South Africa Country Report

SOUTH AFRICA COUNTRY REPORT

Prince Muraguri, Simón Ortiz and David Soler

MAY 2018

TABLE OF CONTENTS CHAPTER 1: COUNTRY OVERVIEW ...... 6 Background ...... 6 A Chronology of Key Events in South Africa ...... 7 CHAPTER 2 - POPULATION AND EMPLOYMENT ...... 13 Demographic Profile ...... 13 Population ...... 15 Population Growth Rate ...... 15 Population Facts ...... 16 Population by City ...... 17 Population Composition by Sex ...... 17 Age Structure ...... 18 Dependency Ratios ...... 19 Languages ...... 21 Immigration ...... 21 Labour Force and Employment ...... 22 Total Labour Force ...... 22 Male vs Female Labour Force ...... 23 Labour Force Participation Rate ...... 23 Unemployment Rate ...... 24 Employment by Industry ...... 25 Employment by Occupation ...... 26 Employment By Province ...... 26 Unemployment By Province ...... 27 CHAPTER 3: GROSS DOMESTIC PRODUCT ...... 28 Economy Overview ...... 28 Gross Domestic Product ...... 29 GDP Value ...... 29 GDP Growth Rate ...... 30 Other Descriptors of the Gross Domestic Product ...... 32 GDP By Activity ...... 34 National Accounts - Components of the Gross Domestic Product by Expenditure Approach ...... 36 CHAPTER 4: TRADE ...... 40 Trade Overview ...... 40 Exports ...... 41 Main Export Products...... 41 Main Export Partners ...... 42 Value of exports of goods and services ...... 42 Percentage changes in exports of goods and services ...... 43 Value of exports as a percentage of GDP ...... 43 Imports ...... 44 Main Import Products...... 44 Main Import Partners ...... 44 Value of Imports of goods and services ...... 45 Percentage changes in exports of goods and services ...... 45 Imports as a percentage of GDP ...... 46 South Africa Trade With the European Union ...... 46 Current Account ...... 47 Capital Account ...... 48 CHAPTER 5: GOVERNMENT FINANCES ...... 49 Revenues ...... 49 Total Government Revenue ...... 49 Revenue as a percentage of GDP ...... 49 Expenditure ...... 50 General Government Expenditure ...... 50 Expenditure as a Percentage of GDP ...... 50 Comparing Revenue and Expenditure ...... 51 Government Borrowing ...... 51 Net Government Debt ...... 51 Debt as a percentage of GDP ...... 52 Net Government Borrowing / Lending ...... 52 CHAPTER 5: FINANCIAL MARKETS ...... 53 Capital Markets ...... 53 Main Stock Market Index Performance (JSE Index) ...... 53 Stock Market Capitalization in South Africa ...... 53 Market Capitalization as a percentage of GDP ...... 54 Number of Listed Companies ...... 54 Total Value of Stock Traded ...... 55 Stock traded as a percentage of GDP ...... 55 Turnover Ratio ...... 56 Domestic and Foreign Ownership of Asset in the Johannesburg Stock Exchange ...... 57 Ownership of top 25 Companies in JSE ...... 57 Money Markets ...... 58 CHAPTER 6: DOING BUSINESS IN SOUTH AFRICA ...... 59 Political Overview ...... 61 Economic Overview ...... 61 Key Economic Developments ...... 61 Business Environment ...... 61 Human Rights ...... 61 Bribery and Corruption ...... 62 Security ...... 62 Intellectual Property ...... 62 CHAPTER 7: CORRUPTION ...... 64 Introduction ...... 64 Most Corrupt Sectors ...... 65 Bribery in South Africa ...... 65 Corruption and Education ...... 66 CHAPTER 8: DEMOCRACY & ELECTIONS ...... 68 Introduction ...... 68 Term Limits ...... 68 Elections ...... 69 CHAPTER 9: CIVIL LIBERTIES ...... 71 Media...... 71 Political Participation and Freedom of Assembly and Expression ...... 71 Human rights ...... 72 CHAPTER 10: SECURITY AND TERRORISM...... 73 Introduction ...... 73 Social Unrest ...... 73 Terrorism ...... 74 CHAPTER 11: WATER SCARCITY ...... 76 Backround ...... 76 Cape Town Water Crisis ...... 76 National Situation ...... 78 CHAPTER 12: RACE ...... 80 Economic Situation ...... 80 Race Relations ...... 82 CHAPTER 13: LAND REFORM ...... 83 Background ...... 83 Land State Audit ...... 83 Role of Politics ...... 84 Recent Example of Zimbabwe ...... 85 Bibliografía ...... 86

CHAPTER 1: COUNTRY OVERVIEW

Background South Africa is home to some of the world’s oldest human fossils, and during the modern era the region was settled by Khoisan and Bantu peoples. Dutch traders landed at the southern tip of modern day South Africa in 1652 and established a stopover point on the spice route between the Netherlands and the Far East, founding the city of Cape Town.

Figure 1: South Africa position in whites-only referendum. In 1948, the Africa Afrikaner-dominated National Party was voted into power and instituted a policy of apartheid - the separate development of the races - which favored the white minority at the expense of the black majority. The African National Congress (ANC) led the opposition to apartheid and many top ANC leaders, such as Nelson MANDELA, spent decades in South Africa's prisons. Internal protests and insurgency, as well as boycotts by some Western nations and institutions, led to the regime's eventual willingness to negotiate a peaceful transition to majority rule. Source: WikiMedia Commons The first multi-racial elections in 1994 After the British seized the Cape of following the end of apartheid ushered Good Hope area in 1806, many of the in majority rule under an ANC-led Dutch settlers (Afrikaners, called government. South Africa has since "Boers" (farmers) by the British) struggled to address apartheid-era trekked north to found their own imbalances in decent housing, education, republics, Transvaal and Orange Free and health care. Jacob ZUMA became State. The discovery of diamonds (1867) president in 2009 and was reelected in and gold (1886) spurred wealth and 2014, but was forced to resign in immigration and intensified the February 2018 after numerous subjugation of the native inhabitants. corruption scandals and gains by The Afrikaners resisted British opposition parties in municipal elections encroachments but were defeated in the in 2016. His successor, Cyril Second South African War (1899-1902); RAMAPHOSA, has pledged to crack however, the British and the Afrikaners, down on corruption and shore up state- ruled together beginning in 1910 under owned enterprises, and is the ANC’s the Union of South Africa, which likely candidate for May 2019 national became a republic in 1961 after a elections. A Chronology of Key Events in South Africa Extracted from BBC News South Africa Country Profile

4th century - Migrants from the north 1877 - Britain annexes the Transvaal. settle, joining the indigenous San and 1879 Khoikhoi people. - British defeat the Zulus in Natal. 1880-81 1480s - Portuguese navigator - Boers rebel against the Bartholomeu Dias is the first European British, sparking the first Anglo-Boer to travel round the southern tip of War. Conflict ends with a negotiated Africa. peace. Transvaal is restored as a republic. 1497 - Portuguese explorer Vasco da Mid 1880s Gama lands on Natal coast. - Gold is discovered in the Transvaal, triggering the gold rush. 1652 - Jan van Riebeeck, representing 1899 the Dutch East India Company, founds - British troops gather on the the Cape Colony at Table Bay. Transvaal border and ignore an ultimatum to disperse. The second 1795 - British forces seize Cape Colony Anglo-Boer War begins. from the Netherlands. Territory is 1902 returned to the Dutch in 1803; ceded to - Treaty of Vereeniging ends the the British in 1806. second Anglo-Boer War. The Transvaal and Orange Free State are made self- 1816-1826 - Shaka Zulu founds and governing colonies of the British expands the Zulu empire, creates a Empire. formidable fighting force. 1910 - Formation of Union of South 1835-1840 - Boers leave Cape Colony Africa by former British colonies of the in the 'Great Trek' and found the Orange Cape and Natal, and the Boer republics Free State and the Transvaal. of Transvaal, and Orange Free State.

1852 - British grant limited self- 1912 - Native National Congress government to the Transvaal. founded, later renamed the African National Congress (ANC). 1856 - Natal separates from the Cape Colony. 1913 - Land Act introduced to prevent blacks, except those living in Cape Late 1850s - Boers proclaim the Province, from buying land outside Transvaal a republic. reserves. 1860-1911 - Arrival of thousands of 1914 - National Party founded. labourers and traders from India, forebears of the majority of South 1918 - Secret Broederbond Africa's current Indian population. (brotherhood) established to advance the Afrikaner cause. 1867 - Diamonds discovered at Kimberley. 1919 - South West Africa (Namibia) 1976 - More than 600 killed in clashes comes under South African between black protesters and security administration. forces during uprising which starts in Soweto. 1934 - The Union of South Africa parliament enacts the Status of the 1976: Black anger boils over Union Act, which declares the country 1984-89 to be "a sovereign independent state". - Township revolt, state of The move followed on from Britain's emergency. passing of the Statute of Westminster in 1989 - FW de Klerk replaces PW Botha 1931, which removed the last vestiges as president, meets Mandela. Public of British legal authority over South facilities desegregated. Many ANC Africa. activists freed.

Apartheid set in law 1990 - ANC unbanned, Mandela 1948 - Policy of apartheid (separateness) released after 27 years in prison. adopted when National Party (NP) takes Namibia becomes independent. power. 1991 - Start of multi-party talks. De 1950 - Population classified by race. Klerk repeals remaining apartheid laws, Group Areas Act passed to segregate international sanctions lifted. Major blacks and whites. Communist Party fighting between ANC and Zulu Inkatha banned. ANC responds with campaign movement. of civil disobedience, led by Nelson 1993 - Agreement on interim Mandela. constitution.

1960 - Seventy black demonstrators 1994 April - ANC wins first non-racial killed at Sharpeville. ANC banned. elections. Mandela becomes president, 1961 - South Africa declared a republic, Government of National Unity formed, leaves the Commonwealth. Mandela Commonwealth membership restored, heads ANC's new military wing, which remaining sanctions lifted. South Africa launches sabotage campaign. takes seat in UN General Assembly after 20-year absence. 1960s - International pressure against government begins, South Africa Seeking Truth excluded from Olympic Games. 1996 - Truth and Reconciliation 1964 - ANC leader Nelson Mandela Commission chaired by Archbishop sentenced to life imprisonment. Desmond Tutu begins hearings on human rights crimes committed by 1966 September - Prime Minister former government and liberation Hendrik Verwoerd assassinated. movements during apartheid era.

