1

The structure of the economy 

1. ECONOMIC SECTORS – DEFINITIONS AND EXAMPLES:

Sector Definition Examples

Primary The extraction of raw materials from the natural Farming
environment. Fishing
Forestry
Mining
Stone quarries
Secondary The process and change raw materials into useful Ship building
goods. Also referred to as 'value added goods' Steel making
Food canning
Construction
Tertiary The provision of services to the wider community. Services: trade, commerce and
Also known as the service sector or service industry. retail. Personnel services : doctors,
accountants, educators, lawyers
Transport

Quaternary The hi-tech sector of an economy that is linked to Scientists

research and development. Concerned with the Medical researchers, Technical
collection, analysis and transmission of information. specialists who develop better
systems in industry, business
and the computer fields.

2. CONTRIBUTION OF ECONOMIC SECTORS TO THE SOUTH AFRICAN ECONOMY:

(Definition, interpretation of, value and contribution to, GNP and GDP)

Gross Domestic Product (GDP) : The total value of the goods and services produced within a country’s
borders in a year

Gross National Product (GNP): The total value of the goods and services produced by the residents of
a country, no matter their location.

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3. EMPLOYMENT (LINKED TO DIFFERENT SECTORS, INTERPRETATION AND APPLICATION)

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4. PRIMARY ECONOMIC GEOGRAPHY

4.1 AGRICULTURE:

4.1.1 CONTRIBUTION OF AGRICULTURE TO THE SOUTH AFRICAN ECONOMY:

1. The agricultural sector produces sufficient food to meet the demand of our still growing
population.
2. This availability of food ensures peace of mind and general stability. -The need to import food
from other countries at high costs is reduced.
3. Earner of foreign exchange-Foreign income is earned from the export of products thus
stimulating economic growth.
4. Contribution to the GDP- Although the contribution has decreased, it still remains an important
backbone of the economy.
5. Farmers pay taxes to the receiver of revenue which is used to develop the country.
6. Job creation -10% of the labour force is employed by this sector.

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7. Infrastructure development-Agriculture has led to the development of infrastructure l in the

country, .Transport networks have been improved and water irrigation schemes developed.
8. Industrial development- Raw materials are supplied to industries thus stimulating industrial
development. Food processing industries (wineries and fruit canning)

4.1.2 SMALL-SCALE FARMING AND LARGE-SCALE FARMING: DEFINITION,

CHARACTERISTICS AND INTERPRETATION:

LARGE SCALE FARMING SMALL SCALE FARMING

Concept: Concept:
Production of crops for local and overseas markets to Farming on smaller plots of land with the
make a profit. Only practiced on a commercial purpose of making a profit. Can be practiced on
a commercial or subsistence level.

Characteristics: Characteristics:
 Use scientific farming methods: chemicals,  Specialized farming:
fertilizers, hybrid seeds, livestock, crop spraying,  Use of irrigation and small dams
GM seeds, contour farming  Intensive farming: every available piece
 Capital intensive use of high tech machinery. of land is used
 High per hectare-Practice monoculture: cultivation  Medium per hectare-Variety of crops are
of one main crop grown
 Extensive farming on large plots of land  Small plots, single unit

Importance: Importance:
 To produce large quantities of food for local and  To reduce poverty in rural areas
international markets  To reduce rural-urban migration
 To provide employment  To provide employment in rural areas
 To promote food security in local areas
Problems: Problems:
 White commercial farmers leaving the country  Poor infrastructure affects access to
 Problems that result from climate change markets
 Increasing cost of production  Getting finance and credit facilities from
 Labour strikes the bank
 Cannot compete with international prices, due to  Lack access to training and
lack of subsidies updating their knowledge

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 Property rights

1.1 MAIN PRODUCTS PRODUCED (DEFINITION AND EXAMPLES)- HOME MARKET AND EXPORT
MARKET:

1.3.1 Home Market: Refers to products sold within South Africa. Also referred to as the
domestic market: e.g maize (corn) Dairy products, Tea, Cotton, Sunflower seeds, Soya
beans, Sugar, Vegetables

