Oxford Business Group - South Africa 2012 Report


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Oxford Business Group - South Africa 2012 Report

  1. 1. 7Country ProfileA rich mix of ethnicities, cultures and languagesPlentiful mineral deposits and natural resourcesConstitutional democracy with a three-tier systemUnemployment and wealth disparity remain challenges
  2. 2. COUNTRY PROFILE 9 Cape Town is the legislative capital and home to the parliamentFacing the futureOld traditions merge with modern life in this resource-rich landAlthough southern Africa has been consistently inhab- elections were held and an ANC-led government wasited for tens of thousands of years, South Africa’s mod- voted in, with Nelson Mandela inaugurated as the coun-ern history traces back most directly to the aboriginal try’s new president. Post-apartheid, the country hasKhoisan. The majority of modern South Africa’s black embraced a new era of equality and revelled in its tran-population is descended from a mix of ethnic groups, sition from diplomatic and economic isolation to its newincluding the Bantu, who migrated from elsewhere in role as one of Africa’s leading powers. While it hasAfrica over the past 2500 years. gained prominence through high-profile milestones, Around 1200 the region emerged as a centre for gold including the hosting of the 2010 FIFA World Cup, theand ivory trading, with routes to India and as far away new South Africa continues to grapple with the imbal-as China. Dutch traders first arrived in the mid-1600s ances of economic empowerment and unequal wealthon stopovers on the spice route between the Nether- distribution wrought by decades of discrimination.lands and the Far East. Towards the end of the 18th POLITICS: South Africa is a constitutional democracycentury the British supplanted the Dutch as the dom- with a three-tier system. The parliament is bicameral,inant mercantile power, assuming an increasingly large with a 400-seat National Assembly and a 90-seat Nation-role in local politics and business, while the Dutch set- al Council of Provinces. Executive leadership lies withtlers migrated to rural areas, adopting the label Boers the president, who is elected by the assembly, which,(Dutch for “farmer”). The discovery of gold and diamond in turn, is elected by proportional representation. Thedeposits in the late 1800s encouraged a significant rise National Council of Provinces represents South Africa’sin European immigration, further marginalising indige- nine provinces. Both the parliament and the presidentnous communities and fostering increasing tension are elected for five-year terms, with the last generalbetween the various groups of settlers. election taking place in April 2009. The head of state The race for land and commodities, along with issues is allowed to serve for two terms. The current presi-over self-determination, gave rise to a number of dis- dent, Jacob Zuma, and his ruling ANC hold 264 of theputes and wars throughout the 19th century between National Assembly’s 400 seats, having gained 69.7% oflocal ethnic groups, as well as between the Boers and the vote in 2009. The main opposition party, the Dem-the British. A spate of British victories eventually brought ocratic Alliance, holds a total of 67 seats, a 20-seatabout the establishment of the Union of South Africa improvement on the 2004 elections. Other prominentin 1910 as an imperial dominion. parties include the Congress of the People, with 30 seats,APARTHEID: Although the role of blacks in the politi- and the Inkatha Freedom Party, with 18.cal and economic domains was already extremely lim- After the end of apartheid, the four provincial gov-ited, in 1948 the National Party came to power and ernments were expanded to nine: Eastern Cape, Freeenacted a system of racial segregation. Apartheid State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalan-favoured the maintenance of white minority rule at the ga, North West Province, Northern Cape and Westernexpense of the black majority, and prompted opposi- Cape. Each local government has basic autonomy con-tion from around the world. Domestically, the most cerning local matters within their province. Functionsactive opponent was the African National Congress of government are separated between regions. Cape(ANC). Boycotts by Western nations, combined with ANC Town is the legislative capital and is where parliamentpressure and a moral shift, eventually led to the regime’s sits. Pretoria is the executive capital, where the gov-decision to cede power and dismantle the system of ernment administration is housed, while the Constitu-nationalised segregation. In 1994 the first multi-racial tional Court of South Africa is based in Bloemfontein. THE REPORT South Africa 2012
