Looking upbeat

Grand landscape, a vibrant economy, seven heritage sites... indeed, South Africa is blessed.

Known as ?The Rainbow Nation' for its cultural diversity, South Africa, at the southern tip of the African continent bordering Namibia, Botswana, Zimbabwe, Mozambique and Swaziland, is slightly smaller than twice the size of Texas. Immigrants from Europe, significant mineralogical wealth, a vibrant economy and nature's unabashed spread of splendour marks South Africa from the rest of the continent.

South Africa is a middle-income country with an abundance of resources, well-developed financial, legal, communications, energy, and transport sectors and a stock exchange (the JSE Securities Exchange) that ranks among the 10 largest in the world. South Africa's per capita gross domestic product (GDP), corrected for purchasing power parity, positions it as the 60th wealthiest nation in the world. The rand, the world's most actively traded emerging market currency, has joined an elite club of 15 currencies - the continuous linked settlement (CLS) - where forex transactions are settled immediately, lowering the risks of transacting across time zones. The rand was the best performing currency against the US dollar between 2002 and 2005, according to the Bloomberg Currency Scorecard.

South Africa has a large agricultural sector, and is a net exporter of farm products. Agriculture constituted eight per cent of its exports in the past five years. It is the eighth largest wine producer in the world, and the 11th largest producer of sunflower seeds. It exports sugar, grapes, citrus, nectarines, wine and deciduous fruits; it is the world's largest producer of platinum, gold and chromium. It has the most sophisticated free-market economy on the African continent. The country represents only three per cent of the continent's surface area, yet it accounts for about 40 per cent of all industrial output, 25 per cent of the GDP, over half of generated electricity and 45 per cent of mineral production in Africa.

South Africa is also a gateway for investment into Sub-Saharan Africa. In addition to its wealth of mineral resources, South Africa is the world's largest exporter of gold, platinum and significant amounts of coal. The value-added processing of minerals to produce ferroalloys, stainless steel and similar products is a major industry and an important growth area. Its diverse manufacturing industry is a world leader in several specialised sectors, which include railway rolling stock, synthetic fuels, and mining equipment and machinery.

South Africa's GDP has been on the rise in recent times. Its growth is close to a healthy five per cent, a distant cry from the economic lull of the late 90s. According to the South African Reserve Bank, GDP growth was running at an annualised 4.8 per cent in the second quarter of 2005 (compared to 3.7 per cent in 2004 and 2.8 per cent in 2003).

Exports have also increased to close to 30 per cent of GDP, up from 11.5 per cent a decade ago. South Africa's major trading partners include the UK, the US, Germany, Italy, Belgium, and Japan along with other Sub-Saharan African countries. South Africa is a member of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC).

Trade policy

In August 1996, South Africa signed a regional trade protocol agreement with its SADC partners. The agreement was ratified in December 1999 and implemented in September 2000. It intends to provide duty-free treatment for 85 per cent of trade by 2008 and 100 per cent by 2012. South Africa is also a member of the World Trade Organisation (WTO). Products from the US qualify for South Africa's most-favoured-nation tariff rates. South Africa is also an eligible country for the benefits under the African Growth and Opportunity Act (AGOA), and most of its products can enter the US market duty free.

After the November 1993 bilateral agreement, the Overseas Private Investment Corporation (OPIC) can assist the 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 (about Dh441 million) OPIC fund to make equity investments in South Africa and southern Africa. OPIC is establishing an additional fund - the Sub-Saharan Africa Infrastructure Fund, capitalised at $350 million (about Dh1,286 million) - for investment in infrastructure projects. The Trade and Development Agency (TDA) has also been actively involved in funding feasibility studies and identifying investment opportunities in South Africa for US businesses.

Without doubt, South Africa is the economic powerhouse of Africa with a GDP four times its southern African neighbours and comprising about 25 per cent of the entire continent's GDP. It was the largest investor into the rest of Africa between 1990 and 2000, according to a 2003 report by LiquidAfrica Research, with investments averaging about $1.4 billion (about Dh5 billion), amounting to some $12.5 billion (about Dh46 billion) over the decade. It was rated the most competitive economy in the sub-Saharan region and the most attractive country in Africa to invest in by the World Economic Forum's 2004 annual Global Competitiveness Index.

Now there is a shift in trade winds. According to market analysts, the rapid growth of bilateral trade between South Africa and China will impact the rand. James Robertson, Standard Chartered Bank's Head of Global Markets in South Africa, says, "China will have a great role to play in South Africa because of rapidly shrinking trade with its traditional partners. The nation's trade with China is growing at an annual compound rate of 26 per cent, compared with the compound annual decline of 26 per cent in trade between South Africa and the US and the four per cent drop with Britain." He adds that the current composition of the trade weighted rand basket was still primarily made up of the euro (36.38 per cent), US dollar (15.47 per cent), British pound (15.37 per cent), the Japanese yen (10.43 per cent) and 22.35 per cent in other currencies. Given the febrile rate of increase in trade with China, the South African Reserve Bank (SARB) could start looking again at adding the Chinese yuan into this mix.

According to Robertson what happens in China will probably set the course for South Africa for at least the next two decades as 1.3 billion Chinese consumers enter a material-intensive consumption phase similar to the one western Europe went through in the 1950s and 1960s. South Africa is China's top trading partner in Africa and its exports to China, mainly resources products, have increased four-fold in the first nine months of 2005 to 22 billion rand ($3.6 billion; about Dh13 billion) from only 5 billion rand (about Dh3 billion) in the first nine months of 2004.

Tourist paradise

Away from its growing economic presence, South Africa is also a tourist paradise. It has golden beaches, some of the world's best surf, spectacular scenery ranging from mountains to deserts, exquisite eco-systems and a window that opens to the wonders of the Dark Continent. It has the third-highest level of biodiversity in the world, and is the only country to contain an entire floral kingdom. Some 18,000 species of vascular plant occur within its boundaries. The semi-desert regions have an incredible variety of succulent plants - one-third of the world's succulent plant species. The treetop canopy trail in Tsitsikamma, along with the oldest and biggest forest trees, is one of only three in the world.

The Table Mountain National Park has more plant species in its 22,000 hectares than the British Isles or New Zealand. The Drakensberg has both the highest mountain range in Africa south of Kilimanjaro and the continent's richest concentration of rock art. South Africa is also home to seven of Unesco World heritage sites.

Kruger Park, more than a century old, is one of the world's first wildlife conservation areas. It is part of a single, broad conservation area that spans private and public game parks, and even stretches across national borders into neighbouring Mozambique and Zimbabwe. South Africa is also a bird watchers' paradise.

Cities that vie in comfort and amenities with the world's best, an economy that is vigorously emerging from inherent challenges and a landscape as grand and pristine as can be, South Africa is a nation on the rise.