1.3.2 Export Market: These are goods produced for selling in other countries: e.g
Unprocessed (raw): Maize, Sugar, Soya beans, Sunflower, seeds, Meat, Citrus, grapes.
Processed (value added): Wine and fruit juice, Wool, Hides and skins, Ostrich products,
Dried fruit and nuts

1.4 FACTORS THAT FAVOUR AND HINDER AGRICULTURE IN SOUTH AFRICA, SUCH AS CLIMATE, SOIL,
LAND OWNERSHIP AND TRADE:

FAVOURING FACTORS HINDERING FACTORS

1. PHYSICAL FACTORS: 1. PHYSICAL FACTORS:
1.1 Temperatures 1.1 Soils
1.1.1 The relatively high summer 1.1.1 Soils are of a poor quality
temperatures are suitable for the especially where the slopes are steep
cultivation of most crops especially as increased runoff accelerates soil
maize and sugar cane. erosion.
1.1.2 The low moisture content in 1.1.2 Poor farming methods such as
maize allows it to be stored over long overgrazing and monoculture
periods. contribute to soil erosion.
1.1.3 The warm temperatures also
1.2 Rainfall
favour the sweetening and ripening
1.2.1 Rainfall is low and unreliable
of fruit.
over the greater part of the country
1.2 Seasonal climatic variations
1.2.1 Different parts of South Africa
1.2.2 The eastern half of the country
experience a range of climates
receives more rainfall than the
therefore a variety of agricultural
western half.
products can be grown throughout
1.2.3 High evaporation rates and low
the year.
rainfall in the west limits agricultural
12.2 The South West Cape
production.
experiences a mild climate with
winter rainfall (Mediterranean 1.2.4 Costly irrigation schemes such
climate). This supports grapes, as the Orange River Project and the
deciduous fruit and wheat Vaal-Hartz scheme have been
production. constructed to transfer water from
1.2.3 The high summer rainfall in one region to another.
Kwazulu-Natal favours the growing of

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subtropical fruit and sugar cane. 1.3 Diseases and pests

1.2.4 Few days with frost 1.3.1 Insect pests such as locusts and stalk
experienced thus there is a longer borers destroy crops and fruit.
growing season. 1.3.2 The use of pesticides and
insecticides to overcome these
1.3 Flat land and fertile soils:
problems increase production costs.
1.3.1 Cattle can adapt to gradual and steeper
slopes with good grazing on fertile soils
1.4 Droughts/Floods: Some areas are
1.3.2 Large flat plateau for cultivation of crops
drought/flood prone
like maize
1.3.3. Cane grows well on steep well drained
2. SOCIAL FACTORS:
slopes of the coastal areas.
2.1.HIV/AIDS:
2. ECONOMIC FACTORS: The high prevalence of HIV and
Aids lowers production on farms
2.1 Research:
as valuable farming skills are
2.1.1 Large sums of money are invested by
lost due to ill health and death.
governments on research and agricultural
Food production declines
education to increase productivity
resulting in food insecurity.
2.1.2 The use of scientific methods of farming
such as the production of genetically modified
2.2 Farmer attributes
crops, better farming methods, hybrid seeds,
2.2.1 Many farmers are subsistence
fertilizers and the control of pests and diseases
farmers and they do not produce
improves yields
surplus crops that can be sold thus
poverty levels remain high.
2.2 Trade:
2.2.1 Well-developed harbours as well as 2.2.2 Subsistence farmers also lack
international airports access to agricultural research and
2.2.2 Trade agreements with EU and are illiterate. This is a major obstacle
US thus having access to more to the development of commercial
markets this encourages exports of agriculture amongst them.
fruit and flowers. Furthermore, it is challenging to
change the attitudes of farmers from
traditional methods.

N.B Also include the following Crime,

labour strikes

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3. ECONOMIC FACTORS:

3.1 Fluctuating prices:

Both locally and internationally,
demand is affected by world market
prices.

