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Report - South Africa

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  • 1. A report on “South Africa” Submitted by: Saurabh Paul Saurav Kumar Shailendra Shankar Gautam Sharad Srivastava 12810073 Submitted to: 12810074 R. L. Dhar Dr. 12810075 12810076
  • 2. TABLE OF CONTENTS 1SOUTH AFRICA: AN INTRODUCTION...............................................................................3 2HISTORY OF SOUTH AFRICA............................................................................................4 3SITUATION ANALYSIS OF SOUTH AFRICA.....................................................................5 3.1 Strength........................................................................................................................................... 5 3.1 Strength........................................................................................................................................... 5 3.2 Weakness........................................................................................................................................ 5 3.2 Weakness........................................................................................................................................ 5 3.3 Opportunity..................................................................................................................................... 5 3.3 Opportunity..................................................................................................................................... 5 3.4 Threat ............................................................................................................................................. 5 3.4 Threat ............................................................................................................................................. 5 4POLITICAL ENVIRONMENT OF SOUTH AFRICA.............................................................6 5ECONOMIC OVERVIEW OF SOUTH AFRICA....................................................................8 6SOCIO-CULTURAL SETTING OF SOUTH AFRICA.........................................................11 7TECHNOLOGICAL LANDSCAPE......................................................................................13 8LEGAL FRAMEWORK.......................................................................................................14 9ENVIRONMENTAL OUTLOOK..........................................................................................15 10FUTURE OUTLOOK.........................................................................................................16 10.1 Challenges.................................................................................................................................. 16 10.1 Challenges.................................................................................................................................. 16 10.2 Recommendations .................................................................................................................... 16 10.2 Recommendations .................................................................................................................... 16 11REFERENCES..................................................................................................................17 11.1 Reports........................................................................................................................................ 17 11.1 Reports........................................................................................................................................ 17 11.2 Online Resources ...................................................................................................................... 17 11.2 Online Resources ...................................................................................................................... 17 2
  • 3. 1 SOUTH AFRICA: AN INTRODUCTION South Africa, also identified as the Republic of Africa is positioned at the southern part of the continent of Africa. It is considered as one of the prominent diversified areas of the world containing various climates and cultures. The famous Safari, an adventure travel is world famous. According to CIA Factbook, South Africa is having a total land area of 1219090 square kilometers which puts it at the 25th rank in the world. It also possesses a huge coastline of 2798 km. The total population of South Africa is 51770560 in the 2011 census which is 24 th largest in the world. It is a multicultural as well as multi-linguistic nation. Blacks are the largest group in population followed by Whites. The constitution of South Africa has eleven official languages with two languages of European roots, English and Afrikaans. The prominent language of official communication is English. South Africa follows a system of parliamentary democracy. However the head of state (president) and head of government is same. All ethnicities as well as linguistic groups are represented in the parliament. The executive capital is located in Pretoria whereas legislative and the judicial capital is Cape Town and Bloemfontein respectively. South Africa achieved independence from British rule in 1910 