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South Africa Country Report 2020

South Africa Country Report 2020

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South Africa Country Report 2020

  1. 1. SOUTHAFRICA COUNTRY REPORTBY ANDRÉS BENAVENTE, JOSÉ MANUEL CUEVAS, DANIEL DOLS, IVÁN KIM, AND DAVID SOLER UPDATED: JULY 2020
  2. 2. Country Overview Demographics Macroeconomics Trade Govermnent Finance Financial Markets Competitiveness and Doing Business 1. 2. 3. 4. 5. 6. 7. 8. Education 9. Corruption 10. State of Democracy 11. Land Reform 12. Race Relations 13. Income Inequality 14. State Owned Enterprises 15. NCID Work INDEX SPECIAL TOPICS SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT
  3. 3. 1.COUNTRYOVERVIEW NAVARRACENTERFORINTERNATIONALDEVELOPMENT South Africa has 3 capitals: Pretoria (executive), Cape Town (legislative) and Bloemfontein (judicial). Johannesburg, South Africa's commercial hub, is the city with the largest population. PRESIDENT Cyril Ramaphosa (2O18-Present) ECONOMY South Africa is Sub-Saharan Africa's second largest economy behind Nigeria. It is one of the countries with the largest income inequality in the world. THREECAPITALSANDACOMMERCIALHUB RACEINEQUALITY Despite being a 7.9% of the population, Whites earn three times as much as Africans, which are a 80.7% of the population. ADMINISTRATIVE UNITS South Africa is divided into 9 provinces, each with its provincial administration. SOUTHAFRICACOUNTRY REPORT
  4. 4. 1.COUNTRYOVERVIEW NAVARRACENTERFORINTERNATIONALDEVELOPMENT TIMELINE OFKEYEVENTS Prehistory-1487 - Territory occupied by Khoikoi, San and Bantu communities. 1487 - First European to land in South Africa, Portuguese Bartomoleu Dias. 1652- Jan Van Riebeeck establishes the Cape Colony. 1652-1795 - Dutch colonization. 1795 - British forces take control of Cape Colony. 1795-1910 - British colonization. 1880-1881 & 1899-1902 - First Anglo-Boer War and Second Anglo-Boer War. 1910 - Independence. Creation of the Union of South Africa. 1948 - National Party wins power and established apartheid. 1961 - Creation of Republic of South Africa. 1990-1994 - Apartheid repealed and transition to democracy. 1994 - First democratic elections. Nelson Mandela elected as South Africa's first black president. 2010 - South Africa hosts first World Cup of Football in African soil. SOUTHAFRICACOUNTRY REPORT (SOURCE: BBC)
  5. 5. TOTAL POPULATION: 58,775,022 people (2019 estimate). POPULATION GROWTH: The estimate annual growth rate was at 1.43% in 2018- 2019. GENDER: South Africans are a 51% female (30,102,275) and 49% male (28,672,747). AGE: Median age is 27.6 years old. A 28.8% of the population is aged 15 or less. 2.DEMOGRAPHICS NAVARRACENTERFORINTERNATIONALDEVELOPMENT POPULATION PYRAMID (SOURCE: MID-YEAR POPULATION ESTIMATES 2019, STATISTICS SOUTH AFRICA) SOUTHAFRICACOUNTRY REPORT
  6. 6. 2.DEMOGRAPHICS NAVARRACENTERFORINTERNATIONALDEVELOPMENT Gauteng province, where Johannesburg and Pretoria are  located, have a population of 15.2 million South Africans. Gauteng is expected to receive the largest number of people, with a net migration of more than one million people predicted for the period 2016-2021, followed by Western Cape with 316.308 migrants. Three provinces lose citizens, led by Eastern Cape with 314.453 people leaving the province. GEOGRAPHICALDISTRIBUTION Gauteng 25.8% KwaZulu-Natal 19.2% Western Cape 11.6% Eastern Cape 11.4% Limpopo 10.2% Mpumalanga 7.8% North West 6.9% Free State 4.9% SOUTHAFRICACOUNTRY REPORT (SOURCE: MID-YEAR POPULATION ESTIMATES 2019, STATISTICS SOUTH AFRICA)
  7. 7. African 80.7% Coloured 8.8% White 7.9% 2.DEMOGRAPHICS NAVARRACENTERFORINTERNATIONALDEVELOPMENT RACE South Africa categorizes its population into four races: African, Coloured, White and Indian/Asian. 8 out of 10 South Africans are Africans. SOUTHAFRICACOUNTRY REPORT Indian/Asian 2.6% (SOURCE: SOUTH AFRICA GATEWAY, CENSUS 2011) Whilst eastern South Africa is dominated by Africans, Coloured citizens are predominant in the Western Cape province, whilst whites focus on urban areas and Asians Gauteng purely. Some areas do not have any dominant race. (SOURCE: MID-YEAR POPULATION ESTIMATES 2019, STATISTICS SOUTH AFRICA)
  8. 8. A majority of South Africans are multi-lingual. Over one quarter of South Africans speak Zulu at home (25.3%), being the most spoken language, followed by Xhosa (14.85%) and Afrikaans (12.2%). English only ranks sixth with 8.1% of the population speaking it at home. However, English is the second language most spoken outside the household, with a 16.1%. Zulu still leads in this category with a 25,1%. 2.DEMOGRAPHICS NAVARRACENTERFORINTERNATIONALDEVELOPMENT LANGUAGES SOUTHAFRICACOUNTRY REPORT (SOURCE: SOUTH AFRICA GATEWAY, CENSUS 2011) (SOURCES: CONSTITUTION OF THE REPUBLIC OF SOUTH AFRICA, 1996, CHAPTER 1: FOUNDING PROVISIONS South Africa has 11 official languages: AFRIKAANS, ENGLISH, NDEBELE, XHOSA, ZULU, SESOTHO SA LEBOA, SESOTHO, SETSWANA, SWATI, VENDA, TSONGA AND SOUTH AFRICA'S PEOPLE, SOUTH AFRICAN GOVERNMENT) Languages predomination varies greatly by provinces. Whilst Afrikaans is spoken mostly in Gauteng and Western Cape, Xhosa is dominant in Eastern Cape and Zulu in KwaZulu-Natal. English is mostly spoken in urban cities.
