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South Africa
International Finance
Country Report
Leann Bustamante
Miriam McDonough
Lindsay Surig
Brief Description of South Africa
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Republic of South Africa
Size: Less than 2x Texas
Capital: Cape Town
Population: 43, 647, 658: Growth rate.02%
Ethnic Groups: black (75,2%), white
(13.6%), colored (8.6%), Indian (2.6%).
Brief Description of South Africa
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The Boers: Dutch Settlers
The Boer War: (1899- 1902)
1990s- End of Apartheid
General Economic Importance
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Middle income, developing country
Well-diversified economy
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Natural Resources
Financial, Legal, Communication, Energy and
Transport, Mining sectors
Stock Exchange: ranked among 10 largest in the
world
General Economic Importance
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Economic Problems
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Unemployment rate
Problems with respect to Apartheid Era
Crime and Corruption
HIV/AIDS
General Economic Importance
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Imports/Exports
Recent Economic History
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External Accounts
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1998- 1.6%
1999- virtual balance
1998- Measures to reduce unemployment
2000- Free Trade Agreement with EU
2001- South African Development Community (SADC)
trade protocol
2000- President MBEKI vow to promote economic growth
and foreign investment
2001- Government slow down (result of international
economy)
2001 GDP Figures
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GDP - $412 billion
GDP growth rate – 2.6%
GDP composition by sector
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agriculture –3%
industry- 31%
services-66%
Inflation Rate- 5.8%
Political Stability and Structure
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Apartheid  Democracy
Reformed structure 2002
Organization for African Unity  African Union
AU focus
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Changed from fight against poverty and human rights
To promote democracy, good governance, and economic
growth
Assistance
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AU and President Thabo Mbeki continue to
seek assistance to implement their ideas
“Future assistance will be focused on countries
that demonstrate a political and financial
commitment to good governance and the rule of
law, investing in their people, and pursuing
policies that spur economic growth and alleviate
poverty implementation. We will not work with
governments which disregard the dignity and
interests of their people.”
Stability
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Increasing levels of stability
The political structure seems strong
enough to hold the diverse region together.
There are huge expectations for the new
South Africa.
Major Exports
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32.3 billion dollars in exports
Export commodities: gold, diamonds,
platinum, metals, minerals, machinery, and
equiptment
Export partners: EU with 33%, United
States with 20%, Japan with 6%, and
Mozambique with 2.5%
Major Imports
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28.1 billion dollars in imports
Larger exporters than importers
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Expected of a growth country
Imports include machinery, rice, equipment,
chemicals, petroleum products, and scientific
instruments
Major importing partners:EU with 41%, United
States with 11.4%, Saudi Arabia with 7.3%, and
Japan with 7%
Currency
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Rand
Over 10 years had devalued by 2/3
2001 fell 25% against the dollar, yen, and
the pound
Favorite object for speculators
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Underrated by 15% - 20%
Exchange rates
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Rand per US dollar from 1997-Jan2002
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11.58786 (January 2002), 8.60918 (2001),
6.93983 (2000), 6.10948, (1999), 5.52828
(1998), 4.60796 (1997).
Trade Relationship with
the United States
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South African shipments are entitled to
specialized treatments under:
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Generalized System of Preferences
African Growth and Opportunity Act
United States shipment are entitled to Most
Favored Nation Status
Trade Relationship with
the United States
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1994: U.S.-South Africa Binational
Commission
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2002: U.S.-South African Cooperative
Forum
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Between 1996 and 1999, foreign
investment has increased significantly
Other Major Trading Partners
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South African Customs Union
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Free Trade Agreement
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Botswana, Lesotho, Namibia, and Swaziland
European Union
South African Development Community
Free Trade Agreement
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Fourteen countries in the region
South African Trade by Country
(Rand ‘000)
Investment Potential
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Positives:
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Offers a market with a steadily growing economy
Provides easy access to the other markets in
Africa
Labor costs that are low
Well developed financial institutions and capital
market
Strong macroeconomic policies
Investment Potential
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Negatives
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Unemployment and crime rates are high
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Education and health care systems are
extremely poor
Investment Potential
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South African Government has conducted a
number of investment promotion efforts
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Attractive investment destination for capital
goods, technology, foreign investment, and
joint ventures
South Africa
Questions or Comments?