An investigation into the state of affairs and sustainability of the Emfuleni economy

Abstract

In this study, the sustainability of the Emfuleni economy is measured in terms of its ability to reduce the levels of unemployment and poverty over a period of time. An input-output model was used to determine the impact of several proposed projects on the level of household income and employment in Emfuleni. An economic impact assessment model was developed and used to measure the impact of a change in household income on the level of poverty. A sectoral analysis of the economy and a household analysis were used to portray the state of affairs and trends in unemployment and poverty. Taking into account both the positive impact of proposed projects and some negative impacts (e.g. the collapse of the Krion Financial scheme), projections were made for Emfuleni in terms of GGP growth, population growth, unemployment and poverty until 2015. Assuming that the two proposed projects in Emfuleni, namely, the Vaal Inland Waterfront Project and a 5% expansion of the Manufacturing sector should materialise, the analysis shows that the unemployment rate will be 53.1% in 2015 and the percentage of households below their respective poverty lines 46.6%. Without the projects the unemployment rate will increase from 51.3% in 2000 to 60.6% in 2015 and the percentage of households below their respective poverty lines will increase from 46.1% in 2000 to 60.6% by 2015. The impact of the projects will be that the unemployment and poverty rates are kept at about the same levels as in 2000. However, the analysis shows that the number of unemployed persons is expected to increase from 155,988 in 2000 to 243,660 in 2015 and the number of poor households is expected to increase from 84,549 in 2000 to 114,227 in 2015. More interventions are therefore required to put the Emfuleni economy on the road towards sustainability. An Inward Industrialisation Process (IIP) aimed at employment creation and poverty alleviation is proposed for intervention. A preliminary analysis indicates that an IIP, focussed on the townships of Emfuleni, may reduce the unemployment and poverty levels substantially and thus increase the sustainability of the economy over a period of time.