Economy ofWestern Cape

Clockwise from top: A panel from the frescoes in the Assembly Room,Mutual Building in Cape Town, painted by Le Roux Smith in 1942; the fresco illustrates the importance of agriculture and shipping to the economy of the Western Cape in the early half of the 20th century. Cheeses production inStanford. Recently galvanised pipes being finished in a Cape Town. The Cape TownCity Bowl. The port at Cape Town. Agricultural workers picking grapes in a Western Cape vineyard.
Statistics
GDP	ZAR 918 billion (US$ 56 billion) (2022)[1]
Gini coefficient	0.58(2010)[2]
Human Development Index	0.75[3]
Labour force	2,785,871(2016)[3]
Unemployment	19.6%(2024)[4]
Public finances
Revenues	R269.58 billion(2020) - to national ficus[5]
Expenses	R72.3 billion(2021)[6]

Theeconomy of the Western Cape inSouth Africa is dominated by the city ofCape Town, which accounted for 72.4% of theWestern Cape's economic activity in 2023.^[7] The single largest contributor to the region's economy is the financial and business services sector, followed by manufacturing.

Close to 30% of the gross regional product comes from foreign trade^[8] with agricultural products andwine dominating exports. High-tech industries, internationalcall centres, fashion design, advertising and TV production are niche industries rapidly gaining in importance.^[9]

The Western Cape province had an estimatedreal GDP (constant 2015 prices) for 2024 ofR666.75 billion (equivalent to US$36.39 billion)^[10] growing 0.75% from R661.79 billion in 2023.^[11]Inflation averaged at 4.4% for 2024.^[12]

The province accounts for 14% of South Africa's total GDP^[11] with Cape Town accounting for approximately 10.1% of the country's total GDP in 2023.^[7] The Western Cape had aGDP per capita of R88,438 compared to the national average of just below R75,000 per capita in 2023.^[7] At 19.6% the province has a substantially lower unemployment rate than the national average standing at 31.9% in Q4 2024.^[13]

In Q4 2024, number of unemployed people declined by 16,000, year-over-year, with employment figures increasing by 2.3% over the same period.^[13] Between 2019 and 2024 the province generated a disproportionately large number of jobs relative to the region's size; creating 52.2% of all new net employment in the country.^[7]

Since the founding of Cape Town by theDutch East India Company (VOC) in 1652, the two pillars of theCape Colony's economy until theKimberley diamond strike of 1868 and the opening of the opening of theSuez Canal in 1869 were shipping and agriculture.

Cape Town's strategic position as the halfway point between Europe and Asia meant that prior to the opening of the Suez Canal, almost every ship involved in thespice trade between those two continents docked at Cape Town to resupply. The supplying of these ships with fresh provisions, fruit, andwine provided a very large market for the surplus produce of the colony. By the late 18th century, the Cape Colony was one of the best developed European settlements outside ofEurope or theAmericas.^[14]

During the 18th century,pastoral production was the dominant economic activity in the more arid north-western Cape (regions north ofPaarl, south ofNamaqualand and to the west of theRoggeveld) whilst mixed agriculture was dominant in the south-western Cape. During this period, the VOC exercised enormous control over the economy of the colony and imposed high and increasingly unpopular taxes in an effort to offset the high costs of running the colony.

For much of the Dutch rule in the Cape,income inequality is thought to have been amongst the highest in thepre-industrial world with pockets of wealthy living amongst an increasingly and relatively poor farming community. The biggest drivers of this inequality-apart from labour and race relations—was wheat and wine production. The wealthy segments of society were dominated by wine producers, alcohol merchants and those farmers that managed to dominate wheat production.^[15] One of the first economic recessions recorded in the colony occurred in years following the departure of French troops that were garrisoned at the Cape from 1781-1783.^[16]

Slavery played a large role in the early economy of the province until theBritish takeover of the Cape Colony in 1806 and theabolition of slavery in theBritish Empire in 1833. Slaves from across theDutch Empire, in addition topolitical prisoners from theDutch East Indies, were imported to work on the farms, homes and workshops in the area of the colony closest to Cape Town. At the beginning of the 18th century, labour relations between Dutch colonists—particularly theTrekboers in the interior—and the nativeKhoisan was largely characterised by semi-cooperativesymbiosis.

