Socio-economic Profile:
Umgungundlovu
District
2009
1. Introduction
This section presents analysis on the recent socio-economic outlook of the District Municipalities (DMs) before reviewing some of the key PSEDS targets. KwaZulu-Natal is on the course towards building a single and integrated economy that benefits all. In pursuit of this objective, the provincial government has made important strides in the delivery of social and basic services.
However, the current global economic downturn presents new economic and administrative challenges over and above the historical challenges municipalities are facing. It is against this backdrop that more than ever before municipalities need to closely examine socio-economic factors to be able to respond appropriately to these challenges. On 26 May 2009 South African economy was reported to have been sunk into its first official recession in 17 years with a contraction in GDP of a massive 6.4 percent in a first quarter of 2009, from a decline of 1.8 percent during the fourth quarter of 2008 (StasSA). Among all the provinces, KwaZulu-Natal has been the biggest casualty of this economic downswing with a contraction in GDP-R of 9.37 percent in a first quarter of 2009.
There is no doubt that the current economic meltdown has serious consequences for the performance of the DMs’ economies.High levels of unemployment and poverty still persist in all district municipalitiesstretching the development chasm. Consequently the gap between the first and second economies continues to widen within DMs, inciting sporadic riots in various municipalities. 2009 is likely to be a tough year for policy decision makers. Hence, consideration of socio-economic factors is essential for fully understanding most resource management issues and for making sound resource management decisions. Several policy interventions have been identified by the Provincial government in order to ensure that we navigate through this economic recession less affected.Well designed socio-economic profile can provide vital information that policymakers need to allocate funds and improve the delivery of services. Service delivery has considerable influence on the quality of life.
2Demographic Profile
The KwaZulu-NatalProvince has agrowing and maturing population, presenting opportunities and challenges to the province. On average between 2002 and 2008, the KwaZulu Natal population was estimated at an average size of 10 million people. The largest number of these people lived in eThekwini Metro (32.8 percent of the provincial population), followed by uMgungundlovu (9.5 percent), anduThungulu district (9.4 percent)(Figure 2.1).
Figure 2.1: Total Population by DMs, average 2002-2008
Source: Global Insight, 2009
Figure 2.2 shows the distribution of the population in uMgungundlovu by gender and age groups between 2002 and 2008. The largest proportion of the population in uMgungundlovu was the age group 15-64 years (63.7 percent) followed by age group 0-14 years (32.5 percent). The elderly population made the smallest portion of the total population (3.8 percent). More potential work seekers translate into higher unemployment levels, particularly if individuals are not appropriately skilled. Hence, the higher number of both young individuals and people in the labour force overall will require more spending in education (primary and secondary) and skills development.
Figure 2.2: Total population distribution by gender and age groups in uMgungundlovu district; average 2002-2008
Source: Global Insight, 2009
The male to female ratio was mostly balanced in the district during this period, with males comprising 49.9 percent and females 50.1 percent of the district population (Figure 2.2). It is important to note that Umgungundlovu was the fourth most densely populated district (105 people per km2) in the province. Of its 945,9 thousand population, 54.2 percent people are regarded as urban residents. This suggests that there is less pressure on environment in the rural areas and that there could be land available for government to promote rural development and boost agriculture in this district.
3Economic Review
3.1Gross Domestic Product per municipality(GDP-M)
The KwaZulu-Natal region produced an average GDP-R of R185,0bn between 2002 and 2008, with the highest annual growth being experienced between 2005 and 2006 (5.25 percent). The economy experienced positive growth again between 2007 and 2008, albeit at a slower pace of 3.52 percent. This slower pace of growth was indicative of the onset of the economic downturn experienced by the country between 2008 and 2009 (Fig 3.1).
Figure 3.1: Districts Real GDP and real growth rate (constant 2000 prices-R1000), average 2002-2008
Source: Global Insight, 2009
In terms of the district contributions to the GDP-R over the same period (2002 to 2008), eThekwini, uThungulu, and uMgungundlovu were the highest contributors at 64.9 percent, 9.3 percent, and 8.4 percent respectively. Umzinyathi (0.8 percent) and Umkhanyakude (1.1 percent) were the least contributors (Figure 3.2). Umgungundlovu grew by 4.1 percent between 2007 and 2008.
Figure 3.3 shows Umgungundlovu’s GDP-M by economic sector between 2002 and 2008. It shows that, on average, the district economy grew at an annual rate of 3.8 percent. Community services (18.1 percent), Manufacturing (13.8 percent) and Trade (12.8 percent) contributed the highest percentages toward the district GDP and are hence the economic drivers in the economy of the district. Electricity (2.7 percent), Construction (2.5 percent) and Mining (0.4 percent), contributed the least.
