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South Africa Political, Economic, and Social Outlook for 2012 and Beyond

This hub takes a brief look at the socio-political and economic outlook of South Africa for 2012 and beyond. The main sources for this presentation were the Economist Intelligence Unit, Euromonitor, CountryWatch, CountryGrams, and the International Futures (IFs) forecasting system by Dr. Barry Hughes of the University of Denver.

Geographic Location

South Africa covers 1.22 million square kilometers (or 470,693 sq. miles) of land located on the southern tip of the continent of Africa. As such, it is slightly larger than the U.S. states of Texas, Oklahoma, and New Mexico combined. It is bordered by Namibia on the northwest, Botswana and Zimbabwe on the north, Mozambique in the northeast, and Swaziland on the east. The Kingdom of Lesotho is landlocked inside South Africa.The Atlantic Ocean flanks the country on the southwest, the Cape of Good Hope on the south, and the Indian Ocean on the southeast.

According to CultureGrams, South Africa has a large interior plateau rising about 5,000 feet (or 1,500 meters) above sea level. The plateau is mainly semidesert and savnna and rimmed by a narrow strip of coastline. The coastline is subtropical on the east coast, but has a Mediterranean-type climate along the Atlantic and Cape of Good Hope on the southwestern shoreline.

South Africa is located in the South Hemisphere and thus the seasons run opposite those in North America, Europe, and Asia.



Voices for Freedom

South Africa History Highlights

According to the CultureGrams report, the region of South Africa was inhabited by the Khoikhoi, San, and other indigenous African tribes for thousands of years.

Dutch settlers established a colonial station at Cape Town in 1652 to supply ships with fresh foods when they passed on trips from Europe to destinations in Asia. French Huguenot refugees joined the Dutch colony in 1688 and sometime later German settlers also joined the colony.For the most part, the European colonists (also called Boers) were farmers who kept to themselves in the coastal areas without much interaction with the indigenous peoples in the plateau areas.

British rule came to the Cape Colony in 1814 and became a possession of the British empire. However, the other European groups grew dissatisfied with British rule and moved in land between 1835 and 1848. The migration of the Boers led to war against the indigenous tribes who the Boers defeated and claimed large portions of land. The British annexed those lands too after large deposits of gold and precious stones were discovered in the Boer territories. South Africa continued under British rule it gained independence in 1961.

In 1948 South Africa's National party installed the apartheid system that segregated the nation's population according to ethnic groups including whites, blacks, coloureds (people of mixed racial groups), and Indians. After three decades of turmoil and violence and international sanctions from world at large, Frederik Willem de Klerk began to make reforms and apartheid was abolished in 1994. Two key figures in the opposition to and end of apartheid were Nelson Mandela and Archbishop of Cape Town, Desmond Tutu.

South African Demographic Information

South Africa has a population estimated around 50 million inhabitants. Its three largest cities included Cape Town at 3.65 million; Durban with 3.5 million; and the capital city Pretoria 1.7 million.

According to CountryWatch 2011 country report, the main ethnic groups of the country are African, 77%; European (Afrikaan), 10%; mixed ethnicity, 9% and South Asian, 4%. Official languages number 11 and include Afrikaans; English, Ndebele, Pedi, Sotho, Swazi, Tsonga, Tswana, Venda, Xhosa, and Zulu. Religious affiliation marks out at Christian, 68%; animist-indigenous, 28%; Muslim, 2%; and Hindu, 2%.

As pictured, in the bar graph below, population growth should eek up slight over the next 20 years to 2030. However, the life expectancy rate has dropped significantly from 1995 to 2010 and is expected to drop further through 2015. This is due to the HIV prevalence and subsequent death rates which in South Africa are among the highest in the world (see the bar graphs in the Health section below). It seems odd that life expectancy is forecasted to go down when total population is expected to rise in the same time period (2015 and 2020).

South Africa Population Data

President Jacob Zuma

Source

South Africa Political Outlook 2012 and Beyond

According to a Euromonitor report, South Africa is governed by a parlimentary system with two chambers. The National Assembly has 400 members; each member is elected by proportional representation for a five-year term. The National Council receives 90 members chosen by provincial parliments; also for five-year terms. The Head of State (or Executive President) is elected by members of the National Assembly and also serves for a five-year term.

Jacob Zuma is the current Head of State and Head of Government, last elected in 2009. The African National Congress (ANC) is currently the main ruling party and heads a coalition with the Inkatha Freedom Party (IFP). In the 2009, the ANC won a clear majority in the National Assembly, capturing 264 or 66% of the seats.

According to Economist Intelligence Unit report filed Nov 2011, President Zuma will attempt to solidify and stengthen the African National Congress through the remainder of this current term to 2014. He is also expected to try to move for further socioeconomic development. However, political infighting and impatience due to slow progress is expected to impede the presient's efforts.

The graphs presented below depict the World Banks Governance Effectiveness Index, the Democracy Index, and Transparency International's Corruption Index. The Governance Effectiveness Index ranks on a scale of 0-5. The bar graph shows South Africa's overall government effectiveness to be in the middle of the index range at 3.25 in 2010 and expected to rise to 3.32 and 3.41 in 2015 and 2020. Since the abolishment of apartheid and the signing of the new constitution in 1996, democracy has been stable in South Africa. However, the latest Transparency International reports showed corruption, while not as bad as many countries in the world, has gotten slightly worse since the transition in 1996. On a scale of 1 to 10 with 10 being least corrupt, South Africa ranked slightly below the midline at 4.5 in 2010.

According to the Euromonitor report, political risk remains a concern due to slow progress in development, the HIV/AIDS problem, and President Zuma's attempts to be all things to all people. Although there has been some progress, an estimated 60% of black South Africans fall below the poverty line. An estimated 20% of the general population is infected with HIV/AIDS including 22% of pregnant women. The country has been plagued by worker strikes due to the debate over nationalization of mines.

