Poverty in South Africa
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The Economy of South Africa is the third largest in
Africa Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
and the most industrialized, technologically advanced, and diversified economy in Africa overall.
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...
is an upper-middle-income economy, one of only eight such countries in Africa. Following 1996, at the end of over twelve years of international sanctions, South Africa's
Gross Domestic Product Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is oft ...
(nominal) almost tripled to a peak of US$416 billion in 2011. In the same period, foreign exchange reserves increased from US$3 billion to nearly US$50 billion, creating a diversified economy with a growing and sizable
middle class The middle class refers to a class of people in the middle of a social hierarchy, often defined by occupation, income, education, or social status. The term has historically been associated with modernity, capitalism and political debate. Com ...
, within two decades of ending
apartheid Apartheid (, especially South African English: , ; , "aparthood") was a system of institutionalised racial segregation that existed in South Africa and South West Africa (now Namibia) from 1948 to the early 1990s. Apartheid was ...
. Although the natural resource extraction industry remains one of the largest in the country with an annual contribution to the
GDP Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced and sold (not resold) in a specific time period by countries. Due to its complex and subjective nature this measure is ofte ...
of US $13.5 billion, the economy of South Africa has diversified since the end of apartheid, particularly towards
services Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a p ...
. In 2019, the
financial industry Financial services are the economic services provided by the finance industry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, ...
contributed US$41.4 billion to South Africa's GDP. In 2021, South Africa-based
financial institutions Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...
managed more than US$1.41 trillion in
assets In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can ...
. The total market capitalization of the
Johannesburg Stock Exchange JSE Limited (previously the JSE Securities Exchange and the Johannesburg Stock Exchange) is the largest stock exchange in Africa. It is located in Sandton, Johannesburg, South Africa, after it moved from downtown Johannesburg in 2000. In 2003 ...
is US$1.28 trillion as of October 2021. The
state-owned enterprises of South Africa In South Africa the Department of Public Enterprises is the shareholder representative of the South African Government with oversight responsibility for state-owned enterprises in key sectors. Some companies are not directly controlled by the Depar ...
play a significant role in the country's economy, with the government owning a share in around 700 SOEs involved in a wide array of important industries. In 2016, the top five challenges to doing business in the country were inefficient government bureaucracy, restrictive labour regulations, a shortage of skilled workers for some high-tech industries, political instability, and corruption. On the other hand, the country's banking sector was rated as a strongly positive feature of the economy. The nation is among the
G20 The G20 or Group of Twenty is an intergovernmental forum comprising 19 countries and the European Union (EU). It works to address major issues related to the global economy, such as international financial stability, climate change mitigatio ...
, and is the only African member of the group.


History

The formal economy of South Africa has its beginnings in the arrival of
Dutch Dutch commonly refers to: * Something of, from, or related to the Netherlands * Dutch people () * Dutch language () Dutch may also refer to: Places * Dutch, West Virginia, a community in the United States * Pennsylvania Dutch Country People E ...
settlers in 1652, originally sent by the
Dutch East India Company The United East India Company ( nl, Verenigde Oostindische Compagnie, the VOC) was a chartered company established on the 20th March 1602 by the States General of the Netherlands amalgamating existing companies into the first joint-stock ...
to establish a provisioning station for passing ships. As the colony increased in size, with the arrival of
Huguenot The Huguenots ( , also , ) were a religious group of French Protestants who held to the Reformed, or Calvinist, tradition of Protestantism. The term, which may be derived from the name of a Swiss political leader, the Genevan burgomaster Be ...
s and German colonists, some of the colonists were set free to pursue commercial farming, leading to the dominance of agriculture in the economy. At the end of the 18th century, the British annexed the colony. This led to the
Great Trek The Great Trek ( af, Die Groot Trek; nl, De Grote Trek) was a Northward migration of Dutch-speaking settlers who travelled by wagon trains from the Cape Colony into the interior of modern South Africa from 1836 onwards, seeking to live beyon ...
, spreading farming deeper into the mainland, as well as the establishment of the independent Boer Republics of the Transvaal and the
Orange Free State The Orange Free State ( nl, Oranje Vrijstaat; af, Oranje-Vrystaat;) was an independent Boer sovereign republic under British suzerainty in Southern Africa during the second half of the 19th century, which ceased to exist after it was defeat ...
. In 1870
diamond Diamond is a solid form of the element carbon with its atoms arranged in a crystal structure called diamond cubic. Another solid form of carbon known as graphite is the chemically stable form of carbon at room temperature and pressure, ...
s were discovered in Kimberley, while in 1886 some of the world's largest gold deposits were discovered in the
Witwatersrand The Witwatersrand () (locally the Rand or, less commonly, the Reef) is a , north-facing scarp in South Africa. It consists of a hard, erosion-resistant quartzite metamorphic rock, over which several north-flowing rivers form waterfalls, which ...
region of Transvaal, quickly transforming the economy into a resource-dominated one. The British annexed the area as a result of the
Second Boer War The Second Boer War ( af, Tweede Vryheidsoorlog, , 11 October 189931 May 1902), also known as the Boer War, the Anglo–Boer War, or the South African War, was a conflict fought between the British Empire and the two Boer Republics (the South ...
which saw the deployment of scorched earth tactics against Boer non-combatants. South Africa also entered a period of industrialization during this time, including the organization of the first South African trade unions. The country soon started putting laws distinguishing between different races in place. In 1948 the National Party won the national elections, and immediately started implementing an even stricter race-based policy named
Apartheid Apartheid (, especially South African English: , ; , "aparthood") was a system of institutionalised racial segregation that existed in South Africa and South West Africa (now Namibia) from 1948 to the early 1990s. Apartheid was ...
, in an attempt to shelter the original white society from a never-ending increase in the black population. The policy was widely criticised and led to crippling sanctions being placed against the country in the 1980s. South Africa held its first non-restricted racial elections in 1994, leaving the newly all-African elected
African National Congress The African National Congress (ANC) is a social-democratic political party in South Africa. A liberation movement known for its opposition to apartheid, it has governed the country since 1994, when the first post-apartheid election install ...
(ANC) government the daunting task of trying to restore order to an economy harmed by sanctions, while also integrating the previously disadvantaged segment of the population into it. The government refrained from resorting to economic populism. Inflation was brought down, public finances were stabilised, and some foreign capital was attracted. However, growth was still subpar. At the start of 2000, then President
Thabo Mbeki Thabo Mvuyelwa Mbeki KStJ (; born 18 June 1942) is a South African politician who was the second president of South Africa from 14 June 1999 to 24 September 2008, when he resigned at the request of his party, the African National Congress (ANC ...
vowed to promote economic growth and foreign investment by relaxing restrictive labour laws, stepping up the pace of privatisation, raising governmental spending and cutting interest rates sharply from 1998 levels. His policies faced strong opposition from organised labour. From 2004 onward economic growth picked up significantly; both employment and
capital formation Capital formation is a concept used in macroeconomics, national accounts and financial economics. Occasionally it is also used in corporate accounts. It can be defined in three ways: *It is a specific statistical concept, also known as net inve ...
increased. In April 2009, amid fears that South Africa would soon join much of the rest of the world in the late-2000s recession, Reserve Bank Governor
Tito Mboweni Tito Titus Mboweni (born 16 March 1959) is a South African politician who served as Minister of Finance of South Africa in the government of President Cyril Ramaphosa from 2018 to 2021. Mboweni was the eighth Governor of the South African Rese ...
and Minister of Finance Trevor Manuel differed on the matter: whereas Manuel foresaw a quarter of economic growth, Mboweni predicted further decline: "technically," he said, "that's a recession." In 2009 the Nobel-Prize-winning economist Joseph Stiglitz warned South Africa that inflation targeting should be a secondary concern amid the global financial crisis of 2007–2009. South Africa, unlike other emerging markets, has struggled through the
late 2000s recession The Great Recession was a period of marked general decline, i.e. a recession, observed in national economies globally that occurred from late 2007 into 2009. The scale and timing of the recession varied from country to country (see map). At t ...
, and the recovery has been largely led by private and public consumption growth, while export volumes and private investment have yet to fully recover. The long-term potential growth rate of South Africa under the current policy environment has been estimated at 3.5%. Per capita GDP growth has proved mediocre, though improving, growing by 1.6% a year from 1994 to 2009, and by 2.2% over the 2000–09 decade, compared to world growth of 3.1% over the same period. The high levels of unemployment, at over 25%, and
inequality Inequality may refer to: Economics * Attention inequality, unequal distribution of attention across users, groups of people, issues in etc. in attention economy * Economic inequality, difference in economic well-being between population groups * ...
are considered by the government and most South Africans to be the most salient economic problems facing the country. These issues, and others linked to them such as crime, have in turn hurt investment and growth, consequently having a negative feedback effect on employment. Crime is considered a major or very severe constraint on investment by 30% of enterprises in South Africa, putting crime among the four most frequently mentioned constraints. In April 2017, political tensions in the country arose over the sacking of nine cabinet members including Minister of Finance
Pravin Gordhan Pravin Jamnadas Gordhan (born 12 April 1949) is a politician and anti-apartheid activist who has held various ministerial posts in the Cabinet of South Africa. He served as Minister of Finance from 2009 until 2014 and again from 2015 until 2017 ...
by the president Jacob Zuma. The finance minister was seen as central to efforts to restore confidence in South Africa. As a result of the tensions,
S&P Global S&P Global Inc. (prior to April 2016 McGraw Hill Financial, Inc., and prior to 2013 The McGraw–Hill Companies, Inc.) is an American publicly traded corporation headquartered in Manhattan, New York City. Its primary areas of business are financ ...
cut South Africa's credit rating to junk status on Monday 3 April 2017. Fitch Ratings followed suit on Friday 7 April 2017 and cut the country's credit status to the sub-investment grade of BBB-. The South African rand lost more than 11% in the week following the cabinet reshuffling.


