South Africa has a modern, well-diversified economy in which agriculture,
mining, secondary industry, commerce and a broad structure of
service establishments contribute to the wealth of the nation.
The South African economy is one of the most 'open' economies
in the world, in the sense that foreign trade accounts form a
much higher share of the gross national product (GNP) than in
the case of many other countries. This also means that the economy
is highly susceptible to trends and developments in the economics
of major trading partners.
The Reconstruction and Development Programme (RDP) emphasises
that small businesses, especially those owned and operated by
women and black entrepreneurs, must form an integral part of the
national economy. Experience shows that four major constraints
face small and micro enterprise; the lack of access to credit,
markets, skills and supportive institutional arrangements.
The Small Business Development Corporation (SBDC) was launched in 1981 as a joint public and private sector venture to assist small entrepreneurs in establishing their businesses. SBDC equity is divided equally between the State and the private sector but the corporation is run on business principles and controlled by the private sector.
In 1994, the manufacturing industry was responsible for 23,5 percent of the gross domestic product (GDP) - the largest single share - and employed 1,4 million people (about 11,1 percent) of the economically active population. The industrial base is capable of producing a wide variety of consumer, intermediate and, to a lesser extent, capital goods.
The average size of manufacturing establishments has increased over the years. Limited companies and close corporations(CCs) are the dominant forms of enterprise. Cartels, holding companies and mergers, both horizontal and circular, are characteristic of the South African economy.
The most important national employer organisations are the South African Chamber of Business (Sacob), The Steel and Engineering Industries Federation of South Africa, the Afrikaanse Handelsinstituut (AHI) and the National African Federated Chamber of Commerce (Nafcoc).
According to the RDP, coherent strategies in industry, trade and commerce are required to meet the challenges of a changing world economy, while at the same time meeting the needs of the majority. The RDP envisages that a 5 percent growth rate and the creation of 300000 to 500000 non-agricultural jobs per annum could be achieved within five years.
The key goals of the industrial strategy are an increase in net national investment, especially in manufacturing, job creation and the meeting of basic needs. In general, the objective is to enhance South Africa's technological capacity to ensure that the country emerges as a significant exporter of manufactures goods.
It is government policy not to interfere unduly with market mechanisms and state intervention in limited to measures to protect the consumer against malpractice and exploitation.
In addition, the Government supports programmes aimed at promoting small business development, training, guidance, consultation and aftercare services to small business through various training institutes.
According to the RDP, a democratic South Africa must rapidly restructure relations with neighbouring African countries, who import about 20 per cent of South Africa's exports. More balanced and less exploitative trade patterns will result in more mutually beneficial outcomes which will strengthen the southern African region in its relations with emerging global trading blocs.
The RDP emphasises that democratic and consistent procedures for revising tariffs and export incentives must be developed. The tariff structure must be simplified, while international trade and tariffs must be sensitive to the interests of the southern African region as a whole.
The importance of foreign trade to the economy is evident both from the ratio of its exports (goods and non-factor services) to GDP, and from the ratio of imports (goods and non-factor services) to gross domestic expenditure.
Despite attempts to diversify its export base, South Africa is still largely reliant on the export of primary and intermediate commodities to industrialized countries. However, manufactured goods account for about 70 percent of exports to Africa. Imports mainly comprise capital goods, raw materials, semi-manufactured goods (approximately 80 percent of total trade imports) and consumer commodities.
Excise duty is levied on certain locally produced goods, of which potable spirits, beer, cigarettes, tobacco, motor cars and certain petroleum products yield the highest revenue. Exchange control regulations are administered by commercial and merchant banks who are authorised dealers in exchange. They, in turn, confer with the Exchange Control Division of the South African Reserve Bank.
Registration with the local controller of customs and excise is required of all factories subject to excise duties, as well as all enterprises that import on a regular basis.
The fundamental principle of the RDP is to safeguard and extend workers' rights. The RDP emphasises that workers' rights are central to building the economy and states that all workers are entitled to a living wage and humane conditions of employment in a healthy and safe working environment.
Affirmative action measures are used to end discrimination on the grounds of race and gender, and to address the disparity of power between workers and management, as well as between urban and rural areas.
The RDP stipulates that the Government must play a leading role in building an economy which offers all South Africans the opportunity to contribute productively. All job-creation programmes should cater particularly for women and the youth, but a system of handouts should be avoided.
South Africa has a mixed economic system - partly socialist and partly free market - and the responsibility for the creation of jobs rests with both the State and the private sector. The Department of Labour represents the State in the tripartite system of industrial relations.
A scientific structure based on the six fundamental human rights - the right to work, freedom of association, the right to negotiate collectively, the right to withhold labour, the right to protection and the right to development - that underlie the collective relationship between employers and workers has been devised for the human resources and industrial relations systems in South Africa.
A new labour Relations Bill was tabled in Parliament and passed
in 1995.
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