  9. 9. 2.DEMOGRAPHICS NAVARRACENTERFORINTERNATIONALDEVELOPMENT Women: 67.7 Men: 61.5 (SOURCE: WORLD BANK) 2019 LIFEEXPECTANCY AGE SOUTHAFRICACOUNTRY REPORT (SOURCE: MID-YEAR POPULATION ESTIMATES 2019, STATISTICS SOUTH AFRICA) Life expectancy declined by more than 7 years in the decade from 1990 to 2000 due to HIV/AIDS. Despite a recovery in the 21st century, life expectancy is practically the same in 2018 (63.86 years) than it was in 1990 (63.31 years).
  10. 10. 2.DEMOGRAPHICS NAVARRACENTERFORINTERNATIONALDEVELOPMENT Average was 3.42 children per women in 2019. Back in 1960 it was over 6 births per women. Fertility declined from 3.96 to 2.69 children per women in the decade from 1990 to 2000 coinciding with oubreak of HIV/AIDS. FERTILITYRATE CHILDRENPERWOMEN SOUTHAFRICACOUNTRY REPORT (SOURCE: WORLD BANK)(SOURCE: MID-YEAR POPULATION ESTIMATES 2019, STATISTICS SOUTH AFRICA)
  11. 11. The average was 1.3% between 2012 and 2019. Considering the current situation of the coronavirus outbreak, the growth rate for 2020, so far, is -5.8%. The IMF projects 4% growth in 2021. 3.MACROECONOMICS GROWTH RATE (SOURCES; WORLD BANK DATA SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT South Africa is in a situation of stagnation due to the aftermath of apartheid in the country, also because of the political, structural and economic transition and finally because of the 2008 crisis and poor government management. & INSTITUTE FOR SECURITY STUDIES) The first step is to update global growth forecasts (including the impact of the COVID-19). The second step is to quell the six trouble spots that cause economic stagnation: Poor health system Poor quality education Lack of electricity Capital-intensive manufatoring industry Unfavourable investment climate Rural areas trapped in poverty To cope with the current economic situation: Poor human capital is the biggest restraint for South Africa´s economy, along with a low investment-to-GDP ratio of 18%, which differs from the target of the National Development Plan (30% of the GDP). SLOWECONOMICGROWTH Note: Data in current US$
  12. 12. The South African economy is predominantly based on the tertiary sector, which accounts for 61.04% of the contribution to GDP. The other important sector in the country's economy is industry, which accounts for 25.85% of GDP. Finally, it is important to note that agriculture has little relevance in the country's economic activity, with an share of only 2.18%. These proportions have been maintained without being seriously altered over the recent years. Employment in the agricultural and industrial sectors is declining and giving way to growth in employment in services. 3.MACROECONOMICS GDP BY SECTOR (% OF GDP) Agriculture 2.18 Services 61.04 Industry 25.85 (SOURCE: WORLD BANK DATABASE AGRICULTURE: SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT South Africa is the second largest economy in Africa after Nigeria SERVICES & INDUSTRY)
  13. 13. South Africa was going through a recession that can be seen in the progressive drop in the GDP per capita from 2012 ($7,574.43) to 2019 ($6,001.62). In 2019 the annual growth rate was -1.17%, now, as a result of the Covid-19, a greater decline is expected. 3.MACROECONOMICS (SOURCES: WORLD BANK DATABASE) GDP PER CAPITA (US$) SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT
  14. 14. In the context of the COVID-19, the South African economy has suffered a deflation of almost two points, falling from 4.13% to 2.43%. (%) INFLATION RATE SOUTH AFRICAN RAND TO US $ RATE 3.MACROECONOMICS (SOURCES: IMF WORLD ECONOMIC OUTLOOK & IMF DATABASE) SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT TOP PROVINCES BY GDP Due to the health crisis, the exchange rate has devalued from 14.03 rands per dollar in 2019 to 17.11 rands per dollar in July 2020. Trade Business Services Transport KwaZulu-Natal (16% of GDP) Financial Services Trade Business Services Innovation Gauteng (33% of GDP) Financial Services Trade Industry High-Tech Innovation Western Cape (14% of GDP )
  15. 15. South Africa experienced an average annual growth rate of -1.34 per cent over the period 2012-2020. It currently has one of the lowest investment ratios among the SACU (Southern African Customs Union), just above Swaziland. DEBTANDCREDITRISK3.MACROECONOMICS In terms of savings, the country has always been stable, experiencing light fluctuations. South Africa has consistently been one of the SACU countries to have less savings in proportion to their GDP . The central government financies its budget through taxes, which represent 27.3% of GDP in 2018. Amongst the BRICS countries, South Africa is the one that earns the most through taxes on income, profits and capital gains. GROSS NATIONAL SAVINGS AS % OF THE GDP TOTAL INVESTMENT AS % OF THE GDP CENTRAL GOVERNMENT BUDGET REVENUE AS % OF THE GDP (SOURCES: WORLD BANK: TCDATA360, IMF DATABASE)WORLD BANK DATABASE & SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT
  16. 16. South Africa is the largest exporter in Sub-Saharan Africa, followed by Nigeria, Angola, Ghana, D. R. of the Congo, Ivory Coast, and Kenya. The country plays an essential role in Southern African, and in the continent. From 2011 to 2019, South Africa's exports of goods and services reached almost 1/3 of its annual GDP. Despite subsequent drops, the ending of the apartheid between 1992 and 1994 was a positive turing point for the increase of exports. 4.TRADE NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRYREPORT EXPORTS (SOURCE: WORLD BANK DEVELOPMENT INDICATORS) EXPORTS VALUE (BILLIONS OF USD) 2019: 104.92 USD bn (29.85% of the GDP)
