ETHEKWINI STATE OF THE ECONOMY

PRESENTATION TO THE S.D.B. LED STAKEHOLDERS

18 AUGUST 2014

ECONOMIC DEVELOPMENT AND INVESTMENT PROMOTION UNIT:

LED AND SPATIAL DEVELOPMENT

Structure of this Progress Presentation

Overview Department Overview Long-term Dev Framework Package of Plans Demographics The Durban Economy Labour Indicators Foreign Trade and

Investment Spatial Economy Summary Majority of data from HSI

Global Insight (2013)

Department Overview

Economic Development and Investment Promotion (H.O.D)

LED & Spatial Development

Policy andResearch

Sector Development

Investment Promotion

Long Term Development Framework

Package of Plans

Demographics

Demographics Cont…

Durban Economy in context

Agriculture1%

Mining0%

Manu-facturing

22%

Elec-tricity

2%

Con-struction3%

Trade17%

Transport16%

Finance22%

Com-munity

ser-vices17%

Sectorial composition of GDP (Main Sectors) in 2013

Main sectors – manufacturing, finance, trade, community services

Total GDP in 2013 = R217.7 billion

Growth over 17 years = 3.7% and 2.6% between 2012 and 2013

Rate not adequate to meet NDP ‘s GDP growth targets – requires growth > 5%.

The Durban economy

Industrial GDP Contribution

GDP growth compared with other regions 1997-2013In 2013, City experienced a positive growth rate of 2.6%, while KwaZulu-Natal and South Africa grew by 3.1% and 1.9%, respectively.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Average Annual Growth of Top 5 Economies in SA

SA Cape Town Ethekwini Joburg Port Elizabeth Pretoria

Economic Production Indicators cont.

Reasons for decline in secondary sector include: • Increased imports at

cheaper prices especially from Asia.

• Increased cost of land and labour

• Inability of local government to finalise large projects such as the automotive supplier park, , or capitalise on existing such as DTP

Tertiary Sector:• Highest contributors are retail trade, land and water transport, and real estate

activities, • Highest growth sectors are real estate activities and wholesale & commission

trade• Citizens are spending more on real estate. This could be due to the low interest

rates prevailing at the time

Tertiary Sectors -Trade, transport, finance & community services

2010 2011 2012 % change2011-2012

% contribution

Wholesale & commission trade

12,550 14,673 17,16217%

5.9%

Retail trade & repairs of goods

22,464 26,149 29,17112%

10%

Sale & repairs of motor vehicles, sale of fuel

7,316 8,794 10,05914%

3.5%

Hotels & restaurants 2,960 3,050 3,476 14% 1.2%

Land & Water transport 23,624 26,041 27,980 7% 9.6%

Air transport & transport supporting activities 5,031 5,770 5,988

4%

1.8%

Post & telecommunication 8,407 9,182 9,657 5% 2.1%

Finance & Insurance 23,870 25,825 26,013 1% 3.3%

Real estate activities 13,695 14,673 18,954 29% 8.9%

Other business activities 14,212 14,812 14,897 1% 6.5%

Public administration & defence activities

9,755 10,282 11,39111%

5.1%

Education 14,457 15,955 17,312 9% 3.9%

Health & social work 11,914 12,925 13,969 8% 4.8%

Other service activities 11,766 12,761 13,620 7% 4.7%

Primary sector1%

Secondary sector23%

Tertiary sector75%

Economic Production Indicators cont.

• The industries with highest labour remuneration figures in eThekwini were community services (32.8%), manufacturing (22,8%), and wholesale and retail trade(15.1%). This trend has changed slightly with finance and business sector slipping to 4th place in 2012

• Highest growth sectors were community services; transport, storage and communications; wholesale and retail trade, and construction; while the lowest growth sector was the finance and business sector. No sectors experienced negative growth between 2011 and 2012.

• The public sector wage bill is excessive for eThekwini

Labour Remuneration (current prices) 2010 2011 2012 % change2011-2012

% contributio

n

Agriculture, fishing & forestry

1,084 1,101 1,181

7%0.8%

Mining & quarrying 139 149 156 5% 0.1%Manufacturing 28,440 30,785 33,667 9% 22.8%Electricity, water & gas 2,440 2,715 3,023 11% 2.0%Building construction & civil engineering

4,228 4,309 4,658

8%3.2%

Wholesale & retail trade 17,785 20,571 22,318 8% 15.1%Transport, storage & communications

11,392 12,838 13,847

8%9.4%

Financial & business 20,324 21,544 21,819 1% 14.8%Community services 39,905 43,325 46,866 8% 32.8%Total industries 125,738 137,339 147,535 7% 100.0%

Labour Indicators

Total Formal/Informal Employment: Broad Sectors

2012 2013 % Change

1,230,425 1,243,820 1.1%

Agriculture1%

Mining0%

Manufactur-ing21%

Electricity1%

Construc-tion4%

Trade15%

Transport7%

Finance17%

Community Services

24%

Households10%

Big employment sectors – community services, manufacturing and finance

Total formal/informal employment in 2013 = 1,243,820

Growth over 12 years = 2.8%

Growth not adequate to meet NDP targets – requires growth > 4%.

