Cape Town - The threats exacerbated by blackouts, high fuel prices and the disruption caused by Covid-19 at the start of 2022 have the Western Cape economy on crutches.
Black Business Chamber (BBC) secretary-general Mntuwekhaya Cishe said the issues of a fuel price hike, electricity increases and blackouts were some of the indicators the country was heading for the worse.
Economic growth and tourism Mayco member James Vos said blackouts created a huge cost for businesses, many of which were forced to divert finances from other necessities, such as hiring more staff, towards buying equipment that would keep the lights on and machines running.
Vos said to fast track and build investor confidence, the City needed to continue to secure renewable power on to the grid consistently and systematically, to ultimately reduce load shedding over time, contribute to economic development, and reduce the carbon footprint.
“While ours is the only municipality in South Africa to protect its customers from one stage of load shedding, the City will also soon publish documents detailing our upcoming procurement of power from independent power producers (IPPs),” Vos said.
Cape Chamber of Commerce and Industry president Jacques Moolman said for business to flourish, the national government, the province and the City must provide and maintain infrastructure to enable businesses to operate.
Moolman said there were hopeful signs – the City was taking a proactive role to ameliorate the power situation with moves to hasten its ability to purchase electricity from local producers to reduce blackout levels.
“This willingness to tackle infrastructure problems, normally the responsibility of the central government, is encouraging. The restoration of bus routes enabling the poorest sections of the city to travel to and from work more cheaply is an admirable goal and will soften the impact of inflation, and enable employees to get to work,” he said.
He said the City has also shown the way by slashing the fees it charged for overseeing advertising billboards.
“It is a small start but a significant one. Reducing local rates, taxes, and tariffs across the board should come next,” Moolman said.
Economist and senior analyst at the Centre for Risk Analysis, Bheki Mahlobo, said the Western Cape benefited quite significantly from global travel as a large percentage of its GDP was made up of tourism.
Mahlobo said in early 2022, global commercial flights levels were above that of 2021 but still below pre-pandemic levels, which was positive for consumer sentiment.
He said this was largely due to a decline in the number of people dying from Covid-19 due to high vaccination levels, better treatment and natural immunity resulting in the lifting of restrictions.
“Although commercial flight figures are still below pre-pandemic levels, we believe they will slowly move upwards towards 2019 levels, which would benefit tourism businesses in the Western Cape,” Mahlobo said.
He said there were still risks ahead.
“Although Covid-19 restrictions in the country have been eased, there still remains the uncertainty in regards to Covid-19 regulations,” he said.
Finance and Economic Opportunities MEC David Maynier said the province’s GDP was expected to grow and exceed 2019 levels this year, reaching R665 billion.
Maynier said following the impact of the first wave of Covid-19, the Western Cape economy was set on a recovery path for 2021.
However, the recovery was impaired by successive waves of Covid-19 infections.
He said the province was nevertheless still on a path to economic recovery.
“Western Cape GDP is estimated to rebound from -5.3% in 2020 to 4.3% in 2021, slowing down to 1.8% in 2022.”
Tourism was a significant earner of foreign direct spend and the province hosted 2 million international tourists in 2019, generated R15.5bn in gross value add and sustained roughly 175 000 jobs he said.
Maynier said the industry has been negatively affected by the Covid-19 pandemic and in 2020, 43% of industry jobs were lost. Yet, as previous global and local crises have shown, tourism is a resilient industry.
“The Western Cape government believes that the province remains a compelling destination and that the industry can bounce back and bounce up in the next five years, substantially contributing to economic recovery, growth and job creation,” said Maynier.