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Speaker 1: Well that Hawtang provincial government, hosting its big investment conference today,

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Speaker 1: says it's been able to get a large number of pledges,

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Speaker 1: a lot of money coming through, and you can imagine

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Speaker 1: the pressure considering how important the haw Teng provincial economy

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Speaker 1: is to the national economy. It also comes that I

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Speaker 1: think are really interesting, maybe a pivotal time for how Teng.

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Speaker 1: There's a minority government in the provincial administration. The eff

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Speaker 1: is now included in calle Ekodunga is the FINANCEMEC, and

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Speaker 1: there's been a lot of talk about that the cities

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Speaker 1: might all change. They might not. I can't tell you

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Speaker 1: what's going to happen later in the year. We thought

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Speaker 1: this might be a good moment to examine how the

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Speaker 1: haw ting economy has changed over the last ten years.

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Speaker 1: Justin Fasachi is an associate professor at the Southern Center

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Speaker 1: for Inequality Studies and one of the people who's been

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Speaker 1: involved in a recent survey of our cities and looking

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Speaker 1: at various provinces. Justin, good evening, and thanks for your time.

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Speaker 1: I mean so often you'll hear someone the Deputy President,

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Speaker 1: Paul Mashatille probably used the phrase today that how TENG

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Speaker 1: is the engine room of the economy. If he didn't

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Speaker 1: use it, I've used it so often. As I understand it,

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Speaker 1: Cape Ton is actually now attracting more people than how

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Speaker 1: TENG or the numbers are getting closer. Is it still

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Speaker 1: true to say how TENG drives the South African economy?

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Speaker 2: Hi, Stephen, and great to be on your show. Look,

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Speaker 2: I think that at this point it's speculation whether there

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Speaker 2: is a bit of reorientation towards Cape Town. Certainly there's

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Speaker 2: a lot of speculation in the media around firms and

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Speaker 2: workers sort of relocating on mass to Cape Town. Actually,

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Speaker 2: we want to do some research in the tax data

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Speaker 2: lab where we can track the location of workers and

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Speaker 2: firms to see if it holds up. But what I

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Speaker 2: can say is that just in terms of the growth

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Speaker 2: performance of Cape Town versus the kW TENG metros, that

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Speaker 2: Capeon has emerged as a clear winner over the last

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Speaker 2: ten years. Look, we're still talking about fairly modest levels

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Speaker 2: of growth, you know, at best three percent in a

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Speaker 2: particular period, but this is still a lot stronger than Johannesburg,

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Speaker 2: which for a long period of time has sometimes struggled

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Speaker 2: to reach even a half a percent growth. So, you know,

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Speaker 2: the performance of joe Burg and the big cities in

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Speaker 2: the Karteng metro certainly have been a concern. When you

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Speaker 2: look at the data over the last ten years.

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Speaker 1: Are we seeing I mean, does Joeberg drive Karteng, which

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Speaker 1: drives the country? I mean Ecuroleni used to be I

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Speaker 1: suppose should still be a manufacturing hub.

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Speaker 2: Yeah. I think it's really important to understand the composition

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Speaker 2: of industry because that then, you know, has big implications

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Speaker 2: for the prospects of that industry and then the prospects

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Speaker 2: of the region. I will add, though, to the conversation

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Speaker 2: that the best thing you can do for Cape Town

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Speaker 2: in the Western Cape is probably have a thriving Johannesburg, Eco, Learni,

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Speaker 2: Trani and Karteng. So we shouldn't see it as an

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Speaker 2: either or. As you pointed out, you know, the national

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Speaker 2: economy won't grow if you can't get all its South

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Speaker 2: Africa's made regions to grow. But I do think there

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Speaker 2: is something of an identity crisis in Karting as industry

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Speaker 2: has shifted away from what's historically being a mining activity

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Speaker 2: and related sort of heavy what I would call heavy manufacturing,

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Speaker 2: things like steel production, cement chemicals, and South Africa just

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Speaker 2: no longer has the cheap energy that it used to

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Speaker 2: have to drive competitiveness in these sectors. So these have

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Speaker 2: been eroding and we have seen the industrialization and karte

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Speaker 2: I suppose.

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Speaker 1: I mean two big things have happened. The one is

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Speaker 1: that that the mining sector just sort of gets smaller

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Speaker 1: and smaller, and there are lots of reasons as to

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Speaker 1: why that is. And someone will remind me not by

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Speaker 1: value because of higher gold prices, but the factor is

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Speaker 1: it employs fewer people. Then you had intense load shedding

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Speaker 1: and that must have had an impact on Karting, maybe

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Speaker 1: an outsize impact on Kartean because of manufacturing there.