By the beginning of the 19th century, the majority of the Khoisan had been turned into a class of wage labourers whose status and situation was similar toserfs.^[17] After 1833, the resistance of free burghers to the creation of a permanent wage-labour force as a result of the abolition of slavery as well as the 'resistance of freed slaves and Khoi to fullproletarianization' produced labour relations characterised by a greater degree of dependency.^[18]

The main export staple of the Cape Colony for most of its history was wine and brandy, but by 1845 it had been overtaken in value by wool. The wool boom continued into the 1850s and in addition to a speculative boom in copper-mining shares investment in the region grew considerably. This sparked the growth of the region's financial industry and by 1860 there were 23 local banks operating in fifteen towns. Increases in costs of production, falling wool prices, poor quality wools and severe drought from 1862 were among the causes of an economic recession that affected the region for most of the 1860s. Increasing competition fromPort Elizabeth for the trade of the interior ofSouthern Africa encouraged Capetonian business interests to lobby for the construction of a railway. By 1865, nine towns in the region had a population of over 2000 people.^[19]

After the MSP Suez Canal was constructed in 1869, Cape Town's importance as a refuelling point declined as the canal obviated the need to navigate the longersea lane around the southern coast of Africa. The recession of the 1860s and the construction of the canal forced the colony to search for new opportunities and adopt new products in rural production. The raising ofAngora goats andostriches for theirmohair and feathers respectively date from this period and became important export commodities.

The discovery of diamonds and gold in the interior again increased investment in Cape Town and despite along depression that plagued thewestern world for much of the 1870s the Western Cape's economy boomed. In addition, wool exports doubled in value from 1869 to 1872 to well over £3 million (equivalent to R794,000,000 in 2018). However, it was Port Elizabeth whose merchants were best placed to service the interior where the gold and diamond deposits were found and as a centre for the wool and ostrich feather industries that would benefit the most.

The consequence of this was that the Western Cape became increasingly dependent on overseas trade (especially with Britain). Despite this, Port Elizabeth's future economic development was threatened by the government's refusal to invest in upgrading its port facilities whilst over £1 million (equivalent to R183,000,000 in 2018) was invested in Cape Town's harbour.^{[19]: 84–85}

Much of the investment used to develop the diamond fields during the diamond-company mania of 1880-1881 came from the older towns in the Western Cape. Over half of the £12 million (equivalent to equivalent to r3,357,000,000 in 2018) invested in developing the Kimberly mines was raised in the Cape Colony. As Port Elizabeth and Kimberly developed the Western Cape found a booming market for its wheat and wine products. During this period, both theEastern Cape and the Western Cape experienced some expansion in their manufacturing sectors.

However, the collapse in Kimberly mining shares (partly brought about byeasy credit), poor agricultural performance and a decline in demand in the interior caused a series of bank collapses throughout the 1880s. This prompted renewed interest in mining investments in gold during theWitwatersrand Gold Rush where Western Cape capital was again used to develop mines in the interior of South Africa andJohannesburg in particular.^{[19]: 85–86}

As the 19th century came to an end, the economic and political dominance of the Western Cape and Cape Town in particular during the 19th century gave way to the dominance of Johannesburg andPretoria in the 20th century.^[19]: 83

By the 1940s, differences in economic development between the Western Cape and theWitwatersrand (andGauteng in general) had become more striking. The growing importance of local production inputs (thereby decreasing the importance of ports), the increasing relative cost of Western Cape labour and a growing reliance on semi-skilled instead ofskilled labour in manufacturing had a negative impact on the province's economy. However this period of economic decline and underdevelopment did produce a highly competitive labour market.^[20]: ix

Between 1999 and 2009 the provinces economy grew at an average rate of 4.9% per year.^[21]

The province'sGini coefficient of 0.625 in 2021 is lower than other provinces such as KwaZulu-Natal (0.634) or Gauteng (0.626)^[22] and is lower than South Africa's average Gini coefficient of 0.63 (for 2022).^[23] This make it more equal than the rest of the country whilst still being extremely high andunequal by international standards. This is also an increase since 2010 when the province had a Gini coefficient of 0.58^[2] representing an increase in inequality levels. Between the year 2000 and 2010 province's income inequality declined as its Gini coefficient decreased from 0.63 in the year 2000 to 0.60 in 2007 and to 0.58 in 2010.^[21]

The Western Cape'sHuman Development Index is the highest in South Africa at 0.7708, compared to theSouth African average of 0.6675 in 2003.^[24]

Exports from the Western Cape totaled R167 billion (equivalent to US$11.13 billion) in 2021; R17 billion of those exports went to theUnited States making it the largest export market for the province in that year.^[25] The United States was also the largest source of investment for the province "investing R2.9 billion and R4.4 billion into the Western Cape in 2020 and 2021, respectively."^[25]

In 2010, the Western Cape imported a total of R104.9 billion^[26] worth of goods and commodities and exported R50.4 billion.^[27] The discrepancy between imports and exports and the dominance ofoil producing countries as the top trade partners can be explained by the large amount of petroleum and petroleum products that are imported into the province to be processed and refined at theChevron Oil Refinery in Cape Town.

