Northern Cape Investment Prospectus 2021

1.       Economy

The economic state of Northern Cape Province is put in perspective by comparing it on a spatial level with its neighbouring provinces and South Africa. The section will also elude to the economic composition and contribution of the municipalities within Northern Cape Province.

The Northern Cape Province does not function in isolation from South Africa and the world and now, more than ever, it is crucial to have reliable information on its economy for effective planning. Information is needed that will empower the municipality to plan and implement policies that will encourage the social development and economic growth of the people and industries in the municipality respectively.

1.1       Gross Domestic Product by Region (GDP-R)

The Gross Domestic Product (GDP), an important indicator of economic performance, is used to compare economies and economic states.

• Gross Domestic Product by Region (GDP-R) represents the value of all goods and services produced within a region, over a period of one year, plus taxes and minus subsidies.

GDP-R can be measured using either current or constant prices, where the current prices measures the economy in actual Rand, and constant prices measures the economy by removing the effect of inflation, and therefore captures the real growth in volumes, as if prices were fixed in a given base year.

• Gross Domestic Product (GDP) - Northern Cape and National Total, 2008-2018 [R billions, Current prices]

	Northern Cape	National Total	Northern Cape as % of national
2008	54.7	2,369.1	2.3%
2009	54.4	2,507.7	2.2%
2010	60.1	2,748.0	2.2%
2011	64.0	3,023.7	2.1%
2012	68.2	3,253.9	2.1%
2013	72.6	3,540.0	2.0%
2014	83.5	3,805.3	2.2%
2015	86.2	4,049.9	2.1%
2016	90.4	4,359.1	2.1%
2017	96.5	4,653.6	2.1%
2018	98.6	4,873.9	2.0%

Source: IHS Markit Regional eXplorer version 1870

With a GDP of R 98.6 billion in 2018 (up from R 54.7 billion in 2008), the Northern Cape Province contributed 2.02% to the South Africa GDP of R 4.87 trillion in 2018 increasing in the share of the National Total from 2.31% in 2008.It's contribution to the national economy stayed similar in importance from 2008 when it contributed 2.31% to South Africa, but it is lower than the peak of 2.31% in 2008.

• Gross Domestic Product (GDP) - Northern Cape and National Total, 2008-2018 [Annual percentage change, Constant 2010 prices]

	Northern Cape	National Total
2008	1.7%	3.2%
2009	-2.3%	-1.5%
2010	2.2%	3.0%
2011	2.0%	3.3%
2012	3.2%	2.2%
2013	2.4%	2.5%
2014	3.0%	1.8%
2015	1.1%	1.2%
2016	-1.2%	0.4%
2017	2.8%	1.4%
2018	-0.3%	0.8%
Average Annual growth 2008‑2018	1.28%	1.50%

Source: IHS Markit Regional eXplorer version 1870

In 2018, the Northern Cape Province achieved an annual growth rate of -0.30% which is a significant lower growth rate than the of South Africa as a whole, where the 2018 GDP growth rate was 0.79%. Contrary to the short-term growth rate of 2018, the longer-term average growth rate for Northern Cape (1.28%) is slightly lower than that of South Africa (1.50%). The economic growth in Northern Cape peaked in 2012 at 3.23%.

• Gross Domestic Product (GDP) - Northern Cape Province and the rest of National Total, 2018 [Percentage]

The Northern Cape Province had a total GDP of R 98.6 billion and in terms of total contribution towards South Africa the Northern Cape Province ranked lowest relative to all the regional economies to total South Africa GDP. This ranking in terms of size compared to other regions of Northern Cape remained the same since 2008. In terms of its share, it was in 2018 (2.0%) slightly smaller compared to what it was in 2008 (2.3%).  For the period 2008 to 2018, the average annual growth rate of 1.3% of Northern Cape was the fourth relative to its peers in terms of growth in constant 2010 prices.

• Gross Domestic Product (GDP) - district municipalities of Northern Cape Province, 2008 to 2018, share and growth

	2018 (Current prices)	Share of province	2008 (Constant prices)	2018 (Constant prices)	Average Annual growth
Namakwa	10.65	10.79%	7.28	7.54	0.35%
Pixley ka Seme	12.23	12.40%	7.39	7.81	0.56%
ZF Mgcawu	24.11	24.44%	13.89	16.94	2.00%
Frances Baard	35.79	36.28%	22.22	22.63	0.18%
John Taolo Gaetsewe	15.86	16.08%	9.38	13.38	3.62%
Northern Cape	98.63		60.16	68.30

Source: IHS Markit Regional eXplorer version 1870

John Taolo Gaetsewe had the highest average annual economic growth, averaging 3.62% between 2008 and 2018, when compared to the rest of the regions within the Northern Cape Province. The ZF Mgcawu District Municipality  had the second highest average annual growth rate of 2.00%. Frances Baard District Municipality had the lowest average annual growth rate of 0.18% between 2008 and 2018.

• GDP contribution - district municipalities of Northern Cape Province, 2018 [Current prices, percentage]

The greatest contributor to the Northern Cape Province economy is the Frances Baard District Municipality with a share of 36.28% or R 35.8 billion, increasing from R 19.9 billion in 2008. The economy with the lowest contribution is the Namakwa District Municipality with R 10.6 billion growing from R 6.49 billion in 2008.

1.1.1        Economic Growth Forecast

It is expected that Northern Cape Province's GDP will grow at an average annual rate of -0.09% from 2018 to 2023. South Africa as a whole is forecasted to grow at an average annual growth rate of 1.04%, which is higher than that of the Northern Cape Province.

