South Africa Economy Overview

South Africa Economy Overview


The Republic of South Africa remains one of the leading states in the mining sector despite its low growth. In 2010 South Africa reached 75% of the world production of platinum (of which it is the largest exporter in the world), more than 30% of the world production of chromium, zinc, vanadium, almost 20% of ilmenite and manganese. 8% gold and 3% nickel. It owns 95% of the world’s reserves of platinoid minerals. Most of the South African deposits are privately owned: the diamond and gold mining activities, unlike other African countries, are entirely carried out by large companies. In 2010, the mining industry accounted for 8.6% of GDP. Mining Indaba takes place in South Africa, one of the largest events dedicated to investments in the mining sector. The number of employees in the sector (488. 141) has not increased in recent years due to poor economic growth and strikes by workers to protest against social policies. Gold production is in decline (after reaching 16% of world production, today it is 8%). Among the causes are the difficulty of extracting at great depths and the lack of sufficient energy power.

South Africa boasts a good infrastructural network, but is forced to deal with scarce energy power. The mining sector requires huge energy needs. The impossibility of having a constant supply has therefore contributed to a decrease in production in the sector and has reoriented mining companies towards the development of the extraction of materials with lower energy consumption. The construction of the port of Richard Bay has facilitated direct access to the sea without necessarily having to go through the distant Cape Town or the territory of Mozambique.

In order to attract more foreign investors, South Africa recently reformed its code of exploitation of mineral resources, introducing environmental criteria (with the approval of projects by government commissions) and the integration of compensatory measures for communities locals. Some progress, albeit minimal, has also been made regarding the defense of workers employed in the mining sector (also for this reason the extraction of gold has slowed down). However, the issues of workplace safety, the miners’ right to decent work, child labor in the mines and the problems related to the rights of relocated and resettled communities for economic reasons and environmental protection remain open.

South Africa adheres to the international certification enforcement agreements on rough diamonds, called Kimberley Process, which certifies the lawful origin of diamonds in order to prevent smuggling or use as a source of conflict financing. In 2013, South Africa held the presidency of this initiative. For South Africa 2007, please check

The rigor of macroeconomic policy, outlined in the Gear (Growth, Employment and Redistribution) plan, has always been the subject of discussion between the majority wing of the ANC and the left-wing components of the tripartite Alliance (Cosatu and Sacp). Dismissing the doubts of the international community and political opponents, the government is managing to contain inflation and guarantee the stability of the country, even in the face of growth rates that are not encouraging compared to the sub-Saharan average (1.4% in 2014). These low growth rates, given by the slowdown in production in the extractive sector, the aftermath of the international crisis and infrastructure shortages, have not achieved the expected results in terms of employment, nor have they made up for the structural current account deficit.

South Africa is part of three regional economic groupings: the Southern Africa Development Community (Sadc), the Southern Africa Customs Union (Sacu) and the Common Market Authority. Within the SADC regional group, South Africa plays a very important role: exports by the country account for 44% of exports within the group and 40% of imports. Despite this, the weight of intra-regional trade on total South African trade is small, despite the fact that the country has a very advanced level of industrial and manufacturing production compared to other countries in the region.

The land question also has a strong symbolic value in post- apartheid South Africa. The Native Lands Act of 1913, which confined Africans to government-defined reserves (equal to 13% of the country’s land area), was one of the pillars of apartheid and the restitution of land to the owners who held it before the settlement of the bianchi appeared among the first objectives of the Anc. The land redistribution process was effectively initiated by the new government, according to the principle of ‘ willing seller, willing buyer ‘: the transfer of agricultural ownership presupposes not only the will of the buyer (state or private), but also the willingness of the seller (the owner). The redistribution proceeds very slowly, also because the economic benefits of the agrarian reform (with the formation of a small widespread peasant property, to the detriment of the more profitable large property) are the subject of discussion among economists. In 2003 and again in 2006 the government announced its intention to abandon the ‘ willing seller ‘ principle’and to introduce the possibility of expropriation on the basis of compensation proportionate to the market value. The enormous unresolved problem of the restitution of the land remains: thousands of complaints remain unexamined and various estimates have calculated that a hundred years would not be enough to accept them all. The problem of land ownership intersects with that of poverty and rural development. Smallholders would like the land to practice subsistence farming, or simply to own property, but there is a tendency on the part of the government to promote the commercial outlet of agriculture: a recent bill provides for farms are divided among workers and transformed into cooperatives, with a tutor who follows their business and invests in the company’s production. Furthermore, legislation in the field of agriculture is clearly more favorable for large multinational companies than for small producers. The experiments of creating cooperatives have had very different outcomes, and successive governments have struggled to find an effective legislative framework. To these problems is added the question of traditional lands, owned by the community and not by individuals, which in some cases were divided among families, while in others they remained administered by the traditional authorities.

South Africa Economy Overview