High‑quality, spatially detailed data is critical for understanding how cities are developing.
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South Africa’s national economic performance will be constrained if metropolitan economies cannot lead in job creation, investment and high-value activity.
Stronger coordination
This calls for stronger coordination between national departments, state-owned entities, metropolitan governments and the private sector to prioritise urban infrastructure, industrial upgrading and spatial integration.
This was as a major new report tracking more than a decade of employment trends, industrial shifts, population growth, and post‑pandemic recovery across South Africa’s eight metropolitan municipalities has been released through the Spatial Economic Activity Data - South Africa (SEAD-SA) partnership.
The Cities Economic Outlook 2026 report is the product of this collaboration, led by the National Treasury, the Human Sciences Research Council (HSRC), the University of the Witwatersrand, and the University of the Free State, and supported by funding from the UK Foreign, Commonwealth & Development Office. Drawing on this collective effort, the report provides evidence‑based insights into the performance, pressures, and prospects of South Africa’s metropolitan economies.
Titled "Cities in flux: Pathways of stress, adjustment and renewal", the Outlook presents new evidence from the Spatial Tax Panel (STP), a unique administrative dataset built from anonymised tax records.
Four in ten South Africans live in metropolitan areas
According to the report, SA’s economic future is closely tied to the trajectory of its cities. Today, approximately four in ten South Africans live in metropolitan areas, and these eight metros have absorbed half of all national population growth over the past three decades.
Yet new evidence suggests that metro job growth has slowed and, in recent years, fallen behind the rest of the country.
A decade of change in South Africa’s cities
Drawing on granular employer-to-employee tax data from the STP, the Outlook provides one of the most detailed accounts to date of how local economies are evolving.
Key findings include:
•Metropolitan employment growth has faltered over the past decade, with only Cape Town and Tshwane bucking the trend.
•Higher-value and tradable sectors such as manufacturing have stagnated in several cities, while job growth has been concentrated in non-tradable and public service activities.
•The population of South Africa’s large metros are expanding rapidly, absorbing half of national population growth and doubling in size every 22–30 years - intensifying infrastructure and service delivery pressures.
•The green transition presents both opportunities and risks, with spatially uneven exposure across regions and industries.
•Bounce back from COVID-19 has been uneven, with metros initially absorbing the majority of job losses and lagging behind non-metro areas in recovery.
•Job losses were most intense for youth with little sign of improvement since.
For decades, South Africans have moved to smaller towns for lifestyle and big cities for career opportunities, said Regis Usaiwevhu of Tyson Properties.
However, with the evolution of remote working and semigration, this divide is becoming less clear-cut, they said. They added that as economic recovery reshapes property demand, living in a smaller town can be a smart career and investment move. The trick, however, is finding the right small town, they said.
According to Tyson Properties, the most promising towns tend to share certain characteristics: diversified local economies, access to transport infrastructure, ongoing private or public investment and strong regional roles in tourism, agriculture or industry.
“Our cities are the engines of national economic growth, inclusion and innovation, says Dr Duncan Pieterse, the director-general of the National Treasury. “They drive economic activity in their regions. If our cities do not work, South Africa cannot grow.”
The National Treasury has long prioritised the use of data to strengthen policy and decision-making. Through the National Treasury Secure Data Facility and Spatial Economic Activity Data South Africa, they said they are unlocking the value of secure, de-identified administrative data to drive more inclusive development outcomes.
“By making spatialised tax data accessible, provinces and municipalities are better equipped with the insights needed for effective planning and a clearer view of how economic activity is distributed across the country.”
SA cities centrality to national prosperity
"South Africa’s cities are central to national prosperity. Yet until recently, even basic questions about metro GDP, employment trends and industrial change were difficult to answer with confidence, says Professor Justin Visagie, the associate professor at the Southern Centre for Inequality Studies at the University of the Witwatersrand and lead editor of the report.
“The Spatial Tax Panel changes that. It provides a credible, granular and longitudinal evidence base that allows us to move beyond speculation and focus on the real dynamics shaping our cities,”
He added that the Cities Economic Outlook is not a ranking exercise. “Its purpose is to bring into focus the distinctive trajectories of our metropolitan economies and to support more informed debate about urban reform, investment and economic renewal. We need all of cities to thrive to improve national outcomes.”
As part of its commitment to reduce poverty and strengthen institutions in partner countries, the UK’s Foreign, Commonwealth & Development Office (FCDO) continues to work with its local partners to drive policy initiatives that are backed by data.
High‑quality, spatially detailed data
“The UK is proud to support the SEAD‑SA partnership in strengthening insights that underpin South Africa’s urban economic policy, says Antony Phillipson, the British High Commissioner to South Africa reflected.
“High‑quality, spatially detailed data is critical for understanding how cities are developing. Through our collaboration, we are working with national and local partners to boost economic opportunity and enhance the quality of life in metros across South Africa.”
Ensuring that cities remain engines of inclusive growth
As South Africa marks three decades of democracy, the Outlook said to underscore that managing-rather than diverting-metropolitan population growth is critical. Strengthening infrastructure, improving service delivery, addressing spatial inequality, and supporting industrial upgrading are essential to ensuring that cities remain engines of inclusive growth.
The Outlook also introduces new analysis on economic complexity, spatial mismatch in Gauteng cities, deindustrialisation patterns, urban wage geographies, and the resilience of cities since the pandemic.