  17. 17. EXPORTSSouth Africa ranks 69th out of 137 countries in the 2018 Economic Complexity Index (ECI, HS12, 4 Digit level detail). It is also the 36th largest exporter in the world. Its exports dynamics involves leading Sub-Saharan Africa and sustaining strong trade relations with top economies from America, Europe, and Asia. 4.TRADE NAVARRACENTERFORINTERNATIONALDEVELOPMENT % CURRENT GROSS EXPORTS (4 DIGIT) MAIN GROSS EXPORTS PARTNERS IN 2018 (SOURCE: ALTAS OF ECONOMIC COMPLEXITY) (SOURCE: ALTAS OF ECONOMIC COMPLEXITY) 2018 (BILLIONS OF USD) GOLD: 16.8 TRAVEL AND TOURISM: 10.9 PLATINUM: 8.19 CARS: 6.08 COAL: 5.85 SOUTHAFRICACOUNTRYREPORT
  18. 18. NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT 4.TRADE NAVARRACENTERFORINTERNATIONALDEVELOPMENT IMPORTS IMPORTS VALUE (BILLIONS OF USD) (SOURCES: WORLD BANK DEVELOPMENT INDICATORS, AND South Africa is also the largest importer in Sub- Saharan Africa, followed by Nigeria, Angola, Ghana, Kenya, Ethiopia, and D. R. of the Congo. During the 2010s, imports reached almost 1/3 of its annual GDP. As with exports, South Africa is the smallest importer among the BRICS. In both cases, China is its most important partner, hence China's recent slower economic growth due to the COVID-19 crisis is affecting South Africa directly, for example, in sectors such as metals manufacturing and tourism. 2019: 103.15 USD bn (29.35% of the GDP) SOUTHAFRICACOUNTRYREPORT 'IMPACT OF TRADE DISRUPTING COVID-19 ON SOUTH AFRICAN BUSINESS' FEB. 2020 REPORT, PWC)
  19. 19. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 4.TRADE IMPORTS South Africa is the 39th largest importer in the world, according to the Observatory of Economic Complexity (2018). In 2018, the country had a positive trade balance of 19.9 USD billions. MAIN GROSS IMPORTS PARTNERS IN 2018 % CURRENT GROSS IMPORTS (4 DIGIT) (SOURCE: ALTAS OF ECONOMIC COMPLEXITY) (SOURCE: ALTAS OF ECONOMIC COMPLEXITY, 2019) 2018 (BILLIONS OF USD) TRANSPORT: 9.4 PETROLEUM OILS, CRUDE: 8.56 CARS: 3.70 ICT: 2.82 SOUTHAFRICACOUNTRYREPORT
  20. 20. NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT 4.TRADE AfCTFAWithin the African Union framework, 44 countries signed in March 2018 the creation of the African Continental Free Trade Area (AfCFTA). Signed by 54 of the 55 African states and with the initial ratification by 22 of those in April 2019, it will be the largest free trade area in the world. With the 55 states it will joint USD 2.2. trillion of combined GDPs, and 1.2 billion people. By January 2020, 29 countries had ratified the agreement. AfCFTA is supposed to increase trade flows, promote trade integration betwen heterogeneous economies, and reinforce intraregional trade, including approximately "USD 60 billion to African exports, and support ongoing diversification efforts". (SOURCE: 'THE AFRICAN CONTINENTAL FREE TRADE AREA: POTENTIAL ECONOMIC IMPACT AND CHALLENGES', IMF 2020) As a "hub for Southern Africa", and "top-five trading partner for 14 African countries," South Africa is meant to be a leader in the AfCTA inside the continent and towards the Global Value Change. Distributional effects Employment effects Fiscal revenue impact Income, welfare, and trade effects
  21. 21. NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT Expenditure: 31.53% Expense: 31.39% Revenues: 27.27% Gross operating balance: -3.83% Net Operating Balance: -4.02% Net lending (+) / net borrowing (-): -4.26% 62.2% in 2019. It was constantly decreasing until the 2008 crisis, which has widened the gap with both expenditure and revenue to GDP ratios. In 2018, as % of GDP: Debt to GDP ratio: In the World Economic Outlook June 2020 update (p. 6), the IMF projects that South Africa's performance "will be severely affected by the health crisis". 5.GOVERNMENTFINANCE GOVERNMENT DEBT, EXPENDITURE AND REVENUE AS % OF GDP (SOURCES: INTERNATIONAL MONETARY FUND DATA, 2018 DEBT: 56.7% of the GDP 2018 EXPENDITURE: 31.53% of the GDP 2018 REVENUE: 27.27% of the GDP AND TRADING ECONOMICS)
  22. 22. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 5.GOVERNMENTFINANCE 2020-2021GOVERNMENTEXPENDITURE (Feb.2020) (SOURCE: NATIONAL BUDGET 2020, NATIONAL TREASURY) *Note: original data in South African rands. 1 ZAR = 0.05844 USD. 1. LEARNING AND CULTURE: 23.16 USD bn 2. SOCIAL DEVELOPMENT: 18.06 USD bn 3. HEALTH: 13.43 USD bn 4. DEBT-SERVICE COSTS: 13.4 USD bn 5. PEACE AND SECURITY: 12.68 USD bn 6. ECONOMIC DEVELOPMENT: 12.36 USD bn 7. COMMUNITY DEVELOPMENT: 12.41 USD bn 8. GENERAL PUBLIC SERVICES: 4.09 USD bn Basic education: 14.53 USD bn University transfers: 2.69 USD bn Social security funds: 5.14 USD bn Old-age grant: 4.86 USD bn District health services: 5.96 USD bn Central hospital services: 2.61 USD bn Police services: 6.2 USD bn Defense and state securities: 3 USD bn Economic regulation and infrastructure: 6.13 USD bn Industrialisation and exports: 2.28 USD bn Municipal equitable share: 4.36 USD bn Human settlements, water, and electrification programs: 3.25 USD bn General administration and fiscal affairs: 2.76 USD bn Executive and legislative organs: 0.85 USD bn 113.95 USD bn* SOUTHAFRICACOUNTRYREPORT
