The Republic of South Africa (RSA), the continent’s most developed country, is rich in natural resources, minerals and agriculture, and boasts advanced manufacturing and scientific sectors. Some of the world’s leading companies, such as Sappi and South African Breweries (SAB) originate there, writes Prince Michael of Liechtenstein.
However, its GDP growth rate of less than 2 per cent is extremely low for an emerging country with a rising population. Whilst GDP per capita is way above the rest of sub-Saharan Africa, the average growth rate is less than half the average for the region.
In the 20th century, South Africa was by far the biggest gold producer. As an example, in the 1980s, it accounted for some 60 per cent of global production. It is down to around 6 per cent today. And, although it is estimated that the country still has the world's largest gold reserves, production is constantly declining.
The reasons for this are inefficiency, industrial action, a lack of investment and depletion. But the main problem is that exploration has been greatly reduced and insufficient new mines have been opened. The development of the industry is hindered by a lack of trust in the economic and political future. Important obstacles are an extremely unreliable power supply, frequent strikes and a corrupt administration.
Mining is just one example, but the inability to provide energy security, is a sign of the administration's broader failings. The problems in the industry are reflected in the overall economy.
The result of governmental mismanagement is high unemployment, which is officially 25 per cent, but closer to 36 per cent when including people who abandoned searching for jobs, according to Herman Mashaba, a successful business man and founder of ‘Black Like Me.’ Youth unemployment currently exceeds 50 per cent.
In a populist move, the government and unions now want to introduce a minimum wage as the recipe to fight unemployment, with probably the only result being that youth unemployment will increase even further.
The alleged corruption and inability of South Africa's government, together with the unions, is damaging the economy and ruining the prospects of its youth. That is before mentioning the lack of human rights and the disastrous attitude towards health issues such as the HIV problem.
Yet, South Africa's government takes pride in being a member of BRICS and the G20, and sees this as an achievement for which to gain credit at home. Unfortunately, South Africa is not the only member of the G20 that has allegedly high levels of corruption and a dire record of managing its country.