Facing the future: Old traditions merge with modern life in this resource-rich land

The Report: South Africa 2012 – Country Profile

Although southern Africa has been consistently inhabited for tens of thousands of years, South Africa’s modern history traces back most directly to the aboriginal Khoisan. The majority of modern South Africa’s black population is descended from a mix of ethnic groups, including the Bantu, who migrated from elsewhere in Africa over the past 2500 years.

Around 1200 the region emerged as a centre for gold and ivory trading, with routes to India and as far away as China. Dutch traders first arrived in the mid-1600s on stopovers on the spice route between the Netherlands and the Far East. Towards the end of the 18th century the British supplanted the Dutch as the dominant mercantile power, assuming an increasingly large role in local politics and business, while the Dutch settlers migrated to rural areas, adopting the labelBoers (Dutch for “farmer”). The discovery of gold and diamond deposits in the late 1800s encouraged a significant rise in European immigration, further marginalising indigenous communities and fostering increasing tension between the various groups of settlers.

The race for land and commodities, along with issues over self-determination, gave rise to a number of disputes and wars throughout the 19th century between local ethnic groups, as well as between the Boers and the British. A spate of British victories eventually brought about the establishment of the Union of South Africa in 1910 as an imperial dominion.

APARTHEID: Although the role of blacks in the political and economic domains was already extremely limited, in 1948 the National Party came to power and enacted a system of racial segregation. Apartheid favoured the maintenance of white minority rule at the expense of the black majority, and prompted opposition from around the world. Domestically, the most active opponent was the African National Congress (ANC). Boycotts by Western nations, combined with ANC pressure and a moral shift, eventually led to the regime’s decision to cede power and dismantle the system of nationalised segregation. In 1994 the first multi-racial elections were held and an ANC-led government was voted in, with Nelson Mandela inaugurated as the country’s new president. Post-apartheid, the country has embraced a new era of equality and revelled in its transition from diplomatic and economic isolation to its new role as one of Africa’s leading powers. While it has gained prominence through high-profile milestones, including the hosting of the 2010 FIFA World Cup, the new South Africa continues to grapple with the imbalances of economic empowerment and unequal wealth distribution wrought by decades of discrimination.

POLITICS: South Africa is a constitutional democracy with a three-tier system. The parliament is bicameral, with a 400-seat National Assembly and a 90-seat National Council of Provinces. Executive leadership lies with the president, who is elected by the assembly, which, in turn, is elected by proportional representation. The National Council of Provinces represents South Africa’s nine provinces. Both the parliament and the president are elected for five-year terms, with the last general election taking place in April 2009. The head of state is allowed to serve for two terms. The current president, Jacob Zuma, and his ruling ANC hold 264 of the National Assembly’s 400 seats, having gained 69.7% of the vote in 2009. The main opposition party, the Democratic Alliance, holds a total of 67 seats, a 20-seat improvement on the 2004 elections. Other prominent parties include the Congress of the People, with 30 seats, and the Inkatha Freedom Party, with 18.

After the end of apartheid, the four provincial governments were expanded to nine: Eastern Cape, Free State, Gauteng, KwaZulu-Natal, Limpopo, Mpumalanga, North West Province, Northern Cape and Western Cape. Each local government has basic autonomy concerning local matters within their province. Functions of government are separated between regions. Cape Town is the legislative capital and is where parliament sits. Pretoria is the executive capital, where the government administration is housed, while the Constitutional Court of South Africa is based in Bloemfontein.

POPULATION & DEMOGRAPHICS: Dubbed the Rainbow Nation, South Africa’s population of around 50.5m is a melting pot of ethnicities, cultures and languages that reflect the country’s rich and tumultuous history. According to the 2010 census 80% of South Africans are of black African ancestry, divided among various ethnic groups and spoken languages.

