ANNEXURE J.7 GROWTH AND DEVELOPMENT STRATEGY

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GDS 2012/13

ANNEXURE J.
7


















GROWTH AND
DEVELOPMENT
STRATEGY



SECTION 4


MERAFONG CITY

LOCAL
MUNICIPALITY





1


GDS 2012/13






Introduction

(section 1)





Thi s document has as i ts purpose the anal ysis of the soci o
-
economi c status quo i n Merafong Ci ty.
Urban
-
Econ:
Development Economists

are i n the process of studyi ng the Merafong Ci ty economy, i n order to gai n i nsi ght
i nto the i mportant factors underl yi ng the

economi c si tuati on and to i denti fy the most appropri ate and
effecti ve strategi es for growth and devel opment.


The document i ncl udes an anal ysis of soci al and economi c trends, the rel evant pol i cy di recti ves from di stri ct
and provi nci al government l evel, an
d the i mpl i cati ons of these for the future growth and devel opment of
Merafong Ci ty.


The document i s i n a user
-
fri endl y format, and i s meant to sti mul ate debate and di scussion about growth and
devel opment potenti al i n Merafong Ci ty.


Each page represents a

di fferent devel opment theme wi th di fferentl y col oured “theme bl ocks”. The pi nk
bl ocks contai n i nformati on on recent trends i n the sector, the yel l ow bl ocks di scuss provi ncial and di strict l evel
pol i cy di recti ves and the bl ue bl ocks i ndi cate the i mpl i cati
ons of these trends and pol i ci es for the Growth and
Devel opment Strategy of Merafong Ci ty.



Development Themes




Demographi c and soci o
-
economi c trends



Spati al factors



Economi c performance



Sectoral structure and performance



Agri cul ture



Mi ni ng



Manufacturi ng



Uti l i ti es (El ectri city and water)



Constructi on



Trade



Transport and communi cati ons



Fi nance and busi ness servi ces



Communi ty and personal servi ces



Government servi ces



Summary of empl oyment trends



Infrastructure and access to servi ces



Water provi si on



Housi ng


2


GDS 2012/13



Demographic & Socio
-
economic trends


Source:

Quantec

Research



Source:

Quantec

Research


Demographic Trends

1)

Current popul ati on esti mated at 287,607 i n I DP
of 2007/08.

2)

As measured i n 2001, Merafong popul ati on
profi l e i s mal e
-
domi nated, mai nl y
due to i n
-
mi grati on of mal e workers i n mi ni ng i ndustry.
(Mal e: 57%, Femal e: 43%) However, femal e
popul ati on was exhi bi ti ng hi gher growth rate.

3)

I f trends observed between 1996 and 2001 were
assumed to persi st between 2001 and 2007,
Merafong woul d have a muc
h more bal anced
gender di stri buti on i n 2007.



4)

I n 2001, l argest proporti on of popul ati on
(75%) was between the ages 15
-
64 years,
whi ch represents the economi cal l y active
popul ati on. Esti mate for 2007 i ndi cate a
sl i ght decrease to 73%.

5)

Thi s i ndi cates a sl i
ghtl y l arger % of the
popul ati on i s dependent on others for thei r
l i vel i hood.

6)

Hi gh and cl i mbi ng HI V i nfecti on rate (Number
of i nfected 2004:
35,085
. Esti mate for 2007:
42,105
)
(Source: Quantec Research & Urban
-
Econ calculations)

7)

Annual AI DS rel ated deaths:

2,235

i n 2004
(Esti mate for 2007 i s
2,950
)
(Source: Quantec
Research & Urban
-
Econ calculations)
.


-60000
-20000
20000
60000
0 - 4
5 - 14
15 - 34
35 - 64
65+
Merafong Age & gender profile, 2001

Female
Male
0
10000
20000
30000
00 - 04 yrs
10 - 14 yrs
20 - 24 yrs
30 - 34 yrs
40 - 44 yrs
50 - 54 yrs
60 - 64 yrs
70 - 74 yrs
80 - 84 yrs
Merafong Age profile

2001
3


GDS 2012/13





Source:

Quantec

Research

and

Urban
-
Econ

calculations


Source:

Quantec

Research


Socio
-
E
conomic Trends

1)

Esti mated educati on profi l e for 2007:

a.

11% of population of Merafong has no
schooling, compared to
9
% in
Gauteng

and 16% in RSA
(Source: Quantec
Research & Urban
-
Econ calculations).

b.

20% of Merafong’s popul ati on has
compl eted Grade 12, compared to 2
8
%
in
Gauteng

and 27% in RSA
(Source:
Quantec
Research & Urban
-
Econ
calculations)
.

Household income

1)

Accordi ng to Census 2001, al most 70% of the
popul ati on of Merafong Ci ty had a househol d
i ncome of R3,200 or l ess.

2)

The Average Wei ghted I ncome (AWI ) as
measured i n 2001 was as fol l ows:


South Afri ca

Gauteng

Merafong

R5,443

R5,015

R4,004

Source: Quantec and Urban
-
Econ cal cul ati ons


3)

Assumi ng that the % di stri buti on of househol ds
by i ncome category remai n constant between
2001 and 2007, the esti mated AWI * of Merafong
i n 2
007 i s R4,809, compared to
R6,019

i n
Gauteng

(Source: Quantec Research & Urban
-
Econ calculations)
.

*
AWI is the average income of households,
taking into account the distribution of
households across income categories.

Gauteng GDS

1)

Soci o
-
Economi c Devel opment

a.

Integrated Development

b.

Sustai nabl e Devel opment

c.

Holistic, participatory planning

2)

Provi de Economi c Growth

3)

Reducti on i n Poverty

4)

Job creati on, and

5)

I mprovi ng soci al service del i very targets


West Rand GDS

1)

Bui l di ng capacity and ski lls i n the di stri ct
through cooperati on wi th
provi nci al &
nati onal government and fundi ng SMME
-
trai ni ng.

2)

Expandi ng publ i c i nfrastructure i nvestment
throughout the di stri ct.

3)

I mprove the qual i ty of educati on throughout
the di stri ct, and i ncreasing the number of
terti ary i nsti tuti ons.


Household Incom
e Levels, 2007


Source:

Quantec

Research

and

Urban
-
Econ

calculations

Spatial factors

Map source: Southern District Municipality Growth and Development Strategy Review 2007

Location and accessibility

1)

Merafong Ci ty i s located within the West Rand
District
Muni cipality i n the Gauteng province.

2)

It i s situated about 65km from Johannesburg and i s
bordered by the North West province on its western side.

3)

The area is serviced by a number of major roads of which
the most important is the N12 from
Johannesburg to
Cape Town.

4)

The N12 has been identified as an important
development corridor (Treasure Corri dor).

5)

Other i mportant roads are the N14 (the main road
between Gauteng and Mafikeng vi a Ventersdorp), the
P61/1 between the N14, Carletonville and Fo
chville, and
the R501 between Potchefstroom and Carletonville.

6)

Merafong’s access to major roads l inking up with
Gauteng’s provincial cities (Johannesburg, Tshwane, etc.)
has positive implications for the region’s access to the
Gauteng economic market.

7)

Thi s

accessibility i s a comparative advantage that should
be exploited in order to maximise development and
growth.


Gauteng

Spatial
O
bjectives

1)

There must be a balance between spatial equity and
effi ciency
.

2)

Recognise that different parts of the province and
di fferent sectors of our community may require different
soci al security responses
.

Source:
Gauteng

GDS


West Rand

Spatial
O
bjectives

The following development zones have been highlighted
:

1)

Urban Growth Zone



major urban development focus
.

2)

Peripheral
Interfaces



are i ntended to control urban
sprawl and contain growth within urban areas

3)

Mi ni ng Corri dor


Include municipalities of Randfontein,
Westonaria and Merafong
.

Potential for SMME in mining
i ndustry to develop and expand

4)

Urban densification infill

and i ntegration between
Khutsong & Carl etonville.

5)

Merafong Ci ty forms part of Agri cultural Dev. Zone.

6)

R28 wi l l be main north
-
south linkage while radial routes
emanating outward from central Gauteng as main east
-
west linkages (N14, N12, N17 etc.)

