Economic Growth

Economic Growth
ECONOMIC RATIONALE Largest contributor to SA GDP Johannesburg is the capital of South Africa’s most prosperous and richest province, Gauteng (a Sesotho name meaning ‘Place of Gold’). Due to Joburg’s attraction both in terms of opportunity and socio-economic growth, it is not only the most densely populated city in SA with a population of 5,04 million (SA slightly over 56 million) but also has the highest number of economically active people As the country’s biggest metropolitan economy, Joburg is the largest single metro contributor to national economic product, generating 15% of SA’s wealth and around 44% of Gauteng’s economic output. Over the past 10 years, the City’s high economic growth rate has undoubtedly been the major driver behind the performance of the national economy. Joburg’s economy is at least one and a half times bigger than that of the second biggest metro, Cape Town. It has consistently outdone the economic performance of the country’s other metros, making the City the country’s economic hub.Source of basic data: IHS Markit Regional Explorer 2018 (1484) Growth rates Over a 20 year period (1996 – 2017), Joburg’s average growth rate was 3.6%, marginally higher than both the provincial economy (3.0%) and national (2.7%) economies. Unsurprisingly, the City enjoys the highest proportion of formal sector employment in SA, currently about 7 – 10 % higher than in all the other Metros. Looking at the educational profile of the City, the population is, in general, becoming better educated. For example, from 2003 to 2013 the number of people with a ‘matric and a Bachelor’s’ degree’ increased with an average annual rate of 6.85%. Positive long-term economic growth outlook Johannesburg’s strong economic fundamentals and structure has meant it grows consistently faster than the country at large. There has been a 92% expansion in Joburg’s economic output since 1996. All sectors have grown, with the financial and business services sector being particularly strong. Joburg has recently introduced several key interventions to ensure continued economic growth, despite the challenges of uneven global growth, electricity supply constraints and labour relations tensions. These include: • Improving service delivery for businesses; • Creating Priority Economic Zones and Business Clusters; • Fast-tracking decision-making and processing of all large, job-creating investments into the City; and • Establishing SME Hubs across the City. Diversification to fast growing sectors One of the key reasons for the City’s growth has been a diversification from its original mining base to globally fast-growing sectors, in line with the country’s shift to a diversified manufacturing and services economy. In 2017, mining contributed just 1% while financial and business services contributed close to 30%, community services 17%, manufacturing 12%, electricity, water and gas 3%, trade 21%, transport 6% and construction 6%. Source of basic data: IHS Markit Regional Explorer 2018 (1484) Financial and Business Services: This star of the Joburg economy has recorded consistently high growth rates and has been a net creator of employment, with all the large banks, a number of the large insurance companies and many Information and Communications Technology (ICT) companies located in Joburg. Apart from financial and ICT, the legal, accounting, market research, architectural, engineering and real estate business activities are also well placed for continued contribution to the City’s economy. Further, this sector is an important enabling sector, underpinning the growth of important consumer expenditure sectors such as retail sales. Community and Personal Services: Growth in this sector reflects the expansion of public sector services to address infrastructure, education and health issues at national, provincial and metropolitan government levels, with the government sector tending to be fairly immune to economic factors. Manufacturing: The nature of manufacturing in Joburg is of a higher value add and the strategy for the Joburg economy has been to increase activities at the tertiary level of manufacturing, promoting high-value added manufacturing. Trade: This encompasses all forms of wholesale and retail trade, including the sales, maintenance and repair of motor vehicles, as well as the hospitality and leisure industries. Transport and Communication: Making up a relatively small portion of the City's economy, the areas of logistics and telecommunications are vital for the City's development and the performance of other critical sectors, such as finance and business services (telecommunications) and manufacturing, trade and construction (transport). Both logistics and telecommunications form part of the City's longer term economic development strategy, with projects such as the City Deep Transport Logistics Hub being vital components. Construction City of Johannesburg construction sector was one of the resilient sectors over the years from 2006. It was one of few sectors that has continued to grow over time. Commercial developments, public transport programmes and public spending on infrastructure programmes supported growth in the sector.