1970s - More than 3 million people 1996 - Parliament adopts new forcibly resettled in black 'homelands'. constitution. National Party withdraws from coalition, saying it is being 2002 April - Court acquits Dr Wouter ignored. Basson - dubbed "Dr Death" - who ran apartheid-era germ warfare programme. 1998 - Truth and Reconciliation Basson had faced charges of murder and Commission report brands apartheid a conspiracy. ANC condemns verdict. crime against humanity and finds the ANC accountable for human rights 2002 July - Constitutional court orders abuses. government to provide key anti-Aids drug at all public hospitals. Government 1999 - ANC wins general elections, had argued drug was too costly. Thabo Mbeki takes over as president. 2002 October - Bomb explosions in 2000 December - ANC prevails in local Soweto and a blast near Pretoria are elections. Recently-formed Democratic thought to be the work of right-wing Alliance captures nearly a quarter of the extremists. Separately, police charge 17 votes. The Inkatha Freedom Party wins right-wingers with plotting against the 9%. state. 2001 April - 39 multi-national 2003 May - Walter Sisulu, a key figure pharmaceutical companies halt a legal in the anti-apartheid struggle, dies aged battle to stop South Africa importing 91. Thousands gather to pay their last generic Aids drugs. The decision is respects. hailed as a victory for the world's poorest countries in their efforts to 2003 November - Government approves import cheaper drugs to combat the major programme to treat and tackle virus. HIV/Aids. It envisages network of drug- distributon centres and preventative 2001 May - An official panel considers programmes. Cabinet had previously allegations of corruption surrounding a refused to provide anti-Aids medicine 1999 arms deal involving British, via public health system. French, German, Italian, Swedish and South African firms. In November the 2004 April - Ruling ANC wins panel clears the government of unlawful landslide election victory, gaining conduct. nearly 70% of votes. Thabo Mbeki begins a second term as president. 2001 September - Durban hosts UN Inkatha Freedom Party leader race conference. Mangosuthu Buthelezi is dropped from 2001 December - High Court rules that the cabinet. pregnant women must be given Aids 2005 March - Investigators exhume the drugs to help prevent transmission of first bodies in a Truth and the virus to their babies. Reconciliation Commission Image copyright AFP Image caption investigation into the fates of hundreds Johannsburg - known as Jozi, Jo'burg or of people who disappeared in the eGoli - is South Africa's largest city and apartheid era. economic hub 2005 May - Geographical names 2007 June - Hundreds of thousands of committee recommends that the culture public-sector workers take part in the minister should approve a name change biggest strike since the end of apartheid. for the capital from Pretoria to Tshwane. The strike lasts for four weeks and causes widespread disruption to schools, Zuma sacked hospitals and public transport. 2005 June - President Mbeki sacks his 2007 December - Zuma is elected deputy, Jacob Zuma, in the aftermath of chairman of the ANC, placing him in a a corruption case. strong position to become the next 2005 August - Around 100,000 gold president. Prosecutors bring new miners strike over pay, bringing the corruption charges against him. industry to a standstill. 2008 May - Wave of violence directed 2006 May - Former deputy president at foreigners hits townships across the Jacob Zuma is acquitted of rape charges country. Dozens of people die and by the High Court in Johannesburg. He thousands of Zimbabweans, Malawians is reinstated as deputy leader of the and Mozambicans return home. governing African National Congress. 2008 September - A judge throws out a 2006 June - Chinese Premier Wen corruption case against ruling ANC Jiabao visits and promises to limit party chief Jacob Zuma, opening the clothing exports to help South Africa's way for him to stand as the country's ailing textile industry. president in 2009.

2006 September - Corruption charges New party launched against former deputy president Zuma 2008 December - A new political party are dismissed, boosting his bid for the is launched in Bloemfontein, in the first presidency. real challenge to the governing ANC. 2006 December - South Africa becomes The Congress of the People - or Cope - the first African country, and the fifth in is made up largely of defectors from the the world, to allow same-sex unions. ANC and is headed by former defence minister Mosiuoa Lekota. 2007 April - President Mbeki, often accused of turning a blind eye to crime, 2009 January - Appeals court rules that urges South Africans to join forces to state prosecutors can resurrect their bring rapists, drug dealers and corrupt corruption case against ANC leader officials to justice. Jacob Zuma, opening the way for Mr Zuma's trial to be resumed, just months 2007 May - Cape Town mayor Helen before general election. Zille is elected as new leader of the main opposition Democratic Alliance 2009 April - Public prosecutors drop (DA). corruption case against Jacob Zuma.

Mass Strike ANC wins general election. 2009 May - Parliament elects Jacob 270 miners after a public outcry, and the Zuma as president. government sets up a judicial commission of inquiry in October. Economy goes into recession for first time in 17 years. 2012 September - Former ANC youth leader Julius Malema is charged with 2009 July - Township residents money laundering over a government complaining about poor living tender awarded to a company partly conditions mount violent protests. owned by his family trust. Mr Malema 2010 June - South Africa hosts the says the case is a politically motivated World Cup football tournament. attempt to silence his campaign against President Zuma, in particular over the 2010 August - Civil servants stage Marikana shootings. nation-wide strike. 2012 October - Platinum mine owner 2011 May - Local elections, with Amplats fires 12,000 striking miners as opposition Democratic Alliance nearly wave of wildcat strikes shows little sign doubling its share of the vote since the of abating. last poll. 2013 December - Nelson Mandela dies, 2011 October - President Zuma sacks aged 95. Tributes to "the father of the two ministers accused of corruption. nation" flood in from throughout the world. Trouble within ANC Fall of Zuma 2011 November - The ANC suspends its controversial and influential youth 2013 March - The anti-corruption leader, Julius Malema, for five years for ombudsman heavily criticises President bringing the party into disrepute. Zuma for a twenty million dollar upgrade to his private home. National Assembly overwhelmingly approves information bill accused by 2014 May - Ruling ANC party wins a critics of posing a threat to freedom of majority in general elections. speech. The ANC says it is needed to safeguard national security. 2014 October - Paralympics athlete Oscar Pistorius - nicknamed the ''Blade 2012 July - Member of white extremist Runner'' because of his prosthetic limbs group found guilty of plotting to kill - is sentenced to five years in jail for Mandela and trying to overthrow killing his girlfriend. government. 2015 February - President Zuma 2012 August-October - Police open fire announces plans to limit farm sizes and on workers at a platinum mine in ban foreign farmland-ownership in an Marikana, killing at least 34 people, and attempt to redistribute land to black leaving at least 78 injured and arresting farmers - a longstanding ANC pledge. more than 200 others. Prosecutors drop murder charges in September against Power utility Eskom rations electricity 2016 March - Supreme Court rules to prevent power cuts, blaming years of President Zuma violated the constitution poor maintenance. for not repaying public money used to improve his private residence. 2015 March-April - A spate of anti- immigrant attacks leaves several people 2017 April - President Zuma dismisses dead. widely-respected Finance Minister Pravin Gordhan, leading to the country's 2015 June - Government receives credit rating being cut to junk status. unwelcome international attention over allegations of bribery to disgraced 2018 February - President Zuma resigns international footballing body Fifa to under pressure from the governing ANC secure 2010 World Cup, and allowing over corruption charges, which chooses Sudanese President Omar al-Bashir to veteran trade unionist and businessman visit despite International Criminal Cyril Ramaphosa as his successor. Court arrest warrant over genocide and war-crimes charges.

CHAPTER 2 - POPULATION AND EMPLOYMENT

Demographic Profile South Africa’s youthful population is gradually aging, as the country’s total fertility rate (TFR) has declined dramatically from about 6 children per woman in the 1960s to roughly 2.2 in 2014. This pattern is similar to fertility trends in South Asia, the Middle East, and North Africa, and sets South Africa apart from the rest of sub-Saharan Africa, where the average TFR remains higher than other regions of the world. Today, South Africa’s decreasing number of reproductive age women is having fewer children, as women increase their educational attainment, workforce participation, and use of family planning methods; delay marriage; and opt for smaller families.

As the proportion of working-age South Africans has grown relative to children and the elderly, South Africa has been unable to achieve a demographic dividend because persistent high unemployment and the prevalence of HIV/AIDs have created a larger- than-normal dependent population. HIV/AIDS was also responsible for South Africa’s average life expectancy plunging to less than 43 years in 2008; it has rebounded to 63 years as of 2017. HIV/AIDS continues to be a serious public health threat, although awareness-raising campaigns and the wider availability of anti-retroviral drugs is stabilizing the number of new cases, enabling infected individuals to live longer, healthier lives, and reducing mother-child transmissions.

Migration to South Africa began in the second half of the 17th century when traders from the Dutch East India Company settled in the Cape and started using slaves from South and southeast Asia (mainly from India but also from present-day Indonesia, Bangladesh, Sri Lanka, and Malaysia) and southeast Africa (Madagascar and Mozambique) as farm laborers and, to a lesser extent, as domestic servants. The Indian subcontinent remained the Cape Colony’s main source of slaves in the early 18th century, while slaves were increasingly obtained from southeast Africa in the latter part of the 18th century and into the 19th century under British rule.

After slavery was completely abolished in the British Empire in 1838, South Africa’s colonists turned to temporary African migrants and indentured labor through agreements with India and later China, countries that were anxious to export workers to alleviate domestic poverty and overpopulation. Of the more than 150,000 indentured Indian laborers hired to work in Natal’s sugar plantations between 1860 and 1911, most exercised the right as British subjects to remain permanently (a small number of Indian immigrants came freely as merchants). Because of growing resentment toward Indian workers, the 63,000 indentured Chinese workers who mined gold in Transvaal between 1904 and 1911 were under more restrictive contracts and generally were forced to return to their homeland.

In the late 19th century and nearly the entire 20th century, South Africa’s then British colonies’ and Dutch states’ enforced selective immigration policies that welcomed “assimilable” white Europeans as permanent residents but excluded or restricted other immigrants. Following the Union of South Africa’s passage of a law in 1913 prohibiting Asian and other non-white immigrants and its elimination of the indenture system in 1917, temporary African contract laborers from neighboring countries became the dominant source of labor in the burgeoning mining industries. Others worked in agriculture and smaller numbers in manufacturing, domestic service, transportation, and construction. Throughout the 20th century, at least 40% of South Africa’s miners were foreigners; the numbers peaked at over 80% in the late 1960s. Mozambique, Lesotho, Botswana, and Swaziland were the primary sources of miners, and Malawi and Zimbabwe were periodic suppliers.

Under apartheid, a “two gates” migration policy focused on policing and deporting illegal migrants rather than on managing migration to meet South Africa’s development needs. The exclusionary 1991 Aliens Control Act limited labor recruitment to the highly skilled as defined by the ruling white minority, while bilateral labor agreements provided exemptions that enabled the influential mining industry and, to a lesser extent, commercial farms, to hire temporary, low-paid workers from neighboring states. Illegal African migrants were often tacitly allowed to work for low pay in other sectors but were always under threat of deportation.

The abolishment of apartheid in 1994 led to the development of a new inclusive national identity and the strengthening of the country’s restrictive immigration policy. Despite South Africa’s protectionist approach to immigration, the downsizing and closing of mines, and rising unemployment, migrants from across the continent believed that the country held work opportunities. Fewer African labor migrants were issued temporary work permits and, instead, increasingly entered South Africa with visitors’ permits or came illegally, which drove growth in cross-border trade and the informal job market. A new wave of Asian immigrants has also arrived over the last two decades, many operating small retail businesses.

In the post-apartheid period, increasing numbers of highly skilled white workers emigrated, citing dissatisfaction with the political situation, crime, poor services, and a reduced quality of life. The 2002 Immigration Act and later amendments were intended to facilitate the temporary migration of skilled foreign labor to fill labor shortages, but instead the legislation continues to create regulatory obstacles. Although the education system has improved and brain drain has slowed in the wake of the 2008 global financial crisis, South Africa continues to face skills shortages in several key sectors, such as health care and technology.

South Africa’s stability and economic growth has acted as a magnet for refugees and asylum seekers from nearby countries, despite the prevalence of discrimination and xenophobic violence. Refugees have included an estimated 350,000 Mozambicans during its 1980s civil war and, more recently, several thousand Somalis, Congolese, and Ethiopians. Nearly all of the tens of thousands of Zimbabweans who have applied for asylum in South Africa have been categorized as economic migrants and denied refuge.

(Central Intelligence Agency, 2018) Population The total population in South Africa as recorded by the World Bank Development indicators stood at 56 million in 2016. Current estimates of the population in 2018 as provided by the United Nations indicate that the population of South Africa stood at 57,286,091 million as of May 2018. South Africa’s population therefore represents about 0.75% of the total world population.

Worldometers forecasts the population of South Africa to stand at 64,465,553 by the year 2030, and at 72,754,583 by the year 2050. (Worldometers, 2018)

South Africa Total Population (1960-2016) 60,000,000

1980: 29,760,471 2006: 45,728,315 50,000,000 2016: 56,015,473

40,000,000 Population

30,000,000

20,000,000

10,000,000 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators 2018

Population Growth Rate The population growth rate in South Africa has been on a general downward trend. As can be seen in the chart below, the growth rate reduced from 2.59% in 1960 to 1.30% by 2016.

South Africa Population Growth Rate (1960-2016)

3.00

2.75 1960: 2.59% 1980: 2.53% 2.50 2000: 1.47% 2016: 1.30% 2.25

Rate 2.00

1.75

1.50

1.25

1.00 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators This reduced population growth has mostly been driven by a declining Total Fertility Rate (TFR) - from 6 children per woman in the 1960s to roughly 2.2 in 2014. The population growth rate is expected to reduce further in coming years as the more families continue to employ family planning methods, as well as more active participation of women in the labour force and formal employment.

