section and Maluti a Phofung the south eastern section and Phumelela the north eastern section of the district and nineteen urban centres. The table below indicate the urban centres in each local municipality:
Maluti A Phofung Local Municipality: Maluti-a- Phofung is located in the Eastern Free State and forms part of the area of jurisdiction of Thabo Mofutsanyana District Municipality. It borders Lesotho to the south and Kwa-Zulu Natal to the east, with the newly established Phumelela Local Municipality to the north and Dihlabeng Local Municipality and Golden Gate District Management Area to the west.
Maluti-a-Phofung comprises three urban areas that are located in the shape of a triangle, namely Phuthaditjhaba, Harrismith and Kestell. It also incorporates a peri-urban community located on tribal land, known as Qwa Qwa, as well as an apartheid-engineered settlement, known as Tshiame, which is some 12km west of Harrismith along the N5 road. The remaining
15 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 area comprises commercial farmland that surrounds the urban nodes. Tshiame also includes a traditional settlement known as Makgolokweng.
The Local Municipality was established on 5 December 2001 after the amalgamation of 5 former transitional councils. The area of jurisdiction is approximately 4 421 km² in extent and accommodates approximately 400 000 people. The municipal area is divided into 34 wards. It is interesting to note that Maluti-a-Phofung covers the smallest surface area within the district municipal area and has the least number of farms. However, if one compares its demographic composition with that of the rest of the district is evident that Maluti-a-Phofung has the highest population density for the district while this represents the third highest density, namely 88 people per square kilometre in the Free State (FSDP, 2001).
The total population of Maluti-a-Phofung was 365 017 in 1996 according to the census 1996 (Stats SA). It is estimated that the total population for 2001 is 396 949, using the compound growth rate of 1.7% per annum for the Free State. It is furthermore estimated that the future population for Maluti-a-Phofung in 2007 can be in the vicinity of 433 238 should the population growth rate remain static. This is however highly unlikely as the impact of HIV/AIDS and migration have not been accounted for in the growth rate. According to the Demarcation Board (2000) the total population for Maluti-a-Phofung in 2000 was 353 373 people. This data differs from the figures revealed above, but again confirms that the population may vary anything between 350 000 and 400 000 people.
Maluti-a-Phofung has three service centres or urban nodes located in the form of a triangle. Kestell is located 44 kilometres to the west of Harrismith along the N5 national road and 30 kilometres to the north of Phuthaditjhaba along the R57. Qwa Qwa, with Phuthaditjhaba as the urban core, forms the southernmost point of the triangle, while Harrismith is located some 45 kilometres northeast of Phuthaditjhaba, along the R712. Tshiame, which forms part of Harrismith is located 12 kilometres west of Harrismith along the N5 route on the way to Kestell. The surrounding areas are mostly commercial farmland areas, except the rural areas of Qwa Qwa where communal farming is practiced on tribal land.
The area is well serviced with access roads. The N3 national road transverses the area, serving as a major linkage road between Kwa-Zulu Natal and Gauteng via Harrismith and the N5 national road between Kwa-Zulu Natal, the Free State and Western Cape via Harrismith and Kestell. The railway line between Ladysmith and Kroonstad pass through Harrismith, while an aerodrome is also available at Harrismith.
Phumelela Local Municipality: The Phumelela Local Municipality was established in terms of Section 14 of the Local Government: Municipal Structures Act, Act No 117 of 1998) and was published in Provincial Gazette No 109 dated 28 September 2000. The new Local Municipality is a category B Municipality with a plenary executive system as contemplated in Section 3(b) of the Determination of Types of Municipality Act, 2000 (Act No 1 of 2000).
Phumelela is situated in the eastern Free State, to the north east of Bloemfontein. The local municipality area measures 7531.24km2 in extent and comprises the former TLCs of Vrede, Warden and Memel, as well as a part of the former Riemland and Drakensberg TRCs. The population is fairly evenly spread across the area. Most of the population (38 %) is resident on the rural farm areas, which makes it difficult to service them. Furthermore, there is no definite predominant urban concentration of people, although Vrede has slightly higher population numbers. There is a constant increase in migration of people from the rural areas to the towns and this creates pressure on urban infrastructure and services. The Phumelela area of jurisdiction consists of 7 wards with a total of 23 304 registered voters.
16 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The following spatial initiatives and corresponding NSDP categories as portrayed in the FSGDS is applicable to identified study area towns:
Town NSDP categories of Combined Development FSSDF spatial development potential development needs initiative potential Harrismith Innovation and Above average Above average Collective Economic Experimentation (agri- development development need Node industry and potential manufacturing (High These towns with its Development Potential) strong service Labour-intensive mass character and produced goods (apart prominent from fuel and electronics commercial and (Above Average industrial Development Potential) components will Public Services and remain growth Administration (Above points. Average Development Potential) Logistic Hub Retail and Private Services (Above Tourism Node Average Development (Events, Potential) entertainment) Tourism (Above Average Development Offer leisure and Potential) tourism products
Warden & No High Development Limited development Limited development Services Centre Swinburne Potential or Above Average potential need Development Potential Attention should be Categories identified. paid to education, health and social infrastructure in these services centres
Development Implications:
Harrismith is identified as a collective economic node, logistic hub and tourism node. It reflects above average development potential and needs boding well toward future investment in the town. Warden and Swinburne are merely listed as service centres with limited development potential and development need.
Harrismith’s development potential is reinforced by the following Key Investment Projects planned for the area:
The Harrismith Logistical hub (HLH) is a future project that has been earmarked by the Free State Provincial Government as a flagship project, as part of the government’s prioritised Accelerated and Shared Growth Initiatives (Asgisa) programme.
The overriding argument for the development of a central logistics hub in the Free State is a need to eradicate the traffic congestion caused by heavy haulage transportation on the N3 highway which is the busiest long-haul freight transport corridor in South Africa.
The HLH has not been established yet, but it is expected to be located in the town of Harrismith, which is funnelled by the N3 (Johannesburg to Durban route) and the N5 (Durban to Cape Town route) national roads, which link the Durban port with inland distribution centres.
As Harrismith is located at one of South Africa’s major interchanges of national and regional roads, the HLH will offer a unique opportunity to reduce the costs of freight by creating an
17 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 inland port that can handle cargo containers through offloading road cargo to rail, thereby reducing the congestion of trucks on the road.
The move also reflects the government’s target to shift more freight off roads and back on to rail, mirroring efforts by Transnet Freight Rail to increase its rail cargo capacity, and its acquisition of additional rolling stock over the next three years.
Earlier this year, the Honourable FB Marshoff, premier of the Free State Province, said that the volume of cargo passing through Harrismith equates to just under 30% of all road cargo through its roads.
CHINA Motor Corporation (CMC) in SA intends building a $1 bn vehicle factory outside Harrismith in the Free State. The company indicated that it will create approximately 2 500 jobs. The plant will eventually build 50 000 vehicles a year to qualify for Automotive Production and Development Programme Incentives. The local director however indicated that original production figures will be much lower to start with. The Harrismith factory will build the Ses’buyile 16-seater minibus taxi, and the Plutus range of single- and double-cab bakkies.
CMC currently imports and distributes vehicles through 40 dealerships and the director indicated that their market share is already strong. CMC wanted to take advantage of the proposed free trade area encompassing 26 African countries and they will be in a prime position to do so. He indicated that the choice of Harrismith was to some extent motivated by pressure on the company to join the local industrial development zone. The town needs serious employment opportunities. The town is also well positioned between components manufacturers and a port. The company wants to break ground towards the end of 2011.
2.2.2 Uthukela District Municipal Area uThukela District Municipality (UTDM) is one of ten District Municipalities in the Province of KwaZulu-Natal. It was established during the 2000 transformation of local government UThukela District Municipality derives its name from one of the major rivers in the Province of KwaZulu-Natal, the uThukela River that rises from the Drakensberg Mountains and supplies water to a large portion of KZN and as well as Gauteng. uThukela District Municipality has three district municipalities bordering onto it within the Province of KwaZulu -Natal, namely Amajuba, UMzinyathi and Umgungundlovu.
The size of the Municipality is approximately 11500km². It is located in the western boundary of KwaZulu-Natal. It is predominately rural, with three of the five local municipalities, rural based. This municipality is characterised by socio-economic indicators such as low revenue base, poor infrastructure, and limited access to services; low economic base; high levels of poverty, unemployment, skills shortage, lack of resources and low level of education; under-developed land and settlement patterns that make it difficult to plan for effective service delivery. uThukela District municipality consists of five Local Municipalities and one District Management Area (DMA), namely Indaka Local Municipality, Emnambithi/Ladysmith Local Municipality, Umtshezi Local Municipality, Okhahlamba Local Municipality, Imbabazane Local Municipality and District Management Area 23. uThukela is highly accessible and linked to both the provincial and national economic centres by well-established provincial and national road networks. The N3 and N11 make uThukela an important entry point to the Province. The R74 is an alternative route from the Free State, and is an important tourist route linking the Drakensberg with the north coast of KwaZulu-Natal.
Two municipalities in the uThukela District Municipality, namely Indaka and Okhahlamba local municipalities were identified for infrastructural development under Project Consolidate. Both local municipalities had high levels of backlogs in water, sanitation, electricity, refuse and
18 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 housing. However, investment into infrastructure and services such as water, sports fields, community halls, roads and crèches has benefited many rural communities.
Spatial Structure:
The uThukela District Municipality is predominantly rural in character with a dispersed rural settlement. Rural dense villages with a population of over 5,000 people are mostly found within the traditional areas of the Indaka and Imbabazane Local Municipalities. Both these Municipalities are characterised by very steep mountainous areas with limit opportunities for agricultural activities and creating difficulties in the provision of infrastructure.
Ladysmith and Estcourt are the two major towns and economic hubs within the uThukela District Municipality. Both Ladysmith and Estcourt are commercial centres for surrounding farming areas and serves as shopping centres for towns such as Bergville, which lacks a strong commercial presence. As Ladysmith is the economic and regional hub, the banking sector is service industry is prevalent. The town is further the industrial hub, with the majority if industries being located around Ladysmith. The only industrial estate in the District is also located a short distance from Ladysmith.
There are two national routes, the N3 and N11, traversing the District, which forms a critical link between uThukela and provincial, national and international destinations. The Indaka and Imbabazane municipal areas are relatively isolated from these routes and can only be accessed via the provincial road network.
The N3 traverses uThukela and form the connection between Durban and Gauteng. This route carries a vast amount of goods and passengers, with only a few filling stations along the route gaining economic benefit. The N11 is an alternative route from Ladysmith to Gauteng and Limpopo and forms an important route between Ladysmith and Newcastle located in the neighbouring Amajuba District Municipality.
In line with Provincial Guidelines, tourism routes have been identified along the Drakensberg, linking areas such as Cathkin Park, Bergville, Winterton and the Northern Berg. The route has been expanded recently to include linkages to tourism nodes within the Drakensberg range.
Spatial development guidelines:
i. The town of Ladysmith is to be developed as the Primary Admin Centre of the District. ii. The industrial area at Ladysmith is to be developed as the Primary Industrial Hub of the District. iii. The town of Estcourt is to be developed as the Primary Agri-processing Hub of the District. iv. The towns of Ekuvukeni, Estcourt, Ntabamhlope and Bergville are to be developed as Secondary Admin Centres to locate an admin centre within each local municipality. v. Tertiary Nodes are to be located at Driefontein, Mhlumayo, Weenen, Colenso, Loskop, Kwadakuza and Winterton and will be places where a decentralization of administrative functions may take place. These nodes will also be targeted for economic investment. vi. Tourism nodes will be focussed upon along the Drakensberg and in Ladysmith to make full use of the Drakensberg World Heritage Site and the Battlefields routes.
19 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 vii. The N11 and N3 are identified as Primary Corridors and play an important part in making the District economically competitive. viii. Secondary Corridors were identified to link the Secondary Nodes and in some cases the Tertiary Nodes where such nodes are located on a route to an adjacent district. ix. A Primary Tourism Corridor was identified and runs from Estcourt along the Drakensberg over the Olivier’s Hoek Pass, to give effect to the Provincial tourism/trekking initiative. x. Secondary Tourism Corridors have been identified from the Primary Tourism Corridor to the Tourism Nodes located along the Drakensberg World Heritage Site to benefit the local communities on these routes. xi. The portion of N11 stretching between Ladysmith and the N3 has been identified as a priority upgrade, as well as a stretch of dirt road between Loskop and Bergville in order to enhance the access to Ladysmith and the Primary Tourism Corridor respectively. xii. The N3 Corridor Development Nodes have been located along the N3 in order to derive some benefits from this major transport route. xiii. Water and Sanitation Infrastructure Investment are identified in the uThukela District Municipality Water Services Development Plan (2007).
Okhahlamba Local Municipality
The Okhahlamba Local Municipality is situated in the mountainous region of KwaZulu-Natal between Lesotho, the Free State, Emnambithi and Mtshezi. Okhahlamba is made up of privately owned commercial farmland, smallholder settlements, the urban areas of Bergville, Winterton, Cathkin Park, Geluksberg, and two tribal authority areas.
The area is relatively well linked through the network of existing provincial roads that run through the municipality. The municipality is largely reliant on Ladysmith for facilities such as shopping, medical services, education, among other services. However, large capital expenditure is needed to meet service backlogs in the area.
Bergville is a small town of South Africa and is known as the gateway to the Northern Drakensberg. Bergville hosts an office of the Drakensberg Publicity Association. Less than 50 km from the towering Amphitheatre of Royal Natal, the ideally-situated agricultural and trading centre of Bergville was laid out in 1897 by a retired sea captain. British forces built a blockhouse in the settlement two years later at the onset of the Anglo-Boer War - that building is now a Monument and Museum within the grounds of the Bergville Court House.
Development Implications: No specific development guidelines were provided for Van Reenen within the SDF. Except for the fact that Van Reenen forms part of the N3 corridor it is not identified as a development node or centre within the district.
Overall, the larger region also represents a strong tourism area characterised by numerous tourism attractions – Refer to Map 2.2 and Table 2.1.
20 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 2.1: Uthukela District SDF
21 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 2.1: Tourist Attractions and Activities Name Type Battle of Groenkop Battlefield Harrismith Botanical Gardens Botanical Garden Road Camp Campsite/Caravan Park President Brand Caravan Park Campsite/Caravan Park Kliphuis Camping Campsite/Caravan Park Glen Reenen - Campsite and or Caravan Park Campsite/Caravan Park Appin Campsite Campsite/CaravanPark Campsite Campsite/CaravanPark Base Camp Campsite/CaravanPark San Cave Cave Overnight Cave Cave Cathedral Cave Cave The Sportsman Country Club Golf Warden Golf Course Golf Kestell Golf Course Golf Groenhoek Guest Farm - Hiking Hiking Hiking Hiking Appin & Bald Ibis Hiking Trail Hiking Mongoose Style Hiking Eland Gate Hiking Doornhoek Fence Ladder Hiking Black Wildebeest Hiking Trail Hiking Old Toll Bridge 1884 Historical Monument Bushman Paintings Historical Monument Blockhouse Historical Monument Blockhouse Historical Monument Historical Monument Historical Monument Protea Hotel - Montrose Hotel/Motel Pringles Country Inn Hotel/Motel Oaklands Manor Hotel/Motel Mount Aux Sources Hotel Hotel/Motel Hotel or Motel Hotel/Motel Harrismith Inn Hotel Hotel/Motel Green Lantern Inn Hotel/Motel Grand National Hotel Hotel/Motel Golden Gate Hotel Hotel/Motel Bergview Motel Hotel/Motel Pyramids Motel Hotel/Motel Museum Museum Historical Farm Machinery Museum Riverview Country Inn Other Accommodation Oban Guest Farm Other Accommodation Boschkloof Bay Other Accommodation Appin Guesthouse & Function Hall Other Accommodation The Homestead Accommodation Other Accommodation Fig Tree Grotto Park Sterkfontein Dam Resort Resort/Spa Brandwag Resort Resort/Spa Sterkfontein Dam - View Site View Point The Gap View Point Windy Corner View Point View Point Siggis Camp View site View Point Cascades View Hide View Point Note: This does not represent a complete list of activities.
22 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 2.2: Tourism Attractions
23 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 2.3 SYNTHESIS
Given the qualitative overview it is evident that Harrismith represents the dominant town along the identified route. It is also the town with the highest economic function, supported by the highest levels of development potential and needs. The other towns merely reflect service centre economies towards the surrounding agricultural communities. The larger region is also characterised by a number of tourist attractions and facilities.
The following chapters provide a more in-depth assessment of the demographic and economic profile of the applicable local economies and specific towns.
24 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 3: DEMOGRAPHIC PROFILE
3.1 INTRODUCTION
This Chapter provides information on the demographic profiles of each of the local economies and selected towns located along the N3 to be impacted on by the proposed route realignment. The Chapter covers aspects of population size, racial distribution, population growth, impact of HIV, employment status, income and expenditure, general living standards and other socio- economic indicators. This provides insight into the order size of each of the municipal areas and relevant towns, supported by a profile of the socio-economic fabric thereof.
The first section of the report focuses on the three local economies; The second section of the report focuses on the socio-economic indicators of the individual towns in relation to that of the local economies.
3.2 DEMOGRAPHIC PROFILE OF LOCAL ECONOMIES
Subsequent paragraphs, tables and figures provide demographic profiles of each of the local economies.
3.2.1 POPULATION, HOUSEHOLDS AND HOUSEHOLD SIZE
3.2.1.1 Local Economy Population Order Sizes
Figure 3.1: Local Economy Population Order Size Comparisons, 2000 and 2010
Source: Demacon, 2011
First order: Maluti-a-Phofung reflects the largest population concentration, experiencing positive growth over the past 10 years. Second order – Okhahlamba reflects the second largest population concentration, experiencing positive growth over the past 10 years. Third order – Phumelela reflects the smallest population concentration, declining over the past 10 years.
Focus is now turned towards each of the local economies.
25 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 3.2.1.2 Maluti-a-Phofung Local Economy
Figure 3.2: Maluti-a-Phofung Population Size with reference to the District Economy, 2000 and 2010
Relative Values: Relative Values: MAP – 364 900 people MAP – 396 300 people District - 726 900 people District – 723 400 people
Source: Demacon, 2011 Note: These figures makes use of the 1996 and 2001 population census data, the 2007 Community Survey, StatsSA midyear estimates as well as the Actuarial Union’s demographic model to estimate population figures.
Figure 3.3: Maluti-a-Phofung Number of Households with reference to the District Economy, 2000 and 2010
Relative Values: Relative Values: MAP – 183 400 households MAP – 196 300 households District – 91 300 households District – 100 100 households
Source: Demacon, 2011
Figure 3.3: Maluti-a-Phofung Racial Profile, 2000 and 2010
Source: Demacon, 2011
26 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 3.4: Maluti-a-Phofung Average Household Size, 2000 and 2010
Source: Demacon, 2011
The local economy is characterised by a population of approximately 396 300 people translated into approximately 100 100 households. The racial profile reflects a dominant segment of Black Africans (98.5%), with a very small segment of Whites (1.3%), Coloureds (0.1%) and Asians (0.1%). Household sizes in general range between 2.6 and 4.0 for the various racial brackets. The average household size for the local economy is 3.9 (2010).
3.2.1.2 Phumelela Local Economy
Figure 3.5: Phumelela Population Size with reference to the District Economy, 2000 and 2010
Relative Values: Relative Values: Phumelela – 50 200 people Phumelela – 38 700 people District - 726 900 people District – 723 400 people
Source: Demacon, 2011 Note: These figures makes use of the 1996 and 2001 population census data, the 2007 Community Survey, StatsSA midyear estimates as well as the Actuarial Union’s demographic model to estimate population figures.
27 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 3.6: Phumelela Number of Households with reference to the District Economy, 2000 and 2010
Relative Values: Relative Values: Phumelela – 11 800 households Phumelela – 12 700 households District – 91 300 households District – 100 100 households
Source: Demacon, 2011
Figure 3.7: Phumelela Racial Profile, 2000 and 2010
Source: Demacon, 2011
Figure 3.8: Phumelela Average Household Size, 2000 and 2010
Source: Demacon, 2011
The local economy is characterised by a population of approximately 38 700 people translated into approximately 12 700 households.
28 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The racial profile reflects a dominant segment of Black Africans (91.2%), with a smaller segment of Whites (8.2%) and a very small segment of Coloureds (0.5%) and Asians (0.2%). Household sizes in general range between 2.4 and 4.4 for the various racial brackets. The average household size for the local economy is 3.0 (2010).
3.2.1.3 Okhahlamba Local Economy
Figure 3.9: Okhahlamba Population Size with reference to the District Economy, 2000 and 2010
Relative Values: Relative Values: Okhahlamba – 134 400 people Okhahlamba – 154 400 people District – 640 000 people District – 734 100 people
Source: Demacon, 2011 Note: These figures makes use of the 1996 and 2001 population census data, the 2007 Community Survey, StatsSA midyear estimates as well as the Actuarial Union’s demographic model to estimate population figures.
Figure 3.10: Okhahlamba Number of Households with reference to the District Economy, 2000 and 2010
Relative Values: Relative Values: Okhahlamba – 27 000 households Okhahlamba – 29 800 households District – 132 900 households District – 146 200 households
Source: Demacon, 2011
29 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 3.11: Okhahlamba Racial Profile, 2000 and 2010
Source: Demacon, 2011
Figure 3.12: Okhahlamba Average Household Size, 2000 and 2010
Source: Demacon, 2011
The local economy is characterised by a population of approximately 154 400 people translated into approximately 29 800 households. The racial profile reflects a dominant segment of Black Africans (98.3%), with a very small segment of Whites (1.2%), Coloureds (0.3%) and Asians (0.1%). Household sizes in general range between 2.9 and 5.5 for the various racial brackets. The average household size for the local economy is 5.2 (2010).
30 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 3.1: Population per Mesozone
31 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 3.2.2 POPULATION AND HOUSEHOLD GROWTH
Figure 3.13: Population Growth, 1995 to 2010
Population Growth
3.0 2.0 1.0 - (1.0) (2.0)
Growth (%) (3.0) (4.0) (5.0)
(6.0)
2002-2003 2009-2010 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Maluti-a-Phofung Phumelela Okhahlamba
Source: Demacon Ex Quantec, 2011
Figure 3.14: Household Growth, 1995 to 2010
Household Growth
6.0 5.0 4.0 3.0 2.0 1.0
Growth (%) - (1.0) (2.0)
(3.0)
2002-2003 2009-2010 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Maluti-a-Phofung Phumelela Okhahlamba
Source: Demacon Ex Quantec, 2011
Maluti-a-Phofung - Population growth has slightly increased compared to household growth over time. Average annual population growth between 1995 and 2010 is 0.6% and average annual household growth between 1995 and 2010 is 1.1%. Phumelela – Population growth has slightly increased compared to household growth over time. Average annual population growth between 1995 and 2010 is (-1.4%) and average annual household growth between 1995 and 2010 is 1.6%. Okhahlamba - Population growth has slightly increased compared to household growth over time. Average annual population growth between 1995 and 2010 is 1.6% and average annual household growth between 1995 and 2010 is 2.3%.
Table 3.1: Population and Household Growth, ten year, five year and three year averages 2000-2010 2005-2010 2007-2010 Maluti-a-Phofung Population Growth 0.8 0.9 0.9 Household Growth 0.9 0.8 0.7 Phumelela Population Growth (2.6) (3.6) (2.7)
32 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 2000-2010 2005-2010 2007-2010 Household Growth 0.8 0.0 1.1 Okhahlamba Population Growth 1.4 1.2 1.0 Household Growth 1.0 0.2 (0.0) Source: Demacon Ex Quantec, 2011 Note: This represents net growth – new household formation includes deaths, births, migration etc.
3.2.3 IMPACT OF HIV / AIDS
Growth in the municipal areas was negatively affected by HIV. The figure below indicates the percentage of the population that is HIV positive.
Figure 3.15: HIV Positive as Percentage of Total Population, 1995 to 2010
HIV Positive (% of population)
18.0
15.9
15.9
15.7
15.6
15.4
15.2
14.8
16.0
14.4
14.4
14.3
14.2
14.0
13.8
13.7
13.5
13.4
13.3
13.1
13.1
12.9
12.8
12.7
12.6
14.0
12.4
12.1
12.0
11.8
11.6
11.1
10.9
12.0
10.4
10.0
10.0
9.0
8.8
8.7
10.0
7.8
7.2
7.1
8.0
6.4
5.6
5.3
5.0
6.0
4.1
3.6
3.6
2.7
4.0
2.4
Percentage of Population (%) 2.0
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Maluti-a-Phofung Phumelela Okhahlamba
Source: Demacon, 2011
Maluti-a-Phofung – HIV positive segment increased from a mere 3.0% in 1995 to 17.6% in 2010. Phumelela – HIV positive segment increased from a mere 2.4% in 1995 to 13.4% in 2010. Okhahlamba – HIV positive segment increased from 3.6% in 1995 to 15.9% in 2010.
Figure 3.16: HIV Positive Population Segment Growth, 1995-2010
HIV Positive Growth
60.0
50.0
40.0
30.0
20.0 Growth (%) 10.0
-
(10.0)
1996-1997 2001-2002 2008-2009 1995-1996 1997-1998 1998-1999 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2009-2010
Maluti-a-Phofung Phumelela Okhahlamba
Source: Demacon, 2011
33 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung - HIV positive growth declined drastically from 49.6% (1995 to 1996) to 1.3% (2009 and 2010). Phumelela - HIV positive growth declined drastically from 51.6% (1995 to 1996) to 0.1% (2009 and 2010). Okhahlamba - HIV positive growth declined drastically from 48.9% (1995 to 1996) to 1.4% (2009 and 2010).
Figure 3.17: AIDS deaths as Percentage of Total Deaths, 1995-2010
AIDS deaths (% of total deaths)
70.0
60.5
60.1
59.7
59.3
58.5
57.4
56.2
55.6
55.2
54.9
54.7
60.0 54.0
53.9
52.9
51.1
50.9
50.4
50.3
50.2
50.0
49.5
48.4
48.2
46.7
45.7
50.0 44.2
43.9
40.0
39.9
39.3
35.3
40.0
33.2
32.8
29.6
26.5
26.1
30.0
23.2
20.4
20.0
17.6
14.7 14.6
20.0
12.8
10.1
9.8
8.6
Percentage of Population (%)
6.4
5.5
10.0
-
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Maluti-a-Phofung Phumelela Okhahlamba
Source: Demacon, 2011
Despite the slowdown in the growth of HIV in the market deaths because of AIDS increased as percentage of total deaths over the years: Maluti-a-Phofung - increasing from a mere 6.4% in 1995 to 55.6% in 2010. Phumelela - increasing from a mere 5.5% in 1995 to 50.9% in 2010. Okhahlamba - increasing from a mere 9.8% in 1995 to 60.5% in 2010.
3.2.4 EMPLOYMENT STATUS
3.2.4.1 Maluti-a-Phofung Local Economy
Figure 3.18: Maluti-a-Phofung Employment Status, 2000 to 2009
Economically Active – 57.8% Economically Active – 61.1%
Source: Demacon, 2011
34 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The economically active market segment increased over the past number of years – increasing from 57.8% in 2000 to 61.1% in 2009 (2010 figures not available as yet). In terms of the EAP segment - The level of employment increased slightly from 54.4% in 2000 to 60.8% in 2009.
3.2.4.2 Phumelela Local Economy
Figure 3.19: Phumelela Employment Status, 2000 to 2009
Economically Active – 56.8% Economically Active – 60.6%
Source: Demacon, 2011
The economically active market segment increased over the past number of years – increasing from 56.8% in 2000 to 60.6% in 2009 (2010 figures not available as yet). In terms of the EAP segment - The level of employment increased slightly from 56.8% in 2000 to 60.6% in 2009.
