Emerging Markets: An Empirical Study on South Africa

Emerging Markets: An Empirical Study on South Africa

3- A summary of the research is prepared in about half a page

Emerging markets are becoming the most fast-growing developing countries. It is

transitioning the market from a low income, less developed, pre-industrialized
economy to a modern, industrialized economy with a higher standard of living, and
that’s why it is mostly benefiting a large segment of the poor consumers.

In 2001, Jim O’Neill was the first economist to coin the presence of the emerging
markets describing how fast growing these markets are and will be and their global
domination by 2050.

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Brazil, Russia, India and China held their first summit in 2009 to declare that
BRIC is a formal institution. The summit focused primarily to improve the global
economic situation and reforming financial institutions. Then, South Africa was
invited to join in December 2010 and was re-named by the “BRICS”.

This paper studies the impact on the market taking the case of South Africa when
joining the BRICS.

4- An introduction to the research topic is written

An emerging country is one whose economy is not yet fully developed yet either
was in the recent past or very likely will be in the near future. Emerging countries
are also known as emerging economies because the emphasis is on their economic
development. There are some emerging countries that you have probably heard of
and some that may be less familiar. Nevertheless, pay attention to these countries –
you probably buy food that was grown there or wear clothes that were made there.
You will probably hear more about these countries soon.

All the members of BRICS have variety of economic history and successful
strategies that have played significant role in stimulating the growth in their
respective economies. All the countries have opened up their economies to varying
extents for foreign trade and investment. Despite the differences in their economic
histories, all these five countries have witnessed high rates of growth and with their
available resources, there seems to be high potential for growth of these
economies.

BRICs have floated into the economies in 2001 and played a significant role in the
global economy afterwards. They attained an important position in the world as the

2
capital receivers, potential markets of consumers, and the producers of
goods/services.

Around 40 percent of the global population comprises the BRICS economy as they
represent approximately 25 percent of the total global GDP in terms of PPP.
Moreover, due to their large share of land, they possess a huge amount of natural
resources.

In general, all members of the BRICS economy have implemented a successful

strategy that led to the growth of their economies; they have opened up to foreign
trade and investment, increased global competitiveness and followed the strategy
of an ease in doing business which at the end promised to cause high rates of
growth to these economies. As said by Sam Palmisano, the CEO of IBM, “To be
truly global today, a company has to do more than set up sales offices or research
facilities in multiple markets, or send its people on international assignments. You
have to engage at the level of culture, as well as process” (Popescu, 2013).

The purpose of this paper is to study a case of EM and how it has changed and
implemented some and external strategies in order to succeed in this market
globally.

The economy of South Africa has the largest GDP in terms of (PPP) purchasing
power parity in Africa with a of 24 percent and according to World Bank, it is
ranked as an upper-middle income economy. Though, a quarter of the economy is
unemployed, and a quarter live below US $1.25 per day. But it has a comparative
advantage in the production of mining, manufacturing and agriculture sector. It
shifted from primary and secondary economy to the tertiary sector driven economy
that accounts for almost 65 percent of the GDP.

3
The first part of the paper will review the theoretical frame work of the emerging
markets; the main definitions describing what defines an emerging market, its
characteristics, the different listings of the countries. The central part studies South
Africa from a less developing economy to a middle-class economy. An economical
and statistical statement will be presented in the final part.

Rising Importance of BRICS in the Globe

In general, the BRICS countries have number of initiatives to increase their

competitiveness in the globe, and to make sure that not only the movement of
people increases but also there is ease in doing business.

Altogether, for the BRICS countries, some of the main factors that are important
for success of organization include: usage of technology, cultural realities,
increased mobility, cost-value relationships and most importantly, high diversity at
the workplace. These markets have sprung up due to globalization. The business
culture of South Africa is different from the other four members. In the BRIC
countries, the communication is more indirect and the organizations have a
hierarchical structure (Budd, 2012). An inclusive and diverse culture needs to be
developed in the countries as they need to manage a highly diverse workforce from
all around the globe.

These countries are based on socio-cultural and socio-economic texts which means
that the concept of corporate social responsibility in the global environment would
be changing soon (Lund-Thomsen & Wad, 2014). All these countries have

4
embarked on economic expansion and have introduced reforms to open their
markets to the global scene.

