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SOUTH AFRICA


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 104,235 113,300 127,900 35
         
GNI per capita
 US $ 2,600 2,820 3,060 94
Ranking is given out of 208 nations - (data from the World Bank)

REPUBLICAN REFERENCE

Area (sq.km)
1,219,912

Population
43,586,097

Capital
Pretoria

Currency
rand

President
Thabo Mbeki

Background:
The Union of South Africa that followed the Boer War (1899-1902) operated under a policy of apartheid - the separate development of the races. The 1990's brought an end to apartheid politically and ushered in black majority rule. Southern Africa as a whole is a very different place than it was two decades ago. Old single-party dictatorships and white minority government have given way to nascent democratic governments with varying degrees of success and maturity. On 10 May 1994, Nelson Mandela took office as the first president of the 'new' South Africa'. His inauguration marked the end of a long struggle to achieve a non-racial political regime and the beginning of an equally difficult and protracted process of state and nation building that is intended to lead eventually to the realisation of a stable democracy. 
The 1990's can be viewed as a success. The diminution of political violence, the relatively peaceful transfer of power, the continuation of the transformation process, albeit painfully slow, can be regarded with pride and promise. The retirement of Mandela as president in 1999 saw the second round of successful majority-rule elections. The succession process was amazingly smooth. Thabo Mbeki was officially named to ANC's candidate for president back in 1997. Mbeki may lack Mandela's charisma, and his capacity for fairness and sensitivity, but his style is different and more efficient and businesslike. Mbeki will remain unchallenged as president in 2002, but the ANC remains deeply divided.
South Africa is the most developed country in southern Africa, and the regional leader economically and politically. But South Africa (and every other country in the region) has its own problems. The political transition from a race-based polity to one based on majority rule is almost complete, yet subject to tensions. Changes have occurred with relatively little violence. Aside from the former Soviet-bloc countries, no nation has experienced greater change than South Africa over the past decade. The non-racial democracy is still in its infancy and still requires nurture and development. 
South Africa has the most sophisticated economy in black Africa. Unlike other African countries its manufacturing sector is relatively advanced. It is the largest sector of the economy, contributing about a quarter of the GDP. Agriculture is also relatively diversified, producing wine, citrus products and wool for export and maize for internal consumption. Agriculture accounts for about 4 percent of the GDP. The population is growing fast at 2.6% pa. In 1999 it totalled 45 million - 76% African, 13% white, 8.5% coloured, and 2.5% Asian. The GNP per head is over $3000 (compared to $300 in Nigeria) but this figure masks inequitable distribution of wealth between the races.
In Southern Africa as a whole, South Africa accounts for less than one-third of the population but for more than 75 percent of the GDP. Its economy is 3.4 times larger than the combined economies of the other members of the Southern African Development Community - SADC (Angola, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Tanzania, Zambia, Zimbabwe). This suggests that South Africa occupies a position in Africa similar to the United States within the global economy. While the United States accounts for 26 percent of global GDP, South Africa accounts for about 44 percent of Africa's GDP. South Africa's economic outreach into and beyond the region grew substantially after the ending of apartheid, and shows every sign of continuing to do so. Many of South Africa's largest conglomerates, banks, and financial institutions have found openings for investment in some twenty countries in Africa. The countries of greatest immediate interest are Angola because of its oil and mineral resources, and the Democratic Republic of the Congo with its huge potential for mining development. 

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Update No: 22 - (30/10/03)

Black Empowerment 
At least a quarter of every South African financial institution should be black-owned by 2010, according to a groundbreaking empowerment charter for the industry released October 17. The new empowerment charter for the financial services sector, has been widely welcomed. The charter has been lauded as a milestone in South Africa's economic history. The blueprint for black economic empowerment (BEE) in the financial sector also provides for billions of rand to be made available for empowerment financing. A particular objective is to give poor households greater access to financial services. The charter, drawn up by the financial sector as a whole, was handed to Finance Minister Trevor Manuel in Pretoria. It enjoys the support of banks, long and short-term insurers, black professionals and black business, unit trusts, fund managers and brokerage units. "This is a voluntary commitment and has been agreed on unanimously by 10 industry associations in the financial sector," the sector said in a statement. These bodies include the JSE Securities Exchange, the Banking Council, the SA Insurance Association, the Investment Management Association of SA, and the Bond Exchange of SA. Under the charter, existing financial institutions undertake to foster new and developing BEE firms through joint ventures, skills transfer, and infrastructure support. "The signatories believe the charter will be a key driver of sustainable growth, redressing social and economic inequities and inequalities, and broadening the skills and asset base of the whole country." The charter provides for some flexibility in its 25-percent black ownership target at holding company level. Foreign-owned financial companies participated in and are signatories of the charter. They are subject to the provisions of the code as far as their South African operations are concerned, with some exemptions allowed. Leading business figures have praised the new blueprint. 