Historical statistics 1980–2022

The following table shows the main economic indicators in 1980–2022. Inflation under 5% is in green. This is a chart of the trend of South Africa's gross domestic product (GDP) at market prices estimated by the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster glo ...
:


Sectors

] South Africa has a comparative advantage in the production of
agriculture Agriculture or farming is the practice of cultivating plants and livestock. Agriculture was the key development in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that enabled people t ...
,
mining Mining is the extraction of valuable minerals or other geological materials from the Earth, usually from an ore body, lode, vein, seam, reef, or placer deposit. The exploitation of these deposits for raw material is based on the economic ...
and
manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of secondary sector of the economy. The term may refer to ...
products relating to these sectors. South Africa has shifted from a primary and secondary economy in the mid-twentieth century to an economy driven primarily by the tertiary sector in the present day which accounts for an estimated 65% of GDP or $230 billion in nominal GDP terms. The country's economy is reasonably diversified with key economic sectors including mining, agriculture and fisheries, vehicle manufacturing and assembly, food processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, manufacturing, IT, transportation, and wholesale and retail trade.


Natural resources

In 2019, the country was the world's largest producer of
platinum Platinum is a chemical element with the symbol Pt and atomic number 78. It is a dense, malleable, ductile, highly unreactive, precious, silverish-white transition metal. Its name originates from Spanish , a diminutive of "silver". Pla ...
; the world's largest producer of chromium; the world's largest producer of
manganese Manganese is a chemical element with the symbol Mn and atomic number 25. It is a hard, brittle, silvery metal, often found in minerals in combination with iron. Manganese is a transition metal with a multifaceted array of industrial alloy use ...
; the 2nd largest world producer of
titanium Titanium is a chemical element with the Symbol (chemistry), symbol Ti and atomic number 22. Found in nature only as an oxide, it can be reduced to produce a lustrous transition metal with a silver color, low density, and high strength, resista ...
; the world's 11th largest producer of
gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile me ...
; the 3rd worldwide producer of vanadium; the 6th largest world producer of iron ore; the 11th largest world producer of
cobalt Cobalt is a chemical element with the symbol Co and atomic number 27. As with nickel, cobalt is found in the Earth's crust only in a chemically combined form, save for small deposits found in alloys of natural meteoric iron. The free element, p ...
; and the 15th largest world producer of
phosphate In chemistry, a phosphate is an anion, salt, functional group or ester derived from a phosphoric acid. It most commonly means orthophosphate, a derivative of orthophosphoric acid . The phosphate or orthophosphate ion is derived from phosph ...
. It was the world's 12th largest producer of
uranium Uranium is a chemical element with the symbol U and atomic number 92. It is a silvery-grey metal in the actinide series of the periodic table. A uranium atom has 92 protons and 92 electrons, of which 6 are valence electrons. Uranium is weak ...
in 2018. Mining has been the main driving force behind the history and development of Africa's most advanced economy. Large-scale and profitable mining started with the discovery of a diamond on the banks of the
Orange River The Orange River (from Afrikaans/Dutch: ''Oranjerivier'') is a river in Southern Africa. It is the longest river in South Africa. With a total length of , the Orange River Basin extends from Lesotho into South Africa and Namibia to the north ...
in 1867 by Erasmus Jacobs and the subsequent discovery and exploitation of the Kimberley pipes a few years later. Gold rushes to Pilgrim's Rest and Barberton were precursors to the biggest discovery of all, the Main Reef/Main Reef Leader on Gerhardus Oosthuizen's farm Langlaagte, Portion C, in 1886, the
Witwatersrand Gold Rush The Witwatersrand Gold Rush was a gold rush in 1886 that led to the establishment of Johannesburg, South Africa. It was a part of the Mineral Revolution. Origins In the modern day province of Mpumalanga, gold miners in the alluvial mines of ...
and the subsequent rapid development of the goldfield there, the biggest of them all. South Africa is one of the world's leading mining and mineral-processing countries. Though mining's contribution to the national GDP has fallen from 21% in 1970 to 6% in 2011, it still represents almost 60% of exports. The mining sector accounts for up to 9% of value added. In 2008, South Africa's estimated share of world platinum production amounted to 77%;
kyanite Kyanite is a typically blue aluminosilicate mineral, found in aluminium-rich metamorphic pegmatites and sedimentary rock. It is the high pressure polymorph of andalusite and sillimanite, and the presence of kyanite in metamorphic rocks gener ...
and other materials, 55%; chromium, 45%;
palladium Palladium is a chemical element with the symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered in 1803 by the English chemist William Hyde Wollaston. He named it after the asteroid Pallas, which was itself na ...
, 39%;
vermiculite Vermiculite is a hydrous phyllosilicate mineral which undergoes significant expansion when heated. Exfoliation occurs when the mineral is heated sufficiently, and commercial furnaces can routinely produce this effect. Vermiculite forms by the we ...
, 39%; vanadium, 38%;
zirconium Zirconium is a chemical element with the symbol Zr and atomic number 40. The name ''zirconium'' is taken from the name of the mineral zircon, the most important source of zirconium. The word is related to Persian '' zargun'' (zircon; ''zar-gun'' ...
, 30%;
manganese Manganese is a chemical element with the symbol Mn and atomic number 25. It is a hard, brittle, silvery metal, often found in minerals in combination with iron. Manganese is a transition metal with a multifaceted array of industrial alloy use ...
, 21%;
rutile Rutile is an oxide mineral composed of titanium dioxide (TiO2), the most common natural form of TiO2. Rarer polymorphs of TiO2 are known, including anatase, akaogiite, and brookite. Rutile has one of the highest refractive indices at visib ...
, 20%;
ilmenite Ilmenite is a titanium-iron oxide mineral with the idealized formula . It is a weakly magnetic black or steel-gray solid. Ilmenite is the most important ore of titanium and the main source of titanium dioxide, which is used in paints, printing ...
, 19%; gold, 11%; fluorspar, 6%; aluminium, 2%;
antimony Antimony is a chemical element with the symbol Sb (from la, stibium) and atomic number 51. A lustrous gray metalloid, it is found in nature mainly as the sulfide mineral stibnite (Sb2S3). Antimony compounds have been known since ancient t ...
, 2%; iron ore, 2%; nickel, 2%; and
phosphate rock Phosphorite, phosphate rock or rock phosphate is a non-detrital sedimentary rock that contains high amounts of phosphate minerals. The phosphate content of phosphorite (or grade of phosphate rock) varies greatly, from 4% to 20% phosphorus pentox ...
, 1%. South Africa also accounted for nearly 5% of the world's polished diamond production by value. The country's estimated share of world reserves of
platinum group metals The platinum-group metals (abbreviated as the PGMs; alternatively, the platinoids, platinides, platidises, platinum group, platinum metals, platinum family or platinum-group elements (PGEs)) are six noble, precious metallic elements clustered t ...
amounted to 89%;
hafnium Hafnium is a chemical element with the symbol Hf and atomic number 72. A lustrous, silvery gray, tetravalent transition metal, hafnium chemically resembles zirconium and is found in many zirconium minerals. Its existence was predicted by Dmitri M ...
, 46%;
zirconium Zirconium is a chemical element with the symbol Zr and atomic number 40. The name ''zirconium'' is taken from the name of the mineral zircon, the most important source of zirconium. The word is related to Persian '' zargun'' (zircon; ''zar-gun'' ...
, 27%; vanadium, 23%;
manganese Manganese is a chemical element with the symbol Mn and atomic number 25. It is a hard, brittle, silvery metal, often found in minerals in combination with iron. Manganese is a transition metal with a multifaceted array of industrial alloy use ...
, 19%;
rutile Rutile is an oxide mineral composed of titanium dioxide (TiO2), the most common natural form of TiO2. Rarer polymorphs of TiO2 are known, including anatase, akaogiite, and brookite. Rutile has one of the highest refractive indices at visib ...
, 18%; fluorspar, 18%; gold, 13%;
phosphate rock Phosphorite, phosphate rock or rock phosphate is a non-detrital sedimentary rock that contains high amounts of phosphate minerals. The phosphate content of phosphorite (or grade of phosphate rock) varies greatly, from 4% to 20% phosphorus pentox ...
, 10%;
ilmenite Ilmenite is a titanium-iron oxide mineral with the idealized formula . It is a weakly magnetic black or steel-gray solid. Ilmenite is the most important ore of titanium and the main source of titanium dioxide, which is used in paints, printing ...
, 9%; and nickel, 5%. It is also the world's third largest coal exporter. The mining sector has a mix of privately owned and state-controlled mines, the latter including
African Exploration Mining and Finance Corporation The African Exploration Mining and Finance Corporation (AEMFC) is a state-controlled mining business in South Africa. The AEMFC was launched by Jacob Zuma, the former president of South Africa, prompting concerns that the state might attempt to n ...
.


Agriculture and food processing

In 2018, South Africa produced 19.3 million tonnes of sugarcane (14th largest producer in the world), 12.5 million tonnes of
maize Maize ( ; ''Zea mays'' subsp. ''mays'', from es, maíz after tnq, mahiz), also known as corn (North American and Australian English), is a cereal grain first domesticated by indigenous peoples in southern Mexico about 10,000 years ago. The ...
(12th largest producer in the world) 1.9 million tons of
grape A grape is a fruit, botanically a berry, of the deciduous woody vines of the flowering plant genus '' Vitis''. Grapes are a non- climacteric type of fruit, generally occurring in clusters. The cultivation of grapes began perhaps 8,000 years a ...
(11th largest producer in the world), 1.7 million tons of
orange Orange most often refers to: *Orange (fruit), the fruit of the tree species '' Citrus'' × ''sinensis'' ** Orange blossom, its fragrant flower *Orange (colour), from the color of an orange, occurs between red and yellow in the visible spectrum * ...
(11th largest producer in the world) and 397 thousand tons of
pear Pears are fruits produced and consumed around the world, growing on a tree and harvested in the Northern Hemisphere in late summer into October. The pear tree and shrub are a species of genus ''Pyrus'' , in the family Rosaceae, bearing the po ...
(7th largest producer in the world). In addition, in the same year, it produced 2.4 million tons of
potato The potato is a starchy food, a tuber of the plant ''Solanum tuberosum'' and is a root vegetable native to the Americas. The plant is a perennial in the nightshade family Solanaceae. Wild potato species can be found from the southern Unit ...
, 1.8 million tons of
wheat Wheat is a grass widely cultivated for its seed, a cereal grain that is a worldwide staple food. The many species of wheat together make up the genus ''Triticum'' ; the most widely grown is common wheat (''T. aestivum''). The archaeologi ...
, 1.5 million tons of
soy The soybean, soy bean, or soya bean (''Glycine max'') is a species of legume native to East Asia, widely grown for its edible bean, which has numerous uses. Traditional unfermented food uses of soybeans include soy milk, from which tofu and ...
, 862 thousand tons of sunflower seed, 829 thousand tons of
apple An apple is an edible fruit produced by an apple tree (''Malus domestica''). Apple trees are cultivated worldwide and are the most widely grown species in the genus ''Malus''. The tree originated in Central Asia, where its wild ancestor, ' ...
, 726 thousand tons of
onion An onion (''Allium cepa'' L., from Latin ''cepa'' meaning "onion"), also known as the bulb onion or common onion, is a vegetable that is the most widely cultivated species of the genus ''Allium''. The shallot is a botanical variety of the onio ...
, 537 thousand tons of
tomato The tomato is the edible berry of the plant ''Solanum lycopersicum'', commonly known as the tomato plant. The species originated in western South America, Mexico, and Central America. The Mexican Nahuatl word gave rise to the Spanish word ...
, 474 thousand tons of
lemon The lemon (''Citrus limon'') is a species of small evergreen trees in the flowering plant family Rutaceae, native to Asia, primarily Northeast India (Assam), Northern Myanmar or China. The tree's ellipsoidal yellow fruit is used for culin ...
, 445 thousand tons of grapefruit, 444 thousand tons of banana, 421 thousand tons of
barley Barley (''Hordeum vulgare''), a member of the grass family, is a major cereal grain grown in temperate climates globally. It was one of the first cultivated grains, particularly in Eurasia as early as 10,000 years ago. Globally 70% of barley p ...
, in addition to smaller productions of other agricultural products, such as
avocado The avocado (''Persea americana'') is a medium-sized, evergreen tree in the laurel family ( Lauraceae). It is native to the Americas and was first domesticated by Mesoamerican tribes more than 5,000 years ago. Then as now it was prized for ...
,
pineapple The pineapple (''Ananas comosus'') is a tropical plant with an edible fruit; it is the most economically significant plant in the family Bromeliaceae. The pineapple is indigenous to South America, where it has been cultivated for many centuri ...
,
peach The peach (''Prunus persica'') is a deciduous tree first domesticated and cultivated in Zhejiang province of Eastern China. It bears edible juicy fruits with various characteristics, most called peaches and others (the glossy-skinned, non-f ...
,
tangerine The tangerine is a type of citrus fruit that is orange in color. Its scientific name varies. It has been treated as a separate species under the name ''Citrus tangerina'' or ''Citrus'' × ''tangerina'', or treated as a variety of ''Citrus retic ...
, pumpkin, cabbage, carrot,
rapeseed Rapeseed (''Brassica napus ''subsp.'' napus''), also known as rape, or oilseed rape, is a bright-yellow flowering member of the family Brassicaceae (mustard or cabbage family), cultivated mainly for its oil-rich seed, which naturally contains a ...
, sorghum etc. The agricultural industry contributes around 5% of formal employment, relatively low compared to other parts of Africa, as well as providing work for casual labourers and contributing around 2.8% of GDP for the nation.Human Rights Watch, 2001
Unequal Protection
The State Response to Violent Crime on South African Farms, .
However, due to the
arid A region is arid when it severely lacks available water, to the extent of hindering or preventing the growth and development of plant and animal life. Regions with arid climates tend to lack vegetation and are called xeric or desertic. Most ...
ity of the land, only 13.5% can be used for crop production, and only 3% is considered high potential land. The sector continues to face problems, with increased foreign competition and crime being two of the major challenges for the industry. The government has been accused of either putting in too much effort, or not enough effort,Farms of Fear
The Sunday Times Magazine.
to tackle the problem of farm attacks as opposed to other forms of violent crime. Maize production, which contributes to a 36% majority of the gross value of South Africa's field crops, has also experienced negative effects due to climate change. The estimated value of loss, which takes into consideration scenarios with and without the carbon dioxide fertilization effect, ranges between tens and hundreds of millions of Rands. According to FAOSTAT, South Africa is one of world's largest producers of: chicory roots (4th); grapefruit (4th);
cereals A cereal is any grass cultivated for the edible components of its grain (botanically, a type of fruit called a caryopsis), composed of the endosperm, germ, and bran. Cereal grain crops are grown in greater quantities and provide more food ...
(5th); green maize and maize (7th); castor oil seed (9th); pears (9th);
sisal Sisal (, ) (''Agave sisalana'') is a species of flowering plant native to southern Mexico, but widely cultivated and naturalized in many other countries. It yields a stiff fibre used in making rope and various other products. The term sisal may ...
(10th);
fibre crop Fiber crops are field crops grown for their fibers, which are traditionally used to make paper, cloth, or rope. Fiber crops are characterized by having a large concentration of cellulose, which is what gives them their strength. The fibers may b ...
s (10th). In the first quarter of 2010, the agricultural sector earned export revenues for R10.1 billion and used R8.4 billion to pay for imported agricultural products, therefore earning a positive trade balance of R1.7 billion. The most important agricultural exports of South Africa include: edible fruit and nuts, beverages, preserved food, tobacco,
cereals A cereal is any grass cultivated for the edible components of its grain (botanically, a type of fruit called a caryopsis), composed of the endosperm, germ, and bran. Cereal grain crops are grown in greater quantities and provide more food ...
,
wool Wool is the textile fibre obtained from sheep and other mammals, especially goats, rabbits, and camelids. The term may also refer to inorganic materials, such as mineral wool and glass wool, that have properties similar to animal wool. ...
not carded or combed, miscellaneous food, sugar, meat, milling products, malt and starch. These products accounted for over 80% of agricultural export revenue in the first quarter of 2010. The most important agricultural imports, which accounted for over 60% of agricultural import value during the same period, include: cereals, meat, soya-bean oil cake, beverages, soya-bean oil and its fractions, tobacco, palm oil and its fractions, miscellaneous food, spices, coffee, tea, and preserved food. The dairy industry consists of around 4,300 milk producers providing employment for 60,000 farm workers and contributing to the livelihoods of around 40,000 others. The food sub-sector is the largest employer within the agro-processing sector – contributing 1.4% to total employment, and 11.5% within the manufacturing sector. In 2006, the agro-processing sector represented 24.7% of the total manufacturing output. Although the economy as a whole gained 975,941 jobs between 1995 and 2006, the agro-processing sector lost 45,977 jobs. The competitive pressures from abroad, particularly from China and India, played a role in the decline of exports for the food, textiles and paper sub-sectors, as firms in these sectors increasingly compete with lower cost producers. Increased exports from the beverages, tobacco, wood and leather sub-sectors over the period are probably due to the presence of large dominant firms within these sectors in South Africa, that have managed to remain competitive.