  23. 23. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 5.GOVERNMENTFINANCE SUPPLEMENTARYBUDGET(June2020) COVID-19crisiseconomiceffects *Note: original data in South African rands. 1 ZAR = 0.05844 USD.SOUTHAFRICACOUNTRYREPORT ECONOMIC RELIEF: 29.2 USD BN* REVISED 2020 SUPPLEMENTARY BUDGET: -41.48 USD BN -14.6% OF GDP 2020-2021 gross national debt: 81.8% of GDP. 2020 budget initially estimated it in 65.6%. Gap between revenue and expenditure is expected to widen in the following years. Main budget revenue-to-GDP ratio is projected to reduce from 26.2% in 2019-20 to 22.6% in 2020/21. Main budget expenditure-to-GDP ratio is projected to increase to 37.2% in 2020-21. Main budget deficit and gross borrowing requirement increase. Significant tax revenue underperformance. Tax-to-GDP ratio, worse than in the 2008 crisis, but should recover along with the econony and further tax measures. Government expectations: RESPONSE PHASES: Preserve: immediate, temporary and targeted responses1. 2. Recover: supporting investment and employment 3. Pivot to position the economy for the faster growth needed Three main additions to spending for the fiscal response to the pandemic: 1. Support to vulnerable household for 6 months 2. Health 3. Support to municipalities (SOURCE: SUPLEMENTARY BUDGET 2020, NATIONAL TREASURY)
  24. 24. South Africa has the most developed financial markets in Africa. The Johannesburg Stock Exchange (JSE) is the largest stock market in Africa and was founded in 1887. 6.FINANCIALMARKETS (SOURCES: SANTANDERTRADE.COM) SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT South Africa also has the most developed fixed income market in Africa, with both the government and private corporations raising financing through bonds. A significant portion of investors in South African markets are foreign investors, making the market highly sensitive to portfolio flows. United Kingdom: 27% Netherlands: 18% Belgium: 14.8% United States: 6.7% Germany 4.9% Main Foreign Direct Investing Countries Brazil: BOVESPA Russia: MOEX India: BSE Sensex China: SZSE Component South Africa: S.A. Top 40 Main stock indexes within the BRICS Countries
  25. 25. MONEY MARKETS CURRENCY MARKETS 349 listed companies in May 2020 Market Capitalization: 343.5% of GDP in 2019 Equity turnover ratio of 33.13% in 2019 3-month government bond YTM: 10.09% (2019) 10-year government bond YTM: 8.26% (2019) 6.FINANCIALMARKETS CEICDATA.COM, CAPITAL MARKETS The capital market is deeper and more efficient than most stock markets in Africa. The main index is the JSE index. The bond markets are well developed and are used for financing by the Central Government, Municipal Governments and Parastatals. Secondary trading is not common. The official currency of South Africa is the South African Rand (ZAR). Since 2000, the government of South Africa pursues a flexible exchange rate regime. 3 Months & IMF DATABASE)KNOEMA.COM(SOURCE: CEICDATA.COM, 10 Years
  26. 26. Among the Southern African Development Community countries (SADC) , the top 3 rank is led by Mauritius (52nd), followed by South Africa (60th) and Seychelles (76th). Its best score was in the Financial System category, ranking 19 out of 141. Another important pillar of the index is Macroeconomic Stability, mainly due to their debt dynamics, obtaining a score of 88.4. However, a poor Healthy Life Expectancy (118/141), a low-skilled workforce (90/141) and a late ICT Adoption (89/141), hinder the country's competitiveness. 7.COMPETITIVENESSANDDOINGBUSINESS (SOURCE: GLOBAL COMPETITIVENESS REPORT 2019, WORLD ECONOMIC FORUM) GLOBALCOMPETITIVENESSINDEX POSITION: 60/141 SCORE: 62.4/100 SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT
  27. 27. South Africa's score on the Doing Business Index was 67.0, slightly higher than its direct competitor Zambia (66.9). Among its most obvious weaknesses were the categories of starting a business (159/190), enforcing contracts (137/190) and getting electricity (137/190). Its best performing categories are Protecting Minority with a score of 80/100 and Paying Taxes with a 81.2/100. In these, South Africa ranks 12th and 13th, respectively. 7.COMPETITIVENESSANDDOINGBUSINESS DOINGBUSINESS DOING BUSINESS SCORE: SADC POSITION: 84/190 SCORE: 67/100 SOUTHAFRICACOUNTRY REPORT NAVARRACENTERFORINTERNATIONALDEVELOPMENT (SOURCE: DOING BUSINESS DATA 2019, WORLD BANK)
  28. 28. 5.32 8.EDUCATION NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT According to the Human Development Report (HDR), the literacy rate in South Africa is around the 94.4%. And the government expenditure on education (as percentage of the GDP) was 6.1% in 2018, according to the World Bank (WB). HUMAN DEVELOPMENT REPORT, 2019)(SOURCES: WORLD BANK INDICATORS AND 5.27 5.36 2015: 5.9% 2016: 5.9% 2017: 6.1% 2018: 6.1% GOVERNMENT EXPENDITURE ON EDUCATION AS % OF GDP 0.72/1 HUMAN DEVELOPMENT INDEX
  29. 29. 8.EDUCATION NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT While gross enrolment rates in primary and secondary schools are high, there is only a 20% enrolment rate in tertiary enrolment. This is the second highest in Africa after Egypt (33%) and higher than the African average (12%), but below the global average (32%). Primary Secondary Tertiary 125% 100% 75% 50% 25% 0% GROSS ENROLMENT RATIO (SOURCE: HUMAN DEVELOPMENT REPORT, 2019) THE 3 BEST AFRICAN UNIVERSITIES ARE IN SOUTH AFRICA 5 SOUTH AFRICAN UNIVERSITIES ARE AMONGST THE TOP 10 IN AFRICA UNIVERSITY OF CAPE TOWN UNIVERSITY OF THE WITWATERSRAND STELLENBOSCH UNIVERSITY UNIVERSITY OF KWAZULU-NATAL NORTH-WEST UNIVERSITY 1. 2. 3. 4. 5. (SOURCES: TIMES HIGHER EDUCATION WORLD UNIVERSITY RANKINGS AND QS
