District Profile Eastern Cape Ukhahlamba District Municipality (DC14)

Home , Aliwal North, Burgersdorp, N6 (South Africa), Oviston, Senqu Local Municipality, Steynsburg

Annexure 4: District Profile Eastern Cape Ukhahlamba District Municipality (DC14)

Programme of Support to Local Economic Development in the Eastern Cape

Eastern Cape Competitive Advantage Assessment And Training Support Project

Produced by Melinda McCann For

European Consultants Organisation (ECO)

EC FRAMEWORK CONTRACT AMS/451 – LOT N°9 MISSION N°2005/109496

Contents

1 District Profile: Ukhahlamba Municipality(DC14) ______3

2 The District Development Framework: Ukhahlamba District Municipality (DC44) ___ 9

2.1 Key Elements of Municipal Competitive Advantage ______9

3 The Local Development Framework: Elundini Local Municipality (EC141) ______12

3.1 Key Elements of Municipal Competitive Advantage ______12

4 The Local Development Framework: Senqu Local Municipality (EC142) ______15

4.1 Key Elements of Municipal Competitive Advantage ______15

5 The Local Development Framework: Maletswai Local Municipality (EC143) _____ 18

5.1 Key Elements of Municipal Competitive Advantage ______18

6 The Local Development Framework: Gariep Local Municipality (EC144) ______21

6.1 Key Elements of Municipal Competitive Advantage ______21

District Profile: Ukhahlamba District Municipality (DC14)

1 District Profile: Ukhahlamba Municipality(DC14)1

The Ukhahlamba District Municipality (UDM), one of the four Provincial ISRDP nodes, is a landlocked district occupying the north-eastern portion of the province, bordered by Lesotho and by the Northern Cape and Free State provinces, and by the Eastern Cape districts of Chris Hani, Alfred Nzo and OR Tambo (refer to 1.3). The District is principally constituted of the former Cape Provincial areas of the Karoo, with parts of the former Transkei in the north-east. UDM is predominantly mountainous and vegetated by grassland, with areas of semi-arid Karoo and highveld from the west to a central portion and areas of high rainfall to the east. Ukhahlamba extends over 25,401.16km2 and incorporates 11 former magisterial districts into four local municipalities and the Oviston Nature Reserve District Management Area (DMA). ECDMA14 incorporates the Gariep Dam and was established for the reason of being a provincial nature reserve; it extends over 77.31km2 and is home to approximately 12 people. ECDMA14 may be re-demarcated as its current boundaries do not accurately follow the extents of the Gariep Dam.

Ukhahlamba is the least populated of all districts – it accounts for 15.16% of the provincial land area, but only 5.16% of the population. While urbanisation stands at only 22.87%, the highest rate of urbanisation after the Metro is reflected for Maletswai (86.66%) with Gariep also reflecting a significant level of urbanisation (71.70%). Senqu, home to the District’s administrative centre of Barkly East, accounts for the highest formal employment contribution (32.02%) and second highest GDP contribution (26.05%) in Ukhahlamba. Maletswai, including the town of Aliwal North sited on the N6 to Buffalo City, accounts for the greatest contribution (29.75%) to GDP, but the lowest share of formal employment (19.70%) in the District. Ukhahlamba is classified as a Category C2 municipality, indicating a largely rural character and low urbanisation rate, as well as limited municipal staff and budget capacity. Senqu and Elundini are classed as Category B4 (rural, mainly subsistence), and Maletswai and Gariep as B3 (small towns, agricultural) municipalities, similarly reflecting limited institutional capacity and areas characterised by small centres, limited SMMEs and market opportunities, greater dependence on public support and LED activities that are principally at the level of the small project.

1 Sources: MDB 2003, Global Insight 2005, Ukhahlamba IDP 2005, ECSECC 2002-2005, ECDC 2003, Department of Social Development 2005 Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

Ukhahlamba’s share of total provincial GDP amounts to only 2.09%, while contribution to formal employment (3.22%) is slightly higher. The District’s principal sectoral employer (37.39%) and contributor to GVA (42.01%) is community services. This pattern of reliance on government and community services is reflected across all but Gariep municipality where agriculture is the dominant contributor to both GVA-R (45.51%) and employment (46.31%). The overwhelming majority (82.94%) of the District’s residents live in poverty, while the poverty gap of R594.58m accounts for 6.67% of the provincial total. The HDI is low for Ukhahlamba (0.45) and only Maletswai scores above the provincial average (0.52). More than half (50.37%) of the Ukhahlamba population is younger than 20 years, suggesting high youth dependency and economic underdevelopment, while further highlighting the need for sustainable employment creation.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