3.2.4.3 Okhahlamba Local Economy
Figure 3.20: Okhahlamba Employment Status, 2000 to 2009
Economically Active – 51.4% Economically Active – 54.6%
Source: Demacon, 2011
The economically active market segment increased over the past number of years – increasing slightly from 51.4% in 2000 to 54.6% in 2009 (2010 figures not available as yet). In terms of the EAP segment - The level of employment increased moderately from 55.0% in 2000 to 80.4% in 2009.
35 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 3.2.5 INCOME AND EXPENDITURE
3.2.5.1 Maluti-a-Phofung Local Economy
Figure 3.21: Maluti-a-Phofung contribution to district’s Final Household Consumption Expenditure and Disposable Income, 2010
Source: Demacon, 2011
Figure 3.22: Maluti-a-Phofung - Final Household Consumption Expenditure versus Disposable Income Growth, 1995-2010
Final Consumption Expenditure versus Disposable Income Growth
8.0 6.8 7.0 6.0 5.0 4.2
6.8 5.0 3.9 3.6 4.0 2.5 2.4 3.0 2.0 1.4 1.2 1.3 4.3 1.2 2.0 1.0 3.7 0.3 2.9 3.0 Growth (%) 2.8 2.9 1.0 2.3 - 1.6 1.0 (1.4) (1.0) 0.6 0.5 0.7 0.4 (2.0)
(1.2)
2001-2002 2009-2010 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
FCE DI
Source: Demacon, 2011
Disposable income growth and final consumption expenditure reflected similar trends over the past few years. Average annual growth between 1995 and 2008 is 2.4% for Final Consumption Expenditure (FCE) and 2.1% for Disposable Income.
Table 3.2: Final Consumption Expenditure and Disposable Income Compound Growth Trends 1995-2010 2000-2010 2005-2010 Final Consumption Expenditure (FCE) 2.4 2.8 2.8 Disposable Income (DI) 2.1 2.4 2.3 Source: Demacon, 2011
36 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 3.2.5.2 Phumelela Local Economy
Figure 3.23: Phumelela contribution to district’s Final Household Consumption Expenditure and Disposable Income, 2010
Source: Demacon, 2011
Figure 3.24: Phumelela - Final Household Consumption Expenditure versus Disposable Income Growth, 1995-2010
Final Consumption Expenditure versus Disposable Income Growth
10.0 8.0 8.0 4.8 4.7 5.2 6.0 8.1 3.4 3.0 4.0 2.1 2.1 1.3 5.0 4.8 5.1 2.0 (0.4) 3.7 (1.2) (0.8) (1.3) Growth (%) - (1.5) 2.6 1.5 (2.1) (2.0) 0.8 0.7 (1.2) (1.1) (4.0) (1.7) (1.9) (1.5)
(2.8)
1998-1999 2001-2002 1995-1996 1996-1997 1997-1998 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
FCE DI
Source: Demacon, 2011
Disposable income growth and final consumption expenditure reflected similar trends over the past few years. Average annual growth between 1995 and 2008 is 1.8% for Final Consumption Expenditure (FCE) and 1.5% for Disposable Income.
Table 3.3: Final Consumption Expenditure and Disposable Income Compound Growth Trends 1995-2010 2000-2010 2005-2010 Final Consumption Expenditure (FCE) 1.8 0.2 0.7 Disposable Income (DI) 1.4 (0.3) (0.1) Source: Demacon, 2011
37 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 3.2.5.3 Okhahlamba Local Economy
Figure 3.25: Okhahlamba contribution to district’s Final Household Consumption Expenditure and Disposable Income, 2010
Source: Demacon, 2011
Figure 3.26: Okhahlamba - Final Household Consumption Expenditure versus Disposable Income Growth, 1995-2010
Final Consumption Expenditure versus Disposable Income Growth
25.0 18.4 18.4 20.0 16.8 15.3 21.3 14.2 13.5 13.3 13.7 15.0 12.1 11.2 17.1 11.1 10.6 16.3 15.2 14.2 9.0 10.0 12.8 13.7 13.3 13.0 7.3
Growth (%) 12.2 10.4 10.4 10.9 10.0 5.0 2.3
- 3.1
1998-1999 2001-2002 1995-1996 1996-1997 1997-1998 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
FCE DI
Source: Demacon, 2011
Disposable income growth and final consumption expenditure reflected similar trends over the past few years. Average annual growth between 1995 and 2008 is 12.5% for Final Consumption Expenditure (FCE) and 12.9% for Disposable Income.
Table 3.4: Final Consumption Expenditure and Disposable Income Compound Growth Trends 1995-2010 2000-2010 2005-2010 Final Consumption Expenditure (FCE) 12.4 12.1 10.9 Disposable Income (DI) 12.9 12.9 12.6 Source: Demacon, 2011
38 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 3.2: Persons below Minimum Living Level
39 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 3.3: Living Standard Map
40 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 3.3 SOCIO-ECONOMIC PROFILE OF STUDY AREA
The demand for commercial and residential activities is a derived demand. Hence, the current level and depth, as well as anticipated future growth in demand are a function of the source market profile. With reference to the study it firstly refers to the three municipal areas, with emphasis on the four towns located along the N3 corridor to be impacted on by potential realignment – Warden, Harrismith, Swinburne and Van Reenen.
The socio-economic profile is outlined in terms of the following headings:
Study area size Socio-economic profile.
3.3.1 STUDY AREA SIZE
Table 3.5 indicates the population size and sub places present within the study area – with reference to each municipal area.
Table 3.5: Population Estimate, 2011 Average Population Population Households Household Distribution Size Maluti-a-Phofung P4D04M04C01: 42nd Hill 17 679 4 960 3.6 4.5 P4D04M04C02: Bolata 32 911 7 600 4.3 8.3 P4D04M04C03: Harrismith 6 970 2 116 3.3 1.8 P4D04M04C04: Intabazwe 4 049 1 046 3.9 1.0 P4D04M04C05: Kestell 980 316 3.1 0.2 P4D04M04C06: Mabolela 26 089 6 129 4.3 6.6 P4D04M04C07: Maluti a 16 648 3 189 5.2 4.2 Phofung P4D04M04C08: Matsieng 26 223 6 168 4.3 6.6 P4D04M04C09: Monontsha 55 453 12 873 4.3 14.0 P4D04M04C10: Namahadi 95 617 23 568 4.1 24.1 P4D04M04C11: Phomolong 7 050 1 740 4.1 1.8 P4D04M04C12: Phuthaditjhaba 58 464 18 731 3.1 14.7 P4D04M04C13: Thaba Bosiu 8 940 2 115 4.2 2.3 P4D04M04C14: Thaba Tshweu 9 751 2 679 3.6 2.5 P4D04M04C15: Thibela 5 541 1 332 4.2 1.4 P4D04M04C16: Tlholong 5 310 1 416 3.8 1.3 P4D04M04C17: Tshiame 14 253 3 770 3.8 3.6 P4D04M04C18: Witsieshoek 4 738 1 092 4.3 1.2 Total 396 667 100 839 3.9 100.0 Phumelela P4D04M05C01: Memel 339 193 1.8 0.9 P4D04M05C02: Phumelela 15 700 4 311 3.6 41.7 P4D04M05C03: Thembalihle 11 784 4 723 2.5 31.3 P4D04M05C04: Vrede 1 092 502 2.2 2.9 P4D04M05C05: Warden 791 347 2.3 2.1 P4D04M05C06: Zamani 3 690 1 236 3.0 9.8 P4D04M05C07: Zenzeleni 4 217 1 557 2.7 11.2 37 612 12 870 2.9 100.0 Okhahlamba P5D03M04C01: Amangwane 77 012 13 395 5.7 49.4 P5D03M04C02: Amazizi 18 183 3 630 5.0 11.7 P5D03M04C03: Bergville Part 1 31 414 6 186 5.1 20.1 P5D03M04C04: Drakensberg 85 39 2.2 0.1 P5D03M04C05: Driefontein 266 63 4.2 0.2 P5D03M04C06: Estcourt 1 121 164 6.8 0.7
41 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Average Population Population Households Household Distribution Size P5D03M04C07: Geluksburg 241 99 2.4 0.2 P5D03M04C09: Northern Natal 5 - - 0.0 Drakensberg P5D03M04C10: Okhahlamba 24 157 5 294 4.6 15.5 P5D03M04C11: Rugged Glen 15 8 2.0 0.0 Nature Reserve P5D03M04C12: Spioenkop Dam 53 35 1.5 0.0 Nature Reserve P5D03M04C13: Van Reenen 85 54 1.6 0.1 P5D03M04C14: Winterton 2 485 733 3.4 1.6 P5D03M04C15: Bergville Part 2 795 194 4.1 0.5 Total 155 916 29 894 5.2 100.0 Source: Demacon, 2011
Maluti-a-Phofung Local Municipal area is characterised by 396 667 people / 100 839 households with an average household size of 3.9. Harrismith is characterised by 6 970 people/ 2 116 households with an average household size of 3.3. The town accommodate 1.8% of the municipal population and 2.1% of the municipal households.
Figure 3.27: Harrismith’s contribution to Maluti-a-Phofung’s population and households, 2010
Source: Demacon, 2011 Note: It should be noted that the township areas of Intabazwe and 42nd Hill is located in direct proximity of the town, with Tshiame located approximately 10km from the town. The town is therefore surrounded by a large lower income community of approximately 35 981 people.
Phumelela Local Municipal area is characterised by 37 612 people / 12 870 households with an average household size of 2.9. Warden is characterised by 791 people/ 347 households with an average household size of 2.1. The town represents 2.1% of the municipal population and 2.7% of the municipal households.
42 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 3.28: Warden’s contribution to Phumelela’s population and households, 2010
Source: Demacon, 2011
Okhahlamba Local Municipal area is characterised by 155 916 people / 29 894 households with an average household size of 5.2. Van Reenen is characterised by 85 people/ 54 households with an average household size of 1.6. The town’s population represents a mere 0.1% of the municipal population and 0.2% of the municipal households.
Figure 3.29: Van Reenen’s contribution to Okhahlamba’s population and households, 2010
Source: Demacon, 2011
3.3.2 SOCIO-ECONOMIC PROFILE
The following tables provide a summary of the socio-economic profile of each of the municipal areas, as well as the towns under investigation.
Table 3.6: Socio-Economic Profile of Maluti-a-Phofung and the town of Harrismith, 2011 Variable Maluti-a-Phofung Municipal Area Town of Harrismith African Blacks: 98.5% White: 53.3% White: 1.3% African Blacks: 42.9% Racial Profile Coloured: 0.1% Indian Asians: 3.2% Indian Asians: 0.1% Coloured: 0.6% Male: 46.0% Male: 49.7% Gender Profile Female: 54.0% Female: 50.3% 0-14: 34.5% 0-14: 23.7% 15-19: 13.3% 15-19: 10.0% Age profile 20-34: 24.3% 20-34: 22.6% 35-64: 23.0% 35-64: 37.7% 65+: 4.9% 65+: 5.9% Educational School: 73.4% School: 65.4% Attendance (aged 5 to None: 22.0% None: 24.1% 24 years) Pre-school: 2.6% Pre-school: 5.2%
43 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Variable Maluti-a-Phofung Municipal Area Town of Harrismith College: 0.9% College: 3.2% Higher: 5.9% Higher: 29.8% Highest level of Grade 12: 17.2% Grade 12: 27.6% education (aged 20 Some Secondary: 29.3% Some Secondary: 21.9% and older) None: 22.7% None: 11.6% EAP: 61.1% EAP: 66.1% Of which: Of which: Level of employment Employed: 60.8% Employed: 88.3% Unemployed: 39.2% Unemployed: 11.7% Paid employee: 87.5% Paid employee: 83.9% Self-employed: 8.9% Self-employed: 12.7% Manner of employment Family worker: 1.4% Employer: 3.0% Employer: 2.2% Family worker: 0.5% Elementary occupations: 28.0% Professionals: 17.3% Craft and related trades: 15.9% Elementary occupations: 15.6% Plant and machine operators and Technicians and associate Occupation profile assemblers: 13.2% professionals: 15.3% Service workers: 11.2% Legislators, senior officials and Technicians and associate professionals: managers: 15.0% 10.8% Service workers: 12.3% Community, social and personal Community, social and personal serv: serv: 37.5% 32.9% Trade: 17.4% Manufacturing: 18.3% Industry Profile Finance and business services: Trade: 14.9% 11.3% Private households: 9.6% Private households: 9.5% Agriculture: 7.5% Manufacturing: 9.3% Total market earning an income: Total market earning an income: R36 785.0/annum R158 074.9/annum R3 065.4/month R13 172.9/month Weighted Average household income LSM 4 to 10+: LSM 4 to 10+: R115 427.9/annum R211 711.8/annum R9 619.0/month R17 642.7/month LSM 1-3: 66.9% LSM 1-3: 20.1% LSM Profile LSM 4-10+: 33.1% LSM 4-10+: 79.9% Pedestrian: 77.3% Private vehicle: 54.6% Primary Mode of Taxi: 13.2% Pedestrian: 26.1% Transport to school Private vehicle: 6.2% Taxi: 9.6% and work Bus: 2.3% Bus: 4.7% House / brick structure on separate stand: House / brick structure on Dominant Dwelling 59.4% separate stand: 78.2% Type Traditional dwelling: 21.0% Traditional dwelling: 7.1% Informal dwelling not in backyard: 8.8% Ownership: 60.0% Ownership: 59.1% Tenure Type Rent: 8.6% Rent: 29.2% Occupy rent-free: 31.3% Occupy rent-free: 11.7% Source: Demacon, 2011
Table 3.7: Socio-Economic Profile of Phumelela and town of Warden, 2011 Variable Phumelela Municipal Area Town of Warden African Blacks: 93.2% White: 58.5% White: 6.6% African Blacks: 39.6% Racial Profile Coloured: 0.2% Indian Asians: 1.6% Indian Asians: 0.0% Coloured: 0.3% Male: 47.3% Male: 48.5% Gender Profile Female: 52.7% Female: 51.5% 0-14: 3.5% 0-14: 21.6% 15-19: 11.6% 15-19: 11.0% Age profile 20-34: 22.6% 20-34: 20.4% 35-64: 25.2% 35-64: 33.4% 65+: 5.7% 65+: 13.7% School: 70.2% Educational School: 88.4% None: 26.4% Attendance (aged 5 to None: 3.2% Pre-school: 3.0% 24 years) College: 1.1% College: 0.1% Highest level of Higher: 4.8% Higher: 5.8%
44 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Variable Phumelela Municipal Area Town of Warden education (aged 20 Grade 12: 12.9% Grade 12: 30.0% and older) Some Secondary: 22.9% Some Secondary: 42.9% None: 24.8% None: 6.6% EAP: 60.6% EAP: 53.9% Of which: Of which: Level of employment Employed: 72.4% Employed: 86.1% Unemployed: 27.6% Unemployed: 13.9% Paid employee: 89.7% Paid employee: 69.0% Self-employed: 6.8% Self-employed: 24.6% Manner of employment Employer: 2.4% Employer: 6.3% Family worker: 1.1% Legislators, senior officials and Elementary occupations: 42.2% managers: 16.2% Skilled agricultural workers: 40.7% Service workers: 15.5% Plant and machine operators and Occupation profile Plant and machine operators assemblers: 18.4% and assemblers: 15.2% Service workers: 11.2% Clerks: 14.9% Craft and related trades: 4.2% Elementary occupations: 14.5% Community, social and personal Agriculture: 40.7% serv: 35.8% Community, social and personal serv: Trade: 28.0% 16.9% Finance and business services: Industry Profile Private households: 26.9% 10.7% Trade: 6.9% Transport and communication: Finance and business services: 2.4% 10.4% Agriculture: 10.1% Total market earning an income: Total market earning an income: R25 570.9/annum R44 732.6/annum R2 130.9/month R3 727.7/month Weighted Average household income LSM 4 to 10+: LSM 4 to 10+: R84 162.8/annum R82 889.9/annum R7 013.6/month R6 907.5/month LSM 1-3: 63.1% LSM 1-3: 32.5% LSM Profile LSM 4-10+: 36.9% LSM 4-10+: 67.5% Pedestrian: 87.1% Primary Mode of Pedestrian: 49.6% Private vehicle: 7.8% Transport to school Private vehicle: 38.5% Taxi: 1.8% and work Taxi: 4.1% Bus: 0.6% House / brick structure on separate stand: House / brick structure on Dominant Dwelling 53.3% separate stand: 88.3% Type Traditional dwelling: 22.4% Traditional dwelling: 6.1% Informal dwelling not in backyard: 15.6% Ownership: 45.6% Ownership: 59.8% Tenure Type Rent: 25.2% Rent: 30.4% Occupy rent-free: 29.2% Occupy rent-free: 9.8% Source: Demacon, 2011
Table 3.8: Socio-Economic Profile of Okhahlamba and town of Van Reenen, 2011 Variable Okhahlamba Municipal Area Town of Van Reenen African Blacks: 97.6% African Blacks: 70.7% White: 2.1% White: 20.0% Racial Profile Indian Asians: 0.2% Indian Asians: 9.3% Coloured: 0.1% Coloured: 0.0% Male: 46.3% Male: 43.2% Gender Profile Female: 53.7% Female: 56.8% 0-14: 41.2% 0-14: 14.7% 15-19: 13.2% 15-19: 4.0% Age profile 20-34: 20.5% 20-34: 45.3% 35-64: 20.3% 35-64: 32.0% 65+: 4.8% 65+: 4.0% School: 70.0% Educational School: 25.0% None: 27.6% Attendance (aged 5 to None: 56.3% Pre-school: 2.0% 24 years) Pre-School: 18.8% College: 0.2% Highest level of Higher: 4.3% Higher: 0.0% education (aged 20 Grade 12: 10.1% Grade 12: 44.4%
45 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Variable Okhahlamba Municipal Area Town of Van Reenen and older) Some Secondary: 21.0% Some Secondary: 25.4% None: 36.8% None: 0.0% EAP: 54.6% EAP: 100% Of which: Of which: Level of employment Employed: 80.4% Employed: 94.8% Unemployed: 19.6% Unemployed: 5.2% Paid employee: 82.3% Paid employee: 93.6% Self-employed: 12.2% Manner of employment Self-employed: 6.4% Employer: 3.6%
Family worker: 2.0% Elementary occupations: 33.8% Service workers: 57.8% Plant and machine operators and Elementary occupations: 24.4% assemblers: 13.3% Legislators, senior officials and Occupation profile Service workers: 12.2% managers: 16.2% Technicians and associate professionals: Clerks: 8.9% 10.2% Craft and related trades: 8.9% Craft and related trades: 8.0% Community, social and personal serv: 30.3% Agriculture: 21.2% Trade: 79.2% Industry Profile Private households: 13.3% Private households: 20.8% Trade: 15.0% Transport and communication: 5.7% Total market earning an income: Total market earning an income: R85 072.4/annum R110 354.7/annum R7 089.4/month R9 196.2/month Weighted Average
household income LSM 4 to 10+: LSM 4 to 10+: R305 717.8/annum R366 729.0/annum R25 476.5/month R30 560.5/month LSM 1-3: 73.3% LSM 1-3: 64.7% LSM Profile LSM 4-10+: 26.7% LSM 4-10+: 35.3% Pedestrian: 87.1% Primary Mode of Private vehicle: 6.2% Pedestrian: 72.0% Transport to school Taxi: 4.0% Private vehicle: 28.0% and work Bus: 1.0% Traditional dwelling: 53.6% House / brick structure on Dominant Dwelling House / brick structure on separate stand: separate stand: 29.9% Type 31.2% Other: 65.0% Occupy rent-free: 44.1% Ownership: 27.3% Tenure Type Ownership: 41.9% Rent: 13.6% Rent: 14.0% Occupy rent-free: 59.1% Source: Demacon, 2011 Note: Limited information is available on the town of Van Reenen. 3.4 SYNTHESIS
Table 3.9 provides a summary of the demographic profile of the local economies forming part of the study area. This is followed by a short summary of the socio-economic profile of each of the selected towns.
Table 3.9: Local Economy Demographic Profile Demographic Maluti-a-Phofung Phumelela Okhahlamba characteristic Population – 2010 396 667 people 38 695 people 154 372 people Racial Profile – 2010 African Blacks – 98.5% African Blacks – African Blacks – Whites – 1.3% 91.2% 98.3% Indian Asians – 0.1% Coloureds – 0.5% Coloureds – 1.2% Coloureds – 0.1% Whites – 8.2% Whites – 0.3% Indian Asians – Indian Asians – 0.2% 0.1% Households - 2010 100 839 households 12 730 households 29 835 households Average household size 3.9 members 3.0 members 5.2 members of racial groups - 2010 Population Growth Average Annual Growth Average Annual Average Annual – 1995 to 2010 – 0.6% Growth – 1995 to Growth – 1995 to
46 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Demographic Maluti-a-Phofung Phumelela Okhahlamba characteristic Ten year compound 2010 – (-1.4%) 2010 – 1.6% growth – 2000 to 2010 – Ten year compound Ten year 0.8% growth – 2000 to compound growth 2010 – (-2.6%) – 2000 to 2010 – 1.4% Household Growth Average Annual Growth Average Annual Average Annual – 1995 to 2010 – 1.1% Growth – 1995 to Growth – 1995 to Ten year compound 2010 – 1.6% 2010 – 2.3% growth – 2000 to 2010 – Ten year compound Ten year 0.9% growth – 2000 to compound growth 2010 – 0.8% – 2000 to 2010 – 1.0% HIV positive segment 14.4% 13.4% 15.9% 2010 HIV Growth 2009 to 2010 – 1.3% 2009 to 2010 – 2009 to 2010 – 0.1% 1.4% AIDS deaths as 55.6% 50.9% 60.5% percentage of total deaths 2010 Economically Active 61.1% 60.6% 54.6% Population Segment 2009 Employed Segment of 60.8% 72.4% 80.4% EAP 2009 Unemployed Segment of 39.2% 27.6% 19.6% EAP 2009 Final Household Average annual growth Average annual Average annual Consumption – 1995 to 2010 – 2.4% growth – 1995 to growth – 1995 to Expenditure Ten year compound 2010 – 1.8% 2010 – 12.5% growth – 2.8% Ten year compound Ten year Five year compound growth – 0.2% compound growth growth – 2.8% Five year – 12.1% compound growth – Five year 0.7% compound growth – 10.9% Disposable Household Average annual growth Average annual Average annual Income – 1995 to 2010 – 2.1% growth – 1995 to growth – 1995 to Ten year compound 2010 – 1.5% 2010 – 12.9% growth – 2.4% Ten year compound Ten year Five year compound growth – (-0.3%) compound growth growth – 2.3% Five year – 12.9% compound growth – Five year (-0.1%) compound growth – 12.6%
Key Attributes and Trends of Selected Towns
Town of Harrismith:
Approximately 6 670 people / 2 116 households in 2011 – representing 1.8% of municipal population. Predominant White and African Black population (53.3%, 42.9% respectively). Large mature adult population segment, supported by a moderate segment of young and upcoming adults and youth. High levels of educated adults (20yrs and older) – 57.4% Grade/12 and higher education. Relatively large economically active population segment – 66.1% of which nearly 90% is employed, reflecting low dependency ratios. Predominantly employed in the community, social and personal services sector, trade sector, manufacturing, and private household sector and finance and business services sector. Dominant occupations include professional occupations, elementary occupations, technicians and associate professionals, legislators, senior officials and managers. Predominance of white collar occupations serving as proxy for medium to higher income consumer market.
47 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Moderate to higher living standards – LSM 1 to 3 (20.1%), LSM 4 to 10+ (79.9%). Middle to higher income consumer market – weighted average monthly household income of HH earning an income R13 172.9, weighted average monthly household income LSM 4 to 10+ is R17 642.7. High levels of private vehicle ownership, supported by a moderate reliance on public transport with emphasis on minibus and bus. Generally reflects a well-educated, predominantly employed market population earning moderate to higher monthly household incomes.
Town of Warden:
Approximately 791 people/ 347 households in 2011 – representing 2.1% of municipal population. Predominant White and African Black population (58.5%, 39.6% respectively). Large mature adult population segment, supported by a moderate segment of young and upcoming adults and youth. Moderate levels of educated adults (20yrs and older) – 35.8% Grade/12 and higher education. Medium sized economically active population segment – 53.9% of which nearly 86% is employed, reflecting low dependency ratios. Predominantly employed in the trade sector, community, social and personal services sector, finance and business services sector, transport and communication and agricultural sectors. Dominant occupations include legislators, senior officials and managers, elementary occupations, plant and machine operators and assemblers, service workers and clerks. Predominance of blue collar occupations serving as proxy for lower to middle income consumer market. Moderate to higher living standards – LSM 1 to 3 (32.5%), LSM 4 to 10+ (67.5%). Lower to middle income consumer market – weighted average monthly household income of HH earning an income R3 727.6, weighted average monthly household income LSM 4 to 10+ is R6 907.5. Moderate levels of private vehicle ownership, supported by a moderate reliance on public transport with emphasis on minibus and bus. Generally reflects a moderately educated, predominantly employed market population earning lower to moderate monthly household incomes.
Town of Van Reenen:
Approximately 85 people/ 54 households in 2011 – representing 0.1% of municipal population. Predominant African Black population, with moderate segment of Whites (70.7%, 20.0% respectively). Large young and upcoming adult population, with a moderate segment of mature adult population with a small segment of youth. Moderate levels of educated adults (20yrs and older) – 25.4% Grade/12 and higher education. Large economically active population segment of which nearly 95% is employed, reflecting low dependency ratios. Predominantly employed in the trade sector and private household sector. Dominant occupations include service workers, elementary occupations, craft and related trades and clerks. Moderate living standards – LSM 1 to 3 (64.7%), LSM 4 to 10+ (35.5%). Middle income consumer market – weighted average monthly household income of HH earning an income R9 196.2, weighted average monthly household income LSM 4 to 10+ is R30 560.5. As evident from the LSM profile the area is characterised with pockets of extreme poverty and wealth. Moderate levels of private vehicle ownership, supported by a moderate reliance on public transport with emphasis on minibus and bus. Generally reflects a moderately educated, predominantly employed market population earning moderate monthly household incomes.
48 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Development Implications:
Municipal Order Size Comparison – Population Size, 2010
Maluti-a-Phofung - 67.2%
Okhahlamba - 26.2%
Phumelela - 6.6%
When the population sizes of the municipal areas are compared with one another a definite order size are reflected as illustrated above – dominant municipal area represented by Maluti-a- Phofung, Okhahlamba and then Phumelela.
Town Order Size Comparison – Population Size, 2011
Harrismith - 88.8%
Warden - 10.1%
Van Reenen - 1.1%
When the population sizes of the selected towns are compared with one another the following order sizes are reflected as illustrated above – dominant town is represented by Harrismith, followed by Warden and then Van Reenen.
Each of these towns contributes towards the local economies:
Harrismith Warden Van Reenen
1.8% of population 2.1% of population 0.1% of population
2.1% of households 2.7% of households 0.2% of households
12.3% of household 5.5% of household 0.4% of household income income income
49 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Each of these towns is located in larger municipal areas reflecting its own unique socio- economic challenges – HIV, unemployment, low levels of education, poverty, limited to declining population growth etc. Given the occupation and industry profiles in which the employed segment are involved it is evident that the most diverse economy is represented by Harrismith, followed by Warden and then Van Reenen. Given the overall living standard measurement and income profiles the most sophisticated consumer market is allocated in Harrismith, then Warden and Van Reenen. Each of the towns fulfils a specific service delivery function and act as an employment location to the surrounding communities – with emphasis on Harrismith. It is evident from the demographic assessment that the town of Harrismith reflects higher levels of development and socio-economic status than the other towns, therefore it is anticipated that this town will most probably be the hardest hit by any impacts affecting the town’s local economy, which ripples down to the socio-economic fabric of the town.
The next chapter provides an in-depth investigation into the economic base and performance of each of the local municipal areas, with emphasis on the selected towns.
