COUNTRY CASE STUDY

SOUTH AFRICA
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COUNTRY PROFILE APARTHEID AGRICULTURE TOURISM AND INFRASTRUCTURE HEALTH PROBLEMS(HIV/AIDS) IBSA

A study on South Africa as a part of AMEE course submitted to Prof. Prabhat Pankaj , Jaipuria Institute of Management, Noida

By: STUDY GROUP NO: 1 Asha Kakoti Niharika Tyagi Noopur Rastogi Pallavi Sinha (PGFA1010) (PGFA1025) (PGFA1026) (PGFA1028)

COUNTRY PROFILE POPULATION 2010 estimate 49,991,300 2001 census 44,819,77 AGE STRUCTURE 0-14 years: 32.1% (male 7.17 million/female 7.21 million) 15-64 years: 63% (male 18.00 million/female 14.74 million) 65 years and over: 4.9% (male 0.8 million/female 1.39 million) (2001 est.) 0-14 years: 28.9% (male 7,093,328/female 7,061,579) 15-64 years: 65.8% (male 16,275,424/female 15,984,181) 65 years and over: 5.4% (male 1,075,117/female 1,562,860) (2009 est.) GDP, GROWTH RATE, PER CAPITA INCOME GDP (PPP) 2009 estimate TOTAL $505.214 billion PER CAPITA $10,243 GDP (Nominal) 2009 estimate TOTAL $287.219 billion PER CAPITA $5,823 WORLD BANK CLASSIFICATION AND RANKING South Africa is among the 47 developing countries according to World Bank data. It ranks South Africa in the upper middle income group($3,946 to $12,195).

NATURE OF THE ECONOMY AND THE BUSINESS South Africa has a mixed economy with high rate of poverty and low GDP per capita. By UN classification South Africa is a middle-income country. South Africa has a huge reserve of natural and mineral resources, a flourishing tourism industry, a stock exchange that ranks among the top twenty in the world, and a modern infrastructure. But there is a contrary side to these facts as the development is limited only to the major cities of South Africa (Cape Town , Johannesburg , Port Elizabeth, Durban). It is ranked 25th in the world in terms of GDP (Purchasing Power Parity) as of 2008.

SPECIFIC FEATURES OF SOCIETY AND ECONOMY South Africa is the largest economy of the African continent and the only African country in the Group of 20. But 34% of the population live below the poverty line and with 23% unemployed people South Africa has many problems to cope with. Discrimination between the blacks and whites in the country have existed long due to apartheid. After apartheid, however government is continuously working on to shorten the gap between the different racial groups. One of the most prevalent problems is the fact that South Africa has the highest HIV AIDS infections in the entire world.

PURPOSE OF THE STUDY

This country case study is a part of the course outline of AMEE (Analysis of Macro Economic Environment). The study aims to give us a clear understanding of one of the most developed countries in the poverty stricken African continent that is, South Africa. It also seeks to determine the causes of its development and also the hurdles that are existing to prohibit the intended growth.

COUNTRY SPECIFIC

APARTHEID South Africas development has been plagued by Apartheid which was a system of legal racial segregation enforced by the National Party government of South Africa between 1948 and 1994, under which the rights of the majority 'non-white' inhabitants of South Africa were curtailed and minority rule by white people was maintained. Blacks constitute 79% of the population while whites constitute 9.5%. From 1958, black people were deprived of their citizenship, legally becoming citizens of one of ten tribally based self-governing homelands called Bantustans, four of which became nominally independent states. The government segregated education, medical care, and other public services, and provided black people with services inferior to those of white people. Post 1994 many measures have been taken to improve the situation.

