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Country ProfileA rich mix of ethnicities, cultures and languagesPlentiful mineral deposits and natural resourcesConstitutional democracy with a three-tier systemUnemployment and wealth disparity remain challenges

COUNTRY PROFILE

Cape Town is the legislative capital and home to the parliament

Although southern Africa has been consistently inhab-ited for tens of thousands of years, South Africa’s mod-ern history traces back most directly to the aboriginalKhoisan. The majority of modern South Africa’s blackpopulation is descended from a mix of ethnic groups,including the Bantu, who migrated from elsewhere inAfrica over the past 2500 years.

Around 1200 the region emerged as a centre for goldand ivory trading, with routes to India and as far awayas China. Dutch traders first arrived in the mid-1600son stopovers on the spice route between the Nether-lands and the Far East. Towards the end of the 18thcentury the British supplanted the Dutch as the dom-inant mercantile power, assuming an increasingly largerole in local politics and business, while the Dutch set-tlers migrated to rural areas, adopting the label Boers(Dutch for “farmer”). The discovery of gold and diamonddeposits in the late 1800s encouraged a significant risein European immigration, further marginalising indige-nous communities and fostering increasing tensionbetween the various groups of settlers.

The race for land and commodities, along with issuesover self-determination, gave rise to a number of dis-putes and wars throughout the 19th century betweenlocal ethnic groups, as well as between the Boers andthe British. A spate of British victories eventually broughtabout the establishment of the Union of South Africain 1910 as an imperial dominion.APARTHEID: Although the role of blacks in the politi-cal and economic domains was already extremely lim-ited, in 1948 the National Party came to power andenacted a system of racial segregation. Apartheidfavoured the maintenance of white minority rule at theexpense of the black majority, and prompted opposi-tion from around the world. Domestically, the mostactive opponent was the African National Congress(ANC). Boycotts by Western nations, combined with ANCpressure and a moral shift, eventually led to the regime’sdecision to cede power and dismantle the system ofnationalised segregation. In 1994 the first multi-racial

elections were held and an ANC-led government wasvoted in, with Nelson Mandela inaugurated as the coun-try’s new president. Post-apartheid, the country hasembraced a new era of equality and revelled in its tran-sition from diplomatic and economic isolation to its newrole as one of Africa’s leading powers. While it hasgained prominence through high-profile milestones,including the hosting of the 2010 FIFA World Cup, thenew South Africa continues to grapple with the imbal-ances of economic empowerment and unequal wealthdistribution wrought by decades of discrimination. POLITICS: South Africa is a constitutional democracywith a three-tier system. The parliament is bicameral,with a 400-seat National Assembly and a 90-seat Nation-al Council of Provinces. Executive leadership lies withthe president, who is elected by the assembly, which,in turn, is elected by proportional representation. TheNational Council of Provinces represents South Africa’snine provinces. Both the parliament and the presidentare elected for five-year terms, with the last generalelection taking place in April 2009. The head of stateis allowed to serve for two terms. The current presi-dent, Jacob Zuma, and his ruling ANC hold 264 of theNational Assembly’s 400 seats, having gained 69.7% ofthe vote in 2009. The main opposition party, the Dem-ocratic Alliance, holds a total of 67 seats, a 20-seatimprovement on the 2004 elections. Other prominentparties include the Congress of the People, with 30 seats,and the Inkatha Freedom Party, with 18.

After the end of apartheid, the four provincial gov-ernments were expanded to nine: Eastern Cape, FreeState, Gauteng, KwaZulu-Natal, Limpopo, Mpumalan-ga, North West Province, Northern Cape and WesternCape. Each local government has basic autonomy con-cerning local matters within their province. Functionsof government are separated between regions. CapeTown is the legislative capital and is where parliamentsits. Pretoria is the executive capital, where the gov-ernment administration is housed, while the Constitu-tional Court of South Africa is based in Bloemfontein.

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THE REPORT South Africa 2012

Facing the futureOld traditions merge with modern life in this resource-rich land

COUNTRY PROFILE

POPULATION & DEMOGRAPHICS: Dubbed the Rain-bow Nation, South Africa’s population of around 50.5mis a melting pot of ethnicities, cultures and languagesthat reflect the country’s rich and tumultuous history.According to the 2010 census 80% of South Africansare of black African ancestry, divided among variousethnic groups and spoken languages.