• Gross Domestic Product (GDP) - Northern Cape and National Total, 2008-2023 [Average annual growth rate, constant 2010 prices]

In 2023, Northern Cape's forecasted GDP will be an estimated R 68 billion (constant 2010 prices) or 2.1% of the total GDP of South Africa. The ranking in terms of size of the Northern Cape Province will remain the same between 2018 and 2023, with a contribution to the South Africa GDP of 2.1% in 2023 compared to the 2.2% in 2018. At a -0.09% average annual GDP growth rate between 2018 and 2023, Northern Cape ranked the lowest compared to the other regional economies.

• Gross Domestic Product (GDP) - district municipalities of Northern Cape Province, 2018 to 2023, share and growth

	2023 (Current prices)	Share of province	2018 (Constant prices)	2023 (Constant prices)	Average Annual growth
Namakwa	12.96	10.66%	7.54	7.40	-0.35%
Pixley ka Seme	15.39	12.66%	7.81	7.73	-0.21%
ZF Mgcawu	28.90	23.78%	16.94	16.07	-1.05%
Frances Baard	43.01	35.38%	22.63	21.68	-0.85%
John Taolo Gaetsewe	21.29	17.52%	13.38	15.11	2.46%
Northern Cape	121.55		68.30	67.99

Source: IHS Markit Regional eXplorer version 1870

When looking at the regions within the Northern Cape Province it is expected that from 2018 to 2023 the John Taolo Gaetsewe District Municipality will achieve the highest average annual growth rate of 2.46%. The region that is expected to achieve the second highest average annual growth rate is that of Pixley ka Seme District Municipality, averaging -0.21% between 2018 and 2023. On the other hand the region that performed the poorest relative to the other regions within Northern Cape Province was the ZF Mgcawu District Municipality with an average annual growth rate of -1.05%.

1.2       Gross Value Added by Region (GVA-R)

The Northern Cape Province's economy is made up of various industries.  The GVA-R variable provides a sector breakdown, where each sector is measured in terms of its value added produced in the local economy.

• Gross Value Added (GVA) is a measure of output (total production) of a region in terms of the value that was created within that region. GVA can be broken down into various production sectors.

The summary table below puts the Gross Value Added (GVA) of all the regions in perspective to that of the Northern Cape Province.

• Gross Value Added (GVA) by broad economic sector - Northern Cape Province, 2018 [R billions, current prices]

	Northern Cape	National Total	Northern Cape as % of national
Agriculture	6.4	106.1	6.0%
Mining	19.4	350.9	5.5%
Manufacturing	3.0	572.9	0.5%
Electricity	3.3	166.0	2.0%
Construction	2.8	170.3	1.6%
Trade	10.5	652.7	1.6%
Transport	10.7	426.7	2.5%
Finance	11.9	854.4	1.4%
Community services	20.4	1,041.3	2.0%
Total Industries	88.5	4,341.3	2.0%

Source: IHS Markit Regional eXplorer version 1870

In 2018, the community services sector is the largest within Northern Cape Province accounting for R 20.4 billion or 23.1% of the total GVA in the province's economy. The sector that contributes the second most to the GVA of the Northern Cape Province is the mining sector at 22.0%, followed by the finance sector with 13.4%. The sector that contributes the least to the economy of Northern Cape Province is the construction sector with a contribution of R 2.8 billion or 3.16% of the total GVA.

• Gross Value Added (GVA) by broad economic sector - Northern Cape Province, 2018 [percentage composition]

The community sector, which includes the government services, is generally a large contributor towards GVA in smaller and more rural local municipalities. When looking at the regions within the province, the Frances Baard District Municipality made the largest contribution to the community services sector at 45.04% of the province.  As a whole, the Frances Baard District Municipality contributed R 31.7 billion or 35.80% to the GVA of the Northern Cape Province, making it the largest contributor to the overall GVA of the Northern Cape Province.

• Gross Value Added (GVA) by broad economic sector - district municipalities of Northern Cape Province, 2018 [percentage composition]

1.2.1        Historical Economic Growth

For the period 2018 and 2008, the GVA in the finance sector had the highest average annual growth rate in Northern Cape at 1.96%. The industry with the second highest average annual growth rate is the construction sector averaging at 1.88% per year. The electricity sector had an average annual growth rate of 0.20%, while the agriculture sector had the lowest average annual growth of 0.01%. Overall a negative growth existed for all the industries in 2018 with an annual growth rate of -0.23% since 2017.

• Gross Value Added (GVA) by broad economic sector - Northern Cape Province, 2008, 2013 and 2018 [R billions, 2010 constant prices]

	2008	2013	2018	Average Annual growth
Agriculture	4.41	4.17	4.42	0.01%
Mining	15.04	16.57	17.68	1.63%
Manufacturing	1.90	1.99	2.01	0.56%
Electricity	1.78	1.82	1.82	0.20%
Construction	1.29	1.50	1.55	1.88%
Trade	6.85	7.18	7.24	0.56%
Transport	5.41	5.74	6.12	1.24%
Finance	7.24	7.84	8.78	1.96%
Community services	10.50	11.84	12.48	1.74%
Total Industries	54.43	58.63	62.11	1.33%

Source: IHS Markit Regional eXplorer version 1870

The tertiary sector contributes the most to the Gross Value Added within the Northern Cape Province at 60.5%. This is slightly lower than the national economy (68.5%). The primary sector contributed a total of 29.2% (ranking second), while the secondary sector contributed the least at 10.3%.