7)

Hi gh conc
entration of linkages i n urban areas, low
density, higher order linkages with prime opportunity
zones to support and strengthen development in the
regi on
.

Source:
West Rand

District GDS

No
schooling

11%

Some
pri mary

25%

Compl ete
pri mary

9%

Some
secondary

33%

Std
10/Grade
12

20%

Hi gher

2%

Education profile 2007, Merafong

-
20,000
40,000
60,000
1995
1998
2001
2004
2007
Merafong City LM

HIV positive
AIDS deaths
0.0%
10.0%
20.0%
30.0%
40.0%
R 1 - R 7,263
R 7,264 - R 14,526
R 14,527 - R 29,052
R 29,053 - R 58,103
R 58,104 - R 116,207
R 116,208 - R 232,414
R 232,415 - R 464,827
R 464,828 - R 929,654
R 929,655 - R 1,859,308
R1,859,308 and more
11.0%

4.7%

14.5%

36.8%

19.5%

7.6%

3.5%

1.6%

0.6%

0.4%

4


GDS 2012/13

Economic performance


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Trends

1)

Economi c growth rate of
Merafong i n general l ower
than the growth rate of South
Afri ca and
Gauteng

Provi nce.

2)

Merafong Ci ty
has been
harder hi t due to the
conti nuous decl i ne and
dependence on the mi ni ng
sector
.

3)

After a sl i ght recovery
b
etween 2006 and 2007 the
economi c cri sis has caused
more negati ve growth i n al l of
the regi ons.

4)

The need to di versi fy
Merafong’s economy i s of
paramount i mportance.



Gauteng

PGDS


General guidelines for growth & investment

SMME Support

1)

Provi de both
fi nanci al and non
-
fi nancial support i n order to:

o

Appropri ate fi nance,

o

Trai ni ng and capaci ty bui lding, and

o

Coachi ng and mentori ng.

Training & skills

1)

I denti fi cati on of ski l ls gaps

2)

I nvestment i n SMME’s, i nformati on technol ogy ski l ls, vocati onal
trai ni ng

Growth and Transforming the Economy

1)

Focus on growth sectors and cl usters usi ng sel ected cri teri a for
i nvestment growth. The fol l owi ng sectors were i denti fi ed:

a.

Smart I ndus tri es (i ncl uding I CT, Pharmaceuti cals )

b.

Trade and Servi ces (i ncl udi ng fi nance and fi l m)

c.

Touri sm

d.

Agri cul ture (agri
-
processing and bi otech)

e.

Manufacturing (steel, automotive parts, beer and malt)

f.

Infrastructure expansi on and i nvestment


Gauteng

PGDS

Gauteng has i denti fi ed 5 strategi c
objecti ves
.

1)

Provi si on of SE i nfrastructure and
servi ces.

2)

Accel erated l abour absorbing
growth over the l ong term.

3)

Sustai nabl e devel opment.

4)

Enhanced government effi ci ency
and cooperati ve governance
.

5)

Deepeni ng parti ci patory
democracy, provi nci al and
nati onal uni ty and ci ti zenshi p.


Implications for Merafong City
GDS

1)

GDS must focus on bri ngi ng margi nal ised communi ti es i nto economi c mai nstream

2)

Del i berate di versi fi cation of the economi c base

3)

I ndustri es targeted by PGDS i ncl. Food processi ng, agro
-
processing, mi ni ng & mi neral benefi ci ati on,
manufacturi ng, touri sm & cu
l tural i ndustr
ies.

4)

Transversal obj ecti ves: SMME devel opment, ski l l s devel opment and touri sm

5)

Preparati on of busi ness pl ans/project l i sts to appl y for fundi n
g from
Provi nci al Government

6)

Proj ects shoul d be chosen accordi ng to devel opment potenti al as i denti f
i ed i n l ocal SDF

and LED

7)

Strengtheni ng and concentrati on of devel opments al ong N12

8)

I denti fi cati on of avai lable l and and i nfrastructure to accommodate devel opment al ong the corri dor

9)

Identify infrastructural backlog that should be addressed

-8%
-4%
0%
4%
8%
GVA Growth (constant prices)

South Africa
Gauteng
West Rand DM
Merafong City LM
5


GDS 2012/13


Sectoral
S
tructure &
P
erformance


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Trends

1)

The economy of
Merafong Ci ty i s sti l l
domi nated by the
mi ni ng sector, whi ch
contri buted 3
5
% to G
VA

in 200
8
.

2)

Al though the mi ni ng
sector i s sti l l domi nant
i n the economy of
Merafong Ci ty, there
has been a decl i ne i n
both producti on and the
contri buti on of the
mi ni ng sector to the
GGP of Merafong over
the past decade.

3)

Thi s trend poi nts to
need for di versi fi cation.

4)

I ndustri es that
experi enced a strong
i ncrease i n producti on
are Trade and Fi nance &
Busi ness servi ces.

5)

The Trade and Fi nance
& Busi ness servi ces
sectors are al so
i mportant contri butors
to the GGP of Merafong,
and exhi bi t an upward
trend i n % contri buti on.


6)

Thi s upward trend may
have posi ti ve
i mpl i cations for the
di versi fi cation of the
l ocal economy.

7)

Other sectors that make
a meani ngful
contri buti on are
Manufacturi ng and
Government servi ces.

8)

The construction sector
also exhibited an
increase in production,
which is set to continue
in the near future.



Implications for Merafong City GDS

1)

I denti fi cati on of areas/sectors wi th devel opment potenti al or
comparati ve advantage.

2)

GDS shoul d have as i ts focus the creati on of an enabl i ng envi ronment,
i nvestment i n
physi cal i nfrastructure and techni cal support
structures.

3)

I denti fi cati on of ski l ls gaps and strategi es for ski l ls devel opment
i ni ti ati ves.

4)

Devel opment of SMME’s, l i nki ng of rel ated SMME proj ects to create
economi es of scal e, e.g. fl ori cul ture & cut fol i age

proj ects.

5)

Other focus areas: Agro
-
processing, mineral beneficiation.


Source:

Quantec

Research

and

Urban
-
Econ

calculations

-
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
R million

Merafong City Sectoral Production (Rand)

2000
2005
0%
10%
20%
30%
40%
50%
60%
Merafong City Sectoral Production (%)

2000
2005
6


GDS 2012/13

Agriculture


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)

Gauteng

PGDS

and SDF

Focus should fall on:

1)

Greater access to markets for
emergi ng farmers.

2)

Fi nanci ng agri cultural
i nfrastructure, machi nery,
technol ogy & ski l l s (especi ally
i n agro
-
progressi ng)

3)

Beneficiation of agricultural
products, e.g. agro
-
processing,
is identified as an important
area of oppor
tunity.


West Rand

GDS

1)

Agri cul ture programmes
shoul d ai m for l abour i ntensi ve
proj ects and uti l i se the l ow
ski l led workforce.

2)

Agro
-
processi ng i ndustri es and
acti vi ti es to enhance the val ue
chai n.

3)

Agro
-
based touri sm i ni ti ati ves
to capi tal ise on thi s growi ng

market.

4)

Merafong Ci ty forms part of
Agri cul tural Devel opment
Zone, contai ni ng hi gh potenti al
agri cul tural areas.



Trends

1)

Decreasi ng producti vi ty i n the agri c
ul tural sector over past
decade. There was however a sharp i ncrease i n producti vi ty
over the
l ast year.

2)

The
decreasi ng trend i n empl oyment i n agri cul tural sector

i s
hamperi ng the expansi on of the sector
.

3)

However, Merafong contai ns hi gh potenti al agri cultural
areas wi th potenti al for more i ntensi ve agri cul tural
producti on (e.g. areas adj acent to do
l omi te aqui fers)

4)

Need for i ncreased producti vi ty, crop di versi fication and
val ue addi ng acti vi ti es (e.g. agro
-
processi ng).

Most
agri cul tural activiti es are l abour i ntensive and shoul d be
i nvested i n to address the empl oyment rate.


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for Merafong City
GDS

1)

Li nki ng current agri cul ture
-
rel ated proj ects, e.g. cut fol i age
and fl ori cul ture proj ects, to
create economi es of scal e.

