The Wild Coast and the Census
Lessons from small places #2: Another small place with a story about South Africa
My next blog post is another lesson from a small place: this time in rural Eastern Cape.
Along the famously beautiful Wild Coast is an Early Childhood Development Centre near the village of Bulungula. The famous tourist town of Coffee Bay is a short hike away along the spectacular coastline. Here you will meet two people you might be surprised to find in such a deep rural area: Réjane Woodroffe and Dave Martin. They are both trained economists – Réjane was previously the Chief Economist and Head of International Portfolio Investments for Metropolitan Asset Managers and a research analyst for the US investment bank, Merrill Lynch, in the economics and fixed-income sales and trading departments. Dave is a University of Cape Town graduate with an undergraduate degree in finance and an Honours degree in accounting.
But for now we want to talk about what these two economists have observed about the population of the area. If you tour the early childhood development centre, you will hear that it is not as overcrowded as it used to be. At one stage there was talk about having to build more than one centre, but that is no longer the case.
How is this so? Well, if we look at the Statistics South Africa numbers (imperfect as they may be), the story is shown in numbers.
Bulungula is in the Amatole district, and the number of children under the age of 10 has been rapidly declining. StatsSA estimates that in 2002 there were 215,000 children in this age group. By 2019, it was down to 185,000. There is an interesting little surge in population around the 2011 mark and then the under tens start declining again.
Census 2022 showed that there were 164,770 under 10s in Amathole, just over 20,000 fewer than in 2019.
The Census data may not be that accurate, but we have other much more accurate sources of data: births, deaths, enrollments in school and hospital visits.
Starting with school children. We have reasonably accurate numbers for school-going children (these numbers should be better, but they are ok). National Treasury publishes the number of school-going children by province in the annual Budget Review. In 2022, there were 1.824 million schoolchildren in the Eastern Cape; down from 1.9 million in 2012.
Primary health care visits are another measure that the Treasury publishes. In 2012, there were 17,968 health care facility visits in the Eastern Cape, versus 13,322 in 2022 or a full 25% fewer visits. Hospitals that were once bursting are now just very full.
This is a result of two things – first, the overall slowing of population growth in South Africa. This is because, despite the tough past several years, South Africans are richer and more educated than they were fifteen years ago. Higher incomes and higher levels of education are associated with smaller family sizes. The number of births each year has fallen from a peak of around 1.7 million in 2003 to less than 1.1 million in 2022.
Second, there has been rapid migration to the economic centres – particularly into Gauteng and the Western Cape. This is causing the population of the Eastern Cape to stagnate. Census 2011 estimated the Eastern Cape population to be 6.6 million, and Census 2022 puts it at 7.2 million, growth of less than 1% a year. Over the same period, the population of Gauteng grew from 12.3 million to 15.1 million, growth of 2.8 million or nearly 3% a year. The population of Gauteng is thus growing nearly 3 times faster than the population of the Eastern Cape.
From China, we learn the lesson of how to ride the “demographic dividend”. This is the natural impetus one gets from a change in the relative population growth rate. If there is an abundant supply of labour, and prices can adjust, this can support economic growth. The important thing is that the price of labour has to be appropriate – i.e., not kept artificially high – and that the labour force needs to be reasonably well-educated or have the right skills for an urbanising economy.
Almost all the success stories in the world involve a period of rapid urbanisation, with this urbanising population finding economic opportunity. In doing so, they in turn created their own demand for goods and services, creating a “virtuous cycle” of an urban middle class.
When the working-age population grows faster than the elderly population, there is a natural window of opportunity. In China, this window opened in roughly 1980 and stretched to around 2010. Across that thirty-year period, the number of working-age people rose from about 550 million to just over 900 million. At the same time, the number of elderly (called the dependent population) stayed roughly constant.[ii]
In Japan, and other advanced economies, the opposite is happening – the elderly population is growing faster than the working age population. This is putting extraordinary pressure on the social system, and consequently on the economy as a whole because this elderly population is leaving the workforce and living longer.
Similarly the South African population is also aging, but we still have one of the highest shares of youth relative to old population. The slowing birth rate will only over time start to impact the population dynamics.
South Africa faces a unique moment in our history – unlike many other countries we still have a young, vibrant population. It is crucial to ride this demographic dividend as best we can in the time we have available.
[i] An excellent source pulled together by the University of Cape Town, collating all the data available on children, is available at http://childrencount.uct.ac.za/index.php
[ii] Fang, C., Garnaut, R., & Song, L. (2018). 40 years of China’s reform and development: How reform captured China’s demographic dividend.