3.2 Dual agricultural system:

3.2.1 Unlike commercial farmers,
subsistence farmers do not
have capital to purchase farm
machinery, fertilizers, hybrid
seeds, insecticides and
pesticides.
3.2.2 Subsistence farms are small
in size and they are over
exploited

4. INFLUENCE OF POLITICAL FACTORS

4.1 Protective measures

4.1.1 The use of tariffs, subsidies and
quotas by MEDCs makes it difficult for
LEDCs to compete with the MEDCs
for major agricultural markets.
4.1.2 Trade agreements and large
trading blocs between MEDCs also
restrict the LEDCs in selling their
primary products.

MAIN AGRICULTURAL PRODUCT :

2. BEEF FARMING:

2.1 AREAS OF PRODUCTION ON A MAP, IDENTIFICATION AND INTERPRETATION

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2.2 FACTORS THAT FAVOUR AND HINDER AGRICULTURE IN SOUTH AFRICA TO THE PRODUCT STUDIED
(BEEF FARMING):

2.2.1 FAVAURING FACTORS:

1. Semi dry savannah and Highveld areas – low in diseases and good grass

2. Local market use most of the meat and milk

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3. Less labour intensive

4. Cattle can adapt to gradual and steeper slopes

5. Good grazing on fertile soils

5. Less water needed for stock faming – adapt to short term droughts

2.2.2 HINDERING FACTORS:

1 Communal farmers see cattle as a measure of their wealth and do not sell them

2 Foot and mouth disease and tick problems

3 Communal grazing land

4 Soil erosion

5 0vergrazing

6 Variable price for beef

7 Limited grazing as SA is a hot and dry country

POSSIBLE SOLUTIONS

1. Agricultural officers to assist small scale and new farmers

2. Provide government subsidies and grants.

3. Increase education and skills of farmers
4. Access to funding from banks

2.3 CONTRIBUTION OF BEEF FARMING TO THE SOUTH AFRICAN ECONOMY

2.3.1 Raw materials for industry – encourages industrial development

2.3.2 Employment – creates jobs

2.3.3 Export of agricultural product – bring in foreign currency into SA

2.3.4 Contributes substantially to food security

3. FOOD SECURITY:

3.1 DEFINITION OF FOOD SECURITY AND FOOD INSECURITY:

3.1.1 Food security: Is the availability of, and access to food for a healthy and productive life.

3.1.2 Food insecurity: It is the lack of basic food/ lack of access to enough nutritious food. It ranges
from chronic hunger and malnutrition to famine and starvation.

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3.2 IMPORTANCE OF FOOD SECURITY IN SOUTH AFRICA :

3.2.1 Maintains the good health of people

3.2.2 Prevents social uprisings

3.2.3 Prevents hunger and famine

3.2.4 Prevents malnutrition

3.3 FACTORS INFLUENCING FOOD SECURITY IN SOUTH AFRICA:

Negative factors affecting food security Positive factors affecting food security
1. Greater variety of crops can be
planted due to a variety of climatic
regions.
1. Soils are thin and infertile in most regions 2. Government incentives to small scale
2. Environmental hazards such as droughts, floods farmers.
Pests and diseases 3. Improved trade relations
3. Damage to the environment such as soil erosion, 4. Processing of raw materials
5. Land re-distribution program
deforestation
6. Protection of the environment through
4. Lack of capital to invest in irrigation schemes, sustainable agriculture.
machinery, hybrid seeds, fertilizers and 7. Planting perennial crops that require
insecticides. less fertilizer and reduces erosion.
5. Farmers in MEDCs are subsidised by their 8. Planting a variety of crops to prevent
governments thus African farmers are unable to soil exhaustion.
compete with them. 9. Planting genetically modified seeds.
6. Poor infrastructure- The road and rail network is
poorly developed (not tarred, potholes, single
lanes).
7. Farmers do not have capital to invest in
agricultural research which contributes to higher
yields.
8. High level of HIV/AIDS which lowers productivity

3.3 STRATEGIES TO IMPROVE FOOD SECURITY IN SOUTH AFRICA:

3.3.1 Use of genetically modified crops
Concept: Crop plants that are modified in a laboratory so that they are more resistant to
herbicides and have a greater nutritional value.