50 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 4: ECONOMIC TRENDS AND PERFORMANCE
4.1 INTRODUCTION
Governments, businesses, individuals, and organisations involved in community and economic development are always searching for a way to forecast patterns of economic growth. They do this for all the right reasons, of course, wanting to encourage economic growth in areas that have the most potential to be successful and avoid devoting scarce resources to economic areas and opportunities that are more likely to fail.
Unfortunately, forecasting economic trends is extremely difficult. The market has a tendency to move in unpredictable ways because of new technology, changes in politics or world events etc. The development of a climate that encourages economic development, supports business, and encourages businesses and consumers to patronise local businesses may be more successful than a strategy to promote or subsidise a particular sector.
This chapter does not provide a forecast of future opportunities. It is, instead, an examination of past trends with a view to identifying industry sectors that have under-performed or over- performed relative to other industries and other regions. One of the purposes of the analysis is to generate an informed debate about where the region’s economies have been and where it could be headed. Reference is made to the local economies in which the section of the N3, as well as selected towns is located:
Maluti-a-Phofung (town of Harrismith) and Phumelela local economies (town of Warden) with reference to the Thabo Mofutsanyana District, Free State Provincial and National Economies; Okhahlamba local economy (town of Van Reenen) with reference to the Uthukela District Economy, KwaZulu-Natal and National Economies in terms of selected time series economic and employment indicators.
4.2 REGIONAL COMPETITIVENESS
4.2.1 LOCAL ECONOMY ORDER SIZES
Local economic figures relate to GVA. The database refers to it as Regional output and GDP as gross value added (GVA) at basic prices (2010 V1 release), R millions, constant 2005 prices. A more detailed definition of GVA is provided below.
Gross Value Added (GVA) - The level of economic activities within a specific area. GVA is calculated as the difference between output and intermediate consumption in the economy. That is the difference between the value of goods and services produced and the cost of raw materials and other inputs, which are used up in production by all sectors of an economy.
Figure 4.1 indicates the order size of the local economies when compared directly to one another.
51 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.1: Order size of local economies, 2000 to 2010
Source: Demacon, 2011
First order: Maluti-a-Phofung reflects the largest local economy, losing some ground to the Okhahlamba local economy over the past ten years. Second order – Okhahlamba reflects the second largest local economy, winning some ground with reference to Maluti-a-Phofung local economy. Third order – Phumelela reflects the smallest local economy when compared directly to the other local economies, also losing some ground over the past ten years.
The following figures provide an indication of the local economies contribution towards the applicable district economies.
4.2.2 SIZE OF MALUTI-A-PHOFUNG AND PHUMELELA LOCAL ECONOMIES
Figure 4.2: Size of the economy, 2010 (GVA at basic prices)
Size of local economies Maluti-a- Size of district economy Phofung LM contribution to district Other 48.5% economic contributions 99.8%
Thabo Other Mofutsanyan economic Phumela LM a DM contributions contribution contribution 46.9% to the district 4.6% to Free State 0.2%
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.2)
Figure 4.2 indicates that the Maluti-a-Phofung Local Economy contributed 48.5% towards the district economy in 2010, compared to Phumelela Local Economy’s mere 4.6%. Figure 4.2 furthermore indicates that the Thabo Mofutsanyana District Economy contributed a mere 0.2% towards the provincial economy in 2010.
52 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.2.3 SIZE OF OKHAHLAMBA LOCAL ECONOMY
Figure 4.3: Size of the economy, 2010 (GVA at basic prices)
Size of local economies Size of district economy Other economic Other contributions economic 78.1% contributions 95.3%
Okhamahlam Uthukela DM ba LM contribution contribution to KZN to district 4.7% 21.9%
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.3)
Figure 4.3 indicates that the Okhahlamba Local Economy contributed 21.9% towards the district economy in 2010. Figure 4.3 furthermore indicates that the Uthukela District Economy contributed a mere 4.7% towards the provincial economy in 2010.
This economic contribution is vested in the performance of the ten economic sub-sectors discussed in the subsequent paragraphs.
4.2.4 SIZE OF THE SELECTED TOWN ECONOMIES
4.2.4.1 Order size of town economies, 2010
Figure 4.4: Order size of town economies when compared with one another, 2010
Order size of town economies when compared with one another, 2010
Harrismith 92.0%
Warden 7.3% Van Reenen 0.6%
Source: Demacon, 2011
Findings: (Figure 4.4)
It is evident that the town of Harrismith represents the dominant local economy when compared directly to the other towns. Warden is characterised by a small economy, whereas Van Reenen is characterised by an extremely small local economy.
53 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 This is re-enforced by Map 4.1 reflecting the GVA by mesozone for the various local economies.
4.2.4.2 Size of the towns with reference to the applicable local municipal economies, 2010
Figure 4.5: Harrismith’s Contribution to Maluti-a-Phofung Local Economy, 2010
Harrismith's GVA Contribution to MAP, 2010
Other local economic contributions 81.8%
Harrismith's contribution to MAP 18.2%
Source: Demacon, 2011
Figure 4.6: Warden’s Contribution to Phumelela Local Economy, 2010
Warden's GVA Contribution to Phumelela, 2010
Other local economic contributions 84.7%
Warden's contribution to Phumelela 15.3%
Source: Demacon, 2011
Figure 4.7: Van Reenen’s Contribution to Okhahlamba Local Economy, 2010
Van Reenen's GVA Contribution to Okhahalamba, 2010
Other local economic contributions 99.7%
Van Reenen's contribution to Okhahalamba 0.3%
Source: Demacon, 2011
54 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
Map 4.1: GVA per Mesozone, 2010 (R/million)
55 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Findings: (Figures 4.5 to 4.7)
Harrismith’s local economy contributed 18.2% towards the local municipal economy in 2010, indicating its importance within the region. Warden’s local economy contributed 15.3% towards the local municipal economy in 2010. Van Reenen’s local economy contributed a mere 0.3% towards the local municipal economy in 2010, clearly indicating the insignificance of the town as economic node. This correlates with the Spatial Development Frameworks clearly not listing it as a key economic node/ centre.
4.3 SECTORAL COMPOSITION AND LEVEL OF DIVERSITY
The sectoral composition of economic activity in a region is a good indication of the level of diversification or concentration of a region’s economy and can be measured by the so-called tress index. A tress index of zero represents a totally diversified economy. On the other hand, the higher the index (closer to 100), the more concentrated or vulnerable the region’s economy to exogenous variables such as adverse climatic conditions, commodity price fluctuations, and so on. An increase in the tress index of an area reflects an increase in the dependence of the economy on a single or a few economic activities and is an ostensibly negative trend.
Table 4.1: Tress Index, 1998 and 2008 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
South Africa 39.5 39.5 39.5 40.3 40.4 40.0 40.4 40.6 41.6 41.9 42.4 Free State 31.7 30.5 29.5 31.7 31.0 31.2 31.6 31.6 33.1 33.6 34.3 Thabo Mofutsanyana DM 39.9 38.5 37.1 38.3 38.3 39.1 39.5 39.8 41.3 41.6 41.8 Maluti-a-Phofung LM 46.7 45.4 44.7 44.3 43.7 43.8 44.0 44.6 45.8 46.4 47.2 Phumelela LM 36.6 41 44.9 43.1 43.4 41.8 40.8 40.8 38.8 36.2 35.7 Kwazulu Natal 41.6 43 43.4 43.3 44 43.6 44.1 45 45.8 45.8 45.8 Uthukela DM 44.6 44.9 45 44 44.1 42.8 42.7 42.5 42.4 41.8 40.8 Okhahlamba LM 30.3 30.1 29.4 28.3 28.8 29.7 31.5 35.8 40.8 44.9 47.9 South Africa 39.5 39.5 39.5 40.3 40.4 40.0 40.4 40.6 41.6 41.9 42.4 Source: Demacon Ex. Quantec, 2011
The Maluti-a-Phofung
Tress Index
Local Economy has
60.0
become slightly more
47.2
46.7
47.9
45.8
44.6
42.4
50.0 41.8
41.6
39.9
39.5
40.8
concentrated over the
36.6
35.7
34.3
40.0 31.7
past few years with the 30.3 30.0
tress index increasing Index 20.0 from 46.7 to 47.2. 10.0 The Phumelela Local - Economy has become slightly more diversified
over the past few years Free State
South Africa
DM
UthukelaDM Kwazulu Natal
with the tress index Phumelela LM OkhahlambaLM
declining from 36.6 to
Maluti-a-Phofung LM ThaboMofutsanyane 35.7 1998 2008 The Okhahlamba Local Economy reflected similar trends to that of Maluti-a-Phofung, becoming more concentrated over the past few years, with the tress index increasing from 30.3 to 47.9.
Overall, the three economies reflect relatively concentrated economies reflecting moderate levels of vulnerability underlying each of the economies.
56 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.4 SECTORAL PROFILE –GVA BASED
The economic contributions are contributed by the ten major economic sectors to the total economic production of the local economies and towns.
The ten economic sectors referred to include:
Agriculture - Include establishments that are primarily engaged in farming activities, commercial hunting, game propagation and forestry, logging and fishing). Mining - Includes the extracting and beneficiating of minerals occurring naturally, including solids, liquids and crude petroleum and gases. It also includes underground and surface mines, quarries and the operation of oil and gas wells as well as all supplemental activities for dressing and beneficiating of ores and other crude material): Manufacturing – Manufacturing is defined as the physical or chemical transformation of materials or compounds into new products. The manufacturing sector represents an important economic and employment sector in any economy. The sector also serve as catalyst for supporting economic activities contributing to economic growth within an area and positive spin-off effects on the whole economy. Utilities – It includes electricity, water, gas, buildings and construction. It includes the production, collection and distribution of electricity; the manufacturing of gas; the distribution of gaseous fuels through mains; the collection, purification and distribution of water; and the construction of infrastructure and buildings. Construction – Buildings and construction involves residential building activities; non- residential building; roads, streets and bridges; water schemes and works; sewerage; and other construction activities Trade – The resale (sale without transformation) of new and used goods to the general public for personal or household consumption or use by shops, department stores, stalls, mail-order houses, hawkers and peddlers, consumer co-operatives, etc. Transport and Communication – Providing passenger or freight transport, whether scheduled or not, by rail, road, water or air and auxiliary activities such as terminal and parking facilities, cargo handling and storage, postal activities and telecommunications. Finance and Business Services – Activity of obtaining and redistributing funds, other than for the purpose of insurance, real estate or commercial/business services. Real estate includes the buying, selling, renting and operating of owned or leased real estate, such as flats and dwellings and non-residential buildings; developing and subdividing real estate into lots, etc. Also included are land-jobbers (i.e. property speculators) and the development and sale of land. Business services in this sector refer to the renting of transport equipment and other machinery such as agricultural, construction, computer, and household equipment. Community, Social and Personal Services - Include general activities of community organisations (NGOs), recreational, cultural and sporting activities, and other community, social and personal services. General Government Services - Include general activities of central, provincial and local government such as health and social work, education, infrastructure provision etc. This includes sewage and refuse removal, sanitation and similar activities and military and navy activities.
Subsequent figures illustrate the sectoral profiles for each of the local economies and selected towns.
57 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.4.1 MALUTI-A-PHOFUNG SECTORAL PROFILE (GVA CONTRIBUTION)
Figure 4.8: Maluti-a-Phofung Local Economic Sectoral Profile, 2006 to 2010 Maluti-a-Phofung Local Economy - Sectoral Profile
19.5 General government serv 18.9 15.5 Community, social & personal serv 15.7 21.6 Finance & business serv 19.2 5.9 Transport & communication 6.4 15.5 Trade 16.1 2.4 Construction 2.2 3.1 Utilities 3.8 13.7 Manufacturing 15.1 0.2 Mining 0.5 2.6 Agriculture 2.0 - 5.0 10.0 15.0 20.0 25.0 Contribution (%)
2010 2008 2006
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.8)
The pillars of the local economy include: Finance and Business Services, General Government Services, Trade, Community, social and personal Services and Manufacturing - contributing approximately 85.9% towards the local economy.
The dominant economic sectors include: Finance and Business Services – 21.6% General Government Services – 19.5% Manufacturing – 13.7% Trade – 15.5% Community, social and Personal Services – 15.5%. Of the economic sectors merely four have increased their market share between 2006 and 2010 – General Government Services, Finance and Business Services, Construction and the Agriculture Sector.
58 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.4.2 PHUMELELA SECTORAL PROFILE (GVA CONTRIBUTION)
Figure 4.9: Phumelela Local Economic Sectoral Profile, 2006 to 2010 Phumelela Local Economy - Sectoral Profile
6.6 General government serv 7.9 12.4 Community, social & personal serv 16.1 14.3 Finance & business serv 15.8 6.4 Transport & communication 7.1 12.1 Trade 14.8 2.5 Construction 2.2 2.0 Utilities 2.3 12.8 Manufacturing 10.9 7.3 Mining 1.6 23.6 Agriculture 21.3 - 5.0 10.0 15.0 20.0 25.0 30.0 Contribution (%)
2010 2008 2006
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.9)
The pillars of the local economy include: Agriculture, Finance and Business Services, Manufacturing, Community, Social and Personal Services and - contributing approximately 75.2% towards the local economy. The dominant economic sectors include: Agriculture – 23.6% Finance and Business Services – 14.3% Manufacturing – 12.8% Community, social and Personal Services – 12.4% Trade – 12.1%. Of the economic sectors merely four have increased their market share between 2006 and 2010 – Construction, Manufacturing, Mining and the Agriculture Sector.
59 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.4.3 OKHAHLAMBA SECTORAL PROFILE (GVA CONTRIBUTION)
Figure 4.10: Okhahlamba Local Economic Sectoral Profile, 2006 to 2010 Okhamahlamba Local Economy - Sectoral Profile
9.4 General government serv 10.3 6.0 Community, social & personal serv 7.1 14.9 Finance & business serv 13.5 10.0 Transport & communication 12.4 11.3 Trade 13.6 3.7 Construction 3.3 4.0 Utilities 6.2 28.5 Manufacturing 20.1 0.3 Mining 0.7 12.0 Agriculture 12.9
- 5.0 10.0 15.0 20.0 25.0 30.0 Contribution (%)
2010 2008 2006
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.10)
The pillars of the local economy include: Manufacturing, Finance and Business Services, Agriculture, Trade and General Government Services - contributing approximately 76.0% towards the local economy. The dominant economic sectors include: Manufacturing – 28.5% Finance and Business Services – 14.9% Community, social and Personal Services – 12.4% Agriculture – 12.0% Trade – 11.3% General Government Services – 9.4%. Of the economic sectors merely three have increased their market share between 2006 and 2010 – Finance and Business Services, Construction and Manufacturing.
60 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.4.4 SELECTED TOWNS SECTORAL PROFILE (GVA CONTRIBUTION)
4.4.4.1 Harrismith Sector Profile (GVA contribution)
Figure 4.11: Harrismith Local Economic Sectoral Profile, 2010 Harrismith - Sectoral Profile, GVA 2010
Infrastructure 13.0
Community & General Government Serv 21.5
Finance & Business Serv 27.9
Trade 11.9
Manufacturing 25.7
Mining -
Agriculture 0.0
- 5.0 10.0 15.0 20.0 25.0 30.0 Contribution (%)
Source: Demacon, 2011 Note: Infrastructure includes Utilities, Construction, Transport and Communication.
Findings: (Figure 4.11)
The pillars of the town’s economy include: Finance and Business Services, Manufacturing, Community and General Government Services, Infrastructure and Trade. This is supported in a lesser extent by the Agricultural sector.
Each of these sectors contributed a certain percentage towards the same sector of the local municipal economy:
61 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
4.4.4.2 Warden Sector Profile (GVA contribution)
Figure 4.12: Warden Local Economic Sectoral Profile, 2010 Warden - Sectoral Profile, GVA 2010
Infrastructure 17.1
Community & General Government Serv 18.8
Finance & Business Serv 17.9
Trade 27.7
Manufacturing 17.6
Mining -
Agriculture 0.9
- 5.0 10.0 15.0 20.0 25.0 30.0 Contribution (%)
Source: Demacon, 2011 Note: Infrastructure includes Utilities, Construction, Transport and Communication.
Findings: (Figure 4.12)
The pillars of the town’s economy include: Trade, Community and General Government Services, Finance and Business Services, Manufacturing and Infrastructure. This is supported in a lesser extent by the Agricultural sector.
Each of these sectors contributed a certain percentage towards the same sector of the local municipal economy:
62 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
4.4.4.3 Van Reenen Sector Profile (GVA contribution)
Figure 4.13: Van Reenen Local Economic Sectoral Profile, 2010 Van Reenen - Sectoral Profile, GVA 2010
Infrastructure 31.1
Community & General Government Serv 5.4
Finance & Business Serv -
Trade 15.8
Manufacturing 10.0
Mining -
Agriculture 37.7
- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Contribution (%)
Source: Demacon, 2011 Note: Infrastructure includes Utilities, Construction, Transport and Communication.
Findings: (Figure 4.13)
The pillars of the town’s economy include: Agriculture, Infrastructure, Trade and Manufacturing. This is supported in a lesser extent by the Community and General Government Service’s sectors.
63 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Each of these sectors contributed a certain percentage towards the same sector of the local municipal economy:
The subsequent set of maps illustrates the GVA by mesozone for the various economic sectors as reflected above.
64 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.2: Agriculture GVA per Mesozone, 2010 (R/million)
65 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.3: Mining GVA per Mesozone, 2010 (R/million)
66 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.4: Manufacturing GVA per Mesozone, 2010 (R/million)
67 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.5: Infrastructure GVA per Mesozone, 2010 (R/million)
Note: Infrastructure include the Construction, Utilities and Transport and Communication Sectors
68 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.6: Retail GVA per Mesozone, 2010 (R/million)
69 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.7: Business and Financial Services GVA per Mesozone, 2010 (R/million)
70 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Map 4.8: Government and Community Services GVA per Mesozone, 2010 (R/million)
71 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.5 REGIONAL GROWTH TRENDS
The assessment in the following sections serves to highlight sub-regional growth trends in the market. Future investment opportunities will be informed by this sub-regional assessment. Figures 4.14 and 4.15 provide detail on the growth performance of the local economies in respect of the district, provincial and national economies between 1995 and 2010.
4.5.1 MALUTI-A-PHOFUNG AND PHUMELELA ECONOMIC GROWTH TRENDS
Figure 4.14: Maluti-a-Phofung and Phumelela Economy Growth, 1995 to 2010 (GVA at basic prices)
Economic Performance
25.0 20.0
15.0
10.0 5.5 5.3 4.1 4.0 2.8 3.1 2.6 3.9 5.0 2.4 1.3 2.0 2.3 (0.6) (0.4)
Growth (%) (1.1) - (5.0)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
National Free State Thabo Mofutsanyana DM Maluti-a-Phufong LM Phumelela LM
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.14)
The local, district and provincial economies reflected a similar growth trend pattern as the national economy. The average annual growth rate of the national economy over this period amounted to 3.3% per annum, the provincial economy amounted to 2.4% per annum, the district economy to 2.6% per annum and the Maluti-a-Phofung economy to 2.5% per annum and Phumelela to 3.0% per annum.
4.5.2 OKHAHLAMBA AND PHUMELELA ECONOMIC GROWTH TRENDS
Figure 4.15: Okhahlamba Economy Growth, 1995 to 2010 (GVA at basic prices)
Economic Performance
18.0 15.2 16.0 13.8 13.3 12.0 12.6 14.0 11.1 10.5 10.7
12.0 9.6 9.3 7.7 10.0 6.5 6.7 8.0 6.1 6.0 4.0 1.9 Growth (%) 2.0 - (2.0)
(4.0)
1998-1999 2001-2002 1995-1996 1996-1997 1997-1998 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
National KZN Uthukela DM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
72 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Findings: (Figure 4.15)
The average annual growth rate of the national economy over this period amounted to 3.3% per annum, the provincial economy amounted to 3.4% per annum, the district economy to 5.1% per annum and the Okhahlamba economy to 9.8%.
Development implications Economic growth in the local economies reflects a similar cyclical trend that correlates with growth trends experienced in the SA domestic economy over the same period of time. Most notable negative impacts that had a lagged effect on domestic demand and consumer expenditure include the 1997/1998 Asian Crisis (more commonly referred to as the Asian Flu), followed by record high prime lending rates of 25.5% in August 1998 and all time high exchange rates in January 2002 (R16.64:1£ and R11.61:1$). The global financial crisis that erupted in 2007 and progressively spread to the real economy resulted in world output growth slowing to 3% in 2008, from 5.2% the previous year. Economic conditions continued deteriorating well into 2009, with output estimated by the International Monetary Fund (IMF) to have declined by 0.6%. As global demand waned and production levels were curtailed, world trade registered a staggering 12% contraction in 2009, according to the World Trade Organisation (WTO). This followed a dismal 2% growth in the volume of world trade in 2008. The global economy emerged from recession in 2010, although the pace of recovery has varied substantially across regions, and particularly at country level. Certain emerging and developing economies, especially those that managed to side-step a recession quite effectively, such as China and India, have seen a visible improvement in their growth momentum. Nevertheless, a number of emerging economies continue experiencing difficulties in resuming and sustaining higher growth trajectories. In South Africa, signs of recovery from the economy’s first recession in 17 years gradually emerged during the last six months of 2009. Gross domestic product (GDP) expanded in real terms by 3.1% (on a quarter-on-quarter basis) in the fourth quarter of 2009, accelerating to 4.6% in the first quarter of 2010. However, economic growth slowed to 2.8% and 2.6% in the subsequent two quarters of 2010 respectively. Although the global economic recovery has been swifter than initially anticipated, its multi- speed characteristics have become more pronounced and the momentum has lost some steam in several advanced economies. Fiscal austerity measures in several countries, particularly in Europe, high unemployment rates and yet excessive household indebtedness underpin expectations of a slowdown, particularly in the industrialised nations, and rising concerns over the sustainability of the global economic recovery. Recently announced by the United States authorities, the second round of quantitative easing (known as QE2 and amounting to a massive US$600 billion) reflects this uneasiness. The South African economy continued to report growth in economic activity during the opening six months of 2010, although there have been signs of the momentum being weaker than initially anticipated. The recovery in demand has been slow, especially from the household segment, as well as externally. After reducing inventory levels during the recession, companies eventually started rebuilding them, resulting in an upturn in production, albeit still at levels below those reached in 2008 for most economic sectors. The local business cycle reflects a negative trend with reference to 2007 to 2009. The local business cycle follows the national cycle closely. In the context of the national recovery - including economic growth and retail sales - local economic growth and growth in disposable income is expected to reveal a similar recovery trend since 2009. Furthermore, the improving economic climate is emphasised by the following criteria: Inflation back within target band of 3% - 6%
73 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Another interest rate cut of 50 basis points (prime rate currently at 9%) House prices starting to recover Car sales up 20% Manufactured prices and employment improving Retailers such as Clicks and Mr Price reporting trading pick-up Latest Leading indicator of May 2011 (barometer of economic growth) declining slightly to 131.5 index level – rising nearly every month since March 2009 (signalling the end of the economic recession). For 2011 household consumption is forecasted to grow at 5.0% (from 4.4% in 2010) and for fixed investment spending to improve to 2.5% (-3.7% in 2010) which should put overall GDP growth at 3.9% - a welcomed improvement from 2.8% in 2010 though well-below the mid-5% growth rates measured in 2005-07. Further ahead, we expect fixed investment spending to contribute more meaningfully in 2012 (at 5.9%) which should place economic growth at a slightly higher 4.1%.
4.6 LABOUR AND EMPLOYMENT
Labour and employment also impacts on the effectiveness of a region’s economy. In general the labour force refers to those people who are available for employment in a certain areas. There are a number of components linked to the labour force – refer to Diagram 4.1.
Diagram 4.1: Composition of the Labour Force,
Source: DBSA, 2001
Impact of global economic crisis on domestic employment levels The impact of the global economic crisis on employment levels in South Africa has been devastating, with almost 780 000 jobs lost during the 18 months to June 2010 in the South African economy, including the informal sector as reported in the Quarterly Labour Force Survey. In the formal sectors, employment losses amounted to around 350 000, with the majority of the job losses in 2009 reported by the services sectors. The manufacturing sector shed 99 673 and the agriculture, forestry and fishing sector lost 95 491, while the mining and quarrying sector reported 28 621 employment losses. In an attempt to reduce costs and raise productivity, the farming community has increasingly considered mechanisation alternatives. This is of particular concern since the overall sector accounts for 6.4% of total employment in the economy and mostly in the low skilled and rural categories.
74 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.6.1 SIZE OF THE LOCAL ECONOMIES WITH REFERENCE TO EMPLOYMENT
4.6.1.1 Local Economy Order Size – Formal and Informal Employment, 2010
Figure 4.16 indicates the order size of the local economies when compared directly to one another in terms of formal and informal employment.
Figure 4.16: Order size of local economies in terms of Formal and Informal Employment, 2010
Order size of local economies - Total Employment, 2010
P4D04M04: Maluti a Phofung Local Municipality 68.2% P4D04M05: Phumelela Local Municipality 8.0%
P5D03M04: Okhahlamba Local Municipality 23.8%
Source: Demacon, 2011
First order: Maluti-a-Phofung reflects the largest local economy in terms of formal and informal employment concentrations. Second order – Okhahlamba reflects the second largest local economy in terms of formal and informal employment. Third order – Phumelela reflects the smallest local economy when compared directly to the other local economies’ labour force figures.
The following figures provide an indication of the local economies contribution towards the applicable district economies.
75 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.6.1.2 Maluti-a-Phofung and Phumelela Labour Contributions to District Economy, 2010
Figure 4.17: Local economy labour force (formally and informally employed segment)
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.17)
Figure 4.17 indicates that the Maluti-a-Phofung local economy contributes 47.6% of formal employees and 47.8% of informal employees towards the district labour force Figure 4.17 indicates that the Phumelela local economy contributes 5.6% of formal employees and 5.5% of informal employees towards the district labour force.
Figure 4.18: Formal and Informal Employment Figures, 1996 to 2010
Source: Demacon Ex. Quantec, 2011
76 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.6.1.3 Okhahlamba Labour Contributions to District Economy, 2010
Figure 4.19: Local economy labour force (formally and informally employed segment)
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.19)
Figure 4.19 indicates that the Okhahlamba local economy contributes 21.0% of formal employees and 20.3% of informal employees towards the district labour force.
Figure 4.20: Formal and Informal Employment Figures, 1996 to 2010
Source: Demacon Ex. Quantec, 2011
77 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.6.2 SIZE OF THE SELECTED TOWN ECONOMIES IN TERMS OF TOTAL EMPLOYMENT
4.6.2.1 Order size of town economies – Total Employment, 2010
Figure 4.21: Order size of town economies (total employment) when compared with one another, 2010
Order size of town employment compared with one another, 2010
Harrismith 90.5%
Warden 8.9% Van Reenen 0.6%
Source: Demacon, 2011
Findings: (Figure 4.21)
It is evident that the town of Harrismith represents the dominant employer when compared directly to the other towns. Warden is characterised by a moderate employment figure, compared to the very small figure of the town of Van Reenen.
4.6.2.2 Size of the towns with reference to the applicable local municipal economies in terms of total employment, 2010
Figure 4.22: Harrismith’s Contribution to Maluti-a-Phofung Total Employment, 2010
Harrismith's contribution to total employment of MAP, 2010
Other 84.0%
Harrismith 16.0%
Source: Demacon, 2011
78 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.23: Warden’s Contribution to Phumelela Total Employment, 2010
Warden's contribution to total employment of MAP, 2010
Other 86.6%
Warden 13.4%
Source: Demacon, 2011
Figure 4.24: Van Reenen’s Contribution to Okhahlamba Total Employment, 2010
Van Reenen's contribution to total employment of MAP, 2010
Other 99.7%
Van Reenen 0.3%
Source: Demacon, 2011
Findings: (Figures 4.22 to 4.24)
Harrismith’s local economy contributed 16.0% towards the local municipal economy’s total employment in 2010, indicating its importance within the region. Warden’s local economy contributed 13.4% towards the local municipal economy’s employment figure in 2010. Van Reenen’s local economy contributed a mere 0.3% towards the local municipal employment figure in 2010, clearly indicating the insignificance of the town as economic node. This correlates with the Spatial Development Frameworks clearly not listing it as a key economic node/ centre.
