South Africa’s economic problems have deepened regional disparities, with rural provinces significantly underperforming, compared with urban hubs Gauteng and the Western Cape.
The latest edition of the Centre for Risk Analysis’s economic review highlights the widening gap between provinces in terms of demographics, economy, education, health, social security and living conditions, underscoring the urgent need for structural reforms.
It cites recent data released by property company Lightstone showing a marked migration trend as rural residents gravitate toward economic opportunities in Gauteng and the Western Cape.
These provinces experienced population growth of 31% and 24%, respectively, between 2011 and 2022, far outpacing the national average of 17%. By contrast, provinces such as the Eastern Cape and Free State recorded negligible growth of 2% and 7%, respectively.
The economies of Gauteng and the Western Cape expanded at an average rate of 3% a year from 1995 to 2018 — a third faster than the rest of the country, which grew at 2.2%, according to a paper published in the South African Journal of Economics.
Gerbrandt van Heerden, an author of the Centre for Risk Analysis report, noted that this differential might seem small, but when compounded over more than 20 years, it adds up to a substantial share of gross value added.
To illustrate, the growth in the gross value added of Gauteng and the Western Cape from 1995 to 2018 — amounting to R224 billion at 2010 prices — is roughly equivalent to the size of the Eastern Cape economy.
Gauteng and the Western Cape also contribute disproportionately to South Africa’s economy, accounting for 47.2% of GDP despite holding only 37.3% of the population.
“These two provinces are home to 53.7% of the country’s assessed individual taxpayers.
“The labour absorption rate, the proportion of the working-age population that is employed, is higher in Gauteng (45.3%) and the Western Cape (52.9%) than at the national level (40.3%),” Van Heerden said.
“South Africa’s other seven, mostly rural, provinces underperform.
“Their collective share of the total population stands at 62.7%, compared to their collective share of GDP at 52.8%.
“The quality of life in these provinces is also significantly worse than in Gauteng or in the Western Cape. The unemployment rate in the North West province (53%) exceeds 50%.”
Gauteng contributes 33.2% to the national GDP, driven by finance and manufacturing, while the Western Cape contributes 14%.
By contrast, Limpopo contributes 7.6% to national GDP and the Northern Cape 2.3%. Their heavy reliance on mining leaves them vulnerable to global commodity fluctuations.
Dependence on struggling primary and secondary industries is a major factor in the economic underperformance of rural provinces.
According toStatistics South Africa’s latest provincial GDP data, mining is the dominant industry in Limpopo, Mpumalanga, the North West and the Northern Cape.
“Although mining is one of the top employers in South Africa, several mining companies said earlier this year that they would need to shed jobs to remain profitable.
“Electricity and logistics constraints are commonly recognised as a major contributor to the industry’s decline,” Van Heerden said.
Unemployment rates also emphasise the divide, with Gauteng’s official rate at 35.1% while North West is at 41.3%, the Eastern Cape at 41% and Mpumalanga at 37.4%.
Rural provinces, such as Limpopo and the Eastern Cape, have high youth and dependency ratios. In Limpopo, 39.2% of the population is under 18, exerting pressure on social services.
According to the report, education outcomes illustrate systemic inequalities. Gauteng and the Western Cape lead with 10.7% and 10.9% of adults holding degrees. These regions also have higher access to school facilities, with more than 68% of schools equipped with libraries compared with Limpopo’s 8.7%.
National Senior Certificate pass rates also reflect disparities in quality. The Free State leads the rural provinces at 89%, while Limpopo is at 79.5%. In the Eastern Cape only 21.8% of learners passed maths, compared with Gauteng’s 33.5%.
In terms of healthcare, the Western Cape and Gauteng fare better with lower HIV prevalence rates of 11.7% and 12.3%, respectively, compared with 15.8% in KwaZulu-Natal. The two provinces also have better doctor-to-patient ratios.
Social grant dependency is highest in rural provinces, with 42.9% of the population in Limpopo and 40.4% in the Eastern Cape reliant on the state.
Child support grants dominate, covering more than 75% of children in the Eastern Cape and Limpopo.
The report highlights how urban provinces provide better living conditions, although they are not without problems. In Gauteng, 97.6% of households have piped water, compared with 64.2% in Limpopo. But Gauteng has higher rates of informal settlements (18.4% of households), driven by migration and housing shortages.
Electricity for lighting is near-universal nationwide but disparities emerge in its use for heating, with only 19.4% of Eastern Cape households using electricity for this compared with 64.1% in Gauteng.
Additional barriers to development in rural provinces include the collapse of municipal functions in many rural towns as well as the severe degradation of water, electricity and transport infrastructure, the researchers said. This dissuades investment and drives away businesses, leading to fewer work opportunities
“As long as this remains the case, rural provinces will continue to see a significant decline in the quality of life of their residents.
“It will further drive people to economically better-off provinces such as Gauteng and the Western Cape, placing further strain on infrastructure already creaking under the load.
“For instance, while Gauteng is the country’s economic engine, it too has entered a rapid period of decline owing to political infighting and corruption. To offset the burden, the government will have to introduce urgent reforms aimed at creating a more attractive environment in rural provinces — for residents as well as businesses,” Van Heerden said.