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ADVANTAGES OF GENETIC MODIFICATION:

1. They are more resistant to pests and diseases.
2. They have a longer storage life.
3. More food per hectare can be produced.
4. They have greater nutritional value.
5. They are able to survive in a greater range of climatic conditions
DISADVANTAGES OF GENETIC MODIFICATION:
1. GM seeds have been developed by a few multinational companies that have the
monopoly over them.
2. The long terms effects of genetic modification on man's health are unknown.
3. New seeds have to be planted every year and this is costly.
4. The effects on the environment, e.g. food chains, are not known.

3.3.2Reduce subsistence farming

3.3.3Education, training and skills development of farmers
3.3.4Improved scientific farming methods
3.3.5Planting surplus in good seasons
3.3.6Availability of funding for new and small scale farmers.
3.3.7Importing foods that cannot be produced cost effectively
3.3.8Eradicating inequality and poverty
3.3.9Exporting food excesses at good prices

4. MINING :

4.1 CONTRIBUTION OF MINING TO THE SOUTH AFRICAN ECONOMY:

4.1.1 Earner of foreign exchange

Foreign income is earned from the export of various minerals such as gold, iron ore,
diamonds and coal.

Almost 50% of South Africa's foreign exchange is earned via the export of minerals.

4.1.2 Contribution to the GDP

Mining companies pay taxes to the receiver of revenue thus stimulating the growth rate of
the country.

4.1.3 Job creation/skills development

A large percentage of the labour force is employed by this sector.

It contributes to the economy in the form of wages, taxes and salaries.

Mines have also attracted workers with valuable skills from Southern African and other
overseas countries.

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4.1.4 Multiplier Effect:

Additional economic development in response to a new or expanding part of the economy

4.1.5 Mining attracts foreign investment:

Is a critical earner of foreign exchange.

4.1.6 Improvement and construction of infrastructure

Accounts for 50% of volume of Transnet’s rail and ports.

4.1.7 Development of link industries:

Supplies materials or equipment to another industry, or is dependent on another industry for materials
and equipment.

4.1 SIGNIFICANCE OF MINING TO THE DEVELOPMENT OF SOUTH AFRICA:

4.2.1 Discovery of minerals, e.g. gold and diamonds brought thousands of people to South Africa in
search of economic opportunities.

4.2.2 Their arrival necessitated services and infrastructure.

 Kimberley was first town in Southern Hemisphere to have street lighting.

 Railway line between Cape Town and Kimberley was the first for Southern Africa.

4.2.3 Diamond mining in Kimberley started a system of migrant labour and the system of migrant labour
and the compounds were replicated in Johannesburg.

4.3 COAL

4.3.1 LOCATION OF COAL ON A MAP, IDENTIFICATION AND INTERPRETATION:

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4.3.2 FACTORS THAT FAVOUR AND HINDER MINING IN SOUTH AFRICA- COAL:
FAVOURING FACTORS HINDERING FACTORS
1.Geology: 1.Climate:
1.1 Coal deposits are generally thick, close to the 1.1 High temperatures in some areas of the
surface – therefore mining is easy. country made mining difficult – cost of cooling
1.2 Temperatures does not increase rapidly as mineshafts are high.
you go underground. 2. Distance:
2.Labour: 2.1 Large distances between mines and
2.1 Large source of unskilled labour. harbours / towns have increased costs. Most
2.2 Skilled miners come from other countries as mined material goes via rail, showing railway
migrant labourers. lines of SA.
3.Investment: 3. Foreign dependency:
3.1 Countries invested capital in our mines 3.1 There is need for overseas buyers
4. Infrastructure: 4. Labour:
4.1Railway lines, water and electricity have been 4.1 High costs in training and housing
readily available in South Africa. 4.2 Strikes
5.Organisation: 4.3 Tribal fighting
5.1 Originally, Chamber of Mines and 5. Water:
government made support readily available to 5.1 Water shortages during times of drought
assist with setting up mines and training labour. causing problems

