SA, the World and Africa - A Socio Economic Comparison Presented by: Dawie Roodt 11 July 2007

SA, the World and Africa- A Socio Economic Comparison

Presented by:Dawie Roodt11 July 2007

Through the Eyes of the World

Source: The Economist

January 20-26, 2007

Full page advertisements

The Oppositionp. 15

The Home Teamp. 17

Missing Something?

Macedonia South Africa

Taxes

Efficiency

Competitive labour

Access to markets

Stability

Infrastructure

Property rights -

But why say it?

2007:Economic Overview

GDP at Market Prices

GDP market prices, q:q seasonal

-1

0

1

2

3

4

5

6

7

8

1994 1996 1998 2000 2002 2004 2006

%

Source: StatsSA and own calculations

GDP

GDP per capita '00

20000

21000

22000

23000

24000

25000

26000

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

R

Relative size to GDP, 2007 Q1

2% 6%

16%

2%

3%

14%

10%

20%

13%

5%

9%

Agri, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and waterConstruction Wholesale and retail Transport, storage Finance, real estate General gov services Personal services Taxes less subsidies

Source: StatsSA

Fiscal Policy

Background

Revenue & Expenditure:GDP

20

21

22

23

24

25

26

27

28

29

30

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

%

Trevor’s reign!

Gold

Source: SARB and own calculations

Background

Deficit:GDP

-8

-7

-6

-5

-4

-3

-2

-1

0

1

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

%


Background

State Debt:GDP

25

30

35

40

45

50

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

%

Good/Stable

Debt Trap Recovery


Monetary Policy

Interest rates

Prime

9

11

13

15

17

19

21

23

25

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

%

De Kock

Stals

Mboweni

Interest rates

Prime

10.0

10.5

11.0

11.5

12.0

12.5

13.0

13.5

14.0

2005 2006 2007

%

Food & Oil?

Capital Expenditure Institute Time Horizon Planned Capital Expenditure

Sasol 2013 R62.0bnEskom 2011 R150.0bnWorld Cup 2010:GautrainAcsaStadiums

201020112010

R24.0bnR20.0bnR8.4bn

Transnet (Rail, Ports, Pipelines)

2012 R78.0bn

State (National Budget) 2009 R372.0bn

Economic Impact of the 2010 FIFA World Cup

Direct expenditure of R30.4 bn R15.6bn to be spent by expected 350,000 tourists Contribute R51.0 billion to the GDP of South Africa (2006-2010) Generate the equivalent of 159 000 annual jobs Additional R7,2 billion will be paid to Government in taxes.

Source: Gauteng Tourism Authority and Grant Thornton (Financial mail)

Inflation

Inflation

CPI & CPIX

0

3

6

9

12

15

18

21

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

%

Inflation bracket

Source: StatsSA and own calculations

Debt Levels

Credit Extension

Private Sector Credit Extension excl Bill & Investments

8

13

18

23

28

33

Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07

%


Household debt to disposable income

Household debt to disposable income of households

40

45

50

55

60

65

70

75

1970 1975 1980 1985 1990 1995 2000 2005

%


Savings to disposable income of households

Ratio of saving by households to disposable income of households

-2

0

2

4

6

8

10

12

1970 1975 1980 1985 1990 1995 2000 2005

%


Balance of Payments

Balance of Payments

Current Account vs Financial Account

-8

-6

-4

-2

0

2

4

6

8

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

% GDPBarclays/Absa

De Beers delisting

Sanctions liftedDebt Standstill

Source: SARS and own calculations

Trade: Imports and Exports per origin, 2005

0

20

40

60

80

100

120

140

AFRICA EUROPE AMERICA ASIA OCEANIA OTHERUNCLASSIFIED

GOOD

Rbn

Imports Exports

Summary

Problems: Debt Levels Tax levels Unemployment Crime AIDS Skills State inefficiency

Positives: Strong GDP growth State debt at more sustainable

level More stable interest rate Capital expenditure plans

South Africa, Africa and the Rest

Percentage of World GDP ‘04

2%

35%

2%2%

4%4%5%

7%

11%

1%

27%

Africa Rest of the World Brazil IndiaUK China France GermanyJapan Russia USA

Source: UNAIDS

4% of African area

23% of African GDP

22% of African Exports

20% of African Imports

GDP

Africa, South Africa, World GDP per Capita

0

1000

2000

3000

4000

5000

6000

7000

1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004

$

Source: UN

Countries Compared to Provinces

Country and Province GDP 2004 ($ Bn)