  30. 30. State contribution to tertiary education went down from a 49% in the year 2000 to a 40% in 2012, increasing the financial burden on students from a 24% to 31% in the same period. 8.EDUCATION 15% Only a 60% of Black students manage to finish the first year and 15% end up graduating. There is four times as much private universities than public ones in South Africa. NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT 40% Total tuition fees paid at the 23 South African public universities in 2012. Student debt rose by a 31% in two years from 2010-2012. 4X NUMBERS REASONS HIGH FINANCIAL COST LACK OF TRANSPORT ORPHAN-HOOD UNPLANNED PREGNANCIES (SOURCES: JOURNAL OF AFRICAN AND ASIAN STUDIES, PWC, QS AND THE CONVERSATION) US$906 M US$198 M
  31. 31. 8.EDUCATION NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT HUMANCAPITALINDEX The World Bank measures in the HCI "the human capital that a child born today can expect to attain by her 18th birthday, given the risks of poor health and poor education in the country where she lives." The WB index also highlights that, by the age of 18, children can expect to have completed 9.3 years of education in South Africa. But when years of schooling are adjusted for quality of learning, these are equivalent to just 5.1 years. So there is a learning gap of 4.2 years. HCI SCORES OF NEIGHBOURING COUNTRIES N am ibia Botsw ana Sw aziland South Africa Lesotho 0,5 0,4 0,3 0,2 0,1 0 (SOURCE: HUMAN CAPITAL INDEX, 2018) 0.41/1
  32. 32. 8.EDUCATION NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT FAILURESINTHEEDUCATIONSYSTEM The 2016 Progress in International Reading Literacy Study (PIRLS) notes that 78% of South African Grade 4 children cannot read for meaning in any language. (SOURCES: TIMSS, 2016;  The Trends in International Mathematics and Science Study (TIMSS) released in 2016 ranked South Africa at the bottom of several of its rankings and said that "South Africa is one of the lower performers of the 39  participating countries (...) and has a wide score distribution, reflecting high educational inequalities which mirror the societal inequalities." An IMF working paper notes that "While there is a global phenomenon of weak correlation between spending on education and the quality of educational outcomes, South Africa’s basic education system has poorer outcomes than that of peer countries with lower spending per capita on education (...) the quality of education continues to limit South Africa from realizing economic returns on its education expenditure." IMF WORKING PAPER, 2019; AND PIRLS, 2016)
  33. 33. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 9.CORRUPTION SOUTHAFRICACOUNTRYREPORT Since 2012, year in which Transparency International introduced a new methodology for the CPI, South Africa's highest score has been 45, in 2016. Sub-Saharan Africa's 2019 average score was 32 points. RANKING: 70/198 SCORE: 44/100 CORRUPTION PERCEPTION INDEX (SOURCE: CPI 2019, TRANSPARENCY INTERNATIONAL) RANKING 2015 2016 2017 2018 2019 61 64 71 73 70 SCORE 44 45 43 43 44 YEAR
  34. 34. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 9.CORRUPTION SOUTHAFRICACOUNTRYREPORT (SOURCE: GCB 2019, TRANSPARENCY INTERNATIONAL) 28 GLOBAL CORRUPTION BAROMETER 2019Public schools Public clinics/H ealth centers ID s U tilities Police 20% 15% 10% 5% 0% BRIBERY RATES (OVERALL: 18%) GLOBAL COMPETITIVENESS INDEX SCORE: 57.1/100INSTITUTIONS PILLAR SCORE 0-100 (BEST) (GLOBAL COMPETITIVENESS REPORT 2019, WORLD ECONOMI(C FORUM) Percentage of people who thought corruption increased in the previous 12 months. Percentage of public service users paid a bribe in the previous 12 months. 64% 18% Checks and balances: 70.7 Public-sector performance: 59.3 Transparency: 43 Corporate governance: 71.5
  35. 35. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 9.CORRUPTION SOUTHAFRICACOUNTRYREPORT According to researchers Catrina Godinho and Lauren Hermanus for a South African case study, state capture is: "A political-economic project whereby public and private actors collude in establishing clandestine networks that cluster around state institutions in order to accumulate unchecked power, subverting the constitutional state and social contract by operating outside of the realm of public accountability.” Regarding South Africa, the concept is used in academia, politics and media, and it is known in the public opinion because it has recently been a major issue with cases coming from both public and private sectors. Economic impact is estimated in USD billions. (SOURCES: '(RE) CONCEPTUALISING STATE CAPTURE,' AND STATECAPTUREFormer President Jacob Zuma (2009-2018): Forced to step down in February 2018 because of corruption scandals. Faces accusations of corruption charges, including embezzlement and accepting bribes from a French arms company. Has been critiziced for highly increasing state bureaucracy and manipulating institutions in favor of his family and the Guptas' business empire. Gupta brothers, entrepreneurs, Indian origin family that arrived in South Africa in the 90s. With relations with Zuma, they are accused of trying to co-opt the Finance minister job, among others, for their own interests, which involved contracts with the state in exchange for Zuma's relatives hirings. 'THE TRIALS OF JACOB ZUMA, BBC NEWS)
  36. 36. NAVARRACENTERFORINTERNATIONALDEVELOPMENT 10.STATEOFDEMOCRACY SOUTHAFRICACOUNTRY REPORT 2019GENERALELECTIONS South Africa is a parliamentary republic with an executive presidency. On May 8, 2019 the sixth elections since the end of apartheid took place. Main outcomes include: Cyril Ramaphosa, from the African National Congress (ANC) party, was elected President after replacing Jacob Zuma in 2018 due to his resignation. The ANC, social-democratic, nationalist, and in power since 1994, won with 57.50% of the votes (10,026,475, 230/400 seats), but it is the first time that its result is under 60%. It was followed by economic liberal Democratic Alliance with 20.77% of the votes (3,621,188, 84 seats). Following the international trend, the election proved the rising presence of extremist parties. Far-left Economic Freedom Fighters (EFF) got the third place, increasing from 6.35% to 10.79% of the votes. Conservative Freedom Front Plus (FF+) grew from 0.9% to 2.38%, achieving its best result. Founded in 2013 Marxist-leninist Represents mainly black youth Founded in 1994 Right-wing conservative Represents mainly nationalist afrikaners (SOURCE: ELECTORAL COMMISION OF SOUTH AFRICA)