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5.2 Underground water flooding also causing

problems
6. Minerals:
6.1 Non-renewable resources and once finished –
mines must close down
7.Accidents:
7.1 Explosions
7.2 Collapsing of tunnel roofs – loss of life and
skills

4.3.3 CONTRIBUTION OF COAL TO THE SOUTH AFRICAN ECONOMY

1. Around 77% of South Africa's energy needs are directly derived from coal
2. Contributes to employment in the country
3. South Africa is the 5th largest exporter of coal in the world, this earns the country
valuable foreign exchange
4. Around 35% of liquid fuel used in South Africa is derived from coal mined by Sasol mining
at the Secunda.
7. Million lower-income households in South Africa depended on coal as their primary
energy source for cooking, lighting and heating.

5. SECONDARY AND TERTIARY SECTORS :

Secondary sector: Concerned with the converting raw material into semi-finished or finished goods/
Industries that take the raw materials produced by the primary sector and process them into
manufactured goods and products.

Tertiary industry: Concerned with rendering services

Quaternary industry Consists of those industries providing information services, such as computing, ICT
(information and communication technologies), consultancy (offering advice to businesses) and R&D
(research, particularly in scientific fields).

5.1 CONTRIBUTION OF SECONDARY SECTOR TO THE SOUTH AFRICAN ECONOMY:

5.1.1 Job creation

5.1.2 Economic empowerment of previously disadvantaged groups.
5.1.3 Indirect increase of raw material production.
5.1.4 Acceleration of the country’s growth and development
5.1.5 Contribution to the GDP of the country

5.2 TYPES OF INDUSTRIES (DEFINITION, DESCRIPTION, EXAMPLES AND CHARACTERISTICS

5.2.1

LIGHT INDUSTRY HEAVY INDUSTRY

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Light weight raw materials Large quantities of raw materials

Light machinery Heavy machinery
Small end product Bulky end product
Little air pollution and noise Large amounts of noise and air pollution
No need for rail transport Direct access to road, rail and harbour facilities
Tends to work during office hours Tends to operate continuously with employees
Often close to suburbs and around the CBD working shifts
Far away from built-up areas and close to bulk
transport facilities.

5.2.2 RAW MATERIAL ORIENTATED

 These types of industries are found close to the source of the raw materials that they require.
This is usually because transportation cost are high.
 For example, sugar mills are located close to the sugar fields.

5.2.3 MARKET ORIENTATED

 These types of industries are located close to the market.

This is usually because the products are perishable and need to be sold relatively fresh.
 For example baked foods, vegetables and fish products.
5.2.4 FOOTLOOSE INDUSTRIES
 Industries that do not have to locate close to factors of production
 For example, a software company. It does
 not need to transport any raw materials and the product is non-perishable (it lasts forever)
5.2.5 UBIQUITOUS INDUSTRIES
 Located all over the geographical area without concentration in on a particular area e.g.
Agriculture
5.2.6 BRIDGE (BREAK OF BULK)
 Located where one means of transport is replaced by another e.g. at the harbour

5.3 FACTORS FAVOURING INDUSTRIAL DEVELOPMENT IN SOUTH AFRICA:

5.3.1 Raw materials: There is large local resources of minerals and agricultural products in the country.

5.3.2 Labour supply: There is a large labour supply of unskilled and semi- skilled workers in the country.

5.3.3 Water supply

5.3.4 Energy supply: Most of S.A’s coal reserves are found close to the surface and is quite cheap to
mine. This helps electrical power cheaper than in other countries. Factories have special arrangements
with ESKOM to buy cheap electricity.

5.3.5 Transport: South Africa has the best infrastructure in Africa.

There is a dense network of railways and roads connecting harbours on the coasts of the
country to the interior of the country.

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Harbours are instrumental in the export of goods out of South Africa.

South Africa has international airports.

5.3.6 Political intervention: Government decisions can have a major impact on the location of industries
e.g Decentralisation of industries during the apartheid era.

