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Challenges Facing South African Economic Growth

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Labor Issues and Immigration

By the end of the first quarter of 2018, and estimated 28% of South African adults will be facing unemployment; and while this particular challenge has been present in the South African job market for many years, it rises steadily as time goes. To make matters more complicated, a steady rise in the number of immigrants into South Africa is leaving locals feeling like the job market is getting more difficult to break into. In reality, however, only around 2% of the people working in South Africa are immigrants; making the issue of unemployment a far deeper one than is evident at a glance.

Housing and Land

There is a crucial shortage of housing in our country, a problem which is often out of sight of those living in residential areas. This problem has been going on and worsening for many years, and is understandably the source of much tension. A lack of access to basic needs and facilities such as shelter leaves individuals inadequately prepared for life’s many challenges, and the disheartening situation may also rob them of dignity and their basic needs to find success in this world. OF course this situation is sometimes worsened in our country with threats and investigations into land claims; which seek to solve one set of problems by creating brand new ones.

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Racism, Sexism and Tribalism

At the core of many of South African problems is the persistent presence of thought-processes and behaviors which are designed to keep up segregated. Racism, although a continually dealt with topic is as rife as it’s always been, between all varying people in our country. A problem which runs even deeper, and is generally not spoken about openly, is that of tribalism which is the source of much of the segregation in our country. Then of course, there is the age old gender-war which is being raged all over the planet. Now, considering our potential when we all work apart from each other, imagine what we could do when we pool our knowledge, understanding and experiences to work together towards a better country.

The Availability of Education

Behind each and every one of these challenges lies a more common one, the trouble with the under delivery of education and schemes for building skills for a more enriched future. Before we can hope to tackle any of the above problems, we will need a nation of educated people who know how to make the right decisions for fostering a sustainable future. Data from the Department of Higher Education showed the number of new graduates that registered at Higher Education Institutes (such as Varsities, Universities of Technologies etc.) coming in at 158 000 in 2013. Thus assuming all the new registrations were matriculants of the previous year (which roughly totals 700 000) , only 22% of martriculants or about 1 in 5 makes it to Higher Education Institutions (HEI) after school. Looking at it a little differently, only 12% (or around 1 in 9) of school children entering grade 1 will make it to HEI if this trend continues.

SA’s key economic sectors

Mining and minerals

South Africa is world-renowned for its mining sector, with an abundance of mineral resources, accounting for a significant proportion of world production and reserves with an estimated worth of R20.3 trillion (US$2.5 trillion). The country is estimated to have the world’s fifth largest mining sector in terms of gross domestic product (GDP) value.

Financial sector

South Africa’s financial services sector boasts dozens of domestic and foreign institutions providing a full range of services including commercial, retail and merchant banking, mortgage lending, insurance and investment.

The manufacturing sector

South Africa has developed a diversified manufacturing base that has shown its resilience and potential to compete in the global economy. The manufacturing sector provides an opportunity to significantly accelerate the country’s growth and development.


Farming remains vitally important to the economy. It is estimated that some 8.5 million people are directly or indirectly dependent on agriculture for their employment and income. South Africa has both well-developed commercial farming and more subsistence-based production in the deep rural areas.

Travel and tourism

Tourism is regarded as a modern-day engine of growth and is one of the largest industries globally. In addition to being a labor-intensive industry, tourism holds the potential to drive increases in export earnings in a trading environment that is generally less volatile than that of commodity exports. The World Travel and Tourism Council (WTTC) indicated that travel and tourism in South Africa, directly employs more people than the mining, communication services, automotive manufacturing and chemicals manufacturing sectors.

Wholesale and retail trade

Stats SA produces a monthly survey of the retail trade industry, covering various retail trade enterprises. The survey generally covers retailers in specialized food, beverages, tobacco, pharmaceutical and medical goods, cosmetics and toiletries, general dealers, textiles, clothing, footwear, leather goods, household furniture, appliances and equipment, hardware, paint and glass, as well as various other dealers in miscellaneous goods.

Critical Analysis

The project to increase job creation which is listed in the 2030 such as the Structural features of the south African economy and Structural challenges specific to South Africa, the key economic elements for employment creation and Employment scenarios Towards faster growth as well as a responsive labor market Providing a stable and enabling macroeconomic platform Sector and cluster strategies. These aforementioned issues have not materialized in the South African economy as we speak the country is facing an economic recession. High interest rates are a cause of recession because they limit liquidity, or the amount of money available to invest. Another factor is increased inflation. Inflation refers to a general rise in the prices of goods and services over a period of time. As inflation increases, the percentage of goods and services that can be purchased with the same amount of money decreases. Mr. Zafar Furth more says that reduced consumer confidence is another factor that can cause a recession. If consumers believe the economy is bad, they are less likely to spend money. Consumer confidence is psychological but can have a real impact on any economy. Reduced real wages, another factor, refers to wages that have been adjusted for inflation. Falling real wages means that a worker’s paycheck is not keeping up with inflation. The worker might be making the same amount of money, but his purchasing power has been reduced.


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