South Africas growth performance has strengthened substantially since the end of apartheid in 1994. South Africas long-run growth prospects depend importantly on policies and institutions that will help to reduce unemployment (by enhancing job skills, increasing labor-market flexibility, and lowering the costs of labor relative to capital), and improve the investment environment. But the racial inequality still exists It was reported that in 1995 the average white household earned four times as much as the average black household. In 2000 the average white household was earning six times more than the average black household. refer Appendix: Figure 1

HIV / AIDS There are, however, several risks to the long-run outlook, including the potential adverse impact of HIV/AIDS on the labor force and productivity. An estimated 5.6 million people were living with HIV and AIDS in South Africa in 2009, more than in any other country. It is believed that in 2009, an estimated 310,000 South Africans died of AIDS. The youth age group 15-49 is the one most affected with 17.8 percent affected. The age bracket that AIDS most heavily targets younger adults means it is not uncommon for one or more parents to die from AIDS while their offspring are young. The number of premature deaths due to HIV/AIDS has risen significantly over the last decade from 39 percent to 75 percent in 2010 Almost one-in-three women aged 25-29, and over a quarter of men aged 30-34, are living with HIV in South Africa.
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As a result South Africas mortality rates have taken a blow. The overall number of annual deaths increased sharply from 1997, when 316,559 people died, to 2006 when 607,184 people died. South Africas HIV and AIDS epidemic has had a devastating effect on children in a number of ways. There were an estimated 330,000 under-15s living with HIV in 2009, a figure that has almost doubled since 2001.

AGRICULTURE South Africa has what is known as a dual agricultural economy. On the one hand, there is a welldeveloped commercial sector; on the other hand, the majority of people engaged in agriculture are involved in subsistence-oriented practices in rural areas. In the predominantly whitecontrolled commercial sector, applied research and improved farm management have nearly doubled agricultural production during the past 30 years. Chief exports include corn, diamonds, fruits, gold, metals and minerals, sugar, and wool. Machinery and transportation equipment make up more than one-third of the value of the countrys imports. Other imports include chemicals, manufactured goods, and petroleum. Currently, South Africa is not only self sufficient in virtually all major agricultural products but in a normal year is also a net food exporter, making it 1 of 6 countries in the world capable of exporting food on a regular basis.

INFRASTRUCTURE AND TOURISM INDUSTRY Also , the infrastructure and tourism industry is rapidly growing which is contributing majorly to the growth of the country. South Africa is on a multibillion-rand development drive to remedy the skewed implementation of infrastructure during the apartheid years, and to meet the demands of a growing economy and population. The country is host to a number of events like IPL , World Cup Cricket, World Cup Football , film shooting, game reserves etc which results in huge turnover for the country. The 2010 FIFA Football World Cup, for which the government is investing heavily in building or upgrading 10 world-class stadiums, and on the energy, transport and telecoms infrastructure needed for this massive event. It is endeavoring to become one of the most popular sporting destinations in the world.

INDIA AND SOUTH AFRICA India and South Africa are very closely bonded on Mahatma Gandhi and non violence. India had been in the forefront of the international community in supporting the anti-apartheid struggle in South Africa ever since Mahatma Gandhi started his Satyagraha movement in South Africa over a century ago. India was the first country to sever trade relations with the apartheid Government in 1946, and subsequently imposed a complete - diplomatic, commercial, cultural and sportsembargo on South Africa. India worked consistently to put the issue of apartheid on the agenda of the UN, NAM and other multilateral organizations and for the imposition of comprehensive international sanctions against South Africa. The ANC maintained a representative office in New Delhi from the 1960s onwards.

Both India and South Africa have dual faces. On one hand, one part of the country is fully developed and world class whereas the other part is struggling to meet the basic necessities of life. Commercial relations have flourished since the establishment of diplomatic relations in 1993. On the trade front, it is particularly noteworthy that the value of bilateral trade has gone up by 33% from about US$ 4.7 billion in 2006-07 to US$ 6.27 billion in 2007-08 and 7.5 billion in 20082009. Bilateral trade figures since 2001 are as follows: refer Appendix: Figure 3. Potential exports from India to South Africa include vehicles, transport equipment, drugs and pharmaceuticals, computer software, engineering goods, footwear, dyes and intermediates, chemicals, textiles, rice etc. Potential areas of import from South Africa to India have been identified as rock phosphates, precious stones and minerals, fertilizers, steel, coal, transport equipment, pulp and pulp manufacturing, etc. Major investors include Tatas (vehicles, IT, ferrochrome plant), the UB Group (beer manufacture, hotels), Mahindras (utility vehicles) and a number of pharmaceutical companies, including Ranbaxy, CIPLA, etc. South African investments in India led by SAB Miller (breweries), SANLAM and Old Mutual (insurance), ALTECH (set top boxes), Adcock Ingram (pharmaceuticals), Rand Merchant Bank and Standard Bank (banking).