and declared a republic in 1961. The majority rule came to power on 27 April 1994 and the same day is celebrated as national holiday every year. It was elected as a non permanent member in the UN for 2011-12 period. South Africa is categorized as a developing country in the world bank data. It is an upper middle class income nation with a GDP of 578.64 billion USD (nominal) and around 11302 USD on PPP basis in 2012. It is in 26th place by nominal GDP as well as 107th by PPP value. However its GDP growth rate has been modest by around 2.6%. The unemployment rate is a big concern in South Africa with over 20% rate. South Africa is a member of many international bodies such as NEPAD, BRICS, WTO, IMF etc. Tourism is the major industry with substantial contribution in GDP. The South African currency is known as Rand. South Africa is a nation full of contradictions. It has graduated from suppression to economy however many people still have the feeling of being left behind. On one hand it has a strong economy yet the unemployment rate is staggering at a 25% rate (by NASDAQ). It also suffers from the highest HIV/AIDS infection globally. Since the end of apartheid in 1994 it has tried to overcome these deficiencies and looked for a leadership role in the world. The country has made good improvement but a lot more is required. The present report seeks to present a comprehensive analysis of the South Africa country, the recent trends, challenges before the nation as well as future prospects. It would involve history, various environmental factors, directions, people etc. and give an idea about the overall scenario of the state. 3
  • 4. 2 HISTORY OF SOUTH AFRICA The formal history of South Africa dates back to 1652 with the arrival of Dutch people from the Dutch East India Company. They wanted to establish a supporting facility for passing naval ships. Later French and Germans too arrived at the scene. This has led to the commercial farming pursued by the guests, which again led to the dominance of agriculture sector. By the start of the 19th century British have colonized the nation. They were trying to promote their culture and language. British people were spreading their farming activities in deeper areas. Meanwhile diamond was discovered in 1870 with gold mines being explored in 1886. This has resulted in the transformation of the economy dependent on resources. It has also caused the British to gain control of the rich metals. The nation also witnessed industrialization with first South African Trade Union. A series of laws were soon put into practices which were discriminatory on the basis of races. 1948 the National Party won election in 1948 and enacted the stricter racial discriminatory policies called Apartheid. The economy was soon divided into classes, the privileged class of Whites as well as deprived Black peoples. This open discrimination invited criticism and sanctions were put on the country in 1980. South Africa saw first interracial elections in 1994 which was won by African National Party (ANC). The winning party has tough challenges to restore the order as well as improve the conditions of underprivileged segment. The government initiated several economic reforms which gave positive results such as foreign investment, inflation control and stabilization of finances. In 2000, the then president of the country Thabo Mbeki initiated several reform measures to attract foreign capital, relaxation of labor laws and introducing privatization. However he faced stiff opposition fro organized labor unions. By 2004, these measures have started paying dividends. The 2009 recession caused the lowering of GDP growth rate but it was soon stabilized. South African economic growth has accelerated and employment opportunities were also generated. Unemployment however is still the major cause of concern for the country with a rate around 25%. Today South Africa is considered as a growing economy. Though the nation is lagging in development parameters such as education and usage of technology but the overall impression of the country is positive. The inclusion of South Africa in prominent economic groups such as BRICS also gave it enough leverage on world forums. In the Global Competitiveness report in 2012-13 by the world Economic forums the country was figured third for financial market development hinting the high confidence in the economy. It is the highest rank African country in the report. Fitch has also given it a Stable outlook. The government is trying to tackle the challenges and the African nation is all set to be a leader in coming days. 4
  • 5. 3 SITUATION ANALYSIS OF SOUTH AFRICA Situation analysis of South Africa is done using a SWOT (Strength, Weakness. Opportunity and Threat) model as given below: 3.1 Strength      3.2 Growing economy and the rise of the middle class Rich availability of natural resources Stable democracy and political system Biodiversity English speaking population Weakness      3.3 Poor human indices such as HIV/AIDS, unemployment and productivity Growing income inequality between rich and poor Lower research and development output Neglect of environmental issues Prevailing corruption Opportunity      3.4 Leadership position status on world forums Diversification of export Rising foreign investment Information Technology business development Trading agreement with other nations Threat      Competition from other countries External economic factors such as a recession Migration from neighboring countries Environmental degradation Less technology penetration 5
