Regional eXplorer (ReX) update
June 2009

IHS Global Insight is pleased to present the second 2009 update to the Regional eXplorer database. The major addition to this version of the database is the inclusion of the 2008 figures for most variables. We now offer comprehensive local municipal data for the thirteen years, starting from 1996 and running up to 2008.

Moreover, we have included, in this release of ReX, a module on household infrastructure. This module is one of the most commonly requested features by our valued clients and includes backlog data for access to sanitation and water supply.

More great news is that we have enhanced and updated the F1-help function within the ReX program.  It now covers all of the new topics, including the complex charts and household infrastructure module.  

This ReX newsletter focuses on the following topics:

• South African GDP to shrink in 2009, grow in 2010; and
• The new household infrastructure module.

South African GDP to shrink in 2009, grow in 2010
In our previous newsletter, we painted a bleak future for short term growth in South Africa and suggested that the country would enter a technical recession by the end of the first quarter. However, the contraction in first quarter growth was far worse than expected and, with a poor start to the second quarter IHS Global Insight has revised its growth forecast for 2009, pointing to a deeper contraction for the year.

Furthermore, with the labour market lagging economic activity and with a further contraction in GDP expected in the second (and even the third) quarters of 2009, we expect that a significant drop in growth of disposable income is still to come. The widespread nature and severity of the downturn are illustrated by the fact that job losses have occurred right from the primary, through to the tertiary sectors, with the epicentre in the secondary sector. This will affect consumer spending, which is an important driver in economic recovery. The latest Quarterly Employment Survey figures underpin the fact that the employment creation target of halving unemployment by 2014 will most probably not be reached.

This leads us to believe that the growth in GDP for 2009 is likely to come in at -2.4% for the year. These forecasts, as well as the final figures for GDP growth in 2008 have been included in this release of ReX.

However, taking a longer term view; some positive signals from the global economy have begun to fuel optimism in South Africa which, coupled with decreased interest rates, frame the start to a tentative recovery by year end.

The following chart shows the leading indicator index (2000 = 100) which is an index of economic indicators which typically lead the growth in GDP, as compiled by the South African Reserve Bank. This index typically leads the growth in GDP by 9 to 15 months.

IHS Global Insight therefore believes that we have just reached the bottom of the downturn and that we will start seeing a return to GDP growth by the end of this year. Nonetheless, such a recovery is only expected to gain traction throughout 2010, with IHS Global Insight expecting growth of 2.0% for next year. We expect the finance and export sectors to lead the recovery, with big investments lagging the recovery.

Household Infrastructure module
One of the features most requested of the ReX team are datasets on municipal service delivery and backlogs. In fact, in the recent ReX Feedback survey, a third of all respondents cited infrastructure as the dataset they would most like to see added to ReX, with another quarter of respondents citing it as the feature they would second most like to see added to ReX. Therefore, in following our client's feedback, we have built a model to deal specifically with this type of data. Furthermore, we have taken the step of making this dataset immediately available to all subscribers of municipal level data at no extra charge.

When measuring household infrastructure, there are two possible routes to take. One can either measure the delivery of infrastructure from the perspective of the households receiving the infrastructure (the demand side) or from the perspective of the institutions delivering the infrastructure (the supply side.) We can measure the ‘demand' side from StatsSA surveys, and occasionally we can measure the supply side from industry associations, institutional statistics or at the utility provider.

IHS Global Insight has married the results from both the demand and the supply side of basic household services into a single model that takes into account the various strengths and weaknesses of both approaches. For example, data measured from the supply (or institution side) may be skewed by differences between reported and actual installation, inefficient infrastructure planning, population migration, structural changes in the economy, etc. Measuring data from the household side solves most of these problems, but suffers other statistical errors, is only conducted on provincial level, and lacks the municipal level of detail.  

By taking all of the above into consideration, IHS Global Insight has produced an accurate estimate of basic service access on a local municipal level. Currently, we present our findings for sanitation and water access, with the intention of adding data for access to electricity and refuse removal in the coming months.   As always, the ReX Encyclopaedia contains a detailed write-up on the methodology employed for the household infrastructure module.

Sanitation Backlog
The following chart shows the change, from 1996 to 2008, of the sanitation backlog situation at a national level. The area above the line represents the percentage of households in backlog while the area below the line represents the percentage of households that have access to hygienic toilets.

Following from the chart the percentage of households that have access to sub-standard toilets has decreased over time, whilst of course the percentage of households with access to hygienic toilets has increased over time. Looking at the breakdown of hygienic and backlog toilets, we can surmise that both the percentage of households using the bucket system, and the percentage of households with no toilet have decreased.

It appears that the primary cause for the change in the sanitation situation has been the increase in the percentage of households using Ventilation Improved Pit (VIP) latrines. These are typically the kind of toilets that local municipalities provide to backlogged households.

On the whole, the trend in the reduction of the backlog is positive, but the large percentage of households with no access to toilets needs to be highlighted as a possible obstacle in the complete eradication of the backlog. We can see that over time, even once hygienic infrastructure has been provided to all households making use of the bucket system, those households with no toilet access begin making use of buckets. Therefore; only by focusing on both the number of households using buckets and those with no toilet infrastructure will the bucket system ever be completely eradicated.

Upcoming releases
IHS Global Insight is currently awaiting the release of a few important datasets which we hope to incorporate into the next release. These datasets include the latest crime statistics and detailed data for the General Household Survey 2008 (GHS). A number of our forecasts and base data rely on GHS information and we hope to improve upon the quality of those models with the latest GHS data.

In addition, we aim to feature a more comprehensive Household Infrastructure module which will comprise four main measures; electrification, refuse removal, sanitation and water supply access - along with a number of derived infrastructure indicators.

Client Feedback
As always, IHS Global Insight values two-way communication with our clients and user feedback is welcomed in order to refine the suite of ReX models. Output generated by these models are merely a reflection of the quality of data input, and any improvement in the reliability of data input - for specific areas or sectors - will render improved results.

If you have more detailed data available for any indicator, which could be used as an input to any of our ReX models, we would appreciate the opportunity to analyse the viability of integrating such data into our systems.

Please send any suggestions or feedback to info@globalinsight.co.za or contact IHS Global Insight on +27 (0)12-665-5420.