1.1. Baseline District and Local Municipal Statistics B4 B4 B3 B3 C2 Ukhahlamba Categories 2004 Elundini Senqu Maletswai Gariep DM Area (km2) (MDB)2 5,358.75 6,770.74 4,357.78 8,836.58 25,401.16 Population (No.) 145,174 144,094 32,142 32,823 354,234 Urbanisation Rate (%) 11.22 9.26 86.66 71.70 22.87 Density (people/km2) 27.00 21.27 16.20 3.71 15.41 Black 98.66 97.85 79.3174.00 94.29 White 0.69 1.03 10.2210.49 2.60 Demographics (%) Coloured 0.62 1.11 10.4315.47 3.09 Asian 0.03 0.01 0.030.03 0.02 Female 54.22 52.50 53.7251.58 53.23 Gender (%) Male 45.78 47.50 46.2848.42 46.77 0-4 12.83 10.88 8.999.55 11.39 5-19 40.38 39.99 33.7833.52 38.98 Age (%) 20-64 40.29 42.69 50.9050.05 43.13 65+ 6.50 6.44 6.346.88 6.50 HDI 0.45 0.44 0.530.48 0.45 HIV Prevalence (%, 2003) 3 24.90 Functional Literacy (%) 52.86 52.19 64.94 48.63 53.40 None 9.51 10.48 8.7016.51 10.53 Education Levels Grade 12 6.00 6.50 15.41 9.91 7.55 (% age 15+) Tertiary 2.76 3.52 6.31 7.50 3.91 R0-200 10.44 8.67 4.40 5.44 8.75 Household Monthly R201-1000 36.64 36.47 23.24 29.53 34.76 Income Levels (%) R1001-2500 27.04 29.51 29.44 25.37 28.08 GDP per capita (R'000)4 2.57 3.45 17.6414.29 5.38 Unemployment (%)5 66.52 66.49 41.4546.05 60.41

2 Municipal Demarcation Board – Global Insight geographic areas used for all other categories for internal integrity 3 EC Department of Health 4 GDP by Region (GDP-R) at Current Prices 5 Expanded definition Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

Dependency Ratio 4.38 3.91 2.26 2.13 3.62 Financial Grant Dependency6 81.67 16.826.61 112.21 Water 19.94 40.73 76.7590.15 41.26 Access to basic Sanitation 43.08 56.98 53.86 41.95 49.54 services Electricity 11.57 62.07 57.54 74.76 43.09 (% Households, Refuse 11.10 11.35 68.1170.11 23.51 2001) Housing 96.60 94.75 65.67 88.55 91.48

6 % of municipal 2002/03 budget constituted of grants/subsidies and transfers/allocations Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

1.2. The District Space Economy

Conceptual map providing overview of socio-economic context and of spatial linkages and surfaces across the district.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

1.3. Competitive Advantage Profiles The elements of municipal competitive advantage, as introduced in Section 3, are explored below for the District and Local Municipalities.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

2 The District Development Framework: Ukhahlamba District Municipality (DC44)7

Ukhahlamba envisions an “improved quality of life for all residents”. The District’s core goal is to fight against poverty through stimulating economic growth and increasing households’ ability to provide for themselves by meeting basic needs, improving service delivery quality and capacitating local government. Identified key development priorities are agriculture, tourism, labour- based activity and pro-poor activities. In addition, the emphasis of development programmes will be placed on strategic areas, such as Aliwal North.

The area currently produces a marginal contribution to provincial GGP but it is hoped that, through LED initiatives, such as support of existing businesses and assistance with new community based enterprises, the area will be set to contribute more in the future. The District’s LED Strategy identifies a thriving and expanding market in the area, however it is believed that marginalized sectors are being left behind and that around 60% of input requirements are sourced beyond the District (significantly Bloemfontein), which could be reduced.

The Municipality plans to implement its LED strategy and to establish two kinds of LED institutions in the District, namely: an LED planning unit, headed by an LED officer with six support staff, tasked with planning, mobilization and project implementation; and a section 21 agency, with a board of directors, with the function of securing project funding and investment and managing contracts.

