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The South African economy

The problems that the South African economy must overcome as it attempts to overcome rising debts and economic slowdown.

Finance27
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The South African economy

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  1. The South African economy The challenges

  2. Growth and jobs Since 1996, and the early days of South Africa’s independence, the GEAR programme (Growth, Employment & Redistribution) has set out to promote jobs and growth. Growth was estimated to be 6%, but between 1996 and 2008, it actually levelled out at 3.2% Since the financial crisis, growth has continued to slow, now down to 1.9% The current ANC government plan to replace GEAR with a new National Development Plan to boost growth in the face of economic uncertainty.

  3. Debts and deficits One obstacle facing any future South African government is the rising trade deficit (currently at 6%), as well as government debt, which is currently 4% of GDP. Unemployment is also a concern for the government, as it currently stands at 24%.

  4. Mining Mining is one of the bedrocks of the South African economy. Commodity exports account for 60% of South Africa’s foreign revenues, but mining only contributes to 10% of economic activity. Strikes have recently been causing a challenge to the mining sector. Companies have lost as much as $590million in sales and workers have lost $500 million wages.

  5. Cost of living In the past year, the South African currency, the rand, has lost 20% of its value. This has been partly due to the removal of stimulus by the United States, which has added to the fragility of the South African economy. The cost of goods has been pushed up, meaning that expenses such as food, transport and housing are proving much more difficult to afford.

  6. Delivery of services South African municipalities are having problems delivering services, with fewer than 20 out of 284 municipalities have successfully delivered water, electricity and housing. This has, in turn, led to many protests in areas of South Africa, especially in poorer black communities. There has been some concern that South Africa could see something similar to the “Arab Spring” if problems are not fixed.

  7. Corruption South Africa has been hit by several corruption scandals since the 1990s. For example, South African President Jacob Zuma has been accused of using $23 million of taxpayer’s money to renovate a luxury government residence. News such as this adds to growing dissatisfaction with the South African government.

  8. Brought to you by http://www.finance27.co.za/

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