• Gross Value Added (GVA) by aggregate economic sector - Northern Cape Province, 2018 [percentage]

The following is a breakdown of the Gross Value Added (GVA) by aggregated sector:

1.2.1.1       Primary Sector

The primary sector consists of two broad economic sectors namely the mining and the agricultural sector. The following chart represents the average growth rate in the GVA for both of these sectors in Northern Cape Province from 2008 to 2018.

• Gross Value Added (GVA) by primary sector - Northern Cape, 2008-2018 [Annual percentage change]

Between 2008 and 2018, the agriculture sector experienced the highest positive growth in 2008 with an average growth rate of 13.7%. The mining sector reached its highest point of growth of 7.1% in 2017. The agricultural sector experienced the lowest growth for the period during 2011 at -11.6%, while the mining sector reaching its lowest point of growth in 2008 at -5.8%. Both the agriculture and mining sectors are generally characterised by volatility in growth over the period.

1.2.1.2       Secondary Sector

The secondary sector consists of three broad economic sectors namely the manufacturing, electricity and the construction sector. The following chart represents the average growth rates in the GVA for these sectors in Northern Cape Province from 2008 to 2018.

• Gross Value Added (GVA) by secondary sector - Northern Cape, 2008-2018 [Annual percentage change]

Between 2008 and 2018, the manufacturing sector experienced the highest positive growth in 2010 with a growth rate of 6.9%. The construction sector reached its highest growth in 2009 at 13.2%. The manufacturing sector experienced its lowest growth in 2010 of -6.0%, while construction sector reached its lowest point of growth in 2010 a with -2.4% growth rate. The electricity sector experienced the highest growth in 2018 at 1.6%, while it recorded the lowest growth of -1.1% in 2016.

1.2.1.3       Tertiary Sector

The tertiary sector consists of four broad economic sectors namely the trade, transport, finance and the community services sector. The following chart represents the average growth rates in the GVA for these sectors in Northern Cape Province from 2008 to 2018.

• Gross Value Added (GVA) by tertiary sector - Northern Cape, 2008-2018 [Annual percentage change]

The trade sector experienced the highest positive growth in 2011 with a growth rate of 4.3%.  It is evident for the transport sector that the highest positive growth rate also existed in 2011 at 2.9% which is lower than that of the manufacturing sector.  The finance sector experienced the highest growth rate in 2015 when it grew by 4.9% and recorded the lowest growth rate in 2010 at -0.6%. The Trade sector had the lowest growth rate in 2009 at -5.1%. The community services sector, which largely consists of government, experienced its highest positive growth in 2008 with 5.6% and the lowest growth rate in 2016 with -0.4%.

1.2.2        Sector Growth forecast

The GVA forecasts are based on forecasted growth rates derived from two sources: historical growth rate estimates and national level industry forecasts. The projections are therefore partly based on the notion that regions that have performed well in the recent past are likely to continue performing well (and vice versa) and partly on the notion that those regions that have prominent sectors that are forecast to grow rapidly in the national economy (e.g. finance and telecommunications) are likely to perform well (and vice versa). As the target year moves further from the base year (2010) so the emphasis moves from historical growth rates to national-level industry growth rates.

• Gross value added (GVA) by broad economic sector - Northern Cape Province, 2018-2023 [R billions, constant 2010 prices]

	2018	2019	2020	2021	2022	2023	Average Annual growth
Agriculture	4.42	4.36	4.44	4.49	4.49	4.52	0.47%
Mining	17.68	16.73	16.60	17.03	17.51	18.00	0.36%
Manufacturing	2.01	1.95	1.92	1.91	1.92	1.93	-0.86%
Electricity	1.82	1.69	1.64	1.61	1.60	1.58	-2.73%
Construction	1.55	1.51	1.49	1.50	1.52	1.54	-0.09%
Trade	7.24	7.09	7.02	7.06	7.11	7.16	-0.22%
Transport	6.12	6.03	6.02	6.07	6.17	6.26	0.47%
Finance	8.78	8.87	8.86	8.93	9.06	9.19	0.90%
Community services	12.48	12.35	12.00	11.79	11.71	11.65	-1.36%
Total Industries	62.11	60.57	59.98	60.40	61.09	61.84	-0.09%

Source: IHS Markit Regional eXplorer version 1870

The finance sector is expected to grow fastest at an average of 0.90% annually from R 8.78 billion in Northern Cape Province to R 9.19 billion in 2023. The mining sector is estimated to be the largest sector within the Northern Cape Province in 2023, with a total share of 29.1% of the total GVA (as measured in current prices), growing at an average annual rate of 0.4%. The sector that is estimated to grow the slowest is the electricity sector with an average annual growth rate of -2.73%.

• Gross value added (GVA) by aggregate economic sector - Northern Cape Province, 2018-2023 [Annual growth rate, constant 2010 prices]

The Primary sector is expected to grow at an average annual rate of 0.38% between 2018 and 2023, with the Secondary sector growing at -1.25% on average annually. The Tertiary sector is expected to grow at an average annual rate of -0.21% for the same period.

Based on the typical profile of a developing country, we can expect faster growth in the secondary and tertiary sectors when compared to the primary sector. Also remember that the agricultural sector is prone to very high volatility as a result of uncertain weather conditions, pests and other natural causes - and the forecasts presented here is merely a long-term trend rather than trying to forecast the unpredictable weather conditions.

