20 November 2012

Africa: Gauteng Increase Contribution to South Africa's and Africa's Gross Domestic Product

press release

Gauteng generated 35.6%or an estimated R675 billion of the gross domestic production last year, consolidating its position as a single largest contributor to the economy of the country. Thus, even though Gauteng has the smallest land area of 1.4% in the country, its economy is more than twice that of KwaZulu-Natal or the Western Cape.

Gauteng also contributed 7.7% to the gross domestic product of the Africa, an indication of the province's importance as one of the economic hubs of the continent. This is according to the 2012 Provincial Economic Review and Outlook (PERO) that Finance MEC Mr. Mandla Nkomfe presented to the Gauteng Legislature today.

The publication is produced by Gauteng Provincial Treasury and outlines the structural make-up of the provincial economy through sectoral analysis to, among other things; determine the province's contribution to national output.

Gauteng's Gross Domestic Product by Region (GDP-R) increased from R618 billion in 2007 to R675 billion in 2011. This trend is expected to continue with the province's GDP-R expanding to R781.6 billion by 2015.

The City of Johannesburg (CoJ) generated R313 billion in 2011, and this was the largest contribution to the province's GDP-R. It was followed by the City of Tshwane (CoT) with R184 billion. Ekurhuleni had the third biggest economy at R128 billion.

CoT is the fastest growing municipality in the whole country. Its economy grew at an average annual growth rate of 4.4% between 1997 and 2011. CoJ grew by an average of 4% and Ekurhuleni by 3% during the same period. The economy of West Rand is the most sluggish in the province, with an average annual growth rate of 0.1%, while Sedibeng's average annual growth during the same period was 1.4%

Economic Opportunities by Municipalities

City of Johannesburg

  • Power generation through renewable energies.
  • Development of new natural systems to minimise the impact of urban flooding.
  • Improving rail freight into the city.
  • Strengthening of the emerging Information Communication Technology (ICT) sector.

City of Tshwane

  • Automotive and components industry.
  • Aerospace village for manufacturing components.
  • Research and development (i.e. Biotechnology Laboratories).
  • Broadband network opportunities.

Ekurhuleni

  • O.R Tambo International Airport and the N12 Johannesburg-Maputo Corridor, create economic opportunities in logistics & transport, business tourism and high value added manufacturing.
  • Intensive agricultural production and food processing and packaging.
  • Environmental opportunities in wetlands, ridges and agriculture potential.

West Rand

  • Due to the availability of vacant land, West Rand has an opportunity for property development.
  • Environmental opportunities in terms of agriculture potential.
  • The geographical location (close proximity to Lanseria airport, Johannesburg and major access routes) allow the opportunity of economic diversification in the municipality.

Sedibeng

  • Tourism development opportunities along the Vaal River.
  • Environmental opportunities around the existing nature reserves, the various conservancies and watercourses.
  • Processing of agriculture produce.

Gauteng has many comparative advantages. These include the fact that:

  • Gauteng has a strong financial and industrial base.
  • High quality information technology accessibility.
  • Outstanding business services.
  • An enabling environment.
  • Excellent freight and logistics.

Provincial Economic Performance - by sector

The economy of Gauteng is driven by the tertiary sector. In 2007 this sector contributed 69.5%, rising to 71.1% last year and is forecast to increase to 71.9% by 2015. The finance & business services sub-sector contributed 24.9% to this growth, followed by government, social & personal services at 23.2%.

The secondary sector was the second largest contributor, generating 24.3% of the provincial economy in 2011. The manufacturing sub-sector dominated contributions within the secondary sector. Gauteng accounts for the largest share of the country's manufacturing sector with almost half of the factories housed in the province. However the contribution of manufacturing to the Gauteng economy is forecast to decline to 15.8% by 2015. This is partly attributed to the global financial crisis, which led to the recession in 2009.

The primary sector contributed the least to the economy of the province, at 4.7% 2011. Its contribution is forecast to trim down to 3.9% by 2015. Mining & quarrying dominates the primary sector..

Overview of Infrastructure Development

The state of the nation's infrastructure influences not only the quality of life, but well-designed infrastructure also leads to improved productivity. This efficiency in turn enhances economic growth while providing significant positive spill-overs to various economic sectors. It is essential to determine how well infrastructure is performing because this assists in ensuring its maintenance. Lack of maintenance decreases the lifespan of infrastructure and harms its ability to contribute to the economy. This leads to investment, which would be better spent on improvements, being used instead on unnecessarily expensive repairs.

Construction projects are divided into categories such as residential buildings (houses and residential property), non-residential buildings (industrial buildings) and public works (government infrastructure like roads and schools).

The total nominal value of contracts awarded in South Africa between April 2011 and March 2012, amounted to R77.7 billion. Gauteng received the largest share of these contracts - 22%, or R17.3 billion. These comprised of a 72.1% (R12.2 billion) share in building expenditure and a 27.9% (R5.2 billion) share in public works. KwaZulu-Natal and the Western Cape accounted for the second and third highest shares at R13.3 billion and R13.1 billion respectively. This reflects that most infrastructure development of buildings in Gauteng is private, with a 70% share in building expenditure and a 30% share in public works.

Highlights of Trade Analysis

Gauteng accounts for 68% of all exports from the country and 61.4% of imports.

The data suggests that Gauteng is able to generate more money from abroad than any other province.

China is the biggest trading partner of the province. Last year China was the destination for just under 15% of exports from Gauteng and the source of just over 15% of imports to the province.

Products that are imported from China include computers, electrical apparatus for line telephone and printers. Imports from Germany include equipment, components and cars.

The province experienced a surplus in the trade account from 2009 to 2011; this surplus amounted to R24.3 billion last year.

A surplus on the trade account indicates that the value of exports exceeds that of imports; a deficit indicates that imports exceed exports.

In the period 2002 and 2008, the province recorded deficits on the trade account that increased annually to reach R39.750 billion in 2007.

Thereafter, the deficit on the balance of the trade account shrank to R8.551 billion in 2008, and entered positive territory in 2009. A trade surplus of R15.756 billion was recorded in 2009.

John Sukazi

MEC Spokesperson

Tel: 011 355-2161

Cell: 083 772 4885

E-mail: john.sukazi@gauteng.gov.za

Issued by: Gauteng Finance

20 Nov 2012

Ads by Google

Copyright © 2012 South African Government. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.