Cape Town is PwC's City of Opportunity for Africa

17 September 2018 4 min. read
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Global professional services firm PwC has released its ‘City of Opportunity’ index for Africa, and the South African city of Cape Town has emerged on top ahead of metropolitans across the continent. The city has a relatively low level of income inequality and a GDP per capita comparable to cities across the developing world.

The ‘City of Opportunity’ report released by Big Four accounting and advisory firm PwC is built on the principle that an urban centre is made liveable not only by its average levels of spending power, but also by the overall possibility of balancing a fulfilling social and economic life in a quality environment.

As explained in the report, “Cities of Opportunity are more than just places of work or travel. To the millions of people who live in and visit them, they are the communities, people and stories that make up everyday life. In our view, the cities that will succeed in the future are those that can provide a balance between economic and physical security, nurtured aspiration and quality of life and environment.

GDP per capita vs Cities of opportunity score

To this end, the firm evaluates cities based on a wide range of variables, including but not limited to its ‘intellectual capital & innovation,’ ‘health, safety & security,’ ‘ease of doing business,’ technology readiness,’ and ‘demographics & liveability.’ The data for the study is gathered from international institutions such as the World Bank and the IMF, as well as national statistics organisations.

Applying these indicators to a number of cities across the African continent, PwC found Cape Town to be the City of Opportunity in Africa, particularly due to its attractiveness and its demonstrated evolution in line with global trends.

The city appears to be undergoing digital disruption on a large scale, in addition to a number of transformations at the social level. Cape Town has been in the news consistently in recent months, after the city underwent one of the largest water crises to have hit any city in South Africa.

Income inequality in SA's big five metros

The situation had reached a point where most were expecting ‘day zero’ to arrive some time in April, when water would officially stop running through the taps all across the city. Nevertheless, the city’s government played its role in managing the crisis and successfully avoided day zero.

The resilience demonstrated by Cape Town in such a scenario is among the many factors that prompted PwC to select it as the City of Opportunity. As stated in the report, “Cape Town is at a crossroads between African problems and global ambitions. Its future success will depend on its ability to solve longstanding problems at home while keeping up with a rapidly changing world.”

One of the major reasons why Cape Town made the cut is its internationally comparable levels of GDP per capita. The city ranks just among Johannesburg in this regard, and places among some of the largest metropolitans across the developing world, including Shanghai and Mumbai. Cape Town’s ‘City of Opportunity’ score was well above those of Sao Paulo, Jakarta and Lagos.

Unemployment in the big cities

Within South Africa, Cape Town fared especially well when compared to some of the other larger metros, particularly with respect to overall income equality levels and unemployment. Cape Town was compared with other cities such as eThekwini, Ekurhuleni, Johannesburg and Tshwane.

To measure income inequality levels PwC used what is known as the Gini coefficient, which offers a scale of 0 to 1 for scoring, with 0 being a scenario where everyone earns equally and 1 being a scenario where one person receives all the income. The Gini coefficient for all of South Africa is very high, given its position as one of the most economically unequal developing countries.

In this context, Cape Town’s Gini coefficient of 0.6 might appear high, but is much lower than that of any other metropolitan. In addition, Cape Town is the only city alongside eThekwini to have a Gini coefficient lower than that of the national average. A similar position of affairs is visible when Cape Town is compared to other cities in terms of unemployment rates.