1.3       Tress Index

• The Tress index measures the degree of concentration of an area's economy on a sector basis. A Tress index value of 0 means that all economic sectors in the region contribute equally to GVA, whereas a Tress index of 100 means that only one economic sector makes up the whole GVA of the region.
• Tress index - Northern Cape and National Total, 2008-2018 [Number]

In 2018, Northern Cape's Tress Index was estimated at 39.9 which are lower than the 40.3 of the national. This implies that - on average - Northern Cape Province is more diversified in terms of its economic activity spread than the national's economy as a whole.

The more diverse an economy is, the more likely it is to create employment opportunities across all skills levels (and not only - for instance - employment opportunities that cater for highly skilled labourers), and maintain a healthy balance between labour-intensive and capital-intensive industries. If both economic growth and the alleviation of unemployment are of concern, clearly there need to be industries that are growing fast and also creating jobs in particular the lower skilled categories. Unfortunately, in practice many industries that are growing fast are not those that create many employment opportunities for unskilled labourers (and alleviate unemployment).

1.4       Location Quotient

• A specific regional economy has a comparative advantage over other regional economies if it can more efficiently produce the same good. The location quotient is one way of measuring this comparative advantage.

If the location quotient is larger than one for a specified sector within a region, then that region has a comparative advantage in that sector. This is because the share of that sector of the specified regional economy is greater than the same sector in the national economy. The location quotient is usually computed by taking the percentage share of the sector in the regional economy divided by the percentage share of that same sector in the national economy.

• Location quotient by broad economic sectors - Northern Cape Province and South Africa, 2018 [Number]

For 2018 Northern Cape Province has a very large comparative advantage in the agriculture sector. The mining sector also has a very large comparative advantage. The transport also has a comparative advantage when comparing it to the South Africa economy as a whole, although less prominent. The Northern Cape Province has a comparative disadvantage when it comes to the manufacturing and finance sector which has a large comparative disadvantage. In general mining is a very concentrated economic sector. The entire Northern Cape Province-economy is centred around the mines in the area, with an LQ of 2.72.

 

 

2.       Labour

The labour force of a country consists of everyone of working age (above a certain age and below retirement) that are participating as workers, i.e. people who are actively employed or seeking employment.  This is also called the economically active population (EAP). People not included are students, retired people, stay-at-home parents, people in prisons or similar institutions, people employed in jobs or professions with unreported income, as well as discouraged workers who cannot find work.

• Working age population in Northern Cape and National Total, 2008 and 2018 [Number]

	Northern Cape		National Total
	2008	2018	2008	2018
15‑19	106,000	100,000	5,300,000	4,570,000
20‑24	104,000	106,000	5,230,000	4,960,000
25‑29	92,000	112,000	4,390,000	5,530,000
30‑34	80,100	116,000	3,690,000	5,420,000
35‑39	73,900	102,000	3,230,000	4,360,000
40‑44	66,000	85,900	2,790,000	3,480,000
45‑49	53,600	78,800	2,440,000	2,950,000
50‑54	41,500	68,200	2,040,000	2,530,000
55‑59	37,300	51,900	1,660,000	2,180,000
60‑64	32,900	38,400	1,310,000	1,790,000
Total	687,696	858,679	32,070,524	37,757,662

Source: IHS Markit Regional eXplorer version 1870

The working age population in Northern Cape in 2018 was 859 000, increasing at an average annual rate of 2.25% since 2008. For the same period the working age population for South Africa increased at 1.65% annually

The graph below combines all the facets of the labour force in the Northern Cape Province into one compact view. The chart is divided into "place of residence" on the left, which is measured from the population side, and "place of work" on the right, which is measured from the business side.

• Labour Glimpse - Northern Cape Province, 2018

Reading the chart from the left-most bar, breaking down the total population of the Northern Cape Province (1.32 million) into working age and non-working age, the number of people that are of working age is about 859 000.  As per definition, those that are of age 0 - 19 (youth) or age 65 and up (pensioners) are part of the non-working age population.  Out of the working age group, 55.6% are participating in the labour force, meaning 477 000 residents of the province forms currently part of the economically active population (EAP).  Comparing this with the non-economically active population (NEAP) of the province: fulltime students at tertiary institutions, disabled people, and those choosing not to work, sum to 382 000 people.  Out of the economically active population, there are 136 000 that are unemployed, or when expressed as a percentage, an unemployment rate of 28.5%. Up to here all the statistics are measured at the place of residence.

On the far right we have the formal non-Agriculture jobs in Northern Cape, broken down by the primary (mining), secondary and tertiary industries.  The majority of the formal employment lies in the Tertiary industry, with 168 000 jobs.  When including the informal, agricultural and domestic workers, we have a total number of 345 000 jobs in the area.  Formal jobs make up 67.3% of all jobs in the Northern Cape Province.  The difference between the employment measured at the place of work, and the people employed living in the area can be explained by the net commuters that  commute every day into the province.

In theory, a higher or increasing population dividend is supposed to provide additional stimulus to economic growth.  People of working age tend to uphold higher consumption patterns (Final Consumption Expenditure, FCE), and a more dense concentration of working age people is supposed to decrease dependency ratios - given that the additional labour which is offered to the market, is absorbed.

2.1       Economically Active Population (EAP)

The economically active population (EAP) is a good indicator of how many of the total working age population are in reality participating in the labour market of a region.  If a person is economically active, he or she forms part of the labour force.

