In line with South Africa’s extraordinary political history, the South African economy faces unusual challenges and will need highly original thought processes to adequately respond to its complex issues.
Despite its challenges, however, the national economy has enormously positive aspects and, as an emerging market, stands to develop at a relatively rapid pace over the next few decades. This development is also in line with a shifting global economy where previously dominant local economies face greater competition from, and slower growth rates than, emerging markets.
The status quo of a global inequality of wealth distribution, with the West commanding the lion’s portion of economic power, is set to continue changing in the future. As Africa’s largest and richest economy, as well as one of Africa’s most politically influential states, South Africa could, as predicted by Pravin Gordhan, play a key role in developing intra-African trade, attracting foreign direct investment for the region, and in changing the global perception of Africa and its economic prospects.
During the latter part of Apartheid, the economic sanctions brought against the state by the United Nations began to take their toll, and when, in 1985, the U.S. based Chase Bank recalled its loans to the South African government, the JSE collapsed. South Africa was in a state near financial ruin and the Apartheid regime was forced to rethink its policy regarding racial segregation and privilege. When the new post-Apartheid regime took power in 1994 via democratic elections, it inherited two economies, each demarcated by racial identity: the wealthy white economy and a nigh-impoverished black economy. This divided economy is, unfortunately, still very much in place in contemporary South Africa. Further, the divide between the wealthy economy (consisting of whites, newly created middle-class blacks, and an elite class of BEE beneficiaries) and the impoverished so-called second economy, is growing. It is thus that whereas South Africa is currently considered an upper-middle income country, there remains a very high level of unemployment and millions of people living below the poverty line (USD 1.25 per day).
The majority of South Africa’s GDP comes from tertiary level activities, but the manufacturing and agricultural sectors also contribute significantly to domestic product: tertiary activities (services) contribute 65% of the total GDP; the manufacturing and mining sector (industry) contributing 32%; and agriculture under 3%.
The national economy is constituted from a variety of key sectors, including: mining, agriculture and fishery, vehicle manufacturing and assembly, food-processing, clothing and textiles, telecommunication, energy, financial and business services, transportation, wholesale and retail trade, tourism and real-estate. South Africa has to import a wide variety of goods: everything from consumer electronics, including home appliances, computers, tele-technology (phones and television), to bedroom suites are imported into South Africa from manufacturers abroad.
Inflation, as measured using the consumer price index (CPI), is at 5%, and the current growth rate of the GDP is at 3.5% (up from the 1.6% during 1994-99, and 2.2% during the 2000-2009 period). The total labour force consists of just fewer than 18 million people, but the unemployment rate (measured in terms of those actively seeking employment) is as high as 24%. This means that the real unemployment rate is higher than the official statistic released to the public. Before looking for property for sale in Namibia, however, bear in mind that with insightful and innovative management, the South African economy could still be an enormously beneficial investment.
It goes without saying that, politically, the South African situation is a globally unique phenomenon, and that this uniqueness and complexity is carried through into the national economy. As such it is safe to say that the economy reflects both wealth and impoverishment, and offers very little between the two extremes. Similarly, it reflects possibility and hope, and at the same time despair and depravity. The immediate and most pressing issue facing the country’s executive administration is the expanding of the first economy to include as many South Africans as is possible, and eradicating the unacceptably high levels of poverty through social programmes and employment opportunities.