  37. 37. 10.STATEOFDEMOCRACY NAVARRACENTERFORINTERNATIONALDEVELOPMENT Based on 60 indicators, South Africa classifies since 2006 as a "flawed democracy" in The Economist Intelligence Unit Democracy Index. That category goes after "full democracy", and before "hybrid" and "authoritatrian regime." South Africa ranks 4th among the countries from Sub-Saharan Africa and 1st between the BRICS. RANKING: 40/167 (SOURCE: THE ECONOMIST INTELLIGENCE UNIT DEMOCRACY INDEX 2019) OVERALL SCORE: 7.24/10 DEMOCRACYINDEX2019 Electoral process and pluralism: 7.42/10 Functioning of government: 7.50/10 Political participation: 8.33/10 Political culture: 5/10 Civil liberties: 7.94/10 SOUTHAFRICACOUNTRYREPORT GLOBALPEACEINDEX2020 RANKING: 123/163 OVERALL SCORE: 2.317/5 COMBINED MAJOR FACTORS Safety and security: 3.2/5 Militarisation: 1.8/5 Domestic and internal conflict: 1.6/5 (SOURCE: GLOBAL PEACE INDEX 2020) SCORE: (BEST) 0-5 REGIONAL RANKING: 29/44 One of the three largest improvers in Sub-Saharan Africa.
  38. 38. 10.STATEOFDEMOCRACY NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRYREPORT WORLDPRESSFREEDOMINDEX2020 1996 constitution protects press freedom. There is an investigative journalism culture, but apartheid-era legislation and terrorism laws "are used to limit coverage of governments institutions" when its for “national interest”. "The state security agency spies on some journalists and taps their phones". Others are harassed or intimidated if they try to cover certain subjects on the ruling ANC, government finances, land redistribution or corruption. EFF party received a high court warning in 2019 because of its "invective and hate speech against journalists". Journalists, especially women, can be mocked, insulted or threatened on social media, by politicians or their supporters. RANKING: 31/180 (SOURCE: REPORTERS WITHOUT BORDERS) CRIMEANDSECURITY Despite not facing terrorism at the level of other Sub- Saharan Africa countries, South Africa has a deep problem with criminality, especially in the big cities of Pretoria, Johannesburg, Cape Town, and Durban. Armed robbery is the most common crime, and others include murder, rape, carjacking, home invasion, property theft, smash and grab, and ATM robbery. SERIOUS* CRIMES REPORTED 04/2009-03/2010 1,884,430 04/2018-03/2019 1,673,790 (SOURCE:SOUTH AFRICAN POLICE SERVICE STATISTICS) 04/2014-03/2015 1,795,947 *Includes contact crimes, contact related, property related, among others.
  39. 39. NAVARRACENTERFORINTERNATIONALDEVELOPMENT South Africa's 1996 Constitution establishes in Section 25 that no one may be deprived of property and that if it is to be expropriated in the public interest, it must always be subject to a just and equitable compensation. The government is now aiming to modify this section of the Constitution to make it legal to expropriate land without compensation. The Government presented a draft bill in 2019 and President Cyril Ramaphosa pretends to end legislation and constitutional provisions for land restitution by the end of 2020. In order to be approved it must have a two-thirds majority in the National Assembly and in votes in the National Council of Provinces. (SOURCE: LAND AUDIT REPORT, RURAL DEVELOPMENT AND LAND REFORM, REPUBLIC OF SOUTH AFRICA, 2017) DISTRIBUTION OF PRIVATE LAND OWNERSHIP BY TYPE OF OWNER Individual s 39% Trust s 31% Companie s 25% CBO s 4%SECTION25OFTHECONSTITUTION SOUTHAFRICACOUNTRY REPORT 11.LANDREFORM A total of 82% of South Africa's total land in hectares belongs to private owners. Of that land, a majority is in hands of individuals (39%), followed by trusts (31%) and companies (25%). (SOURCES: BUSINESSTECH AND IACL-AIDC)
  40. 40. NAVARRACENTERFORINTERNATIONALDEVELOPMENT South Africa only records land ownership by race on individual owned parcels, which account for 39% of total land. It does not account for race in trust, companies and other type of ownerships. Whites amount a 72% of individual privately owned land despite being a 7.9% of the population. Blacks  own only a 4% of the individual land even though they are a 80.7% of the population. Land restitution aims to redistribute land to original black owners who were stripped of their properties during colonialism and apartheid. (SOURCE: LAND AUDIT REPORT, RURAL DEVELOPMENT AND LAND REFORM, REPUBLIC OF SOUTH AFRICA, 2017) DISTRIBUTION OF INDIVIDUAL PRIVATE LAND OWNERSHIP BY RACE White s 72% Coloure d 15% India n 5% African s 4% Othe r 3% LANDDISTRIBUTIONBYRACE SOUTHAFRICACOUNTRY REPORT 11.LANDREFORM
  41. 41. A majority of South Africans (57%) believe race relations have improved since 1994. Moreover, an 88% of citizens believe all races need each other to achieve progress. However, African  people (64%) are the only race who believe relations have improved. Most Coloured (51%), Indian (44%) and White (47%) respondents say relations are worse than when democracy was established in 1994. While the share of Africans believing race relations have improved has gone up from 49% in 2001 to 64% in 2018, Coloured and Indians shifted the other way, from 45% to 26% and 61% to 31%, respectively. 12.RACERELATIONS NAVARRACENTERFORINTERNATIONALDEVELOPMENT RACE RELATIONS SINCE 1994 (SOURCE: UNITE THE MIDDLE, RACE RELATIONS IN SOUTH AFRICA, REASONS FOR HOPE, INSTITUTE OF RACE RELATIONS, 2019) SOUTHAFRICACOUNTRY REPORT EVOLUTION OF RACE RELATIONS SINCE 1994 PER RACE GROUP