• The economically active population (EAP) is defined as the number of people (between the age of 15 and 65) who are able and willing to work, and who are actively looking for work. It includes both employed and unemployed people. People, who recently have not taken any active steps to find employment, are not included in the measure.  These people may (or may not) consider themselves unemployed.  Regardless, they are counted as discouraged work seekers, and thus form part of the non-economically active population.
• Economically active population (EAP) - Northern Cape and National Total, 2008-2018 [number, percentage ]

	Northern Cape	National Total	Northern Cape as % of national
2008	387,000	18,300,000	2.1%
2009	384,000	18,300,000	2.1%
2010	380,000	18,000,000	2.1%
2011	391,000	18,300,000	2.1%
2012	411,000	18,700,000	2.2%
2013	434,000	19,300,000	2.2%
2014	455,000	20,100,000	2.3%
2015	464,000	20,900,000	2.2%
2016	468,000	21,500,000	2.2%
2017	473,000	22,100,000	2.1%
2018	477,000	22,400,000	2.1%
Average Annual growth
2008‑2018	2.13%	2.03%

Source: IHS Markit Regional eXplorer version 1870

Northern Cape Province's EAP was 477 000 in 2018, which is 36.11% of its total population of 1.32 million, and roughly 2.13% of the total EAP of the South Africa.  From 2008 to 2018, the average annual increase in the EAP in the Northern Cape Province was 2.13%, which is 0.099 percentage points higher than the growth in the EAP of National Total's for the same period.

• EAP as % of total population - Northern Cape and the rest of National Total, 2008, 2013, 2018 [percentage]

	2008	2013	2018
Northern Cape	36.0%	36.1%	36.1%
Western Cape	46.2%	46.4%	46.9%
Eastern Cape	28.5%	27.3%	31.6%
Free State	38.3%	38.3%	41.3%
KwaZulu‑Natal	32.4%	29.5%	31.1%
North‑West	35.2%	31.5%	33.5%
Gauteng	48.8%	47.2%	48.4%
Mpumalanga	34.9%	36.2%	39.6%
Limpopo	24.6%	23.8%	29.7%

Source: IHS Markit Regional eXplorer version 1870

In 2008, 36.0% of the total population in Northern Cape Province were classified as economically active which increased to 36.1% in 2018. Compared to the other regions in South Africa, Gauteng Province had the highest EAP as a percentage of the total population within its own region relative to the other regions. On the other hand, Limpopo Province had the lowest EAP with 29.7% people classified as economically active population in 2018.

2.1.1        Labour Force participation rate

• The labour force participation rate (LFPR) is the Economically Active Population (EAP) expressed as a percentage of the total working age population.

The following is the labour participation rate of the Northern Cape and National Total as a whole.

• The labour force participation rate - Northern Cape and National Total, 2008-2018 [percentage]

	Northern Cape	National Total
2008	56.2%	57.2%
2009	54.2%	55.9%
2010	52.2%	54.2%
2011	52.5%	53.9%
2012	53.8%	54.3%
2013	55.6%	55.2%
2014	57.1%	56.6%
2015	57.2%	57.7%
2016	56.6%	58.7%
2017	56.1%	59.5%
2018	55.6%	59.4%

Source: IHS Markit Regional eXplorer version 1870

The Northern Cape Province's labour force participation rate decreased from 56.20% to 55.58% which is a decrease of -0.63 percentage points. South Africa as a whole increased from 57.15% to 59.36% from 2008 to 2018.The Northern Cape Province labour force participation rate exhibited a lower percentage point change compared to the South Africa from 2008 to 2018.

• The labour force participation and unemployment rates - Northern Cape Province, 2008-2018 [percentage]

In 2018 the labour force participation rate for Northern Cape was at 55.6% which is very similar when compared to the 56.2% in 2008. The unemployment rate is an efficient indicator that measures the success rate of the labour force relative to employment. In 2008, the unemployment rate for Northern Cape was 27.5% and increased overtime to 28.5% in 2018. The gap between the labour force participation rate and the unemployment rate decreased which indicates a negative outlook for the employment within Northern Cape Province.

• The labour force participation rate - district municipalities and the rest of Northern Cape Province, 2013 and 2018 [percentage]

Frances Baard District Municipality had the highest labour force participation rate with 57.0% in 2018 decreasing from 57.4% in 2008. Pixley ka Seme District Municipality had the lowest labour force participation rate of 53.0% in 2018, this decreased from 54.7% in 2008.

2.2       Total Employment

Employment data is a key element in the estimation of unemployment.  In addition, trends in employment within different sectors and industries normally indicate significant structural changes in the economy.  Employment data is also used in the calculation of productivity, earnings per worker, and other economic indicators.

• Total employment consists of two parts: employment in the formal sector, and employment in the informal sector
• Total employment - Northern Cape and National Total, 2008-2018 [numbers]

	Northern Cape	National Total
2008	287,000	13,900,000
2009	289,000	13,800,000
2010	286,000	13,500,000
2011	295,000	13,700,000
2012	295,000	14,000,000
2013	310,000	14,500,000
2014	322,000	15,100,000
2015	328,000	15,600,000
2016	331,000	15,900,000
2017	337,000	16,100,000
2018	345,000	16,300,000
Average Annual growth
2008‑2018	1.85%	1.63%

Source: IHS Markit Regional eXplorer version 1870

In 2018, Northern Cape employed 345 000 people which is 2.12% of the total employment in South Africa (16.3 million). Employment within Northern Cape increased annually at an average rate of 1.85% from 2008 to 2018.