India is among the top ten investing countries in South Africa.

Tourism from South Africa to India has shown an upward trend but is still below potential, and is hampered by poor air connectivity between the two countries. Recent figures are tabulated below: refer Appendix: Figure 3

With the mega sporting event like Indian Premier League , and Bollywood film shootings a regular event out here it can be safely said the trade relation is certainly on the rise. Both the countries are known for the diversity in their cultures and languages. The major part of the South African Asian population is Indian in origin ; many of them descended from indentured workers brought in the nineteenth century to work on the sugar plantations of the eastern coastal area.

Review of a related Article with full reference IBSA ( INDIA , BRAZIL, SOUTH AFRICA ALLIANCE) The article was published at http://ipsnews.net/interna.asp?idnews=22714. The IBSA is a partnership of three countries India, Brazil, South Africa representing three continents Asia, South America and Africa. This international tripartite promotes international cooperation and trade (agriculture, defence, education etc.) between these countries. On 6 June 2003, the Brasilia declaration was signed by the foreign ministers of India, Brazil and South Africa. The Ministers highlighted their priorities on promotion of social equity and inclusive growth by reiterating the need for tackling hunger and poverty by means of effective implementation of government schemes. The declaration also highlights the need for promoting family-run farms, food security, health, education, human rights and environmental protection. The ministers also stressed the importance of elimination of racial discrimination and gender bias while framing public policies. This partnership has certainly brought together the three continents in some sense as since the pact was signed in 2003 there has been a huge increase in the exports and import between the three countries. Also using Brazil as a gateway India is exploring new markets in South America which has helped it to reduce the trade deficit significantly. Exports to Latin America doubled in the April-July 2008 period to $3.2 billion followed closely by Africa, the shipments to which were up more than 50%, detailed data put out by the government showed. After the global financial meltdown caused Indias exports to shrink sharply to traditional markets in the EU and the US, the government decided to promote the less tapped markets of Africa and Latin America in its trade policy announced in August 2009. It gave incentives to exporters to explore 39 new markets 26 under the focus market scheme and 13 under market-linked focus product schemes. (Source: Economic Times) Refer Appendix Figure 4

CONCLUSION Thus, after studying the various aspects of South Africa we see that the development is deeply plagued by the worsening problems in the health sector. South Africa is however spearheading the development process in the African continent exploiting its abundant supply of natural and mineral resources. Human capital is one of the most important asset of any country. One of the main reasons why India is believed to become a superpower within the next two decades is because India will the largest number of youths in the coming years. This will lead to a huge human capital . but South Africas mortality rates speak another story. A major percentage of the youths in South Africa are suffering from this deadly disease. The government has to take active steps to counter the health problem and to spread awareness and prevention steps.

APPENDIX
FIGURE 1

FIGURE 2 Figures in M. US$ India's Exports India's Imports Total Trade 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 (Jan-May) 539.35 1,899.19 2,438.54 984.04 2,197.67 3,181.70 1,526.87 2,471.80 3,998.67 2,244.74 2,469.73 4,714.47 2,658.67 3,614.86 6,273.53 1,980.28 5,513.58 7,493.87

Source: Department of Commerce, Govt. of India. FIGURE 3 Inbound/outbound India to South Africa South Africa to India 2003 41,018 23,873 2004 36,172 32,129 2005 36,045 39,239 2006 NA 38,739 2007 NA 41,855 2008 NA 35,856

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FIGURE 4

SOURCE: ECONOMIC TIMES

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