South Africa’s economy is characterized by extreme differences between the white population-controlled, mainly urban-based modern sector and the traditional African sector. The modern sector was built around the country’s mineral deposits from the late 1800s. The manufacturing industry developed from the 1920s and has passed commercial agriculture in importance. With extensive and varied natural resources, good communications, a well-developed infrastructure and a sophisticated banking and financial system, the South African business community has features in common with high-income countries. The modern economy is mainly concentrated in four centers: Cape Town, Port Elizabeth, Durban and Pretoria/Johannesburg.
Economic development was particularly rapid during the 1960s, but with the exception of the shorter upswing, a prolonged recession began in the early 1970s. The underlying factors were several, including the international oil price rises, South Africa’s isolation as a result of its apartheid policy, rising costs for maintaining the apartheid system and the management of Namibia, and declining investment and increasing capital outflow.
The economic stagnation led to new thinking towards the end of the 1980s, with liberalization and privatization as a prominent feature. Economic growth regained momentum after the end of the apartheid system and the first free elections in 1994, mainly with the help of foreign investment. During the late 1990s, the country again experienced an economic decline. As a result of falling world market prices for minerals, mainly gold, many mines had to be closed and as a result unemployment rose sharply. This also affected several of South Africa’s neighboring countries, as many of the miners dismissed were guest workers. During the 1990s, the country’s economy developed positively and the country received falling inflation, budget surpluses and financial stability, but they are still struggling with high unemployment and the promised privatization has encountered strong protests. Furthermore, the rapidly growing tourism industry has become an increasingly important element of the economy.
South Africa is hard hit by the global financial crisis in 2008 as the country went into recession, but thanks to a growing manufacturing industry and the boom in the construction industry ahead of the hosting of the 2010 Soccer World Cup, the country managed to recover fairly quickly.
Agriculture is characterized by far-reaching dualism. The land laws of 1913 and 1936 divided 87 percent of the country’s land, including its best agricultural land, for white settlement and 13 percent for the African majority. The laws were reformed in 1991, and the ANC-led government that took office in 1994 has had comprehensive land reform as one of the key points of its reconstruction and development program. However, the reform has encountered several protests and implementation is slow.
Despite the importance of the mining industry, South Africa is very much an agricultural country. Changing topography and varying climate zones enable the cultivation of virtually all crops, fruits and vegetables, and through specialization, mechanization and extensive investments, a competitive agriculture has been developed. However, with irregular rainfall and in the absence of major rivers and lakes for irrigation, recurrent dry periods are a difficult problem.
The main crop is maize, which is the staple food of the African population and is grown on about 40 percent of the area cultivated. Other important crops are wheat and sugar cane. Fruits and vegetables are grown throughout the country for domestic consumption and exports. The winery concentrated in the Western Cape Province has recently become a significant export industry. Livestock and sheep breeding are also important.
After unrestrained logging of South Africa’s forests, the state took over large areas for forest management and planting of imported conifers during the 1930s. Somewhat later, private interests began to invest in forestry, mainly for the cultivation of fast-growing pine, eucalyptus and acacia. The country has thus become self-sufficient in terms of the needs of the mining and construction industry, and since 1985 paper and pulp has been exported.
Although South Africa has one of the richest fishing waters in the world, the fishing industry is little developed. Since the mid-1990s, more than 500,000 tonnes have been caught per year; In 2007, the catch was 680,000 tonnes. About 90 percent of the catch is taken in the nutrient-rich waters around Cape Town and along the Atlantic coast, where anchovy, sardine, herring, hake and seaweed have the greatest commercial value. They are used for domestic consumption, in the form of fishmeal or as food fish. Lobsters are also fished here, of which about 75 percent are exported.
South Africa’s diverse and extensive mineral resources put the country’s other natural resources in the shade. The ore is found in a wide belt from the west coast through the Free State Province to Transvaal, where the most important mines are concentrated in the Witwatersrand area. South and east of this belt, South Africa has coal reserves that are among the world’s largest.
In 2010, the mining industry’s share of GDP was 9 percent, and in the same year it accounted for just over 2 percent of employment. However, a large part of the labor force consists of contract workers from neighboring countries, mainly Lesotho, Mozambique and Swaziland.
South Africa is the world’s largest producer of gold, and the country is estimated to have almost half of the world’s known gold reserves. However, since 1970, when production exceeded 1,000 tonnes, the richest deposits have been exhausted, the gold content of the ore has become ever lower and the deposits have become increasingly expensive to mine. As a result, production has declined since the late 1990s. At several gold mines, silver and uranium are extracted as important by-products. South Africa is the world’s leading producer of light and heavy platinum metals, which, in addition to gold, coal and diamonds, account for a significant share of the country’s export revenue.
Iron mining developed rapidly in the 1970s, since the export port of Saldanha Bay was completed. In 2010, production amounted to 55 million tonnes, of which about 81 percent goes on exports.