• Total employment per broad economic sector - Northern Cape and the rest of National Total, 2018 [Numbers]

	Northern Cape	Western Cape	Eastern Cape	Free State	KwaZulu‑Natal	North‑West	Gauteng	Mpumalanga	Limpopo	Total  National Total
Agriculture	47,400	205,000	97,600	67,000	133,000	55,600	36,900	87,000	134,000	863,932
Mining	32,500	3,680	1,250	42,800	10,800	130,000	74,200	92,300	69,000	456,478
Manufacturing	13,500	318,000	128,000	56,500	330,000	59,100	603,000	92,600	78,200	1,678,253
Electricity	3,120	7,490	3,820	6,760	9,040	4,450	30,300	22,800	8,430	96,237
Construction	22,700	198,000	152,000	51,000	209,000	68,400	363,000	92,600	133,000	1,290,962
Trade	56,500	537,000	339,000	166,000	560,000	191,000	1,100,000	242,000	321,000	3,512,706
Transport	11,300	131,000	69,700	34,900	165,000	30,900	341,000	49,700	49,500	883,457
Finance	26,400	496,000	170,000	81,200	382,000	98,200	1,230,000	140,000	123,000	2,741,785
Community services	103,000	452,000	389,000	183,000	629,000	211,000	978,000	218,000	308,000	3,470,925
Households	28,200	153,000	118,000	88,300	235,000	78,300	380,000	96,400	111,000	1,286,961
Total	345,000	2,500,000	1,470,000	777,000	2,660,000	926,000	5,130,000	1,130,000	1,340,000	16,281,696

Source: IHS Markit Regional eXplorer version 1870

Northern Cape Province employs a total number of 345 000 people within its province. The province that employs the highest number of people relative to the other regions within South Africa is Gauteng province with a total number of 5.13 million. Northern Cape Province also employed the lowest number of people within South Africa.

In Northern Cape Province the economic sectors that recorded the largest number of employment in 2018 were the community services sector with a total of 103 000 employed people or 30.0% of total employment in the province. The trade sector with a total of 56 500 (16.4%) employs the second highest number of people relative to the rest of the sectors. The electricity sector with 3 120 (0.9%) is the sector that employs the least number of people in Northern Cape Province, followed by the transport sector with 11 300 (3.3%) people employed.

• Total employment per broad economic sector - Northern Cape Province, 2018 [percentage]

2.3       Formal and Informal employment

Total employment can be broken down into formal and informal sector employment. Formal sector employment is measured from the formal business side, and the informal employment is measured from the household side where formal businesses have not been established.

Formal employment is much more stable than informal employment. Informal employment is much harder to measure and manage, simply because it cannot be tracked through the formal business side of the economy. Informal employment is however a reality in South Africa and cannot be ignored.

The number of formally employed people in Northern Cape Province counted 307 000 in 2018, which is about 89.17% of total employment, while the number of people employed in the informal sector counted 37 400 or 10.83% of the total employment. Informal employment in Northern Cape increased from 27 100 in 2008 to an estimated 37 400 in 2018.

• Formal and informal employment by broad economic sector - Northern Cape Province, 2018 [numbers]

Some of the economic sectors have little or no informal employment:

Mining industry, due to well-regulated mining safety policies, and the strict registration of a mine, has little or no informal employment. The Electricity sector is also well regulated, making it difficult to get information on informal employment. Domestic Workers and employment in the Agriculture sector is typically counted under a separate heading.

In 2018 the Trade sector recorded the highest number of informally employed, with a total of 12 600 employees or 33.64% of the total informal employment. This can be expected as the barriers to enter the Trade sector in terms of capital and skills required is less than with most of the other sectors. The Manufacturing sector has the lowest informal employment with 2 400 and only contributes 6.44% to total informal employment.

• Formal and informal employment by broad economic sector - Northern Cape Province, 2018 [numbers]

	Formal employment	Informal employment
Agriculture	47,400	N/A
Mining	32,500	N/A
Manufacturing	11,100	2,400
Electricity	3,120	N/A
Construction	17,300	5,400
Trade	44,000	12,600
Transport	8,590	2,720
Finance	22,300	4,070
Community services	93,100	10,200
Households	28,200	N/A

Source: IHS Markit Regional eXplorer version 1870

The informal sector is vital for the areas with very high unemployment and very low labour participation rates.  Unemployed people see participating in the informal sector as a survival strategy.  The most desirable situation would be to get a stable formal job. But because the formal economy is not growing fast enough to generate adequate jobs, the informal sector is used as a survival mechanism.

2.4       Unemployment

• The unemployed includes all persons between 15 and 65 who are currently not working, but who are actively looking for work. It therefore excludes people who are not actively seeking work (referred to as discouraged work seekers).

The choice of definition for what constitutes being unemployed has a large impact on the final estimates for all measured labour force variables. The following definition was adopted by the Thirteenth International Conference of Labour Statisticians (Geneva, 1982): The "unemployed" comprise all persons above a specified age who during the reference period were:

• "Without work", i.e. not in paid employment or self-employment;
• "Currently available for work", i.e. were available for paid employment or self-employment during the reference period; and
• "Seeking work", i.e. had taken specific steps in a specified reference period to seek paid employment or self-employment. The specific steps may include registration at a public or private employment exchange; application to employers; checking at worksites, farms, factory gates, market or other assembly places; placing or answering newspaper advertisements; seeking assistance of friends or relatives; looking for land.
• Unemployment (official definition) - Northern Cape and National Total, 2008-2018 [Number percentage]

	Northern Cape	National Total	Northern Cape as % of national
2008	106,000	4,470,000	2.4%
2009	104,000	4,440,000	2.3%
2010	105,000	4,490,000	2.3%
2011	110,000	4,590,000	2.4%
2012	117,000	4,710,000	2.5%
2013	126,000	4,870,000	2.6%
2014	135,000	5,070,000	2.7%
2015	140,000	5,320,000	2.6%
2016	141,000	5,690,000	2.5%
2017	139,000	6,020,000	2.3%
2018	136,000	6,130,000	2.2%
Average Annual growth
2008‑2018	2.48%	3.20%

Source: IHS Markit Regional eXplorer version 1870

In 2018, there were a total number of 136 000 people unemployed in Northern Cape, which is an increase of 29 600 from 106 000 in 2008. The total number of unemployed people within Northern Cape constitutes 2.22% of the total number of unemployed people in South Africa. The Northern Cape Province experienced an average annual increase of 2.48% in the number of unemployed people, which is better than that of the South Africa which had an average annual increase in unemployment of 3.20%.

