The report analysed the situation in Umtata, Welkom, Witbank, Upington, Newcastle and Stellenbosch and concluded that all of these towns, bar Stellenbosch, were in economic decline, and have been for the last decade. This is attributable to reduced activity in mining, agriculture, a decline in the manufacturing sector as a result of an ability to compete globally, and, in the case of Umtata, due to the demise of the homeland government. While these primary economic activities have declined, most of the towns have not been able to successfully diversify their economic base, and explore the possibilities of growth in new areas. The success of Stellenbosch in the agribusiness, tourism and service sectors is attributed to its proximity to and integration with greater Cape Town.
While local recession characterises these economies on the one hand, rapid population growth is also under way together with growing informal settlements, a growing backlog in municipal service provision, and a surge in all the social problems that accompany growing poor communities with little hope of employment. Unemployment is high: 57% in Umtata and 54% in Newcastle. Even in Stellenbosch, where unemployment stands at 17%, there is a high percentage of ‘working poor’ who qualify for subsidised water and electricity, and may be seasonal workers.
Pundy Pillay, the report’s author, argues that government policy at national, provincial and local level is doing little to tackle the problem. Municipalities, in particular, are floundering as they try to tackle the challenge of local economic development, a municipal responsibility as set out in the Constitution. He argues that to deal with the economic challenges facing secondary cities there is a need for much deeper intergovernmental cooperation than has occurred up to now. At present, economic development strategies between the three spheres of government show little sign of co-ordination, with local policies often not linked to provincial approaches. Pillay also argues that the macroeconomic approach adopted by government has been particularly rough on secondary city economies, which suddenly found themselves competing unsuccessfully with the world’s most competitive firms and cities. There has also been inadequate focus on the development of local entrepreneurs and small businesses in these areas, particularly when big businesses are increasingly capital intensive. Pillay argues that there are compelling reasons not to ignore the plight of South Africa’s towns. At present they are home to a very significant portion of the population, and doing nothing to create opportunities within them will accelerate migration to the big cities. At the same time there are strong linkages between these towns and the country’s rural areas, and increasing opportunities in these towns will assist in the allevi-ation of rural poverty.