Challenges and opportunities: Natural resources and strong economic growth reveal potential, yet the country must navigate social issues

Since the end of apartheid in 1994, South Africa has come a long way. Indeed, the Rainbow Nation is a symbol of what other continental economies aspire to, with a liberalised economy, a comparatively robust democracy, a free media and the potential for socioeconomic mobility. However, the challenges the country faces, which range from an increasingly strained infrastructure to income disparity and issues of equality, have also highlighted some of the obstacles inherent in achieving a sustainable level of economic growth and social development. Still, while these fundamental issues cannot be ignored, South Africa’s past success and its favourable long-term outlook mean that the country will likely remain a key bellwether of the continent in the years ahead.

Geography & Climate

Lying at the southern tip of continental Africa, South Africa has borders with six nations including Botswana (1840 km), Mozambique (491 km), Namibia (967 km), Swaziland (430 km) and Zimbabwe (225 km). In addition, The mountainous Kingdom of Lesotho is completely landlocked inside of South Africa and shares a 909-km border. The coastline is extensive at 2798 km combined on both the Atlantic and Indian Oceans. Furthermore, South Africa is the 25thlargest country in world, totalling 1.2m sq km. There are two major rivers in South Africa, namely the Limpopo and the Orange. Lake Chrissie is the largest freshwater lake in the nation, and in general there is a shortage of fresh water sources. In terms of topography, the Drakensberg mountain range is the most significant in the country and is highlighted by Mafadi Mountain, which peaks at 3450 metres. In 2000 Drankensberg Park was designated as a UNESCO World Heritage Site. The climate is officially designated as semi-arid, although it ranges from sub-tropics to desert throughout the country. With hot summers and cold winters, the temperature varies significantly in most parts of South Africa depending on the season and the geography.

Natural Resources

Since the 1200s, ivory and gold traders have flocked to the area now known as South Africa with trade routes reaching as far as India and China. In 1886 enormous gold deposits were discovered in what would shortly afterwards become the city of Johannesburg.

South Africa’s most populous urban centre began as a mining town with settlers inhabiting the area during the subsequent gold rush. Though internationally known for gold production, South Africa also has large amounts of diamonds, uranium and coal, as well as other metals and minerals. These natural resources form the basis of what has become the fifth-largest mining industry in the world, which today accounts for over 5% of the nation’s GDP.

Exporting natural resources is an important catalyst for the economy. South Africa contains over three-quarters of the world’s platinum reserves and continues to hold the top spot in platinum production. Despite recent hydrocarbons discoveries, most of South Africa’s oil is imported for refining: the country processes around 20m tonnes of oil a year and consumes 23m tonnes of liquid fuel products, of which 45% is gasoline and 26% diesel. South Africa utilises its abundant supplies of cheap coal to generate most of its electricity, although lack of investment in infrastructure has resulted in electricity shortages in recent years, which have spurred research and investment in natural gas, nuclear and renewable sources of energy. This new era of innovation continues a long history of adaptation: its years of economic isolation and modest oil reserves stimulated the development of a domestic coal-toliquid industry, which has established South Africa as a global innovator in this field.

Wildlife

South Africa has been a popular safari destination for years due to its landscape and worldfamous wildlife. Indeed, South Africa is a popular destination for tourists hoping to catch a glimpse of elephants, rhinos, leopards, buffalos and lions, dubbed the “Big 5”. This is in addition to hippopotamus, zebras, wildebeests, cheetahs, giraffes and other famed species. Poachers, growing metropolitan areas and additional land designated for farming have all had a negative impact on the wildlife of South Africa. The De Wintons golden mole and the riverine rabbit have both been placed on the critically endangered species list, with 11 additional species on the endangered list.

Although many efforts to curb illegal hunting have been put into action, instances of rhino poaching remain high. Through June 2013, 461 cases of rhino poaching had occurred, which is more than the total number in all of 2011. The poachers generally target the rhino horns, which are often sent to China, where many claim the horns have medicinal value though no evidence has ever been found to support this claim. As well as laws and awareness campaigns, several areas have been designated national parks and wildlife reserves to protect the animals. Kruger National Park is one of the largest wildlife reserves in the world, totalling around 20,000 sq kilometres, which is bigger than the nearby nation of Swaziland. Kruger and several other safari destinations have been tourist hotspots for many years. Efforts to sustain South Africa’s wildlife continue, though significant challenges remain.

Population

South Africa is home to around 51.7m people and has a reputation for being a “rainbow nation” due to its unique diversity. In 2012 Statistics South Africa released the 2011 census information, which reported the demographic breakdown of the country: 79.2% black African, 8.9% white, 8.9% coloured and 2.5% Indian.

Approximately 48.7% of South Africans are male, while 51.3% are female. There are 11 officially-recognised languages including Zulu, spoken by 23.8% of the population, Xhosa (17.6%), Afrikaans (13.3%), Sepedi (9.4%), English (8.2%), Setswana (8.2%), Sesotho (7.9%) and Xitsonga (4.4%).

Most South Africans speak English as a second language and most official communication is conducted in English. Hindus, Jews and Muslims combine to comprise roughly 5% of the population, with another 15% either following traditional beliefs or identifying as non-religious. The majority of South African citizens identify themselves as Christian (80%), which is a legacy of the Dutch and British settlers that first introduced the religion to the region. Of the Christian population, the majority are classified as Protestant or Pentecostal.

Economy

With the 18th-largest economy in the world, and the largest in Africa, South Africa is considered to have an advanced economy. Indeed, the rand is one of the most actively traded emerging market currencies in the world.

While South Africa remains a model of economic success, most of the growth is in developed urban areas with rural regions experiencing little growth. Gauteng province, home of both Pretoria and Johannesburg, is the economic epicentre of the nation and accounts for roughly 10% of the GDP of the entire continent of Africa. Moreover, the World Economic Forum’s Global Competitiveness Index ranked the South African economy as the 52nd-most competitive economy out of the 144 countries studied in the 2012/13 report.

The report cited strengths in economy size (ranked 25th globally), financial market development (3rd), soundness of banks (2nd), financial service availability (2nd), reporting and auditing standards (1st), efficacy of corporate boards (1st), legal framework efficiency (17th) and protection of minority stakeholder interest (2nd). The biggest concern outlined in the report was the labour market efficiency ranking of 113th. Overall, the report highlighted South Africa’s strong financial sector, which has been a source for attracting investors.

Infrastructure

South Africa boasts a modern and well-developed infrastructure system. There are 750,000 km of roads and most are generally well maintained. About one-fifth of the roads are toll roads. A multi-billion-rand road upgrade was recently completed in Gauteng, which has improved traffic levels in South Africa’s busiest region.

By sea, South Africa uses its strategic location at the southern tip of Africa and access to two oceans. South Africa has a well-developed shipping system with modern ports that handle more than 95% of the nations exports. There are eight commercial ports which are located in Mossel Bay, Cape Town, Richards Bay, East London, Port of Ngqura, Saldanha, Durban and Port Elizabeth.

With over 20,000 km of rail lines, South Africa has the 14th-largest rail network in the world, and contains over 80% of the rail lines on the entire continent. These lines are responsible for large amounts of freight heading towards South African ports and are estimated to carry some 2.2m passengers a day.