2)

I nvesti gati on of val ue
-
addi ng
agri cul tural activiti es, e.g. agr
o
-
processi ng.

3)

I nvesti gati ng the uti l i sation of
dol omi te aqui fers for i rri gation
purposes.

4)

Expansi on of exi sti ng agri cul tural
acti vi ti es and support to
emergi ng farmers.

5)

Establ i shment of a farmer’s
forum wi l l benefi t the growth
and producti vi ty i n the secto
r.



-
10
20
30
40
50
60
70
80
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Agriculture

3800
4000
4200
4400
4600
4800
5000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in Agriculture

7


GDS 2012/13

Mining


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)

Gauteng

PGDS

1)

Cooperation with Dept. of
Mi ni ng of Energy

2)

Identify & fi nance beneficiation
opportunities

3)

Preferential procurement to
promote BEE

4)

Intensive

and sustainable

job
creati on

5)

Mi ni ng houses must do more
wi th regard to their SLP’s to
obtain and retain their mining
l i cences.


West Rand

GDS

and LED

1)

Coordi nating body comprising of
l ocal government and mines to
be established to minimi
s
e
potential mine closure impact.

2)

B
eneficiation
of mining
products
.

3)

Redundant mining
i nfrastructure as well as existing
s oci al and engineering
i nfrastructure that can be re
-
uti l ised for other purposes. This
i ncl udes:

a.

Vacant or unused land
wi th service i nfrastructure
(Ol d Stilfontein Mi ne)

b.

Social infrastructure
(health facilities, sports
facilities and housing
stock)

c.

Potential recreational or
touri sm infrastructure,
e.g. Bl yvooruitsig.



Trends

1)

The economy of Merafong Ci ty i s sti l l domi nated by the mi ni ng
sector, whi ch contri buted 35% to GGP i n 2008.

2)

Al though there has been a decl i ne i n both producti on and
empl oyment i n Merafong’s mi ni ng i ndustry over the past decade, the
recent surge i n gol d pr
i ces has l ed to a turn
-
around i n the profi tabi l ity
of the mi ni ng sector i n Merafong Ci ty. (See
Recent Trends in the
Mining Sector,
fol l owi ng page)

3)

However, the dependency of thi s sector on i nternati onal pri ces and
exchange rates poi nts to a need for econom
i c di versi fi cati on.

4)

Economi c di versi ficati on i s of paramount i mportance to reduce the
rel i ance of the l ocal economy on the mi ni ng sector.


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for Merafong
City GDS

1)

I mportance of cooperati on

wi th mi ni ng i ndustry i n j ob
creati on i ni ti atives.

2)

I nvesti gati on of mi neral
benefi ci ati on acti vi ties.

3)

Detai l ed i nvesti gati on of
future of mi ni ng i ndustry i n
the area.


-
500
1,000
1,500
2,000
2,500
3,000
3,500
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Mining

0
20000
40000
60000
80000
100000
120000
140000
160000
180000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in Mining

8


GDS 2012/13


Recent Trends in the Mining Sector


Gold Price
2000



20
10

(US$ per ounce)


Source:

www.goldprice.com/www.kitco.com


A turn
-
around in the local mining sector

1)

Over the ten
-
year peri od from 1996 to 2005 the gol d mi ni ng i ndustry i n South Afri ca experi enced a
decl i ne, mai nl y due to a decl i ne i n i nternati onal gol d pri ces. Most of the worl d’s economi es (Chi na bei ng a
notabl e excepti on) experi enced subdued growth i n
2001 and 2002, causi ng a decl i ne i n demand for
commodi ti es. South Afri ca’s gol d producti on decreased, l argel y as a resul t of cl osure, suspensi on or
scal ing down of shafts due to hi gher costs, the strong rand and i ndustri al action.


2)

However, the Uni ted St
ates and, to a l esser extent, the rest of the worl d entered a peri od of stronger
economi c growth i n 2003 and 2004, l eadi ng to an i ncreased demand for commodi ti es. Thi s demand,
together wi th the sustai ned and i ncreasi ng demand by emergi ng economi es such as

Chi na, has
subsequentl y l ed to a sharp i ncrease i n commodi ty pri ces, i ncl udi ng gol d pri ces (Dept. of Mi neral s and
Energy, 2006). The i ncrease i n demand and pri ces has conti nued
from

2005

and i s sti l l i ncreasing i n 2010
.


3)

The substanti al i ncrease i n gol d
and pl ati num pri ces l ed to a l arge i ncrease i n South Afri ca sal es revenue,
and al so had posi ti ve i mpl i cati ons for the profi tabi li ty of South Afri can gol d mi nes. Whi l e gol d mi nes i n
Merafong Ci ty were faci ng downscal ing and cl osure before 2005, the outl ook

and prospects for the mi ni ng
i ndustry has si nce i mproved suffi ci entl y to cause a turn
-
around i n the profi tabi lity of the mi nes and an
expansi on of mi ni ng acti vi ti es.


The current acti vi ti es and outl ook for the gol d mi nes operati onal i n Merafong Ci ty are
as fol l ows:


9


GDS 2012/13

Anglogold Ashanti (Pty) Ltd



Mponeng mi ne

o

Est. producti on for 2007: 588,000 oz

o

Currentl y empl oyi ng 6001 empl oyees

o

Reserves: 10.1 mi l l ion oz

o

Currentl y onl y mi ni ng the Ventersdorp
Contact Reef (VCR). There are al so
opportuni ti es to expl oi t the
Carbon
Loader Reef (CLR).

o

Prospects: Capi tal project


The access of
mi neral s bel ow 120 l evel (VCR), expected
to add 2.5 mi l l i on ounces i n producti on
and extendi ng the l i fe of the mi ne by 8
years to
2024
.

o

The Carbon Loader Reef (CLR) bel ow 120
l evel Proj ec
t


Expected to add 6.8
million ounces to production and extend
the life of the mine to
2040
.

o

CLR sl i ghtl y hi gher gol d val ue than VCR.



Savuka mi ne

o

Esti mated producti on for 2007: 71,000
oz

o

Currentl y empl oyi ng 1107 empl oyees

o

Reserves: 0.68 mi l l ion oz

o

Deepest

mi ne i n the worl d

o

Was pl anned for cl osure i n Apri l 2006.
Due to “ri ght
-
si zi ng” and shared
management servi ces i t conti nues to be
profi tabl e.

o

In the process of expl orati on dri l ling


There are vast resources on the west
CLR.

o

Proj ected l i feti me of mi ne:
201
7



Tautona mi ne

o

Reserves (est. 2005):

o

Proved: 10.5t; Probabl e: 153.5t

o

Proj ected l i feti me of mi ne:
2027


DRD Gold South Africa Operations (Pty) Ltd




Bl yvoorui tzi cht mi ne

o

2007 producti on: 4973 kg Gol d
Recovered

o

Currentl y empl oyi ng 4124 empl oyees

o

Proj ected l i feti me of mi ne:
2037

o

Two mai n gol d
-
beari ng hori zons: CLR
and Mi ddel vl ei Reef

o

Prospects: Bl yvoor Expansi on Proj ect
wi l l i ncrease the mi ne’s l i fe by more
than 15 years


Goldfields Ltd




Dri efontei n mi ne

o

Reserves 2006: 22,616,000 oz or 94.5
Mt

o

Underground production expected to
reach peak in 2009, before decreasing
from 2013 onwards

o

Above infrastructure reserves depleted
in
2025
, bel ow i nfrastructure depl eted
2035

o

Gol d produced wi l l peak i n 2010.

o

Currentl y empl oyi ng 15,500

o

Empl oyment wi l l remai n

fai rly constant
for the next 5 years, after whi ch i t wi l l
decrease al ong wi th producti on.


Harmony Gold Mining Company Ltd




El andskraal mi ne

o

Proj ected l i feti me of mi ne:
2027

o

Producti on to i ncrease unti l 2011, whi ch
wi l l be sustai ned unti l l 2023, after
whi ch
i t wi l l start to decrease.