Manufacturing

The manufacturing industry's contribution to the
economy An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...
is relatively small, providing just 13.3% of jobs and 15% of GDP. There are growing sectors of manufacturing, however, such as in the Space industry. Labour costs are low, but not nearly as low as in most other emerging markets, and the cost of the transport, communications and general living is much higher. The South African automotive industry accounts for about 10% of South Africa's manufacturing exports, contributes 7.5% to the country's GDP and employs around 36,000 people. Annual production in 2007 was 535,000 vehicles, out of a global production of 73 million units in the same year. Vehicle exports were in the region of 170,000 units in 2007, exported mainly to Japan (about 29% of the value of total exports), Australia (20%), the UK (12%) and the US (11%). South Africa also exported ZAR 30.3 billion worth of auto components in 2006. BMW,
Ford Ford commonly refers to: * Ford Motor Company, an automobile manufacturer founded by Henry Ford * Ford (crossing), a shallow crossing on a river Ford may also refer to: Ford Motor Company * Henry Ford, founder of the Ford Motor Company * Ford F ...
,
Volkswagen Volkswagen (),English: , . abbreviated as VW (), is a German motor vehicle manufacturer headquartered in Wolfsburg, Lower Saxony, Germany. Founded in 1937 by the German Labour Front under the Nazi Party and revived into a global brand post-W ...
,
Daimler-Chrysler The Mercedes-Benz Group AG (previously named Daimler-Benz, DaimlerChrysler and Daimler) is a German multinational automotive corporation headquartered in Stuttgart, Baden-Württemberg, Germany. It is one of the world's leading car manufactur ...
, General Motors, Nissan and
Toyota is a Japanese multinational automotive manufacturer headquartered in Toyota City, Aichi, Japan. It was founded by Kiichiro Toyoda and incorporated on . Toyota is one of the largest automobile manufacturers in the world, producing about 10 ...
all have production plants in South Africa. Large component manufacturers with bases in the country are Arvin Exhaust, Bloxwitch, Corning and Senior Flexonics. There are also about 200 automotive component manufacturers in South Africa, and more than 150 others that supply the industry on a non-exclusive basis. The industry is concentrated in two provinces, the Eastern Cape and
Gauteng Gauteng ( ) is one of the nine provinces of South Africa. The name in Sotho-Tswana languages means 'place of gold'. Situated on the Highveld, Gauteng is the smallest province by land area in South Africa. Although Gauteng accounts for only ...
. Companies producing in South Africa can take advantage of the low production costs and the access to new markets as a result of trade agreements with the European Union and the
Southern African Development Community The Southern African Development Community (SADC) is an inter-governmental organization headquartered in Gaborone, Botswana. Its goal is to further regional socio-economic cooperation and integration as well as political and security coopera ...
. After a steep decline of 10.4% in 2009, the manufacturing sector performed well in 2010, growing by 5%, though this rebound was primarily limited to the automotive, basic chemicals, iron and steel and food and beverages industries. The performance of this sector remains curtailed by the low demand in South Africa's main export markets in the developed world. There is growth in some areas, such as the Space industry in South Africa, which is expected to see an increase in Space industry jobs, and jobs in supporting technology and manufacturing sectors.


Service industry


Tourism


Telecommunications

The domestic telecommunications infrastructure provides modern and efficient service to urban and rural areas. This includes cellular and internet services from 5G to Gigabit Broadband. In 1997, Telkom, the South African telecommunications
parastatal A state-owned enterprise (SOE) is a government entity which is established or nationalised by the ''national government'' or ''provincial government'' by an executive order or an act of legislation in order to earn profit for the government ...
, was partly privatised and entered into a strategic equity partnership with a consortium of SBC (AT&T), in exchange for a monopoly to provide certain services for 5 years. Telkom assumed an obligation to facilitate network modernisation and expansion into the unserved areas. A Second Network Operator, Neotel was to be licensed to compete with Telkom across its spectrum of services in 2002. Licensing officially began in late 2005. Five mobile-phone companies provide service to over 50 million subscribers, with South Africa considered to have the 4th most advanced mobile telecommunications network worldwide. The five major cellular providers are
Vodacom Vodacom Group Limited is a South-Western African mobile communications company, providing voice, messaging, data and converged services to over 55 million customers. From its roots in South Africa, Vodacom has grown its operations to include ...
, MTN, Cell C(Vodacom), Telkom Mobile(8.ta) and Rain, with Neotel owned by Liquid Telecoms not offering mobile service anymore. South African companies which provide services related to the Space industry, also increasing, and with the correct government legislation and support, this sector is expected to grow in South Africa.