The constitution recognises 11 languages, includingZulu, spoken by 23.8% of the population; Xhosa (17.6%);Afrikaans (13.3%); Sepedi (9.4%); English (8.2%);Setswana (8.2%); Sesotho (7.9%) and Xitsonga (4.4%).Most non-Anglophones speak English as a second lan-guage, and all business and government matters areconducted in English. Around 80% of the population isclassified as Christian, while 15% claim no religious affil-iation, adhering to traditional indigenous beliefs. Theremaining 5% comprise Muslims, Hindus and Jews. GEOGRAPHY & CLIMATE: South Africa lies on thesouthern tip of Africa, occupying 1.22m sq km with 2798km of coastline along the Atlantic and Indian Oceans.It surrounds the Kingdom of Lesotho as a landlockedenclave and is bordered to the north by Namibia,Botswana and Zimbabwe, and to the east by Mozam-bique and Swaziland. South Africa is home to variedtopographic and climatic zones, ranging from lush sub-tropics in the east to extreme desert in the farthestnorth-west. For the most part the climate is semi-arid,especially on the west coast and inland, making it sus-ceptible to droughts. The west coast and inland regionshave warm days and cool evenings, while along the coun-try’s east coast a prevailing subtropical climate makesthe region hot and humid during the summers butquite pleasant during the winter and autumn.NATURAL RESOURCES & ENERGY: South Africa hasvast deposits of minerals and natural resources. It is theworld’s fourth-largest source of gold and diamondsand sits on more than three-quarters of global platinumreserves. It also has large deposits of uranium, coal, andother metals and minerals. It is estimated that in 2010South Africa’s mining industry contributed nearly 18%

of GDP, of which 8.6% is a direct contribution. The coun-try processes around 20m tonnes per annum of oil andconsumes 23m tonnes of liquid fuel products, of which45% is gasoline and 26% diesel. Because of the abun-dant supplies of cheap coal, this indigenous resourceis used to generate most of its electricity and a signif-icant proportion of its liquid fuels. Rapid economicgrowth and industrialisation is creating growing demandfor electricity, and efforts are being undertaken to fur-ther develop the contribution of natural gas, nuclearand renewable sources to the national energy mix. ECONOMY: South Africa’s is considered the mostadvanced economy in Africa, with well-developed finan-cial, communications, energy and transport sectors. Itsstock exchange is the largest on the continent and theworld’s 18th-largest, while the rand is among the mostactively traded emerging market currencies. With strongmining and manufacturing export sectors and a flour-ishing tourism sector, the domestic economy is verymuch influenced by swings in global economic condi-tions, and there is pressure to keep the rand low. Vastnatural resources and domestic growth opportunitiesaside, investor interest in South Africa also stems fromthe country’s strong financial services infrastructure,political stability and solid regulatory environment, allof which enable it to serve as an entry point and basefor pan-African operations. In June 2011 South Africawas officially granted full entry into the BRIC grouping,with Brazil, Russia, India and China’s decision to extendmembership a reflection of its undeniable influence overAfrican economic development and investment.

While South Africa is an economic success story ona macro scale, development is concentrated in theprime urban centres of Johannesburg/Pretoria, CapeTown and Durban. Gauteng province, in which bothPretoria and Johannesburg are located, is the country’seconomic epicentre and the location a significant por-tion of economic activity, including mining, industry,banking and capital markets. Gauteng contributes one-third of South Africa’s GDP and accounts for roughly10% of GDP for the entire continent. CHALLENGES: According to 2011 figures South Africahad the ninth-worst Gini coefficient in the world, ameasurement widely used to assess income inequali-ty. With the fall of apartheid, the government has beenfaced with equipping the economy to handle the influxof new workers into an already saturated market.

A large proportion of the population lives underdeveloping world standards and nearly a quarter ofSouth Africans are unemployed. Many people inhabitinformal settlements known as townships outside majorcities. Illegal immigration from elsewhere on the con-tinent contributes to the growth of these areas.

While economic empowerment and affirmative actionhave been applauded for contributing to the rise of anemerging black middle class, some in the business com-munity have expressed frustration at what they per-ceive as restrictive labour regulations and high levelsof state ownership in the wider economy. These issuesare ones that the country will have to carefully addressas it continues to work to remedy the wrongs of its past.

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The country is home to varied climatic zones, from the subtropical to the semi-arid

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