2.1 Key Elements of Municipal Competitive Advantage

2.1.1 Infrastructure and Services

Ukhahlamba includes two relatively high performing (Gariep, Malestwai) and two relatively low performing (Senqu, Elundini) local municipalities in respect of the Infrastructure and Services Index. Overall, the District fares better on Quality of Life than on Communications and Economic Infrastructure measures. With the exception of Maletswai, road surfacing is limited and the District’s remoteness from a major economic hub tends to lower the Communications score. Nonetheless, the area of cellular network coverage is considerable and telephone access is likely to increase, while investment in water, sanitation and roads, particularly in the Elundini area, will enhance the area’s performance. Ukhahlamba’s status as an ISRDP node and the District’s MIG allocation – which averages R241.46 per capita, substantially higher than for any of the local municipalities and higher than the Provincial average – may further enhance the infrastructure and services performance of the area. The

7 Sources: IDP 2005/2006; Ukhahlamba District Report November 2005 Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

District’s inclusion in the Mzimvubu Basin Management and Development Programme may further enhance the infrastructure and services, as well as economic, performance of the area.

2.1.2 “Rules of the Game” (Institutional Environment)

The District population is predominantly rural, with an urbanisation rate of 22.87%, and more than half (58.22%) of all households form part of tribal settlements. However, more than half (57.64%) of all households also own their own properties, of which the majority (85.48%) are fully paid-up owners. Of the 138 unsettled land claims in Ukhahlamba, only 19 are for land, for subsistence (11) and livestock (6) farming, and for other crops (2).

The ratio of police stations to population compares favourably with the Eastern Cape, although average geographical coverage is comparatively low. Nonetheless, the District crime rate is significantly lower than the provincial average and has declined significantly (- 5.17%pa) over the past three years.

The District economy, as a whole, is more diverse than the individual local economies and is dominated by the community services sector, followed by the agriculture sector, in terms of both GVA-R and employment. The cost of doing business in the District is high, considering transaction costs arising through distance, and travel time, to major economic centres, and expenditure on transport, communication and finance. In addition, the District has no Telkom service branch and finance and enterprise support is limited. With the exception of Gariep, there are high levels of government employment dependence, poor municipal regulatory capacity, and very limited access to business service providers, across the District.

2.1.3 Economic Indicators

Ukhahlamba has a youthful population, with around half (50.37%) of all residents aged below 20 years. Moreover, the rate of unemployment (60.41%) and of dependency (3.62) is significantly higher than the average provincial rates (55.41% and 2.51, respectively). Poverty is both deep and pervasive, considering the area’s share of the Eastern Cape’s poverty gap (6.67%) relative to its share of the total population (5.16%) and the proportion of residents living in poverty (82.94%). Ukhahlamba’s average per capita income (R8876.90 per annum) falls well below that of the Eastern Cape and the District has evidenced higher growth rates, from 1996 to 2004, in both the poverty gap (11.08%pa) and poverty indicator (4.35%pa) than the Province.

Comparative advantages in terms of GDP contribution are reflected for the sectors of Agriculture (dominated by the Agriculture and Hunting sub-sector) and Community Services (centred on Education, Health, and then Public Administration sub-sectors). Comparative advantages in employment contribution are again reflected for Agriculture (Agriculture and Hunting) and Community Services (principally Education) as well as Households. Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

The District is home to areas of high potential agricultural crop and livestock production, with potential for meat and wool processing and for large and small scale irrigation. The National Wool Growers Association plays a vital supporting role and the wool industry in the District is well organized. Leading products are centred on livestock farming (goats, sheep, and beef), game, cultivation (particularly maize) as well as tourism. Potential for agriculture and tourism development may be enhanced through Ukhahlamba’s inclusion in the Fish River Irrigation Belt – one of the PGDP Corridors, targeting tourism, agro-processing and agriculture, in addition to its inclusion in the Mzimvubu Basin Management and Development Programme.

2.1.4 Capacity

Ukhahlamba is characterised by a low HDI (0.45), a comparatively high proportion of child- headed households, and below average access to health services and professionals. The District has a comparatively low HIV prevalence rate in the Province. However, one quarter (24.90%) of residents are infected. While having above average access to education based on the proportion of teaching professionals, Ukhahlamba’s poor skills base is evidenced by the low functional literacy (53.40%) and qualification rates of the population.

The ratio of women to men, at 1.14, reflects a higher presence of women in the area, although women make up 47.05% of the EAP. While the proportion of women amongst the EAP is lower than the Provincial average (49.05%), women’s activity has increased at a higher rate (3.91%pa) than provincially (3.88%pa) over the past eight years. The rate of women’s unemployment (68.94%) and of growth in women’s unemployment (6.13%pa) is significantly greater than the Provincial average, and higher than for their male counterparts. Finally, above average capacity is reflected for the District Municipality, considering that a relatively high number of functions are performed, managerial experience is modest, and the number of municipal employees relative to the population size is above average for district municipalities. Ukhahlamba also has an LED manager, as well as local tourism and planning staff.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

3 The Local Development Framework: Elundini Local Municipality (EC141)8

Elundini is 5358.75km2 in extent, consists of 16 wards and will have 32 councillors. In line with the District, the local municipality envisions “A better quality of life for all” and its overarching development objective is poverty alleviation to facilitate the inclusion of remote areas in potential economic growth through tourism and agriculture. Nine key priority issues are identified: road access for settlements; water and sanitation, including water for agriculture; sustainable energy; communications infrastructure; sports facilities; HIV/AIDS management; enabling environment for people to create their own jobs; improved quality of skills of government, particularly in health and education; and development of the Municipality to function efficiently and effectively. A two-pronged approach is proposed, focusing on infrastructure development while also trying to develop the municipal institution. Greater emphasis is placed on rural development and there will be an attempt to link economic development to infrastructure provision.