4.7 SECTORAL PROFILE - EMPLOYMENT
Subsequent paragraphs provide a more in-depth assessment of the structure of the local economies from a labour perspective.
79 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.7.1 MALUTI-A-PHOFUNG EMPLOYMENT SECTORAL PROFILE
Figure 4.25: Maluti-a-Phofung Employment Sectoral Profile, 2006 to 2010
Maluti-a-Phofung Local Employment - Sectoral Profile
21.6 General government serv 19.9 16.0 Community, social & personal serv 14.9 11.1 Finance & business serv 9.8 2.6 Transport & communication 2.7 26.3 Trade 25.7 5.9 Construction 7.1 0.3 Utilities 0.3 10.9 Manufacturing 14.5 0.1 Mining 0.3 5.2 Agriculture 4.8 - 5.0 10.0 15.0 20.0 25.0 30.0 Contribution (%)
2010 2008 2006
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.25)
The dominant employment sectors include: Trade – 26.3% General Government Services – 21.6%. Community, Social and Personal Services – 16.0% Finance and Business Services – 11.1% Manufacturing – 10.9%. Of the employment sectors five have increased their market share between 2006 and 2010 including General Government Services, Community, Social and Personal Services, Finance and Business Services, Trade and Agriculture.
80 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.7.2 PHUMELELA EMPLOYMENT SECTORAL PROFILE
Figure 4.26: Phumelela Local Economy Employment Sectoral Profile, 2006 to 2010
Phumelela Local Employment - Sectoral Profile
5.8 General government serv 5.9 15.6 Community, social & personal serv 19.9 4.2 Finance & business serv 4.4 3.0 Transport & communication 2.3 16.6 Trade 17.2 4.9 Construction 5.2 0.2 Utilities 0.1 6.2 Manufacturing 4.8 0.6 Mining 0.8 42.9 Agriculture 39.3 - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Contribution (%)
2010 2008 2006
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.26)
The dominant employment sectors include: Agriculture – 42.9% Trade – 16.6% Community, Social and Personal Services – 15.6% Manufacturing – 6.2%. General Government Services – 5.8%. Of the employment sectors four have increased their market share between 2006 and 2010 including Transport and Communication, Utilities, Manufacturing and Agriculture.
81 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.7.3 OKHAHLAMBA EMPLOYMENT SECTORAL PROFILE
Figure 4.27: Okhahlamba Local Economy Employment Sectoral Profile, 2006 to 2010
Okhamahlamba Local Employment - Sectoral Profile
10.4 General government serv 8.2 18.1 Community, social & personal serv 17.5 10.9 Finance & business serv 7.5 5.0 Transport & communication 4.2 19.3 Trade 20.4 9.3 Construction 7.9 0.4 Utilities 0.6 15.8 Manufacturing 9.8 0.2 Mining 0.1 10.6 Agriculture 23.7
- 5.0 10.0 15.0 20.0 25.0 Contribution (%)
2010 2008 2006
Source: Demacon Ex. Quantec, 2011
Findings: (Figure 4.27)
The dominant employment sectors include: Trade – 19.3% Community, Social and Personal Services – 18.1% Manufacturing – 15.8% Finance and Business Services – 10.9% Agriculture – 10.6%.
Of the employment sectors seven have increased their market share between 2006 and 2010 including General Government Services, Community, Social and Personal Services, Finance and Business Services, Transport and Communication, Construction, Manufacturing and Mining.
82 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.7.4 SELECTED TOWNS SECTORAL PROFILE (TOTAL EMPLOYMENT CONTRIBUTION)
4.7.4.1 Harrismith Sector Profile (Total Employment contribution)
Figure 4.28: Harrismith Total Employment Sectoral Profile, 2010 Harrismith - Employment Sectoral Profile, 2010
Infrastructure 11.5
Community & General Government Serv 26.2
Finance & Business Serv 16.3
Trade 22.8
Manufacturing 23.1
Mining -
Agriculture 0.1
- 5.0 10.0 15.0 20.0 25.0 30.0 Contribution (%)
Source: Demacon, 2011 Note: Infrastructure includes Utilities, Construction, Transport and Communication.
Findings: (Figure 4.28)
The employment pillars of the town include: Community and General Government Services, Manufacturing, Trade and Finance and Business Services. This is supported in a lesser extent by the Infrastructure and Agricultural sectors.
4.7.4.2 Warden Sector Profile (Total Employment contribution)
Figure 4.29: Warden Total Employment Economic Sectoral Profile, 2010 Warden - Employment Sectoral Profile, 2010
Infrastructure 14.5
Community & General Government Serv 24.2
Finance & Business Serv 6.0
Trade 43.6
Manufacturing 9.9
Mining -
Agriculture 1.8
- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 50.0 Contribution (%)
Source: Demacon, 2011 Note: Infrastructure includes Utilities, Construction, Transport and Communication.
Findings: (Figure 4.29)
The employment pillars of the town include: Trade, Community and General Government Services and Infrastructure. This is supported in a lesser extent by the Finance and Business Services, Manufacturing and Agricultural sectors.
83 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.7.4.3 Van Reenen Sector Profile (Total Employment contribution)
Figure 4.30: Van Reenen Total Employment Sectoral Profile, 2010 Van Reenen - Employmnet Sectoral Profile, 2010
Infrastructure 25.4
Community & General Government Serv 9.8
Finance & Business Serv -
Trade 26.6
Manufacturing 5.5
Mining -
Agriculture 32.8
- 5.0 10.0 15.0 20.0 25.0 30.0 35.0 Contribution (%)
Source: Demacon, 2011 Note: Infrastructure includes Utilities, Construction, Transport and Communication.
Findings: (Figure 4.30)
The employment pillars of the town include: Agriculture, Trade and Infrastructure. This is supported in a lesser extent by the Community and General Government Services and Manufacturing sectors.
4.8 LABOUR FORCE GROWTH TRENDS
Figure 4.31: Maluti-a-Phofung Local Economy Formal and Informal Employment Growth, 1995 to 2010
Employment Performance - Maluti-a-Phofung
25.0 20.0
15.0 20.4
10.0 3.8 11.8 1.1 5.0 0.4 (0.4) (0.4) 0.6 0.9 0.2 (1.2) (0.6) (1.9) (2.0) (1.9) (1.3) Growth (%) 5.4 5.3 6.1 (3.8) - 4.0 3.8 2.4 1.2 1.9 (5.0) 0.8 (0.5) 0.2 (2.9)
(10.0) (5.1)
1999-2000 2007-2008 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2008-2009 2009-2010
Formal Informal Total
Source: Demacon Ex. Quantec, 2011
It is evident that the formal employment segment reflected more stable/consistent growth over this time period compared to the formal sector. The average annual employment growth rates over this time period amounted to (-0.4%) per annum for the formal employment segment and 3.6% per annum for the informal employment segment.
84 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.32: Phumelela Local Economy Formal and Informal Employment Growth, 1995 to 2010
Employment Performance - Phumelela
30.0 25.0 20.0 25.6
15.0 10.0 6.1 5.2 2.4 2.4 1.4 0.5 5.0 0.2 (1.3) 7.6 (4.2) 8.2 (4.0) (3.1) Growth (%) - 4.3 (6.2) (6.8) (6.1) (5.6) 3.0 2.3 2.2 (5.0) 1.0 (2.2) (2.5) (2.5) (1.2) (10.0) (7.5) (6.9)
(15.0) (8.3)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Formal Informal Total
Source: Demacon Ex. Quantec, 2011
It is evident that the formal employment segment reflected more stable/consistent growth over this time period compared to the formal sector. The average annual employment growth rates over this time period amounted to (-1.3%) per annum for the formal employment segment and 1.5% per annum for the informal employment segment.
Figure 4.33: Okhahlamba Local Economy Formal and Informal Employment Growth, 1995 to 2010
Employment Performance - Okhahlamba
25.0 20.0 20.2 15.0 19.7
10.0 4.6 4.6 4.5 5.0 5.0 5.1 5.2 4.3 3.9 3.9 4.4 3.0 5.0 1.8 10.7 7.4 8.5 7.1 (1.3) Growth (%) 6.7 5.3 6.3 (3.2) - 3.6 4.9 4.7 (5.0) 0.2 (0.8) (10.0)
(7.7)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Formal Informal Total
Source: Demacon Ex. Quantec, 2011
It is evident that the formal employment segment reflected more stable/consistent growth over this time period compared to the formal sector. The average annual employment growth rates over this time period amounted to 3.4% per annum for the formal employment segment and 6.5% per annum for the informal employment segment.
4.9 SKILLS BASE AND GROWTH TRENDS
The employed market segment also reflected their various skill levels – the subsequent sets of figures reflect these skill segments and their underlying growth trends.
85 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.9.1 MALUTI-A-PHOFUNG SKILLS BASE AND GROWTH
Figure 4.34: Maluti-a-Phofung Local Economy Skills level of the employed, 2000 to 2010
Source: Demacon Ex. Quantec, 2011
Figure 4.35: Maluti-a-Phofung Local Economy Skills Level Growth Trends, 1995 to 2010
Skills Level Growth
6.0 3.2 4.0 2.0 2.1 1.4 1.5 2.0 1.2 0.8 1.1 0.8
2.0 (0.3) (0.5) 0.1 (1.2) - (2.8) (2.0)
Growth (%) (4.0) (6.0)
(8.0)
2001-2002 2009-2010 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Highly Skilled Skilled Semi- and Unskilled
Source: Demacon Ex. Quantec, 2011
Findings: (Figures 4.34 and 4.35)
It is evident that the largest segment of the employed represents skilled employees (45.6%), followed by slightly smaller segment of semi- and unskilled employees (41.5%) and a much smaller segment of highly skilled employees (12.9%). The various skill categories reflected similar growth patterns. The average annual growth rates obtained over this time period by the three skills categories amounted to (-1.7%) for the highly skilled, 0.8% for the skilled segment and (-1.2%) for the semi and unskilled segment.
86 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.9.2 PHUMELELA SKILLS BASE AND GROWTH
Figure 4.36: Phumelela Local Economy Skills level of the employed, 2000 to 2010
Source: Demacon Ex. Quantec, 2011
Figure 4.37: Phumelela Local Economy Skills Level Growth Trends, 1995 to 2010
Skills Level Growth - Phumelela
10.0 8.0 6.0 4.0 2.0 - (2.0)
Growth (%) (4.0) (6.0) (8.0)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Highly Skilled Skilled Semi- and Unskilled
Source: Demacon Ex. Quantec, 2011
Findings: (Figures 4.36 and 4.37)
It is evident that the largest segment of the employed represents semi- and unskilled employees (61.6%), followed by a moderate segment of skilled employees (31.7%) and a small segment of highly skilled employees (6.7%). The various skill categories reflected similar growth patterns. The average annual growth rates obtained over this time period by the three skills categories amounted to (-2.0%) for the highly skilled, (-0.7%) for the skilled segment and (-1.4%) for the semi and unskilled segment.
87 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 4.9.3 OKHAHLAMBA SKILLS BASE AND GROWTH
Figure 4.38: Okhahlamba Local Economy Skills level of the employed, 2000 to 2010
Source: Demacon Ex. Quantec, 2011
Figure 4.39: Okhahlamba Local Economy Skills Level Growth Trends, 1995 to 2010
Skills Level Growth - Okhahlamba
10.0 6.8 8.0 6.5 6.2 5.3 5.8 5.2 5.2 4.4 4.6 4.5 4.8 6.0 3.6 4.0 2.4 0.7 2.0 (0.7) -
Growth (%) (2.0) (4.0) (6.0)
(8.0)
1998-1999 2001-2002 1995-1996 1996-1997 1997-1998 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Highly Skilled Skilled Semi- and Unskilled
Source: Demacon Ex. Quantec, 2011
Findings: (Figures 4.38 and 4.39)
It is evident that the largest segment of the employed represents semi- and unskilled employees (50.0%), followed by a moderate segment of skilled employees (39.3%) and a small segment of highly skilled employees (10.7%). The various skill categories reflected similar growth patterns. The average annual growth rates obtained over this time period by the three skills categories amounted to 5.9% for the highly skilled, 4.3% for the skilled segment and 2.3% for the semi and unskilled segment.
4.10 SECTORAL GVA AND EMPLOYMENT GROWTH TRENDS
A detailed sectoral GVA and employment growth trend analysis are provided within Annexure A. Subsequent table merely indicates the top five growth sectors related to GVA and employment on a municipal basis.
88 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 4.2: Dominant GVA and Employment Growth Sectors, average annual growth between 1995 and 2010 Dominant Employment Growth Dominant GVA Growth Sectors Growth (%) Growth (%) Sectors Maluti-a-Phofung Agriculture 21.5 Agriculture 5.6 Finance and Business Services 4.7 Finance and Business Services 3.5 Manufacturing 3.9 Trade 3.1 Trade 3.3 Utilities 2.1 Community, Social and Personal Community, Social and Personal 2.2 (0.4) Services Services Phumelela Agriculture 14.8 Finance and Business Services 2.3 Finance and Business Services 4.9 Agriculture 1.0 Utilities 1.2 Trade 0.5 Manufacturing 0.9 Utilities 0.2 Trade 0.8 General Government Services (2.2) Okhahlamba Finance and Business Services 18.3 Finance and Business Services 15.3 Construction 13.9 General Government Services 7.6 Transport and Communication 10.6 Construction 7.1 Community, Social and Personal 8.0 6.9 Trade Services Community, Social and Personal 8.0 6.0 Services Transport and Communication Source: Demacon, 2011
4.11 COMPETITIVE AND COMPARATIVE ADVANTAGE ANALYSIS
Competitive Advantage Analysis (CAA) is an assessment of the structure and performance of the economy of an area, to identify local strengths (“competitive advantages”) and potential for economic development. Actually, a full competitive advantage analysis would include an examination of local infrastructure, markets, labour force, amenities, access to transportation routes, etc. The approach outlined here doesn’t go that far. Instead, it focuses on examining local industries/sectors to identify leading and lagging sectors and their prospects for employment growth.
The detailed analysis is provided within Annexure A, a summary of the key findings are merely presented in this section.
4.11.1 LEADING-LAGGING ANALYSIS
This analysis aims to examine the employment growth of the local economy in terms of the district economy. This analysis uses sector employment growth rates to produce two key values:
District Sector Relative Growth (DSRG) – Growth of the sector higher or lower than overall district growth Local Sector Relative Growth (LSRG) – Growth of the sector higher or lower than the same sector on district level.
Figures 4.40, 4.41 and 4.42 illustrate the leading lagging analysis graphically for each of the local economies.
89 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.40: Leading/Lagging Analysis – Maluti-a-Phofung Local Economy Main Sectors, 2005 to 2010 50% Leading 45% 40% 35% 30% Finance and business
services 25% 20% 15% Agriculture, forestry and 10% fishing Trade 5% Community, social and Lagging other personal services General government Leading 0% services -5% Construction -10% -15% Manufacturing Transport & -20% communication
Local Local Employment Sector Relative Growth -25% Electricity & water -30% -35% -40% -45% Mining Lagging -50% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% District Employment Sector Relative Growth
Source: Demacon, 2011
Figure 4.41: Leading/Lagging Analysis – Phumelela Local Economy Main Sectors, 2005 to 2010 50% Leading 45% 40% Manufacturing 35% 30%
25% 20% 15% Mining 10% 5% Lagging Leading 0% Transport & Agriculture, forestry and communication -5% fishing Construction -10% Finance and business Electricity & water Trade -15% services -20%
Local Local Employment Sector Relative Growth -25% General government -30% services -35% Community, social and -40% other personal services -45% Lagging -50% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% District Employment Sector Relative Growth
Source: Demacon, 2011
90 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
Figure 4.42: Leading/Lagging Analysis – Okhahlamba Local Economy Main Sectors, 2005 to 2010
150% Leading 140% Manufacturing 130% 120% 110% 100% 90% 80% Finance and business 70% services 60% 50% Construction 40% Community, social and 30% other personal services Transport & 20% communication 10% Lagging Leading 0% General government services -10% Trade -20% Agriculture, forestry and -30% fishing Electricity & water -40% -50% -60% Mining
Local Local Employment Sector Relative Growth -70% -80% -90% -100% -110% -120% -130% -140% -150% Lagging -120% -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% District Employment Sector Relative Growth
Source: Demacon, 2011
4.11.2 CARVALHO CLASSIFICATION
The Carvalho Classification has been developed in 2000 by Dr. Emanuel Carvalho from the University of Waterloo in collaboration with OMAFRA CED Unit staff. Three values are combined in the classification – Location Quotient, DRSG and LRSG. It is important to note that these categories are descriptive and not pre-scriptive. It provides a multi-dimensional indication of the suitability of sectors, supported by tools and instruments that could be utilised in the development of these sectors.
Table 4.3: Carvalho Classification, 2005 to 2010 Maluti-a-Phofung Phumelela Okhahlamba Driving, accelerating and Trade None Construction rising sectors General Government Trade Services Transport and Growing at local and Finance and Business Communication district level Services Finance and Business Community, Social Services and Personal Services Community, Social and Personal Services General Government Services
Evolving, transitional and Agriculture Agriculture Agriculture moderate sectors Manufacturing Manufacturing Mining Growing faster at local than district level Promising, yielding and Utilities Construction Mining modest sectors Construction Trade
91 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung Phumelela Okhahlamba Growing slower at local Transport and Transport and level than at district level Communication Communication Community, Social and Personal Services Utilities Finance and Business Services General Government Services Challenging sectors Manufacturing None Utilities
High concentration of employment – however, not growing at local or district level Vulnerable and marginal Mining None None sectors
Relatively unrepresented in economy Source: Demacon, 2011
4.11.3 INDUSTRY TARGET CLASSIFICATION
This classification is similar to that of the Carvalho Model in that it is based on a combination of the location quotient, District Sector Growth and LSRG values and it is expressed qualitative not quantitative. It is somewhat different in the way that it classifies the sectors, the categories are phrases that suggest the kind of prospects for growth that could be expected and in some cases, whether the sector should be a retention target.
Table 4.4: Local Economy Industry Target Classification, 2005 to 2010 Maluti-a-Phofung Phumelela Okhahlamba Leading Sectors Current and Emerging Community, social and None Construction Strengths personal services Trade General government Transport and LSRG leading (grow services Communication faster than district) and DG positive Finance and business services Community, social and personal services General government services
Prospects limited by Agriculture Agriculture Agriculture external trends and weak Trade Manufacturing base Finance and business
services LSRG leading (grow faster than district) and DG negative
Lagging Sectors High priority retention Utilities Construction Mining target and prospects Construction Transport and limited by weak base and Transport and Communication declining competitiveness communication Community, social and
LSRG lagging (grow personal services slower than district) and General government DG positive services Mining
92 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung Phumelela Okhahlamba
Prospects limited by Mining Utilities Manufacturing external trends and Manufacturing Trade Utilities declining competitiveness Finance and business and prospects limited services overall
LSRG lagging (grow slower than district) and DG negative Source: Demacon, 2011
The industry target classification is displayed graphically in Figures 4.43, 4.44 and 4.45. The size of the circles represents the location quotient, that is, the relative size of the sector.
Figure 4.43: Maluti-a-Phofung Classification System, 2005 to 2010
50.0% Expanding Prospects Limited Market Share Current and Emerging 45.0% External trends & weak Strengths 40.0% base 35.0% Finance and business services 30.0% 25.0%
20.0% Wholesale & retail trade; 15.0% catering and Agriculture, forestry and accommodation 10.0% fishing Community, social and 5.0% other personal services Declining Expanding 0.0% Market General government Market -5.0% services -10.0% Construction -15.0% Transport &
Local Local Sector Relative Growth(%) communication -20.0% Manufacturing -25.0% Electricity & water -30.0% -35.0% Prospects Limited Retention Targets -40.0% External trends & declining Prospects limited by Declining weak base & declining -45.0% competitiveness / Mining Market Share competitiveness
-50.0% limited overall
0.0% 5.0%
-5.0%
30.0% 40.0% 50.0% 10.0% 15.0% 20.0% 25.0% 35.0% 45.0% 55.0% 60.0%
-55.0% -50.0% -45.0% -40.0% -35.0% -30.0% -25.0% -20.0% -15.0% -10.0% -60.0% District Sectoral Growth (%) Source: Demacon, 2011
93 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.44: Phumelela Classification System, 2005 to 2010 50.0% Prospects Limited Expanding Current and Emerging 45.0% External trends & weak Market Share Strengths 40.0% base 35.0% Manufacturing 30.0% 25.0%
20.0%
15.0% Agriculture, forestry and Mining 10.0% fishing 5.0% Declining 0.0% Construction Transport & Expanding Market communication Market -5.0% -10.0% Wholesale & retail trade; -15.0% catering and accommodation
Local Local Sector Relative Growth(%) Finance and business -20.0% services Electricity & water -25.0% -30.0% General government -35.0% Prospects Limited services External trends & Community, social and Retention Targets -40.0% declining other personal services Prospects limited by -45.0% competitiveness / weak base & declining limited overall Declining competitiveness
-50.0% Market Share
0.0% 5.0%
-5.0%
25.0% 30.0% 35.0% 40.0% 45.0% 10.0% 15.0% 20.0% 50.0%
-50.0% -45.0% -40.0% -35.0% -30.0% -25.0% -20.0% -15.0% -10.0% District Sectoral Growth (%) Source: Demacon, 2011
Figure 4.45: Okhahlamba Classification System, 2005 to 2010 190.0% Expanding 180.0% Prospects Limited Market Share Current and Emerging 170.0% External trends & weak Strengths Manufacturing 160.0% base 150.0% 140.0% 130.0% 120.0% 110.0% 100.0% Finance and business 90.0% services 80.0% 70.0% Construction 60.0% 50.0% Transport & 40.0% communication 30.0% Agriculture, forestry and 20.0% fishing Community, social and other personal services 10.0% Declining Expanding 0.0% General government -10.0% Market services Market -20.0% Electricity & water -30.0% Wholesale & retail trade; -40.0% catering and -50.0% accommodation Mining -60.0% Local Local Sector Relative Growth(%) -70.0% -80.0% -90.0% -100.0% -110.0% -120.0% -130.0% -140.0% Prospects Limited -150.0% External trends & Retention Targets -160.0% declining Prospects limited by -170.0% competitiveness / Declining weak base & declining -180.0% limited overall Market Share
-190.0% competitiveness
0.0%
30.0% 10.0% 20.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
-60.0% -90.0% -80.0% -70.0% -50.0% -40.0% -30.0% -20.0% -10.0%
120.0% 100.0% 110.0% 130.0% 140.0%
-130.0% -120.0% -110.0% -100.0% -140.0% District Sectoral Growth (%) Source: Demacon, 2011
94 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Sectors located in the top and bottom left quadrants are considered having limited prospects because these industries are declining in the aggregate economy. If they are small they have additional challenges and if they are within the negative range in terms of LSRG, they also suffer from declining competitiveness.
In business terminology the upper left quadrant reflect industry groups that are increasing their market share in a declining market, industries in the lower left quadrant represents industries that are losing market share in a declining market.
Sectors falling within the lower right quadrant are classified as retention targets (if large enough) because they are growing in the aggregate economy but more slowly locally. Smaller industry groups in this quadrant are deemed to have limited prospects.
Sectors within the upper right quadrant are growing in the aggregate economy and locally. These industries represent the strengths and emerging strengths of the local economy. If the circles are large it represents current strengths and if the circles are smaller then it reflects emerging strengths.
In business terminology industries in the upper right quadrant are increasing their market share in an expanding market, whereas the industries in the lower right quadrant are losing market share in an expanding market.
4.12 SYNTHESIS
This chapter provided an assessment of each of the local economies in the context of the district, provincial and national economies. Table 4.5 provides a summary of the economic profiles of the respective local economies.
Table 4.5: Economic Profiles of the Respective Local Economies Economic Characteristic Maluti-a-Phofung Phumelela Okhahlamba Local Economy contribution 48.5% 4.6% 21.9% to District GVA 2010 Local GVA Pillars 2010 Finance and Business Agriculture: 23.6% Manufacturing – Services – 21.6% Finance and Business 28.5% General Government Services – 14.3% Finance and Business Services – 19.5% Manufacturing – Services – 14.9% Trade – 15.5% 12.8% Agriculture: 12.0% Community, Social and Community, Social Trade – 11.3 Personal Services – and Personal Services General Government 15.5% – 12.4 Services – 9.4% Manufacturing – 13.7% Trade – 12.1% Economic Growth – 2.5% 3.0% 9.8% Average annual growth 1995 to 2010 GVA top growth sectors – Agriculture – 21.5% Agriculture – 14.8% Finance and Business 1995 to 2010 average Finance and Business Finance and Business services – 18.3% annual growth services – 4.7% services – 4.9% Construction – 13.9% Manufacturing – 3.9% Utilities – 1.2% Transport and Trade – 3.3% Manufacturing – 0.9% communication – Community, social and Trade – 0.8% 10.6% personal services – 2.2% Transport and Communication – 8.0% Community, social and personal services – 8.0% Tress Index 2008 47.2- relatively 35.7- slightly more 47.9- relatively concentrated economy diverse economy concentrated economy Formal employment 47.6% 5.6% 21.0% contribution to district 2010 Informal employment 47.8% 5.5% 20.3% contribution to district 2010 Local Employment Pillars Trade – 26.3% Agriculture – 42.9% Manufacturing –
95 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Economic Characteristic Maluti-a-Phofung Phumelela Okhahlamba 2010 General Government Trade – 16.6% 28.5% Services – 21.6% Community, Social Finance and Business Community, Social and and Personal Services Services – 14.9% Personal Services – – 15.6% Agriculture – 12.0% 16.0% Manufacturing – 6.2% Trade – 11.3% Finance and Business General Government General Government Services – 11.1% Services – 5.8% Services – 9.4% Manufacturing – 10.9% Formal Employment Growth -0.4% – 1.37% 3.4% - Average annual growth 1995 to 2010 Informal Employment 3.6% 1.5% 6.5% Growth – Average annual growth 1995 to 2010 Formal Employment top Agriculture – 5.6% Finance and Business Finance and Business growth sectors – 1995 to Finance and Business services – 2.3% services – 15.3% 2010 average annual Services – 3.5% Agriculture – 1.0% General government growth Trade – 3.1% Trade – 3.1% services – 7.6% Utilities – 2.1% Utilities – 2.1% Construction – 7.1% Community, social and Community, social and Community, social and personal services – (- personal services – (- personal services – 0.4%) 0.4%) 6.9% Transport and communication – 6.0% Skills Profile 2010 Highly skilled labour – Highly skilled labour – Highly skilled labour – 12.9% 6.7% 10.7% Skilled labour – 45.6% Skilled labour – 31.7% Skilled labour – 39.3% Semi and unskilled Semi and unskilled Semi and unskilled labour – 41.5% labour – 61.6% labour – 50.0% Skills growth trends – 1995 Highly skilled average Highly skilled average Highly skilled average to 2010 annual growth (-1.7%) annual growth (-2.0%) annual growth 5.9% Skilled average annual Skilled average annual Skilled average annual growth 0.8% growth (-0.7%) growth 4.3% Semi and unskilled Semi and unskilled Semi and unskilled average annual growth (- average annual average annual 1.2%) growth (-1.4%) growth 2.3% Location Quotient Predominantly medium Predominantly low to Predominantly medium medium to high Shift Share Analysis: Provincial Growth (- 1 836) (-261) 2 176 Share 894 (-351) (-1 157) Industrial Mix 3 276 (-774) 1 874 Local Share Basic Sector Multiplier 9.8 4.4 7.5 Source: Demacon, 2011
Given the Competitive Advantage Analysis (CAA) focused on examining local industries/sectors to identify leading and lagging sectors and their prospects for employment growth. The following primary and secondary target sectors have been identified.
