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WCape economy to rely on booming export market as tourism lags

MEC for Finance and Economic Opportunities in the Western Cape, David Maynier delivers the 2021 Provincial Economic Review and Outlook. Photographer: Armand Hough/African News Agency(ANA)

MEC for Finance and Economic Opportunities in the Western Cape, David Maynier delivers the 2021 Provincial Economic Review and Outlook. Photographer: Armand Hough/African News Agency(ANA)

Published Oct 3, 2021


Exports are key to jump-starting the Western Cape economy as uncertainty lingers over the tourism sector which recorded an R11 billion shortfall last year, says the provincial government.

MEC for Finance and Economic Development David Maynier delivered the Western Cape’s Provincial Economic Review and Outlook outlining the province’s economic growth trends this year.

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Maynier said the province’s economy had been hard hit by the Covid-19 pandemic which had an impact on the lives and livelihoods.

While the national economy is expected to recover and grow by 3.6% for 2021, the Western Cape’s recovery is expected to come in at a lower 3%.

“This year the provincial economy will grow at a slower rate than the national economy which illustrates the impact of the Covid-19 pandemic, and related lockdown restrictions on the tourism and hospitality sector which accounts for 4.5% of of the GDP, and 6.6% of total employment in the Western Cape,” said Maynier.

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Over the next five years the Western Cape economy is expected to grow at an average annual growth rate of 2.9%

According to the report, the province’s economy will be supported by the recovery in the export market.

“Between 2016 and 2020, export growth in the Western Cape was mainly supported by agriculture exports largely due to a stellar performance of 44.4% in 2020. Supported by a relatively weaker local currency and fewer Covid restrictions, the sector is likely to continue its important contribution to Western Cape exports,” read the report.

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At least 47.3% of the province’s exports are destined for developed countries including the United States and the United Kingdom, which are expected to record recoveries this year.

Cape Town Harbour is a key player in advancing the Western Cape’s economy by growing its export market. Picture: File.

In 2020, the Western Cape’s largest export markets were the Netherlands at R12.5billion, United Kingdom with R12.3 billion and the United States of America at R10.8 billion. The top three export destinations in Africa included Namibia at R9.9 billion, Botswana wit R9 billion and Lesotho coming in at R7.9 billion.

In 2020, the agricultural and agri-processing sector together contributed 8% to the total economic activity and provided 10.4% of all employment opportunities in the Province. The province contributes more than 90% of national exports of blueberries, bulk wine, pears, bottled wine and apples.

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“The provincial economy’s expected recovery will be driven by the Finance, Trade and Tourism sectors. However, the recovery is expected to be slower than previously anticipated due to a resurgence in Covid-19 cases and subsequent waves of infections forcing renewed lockdown restriction,” read the report.

“The outlook is further dampened by the slower than expected vaccine uptake due to hesitancy, which heightened the risk of a fourth wave of infections in the last quarter of 2021.”

This weekend the national government embarked on a large-scale ‘Vooma Vaccination’ drive to get people vaccinated ahead of the festive season.

President Cyril Ramaphosa’s decision to move the country’s lockdown restrictions down to level 1 was among the four requirements, Maynier listed as a priority to give the Western Cape tourism sector the boost it needed.

Among them was the removal of South Africa from the UK’s red list, increased vaccinations, as well as a move to implement proposals around the remote working visas, and approval of the Delta Airline route to include Cape Town on it’s Atlanta and Johannesburg route.

Tourism contributed over R6 billion to the Western Cape Regional Gross Domestic Product (GDPR) in 2020, significantly lower than R15 billion in 2019. Around 75 000 jobs were lost in the sector in 2020.

South America was the Western Cape’s top region with respect to international tourism arrivals accounting for 21%, followed by Europe at 19% in 2020. The provincial Total Foreign Direct Spend was estimated at R9.1 billion and a total 6.2 million bed nights were recorded in 2020. The average length of stay in the Western Cape at 14.5 nights ranked as the highest amongst all provinces.