Currently, Elundini is characterised by low education and income levels and high unemployment rates. The economy is dangerously dependent on agriculture and development programmes will seek to provide economic diversity, since this sector is extremely unstable and sensitive to fluctuations. Opportunities are identified in forestry, with potential for investment into a pulp mill, and in tourism. Elundini is home to Tiffendel, the only ski resort in Southern Africa, which is the major tourist attraction of the area although its full potential has been limited by inadequate road access. A massive Tourism Awareness Campaign is identified as essential for the development of this sector.

3.1 Key Elements of Municipal Competitive Advantage

3.1.1 Infrastructure and Services

The Local Municipality’s Communications (transport and telecommunications) infrastructure is poorly developed, with low percentage surfacing (5.77%) of all roads and low percentage (13.33%) direct access to telephones of the local population. However, the municipality does have rail and air transport infrastructure and, of all the local municipalities in Ukhahlamba, is most proximate to a major economic centre – namely, East London. Elundini reflects the lowest Quality of Life in the District on the basis of poor basic services provision (water, electricity, sanitation, and refuse removal), although the Municipality does

8 Sources: IDP 2002 & 2004 Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

perform above the Provincial average on measures of housing and access to both education and health care facilities.

Elundini fares comparatively better, in Ukhahlamba, on Economic infrastructure, with three commercial banks and an ECDC industrial property, as well as six post offices, with banking capability. However, the municipality still reflects the least developed overall infrastructure and services environment in Ukhahlamba. This performance may improve considerably with basic service delivery and improved roads through the MIG allocation.

3.1.2 “Rules of the Game” (Institutional Environment)

Elundini is a predominantly rural municipality where the majority (72.53%) of the population is resident on tribal land, yet own their properties (55.02%) –overwhelmingly (92.35%) paid up ownership. Only nine unsettled land claims remain for Elundini, of which seven seek financial compensation and the remaining two claims are for land for subsistence farming.

The Local Municipality is a top performer in the Province in respect of Crime, with a low (and declining) crime rate, and favourable police coverage by area and by population size. Given the rural nature of Elundini, it is not surprising that stock theft features more prominently than business-directed crime.

The local economy is highly concentrated, dominated by the community services sector in terms of both GVA-R and employment. The cost of doing business in the area is relatively high, but is the most favourable in the District, considering transaction costs arising through distance, and travel time, to major economic centres, and expenditure on transport, communication and finance. Further considerations are the absence of a Telkom service branch in the area, along with limited access to business service providers and development and financial support institutions, and poor municipal regulatory capacity.

3.1.3 Economic Indicators

The highest levels of poverty and unemployment in Ukhahlamba are found in Elundini, which similarly claims the highest dependency (4.38) rate and most youthful population – with 53.21% of residents aged less than 20 years.

The Municipality’s low Productivity score points to low GDP per worker (formal and informal), a relative shortage of skills available to the economy, and low growth in value creation relative to employment and labour remuneration. Elundini’s low Formal Economy Performance score reflects particularly on the highly concentrated local economy and financial grant dependence, and to a lesser extent on low GDP growth performance – GDP contribution has declined (-0.58%pa), from 1996 to 2004. By contrast, Elundini is a leading economy in the Province, but not nationally, on formal employment growth performance, which has experienced above average grown (1.21%pa) over the last eight years.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

Elundini reflects the highest Economic Absorption Capacity in the District, considering its relatively high total disposable income and buying power. A measure acting against the area’s performance on this score is the negative income-expenditure balance.

The local economy claims a comparative advantage in Community Services and Agriculture, for both employment and GDP contribution. Education is the dominant Community Services sub-sector, accounting for 28.74% GVA and 25.99% employment, while the Agriculture and Hunting sub-sector contributes 5.41% GVA and 20.58% employment. Elundini also claims an employment advantage in Households (20.90%) and claims, in terms of value added production, advantages in Construction (3.79%) and in Trade – centred on Retail (7.23%) and Wholesale and Commission (6.36%).