Finally, the EIU report suggested that current president is more of a unifier and facilitator than a leader. His desire to please all factions which helped him come to power has led to indecisiveness. President Zuma's credibility has also come into question due to some personal indiscretions. Those indiscretions led to even further infighting within the governing coalition and delay of policy implementation.The passage of a new, controversial media law that restricts freedom of the press as well as the rise in corruption and alleged interference with the judicial process have also undermined confidence in the current administration.

South Africa Governance

South Africa Economic Outlook 2012

The table and graphs presented below show South Africa's estimated GDP growth rate to 2020; the estimated GDP per capita in both current and purchasing power U.S. dollars; and projected economic activity by sector through 2030. The table and graphs were prepared using International Futures forecasting system software developed by Dr. Barry Hughes and his colleagues from the University of Denver. The IFs system is a complex amalgammation of the leading global economic indicators including UN, World Bank, the International Monetary Fund and other leading sources.The base year for these estimates is 2010.

Overall GDP Outlook

As shown in the tables and graphs, South Africa's GDP overall growth rate is forecasted to decrease from 2010 to 2030, but GDP per capita both in current and adjusted U.S. dollars is expected to increase over the same time period. The IFs table depicting estimated GDP growth in the near term (2011-2015) shows that South Africa's economy will increase by 3.52% in 2011, 3.87% in 2012, and slow 2.42% in 2015. The gradual deceleration of the economy is expected to continue until 2020. EIU's forecast is more optimistic than the IFs outlook. EIU guesstimates slow growth in 2013-14, but an uptick to 3.7% in 2015 and 4.1% in 2016. The IFs estimates take into account the projected drag of HIV/AIDS on the internal economy of the country. The EIU sees the internal problems offset by a recovery in the global economy. The Euromonitor country report for 2011 suggested that some leading economists calculate that HIV/AIDS will cut 1-2% off South Africa's GDP each year.

Economy by Sector

South Africa's economic sectors breakdown as follows:

  1. Services
  2. Manufacturing
  3. Energy
  4. Materials
  5. Information Communication Technologies
  6. Agriculture

The top three sectors dominate South Africas economy and are projected to dominate further into the near- and long-term. Mining accounts for only 9.3% of GDP but one-third of total exports. According to the Euromonitor, the tourist economy has doubled since the elimination of apartheid and has gained large government backing due to its job generating capacity. The banking and financial sectors in South Africa appear to be strong and are required to have 25% black ownership.

Inflation

The EIU projects inflation to rise to 5.3% in 2012, mostly due to an increase in electricity prices and wage growth. However, they suggest inflation will ease a bit from 2013-2016, helped by what the EIU forecasters see as more stable global commodity prices.

Foreign Trade

Both the EIU and Euromonitor project a current account deficit of 4.7% of GDP in 2012 before receding in 2013-2015. South Africa's chief trading partners in 2010 included the European Union at 27.5%; China, 13.5%; and the USA, 9.8%. Basic manufactured goods made up the larger portion of exports at 31.7% in 2010. Imports are expected to increase in the wake of a projected global economic recovery in 2015 and beyond.

Discussion

One might wonder how South Africa's GDP growth rate will decline through 2020 and yet GDP per capita increase during the same time period. The only way this can be is if the the death rate is highest among the lowest wage earners or the poor. It seems self-evident that HIV/AIDS and other health risks are greatest among the poorer members in the South African society.

South Africa Economic Indicators

Health Conditions

As reported above, South Africa is plagued by one of the largest HIV/AIDS prevalence rates in the world. According graphs and tables presented below, the problem has gotten slighlty better since 2005 when the prevalence rate peaked at near 12%. Yet, due in large part to the infection of pregnant women, the prevalence rate is expected to persist above 10% through the year 2020. Consequently, HIV/AIDS related deaths will conitnue to rise in South Africa until the year 2020.

(Note: HIV/AIDS is not a source of death. It is a disease that attacks a person's immune system, stripping the immune system of its abilities to fight other infections. Most HIV/AIDS victims die of tuberculosis (TB), pneumonia, or other infections that attack the body.)

South Africa Health Conditions

South Africa Social Conditions

Relative Freedom

Freedom House is an organization that tracks the relative freedom of a people in a given country. The Freedom House Index rates countries on a scale from 2-14 with 14 indicating the most free. Since the end of apartheid in 1994, the relative freedom of South African citizens has increased dramatically (see the chart below).

Gender Empowerment

The Gender Empowerment Index was first introduced as a global social indicator in 2010. The chart presented below shows that women in South Africa enjoy relative empowerment.

Poverty Under $2 per Day

The number of South Africans living on less than $2 per day was 8 million (or 16%) in 2010. This number is relatively impressive until one considers that 60% of black South Africans fall under this line. The IFs System projects the poverty gap to gradually decrease over the next 20 years.

South Africa Social Conditions

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Comments 2 comments

MartieCoetser profile image

MartieCoetser 4 years ago from South Africa

"The passage of a new, controversial media law that restricts freedom of the press as well as the rise in corruption and alleged interference with the judicial process have also undermined confidence in the current administration."

This is indeed true. We are holding our breath.

This is an excellent article about South Africa and I've detected no false assumptions. Are you from South Africa? If not, your research were done with remarkable insight.


ecoggins profile image

ecoggins 4 years ago from Corona, California Author

Thank you MartieCoetser. You are very quick. I barely posted this and found your comment. I appreciate your positive feedback. I am not from South Africa. The sources spoken of in the opening paragraph were very thorough and helpful. All the best to you.

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