South Africa/US Statement on US$15bn AIDS Fund
The Minister of Health of South Africa, Dr. Manto Tshabalala-Msimang, met United States representatives in South Africa, including the United States Global AIDS Co-ordinator Ambassador Randall Tobias on October 13th. The purpose of the meeting was to discuss the $15 billion that the United States government has pledged to 12 African and 2 Caribbean countries for HIV and AIDS. Countries in SADC that would benefit from the funds are Botswana, Mozambique, Namibia, South Africa, Tanzania and Zambia. Ambassador Tobias explained that the $15 billion would be spread over 5 years, with $2 billion being made available in the first year. $1 billion will be allocated to the Global Fund to fight AIDS, TB and Malaria (GFATM), $5 billion will be for support to about 75 countries as part of the United States bilateral programs and $9 billion will be for the 14 countries. The common objective of both countries was the improvement of the quality of life of the citizens of South Africa, so that expenditure of these funds will support the South African HIV and AIDS Strategic Framework.

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AUTOMOBILES

EU New Trade Deal 

Business Day reported on October 17th that the European Union (EU) is hoping to start negotiations within the next two months on new rules for trade with South Africa in the automotive sector. The aim is to secure a better deal for European manufacturers that do not currently have a manufacturing presence in South Africa. EU ambassador to South Africa, Michael Lake, said the trade and industry department had earlier made its offer to Europe, and confirmed that the European Commission was preparing a counter-offer. He would not go into detail, but the EU is believed to be worried that the Motor Industry Development Programme (MIDP) favours manufacturers who currently manufacture in and export from South Africa by giving them tariff reductions which allow them to bring vehicles into South Africa at low tariffs, or even free of duty. Lake noted that the MIDP "is deservedly very successful it's been reported that exports from the automotive sector could soon overtake gold exports." He said he sympathised with the reluctance by the South African authorities to introduce new modifications to an already successful programme. "But that is, in our view, too static. It doesn't take account of the fact that European manufacturers are crucial for the exporting success of South Africa." Any new rules for automotive trade would be introduced in the context of the existing free trade area between the EU and South Africa, which does not currently include full liberalisation of the motor sector.

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BANKING

International Banks 

South Africa's banking sector could be set to welcome more international banks which will fuel competition in the sector, according to a new PricewaterhouseCoopers (PwC) survey. This year alone, two global heavyweights have been granted bank licences in SA Standard Chartered and HSBC while others, including the UK-listed Barclays, have committed to expanding their South African operations. South Africa's recent allure could yet lure more foreign banks. A new global study collated responses from 118 banks in 31 countries, suggesting global banks see emerging market destinations, such as South Africa, as an increasingly lower risk than previously. While emerging market exposure was rated as one of the top 10 risks for all banks last year, this has now dropped down the table to 22 on a list of 30 potential risks. Tom Winterboer, PwC's lead banking partner in South Africa said this boded well for South Africa's prospects of luring foreign players. 

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EMERGING MARKETS

Corporate Governance

South Africa is among the best performers in corporate governance in emerging markets, according to a report by the Institute of International Finance released on October 17. Peter Wuffli, co-chairman of the equity advisory group of the institute, said there was increasing attention in South Africa and in other emerging markets to improve corporate governance. He said securing sustained growth of the international investor base would require further improvements in a number of emerging markets. This was because investors were now more focused on governance decisions taken by corporations, stock exchanges and securities regulators, he said. But, he made a series of recommendations for further improvements. These, he said, included encouraging shareholder activism by requiring disclosure of voting records by institutional investors and tightening interpretation and enforcement of mergers and takeover procedures. Baker also suggested revising the Companies Act and adopting accounting standards into law. Enforcement could also be improved by giving more power to regulators through the use of class action suits, he said. The institute said weak enforcement of rules and regulations had been a concern for investors in emerging markets and SA was no exception.