Concluding remarks on the Mining Sector

I t i s thus cl ear that the mi ni ng sector i n Merafong Ci ty has entered a peri od of i mproved profi tabi lity, further
expl orati on and i ncreased l i fe expectancy of the mi nes. The mi ni ng
sector wi l l conti nue to pl ay an extremel y
i mportant rol e i n the economy of Merafong Ci ty for many years to come.


I t i s of vi tal i mportance that the mi ni ng i ndustry, as the l argest economi c agent and source of pri vate capi tal i n
Merafong Ci ty, be i nvol ved
i n i ni ti ati ves to promote economi c growth and di versi fi cation i n the area.







10


GDS 2012/13

Manufacturing


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)

Gauteng

PGDS

and LED

1)

Promoti on of manufacturi ng
acti vi ti es
within identified nodal
& spatial

development areas
.

2)

Strong SMME focus

3)

Focus areas: benefi ci ati on,
agro
-
i ndustry.

4)

Carl etonvi l l e urban area
i denti fi ed as area wi th potenti al
to di versi fy i nto manufacturi ng
sector due to i ts strong
rel ati onshi p to the mi ni ng
sector.


West Rand GDS and LED

1)

Carl etonvi l l e urban area
i denti fi ed as area wi th potenti al
to di versi fy i nto manufacturi ng
sector due to i ts strong
rel ati onshi p to the mi ni ng
sector.

2)

I ncrease cl uster devel opment
to take advantage of
economi es of scal e and
geographi cal advantages

3)

Manufact
uri ng Devel opment
Programme


I n cooperati on
wi th I DC, DTI and pri vate
sector. Acti vi ti es to be
consi dered: Agro
-
processi ng,
metal works, chemi cal s,
pharmaceuti cal s, j ewel l ery,
transport equi pment.

4)

Expl ore manufacturi ng
opportuni ti es i n ni che markets
(orga
ni c food suppl ements,
downstream processi ng, etc.)



Trends

1)

The decl i ne over the l ast two years can be ascri bed to the
economi c and manufacturi ng recessi on South Afri ca faced.

2)

4
th

Quarter GDP (2009) resul ts show a drasti c turnaround for
the manufacturi ng sector whi ch contri buted 1.5% of the 3.2%
growth duri ng that speci fi c quarter.

3)

The manufacturi ng sector has

si gni fi cant % contri buti on to the
G
VA

of Merafong City (11%).

4)

However, u
pward trend i n producti on was not accompani ed
by si mi l ar trend i n empl oyment.

5)

As a resul t of the downturn i n the economy, the e
mpl oyment
i n manufacturi ng has general l y decl i ned

over the same peri od

and accounts for 6% of total formal empl oyment.

6)

The above
trends i mpl y a need for more l abour
-
i ntensive
manufacturi ng i ndustri es.


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for Merafong City
GDS

1)

Focus shoul d fal l on more
l abour
-
i ntensi ve manufacturi ng
acti vi ti es.

2)

Cross
-
sectoral
cooperati on wi th
agri cul tural and mi ni ng sector.

3)

Targeted i ndustri es: agro
-
processi ng, mi neral
benefi ci ati on and j ewel l ery
producti on.

4)

Focus on SMME’s


-
50
100
150
200
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Manufacturing

12500
13000
13500
14000
14500
15000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in Manufacturing

11


GDS 2012/13


Utilities (Electricity & water)


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)



Gauteng
PGDS

1)

I ncreased spendi ng on
publ i c i nfrastructure

2)

Reduce the current
backl og of basi c
servi ces throughout
the Provi nce.


Source:

Quantec

Research

and

Urban
-
Econ

calculations

Trends

1)

Decrease i n
producti on duri ng the
l ast 5 years.

2)

However,
empl oyment
i n thi s sector has
i ncreased si nce 2004.

3)

Sectoral contri buti on
to GGP of Merafong i s
about 1.3%.

4)

Not a si gni ficant
contri butor to GGP or
empl oyment i n
Merafong.

5)

However, sector pl ays
an i mportant rol e i n
ensuri ng access to
basi c servi ces for
al l.




-
5
10
15
20
25
30
35
40
45
50
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Electricity/water

480
500
520
540
560
580
600
620
640
660
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in Utilities

12


GDS 2012/13




Construction


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)


Gauteng

PGDS

and LED


1)

I denti fy cri ti cal challenges
faci ng the constructi on and
i nfrastructure sector.

2)

Al i gnment of empowerment
portfol i o i nstruments, e.g.
Broad
Based BEE, Contractor
Devel opment Programmes, and
Expanded Publ i c Works
Programme etc.

3)

Focus fal l s on:

a.

Public sector procurement
to promote BEE

b.

Improved access to roads,
rai l & ai r networks.

c.

Coordination of
infrastructure
implementation across
spheres of g
overnment.

.


Trends

1)

The constructi on sector has exhi bi ted an i ncrease i n
producti on, a trend whi ch i s set to conti nue i n the near future.

2)

Contri buti on to GGP of Merafong was 3% i n 2008
.

3)

Accounts for 2% of empl oyment i n the formal sector.

4)

Empl oyment i n
thi s sector has exhi bi ted an upward trend
si nce 2004.

5)

I nfrastructure and housi ng backl og wi l l have si gnificant future
i mpact on thi s sector
, as wi l l the conti nued townshi p
upgradi ng and expanded publ i c works programmes
.


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for Merafong City GDS

1)

Constructi on sector wi l l pl ay huge
rol e i n i nfrastructure and housi ng
provi si on.

2)

Resettl ement of Khutsong wi l l have
a si gni fi cant i mpact on the sector.

3)

I mportant rol e for publ i c sector
procurement

and publ i c works
programmes i n j ob creati on.

4)

Al i gnment of i nfrastructure
i mpl ementati on across government
spheres.

5)

Focus on the capaci ty and uti l i sation
of l ocal BEE and SMME contractors
for i nfrastructure and publ i c works
programmes i n the muni ci pal ity.


-
20
40
60
80
100
120
140
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Construction

0
1000
2000
3000
4000
5000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in Construction

13


GDS 2012/13

Trade


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)


Gauteng

PGDS

and LED


1)

I ni ti ati ves i n trade sector shoul d
be i ntegrated wi th i ni ti ati ves i n
the manufacturi ng sector, i.e.
agro
-
i ndustry, mi neral
benefi ci ati on.

2)

Focus on SMME’s

and assisting
them wi th busi ness management
ski l ls.


West Rand

GDS

and LED


1)

Fi l l the gaps i n the regi onal retai l
hi erarchy
. Provi de shoppi ng
faci l iti es to fi l l these gaps that are
sti l l experi enced.

2)

Fresh produce markets. A l ocal
fresh produce market
woul d act
as a l ocal off
-
set poi nt for
agri cul tural goods, thus reduci ng
overhead costs to l ocal farmers.

3)

Th
ese

initiative
s

could have a
significant impact on the potential
and competitiveness of the trade
sector.


Trends

1)

Experi enced a steady i ncrease i n
producti on si nce 1995.

2)

Sectoral contri buti on to GGP of Merafong i ncreased from 1
0
% i n
2000 to 1
5
% i n 200
8
.

3)

Has al so exhi bi ted steady i ncrease i n empl oyment
, underl i ni ng
the i mportance of the trade sector as a gateway to j ob creati on
i n Merafong
.

4)

Accounts f
or
between
14

and
15% of formal empl oyment

i n
Merafong
.

5)

Upward trend i n producti on and empl oyment coul d have
posi ti ve i mpl i cati ons for the di versi fi cation of the l ocal economy.



Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for
Merafong City
GDS

1)

I mportance of cross
-
sectoral
cooperati on wi th agri cul tural,
mi ni ng and manufacturi ng
sectors.

2)

I mpact of prov
i nci al and di stri ct
i ni ti ati ves
.

3)

Focus on SMME devel opment

and
enhanci ng busi ness ski lls
.

4)

Competi ti ve advantage due to
proxi mi ty and accessi bility of
other
Gauteng markets.





-
100
200
300
400
500
600
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Trade

0
10000
20000
30000
40000
50000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in Trade

14


GDS 2012/13


Transport &
C
ommunications


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)

Gauteng

PGDS

and LED


1)

Transport and communi cati ons
sector seen as
cruci al for
unl ocki ng devel opment
potenti al of the provi nce.