Cape Town is a major entry point for oil and gas imports into South Africa. Adjusted for petroleum imports, the Western Cape imported R47.6 billion worth of goods and commodities in 2010 and had a trade surplus of R2.78 billion. A total of 1.2 million tons of cargo went through the Port of Cape Town in 2016.^[3]

The importation ofcrude oil and other petroleum related products accounts for the largest proportion of the province's imports. This due to the importance of Cape Town as an entry point andrefining nexus for South Africa and the Southern African region as a whole for oil and gas imports. Imports to the province have increased by and average of 10.6% a year between 2008 and 2018.^[28]

Top five imports in 2010[26] Product Value (millions of Rands) Percentage of total Crude oil 43,683 41.61% Petroleum products 13,688 13.04% Liqueur andspirits 1,674 1.6% Medicaments 1,382 1.32% Electronic components 1,035 0.99% All other imports 43,530 41.46%

Top five source markets in 2010[26] Country Value (millions of Rands) Percentage of total China 13,521 12.88% Iran 12,653 12.5% Saudi Arabia 12,188 11.61% Angola 8,932 8.51% Nigeria 5,298 5.05%

Agriculture still MSP dominates the export industries of the Western Cape with little over 47% of all export commodities in 2010 being agricultural products. Exports have grown on average by 5% a year between 2001 and 2010.^[27] In 2014 countries in the rest of Africa overtook Europe as the leading destination for the province’s exports with most exports to Africa going to countries in theSouthern African Customs Union bordering South Africa.^[7]

Agri-processed products such as food, beverages and tobacco was the biggest export sector accounting for around a quarter of exports in 2016 with most of these products coming from Cape Town or theCape Winelands.^[7] Export growth of good produced in the region has averaged 6.6% a year between 2008 and 2018.^[28]

Top five export markets in 2010[27] Country Value (millions of Rands) Percentage of total United Kingdom 5,076 10.07% Netherlands 4,918 9.76% Germany 2,954 5.86% United States 2,386 4.74% Angola 1,648 3.27%

The city ofCape Town is ranked as the most entrepreneurial city in South Africa withEarly-Stage Entrepreneurial Activity being 190% greater than South Africa’s national average.^[29] In the future Cape Town plans to become a global design and innovation hub by focusing on industries and policies that support the design sector.^[30] The design and advertising sectors are already the best developed in Africa.

There has been a substantial increase in the number ofhigh-tech start-up companies in Cape Town, with companies like Aerobotics, Jumo, Luno and Yoco all making waves in the Cape Town tech scene.^[31] Interest in developingintellectual property start-up companies, has also been expressed through communities such as theSilicon Cape Initiative. In October 2011 Cape Town was awarded the title ofWorld Design Capital 2014 by theInternational Design Alliance.^[32]

By 2018 an estimated 10 to 15technology startups were established in Cape Town annually supported by a strong localbusiness accelerator scene. A large number of South Africa's established technology startups have been founded and are located in Cape Town ranging fromvideo game companies,e-commerce,travel technology, digital services, andfinancial technology.^[33]

The Western Cape has one of the largest technology sectors in Africa, with around 550 companies employing over 40,000 people in the city ofCape Town alone. Tech is one of the fastest-growing sectors of the province's economy.^[34] As of 2005^[35] Cape Town hosts a largeAmazon web services centre for itscloud computing services and customer services employing 1,400.^[36] Thevideo game industry also has a strong presence in the region^[37] with 55% of South Africa's 60 game development studios in 2022 located in the Western Cape.^[38]

The biggest sector in the Western Cape's economy is the financial, business services and real estate sectors contributing approximately R77 billion in 2008.^[39] The province is particularly strong in financial services associated withwealth management. As of 2018 Cape Town is the top ranked African city on theGlobal Financial Centres Index with the Western Cape hosting the fast-growing financial services sector in South Africa.^[34]