Population Facts  South Africa ranks number 25 in the list of countries by population.  The population density in South Africa is 47 people per square kilometer  The total land area in South Africa is 1,213,090 km2 (486,376 mi2)  62.9% of the population in South Africa is urban (36,109,167 people in 2018)  The median age in South Africa is 27.1 years (male 26.9 years / female 27.3 years)  Birth rate: 20.2 births / 1,000 population (2017 est. )  Death rate: 9.4 deaths / 1,000 population (2017 est. )  Net migration rate: -0.9 migrant(s) / 1,000 population (2017 est.)  Population distribution: The population concentrated along the southern and southeastern coast, and inland around Pretoria,; the eastern half of the country is more densely populated than the west.  Rate of urbanization: 1.33% annual rate of change (2015-20 est.)  Major urban areas population: Johannesburg (includes Ekurhuleni) 9.399 million; Cape Town (legislative capital) 3.66 million; Durban 2.901 million; PRETORIA (capital) 2.059 million; Port Elizabeth 1.179 million; Vereeniging 1.155 million (2015)

Source: worldpopulationreview.com

Population by City The chart below shows the population of South Africa by largest cities, as obtained from GeoNames1. Cape Town and Durban are the cities with largest population in South Africa.

South Africa Population by City (2018)

3,600,000

3,200,000

2,800,000

2,400,000

Population 2,000,000

1,600,000

1,200,000

800,000

400,000 i n n rg to th rg n n w a u e ria e u o isa o rb b d To u sb zb n e za mb o e D n Sow Preto i Ben e L p n El T a a C h rmarit te East Jo Port e Pi City

Population Composition by Sex The population of South Africa is generally evenly distributed between both male and female genders, although the number of females is slightly more than the number of males in the population. According to the CIA World Factbook, the sex ratio statistics are as follows:

Sex ratio at birth: 1.02 male(s)/female 0-14 years: 1.01 male(s)/female 15-24 years: 0.98 male(s)/female 25-54 years: 1.02 male(s)/female 55-64 years: 0.87 male(s)/female 65 years and over: 0.73 male(s)/female total population: 0.98 male(s)/female (2016 est.)

1 GeoNames: http://www.geonames.org/ZA/largest-cities-in-south-africa.html Male vs Female Population in South Africa (1960-2016) 32,000,000 Female 28,000,000 Male

24,000,000

Population 20,000,000

16,000,000

12,000,000

8,000,000 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators

Age Structure According to the CIA World Factbook, the population of South Africa has the following age structure:

Percentage of total Age Bracket population Male Female

0-14 years 28.27% 7,768,960 7,733,706

15-24 years 17.61% 4,776,096 4,881,962

25-54 years 41.78% 11,589,099 11,323,869

55-64 years 6.66% 1,694,964 1,953,391

65 years and over 5.60% 1,309,597 1,807,968

South Africa has a generally youthful population, with many people forming the working labour force.

Source: CIA World Factbook

Dependency Ratios Total dependency ratio: 52.5

Youth dependency ratio 44.8

Elderly dependency ratio 7.7

Potential support ratio: 12.9

Source: CIA World Factbook (2015 estimates) Age and Race Distribution

According to the latest the national census conducted in South Africa in 2011, the age and race distribution in South Africa was as follows:

Indian Age % of % of % of % of % of All % of Black Colour or Othe grou Blac Colour White Whit Asia other races All African ed other rs p ks ed es ns s Asian 15,100, 29.2 12,702, 31.0 1,311,8 771,18 16.80 258,60 20.10 56,16 20.00 0 14 28.40% – 089 0% 324 0% 11 7 % 2 % 4 % 15 33,904, 65.5 26,502, 64.6 3,085,6 3,165, 68.90 939,37 73.00 211,1 75.30 – 66.90% 64 479 0% 329 0% 84 965 % 9 % 26 % 2,765,9 5.30 1,796,2 4.40 217,90 649,68 14.20 6.90 13,16 4.70 65+ 4.70% 88,949 92 % 85 % 6 6 % % 4 % - - All 51,770, 100 41,000, 4,615,4 4,586, - 1,286, 280,4 - 100 -100% 100 ages 560 % 938 01 838 100% 930 54 100% % % % of 0.54 100% 79.20% 8.92% 8.86% 2.49% SA % Source: South Africa national census 2011 Black Africans were the highest race in the country, comprising about 79% of the total population. Coloured (which means of both black and white origin) was the second race distribution at 8.92%, closely equal to the percentage of white people (8.88%). Asians comprised about 2.49% of the South African population.

In analyzing the distribution of race across the country, we use a map obtained from Statistics South Africa based on the 2011 census. The map shows the dominant population groups in South Africa, according to Census 2011, at electoral ward level. A population group is considered dominant if it makes up more than 50% of the population in a ward, or if it makes up more than 33% and no other group makes up more than 25%.

Black African Coloured Indian or Asian White No group dominant

Source: Statistics South Africa 2011 national census

The white population has experienced a sharp decline over time, due to Emigration and much lower fertility rates. The first census in South Africa in 1911 showed that whites made up 22% of the population; it declined to 16% in 1980, and 8.9% in 2011.

Languages South Africa has eleven official languages:

1. IsiZulu -22.7% 2. IsiXhosa - 16% 3. Afrikaans - 13.5% 4. English language - 9.6% 5. Sepedi - 9.1% 6. Setswana - 8% 7. Sesotho - 7.6% 8. Xitsonga - 4.5% 9. siswati - 2.5% 10. Tshivenda - 2.4% 11. isindebele -2.1%

While all the languages are formally equal, some languages are spoken more than others. According to the 2011 census, the three most spoken first languages are Zulu (22.7%), Xhosa (16.0%), and Afrikaans (13.5%). Despite the fact that English is recognised as the language of commerce and science, it ranked fourth, and was spoken by only 9.6% of South Africans as a first language in 2011.

Immigration South Africa hosts a sizeable refugee and asylum seeker population. According to the World Refugee Survey 2008, published by the U.S. Committee for Refugees and Immigrants, this population numbered approximately 144,700 in 2007 (U.S. Committee for Refugees and Immigrants, 2007). According to the report, groups of refugees and asylum seekers numbering over 171,000 included people from the Democratic Republic of the Congo (26,300), Zimbabwe (18,000) and Somalia (14,100). These populations mainly lived in Johannesburg, Pretoria, Durban, Cape Town, and Port Elizabeth. Many refugees have now also started to work and live in rural areas in provinces such as Mpumalanga and KwaZulu-Natal. Statistics South Africa assumes in some of their calculations that there are less than 2 million immigrants in South Africa. Other institutions, like the police and Médecins Sans Frontières place estimate the figure at 4 million. Immigration data from Statistics South Africa summarizes the immigration based on race as follows:

Year African Asian White 1985-2000 1 135 275 14 476 -304 112 2001-2005 769 038 23 335 -133 782 2006-2010 922 885 34 688 -112 046 2011-2015 1 067 936 40 929 -95 158

Labour Force and Employment In analyzing the labour force and employment statistics in South Africa, we mostly employ data from the World Bank development indicators, together with the Statistics South Africa quarterly labour force survey. Data indicates that South Africa has been facing the challenge of high unemployment rates, whereby the labour markets are not expanding fast enough to absorb the growing population. The unemployment rate in South Africa has been increasing since the 2008/09 recession, reaching alarming levels in 2017 where it was at its highest since 2003 (27.3%). The government is the largest employer in South Africa. Due to political uncertainties especially in 2017, the unemployment rate went further up. The stubbornly high unemployment rate piled more pressure on the African National Congress (ANC) government as it struggleed with low economic growth and rising debt ahead of the party’s conference to pick a new leader to succeed President Jacob Zuma in 2017. After Zuma was replaced by Cyril Ramaphosa in February 2018, the new president said that he would use the National Development Plan as his blueprint for achieving his goal of delivering 3% GDP growth in 2018, rising to 5% by 2023

Total Labour Force

Source: World Bank Development Indicators

Male vs Female Labour Force

Male vs Female Labour force (% of total population): 1990-2017 64

female labour force 60 male labour force

% of total population 52

44 Male Female 40 1990: 60.34% 39.66% 2000: 56.47% 43.53% 2017: 54.99% 45.01% 36 90 92 94 96 98 00 02 04 06 08 10 12 14 16 Year Source: World Bank Development Indicators

Labour Force Participation Rate

Labor force participation rate, total (% of total population age 15+)

Participation Rate

40 94 96 98 00 02 04 06 08 10 12 14 16 Year Source: World Bank Development Indicators

Unemployment Rate Over the past decade, high rates of unemployment have been a major challenge in the South African economy. Data from sources such as the International Monetary Fund, Statistics South Africa (SSA) and the World Bank reveals that the unemployment rate in South Africa stood at 27.32 percent in 2017. This rate represents the highest unemployment rate experienced in the country since 2003, making it a 14-year high. The high unemployment rate in South Africa is attributed to an ongoing drought, low commodity prices and weak demand from South Africa’s main export markets.

According to the World Bank, the 2016 average unemployment rate for all upper middle-income countries was 6.2%. By having an unemployment rate of 25.9% in 2016 and 27.32% in 2017, South Africa unemployment is higher than other African countries also classified by the World Bank as upper-middle-income countries. These include Botswana (18.4%), Gabon (18.5%) and Namibia (25.5%).

South Africa Unemployment Rate (1994-2017)

24 Percentage 22

20 2000: 23.27% 2007: 22.53% 18 2017: 27.32%

Q2/94 Q1/95 Q4/95 Q3/96 Q2/97 Q1/98 Q4/98 Q3/99 Q2/00 Q1/01 Q4/01 Q3/02 Q2/03 Q1/04 Q4/04 Q3/05 Q2/06 Q1/07 Q4/07 Q3/08 Q2/09 Q1/10 Q4/10 Q3/11 Q2/12 Q1/13 Q4/13 Q3/14 Q2/15 Q1/16 Q4/16 Q3/17

Period Source: Reserve Bank of South Africa

The most recent Quarterly Labour Force Survey (2017 Quarter 4) released by Statistics South Africa (SSA) records the following summary of the employment situation in South Africa:

Source: Statistics South Africa 2017 Quarterly Labour Force Survey (Q4 2017)

In analyzing the employment by industry, government remains the biggest employer in South Africa from quarter 4 of 2016 to quarter 4 of 2017 - community and social services, which includes the state, employs the most the most people as can be seen in the table below:

Employment by Industry

Source: Statistics South Africa 2017 Quarterly Labour Force Survey (Q4 2017)

Further analysis of the report reveals that large sections of the South African population suffer from chronic joblessness. Unemployment data from Statistics South Africa reveals that 39% of all unemployed South Africans have never worked before. Among young people this figure is higher - at 60.3%. The numbers also highlight that many young people struggle to find their first job. In contrast, the elderly face the problem of long-term unemployment after they lose their jobs. A greater share of them last worked more than 5 years ago. This share was the highest at 47.4% for the 50-65 year-olds.

Employment by Occupation

Source: Statistics South Africa 2017 Quarterly Labour Force Survey (Q4 2017)

Elementary jobs provide the highest employment in South Africa, followed by sales and services. Between 2016 and 2017, the highest job losses were experienced in clerical and professional fields.

Employment By Province

Source: Statistics South Africa 2017 Quarterly Labour Force Survey (Q4 2017)

The province of Guateng provides the highest employment in South Africa. Gauteng is the smallest province in South Africa, accounting for only 1.5% of the land area. Nevertheless, it is highly urbanised, containing the country's largest city, Johannesburg, its administrative capital, Pretoria, and other large areas such as Midrand and Vanderbijlpark. As of 2017, Gauteng was the most populous province in South Africa with a population of approximately 14,200,000 people according to estimates

Unemployment By Province

Source: Statistics South Africa 2017 Quarterly Labour Force Survey (Q4 2017)

In analyzing the unemployment rate by province, Eastern Cape has the highest unemployment rate among all nine provinces of South Africa. Among the reasons cited by Bobby Stevenson (MPL), the Democratic Alliance's (DA) Eastern Cape Shadow MEC for Finance, is the political uncertainties in Eastern Cape that make investors risk-averse in investing their money in the province, especially in 2017. The provinces of Western Cape and Limpopo have the lowest unemployment rates in South Africa. In 2017, Western Cape was the province that recorded the highest number of new jobs created - 92,000 new jobs were created in Western Cape in the fourth quarter of 2017 alone (Western Cape Government, 2018).