The constitution recognises 11 languages, including Zulu, spoken by 23.8% of the population; Xhosa (17.6%); Afrikaans (13.3%); Sepedi (9.4%); English (8.2%); Setswana (8.2%); Sesotho (7.9%) and Xitsonga (4.4%). Most non-Anglophones speak English as a second language, and all business and government matters are conducted in English. Around 80% of the population is classified as Christian, while 15% claim no religious affiliation, adhering to traditional indigenous beliefs. The remaining 5% comprise Muslims, Hindus and Jews.

GEOGRAPHY & CLIMATE: South Africa lies on the southern tip of Africa, occupying 1.22m sq km with 2798 km of coastline along the Atlantic and Indian Oceans. It surrounds the Kingdom of Lesotho as a landlocked enclave and is bordered to the north by Namibia, Botswana and Zimbabwe, and to the east by Mozambique and Swaziland. South Africa is home to varied topographic and climatic zones, ranging from lush subtropics in the east to extreme desert in the farthest north-west. For the most part the climate is semi-arid, especially on the west coast and inland, making it susceptible to droughts. The west coast and inland regions have warm days and cool evenings, while along the country’s east coast a prevailing subtropical climate makes the region hot and humid during the summers but quite pleasant during the winter and autumn.

NATURAL RESOURCES & ENERGY: South Africa has vast deposits of minerals and natural resources. It is the world’s fourth-largest source of gold and diamonds and sits on more than three-quarters of global platinum reserves. It also has large deposits of uranium, coal, and other metals and minerals. It is estimated that in 2010 South Africa’s mining industry contributed nearly 18% of GDP, of which 8.6% is a direct contribution. The country processes around 20m tonnes per annum of oil and consumes 23m tonnes of liquid fuel products, of which 45% is gasoline and 26% diesel. Because of the abundant supplies of cheap coal, this indigenous resource is used to generate most of its electricity and a significant proportion of its liquid fuels. Rapid economic growth and industrialisation is creating growing demand for electricity, and efforts are being undertaken to further develop the contribution of natural gas, nuclear and renewable sources to the national energy mix.

ECONOMY: South Africa’s is considered the most advanced economy in Africa, with well-developed financial, communications, energy and transport sectors. Its stock exchange is the largest on the continent and the world’s 18th-largest, while the rand is among the most actively traded emerging market currencies. With strong mining and manufacturing export sectors and a flourishing tourism sector, the domestic economy is very much influenced by swings in global economic conditions, and there is pressure to keep the rand low. Vast natural resources and domestic growth opportunities aside, investor interest in South Africa also stems from the country’s strong financial services infrastructure, political stability and solid regulatory environment, all of which enable it to serve as an entry point and base for pan-African operations. In June 2011 South Africa was officially granted full entry into the BRIC grouping, with Brazil, Russia, India and China’s decision to extend membership a reflection of its undeniable influence over African economic development and investment.

While South Africa is an economic success story on a macro scale, development is concentrated in the prime urban centres of Johannesburg/Pretoria, Cape Town and Durban. Gauteng province, in which both Pretoria and Johannesburg are located, is the country’s economic epicentre and the location a significant portion of economic activity, including mining, industry, banking and capital markets. Gauteng contributes one-third of South Africa’s GDP and accounts for roughly 10% of GDP for the entire continent.

CHALLENGES: According to 2011 figures South Africa had the ninth-worst Gini coefficient in the world, a measurement widely used to assess income inequality. With the fall of apartheid, the government has been faced with equipping the economy to handle the influx of new workers into an already saturated market.

A large proportion of the population lives under developing world standards and nearly a quarter of South Africans are unemployed. Many people inhabit informal settlements known as townships outside major cities. Illegal immigration from elsewhere on the continent contributes to the growth of these areas.

While economic empowerment and affirmative action have been applauded for contributing to the rise of an emerging black middle class, some in the business community have expressed frustration at what they perceive as restrictive labour regulations and high levels of state ownership in the wider economy. These issues are ones that the country will have to carefully address as it continues to work to remedy the wrongs of its past.

Countries: South Africa
Export Action Plan