Situational Analysis

Gross Geographic Product

The Ingquza Hill Local Municipality is the second highest contributor to the O.R. Tambo District Municipality’s GGP, after King Sabata Dalindyebo Local Municipality. Its contribution totals about R617 million per annum,  which accounts for 9.4% GGP contribution (QLM, 2006).

The government sector makes a significant contribution to the GGP of the municipality with a total contribution of 56%, followed by wholesale (8.7%), retail (7.8%) and agriculture & hunting at 7.4%. The remaining sectors have a contribution of less than 5% each which hampers the economic growth of the area. Ironically it is the sectors that are making the smallest contribution that has the highest potential to improve the local economy.

Employment And Labour Trends

The O.R. Tambo District has an unemployment rate of 77%. The unemployment rate of Flagstaff and Lusikisiki is at an average of 66%. High unemployment rates negatively impact municipalities as low affordability levels
result in a poor payment rate for services. The labour market is highly concentrated in the community services sector followed by the household and agriculture sector. These dominant sectors do not guarantee job security and
the associated wage rate is generally below the poverty line. Primary growth sectors which should ideally be the highest contributors to economic development like manufacturing, transport, trade and financial services are
yielding relatively very low contributions towards job creation.

The result of this is that Ingquza Hill is characterised by a narrow economic base, which contributes to the high levels of unemployment and poverty. Resources need to be invested in the primary growth of sectors like agriculture, manufacturing, transport and trade to prevent the unemployment rate from rising.

Ingquza Hill is situated relatively far away from the hubs of economic activity in the Eastern Cape. It is traversed with R61 links Durban to Port St Johns which creates certain potential in terms of future economic development; there is also a proposed N2 toll road that will traverse the Municipality along the coast which shall bring new opportunities economically and in transportation and mobility. The urban nodes of Flagstaff and
Lusikisiki fulfils the commercial needs for the area as well as the residential needs of the people working in the two town centres. The remainder of the area is predominantly rural in nature.

This predominantly rural nature of the majority of the municipal area gives rise to the expectation that the agricultural sector should be the key contributor to the economy of the area. The relatively low contribution of
the agriculture sector to the GDP of the area has a negative impact on the provision of food security and job creation in the area.

The Agricultural Research Council (ARC), in association with the University Of Fort Hare and other research institutions, has developed a comprehensive agricultural potential survey for the entire O.R. Tambo district
(QLM, 2006). The purpose of the survey was to unearth areas where the potential for agricultural development exists. The survey focused on soil analysis, climate and agricultural potential. Suitable areas for specific crops
were identified and a quantum of land was identified for the development of those crops. Crops with high levels of potential include Maize, Sorghum, Dry beans, Cabbage, Potatoes, Tea & Avocados.

Ingquza Hill has the advantage that it has fertile soil and rivers which can be used for irrigation purposes. The agriculture potential is also dispersed throughout the municipal area making it possible to diversify intensive crop farming which in turn provides a good basis for investment on poverty alleviation programs and local economic development. The survey also identified small pockets of potential livestock farming land. It was observed that if properly managed and developed, the production of beef, milk, wool and leather are potential sources of economic development.

In order to facilitate the growth of this sector and utilize available opportunities, there is a need to invest in infrastructure and community development and support. Forestry and logging have been identified as the sectors with the highest potential. It is estimated that about 5000 hectares of land could be developed for new forestation and the commercialization of existing jungle forests. Existing areas currently planted under DWAF management are estimated at about 3500 hectares. Development of this sector needs to be done in a sustainable manner with due consideration of conservation principles. The municipality has also identified tourism, mining, quarrying, aquaculture and fishing as sectors where economic development can take place.

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