An African dream

"We enter into a covenant that we shall build a society in which all South Africans, both black and white, will be able to walk tall, without fear in their hearts, assured of their inalienable right to human dignity - a rainbow nation at peace with itself and the world."
- Nelson Mandela, Pretoria, May 9, 1994 (inaugural address on being elected as President of South Africa).

With the economy on an upswing and GDP growing at a consistent level, South Africa has become one of the most stable and powerful countries on the African continent.

"South Africa is one of the few countries blessed with natural resources such as minerals, agricultural fields and fisheries and is a major producer of fruit such as mangoes, papayas and bananas. It is a diverse country in terms of its people and climate," says Agnes Nyamande-Pitso, Consul General, Dubai.

"Post the 1994 elections, many businesses have been legitimised, which were earlier isolated from the rest of the world, and they are now able to trade on an equal footing with their counterparts on a global level.

"With FDI (foreign direct investment) flooding into the country's economy, the launch of AsgiSA (Accelerated and Shared Growth Initiative of South Africa) and investors more comfortable about investing in the country, there has been a positive change all around," she says.

Economic growth has increased from an average of 0.85 per cent in the decade leading up to 1994, to 3.5 per cent per year in the decade after. More recently there has been a surge in economic growth, with growth exceeding 4.5 per cent in each of the past three years.

"We expect this growth to sustain, so that economic growth should comfortably exceed at least four per cent in the medium term," says Dr Elna Moolman, Economist, Standard Bank's Group, Economics Division, Johannesburg.

Seeking growth
With the ultimate objective of halving unemployment and poverty by 2014, the government formally introduced the AsgiSA in February last year.

"In the interim, it seeks economic growth rates exceeding 4.5 per cent and six per cent respectively between 2005 and 2009 and between 2010 and 2014.

"The government wants this growth, however, to be shared across the population and to be based on a more sustainable basis beyond the current windfalls from high commodity prices, strong consumption spending and capital inflows," says Moolman.

AsgiSA underpins the South African government's vision to have a "vigorous and inclusive economy where products are diverse, more value is added to products and services, the cost of production and distribution are reduced, labour is readily absorbed into sustainable employment, and new businesses proliferate and expand.

"It is not intended to cover all elements of a comprehensive development plan, rather it consists of a limited set of interventions that are intended to serve as catalysts to accelerated and shared growth.

"Essentially AsgiSA identified six sets of remedies to address the six binding constraints to faster growth with broader-based beneficiaries," says Moolman.

Generally, consumer spending, with sectors catering to the buoyant domestic demand performing best, has driven economic growth in recent years.

This followed substantial interest rate cuts between 2003 and 2005. "There were concerns that consumer-driven economic growth may not be sustainable, seeing that households' debt-to-income ratio rose to a record level and interest rate hikes last year made this debt more expensive.

"But there are signs that growth thrust is shifting from consumers towards the supply side of the economy; last year's economic growth was already more broad based and we expect this to continue. This, of course, makes economic growth more balanced and more sustainable," says Moolman.

South Africa's large trade and current account deficits, which have been rising sharply since 2005, are one of the key economic concerns.

"Imports were stimulated by buoyant domestic (especially consumer) demand, a relatively strong currency, and soaring oil imports on the back of high oil prices.

"Consumer imports are expected to moderate in line with the slowdown in consumer activity, but strong expansion in capital formation, which tend to be import-intensive, is likely to keep imports high.

"Exports previously suffered from a relatively strong Rand, which made it difficult to compete with relatively cheap imports; however, exports have been improving more recently on the back of the noticeable depreciation in the Rand rate last year," says Moolman.

Mining.

South Africa is a world leader in mining. The country is internationally renowned for an abundance of mineral resources, accounting for a significant proportion of both world production and reserves, and South African mining companies dominate many sectors in the global industry.

South Africa is the world's biggest producer of gold and platinum and one of the leading producers of base metals and coal.

The country's diamond industry is the fourth largest in the world, with only Botswana, Canada and Russia producing more diamonds each year.

Although well over a century old, South Africa's mining industry is far from fully tapped. The country is a treasure trove, with mineral deposits only matched by some countries of the former Soviet Union.

While holding the world's largest reserves of gold, platinum-group metals and manganese ore, the country has considerable potential for the discovery of other world-class deposits in areas yet to be exhaustively explored.

Horticulture
South Africa has a highly developed deciduous fruit industry geared for the export of a large percentage of its products.

From an economic viewpoint, apples rank first, followed by table grapes, pears, peaches, plums and apricots. In addition, many smaller crops such as kiwi fruit, almonds, strawberries and olives are also cultivated.

Citrus and many other crops including pineapples, bananas, avocados, mangos, litchis, papayas, granadillas, guavas, macadamia nuts, pecan nuts, coffee, tea and ginger constitute another of South Africa's major horticultural industries.

The citrus industry is still by far the largest in this group, while pineapples, bananas and avocados are the three most important fruits. The production of many (sub) tropical fruits, such as avocado and mango has experienced a rapid growth rate in recent years.

Tourism
Tourism in South Africa is an important area that creates jobs and economic opportunities.

"More than eight million tourists visited South Africa in 2006. We had an increase of more than 73,000 visitors from Europe, almost 30,000 more visitors from North America, and over 30,000 more visitors from Asia, Australasia and the Middle East.

"The growth rate for our overseas arrivals kept pace with international industry growth, our 16.9 per cent growth in arrivals from Africa far exceeded the international benchmark," says Marthinus van Schalkwyk, Environmental Affairs and Tourism Minister, in a report published recently in BuaNews.

Sources: SouthAfrica.info reporter; BuaNews; Department of Trade and Industry, hridir.org and allafrica.com