Table 4.6: Primary Target Sectors: Maluti-a-Phofung Phumelela Okhahlamba Community, social and personal Construction Construction services Transport and Communication Trade General government services Community, social and personal Transport and Communication Utilities services Finance and business services Construction General government services Community, social and personal Transport and communication. Mining. services General government services Mining.
Source: Demacon, 2011 Note: In business terminology industries in the upper right quadrant are increasing their market share in an expanding market, whereas the industries in the lower right quadrant are
96 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 losing market share in an expanding market. These sectors represent the primary target sectors within the local economies.
Table 4.7: Secondary Target Sectors: Maluti-a-Phofung Phumelela Okhahlamba Agriculture Agriculture Agriculture. Trade Manufacturing. Finance and business services. Source: Demacon, 2011 Note: The secondary target sectors should represent industries within the upper left quadrant increasing their market share in a declining market.
DEVELOPMENT IMPLICATIONS:
Municipal Order Size Comparison – GVA, 2010
Municipal Order Size Comparison – Total Employment, 2010
Maluti-a-Phofung - 68.2%
Okhahlamba - 23.8%
Phumelela - 8.0%
Maluti-a-Phofung represents the largest local economy with reference to population, GVA and Total Employment when compared directly to the other two local economies, i.e. measured in terms of its contribution to the corridor economy.
This analysis clearly indicates that the respective local economies are relatively well diversified and that the trade sector in itself does not represent a dominant economic pillar. Therefore the fuel sales and related industry component as sub-sector of the trade sector do not define the local municipal areas’ economic base and it is anticipated that changes to this sector will not result in fundamental structural changes within these local economies. This trend is also applicable to the individual town economies.
97 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Town Order Size Comparison – GVA, 2010
Harrismith - 92.0%
Warden - 7.3%
Van Reenen - 0.6%
Town Order Size Comparison – Total Employment, 2010
Harrismith - 90.5%
Warden - 8.9%
Van Reenen - 0.6%
Similar to the municipal economic analysis, it is evident that Harrismith represents the largest town economy with regard to population size, GVA and Total Employment, followed distantly by Warden and then Van Reenen – when these towns are compared directly in terms of the identified indicators.
The town economies are based on the following economic pillars:
Harrismith Warden Van Reenen
Finance & Business - 27.9% Trade - 27.7% Agriculture - 37.7%
Community & General Manufacturing - 25.7% Government Serv - 18.8% Infrastructure - 31.1% Community & General Finance & Business Serv - Government Serv - 21.5% 17.9% Trade - 15.8% Infrastructure - 13.0% Manufacturing - 17.6%
Manufacturing - 10.0% Trade - 11.9% Infrastructure - 17.1%
Community & General Agriculture - 0.1% Agriculture - 0.9% Government Serv - 5.4%
Note: Infrastructure includes Utilities, Construction, Transport and Communication.
98 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Each of the town economies contributes towards the various local economies and respective economic sectors of the local economies:
18.2% 15.3% 0.3%
Note: Infrastructure includes Utilities, Construction, Transport and Communication.
In terms of total employment the various towns contributes the following percentages to the employment figures of the local economies:
Harrismith Warden Van Reenen
Contribution to MAP - Contribution to Phumelela Contribution to 16.0% - 8.9% Okhahlamba - 0.6%
The economic pillars of the town economies also represent the primary and secondary target sectors of each of the local municipal areas. In terms of the order size and underlying contributions to the respective local economies it is evident that the town of Harrismith reflects the first order economy of the three. Despite Van Reenen’s smaller contribution towards the local economy in terms of GVA and total employment, when compared directly to the Warden economy it ranks second.
SYNOPSIS OF THE ECONOMIC STATUS QUO OF THE TOWN ECONOMIES:
Harrismith: Harrismith represents the dominant town economy to be impacted by the N3 realignment. The town economy contributes 18.2% towards the GVA and 16.0% towards the employment figure of the Maluti-a-Phofung local economy.
99 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The perceived decline in growth of the local economy by certain members of the business community is not evident in official growth figures and this perception may have its roots in perception, due to a notable shift in public sector capital investment focus to the former QwaQwa area, where the bulk of the municipality’s local economic activity is concentrated. The local economy is experiencing positive although relatively moderate economic growth (long term growth rate of 2.9% per annum). The dominant economic pillars of the town include Finance and Business Services, Manufacturing, Government and Community Services, Infrastructure and Trade. The dominant employment pillars of the town include Community and General Government Services, Manufacturing, Trade and Finance and Business Services. The geographic distribution of activities within the local economy reflects the following dominant trends: Approximately 30% to 35% of manufacturing activities are located within the town’s industrial areas, whereas the remainder of manufacturing activities are located beyond the town within Tshiame and the three industrial areas in QwaQwa. Approximately 10% to 15% of trade activities are located within the town’s business nodes, filling station and truck stop complexes, supported by a distribution of short-stay accommodation throughout the town. This is also supported by a number of automotive trade and repair facilities distributed throughout town. Harrismith is characterised by a CBD / central area and two formal neighbourhood retail centres. The bulk of trade sector activities are, however, concentrated within QwaQwa which contains a number of larger regional and community type shopping complexes. Approximately 20% to 25% of Business and Financial Service activities are located within Harrismith town with three of the dominant National Banks located in town – ABSA, Standard Bank and First National Bank. This is supported by a number of smaller financial service companies. The town is also characterised by a strong business service sector offering a wide range of professional services. The remainder of activities are concentrated in QwaQwa. Approximately 10% to 15% of Government and Personal Service activities are located within Harrismith. A number of smaller government functions are located within the town itself, supported by a range of personal service activities. The local and district municipal head offices are located within QwaQwa supported by a range of personal service activities. Approximately 20% to 25% of Infrastructure service activities (utilities, construction and transport) are located within the town itself, with the remainder predominantly located in QwaQwa.
Warden and Van Reenen:
The town economies of Warden and Van Reenen reflect small economic bases and a dominant service centre function for the surrounding farming communities. Warden contributed 15.3% towards the GVA and 13.4% towards total employment of the local economy of Phumelela and Van Reenen a mere 0.3% towards the GVA and 0.6% towards the employment figure of the local economy of Okhahlamba. It also reflects much smaller population figures, with no dominant township economies on the town peripheries as is the case with Harrismith.
100 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 5: CORRIDOR TARGET BUSINESSESS
5.1 INTRODUCTION
Given the findings of the previous chapters it is evident that the realignment of the N3 will have a predominant impact on the trade related businesses along the N3 and related businesses within the selected towns. The aim of this chapter is to provide an overview of the key business nodes found along the N3 to be impacted on by the route realignment.
5.2 CORRIDOR NODES TO BE AFFECTED BY N3 REALIGNMENT
5.2.1 Warden Truck Stop
Location: Nywerheidsweg (R714), off the N3 National Road, Warden, Free State Services and Amenities: Toilets, showers, gate control, shop, braai area, security, 100 available parking bays. Charges: R75 to R80/ night. Warden Truck Stop
101 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.2 STAR STOPS MONTE VISTA (South and North Bound) Location: N3 Highway, Harrismith, Free State Oil Company: Caltex Services and Amenities: Petrol, Diesel, Trucks, ATM, Restrooms, Shop, Car Wash and Restaurant, 30 parking bays for trucks each. National anchor: Maxis.
102 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 North bound
South End
103 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.3 ULTRA CITY HARRISMITH / BALMORAL TRUCK STOP
Location: N3 north of Harrismith, Free State Oil Company: Shell Services and Amenities – Ultra City: Petrol, Diesel, Trucks, ATM, shop and restaurant, 30 parking bays for trucks. Services and Amenities Truck Stop: Toilets/ Showers, gate control, shop, braai area, security, 180 parking bays at R75 to R80 per night. National anchor: Steers.
104 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
105 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 5.2.4 BERGVIEW 1-STOP COMPLEX
Location: Boschetto Avenue (Off N3) National Road), Harrismith, Free State Oil Company: Engen Services and Amenities: Petrol, Diesel, Trucks, ATMs, Restrooms, Shops and Restaurants. National Anchors: Nando’s, Wimpy, Mugg & Bean, Spur, Juicy Lucy, Ocean Basket, Nedbank, Standard Bank, FNB, ABSA.
106 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
107 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.5 HIGHWAY JUNCTION TRUCK STOP
Location: No 1, Industrial Road, Harrismith, Free State. It represents a halfway stop between Gauteng and Durban Highway Junction (N3) and between Durban and Bloemfontein (N5). Oil Company: Engen Services and Amenities: Highway Truck Park Toilets, showers, gate control, shop, braai area, security, public phones, breakdown maintenance, ATM, 300 available parking bays. Charges: R108/ night. It includes Highway Junction and Highway Truck Park. It represents the largest truck stop in Africa. It is well positioned to focus on future requirements related to the logistics sector including provision of warehousing, office space, truck repair facilities and container port facilities.
108 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
109 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.6 SPUR VILLAGE
Location: N5 Route, Harrismith, Free State Oil Company: Engen Services and Amenities: Petrol, Diesel, Restrooms, Shop, Restaurant and ATM. National Anchors: Spur, African Sky Hotel.
110 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.7 PETROPORT MOUNTAINVIEW
Location: N3 Route to Durban, Harrismith Free State Oil Company: Total Services and Amenities: Petrol, Diesel, Trucks, Restrooms, Shop and Restaurant and 10 parking bays for trucks. National Anchor: Steers.
111 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.8 MONTROSE
Location: Streetham Hill, N3 Route to Durban, Swinburne, Free State Oil Company: Shell Services and Amenities: Petrol, Diesel, Trucks, Restrooms, Shops and Restaurants, Protea Hotel, tourist information centre and 20 parking bays for trucks. National Anchors: Protea Hotel, Steers, Debonairs, Fishaways, Milky Lane, Mugg & Bean, KFC, Halaal, House of Coffees.
112 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.9 DRAKENSBERG STAR STOP – HALFWAY STOP
Location: N3 Highway, Van Reenen, Free State Oil Company: Caltex Filling Station Services and Amenities: Petrol, Diesel, Trucks, ATM, Restrooms, Shop and Restaurant. Truck Stop Services and Amenities: Toilets and showers, shop, braai area, fence, public phones, breakdown maintenance, 23 truck parking available at R50 per night. National Anchors: None.
113 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
114 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
5.2.10 MANUFACTURING ACTIVITIES
Industries visible from the N3
115 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Industries visible from the N5
Despite the fact that prominent manufacturing industries are located within Harrismith, predominantly along the N3 and N5 these industries do not rely on the volume of through traffic, as is the case with the trade related industries. These industries are not sensitive to the visibility from the national roads as seen from limited marketing through proper signage towards these routes. These manufacturing industries relate to the regional location, low rentals and access to a large labour pool. Key industries in direct proximity of the national routes include:
116 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 MAN Trucks, New Vision Manufacturing, Country Meat Market, Nouwens Carpets, Nestle, Delo Petroleum products (Caltex), Imperial Gloves, Bridge Stone / MaxT Solutions, Engineering firms, to name a few. 5.3 SYNTHESIS
In terms of locational theory, different land uses compete for land in the same areas, said differently, various land uses / economic activities reveal distinctly different location preferences (and sensitivities). In this context, the concept of highest and best use is important. In a free-market society, on-going competition between different land uses is regulated by the market mechanism. Every site in the urban system has a highest and best economic use and equilibrium in the market will only be reached when the highest and best uses are allocated to a site. This highest and best economic use is a function of physical and economic factors. Physical factors refer to the location of the site, the size thereof, visibility etc. Economic factors mainly refer to the productivity of the land use, including the return on investment and site rent achievable.
In the context of the aforementioned principles, the location rationale (and subsequent sensitivity to N3 realignment) of each economic sector is briefly outlined.
Finance and Business Services – overall these types of uses locate in areas in proximity to clients, qualified labour force, proximity to similar activities, areas with a specific image, and it should have linkages to other economic activities. The majority of these activities in Harrismith are located in and around the town CBD – characterised by moderate levels of accessibility and visibility. As such it is accessible to the local and regional consumer market and do not rely on direct accessibility and visibility from main roads such as the N3 itself. This sector can therefore be regarded as location insensitive towards the N3 realignment. Manufacturing Activities – manufacturing activities in and around Harrismith is predominantly located in two industrial areas – one visible from the N3 and the other from the N5. These manufacturing activities include a range of heavy and light industries, including big brands such as Nestle, Nouwens Carpets, Country Meat Market etc. In general, these activities do not market itself in such a way that it is visible from either of the highways, re-enforcing the notion that these industries’ location is driven by regional accessibility, available labour pool and agglomeration advantages. It therefore differs from modern industrial / business parks located within urban settings reliant on direct access and visibility from main roads / freeways. In terms of the original March 2006 feasibility study, the proposed logistics hub and Chinese Car Manufacturing plant would be located within Industriqwa – an industrial area located approximately 10km outside of Harrismith along the N5. The industrial area is not visible from the N5 – reinforcing the location factors mentioned above. In terms of the apparent latest site identification, the new site is situated southeast of Harrismith along the existing N3. Alternative A veers to the north from the existing N3 alignment, just east of the new logistics hub site. Nevertheless, neither the access nor mobility function of the existing N3 will be diminished and hence, the hub should not be negatively affected by the proposed new alignment. Furthermore, the logistics hub is aimed at an existing (and growing) freight market and, as such, its success does not hinge on visibility / passing trade on the existing N3 per se – it will be a destination in its own right. Interestingly, this site still does not respond to the challenges experienced by heavy vehicles on the existing Van Reenen’s Pass alignment. It can also be reasoned that the proposed N3
117 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 realignment was known well in advance, before the new proposed hub location was selected. Overall, the sector is regarded as location insensitive towards the N3 realignment, and it is anticipated that the impact on this sector with regard to the potential realignment of the route will be minimal. Community and General Government Services and Infrastructure – these services in general locate where it is accessible to the local and regional consumer market. Although the transport component of the infrastructure sector relies on local and regional accessibility it does not rely on direct access or visibility from national roads such as the N3 and is regarded as location insensitive. Trade sector – the trade sector is arguably the sector which is most sensitive to access and exposure variances. The trade sector includes retail activities, wholesale activities, short-stay activities, restaurants and takes away offerings, automotive sales and repairs and fuel sales. Given the spatial structure of the town economy, specific activities are reliant on direct access and visibility from the N3. These activities relate directly to fuel sales and ancillary activities including retail sales, catering establishments (restaurants) and to a lesser scale short-stay establishments (e.g. guesthouses). The majority of these activities are concentrated towards the entrances to the town. It is therefore evident that certain components of this sector are location sensitive with regard to the N3 realignment. In the context of the above, it can be concluded that the impact of the N3 realignment will be most noticeable in terms of selected trade based activities. In terms of the town of Warden none of its economic activities front directly onto the N3. In the case of Van Reenen, limited trade sector activities front directly onto the N3.
Relative Sizes:
Given the findings of the location theory and sectoral sensitivity exercise it is evident that the trade sector is location sensitive with regard to the N3 realignment. The trade sector of the various towns contributes moderately towards the town economies (11.9% to Harrismith, 27.7% to Warden, 15.8% to Van Reenen) as well as towards the trade sectors of the various local economies (13.9% to Maluti-a-Phofung, 35.3% to Phumelela, 0.4% to Okhahlamba). It is therefore anticipated that the impact will be deemed towards a certain proportion of the trade sector and not the local economy at large. To reflect on the actual size of the affected economies and the respective trade sectors, refer to Table 5.1.
Table 5.1: Economic: Regional output and GDP as gross value added (GVA) at basic prices (2010 V1 release), R millions, constant 2005 prices Local Municipal Economy 2010 Town Economy 2010 Maluti-a-Phofung 6 583.4 Harrismith 1 198.2 Phumelela 625.5 Warden 95.7 Okhahlamba 2 746.9 Van Reenen 8.2 Source: Demacon Ex. Quantec, 2011
118 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
Table 5.2 Sectoral Value: Regional output and GDP as gross value added (GVA) at basic prices (2010 V1 release), R millions, constant 2005 prices Local Municipal Economy 2010 Town Economy 2010 Maluti-a-Phofung Harrismith
Agriculture 172.3 Agriculture 0.6 Mining 12.0 Mining - Manufacturing 904.9 Manufacturing 307.5 Trade 1 022.4 Trade 141.9 Finance & Business Serv 1 421.3 Finance & Business Serv 333.3 Community & General 2 303.4 257.3 Community & General Government Serv Government Serv Infrastructure 747.1 Infrastructure 155.0 Phumelela 2010 Warden 2010 Agriculture 147.5 Agriculture 0.8 Mining 45.8 Mining - Manufacturing 80.0 Manufacturing 16.9 Trade 75.5 Trade 26.6 Finance & Business Serv 89.6 Finance & Business Serv 17.2 Community & General 118.8 18.0 Community & General Government Serv Government Serv Infrastructure 68.3 Infrastructure 16.4 Okhahlamba 2010 Van Reenen 2010 Agriculture 328.4 Agriculture 3.0 Mining 8.6 Mining - Manufacturing 781.8 Manufacturing 0.8 Trade 309.8 Trade 1.2 Finance & Business Serv 408.5 Finance & Business Serv - Local Municipal Economy 2010 Town Economy 2010 Community & General 422.1 0.4 Community & General Government Serv Government Serv Infrastructure 487.7 Infrastructure 2.4 Source: Demacon Ex. Quantec, 2011
119 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 6: CASE STUDY ANALYSIS AND ECONOMIC IMPACT ANALYSIS 6.1 INTRODUCTION
The purpose of this chapter is firstly, to provide a local case study analysis to establish the anticipated economic impacts to arise from national route realignment. Secondly, the chapter focuses on the potential impact that the N3 realignment given the various development scenarios will have on the identified town economies. 6.2 CASE STUDY ANALYSIS
The case study analyses of various towns situated along the N1 between Gauteng and Polokwane revealed that selected businesses with an original freeway / main road location rationale may be affected by national route realignment – no research could be traced which assessed the actual nature and extent of these presumed impacts. Furthermore, apart from a noticeable short term spike during the construction period, not discernible negative long term / sustained impacts could be found in the respective towns’ economic data.
In short, the case study assessment focused on selected towns Gauteng and Polokwane – pre and post 1996/1997 (when the route was handed over). Each local economy was analysed in terms of numerous time series indicators to assess the extent to which route construction may have caused visible growth impacts (positive or negative) during respectively the construction and operational phases of a new national route.
Map 6.1: Location of towns with reference to the N1
Table 6.1: Distance of towns from the N1 – post completion of N1 Bela Bela Modimolle Mookgopong Mokopane Polokwane 9km 10km 1km 5km N1 runs through CBD Note: Distance expressed in terms of midpoint of freeway to midpoint of CBD.
120 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The N1 currently runs through the CBD of Polokwane, currently the N1 eastern bypass is under construction, it is however too early to reflect on the impact thereof on various local indicators.
Route background:
The original alignment represented a dual carriage way that cut through a number of smaller town’s CBDs or business areas (Bela Bela, Modimolle, Mookgopong and Mokopane) – it was referred to as the R101 It was the main linkage between the economic powerhouse of Gauteng and the provincial capital Polokwane. Besides the R101, no alternative routes existed. The N1 between Pretoria and Polokwane was completed in 1996 and was handovered during early 1997. The new route alignment resulted in the bypass of a number of these towns (with varying distances as reflected above). The original alignment however is still operational and is being maintained.
The affected local economies investigated in more detail are:
Polokwane Local Economy (Polokwane); Mogalakwena Local Economy (Mokopane); Mookgopong Local Economy (Naboomspruit); Modimolle Local Economy (Nylstroom); Bela Bela Local Economy (Bela Bela).
To illustrate the impact that road construction and operation had on these local economies the following set of figures and tables were analysed – commencing with economic value added, employment contribution, GVA/capita and Income/capita.
6.2.1 ECONOMIC CONTRIBUTION - GROSS VALUE ADDING
Table 6.2: Local Economy Sizes, GVA 2010 (at constant 2005 values (R’million)) Trade Sector (Retail, wholesale, fuel sales, Manufacturing Local Economy Total Economy automotive repairs, catering Sector and accommodation) P9D03M04: Polokwane Local 17 136.7 1 800.8 775.2 Municipality P9D04M03: Mookgopong Local 751.3 83.9 62.8 Municipality P9D04M04: Modimolle Local 2 015.4 334.0 114.0 Municipality P9D04M05: Bela-Bela Local 1 812.4 287.8 38.9 Municipality P9D04M06: Mogalakwena Local 6 259.8 843.9 348.5 Municipality Source: Demacon ex Quantec, 2011
It is evident that Polokwane and Mogalakwena represented the largest local economies, with Modimolle, Bela-Bela and Mookgopong representing smaller local economies. In order to reflect on the level of diversity of these economies, the Tress Indices were compiled and analysed (refer to Table 6.3).
121 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 6.3: Tress Index, 1995 to 2008 Local Economy 1995 2008 P9D03M04: Polokwane Local Municipality 59.1 57.4 P9D04M03: Mookgopong Local Municipality 65.1 68.1 P9D04M04: Modimolle Local Municipality 52.3 55.2 P9D04M05: Bela-Bela Local Municipality 63.0 52.4 P9D04M06: Mogalakwena Local Municipality 45.0 43.2 Source: Demacon ex Quantec, 2011
The sectoral composition of economic activity in a region is an indication of the level of diversification or concentration of a region’s economy and can be measured by the so-called tress index. A tress index of zero represents a totally diversified economy. On the other hand, the higher the index (closer to 100), the more concentrated or vulnerable the region’s economy to exogenous variables such as adverse climatic conditions, commodity price fluctuations, and so on.
It is evident that the majority of these economic entities reflected relatively well diversified economies in 1995. The most diverse economy is represented by Mogalakwena. Over the past few years the majority of these economies became more diversified, except for the Mookgopong and Modimolle becoming more concentrated.
The following set of figures illustrates the growth trends pertaining these economies, trade and manufacturing sectors within them pre-and post the construction period of the road.
Total Economy
In order to reflect on the period before and after construction Figure 6.1 is employed. Due to data constraints these trends could only be reflected for Polokwane, Bela Bela, Mogalakwena and Modimolle.
Figure 6.1: Pre-and post-construction growth trends (%), 1984 to 2010
Local Economic Growth
35.0 30.0 Pre-Construction 25.0
20.0 15.0 Post-Construction 10.0 Growth (%) 5.0 - -5.0
-10.0
1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1984-1985 1992-1993 1993-1994 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Polokwane Mogalakwena Bela Bela Modimolle
Source: Demacon Ex. Quantec, 2011 Note: No data are available pre-1995 for Mookgopong.
What is evident from Figure 6.1 is that these local economies reflected discernable decelerating (although still positive) long term growth trends even before the construction period commenced. This trend therefore aligns with macro / national / historic trends and not with road construction per se.
122 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The construction period resulted in an artificial acceleration (short term spike) of economic growth. After completion of the construction period, local economic growth stabilised to a normal, more stable growth cycle closely aligned with the national business cycle. In general, it should be noted that cities and towns in SA reflected high but erratic growth pre-1994/1995, followed by more stable, albeit lower growth rates post 1994/1995. This trend per se, therefore does not correlate with road construction.
Trade and Manufacturing Sub-Sectors
In order to reflect on growth trends related to the trade and manufacturing sub-sectors before and after construction refer to Figures 6.2 and 6.3.
Figure 6.2: Pre-and post-construction growth trends (%), 1984 to 2010
Trade Sector Growth
40.0 34.0 35.0 28.1 25.7 30.0 23.3 23.9 25.0 15.2 16.9 20.0 13.3 13.0 13.8 15.0 10.1 5.2 6.4 5.6 5.1 5.1 10.0 3.6 1.6 3.5 1.9 2.2 0.8 -1.0 -1.0
Growth (%) 5.0 -3.7 - -5.9 -5.0 -10.0
-15.0
1984-1985 1995-1996 2001-2002 2006-2007 1985-1986 1986-1987 1987-1988 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1994-1995 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2007-2008 2008-2009 2009-2010
Polokwane Mogalakwena Bela Bela Modimolle
Source: Demacon Ex. Quantec, 2011 Note: No data are available pre-1995 for Mookgopong.
Figure 6.3: Pre-and post-construction growth trends (%), 1984 to 2010
Manufacturing Sector Growth
40.0
23.6 30.0 20.8 22.0 17.2 15.8 20.0 12.4 11.1 8.8 9.2 9.4 8.1 7.1 7.4 7.0 6.3 5.5 10.0 4.2 2.7 2.8 0.2 -0.2 1.5 -0.7 -3.9 -2.0 -3.5
- Growth (%) -10.0
-20.0
-30.0
1987-1988 1994-1995 2006-2007 1984-1985 1985-1986 1986-1987 1988-1989 1989-1990 1990-1991 1991-1992 1992-1993 1993-1994 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2007-2008 2008-2009 2009-2010
Polokwane Mogalakwena Bela Bela Modimolle
Source: Demacon Ex. Quantec, 2011 Note: No data are available pre-1995 for Mookgopong.
It is evident from these figures that a trend strongly correlating to that of economic growth pre and post-construction are evident within the trade and manufacturing sub-sectors.
123 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 6.2.2 EMPLOYMENT CONTRIBUTION – FORMAL AND INFORMAL
Table 6.4: Local Economy Sizes, Total Employment, 2010 Trade Sector (Retail, wholesale, fuel sales, Manufacturing Local Economy Total Economy automotive repairs, catering Sector and accommodation) P9D03M04: Polokwane Local 110 448 26 893 9 429 Municipality P9D04M03: Mookgopong Local 6 673 1 330 727 Municipality P9D04M04: Modimolle Local 18 380 5 234 1 467 Municipality P9D04M05: Bela-Bela Local 15 625 4 342 518 Municipality P9D04M06: Mogalakwena Local 51 121 10 718 4 429 Municipality Source: Quantec, 2011
As in the case with GVA, Polokwane and Mogalakwena represents the largest employment concentrations compared with the other three local economies. The following set of figures illustrates total employment growth trends pertaining to the economies.
Total Employment
Note: No data on municipal employment is available pre-1995. Therefore the comparison between employment and economic growth trends post 1995 – Refer to Figures 6.4 and 6.5.
Figure 6.4: Total Employment Growth, 1995 to 2010
Employment Growth (%)
35.0 30.0 25.0
20.0
15.0 10.0
5.0 Growth (%) - (5.0) (10.0)
(15.0)
2004-2005 2005-2006 2006-2007 2007-2008 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2008-2009 2009-2010
P9D04M03: Mookgopong Local Municipality P9D04M04: Modimolle Local Municipality P9D04M05: Bela-Bela Local Municipality P9D04M06: Mogalakwena Local Municipality Total: South Africa
Source: Demacon, 2011
In terms of employment growth trends, it is evident that the construction of the road had a positive (although short-lived) impact on the affected local economies. This positive impact is more profound within the smaller economies such as Modimolle, Mookgopong and Bela-Bela.
Post construction trends suggest that employment follows a similar trend to that of the national economy. National employment figures have been under significant pressure and employment losses (negative growth) with emphasis on the economic recession period. Therefore the
124 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 negative growth trend reflected in the figure correlates with a national trend rather than a purely local phenomenon.
Figure 6.5: Economic Growth, 1995 to 2010
Economic Growth (%)
45.0 40.0 35.0 30.0 25.0 20.0 15.0
Growth (%) 10.0 5.0 - (5.0)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
P9D03M04: Polokwane Local Municipality P9D04M03: Mookgopong Local Municipality P9D04M04: Modimolle Local Municipality P9D04M05: Bela-Bela Local Municipality P9D04M06: Mogalakwena Local Municipality Total: South Africa
Source: Demacon, 2011
6.2.3 GVA/ CAPITA AND INCOME/ CAPITA
It is evident that the construction period of the road resulted in growth spurs in GVA/ capita and income/ capita, however, as in the case of GVA and employment growth trends stabilised from which it adopted a growth pattern aligned with the national economy.
Figure 6.6: GVA/Capita Growth, 1995 to 2010
GVA/Capita Growth (%)
30.0
25.0
20.0
15.0
10.0
Growth (%) 5.0
-
(5.0)
(10.0)
2006-2007 2007-2008 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2008-2009 2009-2010
P9D03M04: Polokwane Local Municipality P9D04M03: Mookgopong Local Municipality P9D04M04: Modimolle Local Municipality P9D04M05: Bela-Bela Local Municipality P9D04M06: Mogalakwena Local Municipality Total: South Africa
Source: Demacon, 2011
125 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 6.7: Income/Capita Growth, 1995 to 2010
Income per capita growth (%)
35.0 30.0 25.0
20.0 15.0 10.0
Growth (%) 5.0 - (5.0)
(10.0)
1996-1997 2005-2006 1995-1996 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2006-2007 2007-2008 2008-2009 2009-2010
P9D03M04: Polokwane Local Municipality P9D04M03: Mookgopong Local Municipality P9D04M04: Modimolle Local Municipality P9D04M05: Bela-Bela Local Municipality P9D04M06: Mogalakwena Local Municipality Total: South Africa
Source: Demacon, 2011
6.2.4 DEVELOPMENT IMPLICATIONS:
1. The development of the N1 between Pretoria and Polokwane affected a number of smaller towns and local economies along the route alignment. 2. There is no definite or discernable correlation between economic impact and the distance from the town centre to the midpoint of the new alignment. The towns furthest away from the new alignment reflected the highest growth spurs during construction and after construction revealed growth trends on par with the other economies. 3. The affected local economies reflected slightly more erratic growth patterns prior to the road construction period (pre-1994/1995). 4. The period preceding the N1 construction between Polokwane and Pretoria furthermore appears to reflect a distinctive decelerating (although still positive) growth trend within these affected local economies which correlates with national trends and not road construction per se. As a rule, economic growth patterns have stabilised noticeably since 1994/1995. 5. The construction growth spike is less noticeable in larger economies (e.g. Polokwane) and vice versa (e.g. Mookgopong). 6. The size (and juxtaposition relative to national highways) of the Maluti-a-Phofung economy correlates closely with the size (and juxtaposition) of the Mogalakwena economy.
Given economic growth trends the rate of change was calculated for Polokwane and Mogalakwena, pre-road construction, during construction and post-construction.
126 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 6.8: Rate of Change
Source: Demacon, 2011
Pre-construction: The rate of change in economic growth was negative (although growth was still positive) – reflecting discernable deceleration in local economic growth. Construction period: The rate of change in terms of Polokwane declined but Mogalakwena’s experienced positive changes. Post construction: Post-construction revealed positive growth in the rate of change.
7. During the construction period of the N1 a noticeable spike within the local economies are visible. The local economies stabilised after the artificially induced growth period towards a growth cycle correlating strongly with the national economy (reflecting negligible impacts over the long term operational period of the road). 8. The fact that these local economies stabilised to a normalised long term trend indicates that national route realignment is not sufficient enough to result in fundamental long term structural economic changes. 9. The size and level of diversity of the local economies correlated with the level of the construction impact of the road on the local economies. From the economic data it is
evident that the impact during the
construction phase is more pronounced in terms of smaller economies such as Bela-Bela,
Modimolle and Mookgopong, and of Level Impact less intense / pronounced in larger economies such as Mogalakwena and Polokwane. 10. The new road alignment stimulated hardly any new commercial and new town development. Besides the od filling station development, no other commercial developments located along the new N1 alignment transpired. This in itself indicates that a new route alignment in itself is not significant in itself to cause a spatial economic shift. 11. It is true that selected business enterprises that was purely reliant on transient trade were negatively affected – limited to filling stations and directly associated establishments at major entrances to these towns.
127 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 12. The fact that no discernable deceleration in local economic growth post-construction occurred, indicate that these impacts did not translate into real economic losses per se but rather in a displacement effect which impacted a limited number of filling station and directly related establishments in town through the creation of a similar limited number of new facilities along the new alignment. This impact can therefore be mitigated. Once again, it is limited to selected business establishments and appears not to have sustained negative long term economic impacts. 13. It is evident that these local economies reflected sufficient levels of economic diversity to ‘naturally’ absorb and mitigate the impact of the new alignment. In the case of the N1 construction, there were no identifiable economic mitigation measures. 14. In the context of the above, national route realignment appears to create very focused and limited business impacts on selected business enterprises only – business enterprises which capitalised on a previous, opportunistic route-based location rationale. Route realignment is, in essence, a given and known risk to these business enterprises. Some schools of thought might argue it is an inevitable risk bound to materialise at some point in time and this risk is therefore automatically factored (directly or indirectly) into the long term financial assessments / payback periods of such enterprises. 15. Maluti-a-Phofung can be compared to Mogalakwena – given the similar size of the economies, labour force and Tress Index values. The towns of Mokopane and Harrismith can furthermore be compared directly given their locational attributes and the fact that each of these towns has strong economic pillars that are neither location sensitive nor reliant on transient trade from national highways. Mokopane has a strong mining sector, whereas Harrismith is characterised by a strong manufacturing sector. Mokopane sits at the junction of the N1 and N11, whereas Harrismith sits at the junction of the N3 and N5. 16. Overall, the negative impacts associated with the N3 realignment can be mitigated by offering development rights to these new facilities to the affected local business operators currently active in Harrismith. In general, locational factors dictate that hardly any additional business / urban development will occur in the vicinity of this new convenience filling station (and truck stop) facility / facilities.
6.3 IMPACT ASSESSMENT APPROACH
Given the route alternatives it is evident that the development thereof will have an impact on three levels – a macro level, a meso level and a micro economic level.
Note: For the purposes of this impact assessment the impact of the logistics hub is regarded as immaterial, as there is no established correlation/ dependence between this industrial development and the N3 realignment.
6.1 MACRO LEVEL
With the development of a new route, such as the De Beers Pass route, neither the mobility nor the accessibility function of the existing N3 and N5 routes will diminish. The proposed new road will benefit users on both the new route and existing N3 if the principle that the toll fee is less than the road user benefits is applied (The existing route should be lower tolled than the new realignment). The project’s anticipated macroeconomic multiplier effect will align with national agendas pertaining to employment creation, economic growth and income distribution. Similar contributions will be made with regard to provincial growth and development agendas.
128 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The development of a new route will address road capacity constraints on the existing route and will contribute to greater transport efficiency along the routes between Gauteng and KwaZulu Natal. Failure to address these needs will stifle long term growth.
6.2 MESO LEVEL
Given the findings of the previous chapters it is evident that the proposed N3 realignment, even, with the potential “worst case” scenario, i.e. the development of the De Beers Pass Route, will result in the potential siphoning of economic activities that would benefit selected new trade based activities. Trade based activities that draw direct benefit from locational positioning relative to a major freeway include fast food outlets, filling stations, truck stops and to a limited extent short stay accommodation. At best, the realignment will result in the development of one to a maximum of two new filling stations / truck stop facilities – as is understood based on discussions with N3TC. Despite the above, the benefits of these new trade activities will still accrue to the same local economy, i.e. Maluti-a-Phofung. On a meso level it can be expected that local economic benefits will merely be displaced within the same local economies, and not be lost to these local economies. This notion is substantiated by means of the various N1 case study analyses.
Meso Level Impact Modelling
Model Scenarios
1. Current Status Quo – this constitutes a long term economic forecast of local economic growth based on prevalent and historic time series data. This scenario assumes no extraordinary economic interventions, neither does it speculate about projects such as the logistics hub. 2. Baseline Intervention Scenario – The baseline scenario introduces a minimum expected
impact on the local economy during the construction period. The impact coefficient (β1) was deducted from case study time series data for the various towns situated along the N1
between Gauteng and Polokwane. A post construction transient trade loss coefficient (β2) was similarly calculated from these case studies and factored into the equation. 3. Optimistic Intervention Scenario – Similarly, the optimistic scenario factors in a
marginally higher construction coefficient (β1). Similar to the baseline scenario, the
transient trade loss coefficient (β2) is factored in.
Note: refer to the GVA Impact Formula which is applied to calculate the effects / impacts associated with each scenario. Table 1.9 contains coefficient values and brief explanations.
Modelling Assumptions:
From the case study material it is evident that the proposed road realignment will induce a displacement effect to the local economy, as opposed to a real net loss. In this context, the anticipated local economic displacement is a so-called ‘direct’ effect, which in itself does not translate into a real loss. Hence, there is no actual negative multiplier effect that will permeate the local economy (as is incorrectly suggested by the Urban Econ study). This suggestion is consistent with economic base theory and case study findings. The actual impact / displacement effect is furthermore expressed in economic terms (i.e. gross geographic value added or GVA) and not turnover or total business sales.
129 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
These coefficients (β1 and β2) are considered conservative as they were determined from a scenario which could arguably be considered more severe than the proposed N3 realignment for the following reasons: The realigned N1, which completely and comprehensively by-passes the affected towns (except for Polokwane), previously passed directly through the respective business districts of the affected towns. No sustained long term economic effects could be established. In the case of Harrismith, the existing N3 already by-passes the town centre and this effect has therefore already been discounted in the economy. It therefore follows that the sustained long term economic displacement effects / impacts for Harrismith and Maluti-a-Phofung is expected to be even less discernable, compared with the aforementioned N1 case studies. Apart from new access roads, no special economic mitigation measures were implemented when the N1 was realigned in the aforementioned case studies. The construction impact can be expected to correlate with the impact coefficient of an economy of similar size. The formula applied estimates the future value of GVA within the local economy given annualised economic growth, the impact coefficient and transient trade loss coefficient. This is discussed in more detail below. The case study assessment furthermore indicates that, provided the accessibility and mobility functions of the existing N3 are not diminished, the quantum of the impact / effect does not correlate directly with the distance between the town centre and the new alignment – provided the route still passes through the same local economy and the new filling stations / truck stops are situated in same (i.e. whether the realignment of the N3 passes east of Platberg Mountain some 20km north east of town or whether it passes between Harrismith and Platberg Mountain some 1km to 1.5km east of Harrismith – all relevant off-ramps still miss the existing main entrances to town – the difference between the two scenarios in local real economic terms, i.e. in terms of displacement effect, will be negligible). Another important observation from the case study analyses, is that in spite of economic growth rates ‘normalising’ back to lower levels post construction (compared with during construction), once the construction impact has been factored into the local economy, the affected local economies all seem to sustain higher aggregate levels of gross geographic value added. In simpler terms, the economy does not ‘shrink’ / reduce back to its original size as during pre-construction. All case study towns reflected this interesting phenomenon. This could be attributed, inter alia, to long term operational / maintenance aspects, improved road network efficiency and its impact on economic activity in general.
GVA Impact Formula Applied
n GVAn = GVAPV x ((1+(k x β1)) x β2
Where: GVAn = future value at end of period n GVAPV = initial GVA value k = annual compound long term economic growth rate β1 = impact coefficient β2 = transient trade loss coefficient.
130 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 6.5: Coefficient Values and Explanations Coefficient Value Explanation β1 Construction: It represents the coefficient by which growth will local Baseline: 2.45 economic growth will change, respectively over the Optimistic: 3.93 construction and operational period of the project. These coefficients were deducted from case study time series data Operational: 1.0 for the various towns situated along the N1. β2 0.8 The maximum expected loss in town traffic, as calculated by Tech World is 20%. Hence, the transient trade loss coefficient is 1- 0.2 = 0.8. this holds true, provided the mobility and accessibility functions of the existing N3 are not diminished and the realigned route and associated filling station truck stop is situated in the same geographic economic entity. k 2.91% Long term local economic growth rate
Impact Analysis:
Figure 6.9 indicates the current status quo, baseline as well as optimistic growth scenarios, reflecting the potential impact of the proposed road construction on the local economy.
Figure 6.9: Road Impact – Baseline and Optimistic Growth Scenarios (GVA at constant 2005 prices)
Road Impact
30 000.0
25 000.0
20 000.0
15 000.0 GVA (R'million) 10 000.0
5 000.0
-
2012 2022 2035 2011 2013 2014 2015 2016 2017 2018 2019 2020 2021 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2036 2037 2038 2039 2040 2041
Status Quo Baseline Scenario Optimistic Scenario
Source: Demacon, 2011
It should be noted from Figure 6.9 (and case study time series data) that road construction accelerates the local economy to a higher GVA level. Post-construction, the local economy reverts back to its lower, long term growth rate, however, GVA does not decline / deteriorate back to original lower levels as observed during the pre-construction period.
6.3 MICRO-ECONOMIC LEVEL
It is evident that it is on a micro-economic level where the impact / effect will be more noticeable – with emphasis on the towns being by-passed in the proposed alternatives. As is evident from the case studies, the larger and more diversified the economy, the lower the anticipated impact of the proposed route realignment and vice-versa.
131 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Given the order size of the towns (with regard to GVA and total employment size) it is evident that Harrismith represents the dominant town of the three. Given its location and function and the fact that all the proposed route realignments effectively result in by-passing the town, it can be expected that the displacement effect of all three scenarios will be similar. The economic impact on each of these towns is subsequently discussed.
6.3.1 Harrismith
The town economy contributes 18.2% (R1.2 billion) towards the GVA and 16.0% (11 111 employees) towards the employment figure of the Maluti-a-Phofung local economy. The town constitutes 6 970 people, with a dependent township population of 35 981 located just beyond the town in Intabazwe and 42nd Hill. The dominant economic pillars of the town include Finance and Business Services, Manufacturing, Government and Community Services, Infrastructure and Trade. The dominant employment pillars of the town include Community and General Government Services, Manufacturing, Trade and Finance and Business Services. Given the location theory analysis it is evident that it is primarily the trade sector that is location sensitive with regards to the N3. The trade sector is arguably the sector which acts most sensitive to access and exposure variances. The trade sector include retail activities, wholesale activities, short-stay activities, restaurants and take away offerings, automotive sales and repairs and fuel sales. Given the structure of the town economy specific activities are reliant on direct access and visibility from the N3. These activities directly relate to fuel sales, retail sales, catering establishments and to a much lesser scale short-stay establishments. The majority of these activities are concentrated towards the entrances to the town. In the context of the above it can be concluded that the impact of the N3 realignment will be most profound in terms of these activities. It is therefore evident that the route realignment will not result in an impact on the town economy as a whole, or in fact on the trade sector as a whole but that it will be focused on very specific trade sector activities only. An analysis of the national accounts and local economic structure furthermore indicate that the actual economic impact (whether real net loss / displacement effect) does not correlate with a loss or change in turnover: the actual economic impact correlates with a net change in GVA which, for fuel sales and related activities, only accounts for approximately 10% of business turnover, e.g. if business turnover were to change (positive or negative) by R100 million per annum, the actual economic impact is not R100 million per annum but merely 10% thereof, i.e. R10 million. The trade sector contributes 11.9% towards the GVA (R141.9 million) and 22.8% towards the total employment (2 534) of the town economy.
Table 6.6: Size of Harrismith’s Trade Sector Variables GVA (R’ million) Total Employment Harrismith Town Economy 1 198.2 11 112 Trade Sector Value 141.9 2 534 Retail, wholesale, fuel and automotive sales 133.2 2 331 Catering and Accommodation 8.7 203 Source: Demacon Ex. Quantec, 2011
As mentioned earlier the impact will merely relate to the businesses directly reliant on transient trade from the N3, with emphasis on those predominantly located at the entrances to the town. This predominantly refers to fuel sales, automotive repairs and support,
132 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 restaurants and to a much lesser extent short-stay accommodation. These sub-sectors’ contribution to the town’s economy is illustrated in the table below.
Table 6.7: Size of affected Trade Sub-Sectors Percentage of GVA Percentage of Total Trade Sub-Sectors Town (R’million) Town GVA Employment Employment Automotive maintenance and repairs 7.61 0.64% 133 1.20% Fuel sales 9.59 0.80% 168 1.51% Sale of motor vehicle parts and 1.68 0.14% 29 0.27% accessories Short-stay accommodation 1.80 0.15% 42 0.38% Restaurants 6.86 0.57% 161 1.44% Source: Demacon Ex. Quantec, 2011
Economic Impact Modelling:
Given the fact that no direct correlation between the level of impact and the distance from a new national route and bypassed town centre could be established (provided the new route and associated filling station / truck stop still passes through the same economic entity), it is anticipated that regardless of the route alignment alternatives which will materialise, i.e. De Beers Pass and Scenario A, the impact on the town economy will be similar. The following subsection illustrates the anticipated impact / effects that the realignment will have on the town of Harrismith.
A number of factors should be acknowledged in this impact assessment:
The impact will not relate to the town economy at large, but will be focused towards a specific segment of the trade sector, as illustrated in Table 6.8. Given a land use survey, the segment of businesses within each of these sub-sectors that are directly reliant on transient trade from the N3 were calculated. The impact of the road realignment will relate to these segments. Automotive maintenance and repairs and motor vehicle parts and accessories: approximately 30% of these businesses in Harrismith are directly reliant on transient trade from the N3. Fuel sales: approximately 45% of such businesses in Harrismith are directly reliant on transient trade from the N3. Short-stay accommodation: no more than 10% of such businesses in Harrismith are directly reliant on transient trade from the N3. Restaurants: approximately 85% such of businesses in Harrismith are directly reliant on transient trade from the N3.
Table 6.8: Economic Impact of Route Realignment on Specific Trade Sub- Segment of Percentage GVA Percentage Total Trade Sub-Sectors Businesses of Town (R’million) of Town GVA Employment Employment Automotive maintenance and 30% 2.28 0.19% 40 0.36% repairs Fuel sales 45% 4.32 0.36% 76 0.68% Sale of motor vehicle parts 30% 0.51 0.04% 9 0.08% and accessories Short-stay accommodation 10% 0.18 0.02% 4 0.04% Restaurants 85% 5.83 0.49% 136 1.23% Total 13.11 1.09% 265 2.38% Source: Demacon Ex. Quantec, 2011
133 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The overall impact / effect of the road realignment will be manifested in the loss of transient trade with reference to these business segments specified above. Loss of transient trade is estimated at a maximum of 20%, as indicated by Techworld Consulting Engineers.
Table 6.9: Economic Displacement Impact of Route Realignment on Harrismith Trade Sub-Sectors GVA (R’million) / annum Total Employment Business Segment to be Impacted 13.11 265 Economic Displacement Impact (loss) 2.62 53 Percentage of total town economy 0.22% 0.48% Source: Demacon Ex. Quantec, 2011
During the construction period of the road it is anticipated that the local economy as well as Harrismith itself will benefit from artificially induced economic growth. However, the real displacement effect will only be visible after construction. Figure 6.10 indicates the anticipated economic growth of the town and the displacement effect that will apply after construction – reflected from 2020 onwards. The quantum of this impact (displacement effect) is negligible – 0.22%. It is consistent with statistical analyses which affirm that it does not translate into structural economic changes. Hence, the effects are negligible in economic terms.
Figure 6.10: Town Growth and Displacement Impact (GVA R’million) (at constant 2005 prices)
Economic Growth and Displacement Effect - Road Operations
3 100.0 3 000.0 2 900.0 2 800.0 2 700.0 2 600.0 2 500.0 2 400.0 2 300.0 2 200.0 2 100.0
2 000.0 1 900.0 1 800.0 1 700.0 1 600.0 1 500.0 1 400.0 1 300.0
GVA (R'million) 1 200.0 1 100.0 1 000.0 900.0 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0
-
2023 2027 2038 2020 2021 2022 2024 2025 2026 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2039 2040 2041
Economic Growth Displacement Effect
Source: Demacon, 2011
Clearly, the displacement effect values in Figure 6.10 are negligible. For the benefit of the reader, this segment of the graph is amplified / enhanced in Figure 6.11.
134 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 6.11: Road Impact – Harrismith Displacement Effect (GVA R’million) (at constant 2005 prices)
Harrismith - Displacement Effect
7.0 6.4 6.2 6.0 5.8 6.0 5.5 5.7 5.2 5.4 4.9 5.1 5.0 4.6 4.8 4.4 4.5 4.1 4.3 3.9 4.0 3.7 3.8 4.0 3.5 3.6
3.0 GVA (R'million) 2.0
1.0
-
2020 2021 2039 2040 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2041 2022 Source: Demacon, 2011
Table 6.10: Impact of Scenarios on Harrismith Alignment Alternatives Displacement Effect De Beers Pass Route Applicable Alternative A Applicable Alternative C Not Applicable
It is therefore evident that national route realignment / route construction induces a displacement effect within the local economy. This can be explained as follows: a new national road is constructed; limited new opportunities emerge along the new route alignment. In general, traffic volumes and economic growth increases along the new route. Business sales of affected by-passed businesses decline, but stabilises over the medium term in conjunction with normalised traffic volume along the existing route. The short term decline in sales by selected existing business activities along the old alignment is mitigated / substituted by new sales (and concomitant employment opportunities) generated by limited new establishments along the new alignment, provided such facilities are situated within the same economic geographic system. Under these conditions, there can be no negative local multiplier effect in as far as economic value added and job creation / losses are concerned.
Whereas the town may experience a ‘net loss’, the local / municipal economy, however, merely experiences a displacement effect. This net loss therefore does not apply to the municipal economy at large, but predominantly relates to very specific businesses only that were directly reliant on transient trade from the N3. These businesses, however, stabilise over time and no structural economic shifts are affected. Hence, the town economy quickly stabilises back to its ‘normal’, long term growth trend.
6.3.2 Warden and Van Reenen:
The town economies of Warden and Van Reenen reflect significantly smaller economic bases and primarily offer a service centre function to the surrounding farming communities. Warden contributed 15.3% towards the GVA and 13.4% towards total employment of the local economy of Phumelela. Van Reenen contributed a mere 0.3% towards the GVA and 0.6% towards the employment figure of the local economy of Okhahlamba. It also reflects much smaller population figures, with no dominant township economies on the town peripheries as is the case with Harrismith.
135 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 As mentioned previously it is the trade sector that reveals the greatest degree of location sensitivity with regard to N3 realignment. Warden’s trade sector contributes 27.7% towards the town’s GVA and 43.6% towards total employment. Van Reenen’s trade sector contributes 15.8% towards the town’s GVA and 26.6% towards total employment.
Table 6.11: Size of the Trade Sector Warden Van Reenen Total GVA Total GVA (R’million) Employment (R’million) Employment Warden value 95.7 1 094 8.2 73 Trade Sector Value 26.6 477 1.2 19 Retail and Wholesale 25.3 449 0.9 15 Catering and Accommodation 1.3 28 0.3 5 Source: Demacon Ex. Quantec, 2011
The impact will merely relate to the businesses directly reliant on business from the N3. These sub-sectors’ contribution to the town economies are illustrated in the table below.
Table 6.12: Size of the Size of affected Trade Sub-Sectors Warden Van Reenen Percenta Percenta Percenta Percenta Total ge of GVA Total ge of GVA ge of ge of Employm Town (R’milli Employm Town (R’million) Town Town ent Employm on) ent Employm GVA GVA ent ent Automotive maintenance and 2.00 2.09% 36 3.24% 0.10 1.21% 2 2.13% repairs Fuel sales 2.26 2.37% 40 3.68% 0.05 0.59% 1 1.03% Sale of motor vehicle parts and 0.35 0.36% 6 0.56% 0.01 0.09% 0 0.17% accessories Short-stay 0.49 0.51% 10 0.92% 0.20 2.39% 4 4.88% accommodation Source: Demacon Ex. Quantec, 2011
It is evident that these sub-sectors contribute small segments towards the town economies. It should also be noted that merely a segment of these businesses will be impacted on directly by the realignment of the N3:
Warden: Automotive maintenance and repairs: approximately 10% of businesses in Warden is directly reliant on transient trade from the N3 Fuel sales: approximately 5% of businesses in Warden is directly reliant on transient trade from the N3 Short-stay accommodation: approximately 5% of businesses in Warden is directly reliant on transient trade from the N3 Restaurants: approximately 5% of businesses in Warden are directly reliant on transient trade from the N3.
Van Reenen: Automotive maintenance and repairs: approximately 25% of businesses in Van Reenen are directly reliant on transient trade from the N3 Fuel sales: approximately 50% of businesses in Van Reenen are directly reliant on transient trade from the N3 Short-stay accommodation: approximately 25% of businesses in Van Reenen are directly reliant on transient trade from the N3
136 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Restaurants: approximately 35% of businesses in Van Reenen are directly reliant on transient trade from the N3.
Table 6.13: Economic Impact of Route Realignment on Specific Trade Sub-Sectors Warden Van Reenen Segment of GVA Total Segment of GVA Total Trade Sub-Sectors Businesses (R’million) Employment Businesses (R’million) Employment Automotive maintenance 10% 25% 0.20 4 0.02 0.4 and repairs Fuel sale 5% 0.11 2 50% 0.02 0.4 Sale of motor vehicle parts 10% 25% 0.03 1 0.00 0.0 and accessories Short-stay accommodation 5% 0.02 1 25% 0.05 0.9 Restaurants 5% 0.04 1 35% 0.02 0.4 Source: Demacon Ex. Quantec, 2011
Impact modelling:
Table 6.14: Impact of Scenarios on Warden and Van Reenen Alternatives Warden Van Reenen Displacement Effect Displacement Effect De Beers Pass Route Applicable Applicable Alternative A Not Applicable Applicable Alternative C Not Applicable Not Applicable
Overall, it is evident that the impact on these two towns will be minimal / negligible.
6.4 SYNTHESIS
It is therefore evident that national route realignment / route construction induces a displacement effect within the local economy. This can be explained as follows: a new national road is constructed; limited new opportunities emerge along the new route alignment. In general, traffic volumes and economic growth increases along the new route. Business sales of affected by-passed businesses decline, but stabilises over the medium term in conjunction with normalised traffic volume along the existing route. The short term decline in sales by selected existing business activities along the old alignment is mitigated / substituted by new sales (and concomitant employment opportunities) generated by limited new establishments along the new alignment, provided such facilities are situated within the same economic geographic system. Under these conditions, there can be no negative local multiplier effect in as far as economic value added and job creation / losses are concerned.
Whereas the towns may experience a ‘net loss’, the local / municipal economy, however, merely experiences a displacement effect. This net loss therefore does not apply to the municipal economy at large, but predominantly relates to very specific businesses only that were directly reliant on transient trade from the N3. These businesses, however, stabilise over time and no structural economic shifts are affected. Hence, the town economy quickly stabilises back to its ‘normal’, long term growth trend.
137 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
CHAPTER 7: DETAILED IMPLICATIONS AND RECOMMENDATIONS
7.1 INTRODUCTION
The purpose of this chapter is to integrate the findings of the report into a set of detailed implications and recommendations. Each of the anticipated impacts (negative and positive) will be assessed according to a rating scale, supported by mitigation actions to limit the impact on the local towns under investigation.
7.2 IMPACT ACCORDING TO A RATING SCALE
A rating scale was provided according to which the identified impacts should be rated. The following table summarises the findings thereof.