  • 6. 4 POLITICAL ENVIRONMENT OF SOUTH AFRICA The colonialism started with the arrival of the Dutch East India Company in 1652. The Dutch considered themselves as white settlers and called themselves “Afrikaners”. However their powers were decreasing by 18th century and British filled the gap. They established a racially discriminating system. As British influence continued to rise, so the racial discrimination is. In 1841, they passed Masters and Servants Ordinance which enacted white supremacy. Meanwhile Dutch people were not satisfied with the situation due to the dominance of the British. In 1914 they created National Party to gain power. The founders believed in a collaborative approach with the British. However with the passage of time a militant section is created with the name of Broederband (Band of Brothers). These militants took over the party in 1934 with Daniel Malan as the leader. He advocated the supremacy of Afrikaners and supported job for every Afrikaner giving the party huge public support. Riding in popularity the party won 1948 with a clear majority and remained in power till 1994. The National Party government made all efforts to promote racial dominance. An Apartheid State (separateness) is created based on racial differences. All people were categorized into one of the four racial classes of Whites, Colored, Asians and Blacks. Interracial marriages were prohibited, blacks were banned from studying in certain universities and separate facilities were created on racial grounds. The architect of apartheid state is Hendrik Verwoerd who became PM in 1958. He even propagated the theory of separate nations. Among these developments a small number of black people have created African National Congress (ANC). The party was trying to acquire space for black people through petitions but without much success. In the 1940s, the ANC youth league decided to shift approach from the politics of petition to politics of mass demonstrations. The league was led by Nelson Mandela. ANC started to disobey the apartheid laws through mass demonstration which led to harassment by government. The Sharpville Massacre in 1960 was a turning point after which ANC decided to go for armed resistance. ANC created an armed wing and initiated a sabotage campaign. Nelson Mandela was made the leader. The government tried to crush the movement and several ANC leaders including Mandela was arrested. The shift has forced the ANC to resort to Guerilla Warfare. The sequence of events also resulted in a black consciousness. Interestingly a little amount of white support also began to surface. International pressure was building up such as ban for Olympics. In 1985 USA cleared a bill which made investment in South Africa illegal. These measures presented a crisis situation for government and they were compelled to introduce some reforms. The period also saw the breakdown of law & order situation and street violences. Finally in 1994 6
  • 7. the first ever interracial elections were conducted and the ANC won with full majority. The party has been in power since then. The South African political system has a profound impact on other nations as well. The case of India is most significant. MK Gandhi, the father of India, has been a direct recipient to the discrimination prevailed in South Africa. Leaders such as Mandela has also been the motivating factor for several other leaders and political movements. Structure South Africa follows the parliamentary form of democracy with President being the head of government as well as head of state. The constitution is supreme and the supreme court has the power to nullify action which is unconstitutional. South Africa has a multiparty system with the representation of 13 parties in the National Assembly of Parliament. Most popular parties are mentioned as: • African National Party • Democratic Alliance • Congress of the People • Inkatha Freedom party Currently African National Party has been in power since 1994. It won 2009 election with 264 seats out of 400. Jacob Zuma is the president of the party. Politics in South Africa is a three tier structure of federal, state and local level. Elections are conducted every five years. So far the country had four elections in 1994, 1999, 2004 and 2009. South Africa has a bicameral parliament with National Assembly as the lower house and National Council of Provinces as the upper house. Judiciary The South African judicial system is based on common law and Roman law. The judiciary has three levels of local, high courts and supreme court. The judiciary is independent from legislative and executive. The supreme court has the power to outlaw any action or policy which is contradictory to the constitution. Though South Africa has followed the path of democracy however it faces certain challenges. The system is plagued by corruption and unethical practices. Another hurdle is to promote inclusive growth or to counter the effect of apartheid rule. South Africa over the years has developed good relations with foreign countries such as India, China, US and others. It is also a member of the United Nations and served as a non permanent member in the security council. It is also a key player in the Non Alignment Movement. South Africa is considered as a major power in the African region. 7