CHAPTER 3: GROSS DOMESTIC PRODUCT

Economy Overview The economy of South Africa is the third largest in Africa, after Nigeria and Egypt. It is one of most industrialized countries in Africa. South Africa is an upper-middle-income economy by the World Bank – one of only four such countries in Africa (alongside Botswana, Gabon and Mauritius). Since 1996, at the end of over twelve years of international sanctions, South Africa's Gross Domestic Product had almost tripled to $400 billion by 2011, but has since fallen to $294.8 billion in 2016 following an ongoing economic recession. Foreign exchange reserves have increased from $3 billion in 1994 to nearly $50 by 2018 billion creating a diversified economy with a growing and sizable middle class, within two decades of ending apartheid. The nation is amongst the G-20, and is the only African member of the group (Global Economic Governance, 2014).

South Africa is a middle-income emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors; and a stock exchange that is Africa’s largest and among the top 20 in the world.

Economic growth has decelerated in recent years, slowing to an estimated 0.7% in 2017. Unemployment, poverty, and inequality - among the highest in the world - remain a challenge. Official unemployment is roughly 27% of the workforce, and runs significantly higher among black youth. Even though the country's modern infrastructure supports a relatively efficient distribution of goods to major urban centers throughout the region, unstable electricity supplies retard growth. Eskom, the state-run power company, is building three new power stations and is installing new power demand management programs to improve power grid reliability but has been plagued with accusations of mismanagement and corruption and faces an increasingly high debt burden.

South Africa's economic policy has focused on controlling inflation while empowering a broader economic base; however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness, and frequent work stoppages due to strike action. The government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas, to increase job growth, and to provide university level-education at affordable prices. Political infighting among South Africa’s ruling party and the volatility of the rand risks economic growth. International investors are concerned about the country’s long-term economic stability; in late 2016, most major international credit ratings agencies downgraded South Africa’s international debt to junk bond status.

(Central Intelligence Agency, 2018)

Gross Domestic Product The economy of South Africa has had mixed phases of growth over time. With the introduction of Dutch settlers in 1652 that had been sent by the Dutch East India Company to establish a provisioning station for passing ships, some of the colonists were set free to pursue commercial farming, leading to the dominance of agriculture in the economy of South Africa.

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 country also entered a period of industrialization during this time, including the organization of the first South African trade unions.

The country 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.

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. The 1994 government inherited an economy wracked by long years of internal conflict and external sanctions.

GDP Value

Source: IMF World Economic Outlook 2017 South Africa, unlike other emerging markets, struggled through the late 2000s recession, and the recovery has been largely led by private and public consumption growth, while export volumes and private investment had yet to fully recover (International Monetary Fund, 2011).

In analyzing the Gross Domestic Product (GDP) data as provided by the World Bank Development Indicators, the GDP value in South Africa was worth 294.84 billion US dollars in 2016. The IMF World Economic Outlook database provides more updated estimates for the GDP - the value is estimated at $361.155 in 2018, and is projected to grow to $419.932 by the year 2022. The GDP value of South Africa represents 0.48 percent of the world economy.

GDP Growth Rate

The figure below describes the GDP growth rate of the South African economy.

Source: IMF World Economic Outlook 2017

According to data obtained from the IMF World Economic Outlook, the GDP growth rate of South Africa averaged 2.26% for the period 1980-2018. The average of the GDP growth rate in the post-apartheid era alone (1994-2018) is 2.73% while the average of the GDP growth in the most recent decade (2008-2018) is 1.61%.The fall in the GDP growth rate over the past decade has mostly been attributed to an economic recession that faces challenges of high unemployment, political turmoil, growing public debt and weakened investor confidence.

Source: Statistics South Africa

The year 2016 had the lowest GDP growth rate since 2009, where the economy expanded by a meager 0.6%.

Comparing the GDP growth of South Africa to that of the Sub-Saharan African region, the GDP growth rate of South Africa has been lower, especially after the 2008/09 financial crisis. The effects were further exacerbated by a terrible drought that reduced agricultural yields in the South African economy.

GDP Growth Rate: South Africa vs SSA (1960-2016)

% 4

-2 Sub-Saharan Africa South Africa -4 65 70 75 80 85 90 95 00 05 10 15

Year Source: World Bank Development Indicators Recent data released by Statistics South Africa in March 2018 indicates that the economy recovered from the sharp contraction in 2016 and begun to expand 2017. Economists from Statistics South Africa are confident that economic growth is expected to continue increasing through 2018 following the end of a drought that had depressed agricultural output, coupled with the introduction of a new government regime under the leadership of President Cyril Ramaphosa. The South African economy grew by 1.3% in 2017, exceeding the National Treasury’s expectation of 1.0% growth in the 2017 financial year.

The latest GDP Statistical Release by Statistics South Africa (Quarter 4 2017) notes the following:

After a wobbly start to 2017, which saw economic activity contract in the first quarter, the economy saw sustained growth for the remainder of the year. The fourth quarter experienced the highest growth rate of 2017, with the economy expanding by 3.1% quarter-on-quarter (seasonally adjusted and annualised). The strengthening in economic activity over 2017 was partly driven by an agriculture industry bouncing back from one of the worst droughts in recent history. A bumper maize crop and recovery in other agricultural commodities saw agriculture production rise by 17.7% in 2017 compared with 2016.

(Statistics South Africa, 2018)

Other Descriptors of the Gross Domestic Product Gross Domestic Product per capita

The GDP per capita of South Africa as provided by the IMF World Economic Outlook database stood at $6,291.72 in 2018. The GDP per capita grew at an average rate of 2.96% between 1980 and 2018. The average growth rate of the GDP per capita reduced to 0.79% between 2008 and 2018.

Source: IMF World Economic Outlook 2017 In comparing the GDP per capita of South Africa to that of other African countries ranked as upper middle income, we observe the following chart:

Source: Author’s computation based on data from IMF World Economic Outlook

GDP By Activity South Africa’s economy has been traditionally rooted in the primary sectors – the result of a wealth of mineral resources and favourable agricultural conditions. Recent decades, however, have seen a structural shift in output. Since the early 1990s, economic growth has been driven mainly by the tertiary sector, which includes wholesale and retail trade, tourism and communications. Now South Africa is moving towards becoming a knowledge-based economy, with a greater focus on technology, e-commerce and financial and other services.

Data from the Reserve Bank of South Africa indicates that the main sectors contributing to the Gross Domestic Product are: (1) finance, insurance, real estate and business services; (2) general government services; (3) wholesale, retail trade, accommodations; (4)manufacturing; and (5) transport storage and accommodation.

Source: South Africa Reserve Bank

Other sectors contributing to the GDP of South Africa include: (6) mining and quarying; (7) personal services; (8) construction; (9) electricity and water; and (10) construction.

Source: South Africa Reserve Bank

Source: Statistics South Africa

National Accounts - Components of the Gross Domestic Product by Expenditure Approach In the next few graphs, we will use data obtained from the South African Reserve Bank national accounts to analyze the GDP by expenditure approach.

퐺푃 = 푖 + 퐼 + 퐺. 푥푖 + 푥 − 퐼

In analyzing the charts, we observe퐺푃 = that + 퐼private + 퐺 + consumption푋 − 푀 is the largest contributor to the GDP of South Africa.

Private Consumption Expenditure

Private Consumption Expenditure in South Africa (1980-2017)

3,000,000

1997: 1,781.084 Billion ZAR ($140.89 Billion) 2,500,000 2007: 5,187.984 Billion ZAR ($410.40 Billion) 2017: 11,057.588 Billion ZAR ($874.71 Billion) 2,000,000

Rand (Millions) 1,500,000

1,000,000

500,000

Q2/80 Q4/81 Q2/83 Q4/84 Q2/86 Q4/87 Q2/89 Q4/90 Q2/92 Q4/93 Q2/95 Q4/96 Q2/98 Q4/99 Q2/01 Q4/02 Q2/04 Q4/05 Q2/07 Q4/08 Q2/10 Q4/11 Q2/13 Q4/14 Q2/16 Q4/17 Period Source: South African Reserve Bank

Government Consumption Expenditure

General Government Consumption expenditure in South Africa (1980-2017)

1,200,000

1,000,000 1997: 542.580 Billion ZAR ($42.89 Billion) 2007: 1,503.148 Billion ZAR ($118.83 Billion) 2017: 3,895.281 Billion ZAR ($307.94 Billion) 800,000

Rand (Millions) 600,000

400,000

200,000

Q2/80 Q4/81 Q2/83 Q4/84 Q2/86 Q4/87 Q2/89 Q4/90 Q2/92 Q4/93 Q2/95 Q4/96 Q2/98 Q4/99 Q2/01 Q4/02 Q2/04 Q4/05 Q2/07 Q4/08 Q2/10 Q4/11 Q2/13 Q4/14 Q2/16 Q4/17 Period South African Reserve Bank Gross Domestic Fixed Investment

Gross Domestic fixed investments in South Africa (1980-2017)

1,000,000

1997: 493.748 Billion ZAR ($39.03 Billion) 800,000 2007: 1,742.192 Billion ZAR ($137.73 Billion) 2017: 3,485.905 Billion ZAR ($275.58 Billion)

Rand (Millions) 600,000

400,000

200,000

Q2/80 Q4/81 Q2/83 Q4/84 Q2/86 Q4/87 Q2/89 Q4/90 Q2/92 Q4/93 Q2/95 Q4/96 Q2/98 Q4/99 Q2/01 Q4/02 Q2/04 Q4/05 Q2/07 Q4/08 Q2/10 Q4/11 Q2/13 Q4/14 Q2/16 Q4/17 Period Source: South African Reserve Bank

Exports of Goods and Non-Factor Services

Exports of goods and non factor services (1980-2017)

1,600,000

1,400,000 1997: 674.636 Billion ZAR ($53.29 Billion) 1,200,000 2007: 2,630.452 Billion ZAR ($207.78 Billion) 2017: 5,539.883 Billion ZAR ($437.59 Billion) 1,000,000

Rand (Millions) 800,000

600,000

400,000

200,000

Q2/80 Q4/81 Q2/83 Q4/84 Q2/86 Q4/87 Q2/89 Q4/90 Q2/92 Q4/93 Q2/95 Q4/96 Q2/98 Q4/99 Q2/01 Q4/02 Q2/04 Q4/05 Q2/07 Q4/08 Q2/10 Q4/11 Q2/13 Q4/14 Q2/16 Q4/17 Period Source: South African Reserve Bank

Imports of Goods and Non-Factor Services

Imports of Goods and non factor services (1980-2017)

1,600,000 1997: 642.872 Billion ZAR ($50.78 Billlion) 1,400,000 2007: 2,743.132 Billion ZAR ($216.68 Billlion) 1,200,000 2017: 5,285.682 Billion ZAR ($417.51 Billlion)

1,000,000

Rand (Millions) 800,000

600,000

400,000

200,000

Q2/80 Q4/81 Q2/83 Q4/84 Q2/86 Q4/87 Q2/89 Q4/90 Q2/92 Q4/93 Q2/95 Q4/96 Q2/98 Q4/99 Q2/01 Q4/02 Q2/04 Q4/05 Q2/07 Q4/08 Q2/10 Q4/11 Q2/13 Q4/14 Q2/16 Q4/17 Period Source: South African Reserve Bank

In comparing the imports and exports, we observe that the South Africa maintains a healthy balance between imports and exports.

Expenditure on Imports vs Expenditure on Exports (1980-2017)

1,600,000

Imports of Goods and non factor services 1,400,000 Exports of goods and non factor services

1,200,000

1,000,000

Rand (Millions) 800,000

600,000

400,000

200,000

Q2/80 Q4/81 Q2/83 Q4/84 Q2/86 Q4/87 Q2/89 Q4/90 Q2/92 Q4/93 Q2/95 Q4/96 Q2/98 Q4/99 Q2/01 Q4/02 Q2/04 Q4/05 Q2/07 Q4/08 Q2/10 Q4/11 Q2/13 Q4/14 Q2/16 Q4/17 Period Source: South African Reserve Bank

Source: IMF World Economic Outlook 2017

CHAPTER 4: TRADE

Trade Overview Since the end of apartheid foreign trade in South Africa has increased, following the lifting of several sanctions and boycotts which were imposed as a means of ending apartheid.