Tourism is a leading product in Elundini, with scenic beauty, trout fishing and Southern Africa’s only ski resort, Tiffendell, which is undergoing expansion and improvements to its airstrip to cater for charter flights. The area has high agricultural potential, with high rainfall favouring crop production, particularly of maize, and also of wheat, potato and sunflowers. There is also potential for plantations and related forestry value-adding, while existing livestock production, in goats, cattle and sheep, presents opportunities for further development and for value-adding, particularly in meat processing.

3.1.4 Capacity

Factors contributing to low Resident Participation Capacity in Elundini are the low HDI (0.45), below average access to health services and professionals, and a relatively high proportion of child-headed households. HIV prevalence stands at 24.90%.

The number of municipal functions performed with capacity and the number of municipal employees, relative to population size, are the lowest in the District, but managerial experience is high and some Municipal Capacity is evidenced by the presence of regulatory and planning staff.

Functional literacy (52.83%) is low, as is qualification rate and proportion of residents with at least a matric (8.77%). However, the Municipality has a favourable measure of access to education in terms of representation of teaching professionals. Women’s Economic Participation is limited, where they constitute 47.28% of the EAP and face higher unemployment levels and rate of growth in unemployment than their male counterparts.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

4 The Local Development Framework: Senqu Local Municipality (EC142)9

Senqu extends over 6770.74km2, consists of 16 wards and will have 32 councillors. The local vision is “to be a municipality that adheres to Integrated Development Planning and governs in an efficient, open and participative manner to promote local economic development as a priority, in order to facilitate the creation of a sustainable economic base and enable it to develop and maintain an acceptable basic level of services in both its urban and rural areas, thereby assisting to build a crime-free and better life for all. “

Identified development objectives are to: facilitate economic development; ensure access to basic services; provide adequate land for development and housing thereby enabling personal and social development; and ensure good governance and management to effectively carry out the municipality’s primary functions. As such, key areas of local concern include food security, employment creation and the facilitation of LED by various means, including housing and infrastructure development and associated skills development training. Senqu, home to the District Office at Barkly East, relies heavily on external players for both services and markets and this trend is unlikely to change. Aliwal North is the closest large service node, yet services and markets are also sought in Bloemfontein and East London. Agriculture and services are the Municipality’s key economic sectors, but tourism is identified as having the greatest potential for expansion in the short term.

4.1 Key Elements of Municipal Competitive Advantage

4.1.1 Infrastructure and Services

Senqu scores marginally better than Elundini on the Communications (transport and telecommunications) score, and has rail and air transport infrastructure. Principal contributing factors to Senqu’s performance are the area’s relative remoteness from any major economic hub, the low percentage surfacing (8.48%) of all roads and low percentage (15.56%) direct access to telephones of the local population.

On Quality of Life, Senqu scores above the Provincial average for adequate housing, electricity services and access to schools and clinics, but does not perform well on basic water, sanitation and refuse removal services, and access to hospital beds.

9 Sources: IDP 2002 Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

Senqu claims the highest Economic Infrastructure score in Ukhuhlamba with five commercial banks, an ECDC commercial complex, a Farmers’ Support Centre, as well as six post offices, with banking capability.

The Municipality may considerably improve upon its infrastructure and services performance with basic service delivery and improved roads through the MIG allocation which, although below provincial average, at R57.09 per capita is the highest local municipal allocation in Ukhahlamba.

4.1.2 “Rules of the Game” (Institutional Environment)

Senqu is overwhelmingly rural and tribal (81.12%) in respect of settlement, although around two-thirds (67.72%) of households own their properties, of which 86.12% are fully paid-up owners. Senqu has the highest number of unsettled land claims in Ukhahlamba, at 88, of which the majority (76) seek financial compensation and the remaining 12 claims are for land for livestock (6), subsistence farming (4) and crops (2).

The Municipality has one of the more favourable Crime scores in the Province, with a relatively low crime rate that has declined significantly (-6.99%pa) over the past three years. The ratio of police to population compares favourably against the provincial average, although police coverage by area is slightly below average. Senqu reflects a greater rate of stock theft than business-directed crime, understandable given the area’s rural nature.

The local economy is highly concentrated, centred on the community services sector in terms of both GVA-R and employment. The cost of doing business in the area is high, considering transaction costs arising through distance, and travel time, to major economic centres, and expenditure on transport, communication and finance. Further considerations are the absence of a Telkom service branch in the area, along with relatively limited access to business service providers and development and financial support institutions.

4.1.3 Economic Indicators

Senqu has a youthful population with high levels of poverty, unemployment and dependency, comparable only to Elundini in the District.