Finance (6.1 percent), Transport (5.8 percent) and Construction (5.1 percent), were the fastest growing sectors in the region. Agriculture saw staggering growth of 16.4 percent between 2007 and 2008. This is up from the 1.7 percent growth experienced between 2006 and 2007. The Mining sector contracted by -7.2 percent.
Figure 3.2: Districts contribution to KwaZulu-NatalGDP-R, average 2002-2008
Source: Global Insight, 2009
Figure 3.3: Umgungundlovu GDP-M by sectors (2002-2008)
Source: Global Insight, 2009
3.2International Trade
Figure 3.4 shows the percentage of export, import and trade balance (as an appropriation of GDP-M) across DMs. It shows that the economy of uMgungundlovu had a reasonable level of international trade, coming second to uThungulu which was mainly dominated by international trade. Umgungundlovu’s imports were 18.8 percent of its GDP-M, while exports were 37.9 percent, resulting in a favourable trade balance. Zululand and Sisonke on the contrary had virtually no engagement in international trade.
Figure 3.4: Export, Import and Trade Balance (percent of GDP-M), average 2002-2008
Source: Global Insight, 2009
4. The Labour Market
4.1 The size of the DMs working population (POWA) and economically active population (EAP)
Between 2002 and 2008, the provincial labour force approximated at 6.0 million people per annum (approximately 60 percent of the total provincial population). Of this total, approximately 2.6 million were economically active population (EAP). As it is clear from figure 4.1 that the KwaZulu-Natal people of working age (POWA) and EAP grew rapidly during the same period, necessitating the creation of many job opportunities in the province.
Fig 4.1: The size of the KwaZulu-Natal POWA and EAP, 2002-2008
Source: Global Insight, 2009
Although in all DMs,with the exception of uMzinyathi, employment rates were generally higher than POWA and EAP, these were not sufficient to ensure that unemployment rates reduced significantly (Figure 4.2). This could be attributed to the structure of our economy. Jobs created in many instances demand highly skilled workers, with high levels of illiteracy across DMs, many EAP fail to obtain employment. Hence, high numbers of the population were dependent on social grants.
Fig 4.2: The population, POWA, EAP and Employment per DM, average 2002-2008
Source: Global Insight, 2009
4.2 Unemployment
The KwaZulu-Natal unemployment rate (using official definition) on a quarter-on-quarter basis has declined by 3.1 percentage points from 19.3 percent in Q2 2009 to 18.7 percent in Q3 2009. However, the number of discouraged workers has increased by 1.3 percentage point during the same period (StatsSA).
Figure 4.3 presents the average unemployment rates across DMs between 2002 and 2008. As indicated above, it reveals thatUMzinyathi, uMkhanyakude and Zululand were district municipalities with the highest unemployment rates ranging on average from 42 to 48 percent. Indeed these municipalities were the highest contributors to the provincial unemployment levels.Umgungundlovu had one of the lower unemployment levels at 28.8 percent, after Uthungulu (28.4 percent), Amajuba (27.3 percent), iLembe (25.6 percent), and eThekwini (22.8 percent).
Fig 4.3: Total unemployment by DMs (Official definition), average 2002-2008
Source: Global Insight, 2009
4.3 Employment
4.4.1 Total employment
Figure4.4 shows the total number of employed people by district municipality between 2002 and 2008. It reveals that uMgungundlovu had the highest employment levels in the province, followed by uThungulu and eThekwini. When considering the fact that uMgungundlovu has the highest employment rate in comparison to other districts, one would assume that it would also have the lowest unemployment rate. This is however not the case as we saw when analyzing unemployment. This indicates that this district is struggling to create jobs for all its economically active population.
Fig 4.4: Total employment by district, average 2002-2008
Source: Global Insight, 2009
4.4.2 Formal employment
The district’s formal employment was among the highest in the province (76.5 percent) second only to eThekwini (76.8 percent) (Figure 4.5). The formal employment sector in the district was dominated by the Community Services sector at 28.0 percent (Figure 4.6). Education and Health sectors were equally important contributors to the sector’s employment, together accounting for 18.9 percent. This shows that the education-and-health inclined provincial expenditure budget reaches this district proportionately, as with uThungulu, Umkhanyakude and iLembe.
