GEORDIN HILL-LEWIS: Why Cape Town bucks South Africa’s unemployment trend

About 40,000 more people in employment in three months; 125,000 more people with jobs in the three months before that; four straight quarters of jobs growth; unemployment receding.

If you’re in politics for the right reasons, there’s no greater joy than seeing numbers like this. They represent real, meaningful change in the lives of the least well off. They’re also a reminder of what the economy is capable of — despite the odds stacked against it.

Stats SA’s most recent Quarterly Labour Force Survey reveals two stubborn truths. First, the unemployment crisis shows no signs of abating, with the national expanded unemployment rate (including those who’ve given up looking for work) stuck above 42%. Second, there’s a stark contrast between the grim national picture and that of the Western Cape and Cape Town. 

In the first quarter of 2023, the metro’s expanded unemployment rate was 26%. That’s still too high, but it’s a full 16.2 percentage points (pp) lower than the national average, and it’s lower than the next-best province’s narrow unemployment rate. Year on year, Cape Town has seen a 4pp drop in unemployment. 

The question is why? Or, rather, how? Because if we can buck the trend, surely this can be replicated elsewhere?

Any investment in a business is a bet on the future. Whether you want to open a coffee shop, or if you’re Amazon looking to establish a regional headquarters, you’ll make a decision based on your confidence that conditions for operating your business will remain conducive for five, 10 or 20 years. So you consider the present environment and extrapolate from that. 

We know Cape Town is in competition with other cities for precious job-creating investment. It is our most important mission to make the city as competitive and attractive as possible, and to assure potential investors that this will remain the case.

That’s not the task of a single office in our administration — it’s a mission that spans every function of the city and its services. 

Future focus

Arguably the most important aspect is a city’s investment in infrastructure: roads, pipes, grids, and the equipment and vehicles connected to them. When a city’s infrastructure keeps ahead of population growth and urbanisation, it creates an environment where businesses can conduct their operations, move their products and serve their customers. 

In our recent budget, we tabled Cape Town’s biggest-ever capital expenditure — R11bn. That’s a lot of infrastructure; over the next three years we’ll spend more than Joburg and Durban combined. But it’s part of an even bigger and longer-term project: over the next 10 years we plan to spend R120bn expanding infrastructure. 

That kind of future focus is not lost on business owners. Knowing that water, sewers, roads, refuse removal and other municipal services are guaranteed is often the biggest deciding factor for investment.

The bulk of this investment will be in water and sanitation, including pipes, pump stations and wastewater treatment plants — particularly in poorer areas. But substantial amounts have also been set aside for critical economic enablers such as public transport. For example, our R5.4bn MyCiti bus service expansion to link Khayelitsha and Mitchells Plain with Wynberg and Claremont will be a game-changer for people from those areas as well as businesses along the route. 

Then there’s electricity. The biggest impediment to growth is the inability to supply power. Nothing the national government or Eskom have said suggests they have a credible strategy to deal with the crisis, and that is a major red flag to potential investors. 

Cape Town is not going to wait for Eskom to heal itself. We’re taking a range of steps to isolate ourselves from the power utility’s failure. These include tenders for 500MW of dispatchable energy and 200MW of renewable energy, solar PV plants and an incentivised voluntary power saving scheme. There’s also a plan to pay residents and businesses cash for their excess rooftop solar.

Finally, there are the hoops businesses have to jump through, and delays they face in being issued with, say, the necessary permits to operate. We’re taking steps to cut red tape and speed up our business-facing services. Our recently launched ease of doing business index is an effort to make ourselves publicly accountable and show us where we need to improve. 

When you combine these elements with a 17-year track record of responsible governance, you end up with the most important thing investors look for: confidence in the future. That explains our outlier job stats. And if it can be done in Cape Town, it can be done elsewhere too. 

* Hill-Lewis is the executive mayor of Cape Town