1

Provincial Applications & WC Economic Trends

PP & DF Report

2

Contents

Table of Figures ....................................................................................................................................... 2

Definitions / Data Assumptions .............................................................................................................. 3

Acronyms ................................................................................................................................................ 3

1. Introduction .................................................................................................................................... 4

2. Methods .......................................................................................................................................... 4

3. Data and Analysis ............................................................................................................................ 4

3.1. Global and SA GDP data as Context ........................................................................................ 5

3.2. Real Western Cape GDP Data ................................................................................................. 8

3.3. Western Cape Environmental and Development Applications .............................................. 9

4. Results discussion ......................................................................................................................... 13

5. Conclusion and Recommendations............................................................................................... 15

References ............................................................................................................................................ 16

Appendix 1. Other known data sources to consider............................................................................. 16

Appendix 2. Data Table of Environmental and Planning Applications. ................................................ 17

CONTACT ............................................................................................................................................... 18

Table of Figures

Figure 1. Real SA GDP Growth by Sector to 30 March 2016 (various periods) ....................................... 5

Figure 2. Real SA National Industrial Sector growth for 1 January to 30 March 2016 ........................... 6

Figure 3. Global growth and commodity price forecasts (World Bank, 2016) ....................................... 6

Figure 4. Real SA Construction Industry GDP quarterly data (5 years) ................................................... 7

Figure 5. Real SA Business, Financial & Real Estate GDP - quarterly data (5 years) ............................... 7

Figure 6. Real Western Cape GDP Growth by Sector to 30 March 2016 (various periods) .................... 8

Figure 7. Real Western Cape GDP by industry sector & Environmental and Planning Applications ...... 8

Figure 8. Western Cape Environmental Applications (2011/12 to 2015/16) ....................................... 11

Figure 9. Western Cape Environmental Amendment Applications (2011/12 to 2015/16) .................. 11

Figure 10. Western Cape Planning Applications (2011/12 to 2015/16) ............................................... 12

Figure 11. Western Cape Planning “non-Applications” (2011/12 to 2015/16) .................................... 12

Figure 12. Real Construction Sector Growth (Y/Y) and Development Applications ............................. 13

Figure 13. JSE growth (Q/Q) and Western Cape Applications .............................................................. 14

Figure 14. JSE growth (Y/Y) and Western Cape Applications ................................................................ 14

Acknowledgements

All data for tables and figures in this document is sources from Stats SA unless otherwise stated

3

Definitions / Data Assumptions

The Financial Year for this report is defined as being that of the WCG being 1 April to 30 March with

the most recent complete financial year being 1 April 2015 to 30 March 2016. This is termed the

2015/16 financial year. The financial year is typically broken up into 4 quarters of 3 months each.

The start and end dates of specific financial years vary between organisations with some using the

calendar year from 1 January to 31 December as their financial year.

Current GDP is the total value of goods and services that are produced in an economy in a certain

time period. When current data is analysed in a time-series the data will contain some inflation

effects which can be removed

Real GDP is the total value of goods and services that are produced in an economy in a certain time

period, with the term “real” indicating that the GDP has been adjusted to remove the effects of

inflation.

Quarterly growth at a seasonal adjusted and annualised rate, expressed in an annualised rate,

reflects changes in real GDP from one quarter to the next. This annualised rate is calculated by

raising the percent change between the two quarters by the power (exponent) of four.

The quarters are seasonally adjusted1 to remove all seasonal affects before its annualised.

[This method is based on the assumption that the percentage change from the one quarter to

the following quarter will be maintained for the entire year (sometimes questionable

assumption, but the best option in the absence of better alternatives). This method is called

“annualising” and is used in South Africa as the official economic growth rate.]

Statistics South Africa

Acronyms GDP Gross Domestic Product

JSE Johannesburg Stock Exchange

LUP Land Use Planning

LUPA Land Use Planning Act, 2014 (Act 3 of 2014)

MPC Monetary Policy Committee

NEMA National Environmental Management Act, 1998 (Act 107 of 1998)

PP&DF Provincial Property and Development Forum

Stats SA Statistics South Africa

SPLUMA Spatial Planning and Land Use Management Act, 2013 (Act 16 of 2013)

Q/Q quarter-on-quarter (comparison)

SA South Africa

SARB South African Reserve Bank

WCG Western Cape Government

Y/Y year-on-year (comparison)

1 No Stats SA indication on how these seasonal adjustments are made was available for this analysis.

4

1. Introduction

The Western Cape Provincial Planning and Development Forum (PP&DF) meets quarterly. The meeting

of 26 May 2016 resolved as follows:

Resolved: The verified statistics collated for the financial year 2015/2016 to be forwarded to the

economist in CD: Development Planning, to provide a basic analysis in relation to economic trends

during the same period.