5.3.7 Competition: Good quality products and lead producer in the region
5.3.8 Trade: Large trade with Europe, China, Germany and rest of Africa

5.4 FACTORS HINDERING INDUSTRIAL DEVELOPMENT IN SOUTH AFRICA:

5.4.1 Over-concentration: Too many industries and similar ones in the same region

5.4.2 Air pollution: Adds to climate change and health problems. Newer clean technology is expensive.
5.4.3 Labour supply: Expensive labour, labour unrest, lack of technical skills and labour strikes are
common and affect production

5.4.4 Water supply: Water limits industrial growth as SA is a semi-arid country – all process must be
designed to use less water than in other parts of the world.
5.4.5 Energy supply

5.4 6 Raw materials

5.4.7 Political interference: Legislation in South Africa retarded economic development in the former
homelands

5.4.8 Competition: Cheaper imported products can destroy local industries e.g. the cheap clothes and
fabrics brought the SA textile industries to their knees.
5.4.9 Transport: Infrastructure is not well maintained and tolls, taxes and fuel is expensive
5.4 10 Trade: Restrictions and taxes on imports to SA and exports to other countries lead to lower
profits. Trade is often limited due to embargos and cooperation agreements between countries

5.5 SOUTH AFRICA'S CORE/MAIN INDUSTRIAL REGIONS; (GAUTENG/PWV, SOUTH-WESTERN CAPE)

5.5.1 MAP SHOWING THEIR LOCATION (FOUR INDUSTRIAL REGIONS) AND MAIN ACTIVITIES:

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5.5.2 FACTORS INFLUENCING THE LOCATION OF THE PRESCRIBED INDUSTRIAL REGION

PWV/ GAUTENG

FAVOURING FACTRS:

Discovery of gold.
Fast growing population provided market.
Availability of various raw materials
Water available from Vaal river
Plenty skilled and unskilled labour
Well-developed transport routes
Access to money
Flat land makes construction easier.

HINDERING FACTORS:

Water shortages
Pollution
Congestion and overpopulation
Pressure on resources due to large population/ Overutilisation of resources

SOUTH-WESTERN CAPE:

FAVOURING FACTORS:

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Cape Town harbor, fast rail and road links.

Historical reasons
Plenty of skilled and unskilled labours
Availability of farming products
Raw materials: A variety of raw materials are produced by surrounding areas
Good infrastructure
Water from Berg river
Rich fishing areas
Pleasant Mediterranean climate- ideal work conditions

HINDERING FACTORS:

Power supply: Electricity is expensive in this region

Raw materials: The industrial region does not have mineral resources
Water resources: Although they meet present needs, they are sometimes barely adequate towards the
end of a dry summer
Eccentric location: Cape Town is far from the large interior market of Gauteng
Buying power is lower than Gauteng industrial region

5.5.4 FACTORS THAT FAVOUR AND HINDER THE CONTINUED SUCCESS OF THE PRESCRIBED CORE
INDUSTRIAL REGIONS STUDIED:

HINDERING FACTORS FOR CONTINUED SUCCESS:

Pollution-air and water

Traffic congestion

Insufficient housing

Infrastructure becomes overused- power cuts/loashedding

Insufficient jobs- no money, squatter camps and crime

Limited water supply from Vaal dam (Gauteng)

Recent unrest and looting (Gauteng)

Corruption

Covid 19

5.5.5 ECONOMIC AND SOCIAL IMPACTS OF THE PRESCRIBED CORE INDUSTRIAL REGION

Creates jobs

Encourages foreign investment

Develops infrastructure

Earns valuable foreign exchange from export products

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Stimulates mining and agriculture ( Gauteng)

6. STRATEGIES FOR INDUSTRIAL DEVELOPMENT:

6.1 OVERVIEW OF APARTHEID INDUSTRIAL DEVELOPMENT STRATEGY:

6.1.1 THE GOOD HOPE PLAN:

The Good Hope Plan (1981) was probably the most significant strategy to try and spread
economic wealth around South Africa except for in the four core industrial regions. It also laid
the foundation for the current nine provinces in South Africa today.
o The country was divided into eight major development regions and these regions into
42 planning regions.
o Deconcentration points such as Atlantis near Cape Town were developed.
o Isolated industrial development points were also developed, such as at De Aar,
Nelspruit and Empangeni.
o Incentives were provided to attract industry to these points. It included tax concessions
on rates as well as reduced service rates.
o In the homelands border industries were created such as Hammersdale, Loskop and
Isithebe.