For many years until 2006, South Africa was the world's dominant gold producer, but recently other countries have surpassed South Africa: China, Russia, Canada, the United States, Peru and Australia. Albeit, none of these countries have approached South Africa's peak production which occurred in the apartheid-era 1970s. In recent times, South Africa’s economy has shifted from mining to more of the tertiary sectors. South Africa is the world's largest producer of chrome, manganese, platinum, vanadium and vermiculite, the second largest producer of ilmenite, palladium, rutile and zirconium. It is also the world's third largest coal exporter. Although, mining only accounts for 3% of the GDP, down from around 14% in the 1980s. South Africa also has a large agricultural sector and is a net exporter of farming products.

Principal regional trading partners of South Africa in Africa are Botswana and Namibia, while the other international trading partners include China, the United States, Germany, Japan, the United Kingdom and Spain. Chief exports include diamonds, gold, metals and minerals, sugar, and wool. Machinery and transportation equipment make up more than one-third of the value of the country’s imports. Other imports include chemicals, manufactured goods, and lots more, mainly found in other hot country mainly Spanish countries.

According to data from the Observatory of Economic Complexity, South Africa was the 33rd largest export economy in the world in 2016. In 2016, South Africa exported $69.1B and imported $73.7B, resulting in a negative trade balance of $4.57B. In 2016 the GDP of South Africa was $294B and its GDP per capita was $13.2k.

The top exports of South Africa as from the OEC 2016 trade statistics are Gold ($19.1B), Platinum ($9.6B), Cars ($7.53B), Coal Briquettes ($6.62B) and Diamonds ($6.61B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Unspecified ($6.27B), Crude Petroleum ($6.07B), Gold ($4.61B), Cars ($3.71B) and Vehicle Parts ($3.49B).

The top export destinations of South Africa are China ($6.81B), the United States ($5.47B), Germany ($5.26B), Botswana ($3.71B) and Namibia ($3.53B). The top import origins are China ($12.8B), Germany ($10B), the United States ($4.61B), India ($3.24B) and the United Kingdom ($2.67B).

Exports South Africa is among the leading export markets in Africa. South Africa´s exports are mostly dominated by mineral exports, given the country’s rich endowment in mineral resources such as gold and diamonds. However, the contribution of mining to the GDP has decreased over the years as the economy underwent structural changes from a primary economy to a tertiary economy where services play a big role.

Main Export Products The main products exported from South Africa are gold, diamonds, platinum, other metals and minerals, machinery and equipment.

According to World’s Top Exports report in 2018, the main products exported by South Africa in 2017 were as follows. The list gives the monetary value of the export item as well as the percentage share in terms of overall exports from South Africa.

At the more granular four-digit Harmonized Tariff System code level, South Africa’s most valuable export products are platinum then motor cars, coal then iron ores and concentrates.

1. Gems, precious metals: US$14.9 billion (16.7% of total exports)

2. Ores, slag, ash: $11.3 billion (12.6%)

3. Mineral fuels including oil: $10.6 billion (11.8%)

4. Vehicles: $9.8 billion (11%)

5. Iron, steel: $6.1 billion (6.8%)

6. Machinery including computers: $5.4 billion (6%)

7. Fruits, nuts: $3.4 billion (3.8%)

8. Electrical machinery, equipment: $1.8 billion (2%)

9. Aluminum: $1.8 billion (2%)

10. Beverages, spirits, vinegar: $1.4 billion (1.5%)

South Africa’s top 10 exports accounted for three-quarters (74.3%) of the overall value of its global shipments.

The fastest-growing top export categories from 2016 to 2017 were: mineral fuels including oil (up 49.4%), ores, slag and ash (up 47.9%) led by iron, manganese and chromium (up 47.9%) then gems and precious metals (up 24.7%) led by gold and imitation jewelry.

Only one top category declined, specifically South Africa’s electrical machinery and equipment which depreciated -1.4% in dollar value. Main Export Partners According to 2016 data from the World Bank World Integrated Trade Solution (WITS), the main export destinations for South Africa merchandise in 2016 were as follows:

 South Africa exports to China worth US$ 6,812 million, with a partner share of 9.19 percent.  South Africa exports to United States worth US$ 5,474 million, with a partner share of 7.39 percent.  South Africa exports to Germany worth US$ 5,260 million, with a partner share of 7.10 percent.  South Africa exports to Unspecified worth US$ 4,149 million, with a partner share of 5.60 percent.  South Africa exports to Botswana worth US$ 3,712 million, with a partner share of 5.01 percent.

(World Integrated Trade Solution, 2018)

Value of exports of goods and services South Africa Exports of Goods and Services (1960-2016)

140

120 1980: $24.498 Billion 2000: $37.034 Billion 100 2016: $89.406 Billion

80 USD (Billions)

0 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators

The most recent trade data from the South African Reserve Bank indicates that the total value of exports in 2017 was ZAR 1187.157 billion ($94.729 billion), representing an increase of 5.95% from the exports in 2016.

The value of exports in South Africa has been decreasing since 2011. Part of the decrease is due to low metal prices, given that metals constitute a large part of exports. The other factor leading to decrease in exports was a massive drought in 2014-16 that reduced agricultural yields by a great margin. Percentage changes in exports of goods and services South Africa Percentage Change of Exports of Goods and Services (1960-2017)

% change 0

-5

-10

-15

-20 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators; IMF World Economic Outlook

Value of exports as a percentage of GDP South Africa Exports as a Percentage of GDP (1960-2016)

34 2000: 27.15% 2007: 31.17% 32 2016: 30.26%

% of GDP 28

20 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators

Imports South Africa imports accelerated heavily after the end of the apartheid regime, following the withdrawal of a number of trade sanctions.

Main Import Products According to data from the South Africa Revenue Service (SARS) the main imports as of May 2018 are: machinery (23.5 percent of total imports), mineral products (15.1 percent), vehicles and aircraft vessels (10 percent), chemicals (10.9 percent), equipment components (8.1 percent) and iron and steel products (5.3 percent). Main trading partners are: China (18.3 percent), Germany (11.5 percent), United States (6.6 percent), India (4.7 percent), Saudi Arabia (4.6 percent) and Japan (3.4 percent). Others include: the UK, Thailand, Italy and France.

(South Africa Revenue Service, 2018)

Main Import Partners According to 2016 data from the World Integrated Trade Solutions, the main import partners for South Africa for 2016 were as follows:

 South Africa imports from China worth US$ 13,537 million, with a partner share of 18.11 percent.  South Africa imports from Germany worth US$ 8,817 million, with a partner share of 11.80 percent.  South Africa imports from United States worth US$ 4,978 million, with a partner share of 6.66 percent  South Africa imports from India worth US$ 3,104 million, with a partner share of 4.15 percent.  South Africa imports from Saudi Arabia worth US$ 2,836 million, with a partner share of 3.79 percent.

(World Integrated Trade Solution, 2018) Value of Imports of goods and services South Africa Imports of Goods and Services (1960-2015)

140

120 1980: $22.029 Billion 2000: $33.107 Billion 100 2016: $88.976 Billion

USD (Billions)80

0 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators

The most recent trade data from the South African Reserve Bank indicates that the total value of imports in 2017 was ZAR 1107.019 billion ($88.334 billion), representing a slight decrease of 0.72% from the import levels in 2016.

Percentage changes in exports of goods and services Percentage change of Exports of Goods and Services (1960-2017)

10 %

-10

-20 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators; IMF World Economic Outlook

Imports as a percentage of GDP South Africa Imports as a percentage of GDP (1960-2016)

2000: 20.27% 36 2007: 32.51% 2016: 30.11% 32

% of GDP 28

16 60 65 70 75 80 85 90 95 00 05 10 15 Year Source: World Bank Development Indicators

South Africa Trade With the European Union According to a report by the European Commission, South Africa trade with the European Union is as follows:

Source: Eurostat Comext

(Europen Commission, 2018)

Source: Eurostat Comext

Current Account South Africa's current account deficit increased to ZAR 137.5 billion in the fourth quarter of 2017 from ZAR 99 billion in the previous period. It was the largest current account gap since Q1 2016. The trade surplus decreased to ZAR 74 billion from ZAR 92 billion, as imports advanced 9 percent to ZAR 1173 billion while exports grew only 6 percent to ZAR 1168 billion. Also, the shortfall on service, income and current transfer payments went up to ZAR 211 billion compared to a ZAR 191 billion deficit in Q3. In particular, there was an increase in net dividend payments to non-residents and in net payments for services, namely for transport-related services linked to higher imports and payments for other services, such as intellectual property. In 2017, the current account gap narrowed to ZAR 114 bilion or 2.5 percent of the GDP from ZAR 121 billion or 2.8 percent of the GDP. Current Account in South Africa averaged -27282.35 ZAR Million from 1960 until 2017, reaching an all time high of 15627 ZAR Million in the fourth quarter of 2002 and a record low of -246452 ZAR Million in the third quarter of 2013.

Current Account (1960-2017)

10,000

-10,000

-20,000

Rand (Millions) -30,000

-40,000

-50,000

-60,000

-70,000

Q2/60 Q4/62 Q2/65 Q4/67 Q2/70 Q4/72 Q2/75 Q4/77 Q2/80 Q4/82 Q2/85 Q4/87 Q2/90 Q4/92 Q2/95 Q4/97 Q2/00 Q4/02 Q2/05 Q4/07 Q2/10 Q4/12 Q2/15 Q4/17 Period Source: South African Reserve Bank

Recent widening of the current account deficit in 2017 was mainly due to rallying of the South African Rand against global currencies, especially from October 2017, which led to increased imports during the period.

Capital Account Capital Account (1960-2017)

120

Rand (Millions) 0

-40

-80

-120

Q2/60 Q4/62 Q2/65 Q4/67 Q2/70 Q4/72 Q2/75 Q4/77 Q2/80 Q4/82 Q2/85 Q4/87 Q2/90 Q4/92 Q2/95 Q4/97 Q2/00 Q4/02 Q2/05 Q4/07 Q2/10 Q4/12 Q2/15 Q4/17 Period Source: South African Reserve Bank CHAPTER 5: GOVERNMENT FINANCES

Revenues

Total Government Revenue South Africa Total Government Revenue (2000-2017)

1,400

2000: ZAR 223.936 Billion ($17.73 Billion) 1,200 2007: ZAR 600.107 Billion ($47.49 Billion) 2017: ZAR 1,340.963 Billion ($106.13 Billion) 1,000

Rand (Billions) 800

600

400

200 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year Source: IMF World Economic Outlook

Revenue as a percentage of GDP General Government Revenue as a Percentage of GDP (2000-2017)

30 2000: 23.664% 29 2007: 28.448% 2017: 29.085% 28

27 % of GDP

23 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year Source: IMF World Economic Outlook

Expenditure

General Government Expenditure South Africa Government Net Expenditure (2000-2017)

1,600 2000: ZAR 238.498 Billion ($18.877 Billion) 1,400 2007: ZAR 573.253 Billion ($45.373 Billion) 2017: ZAR 1,546.297 Billion ($122.389 Billion) 1,200

1,000

Rand (Billions) 800

600

400

200 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

Expenditure as a Percentage of GDP General Government Expenditure as a Percentage of GDP (2000-2017)

34 2000: 25.20% 2007: 27.18% 32 2017: 33.54%

30 % of GDP

24 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

Comparing Revenue and Expenditure Total Government Revenue vs Total Government Expenditure 1,600 revenue (National currency) 1,400 total expenditure (National currency)

1,200

1,000 ZAR (Billions)

800

600

400

200 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year Government Borrowing

Net Government Debt South Africa Net Government Debt (2000-2017)

2,400 2000: ZAR 392.727 Billion ($31.084 Billion) 2,000 2007: ZAR 482.015 Billion ($38.151 Billion) 2017: ZAR 2,196.866 Billion ($173.882 Billion)

1,600

ZAR (Billions) 1,200

800

400

0 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

Debt as a percentage of GDP South Africa Net Debt as a Percentage of GDP (2000-2017)