0 20 40 60 80 100 120 140 160 180 200 220

South AfricaEgypt

AlgeriaNigeria

GautengMorocco

KwaZulu-NatalWestern Cape

TunisiaAngolaSudan

Libyan ArabEastern CapeCote d'Ivoire

CameroonMpumalanga

KenyaLimpopo

North-WestFreestateTanzania

GhanaBotswana

EthiopiaUgandaSenegal

GabonDRC

MozambiqueMauritius

NamibiaZambia

Northern CapeMali

ZimbabweBurkina Faso

CongoBenin

MadagascarChad

GuineaSmallest 20

Source: UN

Africa Average Annual GDP Growth, 1996 - 2005

Average Annual GDP Growth, 1996 - 2005

-5

0

5

10

15

20

25

0 5 10 15 20 25 30 35 40 45Countries

%

Equatorial Guinea

Zimbabwe

Average: 4.2

Source: World Bank, Africa Development Indicators, 2006

South Africa

Mozambique

Congo

Median: 3.6

Angola

Oil-exporters

Africa’s Divergent Growth Paths

Average Annual GDP Growth, 1996-2005, % of Population

20%16%

35% 29%

Little or no growth Slow growth Sustained growth Oil-exporting

Ave: 5.5

Ave: 3.4 Ave: 1.3

Ave: 7.4

Namibia (4.0)

Malawi (3.2)

South Africa (3.1)

Source: World Bank, Africa Development Indicators, 2006

Kenya (2.8)

DRC (0.0)

Zimbabwe (-2.4)

Mozambique (8.4)

Botswana (5.7)

Mauritius (4.9)

Eq. Guinea (20.9)

Angola (7.9)

Nigeria (4.0)

Socio-Economic Development

Close-up on South Africa

Category 2004 2006

Total population (000) 46.6mil 47.4mil

Annual population growth rate (%) 1.1% -0.4% ?

Population 0-14 years(%) 33% 32%

Rural population (%) 41

Total fertility rate (births per woman) 2.8 2.7

Infant mortality rate (1,000) 53 60

Life expectancy at birth (years) 46 42

HIV rate (%) in adults (15-49 years) 15.6 20.0%

Poverty (% of pop. on less than $2 a day) 34

GDP per capita (PPP) US$ 11 192 12 760

GDP growth rate (%) 4.5% 5.0%

Children of primary school-age who are out-of-school (%) 7

Source: Unesco and World Bank Development Indicators

Social Services Expenditure


Budget 2006/07 Budget 2007/08

Functional allocation R260.9bn R296.6bn

% of Total Expenditure 59.2% 59.0%

% of GDP 14.6% 15.4%

Expected Overrun R2.5bn

Social Services Expenditure as % of Total Expenditure


40

44

48

52

56

60

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

% Expenditure

Source: Various Budgets and own calculation

Human Poverty Index (HPI): Developing Countries (HPI-1),2004

Human Poverty Index, Developing Countries (High value = High Poverty)

0

10

20

30

40

50

60

70

0 20 40 60 80 100Countries

Value

South Africa 2004

Cuba

Mali

Average: 30

Median: 27

Source: Human Development Report, 2006 (undp.org)

South Africa(1998)

Health

Healthy Spending…?




% of GDP 3.0% 3.1%


2007 Budget: R7.2bn more for HIV-Aids, hospitals and salaries of health workers

Health Spending as % GDP

Health Spending from 1995

2

3

4

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

% GDP

Source: Various Budgets

Public Expenditure on Health Comparison (2003-04)

Public Health Expenditure as % GDP

0

1

2

3

4

5

6

7

8

9

0 20 40 60 80 100 120 140 160Countries

% GDP


South Africa (‘04&’06)

Myanmar

Iceland

Average: 3.5

Median: 3.0

CubaMalawi

South Africa (’07)

Male Life Expectancy at Birth, 2004

Male Life Expectancy at Birth, 2004

30

35

40

45

50

55

60

65

70

75

0 10 20 30 40 50Countries

Age

Sierra Leone

Average: 51

Source: Africa Development Indicators, World Bank, 2006

South Africa

Swaziland

Tunisia

South Africa (2006)

Public Health Expenditure (2003) vs. Life Expectancy at Birth (2000-05)