2. Methods

Quarterly statistics were gathered for 5 annual periods up to and including 2015/16 (where possible)

for:

a) Western Cape Environmental Applications;

b) Western Cape Development Applications (selected categories only), and;

c) Global, SA, Western Cape Provincial Economic Performance (only annual Western Cape

economic data obtained).

Other relevant informative information has also been included. Five years of data were considered

necessary for insight into trends over time.

Data were then analysed and reported on.

3. Data and Analysis

This report presents data on the South African economy GDP up to the end of March 2016 while

only including data on the Western Cape economy up to December 2014 as this represents the most

recent available sets of relevant data from Statistics South Africa (Stats SA) as the national provider.

5

3.1. Global and SA GDP data as Context

Figure 1. Real SA GDP Growth by Sector to 30 March 2016 (various periods)

Source: Stats SA / WC

Figure 1 above provides analysis on the ten Standard Industrial Classification (SIC) sector divisions

representing the South African economy as a whole.

All depicted sectors showed constrained growth in short term of one or 3 years relative to the

recorded growth over the medium to longer terms of five or ten years.

The Construction sector (8.1%) had the highest average annual real growth over 20 years in South

Africa (SA) with Financial Services, Business Services and Real Estate sector (7.4%) and Transport and

Communications (6.7%) being the only other sectors that demonstrated growth in the region of 7%

over the 20 years to 30 March 2016, thus forming the top tier of growth in SA over the last two

decades. Note that these 3 sectors vary in size and make up 4.0%, 20.6% and 10.2% of the national

economy respectively.

Agriculture (4.9%), Wholesale & Retail trade, Hotels and Restaurants (4.8%) formed a second growth

tier with production having expanded in the region of 5% while Personal Services (3.6%),

Government Services (2.5%) and Manufacturing (2.4%) provided third growth tier when viewed over

20 years.

Utilities (Electricity, Gas and Water supply, 1.0%) and Mining (-0.4%) provided virtually stagnant

average annual growth in SA over the last 20 year period.

Construction lead the growth rate in SA when measured over the over last 20 years and over 10

years, 3 years and 1 year. It is only in the 5 year window to 30 March 2016 that Agriculture narrowly

out-performed Construction.

Innovative ways to sustain and drive observed growth and investment should be pursued.

6

Figure 2. Real SA National Industrial Sector growth for 1 January to 30 March 2016

Source: Stats SA

Figure 2 above shows GDP growth in various South African sectors by providing annualised2

seasonally adjusted data for final quarter of the 2015/16 financial year. The data indicate a quarter

with marginal growth in certain sectors while other sectors shrank in real terms over the 3 months.

The reasons for slowed growth are not analysed in depth here. Suffice to note that the entire SA

economy demonstrated declining growth since a peak of 3.7% in the 4th quarter of 2010/11 to a low

of -0.2% in the 4th Quarter of 2015/16. The overall growth rate achieved in the 2015 calendar year

was 1.2% (World Bank, 2016). Figure 3 shows certain global economic pressures and forecasts.

Figure 3. Global growth and commodity price forecasts (World Bank, 2016)

These data show that SA is not alone in experiencing slower growth in recent years. SA is however underperforming against our peer-group of emerging and developing economies.

2 A definition of annualised is provided at the start of this document. The author prefers Y/Y analysis .

7

Figure 4. Real SA Construction Industry GDP quarterly data (5 years)

Note: Y/Y denotes year-on-year; Q/Q denotes quarter-on-quarter

Figure 5. Real SA Business, Financial & Real Estate GDP - quarterly data (5 years)

These data show that SA is not alone in experiencing slower growth in recent years. SA is

however underperforming against our peer-group of emerging and developing economies.

Figure 4 above indicates that year-on-year (Y/Y) growth in the Construction sector ticked up to 2.6%

in the 4th quarter of 2015/16 (up from 1.6% in the 3rd quarter) after a sustained declining growth

trend that began in the 1st quarter of 2013/14.

1.6 2.6

1.40.5

20000

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quarterly GDP (const. 2010, Rm)

quarterly change Y/Y (const. 2010, %)

annualised seasonally adjusted change Q/Q. (const. 2010, %)

(GDP Rm)(%)

2.4 2.3

1.7 1.9125000130000135000140000145000150000155000160000

0

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quarterly GDP (const. 2010, Rm)

quarterly change Y/Y (const. 2010, %)

annualised seasonally adjusted change Q/Q (const. 2010, %)

(GDP (%)

8

Figure 5 above however indicates that the country’s largest economic sector, the Financial Services,

Business Services and Real Estate sector remained flat at 2.4%.

