Is an Independent Western Cape Economically Viable?
Empirical data confirms that an independent Western Cape would be economically viable (& would likely thrive)
Explainer
South Africa has a single tax system which makes exact calculations about an individual province very difficult. To keep the calculations simple to understand, we have used key indicators from official government sources.
You may have seen some organisations trying to reduce the amount of money Cape Independence would save to a ZAR amount. This is very misleading and is not an accurate picture. You cannot simply say the Western Cape pays in R’x’ and receives R’y’ back, because the national government funds many of the services provided to the Western Cape (eg, police, roads, grants, etc).
By using percentages, and by making the assumption that at the very least the Western Cape will run national services at least as efficiently as they are run now, we can get an accurate indication of the Western Cape’s economic viability.
Key numbers
- Western Cape produces 14.2% of SA’s GDP (source: Wesgro, 2023)
- Western Cape houses 11.9% of SA’s population (source: StatsSA, 2022)
- Western Cape has 16.6% of all SA taxpayers (source: SARS, 2022)
- Western Cape receives 10.5% of the funds allocated to provinces (source: Treasury, 2022)
Simplistically, the Western Cape is paying 14.2% into the system and receiving 10.5% back out. If it paid nothing to SA and got nothing back from SA, it would be 35% better off.
In 2022, Afriforum conducted an in depth tax flow study on the Western Cape. Unfortunately it has never been released, but after making an extremely complex set of calculations, it ended up with a virtually identical number.
Only two provinces make a net contribution to the South African economy (i.e. contribute a higher proportion of income than they receive in allocations). They are Gauteng and the Western Cape. The Western Cape is subsidising South Africa, not the other way around.
African Comparisons
In 2022, the GDP of the Western Cape economy was US$ 57.6bn. In comparison, Zimbabwe (33.0), Botswana (20.3), and Namibia (12.6) had a combined GDP of US$ 66.2bn. In African terms, the Western Cape economy is big. (source: Statista)
In 2018, StatsSA actually produced a report establishing how South African provinces would measure up with other African countries economically if they were independent states. The Western Cape would have had the 16th largest economy in Africa, between Tunisia and the Democratic Republic of Congo. You can read the report here.
Summary
There is no doubt whatsoever that the Western Cape is not only economically viable, but that it would thrive as an independent country once released from the shackles of ANC economic policy.
Economist Russell Lamberti summed it up perfectly in this tweet when he said, Cape Independence may have many challenges, but economic viability is not one of them.