138 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
Table 7.1: Impacts in terms of Rating Scale Potential for impact on Description Nature Extent Duration Intensity Consequence Probability Significance irreplaceable resources Decline in transient traffic Negative Medium High Medium Medium Medium High Medium volumes Decline in demand for Negative Medium High Medium Low Medium High Medium travel-related businesses Decline in retail sales Negative Medium High Medium Low Medium High Medium Decline in business Negative Medium High Medium Low Medium High Medium volumes Business closure Negative Low Medium Medium Low Medium Medium Medium Shift in local jobs related to Negative Medium High Medium Low Medium High Medium travel-related businesses Financial impact of tolling Negative High High Medium Low Medium High Medium of roads on public transport Increased consumer cost Negative High High Medium Low Medium High Medium Potential impact on the Negative Regional High Medium Low Medium High Medium pricing of goods and services Increased consumer Positive High High Medium Low Medium High Medium choice (two routes) Reduced travel distance Positive High High Medium Medium Medium High Medium and travel time Reduced operational costs Positive High High Medium Low Medium Medium Medium for heavy vehicles Opportunity for new Positive Medium Medium Medium Medium Medium Medium Medium economic activities along new route Job creation Positive High Medium Medium Low Medium High Medium Income multiplier effect of Positive High High Medium Low Medium High Medium investment Alternative adjustment for Positive Low Medium Medium Medium Medium Medium Medium travel-related business is to relocate to realignment
139 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
7.3 MITIGATION ACTIONS
In order to reduce the negative impact of the construction of the new roads / upgrade of existing road the following mitigation actions are recommended:
1. Ensure that the accessibility and mobility function of the existing route is not diminished. 2. Careful design of interchanges to ensure continuity and access. 3. Maintain the existing route to the same standard as before. 4. Ensure that proper linkages between the new alignment and old alignment as well as towns along the route are affected (similar to the N1 between Gauteng and Polokwane). 5. By virtue of the various spatial development frameworks, the number of economic opportunities along the new route will be limited – no new town or major nodal developments are envisaged. 6. Actively encourage light vehicle utilisation of the existing route. This could be achieved via differentiated tolls. This might further reduce the impact (displacement effect) on filling stations (and related activities reliant on transient trade) at the entrances to town. 7. As far as possible, utilise / contract local expertise (labour and professional firms) in road construction and long term maintenance. Harrismith has the labour base to effect such conditions. This may enhance the construction and maintenance impact (post construction) on the local economy, but also o specific sub-sectors, including mining and quarrying, manufacturing, construction and trade.
140 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011
ANNEXURE A: SECTORAL GVA AND EMPLOYMENT GROWTH TRENDS
A. SECTORAL GVA AND EMPLOYMENT GROWTH TRENDS
A1 Agriculture Sector
Include establishments that are primarily engaged in farming activities, commercial hunting, game propagation and forestry, logging and fishing).
Subsequent figures indicate the growth performance of the agricultural sector within the local economies.
Figure 1: Agriculture Sector Economic Performance, 1995-2010
Agriculture, Forestry and Fishing - Economic Performance
250.0 214.2
200.0
150.0 184.2
100.0 44.9 33.6 Growth (%) 29.8 50.0 10.8 13.8 5.0 0.0 7.4 7.0 1.9 1.8 (10.6) (6.3) - (30.4) 35.7 20.9 24.9 19.222.7 4.3 7.0 8.6 9.4 6.6 7.1 1.7 1.2 0.1 1.7 1.6 (5.7) 2.44.1 (2.1) 2.2 2.7 (3.9) 0.9 0.71.7 (50.0) (13.5) (8.0)
(33.6)
2006-2007 2007-2008 2008-2009 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 2: Agriculture Sector Employment Performance, 1995-2010
Agriculture, Forestry and Fishing - Employment Performance
40.0 29.8 30.0 19.4 20.0 13.0 11.7 22.1 10.0 10.0 4.1 4.1 4.7 1.0 0.9 0.2 12.6 (1.9) (4.2) (5.2) (3.5) - 6.2 6.5 5.0 Growth (%) 1.1 (0.9) 0.3 (0.1) (0.0) (0.9) (1.0) (1.3) 0.1 (0.5) (0.3) (0.2) (10.0) (2.8) (1.6) (2.8) (3.1) (3.5) (6.0) (8.2) (9.2) (8.0) (9.5) (20.0) (17.2) (19.3)
(30.0) (22.4)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
141 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung: Contributed a mere 2.6% towards the GVA and 5.2% towards the employment of the local economy in 2010. Average annual GVA growth between 1995 and 2010 is 21.5%. Average annual employment growth between 1995 and 2010 is 5.6%.
Phumelela: Contributed a 23.6% towards the GVA and 42.9% towards the employment of the local economy in 2010. Average annual GVA growth between 1995 and 2010 is 14.8%. Average annual employment growth between 1995 and 2010 is 1.0%.
Okhahlamba: Contributed 12.0% towards the GVA and 10.6% towards the employment of the local economy in 2010. Average annual GVA growth between 1995 and 2010 is 5.5%. Average annual employment growth between 1995 and 2010 is (-5.3%).
A2 Mining Sector
Includes the extracting and beneficiating of minerals occurring naturally, including solids, liquids and crude petroleum and gases. It also includes underground and surface mines, quarries and the operation of oil and gas wells as well as all supplemental activities for dressing and beneficiating of ores and other crude material):
Figure 3: Mining Sector Economic Performance, 1995-2010
Mining- Economic Performance 73.6 80.0
60.0
40.0 21.9 18.4 12.7 20.0 8.7 6.0 3.2 5.5 1.1 (1.0) 1.1 (2.1) (4.8) (7.1) (5.5) (7.0) (8.1) - (10.0) (10.9) (12.0) (14.0) (14.7) (16.6) (15.9) (16.3) (16.3) Growth (%) (18.4) (19.4) 5.4 (24.1) 3.1 (0.2) (3.7) (2.9) (20.0) (7.1) (8.9) (9.3) (35.8) (13.5) (15.7) (13.4) (20.6) (40.0) (23.5) (27.0) (35.5)
(60.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
142 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4: Mining Sector Employment Performance, 1995-2010
Mining- Employment Performance
30.0 21.9 16.0 12.7 11.6 20.0 8.1 10.0 10.0 (2.0) 0.7 0.4 0.4 (3.9) (6.2) (4.8) (4.1) (7.2)(8.1) (7.7) - (12.0) (10.7) (10.9) (11.3) (13.0) (15.7) (10.0) (18.9) (17.0) (18.7) (3.4) (22.1) (21.0) (1.6) (5.2) (6.4) (6.9) (20.0) (7.5) (10.1) (12.1) (11.9) (11.1) (34.0)
Growth (%) (17.7) (30.0) (21.1) (21.5) (40.0) (34.1) (54.9) (50.0) (60.0)
(53.8)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Mining sector contributed a mere 0.2% towards the GVA and a mere 0.1% towards the employment of the local economy in 2010. Average Annual GVA growth for the sector between 1995 and 2010 is (-9.3%). Average Annual Employment growth for the mining sector between 1995 and 2010 is (- 14.8%).
Phumelela: The Mining sector contributed 7.3% towards the GVA and a mere 0.6% towards the employment of the local economy. Average Annual GVA growth for the sector between 1995 and 2010 is (-11.5%). Average Annual Employment growth for the mining sector between 1995 and 2010 is (- 15.0%).
Okhahlamba: The Mining sector contributed a mere 0.3% towards the GVA and a mere 0.2% towards the employment of the local economy. Average Annual GVA growth for the sector between 1995 and 2009 is 2.1%. Average Annual Employment growth for the mining sector between 1995 and 2009 is (- 0.03%).
A3 Manufacturing Sector
Manufacturing is defined as the physical or chemical transformation of materials or compounds into new products. The manufacturing sector represents an important economic and employment sector in any economy. The sector also serve as catalyst for supporting economic activities contributing to economic growth within an area and positive spin-off effects on the whole economy.
143 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 5: Manufacturing Sector Economic Performance, 1995-2010
Manufacturing - Economic Performance 36.5 40.0 35.0 32.3 31.6 27.7 30.0 23.8 19.8 16.0 15.2 20.0 14.9 14.7 11.2 11.6 12.2 8.7 6.9 6.5 10.0 4.7 5.6 5.8 5.6 3.7 2.4 3.23.5 3.4 4.0 2.9 1.0 1.5 1.9 1.3 0.4 2.1 1.4
(0.7) (0.4) (1.5)(0.5) (1.3) Growth (%) - (6.0) (6.0) (6.5) (10.7) (10.0)
(20.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 6: Manufacturing Sector Employment Performance, 1995-2010
Manufacturing - Employment Performance
35.0 28.4 25.2 26.0 26.3 30.0 22.0 25.0 19.8 18.8
20.0 13.1 13.0 15.0 8.2 7.6 6.2 5.0 6.6 6.5 5.2 10.0 3.0 2.9 3.8 2.8 0.6 0.6 0.6 0.5 5.0 (1.8) (1.2) 0.1 (0.1) (1.9) (0.2) (0.5) (3.6) (2.7) (3.5) (3.8) (3.6) (4.0) (2.9) Growth (%) - (6.9) (5.2) (9.0) (8.8) (8.6) (5.0) (10.6) (11.5) (10.0)
(15.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Manufacturing sector contributed 13.7% towards the GVA and 10.9% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 3.9%. Average Annual Employment growth for the manufacturing sector over this period amounts to (-4.8%).
Phumelela: The Manufacturing sector contributed 12.8% towards the GVA and 6.2% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 0.9%. Average Annual Employment growth for the manufacturing sector over this period amounts to (-6.5%).
Okhahlamba:
144 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 The Manufacturing sector contributed 28.5% towards the GVA and 15.8% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is (- 1.4%). Average Annual Employment growth for the manufacturing sector over this period amounts to (-7.7%).
A4 Utilities Sector
It includes electricity, water, gas, buildings and construction. It includes the production, collection and distribution of electricity; the manufacturing of gas; the distribution of gaseous fuels through mains; the collection, purification and distribution of water; and the construction of infrastructure and buildings.
Figure 7: Utilities Sector Economic Performance, 1995-2010
Utilities - Economic Performance
20.0
15.0 14.1 15.0 13.6 12.7 10.7 10.0 9.2 6.6 5.0 6.1 5.5 5.8 6.2 4.7 4.4 4.5 3.6 4.2 1.12.0 1.5 2.0 1.6 2.0 1.8 1.71.8 - (0.6) (1.0) 0.1 (0.8) (0.7) 0.2 (2.5) (2.2) (2.2) (2.7)(3.3) (4.6)(4.7) (3.5)(4.5) Growth (%) (5.0) (6.0) (7.5) (10.0) (9.1) (13.4) (15.0) (15.3)
(20.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 8: Utilities Sector Employment Performance, 1995-2010
Utilities - Employment Performance
30.0 25.0 23.8 20.0 20.519.5 17.2 15.0 12.712.5 12.7 10.0 9.2 8.0 8.8 7.3 8.7 9.1 5.0 4.6 4.5 5.4 2.7 4.0 3.5 3.6 2.3 - 2.0 0.5 1.9 1.3 1.4 (0.8) (0.9) (0.1) (1.9) (0.6)
Growth (%) (5.0) (4.6) (4.7) (5.6) (6.5) (7.7) (6.4) (10.0) (9.5) (12.6) (15.0) (13.6) (14.6) (13.8) (18.7) (20.0) (21.2) (20.4)
(25.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Utilities sector contributed 3.1% towards the GVA and 0.3% towards the employment of the local economy in 2010.
145 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 1.2%. Average Annual Employment growth for the manufacturing sector over this period amounts to 2.1%.
Phumelela: The Utilities sector contributed 1.9% towards the GVA and 0.2% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 1.2%. Average Annual Employment growth for the manufacturing sector over this period amounts to 0.2%.
Okhahlamba: The Utilities sector contributed 4.0% towards the GVA and 0.4% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 1.5%. Average Annual Employment growth for the manufacturing sector over this period amounts to 0.5%.
A5 Construction Sector
Buildings and construction involves residential building activities; non-residential building; roads, streets and bridges; water schemes and works; sewerage; and other construction activities
Figure 9: Construction Sector Economic Performance, 1995-2010
Construction - Economic Performance
60.0
50.0 48.8 40.0
30.0 23.5 13.9 20.0 10.8 22.6 8.2 19.0 16.3 8.6 17.9 17.0 5.0 14.5 5.4 3.6 4.8 15.4 5.6 10.0 10.5 2.0 9.8 0.7 5.8
Growth (%) 13.9 - (9.5) (0.4) (9.2) (9.1) 1.1 3.7 5.7 4.8 3.9 5.1 3.6 4.8 5.5 (10.0) (16.1) 1.9 0.7 (13.3) (20.0) (12.8) (13.2) (11.1)
(30.0) (20.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
146 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.10: Construction Sector Employment Performance, 1995-2010
Construction - Employment Performance
30.0 27.7 25.0 20.0 16.1
15.0
11.0 6.1 12.5 10.0 4.5 16.1 9.3 8.3 8.5 2.4 1.9 9.0 7.7 5.0 5.8 6.5 0.9 2.4 3.6 (3.4) - (5.5) (4.8) 6.1 0.9
Growth (%) (6.7) (2.2) (8.2) 4.1 (8.4) (7.0) (5.0) (9.5) (4.6) 0.9 (12.7) (1.2) (0.3) (10.0) (3.4) (7.0) (9.0) (8.8) (8.5) (15.0) (10.8) (9.2) (20.0) (13.6)
(16.8)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Construction sector contributed 2.4% towards the GVA and 5.9% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 1.6%. Average Annual Employment growth for the manufacturing sector over this period amounts to (-2.3%).
Phumelela: The Construction sector contributed 2.5% towards the GVA and 4.9% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is (- 0.2%). Average Annual Employment growth for the manufacturing sector over this period amounts to (-4.1%).
Okhahlamba: The Construction sector contributed 3.7% towards the GVA and 9.3% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 13.9%. Average Annual Employment growth for the manufacturing sector over this period amounts to 7.1%.
A6 Trade Sector
The resale (sale without transformation) of new and used goods to the general public for personal or household consumption or use by shops, department stores, stalls, mail-order houses, hawkers and peddlers, consumer co-operatives, etc.
147 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 4.11: Trade Sector Economic Performance, 1995-2010
Trade - Economic Performance
20.0 14.5 13.4 13.3 15.0 9.9 8.6 9.7 9.0 9.2
7.5 10.0 7.0 6.4 5.2 8.0 8.8 7.66.8 6.7 4.0 5.0 5.65.7 5.2 5.7 1.7 3.9 5.0 0.8 2.2 2.3 2.4 2.9 3.0 2.0 1.8 1.01.4 Growth (%) - 0.7 0.6 0.5 (0.1) 0.5 (2.8) (3.1) (5.0) (8.2)(7.1) (8.1)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 12: Trade Sector Employment Performance, 1995-2010
Trade - Employment Performance
10.0 8.6 7.1 7.4 7.4 7.1 8.0 6.6 6.2 7.3 7.2 6.0 5.7 5.7 5.9 5.0 3.3
4.5 4.5 4.0 4.2 2.1 4.0 2.4 2.1 1.8 2.9 2.7 0.8 2.9 1.0 2.0 1.61.8 1.8 1.8 1.4 1.1 0.9 - 0.3 0.2 0.1 0.6 (0.6) Growth (%) (2.0) (2.6) (2.3) (4.0) (5.4) (4.4) (4.6) (6.0) (5.5)
(8.0)
1998-1999 2001-2002 1995-1996 1996-1997 1997-1998 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Trade sector contributed 15.5% towards the GVA and 26.3% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 3.3%. Average Annual Employment growth for the manufacturing sector over this period amounts to 3.1%.
Phumelela: The Trade sector contributed 12.1% towards the GVA and 16.6% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 0.8%. Average Annual Employment growth for the manufacturing sector over this period amounts to 0.5%.
Okhahlamba: The Trade sector contributed 11.3% towards the GVA and 19.3% towards the employment of the local economy in 2010.
148 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 8.0%. Average Annual Employment growth for the manufacturing sector over this period amounts to 3.9%.
A.7 Transport and Communication Sector
Providing passenger or freight transport, whether scheduled or not, by rail, road, water or air and auxiliary activities such as terminal and parking facilities, cargo handling and storage, postal activities and telecommunications.
Figure 13: Transport and Communication Sector Economic Performance, 1995-2010
Transport, Storage and Communication - Economic Performance
25.0 18.6 19.0 17.3 20.0 15.1 15.8 16.0 13.3 15.0 12.1
7.3 7.1 7.9 10.0 5.0 5.0 5.5 5.1 1.1 1.3 2.0 3.5 2.2 3.5 2.32.9 1.1 1.0 0.6 0.6 1.31.8 1.11.1 Growth (%) - 0.2 (0.4) (0.1) (0.4)0.3 (3.4) (2.2) (2.9) (3.4)(2.4) (5.0) (4.6) (3.9) (5.0) (8.3) (10.0) (8.7)
(15.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 14: Transport and Communication Sector Employment Performance, 1995-2010
Transport, Storage and Communication - Employment Performance
20.0 13.6 13.3 15.0 9.1 9.0 6.6 7.8 10.0 4.5 5.0 9.410.2 4.8 3.6 3.5 2.5 3.3 2.0 5.0 1.4 1.0 2.2 1.21.9 1.42.0 1.11.9 2.2 - (0.8) (0.4) (0.8)0.0 (2.9) (1.9) (5.0) (4.9) Growth (%) (6.4) (6.2) (6.2) (7.2) (8.1) (10.0) (10.7) (11.7) (10.9) (15.0) (15.2) (14.4) (15.8) (14.7)
(20.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Transport and Communication sector contributed 5.9% towards the GVA and 2.6% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 1.8%. Average Annual Employment growth for the manufacturing sector over this period amounts to (-2.1%).
149 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Phumelela: The Transport and Communication sector contributed 6.4% towards the GVA and 3.0% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is (- 2.6%). Average Annual Employment growth for the manufacturing sector over this period amounts to (-4.9%).
Okhahlamba: The Transport and Communication sector contributed 10.0% towards the GVA and 5.0% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 10.6%. Average Annual Employment growth for the manufacturing sector over this period amounts to 6.0%.
A8 Finance and Business Services Sector
Activity of obtaining and redistributing funds, other than for the purpose of insurance, real estate or commercial/business services. Real estate includes the buying, selling, renting and operating of owned or leased real estate, such as flats and dwellings and non- residential buildings; developing and subdividing real estate into lots, etc. Also included are land-jobbers (i.e. property speculators) and the development and sale of land. Business services in this sector refer to the renting of transport equipment and other machinery such as agricultural, construction, computer, and household equipment.
Figure 15: Finance and Business Services Sector Economic Performance, 1995-2010
Finance, Insurance, Real Estate and Business Services - Economic Performance
35.0 31.8 30.0 26.6 22.0 25.0 20.5 20.5 19.0 18.5 18.5 19.8 16.9 17.5 17.6 20.0 13.5 15.0 13.9 9.8 11.3 11.1 11.3 12.3 10.0 10.1 10.5 9.8 9.9 9.3 8.2 7.5 8.0 Growth (%) 6.5 1.9 5.0 4.8 3.2 2.6 2.7 0.8 1.1 1.81.6 - 0.5 (0.8) (0.6) 0.7 0.3 (2.5) (5.0) (4.5) (7.3)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
150 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 16: Finance and Business Services Sector Employment Performance, 1995-2010
Finance, Insurance, Real Estate and Business Services - Employment Performance 32.0 35.0 26.1 30.0 20.5 20.8 25.0 19.1 18.1 16.3 16.0 20.0 14.1 18.8 12.0 11.6 15.0 16.6 8.8 13.0 6.9 6.7 10.0 9.6 9.1 9.0 7.4 5.0 5.4 5.4 6.4 6.65.0 0.6 3.6 2.9 3.9 Growth (%) 1.5 1.4 - 0.2 0.7 0.5 (0.6) (2.2) (1.4) (2.7) (2.2) (0.8)(2.5) (5.0) (7.4) (8.7) (10.0) (11.3)
(15.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Financial and Business Services sector contributed 21.6% towards the GVA and 11.1% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 4.7%. Average Annual Employment growth for the manufacturing sector over this period amounts to 3.5%.
Phumelela: The Financial and Business Services sector contributed 14.3% towards the GVA and 4.2% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 4.9%. Average Annual Employment growth for the manufacturing sector over this period amounts to 2.3%.
Okhahlamba: The Financial and Business Services sector contributed 14.9% towards the GVA and 10.9% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 12.3%. Average Annual Employment growth for the manufacturing sector over this period amounts to 15.3%.
A9 Community, Social and Other Personal Services Sector
Include general activities of community organisations (NGOs), recreational, cultural and sporting activities, and other community, social and personal services.
151 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 17: Community, Social and Other Personal Services Sector Economic Performance, 1995- 2010
Community, Social and Personal Services - Economic Performance
20.0 14.3 13.6 15.0 10.2 10.3 9.7 8.7 8.4 8.3 7.7 10.0 7.1 6.6 5.9 6.6 4.9 5.1 4.8 6.9 4.4 4.2 6.1 2.7 2.7 3.5 2.9 5.0 1.4 0.3 3.5 0.3 0.4 0.41.0 2.2 1.7 2.0 (0.8) Growth (%) (2.3) - (0.4) 0.4 (0.4) (1.6) (2.1) (5.0) (3.9) (4.0) (4.1) (6.7)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 18: Community, Social and Other Personal Services Sector Employment Performance, 1995-2010
Community, Social and Personal Services - Employment Performance 12.8 12.6 15.0 12.2 11.9 11.3 11.1 8.0 10.0 7.4 6.2 7.1 4.9 3.6 4.3 4.4 4.4 5.0 4.4 4.7 0.1 0.2 0.2 (1.1) 3.8 (1.2) (1.0) (0.4) (0.5) (1.6) 2.2 (2.4) (1.3) - (2.7) 0.7 (3.0) (3.2) (2.3) (2.2)
Growth (%) (5.0) (8.3) (6.1) (7.1) (6.6) (7.1) (6.6) (7.1) (10.0) (9.7) (11.3)
(15.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The Community, Social and Personal Services sector contributed 15.5% towards the GVA and 16.0% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 2.2%. Average Annual Employment growth for the manufacturing sector over this period amounts to (-0.4%).
Phumelela: The Community, Social and Personal Services sector contributed 12.4% towards the GVA and 15.6% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is (- 0.02%). Average Annual Employment growth for the manufacturing sector over this period amounts to (-3.3%).
152 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Okhahlamba: The Community, Social and Personal Services sector contributed 6.0% towards the GVA and 18.1% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 8.0%. Average Annual Employment growth for the manufacturing sector over this period amounts to 6.9%.
A10 General Government Services Sector
Include general activities of central, provincial and local government such as health and social work, education, infrastructure provision etc. This includes sewage and refuse removal, sanitation and similar activities and military and navy activities.
Figure 19: General Government Services Sector Economic Performance, 1995-2010
General Government Services - Economic Performance
20.0 16.4
15.0
11.0
7.9 7.8 7.9 10.0 6.7 7.5 6.7 7.2 7.5 5.3 6.1 4.3 4.4 3.9 3.0 3.4 3.5 3.7 3.03.2 5.0 2.4 1.7 Growth (%) 0.8 (1.2) (0.9) (0.8) - (3.0) (3.0) (2.8)
(5.0)
1998-1999 2001-2002 1995-1996 1996-1997 1997-1998 1999-2000 2000-2001 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Figure 20: General Government Services Sector Employment Performance, 1995-2010
General Government Services - Employment Performance
20.0 14.5 12.1 15.0 9.2 8.5 8.3 6.7 7.3 7.8 7.3 10.0 6.1 5.0 5.5 5.2 5.9 5.0 1.5 1.8 5.0 0.0 (0.0) 0.9 1.2 0.3 (1.4) (2.2) (1.0) - (4.5) (3.9) Growth (%) (6.4) (6.7) (5.0)
(10.0)
1999-2000 1995-1996 1996-1997 1997-1998 1998-1999 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Maluti-a-Phufong LM Phumelela LM Okhahlamba LM
Source: Demacon Ex. Quantec, 2011
Maluti-a-Phofung: The General Government Services sector contributed 19.5% towards the GVA and 21.6% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 0.9%. Average Annual Employment growth for the manufacturing sector over this period amounts to (-1.0%).
153 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Phumelela: The General Government Services sector contributed 6.6% towards the GVA and 5.8% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is (- 0.3%). Average Annual Employment growth for the manufacturing sector over this period amounts to (-2.2%).
Okhahlamba: The General Government Services sector contributed 9.4% towards the GVA and 10.4% towards the employment of the local economy in 2010. Average Annual GVA growth for the manufacturing sector between 1995 and 2010 is 7.3%. Average Annual Employment growth for the manufacturing sector over this period amounts to 7.6%.
B COMPETITIVE AND COMPARATIVE ADVANTAGE ANALYSIS
Competitive Advantage Analysis (CAA) is an assessment of the structure and performance of the economy of an area, to identify local strengths (“competitive advantages”) and potential for economic development. Actually, a full competitive advantage analysis would include an examination of local infrastructure, markets, labour force, amenities, access to transportation routes, etc. The approach outlined here doesn’t go that far. Instead, it focuses on examining local industries/sectors to identify leading and lagging sectors and their prospects for employment growth.
B1 LOCATION QUOTIENT
A location quotient identifies the level of specialisation in a geographic region. In simple terms it measures the concentration of certain industry sectors in the region relative to the aggregate / reference economy1.
LQ = (Local Employment in Industry/Total Local Employment) / (District Employment in Industry/Total District Employment)2.
The interpretation of location quotients is not particularly complex; we are simply measuring employment concentration in the region. Industry groups that dominate in the region will have higher location quotients and ones that are relatively scarce will have lower location quotients.
Table 1 shows the range of possible location quotients arising from the formula and their suggested interpretation. Note that a low (or high) location quotient doesn’t necessarily mean the industry group is small (or large), unimportant (or important) in the region, just that it is less so (or more so) than in the reference economy as a whole.
Table 1: Interpretation of Location Quotient Location Label Interpretation Quotient Less than 0.75 Low Local needs are not being met and goods and services are imported Most local needs are being met by the sector. The region will probably 0.75 to 1.24 Medium be both importing and exporting goods and services in this sector. Sector is serving the needs that extend beyond the boundaries of the 1.25 to 4.99 High municipality - likely to export goods and services High level of local dependence on the sector – typically a single industry More than 5.00 Very High community.
1 Source: www.citiesalliance.org/doc/resources/led 2 Source: Florida State University Department of Urban and Regional Planning. Planning Methods III: Forecasting
154 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 2 indicates the Location Quotient for the various local economies with reference to the various district economies for 2010.
Table 2: Location Quotients, 2010 Maluti-a-Phofung to Phumelela to District Okhahlamba to District District LQ Classification LQ Classification LQ Classification
PA: Agriculture, forestry 0.36 Low 2.96 High 1.41 High and fishing [SIC: 1] PB: Mining and 0.01 Low 0.11 Low 0.27 Low quarrying [SIC: 2] SC: Manufacturing [SIC: 1.36 High 0.78 Medium 1.14 Medium 3] SC03: Food, beverages and tobacco [SIC: 301- 0.48 Low 1.62 High 1.52 High 306] SC04: Textiles, clothing and leather goods [SIC: 3.36 High 0.29 Low 1.05 Medium 311-317] SC05: Wood, paper, publishing and printing 0.96 Medium 0.83 Medium 1.31 High [SIC: 321-326] SC06: Petroleum products, chemicals, 0.51 Low 0.22 Low 0.98 Medium rubber and plastic [SIC: 331-338] SC07: Other non-metal mineral products [SIC: 1.06 Medium 1.55 High 1.34 High 341-342] SC08: Metals, metal products, machinery and 0.81 Medium 0.78 Medium 1.06 Medium equipment [SIC: 351-359] SC09: Electrical machinery and apparatus 4.23 High 0.80 Medium - Low [SIC: 361-363] SC10: Radio, TV, instruments, watches and 1.39 High - Low 2.04 High clocks [SIC: 371-376] SC11: Transport 0.24 Low 0.47 Low 0.49 Low equipment [SIC: 381-387] SC12: Furniture and other manufacturing [SIC: 391- 2.20 High 0.37 Low 1.35 High 392] SD: Electricity, gas and 1.03 Medium 0.59 Low 1.31 High water [SIC: 4] SD13: Electricity [SIC: 41] 0.71 Low 0.66 Low 1.26 High SD14: Water [SIC: 42] 1.81 High 0.43 Low 1.39 High SE: Construction [SIC: 5] 1.15 Medium 0.95 Medium 1.50 High TF: Wholesale and retail trade, catering and 1.25 Medium 0.79 Medium 0.84 Medium accommodation [SIC: 6] TF16: Wholesale and retail 1.25 Medium 0.81 Medium 0.70 Low trade [SIC: 61-62] TF17: Catering and accommodation services 1.26 High 0.58 Low 2.15 High [SIC: 63] TG: Transport, storage and communication 0.67 Low 0.78 Medium 0.88 Medium [SIC: 7] TG18: Transport and 0.73 Low 0.88 Medium 0.97 Medium storage [SIC: 71] TG19: Communication 0.36 Low 0.20 Low 0.25 Low [SIC: 72] TH: Finance, insurance, real estate and business 1.23 Medium 0.46 Low 0.74 Low services [SIC: 8] TH20: Finance and 0.83 Low 0.34 Low 0.40 Low insurance [SIC: 81-82]
155 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung to Phumelela to District Okhahlamba to District District LQ Classification LQ Classification LQ Classification
TH21: Business services 1.31 High 0.49 Low 0.79 Medium [SIC: 83] TI: Community, social and personal services 0.89 Medium 0.87 Medium 1.11 Medium [SIC: 92, 95-6, 99, 0] TJ: General government 1.26 High 0.34 Low 0.65 Low [SIC: 91, 94] Source: Demacon, 2011
Maluti-a-Phofung: Sectors classified as high: Manufacturing and General Government Sectors classified as medium: Utilities, Construction, Trade, Finance and Business Services and Community, social and personal services.
