South Africa has well and truly moved on from the Apartheid regime of the latter half of the 20th century. The country’s new burgeoning democracy has seen increased productivity and revenues from the principle sectors for growth in their economy.
With a long history of economic reliance on the traditional sectors of agriculture and mining, the country has seen huge growth in output from financial services, technology, tourism and gambling. Let’s take a look at how these industries have developed, and where they might be going.
As the world’s fifth largest mining sector in terms of GDP, mining is contributed 8% of South Africa’s GDP in 2017. The mineral reserves include virtually all precious metals and minerals, energy minerals, ferrous and non-ferrous metals and minerals, and industrial minerals. Only crude oil and bauxite are seemingly not available.
Not only is South Africa able to mine all these resources, but they also have leading primary processing facilities for gold, platinum, carbon steel, stainless steel and aluminium.
The area that is likely to accelerate growth in the sector and which has to be fully realised yet is the mining of rare earth minerals which are used in the production of smartphones, electric cars and other electronics. China currently dominates the mining of these minerals with 90% of global production, but the Namaqualand region on the Atlantic coast is being targeted by South Africa.
But it’s not all rosy in the sector as Gold production has been falling for many years. While South Africa produced as much as 30% of the world’s gold in 1993, this figure fell to 12% in 2005. However, the mining industry in general still employs nearly half a million people and represented 18% of South Africa’s GDP in 2007.
Financial services in South Africa are well regulated, and its banking system boasts a central bank, some financially strong banks and investment institutions that operate in multiple countries. There are also competitive investment and merchant banks. The opening up of the country early in the 21st century has meant that many foreign banks and investment companies have begun operations.
The Johannesburg Stock Exchange (JSE) is the 17th largest in the world with a market capitalisation of 6 trillion South African Rand 400 listed companies and 907 securities.
The success of the JSE is down to it being the market of choice for overseas investors wanting exposure in the broader African continent and the big capital markets available in the country.
The meteoric rise of the gambling sector in South Africa is also a result of the broader changes seen in the country since Apartheid. Gambling has been illegal in South Africa for many years. However, casinos have operated illegally in the homelands areas of Bophuthatswana, Ciskei, Transkei and Venda – where only native South Africans lived – since the 1970s.
The restructuring of the provinces after Apartheid meant that legislation was required to legalise the 2,000 or so casinos existed in those areas in the 1990s. The National Gambling Act of 1996 set out proper regulation for the casinos and set up the National Gambling Board to supervise and regulate the industry.
The country now boasts 38 regulated land casinos and, like gambling resorts everywhere, they have become favourite destinations for tourists. However, unlike the rest of the world, South Africa hasn’t legalised online casinos. It’s not only illegal to own or operate an online casino in South Africa, but also to gamble in one. This rule, however, only relates to games that would usually be found at a casino – such as poker and bingo. Land-based casino gambling currently generates the largest revenues for the government and the casinos from all gambling activities in the country – the 38 casinos accounting for 70% of the total gambling revenue. So it stands to reason that the government would want to protect these interests.
However, perhaps it could look to the UK – and other countries where gambling is legal but heavily regulated – to ensure its gambling industry can flourish in the future. In the UK, online casinos are a growing part of the country’s gambling experience. Just like high-street bookmakers and casinos, online operators are subject to the same rules – and must ensure they’re meeting requirements to prevent money laundering and problem gambling from happening.
The online gambling industry has grown so exponentially that it now accounts for one-third of all gambling revenues. It gives players the freedom and convenience to play their favourite games from the comfort of their own home, or on the move, in an increasingly realistic environment that replicates a genuine casino experience. To see why it’s so popular in the UK, play casino online at 888 – one of the industry leaders – now.
The World Series of Poker, which is played at tables and held in Las Vegas every year has benefitted hugely from the online game which has uncovered some hugely talented players. It remains to be seen whether the ban on online casinos will be lifted.
As with most of Africa, agriculture is hugely important to the economy as over 8.5 million people are employed in the sector which contributed 2.4% of the GDP in 2014. The geography of the country is such that there is a huge diversity of climatic conditions which allows for a wide range of agricultural products. The large coastline and seven commercial ports mean that transportation for export is easily achieved.
Being self-sufficient in nearly all agricultural products from intensive crop production, mixed farming in high rainfall areas and cattle and sheep farming in the more arid areas means that the sector is not only hugely beneficial to the economy – it also has huge potential for export. With its counter seasonality to Europe and highly competitive processing facilities, South Africa has become a major global player in the world’s food markets.
However, recently the exports have been put under pressure from China and India especially who manage production with lower costs. The traditionally large company dominated beverages, tobacco, wood and leather sub-sectors have remained so and have remained competitive.
The global rise of smartphone usage has not missed Africa, and South Africa has been well-positioned in the continent for producing technology solutions. When smartphone use has doubled in Africa in only to years (as of 2016) the potential was huge. The sector is now larger than agriculture in South Africa and is catching the tourism industry with nearly 3% of GDP. The 93 Billion Rand has come about largely from telecommunications services – broadcasting and smartphones.
South Africa has experienced economic woes over the past decade due to the general economic slowdown after the global banking crisis of 2009. The recovery has been slower than most due to political and competitive issues. However, the vast natural resources of the country and the enviable geographic position at the bottom of the Africa continent means that they are likely to recover. The ‘old’ industries of mining and agriculture are being slowly caught and superseded by gambling and technology industries as the world shifts its focus.