The economy of South Africa is the second largest in Africa, after Nigeria. But why is it that Africa as a whole has the most naturally occurring resources on the planet but also has the highest level of corruption in their politics and government operations. This goes back to the roots on which the nation was founded. Unfortunately, civil war and guerrilla warfare have ravaged the country for years upon years. The solution to this is not an easy one. These people operate these lands with an iron fist and make it very difficult for successful change to be integrated.
If you look through the beautiful landscape and fascinating wildlife, you can see the social and economic issues that are impoverishing the nation of South Africa. Behind the massive mountains and star lit savannahs are people struggling to get through day to day life. A large portion of South African citizens work for under 5ZAR (.33 USD) a day and are expected to provide for their families. As you drive through the streets of South Africa you will undoubtedly see a large amount of people working and living on the streets. In order to fix this economic issue, we first need to improve the unemployment situation within the nation.
There has been a small increase in wealthy black South Africans post-apartheid, but the majority of wealth holders are still white. People who reside in areas such as Cape Town and Johannesburg are still being denied rights by the community because their behaviors have not changed. Companies that thrived during apartheid are denying any role in the previous political and economic system and have removed their assets from the land to ensure they do not benefit the affected citizens. The profits of several industries are being taken out of the country by the owners while they leave the nation in destress.
One may conclude that a rational response to the soaring unemployment would be to create more cheaper jobs that did not require specialization, but the South African government did not see it that way. In order to keep trade partners happy, the African National Congress (ANC) decided it would be better to implement “a highly regulated labor market” (Economist, 2019). The ANC did create legislation requiring firms to hire a specific number of non-white workers, but this regulated labor market did not help the uneducated and unskilled individuals find employment. Instead of creating jobs for these people, the government just continued to provide welfare and grants in attempt to help their situation.
Due to the corona virus South Africa has basically shutdown every aspect of their economy minus food, water, and other essentials. President Cyril Ramaphosa announced at the beginning of quarantine that the sale of alcohol and cigarettes is now banned country wide. But enforcing the prohibition has not been so straightforward. The security forces have been accused of beating, even killing people, as they patrol poorer neighborhoods, hunting for any signs of alcohol. Although the sales have continued illegally this has basically created a prohibition on both substances.
South Africa’s strict lockdown rules to curb the spread of coronavirus prohibit the sale and transportation of alcohol, and this has prevented the brewer from moving its stock to warehouses for storage. The prohibition of alcohol and cigarettes is a contentious issue in South Africa and it has divided cabinet ministers and members of the public. The ban has created a thriving black market for products which were once freely available.
Even though the lockdown is threatening the survival of many businesses in an economy struggling with recession even before the coronavirus pandemic. Business leaders are now warning that if the lockdown does not ease sharply soon, South Africa’s gross domestic product could shrink by over 16%, and up to four million jobs could be threatened – staggering figures for any country, but particularly challenging for an economy already in recession and wrestling with a 27% unemployment rate.
It is especially important to look into long-term trends of unemployment to understand how to proceed. Since 2008 there has been an 8.8% increase in unemployment in which “two of [these] percentages have occurred in the past two years” (Webster, 2019). The current unemployment rate also reflects the lingering effects of apartheid. The percent of black South Africans who are unemployed is still drastically higher than the white South Africans (46% to 9.8%).
Only in the Western Cape do we see black unemployment below 40%. We can also see a large number of women (43%) are unemployed while only 35% of men are unemployed. There is also large percentage of youth that are victims of unemployment. The youth population makes up 35.7% of South Africa’s total population, and over 50% of the youth population is currently unemployed (South African Marketing Insights, 2019). It is hard to tell whether this is due to much of the youth being enrolled in school or if there just simply are not enough jobs to provide for this large percentage of the population.
One can infer that these many job cuts is because of low productivity that comes from uneducated and unskilled workers. The only way to fix this problem is to improve the South African education system. The quality of education given to most students does not provide the students with the necessary information or skills to succeed in the workplace nor the competitive global environment. Five percent of South African government spending is put into the education system, but there is little put into teacher training or teacher evaluation (USAID, 2019). If a portion of government spending was put into training and evaluating teachers, we may see an increase of qualified individuals leaving the schoolyard and entering the workplace. But since there is not enough jobs being created, we could run into some issues.