The first private banks in the Western Cape were established in Cape Town in the 1830s^[19] to take advantage of the city's then strategic importance to world trade and facilitate trade and investment in the local economy. A number of large financial companies were founded in the province, and continue to maintain a significant presence in the province's capital, Cape Town. The largest such company beingOld Mutual which was founded in Cape Town in 1845. Financial services groupSanlam Limited is headquartered in Cape Town where it was founded in 1918.Investment and wealth management firmAllan Gray is also headquartered in Cape Town.^[40]

Thebusiness process outsourcing industry has grown in the Cape Town by 85% in 2016 contributing 20,500 jobs.^[7]

Oil,gas and otherenergy related industries play a significant role in the economy of the Western Cape. With South Africa's largest gas facility inMossel Bay, naturaloffshore gas reserves, the province's strategic location and the Chevron Oil Refinery the region plays an important role in producing, processing and distributing petroleum products throughout the Southern African region.^[41]

TheAstron Energy Refinery inMilnerton is the third-largest of four refineries in South Africa. and is capable of processing 100,000 barrels of crude oil a day^[42] whilst the PetroSA facility in Mossel Bay is capable of refining up to 45,000 barrels a day of syntheticgas-to-liquids.^[43] Combined this represents just over 20% of South Africa's refining capacity in 2018.

There is an estimated one trillion cubic feet of natural gas reserves in the Bredasdorp Basin south-east of Cape Town.^[41]

The province's strategic location plays an important role in the growth of the local energy industry. With 32.2% of allWest Africa's and 23.7% of allMiddle Eastern oil produced in these regions being transported around theCape of Good Hope. The servicing and maintenance ofoil rigs and shipping involved in the transportation of oil and gas is a significant industry in its own right.^[41]

Unlike much of the rest of the country, which relies on coal fired power plants, the Western Cape relies more on a mix of natural gas, nuclear, andrenewable energy to provide the bulk of its electricity.^[44] This has resulted in the majority of South Africa's growing renewable energy industry being based in the province.^[45]

Manufacturing was the second largest contributor to the Western Cape's economy valued at R43.7 billion in 2008. The province's manufacturing sector has proven to be more robust than the rest of the country as a large part of the manufacturing sector is made up of a food processing sector whose products have been in relatively constant demand.^[39] The Western Cape accounts for half of South Africa's domestic production of cheese.^[46]

The largest manufacturing industry in the province is the clothing and textile industry, which employs over 170,000 people. The textile industry is presently declining in importance, due to competition with cheaper Eastern producers, such asChina. TheSaldanha Steel mill inSaldanha was a major producer and exporter of hot-rolled carbon steel; designed to produce 1,25 million tons of hot-rolled carbon steel coil per year, the mill was mothballed in 2020.^[47] The petrochemical andplastics industry, furniture, printing, pharmaceuticals, and publishing are also significant industries.

Of increasing importance to the province's economy are the production of and research ininformation technology,telecommunications,medical equipment, research equipment and otherhi-tech industries. The Capricorn Science and Industrial Park in the Cape Town suburb ofMuizenberg is an important growth node of the hi-tech industry in the province.^[8]

Companies with notable manufacturing operations in the province includes electronics producer Tellumat andGeneral Electric, white goods producerHisense,^[48] personal care products producersKimberly-Clark andGlaxoSmithKline.

The province has grown a large tourism industry since 1994. The majority of international tourist visiting South Africa visit the province, with Cape Town,Garden Route and theWinelands being popular tourist destinations. In 2004, Cape Town was listed as one of the top five international tourist destinations.^[49] Fifty percent of international tourists to South Africa visit the Western Cape. The province's overall share of South Africa's tourism sector by gross expenditure is 24 percent^[8] and totalling R23.1 billion (US$1.8 billion) in 2017.^[28]

There were 1,535,903 international arrivals in 2004 with continued growth annually. Annually 8 million tourists visit the province.^[8] Domestic tourism is also on the rise, as low-cost air carriers make travel more affordable to more South Africans.

