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SOUTH AFRICA

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INTRODUCTION

South Africa, officially the Republic of South Africa, is the southernmost sovereign state in Africa.

It is bounded on the south by 2,798 kilometers of coastline of Southern Africa stretching along the South Atlantic and Indian Oceans, on the north by the neighbouring countries of Namibia, Botswana and Zimbabwe, and on the east by Mozambique and Swaziland, and surrounding the kingdom of Lesotho.

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South Africa is a multiethnic society encompassing a wide variety of cultures, languages, and religions.

Its pluralistic makeup is reflected in the constitution's recognition of 11 official languages, which is among the highest number of any country in the world.

South Africa has the seventh-highest per capita income in Africa. However, poverty and inequality remain widespread, with about a quarter of the population unemployed and living on less than US$1.25 a day.

INTRODUCTION

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MARKET SIZE

TOPICS COVERED UNDER THIS SECTION ARE:-

Demographics

Per Capita Income

Demand

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DEMOGRAPHICS

Age structure

0-14 years: 28.3% (male 6,859,518/female 6,815,185)15-24 years: 20.2% (male 4,914,394/female 4,866,121)25-54 years: 38.2% (male 9,543,746/female 8,923,605)55-64 years: 7.1% (male 1,470,282/female 1,950,499)65 years and over: 6.3% (male 1,205,657/female 1,826,638) (2014 est.)

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DEMOGRAPHICS

Dependency ratio

total dependency ratio: 53.9 %youth dependency ratio: 45.2 %elderly dependency ratio: 8.7 %potential support ratio: 11.5 (2014 est.)

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DEMOGRAPHICS

Median age

total: 25.7 yearsmale: 25.4 yearsfemale: 26 years (2014 est.)

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DEMOGRAPHICS

Population growth rate -0.48% (2014 est.) Birth rate 18.94 births/1,000 population (2014 est.) Death rate 17.49 deaths/1,000 population (2014 est.) Net migration rate -6.27 migrant(s)/1,000 population note: there is an increasing flow of Zimbabweans into South

Africa and Botswana in search of better economic opportunities (2014 est.)

Urbanization urban population: 62% of total population (2011) rate of urbanization: 1.21% annual rate of change (2010-15 est.) Major cities - population Johannesburg 3.844 million; Cape Town

(legislative capital) 3.562 million; Ekurhuleni (East Rand) 3.357 million; Durban 3.012 million; PRETORIA (capital) 1.501 million; Vereeniging 1.2 million; Bloemfontein (judicial capital) 468,000 (2011)

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PER CAPITA INCOME

The Per Capita income of South Africa is $12,240 whereas Per capita income of India is $5350 and Per capita income of Lesotho is $3160.

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DEMAND

Crude & Refined Petroleum

Automobiles

machines (i.e. Computers, Laptops etc.)

Gold etc.

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ACCESSIBILITY

TOPICS COVERED UNDER THIS SECTION ARE:-

1.Market Access

2.Geographic Access

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MARKET ACCESSIBILITY

The Department of trade & Industry seeks to foster African development, through regional and continental integration and development, aligned to the objectives of the New Partnership for Africa's Development (NEPAD).

The Department of trade & Industry contributes to creating the conditions that enhance the export of higher value-added products, promote inward and outward investment, and preserve the space to implement national development policies.

the Department of trade & Industry broadens and strengthens national consultative mechanisms both within government, and between government and its stakeholders. Consultation between departments, particularly within the intra-governmental cluster system, with Parliament and stakeholders, primarily through the National Economic Development and Labour Council (NEDLAC), are focus areas in this regard.

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GEOGRAPHICAL ACCESSIBILITY

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ECONOMY OF SOUTH AFRICA

TOPICS COVERED UNDER THIS SECTION ARE:-

State of LiberalizationGrowth RateLevel and Rate of IndustrilizationFiscal PoliciesCAD/GDP ratio- Level & TrendMonetary Policy- Inflation & intrest rates - Level & trendForeign Trade Policy.

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STATE OF LIBERALIZATION

Trade liberalization has been at the center of South Africa’s post-Apartheid development strategy. However, despite considerable reforms, the country has failed to generate pro-poor growth, with both unemployment and inequality worsening over the last ten years.

This raises concern that trade liberalization may have worked against the country’s development objectives.

