Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview
South Africa has a subsoil rich in mineral resources. South Africa is the worlds largest producer and exporter of gold and platinum and the 5thlargest producer of diamonds. South Africa produces 70% of the worlds platinum and also has 60% of the worlds coalreserves. South Africa diverse manufacturing industries and is a world leader in several specializedsectors, including railway rolling stock, synthetic fuels, mining equipment and machinery. The services sector is flourishing (almost two thirds of the GNP) and tourism should continueto 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 countrys activepopulation. 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 ranksamong the worlds top 20 in terms of market capitalization. South Africa has to be pointed out that the Rand weakened considerably during the financialcrisis. The South African government has put in place funds to support companies to guard against a higher depreciation.
South Africa is the economic giant of the African continent, contributing nearly 40% tothe total African GDP.In the secondary sector, 75% of the biggest African companies are South African.Rebinding after the severe international economic crisis and enjoying the benefits of theorganization of the World Football Cup in 2010, the South-African economy hasexperienced a slight recovery in 2010, with an estimated growth at 3%, with anexpectation of a speedier growth in 2011.The government is mainly focusing on the construction of infrastructure, support of theindustry, improvement of labor skills, on speeding up the agricultural reform andreducing criminality.After pursuing the policy of economic stimulus in 2010, the government is planning totighten its budgetary policy in 2011 and reduce non-priority expenses in order to containthe deficit.Unemployment, which affects nearly a third of the countrys active population and AIDS(infecting nearly 12% of the population) are a cause for major concerns to the countrysoverall economic development.A third of the population continues to live below the poverty line and social inequalitiesremain high.
Being largely a free-market economy, South Africa encourages foreign investment in both private andpublic sectors. Factors attracting FDI into the country include: transparent regulatory framework, large population,access to raw materials and political stability. According to the UNCTAD World Investment Report, the potential appeal for foreign investment inSouth Africa is strong compared with other countries in the world, but performances are poor in terms ofFDI attraction. The global financial crisis which affected the world at the end of 2008 - beginning 2009,South Africa is suffering from the lack of foreing investor interest and the net capital export ishigher than the income
Nearly all the business sectors are open to foreign investors. No government approval is required, and there are almost no restrictions on the form or theextent of foreign investment. Other measures taken by the government are simple tax rules, investment incentives, a betterregulatory policy on competition, protection of intellectual rights. We can quote : The Foreign Investment Grant up to 15% of the value of new machinery and equipment; The Skills Support Program which provides up to 50% of training costs and 30% of workers salaries; The Strategic Industrial Project program which offers tax allowances; and The Small and Medium Enterprise Development Program which offers tax free grants. With 23.5% unemployment, Jacob Zuma recognizing that the recession had delayed economic recovery and the private sectors capacity to create new opportunities, announced the remittance of some 303 million dollars in order to help company heads and employees who were in trouble due to the crisis
South Africa has high market potential, developed infrastructures and a reasonablycompetitive domestic economy. South Africa has put into place economic reforms, which have led to macro-economicstability, tax and customs reduction. It also has a large and active stock exchange. South Africa has shifted from its traditional industries to production and financial serviceswhich are the main contributors to the GDP. Tourism and the retail sector have great potential.
South Africa has a certain amount of weaknesses: High rate of criminal violence and corruption, A highly regulated labour market and poor or unclear regulations in some of the key sectors like telecommunications.These factors contribute negatively to foreign investment.
South Africa is very open to international trade. The share of international trade in the countrys GNP exceeded 64%, an increaseof almost 20% over the last 4 years. The three top trade partners of South Africa are: the United States, Japan, and theEuropean Union. The beginning of the world economic crisis, the countrys exports remain weak,while import is steadily increasing, leaving the trade balance in deficit.
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