6.2 OVERVIEW OF POST-APARTHEID INDUSTRIAL DEVELOPMENT STRATEGIES:

6.2.1 RDP - RECONSTRUCTION AND DEVELOPMENT PROGRAMME (1994) POST APARTHEID

This programme focused on the transformation of the post-apartheid South Africa addressing the
social and economic needs of all the people and to create a strong, dynamic and balanced economy
that would:
o Create sustainable jobs that could employ new job seekers in both the formal and non-
formal sectors.
o Alleviate the poverty, low wages and extreme inequalities in wages and wealth created by
the apartheid system.
o Address economic and employment imbalances and problems in industry, trade, commerce,
mining, agriculture, finance and labour markets.
o Provision of basic services
o Development of South Africa’s human resource capacity by providing education to develop
the country’s human resource capacity to provide highly qualified labour for the industry.
o Ensuring that no one suffered discrimination in hiring, promotion or training on the basis of
race or gender.
o Democracy of the state and the community/society
o Strengthens the economy by opening it to everyone

6.2.2 GEAR – THE GROWTH, EMPLOYMENT AND REDISTRIBUTION

STRATEGY

In June 1996, the government adopted this new macro-economic policy framework.

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The aim was to strengthen economic development by creating more job-opportunities,

redistribution of income and socio-economic opportunities in favour of the poor.
The strategy targeted economic growth, inflation and a better income. Distributing and decreasing
poverty and unemployment.

However, a report in 2001 recorded that:

 65% of South Africans still live below the poverty datum line.
 The poor were even worse off than prior to 1994.
 Few people had better access to education and the development of skills.
 There was still an increasing gap within the races and that the upper and middle classes in all
racial groups had benefited the most from changes.
 The gender gap continue to exist.

6.2.3 INDUSTRIAL DEVELOPMENT ZONES (IDZs) SALDANHA BAY IDZ AND SPATIAL DEVELOPMENT
INITIATIVES (SDIs)-WEST COAS SDI:

1. DEFINITION AND DIFFERENCE BETWEEN AN IDZ AND SDIS

Industrial Development Zone: The Industrial Development Zones (IDZs) are purpose-built industrial
estates, linked to an international port or airport, which have been specifically designated for new
investment by export oriented industries and related services.
OR
An industrial estate that was built with the purpose of maximising domestic and foreign fixed direct
investments, value-added products and export-orientated manufacturing industries and services.

Spatial Development Initiative: A program to initiate and support a series of development corridors
across S.A and neighbouring countries.

2. MAP SHOWING THE LOCATION OF PRESCRIBED IDZs

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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Saldanha is situated in the West Coast region of the Western Cape

3. FACTORS INFLUENCING THE LOCATION OF SALDANHA BAY IDZ

It has the right depth:This Enables the port to accommodate vessels and offshore mobile drilling units
up to the 21.5m draft.

It has the right location:It is geographically near to regional Oil & Gas markets in Sub- Saharan sectors.

It has more room for growth: There is ample space available for further infrastructure development and
partnerships

Free port operations

Access to skilled workforce

Tax and investment incentives

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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Provision of infrastructure

4. MAIN INDUSTRIAL ACTIVITIES:

Oil and gas

Marine repair engineering

Logistics services

Warehousing

Supporting services segment

Tourist and mariculture industries

5. FACTORS THAT FAVOUR AND HINDER THE DEVELOPMENT OF SALDANHA BAY:

FACTORS INFLUENCING THE LOCATION OF SALDANHA BAY IDZ:

Availability of an international port for the import and export of goods & services.

Incentives and concessions provided for investors.

Decentralisation to enhance regional industrial growth and development.

