Strenghts and Weaknesses of the South African Economy

Topics: Economics, Unemployment, Economy Pages: 15 (5642 words) Published: February 7, 2011
The Strengths and Weaknesses of South African Economy

In some ways South Africa is like all other countries, in other ways it is like some others, and in its own, unique way it is like no other country. It is subject to the same environmental and ecological threats as all other countries on this earth, it is caught up in the realities of a globalising economy and it is adapting to rapidly changing production, service and information technologies. South Africa shares many features with more advanced economies in that it has a well-developed physical infrastructure, an advanced banking and financial sector and a manufacturing sector that can produce varied and sophisticated products. It also shares features with the poorest nations: an under-educated and under-skilled population relative to the requirements of an advanced economy, large-scale unemployment negatively affected by economic globalisation patterns, and local communities lacking modern economic, social and infrastructural facilities. Yet in some ways South Africa is like no other nation. South Africa has a historical pattern which has determined a current reality which must be understood if we are to find effective solutions for its current malaise. It has a complex problem structure with a unique mix of human and physical resources which contribute to both its strengths and its weaknesses. South Africa has some significant positive features such as its well developed and diversified economy and infra-structure, and the universal global goodwill towards the current government. The country has an attractive climate, great tourist potential and bountiful mineral resources. It has a heterogeneous population mix which has emerged peacefully from an apartheid regime to a fully democratic government. But there are also many serious negatives. The country has a dual social and economic structure with a minority of the population living according to the pattern of a 'First World' economy and the majority living according to degraded 'Third-World' standards or in socially and economically marginalised 'Fourth World' conditions. Over the past quarter century South Africa has experienced economic (GDP) growth rates which have consistently fallen below the population growth rate. This has resulted in a persistent trend towards economic impoverishment. This trend has gone hand in hand with even slower employment growth and more recently a rapid decline in employment opportunities in the formal economy. The steep rise in criminality in the country is directly correlated with these circumstances. If we are to get the nation back to health and towards a sustainable future it is important to take a look at the historical roots and structure of South Africa's current disease. We cannot accept simplistic ideological solutions designed for other times and other countries. Strengths

South Africa is the economic powerhouse of Africa, with a gross domestic product (GDP) four times that of its southern African neighbours and comprising around 25% of the entire continent's GDP. The country leads the continent in industrial output (40% of total output) and mineral production (45%) and generates most of Africa's electricity (over 50%). Its major strengths include its physical and economic infrastructure, natural mineral and metal resources, a growing manufacturing sector, and strong growth potential in the tourism, higher value-added manufacturing and service industries. South African banking regulations rank with the best in the world. The sector has long been rated among the top 10 globally. There are 55 locally controlled banks, 12 foreign-controlled banks and five mutual banks. Some of the world's leading institutions have announced their intention to enter the local banking sector through mergers and acquisitions. The JSE Limited is the 18th largest exchange in the world by market capitalisation (some R3.3-trillion as of September 2005). The JSE's rules and their...
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