Health Spending vs Life Expectancy

0

4.5

9

30 60 90

Life Expectancy (years)

Hea

lth E

xpen

ditu

re (%

GD

P)

Malawi

South Africa ('07)Cuba

Singapore

Namibia

South Africa


Physicians

Physicians 1990-2004

0

100

200

300

400

500

600

0 20 40 60 80 100 120 140 160 180

Countries

per 100,000


South Africa 2004

Malawi

Average: 147.0

Cuba

Median: 109.0

South Africa(2001)

Public Health Expenditure (2003) vs. Physicians 2004)

Health Spending vs Physicians

0

4.5

9

0 300 600

Number of Physicians, per 100,000

Hea

lth E

xpen

ditu

re (%

GD

P)

Malawi

Cuba

Saint Lucia

Canada

South Africa 2004

South Africa (2001)


Percentage of People ages 15-49 Infected with HIV, 2005

HIV Prevalence (% Ages 15-49)

0

5

10

15

20

25

30

35

0 20 40 60 80 100 120 140 160 180

Countries

%

Source: Human Development Report, 2006 (undp.org) from UNAIDS (Joint United Nations Programme on HIV/AIDS). 2006

South AfricaJapan

Swaziland

Average: 2.0

Zimbabwe

Number of HIV Positive and Cumulative HIV Deaths

Total HIV+ and Cumulative Aids Deaths

0

1

2

3

4

5

6

Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15

Mil

Total HIV+ Cumulative Aids Deaths

Projection

Currently 250 000 on antiretrovirals- Shortfall 800 000! ( Economist)

Source: Centre for Actuarial Research and South African Medical Research Council, 2004

Estimated HIV Prevalence Amongst Antenatal Clinic Attendees, by Age

Age group (years)

2000 prevalence

%

2001 prevalence

%

2002 prevalence

%

2003 prevalence

%

2004 prevalence

%

2005 prevalence

%

<20 16.1 15.4 14.8 15.8 16.1 15.9

20-24 29.1 28.4 29.1 30.3 30.8 30.6

25-29 30.6 31.4 34.5 35.4 38.5 39.5

30-34 23.3 25.6 29.5 30.9 34.4 36.4

35-39 15.8 19.3 19.8 23.4 24.5 28.0

40+ 11.0 9.8 17.2 15.8 17.5 19.8

Source: Avert international AIDS charity

Tuberculosis Cases – Prevalence per 100 000 People, 2004

Tuberculosis Cases Reported

0

200

400

600

800

1000

1200

0 20 40 60 80 100 120 140 160 180

Countries

Per

100

,000

peo

ple


South Africa

Iceland

Djibouti

Average: 200

Zimbabwe

Median: 83

AIDS

People infected with Aids

20%

68%3%1%

4%

4%

Asia Africa Eastern Europe & Central Asia Caribbean Latin America High Income Countries

Source: UNAIDS

Summary

Low/average spending on health Very low life expectancy Lack/losing skilled medical personnel HIV and Tuberculosis:

Top prevalence rates in the world Appears to escalate Lack of commitment from Government (Department of Health)

Impact on economy

Serious competence and planning deficiency

PROBABLY THE WORST RUN DEPARTMENT!

Eddjucation

Bas(e)ing the Outcome…




% of GDP 5.2% 5.4%


2007 Budget: R8.1bn more for additional teachers

Education expenditure comparison (2002-2004 as available)

Expenditure on education as % GDP

0

1

2

3

4

5

6

7

8

9

10

0 20 40 60 80 100 120

Countries

% G

DP


South Africa (’06 & ’07)

Equatorial Guinea

Lesotho

Average: 4.7

Zimbabwe

Education Spending as % GDP

Education : GDP

4

5

6

7

8

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

% GDP

Source: Various Budgets

Pass Rate of SCE and Education Spending

Pass Rate and Education Spending

40

45

50

55

60

65

70

75

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

%

5

6

7

8

% GDP

Pass Rates Education Spending

Source: HSRC

Learners and Educators in Ordinary Schools

Learners and Educators

11.6

11.8

12.0

12.2

12.4

2001 2002 2003 2004 2005

Number (mil)

350

360

370

380

390Number ('000)

Learners Educators

Source: 2001-2005 SNAP Survey (www.education.gov.za)

Number of Schools and Educators in Ordinary Schools

Number of Schools and Educators

26.0

26.5

27.0

27.5

28.0

2001 2002 2003 2004 2005

Number ('000)

