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Economy of South Africa PDF Print E-mail
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Wednesday, 03 August 2011 09:44
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Economy of South Africa
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South Africa has a mixed economy with high rate of poverty and low GDP per capita. By UN classification South Africa is a middle-income country with an abundant supply of resources,

well-developed financial, legal, communications, energy, and transport sectors, a stock exchange that ranks among the top twenty in the world, and a modern infrastructure supporting an efficient distribution of goods to major urban centres throughout the entire region. South Africa is ranked 25th in the world in terms of GDP (PPP) as of 2008, and is considered a newly industrialized country.

Advanced development is significantly localised around four areas: Cape Town, Port Elizabeth, Durban, and Pretoria/Johannesburg. Beyond these four economic centres, development is marginal and poverty is still prevalent despite government efforts. Consequently the vast majority of South Africans are poor, though key marginal areas have experienced rapid growth recently. Such areas include Mossel Bay to Plettenberg Bay; Rustenburg area; Nelspruit area; Bloemfontein; Cape West Coast; and the KwaZulu-Natal North Coast.

Unemployment is extremely high and South Africa is ranked in the top 10 countries in the world for income inequality, measured by the Gini coefficient. During 1995–2003, the number of formal jobs decreased and informal jobs increased; overall unemployment worsened. The average South African household income decreased considerably between 1995 and 2000. Average white households were reported by Statistics South Africa in 1995 as earning four times as much as the average black household. In 2000 the average white household was earning six times more than the average black household. The post-apartheid government's official Black Economic Empowerment (BEE) policies are defined as acknowledging "the need for greater overall equity, including through collective ownership by workers and communities as well as skills development." In practice, however, BEE has drawn criticism from the Development Bank of Southern Africa's lead economist for focusing "almost exclusively on promoting individual ownership by black people (which) does little to address broader economic disparities, though the rich may become more diverse." Official affirmative action policies have seen a rise in black economic wealth and an emerging black middle class. Other problems include crime and HIV/AIDS. South Africa suffers from relatively heavy overall regulation burden compared to developed countries. State ownership and interference impose high barriers to entry in many areas. Restrictive labour regulations have contributed to the unemployment malaise.

The 1994 government inherited an economy wracked by long years of internal conflict and external sanctions. The government refrained from resorting to economic populism. Inflation was brought down, public finances were stabilised, and some foreign capital was attracted. Growth was still subpar. At the start of 2000, then President Thabo Mbeki vowed to promote economic growth and foreign investment by relaxing restrictive labour laws, stepping up the pace of privatisation, and cutting unneeded governmental spending. His policies faced strong opposition from organised labour. From 2004 onward economic growth picked up significantly; both employment and capital formation increased.



Last Updated on Wednesday, 03 August 2011 10:17