South Africa’s economy is still trundling along at a sluggish pace, which has economists, officials, and even President Cyril Ramaphosa suggesting ways in which economic growth drivers could be implemented in order to move the GDP (Gross Domestic Product) along. South Africa has a series of key sectors that have historically driven the economy – and Ramaphosa’s latest suggestion is that mining may be the key to job creation, the flourishing of new business, and growing the economy. Indeed, South Africa has been known for its mining heritage and a move towards the industry could foster the results in the economy that are hoped for.Mining
According to the Minerals Council of South Africa, the mining sector contributed R312 billion towards the GDP. Gold, diamonds and platinum are the key minerals mined, but also chrome, vanadium, and titanium have a large presence in the country. Around 465,000 people were employed in the mining sector in 2017 – so enlarging the mining sector could definitely be said to bring about jobs to facilitate the growth of the economy. One of the biggest benefits that mining brings to the economy – and perhaps the reason that President Ramaphosa is pushing for the industry to grow – is that the mining sector attracts foreign investment. So, in order to bring South Africa’s economy out of any perceived slump, bringing in a cash injection from out of the area could get the economy going again. Many of the precious metals mined in South Africa are traded around the world and a shortage would definitely be felt, so increasing the output from mining and placing a greater focus on development in the industry could see the GDP from mining rise and improve the economy.Agriculture
Agriculture is responsible for at least 10% of South Africa’s economy and helps bring in the US$60 billion in Rand that is traded every day on the South African forex market. This also takes into account inflation rates set by the MPC, which also sets the interest rate. Indeed, exports in grains and cereals are key to South Africa’s growth. On a year of good rainfall, maize production produces 150,000 jobs, which equates to around half of the entire agriculture industry in South Africa. The agriculture sector faced a regional drought in 2018 but the figures look promising moving into 2019 and beyond. The growing wine industry in South Africa has reported growth, with a 4% year-on-year increase of South Africa’s wine exports. The first eleven months of 2018 recorded a positive trade balance for agriculture, which represented a record dataset since 2001. The largest market for the agriculture in South Africa – including also palm oil and offal – is elsewhere on the continent. Becoming an agricultural powerhouse not only helps increase jobs but it helps invigorate entire areas. As other countries look elsewhere for trade deals, South Africa’s agricultural exports will look even more enticing and the trade relationship built from that could pay dividends for the sector and for the country.Digital
Another key area of growth that South Africa has been focusing on is the digital sector. Harnessing the power of technology and being able to facilitate greater communication and information sharing in the digital age could unlock pockets of growth to boost the economy. The digital growth stands at R59 billion - 2% of South Africa’s GDP. Part of this includes the growth of blockchain and Bitcoin and other cryptocurrencies in the country. Enhancing payment options to include those which allow for easier and cheaper cross-border transactions means that the country can open its channels of trade with countries that might previously have been out of bounds due to the expensive nature of the financial transaction. The digital economy also includes social media and the ability to reach a wider audience through the internet, which could spell benefits for attracting tourism, trade development, and even investment. However, the issue with digital is that not all sectors are able to equitably benefit from it, so many don’t see its inherent value. While the digital revolution might not be occurring at the same rate that other countries have seen it occur, there is no doubt that the GDP from digital means will increase year on year and show the value of the sector.
South Africa’s future looks bright. There is a significant growth to be had across the board. Whether the mining sector continues to grow or the agriculture sector focuses its strengths in these areas, it can see positive movement, such as wine, or the digital sector sees yet more innovation.
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