By UN classification South Africa is a middle-income country. It is blessed with an abundant supply of natural resources, and has well-developed financial, legal, communications, energy, and transport sectors, a stock exchange (the Johannesburg Stock Exchange Limited, or JSE ), that ranks among the top twenty in the world, and a modern infrastructure supporting an efficient distribution of goods to major urban centres throughout the entire country and beyond its borders. South Africa is ranked 20th in the world in terms of GDP as of 2007. However, South Africa suffers from large income gaps and a dual economy marking it as a developing country, even though it has the seventh highest per capita income in Africa. Other problems are crime, corruption, and HIV/AIDS. At the start of 2000, then President Thabo Mbeki vowed to promote economic growth and foreign investment by relaxing restrictive labour laws, stepping up the pace of privatisation, and cutting unneeded governmental spending, policies which faced strong opposition from organised labour.
The South African Rand (ZAR), is the most actively traded emerging market currency in the world. It has joined an elite club of fifteen currencies, the Continuous Linked Settlement (CLS), where Forex transactions are settled immediately, lowering the risks of making financial transactions across time zones. The Rand was the best-performing currency against the United States Dollar (USD) between 2002 and 2005, according to the Bloomberg Currency Scorecard. However, recent volatility of the Rand has affected economic activity, with its value falling sharply during 2001 and hitting a historic low of 13.85 ZAR to the USD, raising fears of inflation, and causing the Reserve Bank to increase interest rates. The Rand has since recovered, trading at 7.13 ZAR to the dollar as of January 2008. However, as exporters are put under considerable pressure from a stronger domestic currency, there have been calls for government intervention to help soften the Rand.
Principal international trading partners of South Africa - besides other African countries - include Germany, Japan, Switzerland, the United Kingdom, and the United States. South Africa has a large agricultural sector and is a net exporter of agricultural products and foodstuffs, the largest volume of exports being sugar, grapes, citrus, nectarines, wine and deciduous fruit. Other major exports include Maize, diamonds, gold, metals and minerals and wool. Machinery and transportation equipment make up more than one-third of the value of the country's imports. Other imports include chemicals, manufactured goods, and petroleum.
South Africa is a popular tourist destination, and a substantial amount of revenue comes from tourism. Among the main attractions are the diverse and picturesque landscape, easy-going culture, game reserves and highly regarded local wines. Advanced development is significantly localised around four areas: Cape Town, Port Elizabeth, Durban, and Pretoria/Johannesburg. Beyond these four economic centres, development is marginal and poverty is widely prevalent despite government efforts. Consequently the vast majority of South Africans are poor. However, key marginal areas have experienced rapid growth recently. Such areas include Mossel Bay, Plettenberg Bay; the Rustenburg area, the Nelspruit area; Bloemfontein; Cape West Coast, and the KwaZulu-Natal North Coast.
South Africa has one of the highest rates of income inequality in the world. A decade of continual economic growth has helped to lower unemployment, but daunting economic and social problems remain. The average South African household income decreased considerably between 1995 and 2000, with a growing disparity between Whites and Blacks. Statistics South Africa reported that in 1995 the average White household earned four times as much as the average Black household. By 2000. the disparity had increased so that the average White household earned six times more than the average Black household. Nonetheless, affirmative action policies have resulted in a rise in Black economic wealth along with the emergence of a growing Black middle class.
There are almost a thousand agricultural cooperatives and agribusinesses throughout the country, and agricultural exports have constituted 8% of South African total exports for the past five years. The agricultural industry contributes around 10% of formal employment, relatively low compared to other parts of Africa, as well as providing work for casual labourers and contributing around 2.6% of GDP for the nation. It is the eighth largest wine producer in the world, and the eleventh largest producer of sunflower seeds. The largest locally produced crop is Maize, and it has been estimated that 9 million tons are produced every year, with 7.4 million tons being consumed. Livestock are also prevalent on South African farms, with the country producing 85% of all meat consumed. The dairy industry consists of around 4,300 milk producers providing employment for 60,000 farm workers and contributing to the livelihoods of around 40,000 others.
However, due to the aridity of the land, only 13.5% can be used for crop production, and only 3% is considered high potential land. Although the commercial farming sector is relatively well developed, people in some rural areas still survive on subsistence agriculture. In recent years, the agricultural sector has introduced several reforms, some of which are controversial, such as land reform and the deregulation of the market for agricultural products. Land reform has been criticised both by farmers' groups and by landless workers, the latter alleging that the pace of change has not been fast enough, and the former alleging racist treatment and expressing concerns that a similar situation to Zimbabwe's land reform policy, which resulted in the displacement of white landowners, may develop in South Africa. The sector continues to face problems, with increased foreign competition and crime being two of the major challenges for the industry. The government has been accused of not devoting enough time and money to tackle the problem of farm attacks as opposed to other forms of violent crime.
Another issue which affects South African agriculture is environmental damage caused by misuse of the land and global climate change. Like much of the African continent, South Africa is unusually vulnerable to climate change and the resulting diminution of surface waters. Some predictions show surface water supply could decrease by 60% by the year 2070 in parts of the Western Cape. To reverse the damage caused by land mismanagement, the government has supported a scheme which promotes sustainable development and the wise use of natural resources. Maize production, which contributes to a 36% majority of the gross value of South Africa's field crops, has also experienced negative effects due to climate change, with projected losses estimated to range between 10's to 100's of millions of Rands.
Refugees from poorer neighbouring countries include many immigrants from the Democratic Republic of the Congo, Mozambique, Zimbabwe, Malawi and others, representing a large portion of the informal sector. With high unemployment levels amongst poorer South Africans, xenophobia is prevalent and many people born in South Africa feel resentful of immigrants who are seen to be depriving the native population of jobs, a feeling which has been given credibility by the fact that many South African employers have employed migrants from other countries for lower pay than South African citizens, especially in the construction, tourism, agriculture and domestic service industries. Illegal immigrants are also heavily involved in informal trading. Many immigrants to South Africa continue to live in poor conditions, and South African immigration policy has become increasingly restrictive since 1994.
South Africa is the largest energy producer and consumer on the continent. After unsuccessful attempts by the government to encourage private construction of electricity generation capacity, in 2007 the state-owned electricity supplier (Eskom) began to suffer from a lack of capacity in the electrical generating and reticulation infrastructure. This led to the inability to meet routine demands of industry and consumers, resulting in countrywide rolling blackouts. Although the initial lack of capacity was triggered by a failure at the Koeberg nuclear power station, since then a general lack of capacity has become evident. The supplier has been widely criticised for failing to adequately plan for and construct sufficient electrical generating capacity to meet growing demands, although ultimately the government has admitted that it was at fault for refusing to approve funding for investment in infrastructure.
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