An IDZ requires domestic goods and services to support the industries located in it.

MAIN INDUSTRIAL ACTIVITIES AT SALDANHA BAY IDZ:

Renewable energy production & manufacturing cluster.

Oil supply base/hub for the Oil and Gas cluster.

Maritime shipbuilding and repair cluster.

A Steel and Minerals production & manufacturing cluster.

FACTORS THAT FAVOUR AND HINDER THE DEVELOPMENT OF THE SALDANHA BAY IDZ

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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6. ECONOMIC AND SOCIAL IMPACTS

Economic returns increase in the area.

Increased shipping to foreign countries.

Infrastructure subsidies.

Real estate below market value.

Sustainable and direct jobs creation.

Large requirement for maintenance personnel in chemical, mechanical, electrical and control
engineering, from highly to semi-skilled.

Public and private training for artisans must improve.

Regional linkages to meet demand.

In-company training will occur for specialist skills.

MAP SHOWING THE LOCATION OF PRESCRIBED SDIs

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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West Coast SDI

The Spatial Development Initiative (SDI) program has been in existence since 1995.

Aims of generating investment projects in key economic sectors in specific areas of South Africa.

Increasing employment in these sectors and areas.

Assessment of the capacity of the SDIs to restructure the economy and enhance employment creation in
South Africa.

The extent to which the SDI strategy conforms to economic theory on industrial location and economic
development.

The SDIs have been (and can be) successful in employment creation.

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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MAP SHOWING THE LOCATION OF THE WEST COAST SDI ON THE SOUTH AFRICAN MAP:

Factors that favour the development of the West Coast SDI

Organic farming & new generation products.

Most wheat farmers rotate crops with animal feed and are exploring canola as crop for new generation
products.

Increased availability and affordability of broad-band internet access becoming increasingly important
for globally connected businesses such as tourism, agriculture, and oil and gas.

Bridging the digital divide can also contribute towards poverty alleviation.

Factors that hinder the development of the West Coast SDIs

Climate change and increasing temperatures may negatively impact future sustainability of certain
segments.

Water supply constraints, including competing demand for water from Cape Town at higher prices
constrains new production.

Export Agro-products compete with global market restrictions.

New mines often require major transport and other infrastructure investments from local and district
government.

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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Huge backlog in water supply for sanitation.

There are no commercial airports within the West Coast District.

Economic and social impacts of the West Coast SDI

Increasing share of economic activity and constitute an important potential area for economic growth
and job creation.

Foreign Direct Investment and International Trade

Domestic Investment.

Promote skills development

Promote tourism.

Promote bulk infrastructural development and services for the district as a whole.

MAIN FUNCTIONS IN THE WEST COAST SDI

Bulk water supply.

Bulk sewage purification works and main sewage disposal.

Solid waste disposal sites that serve the whole area.

Building and maintenance of municipal roads. • Regulation of passenger transport services.

MAIN INDUSTRIAL ACTIVITIES

Agriculture:

Practiced around the majority of towns i.e. rooibos tea, fruit, grains, livestock, potatoes and wine

Fishing Industry:

Lucky Star, Oranjevis, Sea Harvest and West Point

Aquaculture:

Tourism:

Abundance of natural and cultural capital that attract tourist e.g. Langebaan lagoon & West Coast
National Park

Freight transport:

Imports and exports through Port of Saldanha

Transport of freight through the district between Cape Town and Windhoek

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)

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ECONOMIC AND SOCIAL IMPACTS:

Creation of job opportunities in industries and farming (economic)

Infrastructure development and tourism (economic)

Poverty reduced

Tourism provides for the buying and selling of arts and crafts for growth of the informal sector
(economic)

The growth of informal and formal economic activities along the development corridors of the SDI will
increase the productivity and wealth of people in marginal areas (social/ economic)

Promoting social wellbeing of the community/ Standard of living increases (social)

Promoting bulk infrastructure and development services (economic)

Ensuring good governance and financial viability (economic)

Compiled by: T.E Makhoali (SES- Geography- Fezile Dabi)