The recent report on regional economic disparities in South Africa by the Centre for Risk Analysis highlights the deep inequalities between rural provinces and urban centres, particularly Gauteng and the Western Cape.
The rural eastern region of the country, particularly the Eastern Cape, is underperforming compared to urbanised provinces such as Gauteng and the Western Cape. The data presented in the report highlight significant gaps in demographics, economics, education, health, social security and living conditions, highlighting the urgent need for structural reforms.
The study notes a marked migration trend, with rural residents moving to Gauteng and the Western Cape in search of economic opportunities. Between 2011 and 2022, these provinces recorded population growth of 31% and 24% respectively, far exceeding the national average of 17%. In contrast, provinces such as the Eastern Cape and the Free State recorded negligible growth of 2% and 7% respectively.
According to a study published in the South African Journal of Economics, the economies of Gauteng and the Western Cape grew at an average annual rate of 3% between 1995 and 2018, a third faster than the rest of the country, which grew by 2.2%. Gerbrandt van Heerden, one of the authors of the Centre for Risk Analysis report, points out that this difference, while seemingly small, has a significant cumulative effect on gross value added.
For example, the growth in gross value added in Gauteng and the Western Cape from 1995 to 2018, equivalent to R224 billion in 2010 prices, is roughly equivalent to the size of the Eastern Cape economy.
Gauteng and the Western Cape also contribute disproportionately to the South African economy, accounting for 47.2% of GDP while having only 37.3% of the population. These two provinces are home to 53.7% of the country’s assessed individual taxpayers.
“The labour absorption rate, that is, the proportion of the working-age population that is employed, is higher in Gauteng (45.3%) and the Western Cape (52.9%) than at the national level (40.3%),” van Heerden points out.
The other seven provinces, which are mainly rural, underperform in economic, demographic and social terms. Their collective share of the total population is 62.7%, compared to their collective share of GDP of 52.8%.
The quality of life in these provinces is significantly lower than in Gauteng or the Western Cape. The unemployment rate in the North West province (53%) is over 50%.
Gauteng contributes 33.2% to the national GDP, driven by the financial and manufacturing sectors, while the Western Cape contributes 14%.. In contrast, Limpopo contributes 7.6% to national GDP and the Northern Cape 2.3%, with these provinces heavily dependent on mining and vulnerable to fluctuations in global commodity markets.
Reliance on struggling primary and secondary industries is a major factor in the economic underperformance of rural provinces. According to Statistics South Africa’s latest provincial GDP data, mining dominates in provinces such as Limpopo, Mpumalanga, North West and the Northern Cape.
“Despite the fact that mining is one of South Africa’s largest employers, several mining companies announced earlier this year that they would have to cut jobs to remain profitable. Power and logistics constraints are widely acknowledged as contributing factors to the industry’s decline,” says van Heerden.
Unemployment rates also highlight the disparity, with Gauteng reporting an official rate of 35.1%, while the North West has a rate of 41.3%, the Eastern Cape 41% and Mpumalanga 37.4%.
Rural provinces such as Limpopo and the Eastern Cape have high ratios of youth and dependents. In Limpopo, 39.2% of the population is under 18, putting pressure on social services.
In education, the systemic differences are evident. Gauteng and the Western Cape lead the way with 10.7% and 10.9% of adults holding qualifications respectively. These regions also have better access to school infrastructure, with over 68% of schools equipped with libraries, compared to 8.7% in Limpopo.
National Senior Certificate pass rates also reflect the disparities in quality. The Free State leads the rural provinces with a pass rate of 89%, compared to 79.5% in Limpopo. In the Eastern Cape, only 21.8% of students passed mathematics, compared to 33.5% in Gauteng.
In terms of health, the Western Cape and Gauteng have better indicators, with lower HIV prevalence rates of 11.7% and 12.3% respectively, compared to 15.8% in KwaZulu-Natal. Both provinces also have more favourable doctor-patient ratios.
Dependence on social grants is higher in rural provinces, with 42.9% of the population in Limpopo and 40.4% in the Eastern Cape relying on the state. Child grants predominate, covering over 75% of children in the Eastern Cape and Limpopo.
The report highlights how urban provinces offer better living conditions, although they are not without their challenges. In Gauteng, for example, 97.6% of households have access to safe drinking water, while only 67.8% of households in the Free State have access to safe drinking water..
In conclusion, regional economic disparities in South Africa pose a major challenge to development and people’s well-being. It is imperative to implement structural reforms and invest in underperforming provinces to reduce these gaps and foster more balanced and inclusive development across the country.