The Municipality’s low Productivity score reflects principally on the low GDP per worker (formal and informal), relative shortage of skills available to the economy, and modest growth in value creation relative to employment and labour remuneration. However, within the District, Senqu contributes the greatest share of formal employment (32.02%) and is the only local economy to record a positive, albeit small (0.14%pa) growth in GDP contribution from 1996 to 2004.

Senqu’s low Formal Economy Performance score reflects particularly on high financial grant dependence, as well as the highly concentrated local economy and low economic growth performance. Formal employment has grown by only 0.96%pafrom 1996 to 2004. Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

The local economy exhibits limited Economic Absorption Capacity, considering its poor performance on the income-expenditure balance, employment and economic multipliers. Senqu does, however, claim relatively high total disposable income and buying power.

The local economy claims a comparative advantage in Community Services and Agriculture, for both employment and GDP contribution. Education is the dominant Community Services sub-sector, accounting for 21.44% GVA and 21.25% employment, while the Agriculture and Hunting sub-sector contributes 16.50% GVA and 29.62% employment. Senqu also claims an employment advantage in Households (18.32%) and claims, in terms of value added production, advantages in Construction (2.38%) and in Trade – centred on Retail and Repairs of goods (12.84%).

Tourism is a leading product, with scenic beauty, hiking and wildlife attractions, and trout fishing. Leading agricultural products include maize, sheep and beef. The area is noted for strong farmers’ unions and for high rainfall favouring agricultural development and maize production has been identified as an anchor project for Senqu. There is also potential for the further development of livestock farming and for meat processing.

4.1.4 Capacity

Senqu reflects a Resident Participation Capacity below the provincial average, with a low HDI (0.44), below average access to health services and professionals, and highest proportion of child-headed households in the Province. HIV prevalence in the District stands at 24.90%.

While the number of municipal employees to population size is low, Municipal Capacity is fairly high, with local tourism, trading, regulatory and planning staff, along with performance of many functions (including all priority 1 functions) with capacity and relatively high managerial experience.

Functional literacy (52.19%) is low, as is the qualification rate and proportion of residents with at least a matric (10.02%). However, the Municipality has a favourable measure of access to education in terms of representation of teaching professionals. Women’s Economic Participation is limited, where they constitute 46.32% of the EAP and face higher unemployment levels and rate of growth in unemployment than their male counterparts.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

5 The Local Development Framework: Maletswai Local Municipality (EC143)10

The Maletswai Local Municipality covers 4357.78km2, consists of 6 wards and will have 12 councillors. In line with the District, the local vision is that of “Improved quality of live (sic) for all residents”. Key development priorities are identified as meeting basic needs, revitalising the economy, and improving service delivery quality.

The Maletswai local economy is currently based on the social services, industry, trade, agriculture and tourism sectors. However, the key development challenge facing the municipality is that the majority of residents have neither a regular source of income nor access to employment opportunities. A further challenge is that the municipality’s institutional capabilities are severely limited due to financial constraints.

Four key areas, identified as development priorities which need to be tackled in the interests of rehabilitating the economy, are: road network and transport route improvements; expansion of agriculture and agro-businesses; revitalisation of the tourism sector; and providing access of economic opportunities to local populations.

5.1 Key Elements of Municipal Competitive Advantage

5.1.1 Infrastructure and Services

Maletswai reflects the highest Communications (transport and telecommunications) score of the Ukhahlamba municipalities. The area is relatively remote, but has a municipal airport, rail infrastructure, a high percentage surfacing (48.26%) of all roads as well as high cellular network area coverage and higher than average proportion of residents (34.69%) with direct access to telephones. Aliwal North, the biggest town in the District, is sited on the N6 which links the Municipality with the major economy of East London, but also flows beyond the Province, notably to the Bloemfontein economy.

On Quality of Life, Maletswai scores above Provincial average across all measures but adequate shelter. The municipal area performs well on access to health care facilities and

10 Sources: IDP 2005/06 Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

relatively well on access to schools, basic water, sanitation and refuse removal services. While above Provincial and District average, electricity services are comparatively poor.

The Municipality performs below Provincial average on the score of Economic infrastructure, with two commercial banks, three post offices, a SEDA-affiliate (Ikamva Recruitment Services) and an ECDC residential property.

5.1.2 “Rules of the Game” (Institutional Environment)

The Municipality is overwhelmingly urban (86.66%) and around one-third (35.93%) of households own their properties, of which 66.31% are fully paid-up owners. Maletswai has 30 unsettled land claims; the majority (25) seek financial compensation while the remaining five are for land for subsistence farming.