ECONOMIC RATIONALE

Largest contributor to SA GDP

Johannesburg is the capital of South Africa’s most prosperous and richest province, Gauteng (a Sesotho name meaning ‘Place of Gold’). Due to Joburg’s attraction both in terms of opportunity and socio-economic growth, it is not only the most densely populated city in SA with a population of 5,04 million (SA slightly over 56 million) but also has the highest number of economically active people

As the country’s biggest metropolitan economy, Joburg is the largest single metro contributor to national economic product, generating 15% of SA’s wealth and around 44% of Gauteng’s economic output. Over the past 10 years, the City’s high economic growth rate has undoubtedly been the major driver behind the performance of the national economy. Joburg’s economy is at least one and a half times bigger than that of the second biggest metro, Cape Town. It has consistently outdone the economic performance of the country’s other metros, making the City the country’s economic hub.Source of basic data: IHS Markit Regional Explorer 2018 (1484)

Growth rates

Over a 20 year period (1996 – 2017), Joburg’s average growth rate was 3.6%, marginally higher than both the provincial economy (3.0%) and national (2.7%) economies.

Unsurprisingly, the City enjoys the highest proportion of formal sector employment in SA, currently about 7 – 10 % higher than in all the other Metros.

Looking at the educational profile of the City, the population is, in general, becoming better educated. For example, from 2003 to 2013 the number of people with a ‘matric and a Bachelor’s’ degree’ increased with an average annual rate of 6.85%.

Positive long-term economic growth outlook

Johannesburg’s strong economic fundamentals and structure has meant it grows consistently faster than the country at large. There has been a 92% expansion in Joburg’s economic output since 1996. All sectors have grown, with the financial and business services sector being particularly strong.

Joburg has recently introduced several key interventions to ensure continued economic growth, despite the challenges of uneven global growth, electricity supply constraints and labour relations tensions. These include:

• Improving service delivery for businesses;

• Creating Priority Economic Zones and Business Clusters;

• Fast-tracking decision-making and processing of all large, job-creating investments into the City; and

• Establishing SME Hubs across the City.

Diversification to fast growing sectors

One of the key reasons for the City’s growth has been a diversification from its original mining base to globally fast-growing sectors, in line with the country’s shift to a diversified manufacturing and services economy. In 2017, mining contributed just 1% while financial and business services contributed close to 30%, community services 17%, manufacturing 12%, electricity, water and gas 3%, trade 21%, transport 6% and construction 6%. Source of basic data: IHS Markit Regional Explorer 2018 (1484)

Financial and Business Services:

This star of the Joburg economy has recorded consistently high growth rates and has been a net creator of employment, with all the large banks, a number of the large insurance companies and many Information and Communications Technology (ICT) companies located in Joburg. Apart from financial and ICT, the legal, accounting, market research, architectural, engineering and real estate business activities are also well placed for continued contribution to the City’s economy. Further, this sector is an important enabling sector, underpinning the growth of important consumer expenditure sectors such as retail sales.

Community and Personal Services:

Growth in this sector reflects the expansion of public sector services to address infrastructure, education and health issues at national, provincial and metropolitan government levels, with the government sector tending to be fairly immune to economic factors.

Manufacturing:

The nature of manufacturing in Joburg is of a higher value add and the strategy for the Joburg economy has been to increase activities at the tertiary level of manufacturing, promoting high-value added manufacturing.

Trade:

This encompasses all forms of wholesale and retail trade, including the sales, maintenance and repair of motor vehicles, as well as the hospitality and leisure industries.

Transport and Communication:

Making up a relatively small portion of the City's economy, the areas of logistics and telecommunications are vital for the City's development and the performance of other critical sectors, such as finance and business services (telecommunications) and manufacturing, trade and construction (transport). Both logistics and telecommunications form part of the City's longer term economic development strategy, with projects such as the City Deep Transport Logistics Hub being vital components.

Construction

City of Johannesburg construction sector was one of the resilient sectors over the years from 2006. It was one of few sectors that has continued to grow over time. Commercial developments, public transport programmes and public spending on infrastructure programmes supported growth in the sector.