Figure 4.5: Formal employment within districts (%), average 2002-2008
Source: Global Insight, 2009
Figure 4.6: UMkhanyakude formal employment by economic sector (%), average 2002-2008
Source: Global Insight, 2009
Manufacturing was the second major employment sector in the district, contributing 15.2percent to the district’s total employment. A larger part of this sector’s employment was recorded in Textiles, clothing and leather goods (3.9 percent)(Figure 4.7).
Figure 4.7: Manufacturing formal employment rates by detailed categories (%), average 2002-2008
Source: Global Insight, 2009
4.4.3Informal employment
KwaZulu-Natal’s informal sector employment, recorded mainly in Trade,Construction,Community Services, Manufacturing, Transport and Finance[1] sectors, was generally skewed towards the Trade sector. Umgungundlovu’s Trade sector had high levels of informal employment in comparison to other sectors (Figure 4.8).
Figure 4.8: Informal employment by district and main economic sector (%), average 2002-2008
Source: Global Insight, 2009
Figure 4.9: UMkhanyakude formal employment in Trade (%), average 2002-2008
Source:Global Insight, 2009
Figure 4.9 shows the distribution of formal employment in the Trade sector. As was the case in uThungulu, and iLembe, uMgungundlovu’s formal employment in trade was concentrated in the four main industries, with ‘Retail Trade and Repairs of Goods’ contributing the most (4.3 percent). The informal employment sector could also have followed a similar structure.
5Land cover and use
42.8 percent of uMgungundlovu land was unimproved grassland in 2008, followed by Forest plantations (16.1 percent), and cultivated: permanent-commercial sugarcane (Figure 5.1). This unimproved grassland should be utilized to enhance the GDPR of the district by district municipalities. Municipalities should take into consideration the amount of land which is available to them when compiling IDPs.
Figure 5.1: uMgungundlovu land use, 2008
Source: Global Insight, 2009
6Crime
Figure 6.1 gives the top ten categories of crimes reported in Umgungundlovuon average between 2002 and 2008. The two leading categories were Theft and Residential Burglaries, which highlights the effects of poverty on the economy of the district. The high statistics of theft incidences in the district are alarming as they are among the highest reported in the province.
Figure 6.1: Top 10 crime categories, crimes per 100,000 people, average (2002-2008)
Source: Global Insight, 2009
7Development
Figure 7.1 shows average poverty rate, Human Development Index (HDI), Gini coefficient, and urbanization rates expressed for all district municipalities as percentages. Relative to the other districts within the province, uMgungundlovu had the highest HDI (0.57), indicating that the district has made strides in its quest to improve the quality of life for its residents.
The Gini coefficient for the district is at 0.67 equal to that of Uthungulu, and slightly better than that of Amajuba (0.68). It is among the highest in the province. This indicates a wide gap between the rich and the poor people within the province as a whole. On a brighter note, however, poverty in uMgungundlovu is at 48.6 percent, the lowest in KwaZulu-Natal, signifying that overall uMgungundlovu inhabitants are better off in comparison to other districts within the province.
The urbanization rate in the district is 54.2 percent meaning 45.8 percent of the communities in the district are rural. Rural development policies need to be implemented in this district in order for the poverty situation to improve as well as to increase the HDI. Other districts in dire need of these interventions may be prioritized before Umgungundlovu, however, as the situation in the district is not as urgent as in others.
Figure 7.1: Poverty, HDI, Gini coefficient, and Urbanisation rates, average (2002-2008)
Source: Global Insight, 2009
The district has the second highest literacy rate (69.5 percent) after Amajuba (70.4 percent) in the province. These two districts are more or less on par with each other when comparing their HDI, Gini coefficients, and urbanization rates.Amajuba and Umgungundlovu have the highest literacy rates and HDIs in the province. This reflects a positive relationship between the two indicators, and could be used to improve the situation in Umkhanyakude, Umzinyathi and Zululand (Figure 7.2).
Figure 7.3 gives the number of people living per square kilometer in each municipal district. Ilembe (172 people), Ugu (141 people) and Uthungulu (113 people) had the highest population density rates. Umgungundlovu had the fourth highest population density in the province (105 people). Umkhanyakude and Sisonke had the lowest density rates, 46 and 43 people per square kilometer respectively.
Figure 7.2: Literacy levels by district, average (2002-2008)
Source: Global Insight, 2009
Figure 7.3: Population density per DM, average (2002-2008)
Source: Global Insight, 2009
1
[1] These are the sectors recorded by Global Insight; they are easier to monitor and collect data thereon than the remaining others.