48 2000: 41.5% 44 2007: 22.9% 2017: 47.7% 40

36 % of GDP 32

20 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

Net Government Borrowing / Lending South Africa Government net lending / borrowing (2000-2017)

-40

ZAR (Billions) -80

-120

-160

-200

-240 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year

CHAPTER 5: FINANCIAL MARKETS

Capital Markets

Main Stock Market Index Performance (JSE Index) Johannesburg Stock Exchange index (FTSE/JSE Top 40) Historical Data

60,000

Dec '97: 5,012.13 ZAR 50,000 Dec '07: 26,250.29 ZAR Dec '17: 52,533.04 ZAR 40,000

ZAR 30,000

20,000

10,000

0 96 98 00 02 04 06 08 10 12 14 16 18 Year Source: Investing.com

Stock Market Capitalization in South Africa South Africa Stock Market Capitalizaton (1975-2017)

1,400

1975: $24.10 Billion 1,200 2000: $204.30 Billion 2017: $1,230.97 Billion 1,000

800

USD (Billions) 600

400

200

0 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year Source: World Bank Development Indicators Market Capitalization as a percentage of GDP South Africa Market Capitalization as a Percentage of GDP

350 1975: 63.23% 300 2000: 149.82% 2016: 321.98%

250

% of GDP 200

150

100

50 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year Source: World Bank Development Indicators

Number of Listed Companies Total Listed Domestic Companies in South Africa (1975-2017)

800

1975: 577 700 1990: 740 2017: 294 600

No. of Companies 500

400

300

200 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year Source: World Bank Development Indicators

Total Value of Stock Traded Total Value of Stock Traded (1975-2017)

500

1975: $0.894 Billion 400 1990: $8.245 Billion 2017: $409.717 Billion

300 USD (Billions)

200

100

0 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year

Stock traded as a percentage of GDP Stock traded as a percentage of GDP (1975-2017)

140

120 1975: 2.35% 1990: 7.14% 100 2017: 138.56%

% of GDP 80

0 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year

Turnover Ratio Turnover Ratio of Domestic Shares in South Africa (1975-2017)

40 1975: 3.71 1990: 5.08 2017: 25.73 30 Turnover Ratio

0 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year Source: World Bank Development Indicators

Overview of the Johannesburg Stock Exchange Market as at the end of 2016

Source: National Treasury of South Africa

Domestic and Foreign Ownership of Asset in the Johannesburg Stock Exchange (Percentage of Market Capitalization on Strate)

Source: National Treasury of South Africa

Ownership of top 25 Companies in JSE

Source: National Treasury of South Africa Money Markets South Africa has the most developed fixed income market in Africa. Government securities yield curve extends out to 26 years. The National Treasury (NT) issues Treasury bills with tenors for 91, 182, 273 and 365 days. Auctions are usually held weekly on Fridays, but T-bills may also be issued by private placement or any other means chosen by the NT. Minimum bids are for ZAR 1,000,000, with multiples of ZAR 100,000 thereafter. Direct access is through the Money Market Internet System (MMIS) to registered users. Republic of South Africa (RSA) Government Bonds are issued primarily to support the fiscal budget. This is exclusively a wholesale market with more sophisticated investors and systems, hence only primary dealers may take part in primary auctions of RSA Government bonds. The RSA retail savings bonds are better suited to the retail investors. South Africa is included in Citigroup’s world government bond index. Municipal Bonds are issued by city councils for development projects with tenors typically longer than one year. Municipal bond issues are not guaranteed by the central Government. Secondary market trading is very rare. Parastatal and corporate issuers are very active in the primary market for both short-term and long-term debt, the most noteworthy being ESKOM, Transnet and SANRAL. Other key issuers are the commercial banks, mortgage houses, asset finance houses, as well as off-balance sheet SIVs like securitizations and conduits. The Commercial paper (CP) primary market is very active and is tapped by corporate issuers and state-owned companies. The definition of Commercial paper in South Africa has less to do with its tenor, and CP in South Africa can have a maturity longer than one year. South Africa is a prominent African name in the international bond market. It is ahead of all other African nations in terms of eurobond issuance.

CHAPTER 6: DOING BUSINESS IN SOUTH AFRICA According to the World Bank Doing Business Report of 2017, South Africa is ranked 82 among 190 economies in the ease of doing business. The rank of South Africa deteriorated to 82 in 2017 from 74 in 2016. Ease of Doing Business in South Africa averaged 51.60 from 2008 until 2017.

Source: World Bank Doing Business Report Database

The World Bank Doing Business Report of 2018 provides the following rankings to South Africa

Source: Doing Business Report 2018

Distance to Frontier

Overall Business Risk of South Africa - Report derived from Gov.Uk

Political Overview South Africa is a young, relatively stable democracy, dominated by one political party. Cyril Ramaphosa recently replaced Jacob Zuma as president in February 2018 following his election as President of the ANC. The ANC’s 2014 National Election victory at the polls secured 65.9% of the popular vote for the party. This victory came with the support of the tripartite alliance which consists of the South African Communist Party (SACP), the Congress of South African Trade Unions (COSATU) and the ANC. National Elections will take place next year (2019).

Economic Overview The South African economy is forecast to have grown at around 1% in 2017, an upward revision from the 0.7% previously forecasted. This is expected to improve further in 2018 and 2019. South Africa is the most sophisticated and developed economy in Africa and has some high class companies in finance, real estate and business services, manufacturing and wholesale and retail trade. South Africa is the ‘gateway to Africa’ for investors due to its comparative sophistication, ease of doing business (compared to African counterparts), continental expertise and ability to act as a base for critical services for doing business on the rest of the continent.

Key Economic Developments Unemployment remains an immense challenge with an official figure of 26.7%, and wider definitions of unemployment taking it above 35%. Two thirds of all those unemployed are below the age of 35. South Africa is the world’s most unequal country. Poverty is deep, structural and worsening. 40% of the population live on less than $1.75 a day. The National Treasury’s forecast growth rate falls far short of the 6% rate analysts believe the country needs to tackle its pervasive social problems.

Business Environment South Africa’s business environment is challenging, but still one of the best in Africa. Problems include the skills deficit, poor labour relations, lack of electricity and corruption. But a well developed transport infrastructure and robust financial and legal frameworks exist. South Africa’s overall performance in the World Bank’s Ease of Doing Business Index dropped from 39th in 2013 to 82nd in 2017, at a time of subdued GDP outlook. The main contributor to this score is the country’s poor and limited access to electricity. There are still challenges for South Africa in attracting further investors, but these are not insurmountable, and sentiment is improving under President Ramaphosa.

Please see the World Bank’s Ease of Doing Business report for South Africa.

Human Rights Human rights in South Africa are protected under its 1996 constitution, which has been hailed as one of the most progressive in the world. It guarantees economic, social and cultural rights. The country has a strong commitment to human rights and has statutory oversight bodies such as the South African Human Rights Commission which protects the rights guaranteed under the Constitution.

South Africa is signatory to various international human rights instruments including the Universal Declaration of Human Rights; African Charter on Human and Peoples’ Rights; the International Covenant on Economic, Social and Cultural Rights; and the UN declaration on sexual orientation and gender identity.

Despite South Africa’s strong constitutional protections for human rights and its relative success at providing basic services, the government continues to struggle to meet demands for economic and social rights. Issues such as unemployment, corruption, and threats to freedom of expression remain a concern for many citizens. Excessive force by police is a persistent problem as well as concerns about the treatment of migrants, refugees, and asylum seekers, and resultant xenophobia violence. South Africa continues to play an important but inconsistent role in advancing the rights of lesbian, gay, bisexual and transgender people

Bribery and Corruption Corruption in South Africa includes the private use of public resources, bribery and improper favouritism. It often takes the form of individuals who enrich themselves through corrupting the awarding of government tender contracts, mostly based on personal connections and corrupt relationships.

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. South Africa is a signatory to the OECD Anti-Bribery Convention. It should be noted that UK bribery legislation also applies to UK registered companies and UK nationals committing acts of bribery wholly outside the UK.

Please see the information provided on our Bribery page

Security Terrorists are likely to try to carry out attacks and there is a very high level of crime in South Africa. Please consult FCO travel advice for up-to-date information

The Centre for the Protection of National Infrastructure provides protective security advice to businesses.

Intellectual Property Intellectual Property (IP) rights are territorial, they only give protection in the countries where they are granted or registered. If you are thinking about trading internationally, you should consider registering your IP rights in your export markets. South Africa is a signatory to various international IP treaties, the notable of which are the World Trade Organisation (WTO) Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS Agreement), Berne Convention for the Protection of Literary and Artistic Works, Paris Convention for the Protection of Industrial Property, World Intellectual Property Organisation (WIPO) Treaty and the Patent Cooperation Treaty.

In general, South Africa provides adequate protection of IP rights. However, infringement is common, particularly of trademarks and copyright. Often, the State does not have sufficient enforcement capacity. In view of the fact that IP rights are private rights, the IP rights owner or holder bears the onus and costs of enforcing such rights. Currently, there are certain reforms being undertaken which include the controversial Copyright Amendment Bill and draft IP policy.

(UK Government, 2018)

CHAPTER 7: CORRUPTION

Introduction In the 2017 Transparency International Corruption Perception Index South Africa was ranked 71st out of 180 positions with a score of 43 points. The trend shows that the country has stagnated in corruption development, having the same score that it had back in 2012. South Africa scores in the top ten of less corrupt countries in Sub-Saharan region, ranking 9th out of 49 countries. It is important to note that South Africa is the best ranked member of the BRICS, just ahead of China and 14 points clear from Russia, which ranks 135th.

South Africa is bouncing back according to the 2017 Mo Ibrahim Index of African Governance, which mentions that the country still carries an annual average decline over the decade, but lists improvement in governance in the last five years. However, in Accountability the southern nation scores less than its average, with a 61.9 score against a 70.1 total score. This is due to low scores on corruption indices: Corruption Investigation has deteriorated in more than five points in the last five years; Diversion of Public Funds has the lowest score in accountability with 34.7 points and Corruption & Bureaucracy and Corruption in Government & Public Officials subsections show no improvement at all. Only Public Sector Accountability & Transparency has improved, together with Online Public Services.

Most Corrupt Sectors Local South African NGO Corruption Watch has received 20.306 reports of corruption since its foundation in 2012. In 2017 reports incremented by 25% up to 5334 in a natural year. The vast majority of these reports, up to 46%, come from the Gauteng region. This does not mean that it is the most corrupt province, but rather that there is where most business happens and public institutions are, as well as where most presence the NGO Corruption Watch has.

An alarming 81% of reports point out at corruption on the public sector, either at a national, provincial, or local level. The local NGO reports that most corrupt practices happen between the public and private sector, for example when a business bribes the members of a bid committee.

The 2017 Annual Report dedicates an entire section to corruption in the police. It highly criticizes this institution and says it has cost lives of people, as murders have increased by 22% in the last five years whilst aggravated robberies went also up by 5.6%. The three main types of police corruption reported were abuse of power (35%), bribery (21%) and failure to act (21%).

To be accepted into the South African Police Service the criteria is simple: you must be native, over 18 years old and have no criminal record. However respondents ask for further criteria to be considered such as having previous police experience, possess investigative and conflict resolution skills and knowing the legislation in the Constitution.

Bribery in South Africa The Ethics Institute is a non-profit, public benefit organization which collects the South African Citizens' Bribery Survey. In its latest version of 2017 it showed that 37% of south africans know someone who has asked for a bribe, and that one in four citizens admit to know someone that has paid a bribe in the last year.

Avoiding traffic offenses was listed as the main reason to pay a bribe, with 39% of respondents saying so. Getting a drivers license comes second with 18%, followed by a 14% who paid a bribe to enter a job, an 8% who paid a bribe for public services and finally a 7% that did so to avoid police and criminal charges.

The average amount of a bribe is R1550 (about $100). However, prices vary a lot depending on the situation. Bribes paid for traffic offenses average R250 (about $20), whilst those paid to tenders increase to R82 282 (about $6,600).

On a positive note this Bribery Survey found that 35% of respondents have said no at sometime for a bribe, mainly though due to religious reasons (47%) and not due to its ilegal nature (18%) or lack of money (12%). Furthermore, a 51% of South Africans believe they can get through life without paying a bribe, however, when the question is asked reversely answers change depending on the socioeconomic situation of the respondent: 45% of low income people agree with the statement that it is impossible to get through everyday life without a bribe, a number that decreases by sixteen points when asking a rich person.