2)

Focus fal l s on i mprovement of
communi cati on and transport
l i nks al ong i denti fi ed
devel opment corri dors and
between core areas/nodes.

3)

Speci al focus on devel opment
corri dors that l i nk up wi th

other

Gauteng

ci ti es
.

4)

Rel evance for Merafong Ci ty:
Treasure Corri dor al ong N12

connecti ng North West Provi nce
wi th Gauteng
.


West Rand

GDS

and LED


1)

Improvement of existing
infrastructure
.

Wi th ai m of
i ncreasi ng accessibility i n the
regi on.

2)

Transportation corridor
development
wi th surroundi ng
areas and economi es of
i mportance.



Trends

1)

No si gni ficant i ncrease i n producti on.

2)

Contri buti on to G
VA

of Merafong has
increased to 9% in 2008.

3)

Accounts for about 1
.3
% of formal sector employment

in
Merafong
.

4)

Empl oyment i n thi s sector exhi bi ted decl i ni ng trend between 1995
and 2004, and
has remai ned fai rl y constant

si nce 2004.



Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for Merafong City
GDS

1)

I mportance of sector i n
ensuri ng an enabl i ng
envi ronment for growth and
devel opment.

2)

Cruci al for access to markets
and opportuni ti es.

3)

Cruci al for competi ti veness.

4)

I mpact of prov
i nci al and
di stri ct i ni tiatives
.





-
100
200
300
400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Transport and
communication

0
1000
2000
3000
4000
5000
6000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Employment in
Transport/Communications

15


GDS 2012/13


Finance & Business
S
ervices


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)


Gauteng

PGDS
and


West Rand

GDS


1)

No speci fi c strategy for thi s sector
i s menti oned i n the above
documents.

2)

However, the fi nance and
busi ness servi ces sector i s
anti ci pated to be an i mportant
contri butor to growth and
e
mpl oyment creati on.

3)

A heal thy and growi ng fi nance
and busi ness servi ces sector i s an
i mportant factor i n enabl i ng
busi nesses, especi ally smal l
busi nesses, manufacturi ng and
other economi c acti vi ti es to
devel op and thri ve.

4)

The Gauteng GDS i ndi cated that
gro
wi ng and transformi ng the
economy i s an i mportant
mechani sm. The trade and
fi nance sectors are very i mportant
to real i sing thi s obj ecti ve.

Trends

1)

Fi nance & Busi ness servi ces sector has expe
ri enced strong
growth i n output unti l 2004. There has been a
worryi ng
decl i ne i n output si nce 2005 that needs to be addressed.

2)

I ts sectoral contri buti on to
t
he GGP of Merafong has al so
shown
a downward

trend,
de
creasi ng from
12
% i n 2000 to
10
% i n 200
8
.

3)

Empl oyment i n thi s sector has exhi bi ted a strong upward
trend an
d accounted for 12
.5
% of formal sector
employment in 200
8

(
up from 9.5% in 2000
).

4)

Above trends coul d have
mi xed

i mpl i cati ons for the
di versi fi cation of the l ocal economy.

I ncreased empl oyment
i s posi ti ve but the decl i ne i n output and contri buti on si nce
200
5 wi l l have a negati ve effect on the di versi ficati on of the
l ocal economy.

5)

Thi s sector
has

show
n

si gni fi cant growth potenti al
, but
needs to be addressed to real i se that potenti al
.



Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for

Merafong City
GDS

1)

Fi nance and busi ness servi ces
sector wi l l pl ay an i mportant rol e
i n creati ng an enabl i ng
envi ronment for smal l busi nesses.

2)

Access to fi nance for especi al l y
SMME’s shoul d be enhanced.

3)

Ski l l s training opportuni ti es must
be i ntroduced and b
usi ness skills
taught to l ocal busi ness
entrepreneurs.



-
100
200
300
400
500
600
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Finance and business

0
10000
20000
30000
40000
Employment in Finance and
Business

16


GDS 2012/13


Personal and
C
ommunity
S
ervices


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)

Gauteng

PGDS
and LED


1)

No speci fi c strategi es i n the above
document for the servi ces sector i n
general.


Objectives for tourism sector

1)

Di versi fy the touri sm i ndustry
through cul tural touri sm

2)

To promote the entertai nment and
hospi tal ity i ndustries

3)

Bui l d human capi tal amongst tour
operators

4)

Promoti ng heri tage si tes as
i nternati onal touri sm desti nat
i ons.














Trends

1)

Upward trend i n output of servi ces sector.

2)

Sectoral contri buti on was
8
% i n 2005 and esti mated to be
about
10
% i n 200
8
.

3)

However, no si gni fi cant i ncrease i n empl oyment i n the
servi ces sector.

4)

Servi ces accounts for
6.1
% of formal
sector empl oyment

i n
Merafong Ci ty
.


Source:

Quantec

Research

and

Urban
-
Econ

calculations


Implications for Merafong City GDS

1)

Di versi fi cati on of terti ary (servi ces)
sector i mportant for devel opment.

2)

I mportance of SMME devel opment
i n servi ces sector.

3)

Potenti al for touri sm

must be
expl ored and addressed
.





-
100
200
300
400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Services

0
5000
10000
15000
20000
Employment in Services

17


GDS 2012/13


Government
S
ervices


Source:

Quantec

Research

and

Urban
-
Econ

calculations

(R million)


Gauteng

PGDS

and LED


1)

Government i s set to pl ay
i mportant rol e i n creati ng an
enabl i ng envi ronment for
devel opment through
i nvestment i n i nfrastructure,
ski l ls devel opment and
supporti ng servi ces.

2)

Government shoul d strongl y
focus on SMME
devel opment.

3)

Establ i shment of
mul ti purpose centres,
databases and cooperati ves
to assist SMME’s.

4)

Government to pl ay
i mpor
tant rol e i n the
i denti fi cati on of areas/sectors
wi th devel opment potenti al
or comparati ve advantage.

Trends



Upward trend i n output of government servi ces sector si nce 2001.



Sectoral contri buti on to GGP of Merafong i s 11.4%.



Al so an i mportant sector i n
terms of formal empl oyment (9
-
10%)



Number of peopl e empl oyed i n government servi ces sector i n
Merafong has i ncreased by about 5000 between 1995 and 2005.

West Rand

GDS

and LED

1)

I mportant factors:

a.

Public sector investment (seen as complementary to private
sector investment)

b.

Faci l itate ski l ls provi sion

c.

Increase access to resources (e.g. basic services)

d.

Local government fi nanci al sustainability

2)

Government must invest in economic infrastructure that can reduce
the cost of doing business.

3)

Simplifying the tender

process to enhance development
.


Source:

Quantec

Research

and

Urban
-
Econ

calculations

Implications for Merafong City
GDS

1)

Government spendi ng and
i nvestment shoul d be
focused on areas/i ndustri es
wi th comparati ve advantage
and/or devel opment
potenti al.

2)

I n these areas/i ndustries,
i nterventi ons by government
shoul d focus on physi cal
i nfrastructure and techni cal
support.

3)

I denti fi cati on of ski l ls gaps,
l eadi ng to ski l ls devel opment
i ni ti ati ves.

4)

I mportance of provi si on of
basi c servi ces.

-
100
200
300
400
500
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Government

0
5000
10000
15000
20000
25000
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
General Government Services

18


GDS 2012/13


Summary of
Employment Trends


Source:

Quantec

Research

and

Urban
-
Econ

calculations

Gauteng

PGDS

and LED




1)

Enhancing competitiveness
& profi tability of SMME’s

2)

There needs to be
del iberate action taken to
i ncrease the pool of
entrepreneurs by
muni cipalities



West
Rand GDS and LED


1)

Gi ven the amount of
mi nes i n the area and
gi ven the mining act, all
mi nes need to make a
contri bution to
sustainability and address
thei r social responsibilities

2)

Trai ning of l eadership at
al l l evels of government
wi l l bring about
i mprovem
ents to equity
and skills development.

