South African Business 2016 edition

SPECIAL FEATURE In a

SPECIAL FEATURE In a year that saw world economic and political uncertainty, South Africans still had much cause to celebrate. Great strides have been made nationwide in building schools and hospitals, major efforts are underway in terms of job creation, skills development, SMME growth, the empowerment of women as well as innovation. After a tough period of loadshedding and energy instability, Eskom seems to have the national grid stabilised as well as solid plans for the expansion of our infrastructure. South Africa also hit the world headlines through the discovery of a new species of human relative (“Homo naledi”) at the Cradle of Humankind World Heritage Site, a local doctor successfully completed the world’s first penis transplant, and Trevor Noah captured a slice of America’s cultural empire by taking over as host of Comedy Central’s The Daily Show. National priorities In his State of the Nation Address in early 2015, President Jacob Zuma said that it had been the year of “rededicating ourselves to eradicate racism and all related intolerances in our country. Zuma added that the country’s ambition of achieving a growth target of 5% by 2019 is at risk because of slow global growth as well as domestic constraints in energy, skills, transport and logistics amongst other factors. However, the situation was more promising on the jobs front as Statistics South Africa’s report on the last quarter of 2014 showed that there are now 15.3-million people who are employed in South Africa. “Jobs grew by 203 000,” said Zuma, adding that the economy still needed a major push forward. Zuma also presented government’s nine-point plan to ignite growth and create jobs. SOUTH AFRICAN BUSINESS 2016 12

SPECIAL FEATURE “A lot has been achieved in the past year. We believe that our nine-point economic intervention plan on the economy will consolidate the achievements, and ignite much-needed growth,” said Zuma. South Africa has the 24th largest economy in the world and contributes 30% of sub-Saharan GDP despite having only 6.5% of the population. Sound financial management has seen South Africa’s macro-economic fundamentals become very strong off the shaky base that the apartheid regime created. In particular, prudent controls meant that South Africa was able to withstand the shockwaves sent around the world by the international financial-sector meltdown. The country is renowned for an abundance of mineral resources, accounting for a significant proportion of both world production and reserves, and South African mining companies dominate many sectors in the global industry. South Africa produces 10% of the world’s gold (it is estimated that about one-third of the world’s unmined gold still remains in South Africa) and there has been an increase in the beneficiated minerals industry, which the government has targeted as a growth sector. National Government’s 9-point growth plan 1. Resolving the energy challenge. 2. Revitalising agriculture and the agro-processing value chain. 3. Advancing beneficiation or adding value to our mineral wealth. 4. More effective implementation of a higher impact Industrial Policy Action Plan. 5. Encouraging private sector investment. 6. Moderating workplace conflict. 7. Unlocking the potential of small, medium and micro enterprises (SMMEs), cooperatives, township and rural enterprises. 8. State reform and boosting the role of state owned companies, information and communications technology (ICT) infrastructure or broadband roll-out, water, sanitation and transport infrastructure. 9. Operation Phakisa, which is aimed at growing the ocean economy and other sectors. Economy The discovery of diamonds and gold in the 19th century laid the platform for the development of South Africa as an industrialised economy. Wool, wine and mohair were the country’s only exports before minerals were discovered. Although mining plays a far smaller role in the economy than it used to, it still contributes significantly to GDP, employment and taxation income. Demand for platinum, iron ore and manganese from the new global powerhouses of China and India is motivating investment in the sector in South Africa. Mining companies account for about a third of the market capitalisation (R1.86-trillion) of the country’s stock exchange, the JSE. One of South Africa’s fastest-growing manufacturing sectors, catalytic converters, also 13 SOUTH AFRICAN BUSINESS 2016