The survey further found that South Africans believe parents are the most committed against corruption, scoring 6.3 on a scale of 1 to 10. Politicians had the worst score with only 3.4 out of 10. A 71% of respondents said they would change party in the next elections if the one they voted for admitted to corrupt practices. In that sense, respondents chose the Democratic Alliance, main opposition and governing party in the two biggest cities in the country, as the party most committed to fight corruption, followed by the Economic Freedom Fighters with 28% and finally the leading African National Congress, with a 19%.

Corruption and Education Corrupt practices do not only extend to business and politics. NGO Corruption Watch also point out at the education system as a place where corruption flourishes in South Africa. 2.062 reports have been received since 2012 of alleged corruption in the classrooms. Financial mismanagement was noted the most repeated practice by respondents (with a 34%) followed by theft of funds (29%) and employment corruption (13%). Two thirds of respondents pointed out to principals and principals with the help of others as the main culprits of corrupt activity taking place in schools.

One example is Mpumelelo Primary School. The principal of this non-fee school supposedly forced parents, the majority of them coming from a poor background and living in the Ivory Park informal settlement in Tembisa, to pay R50 in school fees per year.

CHAPTER 8: DEMOCRACY & ELECTIONS

Introduction The 2017 Mo Ibrahim Index of African Governance ranks the country 6th over Africa, and gives it a strong positive score of 94.7 in Rule of Law, with a perfect score in Judicial Process and Transfers of Power. In a recent visit to South Africa, University of Johannesburg Professor Steven Friedman told the NCID that “the institutional frame of democracy is” present and there is credibility and integrity for an independent judiciary. He listed, however, that the problem is that the system doesn’t reach everyone, and although everyone should have access to court, only a third of the population end up having real access. This is reflected in the report, which classifies Access to Justice as increasingly deteriorating with a 2.45 points decline over the last lustrum. South Africa is one of the only eight countries in Sub-Saharan Africa considered a democracy, ranking 4th in the region with a 7.24 overall score, according to The Economist Intelligence Unit’s Democracy Index 2017. This locates them above their neighbor Namibia, but still behind Botswana, considered by many the most stable democracy. The ranking is led by Mauritius, the only country with a score over 8.00 and considered a Full Democracy in Sub-Saharan Africa. Overall, the country is ranked 41st, which lists them as the most democratic country of the BRICS group, just one position ahead of India and eight over Brazil and way in front of Russia and China, which are both considered authoritarian regimes and are located at positions 135 and 139 of the ranking respectively. As it can be seen in the graph below, the country has decreased it’s democracy levels in the last decade, with a fall from 7.91 to 7.24.

Term Limits Professor Friedman further noted that term limits in South Africa are taken for granted and therefore, are a non-issue, helping peaceful transfers of power. He mentioned having Mandela making clear he only wanted to be one term in power helped to frame this concept. Southern Africa is the region with the strongest adherence to term limits and South Africa follows the path of Namibia, Botswana and Mozambique. This two examples can be seen in the current state. Former president Jacob Zuma was forced to resign by his own party due to alleged corruption cases and transferred power pacifically, without any coup d’etat or military intervention as in neighbor countries. Zuma is now facing court charged of 738 counts of alleged corruption, fraud and racketeering.

Elections National Elections are set for happen in 2019 after this year a new president was sworn in: Cyril Ramaphosa. The African National Congress (ANC) forced former president Zuma to step down amid corruption scandals and appointed its vice-president and recently elected leader as the new president. He will face the Democratic Alliance (DA) and Economic Freedom Fighters (EFF) as main rivals in the first elections in which confidential polls seem to suggest the ANC could lose. In the August 2016 municipal elections the DA won the most important metropolitan areas of the country: the larges city Johannesburg, the administrative capital Pretoria and the are where they are more present in: Cape Town, as well as Nelson Mandela Bay.

The ANC won the last general elections in 2014 with a 65.90% of the vote for Jacob Zuma and 249 out of 400 seats in the National Assembly. This was, however a 15 seat backdrop in benefit of the DA and EFF, which entered parliament for first time with 25 seats. Controversy happened around elections as Zuma was cleared to participate after corruption charges were dropped. However, an overwhelming 97% of sampled voters felt election procedures were free and fair, according to the Electoral Commission of South Africa Election Report.

CHAPTER 9: CIVIL LIBERTIES

Media Press freedom is largely present in South Africa, and has for long been considered the most opening Sub-Saharan Africa. However, recent moves have sought to restrict the freedom to publish certain relevant information on the government and the relations of former president Jacob Zuma with the powerful and influential Gupta family. More than half of South Africans have internet access, which is free and unrestricted, but many still have no connectivity.

Government pressure on independent and state-run media outlets has worryingly increased in the last years. The Protection of State Information Bill is yet to become law and has produced great controversy as it includes restrictions on media due to “national security interest” reasons, as well as bills on hate crimes. The bill is now popularly known as the Secrecy Bill. This is not a unique case. Last June 2016 eight journalists at the public South African Broadcasting Corporation (SABC) were fired after disagreeing to not cover a peaceful protest against censorship and abuse of power in their media outlet. Four of them sued the SABC and the Labour Court ruled in favor of them and said the company had violated procedures. The eight where then reinstalled into their job positions, Amnesty International reports. One of them, Suna Venter, died not even one year later due to “prolonged and unnatural stress”, as Freedom House reports.

Months later, in November 2017, the State Security Agency (SSA) attempted to block the publication of journalist Jacques Paw’s book The President’s Keepers, which gave information on how the SSA was helping president Zuma from being prosecuted.

Due to all of these events, media freedom ranks as partly free and not fully free for The Economist Intelligence Unit’s Democracy Index. Freedom House does also Press Freedom in South Africa is Partly Free. It’s Freedom in the World 2018 report scores the question “Are the free and independent media?”, with a three out of four, the only question with no full marks on “Freedom of Expression and Belief”.

Political Participation and Freedom of Assembly and Expression South Africa has many rising opposition parties such as the DA and EFF that can compete for power. However, the coalition of the ANC is still the only party to have governed after apartheid ended. Having a variety of strong parties reflects in the indices. The Mo Ibrahim Index states South Africa as the 2nd African country with highest political participation with a 94.6% score, whilst the country’s best score in The Economist Intelligence Unit’s Democracy Index is on the same category, with a score of 8.33 out of 10.

However, South Africa ranks worst on political culture and civil society participation. In the first of these two categories it is given only a 5.00 score by The Economist, which is worse than neighbor countries Namibia, Botswana and even Zimbabwe, which just recently ousted thirty year long dictator Robert Mugabe. Civil Society Participation is the lowest section of participation for Mo Ibrahim Index, with a score of 71.2 that sets South Africa as the 19th nation in Africa.

It is important to note, though, that the revelations of state capture by president Zuma and the Gupta Family have decreased the score of political pluralism and participation for Freedom House. The Freedom in the World 2018 report states that people’s choices are not totally free from domination by powerful groups, and it explains the score decreased from 4/4 to 3/4 “due to the influence of wealthy outside interests on the ruling African National Congress, including on the party leadership race and political appointments”.

Human rights Human Rights Watch affirms in its World Report 2018 that “the (South Africa) government’s record on human rights was poor”. The report lists failure to grant access to education to half a million children with disabilities; a lack of a national plan to combat racism and violence against women but also congratulates for a progressive constitution that prohibits discrimination on the basis of sexual orientation and protects the LGBTQ community. However, this same year South Africa’s Film and Publication Board rated the Oscars nominated gay movie Inxeba as X18, the same category as hardcore pornography, banning it therefore from family cinemas. However the film, which portrays a Xhosa circumcision ritual for boys in the form of a gay love story, won six awards from the South African Film and Television Awards. Furthermore, violence against women is also high. The 2016-2017 South Africa Police Service report stated there was an average of 109.1 rapes each day. CHAPTER 10: SECURITY AND TERRORISM

Introduction National Security in South Africa remains high, with domestic armed conflict and violence by non-state actor scores improving in the Mo Ibrahim Index. However, Personal Safety ranks as the worst category with an average score of 33.4. South Africa ranks in the worst ten countries for safety of the person and the four lowest scores in Africa in social unrest and crime, which are deteriorating.

However, in a controversial move, South Africa’s government announced back in 2016 its plan to withdraw from the International Criminal Court, plans which were confirmed late 2017 by the ANC, albeit a court had ruled it “invalid” as it hadn’t gone through Parliament.

Police Services is also declining over the last five years, with a 40.1 score. The Independent Police Investigative Directorate reported for the 2015-2016 period 366 deaths as a result of police action and 216 deaths in police custody, according to Amnesty International’s 2016-2017 report. It also reported 145 cases of torture, including 51 cases of rape, by police officers on duty, and 3,509 cases of assault by police.

In South Africa, social unrest is high, but terrorism presence is low. Whilst protests and riots are very common, terrorist attacks remain low, although the risk of suffering one has increased in the last years amid reports of arrested citizens trying to fly to Syria to pledge alliance to ISIS.

Social Unrest According to the Armed Conflict Location & Event Dataset (ACLED) only on April 2018 there were 85 riots and protests all over the country. The peak reached in March 2016, when ACLED registered a total of 165 riots and protests and 15 events of violence against civilians. Back then the largest student protests happened in South Africa since the end of apartheid in 1994 due to a proposed rise of tuition fees of 10- 12%. The protests caused $44 million in damages to property in a few weeks, according to the BBC. ACLED notes that “demonstrations are increasing not only in frequency but also intensity, with a burgeoning amount of demonstrations descending into violence and destruction of property” and refers to the high mobilization capability of trade unions which comes back from the Apartheid era to explain the issue. The reasons to protest are very diverse, from bad service delivery to anti-government and corruption protests. Due to the high amount of protests ACLED notes that there is a moderate risk to civilians in South Africa, with special note in KwaZulu-Natal, Western Cape, Gauteng, and Eastern Cape regions.

Terrorism Regarding terrorism, South Africa is the 47th country with highest impact of terrorism in the world, 20th in Africa, with a score of 4.09 out of 10, being 10 the highest impact. This is a low score, taking into account countries such as Kenya are in place 22 and major Western countries such as France, United States and Germany, as well as Russia and China have a higher impact of terrorism in their territory.

South Africa is not a place with a large history of foreign terrorist attacks. However, inside its frontiers it has experienced with violent extremism as a mean to achieve political gains. The former president Nelson Mandela founded the paramilitary wing of the ANC, uMkhonto we Sizwe when the National Party governed and Apartheid was in place. After the 1994 elections, right wing white nationalist parties who lost their supremacy have emerged against the new system. In the face of the new era, the extremist right wing Afrikaner Weerstandsbeweging (AWB) group and the so called Boeremag (translated to Boer-Afrikaner in power) detonated bombs and some of its members were accused of terrorism. In the late 1990s another group, People Against Gangsterism and Drugs (Pagad) also appeared which sought to end with high levels of drugs and crimes on the streets and ended using violent killings and attacks on US companies and interests to do so. Nowadays neither the far right movement nor the Pagad movement are a major threat to security in South Africa, although there is still some minor support for these groups and some Pagad members recently left prison after their sentences.

Whilst national extreme groups are in the decline, international extremist groups presence is on the rise. There is no major past of international terrorist groups presence in South Africa, but there are reports in the last years of south africans joining ISIS and Al Qaeda, and the threat of a terror attack in the country has risen.

Back in 2010 an al-Qaeda suspect was arrested plotting to attempt during the football World Cup. However, aside from the World Cup South Africa has not welcomed any major international event with Western nations or influence. This, together with the lack of a colonial past, a history of no-intervention in foreign policy and a good integration and acceptance of muslims in the country, which are considered as South Africans as any other and not an immigrant community make South Africa a country with a low risk of terror attack. However, in the last few years supports for ISIS, and worrisome of an attack, has grown.