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Speaker 2: So I think the important question is how can their

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Speaker 2: hearting economy evolve and you know what shape can it

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Speaker 2: take where it can start to grow again? You know

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Speaker 2: where do the prospects lie? And look, mining still is

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Speaker 2: very important to the South African economy. I think it's

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Speaker 2: as much as fifty percent of eye exports that still

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Speaker 2: relate in one way or another to sort of minerals

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Speaker 2: and mineral related activities. But I think that in some

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Speaker 2: ways is a sign of our weakness that we haven't

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Speaker 2: been able to sort of move up the value chain

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Speaker 2: in a sort of high value adding activities. When you

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Speaker 2: look at the overall manufacturing picture of Farting, you know,

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Speaker 2: it's quite dismal, but there are sins of hope when

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Speaker 2: you don't treat the manufacturing is one big thing. They're

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Speaker 2: very different sorts of manufacturing activities. So, for instance, food

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Speaker 2: and beverage production or agro processing is another word for

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Speaker 2: it has performed very strongly in the starting over the

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Speaker 2: past while and it comes off the back of retail

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Speaker 2: and in some ways a lot of innovativeness from our

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Speaker 2: retail sector which is expanding to the rest of Africa,

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Speaker 2: and I think using those supply chains and networks, you know,

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Speaker 2: probably could still drive a lot of growth potential for

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Speaker 2: food and food related production. But there are also things

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Speaker 2: which are more less conventional in the way in which

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Speaker 2: services are increasingly important in economies because they've become more

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Speaker 2: digital and more tradeable. We think of call centers, which

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Speaker 2: has probably been very labor absorbed, absorbative and driven a

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Speaker 2: lot of growth in South Africa and showing lots of potential.

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Speaker 2: But there are also things like that relate to construction

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Speaker 2: in the built environment. We know that the rest of

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Speaker 2: Africa has a huge infrastructure eficit, and South Africa actually

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Speaker 2: has a lot of high end skills when you think

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Speaker 2: of engineering, architecture and related services. So I do think

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Speaker 2: that there's lots of potential, but there does need to

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Speaker 2: be an evolution in macuting economy away from heavy industry

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Speaker 2: and towards sectors which actually can drive more competitiveness and

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Speaker 2: growth into the future.

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Speaker 1: I mean, the big advantage for karting is where it is,

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Speaker 1: and the fact that over the years there's been so

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Speaker 1: much investment in transport networks that will get you too

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Speaker 1: karting and away from hunting, and that must be going

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Speaker 1: forward still a big advantage. I mean everything from railway

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Speaker 1: lines that were laid I can't even tell you when,

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Speaker 1: to roads that are well maintained by Samral.

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Speaker 2: It's definitely and we think a lot of head office

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Speaker 2: activity in South Africa has historically been in shouting and

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Speaker 2: still is in karting. So we think of the financial sector,

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Speaker 2: for instance, all the big banks and financial services have

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Speaker 2: performed particularly well, particularly well and have been fairly tradable

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Speaker 2: into the rest of the continent. We also think of

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Speaker 2: ICT and telecoms, companies like MTN, which are big players

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Speaker 2: on the JC. So yes, I don't think harting is

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Speaker 2: going anywhere despite the struggle that it's faced, but it does.

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Speaker 2: The data is fairly sobering when you look at the performance.

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Speaker 2: It has been lagging behind, and we know in the

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Speaker 2: news and the media that there's been a lot of

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Speaker 2: negative publicity. You're just about the basic service delivery of energy,

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Speaker 2: water road rail in many of the karting metros. So

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Speaker 2: I think it is a priority. We are seeing, for instance,

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Speaker 2: the Presidential Working Group for Johannesburg, which is taking sort

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Speaker 2: of a new initiative, and I think that there needs

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Speaker 2: to be a lot of national focus on getting our

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Speaker 2: big metros to work, and that needs to start with

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Speaker 2: certainly start with Johannesburg and karting.

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Speaker 1: I mean, there's sort of so much to do. I mean,

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Speaker 1: I know people will say, well, the Western Cape works, therefore,

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Speaker 1: I mean it's a lot more complicated than that. But

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Speaker 1: there's also a huge amount you'd need to do to

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Speaker 1: get karting going again. But the investment would be paid

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Speaker 1: many times over for the whole country. I presume, and.

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Speaker 2: You're right that there's already sunk costs, so films don't

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Speaker 2: just up and move and build. Environments is already there,

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Speaker 2: the infrastructure is really there, So those things are very

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Speaker 2: slow to shift over time. And so I think, yeah,

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Speaker 2: the question is just about turning potential into into reality

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Speaker 2: in the couting economy. And as as we were discussing earlier,

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Speaker 2: there are structural reasons that actually some of the sectors

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Speaker 2: of counting has had an advantage and you know, South

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Speaker 2: Africa probably no longer has that advantage, so it needs

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Speaker 2: to find a way to evolve and to shift and

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Speaker 2: and and and these are complex and difficult pathways for

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Speaker 2: countries to face, but certainly something that's possible if we

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Speaker 2: look up into the rest of Africa and what's projected

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Speaker 2: in terms of demographic change and population growth and opportunities

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Speaker 2: for the future. You know, South Africa has a lot

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Speaker 2: to offer, certainly within the region. So I think we're

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Speaker 2: economics is often a long game, and so we do

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Speaker 2: need to stick with it and fix the basics and

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Speaker 2: hopefully get a draft in the media into long term.

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Speaker 1: Professor Justin Fasaki, thank you, and associate professor at the

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Speaker 1: Southern Center for Inequality Studies. Well, the future of the

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Speaker 1: karting economy,