Essay Example on South Africa: Economic Hub of Africa Since 1994

A country that is located in the southernmost of the African continent has brought a lot of impact on the economy of Africa at large. Since they gained their independence in the year 1994, a move that was spearheaded by the great nationalist Nelson Mandela, South Africa's economy has always been steady. They are being considered as the economic hub in Africa. It is the only country in Africa that attracts more investment from the whites despite the fact they got their independence last. South Africa has the most developed streets and towns in Africa with vast and diverse cultures. Let us say it is the Europe of Africa. They experience good leadership with little political wrangles as experienced in other countries of Africa. However, over the years, South Africa has lost the glory both in Africa and the world at large. Countries like Algeria, Tunisia among others, have taken the title of economic hub in the continent. The country has downgraded both economically and on investment and has remained on junk status. They are now experiencing political disputes, something that was never experienced during the reign of Nelson Mandela and his predecessor.

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Having the second-largest economy in Africa, a basket of opportunities is being hindered by grueling challenges. A country that was considered as an economic hub in the continent is now battling to revive the economy to the original position ("Brief political history of South Africa" 2015). Since the country is being seen as a metropolitan, they are facing high levels of racism and discrimination in their land. Should we say Germany in Africa? With a population of about 56.72 million, the country is now facing the most significant rate of the youth unemployment rate at 54.7% ("International transmission of U.S. shocks into South Africa" n.d.). The GDP has dropped drastically by 0.8%, with the economists in the country been brought to their knees. With the ailing economy, the country has a bloated public sector wage bill with a massive deficit in the budget to fill. With all this, the nightmare is that the rate of general unemployment is now at 25% ("International transmission of U.S. shocks into South Africa" n.d.). This is the highest rate of unemployment they have ever experienced since independence. Even though they attract tourists due to their beautiful natural landscapes on the shores, they have a massive gap between the rich and the poor. Sadly, a high percentage of those who are poor is becoming a deadlock to be unlocked by the government. The economy is slowly sinking under the watch of the stakeholders who have been given the authority to oversee the economy. Consequently, the tourism sector has also been beaten hardly due to racism and political disagreements.

Living in the past hinders a better tomorrow. This is what is troubling the country. Although South Africa boasts of significant scientific innovations, good infrastructure, robust financial system, they are still ailing with poor security, weak labor markets, and poor international relation, among others (Jones & Muller 2016). This is the genesis factors to the sinking of their economy. The problems have successfully intertwined with the economy, and now the country is sinking. Economists around the globe still are predicting the worst times in the economy of South Africa because they have not taken any measures towards reviving (Bam and Bruyne 2019). Those who are well educated juxtapose with those who have little education, call them illiterates, or semi- illiterates. A percentage of literate citizens in South Africa can be compared to a drop of ink in the ocean. Those who are wealthy have their mansions heavily guarded just a few meters from the shanties townships. Major government projects in the country are facing poor management, and they are slowly jumping into oblivion (Buys 2018). Since they depended heavily on foreign investors to boosts the industrial growth in the country, the investment sector, together with the industrialization department, is now weak. They have nothing to contribute to the gross domestic product of the country. Furthermore, poor policies to revive the industry sector is also ailing the country.

The progress of South Africa has been impeded by the cognitive peculiarity that sees it deteriorating day in day out. Anyone who tries to make an effort to liberate the economy of the country he/she is seen is being rebuked. The government, in its comfort, has failed to put strategies in place on how to handle the situation and bring back the glory of the country. Corruption and misappropriation of funds in government projects is seen as a non-issue (Hoffmann and Schnabl 2016). Whistleblowers have been threatened not to speak out what happens within the corridors. The judicial system is in a terrible state since they cannot make any judgment that will go against the wish of the government. Poor monetary policies that cannot be used to control the inflation rates are being used regardless of the effects on the country.

