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South Africa - geared for economic growth
South Africa is home to 6% of Africa's population, and produces 18% of the continent's gross domestic product. It also boasts 45% of Africa's mineral production and 50% of the continent's purchasing power.
The country's economic growth averaged 3% from 1994 to 2004, an improvement on the average of 1% in the decade before 1994. Since 2004, growth has exceeded 4% per year, reaching about 5% in 2005.
With the faster growth rate has come rapidly improving employment creation. In the last year measured (to September 2005), around 540 000 net new jobs were created. Inflows of foreign capital have been exceptionally high since 2003 - R80 billion (about US$13 billion) came into the JSE share market between the beginning of 2005 and the first quarter of 2006.
Macroeconomic strategy
Since democracy, South Africa's economy has been subject to a process of structural transformation. Policies seeking to promote domestic competitiveness, growth and employment and increase the outward orientation of the economy have been implemented.
Government has also embarked on a programme of fiscal reform to restructure government expenditure towards social services that will contribute to a better quality of life for all South Africans.
In South Africa, the central bank maintains its independence from government. The bank has embarked on a programme of inflation targeting, which has had positive outcomes; the real interest rate has stabilised and the currency is able to fluctuate at competitive levels.
Business confidence now stands at a 13-year high, having followed a cyclical upswing since the political reforms of 1994. All key macroeconomic indicators have improved over the past decade and, since 1994, South Africa has experienced a surge in the registration of new businesses.
A sound environment
South Africa has a world-class, progressive legal framework. Legislation pertaining to commerce, labour and maritime issues is particularly well developed, while laws relating to competition policy, copyright, patents, trademarks and disputes conform to international norms and conventions. Sanctity of contract is protected under common law and independent courts ensure respect for commercial rights and obligations.
South Africa's financial systems are robust and well-regulated. Four of South Africa's banks are rated among the world's top 500 financial institutions. At the end of December 2005, 34 banks, including 15 branches of foreign banks and two mutual banks, were registered with the Office of the Registrar of Banks. Furthermore, 47 foreign banks had authorised representative offices in South Africa. By the end of December 2005, the banking institutions collectively employed 122 135 workers. In addition, the country boasts the world's 15th largest stock exchange, the JSE Limited. South Africa also has a Futures Exchange (Safex) and a Bond Exchange (Besa).
Infrastructure
South Africa boasts the most modern and extensive road, rail and air infrastructure in Africa. There is also an efficient network of ports in the country with the major ports located at Cape Town, Durban, Port Elizabeth and East London. Other ports are found at Richards Bay, Saldanha Bay and Mossel Bay. There are approximately 148 licensed airports and aerodromes, including nine major airports.
The country's telecommunications sector is also well-developed. The country has the largest telecommunications network on the contintent, including the latest in fixed-line, wireless, satellite and cellular technology. The country has a large transmission infrastructure, and 99% of the network is digital. The leader of IT development in Africa, South Africa is also the 20th largest consumer of IT products and services in the world, ranking 18th in terms of Internet usage.
Growth in South Africa's mobile market is particularly strong, standing at 50% per annum and making the country's GSM market the fourth fastest growing worldwide.
The cost of doing business in South Africa.
South Africa's energy costs are among the lowest in the world. Eskom supplies most of Africa with electricity, and is known for its superior supply quality. South Africa also compares favourably in terms of petroleum prices. Private sector and multinational oil companies refine and market nearly all imported petroleum products in southern Africa.
Telecommunications are becoming increasingly competitive, with the partial privatisation of the telecommunications service-provider, Telkom, driving down the cost of international phone calls.
South Africa's unit labour cost is significantly lower than those of other key emerging markets, including Mexico, Hungary, Malaysia and Singapore. In terms of the corporate tax rate, South Africa ranks favourably against a number of developing countries who have tax rates higher than 30%.
Competitiveness
South Africa's global economic strategy focuses on improving the country's export performance by dismantling the barriers to trade and gaining increased market access. Several free trade agreements (FTAs) have been signed, and the country is also seeking to develop bilateral trade relations with markets in Africa, Latin America and Asia.
A number of industrial support measures have been implemented to enhance the competitiveness of South Africa's industrial base. Government has also put in place incentives for value-added manufacturing projects, support for industrial innovation, improved access to finance, the creation of an enabling environment for small, medium and micro enterprise (SMME) development, industrial development zones, and the promotion of competition and consumer protection.
A nation on the rise: the Accelerated and Shared Growth Initiative for South Africa (AsgiSA)
In order to fulfil its mandate of halving poverty and unemployment in South Africa by 2014, the Government, working with its social partners, intends to move the country to a higher range of growth.
AsgiSA - the Accelerated and Shared Growth Initiative for South Africa - aims to lift growth to an average of 4,5% till 2009 and at least 6% from 2010. AsgiSA will overcome obstacles that have been holding South Africa's economy back from reaching its full potential, through:
- a R134 billion investment in infrastructure, including preparations for the FIFA 2010 World Cup™
- a focus on strategic sectors with potential for fast job-creating growth
- ensuring the country has the skills it needs
- creating opportunities for those marginalised in the Second Economy
- maintaining the policies that have brought macroeconomic stability
- improving government's capacity to deliver