  42. 42. A majority of South Africans say they have not experienced any racist incident (58%), however vast differences emerge between races. A 70% of Coloured respondents say they have experienced racist acts against them, whilst also a majority of Indians (56%) and Whites (52%) say so. Whilst a 64% of Blacks reported to not have ever been target of a racist attack in 2018, this number has significantly gone down from a 79% only three years earlier in 2015. NAVARRACENTERFORINTERNATIONALDEVELOPMENT RACISM COMPLAINTS (SOURCE: ANNUAL TRENDS REPORT 2016/2017, SOUTH AFRICAN HUMAN RIGHTS COMMISSION) SOUTHAFRICACOUNTRY REPORT 12.RACERELATIONS (SOURCE: UNITE THE MIDDLE, RACE RELATIONS IN SOUTH AFRICA, REASONS FOR HOPE, INSTITUTE OF RACE RELATIONS, 2019) The South African Human Rights Commission records that race issues are by far the major type of equality complaint received, about eight times more than the second listed, on disability grounds. In 2016/2017 a total of 486 race-related complaints were filed in, a record 69% of all equality complaints received. RACE COMPLAINTS AS A PERCENTAGE OF TOTAL EQUALITY COMPLAINTS
  43. 43. NAVARRACENTERFORINTERNATIONALDEVELOPMENT POLITICS INCIDENCE Almost two-thirds of South Africans (64%) believe politicians stir racial issues to cover their own failures. This is consistent across all race groups. South Africa's two major political parties, the African National Congress (ANC) and the Democratic Alliance (DA) have since the advent of democracy held a policy of non-racialism. Although they are still by far the leading parties, both are losing support against radical parties in a country where race still is important in politics. The two parties that most grew in the 2019 elections were the far-right Freedom Front Plus (FF) based mostly on white afrikaaner voters and the radical left Economic Freedom Fighters (EFF) who mobilise support on a young black population with a racial rethoric against white privileges. (SOURCE: ELECTORAL COMMISSION OF SOUTH AFRICA)AND THE CONVERSATION) SOUTHAFRICACOUNTRY REPORT 12.RACERELATIONS ANC: -15 DA: -5 EFF: +15 FFP: +6 2019 ELECTIONS NATIONAL ASSEMBLY SEATS ANC: 230 DA: 84 EFF: 44 FFP: 10 TOTAL SEATS WON CHANGE OF SEATS TO LAST ELECTION (SOURCES: UNITE THE MIDDLE, RACE RELATIONS IN SOUTH AFRICA, REASONS FOR HOPE, INSTITUTE OF RACE RELATIONS, 2019
  44. 44. Black South Africans account for a 94.4% of all chronic poor, 86.4% of the transient poor and 91.1% of South African vulnerable population. Whites only account a 1.6% of transient poor, 0.1% of vulnerable and none of the chronic poor. 13.INCOMEINEQUALITY NAVARRACENTERFORINTERNATIONALDEVELOPMENT WHITESVSBLACKS (SOURCE: INEQUALITY TRENDS IN SOUTH AFRICA, STATISTICS SOUTH AFRICA) WAGE EMPLOYMENT SOCIAL CLASS SOUTHAFRICACOUNTRY REPORT Black citizens have the highest unemployment rate, which is five times higher than white locals. White people earn, on average, three times as much income as black people do. Whites account for 65.4% of South Africa's elite whilst Africans only for a 22.4%. POVERTY
  45. 45. NAVARRACENTERFORINTERNATIONALDEVELOPMENT GINICOEFFICIENT SOUTHERN AFRICAN COUNTRIES AMONGST TOP TEN GINI COEFFICIENT WORLDWIDE (SOURCES: POVERTY & EQUITY DATA PORTAL WORLD BANK 0.63/1 71% South Africa is the most unequal country in the world in terms of income with a 0.63 Gini coefficient. Inequality has gone up since the end of apartheid. Back in 1993 South Africa had a Gini coefficient of 0.59. The richest 10% of South African citizens hold 71% of the country's wealth, whilst a 60% of people only have a 7% of the total wealth. Southern Africa has 7 countries amongst the  top 10 with highest income inequality in the world. It is the most unequal region in Sub- Saharan Africa and amongst the worst in the world. SOUTHAFRICACOUNTRY REPORT 13.INCOMEINEQUALITY +0.04 7/10 AND CNN)
  46. 46. South Africa's vital state-owned enterprises which should drive the country's growth are nearing bankruptcy. Only the South African Forestry Companies Limited (Safcol) is not making losses. 14.STATEOWNEDENTERPRISES South African Airways: Set on November 2019 on business rescue with US$1.6 billion losses since 2010. In 2018 it lost about US$20 per passenger. South African Broadcast Company: Had US$28.2 million in losses in 2018/2019 and Treasury had to save it with a US$122.7 million lifeline. Passenger Rail Agency of South Africa: Had losses of US$54 million in the 2017/2018 period and an audit found US$1.4 billion spent on irregular expenditure. PetroSA: The oil company had US$22.4 million in losses in 2017/2018 and it spent US$6.32 billion irregularly. NAVARRACENTERFORINTERNATIONALDEVELOPMENT LOSSES South African National Roads Agency: accounted for US$374 million in losses in the 2017/2018 year and asked Treasury for a US$351 million bailout. Denel: The arms manufacturer public company lost US$1.4 billion in the 2018/2019 financial year and debt grew to US$1.99 billion. (SOURCES: BUSINESSTECH AND FIN24) SOUTHAFRICACOUNTRY REPORT