• Unemployment rate (official definition) - Northern Cape and National Total, 2008-2018 [Percentage]

	Northern Cape	National Total
2008	27.5%	24.4%
2009	27.1%	24.3%
2010	27.7%	24.9%
2011	28.1%	25.1%
2012	28.5%	25.1%
2013	29.1%	25.2%
2014	29.7%	25.2%
2015	30.1%	25.5%
2016	30.1%	26.4%
2017	29.5%	27.2%
2018	28.5%	27.4%

Source: IHS Markit Regional eXplorer version 1870

In 2018, the unemployment rate in Northern Cape Province (based on the official definition of unemployment) was 28.47%, which is an increase of 0.966 percentage points. The unemployment rate in Northern Cape Province is higher than that of National Total. The unemployment rate for South Africa was 27.35% in 2018, which is a increase of -2.94 percentage points from 24.41% in 2008.

• Unemployment and unemployment rate (official definition) - Northern Cape Province, 2008-2018 [number percentage]

When comparing unemployment rates among regions within Northern Cape Province, Pixley ka Seme District Municipality has indicated the highest unemployment rate of 34.0%, which has increased from 31.5% in 2008.  It can be seen that the Namakwa District Municipality had the lowest unemployment rate of 21.4% in 2018, which decreased from 24.4% in 2008.

• Unemployment rate - district municipalities and the rest of Northern Cape Province, 2008, 2013 and 2018 [percentage]

3.       Income and Expenditure

In a growing economy among which production factors are increasing, most of the household incomes are spent on purchasing goods and services. Therefore, the measuring of the income and expenditure of households is a major indicator of a number of economic trends.  It is also a good marker of growth as well as consumer tendencies.

3.1       Number of Households by Income category

The number of households is grouped according to predefined income categories or brackets, where income is calculated as the sum of all household gross disposable income: payments in kind, gifts, homemade goods sold, old age pensions, income from informal sector activities, subsistence income, etc.). Note that income tax is included in the income distribution.

Income categories start at R0 - R2,400 per annum and go up to R2,400,000+ per annum. A household is either a group of people who live together and provide themselves jointly with food and/or other essentials for living, or it is a single person living on his/her own. These income brackets do not take into account inflation creep: over time, movement of households "up" the brackets is natural, even if they are not earning any more in real terms.

• Households by income category - Northern Cape and National Total, 2018 [Number Percentage]

	Northern Cape	National Total	Northern Cape as % of national
0‑2400	32	1,700	1.91%
2400‑6000	758	32,900	2.31%
6000‑12000	5,450	318,000	1.71%
12000‑18000	10,900	627,000	1.73%
18000‑30000	32,400	1,770,000	1.82%
30000‑42000	34,400	1,790,000	1.92%
42000‑54000	31,700	1,590,000	2.00%
54000‑72000	39,000	1,730,000	2.25%
72000‑96000	37,600	1,580,000	2.38%
96000‑132000	37,400	1,500,000	2.49%
132000‑192000	36,700	1,440,000	2.54%
192000‑360000	46,100	1,870,000	2.47%
360000‑600000	28,300	1,220,000	2.31%
600000‑1200000	19,700	892,000	2.21%
1200000‑2400000	5,840	290,000	2.01%
2400000+	806	46,700	1.73%
Total	367,000	16,700,000	2.20%

Source: IHS Markit Regional eXplorer version 1870

It was estimated that in 2018 13.48% of all the households in the Northern Cape Province, were living on R30,000 or less per annum. In comparison with 2008's 30.91%, the number is about half. The 192000-360000 income category has the highest number of households with a total number of 46 100, followed by the 54000-72000 income category with 39 000 households. Only 32 households fall within the 0-2400 income category.

• Households by income bracket - Northern Cape Province, 2008-2018 [Percentage]

For the period 2008 to 2018 the number of households earning more than R30,000 per annum has increased from 69.09% to 86.52%. It can be seen that the number of households with income equal to or lower than R6,000 per year has decreased by a significant amount.

3.2       Annual total Personal Income

Personal income is an even broader concept than labour remuneration. Personal income includes profits, income from property, net current transfers and net social benefits.

• Annual total personal income is the sum of the total personal income for all households in a specific region. The definition of income is the same as used in the income brackets (Number of Households by Income Category), also including the income tax. For this variable, current prices are used, meaning that inflation has not been taken into account.
• Annual total personal income - Northern Cape and National Total[Current Prices, R billions]

	Northern Cape	National Total
2008	32.1	1,587.9
2009	34.2	1,695.1
2010	37.2	1,843.3
2011	41.2	2,033.0
2012	46.0	2,226.5
2013	49.6	2,412.1
2014	56.7	2,590.6
2015	61.9	2,794.9
2016	65.8	2,990.4
2017	72.0	3,227.9
2018	76.7	3,420.9
Average Annual growth
2008‑2018	9.09%	7.98%

Source: IHS Markit Regional eXplorer version 1870

Northern Cape Province recorded an average annual growth rate of 9.09% (from R 32.1 billion to R 76.7 billion) from 2008 to 2018, South Africa had an average annual growth rate of 7.98% (from R 1.59 trillion to R 3.42 trillion) which is less than the growth rate in Northern Cape Province.