For these emerging markets, there are great risks as well as opportunities for the
CSR or responsible stewardship. Doing business in these countries is a bit difficult
as most are corrupted, have weak governance, lack public transparency and have
high records of bribery and poverty. Therefore, first of all, this concept or core
value needs to be integrated locally in these rising economies so that they can
come on equal status with the rest of the economic world. It is very important for
the BRICS countries to practice corporate social responsibility within their local
markets, as it would ensure that they attract more foreign business in the future.

The concept of responsible stewardship clearly states that we must look beyond
our personal benefit as it is our duty to share the available resources with the rest
of community. So, for the emerging market economies like BRICS, first
incorporating this phenomenon at home is critical so that they can deal with the
global requirements and standards (Ardichvili et al., 2013).

5- The theoretical framework of the research includes:

(a) The concept of emerging markets (various definitions and their

sources/references)

“Emerging markets” is a term that refers to an economy that experiences

considerable economic growth and possesses some, but not all, characteristics of a
developed economy. Emerging markets are countries that are transitioning from
the “developing” phase to the “developed” phase.

5
The emerging market economy the term was originally coined by Antoine
W. Van Agtmoel of the International Finance Corporation of the World
Bank – the emerging economy is defined as an economy with low to middle
per capita income and it constitutes 80 percent of the global population and
represents about 20 percent of the world economies.
Learn more in: FDI Inflows and Military Expenditure: A Study Across the
Emerging Market Economies

Are known as countries that have not fully industrialized but are pursuing
those qualities that are synonymous with developing countries. Often
with emerging economies, unemployment and poverty levels are high.
There are several emerging economies with superpowers among them being
China and Russia.
Learn more in: SME Sustainability and Growth in Emerging Markets

These are developing countries that progressively manifest some

characteristics of developed countries but have not fully meet the standards.
They attained this enviable status because of engagement with global
markets and steady transition from natural resource-driven economies to
becoming newly industrialized countries.
Learn more in: The Discourse of Blue Economy Definitions, Measurements,
and Theories: Implications for Strengthening Academic Research and
Industry Practice

Economies that cannot yet be considered as developed and the term has
subsequently superseded that of developing country.

6
Learn more in: The IHS Library and Its Response to the COVID-19
Pandemic

Rapidly growing and volatile economies that are progressing toward

becoming advanced, promise huge potential for growth, but also pose
significant political, monetary, and social risks.
Learn more in: Globalization: Reshaping the World Economy in the 21st
Century

Low-income and rapidly growing countries that use economic liberalization

as their primary engine of growth.
Learn more in: The Internationalization Process of Multilatinas from Chile

They refer to the countries whose economies are not developed yet.
However, they have a potential to be a developed country.
Learn more in: Measurement of Economic and Banking Stability in
Emerging Markets by Considering Income Inequality and Nonperforming
Loans

Emerging economies are found in countries that have some characteristics

typical of a developed market; therefore, these countries may become
developed markets in the future. The countries characterized by emerging
economies experience a beginning of economic growth and a remarkable
first phase of industrialization.
Learn more in: Smart Tools for Tracing Organizational Competitive
Behavior on Fast Decision Making

7
Are the most economically progresses of developing countries. In terms of
GNP per capita, they correspond to the medium-low and medium-high
country groups but are characterized by a regulated and functioning
securities exchange, or in the process of developing one, and the fact that
shares traded on the stock exchanges must be available for purchase by
foreign investors, even if subject to certain restrictions.
Learn more in: Open Innovation in SMEs: Contexts of Developing and
Transitional Countries

They are the economies promise huge potential for growth together with
some risks.
Learn more in: Conflict Risk and Defense Expenses and Their Impact on
the Economic Growth

An emerging economy reflects the characteristics of a developed market,

but does not satisfy standards to be termed a developed market.
Learn more in: The Impact of Creating a Business Intelligence Platform on
Higher Education: The Case of the American University in Cairo

Countries that are investing in order to develop their production capacity, to

leave behind a more traditional economic model.
Learn more in: Consumer Emotions Research in Luxury Contexts in
Emerging Economies

Refers to a country that is in the process of developing its economy,

generates low to middle per capita income and is rapidly expanding due to

8
high production levels and significant industrialization in their transition to
become more advanced.
Learn more in: Integrated Reporting for Inclusive and Sustainable Global
Capitalism

