54 AFRICAN COUNTRIES

Principle Economic Sectors of South Africa

South Africa has a well-built financial system, legal system, communications, energy, transport, stock exchange - the JSE Limited which ranks among the top 20 in the world and a modern infrastructure supporting the distribution of goods to major urban centres throughout the entire region.The country is ranked 26th in the world in terms of GDP (PPP) as of 2009.

Sector % contribution to GDP (2007) Finance, Insurance ,real estate & business services 19.70% Wholesale & retail trade Hotel & Restaurant 14.10% Government services 12.30% Transport, storage & communication 9.90% Construction 3.40% Agriculture, Forestry & fishing 2.30% Electricity 2.10%

An average growth rate of 4.5% over the years 2006 to 2008 and has a GDP (PPP) for the year 2008 was $ 504.2 Billion. The graph given below shows the GDP (PPP) and GDP (Per capita) of South Africa for 3 years.

South Africa is a logical and attractive choice for companies all across the globe to enter the African continent. It is situated at the southern Africa and is bordered by Namibia, Botswana, Zimbabwe, Mozambique and Swaziland.

Since 1994, particularly, the country's economy has grown at a great pace. The booming sectors of the economy are Minning followed by Manufacturing and Agriculture & hunting. The most prominent sectors are listed above in the pie chart along with their contribution to South Africa’s GDP.

Agriculture, Forestry and Fishing

The agricultural sector of South Africa, like all other African economies is a key component of the economy. The country is into all segments of agriculture from subsistence farming to large-scale agricultural projects that export produce internationally.
              
South Africa has both well-developed commercial farming and more subsistence-based production in the deep rural areas. The country possesses around 1.2-million sq kms of land and also has seven climatic regions - from Mediterranean to subtropical to semi-desert. This huge difference in climate along with a coastline of 3,000 kms land the seven commercial ports, gives an opportunity for the cultivation of a diverse ranges.

The Agricultural activities range from intensive crop production and mixed farming in winter rainfall and high summer rainfall areas to cattle ranching in the bushveld and sheep farming in the arid regions. The crops maize, wheat, oats, sugar cane and sunflower are widely grown.

In the South African province of Northern Cape, the government has prioritized the sector and working to ensure transformation at all levels as well as funding specific agricultural programmes that benefit the local community. The Northern Cape Department of Agriculture Land Reform and Rural Development have started various programmes : The Comprehensive Agricultural Support Programme (CASP) was established to enhance the provision of comprehensive support services and to promote agricultural development with emphasis put on beneficiaries of the Land Reform and Agrarian Reforms programmes.

The agricultural sector has also benefited by modern technology although some areas are yet to experience this benefit. The challenges faced by South Africa are of scarce water, desertification, soil erosion, population growth and an increase in costs associated with farming. The country is sometimes subject to droughts that have a hindering the production levels.

Machinery & Equipment

The progress in construction sector in many of the African countries has brought about good times for companies in manufacturing construction machineries and equipment. The boost in construction activities in African countries has resulted in a substantial growth of the demand for concrete mixers, bar-bending and cutting machines, excavators and backhoes and earth rammers. Thus increasing the demand for the machinery and equipments. Not only has the domestic market demand increased but it is one of the industry which now exports heavily. The exports in the year 2007-08 is US $ 5.2 Billion while the imports amounted to  US $ 10.19 Billion.The average tariff rate was 9.3%.

Manufacturing and Engineering Sector

The manufacturing sector in South Africa is quite well developed, established and diversified. The manufacturing segment lays stress on objective of employment opportunities and encouraging economic empowerment and also of advancing economic growth in the country.The major industry sectors that play an important role are Agriculture and Agriprocessing, Automative, Chemicals, Information and Communications Technology (ICT) and Electronics, Mining and Metallurgy, and, Textiles and Clothing production.

Textile Sector

The textile industry of South Africa has many segments - fiber production, spinning, weaving, knitting, non-woven, carpet production, fabric coating. South African textile and clothing industry plans to put all the natural, human and technological resources to use and make South Africa the preferred region for domestic and international supply of South African manufactured textiles and clothing.With the technological development taking place the local textile production has evolved into a more capital intensive industry, which has further enhanced the production of synthetic fibers.The apparel industry has also taken advantage of country's sophisticated transport and communications infrastructure.

