New data programme to make sense of economic activities in SA

A new data programme that will make sense of economic activities in South Africa could help metros make policy, planning and investment decisions based on real data instead of using modelled and incomplete data mostly accessed at a price from the private sector.

Finance minister Enoch Godongwana, who was the keynote speaker at National Treasury’s launch of the Spatial Economic Activity Data South Africa (SEAD-SA) programme, said government contributes R6.3 billion in financial support to South Africa’s metros through grant instruments over the medium term.

Municipal managers and local officials must plan for more productive, inclusive and sustainable economies but lack credible information about the ‘what’ and ‘where’ of jobs and investment. Businesses and other local stakeholders also lack the evidence base from which to advocate for change or hold leaders to account.

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The programme aims to make sense of the geographic distribution and characteristics of economic activities in the country. Godongwana said metros do not know where companies and jobs are in their boundaries and how company and employment activity changed over time. Therefore, cities find it difficult to plan and allocate resources, including spatial planning, job creation, social initiatives and tax collection.

“The SEAD-SA programme is a key step toward making sure that allocated funds and efforts are well-targeted. The launch represents an important milestone on a journey that started about nine years ago, when the metropolitan municipalities lobbied national government to make available national administrative data sets that could assist them in making sense of their city economies,” Godongwana said.

Lack of spatialised economic activity data

There was a lack of spatialised economic activity data in South Africa and the process started with a GTAC-convened Economies of Regions Learning Network, which brought together city and national economic role-players to identify possible administrative data sources that could plug this gap.

Treasury produced the first Metro Spatialised Economic Activity Reports in April 2021 that demonstrated firm and employment trends across metro spaces from 2013 to 2018 and has since been extended to all municipalities in the country with the support of local government association SALGA.

This collaboration extended to the exploration of a spatialised version of the entire Sars Integrated Business Register, to enable access to additional public and third-party data sources and there is an agreement to integrate this with StatsSA’s National Statistics System to broaden the scope further to include the contributions of other national administrative data sources.

The SEADsa programme involves a wide range of partners currently led by the Human Sciences Research Council in collaboration with the National Treasury: Cities Support Programme and Economic Policy Unit.

Other programme partners include the South African Revenue Services, UNU-WIDER, Statistics South Africa, Metropolitan Municipalities, South African Local Government Association, South African Cities Network, the UK’s Foreign, Commonwealth and Development Office and the University of the Free State.

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Godongwana says the programme is not owned by any particular entity, but a shared brand that is intended to act as an umbrella for joint efforts to ensure open access to credible spatialised economic activity data from multiple sources.

“We all know the challenging times South Africa finds itself in increasing fiscal risks, low economic growth, high unemployment, declining productivity and stubborn structural economic constraints. These are putting a brake on the kind of economic activity we are striving for to meet our developmental challenges.”

Assist government to make investment choices

Godongwana emphasised that the country cannot afford low returns on public sector investment, company closures and downsizing or job losses. “Reviewing this data, its value in providing clear policy directions and evidence to assist government make tough investment choices and decisions, is abundantly clear.”

He says six key messages emerge from the data:

• Metros are the country’s job generators;
• Sector composition differs across metros;
• Strong urban centres are necessary for productive rural hinterlands;
• Marginal city economic spaces, such as townships and communities, such as youth and women, continue to be marginalised from the formal economy;
• There is a strong correlation between well-governed and stable cities and increasing productive activity;
• Measuring the economic outcome of public sector investment in and within municipalities is now possible.

Godongwana says the spatialised tax data enables the measurement of our collective impact on the numbers of jobs and firms of different sizes and sectors as far back as 2014 with annually updated data that will allow government to track the impact across space of different economic shocks at specific points in time and understand market responses and time-periods for recovery.

“The data makes this reality visible and requires government to be held and to hold itself to account. This shared journey has placed the country on a positive trajectory of evidenced-based economic planning and investment, greater transparency and deeper accountability for our collective efforts within municipal spaces,” Godongwana says.