The economy of South Africa has a two tiered economy; one rivaling other developed countries and the other with only the most basic infrastructure. It is therefore a productive and industrialised economy that exhibits many characteristics associated with developing countries, including a division of labour between formal and informal sectors and an uneven distribution of wealth and income. The primary sector, based on manufacturing, services, mining, and agriculture, is well developed.
South Africa's transportation infrastructure is among the best in Africa, supporting both domestic and regional needs. OR Tambo International Airport serves as a hub for flights to other Southern African and International countries. South Africa also has several major ports that make it central point for most trade in the Southern African region.
History
Main article: Economic history of South AfricaThis is a chart of the trend of South Africa's gross domestic product at market prices estimated by the International Monetary Fund with figures in millions of South African rand.
The formal economy of South Africa has its beginnings in the arrival of Dutch settlers in 1652, originally sent by the Dutch East India Company to establish a provisioning station for passing ships. As the colony increased in size, with the arrival of French Huguenots and German citizens, some of the colonists were set free to pursue commercial farming, leading to the dominance of agriculture in the economy.
At the end of the 18th century, the British gained control of the colony, imposing the English language on the colonists, who were now developing a culture of their own. This in turn lead to the Great Trek, spreading farming deeper into the mainland, as well as the establishment of the independent Boer Republics of Transvaal and the Orange Free State.
In 1870 diamonds were discovered in Kimberley, while in 1886 some of the world's largest gold deposits were discovered in the Witwatersrand region of Transvaal, quickly transforming the economy into a resource-dominated one. The British, seeking the riches of the gold fields, invaded the Boer republics and gained control of them in 1902 after the Second Boer War. The country also entered a period of industrialisation during this time, including the organisation of the first South African trade unions.
The government soon started putting laws distinguishing between different races in place. In 1948 the National Party won the national elections, and immediately started implementing an even stricter race-based policy named Apartheid, effectively dividing the economy into a privileged white one, and an impoverished black one. The policy was widely criticized and led to crippling sanctions being placed against the country in the 1980s. However, after international pressure led to the end of this system, the economy has faltered, crime rates have increased dramatically, and whites have become victims of frequent hate crimes.
South Africa held its first multi-racial elections in 1994, leaving the newly-elected African National Congress (ANC) government the daunting task of trying to restore order to an economy harmed by sanctions, while also integrating the previously-disadvantaged segment of the population into it. As of 2005, agriculture contributes only 3.4% to the country's GDP, while services now account for 65.1%.
In April 2009, amidst fears that South Africa would soon join much of the rest of the world in recession, Reserve Bank Governor Tito Mboweni and Finance Minister differed on the matter: whereas Manuel foresaw a quarter of economic growth, Mboweni predicted further decline: "technically," he said, "that's a recession."
Sectors
Telecommunications
The domestic telecommunications infrastructure provides modern and efficient service to urban areas, including cellular and internet services. In 1997, Telkom, the South African telecommunications parastatal, was partly privatised and entered into a strategic equity partnership with a consortium of two companies, including SBC, a U.S. telecommunications company. In exchange for exclusivity (a monopoly) to provide certain services for 5 years, Telkom assumed an obligation to facilitate network modernisation and expansion into unserved areas. A Second Network Operator was to be licensed to compete with Telkom across its spectrum of services in 2002, although this license was only officially handed over in late 2005 and has recently begun operating under the name, Neotel. Four cellular companies provide service to over 20 million subscribers, with South Africa considered to have the 4th most advanced mobile telecommunications network worldwide. The four cellular providers are Vodacom, MTN, Cell C and Virgin Mobile.
Agriculture
Main article: Agriculture in South AfricaUnlike other African countries, South Africa's agricultural sector is not dominated by subsistence farming, with most farms being large commercial, albeit family-owned, enterprises. The country is completely self-reliant and has more than enough output to export massive amounts of agricultural produce. Many other southern African countries rely on South Africa for maize imports.
Due to the country's varied climate, many different crops are grown. The Western Cape province has the most varied and prolific agricultural sector. Wine has become a massive export, with South Africa now being the 5th largest producer worldwide. Deciduous fruit is also of major importance, with grapes, apples, cherries, pears, peaches, citrus and other fruit being exported in great quantities, mostly to Europe. Heavy wheat cultivation also occurs in the region, along with major wheat growing areas in the Highveld of Mpumalanga and the Free State. The Free State is the leading producer of South Africa's staple, maize.
The vast inland regions of the Karoo provide ideal conditions for livestock farming, especially sheep farming (for wool and mutton). Cattle farming is more popular amongst the indigenous people and flourishes more in the more well-watered eastern areas of South Africa. Ostrich farming is popular in the Oudtshoorn area of the Western Cape, along with extensive dairy farming in the Garden Route area just to the south. Sugarcane farming is a mainstay on the KwaZulu-Natal coast, with subtropical fruits, such as mangos, lychees, papaya, bananas and melons being extensively cultivated in KwaZulu-Natal, Limpopo and Mpumalanga Lowveld areas. Pineapples are cultivated around East London. Many game farms specializing in South African wild antelope are also gaining in importance and are found mainly in the north and east of South Africa.
Despite attempts by government to reform the distribution of land, historically mostly held by whites, these efforts have not yet translated into growth in the agricultural sector, which continues to lag or decline in relation to the rest of the economy. This may also be due to the fact that indigenous people are mostly subsistence farmers and that anti-competitive practices like agricultural subsidies in developed countries and climate change are curtailing sector growth.
According to the OECD, "Agriculture contributes less than 4% to GDP but accounts for 10% of total reported employment."
Trade and investment
South Africa has rich mineral resources. It is the world's largest producer and exporter of gold and platinum and also exports a significant amount of coal. Another major export is diamonds. During 2000, platinum overtook gold as South Africa's largest foreign exchange earner. The value-added processing of minerals to produce ferroalloys, stainless steels, and similar products is a major industry and an important growth area. The country's diverse manufacturing industry is a world leader in several specialised sectors, including railway rolling stock, synthetic fuels, and mining equipment and machinery.
Agriculture, based on a 2005 estimate by The World Factbook, accounts for only 3.4% of the gross domestic product. Major crops include citrus and deciduous fruits, corn, wheat, dairy products, sugarcane, tobacco, wine and wool. South Africa has many developed irrigation schemes and is a net exporter of food.
Exports reached 29.1% of GDP in 2001, up from 11.5% a decade ago. South Africa's major trading partners include the United Kingdom, the United States, Germany, Italy, Belgium, China, and Japan. South Africa's trade with other Sub-Saharan African countries, particularly those in the Southern Africa region, has increased substantially. South Africa is a member of the Southern African Customs Union (SACU) and the Southern African Development Community (SADC). In August 1996, South Africa signed a regional trade protocol agreement with its SADC partners. The agreement was ratified in December 1999 and implementation began in September 2000. It intends to provide duty-free treatment for 85% of trade by 2008 and 100% by 2012.
South Africa has made great progress in dismantling its old economic system, which was based on import substitution, high tariffs and subsidies, anticompetitive behaviour, and extensive government intervention in the economy. The new leadership has moved to reduce the government's role in the economy and to promote private sector investment and competition. It has significantly reduced tariffs and export subsidies, loosened exchange controls, cut the secondary tax on corporate dividends, and improved enforcement of intellectual proper
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