South African Market ReviewMay 18, 2023
Warwick Wealth Matters – May 2023May 24, 2023
An article written by Ian Kilbride
“If the Russian leader sets foot in the Western Cape, we, as the provincial government will have him arrested by our own Western Cape Government-funded Law Enforcement Plan (LEAP) officers. If the South African Police Service is not instructed to act, we will.” Western Cape Premier, Alan Winde, (April 27, 2023).
While Premier Winde’s threat reflected the sentiments felt by many South Africans (not just Western Cape residents), his warning to Vladimir Putin and the National Government, prompted serious considerations of the constitutional powers vesting in the Western Cape Government and its Premier.
Winde’s political will could have been tested much earlier had his law enforcement agencies sought to block or impound the sanctioned Russian RoRo container vessel Lady R on Friday 9 December 2022 after it had allegedly been loaded with South African military equipment. While the cargo off-loaded and loaded in Simon’s Town remains shrouded in mystery, the fact that the Lady R was sanctioned and its Automatic Identification System turned off is not in dispute. No doubt, once established, the Commission of Inquiry into ‘Lady Russiagate’ will yield the customary heat and light we have become used to.
Anyway, back to the future of the Western Cape. Is there a case for independence, or is this just a case of political posturing aimed at keeping the Democratic Alliance in power and the African National Congress out of power in the 2024 elections?
To be clear, the South African constitution categorically does not allow for or permit secession. However, Section 127 2. (f) of the constitution empowers the Premier to call for a referendum in accordance with national legislation. Adding grist to the mill of the independent ‘Kaapenaars’, Section 235 of the Constitution provides a clear right to the “people as a whole” to self-determination and provides for the “recognition of the right of self-determination of any community sharing common cultural and language heritage within a territorial entity in the Republic, or in any other way, determined by national legislation.”
Not unlike the Scottish National Party in the UK, entities such as the Cape Independence Party and broader independence movement have seized on populist anti-government sentiment to pressure the Western Cape government to hold a referendum on independence for the Western Cape. Notably, a majority of those polled favour the holding of a referendum and an increasing number (although still a minority) favour independence. But as the famous Chinese saying goes, “Be careful of what you wish for.”
The distinctive features, attractions and advantages of the Western Cape are clear not only to its seven million residents, but also to the hundreds of thousands who have migrated to the province over the past few years. In fact, some 48% of the growth in Western Cape population over the past five years is because of ‘in-migration’. And it’s not just jobseekers who are moving to the Western Cape. In 2023, Cape Town rose 63 places to 31st on the Prime International Residential Index which tracks the property purchase of the ultra-wealthy globally.
While smaller than Gauteng and KwaZulu-Natal, the Western Cape economy has a far higher per capita GDP than the national average, with the lowest unemployment levels and the highest human development index, including the lowest level of inequality nationally. In purely economic terms, the Western Cape, generates far more revenue for the national fiscus than it receives in transfers and this alone gives rise to resentment from those advocating for independence. As those with an historical bent will remember, taxation, revenue transfers and representation have been key touchpoints for many conflicts ranging from the Boston Tea Party, to the Anglo-Boer War and more recently, Brexit.
With respect to governance, Ratings Afrika ranks the Western Cape as the best run province, with Cape Town the top-performing Metro and the province housing 12 of the top 20 municipalities.
In my view, the Western Cape is also best placed to take advantage of global economic trends such as (green) energy production, tourism, agro-processing, software development, business process outsourcing, and hi-tech manufacturing. All of these economic drivers are being promoted by the province and are supported by the country’s leading universities and business schools, notably UCT and Stellenbosch.
But does all of this add up to a recipe or justification for secession? Certainly not. The benefits of secession for an independent Cape (currently accounting for just 14% of South Africa’s GDP) are not at all clear. In purely political terms, the ‘independent secessionists’ would do well to reflect on national conflicts that have blighted countries such as Ethiopia, Nigeria, Yugoslavia, Sri Lanka and Ireland. Rather, if the Western Cape really wants to flourish in its own right, it has to retain its unique character, while developing into the most open, forward-looking, attractive and progressive economy on the African continent.
In fact, this can only be achieved by not waving exclusive ethnic, nationalist, or racist flags. Rather, the Western Cape can become the California of Africa, with infinitively more potential and by so doing, contribute the sustainable future of the entire country.
Chairman, Spirit Invest
Chairman, Spirit Foundation
Honorary Professor Stellenbosch Business School