The results suggest that trade policies have contributed to increased poverty and that trade-induced technological change has accelerated growth. However, liberalization has changed the structure of production and exacerbated income inequality.

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While all population groups have benefited from trade-induced growth, it is higher-income and African and White households who have benefited more than lower-income and Asian and Colored households.

Trade reforms also contributed to the rising capital and skill-intensity of production. Accordingly, the decline in poverty has been small and it is higher-income households that will benefit more from further liberalization. Therefore, while there may not be a trade-off between trade reform and poverty reduction, the country should not rely on further liberalization to generate pro-poor growth or address the prevailing inequalities.

STATE OF LIBERALIZATION

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GROWTH RATE

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LEVEL OF INDUSTRIALIZATION

South African history of industrialization, the emphasis was rather on the relationship between industrialization as a definite phase of capitalist development and the specific political model of the country.

industrialization in SouthAfrica before 1924, but then consider the conscious policy of industrialization through protectionist policies, which is then seen as the turning-point of local industrial development.

industrialization in three phases, namely 1910-1933,1933-1961 and post-1961.

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1) industries that did not use moderntechnology to produce competitively because of the Limited local market (e.g., the explosives industry);

2)Industries that enjoyed a high degree of natural protectionbecause of the high transport, insurance and handling costs of imports; and

3) industries that had a competitive edge because of the availability of raw materials.

LEVEL OF INDUSTRIALIZATION

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FISCAL POLICIES

Government is committed to reducing the budget deficit and stabilising debt. Despite weaker GDP growth, the projected deficit for 2014/15 is 3.9 per cent of GDP, just below the October 2014 estimate.

Main budget non-interest expenditure has been reduced by R25 billion over the next two years compared with the 2014 Budget estimate.

Capital is the fastest-growing area of non-interest expenditure over the medium term, while goods and services decline in real terms. Compensation stabilises as a share of total expenditure.

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FISCAL POLICIES

Taxes will increase by R16.8 billion in 2015/16 as a result of higher personal income tax rates, a 30.5 c/litre increase in the general fuel levy and various excise duties. The Road Accident Fund fuel levy increases by 50 c/litre, generating R9 billion over the next two years.

The Unemployment Insurance Fund (UIF) monthly income contribution threshold is reduced to R1 000 for one year, with no change in benefits. This will reduce the UIF surplus by about R15 billion in 2015/16

Therefore South Africa is having a contractionary Fiscal Policy.

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CAD GDP RATIO

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MONETARY POLICY

Monetary policy in South Africa confronts the prospect of a prolonged breach of the inflation target, even as growth trends lower.

The policy rate has been increased, most recently by a quarter of a percentage point at the March 2016 meeting of the Monetary Policy Committee (MPC).

This rate has now been raised by a total of 2 percentage points since January 2014, when forecasts for inflation first began showing significant risks of sustained target breaches.

Monetary policy remains in a tightening cycle, although this is subject to data outcomes.

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MONETARY POLICY

South Africa is part of this trend and the decision on the appropriate monetary policy stance is taken by the Monetary Policy Committee (MPC).

This committee was constituted shortly before South Africa adopted the inflation-targeting framework. The MPC meetings are chaired by the Governor of the Bank.

It consists of eight members of the Bank: the Governor, three deputy governors and four senior officials of the Bank.

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FOREIGN TRADE POLICY

The South African Government’s broad developmental strategy aims to promote and accelerate economic growth along a path that generates sustainable, decent jobs in order to reduce the poverty and extreme inequalities that characterise South African society and economy.

Successful developing economies have adopted a strategic approach to tariff policy.

In the early 1990s, South Africa’s average tariff was around 23%. It now stands at 8.2%. In 2006, the proportion of zero rated tariff lines rose to about 54%. There has also been considerable simplification of the tariff regime.

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FOREIGN TRADE POLICY

In 1990, the tariff schedule consisted of 13609 tariff lines and 28% were subject to import control. By 2006, the number of tariff lines had been reduced to 6420, a decline of 53%, and import controls were eliminated.

The South Africa-EU TDCA, the SADC Trade Protocol and the SACU-EFTA FTA have further reduced the overall incidence of tariff protection. The South African economy is now moderately protected by tariffs.