It remains to be seen whether South Africa will share in the World Bank’s projected growth for

Emerging and Developing economies of upwards of 3% from 2016 onwards (see Figure 3).

The SA Reserve Bank (SARB) revised the growth outlook for SA in 2016 to 0.0% in its latest Monetary

Policy Committee (MPC) statement on 21 July 2016 citing negative growth in the quarter to 30

March 2016 as a contributing reason for this outlook.

3.2. Real Western Cape GDP Data

This the Western Cape provincial economy and can be compared with SA data on page 5.

Figure 6. Real Western Cape GDP Growth by Sector to 30 March 2016 (various periods)

Source: Stats SA / WCG DEA&DP

Figure 7. Real Western Cape GDP by industry sector & Environmental and Planning Applications

9

Figure 6 above show that Construction (5.0%), Transports & Communications (5.0%), Financial

Services, Business Services & Real Estate (4.8%) and Wholesale and Retail Trade, Restaurants &

Hotels (4.1%) have shown the greatest average annual growth in the province over 20 years.

It is interesting to note the recent “spark line” up-tick in the data for Agriculture, Forestry & Fishing

and the provincial Mining sector as at the end of the quarter ended 30 March 2016.

The data above in Figure 7 show the only available Stats SA data on annual provincial GDP that has

been adapted to show quarterly applications data.

Recommended: DEA&DP should investigate whether they can access proprietary quarterly data on

economic sub-sectors from other provincial departments (e.g. Treasury) who may have this data.

Similarly necessary software for analysis and dissemination of the data should be investigated.

3.3. Western Cape Environmental and Development Applications

Not all data on all Development Applications within the province for 2015/16 was available for this

analysis as per the PP&DF resolution. The reason for this is as follows:

Prior to the new planning dispensation, before the promulgation of SPLUMA and LUPA , DEA&DP

had access to data about:

ALL provincial Environmental Applications because NEMA is administered by Provincial

Government; but

LIMITED Development Applications, because DEA&DP administered / processed only certain

applications and appeals pertaining to land use / development, in terms of various sets of

old order planning related legislation. A great number of Development Applications were

administered by Municipalities under previous “delegated authority”.

Following the National legislation (SPLUMA) promulgation on 1 July 2015 and the staggered

promulgation of the Western Cape legislation (LUPA), ALL municipal land use matters are now

191 166208

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Agriculture Mining Manufacture Utilities

Construction Trade Tpt & Coms. Fin & Bus.

Pers. Serv. Gov. Serv. Env. Ap. Rec. Plan. Ap. Rec.

applicationsannual GDP Rm

SPLUMA

10

administered by municipalities. Certain land matters use as per schedules 4 & 5 of the SA

Constitution are still considered to be a provincial and/or national mandate, in addition to

handling by the municipalities.

Thus, following 1 July 2015 the number of development applications received by DEA&DP fell to just

6 applications in the quarter ended 30 March 2016 because SPLUMA has devolved responsibility for

the administration of such applications to municipalities. While SPLUMA requires provincial

oversight, monitoring and support for municipalities in matters relating to the Act, it appears that

capability to acquire data for this purpose requires further development.

Recommended: DEA&D should put in place necessary information collection methods to enable

access to sufficient municipal data on planning applications to fulfil SPLUMA obligations in terms of

provincial support, monitoring and oversight of municipal land use planning functions.

11

Figure 8. Western Cape Environmental Applications (2011/12 to 2015/16)

A fall in the number of Environmental application received can be observed from 174 in 2014/15 Q2

to only 21 in 2014/15 Q4 (see Figure 8). Indications are that the fall in applications received allowed

the backlog to be reduced (as shown by the bracket).

Figure 9. Western Cape Environmental Amendment Applications (2011/12 to 2015/16)

Recommended: The NEAS-System Reporting should be developed (if feasible/possible) to show whether environmental applications have been approved or not. A parameter to show the type of application3 and one to show an estimated value of the application should also be developed (if feasible/possible).

Recommended: Suggest data show the number of applications pending or outstanding at any time.

3 Application types may include a Basic Analysis (BA), Environmental Impact Assessment (EIA) and Other type(s).

159 141 144173 191

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backlog reduced

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2011-12 2012-13 2013-14 2014-15 2015-16

Amendment Appli.: Received Amendment Appli.: Finalised

12

Figure 10. Western Cape Planning Applications (2011/12 to 2015/16)

*incl. Appeals (regarded as non-applications)

Figure 10 above clearly shows the effect of the new planning dispensation (SPLUMA and LUPA) on

the planning applications received by DEA&DP. It is interesting to note the rise in the number of

applications from the start of 2011/12 (47) to peak of 175 at the start of 2013/14. This is followed by

a decline in the number of planning applications received with a small peak just before SPLUMA and

LUPA were implemented.