An Institute for Security Studies report indicates that an estimated 60 to 100 South Africans had left to join the ISIS and more than half had since returned. The biggest example of the presence was the Thulsie twins case. In March 2016 US, UK and Australia sent an alert of a possible terror attack in South Africa. Four months later brothers Brandon-Lee and Tony-Lee Thulsie, who are South African citizens, were arrested on charges related to terrorism. It is alleged that after failed attempts to travel to Syria to join ISIS, the pair began planning attacks on US and Jewish targets in South Africa. CHAPTER 11: WATER SCARCITY

Backround South Africa is suffering a tremendous water crisis. A three year long drought combined with mismanagement, lack of investment on water resources and no alternative source of water other than surface storage caused an emergency crisis in Cape Town.

Cape Town Water Crisis The city had to establish a Day Zero, where taps would be turned off after water restrictions hadn’t drastically decreased consumption. Fortunately, locals reduced water consumption nearly by half and farmers opened their private water resources. These initiatives, together with long- awaited rainfall, has pushed back Day Zero, originally planned for April 2018, to a no definite day in 2019.

Capetonians can breathe, but there are still water restrictions of 50 liters per person per day. To put this in context: a two minute shower accounts more or less for twenty liters, flushing the toilet is nine liters, cooking for one is a minimum of two liters and personal hygiene adds up to three liters a day. All this together with two liters a day of water to drink sums to 36 liters a day. “But then if a washing machine on water saving mode uses 60 to 70 liters of water, how are you going to wash your clothes?”, says Bridgetti Lim Banda. She is a local capetonian who created the NGO Cape Town Water Crisis to inform fellow citizens about the steps to take to reduce water consumption.

Local hydrogeologist and water consultant Peter Rosewarne told the NCID Team that the city had registered over 20,000 boreholes, which would sum up to those not registered. Days Zero marks the day where dam levels would be at an average of 13.5%. That day water would be rationalized to 25 liters per day per person and distributed at 200 spots around the city, but the logistics of it hasn’t been tested and it would mean an average of 20,000 people per spot. “There is the question of how you’re going to deliver it. It could be by car as if it was a McDonalds, but not everyone has a car. Then how do you deal carrying it. Not everyone has a 25 liter container, plus elder people wouldn’t be able to carry it”, said Rosewarne.

How the situation got to this point in Cape Town is driven by diverse factors. First, Cape Town has experienced the worst drought during the last three years, with 2017 having only 153.5 milliliters of accumulated rainfall, as data from the Climate System Analysis Group of the University of Cape Town shows. Furthermore the rise of population in Western Cape has caused stress on water services and a major consumption. From 2001 to 2013 population has increased in 1.5 million people

However, a lack of planning and investment is also a major cause. Many look towards Pretoria, where the national government and the Department of Water and Sanitation is. The South African Constitution of 1996 establishes that the national government has to grant water access, but there is no money for it. The budget of the Department of Water and Sanitation amounts 15 bullion rands, about one thousand million euros, but experts signal this is far from enough to revert this situation. Benoit Le Roy, environmental engineer and founder of NGO Water Shortage South Africa indicates that there should be an investment of about six times as much a year during the following ten years, 800 billion rands in total, to go back to a normal situation.

But state coffers are empty. Major corruption at state level, which has forced president Zuma’s resignation and having a 55% of south africans on poverty lines, which accounts for 30 million people who live with less than 66 euro a month, according to data from Statistics South Africa causes this. Le Roy says that “extreme poverty means there are only 6 million taxpayers and 18 million receiving benefits. There is no money for infrastructures”.

Cape Town is served by six major dams, which are at an average capacity of 22.5%. Theewaterskloof is the biggest, with a capacity of 480 million cubic meters of water which could supply more than half of the population. It’s level is at 13.6%, as the city of Cape Town reports, and the last 10% is void as it is impossible to extract.

National Situation Water scarcity however is not unique to the Western Cape region. South Africa’s average dam levels plummeted from around 93% in March 2014 to a low of 48% in November 2016, now standing at 59%, according to data from the Department of Water & Sanitation. Furthermore, 46 of South Africa’s 565 rivers are categorised as having ‘very low’ flows , while a further 105 are ‘low’ and another 88 ‘moderately low’, as the figure below shows.

South Africa’s water consumption is also higher than the global average. According to data from the Water Research Commission, consumption is about 235 liters per capita per day in South Africa whilst the global average is 175 liters per capita per day.

An Institute of Security Studies investigation predicts that in order to “bring back water levels to a relative balance shortly, per hectare water use should decrease by 7% by 2035, treated wastewater that is recycled through the system should be increased by about 0.72 cubic km by 2035, and the amount of renewable groundwater extracted by about 0.3 cubic km. But even then the country would be vulnerable to droughts. The study concludes that many steps have to be taken now to avoid a national chaos: water conservation and demand reduction measures must be implemented; treatment and reuse of wastewater has to increase, as currently about 60% of the countries wastewater is untreated; groundwater extraction must be increased as a viable alternative to surface water; constructing desalination plants, which account for less than 1% of South Africa’s total water demand, must be considered and finally adopting renewable energy to reduce industrial water demand and minimize water contamination, as the country is almost entirely dependent on coal.

CHAPTER 12: RACE

Economic Situation The wealthiest 10% of the population own at least 90–95% of all wealth, even though they only account for 55-60% of income, a recent investigation shows (Orthofer, 2016). Furthermore, this study shows that white and Indian households are still much wealthier on average than colored and black African households. The figure below shows how the majority of whites are wealthier than the majority of native Africans, as the line of the first is more to the right than of the second. Moreover, wealth inequality within the total black population is also higher than within the white group, as the steeper curve in the second graphic shows. Combining both indicates there are a majority of whites which are rich, with a small difference in their wealth, whilst there are a few black African households very rich and a majority of them poor.

This could be a cause of a shift in sector employment and a lack of opening to all types of population. A recent investigation (Bhorat, Kahn 2018) found that African and Colored individuals in South Africa face a lower probability of working in the services sector as opposed to White workers. The services sector accounts for over 70 percent of the labour force in 2015, reinforcing racial patterns of wage inequality in the labour market. Furthermore, probabilities of being employed in the tertiary sector were only high for those with post-secondary education, suggesting that Black and Colored individuals have less level of education than White people.

Furthermore, data shows that the difference in employment probability for both African and Colored workers relative to White employees has increased. Back in 1995 the gap between Whites where 16% more likely to be employed than Black individuals, and 9.6% more than Colored people, now, despite more access to education and freedom, it is still larger, as the table below shows. Race Relations Polls made to South Africans on how race groups feel about each other are revealing. A 2016 Ipsos poll on Race Relations in South Africa shows that 57% of South Africans are confident of a good future for all races in the country. However, this is a drop from two thirds who said so in the previous poll. It is also worrying to note that about half of the population (46%) think it is impossible to create one united nation, whilst only one quarter of adults believe it is possible respecting all races. A majority of South Africans blame the government for failing in nation building, with 58% of respondents pointing towards Pretoria.

Following the aforementioned study, it is noticeable that those employed are more confident of a happy future than the unemployed. This is also repeated when asked about how the relationship amongst different races is. 37% of full-time workers state relations are improving, while only 24% of unemployed say the same.

Finally, it is also relevant that black people are more confident for a better future than others. Blacks are also the majority group, tied with whites, that agree that relationship between races are improving, with 30% of each group saying 17% so against a 23% of coloreds and 17% of Indians. However, the majority of the entire South African population (51%) believes relations are remaining the same, way ahead of a 29% who think are improving and 20% who believe they are getting worse.

CHAPTER 13: LAND REFORM

Background Twenty four years after apartheid Parliament agreed to pass on changes to section 25 of the Constitution. What does this mean? On Feb. 27 2018 lawmakers agreed to the principle of land expropriation without compensation, and now the parliament’s Constitutional Review Committee will report back to lawmakers by Aug. 30 2018. But why is land seizure without compensation on the table again?

President Cyril Ramaphosa recently said in National Assembly that a Land Audit showed that 72% of individually owned land is in hands of white people, whilst Africans only have a 4%. This sums to EFF’s claim “that black people own less than 2% of rural land, and less than 7% of urban land”, which is included in the motion to amend Section 25 of the Constitution.

Land State Audit Poverty, politics and race inequality are the three main drivers for this change. As mentioned before, whites are still richer than the black population, which is an important factor for the land reform. Race inequality in land ownership is stated as the reason for this expropriation without compensation, but until what extent are claims of such big differences, saying that white South Africans own 72% of all land, is true? An in-depth analysis of the Land State Audit by the Institute of Race Relations suggests that data used by the ANC and EFF is misleading.

The report divides land in South Africa between three categories: “erven” (urban land – 3,2m ha), agricultural holdings (340 000 hectares) and “farms” (110,7m ha.) It then divides them into private land, those held by companies, trusts, individuals, community-based organisations and into state-owned land, which belongs to national government, municipalities, provincial government, public entities and public school.

The first claim made wrong is that of EFF’s that black people own less than 7% of urban land. The State Land Audit says that individual black owners own 219 033 ha of urban land. if this is divided by the total urban land of 3,2 million ha, then it does give a 6,85% that claims the EFF. However, individual owned urban land is just a 22,6% of the total land, which accounts for 722 667 ha, so black africans really own 30,3% of the urban land in individuals hands. The 77,4% which is not individually owned is either privately owned by trusts, companies and community-based organizations or state- owned, but the land audit does not give figures for these.

A second wrong claim was made directly by president Ramaphosa. In an address to National Assembly he said: “While more than 3 million hectares of land was restored between 1995 and 2014, the Land Audit Report indicates that white people in our country still own around 72% of the farms owned by individuals; Coloured people in our country own 15%; and Indians 5% and Africans – who constitute the majority of the people who live in this beautiful land – only own 4%.” Again, this is a partial and misleading interpretation of the report. President Ramaphosa only takes into account on individual land ownership of farms and agricultural holdings, which accounts for only 30,4% of the total extent of the country. According to the land audit, 24% is in the hand of trsuts, 22,9% in state hands, 19% in companies, 2,9% in community-based organizations and 0,7% under co-ownership. If one looks at individual land only then yes, his claim would be right. However, if that 72% is adjusted to the 30,4% that individual land accounts for in the total, then land individually owned by whites do only make up for 21,4% of all land in the country, which is less than the state’s proportion. This also is a misleading argument as it forgets that the ANC government has acquired land and transferred it to black hands since the end of apartheid, and it also does not take into account that the land owned by community-based organizations, trusts and companies could own to black people.

All of this suggests that the State Land Audit offers little conclusions on the extent of how land is distributed by race, and the Institute for Race Relations’ analysis shows ANC and EFF politicians are using it in their favor.

Role of Politics Finally politics also enter the equation. The ANC is fearing they may lose their majority in the 2019 elections as the EFF is on the rise and corruption scandals in their party, including Zuma’s resignation, have hit them hard. The EFF leader Julius Malema has made it clear he won’t reach an agreement for a coalition the ANC, but would rather talk to the DA, according to reports on local press. The ANC therefore needs a majority by itself to govern and it is looking to attract the nation’s poor which traditionally voted massively for them and make the majority of their electorate This move to change the constitution to allow land expropriation without decompensation is one step in that direction.

Recent Example of Zimbabwe The move to expropriate land without compensation has reminded many of the recent example in Zimbabwe. Back in the year 2000 Robert Mugabe implemented a land- grabbing policy where white Zimbabwean farmers were expropriated without reimbursement and land was given to poor black people. This move, fueled by Mugabe after popular support was decreasing and he was risking losing the elections, a similar situation as Ramaphosa and the ANC are facing now in South Africa, was an economic disaster. In 1998 agriculture accounted for 21,8% of Zimbabwe’s GDP, and by 2016 that has fallen to 11%. But why did it work so badly? Many white farmers had loans and mortgages with banks and once their land was grabbed out of their hands they couldn’t pay them back causing losses in the banking sector and hyperinflation. Furthermore the new land owners couldn’t manage appropriately their land, reducing productivity. Recently Mugabe admitted for first time that "the farms we gave to people are too large. They can't manage them”, as the BBC reported. However, president Ramaphosa has said that this would be “no smash and grab”, as they are taking steps not to repeat Zimbabwe’s example, Associated Press reported. How land expropriation is done, if it is finally implemented, and the economic consequences which derive from it are yet to be seen.

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