The Western Cape Depart-ment of Economic Devel-opment and Tourism reports that manufacturing output in the Western Cape is expected to grow between 2% and 3% in 2010 as the global economy recovers.
Western Cape Finance, Eco-nomic Development and Tourism MEC Alan Winde says that the province’s diversified economy, particularly in strong sectors, such as financial intermediation, insurance, real estate and business services, has kept financial figures afloat during the global recession.
“These sectors contribute more than 30% to the provincial economy and are growing rapidly. As the global economy and stock markets recover and invest- ments increase, more growth is expected. However, further growth will be constrained if the supply of skills is not increased,” he asserts.
The department recognises that increasing the skills levels in the province is important in increasing manufacturing output. To this end, it has identified sectors and industries that are well placed to absorb labour, which it will support through skills programmes, funding and cofunding to increase job opportunities and skills availability.
Wholesale and retail, as well as catering and accommodation, which contribute 16% to the provincial economy, are growing rapidly. The growth in tourism, as well as the growth in trade locally and globally, also contributes to growth in these sectors.
Manufacturing, contributing 17% to the provincial economy, has not experienced significant growth and its contribution to the provincial economy is declining. But, as the global economy picks up, this industry is expected to perform better. Within the industry, there are particularly good prospects in food and beverage sectors.
“The Western Cape has escaped the worst of the nationwide slump in the manufacturing of consumer goods, particularly because food, beverage and clothing manufacturing form a larger share of the provincial manufacturing sector than is the case nationally,” Winde explains.
Meanwhile, the department believes that the continued growth in exports is critical to the province’s economic future. Exports from the Western Cape to the global market increased from R48-billion, in 2007, to R60-billion, in 2008, representing a 24,7% growth. The department plans to increase these figures substantially over the next five years. The most significant export products are vegetable and mineral products, as well as prepared foodstuffs, which make up 56% of the total exports. The largest market is Europe, which buys 46% of the province’s exports.
The department also expects the growth of exports to keep pace with the renewed growth of the global economy.
“The global market holds the key to future prospects. If we can increase our global participation, we will be able to scale up production by significantly increasing manufacturing output and employment. The department is optimistic about the province’s export prospects since most of the priority sectors, like oil and gas, business process outsourcing, including call centres and information and communication technology (ICT), have significant export potential,” says Winde.
While there is a wide range of growth opportunities in existing sectors, there are also economic growth opportunities in new areas.
“Oil and gas services are particularly promising. As these industries develop on the West Coast of Africa, and, with new discoveries of oil and gas, indications are that the market will grow rapidly,” Winde asserts.
Another area of future growth is business process outsourcing, particularly in call centres. This industry is expanding rapidly, and is expected to expand even more as global demand for outsourcing grows and domestic services, such as telecommunications linkages with the rest of the world, improve. The province is particularly positive about supporting development in this sector as it is labour intensive.
Winde points out that there are also many new ICT-based businesses in marketing, design and software development in Cape Town.
“Typically, these operations are developed by young and creative people, who are educated and are global in their outlook and connections. They bring a new creative energy to the city and the province, and are likely to introduce the province to new products, services and markets,” he asserts.
Meanwhile, a prefeasibility study for an industrial development zone, in Saldanha Bay, was completed in October 2009. An environmental-management framework is currently being developed for the area and the full feasibility study is likely to start in the next few months.