The seven most visited locations in 2016 were theV&A Waterfront,Cape of Good Hope,Boulders Beach,Table Mountain Cableway,Kirstenbosch Botanical Gardens, andRobben Island.^[3]

Although agriculture accounts for a relatively small proportion of overall economic output of the province, the Western Cape nevertheless accounts for the highest gross value of agricultural production of all of South Africa's provinces.^[50] The sector consists of 9,480 small scale farmers and 6,653 large scale commercial farmers.^[51]

Around 11,5 millionhectare of land in the province is cultivated. Although this only represents 12.4% of the total land used for agriculture in South Africa, the Western Cape produces 55% to 60% of South Africa’s agricultural exports, valued at more thanR7 billion^[52] (US$1 billion)^[53] a year. In 2008, the sector was also one of the fastest growing of the economy, expanding by 10.6%.^[39]

Key agricultural export products from the province includewine,wool,ostrich related products,essential oils andfruit.^[52]Wheat and othercereals are extensively cultivated in theSwartland andOverberg districts of the province.^[8] For most of theprovince's history exports have been dominated by agricultural products (primarily fruit, sea food, vegetables, wine and brandy).^[8] In 2017, fruit and wine exports generated R37 billion (US$2.87 billion) in foreign export earnings.^[28] Overall 400,000 people are directly and indirectly employed by industries in the agricultural value chain.^[28]

Water shortages caused byclimate change is a notable recent challenge to the further development of the agriculture sector in the region. The2015-2018 drought in the Western Cape had a large negative impact on the province's agricultural sector.^[28]

The Western Cape region has been famous for its wine since the late 18th century and exports wine all over the world. In 2010 the Western Cape exported 374.8 million litres of wine.^[54] With 100,200ha of vines under cultivation the province is the ninth largest exporter of wine in the world.^[8]

Distilled wine orbrandy is produced in the area long theR62 around the towns ofWorcester,Robertson,Barrydale,Calitzdorp andOudtshoorn. Brandy is also produced around the towns ofPaarl,Stellenbosch,Franschhoek,Wellington andGrabouw.^[55] Brandy from these regions are regarded as amongst the best in the world.^[56]

As of 2019, the province accounts for half of the beer microbreweries in South Africa.^[57]

With 52,300ha of fruit trees under cultivation the province is also well known for its fruit and fruit related products. 40% of all fruit grown in South Africa originates from the Western Cape.^[58] The vast majority of South Africa'spome (apples & pears) fruit and most of itsstone fruit is grown in the province. Around 687,121 tons of apples and 345,296 tons of pears were exported in 2008.

Ceres Fruit Juices originated in the town ofCeres and is a major exporter offruit juices to North America, Europe, and Asia.Appletiser, a popular sparkling fruit juice, originated from and all production is based in the town ofElgin. The major fruit growing regions of the province are Ceres,Grabouw, andVilliersdorp.^[59]

The Western Cape produces 90% of South Africa'solive oil and the province has experienced "astonishing growth" in this product. Between 2012 and 2019, olive groves grew 640% from 60 ha to 420 ha.^[60]

Around 75% of all commercial fishing in South Africa takes place along the Western Cape's coastline. The provinces rich cold water fishing grounds are abundant in marine life. Marine life such asspiny lobster (locally known as crayfish),abalone,snoek,squid,octopus,oysters andmussels are extensively fished. The fishing of spiny lobster and abalone is heavily regulated due to their high value and dwindling population due to extensive poaching.^[8]

The Western Cape has two of the five operatingspecial economic zones (SEZ) within South Africa; the Saldanha Bay Industrial Development Zone and the Atlantis SEZ.^[61][62] Invigorated in 2013 the Saldanha Bay Industrial Development Zone is based around the port atSaldanha Bay and is focused on supporting the growth of theenergy andmarine services industries.^[61][63][62] The Atlantis SEZ is focused onrenewable energy andgreen technology manufacturing and is based around the town ofAtlantis, a satellite community of Cape Town.^[61][64][62]

This graph was using thelegacy Graph extension, which is no longer supported. It needs to be converted to thenew Chart extension.

GDPR growth rates in constant 2010 prices: 1996 to 2019. The1997 Asian financial crisis,Great Recession (2007-2009) andCOVID-19 pandemic (2020) are highlighted.^[65] 2020-2022 projects^[66]

• Western Cape Government
• Western Cape Tourism
• Wesgro: Western Cape Tourism Trade and Investment Agency
• Invest Cape Town

• Economy of the Western Cape

• Pages using the Graph extension
• Pages with disabled graphs
• All articles with dead external links
• Articles with dead external links from July 2025
• Articles with permanently dead external links
• Webarchive template wayback links
• Articles with short description
• Short description is different from Wikidata
• Use dmy dates from June 2020
• Use South African English from September 2012
• All Wikipedia articles written in South African English
• Pages using multiple image with auto scaled images
• Pages using photo montage with one or fewer images