In 1994, South Africa surprised the global community with its peaceful transition to democracy after 40 years of apartheid rule. Eleven years later, this country continues to be an inspiration to the entire African continent.
Business confidence
South Africa’s business cycle has been in an upward phase for 71+ months, making it the longest sustained growth in the country’s recorded economic history, according to the country’s central bank, the SA Reserve Bank. The South African Chamber of Commerce has confirmed this, saying that business confidence climbed to the highest level ever in 2005. Bankers agree. There was no doubt that South Africa was ‘firing on all cylinders,’ said Neil Gregson, of Credit Suisse in London, adding that ‘on average, South African companies are better run than many others’. The South African economy was enjoying one of the healthiest periods for many years, said Rudolf Gouws of Rand Merchant Bank.
South Africa’s budgeting target is to close the gap between the formal ‘first’ economy and the informal ‘second’ economy by spurring GDP growth, according to Finance Minister Trevor Manuel.
Economic Growth
The Gross Domestic Product (GDP – the total of all goods and services, a statistic that measures economic growth) was R3096bn in 2004, an increase for the year of 3,7%, growing to 4,8% in the second quarter of 2005. The government hopes to achieve growth of between 6,5% and 7,5% by 2014. President Thabo Mbeki’s International Investment Council of business leaders, which met in October, 2005, said that a growth rate of 6% could be achieved before the target date of 2010 if the government implemented its policies more quickly - which included home building and expanding services to the poor.
The South African government has succeeded in bringing consumer price inflation down to single digits since April, 2003, but it could rise in 2006 because of high oil prices. Consumer inflation rose from 4,2% in August, 2004 to 4,8% in August, 2005. The producer price index rose from 3,6% in July, 2004 to 4,2% in July, 2005.
Low deficit
The budget deficit for 2005-2006 could be as low as 1,2% of GDP, although some economists expect a deficit of 2,4%. Government cash balances in September, 2005 totalled R48,7bn, double the level in September, 2004. The per capita share of South Africa’s GDP in 2004 was R69 930. However, about 60% of the country’s black people are classified as ‘poor’ – a situation inherited from the discriminatory policies of colonial and apartheid policies. In 2005, about 22% of the population, or about 10m people, receive government grants of one sort or another. Medium-term estimates for welfare spending are R72bn in 2005-2006, R80bn in 2006-2007 and R87bn in 2007-2008.
Increase in black middle class
An encouraging aspect of the economy is that since the economy opened up to all races in 1994, the number of middle class black households with annual incomes of R40 000 and over has increased. Black households in the high-income group (R153 000 a year and over) increased by 368% between 1998 and 2004, according the Bureau of Market Research at the University of Pretoria.
Population
The South African population was estimated in mid-2005 at 46,9m, broken down thus: - 37,2m or 79,4% black
- 4,4m or 9,3% white
- 4,1m or 8,8% coloured (mixed race) and
- 1,1m or 2,5% Asian.
Languages
There are eleven official languages – English, Afrikaans, isiNdebele, isiXhosa, isiZulu, Sepedi, Sesotho, Setswana, siSwati, Tshivenda and Xitsonga. English is spoken almost everywhere and is the language of commerce and industry.
Employment
There are about 16,2m economically active people, of whom about 11,6m are employed. Estimates of sectors of employment are:
- 6,9m in formal employment
- 1,9m in informal employment
- 832 000 in agriculture and
- about 1m in domestic service.
Unions
There are 7,5m members of trade unions. The number of strike days lost has decreased dramatically since 1995, when the Labour Relations Act led to improved bargaining relationships.
Industry
The main industries are:
- mining
- automobile assembly
- metal-working and machinery
- iron and steel
- chemicals and
- foodstuffs.
Mining, financial services and manufacturing (including automobile assembly) are the biggest contributors to economic growth. In 2004 total manufacturing output was R798bn, while agricultural output dropped to R35bn and contributed only 2,6% to the GDP. However, the country is a net exporter of food.
Trading partners
In 2004, exports totalled R231bn, the main destinations being:
- the United Kingdom, 2,6%
- US 12,4%
- Japan 9,2%
- Germany 8,1%
- China 4,7% and
- Italy 4,4%.
Imports of R213,5bn came from:
- Germany 16,6%
- United Kingdom 8,5%
- US 8,5%
- Japan 5,9%
- China, 5,9%
- Saudi Arabia 5,2% and
- France 5%.
Africa’s industrial leader
South Africa is 3% of the continent’s surface area and is home to about 4,5% of its population, yet it accounts for 40% of Africa’s industrial output, 25% of Gross Domestic Product, generates more than half of all electricity and is responsible for 45% of all mineral production.
South Africa is among the world’s top producers of gold, platinum, rhodium, chrome, manganese, vanadium, vermiculite and ferro-chrome. It has 80% of all platinum reserves in the world, 72% of chrome, 88% of platinum-group metals, 41% of gold and 38% of alumino-sulphates. It produces more than 80% of all motor vehicles made in Africa and 57% of all steel manufactured on the continent.
World rankings
The chemical industry, producing 13m tons of chemicals a year, is the biggest in Africa and ranks 25th in the top 75 chemical producers worldwide. The petrochemical group Sasol is the acknowledged world leader in coal-based synthesis and gas-to-liquid (GTL) technology. Sasol operates joint-venture GTL plants in Qatar and Nigeria and has similar plans for China, Iran, Australia, Russia and Indonesia.
Transport
With 30 600km of single track, South Africa has the biggest rail network in Africa, serviced by 92% of all electric locomotives in Africa. There are 535 000km of built-up roads, of which 105 000km are tarred. South African Airways is the biggest airline in Africa and Johannesburg International Airport, which handles 18m passengers a year, is the biggest airport on the continent.
Links: