South Africa has started to mine its tax records in a bid to produce highly localised spatial economic data that will offer city and municipal policy makers far greater visibility of the geographic distribution of both industries and jobs within their boundaries, as well as key developmental disparities.

The information is being analysed under the aegis of the newly launched Spatial Economic Activity Data – South Africa programme, which is spearheaded by the National Treasury, the Human Sciences Research Council and the Cities Support Programme, but is also supported by several other departments and institutions, as well as the UK Foreign, Commonwealth and Development Office and Switzerland’s State Secretariat for Economic Affairs.

Finance Minister Enoch Godongwana says that by scrutinising anonymised tax data – which is being provided by the South African Revenue Service but housed in a National Treasury secure data centre – it is now possible to measure the economic outcome of public sector investment in and within municipalities.

Although tax data is limited in scope to the formal sector only, HSRC senior research specialist Dr Justin Visagie says the data still covers about 80% of the country’s jobs and more than 90% of gross domestic product.

The data source, he adds, offers an impressive array of economic indicators for jobs and firms, which can also be broken down by industry or sector, wage levels, gender, age, export status and firm size.

Importantly, too, the data is current, covering the period from the 2013/14 tax year to 2021/22 and can be updated with each new tax year.

The data source extends to all 213 municipalities and includes suburb-level information for the six metropolitan councils.

The first report to emerge from the mining of the tax data is titled the ‘Cities Economic Outlook 2023’ and shows that South Africa’s six metros dominate the national economy, with almost two-thirds of all formal jobs in the country located within their boundaries.

“The concentration of employment opportunities in cities explains why their population has been growing more strongly than the rest of the country,” the authors state, adding that the ratio of jobs to population is also much healthier than elsewhere.

Nevertheless, it also shows that the recent trajectory of employment growth in South African cities has been weak.

“The very poor performance of manufacturing and construction industries is also a major concern for the millions of less-skilled workers that live in cities.”

The review of spatial tax data for metropolitan economies also highlights the unique role and profile of each city within a broader urban, regional and national system.

It confirms, for instance, that Johannesburg is a financial centre, that manufacturing and logistics dominate in Ekurhuleni and eThekwini, that Tshwane’s economy has a strong bias towards national government and professional services, while Cape Town is a diversified but tourism-centric economy, that Nelson Mandela Bay is an automotive centre, Buffalo city depends on provincial government and Mangaung has strong contributions from health and education.

Godongwana says the data shows that, while the metros are the country’s job generators, it also shows that there has been job-shedding within strategic industrial spaces within the metros, with more than half of the top 30 metro industrial spaces losing jobs since 2014.

It also indicates that the collapse of one metro could result in the collapse or severe decline of specific industries and that strong urban centres are also necessary for productive rural hinterlands.

“There is a strong correlation between well-governed and stable cities and increasing productive activity. Failure to get the basics right in our cities is resulting in firms and households voting with their feet.”

The Minister notes, too, that the analysis shows that townships continue to be marginalised from the formal economy and that there has been a failure, post-apartheid, to integrate these areas fully.

He says the spatialised tax data also allows South Africa to track the geographic impact of different economic shocks at specific point in time and to understand market responses and time-periods for recovery.

“It provides us with the tools to question what we are currently doing, its impact, and what we need to change to rebuild and grow our economy,” Godongwana says.

He also encourages other researchers to make use of the data, which is available at https://spatialtaxdata.org.za/.