South Africa: Economic and Political Outline

Economic Overview

South Africa is the economic giant of the African continent, contributing nearly 40% to the total African GDP. In the secondary sector, 75% of the biggest African companies are South African. Rebonding after the severe international economic crisis and enjoying the benefits of the organization of the World Football Cup in 2010, the South-African economy  has experienced a slight recovery in 2010 (3% growth)., with an expectation of a speedier growth in 2011. After the economy started slowing down again as an effect of the eurozone crisis (which is the destination of a third of South-African exports), growth reached 3.1% for 2011 and should not exceed 2.3% in 2012.

To boost growth, the government announced in October 2011 a plan to make the industry more competitive and create jobs, providing for higher spending on public investment. The eradication of poverty, the establishment of a system of social security, rural development, education, health and the fight against crime have become priorities. To stimulate industrial policy, legislation authorizing the establishment of a new special economic zone was passed. There is now a debate about a possible nationalization of mines, or of imposing higher taxes on mining companies coupled with a strengthening of the equity capital of blacks in the extractive companies. Accelerating the land reform while not affecting investor sentiment will be a major challenge.

Unemployment affects nearly a third of the country's active population and one in two young people. A five-year plan was announced in December 2011 to tackle the scourge of AIDS (affecting nearly 12% of the population), which represents another obstacle to the overall economic development of the country. Eradicating poverty by 2030 is a government objective, since one third of the population is still living below the poverty line. South Africa is the most unequal country in the world, the black majority being largely left behind. Demonstrations have been taking place in the economic capital Johannesburg demanding a fairer redistribution of wealth.

Main Sectors of Industry

South Africa has a subsoil rich in mineral resources. It is the world's largest producer and exporter of gold and platinum and the 4th largest producer of diamonds. The country produces 70% of the world's platinum and also has 60% of the world's coal reserves.

The country has diverse manufacturing industries and is a world leader in several specialized sectors, including railway rolling stock, synthetic fuels, mining equipment and machinery. The services sector is flourishing (almost two thirds of the GNP) and tourism should continue to grow after the stimulus it has received from the World Football Cup.  Agriculture only represents a small part of the GNP but employs 30% of the country's active population. South Africa is the 6th largest producer of wine in the world.

South Africa has a sophisticated financial structure with an active stock exchange that ranks among the world's top 20 in terms of market capitalization. Nevertheless, it has to be pointed out that the Rand weakened considerably during the financial crisis. Consequently, the South African government has put in place funds to support companies to guard against a higher depreciation.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

62.7/100

Position:

Moderately free

World Rank:

68/179

Regional Rank:

4/45

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Department of Agriculture
Department of Trade and Industry
Department of Minerals and Energy
Department of Public Enterprises

Statistical Office

Statistics South Africa

Central Bank

South African Reserve Bank

Stock Exchange

JSE Securities Exchange
South African Futures Exchange
Johannesburg Stock Exchange

Other Useful Resources

The South African government
South African Government Online
South African Department of Foreign Affairs
Constitutional Court
National Treasury

Main Online Newspapers

Business Day
South African Newspapers
Mail and Guardian Online
African Sporting Gazette
Afrika link
List of online newspapers

Economic Portals

Economy watch

Political Outline

Type of State

South Africa is a federal republic state based on parliamentary democracy.

Executive Power

President is both the chief of state and head of government. President is elected by the parliament (lower house), who usually happens to be the leader of the largest party, to serve a five-year term. President is the commander-in-chief of the armed forces, declares war or peace and appoints the Cabinet.

Legislative Power

South Africa has a bicameral legislature. The parliament's members are elected by popular vote under a system of proportional representation to serve five-year terms and National Council of Provinces (the upper house) having 90 seats, with 10 members elected by each of the 9 provincial legislatures for five-year terms.

The executive branch of government is directly or indirectly dependent on the support of the parliament, often expressed through a vote of confidence. President can dissolve Parliament if a majority of the members of the National Assembly seek its dissolution and at least three years have lapsed since the last election.

Main Political Parties

South Africa is a democratic but one-party dominant state with the ANC (African National Congress - a social-democratic political party formed by Nelson Mandela to fight apartheid) in power since 1994. Opposition parties are allowed, but are widely considered to have no real chance of gaining power.
Other important parties are:

•  African Christian Democratic Party (ACDP) - claims to represent "Bible believing Christians"

•  Inkatha Freedom Party (IFP) – advocates prevention of one-part state and social justice for all

•  Democratic Alliance (DA) – a liberal political party which officially opposes the ANC

•  South African Communist Party (SACP) – advocates communist ideology

•  United Democratic Movement (UDM) – advocates individual self-reliance, liberty and diversity

Current Political Leaders

President: Jacob ZUMA (since May 2009) – ANC
Executive Deputy President: Kgalema MOTLANTHE (since May 2009) - ANC

Next Election Dates

Presidential: 2013
National Assembly: 2014
National Council of Provinces: 2014

Indicator of Freedom of the Press

World Rank:

42/179

Evolution:

4 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).