  • 8. 5 ECONOMIC OVERVIEW OF SOUTH AFRICA Until a couple of decades ago the apartheid system denied black people to enjoy a comfortable standard of living. After getting away with the model, South economy has been rising for successive years. Today South Africa is considered as a middle income emerging economy. It has achieved a stable GDP growth rate over the years. During 2003-2008 served as a milestone as the country saw the longest economic growth. New employment opportunities were created, foreign investment increased and inflation was contained. The global economic downturn brought a halt to that progress. The year 2009 saw a negative GDP growth due to worldwide recession. Also around 1 million jobs are lost due to decrease in demand. However the economy again found its ground and recorded a positive rate in 2010. The GDP outlook is mentioned below: Figure 1: South Africa GDP growth rate Source: International Monetary Fund, October 2012 Sector Mining was the pillars behind the South African economy. Large scale mining was started in 1867 with the discovery of diamonds. Today South Africa is considered as the leading nation for mining. It is the world's largest producer of platinum, gold and chromium. The mining business contributes to around 60% of total exports. Its contribution to GDP is approx. 9 percent. The sector has both public and private players, though dominated by private houses. There are allegations of suppression and unethical as well as illegal means adopted by the private sector and the government is seriously considering on nationalization of 60% of total mines. Agriculture is another major sector of the economy. Its contribution to GDP is around 2.6% and it employs around 10% of the workforce. The soil infertility also plays a role and only 13% of the land could be utilized for agriculture. The farm crimes are one major issue for this sector. It also faces stiff foreign competition notably from China and India. Tourism is also a big industry in South Africa. According to National Department of Tourism, the contribution is around 7.9% of GDP and provide around 8% of the employment. 8
  • 9. Apart from these traditional sectors there are some niche areas. The Cape Town region has come out as a BPO and call center destination. Many firms such as Amazon, Delta Airlines and Lufthansa have established their call center offices in the region. The banking industry consists of four key players Nedbank, ABSA, Standard bank and First Rand. The banking operations are controlled by the South Asian Reserve Bank. With the involvement of several private banks the sector has become competitive and more sophisticated. South Africa has Johannesburg Stock Exchange (JSE) which is the 17 th largest stock exchange in the world in terms of market capitalization. It has a market capitalization of 903 billion USD as on 31st December 2012. South African currency is Rand (ZAR). Trade Trade liberalization in South Africa started in 1970s with providing export securities. A General Export Incentive Scheme (GEIS) was launched in 1990s. After becoming a member of WTO more liberalization was introduced. Today total export has 30% of agriculture, 50% manufacturing and rest service based products. South Africa has trade relations with a number of countries. Apart from African, it trades with Germany, USA, China, Japan, UK and Spain. The main export are diamonds, metals and minerals and agro-based products. Major imports are machines and transportation equipments. The South Africa has had a negative balance of trade for a few years. South Africa has signed various trade agreements, including free trade agreements (FTAs) with the South African Development Community (SADC), European Union (EU), Mecosur, EFTA, China, India and others. Interestingly, China’s share has increased from 1.7% in 1994 to 11% in 2008. South Africa has also joined economic forums such as WTO and BRICS (joined in 2010). The trade is limited by inefficient border management, underdeveloped infrastructure and tariff barriers. Competitiveness The South African economy is highly centralized with few players dominating the social sectors. This has resulted in a higher price as compared to global standards. These high prices tend to cut down the return to the downstream, more labor intensive activities. South Africa has not concentrated on human development or education. This has taken a toll on the quality of service. According to World Economic Forum Global Competitiveness Report, there is a lot of scope for improvements in education, cost of crimes to business and labor regulations. It also does badly on productivity, availability of technical skills and quality of education. These intrinsic deficiencies are masked by the good mining exports. However due to economic recession where demand fell these gaps were evident. 9