Figure 11. Western Cape Planning “non-Applications” (2011/12 to 2015/16)

The strong correlation between “non-Apps” received and finalised can be observed from the data in

Figure 11 above suggesting that this has been an area of administrative strength.

Recommended: Definitions of the types of applications and non-applications required.

4747

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SPLUMA

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13

Recommended: Appeals data should be separated from initial applications data (if warranted /

feasible / useful).

Recommended: Suggest data show the number of non-applications pending or outstanding at any

time.

4. Results discussion

The effect of the promulgation of SPLUMA on 1 July 2015 is apparent in data from the number of

applications received by DEA&DP in the 5 years to 30 March 2016. A current challenge exists to

ensure data from municipalities is now collected in a coherent and well data-governed way that

brings value to all sectors including policy makers and other decision takers.

Figure 12 below shows year-on-year (Y/Y) growth in the South African Construction sector as

columns. There appears to be some correlation between this growth (columns) and the provincial

planning applications received (red dotted line).

Figure 12. Real Construction Sector Growth (Y/Y) and Development Applications

5.4

2.6

159141 144

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Construction - quarterly change Y/Y (const. 2010, %)

Env. Applic.'s: Rec'vd

Plan. App's Received

Construction sector growth (%)

Applicatonsreceived (n)

14

Figure 13. JSE growth (Q/Q) and Western Cape Applications

Similarly to the analysis in Figure 12 relating to Construction sector growth, Figure 13 above

indicates some correlation between the JSE quarterly growth (Q/Q) and planning

applications received by the Western Cape Government.

Figure 14. JSE growth (Y/Y) and Western Cape Applications

There also appears to be some correlation in the JSE’s quarterly observed year-on-year

growth during the observed 5 year period from 2011/12 Q1 to 2015/16 Q4.

0

47 47

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growth (Q/Q) growth (Y/Y) Plan. Ap. Rec.

15

5. Conclusion and Recommendations

The body of text in this document provides several recommendations for consideration. These

recommendations collectively suggest that the following broad areas of action could be of value

Provincial government should continue to work to develop relationships with municipalities

so that they might regularly obtain applications data in a desired format from municipalities

for the necessary provincial functions of support, monitoring and oversight.

The format for data to be obtained from municipalities together with necessary definitions

require collaborative development with provincial municipalities.

Further useful datasets and necessary tools for quarterly analyses should be considered and

acquired if possible so that good information can assist evidence-based decisions as

necessary at all levels.

Ways to obtain the data and information needs of individual municipalities and other

stakeholder groups relating to development applications should by explored and developed

so that development is informed by the needs of information users and stakeholders.

This document provides an initial analysis on Provincial applications and Western Cape

Economic Trends and should form a basis for further Research and Development in this area,

if warranted.

The PP&DF recommendation that this brief analysis should be undertaken is to be commended. It

will certainly lead to a greater focus on the systems, tools, data and information required to

understand economic trends and their relationship to Development Planning within the Western

Cape Province.

END

16

References

SARB. 2016. South African Reserve Bank. Press Statement of the Monetary Policy Committee. 21 July

2016

Stats SA (undated). Statistics South Africa. Measuring South Africa’s Economic Growth. By Gerhard

Bouwer GerhardB@statssa.gov.za

Stats SA (2016). Statistics South Africa. Quarterly GDP data for South Africa. World Bank. 2016. Data extract on GDP by Country form the World Development Indicators: http://databank.worldbank.org/data/reports.aspx?source=2&series=NY.GDP.MKTP.KD.ZG&country=# World Bank. 2016. Global Economic Prospects - Divergences and Risks. June 2016. Page 5 or .pdf p23. Graphs.

Appendix 1. Other known data sources to consider

The following non-exhaustive list of data sets emerged during this analysis as potential sources of

information for future analysis.

National Treasury (data on the economy e.g. IHS-Global Insight and Quantec)

Provincial Treasury (data on the economy e.g. IHS-Global Insight and Quantec)

Insolvency data (for constructions / generally)

Employment data (SA and Construction)

UK (Drivers Jonas Crane Survey (structure / format / messages)

SARB Construction Contractors Value Add

Value of Building Plans passed (Stats SA)

WCG GIS mapping of all applications received

17

Appendix 2. Data Table of Environmental and Planning Applications.

18

CONTACT

For information enquiries please contact:

Helena Jacobs, DPIM&R Director: Helena.Jacobs@westerncape.gov.za

Riette Fourie, DPIM&R Chief Town and Regional Planner: Riette.Fourie@westerncape.gov.za

Julien Rumbelow, DPIM&R Innovation Economist: Julien.Rumbelow@westerncape.gov.za

ENDS