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TRADE OF SOUTH AFRICA

TOPICS COVERED UNDER THIS SECTION ARE:-

MAJOR EXPORTS

MAJOR IMPORTS

MAJOR DESTINATIONS OF EXPORTS

MAJOR DESTINATIONS OF IMPORTS

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MAJOR EXPORTS

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MAJOR IMPORTS

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TRADE BALANCE

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MAJOR EXPORT DESTINATIONS

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MAJOR IMPORT DESTINATIONS

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MARKET OF SOUTH AFRICA

TOPICS COVERED UNDER THIS SECTION ARE:-

NATURE & STATE OF CAPITAL MARKET

FINANCIAL SECTOR & INSTITUTIONS

EDUCATIONAL INSTITUTIONS

REGULATORY & LEGAL FRAMEWORK

TYPES & LEVELS OF TRADE BARRIERS

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CAPITAL MARKETS IN SA

The significance of South Africa's capital markets in the economy is substantial. The stock market is worth almost twice the country's output, andis larger than the bourses of, for example, Mexico, Indonesia and Turkey signicantly larger economies. The currency, bond and derivatives markets are all among the worldís twenty largest by turnover.

Capital market variables are volatile and largely unpredictable, but influence the outcomes and ectiveness of economic policy, especially of monetary and fiscal decisions in addition to the evident interest to financial market participants.

The currency is a common speculative target, which can affect exchange rate dynamics. Arbitrage in the fixed income market inuences the yield curve, which affects the monetary transmission mechanism, and long-term investment.

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EDUCATION

The adult literacy rate in 2007 was 88.7%.[168] South Africa has a 3 tier system of education starting with primary school, followed by high school and tertiary education in the form of (academic) universities and universities of technology. Learners have twelve years of formal schooling, from grade 1 to 12. Grade R is a pre-primary foundation year. Primary schools span the first seven years of schooling.High School education spans a further five years. The Senior Certificate examination takes place at the end of grade 12 and is necessary for tertiary studies at a South African university.

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LEGAL & REGULATORY FRAMEWORK

The Constitution of South Africa is the supreme rule of law in the country. The primary sources of South African law are Roman-Dutch mercantile law and personal law with English Common law, as imports of Dutch settlements and British colonialism.The first European based law in South Africa was brought by the Dutch East India Company and is called Roman-Dutch law. It was imported before the codification of European law into the Napoleonic Code and is comparable in many ways to Scots law. This was followed in the 19th century by English law, both common and statutory. Starting in 1910 with unification, South Africa had its own parliament which passed laws specific for South Africa, building on those previously passed for the individual member colonies.

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The judicial system consists of the magistrates' courts, which hear lesser criminal cases and smaller civil cases; the High Courts, which are courts of general jurisdiction for specific areas; the Supreme Court of Appeal, which is the highest court in all but constitutional matters; and the Constitutional Court, which hears only constitutional matters.

The private security industry in South Africa is the largest in the world,with nearly 9,000 registered companies and 400,000 registered active private security guards, more than the South African police and army combined. Many emigrants from South Africa also state that crime was a big motivator for them to leave.Crime against the farming community has continued to be a major problem

LEGAL & REGULATORY FRAMEWORK

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TYPES AND LEVELS OF TARIFF & NON TARIFF BARRIERS

In the early 1990s, South Africa’s average tariff was around 23%. It now stands at 8.2%. In 2006, the proportion of zero rated tariff lines rose to about 54%. There has also been considerable simplification of the tariff regime.

In 1990, the tariff schedule consisted of 13609 tariff lines and 28% were subject to import control. By 2006, the number of tariff lines had been reduced to 6420, a decline of 53%, and import controls were eliminated.

The South Africa-EU TDCA, the SADC Trade Protocol and the SACU-EFTA FTA have further reduced the overall incidence of tariff protection. The South African economy is now moderately protected by tariffs.

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REI IN WHICH SOUTH AFRICA IS PRESENT

African Union (AU) New Partnership for Africa's Development (NEPAD). Group of 77 Southern African Development Community, South Atlantic Peace and Cooperation Zone, Southern African Customs Union, Antarctic Treaty System, World Trade Organization, International Monetary Fund, G20 and G8+5.

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DEPTH AND LEVEL OF INTEGRATION

SA is increasing its participation in all groups by liberalizing its economy.

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