In any government, macroeconomic policies are very vital in fostering economic growth and also in providing a suitable environment to promote growth (Fine & Rustomjee1996). In South Africa, nothing is different as far as fostering economic growth is concerned. They have a set of policies that help them in fighting back their impaired economy. Some of these policies include fiscal policy, monetary policy, and environmental policy. All these policies have the aim of making the lives of citizens in the country hospitable and to come up with a conducive environment that can attract investors both locally and internationally (Bond and Malikane 2019). These policies are being set within the parliament under different committees to oversee the work of the ministry. The policies managed to reduces the levels of corruption and scandals in the government. It also helped in creating a good relationship between the government and the people. All the looted funds in the government were followed up, and 60% of the funds were recovered to the national treasury because of the enforcement of the policies that were formulated (Jones & Muller 2016). Some of the features of South Africa macro policies include; ability to lower the inflation rates, the ability to lower the government rate of borrowing, capacity to reduce the unemployment rate, stability in the exchange rates. The implementation of the policy is what will see the above features been achieved. The policies are also flexible, dynamic, and volatile, among others. It depends on the area where it is being applied. These policies are the only tool the government is now using to revive the economy of the country.

With the nature of the above policies, it can easily bring stability to the economy of the country. If the government under its ministries follows the stipulated policies as advised by the parliament or the committee of experts, then better days will come faster. In the case of monetary policies, the policy highlights the way the government should borrow and spend the money appropriately without misusing the funds. However, better days will come to the citizens of South Africa if they will get a committed government that will push for the implantation of the policies. It is without a doubt that the policies that the parliament passed are the best, and if implemented, they will bring change both economically, politically, and socially. The environmental policy will raise the tourism sector, which will contribute to the GDP of the country in a large percentage. However, if the government will not commit itself towards implementing the policies, we shall soon be seeing high rates of inflation, as witnessed in Zimbabwe (Lemon & Rogerson 2017).

As witnessed in many developed and developing countries, the National Development Plan aims to eradicate the poverty levels and to reduce the enormous gap that may exist between the rich and the poor. In South Africa, the plan is in progress, though, in a sluggish manner. They are aiming by 2030, ten years from now, to have eradicated poverty in the country. Nevertheless, they can achieve the plan if they unite all the races in the country, and they both fight poverty under one strength. According to the planning committee, the plan is still relevant. They have identified the vital areas in which they can operate to turn things around in the country successfully. The areas identified by the committee include growing of an exclusively economy in the country, building capabilities, promoting the capacity of the state, and promoting servant leadership in the society (Miranda-Agrippino, Nenova. and Rey 2020). The committee suggested that if these areas are touched effectively and worked upon in a scholarly manner, then the glory of the country will be restored.

In 2015, South Africa launched its industrial policy as a way of promoting industrialization in the country. This came as the fact that most of the industries were shutting down due to a lack of proper management. High levels of taxation was another critical factor that brought most trades to a halt in South Africa. With the launching of the industrial policy, we saw companies reviving and becoming functional to the state (Rogerson 2019). High rates of taxation were reduced, and competent management was to run the industry. The industrial plan remains effective in the country because through it, the country was able to sustain the economic growth and promoted the local industries by providing the market of their locally produced goods both in the country and outside the country. This is because the policy managed to raise the taxation on imported goods to reduce the rate of importation and to consume the locally produced products by the countrymen. The policy also enhanced competition in the market, making industries to produce quality goods to consumers. The policy can be improved if the purpose of its formulation has not been achieved. When the local goods have flooded the market, the policy can be adjusted to allow the importation of foreign goods to saturate the market to bring a variety in the menu of consumers.

The main aim of the monetary policy in any country is to control the rates of inflation, and by doing that, they control the bank rates in the country. Monetary policy refers to measures taken by the government or the central bank to influence how the money is available to citizens of the country, the cost, the use of money, and credit with the help of monetary techniques set by the World Bank (Schwank 2018). The features of the fiscal policies are the ability to create financial institutions, the ability to spark development in the country through regulating the rates of borrowing either locally or internationally, ability to integrate the financial market both organized or unorganized. These features are flexible, and they are being applied without any discrimination or favor. They can be improved, or they can be altered under the permission of the parliament and approval by the president of the country. South Africa has a monetary policy that is set by the central bank. It regulates and controls all the banking activities in the country under the assistance of the financial techniques established by the World Bank (Schwank 2018). The monetary policy in South Africa also controls the rates of inflation in the country to cushion the government against high levels of borrowing.

Conclusion

At the moment, the South Africa bank does not have enough reserves that can stimuli the growth of the economy. However, after a considerable time, they will accumulate enough reserves to boost the economy and also to improve on the investment. By doing this, foreign investors will be attracted by the exchange rates that the country will be ha...