The Overberg District is one of five administrative districts within the Western Cape Province of South Africa. The Overberg borders the Indian and Atlantic Oceans to the south and mountain ranges to the North. It is home to approximately 265 858 people and is sparsely populated (4.4% of the Western Cape population) with a small economy, (GDP of R13.3 billion in 2013 which constitutes 3.3% of the Western Province GDP), and contains a number of small towns and other settlements. Its economy is dominated by agriculture and tourism and is a popular area for holiday-making and retirement[1].

With regard to energy service provision, 94.1% of all households have access to electricity.[2] The four municipalities in the Overberg District appear to have purchased approximately kWh 478 642 115 of electricity from Eskom in 2014[3]. The revenue received from the sale of electricity by these municipalities is R 529 975 469. This is 34% of total municipal revenue. Presently, this money flows out of the district to Eskom’s generators elsewhere in the country and is a total loss to the local economy[4].

It is clear from the above that the need for economic activity in the Overberg is critical for the longer-term sustainability of the district.

The agricultural sector did not live up to its promise to create more jobs and ‘a better life for all’. The tourist industry is the most promising sector and has been growing steadily, but future sustainability of this sector is in question. The tourist industry is a global industry and notoriously fickle and unpredictable.

The energy market in the Overberg appears to be available for exploitation and a promising candidate as a future driver of economic development. All sections of the population could be positively affected by the energy market. The potential for renewable energy generation is high; the Overberg has been identified by the Department of Environmental Affairs as a Renewable Energy Development Zone (REDZs).

The majority of the population is Coloured (50.52%) and Black (17.16%) and Afrikaans speaking (68.2%). The Gini Coefficient is high with the majority of wealth concentrated in a small minority of mostly white people. The richest 20% of the population accounted for 61.0% of consumption and the poorest 20% for 4.5% of consumption in 2011. The Human Develop Index (0.66) is low. Whilst the Overberg District economy grew steadily at 4.8% between 2000 and 2013, unemployment remained stable (17.0%) and poverty rates in the Overberg District dropped only marginally from 31% in 2001 to 30% in 2010.

The economic growth in the district is driven by tourism as well as people relocating from the North and retiring to the coast. More than 13 700 jobs were gained in the services sector during 2000-2013. The employment in the agricultural is shrinking, approximately 13 550 formal net jobs were lost in the agricultural sector over the same period. “The rural sector is undergoing a form of compositional change, with the literature suggesting that a phenomenon of de-agrarianisation is taking place as households become more dependent on government grants while moving away from agricultural-based activities” [5].

“There is also evidence of increasing reliance on government grants[6] as a source of income in rural areas. Firstly, there were a high proportion of individuals who in 2008 were not part of a household receiving a grant but in 2012 were part of such a household. Secondly, there was a significant increase in the already high share of household income attributable to government grants (53%) for rural households”[7].

[1] See Socio-economic Profile Overberg District 2014. Western Cape Government Provincial Treasury

[2] OVERBERG DISTRICT ENERGY CONSUMPTION AND CO2e EMISSIONS SUMMARY REPORT (2013). Western Cape Provincial Government, Department of Environmental Affairs.

[3] Our own calculations using the Annual Reports, IRP’s and Budgets from Overstrand, Agulas, Theewaterskloof and Swellendam Municipalities.

[4] Whilst the municipalities appear to be protective of this income stream as a revenue item in their budgets, it is becoming clear (from interviews with municipal managers locally and in Cape Town and Stellenbosch) that the ‘profits’ made from trading in electricity is small and that the loss of staff and facilities seems to be a more pertinent reason.

[5] Daniels, Reza C. Et al. Rural Livelihoods in South Africa. SALDRU Working Paper 122. University of Cape Town.

[6] The ‘social wage’ which consists of free primary health care, no-fee paying schools, RDP housing and the provision of basic services such as water, electricity and sanitation and, in addition, direct old-age pensions and child support grants.

[7] Daniels, Reza C. Et al. Rural Livelihoods in South Africa. SALDRU Working Paper 122. University of Cape Town.