• Annual total personal income by population group - Northern Cape and the rest of National Total [Current Prices, R billions]

The total personal income of Northern Cape Province amounted to approximately R 76.7 billion in 2018. The African population group earned R 23 billion, or 37.34% of total personal income, while the White population group earned R 24 billion, or 31.24% of the total personal income. The African and the Asian population groups only had a share of 30.02% and 1.40% of total personal income respectively.

• Annual total personal income - Namakwa, Pixley ka Seme, ZF Mgcawu, Frances Baard and John Taolo Gaetsewe district municipalities[Current Prices, R billions]

	Namakwa	Pixley ka Seme	ZF Mgcawu	Frances Baard	John Taolo Gaetsewe
2008	4.28	5.11	7.24	10.68	4.82
2009	4.58	5.50	7.78	11.15	5.24
2010	4.93	5.97	8.47	11.98	5.84
2011	5.37	6.57	9.37	13.21	6.66
2012	6.05	7.27	10.53	14.49	7.67
2013	6.62	7.92	11.45	15.41	8.21
2014	7.44	9.23	13.19	17.62	9.26
2015	8.03	10.14	14.52	18.94	10.23
2016	8.63	10.86	15.51	19.88	10.88
2017	9.60	11.92	17.08	21.41	12.01
2018	10.26	12.73	18.30	22.52	12.91
Average Annual growth
2008‑2018	9.13%	9.57%	9.71%	7.74%	10.36%

Source: IHS Markit Regional eXplorer version 1870

When looking at the annual total personal income for the regions within South Africa it can be seen that the Frances Baard District Municipality had the highest total personal income with R 22.5 billion which increased from R 10.7 billion recorded in 2008. It can be seen that the Namakwa District Municipality had the lowest total personal income of R 10.3 billion in 2018, this increased from R 4.28 billion in 2008.

3.3       Annual per Capita Income

• Per capita income refers to the income per person. Thus, it takes the total personal income per annum and divides it equally among the population.

Per capita income is often used as a measure of wealth particularly when comparing economies or population groups. Rising per capita income usually indicates a likely swell in demand for consumption.

• Per capita income - Northern Cape and National Total, 2018 [Rand, current prices]

The per capita income for Northern Cape Province (R 58,000) is lower than that of the South Africa as a whole which is R 58,800.

• Per capita income by population group - Northern Cape and the rest of South Africa, 2018 [Rand, current prices]

	African	White	Coloured	Asian
Northern Cape	34,500	244,000	52,600	97,300
Western Cape	35,900	276,000	58,700	129,000
Eastern Cape	28,800	237,000	53,400	116,000
Free State	36,500	234,000	66,000	121,000
KwaZulu‑Natal	28,900	259,000	84,600	123,000
North‑West	41,000	202,000	51,800	97,500
Gauteng	52,500	258,000	81,000	135,000
Mpumalanga	36,800	179,000	58,500	91,300
Limpopo	32,100	204,000	61,300	94,400

Source: IHS Markit Regional eXplorer version 1870

Gauteng Province has the highest per capita income with a total of R 83,400. Western Cape Province had the second highest per capita income at R 80,100, whereas Limpopo Province had the lowest per capita income at R 36,500. In Northern Cape Province, the White population group has the highest per capita income, with R 244,000, relative to the other population groups.  The population group with the second highest per capita income within Northern Cape Province is the Asian population group (R 97,300), where the Coloured and the African population groups had a per capita income of R 52,600 and R 34,500 respectively.

3.4       Index of Buying Power

• The Index of Buying Power (IBP) is a measure of a region's overall capacity to absorb products and/or services. The index is useful when comparing two regions in terms of their capacity to buy products. Values range from 0 to 1 (where the national index equals 1), and can be interpreted as the percentage of national buying power attributable to the specific region. Regions' buying power usually depends on three factors: the size of the population; the ability of the population to spend (measured by total income); and the willingness of the population to spend (measured by total retail sales).
• Index of buying power - Northern Cape and National Total, 2018 [Number]

	Northern Cape	National Total
Population	1,321,491	58,125,712
Population ‑ share of national total	2.3%	100.0%
Income	76,713	3,420,872
Income ‑ share of national total	2.2%	100.0%
Retail	32,924,007	1,056,278,508
Retail ‑ share of national total	3.1%	100.0%
Index	0.03	1.00

Source: IHS Markit Regional eXplorer version 1870

Northern Cape Province has a 2.3% share of the national population, 2.2% share of the total national income and a 3.1% share in the total national retail, this all equates to an IBP index value of 0.025 relative to South Africa as a whole. National Total has an IBP of 1.  . 

The considerable low index of buying power of the Northern Cape Province suggests that the province has access to only a small percentage of the goods and services available in all of the South Africa. Its residents are most likely spending some of their income in neighbouring areas.

• Index of buying power Northern Cape Province, 2008-2018 [Index value]

Between 2008 and 2018, the index of buying power within Northern Cape Province increased to its highest level in 2015 (0.02526) from its lowest in 2008 (0.02339). Although the buying power within Northern Cape Province is relatively small compared to other regions, the IBP increased at an average annual growth rate of 0.70%.