  • 10. Another issue is the cost of labor to the employer. South Africa has five times higher wages when compared to India, China, Sri Lanka and Phillipines. The hourly wages were three times of Mexico and Malaysia and even higher than Russia, Brazil, Turkey and Hungary. This has posed a major challenge for foreign investment as well as capturing the global outsourcing business. A comparison of wages is given below: Figure 2: Comparison of wages to foreign countries Source: OECD Future Prospects The overall South African economy is strong on system’s perspective but weak from human or operational perspective. Skill is the single biggest challenge for the South African economy. This has restricted business houses and large corporate to enter into the economy. South Africa should work on investing in human resource development activities and strengthening infrastructure capabilities. Unemployment and higher labor wages are other hurdles for South Africa to realize its full potential. In future and even today it is facing competition from countries like India & China who are strong in human talent and also cheaper in terms of labor. Corruption is another sore spot where much focus is required. All these factors make a negative impact on the economy and business. The current is working on eradicating some of the deficiencies and the country is on a right track. All the three credit ratings agencies (Standard & Poor, Fitch and Moody) have given a “Stable” outlook for South Africa which reinforces the confidence in the leadership. The governmental efforts are slowly paying off. FDI is also rising and GDP is also going up. If all above challenges are handled, the future seems bright for the nation. 10
  • 11. 6 SOCIO-CULTURAL SETTING OF SOUTH AFRICA Demographics The social setting has undergone a radical change in the past century. The population has grown significantly though it is largely due to migration. According to CIA Factbook, the actual population growth is negative which means that share of local people is reducing. The table below describes the population growth as well as real population growth (discarding migrating population) from 2001. Table 1: Summary of population growth of South Africa Year Real Growth Total Growth Yea Real growth Total Growth (%) (%) r (%) (%) 2001 0.26 1.83 2007 -0.46 1.10 2002 0.02 0.96 2008 0.83 1.10 2003 0.01 1.27 2009 0.28 1.07 2004 -0.25 1.18 2010 -0.05 1.35 2005 -0.31 1.14 2011 -0.38 1.18 2006 -0.40 1.12 2012 -0.41 1.07 Source: Real Growth is taken from the CIA World Factbook. Total growth is taken from World Bank data. As of 2010 there are 5 million immigrants estimated to be in the country. Of which Zimbabwe alone has a share of 3 million people. This huge population has caused a demographic shift in South Africa and also results in law and order situation. As per the 2011 census, the population is predominately female with a percentage of 51.7%. The overall literacy rate is also good with the 86.4% figure.. However unemployment rate is very high with close to 25%. The reduced infant mortality rate as well as higher life expectancy has increased the middle age group of 15-64 years which was 65.2% in 2011. The median age is found to be 25 years earning it the recognition of a Youthful nation. Racial Profiling South Africa is a multiracial society known as “Rainbow Nation”. The entire population can be divided into four racial classes of Whites, Colored, Asian (Indian), Blacks and Others. Their shares were found to be 8.9%, 8.9%, 2.5%, 79.2% and 0.5% in 2011 census. Indians have formed a major chunk of the Asian community along with Chinese and Vietnamese. The lingua franca of the state is English. However there are other languages which are also used in Africa, most notably Afrikaans which . Christianity is the main religion practiced by almost 80% of the population. Other main religions are Islam, Hinduism and Judaism. A significant population (around 16%) is not associated with any religion. Social Indicators 11
  • 12. South Africa is facing issues on several human indicators. The first and foremost challenges is the education system overhaul. South Africa is having problems with low quality teachers, lack of infrastructure and high turnover rates. This has direct consequences on the quality of the workforce and thus the overall productivity of the nation. Poverty is another major concern. In the 2011 census, around 39% of people are below the poverty line. Moreover, the gap between poor and rich is widening which is reflected by a Gini Index of 63.1. One of the cause of concern for the nation is the HIV/AIDS epidemic. South Africa is worst affected countries in the world. The situation is so serious that daily approx. 