Business process outsourcing

Over the last few decades, South Africa and particularly the
Cape Town Cape Town ( af, Kaapstad; , xh, iKapa) is one of South Africa's three capital cities, serving as the seat of the Parliament of South Africa. It is the legislative capital of the country, the oldest city in the country, and the second largest ...
region has established itself as a successful
call centre A call centre ( Commonwealth spelling) or call center ( American spelling; see spelling differences) is a managed capability that can be centralised or remote that is used for receiving or transmitting a large volume of enquiries by telephon ...
and
business process outsourcing Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and sometimes involves transferring employees and ...
destination. With a highly talented pool of productive labour and with Cape Town sharing cultural affinity with Britain, large overseas firms such as Lufthansa, Amazon.com, ASDA, The Carphone Warehouse, Delta Airlines and many more have established inbound call centres within Cape Town as a means of utilising Cape Town's low labour costs and talented labour force.


Tourism

South Africa is a popular tourist destination, with around 860,000 arrivals per month (March 2008) of which around 210,000 is from outside the African continent. In 2012 South Africa received 9.2 million international arrivals. In August 2017 3.5 million travellers came to South Africa. According to the World Travel & Tourism Council, travel and tourism directly contributed ZAR102 billion to South African GDP in 2012 and supports 10.3% of jobs in the country. Among the main attractions are the diverse and picturesque landscape, the game reserves and the highly regarded local wines. The country's borders were reopened on 1 October 2020, with some exceptions to tourists travelling from specific European countries and the US, due to high levels of COVID-19 activity taking place there.


Financial services

South Africa has a sophisticated financial structure, with the JSE Limited, the largest stock exchange on the African continent, ranking 17th in the world in terms of total
market capitalisation Market capitalization, sometimes referred to as market cap, is the total value of a publicly traded company's outstanding common shares owned by stockholders. Market capitalization is equal to the market price per common share multiplied by t ...
, which is $1,005 Trillion as of August 2020. The
banking industry {{set category, first= industries (branches of an economy), alternative=industries, topic=Industry (economics) For other meanings of "industries", see :Industries. ...
, overseen by the
South African Reserve Bank The South African Reserve Bank (SARB) is the central bank of South Africa. It was established in 1921 after Parliament passed an act, the "Currency and Bank Act of 10 August 1920", as a direct result of the abnormal monetary and financial condit ...
, is dominated by four local players:
Nedbank Nedbank Group is a financial services group in South Africa offering wholesale and retail banking services as well as insurance, asset management, and wealth management. Nedbank Limited is a wholly owned subsidiary of Nedbank Group. Nedbank's ...
, ABSA,
Standard Bank Standard Bank Group Limited is a major South African bank and financial services group. It is Africa's biggest lender by assets. The company's corporate headquarters, Standard Bank Centre, is situated in Simmonds Street, Johannesburg. History ...
and
First Rand FirstRand Limited, also referred to as FirstRand Group is the holding company of FirstRand Bank, and is a financial services provider in South Africa. It is one of the financial services providers licensed by the Reserve Bank of South Africa, t ...
. These banks provide both retail and investment banking services as the sector has become highly competitive with the re-entry of many experienced foreign banks, which returned to the market in the mid-1990s, having left in the late 1980s. Banks operating in South Africa, when left short of liquidity, need to borrow from the SARB at a fluctuating
repo rate A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and, by agreement between the two pa ...
, which, in turn, allows the central bank to monitor liquidity positions.


Informal sector

South Africa's informal sector contributes 8% of the country's GDP and supports 27% of all working people. The South African Local Economic Development Network values the informal economy at 28% of SA's GDP. Given the relevance of this input, there is a constant interest in developing actions on an inclusive urban planning for the working poor.


Trade and investment

Principal international trading partners of South Africa—besides other African countries—include Germany, the United States, China, Japan, the United Kingdom, Bangladesh and Spain. Chief exports include corn, diamonds, fruits, gold, metals and minerals, sugar, and wool. Machinery and transportation equipment make up more than one-third of the value of the country's imports. Other imports include chemicals, manufactured goods, and petroleum. As a result of a November 1993 bilateral agreement, the
Overseas Private Investment Corporation The Overseas Private Investment Corporation (OPIC) was the United States Government's Development finance institution until it merged with the Development Credit Authority (DCA) of the United States Agency for International Development (USAID ...
(OPIC) can assist US investors in the South African market with services such as political risk insurance and loans and loan guarantees. In July 1996, the US and South Africa signed an investment fund protocol for a $120 million OPIC fund to make equity investments in South and Southern Africa. OPIC is establishing an additional fund – the Sub-Saharan Africa Infrastructure Fund, capitalised at $350 million – to investment in infrastructure projects. The Trade and Development Agency also has been actively involved in funding feasibility studies and identifying investment opportunities in South Africa for U.S. businesses. Despite the numerous positive economic achievements since 1994, South Africa has struggled to attract significant foreign direct investment. The situation may have started to change however, with 2005 seeing the largest single FDI into South Africa when Barclays bought a majority share in local bank
Absa Group Limited Absa Group Limited (ABGL; formerly Barclays Africa Group Limited), and originally Amalgamated Banks of South Africa, is a South African-based financial services group, offering personal and business banking, credit cards, corporate and invest ...
. Deals between the British-based
Vodafone Vodafone Group plc () is a British multinational telecommunications company. Its registered office and global headquarters are in Newbury, Berkshire, England. It predominantly operates services in Asia, Africa, Europe, and Oceania. , Vod ...
and South Africa's
Vodacom Vodacom Group Limited is a South-Western African mobile communications company, providing voice, messaging, data and converged services to over 55 million customers. From its roots in South Africa, Vodacom has grown its operations to include ...
have taken place in 2006. In 2010, two multibillion-dollar deals, one by HSBC to acquire Nedbank and one by Walmart to acquire Massmart Holdings, fell through. (Walmart did buy Massmart in 2011)


Land reform and property rights


Nationalisation of mines debate

South Africa has been riven by arguments over whether the state should take over mineral resources. A study commissioned by the African National Congress recommended against the policy, saying nationalisation would be an "economic disaster." However, the ANC Youth Employment supporters disagree and state that it will give the government direct control over the mining sector which is also in alignment with the Freedom Charter signed in 1995.


Land redistribution

The government aimed to transfer 30% of the 82 million hectares estimated to be in the hands of white farmers by
Gugile Nkwinti Gugile Ernest Nkwinti (born 18 December 1946) is a South African politician, previously serving in the Cabinet of South Africa as the Minister of Water and Sanitation and before as the Minister of Rural Development and Land Reform. Education an ...
, Minister of Rural Development and Land Reform, amounting to 24.5 million hectares, to black farmers by 2014. 6.7 million hectares had been transferred by early 2012 via redistribution and restitution. The land reform program has been criticised both by farmers' groups and by landless workers, the latter alleging that the pace of change has not been fast enough, and the former alleging anti white racist treatment with threats of genocide, voiced openly on multiple occasions by the ANC, including the former president Zuma, and expressing concerns that a similar situation to Zimbabwe's land reform policy may develop, a fear exacerbated by comments made by former deputy president
Phumzile Mlambo-Ngcuka Phumzile Mlambo-Ngcuka (; born 3 November 1955), South African Government Information. is a South African politician and former United Nations official, who served as the Executive Director of UN Women with the rank of Under-Secretary-General ...
.


