Eastern Cape unemployment rate highest in SA, province enters technical recession

Eastern Cape has officially entered a technical recession. The province’s economy is in recession after contracting for the third consecutive quarter.

A report released by the Eastern Cape Socio-Economic Consultative Council (ECSECC ) earlier in July this year noted the construction, manufacturing, and mining industries as the largest contributors to the decline in the gross domestic product (GDP.

Eastern Cape’s GDP decreased in rands

The report reveals that in rand value, the province’s GDP has declined from R368.8 billion in 2023 the fourth quarter, to R366.9 billion in the first quarter of 2024.

Eastern Cape is amongst the least contributors to the national GDP by 7.9%. The biggest province in the country, Northern Cape contributed the least to the national GDP at 2.1%, followed by Free State with 4.7%, North West with 6.2%, Limpopo with 7.1%, and Mpumalanga with 7.3%.

The largest contributors to the national GDP were Gauteng with 33.9%, KwaZulu-Natal with 16.6% and Western Cape with 14.2%.

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Only two industries contributed positively

While the province’s economy contracted in the first quarter of 2024, only two industries, agriculture and electricity, saw growth. The largest negative contributors were construction, which declined by 2.9%; manufacturing, down by 1.5%; mining which decreased by 1.2%; and transport by 0.7%. 

The report also says government services, the biggest employer in the province,e contracted by 0.2%.

On a quarter-on-quarter basis, manufacturing declined by R617 million; finance by R328 million; and construction went down by R246 million. While the agriculture sector grew by R742 million from R 5 800 billion in the forth quarter of 2023 to R6 542 billion in the first quarter of 2024. The electricity sector grew by R5 million from R4 634 billion to R4 639 billion.

Most unemployed people found in Eastern Cape

According to Stats SA, the unemployment rate in the Eastern Cape rose to 42.4% in the first quarter of 2024. 77,000 jobs were lost during the same period in the province. Most job losses were recorded in construction, manufacturing, mining and transport. Even some of the government employees lost their jobs in the sector.

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The recession is not a surprise

iCEO of ECSECC, Luvuyo Mosana told Newzroom Afrika the news that the province has entered a recession does not come as a surprise. However, they were surprised they did not predict the recession happening in the first two quarters. Mosana said they did not anticipate the declines to go into the third quarter.

He says all the relevant stakeholders could have done something to prevent this from happening. The provincial government has already started to put measures in plan to address this particular issue. He says there are projects in place, such as the road infrastructure project that will help accelerate business activity in the province.

He said a R200 billion investment commitment was made by different investors at two different provincial investment conferences. He said the commitment, including other relevant stakeholders’ efforts, would bring positive results.

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Construction mafia in the province

He also noted the construction mafia crisis in the province. “The people violently causing the disruption on construction sites are people known by the community, so there is a call for the community to inform the government who these people are. Therefore, justice is done.” He highlighted there should be police visibility on high cost construction projects to ensure there is law and order.