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FOREIGN AID

Unicef to Open Emergency Supplies Facility in South Africa

The South African Press Association has reported that The United Nations Children's Fund (Unicef) will open its first emergency supplies facility outside Europe in South Africa. In a statement on October 15, Unicef said Rohlig-Grindrod, through its partner, Picpack Logistics had been appointed as Unicef's warehousing and freight forwarding partner in South Africa. The investment into South Africa would be about US$1-million (about R6.9-million). Future stock would be replenished from South African suppliers, which would add additional value. "Every year, Unicef responds to emergencies around the world where the appropriate supplies make an immense difference in the lives of affected communities. South Africa was selected as the primary location for the emergency hub because of its excellent infrastructure, road links and seaports. South Africa is the only other Unicef supply facility in the world besides the main facility in Copenhagen," the statement read.

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FOREIGN ECONOMIC COOPERATION

Sacu - US Negotiations

The Southern African Customs Union (Sacu) and the US are ready for "real trade negotiations" following a successful round of talks in Washington, South Africa's chief trade negotiator, Xavier Carim, said October 19. This means that it is still possible that the negotiations will be concluded on schedule at the end of next year. The South African government believes a free trade area with the US will lock in the existing benefits which Sacu states enjoy under the African Trade and Opportunity Act (Agoa) this is a unilateral concession by Washington, which can withdraw benefits at any time. Sacu's members are South Africa, Namibia, Botswana, Swaziland and Lesotho. Sacu is now to prepare a common position for those talks on the next phase of issues which include intellectual property, investment, government procurement, dispute settlement, and the institutions which will be needed to govern the planned US-Sacu free trade area agreement. The US is also seeking discussions on labour law and the environment which Carim suggested are more issues for other Sacu states than for South Africa, which has highly advanced legislation on the environment and on labour. He said it will be tough but realistic to hope the negotiations can conclude on target by the end of next year. "It is very do-able by the end of 2004," he said. He said that there had been no sign that the discussions had been affected by the fallout from last month's collapse of the World Trade Organisation's trade ministers' meeting in Cancun, Mexico.

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HEALTHCARE 

South Africa/UK healthcare memorandum

Health Minister, Manto Tshabalala-Msimang, and her UK counterpart, John Hutton, signed a groundbreaking memorandum in London on October 24th. It provides a reciprocal educational exchange of health care personnel to mutually benefit the two countries. The deal is aimed at stopping the NHS from poaching large numbers of medical staff from South Africa. Under the deal, health professionals from both countries will be able to go on "time-limited placements" to the other country. South African doctors and nurses will work in the NHS on projects that have an educational basis. This aims to ensure they bring new skills with them when they go home. Their jobs in South Africa will be kept open while they working in the UK. NHS staff will also be encouraged to work in South Africa for limited periods. The Memorandum of Understanding between both governments will also enable the NHS and South Africa to share information and expertise on public health, professional regulation, workforce planning and public-private partnerships. The memorandum was drawn up after requests from the South African government. It had voiced concerns over the huge numbers of South African doctors and nurses travelling to the UK to take up work. Figures show that thousands of South African nurses and doctors register to practise in the UK. British ministers have pledged in recent years not to actively recruit staff from developing countries, which already have their own staff shortages. 

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INTERNATIONAL RELATIONS

India and South Africa 

Relations between South Africa and India enter were strengthened by President Mbeki's five-day visit to India October 15. Both have renewed calls for a radical reform of the United Nations and other global institutions to allow developing countries a greater say in world affairs. In a joint declaration signed in New Delhi the two countries said there was a need for an expanded UN Security Council that would ensure "equitable balance" and provide a "decisive voice" to developing countries. "After more than five decades it is clear that these institutions are not truly democratic," Mbeki said, adding that there was consensus in the international community that changes were needed, but that "the world has not moved to effect" them. Further talks saw Pretoria and New Delhi getting closer to each other, after the administration and leaders of both sides tabled a series of mutual issues which were sealed with several agreements on extradition, mutual legal assistance and co-operation in the power sector and culture. Bilateral relations, spanning ten years between the two, are set to further deepen with business investment and knowledge sharing likely to be taken to its highest level. Trade relations between the two stood at R7 billion in 2002, with imports from India worth about R2.91 billion while South African export products to India total R4.03 billion. India is negotiating a free trade agreement with the Southern African Customs Unions, and Indian Prime Minister, Atal Behari Vajpayee says he hopes a deal will be concluded before the end of the year. Even before the deal, India - along with China - was South Africa's fastest growing export destination. At a global political level, Mbeki sees India as an important strategic partner with which South Africa can work to champion developing countries in a world that, he says, is threatened by the unilateralism of the West. The first step towards achieving this end was taken in June when South Africa, India and Brazil established a trilateral forum that will enable the three countries to formulate collective positions on international issues ranging from trade to the powers of the UN Security Council. 