Labour market

South Africa has an extreme and persistent high unemployment rate of over 30%, which interacts with other socioeconomic problems such as: inadequate education, poor health and high levels of crime. The poorest have limited access to economic opportunities and basic services. According to a 2013 Goldman Sachs report, that number increases to 35% when including people who have given up looking for work. A quarter of South Africans live on less than US$1.25 a day. South Africa's mass unemployment dates back to the 1970s, and continued to rise throughout the 1980s and 1990s. Unemployment has increased substantially since the
African National Congress The African National Congress (ANC) is a social-democratic political party in South Africa. A liberation movement known for its opposition to apartheid, it has governed the country since 1994, when the first post-apartheid election install ...
came to power in 1994, increasing from 15.6% in 1995 to 30.3% in 2001. In the second quarter of 2010, the jobless rate increased to 25.3%, and the number of people with work fell by 61,000 to 12,700,000. The biggest decline in employment was recorded in the manufacturing industry, which lost 53,000 jobs. Agriculture lost 32,000 jobs, employment in the construction industry fell by 15,000. In the third quarter of 2010, 29.80% of blacks were recorded as unemployed, compared with 22.30% of Coloureds, 8.60 of Asians and 5.10% of Whites. The official unemployment rate, though very high by international standards, understates its magnitude because it includes only adults who are actively looking for work. Therefore, excluding those who have given up looking for employment. Only 41% of the population of working age have any kind of job (formal or informal). This rate is 30% points lower than that of China, and about 25% lower than that of Brazil or Indonesia. The relatively generous social grants reduces the political cost of unemployment. There is some evidence that households view paid employment and social grants as substitutes at the margin: households that lose a pension-eligible member subsequently report increased labour force participation. The unemployment problem is characterised by its lengthy duration. In the mid-1990s, nearly two-thirds of unemployed people had never worked for a salary. The 2005 Labour Force Survey found that 40% of unemployed individuals have been unemployed for more than three years, while 59% had never had a job at all. The unemployment rate has fuelled crime, inequality and social unrest. The global economic downturn made the problem worse, wiping out more than one million jobs. In September 2010, over one-third of South Africa's workforce were out of work, and so were more than half of blacks aged 15–34, three times the level than Whites. Some experts contend that higher wages negotiated by politically powerful
trade unions A trade union (labor union in American English), often simply referred to as a union, is an organization of workers intent on "maintaining or improving the conditions of their employment", ch. I such as attaining better wages and benefits ( ...
have suppressed job growth. According to a study by
Dani Rodrik Dani Rodrik (born August 14, 1957) is a Turkish economist and Ford Foundation Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University. He was formerly the Albert O. Hirschman Professor of t ...
, the shrinkage of the non-mineral tradable sector since the early-1990s and the weakness of the export-oriented manufacturing were more to blame for the low level of employment. The government, however, tries putting measures in place to creat
employment in South Africa
. On 5 March 2022, The department of home affairs announced that it was starting to recruit 10,000 youths to digitise its paper system.


Knowledge

There has been a large degree of
human capital flight Human capital flight is the emigration or immigration of individuals who have received advanced training at home. The net benefits of human capital flight for the receiving country are sometimes referred to as a "brain gain" whereas the net cost ...
from South Africa in recent years.Human Capital Flight: Stratification, Globalization, and the Challenges to Tertiary Education in Africa; ''Benno J. Ndulu''; JHEA/RESA Vol. 2, No. 1, 2004, pp. 57–91 South Africa's Bureau of Statistics estimates that between 1 million and 1.6 million people in skilled, professional, and managerial occupations have emigrated overseas between 1994 and 2004 and that, for every emigrant, 10 unskilled people lose their jobs. There are a range of causes cited for the migration of skilled South Africans. In mid-1998, the Southern African Migration Project (SAMP) undertook a study to examine and assess the range of factors that contribute to skilled South Africans’ desire to leave the country: over two-thirds of the sample said that they had given the idea of emigration some thought while 38% said they had given it a "great deal of thought". Among the reasons cited for wishing to leave the country was the declining quality of life and high levels of crime. Furthermore, the government's affirmative action policy was identified as another factor influencing the emigration of skilled White South Africans. The results of the survey indicate that skilled Whites are strongly opposed to this policy and the arguments advanced in support of it, due to the negative impact it has had on South Africa. However, flight of human capital in South Africa should not be attributed solely to regional factors. For example, the demand for skilled labourers in the UK, US, Canada, New Zealand, and Australia has led to active recruitment programs by those countries in South Africa. These countries accounted for 75% (by volume) of recent skilled emigration with the UK receiving approximately half of annual skilled South African emigration from 1990 to 1996. It has been suggested that the role of domestic socio-political variables may be negligible. The health sector has been hit particularly hard. A widespread skills drain in South Africa and in the developing world in general is generally considered to be a cause for concern. For the medical sector, the loss of returns from investment for all doctors emigrating is $1.41bn for South Africa. The benefit to destination countries is huge: $2.7bn for the United Kingdom alone. In a case of
reverse brain drain Reverse brain drain is a form of brain drain where human capital moves in reverse from a more developed country to a less developed country that is developing rapidly. These migrants may accumulate savings, also known as remittances, and develo ...
a net 359,000 high-skilled South Africans have returned to South Africa from foreign work assignments over a five-year period from 2008 to 2013. This was catalysed by the global financial crisis of 2007–8 and perceptions of higher quality of life in South Africa relative to the countries from which they first emigrated to. It is estimated that around 37% of those returning are professionals such as lawyers, doctors, engineers and accountants.


Immigration

Refugees from poorer neighbouring countries include many immigrants from the Democratic Republic of the Congo, Mozambique, Zimbabwe, Malawi and others, representing a large portion of the
informal sector An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countrie ...
. With high unemployment levels amongst poorer South Africans, xenophobia is prevalent and many South Africans feel resentful of immigrants who are seen to be depriving the native population of jobs, a feeling which has been given credibility by the fact that many South African employers have employed migrants from other countries for lower pay than South African citizens, especially in the construction, tourism, agriculture and
domestic service A domestic worker or domestic servant is a person who works within the scope of a residence. The term "domestic service" applies to the equivalent occupational category. In traditional English contexts, such a person was said to be "in service ...
industries. Illegal immigrants are also heavily involved in informal trading. However, many immigrants to South Africa continue to live in poor conditions, and the South African immigration policy has become increasingly restrictive since 1994.


Trade unions

Since 2007 the South African unions representing public sector workers recurrently went on strike, demanding pay rises significantly above inflation, in a practice that some experts argue is suppressing job growth, harming millions of South Africans who are out of a job. In August and September 2010, South African unions organised a crippling four-week national strike involving 1.3 million public sector workers, demanding an 8.6% wage increase. The strike ended after the government had raised its 5.2% wage increase to 7.5%. The deal swelled state spending by about 1%. Protesters sought to block hospitals, and South African media have reported numerous acts of violence against health and education staff who insisted on going to work. Volunteers and army medics were called in to help at hospitals, and some patients were moved to private medical facilities. There is a persistent wage differential between unionised and non-unionised workers in South Africa, suggesting that unions are keeping wages higher for their members, thereby posing additional challenges to the unemployment problem. In July 2014, amidst a national strike by 220,000 metalworkers, General Motors temporarily shut down its vehicle assembly plant, frustrating its plans to build 50,000 cars a year in the country. "The ongoing labour disruptions are harming the South African economy and are affecting the country's image around the globe," the company said in a statement at the time.