  3. 3. 10 COUNTRY PROFILE of GDP, of which 8.6% is a direct contribution. The coun- try processes around 20m tonnes per annum of oil and consumes 23m tonnes of liquid fuel products, of which 45% is gasoline and 26% diesel. Because of the abun- dant supplies of cheap coal, this indigenous resource is used to generate most of its electricity and a signif- icant proportion of its liquid fuels. Rapid economic growth and industrialisation is creating growing demand for electricity, and efforts are being undertaken to fur- ther develop the contribution of natural gas, nuclear and renewable sources to the national energy mix. ECONOMY: South Africa’s is considered the most advanced economy in Africa, with well-developed finan- cial, communications, energy and transport sectors. Its stock exchange is the largest on the continent and the world’s 18th-largest, while the rand is among the most actively traded emerging market currencies. With strong mining and manufacturing export sectors and a flour- ishing tourism sector, the domestic economy is very much influenced by swings in global economic condi-The country is home to varied climatic zones, from the subtropical to the semi-arid tions, and there is pressure to keep the rand low. Vast POPULATION & DEMOGRAPHICS: Dubbed the Rain- natural resources and domestic growth opportunities bow Nation, South Africa’s population of around 50.5m aside, investor interest in South Africa also stems from is a melting pot of ethnicities, cultures and languages the country’s strong financial services infrastructure, that reflect the country’s rich and tumultuous history. political stability and solid regulatory environment, all According to the 2010 census 80% of South Africans of which enable it to serve as an entry point and base are of black African ancestry, divided among various for pan-African operations. In June 2011 South Africa ethnic groups and spoken languages. was officially granted full entry into the BRIC grouping, The constitution recognises 11 languages, including with Brazil, Russia, India and China’s decision to extend Zulu, spoken by 23.8% of the population; Xhosa (17.6%); membership a reflection of its undeniable influence over Afrikaans (13.3%); Sepedi (9.4%); English (8.2%); African economic development and investment. Setswana (8.2%); Sesotho (7.9%) and Xitsonga (4.4%). While South Africa is an economic success story on Most non-Anglophones speak English as a second lan- a macro scale, development is concentrated in the guage, and all business and government matters are prime urban centres of Johannesburg/Pretoria, Cape conducted in English. Around 80% of the population is Town and Durban. Gauteng province, in which both classified as Christian, while 15% claim no religious affil- Pretoria and Johannesburg are located, is the country’s iation, adhering to traditional indigenous beliefs. The economic epicentre and the location a significant por- remaining 5% comprise Muslims, Hindus and Jews. tion of economic activity, including mining, industry, GEOGRAPHY & CLIMATE: South Africa lies on the banking and capital markets. Gauteng contributes one- southern tip of Africa, occupying 1.22m sq km with 2798 third of South Africa’s GDP and accounts for roughly km of coastline along the Atlantic and Indian Oceans. 10% of GDP for the entire continent. It surrounds the Kingdom of Lesotho as a landlocked CHALLENGES: According to 2011 figures South Africa enclave and is bordered to the north by Namibia, had the ninth-worst Gini coefficient in the world, a Botswana and Zimbabwe, and to the east by Mozam- measurement widely used to assess income inequali- bique and Swaziland. South Africa is home to varied ty. With the fall of apartheid, the government has been topographic and climatic zones, ranging from lush sub- faced with equipping the economy to handle the influx tropics in the east to extreme desert in the farthest of new workers into an already saturated market. north-west. For the most part the climate is semi-arid, A large proportion of the population lives under especially on the west coast and inland, making it sus- developing world standards and nearly a quarter of ceptible to droughts. The west coast and inland regions South Africans are unemployed. Many people inhabit have warm days and cool evenings, while along the coun- informal settlements known as townships outside major try’s east coast a prevailing subtropical climate makes cities. Illegal immigration from elsewhere on the con- the region hot and humid during the summers but tinent contributes to the growth of these areas. quite pleasant during the winter and autumn. While economic empowerment and affirmative action NATURAL RESOURCES & ENERGY: South Africa has have been applauded for contributing to the rise of an vast deposits of minerals and natural resources. It is the emerging black middle class, some in the business com- world’s fourth-largest source of gold and diamonds munity have expressed frustration at what they per- and sits on more than three-quarters of global platinum ceive as restrictive labour regulations and high levels reserves. It also has large deposits of uranium, coal, and of state ownership in the wider economy. These issues other metals and minerals. It is estimated that in 2010 are ones that the country will have to carefully address South Africa’s mining industry contributed nearly 18% as it continues to work to remedy the wrongs of its past. www.oxfordbusinessgroup.com/country/South Africa