3)

I mpl ementation of a
Publ ic Sector Employment
Programme (public works
programme)


Trends

1)

Mi ni ng is still by far the most i mportant sector in terms of formal employment

2)

However, there has been a decline i n formal
employment in this i ndustry over the past
decade.

3)

Downward trend in mining employment highlights the need for diversification of the
economic base.

4)

Other i mportant employment sectors: Trade, financial & business services and
government servi ces.

5)

Data shows

a steady i ncrease i n the number of people employed in the trade and
fi nance sectors over the past decade.

6)

No si gnificant increase in the % of the labour force employed i n the manufacturing
sector.

7)

% empl oyed in manufacturing is small relative to i ts con
tribution to GGP, which implies
a need for more labour
-
intensive manufacturing i ndustries.

8)

Esti mates for 2007 i ndicate:

a.

An empl oyment rate higher than the national and provincial rates.

b.

An unemployment rate slightly lower than the national rate, but
higher than
the provincial rate.

c.

Employment situation is comparable to national and provincial labour market
conditions.

Employment status, 2007

Status

South Africa %

Gauteng

%

Merafong %

Employed

28.9

30
.8

35.5

Unemployed

30.1

2
9
.2

29.9

Not
economically active

41.1

4
0
.0

34.6

Total

100.0

100.0

100.0



Source:

Quantec

Research

and

Urban
-
Econ

calculations




Implications for Merafong
City GDS

1)

Cooperati on wi th
mi ni ng i ndustry i
n terms
of

empl oyment
i ni ti ati ves

2)

I nvesti gati on of l abour
-
i ntensi ve
manufacturi ng

3)

SMME devel opment







0
20000
40000
60000
80000
100000
120000
140000
160000
Sectoral distribution of formal employment, Merafong City

2000
2005
2007
19


GDS 2012/13



Infrastructure & Access to
S
ervices

Merafong Service Delivery & Backlogs

Service

2006

Service gap

El ectri city connections

19,220

14,965

Fl ush toi let

40,795


±26,702

Refuse removal (poi nts serviced)

40,223

38,251

Pi per water to dwell ing

25,090


±26,702

Roads

362.64km

304.72km

Storm water

78.11km

166.1km

Source: Merafong Ci ty Municipali ty IDP Revi ew 2007/08


Gauteng GDS and LED


1)

I t i s of paramount
i mportance that the
current servi ce
del i very backl ogs
experi enced
by
muni ci pal ities be
reduced and
eradi cated.

Trends


Access to services

1)

There is still a huge service delivery backlog that needs to be addressed, especially i n terms of housing, electricity and
sanitation.

2)

2007 esti mates of dwelling types (see below) we
re obtained by extrapolating historic growth rate between 1996 and
2001.

3)

There is still a shortfall in housing after accounting for planned housing delivery projects, i.e. land identified and
number of units possible.

4)

Rel ocation of households residing in
Khutsong dolomite area (18,000 units)

a.

I mportance of measuri ng possi bl e i mpact on housing a nd basi c servi ces needs a nd i nf rastructure provi si on.

5)

Majori ty of residents in Merafong City do not use vehicular transport as transport mode to school/work. (On foot
:
29%)

6)

Second most prevalent transport mode was mi nibus/taxi (9%).

Transport access in Merafong City, 2001

On foot

61548

By bicycle

1258

By motorcycle

471

By car as a driver

12837

By car as a passenger

7800

By minibus/taxi

18832

By bus

15437

By
train

927

Other

577

Source: Quantec Research

Implications for Merafong City GDS

1)

Wi pi ng out servi ce del i very backl og.

2)

I mportance of the transport and communi cati ons sector i n unl ocki ng devel opment potenti al.

3)

Bul k i nfrastructure pl anni ng and i nvestment
focused on devel opment corri dors and nodes as i denti fi ed i n
SDF, i n order to attract pri vate sector i nvestment and sustai nable economi c acti vi ti es.

4)

I n l ocal i ties wi th l ow devel opment potenti al, government spendi ng, beyond basi c servi ces, should focus
on
provi di ng soci al transfers, human resource devel opment and l abour market i ntel l i gence.

5)

Opti mi se benefi ts of EPWP i n i nfrastructure provi sion.

6)

Coordi nati on of i nfrastructure provi sion across spheres of government.

7)

Khutsong relocation will have significant i
mpact.

20


GDS 2012/13


Water provision

Impact of dolomitic areas on water services provision

1)

Merafong Ci ty i s l ocated on hi gh ri sk dol omi ti c areas, requi ring a very hi gh standard of water servi ces
provi si on.

2)

Speci fi cal ly, sanitation shoul d be water
-
borne and wel l
mai ntai ned.

3)

Thi s requi rement, together wi th the fact that the economy of Merafong has been i n a decl i ne over the
recent years, makes water servi ces provi sion i n the area chal l engi ng.

4)

Due to the speci al requi rements of the dol omi ti c area, a deci si on was mad
e to provi de al l stands
in
proclaimed areas

wi th ful l water
-
borne sani tati on.

5)

Approxi matel y 47% of househol ds i n Merafong Ci ty sti l l do not have adequate access to water and
sani tati on servi ces.

6)

Attenti on has to be pai d to i nformal housi ng wi thout water
-
bo
rne sani tati on, si nce the uncontrol l ed
di sposal of “grey water” contri butes to si nkhol e formati on.



Environmental factors

1)

Mi ne dewateri ng acti vi ti es are pol l uting
hi stori cally pristine fountai ns, whi ch coul d have a
negati ve effect on touri sm potenti al.

2)

The restri cti on of water extracti on from the
dol omi te water compartments has an i mpact on
the agri cul tural potenti al of the area. Uti l i sati on
of the dol omi te aqui fers coul d enhance
agri cul tural potenti al.



Potential for water provision to mines

1)

At present
, Merafong Ci ty recei ves al l i ts water
from Rand Water. However, Merafong has the
ground water potenti al to provi de a si gni fi cant
amount of the dai l y water demand.

2)

Merafong Ci ty Muni ci pal ity coul d have an
opportuni ty to rai se revenue for i tsel f by taki ng
over the water suppl y chai n and provi di ng water
to the mi nes.

3)

I mportance of regi steri ng al l borehol es and
formal moni tori ng of qual i ty and quanti ty of
water.














21


GDS 2012/13


Housing

Dwelling types in Merafong City

Type of dwelling

2001

2007
(est.)

House/brick structure on separate
stand

56%

62%

Tradi ti onal

1%

1%

Fl at i n bl ock of fl ats

3%

4%

Town/cl uster/semi
-
detached house

1%

1%

House/fl at/room in back yard

6%

4%

Informal dwell ing/shack i n back yard

9%

6%

Informal dwell ing/shack NOT i n back
yard

22%

16%

Room/fl atl et not i n back yard but on
shared property

2%

2%

Source: Quantec and Urban
-
Econ esti mates

Challenges

1)

Si gni fi cant porti ons of Merafong are
l ocated on dol omi ti c areas.

2)

A l arge porti on of the Khutsong Proper
formal townshi p i s
si tuated on hi gh ri sk
dol omi ti c areas that are dangerous and
unsui tabl e for human settl ement.

3)

These househol ds urgentl y need to be
rel ocated to a geographi cal l y stable area.

4)

The shortage of resi denti al l and suitable
for human settl ement i s a maj or chal l eng
e.

5)

Most of the l and earmarked for the
rel ocati on i s pri vatel y owned.

6)

Fundi ng i s therefore needed to purchase
the necessary l and, or expropri ate i n cases
where a purchase agreement cannot be
reached.

7)

Currentl y, housi ng subsi dies do not
adequatel y provi de fo
r the acqui siti on of
pri vatel y owned l and.

8)

Current housi ng backl og i s 26,702.

9)

Pl anned housi ng proj ects currentl y total
23,947 uni ts.

10)

There i s a commi tment from mi nes and
the Far West Rand Dol omi ti c Water
Associ ati on to make geol ogi cal l y sound
l and avai labl
e for resi denti al purposes.

11)

Mi nes are al so pri oriti sing the
formal i sation of mi ni ng vi l l ages, whi ch
coul d further add to sui tabl e l and avail able
for housi ng devel opments.