Black Economic Empowerment

The end of apartheid in 1994 left behind a skewed racial economic hierarchy that placed minority whites at the top. Since then, the African National Congress government created the
Black Economic Empowerment Black Economic Empowerment (BEE) is a policy of the South African government which aims to facilitate broader participation in the economy by black people. A form of affirmative action, it is intended especially to redress the inequalities creat ...
(BEE) policy, designed to increase the participation of blacks, Coloreds, and Indians in the economy. However, BEE has faced criticism for not doing enough to accomplish this goal and only benefiting a small number of people to a great extent. This was acknowledged in 2010 by Deputy President Kgalema Motlanthe, at the first meeting of the BEE Advisory Council, when he said, "The story of black economic empowerment in the last 15 years has been a story dominated by a few individuals benefiting a lot." A 2010 report from the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
concluded that the "relative improvement in poverty levels," since the end of apartheid, has actually been driven by social assistance grants and not the labour market. As of 2014, roughly ten percent of the Top 100 companies on the Johannesburg Stock Exchange were directly held by black investors through Black Economic Empowerment schemes. Black Economic Empowerment policies have been credited with creating a class of Black South Africans with a level of wealth on the same order of magnitude as very rich White South Africans. Black Economic Empowerment—its purpose the "economic empowerment of all black people, including women, workers, youth, people with disabilities and people living in rural areas"—requires the Minister of Trade and Industry to develop and publish Codes of Good Practice, aimed at setting guidelines for the process of BEE in the whole economy. A scorecard is used by the department to measure compliance with the BEE requirements, and is used for public procurement, public-private partnerships, sale of state-owned enterprises, when licenses are applied for, and for any other relevant economic activity. The government's Black Economic Empowerment policies have drawn criticism from the Development Bank of Southern Africa for focusing "almost exclusively on promoting individual ownership by black people (which) does little to address broader economic disparities, though the rich may become more diverse." The System has also been criticised for placing lesser educated people in more important positions in the workplace and their failure to perform to the standards required has had an immense impact on the economy. Another criticism also includes that the system goes against the constitution's preaching of equality by having preference over people, not on merit, but for their skin colour and is considered the opposite of what many people fought for during the Apartheid era. Official affirmative action policies have seen a rise in black economic wealth and an emerging black middle class. An increasing number of black candidates who are supposed to be beneficiaries of affirmative action are dissociating themselves from it, largely because of the perception that the appointments are not based on merit. The policy has also been criticised for having a negative impact on employment levels as it is viewed as being more of an additional burden for employees than as a transformative agent for the unemployed. Particularity in an economy where a major cause of inequality has been a growing disparity of income within the majority black population divided along lines of employment.


Gender Equality

South Africans in general, regardless of race, hold what would be considered "traditional" stances on gender roles for men and women. The majority of the workforce is composed of males, while the majority of women do not participate. This viewpoint on males as "breadwinners" is very much in line with traditional African values across the continent. Additionally, females face a problem in terms of earnings, with 77% of women earning the same as their male counterparts. However, more women are becoming part of the agricultural workforce (55%) as of 2012, marking a move towards modernisation for women's participation in the economy. South African legislation is strongly geared to promoting gender equality in the workplace. This is characterised by several comprehensive government programs and organisations that provide resources and services to females, both adult and adolescent. Such initiatives include the Employment Equity Act, No. 55 of 1988 (aimed at promoting women's participation in mainly private sector jobs). UNFPA South Africa is one such promoter of these policies and programs. Internally, the South African government has founded the Commission for Gender Equality. The commissions main focus is on securing adequate education and job training for women who are disenfranchised or otherwise at a disadvantage when attempting to enter the workforce. Not uncommon in Africa, gender equality seems to be a very cogent problem in the South African workforce. According to Bain & Company, around 31% of companies have no form of female leadership, either in management or executive positions. 22% of board directors are women, however, only 7% were designated as "executives", lower than the global average of 12%. Additionally, the eNPE (Employee Net Promoter Score) for women is a net negative (- 4) as compared to men (8), according to a survey conducted of 1000 participants. This indicated a low level of actual economic promotion for women, despite public and international initiative towards the contrary.


Infrastructure


Energy

Scheduled rolling blackouts are a part of daily life. Electricity theft is widespread

After years of sub-standard maintenance and the South African government's inability to manage strategic resources, the state-owned power supplier
Eskom Eskom Hld SOC Ltd or Eskom is a South African electricity public utility. It was established in 1923 as the Electricity Supply Commission (ESCOM) and was also known by its Afrikaans name Elektrisiteitsvoorsieningskommissie (EVKOM). Eskom repre ...
started experiencing deficiency in capacity in the electrical generating and reticulation infrastructure in 2007. Such lack led to inability to meet the routine demands of industry and consumers, resulting in countrywide
rolling blackout A rolling blackout, also referred to as rota or rotational load shedding, rota disconnection, feeder rotation, or a rotating outage, is an intentionally engineered electrical power shutdown in which electricity delivery is stopped for non-overla ...
s. Initially, the lack of capacity was triggered by a failure at
Koeberg nuclear power station Koeberg nuclear power station is a nuclear power station in South Africa. It is currently the only one on the entire African continent. It is located 30 km north of Cape Town, near Melkbosstrand on the west coast of South Africa. Koeberg ...
, but a general lack of capacity due to increased demand and lack of government planning soon came to light. The supplier and the South African government has been widely criticised for failing to adequately plan for and construct sufficient electrical generating capacity, although ultimately the government has admitted that it was at fault for refusing to approve funding for investment in infrastructure. The margin between national demand and available capacity is still low or negative (particularly in peak hours), and power stations are under strain, such that surges in demand, which are common during winter, or drops in supply, often a result of a lack of coal for power plants, result in another phase of rolling blackouts. The government and Eskom are currently planning new power stations, at cost to the South African consumer. The power utility plans to have 20,000 megawatts of nuclear power in its grid by 2025.


Water

Some predictions show surface water supply could decrease by 60% by the year 2070 in parts of the
Western Cape The Western Cape is a province of South Africa, situated on the south-western coast of the country. It is the fourth largest of the nine provinces with an area of , and the third most populous, with an estimated 7 million inhabitants in 2020 ...
. The South African government planned to spend R69 billion on water infrastructure between 2008 and 2015. This involves building new dams and ancillary infrastructure, and repairing existing infrastructure. South Africa has an estimated total water capacity of 38 billion cubic metres, but will need 65 billion by 2025 if the economy is to keep on growing. The massive urban migration has placed further strain on the country's ageing water infrastructure and created a large backlog.


Developments and Maintenance

As part of an international attempt to modernize infrastructure, South Africa has faced increasing pressure to invest government funds into its water and electricity sectors. At current, these sectors are underfunded by approximately US$464 billion (This is according to the G20 GI Hub).


