Cultural Commentaries: A Closer Look Overview

South Africa is called “The Rainbow Nation,” its people have diverse origins, cultures, languages and beliefs of its people. Following years of strict racial segregation under Apartheid, South Africa has emerged as a multi-party and multi-racial democracy. The country boasts the largest and best developed economy on the continent, a modern infrastructure, and strong financial and manufacturing sectors. The years of segregation and conflict in South Africa have resulted in many problems for the country, including poverty, lack of economic equality, educational deficiencies and high crime in some areas. South Africa also has among the highest number of HIV/Aids patients in the world. Though South Africa faces major challenges, it has successfully held several elections since the end of white rule, indicating that a democratic infrastructure is taking hold. The country has abundant resources and the highest GDP in Africa. This leads most people to have high expectations for the New South Africa.

South Africa is a parliamentary Democracy. After years of repressive minority rule, full enfranchisement of all citizens was implemented in 1994. South Africa’s constitution, widely regarded as the most progressive in the world, has been in effect since 1999. It contains a Bill of Rights that stresses human
rights and freedom. South Africa is divided into nine provinces which are further divided into 52 districts. The national government is a bicameral Parliament. The National Council of Provinces (or upper house) contains 90 members, 10 elected from each province. The National Assembly (or lower house) has 400 members apportioned based on population. Elections for both chambers are held every five years.

Economy

South Africa has an abundant supply of resources, well developed
financial, legal, communications, energy, and transport sectors, a stock exchange, and a modern infrastructure. Today the service sector, including financial, retail and tourism, leads the GDP. Agriculture and mining remain important in South Africa as well.

Income distribution remains unequal, with economic activity concentrated in the Gauteng province (Johannesburg), which produces over one-third of the total GDP, and in the Western Cape (Cape Town), which produces about 15 percent of the GDP. Other areas of South Africa are underdeveloped
and poverty is wide spread.

High unemployment, at more than 25 percent, is also a problem, although job growth has been consistent and even achieved a 5.7 percent increase in 2005. In addition, there has been uninterrupted economic expansion since September 1999.

South Africa’s economy grew by 3.7 percent in 2002, 3 percent in 2003, 4.5 percent in 2004, and 4.9 percent in 2005 – the fastest in 21 years.

South Africa offers a favorable legal and business environment that encourages trade and investment. The government is implementing a development strategy involving large-scale state investment in infrastructure, small business and skills development, and interventions targeting specific areas of the economy. The goal is to boost the country’s economic growth rate to 6% of GDP by 2014 and reduce unemployment.

Technology

Information and communication technologies are rapidly changing the way individuals live, firms do business, governments administer and nations interact. South Africa is no different. The number of personal computers in use in South Africa will pass the 5-million mark for the first time in 2006,
according to a new study by technology research firm World Wide Worx. The study of the installed base of computers in South Africa, shows that the 4.5-million mark was reached at the end of 2005, and it is expected to grow by 17 percent to 5.3-million by the end of 2006.

South Africa is focusing on less costly wireless networks as it moves to roll out a broadband infrastructure across the country. The network is designed to be robust enough to meet all socio-economic, business and research needs. The stateowned company Sentech, Africa’s largest broadcast signal
distributor, will complete the core of South Africa’s wireless broadband rollout.

Another major development regarding broadband rollout is the development of the Eastern Africa Submarine Sea Cable commonly referred to as Eassy, that will complete the broadband infrastructure surrounding the continent. This cable involves 23 African countries including South Africa, which is a co-initiator of the project, and more than 30 African companies.

The government has also instituted a number of measures aimed at stimulating research and development in South Africa, so as to boost economic growth. These include tax incentives, increased government funding, and protection of intellectual property rights of publicly funded research conducted at the nation’s universities.

Bio-technology has attracted the largest amount of R&D funding so far. A South African space program, intended to develop satellites, and alternative energy research are also areas of R&D investment.

Doing Business

South Africa is among the top 30 countries in the world for ease of doing business, according to a 2005 World Bank report. It is also one of the most sophisticated and promising emerging markets in the world, offering a unique combination of highly developed first world economic infrastructure with an emerging market economy. South Africa’s GDP is already four times that of the combined GDP of the ten other countries of southern Africa.

The country is also a gateway to the rest of the African continent. When conducting business in South Africa; remember the following few guidelines:

• Although there are 11 official languages in South Africa, most South Africans are multi-lingual and English is the language of business.

• A firm handshake is an important first gesture of communication for any person, male or female, desiring to make an impression.

• Business dress is formal. Men wear jackets and ties and women wear dresses or skirts. This is also the appropriate dress for meals out at a restaurants or at someone’s home.

• It is impolite to point at someone with your index finger and talking with your hands in your pockets is considered rude. Personal relationships, rapport and trust are important in business dealings in South Africa. Take time to establish these. The pace of business is slow and being aggressive
about deadlines or pressing for a decision will only be counter productive.

• South Africans like to be physical when talking. Visitor will experience a lot of handshaking and backslapping. Moreover, hand-holding is a sign of friendship. Recoiling from physical contact may be interpreted as unfriendliness, aloofness or a lack of trust.

• Discussions should be conducted in a cordial manner and in quiet voices. A raised voice will be interpreted as an insult.

• South Africa is far behind other industrialized nations when it comes to hiring women for senior management positions. Visiting businesswomen can expect to run into a patronizing attitude at virtually every level in both black and white cultures. Whatever happens, women should always maintain
their professionalism. South Africans admire people who are
tough, confident, and capable.

Prospects

South Africa’s economic growth has been impressive, rising from three percent during the first decade after Apartheid to close to five percent in 2005. The boom has been based on high commodity prices, large capital inflows and strong domestic consumer demand, and rooted in anti-poverty measures, growing employment, and rising asset prices.

The government’s Accelerated and Shared Growth Initiative for South Africa, launched in July 2005, aims to halve unemployment and poverty by 2014. To accomplish this, the government has determined that growth must be boosted to at least six percent, if not higher. With this incentive, and solid results to date, the long term prospects for South Africa are favourable.