The market demand of South Africa is increasingly showing the sophistication of First World markets and the local clothing and textile. The industry has grown at a fast pace to offer the full range of services from natural and synthetic fiber production to non-woven, spinning, weaving, tufting, knitting, dyeing and finishing.The textiles, clothing and footwear industry in South Africa is trying hard to come up, but there are certain problems like negative impact of cheap imports, the effect of which is exacerbated by the reduction of import protection, stemming the flow of illegal imports, the effect of the discontinuation of export incentives

Pharmaceutical & Chemical Industry

The chemical industry in South Africa has become what it is today by the political and regulatory environment which created a philosophy of isolationism and protectionism during the apartheid years. This tended to promote an inward approach and there was stress on replacement of imports in the domestic market. It helped in the building of small-scale plants with capacities geared to local demand which tended to be not so economic. By isolation of the industry from international competition and the high raw material prices as a result of the import tariffs which locally processed goods have mostly been less than competitive in international market. As South Africa is now once more fully part of the global community, South African chemical companies are focusing on the need to be internationally competitive and the industry is reshaping itself accordingly. Two noticeable traits of the industry is that while its upstream sector is concentrated and well developed, the downstream sector although diverse but remains underdeveloped. Secondly, the synthetic coal and natural gas-based liquid fuels and petrochemicals industry is quite well established.

Gems & Jewellery

South Africa is well renowned for the quality of her gold and diamond products and has established itself as among the leading traders in Tanzanite and platinum. The gold production decreased by 7.2% from 272.1 t in 2006 to 252.6 t in 2007.

The silver mine production in 2007 was at 69.8 t this was 19.7% lower than the 2006 figure of 86.9t. Silver was produced as a by product of gold, lead zinc, copper and PGM mines. Domestic sales value has decreased from R11.0 million to R10.9 million due to the higher price, despite lower sales volume volumes. The export sales value decreased from R239.6 million to R2224.1 million.

Iron and Steel Industry

South Africa's large, well-developed metal industry represents roughly a third of all South Africa's manufacturing. It includes basic iron ore and steel, basic non-ferrous metals and metal products. The iron and steel basic industries involves the manufacturing of primary iron and steel products from smelting to semi-finished stages.

Ranked the world's 19th largest steel producing country in 2001, South Africa is the largest steel producer in Africa and contributes to almost 60% of Africa's total production.

Power Sector

Almost all the electricity produced in South Africa is thermal which is mainly produced  from coal. ESKOM generates the maximum amount from a huge station in Mpumalanga. The synthetic fuel derived from coal supplies a small proportion of the country’s energy needs, as does imported oil refined at the ports or piped to a major inland refinery at Sasolburg. There are large coal deposits lie, mostly at easily mined depths, beneath the Mpumalanga and northern Free State Highveld.

Transport Sector

The road network contains some 300,000 km of roads which ranges from rural unpaved stretches to multilane freeways. Almost 2/5th of the roads are paved. The towns are mostly connected by two-lane highways, multilane freeway systems extend around the four major urban areas. Though over long distances only two cities Johannesburg and Durban are connected by such a highway. The responsibility for maintaining and regulating roads falls to the different levels of government, but some long-distance roads have been transferred to the private sector and transformed into toll roads.
The railway system connects all the major cities, smaller towns and many rural areas. Many railway lines are operated through the Transnet public corporation gradually although parts of Transnet are gradually being privatized.

Financial Sector :

South Africa has a well-developed financial system, centered on the South African Reserve Bank. The national currency of South Africa is Rand which is solely issued by South African Reserve Bank. It formulates and implements monetary policy and manages foreign-exchange transactions. There are many registered banking institutions, a number of which concentrate on commercial banking, as well as merchant, savings, investment, and discount banks. One such bank, the Development Bank of Southern Africa, is a quasi-governmental company created to promote development projects. Private pension and provident funds and more than two dozen insurance companies play significant roles in the financial sector. An active capital market exists, organized around the Johannesburg Stock Exchange.

For Further Reference

African Economic Outlook

South Africa Country Profile - BBC News

World Bank

Budget