The Economy Of South Africa
The Economy of South Africa is the second largest in Africa and the most industrialized, technologically advanced, and diversified economy in Africa overall.South Africa is an upper-middle-income economy, one of only eight such countries in Africa.Following 1996, at the end of over twelve years of international sanctions, South Africa’s Gross Domestic Product (nominal) almost tripled to its current peak at US$416 billion in 2011. In the same period, foreign exchange reserves increased from US$3 billion to nearly US$50 billion, creating a diversified economy with a growing and sizable middle class, within two decades of ending apartheid.
Natural Resources Industry In South Africa
Although the natural resource extraction industry remains one of the largest in the country with an annual contribution to the GDP of US$13.5 billion,the economy of South Africa has diversified since the end of apartheid, particularly towards services. In 2019, the financial industry contributed US$41.4 billion to South Africa’s GDP.In 2021, South Africa-based financial institutions managed more than US$1.41 trillion in assets.The total market capitalization of the Johannesburg Stock Exchange is US$1.28 trillion as of October 2021.
State Owned Enterprises In South Africa
The state-owned enterprises of South Africa play a significant role in the country’s economy, with the government owning a share in around 700 SOEs involved in a wide array of important industries. In 2016, the top five challenges to doing business in the country were inefficient government bureaucracy, restrictive labour regulations, a shortage of skilled workers for some high-tech industries, political instability, and corruption. On the other hand, the country’s banking sector was rated as a strongly positive feature of the economy.The nation is among the G20, and is the only African member of the group.
Sectors Of The South African Economy
South Africa has a comparative advantage in the production of agriculture, mining and manufacturing products relating to these sectors.South Africa has shifted from a primary and secondary economy in the mid-twentieth century to an economy driven primarily by the tertiary sector in the present day which accounts for an estimated 65% of GDP or $230 billion in nominal GDP terms. The country’s economy is reasonably diversified with key economic sectors including mining, agriculture and fisheries, vehicle manufacturing and assembly, food processing, clothing and textiles, telecommunication, energy, financial and business services, real estate, tourism, manufacturing, IT, transportation, and wholesale and retail trade.
Trade And Investment In South Africa
Principal international trading partners of South Africa—besides other African countries—include Germany, the United States, China, Japan, the United Kingdom, Bangladesh and Spain.Chief exports include corn, diamonds, fruits, gold, metals and minerals, sugar, and wool. Machinery and transportation equipment make up more than one-third of the value of the country’s imports. Other imports include chemicals, manufactured goods, and petroleum.
As a result of a November 1993 bilateral agreement, the Overseas Private Investment Corporation (OPIC) can assist US investors in the South African market with services such as political risk insurance and loans and loan guarantees. In July 1996, the US and South Africa signed an investment fund protocol for a $120 million OPIC fund to make equity investments in South and Southern Africa. OPIC is establishing an additional fund – the Sub-Saharan Africa Infrastructure Fund, capitalised at $350 million – to investment in infrastructure projects. The Trade and Development Agency also has been actively involved in funding feasibility studies and identifying investment opportunities in South Africa for U.S. businesses.