Phumelela: Sectors classified as high: Agriculture Sectors classified as medium: Manufacturing, Construction, Trade, Transport and Communication and Community, social and personal services.
Okhahlamba: Sectors classified as high: Agriculture, Utilities, Construction Sectors classified as medium: Manufacturing, Trade, Transport and Communication and Community, social and personal services.
B2 SHIFT-SHARE ANALYSIS
Shift-Share analysis is used to account for the competitiveness of a region’s industries and to analyse the local base. The analysis calculates how much of the employment growth experienced by a local economy in a specific time period can be accounted for by3:
The economy’s mix of sectors – because different sectors grow at different rates Metropolitan growth rate – because a certain similarity between metropolitan and local employment growth is a reasonable expectation Local factors – because a local economy may possess a competitive advantage in certain sectors. If a city’s employment in a sector is growing at a faster rate than the regional economy’s employment growth in that sector it would suggest that the local economy has a competitive advantage in that sector.
The shift-share analysis decomposes local industry employment change into three components4:
District Growth Share – refers to local job growth that is attributed to regional economic growth.
DGS = Industry Employment x District Average Growth Rate of Total Employment Growth = (employment in 2010- employment in 2005)/ employment in 2005
Industrial Mix Share – reflects the differences in industry mix between the local and metropolitan levels. The mix-factor examines how district growth or decline of a particular industry translates into local growth or decline of that industry.
3 Source: www.citiesalliance.org/doc/resources/led 4 Source: http://cecd.aers.psu.edu/using_employment_data_to_better.htm
156 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 IMS = Local Industry Employment x (District Industry Growth Rate – District Average Growth Rate)
Local Share – describes the extent to which unique local factors relate to regional industrial employment growth or decline. The local component aids in identifying a local area’s economic strengths and represents how a region’s competitive position can contribute to regional job growth.
LS = Local Industry Employment x (Local Industry Growth Rate – District Industry Growth Rate)
Total Employment Change = MGS + IMS + LS.
Table 3 summarises the findings of the shift share analysis. .
Table 3: Shift Share Analysis – Local Economies versus applicable District Economies, 2005 to 2010 Shares of Employment Change
Local District Local Economy Industry Local Growth Total Employment Employment Mix Share Share Share in 2010 in 2005 Maluti-a-Phofung 67 118 (1 836) 894 3 276 2 334 69 452 Phumelela 9 554 (261) (351) (774) (1 387) 8 167 Okhahlamba 21 349 2 176 (1 157) 1 874 2 893 24 242 Source: Demacon, 2011
Maluti-a-Phofung:
District Growth Share – If the local economy was identical to the Thabo Mofutsanyana District economy then the local economy should have declined by 1 836 jobs between 2005 and 2010. However, it is evident that the local economy increased with 2 893 jobs. This suggests that the local economy is performing stronger than the district economy. Industry Mix Share - The overall industrial growth component of 894 means that the local economy has 894 more jobs than it would have if its structure were identical to the district economy. Local Share - According to the local share component the increase of 3 276 jobs can be attributed to its competitive position.
Phumelela:
District Growth Share – If the local economy was identical to the Thabo Mofutsanyana District economy then the local economy should have declined by 261 jobs between 2005 and 2010. However, it is evident that the local economy declined with 1 387 jobs. This suggests that the local economy is performing poorer than the district economy. Industry Mix Share - The overall industrial growth component of (-351) means that the local economy has 351 less jobs than it would have if its structure were identical to the district economy. Local Share - According to the local share component the decline of 774 jobs can be attributed to its uncompetitive position.
157 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Okhahlamba:
District Growth Share – If the local economy was identical to the Uthukela District economy then the local economy should have grown by 2 176 jobs between 2005 and 2010. However, it is evident that the local economy increased with 2 893 jobs. This suggests that the local economy is performing slightly better than the district economy. Industry Mix Share - The overall industrial growth component of (-1 157) means that the local economy has 1 157 less jobs than it would have if its structure were identical to the district economy. Local Share - According to the local share component the increase of 1 874 jobs can be attributed to its competitive position.
B3 ECONOMIC BASE ANALYSIS
Economic base analysis is designed to analyse the broad economic structure of the local economy. It does this by dividing the economy into two sectors:
Basic or export sectors (which includes all output – goods and services – sold outside the borders of the local economy. Non-basic sectors (which includes all output that is sold within the local economy).
A local region’s export industries are its economic foundation, and all other industries thrive by servicing the export industries and one another. A change in the basic sector will automatically lead to a change in the same direction in the non-basic sector. The ratio of non-basic to basic activity is reasonably stable over the long term.
Overall, if a region can increase the level of basic employment, it can increase total employment by that amount times the multiplier5.
Basic Multiplier = Change in Total Employment/Change in Basic Employment
Change in Total Employment = Change in Basic Employment x the Basic Multiplier.
Another of methods can be utilised to estimate the economic base of the area:
Judgemental Approach Survey method Location Quotient Minimum Requirements.
For the purpose of this study the location quotient method is applied. It is important to understand that not all of a basic industry is ‘basic’. Only that part of the industry that serves the export market is considered basic. It is the part of the industry that raises the location quotient above 1.0. Any employment below an LQ of 1.0 is Non-Basic – those jobs serve local demand.
A second formula must be applied to the location quotient to determine the number of Basic Sector Jobs – this is only applied to industries with LQ exceeding 1.0.
Basic Sector Employment = (Local Employment Industry/Metropolitan employment Industry) – (Total Local Employment/ Total Metropolitan Employment) X Metropolitan Employment Industry6
5 Source: Georgia Tech, taken from Avrom Bendavid-Val. 6 -tchapin/urp5261/topics/econbase/lq.htm
158 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 4: Basic Sector Multiplier, 2010 Local Economy Total Industry Multiplier Maluti-a-Phofung 9.8 Phumelela 4.4 Okhahlamba 7.5 Source: Demacon, 2011
Maluti-a-Phofung:
The Main Basic Sectors within the Local Economy is vested in the Manufacturing, Utilities, Construction, Finance and Business Services and General Government Services Sectors. Overall the Basic Multiplier for the local economy amounts to 9.8 – reflecting that for every job created in the basic sector, 9.8 jobs could be created in the non-basic sectors of the local economy.
Phumelela:
The Main Basic Sectors within the Local Economy is vested in the Agriculture, Mining, Construction, Transport and Communication Sectors. Overall the Basic Multiplier for the local economy amounts to 4.4 – reflecting that for every job created in the basic sector, 4.4 jobs could be created in the non-basic sectors of the local economy.
Okhahlamba:
The Main Basic Sectors within the Local Economy is vested in the Agriculture, Manufacturing, Utilities, Construction, Finance and Business Services and Community, Social and Personal Services Sectors. Overall the Basic Multiplier for the local economy amounts to 7.5 – reflecting that for every job created in the basic sector, 7.5 jobs could be created in the non-basic sectors of the local economy.
B4 LEADING-LAGGING ANALYSIS
This analysis aims to examine the employment growth of the combined regional local economy in terms of the aggregate economy. This analysis uses sector employment growth rates to produce two key values: District Sector Relative Growth (DSRG) and Local Sector Relative Growth (LSRG)7.
DSRG = District Employment Growth in a Sector – District Employment Growth Overall
The results indicates whether the selected sector’s growth at district (or reference economy) level was higher or lower than district (or reference economy) growth overall.
Three possible results: Leading Sector exceeds growth of aggregate economy Lagging Sector either declined in employment or grew at slower rate than aggregate economy Even The sector’s growth equals aggregate economy growth overall
LSRG = Local Employment Growth in the Sector – District (or Reference Economy) Employment Growth in the Sector
7 Source: www.laverentianvalleytwsp.oh.ca
159 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Three possible results: Leading The local sector grew faster or declined at a slower rate than the aggregate economy’s sector The local sector grew at a slower rate, or declined at a greater rate than the aggregate Lagging economy’s sector Even Local sector growth equalled growth in the sector of the aggregate economy
This should be interpreted together with a positive, negative or constant industry growth:
Positive Growth – Sector grew in employment Negative Growth – Sector declined in employment Constant Growth – Employment was constant over the time period of the analysis.
Figures 1, 2 and 3 illustrate the leading lagging analysis graphically for each of the local economies.
Interpreting leading and lagging results: The MSRG and LSRG is merely a way of describing the relative growth dynamics of the various sectors. It is provided to compliment the shift share analysis numerical results, by describing the dynamics in words. These values should be considered when looking at the Carvalho and Industry Targeting Classifications.
Figure 1: Leading/Lagging Analysis – Maluti-a-Phofung Local Economy Main Sectors, 2005 to 2010 50% Leading 45% 40% 35% 30% Finance and business
services 25% 20% 15% Agriculture, forestry and 10% fishing Trade 5% Community, social and Lagging other personal services General government Leading 0% services -5% Construction -10% -15% Manufacturing Transport & -20% communication
Local Local Employment Sector Relative Growth -25% Electricity & water -30% -35% -40% -45% Mining Lagging -50% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% District Employment Sector Relative Growth
Source: Demacon, 2011
160 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 2: Leading/Lagging Analysis – Phumelela Local Economy Main Sectors, 2005 to 2010
50% Leading 45% 40% Manufacturing 35% 30%
25% 20% 15% Mining 10% 5% Lagging Leading 0% Transport & Agriculture, forestry and communication -5% fishing Construction -10% Finance and business Electricity & water Trade -15% services -20%
Local Local Employment Sector Relative Growth -25% General government -30% services -35% Community, social and -40% other personal services -45% Lagging -50% -70% -60% -50% -40% -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% District Employment Sector Relative Growth
Source: Demacon, 2011
Figure 3: Leading/Lagging Analysis – Okhahlamba Local Economy Main Sectors, 2005 to 2010
150% Leading 140% Manufacturing 130% 120% 110% 100% 90% 80% Finance and business 70% services 60% 50% Construction 40% Community, social and 30% other personal services Transport & 20% communication 10% Lagging Leading 0% General government services -10% Trade -20% Agriculture, forestry and -30% fishing Electricity & water -40% -50% -60% Mining
Local Local Employment Sector Relative Growth -70% -80% -90% -100% -110% -120% -130% -140% -150% Lagging -120% -100% -80% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% District Employment Sector Relative Growth
Source: Demacon, 2011
161 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 B5 CARVALHO CLASSIFICATION
The Carvalho Classification has been developed in 2000 by Dr. Emanuel Carvalho from the University of Waterloo in collaboration with OMAFRA CED Unit staff. Three values are combined in the classification – LQ, N/PRSG and LRSG.
There are 12 classifications, from ‘driving’ (for sectors that ere leading in MSRG and LSRG and had high location quotients) to ‘marginal’ (for sectors that were lagging in MSRG and LSRG and had low location quotients). It is important to note that these categories are descriptive and not pre-scriptive. It provides a multi-dimensional indication of the suitability of sectors, supported by tools and instruments that could be utilised in the development of these sectors.
Table 5: Classification, Interpretation and Definition Classification Interpretation Definition Driving MSRG and LSRG leading Community is highly specialised in this sector, LQ > 1.25 which is growing in the aggregate economy and growing at an even higher rate locally Accelerating MSRG and LSRG leading Community is neither highly specialised nor LQ 0.75 to 1.24 under-specialised in this sector, which is growing at the aggregate economy level and growing at an even higher rate locally Rising MSRG and LSRG leading Relatively low proportion of local employment, but LQ <0.74 will likely increase due to growth in this sector, which is growing on an aggregate economy level and growing at an even higher rate locally Evolving MSRG lagging and LSRG leading High local specialisation in a sector which grew at LQ > 1.25 an aggregate economy level at a slower rate than overall growth, local growth exceeded aggregate economic growth in this sector Transitional MSRG lagging and LSRG leading Average specialisation in a sector which grew at LQ 0.75 to 1.24 an aggregate economy level at a slower rate than overall growth, local growth exceeded aggregate economy growth in this sector Moderate MSRG lagging and LSRG leading Relatively underrepresented in a sector which LQ <0.74 grew at an aggregate economy level at a slower rate than overall growth; local growth exceeded aggregate economy growth in this sector Promising MSRG leading and LSRG lagging High local specialisation in a sector which grew at LQ > 1.25 an aggregate economy level, local growth was slower than aggregate economic growth in this sector Yielding MSRG leading and LSRG lagging Average specialisation in a sector which grew at LQ 0.75 to 1.24 an aggregate economic level, local growth was slower than aggregate economic growth in this sector Modest MSRG leading and LSRG lagging Relatively low specialisation in a sector which LQ <0.74 grew at an aggregate economic level; local growth was slower than aggregate economic growth in this sector Challenging MSRG lagging and LSRG lagging Industries have a relatively high concentration of LQ > 1.25 employment in the community, which suggests that they play a prominent role in overall employment in the community and should be monitored carefully Vulnerable MSRG lagging and LSRG lagging Industries have an average concentration of LQ 0.75 to 1.24 employment Marginal MSRG lagging and LSRG lagging Industries are under-represented in the LQ <0.74 community Source: Demacon based on www.reddi.gov.on.ca/cea_carvalho.htm
Table 6: Carvalho Classification of Local Economies versus applicable District Economies, 2005 to 2010 Maluti-a-Phofung Phumelela Okhahlamba PA: Agriculture, forestry and fishing [SIC: 1] Moderate Evolving Evolving PB: Mining and quarrying [SIC: 2] Marginal Moderate Modest SC: Manufacturing [SIC: 3] Challenging Transitional Transitional
162 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung Phumelela Okhahlamba SC03: Food, beverages and tobacco [SIC: 301-306] Modest Driving Driving SC04: Textiles, clothing and leather goods [SIC: 311-317] Challenging Moderate Transitional SC05: Wood, paper, publishing and printing [SIC: 321-326] Vulnerable Vulnerable Challenging SC06: Petroleum products, chemicals, rubber and plastic [SIC: 331-338] Marginal Moderate Transitional SC07: Other non-metal mineral products [SIC: 341- 342] Vulnerable Evolving Evolving SC08: Metals, metal products, machinery and equipment [SIC: 351-359] Yielding Accelerating Transitional SC09: Electrical machinery and apparatus [SIC: 361-363] Evolving Transitional Moderate SC10: Radio, TV, instruments, watches and clocks [SIC: 371-376] Evolving Moderate Evolving SC11: Transport equipment [SIC: 381-387] Marginal Moderate Moderate SC12: Furniture and other manufacturing [SIC: 391-392] Challenging Moderate Evolving SD: Electricity, gas and water [SIC: 4] Yielding Modest Challenging SD13: Electricity [SIC: 41] Modest Modest Challenging SD14: Water [SIC: 42] Promising Modest Challenging SE: Construction [SIC: 5] Yielding Yielding Driving TF: Wholesale and retail trade, catering and accommodation [SIC: 6] Driving Yielding Accelerating TF16: Wholesale and retail trade [SIC: 61-62] Driving Yielding Rising TF17: Catering and accommodation services [SIC: 63] Evolving Marginal Challenging TG: Transport, storage and communication [SIC: 7] Modest Yielding Accelerating TG18: Transport and storage [SIC: 71] Modest Yielding Accelerating TG19: Communication [SIC: 72] Modest Modest Rising TH: Finance, insurance, real estate and business services [SIC: 8] Accelerating Modest Accelerating TH20: Finance and insurance [SIC: 81-82] Transitional Marginal Moderate TH21: Business services [SIC: 83] Driving Modest Accelerating TI: Community, social and personal services [SIC: 92, 95-6, 99, 0] Accelerating Yielding Accelerating TJ: General government [SIC: 91, 94] Driving Modest Rising Source: Demacon, 2011
The driving, accelerating and rising sectors represent the sectors that are growing on a district as well as a local level.
The evolving, transitional and moderate sectors represent the sectors that are growing on a local level faster than at district level.
The promising, yielding and modest sectors represent the sectors that are growing on a local level slower than at district level.
The challenging sectors represent the Industries have a relatively high concentration of employment in the community, which suggests that they play a prominent role in overall employment in the community and should be monitored carefully
The vulnerable and marginal sectors are characterised by average employment concentration and are relatively underrepresented in the economy.
B6 INDUSTRY TARGET CLASSIFICATION
This classification is similar to that of the Carvalho Model in that it is based on a combination of the location quotient, District Sector Growth and LSRG values and it is expressed qualitative not quantitative. It is somewhat different in the way that it classifies the sectors, the categories are phrases that suggest the kind of prospects for growth that could be expected and in some cases, whether the sector should be a retention target.
163 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Table 7: Industry Target Classification System - Categories LSRG District Location Classification Definition Growth Quotient Leading Positive Medium or High Current Strength Sector currently growing strong (> 0.75) Low (<0.75) Emerging Strength Indication that a sector is experiencing growth and can be classified as having definite development potential Negative Medium or High Prospects limited by External trends represent a multitude of (> 0.75) external trends elements that strain development and growth and include competitiveness, exchange rate, fluctuations, performance of international economies, oil prices etc. Low (<0.75) Prospects limited by A weak base is an indication that the external trends and sector is structurally not particularly weak base strong and limited in its diversification. This along with external trends strain the development prospects Lagging Positive Medium or High High priority retention Indication of a previously dominant or (> 0.75) target economically important sector that needs to retain its positive economic position – making it a priority for growth and development. Low (<0.75) Prospects limited by A week base indicate a need for weak base and diversification and declining declining competitiveness reflects that it might competitiveness not be structural as strong as is needed for development potential Negative Medium or High Prospects limited by External trends hinder development, (> 0.75) external trends and supported by declining levels of declining competitiveness. competitiveness Low (<0.75) Prospects limited Growth prospects are limited to a overall minimum for this sector and the economy should rather focus on other economic sectors. Source: Sask Trends Monitor, 2007
Table 8: Local Economy Industry Targeting Classification, 2005 to 2010 Maluti-a-Phofung Phumelela Okhahlamba
PA: Agriculture, forestry Prospects limited by weak Prospects limited by Prospects limited by and fishing [SIC: 1] base and external trends external trends external trends Prospects limited overall Prospects limited by weak Prospects limited by weak PB: Mining and base and declining base and declining quarrying [SIC: 2] competitiveness competitiveness Prospects limited by Prospects limited by Prospects limited by SC: Manufacturing external trends and external trends external trends and [SIC: 3] declining competitiveness declining competitiveness SC03: Food, beverages Prospects limited overall Prospects limited by Current Strength and tobacco [SIC: 301- external trends 306] SC04: Textiles, clothing Prospects limited by Prospects limited by Prospects limited by and leather goods [SIC: external trends and external trends external trends 311-317] declining competitiveness SC05: Wood, paper, Prospects limited by Prospects limited by Prospects limited by publishing and printing external trends and external trends and external trends and [SIC: 321-326] declining competitiveness declining competitiveness declining competitiveness SC06: Petroleum Prospects limited overall Prospects limited by weak Prospects limited by products, chemicals, base and external trends external trends rubber and plastic [SIC: 331-338] SC07: Other non-metal Prospects limited by Prospects limited by Prospects limited by mineral products [SIC: external trends and external trends external trends 341-342] declining competitiveness SC08: Metals, metal High priority retention Current Strength Prospects limited by products, machinery target external trends and equipment [SIC:
164 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Maluti-a-Phofung Phumelela Okhahlamba
351-359] SC09: Electrical Prospects limited by Prospects limited by Prospects limited by weak machinery and external trends external trends base and external trends apparatus [SIC: 361- 363] SC10: Radio, TV, Prospects limited by Prospects limited by weak Prospects limited by instruments, watches external trends base and external trends external trends and clocks [SIC: 371- 376] SC11: Transport Prospects limited overall Prospects limited by weak Prospects limited by weak equipment [SIC: 381- base and external trends base and external trends 387] SC12: Furniture and Prospects limited by Prospects limited by weak Prospects limited by other manufacturing external trends and base and external trends external trends [SIC: 391-392] declining competitiveness High priority retention Prospects limited by Prospects limited by SD: Electricity, gas and target external trends and external trends and water [SIC: 4] declining competitiveness declining competitiveness Prospects limited by weak Prospects limited by Prospects limited by SD13: Electricity [SIC: base and declining external trends and external trends and 41] competitiveness declining competitiveness declining competitiveness High priority retention Prospects limited by Prospects limited by SD14: Water [SIC: 42] target external trends and external trends and declining competitiveness declining competitiveness SE: Construction [SIC: High priority retention High priority retention Current Strength 5] target target TF: Wholesale and Prospects limited by Prospects limited by Current Strength retail trade, catering external trends external trends and and accommodation declining competitiveness [SIC: 6] TF16: Wholesale and Current Strength High priority retention Emerging strength retail trade [SIC: 61-62] target TF17: Catering and Prospects limited by Prospects limited overall Prospects limited by accommodation external trends external trends and services [SIC: 63] declining competitiveness TG: Transport, storage Prospects limited by weak High priority retention Emerging strength and communication base and declining target [SIC: 7] competitiveness Prospects limited by weak High priority retention Current Strength TG18: Transport and base and declining target storage [SIC: 71] competitiveness Prospects limited by weak Prospects limited by weak Emerging strength TG19: Communication base and declining base and declining [SIC: 72] competitiveness competitiveness TH: Finance, insurance, Prospects limited by Prospects limited overall Emerging strength real estate and external trends business services [SIC: 8] TH20: Finance and Prospects limited by Prospects limited overall Prospects limited by weak insurance [SIC: 81-82] external trends base and external trends Current Strength Prospects limited by weak Current Strength TH21: Business base and declining services [SIC: 83] competitiveness TI: Community, social Current Strength High priority retention Current Strength and personal services target [SIC: 92, 95-6, 99, 0] Current Strength Prospects limited by weak Emerging Strength TJ: General base and declining government [SIC: 91, competitiveness 94]
Source: Demacon, 2011
The industry target classification is displayed graphically in Figures 4, 5 and 6. The size of the circles represents the location quotient, that is, the relative size of the sector.
165 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Sectors located in the top and bottom left quadrants are considered having limited prospects because these industries are declining in the aggregate economy. If they are small they have additional challenges and if they are within the negative range in terms of LSRG, they also suffer from declining competitiveness.
In business terminology the upper left quadrant reflect industry groups that are increasing their market share in a declining market, industries in the lower left quadrant represents industries that are losing market share in a declining market.
Sectors falling within the lower right quadrant are classified as retention targets (if large enough) because they are growing in the aggregate economy but more slowly locally. Smaller industry groups in this quadrant are deemed to have limited prospects.
Sectors within the upper right quadrant are growing in the aggregate economy and locally. These industries represent the strengths and emerging strengths of the local economy. If the circles are large it represents current strengths and if the circles are smaller then it reflects emerging strengths.
In business terminology industries in the upper right quadrant are increasing their market share in an expanding market, whereas the industries in the lower right quadrant are losing market share in an expanding market.
Figure 4: Maluti-a-Phofung Classification System, 2005 to 2010
50.0% Expanding Prospects Limited Market Share Current and Emerging 45.0% External trends & weak Strengths 40.0% base 35.0% Finance and business services 30.0% 25.0%
20.0% Wholesale & retail trade; 15.0% catering and Agriculture, forestry and accommodation 10.0% fishing Community, social and 5.0% other personal services Declining Expanding 0.0% Market General government Market -5.0% services -10.0% Construction -15.0% Transport &
Local Local Sector Relative Growth(%) communication -20.0% Manufacturing -25.0% Electricity & water -30.0% -35.0% Prospects Limited Retention Targets -40.0% External trends & declining Prospects limited by Declining weak base & declining -45.0% competitiveness / Mining Market Share competitiveness
-50.0% limited overall
0.0% 5.0%
-5.0%
30.0% 40.0% 50.0% 10.0% 15.0% 20.0% 25.0% 35.0% 45.0% 55.0% 60.0%
-55.0% -50.0% -45.0% -40.0% -35.0% -30.0% -25.0% -20.0% -15.0% -10.0% -60.0% District Sectoral Growth (%) Source: Demacon, 2011
166 Regional Economic Assessment of the N3: Keeversfontein to Warden (De Beers Pass) – December, 2011 Figure 6: Phumelela Classification System, 2005 to 2010 50.0% Prospects Limited Expanding Current and Emerging 45.0% External trends & weak Market Share Strengths 40.0% base 35.0% Manufacturing 30.0% 25.0%
20.0%
15.0% Agriculture, forestry and Mining 10.0% fishing 5.0% Declining 0.0% Construction Transport & Expanding Market communication Market -5.0% -10.0% Wholesale & retail trade; -15.0% catering and Finance and business accommodation Local Local Sector Relative Growth(%) -20.0% services Electricity & water -25.0% -30.0% General government -35.0% Prospects Limited services External trends & Community, social and Retention Targets -40.0% declining other personal services Prospects limited by -45.0% competitiveness / weak base & declining limited overall Declining competitiveness
-50.0% Market Share
0.0% 5.0%
-5.0%
25.0% 30.0% 35.0% 40.0% 45.0% 10.0% 15.0% 20.0% 50.0%
-50.0% -45.0% -40.0% -35.0% -30.0% -25.0% -20.0% -15.0% -10.0% District Sectoral Growth (%) Source: Demacon, 2011
Figure 7: Okhahlamba Classification System, 2005 to 2010 190.0% Expanding 180.0% Prospects Limited Market Share Current and Emerging 170.0% External trends & weak Strengths Manufacturing 160.0% base 150.0% 140.0% 130.0% 120.0% 110.0% 100.0% Finance and business 90.0% services 80.0% 70.0% Construction 60.0% 50.0% Transport & 40.0% communication 30.0% Agriculture, forestry and 20.0% fishing Community, social and 10.0% other personal services 0.0% Declining General government Expanding -10.0% Market services Market -20.0% Electricity & water -30.0% Wholesale & retail trade; -40.0% catering and -50.0% accommodation Mining -60.0% Local Local Sector Relative Growth(%) -70.0% -80.0% -90.0% -100.0% -110.0% -120.0% -130.0% -140.0% Prospects Limited -150.0% External trends & Retention Targets -160.0% declining Prospects limited by -170.0% competitiveness / Declining weak base & declining -180.0% limited overall Market Share
-190.0% competitiveness
0.0%
30.0% 10.0% 20.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
-60.0% -90.0% -80.0% -70.0% -50.0% -40.0% -30.0% -20.0% -10.0%
120.0% 100.0% 110.0% 130.0% 140.0%
-130.0% -120.0% -110.0% -100.0% -140.0% District Sectoral Growth (%)
167