Enterprising Cape: building an inclusive and vibrant economy

The Western Cape faces two interrelated sets of development challenges in its efforts to become a more cohesive high-income society and economy.

The Western Cape faces two interrelated sets of development challenges in its efforts to become a more cohesive high-income society and economy. The first is unequal access to basic services and economic opportunities; the second is an economic environment with inadequate technology, skills and governance to enable it to move rapidly from middle-income to high-income status.

Many of the province’s residents, particularly those in rural areas, still lack access to essential services, such as health care, basic education and basic infrastructure, such as electricity and sanitation. And the province’s economy continues to struggle because of excessive red tape, a skills gap and insufficient infrastructure for economic development (such as information and communication technology [ICT]). If these challenges are not properly addressed, the economy of the Western Cape will remain characterised by fairly slow growth and a deeply divided society.

This FuturesCape policy brief analyses these two sets of challenges and explores some of the outcomes of pursuing policies designed to address them – first in isolation and then in combination. It compares these outcomes with a Base Case, which is how the future might be if no significant changes were made to the Western Cape’s current mix of policy strategies. Under such a Base Case scenario, the Western Cape won’t reach high-income status until around 2040.1

This paper uses the International Futures (IFs) forecasting model to create and explore three scenarios for the Western Cape up to 2040. These have been titled Inclusive Economy, Vibrant Economy and Enterprising Cape. These scenarios provide pictures of how policy interventions might have a foreseeable impact on the development challenges outlined above.

In the Inclusive Economy scenario, the Western Cape adopts policies designed to address the structural problems surrounding access to services, such as providing better public transport; improving the numbers enrolled in and persisting with basic education; enhancing access to health care, particularly treatment for HIV/AIDS; and access to sanitation and electricity infrastructure. These initiatives would raise the province’s gross domestic product (GDP) per capita by 8% above the Base Case GDP level by 2040 and increase its UN Human Development Index (HDI) by 1,4 points (an increase equivalent to 1,8%).2 Under this scenario, the Western Cape reaches high-income status in the late 2030s – earlier than it would under the Base Case.

In the Vibrant Economy scenario, the Western Cape pushes to escape the middle-income trap and become a more globally competitive economy by implementing policies designed to improve vocational and tertiary education – with the emphasis on science and engineering; reducing the red tape holding back business; increasing funding for research and development (R&D); and improving access to high-speed ICT. These interventions would increase the province’s GDP per capita by 16% above the Base Case and its HDI by 2,8 points (or 3,4%) by 2040. Under this scenario, the province would also achieve high-income status in the late 2030s.

The final scenario, Enterprising Cape, represents a comprehensive approach to the province’s two sets of development challenges. A combination of interventions from the inclusive and vibrant scenarios spurs much greater economic growth and human development than either would achieve on its own. In the Enterprising Cape scenario, the province’s GDP per capita is 24% greater than in the Base Case and its HDI is 3,6 points (4,3%) higher. Under this scenario, the province reaches high-income status earlier, in the mid-2030s.

Together, these three scenarios help illustrate the importance of a comprehensive approach to addressing the Western Cape’s development challenges and creating a simultaneously more inclusive and vibrant economy.

Authors: Eli Margolese-Malin, Jonathan D Moyer, Mickey Rafa and Mohammod Irfan