500 die because of this. A survey finding by the South African Insititute of Race Relations states HIV is the reason behind 31% of all deaths. The HIV is still posting a threat to the economic and social development of South Africa. Some of the social indicators are mentioned below: Table 2: Key Social Indicators of South Africa Year 1996 2001 % Female 51.9 52.2 Population Median Age 22 23 Average 4.5 3.8 Household Size Unemployment 19.3 29.4 Rate Source: South Africa Census 2011 2007 51.7 2011 51.4 24 3.9 25 3.4 22.3 24.7 Social Dynamics South Africa has gone through a radical social transformation. After the end of apartheid in 1994 reservations for Blacks were introduced to uplift them. This coupled with growing GDP has created a significant middle class. The rise of this middle class has led to various socioeconomic changes. The first among them is the emergence of the nuclear family system. Another related change is the growth of single parent families. During apartheid, labor for mining business were taken from far away region while their families were not allowed to resettle. This again resulted in a large number of single parent families. The middle class also also contributed to the increased consumption and demand. However the rise has its own side effects. It contributed towards to pollution and increased waste materials. Land reforms were also brought in for promoting equality among classes. The non-white population was restricted from purchasing land since 1913. The ban was hardened during the rise of NP to power in 1948. After the end of apartheid rule in 1994, land reforms were introduced to distribute land from commercial sector. 12
  • 13. 7 TECHNOLOGICAL LANDSCAPE South Africa’s IT standards have been praised globally. The government has also encouraged the usage of open source software. Information and communication technology (ICT) governance has been hardened under the modified King Code and Report on Governance, introduced in 1994. However high piracy and diminishing number of patients present serious threat. It is estimated that a third of softwares are not licensed, by a 2011 BSA Global Software Piracy study. One major issue is the low number of research professionals. Going by the World bank data, there are only 396 per million researchers in South Africa. A poor internet penetration is another key issue. By 2011 only 8.5 million people or roughly 17% has access to the internet. The situation is further aggravated by high broadband rate is 20 times higher than competitor nations. It is prohibitive for the development of e-commerce business. The government has taken several initiatives to exploit technology for economic growth. It has concentrated on improving infrastructure such as new cables for improving communication. The government is also working on the plan for providing broadband access throughout the country by 2019. Additionally, the government also aims to strengthen the ICT policy framework. Proving laptops to all school children is also being considered. Figure 3: Position of South Africa in Internet in terms of Internet Source: Internet World Stats 2012 Private sector contribution is also on the rise with the IBM announcement in 2011 that it would host a datacenter in South Africa, making it a fourth nation in the world. The efforts are now showing the benefits. In a joint report by the World Bank, African Development Bank and African Union the mobile phone market in South Africa has expanded to 650 million subscribers. 13
  • 14. 8 LEGAL FRAMEWORK South Africa has an independent judiciary which ensures the appropriate legal atmosphere for business. The courts in South Africa do not discriminate between a foreigner and citizens. Abuse of power by public officers is strictly dealt with. The Public Finance Act was ratified in 1999 and in 2003 the Prevention of Corruption and Combating of Corrupt Activities Act was approved by parliament, therefore making it illegal to receive political bribes. Patents and copyrights are legally acknowledged. The country was a leader in the signing Trade Marks Law Treaty in 1994. The Companies and Intellectual Property Registration Office of South Africa supervise intellectual property rights. This has guaranteed compliance with the TRIPS plan and agreements prepared under the Uruguay Round of the GATT. Corporation tax has been reduced from 33% to 28% in 2012. This has formed equal opportunities for both resident and non-resident companies with the same tax rate. Moreover, the government has also removed the secondary tax on companies. Such steps are expected to increase FDI in the nation. From fiscal year 2012–13, the government has declared a hike in capital gains tax from 14.0% to 18.6% for businesses. Additionally the government is considering the introduction of carbon tax from next fiscal year (2013–14). This will put a load on businesses and shareholders. Reserve Bank has the responsibility for banking supervision in South Africa. It also decides the monetary policy. To incorporate the Basel II standards, reserve bank has amended the Bank Act to meet the requirement. The Bank Amendment Act facilitates the implementation of Basel norms in the country. The act also regulates the foreign bank's operations in the country. South Africa has a number of international trade agreements signed. Some of them are listed below (Source: WTO): • The Southern African Development Community (SADC) Trade Agreement • The Southern African Custom Union (SACU) Trade Agreement • Trade Agreement between Southern African Customs Union (SACU) and European Free Trade Association (EFTA) states • European Union: Trade Agreement between the (EU) and South Africa • India: Trade Agreement between Southern African Customs Union (SACU) and India • In 2010, South Africa has also joined BRIC making it BRICS (S stands for South Africa) 14