Income levels

South Africa has extreme differences in incomes and wealth. The good level of economic growth in the post-apartheid period has led to a measurable decline in income poverty, but
inequality Inequality may refer to: Economics * Attention inequality, unequal distribution of attention across users, groups of people, issues in etc. in attention economy * Economic inequality, difference in economic well-being between population groups * ...
has increased. The high level of overall income inequality has further accentuated: the country's Gini coefficient increased by four percentage points, from 0.66 to 0.70, between 1993 and 2008, and income has become increasingly concentrated in the top decile. Inequality between urban and rural areas is changing: while rural poverty rates remain substantially higher than those in urban areas, urban poverty rates are rising and rural rates seem to be falling. While between-race inequality is slowly falling, an increase in intra-race inequality is preventing the aggregate measures from declining. Despite that, between-race inequality remains a central issue: real incomes have been rising for all groups, but many blacks in the country still live in poverty. At any poverty line, blacks are very much poorer than coloureds, who are very much poorer than Indians, who are poorer than whites. In 2002, according to one estimate, 62% of Black Africans, 29% of Coloureds, 11% of Asians, and 4% of Whites lived in poverty. The mean per-capita income has risen from R10,741 in 1993 to R24,409 in 2008, but these figures hide large differences in household welfare, both within and across population groups: the average Black income increased from R6,018 in 1993 to R9,718 in 2008; for Coloured households, the increase was from R7,498 to R25,269; for Whites, the increase was from R29,372 to R110,195. While mean income rose about 130% from 1993 to 2008, the median income rose just 15% over the same period, from R4,444 to R5,096, indicating that the increases are being driven by a small number of very large incomes, especially for Whites. In 2000 the average white household was earning six times more than the average black household. In 2004, 29.8% of all households had an income (at constant 2001 prices) of less than R9,600 per annum, while 10.3% of all households enjoyed an annual income (at constant 2001 prices) of more than R153,601 per annum. One study using calculations based on National Income Dynamics Study (NIDS) data suggests that 47% of South Africans live below the poverty line: 56% of blacks live in poverty compared to 2% of whites, using an arbitrary income poverty line of R502 per capita. Although, it should also be noted that black South Africans make up the majority of the population at 79.2% while white South Africans make up only 8.9% of the population according to the Statistics South Africa census released in 2011. The
United Nations Development Program The United Nations Development Programme (UNDP)french: Programme des Nations unies pour le développement, PNUD is a United Nations agency tasked with helping countries eliminate poverty and achieve sustainable economic growth and human dev ...
's
Human Development Index The Human Development Index (HDI) is a statistic composite index of life expectancy, education (mean years of schooling completed and expected years of schooling upon entering the education system), and per capita income indicators, wh ...
(HDI) ranked South Africa 110 out of 169 countries in 2010. The report notes, however, that the region's assessment has improved slowly since 1980. The HDI includes a Human Poverty Index (HPI-1), which ranked South Africa 85 out of 135 countries. The number of South Africans living below the poverty line, identified according to Apartheid-era social categories, was calculated in one study as 56% "black", 27% "coloured", 9% "Indian", and 2% "white". In the past inequality in South Africa was largely defined along race lines, but it has become increasingly defined by inequality within population groups as the gap between rich and poor within each group has increased substantially. The Organisation for Economic Co-operation and Development proposals for addressing income inequality included: encouraging more saving and investment; a liberalisation of product-market regulation; easier access to credit for small businesses; greater co-ordination in wage bargaining; and measures to tackle the high level of youth unemployment. Some proposals have included wage subsidies for people being trained, a minimum wage differentiated by age, and extended periods of probation for young workers. In post-Apartheid South Africa, only Asians have made significant strides in closing the income gap with Whites; while Coloured and Black South Africans have had much more muted progress. A 2011 study published by the
University of Cape Town The University of Cape Town (UCT) ( af, Universiteit van Kaapstad, xh, Yunibesithi ya yaseKapa) is a public research university in Cape Town, South Africa. Established in 1829 as the South African College, it was granted full university statu ...
about the richest 10% found that nearly 40% are black, where this group had once been almost exclusively white. While only 29% of the absolute wealthiest South Africans are black, this jumps to 50% among the "entry-level" rich (defined as earning more than $4,000 per month). Factors that were found to be common among those in the entry-level rich group include being young, entrepreneurial and having some post-secondary education. According to one estimate, 10.4% of South Africans belonged to the "higher middle class" in 2004, defined as having a per capita income of over R40,000 (in 2000 Rand).


Taxes and transfers


Taxation

The top rate of personal income tax rate in South Africa is 45%; the corporate tax rate is 28%. Other taxes include a
value-added tax A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...
and a
capital gains tax A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property. Not all countries impose a c ...
, with the overall tax burden amounting to 23.4% of total domestic income.


Social benefits

South Africa has about three times as many recipients of social benefits as it has income tax-payers, an extremely high ratio by international standards. After 1994 resources have been rapidly reallocated to black households: while approximately 40% of aggregate social spending was directed to whites and 43% to blacks in the mid-1980s, by the late 1990s fully 80% of total social spending was assigned to blacks and less than 10% to whites. At present, blacks contribute some 50% of total government transfers, while receiving roughly 80%. The Unemployment Insurance Fund is financed out of premiums, contributions and benefits depend on earnings, and focuses on insuring workers against the risk of income loss.


Social assistance grants

Social assistance grants are non-contributory, income-tested benefits provided by the state to the poor, and are financed out of general tax revenues without any links between contributions and benefits. They are provided in the form of: grants for older persons; disability grants; war veterans grants; care dependency grants; foster child grants; child support grants; grant-in-aid; social relief of distress. The state old age pension, received by over 80% of the elderly, is a non-contributory pension and pays more than twice median per capita Black income, thus representing an important source of income for a third of all Black households in the country. It pays a maximum of R1,780 (as of July 2019) to people who reach pension age without access to private pensions. The child support grant provides R420 per month, per child (as of July 2019) for every child in the household younger than 18, and benefited 9.1 million children by April 2009. The war veterans grant is provided to former soldiers who fought in the Second World War or the Korean War, and pays a maximum amount of R1,800 per month (as of July 2019).


Comparison with other emerging markets

According to a December 2010 article by the South African Government Communication and Information System's now-defunct BuaNews news service, South Africa was said to compare well to other
emerging market An emerging market (or an emerging country or an emerging economy) is a market that has some characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or wer ...
s on affordability and availability of capital,
financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial market ...
sophistication, business tax rates and infrastructure, but to fare poorly on the cost and availability of labour, education, and the use of technology and innovation. South Africa does have expertise in the Space industry, and students learning more through the South African
SEDS Students for the Exploration and Development of Space (SEDS) is a non-profit international student organization whose purpose is to drive space advocacy of space exploration and development through educational and engineering projects. Histo ...
. With the correct government support, South Africa can increase the jobs in the manufacturing, testing, and analysis sectors of the growing Space industry. Released in early December 2010 and no longer available online, the survey by Brazil's National Confederation of Industry, “Competitividade Brasil 2010: Comparaçao com Paises Selecionados“, (Competition Brazil: A comparison with selected countries), found South Africa to have the second most sophisticated financial market and the second-lowest effective
business tax A corporate tax, also called corporation tax or company tax, is a direct tax imposed on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at the national level, and a similar tax may be imposed at ...
rate (business taxes as a percentage of company profits), out of 14 surveyed countries. The country was also ranked fourth for ease of accessing capital, fourth for cost of capital, sixth for its
transport infrastructure Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land (rail and road), water, cable, pipeline, ...
(at the time considered better than that of China, India, Mexico, Brazil and Poland, but behind that of Korea and Chile), and seventh for foreign direct investment as a percentage of GDP: in 2008 it was over 3% of the GDP. Nevertheless, South Africa is falling behind other emerging markets, such as India and China, owing to several factors: the country is relatively small, without the advantage of a huge domestic customer base; it has had for decades an unusually low rate of saving and investment, partly because of low disposable income; an inadequate education system results in an acute shortage of skilled manpower; a strong and volatile currency deters investors and makes its exports less competitive; the infrastructure, though far better than in the rest of Africa, suffers from severe bottlenecks, including scheduled power shortages, and urgently needs upgrading. In 2011, after a year of observer status, South Africa officially joined the
BRICS BRICS is an acronym for five leading emerging economies: Brazil, Russia, India, China, and South Africa. The first four were initially grouped as "BRIC" (or "the BRICs") in 2001 by Goldman Sachs economist Jim O'Neill, who coined the ter ...
group of now-five emerging-market nations at the summit held in
Sanya Sanya (; also spelled Samah) is the southernmost city on Hainan Island, and one of the four prefecture-level cities of Hainan Province in South China. According to the 2020 census, the total population of Sanya was 1,031,396 inhabitants, li ...
, Hainan, China.Blanchard, Ben and Zhou Xin, reporting; Ken Wills, editing
"UPDATE 1-BRICS discussed global monetary reform, not yuan"
''Reuters Africa'', 14 April 2011 9:03 am GMT. Retrieved 14 April 2011.


See also

*
United Nations Economic Commission for Africa The United Nations Economic Commission for Africa (UNECA or ECA; french: link=no, Commission économique pour l'Afrique, CEA) was established in 1958 by the United Nations Economic and Social Council to encourage economic cooperation among its ...
* National Budget of South Africa


References


External links

*
South African Tax ResourcesSouth African Reserve Bank – Economic and Financial DataStatistics South Africa – Official Government StatisticsWorld Bank Summary Trade Statistics South Africa
*Tariffs applied by South Africa as provided by ITC'
ITC Market Access Map
an online database of customs tariffs and market requirements {{DEFAULTSORT:Economy Of South Africa
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...