12)

Not al l i nhabitants of i nformal structures
wi l l qual ify for subsi dised housi ng i n
acc
ordance wi th the I ntegrated Housi ng
and Human Settl ement Devel opment
Grants.

13)

There i s therefore a need for soci al
housi ng/rental stock to address the total
housi ng need i n Merafong Ci ty.

14)

The provi si on of servi ces and soci al
ameni ti es to the resettl ement ar
eas wi l l
have a huge i mpact on government
spendi ng and i nfrastructure demands i n
the Merafong Ci ty area.

Source: Merafong Ci ty Municipali ty IDP Revi ew
2008/09


Housing backlog, Merafong City 20
09

Total housing demand (backlog 200
9
)

23,061

Shortfall after

accounting for planned
housing projects.

13,762

Source: Merafong Local Munici pali ty, 2009




Implications for Merafong City GDS

1)

Provi si ons of housi ng, both i n terms of housi ng
backl og, and the rel ocati on of Khutsong
househol ds currentl y resi di ng on
geol ogi cal ly
unstabl e l and, presents a huge chal l enge.

2)

Maj or chal l enges i nclude:

a.

Availability of geologically suitable
land.

b.

Avai l abi lity of funds to purchase
necessary l and.

c.

Provision of services and social
amenities to resettled areas, and its
impact on
government spending and
infrastructure demands.





22


GDS 2012/13


References


AngloGold Ashanti Ltd. 2007.
“Year to date”

reports (Ms. C. Smith
-
Morgan).

Department of Minerals and Energy. 2006.
South Africa’s Mineral Industry.

DRD Gold (Pty) Ltd. 2007.
Production
Summary

and
Social and Labour Plan
.

Gauteng Provincial Government.
Gauteng Provincial Growth and Development Strategy


Review
2005

Goldfields Ltd. 2007.
Mining Work Programme.

Harmony Goldmining Company Ltd. 2007.
Telephonic interview with Mr. Frans Potgi
eter.

Merafong City Local Municipality.
IDP Review 200
8/09
.

Minerals Bureau Bulletin. 2006.
South Africa’s Gold and Platinum
-
group Metal Production and Sales,
2005.

April. 19(1).

Minerals Bureau Bulletin. 2007.
South Africa’s Gold and Platinum
-
group Metal
Production and Sales,
2006.

April. 20(1).

Minerals Bureau Bulletin. 2007.
South Africa’s Gold and Platinum
-
group Metal Production and Sales
for the first half of 2007.

October. 20(3).

North West Provincial Government.
North West Spatial Development Framewo
rk 2005.

Quantec Easy Data. 20
10.
www.quantec.co.za


West Rand District Municipality.
West Rand District Growth and Development Strategy


September
2007

www.goldprice.com/www.kitco.com

(Gold price data)

-

January 2010





23


GDS 2012/13


Introduction

(section 2)

The purpose of this document is to identify, for further investigation, the constraints to development
and areas of perceived potential in the economy of Merafong City. It is therefore not a final and
complete potential analysis, but
Research Sheets

that
give an indication of the demonstrated and
latent potential of the different economic sectors. A colour
-
coded system is used, whereby green
blocks provide a definition of each sector, yellow blocks contain data related to economic
performance and potentia
l, the pink blocks discuss the constraints to development, the blue blocks
identify areas of perceived potential and the purple blocks contain some innovative concepts for
consideration.

The identification of potential and comparative advantage was informe
d by the
Spatial Profiles

contained in the
National Spatial Development Perspective

(NSDP) of 2006, which provides
information on the Gross Value Added (GVA) of different localities (national, provincial, district and
local) in the different economic secto
rs. The NSDP and its principles were designed to act as a guide
for policy coordination, with emphasis on the spatial and economic implications of development
policy and programmes of national, provincial and local government. According to the NSDP, all
t
hree spheres of government should use the notion of potential to inform an analysis of the space
economy, to identify areas of economic significance and the relative and dynamic comparative
advantage of localities.

In relation to economic potential, the NS
DP uses six categories:

1.

Innovation and experimentation

2.

Production of high
-
value differentiated goods

3.

Production of labour
-
intensive mass
-
produced goods

4.

Public services and administration

5.

Retail and private
-
sector services

6.

Tourism


These categories were de
signed to enable an identification of areas of economic significance,
highlight key characteristics and unique attributes of localities, and provide signals as to which
sectors need to be supported in order to promote and maintain areas of demonstrated eco
nomic
significance.


The assumption underlying the NSDP approach is that localities that exhibit high levels of economic
activity in a particular category are more likely to have the potential to do so in the future.
Economic potential is therefore demons
trated through existing economic activities and especially
through the generation of Gross Value Added (GVA) for the specific geographic area. The relevant
NSDP statistics are included in this document, have been updated to 2008 figures and compensated
fo
r the return of Merafong LM back into the Gauteng province.


The client and stakeholders are encouraged to comment on the content and findings of this
document, after which a more complete potential analysis of each economic sector will be
conducted and the areas of perceived potential identified in this document wi
ll be further
24


GDS 2012/13

investigated.

Agriculture

The
agriculture

sector incorporates establishments and activities that are primarily engaged in
farming activities, but also includes establishments focusing on commercial hunting and game
propagation and forestry, logging and fishing.



Source:

Quantec

Research

and

U
rban
-
Econ

calculations

Economic Performance & Trends

1)

Sector characterised by
stagnating

production and
employment over the past
decade.

2)

Merafong is the
greatest

contributor to Agriculture GVA in
the District
.

3)

Therefore, Merafong City does
currently exhibit

a comparative
advantage in this sector.

4)

Merafong contains high potential
agricultural areas with potential
for more intensive agricultural
production.

Constraints

1)

Lack of available land:

a.

Mining receives priority in land use

b.

Large tracts of land owned by
mining companies

c.

Use of land restricted by the Far West Rand
Dolomitic Association

2)

Water availability:

a.

Mining receives priority in water use

b.

Use of dolomitic water compartments restricted
by the Far West Rand Dolomitic Association

c.

No new water rights award
ed in Merafong City,
which especially has negative implications for
emerging farmers

3)

High input costs, e.g. labour costs

4)

Very little value added to primary products, i.e. maize,
wheat

5)

Lack of leadership and champions in agricultural
projects



West Rand
District

GVA in
Agriculture, Forestry and Fishing

Municipality

% of
Prov
GVA

% of
National
GVA

Mogale City

3.99

0.28

Randfontein

0.90

0.06

Westonaria

0.22

0.02

West Rand

0.22

0.02

Merafong

4.55

0.32

West Rand

District Total

9.88

0.70

GP

Prov Total

100

5.8

National Total


100

Source: Urban
-
Econ calculations based on
Quantec data and NSDP


Spatial Profiles

Areas of
perceived
potential

1)

Value addition

to primary products, e.g. processing/packaging of maize, wheat, meat

2)

Investigation of possibility to
utilise dolomite acquifers

to increase agricultural production

3)

Diversifying

into new crops/products, with specific focus on practices suitable for small
-
scale/emerging farmers, e.g.:

a.

Horticulture (vegetables, tobacco)

b.

Floric
ulture (expansion of existing floriculture project)

c.

Aquaculture (Cultivation of fish)

d.

Organic farming
-

Exploiting growing niche market for organic agricultural products

e.

Biotechnology


Improving the yield of local crop production, reducing crop failure ri
sks,
0
20
40
60
80
100
120
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Agriculture

25


GDS 2012/13

improve profitability, introducing new varieties into local agricultural sector

4)

Investigating the potential for development of
feed lots

in Merafong City

5)

Investigation of economic linkages, e.g.:

a.

Current sources of inputs and opportunities for local sourcing and
production of inputs
,
e.g. seeds, fertilizer, implements

b.

Production of
animal feed

using local agricultural products as inputs

c.

Opportunities for
delivery of agricultural products

to local m
ines and supermarkets
within and outside Merafong City

6)

Investigation of ways to link struggling agricultural projects, e.g. cut foliage, with more successful
projects, e.g. Living Gold, in order to
create economies of scale

and improve economic viability

7)

L
inking

agricultural projects with the agricultural school and small
-
scale farming initiatives. This
could:

a.

Provide
on
-
site training

opportunities to emerging farmers and agricultural students

b.

Improve management and profitability

of agricultural projects

8)

Es
tablishment of an
agriculture hub

in Merafong City which incorporates current projects by
mines, i.e. the cut foliage project, Living Gold, water purification, as well as the proposed
agricultural school. This project is still in conceptual phase (
Living
Gold Expansion Project
Charter
, 2007).

9)

Investigation of
enabling services/support structures

needed by commercial/emerging farmers.


Innovative concept for consideration

Horticulture cluster:
A geographic concentration of horticulture farms or
establishments related to
horticulture, that either have close buy
-
sell relationships with other industries in the region, use
common technologies, or share a specialised labour pool that provide the horticulture industry with
a competitive advantage over
the same industry in other places (Hill and Brennan, 2000).
Horticulture includes the production and marketing of floral crops, vegetables, fruit, tobacco, etc.


Diagram of a simplified horticulture cluster value chain


Source: Waterberg Agricultural Dev
elopment Strategy, 2006


Mining

26


GDS 2012/13


The
mining

sector includes the extracting or

beneficiating of
minerals occurring naturally, including solids, liquids and crude
petroleum and gases. It also includes underground and surface
mines, quarries and the operation of oil and gas wells and all
supplemental activities for dressing and benefi
ciating for ores
and other crude materials.



Economic Performance &
Trends

1)

Characterised by declining
production and employment
until 2005.

2)

Since 2005, a significant
increase in international gold
prices and, subsequently, the
sales revenue and profitabi
lity
of gold mines in Merafong
City.

3)

Increase in gold price has also
extended the operational
lifetime of mines in Merafong
City, and led to an expansion
of mining activity.

4)

Merafong is the
largest
contributor to mining GVA in
the District
.

5)

The comparative

advantage of
Merafong City is thus
currently located in the
mining sector.



Source:

Quantec

Research

and

Urban
-
Econ

calculations


Constraints

1)

No beneficiation of mining products

2)

Many products and services used by mines are purchased
outside Merafong
City (East Rand, Johannesburg)

3)

Lack of skilled labour

4)

Effect of HIV on the labour force

5)

Sensitivity of the mining sector to international commodity
prices and exchange rates

6)

High input costs, e.g. steel and labour costs

7)

The lack of economic diversification

is currently hampering
growth in the broader economy.


West Rand

District GVA in Mining
and Quarrying

Municipalit
y

% of
Prov
GVA

% of
Nationa
l GVA

Mogale City

2.38

0.36

Randfontein

2.73

0.41

Westonaria

19.32

2.93

West Rand

0.01

0.00

Merafong

23.65

3.59

West Rand

District
Total

48.1
0

7.30

GP

Prov
Total

100

15.2

National
Total


100

Source: Urban
-
Econ calculations
based on Quantec data and NSDP


Spatial Profiles

Areas of
perceived
potential

1)


Investigation of cooperation with mines to develop a local
gold beneficiation

industry (e.g. wire,
jewellery, industria
l
, dental)

2)

Beneficiation of mining by
-
products

(e.g. charcoal produced from used timber, crushed stones
used in construction)

3)

Increasing

the
local sourcing and provision of goods/services

to mines, e.g. drilling equipment,
explosives, laundry, catering and cleaning services.

0
2000
4000
6000
8000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Mining

27


GDS 2012/13

4)

Development of service industries linked to the mining sector, e.g. steel cutting and other metal
fabrication activi
ties.

5)

Investigating potential for a
jewellery manufacturing school

6)

Investigating potential for
linkages with the gemstone industry

in e.g. the Northern Cape

7)

Opportunities for
small
-
scale mining

8)

Projects involving
environmental rehabilitation

of land and wa
ter bodies by mines

9)

Investigation of
social investment by mines
, and involvement of mines in social/economic
development projects

10)

Opportunities for training and information provision to
mining
-
related SMME’s

11)

Mining and processing of uranium

in Merafong Cit
y: Although mines are currently investigating
this option, no data or reports are yet available on the feasibility of mining and selling uranium
as a product. The reports might become available by March/April.


Innovative concept for consideration


The
Mining Charter
:
The Broad
-
based Socio
-
economic Charter for the Mining Industry was
developed in consultation between the mining and minerals industry and Government, and has the
following goals:



To promote equitable access to mineral resources to all
people of South Africa



To substantially and meaningfully expand opportunities for HDSA’s to enter the mining and
minerals industry and to benefit from the exploitation of the nation’s mineral resources



To utilise the existing skills base for the empowermen
t of HDSA’s



To promote employment and advance the social and economic welfare of mining
communities and major labour sending areas



To promote beneficiation of South Africa’s mineral commodities


Due to the implementation of the Mining Charter, mines now ha
ve a responsibility to cooperate
with local mining communities in their area to devise strategies and initiatives that promote
employment creation, improved living standards and beneficiation of local mining products.


It is also important to incorporate t
he mining Social and Labour Plans (SLPs) into the growth and
development strategy to maximise the benefit and impact of the mining contributions towards the
upliftment of the local communities.











28


GDS 2012/13

Manufacturing

The
manufacturing

sector is broadly defined as the physical or chemical transformation of materials
or compounds into new products and can be classified into 10 sub
-
groups of which the most
relevant are
:

• Fuel, petroleum, chemical and rubber products;

• Other non
-
metalli
c mineral products, e.g. glass;

• Metal products, machinery and household appliances;

• Elec
trical machinery and apparatus


Source:

Quantec

Research

and

Urban
-
Econ

calculations

Economic Performance & Trends

1)

This sector has witnessed an upward trend in

production, but not in employment, which has
generally been in decline.

2)

Merafong City is in 3
rd

position in the District in
terms of GVA in manufacturing.

3)

Merafong City is slightly more efficient in the
production of highly differentiated goods than in
la
bour
-
intensive manufacturing.

4)

The relative inefficiency in labour
-
intensive
manufacturing has negative implications for
employment creation.

West Rand

District GVA in Manufacturing

Municipality

% of
Prov
GVA

% of
National
GVA

Mogale City

3.10

1.27

Randfontein

1.08

0.44

Westonaria

0.22

0.09

West Rand

0.03

0.01

Merafong

0.27

0.11

West Rand

District Total

4.70

1.92

GP

Prov Total

100

41.0

National Total


100

Source: Urban
-
Econ calculations based on
Quantec data and NSDP


Spatial Profiles

Constraints

1)

Current underutilisation of industrial land/stands

2)

Underutilisation of railway linkages

3)

Poor quality of roads

4)

Spatial disadvantage relative to manufacturing industries in Ekhuruleni and the City of
Johannesburg

5)

Lack of labour with the necessary

skills

6)

Lack of diversification in industrial base, since industries are mainly linked to the mining sector

7)

Inputs sourced mainly outside Merafong City

8)

High input costs, e.g. labour and steel costs

9)

Lack of marketing and exposure to investors/regions outsid
e Merafong City

0
50
100
150
200
250
300
350
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Manufacturing

29


GDS 2012/13

10)

Lack of industrial incentives

11)

Lack of an industrial development strategy

12)

Recession in the manufacturing sector during 2008 and 2009 has decreased output and
employment figures. The recession was on national level and affected most areas and

not
confined only to Merafong LM. (Third quarter figures for 2009 indicated an end to the recession
and a sharp increase in productivity in the manufacturing sector).

Areas of
perceived
potential

1)

Due to the fact that the mining industry is by far the largest economic agent and source of
private capital in the area, the development of manufacturing in Merafong City should be
catalysed by the mining industry.
Cooperation with mines

in devising a str
ategy for industrial
development is therefore critical.

2)

The development of the
manufacturing

industry should therefore be
linked to the mining
industry

if it is to be economically viable with sufficient market demand and capital investment.

3)

Some manufactur
ing possibilities to be investigated include:

a.

Agro
-
processing

b.

Beneficiation of mining products

c.

Materials/equipment used in the mining sector, e.g. drilling, explosives

d.

Recycling plant (waste recycling)