  • 15. 9 ENVIRONMENTAL OUTLOOK South Africa is known for its diversity. Furthermore, South Africa has implemented the UN's Agenda 21 to ensure sustainable development. The judicial system has a heavy punishment for environmental violations, which also enables the government to earn substantial revenue and restrict environmental depreciations. In addition, the government has cooperated with many business houses to invite investment for various industrial sectors that tend to violate environmental hazard. However, the recent acid mine drainage is a major health and safety concern. Along with other countries, South Africa has taken significant steps to preserve its environmental legacy. Prominent among such initiatives was the declaration to guard and restore biodiversity by representatives around the world. Moreover the government started a National Green Fund in April 2012 to support green economic activities, while in November 2011 the cabinet endorsed an action plan for sustainable development. South Africa has taken several steps towards implementing the sustainable environmental development. Some of the measures include reforming ecological policies. The government has also decided to reduce the country's greenhouse emissions by 34% by the year 2020. Further, it played a key role in the ratification of the Kyoto Protocol during the Durban. These steps will help towards preserving country’s biodiversity. South Africa also faces a water issue that could hamper its economic growth and cause health troubles. A pressing problem is acid mine drainage, which is causing pollution a vast area from the Witwatersrand to Mpumalanga. In South Africa, the environment remains a distant priority after economic and social problems. For example, the government has given priority to housing, aimed at the lower sections of society. However, new housing projects have mostly been completed with little consideration for the environment. In addition to this, the government has been slow in implementing its progressive green policies and laws. The manufacturing industries in particular have displayed scant environmental concerns, leading to pollution. The disregard of environmental is clearly reflected in the country's green Performance Index published in 2012 by Yale University, where it ranked a dismal 128th out of 132 countries. The government has made efforts to curb environmental violation. The National Environmental Laws Amendment Bill will give inspectors with more authority to police offenders. There are hundreds of such inspectors across the country, responsible for examining cases of nonconformity with environmental regulations. The designation of the inspectors will be "peace officers" and are given power to arrest and impose fines. . 15
  • 16. 10 FUTURE OUTLOOK 10.1 Challenges South Africa has made impressive progress after the apartheid rule. However there are several challenges in front of the nation. The major issues faced are high poverty level and extreme income inequality. This not only hampers the growth of the nation but also give birth to various social as well as law & order problems. The dearth of qualified workforce is another key area which needs to be handled. This is a direct fallout of the inadequate education system. Lack of infrastructure adds up to the crisis. Besides these things, the trade is highly dependent on natural resources. There are environmental deterioration and it has its effect on tourism industry. Lastly the HIV/AIDS poses a serious danger to the country. 10.2 Recommendations Though the list of issues is exhaustive yet they do not take away the the strides made by the country. The nation should have its eye on the future and act accordingly. Some of the steps suggested are as follows:  Invest in building infrastructural capability  Focus on education and competency development  Improve crime management system and judiciary to handle them in a shorter time  Initiate social security measures to alleviate poverty and reduce the income gap  Develop proficiency in Information Technology  Introduce agricultural and manufacturing reforms These measures are essentially long term and will not give immediate benefits. Over the years, they will lead to increase overall efficiency and competitive advantage. This will then be leveraged to extract dividends. For short term measures, temporary regulations can be introduced to contain the situation. 16
  • 17. 11 REFERENCES 11.1 Reports • • • 11.2 • • • • • • • • • Accessing Development Strategies to Achieve the MDGs in The Republic of South Africa; UNDESA; 2011 Census 2011; Statistics South Africa; 2011 The Global Competitiveness Report 2011-2012; World Economic Forum; 2012 Online Resources http://en.wikipedia.org/wiki/South_africa http://www.geographia.com/south-africa/ http://www.statssa.gov.za/Census2011/Products/Census_2011_Census_in_brief.pdf https://www.cia.gov/library/publications/the-world-factbook/geos/sf.html http://data.worldbank.org/country/south-africa http://www.npconline.co.za/MediaLib/Downloads/Home/Tabs/Diagnostic/Diagnostic _Economy.pdf http://ms.cc.sunysb.edu/~bleventoglu/southafrica1.pdf http://www.ngo.grida.no/soesa/nsoer/issues/social/pressure.htm http://www.politicsweb.co.za/politicsweb/view/politicsweb/en/page71656? oid=240416&sn=Detail&pid=71616 17

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