South Africa’s economy is the largest on the African continent in monetary terms. It is also one of the most fluid, something which the recent trend of relaxation of exchange controls has helped to bring about. The economy is based largely on mining and agriculture, with manufacturing playing a lesser yet significant role. There is also a world-class financial services sector.
The most important resources mined in South Africa are coal, gold, platinum, and uranium. An enormous amount of coal is used domestically to generate electricity (there is estimated to be another 200 years’ worth of coal still in the ground), while gold and platinum are so important to the economy that they have their own indices on the national stock exchange. Diamonds are mined but because their sale and distribution is controlled by a global company monopoly they may or may not be as influential in the country’s economy.
In the agricultural sector, there are various crops which are cultivated for export, such as fruit and wine. Domestic consumption is based mainly on maize (“mielies”), which is traded as an international commodity at international prices. However, because maize is a staple component of the diet of many people in South Africa, its retail price is subsidised by the government.
South Africa imports of crude oil, but petrol is also produced from coal locally using solid-to-liquid technology in a massive plant situated in the north of the country, known as the SASOL plant.
The government approach to the fiscus is based on inflation targeting which is executed by adjusting the prime lending rate. Employment is also a key factor. Inflation was relatively high towards the end of Apartheid, a situation aggravated by a growing current account deficit and international sanctions. Since the end of the Apartheid system, which made little sense in economic terms, the situation has improved to the extent that the deficit has been eliminated and the economy has started to grow. Inflation has also fallen into single figures.