The crime rate in Maletswai is comparatively high, although it has declined significantly (- 4.67%pa) over the past three years. The presence of police stations, relative to population size, is the highest in Ukhahlamba, whereas police coverage by area compares unfavourably to the provincial average. Business-related crime is marginally more prominent than livestock-related crime.

While the local economy is the most diverse in Ukhahlamba, it remains concentrated, dominated by the community services sector in terms of both GVA and employment. The cost of doing business in the area is high, considering transaction costs arising through distance, and travel time, to major economic centres, and expenditure on transport, communication and finance. Further considerations are the absence of a Telkom service branch, limited access to business service providers and development and financial support institutions, and relatively poor municipal regulatory capacity.

5.1.3 Economic Indicators

Maletswai exhibits the most developed age structure within Ukhahlamba, with the lowest proportion (42.76%) of under 20-year-olds. Dependency and poverty rates remain high, but are lower than the average for the District and Province.

The local economy has experienced negative growth in both employment (-0.08%pa) and GDP (-2.03%pa) contribution over the past eight years. This performance has contributed to the Municipality’s low Productivity score, which further reflects on the marginal growth in value creation relative to employment and labour remuneration. By contrast, Maletswai performs well on the measures of GDP per worker (formal and informal) and of skills available to the economy. In fact, the local economy generates the smallest share of the District’s formal employment (19.70%) but the greatest share of GDP (29.75%).

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

Maletswai has a relatively low financial grant dependence, and its Formal Economy Performance score is diminished by the negative shift in share of Provincial employment and GDP contribution, and the relatively concentrated local economy. The local economy’s Economic Absorption Capacity is limited considering its negative income-expenditure balance and modest total disposable income and buying power, although the informal sector capacity for employment opportunities relative to formal employment is above Provincial average.

The local economy claims a comparative advantage in Community Services and Agriculture, for both employment and GDP contribution. Dominant Community Services sub-sectors are Public Administration and Defence Activities (17.27% GVA; 16.02% employment) and Education (11.40% GVA; 16.71% employment), while Agriculture and Hunting (7.74% GVA; 18.05% employment) is the dominant agricultural sub-sector. Maletswai also claims comparative employment advantages in Households (20.77%) and Electricity (1.21%). In terms of value added production, the local economy claims a comparative advantage in Manufacturing (34.24%), centred on Furniture and other items (14.89%) and on Food, beverages and tobacco products (12.87%).

Tourism is a leading product, with attractions including hot springs in Aliwal North, and wildlife and hunting. Leading products include sheep and goats, as well as game. There is also potential for the further development of sheep farming for wool and meat processing.

5.1.4 Capacity

Maletswai claims the highest Resident Participation Capacity in Ukhahlamba, with the only HDI (0.53) above the Provincial average coupled with above average access to education and health services and professionals, and a low proportion of child-headed households.

The ratio of municipal employees to residents is the most favourable in the District. Municipal Capacity is fairly high, with local tourism, street trading, regulatory and planning staff, along with performance of many functions (including all priority 1 functions) with capacity and high managerial experience.

Resident Skills Capacity is the highest in the District, based on comparatively high functional literacy (64.94%), qualification rate and proportion of residents with at least a matric (21.72%). While Women’s Economic Participation is the highest in the District, it remains limited; Women constitute half (49.88%) of the EAP and face slightly higher unemployment levels and rate of growth in unemployment than their male counterparts.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

6 The Local Development Framework: Gariep Local Municipality (EC144)11

The Gariep Local Municipality, 8836.58km2 in extent, consists of 4 wards and will have 8 councillors. The local vision is to “render a comprehensive, affordable and efficient service to all residents of the Gariep Municipality in a transparent, democratic and corruption free manner with maximum control over the utilisation of all financial, human and other resources at our disposal, and always applying the Batho Pele principle.” Key development priorities are identified as: unemployment; poverty and the related crime cycle; and extension and upgrade of both social and technical infrastructure.

The Gariep population is principally resident in urban areas, especially Burgersdorp, Venterstad and Steynsburg. However, the latter two centres have been experiencing steady economic decline over the years which, coupled with a growing population, has led to a decline in living conditions and in the rate of formal employment, which has perpetuated the cycle of crime. In response to the local development challenges, the Municipality has identified several areas for urgent intervention, such as skills development, exploiting tourism potential, supporting SMME’s and upgrading existing road networks. The Great Karoo environment of Gariep is identified as being too dry for crop production, but as ideal for sheep and goat grazing, with related high potential for wool and meat production.

