Cape Town - a force to be reckoned with
Cape Town is South Africa’s second-richest city, in terms of gross domestic product (GDP) per capita, after Johannesburg. As the province’s economic hub, it produces 10.58% of South Africa’s GDP & accounts for 71.10% of the Western Cape’s economic activity. Based on these 2009 figures, Cape Town is the second main economic centre in South Africa.
The majority of the city’s economic activity is driven by small, medium and micro enterprises (SMMEs). According to the Department of Trade and Industry’s Companies and Intellectual Property Registration Office (CIPRO, 2008), approximately 75% of its businesses can be classified as such. Furthermore, SMMEs account for 50% of the city’s output. In 2009 the City’s real gross geographic product (GGP) was R188, 456 million (constant 2005 prices). Other economic drivers include:
- finance, insurance, real estate and business services and business services
- wholesale and retail trade, catering and accommodation
Although manufacturing and agricultural activities are important to the local economy, Cape Town is a service based metropolitan economy.
A growing economy
Sector’s contribution to the City of Cape Town’s GGP (percentage)
Between 2005 and 2009 the city’s economy grew at an average annual growth rate of 4.06%, which although strong, falls below the 6% target that is required to significantly reduce unemployment, which stands at 21.69% (2008)Growth and value of the City of Cape Town's real GGP from 2005 - 2009
Why Cape Town’s economy is upwardly mobile
Cape Town’s position as the Western Cape’s economic growth engine can be attributed to five main factors:
- An increasing young population, which has boosted the domestic demand for goods and services
- A relatively low rate of unemployment and inactivity compared to South Africa’s rate (but not international rates)
- Cape Town is one of the top destinations for investment and foreign direct investment in the country and the province.
- The city has increased the size of the market for its products by targeting international markets.
- On average, residents of Cape Town have access to the country’s best health, education and housing services.
For an in depth analysis of Cape Town’s economy, click here.