350

360

370

380

390

Number('000)

Schools Educators

Source: 2001-2005 SNAP Survey (www.education.gov.za)

Pass Rate of SCE and Matriculation Exemption

Pass Rate vs Matric Exemption

8.0 8.26.2 6.4 6.4

8.19.3

11.713.9 12.9 11.6

16.6

0

20

40

60

80

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

%

Pass Rates Matriculation Exemption

Source: HSRC

53.4 54.4

47.4 49.3 48.9

61.7

68.9 70.773.368.3

57.9

66.7

Learners Presenting For Standard and Higher Grade Exams

Subject Year SG HG HG as % Tot

Accounting 2002 100199 41216 29.1

2003 106621 39548 27.1

2004 112948 43442 27.7

2005 120129 42727 26.2

Biology2002 200608 98468 32.9

2003 199432 86813 30.3

2004 204073 96081 32.0

2005 219838 111619 33.6

English (Second language)2002 22408 362534 94.2

2003 18535 355965 95.1

Source: HSRCSource: HSRC / Department of Education

Learners Presenting For Standard and Higher Grade Exams

Subject Year SG HG HG as % Tot

Mathematics2002 226295 35518 13.6

2003 223156 35994 13.9

2004 236155 39939 14.5

2005 259099 44053 14.5

Physical Science2002 103044 51047 33.1

2003 100166 52215 34.3

2004 105245 55969 34.7

2005 119491 62337 34.3

Source: HSRC / Department of Education

Case Study: Flow of Pupils from Grade 1 to Grade 12

Flow Through for 1991 Pupils

100.0 99.095.5

88.8 89.4

80.678.0

85.8

75.9

69.3

58.8

40.3

30

40

50

60

70

80

90

100

1991Gr1

1992Gr2

1993Gr3

1994Gr4

1995Gr5

1996Gr6

1997Gr7

1998Gr8

1999Gr9

2000Gr10

2001Gr11

2002Gr12

Source: HSRC Note: Repeaters and drop outs not indicated

1 207 066 learners

486 786 learners

Home Schooling?

1995 to 2006: 31.7%31.7

Grade 1 and Grade 2 Pupils

Grade 1 and Grade 2 Pupils

900

950

1000

1050

1100

1150

1200

1250

1300

2002 2003 2004 2005

Number ('000)

Grade 1 Grade 2

Source: Department of Education

- 9.4%- 15.1%- 13.1%- 21.3%

Adult Literacy Rate (2005)

Adult Literacy Rate

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100Countries

% o

f P

op

ula

tio

n


South Africa: 82.2

Mali

Estonia

Average: 79.5

Median: 87.4

South Africa (1991): 82.1

Pupils-Teacher Ratio in Primary Education (Newest data available)

Pupils-Teacher Ratio

0

10

20

30

40

50

60

70

80

0 20 40 60 80 100 120 140 160

Countries

Ave

rag

e n

um

ber

of

pu

pils

Source: UNESCO

South Africa 2004

Central African Republic

Libya

Average: 26.7

Median: 23.0

South Africa (2006)

Summary

Above average spending on education Below average teacher : pupil ratio Ordinary schools, change between 2001-2005:

Learners: 4.1% Educators: 7.9% Schools: -3.2%

Weaker higher grade enrollment Low critical subject enrollment Obvious efficiency problem but improving

Protection

Military

Military Expenditure, % of GDP (2004)

Military Expenditure per country

0

2

4

6

8

10

12

0 20 40 60 80 100 120Countries

% GDP

Source: SIPRI (Stockholm International Peace Research Institute). 2006c.

South AfricaMauritius

Oman

Average: 2.3

Median: 1.7

South Africa (’07)

Police and Crime

2007 Budget: R2.4bn more to get 190 000 police by 2010

Murders (per capita) by Country (1998-2000)

Total Recorded Homicides Completed

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0 10 20 30 40 50 60Countries

Per 1000

Source: UN Survey of Crime Trends and Operations of Criminal Justice Systems, 2000

South Africa ’98-’00

Colombia

Qatar

Jamaica

Venezuela

South Africa (2006)

Reported Crime Figures for the financial years 1994/95 to 2006/07

Crime Categories, per 100 000 population

0

50

100

150

200

250

300

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Rat

io p

er 1

00 0

00

Rape and attempted rape Murder Aggrevated Robbery

Source: Institute for Security Studies (issafrica.org) / saps.gov.za

Crime and Policing Facts:

2000: SA murder rate 3rd of 63 countries. (Behind Swaziland and Colombia) Murder rate per 100 000:

1994/05: 66.9 2005/06: 39.5 World average: 5.5

Policing Expenditure % GDP: 2.0% (1994), 1.8% (2003) % budget expenditure: 6.7% (1994), 7.9% (2003), 7.8% (2007 est)

Security personnel outnumber police officers 3:1 2006: Almost 300 000 security officers (1996: 100 000) 2006: SAPS employment complement 155 000, of which around (only) 105 000

officers

Source: Institute for Security Studies (issafrica.org) / SAPS Annual Report / own calculations /

UN Survey of crime trends and operations of criminal justice systems

Police (per capita) by country (2000)

Police (per capita) per Country

0

1

2

3

4

5

6

7

8

0 10 20 30 40 50Countries

Per

100

0 p

eop

le

Source: United Nations Office on Drugs and Crime, Centre for International Crime Prevention

South Africa

Costa Rica

Montserrat

Average: 2.9

Median: 2.6

Summary

Average number of police officers Security personnel outnumber police officers 3:1= (police efficiency?) 8 out of 10 businesses affected by crime Murders per 100 000 almost 8 times higher than world average! President Mbeki’s stance on crime?

Lack of commitment…Questionable statistics…Be scared, be very scared!

Fiscal Efficiency

Revenue Sources (Est. 2006/07)

29%

25%28%

4%

4%

10%

Individual Tax

Company Tax

VAT

Excise Duties

Fuel Levy

Other

Contribution to Fiscus

Budget Revenues (per $ GDP) by Country, 2006

Dollar Revenue per Dollar GDP

0.0

0.2

0.4

0.6

0.8

1.0

1.2

0 20 40 60 80 100 120 140 160Countries

$

Source: Nationmaster: CIA, World Factbook

Libya

Kuwait

Afghanistan

South Africa

Average: 0.32

Median: 0.29

Collection cost: 1.3% of revenue; US 0.5%

Company Tax Rate, per Country (2006)

Company Tax Rates

0

5

10

15

20

25

30

35

40

45

0 10 20 30 40 50 60

Countries

%

Source: worldwide-tax.com

South Africa

Bulgaria

Egypt

Average: 26.6%

Median: 29.0%

Ireland

USA

South Africa + STC (’06)

South Africa + STC (’07)

Individual Tax Rate, per Country (2006)

Individual Marginal Tax Rates

10

20

30

40

50

60

0 10 20 30 40 50

Countries

%


South Africa

Russia

Denmark

Average: 35.4%

Median: 36.0%

USA

Ireland

VAT Rate, per Country (2006)

VAT Rates

0

10

20

30

0 10 20 30 40 50

Countries

%

South Africa

Ireland

Denmark

Singapore


Average: 16.7%

Median: 18.0%

Fiscal Efficiency: Revenue Summary

Average tax red tape Individual tax rate: above average (high marginal rate, low

threshold) Company tax rate: above average VAT rate: below average

Financial Management

Auditor General: 12% of state departments received clean audit reports (2005/06) Qualified audit reports of state departments:

2005/06: 32% 2004/05: 21%

Large number of qualifications fell into level two: Lack of basic financial control

Generally deficient financial control, and deteriorating……..leading indicator of corruption?

Asset Allocation

Asset Allocation Reason

Equities Demand/Rand

Bonds Inflation/Supply/Interest Rates

Cash Short Interest Rates

Property Property Cycle

– Heavy Overweight

– Overweight

– Neutral

– Underweight

– Heavy Underweight

Local Equities, 2006Economic Sector MC EAA JSE Sector

Mining and Quarrying 32% 34% Mining, Platinum, Gold, Coal

Finance, prop and bus. serv 30% 30%Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv

Manufacturing 12% 12%Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other

Personal Service 6% 5%Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care

Transport, storage and comm. 6% 6% Telecomm, Transport

Trade, hotels and restaurants 6% 4%Cyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons

Electricity, gas and water 4% 3% Oil & Gas

Agri, Forestry and Fishing 3% 1% Food Prod

Construction 2% 5% Const & Build

100% 100%

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Documents

SA, the World and Africa - A Socio Economic Comparison Presented by: Dawie Roodt 11 July 2007