Enterprising Cape: Building an inclusive and vibrant economy

The Western Cape is currently caught in a middle-income trap, characterized by slow GDP per capita growth and significant inequality in access to basic services. The document evaluates three scenarios: an 'Inclusive Economy' focusing on basic services and education, a 'Vibrant Economy' focusing on high-level skills and business environment, and an 'Enterprising Cape' which combines both. The analysis finds that while isolated interventions provide some gains, a comprehensive approach is necessary to significantly raise GDP per capita, improve the Human Development Index (HDI), and accelerate the transition to high-income status by the mid-2030s.

• The Western Cape is currently mired in a 'middle-income trap,' where its GDP per capita growth has remained below the 3.5% threshold required to transition to high-income status in a timely fashion. Between 2001 and 2011, the province's GDP per capita grew at an average rate of only 2.6%.
• Under a 'Base Case' scenario with no significant policy changes, the Western Cape is forecast to reach high-income status only around 2040, with a GDP per capita growth rate averaging 2.5% between 2014 and 2040.
• The 'Enterprising Cape' scenario, which combines inclusive and vibrant economy policies, is the most effective path, projecting a GDP per capita 24% higher than the Base Case and an HDI 3.6 points (4.3%) higher by 2040, accelerating high-income status to the mid-2030s.
• The province faces a significant mismatch between sectoral GDP contribution and labour force share; the tertiary sector contributes 74% of GDP but employs only 67% of the labour force, while primary and secondary sectors contribute 26% of GDP but employ 33% of the workforce.
• Severe income inequality persists in the Western Cape, where the richest 1% of the population takes home 13.7% of the total income, while the poorest 22% of the population receives only 4.7% of all income earned.
• A critical 'skills gap' exists, particularly in science and engineering, which hinders the transition to a knowledge society. In 2010, only 5% of people aged 15 and older in the Western Cape held a bachelor's degree or higher.
• Government red tape is a major barrier to business; 73.4% of businesses surveyed in the Cape Town metro area identified it as a moderate or major constraint.
• While basic infrastructure access is generally high—with 93% of households having electricity and 95% having improved sanitation in 2013—reliability remains a problem, and significant gaps persist outside the Cape Town metro area.
• The province's health outcomes are lower than expected for its income level, with an average life expectancy of 66 years, compared to 73 years expected based on GDP per capita.
• Broadband penetration is identified as a key driver for growth; a 10% increase in broadband penetration in developing countries has been shown to boost GDP growth by 1.38 percentage points.

APA

Margolese-Malin, E., Moyer, J. D., Rafa, M., & Irfan, M. (n.d.). Enterprising Cape: Building an inclusive and vibrant economy. Institute for Security Studies. https://issafrica.s3.amazonaws.com/site/uploads/PolBrief-FuturesCape-3.pdf

Chicago

Margolese-Malin, Eli, Jonathan D Moyer, Mickey Rafa, and Mohammod Irfan. Enterprising Cape: Building an inclusive and vibrant economy. Institute for Security Studies, n.d. https://issafrica.s3.amazonaws.com/site/uploads/PolBrief-FuturesCape-3.pdf.

Wikipedia

{{cite report |last1=Margolese-Malin |first1=Eli |last2=Moyer |first2=Jonathan D |last3=Rafa |first3=Mickey |last4=Irfan |first4=Mohammod |title=Enterprising Cape: Building an inclusive and vibrant economy |publisher=Institute for Security Studies |url=https://issafrica.s3.amazonaws.com/site/uploads/PolBrief-FuturesCape-3.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{margolesemalinndenterprising, author = {Margolese-Malin, Eli and Moyer, Jonathan D and Rafa, Mickey and Irfan, Mohammod}, title = {{Enterprising Cape: Building an inclusive and vibrant economy}}, institution = {Institute for Security Studies}, url = {https://issafrica.s3.amazonaws.com/site/uploads/PolBrief-FuturesCape-3.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }