In most societies car ownership symbolises one’s wealth or social standing. If you are moving up the social ladder, the first telltale sign is the acquisition of a vehicle, signalling rising purchasing power or income.
In the past five years I have noticed that the Western Cape economy is increasingly providing upward social mobility for skilled workers and educated professionals. When in my home province, the Eastern Cape, usually around the Christmas or Easter holidays, I see many cars with Western Cape registration plates.
These are not just entry-level vehicles. Some are high-end brands, indicating their owners are in well-paid jobs. There was a time, probably 15 or 20 years ago, when cars with Gauteng registration plates outnumbered those from other wealthy provinces, such as KwaZulu-Natal (KZN) and the Western Cape, as Gauteng-based migrants returned to the Eastern Cape to show off their fancy wheels and buying power.
You would see GP plates everywhere, Cape Town’s CA and Durban’s ND registrations here and there. Childhood friends, who never migrated from the region, would joke that they were hiding their girlfriends, fearing losing them to big-spending Gautengers.
These days, however, Western Cape-based migrants, whether CA, CAA, CF, CY or CL, are making their presence felt when they visit their home province.
My observation is purely anecdotal, but there are noticeable signs that the Western Cape is a rising economic power. The province’s economy grew by 2.16% in the first quarter of 2022, the second-highest economic performance of South Africa’s nine provinces. During this time, KZN outperformed all provinces with 2.19% growth.
The Western Cape’s economic structure indicates the province has a large private sector powered by the services industry and a skilled workforce. It is also powered by semigration and perceptions that it offers a quality lifestyle, is well-governed and has decent infrastructure
However, Gauteng is still the country’s most dominant economic region.
According to Stats SA, the province contributes 34% to South Africa’s GDP, followed by KZN with 16% and the Western Cape with 14%. This means Gauteng is responsible for R34 of every R100 generated by the national economy, while KZN and the Western Cape account for R16 and R14 respectively. The Eastern Cape accounts for R8.
Though the Western Cape has the third-largest provincial economy, it has the country’s second-highest per capita GDP, behind Gauteng.
In 2020, the Western Cape’s per capita GDP, a measure of economic output per person, was estimated at R88,051, while Gauteng’s was in the region of R97,866. In 2016, the Western Cape’s touched R97,896. The Eastern Cape has the country’s lowest per capita GDP at R49,083.
Given per capita GDP is used by economists to measure a country’s prosperity and productivity, it is worth taking a closer look at the Western Cape’s sources of wealth to understand where the province’s residents find employment and business opportunities. Its economy is dominated by Cape Town, which accounts for 72% of economic activity.
Interestingly, the tertiary sector (or services industry) accounts for a significant chunk of this. According to a report by Wesgro, an agency responsible for promoting trade and investment opportunities in the Western Cape, the services sector accounted for about 76% between the first quarter of 2020 and the first quarter of 2022. The biggest contributors were finance, real estate and business services, accounting for about 33.3% of activity, followed by trade, hotels and restaurants with 14.4% and manufacturing with 14.3%.
If you are in Gauteng, once the world’s gold-mining capital, you are likely to make a living from industries such as finance, government, manufacturing and construction. Mining is the leading industry in the Northern Cape, North West, Mpumalanga and Limpopo, where rich deposits of platinum, chromite, gold, uranium and coal are spread across these provinces.
In KZN, which has the fourth-lowest per capita GDP in the country, estimated at R60,332, the economy is mainly underpinned by manufacturing, trade, business services and transport communications.
On the other hand, government is the largest industry in the Eastern Cape and Free State, and the second-largest contributor to the GDP of Gauteng and Limpopo.
The Western Cape’s economic structure indicates the province has a large private sector powered by the services industry and a skilled workforce. It is also powered by semigration, or the migration of skilled professionals from other provinces who are lured there by remote working opportunities and perceptions that the province offers a quality lifestyle, is well-governed and has decent infrastructure. If the migration of skilled workers to the Western Cape continues, I foresee the province challenging Gauteng’s economic dominance in the future.
My nephew, who spent two years in Cape Town, is impressed with economic progress in the region. He told me recently that the city is a “paradise” that is loved by tourists, while some of his close friends said they would never trade Gauteng for the Western Cape due to perceptions that the DA-governed province is an “enclave for racists”.
Last week, Cape Town’s mayoral committee member for economic growth, James Vos, said the city was processing about 30,000 international passengers daily. These tourists are attracted to the city by its beauty, hospitality and iconic landmarks, such as Table Mountain and Robben Island.
Whether the Western Cape is a “paradise” or “enclave for racists”, there is no doubt migrants are flocking there, boosting property prices in Cape Town, Hermanus, Langebaan, Mossel Bay and George. This has heightened fears that the influx will stretch the province’s public infrastructure. There is pressure to build new schools and health-care facilities to cater for new residents, who see the region as providing opportunities for upward social mobility.
With the Eastern Cape plagued by the highest unemployment and worst per capita GDP in South Africa, it is no wonder many of its residents are looking elsewhere to eke out a living. And the Western Cape is proving a viable alternative to Gauteng for those seeking to climb the social ladder, as shown by the quality of the vehicles they drive when visiting the province of their birth.
• Ntingi is founder of GetBiz
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