Turkey

BuaNews reported Deputy President, Jacob Zuma's, comments at an honorary dinner by Turkish Prime Minister, Recep Tayyip Erdogan, in Ankara, October 14. He claimed developing economies face a challenge of fighting against exclusion from trade and commercial issues. "As countries with developing economies we are also facing major economic international challenges, namely, not to be marginalised in terms of trade and commercial issues," he said. "As emerging markets and major exporters to the European Union, we cannot afford to be excluded from these markets, especially concerning our agricultural products." Mr Zuma added that as members of the G21, South Africa and Turkey ought to strengthen their efforts and join forces to address this crucial challenge. During the visit South Africa and Turkey have signed a milestone agreement that commits the two countries to co-operate in fighting crime. The agreement was sealed by Deputy President Jacob Zuma, on an official visit to Turkey. According to a statement from the Presidency, the agreement signed entails co-operation, wherein the South African Police Service (SAPS) and their Turkish counterparts will co-operate in combating organised crime, drug trafficking and trading in illicit diamonds.

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MINERALS & METALS

Gold - Ashanti sticks with Anglo bid

Ghanaian mining firm Ashanti Goldfields has backed a takeover offer from South Africa's AngloGold, brushing off a higher bid from Randgold Resources Ashanti's board said October 27 that it had unanimously backed the AngloGold offer, describing it as "in the best interests of Ashanti's shareholders, employees, and the people of Ghana." The move comes three days after Randgold upped the stakes in a long-running battle to buy Ashanti by tabling a fresh bid which eclipsed AngloGold's offer. Randgold's latest bid values Ashanti at about $1.7bn, against AngloGold's most recent offer - also revised upwards - of $1.5bn. Both would-be buyers are proposing to pay for the acquisition entirely in shares. Randgold said it would not comment until it had studied Ashanti's decision. The race to buy Ashanti, Ghana's largest employer, began in May when AngloGold approached it with a takeover offer valuing the firm at about $900m. AngloGold, a subsidiary of mining giant Anglo American, is keen to buy Ashanti in order to expand its operations beyond South Africa. Its bid is supported by Ashanti's biggest shareholder, Lonmin. Anglo, with a market value of about $8.5bn, would be able to support higher levels of investment in Ashanti than the far smaller Randgold. But any takeover of Ashanti would also require the support of the Ghanaian government, the company's second biggest shareholder. There has been speculation that the government may come under pressure to block Anglo's bid because of resentment in west Africa over the growing power of South African corporations. But with Ashanti in urgent need of cash to fund future expansion, most investors expect the deal to go through. While the South African companies, AngloGold and Randgold Resources, keep upping their billion-dollar bids in the contest for Ghana's Ashanti Goldfields Company, it seems the deal could take at least another six months to conclude, writes Thom Calandra in The Vanguard, Lagos. 

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TRAINING

Skilled Workers Needed To Drive Economy

BuaNews reports comments by The Minister of Science and Technology Ben Ngubane that South African industries need a huge influx of suitably qualified and skilled workers .In this regard, he said an estimated 40,000 engineers per year were needed to replace lost skills and provide the core disciplines to drive the country's economy. Speaking in Durban October 21, Dr Ngubane said South Africa could pull off the economic miracle if it could develop the human skills and a culture in which Maths and Science disciplines were automatic and natural. "The country has a desperate need for skilled artisans and other technically oriented disciplines. The educational sector needs to be resourced and realigned as a matter of urgency to bring it more in line with expectations from industry." Failure to address this challenge would result in barriers to growth and lost opportunities continuing to frustrate the development agenda. The minister added that South Africa was ranked number 39 out of a total of 162 countries in terms of technology achievement. He said the broader assessment of development and human development in particular placed the country 94th out of 162 countries, adding the country was not putting technology to work for the broader population.

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