4.1 Background of the selected site
4.1.3 Gross Value Added
The economy of the local municipality of Mbhashe consists of several industries. The GVA variables provide fault of the sector. Here, each sector is measured from the perspective of its valuables produced in the regional economy.
Definition: Gross Valued Added (GVA) measures the region's output (total production) from the point of view of the value created in that area. GVA can be classified into several production departments.
The following summary table is expanding the GVA of all areas of the local municipality of Mbhashe.
Table 4. 7: Gross value added (Municipality, 2016).
In 2016, the community service department was the largest local department in Mbhashe, accounting for R1.48 billion or 39.6% of the local economy. The industry that contributes the most to the GVA of the local municipality of Mbhashe is the commercial sector, accounting for 31.7%, followed by the financial sector, accounting for 12.7%.
The industry that contributes the least to the local economy of Mbhashe City is the mining industry, which has 15.8 million rands or 0.42% of the total GVA (Municipality, 2016).
Figure 4. 5: GVA by broad economic sector (Municipality, 2016).
The community sector, including government services, is often the most significant contributor to GVA. If all areas of the Amatole district are analyzed, it is evident that Mkuma has contributed most of the community services to its own GVA, accounting for 27.37%, compared to other areas of the Amatole district. Mnquma contributed R7.61 billion or 30.30% to the GVA of the Amatole district. The area in the Amatole district that contributed the most to the GVA is Ngqushwa, with a total of R2.49 billion or 9.90%
(Municipality, 2016).
In 2016 and 2006, the GVA of the construction industry had the highest average annual growth rate in Mbhashe, at 2.60%. The industry with the second-highest average annual growth rate in the financial industry, with an average annual growth rate of 2.38%. On the other hand, the mining industry has an average annual growth rate of 1.29%, while the energy sector has the lowest average annual growth rate of 4.12%.
In 2016, all industries showed negative growth, with an average annual growth rate of 0.67% since 2015 (Municipality, 2016).
Table 4. 8: Historical GVA (Municipality, 2016).
The tertiary industry provides the most to the GVA within Mbhashe at 89.2%. This is significantly higher than the country’s economy (68.6%). The secondary industry contributed 9.1% (ranked second), while the primary sector contributed the least at 1.7%.
Figure 4. 6: Breakdown of the GVA (Municipality, 2016).
The following is a breakdown of the Gross Value Added (GVA) by aggregated sector (Municipality, 2016):
4.1.3.1 Primary Sector
The primary sector includes two main economic sectors, namely the mining industry and the agricultural sector. From 2006 to 2016, the agricultural sector experienced the highest positive growth in 2008, with an average growth rate of 16.9%, while the mining industry reached the highest growth point of 6.5% in 2014 (Municipality, 2016). The agricultural sector experienced the slowest growth in 2016 with -9.8%, while the mining industry reached the growth point lower with -8.4% in 2007 (Municipality, 2016). During this period, the development of agriculture and mining, in general, has fluctuated.
4.1.3.2 Secondary Sector
The secondary industry includes three major economic sectors: manufacturing, power, and construction. From 2006 to 2016, the manufacturing industry experienced the highest positive growth 2006, with a growth rate of 4.0% (Municipality, 2016). The construction industry achieved its highest growth in 2008, at 10.1% (Municipality, 2016). The manufacturing industry had the lowest growth rate in 2010 at -11.0%, while the construction industry reached its lowest point in 2010, with a growth rate of -5.1%
(Municipality, 2016). The energy sector had the highest growth rate in 2007, at 4.7%, and the lowest growth rate in 2014, at -14.9%.
4.1.3.3 Tertiary Sector
The tertiary industry includes four main economic sectors: commerce, transportation, finance, and community service. The commerce sector experienced the highest positive growth in 2008, with a growth rate of 5.6%. The transport sector also experienced the highest positive growth rate, which was 3.8% in 2008, lower than that of the manufacturing industry. The financial industry had the highest growth rate in 2008, at 7.7%, and the lowest growth rate in 2009, at 1.6% (Municipality, 2016). The commercial sector also had the lowest growth rate in 2009, at -4.0% (Municipality, 2016). The community service sector, mainly composed of the government, had the highest positive growth in 2008, at 5.2%, and the lowest growth rate in 2013, at 5.9%
(Municipality, 2016).
4.1.3.4 Sector growth forecast
GVA predictions are based on forecasted growth rates derived from historical growth rate estimates and national industry forecasts. Therefore, these forecasts are based in part on the view that regions that have performed well in the short term may continue to perform well (and vice versa), and in part on the idea that areas that have prominent industries are expected to grow excessively across the country. The economy can work well (and vice versa). As the target year moves away from the base year (2010), the focus shifts from historical growth rates to industry growth rates nationwide.
Table 4. 9: GVA by broad economic sector (Municipality, 2016).
The agricultural sector is expected to grow at an average annual rate of 3.19%, from R28.9 million in the local municipality of Mbhashe to R33.8 million in 2021 (Table 4.9).
The community service department is estimated to be the biggest department in the local municipal government. In 2021, Mbhashe accounts for 39.3% of the total GVA (at
with the slowest growth rate is expected to be the mining industry, with an average yearly growth rate of 0.33% (Municipality, 2016).
Figure 4. 7: Gross value added by aggregate sector (Municipality, 2016).
It is estimated that the average annual growth rate of the primary industry from 2016 to 2021 will be 1.94%, and the annual growth rate of the secondary industry will be 1.34%.
The tertiary industry is expected to grow at an average annual rate of 1.16% during the same period (Municipality, 2016).