South Africa has more than 70 percent of the world’s known chromium ore reserves, the world’s largest manganese deposits, and about 30 percent of the world’s vanadium reserves. These metals are mainly used in the country’s steel industry but also export. A number of other metals are mined. This includes copper, lead, tin, zinc and titanium, but also industrial minerals and rocks such as asbestos, flux, quartz, granite and marble.
South Africa is the country in Africa that has the largest electricity consumption. This is despite the fact that only 70 percent of the population has access to electricity. The electricity demand is mainly covered by coal and hydroelectric power stations, but the country also has a nuclear power plant. In 2009, the country’s coal production reached 250 million tonnes. A large part of the production goes to the state-owned electricity company Eskom, which accounts for over 90 percent of electricity generation. In 2007, the country was hit by major problems in the electricity supply and both private individuals and companies had daily interruptions in the supply. The following year, the mining industry was forced to stop production for a few days due to power outages. The event highlighted the country’s shortcomings with too low capacity and poorly maintained infrastructure.
South Africa imports large quantities of oil to meet its oil needs. The country’s only nuclear power plant was built in 1976 at Koeberg 30 km north of Cape Town. It has a capacity of 1,800 MW.
South Africa has a broad industrial base, based on the country’s rich natural resources. Like the economy in general, the South African industry is characterized by cartel formation and a high degree of monopolization.
During the 1960s, the industry expanded greatly, and the sector’s contribution to GDP increased by an average of 10 percent per year. The latter half of the 1980s saw a decline in the industry as a result of international sanctions, low domestic demand, rising production costs and declining investments. When the country was opened to the outside world in the 1990s, the industry was restructured to be able to act on the international market.
Today’s industry is dominated by the automotive industry (passenger and truck assembly industries) and the steel and aluminum industries. Many industries have been developed in connection with the mining industry, such as explosives, chemical and machinery. Furthermore, there are a large number of food and textile industries that primarily produce the domestic market.
Over 50 percent of industrial production is concentrated in the Gauteng province. Other significant industrial areas are Cape Town with suburbs, Durban – Pinetown – Pietermaritzburg and Port Elizabeth – Uitenhage.
Between 1973 and 1994, South Africa’s foreign trade was subject to international restrictions, which posed major problems for the trade-dependent economy. South Africa’s main export product is gold; the country is the world’s largest gold exporter. Other prominent export products are a range of base metals and minerals, including iron and steel, coal, manganese, chromium and titanium. Diamonds and platinum are also exported.
Except during periods of extreme drought, South Africa is a net exporter of food, with fruits, vegetables, sugar, wool and wine as prominent products. South Africa’s imports are dominated by workshop products. Chemical products and oil are also important import products. According to Countryaah, the most important trading partners are Germany, China, the USA and Japan. An increasing share of South Africa’s exports also goes to other African countries.
Tourism and gastronomy
Tourism is an important and growing part of South Africa’s business community. The country’s democratization has meant a lot to tourism, and especially after the first free elections in 1994, the number of foreign visitors has steadily increased. In 2012, the country was visited by just over 9 million, of which two thirds came from the rest of Africa and the remainder came mainly from the UK, USA, Germany and the Netherlands. South Africa’s pleasant climate, beautiful scenery and exciting wildlife make tourism expected to increase further.
The biggest destinations are the big cities, especially Cape Town, and the wild and well-equipped nature reserves, where Kruger National Park is a common destination.
The many peoples, the great distances, the good pastures and the fertile soil have provided a very varied kitchen. Maize meal (maize) and stews or pots of mostly dried meat are the everyday food of those who lived farthest in the country, but today the many influences flow together so that Dutch, British, French, Indian, Chinese and Malay are as indigenous as the original.
The meat – sheep, lamb, ostrich, ox and antelope – must previously be able to be preserved and transported, and even today, dishes such as biltong (dried, salted and spiced meat), stew (meat stew with vegetables cooked for a very long time) and bobotie (meat stew) with curry, fruit and rice) on this procedure, as well as the common sausage (boerwors). Fruit is used in conjunction with meat, for example in sosaties (lamb skewers with apricots). Devices with names like milk teri (vanilla pudding), sweet cookies (spicy cakes), soutribbetjies (salted sheep ribs) and greased chicken(chicken in chili sauce) is reminiscent of Dutch colonization; the many recipes for pickled and dried fish that remain in the inland are reminiscent of the knowledge of the Malays in conservation. The Scots who settled in binnieland (inland) preserved fruits and berries (mulberries, apricots, figs, gooseberries, apples, citrus, nectarines), also it is a living tradition. Along the coasts are fresh fish and seafood, which are also happy to be served in combination with fruit.
International, often French, Swedish and Italian, restaurateurs have established themselves in the larger cities to scoop out the cornucopia of exquisite ingredients offered by the country. The South African grant is precisely the use of fruit in surprisingly European combinations; also the noticeable widening in the range of meat varieties (ostrich, antelope) in recent years has been influenced by South Africa’s great success in international gastronomy.