Economy
From The Report: South Africa 2014
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South Africa’s economy has come a long way since apartheid ended 20 years ago, with significant improvements in both productivity and capacity – and a GDP that is now 2.5 times larger – but domestic and exogenous pressures have taken their toll on GDP growth. Headline GDP grew by 1.9% in 2013, although its components fluctuated considerably in synch with labour unrest. Although strong by comparison to many members of the OECD – particularly the eurozone – GDP performance in 2013 was nonetheless the third-worst since the end of apartheid in 1994. The turbulence is expected to continue over the short term, although 2015 should show a stronger recovery. South Africa continues to benefit from a number of comparative advantages, such as a robust financial services industry, a strong private sector and well-maintained infrastructure, but with regular strikes, twin deficits and high levels of unemployment, the country’s performance since the onset of the global financial crisis has been lacklustre.

This chapter contains interviews with Nhlanhla Nene, Minister of Finance; Rob Davies, Minister of Trade and Industry; and S’dumo Dlamini, President, Congress of South African Trade Unions; and a viewpoint from Clem Sunter, Scenario Planner and former Chairman of Gold and Uranium Division, Anglo American.

Articles from this Chapter

Overview

The government has been taking action to tackle unique challenges
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Africa’s second-biggest economy and by far its most globally integrated in terms of capital and trade flows, South Africa has had to navigate challenging waters in recent years. The economy has come a long way since apartheid ended 20 years ago, with significant improvements in both productivity and capacity – and a GDP that is now 2.5 times larger – but domestic and exogenous pressures have taken their toll on GDP growth. South Africa continues to benefit from a number of comparative advantages,…

Analysis

Despite significant challenges, the country has competitive advantages to move forward
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The South African economy grappled with headwinds in early 2014, although it did avoid a recession in the second quarter of the year. The country’s long-term fundamentals remain fairly attractive, but the new cabinet still faced a tricky job of stimulating growth over the remainder of the year. The economy grew 0.6% in the second quarter of 2014, after shrinking by an annualised 0.6% in the first quarter, its first contraction since 2009. While it dodged a recession, defined as two consecutive…

Interview

OBG talks to Nhlanhla Nene, Minister of Finance
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Interview:Nhlanhla Nene How can be revenues be enhanced with fiscal tools? NHLANHLA NENE: We are currently operating in a constrained fiscal environment and our current fiscal programme seeks to stabilise debt growth and restore fiscal sustainability. Weaker growth outcomes, higher inflation and rising interest rates will place additional pressures on this fiscal programme, but the expenditure ceiling identified in the 2014 budget remains in place and if this proves insufficient, the government…

Interview

OBG talks to Rob Davies, Minister of Trade and Industry
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Interview:Rob Davies How will the Promotion and Protection of Investment Bill impact foreign direct investment (FDI)? ROB DAVIES: South Africa’s decision to terminate bilateral investment treaties (BITs) and replace them with the Promotion and Protection of Investment Bill should not affect the decisions of foreign firms to invest in the country. Based on our experience, we have seen that there is no correlation between the existence or lack of BITs and the level of FDI. In the years just…

Interview

OBG talks to Rob Davies, Minister of Trade and Industry
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Interview:Rob Davies How will the Promotion and Protection of Investment Bill impact foreign direct investment (FDI)? ROB DAVIES: South Africa’s decision to terminate bilateral investment treaties (BITs) and replace them with the Promotion and Protection of Investment Bill should not affect the decisions of foreign firms to invest in the country. Based on our experience, we have seen that there is no correlation between the existence or lack of BITs and the level of FDI. In the years just…

Analysis

SMEs face an uphill climb against new legislation and red tape
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As with many emerging markets, small and mediumsized enterprises (SMEs) make up a large proportion of South Africa’s private sector. According to the government’s economic blueprint, the National Development Plan, 90% of planned new jobs will be created by SMEs by 2030. To enable this, the government has rolled out a new department charged with aiding SME activity, the Ministry of Small Business Development. State Of SMEs Unsurprisingly, SMEs are being hit by the broader headwinds facing the…

Viewpoint

Clem Sunter, Scenario Planner and Former Chairman of Gold and Uranium Division, Anglo American, on encouraging the growth of entrepreneurship
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The development of entrepreneurship and small and medium-sized enterprises (SMEs) is integral to promoting job creation in South Africa. While the country has an encouraging demographic profile and strong institutional infrastructure, the enabling environment must be improved for small business owners to thrive. I believe entrepreneurship activity is currently low in South Africa because we are a hybrid economy. Some of our industries are first world whereas some are third world. The rest of Africa…

Interview

OBG talks to S’dumo Dlamini, President, Congress of South African Trade Unions (COSATU)
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Interview:S’dumo Dlamini What benefits could be achieved through the implementation of a national minimum wage? S'DUMO DLAMINI: South Africa currently faces a trifecta of challenges that consists of high inequality, poverty and unemployment. We have one of the most unequal societies compared to other developing countries, with a large proportion of the population living below the poverty line and a high rate of unemployment that stands at around 35.6% (conservatively 25.5%). In assessing…

Analysis

Promoting youth employment and working to resolve labour disputes
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Stoking job creation in any country is a tricky thing, and South Africa is no exception, as the government faces an uphill battle in transforming what 20 years ago was a lopsided, closed and exclusionary system into an inclusive economy. The task is daunting. Unemployment ticked up to 25.5% at the end of the first half of 2014, and youth unemployment is estimated to be double that. Taking the broader measure including discouraged workers, overall unemployment is estimated to be 35.6% and 63% among…