A Glimpse of South Africa’s Rich Economy

Cape Town, South Africa – Image courtesy of Seascape Tours

From a picturesque coastline to rolling grasslands and one of the world’s most iconic mountains, South Africa’s landscape is a sight to behold. Yet the country is rich in more than natural beauty: South Africa has a competitive, world-class economy that exports to many of the world’s leading nations. With a newly elected President who is known for his forward-thinking policies and investments, this African country has made a name for itself as a developing market to watch.

South Africa by the Numbers

Here are some key figures that explain why sophisticated investors are so intrigued by South Africa:

  • South Africa’s economy is the second largest in all of Africa and the 34th largest in the world.
  • South Africa’s debt to Gross Domestic Product (GDP) ratio averaged 39.5% from 2007 to 2017. The World Bank recommends a ratio below 60%.
  • In terms of Purchasing Power Parity (PPP), South Africa has the eighth highest per capita income in Africa.
  • South Africa’s tax revenue increased from R100 billion in 1994 to R1 trillion in 2014.
  • In 2018, one of South Africa’s main economic hubs, Cape Town, saw 8.5x growth in its luxury real estate market compared to the world’s overall property markets.

South Africa’s Top Industries & Exports

South Africa’s rich ecosystem is one of the country’s greatest assets. For instance, South Africa is the second largest exporter of fruit in the world, with oranges, apples, grapes, and pears making up the biggest share. The fruit industry has a high job-multiplier effect on the local economy that creates hundreds of thousands of jobs for South Africans, boosting the local economy through increased consumer spending.

Mineral resources are also an important industry in the South African economy, worth an estimated R20.3 trillion. In 2017, agriculture, mining, and manufacturing were the main drivers of economic growth during the third quarter, and for years South Africa has been the world’s leader in platinum output, producing over six times more than the next best country (Russia). The country also ranks highly in palladium output (2nd), gold output (3rd), coal output (6th), and wool output (9th).

Image courtesy of Pexels

Here are the top 5 economic sectors that contributed to South Africa’s GDP in Q1 2018:

  • Finance, real estate, and business services: 21.0%
  • Government services: 18.0%
  • Trade: 15.0%
  • Manufacturing: 13.0%
  • Transport: 10.0%

According to a recent report, “South Africa has sophisticated financial, legal, and telecommunications sectors and a number of global business process outsourcing (BPO) operations are located in the country.” Chemical technologies, the automotive industry, and South Africa’s ocean economy each play an important role in the country’s economic prowess.

Vehicle manufacturers such as BMW, Ford, Volkswagen, Nissan, Daimler-Chrysler, and Toyota have production plants in South Africa. At the same time, the country is a world leader in coal-based synthesis and gas-to-liquids (GTL) technologies within its prominent petrochemicals industry.

Image courtesy of Pexels

South Africa Tourism Rates Continue to Rise

With beautiful landscapes, bustling cities, and some of the highest levels of biodiversity in the world, South Africa is quickly becoming an in-demand tourist destination. Since 2006, the number of tourists has nearly doubled and is expected to reach 19.5 million individuals by the year 2022.

There are nine UNESCO World Heritage sites in South Africa alone, and in 2012, South Africa’s iconic Table Mountain was inaugurated as one of the New Seven Wonders of Nature.

Cape Town, South Africa

South Africa has also hosted a number of important sporting events, which has helped attract increasing numbers of tourists. In 2010, the region became the first African country to host the FIFA Soccer World Cup, earning it recognition as the second country in the world to host the Cricket, Rugby Union, and Soccer World Cups.

Other Fun Facts

Here are some other fun facts:

  1. Elon Musk, the founder of Tesla, SpaceX, and the Boring Company, was born in South Africa.
  2. The first MBA programme outside of the U.S. was started by the University of Pretoria in 1949.
  3. The first human-to-human heart transplant was performed by cardiac surgeon Christiaan Barnard in December 1967.
  4. South Africa has the highest commercial bungy jump in the world (710 feet).
  5. South Africa is home to the world’s largest individually timed cycle race (the Cape Argus Cycle Race), the world’s largest open water swim (the Midmar Mile), and the world’s largest ultra-marathon (the Comrades Marathon).
  6. Kruger National Park supports the greatest variety of wildlife species on the African continent.
  7. Since the 1940s, South African golfers have won more golf majors than any other nation, apart from the United States.
  8. Cape Town was named the top tourist destination in the world in the 2013 Traveler’s Choice Destinations Awards.
  9. Cape Town International was rated the best airport in Africa, according to the World Airport Awards 2012. O.R. Tambo International in Johannesburg was second, and King Shaka International in Durban came in third.

Elon Musk, the South African founder of Tesla, SpaceX, and the Boring Company. Image courtesy of FS Media.

With a rich economy, growing influence in the global arena, and extremely favorable trade agreements with the United States, South Africa has caught the attention of sophisticated goal-based investors from around the globe.

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