Labour Indicators

Labour Indicators (continued)

• The highest percentage of people unemployed fall within the African population group; whereas the white population are among the least unemployed.

• Most of employment is in trade sector, then community services and manufacturing.

• High growth sectors are agriculture(10.6%) and community services (5.9%) with manufacturing and construction experiencing negative growth

2010 2011 2012 Growth2011-2012

Unemployed 290,823 270,523 280,058 3.5%

African 246,937 229,640 236,674 3.1%

White 5,171 4,722 4,736 0.3%

Coloured 7,164 6,692 6,906 3.2%

Asian 31551 29,470 31,741 7.7%

Employed 1,064,900 1,094,014 1,115,737 2%

Agriculture 11,048 10,678 11,810 10.6%

Mining 377 357 369 3.3%

Manufacturing 198,371 197,812 193,947 -2%

Electricity 4,755 4,655 4,990 7.2%

Construction 72,640 71,923 71,632 -0.4%

Trade 255,548 267,157 270,058 1.1%

Transport 73,782 75,311 78,850 4.7%

Finance 145,987 151,113 153,942 1.9%

Community services 214,752 228,991 242,549 5.9%

Households 87,641 86,015 87,590 1.8%

Informally employed 259,433 269,139 270,325 0.4%

Foreign Trade and Investment

Foreign Trade Overview

.

Merchandise exports from and imports to eThekwini (R thousands, current prices)

• In eThekwini, imports have grown at a faster rate than exports (growth of 9% and 10% respectively), therefore, the trade balance has remained negative, and spiked in 2011 and 2012 due to a large increase in imports driven by renewed local consumer spending.

• Over 60% of all exports are ‘motor vehicles, parts & accessories’ and ‘basic iron & steel’. Almost 50% of imports are ‘motor vehicles, parts & accessories’, and ‘basic chemicals’.

• The majority of exports are destined for African countries and the majority of imports are from Asia. The number one export partner is Japan, while the top import partners are Germany and China.

2006 2007 2008 2009 2010 2011 2012

-100,000,000

-80,000,000

-60,000,000

-40,000,000

-20,000,000

0

20,000,000

40,000,000

60,000,000

-35,000,000

-30,000,000

-25,000,000

-20,000,000

-15,000,000

-10,000,000

-5,000,000

0

Merchandise ExportsMerchandise ImportsTrade Balance

Domestic Fixed Investment Trends (Constant, 2005, Rm)

Total domestic fixed investment in 2011: R48, 1 billion, with a growth rate of 3.8 % year-on-year

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Agriculture, forestry and fishing

Mining and quarrying

Manufacturing

Electricity, gas and wa-ter

Construction

Wholesale and retail trade, catering and accommodation

Transport, storage and communication

Finance, insurance, real estate and business services

Community, social and personal services

General government

Investment Indicators

Investment IndicatorsDurban Investment Dashboard

Investment IndicatorsDurban Investment Dashboard

Latest Statistics on Dashboard: 57 Projects 3, 736, 674 work

opportunities during construction

617 360 permanent jobs

R8,4bn in rates income 20 year timeframe

Investment IndicatorsDurban Investment Dashboard

Spatial Economy

Share of GDP and Manufacturing per region

West North Central South

GDP 12892571340 37114978100 103335912710 41998527850

10,000,000,000

30,000,000,000

50,000,000,000

70,000,000,000

90,000,000,000

110,000,000,000

GDP per Planning Region: 2013 (Rands)

Comparing Manufacturing sectors amongst top 5 economies

Cape Town Ethekwini Johannesburg Nelson Mandela Bay Tshwane

Primary sector 1586396.3748986 2526130.37650209 4638320.67718388 206591.107682256 1879628.31242221

Secondary sec-tor

42931634.8228883 53100927.9565523 67728193.2023721 16256930.0695726 36664302.2346589

Tertiary sector 158944536.88129 139714931.678542 230146098.112874 41219463.1861043 140716397.042207

25,000,000

75,000,000

125,000,000

175,000,000

225,000,000

Share of Primary, Secondary and Tertiary contribution 2013 (R1000, Constant 2005 Prices)

• EThekwini 2nd most significant manufacturing region• 2nd largest compound annual growth rate in last 10 years

(3.23%). • Tshwane largest growth rate = 3.79% and Johannesburg =

2.63%

Central60%

North26%

South11%

West4%

Total Business rates

Services and Utilities!!

Summary

Challenges and Opportunities

CHALLENGES ????

OPPORTUNITIES SEZ at DTP and significant

development momentum Look at SEZ at

Hammarsdale and Cato Ridge

SIP 2 projects Implementation of the

Economic Development and Job creation Strategy – address a lot of the challenges

DTIs incentives in to grow our manufacturing base.

Inner City Township development ICDG Unlock key projects on

the investment dashboard

Thank youProject Manager: LED and Spatial Development Department

Economic Development & Investment Promotion UnitEThekwini Municipality

vuyo.jayiya@durban.gov.za