South Africa’s Gauteng province beat several other African locations to host the Africa Investment Forum, premier David Makhura said in early November.
Makhura was speaking at the opening of the regional meeting in Johannesburg, which sought to seal billions in investment deals.
To highlight Gauteng’s attractiveness to African finance and industry, Makhura made two claims about the size of the province’s economy. We tested them against the best available evidence.
Gauteng was the “leading financial nerve centre and manufacturing hub of sub-Saharan Africa”, Makhura said. “We contribute 35% to our country’s GDP.”
A country’s gross domestic product is the measure of the size of its economy. It is the market value of all goods and services produced in a country in a given period, usually a year. Any economic activity will increase GDP – as long as the activity is recorded.
Statistics South Africa, the national data agency, records the nine provinces’ contribution to the country’s economy. Its most recent data puts South Africa’s total GDP at R4.35 trillion in 2016. Gauteng’s contribution was R1.5 trillion, or 34.64%.
How is GDP calculated?
When compiling the data, the agency used a “bottom-up approach”, Stats SA chief economist Bontlenyana Makhoba told Africa Check.
“All the industries that we look at will have different data sources. So if, for example, we are looking at agriculture, we will work with the department of agriculture. If it’s mining, we will work with the department of mineral resources… so it depends on what you are looking at.”
Provincial contributions were calculated at current rates, which meant they “include all changes in market prices that have occurred during the year due to inflation”, Makhoba added.
“It might be slightly skewed because many head offices are registered here in Gauteng but they have activities in other provinces.” He said the province had been South Africa’s economic heartland for years.
Gauteng was key to trade and other connections between the continent’s economies, Makhura said, and was “the seventh largest economy in Africa”.
Comparing the GDP of different geographical regions was accepted practice, said Grieve Chelwa, who lectures economics at the University of Cape Town’s Graduate School of Business. It’s a useful way to better understand the size of an economy.
“For example, it’s far easier if I say ‘if California were a country it would be the xth largest country by economy’ than if I gave you some absolute statement about the actual size of California’s GDP,” Chelwa told Africa Check.
“So the premier is perfectly correct to make that statement.” The expectation was that Gauteng’s GDP had been calculated correctly, he said, without produce from other provinces being added. “This is much harder to do in practice.”
Gauteng’s 35% share of South Africa’s estimated GDP of $285.8 billion would be $100 billion, placing it seventh – ahead of Kenya, Ethiopia and Tanzania.
|Country||2016 GDP (US$)|
|South Africa||$285.8 billion|
This article was first published by Africa Check. You can read the original and follow any updates here.