Picture: 123RF/HANDMADEPICTURES
Picture: 123RF/HANDMADEPICTURES

The Western Cape’s economy is slowly returning to life and is on track for strong growth as the country emerges from the third wave of Covid-19 infections.

The province is one of SA’s economic powerhouses, contributing about 15% to SA’s GDP, while Gauteng contributes just more than a third.

But the UK’s decision to keep SA on its red list — which means that travellers returning to the UK from SA must spend 10 days in quarantine at a cost of more than £2,000 (R40,500) thus making travel between the two nations expensive — could derail recovery efforts, said Western Cape finance and economic opportunities MEC David Maynier.  

Before Covid-19 struck, the Western Cape counted tourism as one of the mainstays of the provincial economy with the UK a key source market.

Earlier in September, the UK high commission said via Twitter that it remained “concerned about the continued presence of Beta [Covid-19 variant first identified in SA] given its potential ability to circumvent vaccines”. The UK has said it will review its decision in the coming weeks, amid growing pressure from the SA government and tourism industry players.

Western Cape tourism authorities are now largely banking on local travellers to fast track the recovery of the sector. The sector was pushed to the brink of collapse as governments across the globe imposed stringent movement regulations to curb the spread of Covid-19. However, governments have since progressively eased the lockdown as vaccine rollouts gather momentum.

On Thursday, Maynier released the latest provincial economic review and outlook report, which shows that activity at retail, recreation areas and workplaces is now only 10% less compared to pre-Covid-19 period — a substantial improvement on the April 2020 figures during the shutdown, at the peak of the first wave of Covid-19 infections. During the early stages of the lockdown, activity at these places was 80% lower than the corresponding period prior to lockdown. The report cites Google Mobility data, which measures average activity at a location.

Maynier said the rapid vaccine rollout had supported economic recovery in the Western Cape economy. By mid-September, following public and private sector collaboration, 2.5-million vaccines had been administered in the Western Cape to almost 37% of adults, compared to 29% of the adult population for SA as a whole, Maynier said.

He said the lockdown measures, especially those restricting travel and alcohol sales, had had a devastating effect on the tourism and hospitality sector, which has been the lifeblood of the economy in the Western Cape in recent times. 

“To compound the problem, we have been hit by other significant shocks, such as load-shedding, taxi violence and a cyberattack that collapsed operations at the port of Cape Town. But we are a resilient region, proven by our internationally recognised management of the drought, and our management of three waves of the Covid-19 pandemic, and although economic recovery will not be easy, we will reopen and recover in the Western Cape,” the MEC said.

According to the provincial economic review and outlook report, recovery will be mainly driven by agricultural exports. It also cites the tourism, trade and finance sectors as crucial in recovery efforts.

Between 2016 and 2020, export growth in the Western Cape was mainly driven by agriculture exports including wine and fruit, which was supported by a relatively weaker local currency and fewer Covid-19 restrictions.

In 2020, agriculture and agri-processing together contributed 8% to the total economic activity and provided 10.4% of all employment in the province, and accounted for 50% of national agricultural exports. The Western Cape contributes more than 90% of national exports of blueberries, bulk wine, pears, bottled wine and apples.

The national economy is expected to recover and grow 3.6% in 2021 and 3.4% in 2022, while the provincial economy is forecast to expand 3% in 2021 and 4.1% in 2022.

Maynier said that to ensure faster recovery, the UK must remove SA from the “red list” as soon as possible.

“The decision to keep SA on the ‘red list’ seems manifestly unfair, unnecessarily strangling a key source market for tourism in the Western Cape,” Maynier said.

He said President Cyril Ramaphosa must also immediately move SA to alert level 1 of the lockdown to allow more economic activity and give consideration to increasing the capacity of large conferencing venues, and allowing spectators at major sporting events and reopening ports for the cruise season.

“Finally, it is now time for national government to trust provinces, to end the national state of disaster, and to allow provinces to manage the Covid-19 pandemic with a response that is proportional to the threat. Our health systems are robust and our response has been institutionalised. We need a new, differentiated approach that avoids a blunt instrument that kills jobs,” Maynier said.

phakathib@businesslive.co.za

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