6.1 Key Elements of Municipal Competitive Advantage

6.1.1 Infrastructure and Services

Gariep performs relatively well on the Communications (transport and telecommunications) score, with a municipal airport and rail infrastructure, as well as being the only inland municipality to have a municipal pontoon/ferry. Factors which limit its performance include the low proportion of tarred roads (13.78%), the comparatively low telecommunications score and the area’s relative remoteness from any major economic hub.

Gariep has the highest Quality of Life score in Ukhahlamba and performs above Provincial average across all measures but access to hospital beds. The municipal area performs particularly well on provision of water services, then electricity and access to clinics. By contrast, the municipality fares worst in the District on the score of Economic infrastructure, with two commercial banks and three post offices.

11 Sources: IDP 2002 Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

6.1.2 “Rules of the Game” (Institutional Environment)

Gariep is overwhelmingly urban (71.70%) in respect of settlement and more than half (53.04%) of households own their properties, of which 68.99% are fully paid-up owners. Gariep has 11 unsettled land claims, all of which are for financial compensation.

The crime rate in Gariep is relatively high, but has declined significantly (-4.62%pa) over the past three years. The presence of police stations, relative to population size, is well above the district and Provincial averages, whereas police coverage by area is compares unfavourably to both the district and Provincial averages. Business-related crime is marginally less prominent than livestock-related crime.

The local economy is highly concentrated, dominated by the agriculture sector in terms of both GVA-R and employment. The cost of doing business in the area is relatively high, considering transaction costs arising through distance, and travel time, to major economic centres, and expenditure on transport, communication and finance. Further considerations are the absence of a Telkom service branch in the area, along with limited access to development and financial support institutions and, to a lesser extent, to business service providers. By contrast, municipal regulatory capacity is high, with provision in the IDP, staff, budget, infrastructure and capacity in planning, tourism, markets, street trading, building and trading regulations.

6.1.3 Economic Indicators

Gariep has an age structure comparable to Maletswai’s, with 43.07% of residents aged under 20 years, and it has the lowest dependency ratio (2.13) in the District. Unemployment stands at 46.05% and the proportion of residents living in poverty (69.39%) is slightly higher than the Provincial average.

The local economy has experienced negative growth in both employment (-0.13%pa) and GDP (-0.53%pa) contribution over the past eight years, although it reflects a positive shift in share (0.29%) of provincial GDP in this period. In spite of negative growth rates, the Municipality claims the highest Productivity score in Ukhahlamba, considering favourable performance in value creation relative to employment and, particularly, labour remuneration and relatively high measures of GDP per worker (formal and informal) and of skills available to the economy.

Gariep reflects the lowest financial grant dependence, a positive trade balance, and the highest Formal Economy Performance score in the District, although the latter is somewhat diminished by the negative shift in share of Provincial employment and the relatively concentrated local economy.

Economic Absorption Capacity is low considering the local economy’s negative income- expenditure balance and modest total disposable income, buying power and employment

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)

multiplier. However, informal sector capacity for employment opportunities relative to formal employment is the highest in Ukhahlamba.

The local economy claims a comparative advantage in Agriculture and Community Services, for both employment and GDP contribution. Agriculture and Hunting is the only active sub- sector of Agriculture and generates 45.51% GVA and 46.31% employment. Dominant Community Services sub-sectors are Public Administration and Defence Activities (8.15% GVA; 11.82% employment) and Education (8.66% GVA; 10.18% employment). Gariep also claims a comparative employment advantage in Households (15.51%).

The Municipality is home to the Gariep Dam, which is an asset in terms of water resources and related agricultural and tourism development. Tourism is a leading product, with attractions including adventure sports, fishing, a nature reserve, game farming and hunting. Other leading products include sheep and goats, as well as game, and potential exists for the further development of sheep farming for wool and meat processing industries.

6.1.4 Capacity

Gariep’s Resident Participation Capacity is relatively low considering below Provincial average HDI (0.48) and access to education and health services and professionals. The Municipality does, however, have the lowest proportion of child-headed households in the District.

Municipal Capacity is amongst the highest in the Province, with a favourable ratio of municipal employees to population, along with well staffed local tourism, trading, regulatory and planning functions, relatively high managerial experience and performance of all, but one (air pollution), municipal functions with capacity.

Gariep performs comparatively well on Resident Skills Capacity based principally on high qualification rates and a relatively high proportion of residents with at least a matric (17.41%). Functional literacy (48.63%), by contrast, is well below the Provincial and District average. Women’s Economic Participation is below provincial average and women constitute only 45.64% of the EAP, the lowest in the District. Women engaged in the local economy face considerably higher unemployment levels, and rate of growth in unemployment, than their male counterparts.

Annexure 4: District Profile: Ukhahlamba District Municipality (DC14)