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June 2017 Credit Management magazine

The CICM magazine for consumer and commercial credit professionals

COUNTRY FOCUS The

COUNTRY FOCUS The country has a wealth of natural resources, a good banking system, a reasonable tax structure and a business culture that chimes with that of the UK. Aerial View of Cape Town Coastline South Africa 40 June 2017 www.cicm.com The Recognised Standard

In the first of a two-part article in our ongoing country focus series, Adam Bernstein delves into the South African economy and what the future may have in store. SOUTH Africa has a long and interesting history. While it has some of the oldest human fossil sites in the world, it’s more (recently) known for the Zulu and Boer wars, apartheid and the freedom movement led by the late Nelson Mandela. The country has an area of some 1.22km 2 but is only 24th in the world rankings on landmass. It’s a parliamentary democracy that has a population of around 55 million (2015 estimate – almost double the 29 million population in 1980) that speak 11 official languages because of diverse origins, cultures and religions. Visitors to the country will find it easy to see why it’s been termed the Rainbow Nation; considering South Africa’s history and long reviled former policy of apartheid, the country has made great strides towards racial harmony. ECONOMIC WEAKLING The country’s economy is the second largest in Africa, after Nigeria. It’s GDP (based on purchasing power parity in 2016) is $736 billion. To put this into context, Nigeria’s equivalent GDP is $1,088 billion, while the UK’s is $2787 billion. Despite South Africa’s relative wealth, the country is struggling with poverty and unemployment. The post-apartheid economy has picked up – after 1994, inflation and public finances were stabilised and, since 2004, the economy has grown but that growth has slowed in recent years. According to Focus Economics, growth in 2011 was 3.2 percent but by 2015, was only 1.3 percent. Part of the problem for the poor performance of the economy is that under the current president, Jacob Zuma, state-owned firms have grown in importance yet they’ve remained unprofitable. Some figures suggest that in 20 years these organisations have needed around $2.3 billion in bailouts. According to the World Bank’s 2017 Doing Business rankings, South Africa comes 74 (out of 190) for ease of starting a business, 105 for registering a property, 62 for obtaining credit, 139 for trading across borders, 113 for enforcing contracts, and 50 when resolving an insolvency. These rankings, barring the resolution of insolvency, are worse than for the previous year. The country has a wealth of natural resources, a good banking system, a reasonable tax structure and a business culture that chimes with that of the UK. Just as noteworthy, is that South Africa has a time difference of one or two hours (depending on region) and can be considered a gateway to the rest of Africa. As a member of the Global Agreement on Tariffs and Trade and the World continues on page 42 > www.cicm.com June 2017 41

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