  47. 47. 14.STATEOWNEDENTERPRISES The national power utility is in serious pressure with mounting debt. The company has faced greater demand than its supply capablity, forcing it to do blackouts which have left millions of South Africans without power up to 9 hours per day. Eskom supplies electricity to a 95% of South African households. It drastically expanded its network from a 35% reach at the end of apartheid in 1990. The company has a debt of R450 billion, about 28 billion dollars and foresees losses amounting 1.2 billion dollars for this financial year. US$ 26.4B Cost of two power plants Medupi and Kusile which had a budget a third of actual cost and were supposed to add 9.000mw of power. They should've been ready by 2012 and 2014 but are yet to be finalized. 66% Amount of extra workers the company has according to World Bank. Eskom went from 30.000 employees in 2003 to 50.000 in 2017, whilst salaries went from average 15.000 dollars to 48.000 dollars per employee. US$ 1.5B Debt that municipalities have with Eskom is of  1.5 billion dollars. More than half ($1.1b) comes from Soweto  where only 10% pay for electricity. NAVARRACENTERFORINTERNATIONALDEVELOPMENT (SOURCES: DAILY MAVERICK, SOUTHAFRICACOUNTRY REPORT ESKOM 95% US$ 26.3B BUSINESS INSIDER, FIN24,WORLD BANK, ENGINEERING NEWS,BUSINESS TECH 1 AND 2)
  48. 48. Need to include all: After apartheid only a part of the country and its citizens was developed and the government had to increase the reach of services such as electricity and infrastructure in order to include all citizens. That increased costs and put pressure on SOEs. Clientelism: The government has used the Black Economic Empowerment (BEE) tool aimed to redress racial inequalities and incorporate black citizens to the labor market as a tool to establish a system of patronage that ensures their power in future elections. Corruption: Extended corrupt practices in public office have permeated SOEs and stripped them of financial resources. During the presidency of Jacob Zuma, South Africa lost a third of its GDP, 1.5 trillion rand, about 92.8 billion dollars, to corruption. NAVARRACENTERFORINTERNATIONALDEVELOPMENT MAIN CAUSES POSSIBLE SOLUTIONS Divide companies: President Cyril Ramaphosa has said it will divide Eskom into three to reduce costs and increase efficiency. Pay with pensions money: Biggest labor union COSATU suggested the public entity which pays pensions should absorb half of Eskom's debt. Privatize SOEs: It is very unlikely as they play an important role in government's control of the economy and international reputation. Ramaphosa has said it won't let companies fall. AND NCID OP02/2019) SOUTHAFRICACOUNTRY REPORT 14.STATEOWNEDENTERPRISES (SOURCES: DAILY MAVERICK, BUSINESS TECH
  49. 49. The NCID has had an interest in South Africa for a long time. In 2015 it did a project in the country together with Fundación Moderna which gave advise to the Cape Town and Johannesburg local governments in the design and implementation of an economic development plan. The cooperation with local public officials extended to the agricultural industry, tourism and renewable energy sectors. NCID Resident Fellows Pedro Mendi and Luis Alberiko Gil-Alana participated in this project. 15.NCIDWORK NAVARRACENTERFORINTERNATIONALDEVELOPMENT The NCID has a good relationship with the Konrad Adenauer Stiftung South Africa office based in Johannesburg. Both institutions share the vision of promoting democratic values and civil liberties in South Africa and across the African continent. PROJECT SOUTHAFRICACOUNTRY REPORT
  50. 50. Topics published about in South Africa include: tourism, exchange rates,  inflation, house prices, technology, probability of recession and others. The majority of these papers have been published by NCID Resident Fellow Luis Alberiko Gil-Alana. 7 publications which mention South Africa, featured in leading economic journals. Other publications have been done on Southern Africa and Sub-Saharan Africa on unemployment, health and climate change. 15.NCIDWORK-Research NAVARRACENTERFORINTERNATIONALDEVELOPMENT PUBLICATIONS SOUTHAFRICACOUNTRY REPORT Several Working Papers have published about South Africa since the NCID's start on migration, technology, house prices and security. The Working Paper Cooperation with the police in a diverse society: the case of South Africa analyzed insecurity in South Africa. The paper researched how public cooperation could help to reduce crime in one of the countries with highest murder rates in the world. WORKING PAPERS
  51. 51. 15.NCIDWORK-GeneralContributions NAVARRACENTERFORINTERNATIONALDEVELOPMENT The OP is titled The Slow Death of Liberation Movements in Southern Africa and analyzes their tenure in power and reasons for reducing support. The book review is of the book Liberation Movements in Power: Party and State in Southern Africa by researcher Roger Southall. NCID Junior Researcher David Soler Crespo has been studying  governance, corruption and race relations in South Africa for the last years. Soler's research focuses on the former liberation movements of Southern Africa. These went from protest movements to government and still are in power decades later, but are losing support. He has published an Ocassional Paper and a Book Review: SOUTHAFRICACOUNTRY REPORT
  52. 52. 15.NCIDWORK-MediaAppearances One of the NCID's objective is to also reach the wider public through analysis published in media outlets on our areas of research. The NCID has published in Spanish media outlets eldiario.es, El Orden Mundial, esglobal and Africaye. NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT
  53. 53. ncid.unav.edu JULY 2020 NAVARRACENTERFORINTERNATIONALDEVELOPMENT SOUTHAFRICACOUNTRY REPORT

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