Emerging economies is a suitcase term to denote countries that start from a

low per capita income and take advantage of globalization and market
liberalization to grow rapidly.
Learn more in: International R&D Collaboration in High Tech: The
Challenges of Jet Fighter Development Partnerships in Emerging Economies

Emerging Market Economies—the BRIC

Which Emerging Markets to Watch
By John Christy
Updated on March 2, 2022
Reviewed by JeFreda R. Brown

An emerging market is a country that is recognized as having a significant

GDP growth (as well as a large global contribution to production), an
increase in the size of the middle class, and a potential for rapid growth and
investment.

Emerging markets used to be a somewhat obscure niche of the international

investing world. These rapidly developing countries play an increasingly
important role in the global economic system. In fact, more than half of
global economic growth is now driven by emerging markets.

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(b) Characteristics of emerging markets, with an explanation of each
characteristic

Some common characteristics of emerging markets are illustrated below:

1. Market volatility

Emerging markets often experience high volatility, which means a bigger

possibility for dramatic economic upturns or downturns. High volatility often
results from rapid social change, which itself can happen due to events such as
natural disasters, domestic policy instability or external price shocks. Countries
with economies that rely on agriculture are most easily influenced by natural
disasters like earthquakes, droughts or tsunamis. It exposes investors to the risk of
fluctuations in exchange rates, as well as market performance.

2. Growth and investment potential

Emerging markets are often attractive to foreign investors due to the high (ROI)
return on investment they can provide. In the transition from being an agriculture-
based economy to a developed economy, countries often require a large influx of
capital from foreign sources due to a shortage of domestic capital.

Using their competitive advantage, such countries focus on exporting low-cost

goods to richer nations, which boosts GDP growth, stock prices, and returns for
investors.

3. High rates of economic growth

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Governments of emerging markets tend to implement policies that favor
industrialization and rapid economic growth. Such policies lead to lower
unemployment, higher disposable income per capita, higher investments, and
better infrastructure. On the other hand, developed countries, such as the USA,
Germany, and Japan, experience low rates of economic growth due to early
industrialization.

4. Income per capita

Emerging markets usually achieve a low-middle income per capita relative to other
countries, due to their dependence on agricultural activities. As the economy
pursues industrialization and manufacturing activities, income per capita increases
with GDP. Lower average incomes also function as incentives for higher economic
growth.

5. Swinging currency

Emerging Markets are more susceptible to extreme currency or commodity swings.

Some examples include food, oil or the United States dollar. These emerging
countries can't control the swing of currency or commodities because they do not
have enough influential power. As emerging markets become more industrialized,
some sectors may undergo dramatic adjustments such as a regime change within a
short amount of time.

Advantage of Becoming a member in BRICS economy:

The overall goals of emerging markets are rapid industrialization and a better
quality of life for their citizens. If experts consider a country to be an emerging

11
market, it suggests positive economic progress in those countries. That means it
can have increased liquidity in local debt and equity markets, increased trade
volume and foreign direct investment. It can develop modern financial and
regulatory institutions. Currently.

(c) List of emerging market countries

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13
https://www.imf.org/external/datamapper/profile/OEMDC

14
https://www.imf.org/external/datamapper/profile/ZAF

Excel available

Emerging market economies are classified in different ways. Levels of income,

quality of financial systems, and growth rates are all considered criteria but the
exact list of emerging market economies can vary.

For example, the International Monetary Fund (IMF) classifies 23 countries as

emerging markets while Morgan Stanley Capital International (MSCI) classifies
24 countries as emerging markets. There are some differences between the two
lists. Standard and Poor's (S&P) classifies 23 countries and FTSE Russell
classifies 19 countries as emerging markets, while Dow Jones classifies 22
countries as emerging markets.

At any of these institutions, a country can be removed from the list by either
upgrading it to developed nation status or downgrading it to a frontier nation.
Likewise, developed nations may be downgraded to an emerging market, as was
the case with Greece. Frontier markets may be upgraded to an emerging market,
as was the case for Qatar and Argentina.

Some of the most rapidly emerging countries include Brazil, Turkey, Russia, India,
and China. Other emerging countries include the oil rich countries

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of Bahrain, Saudi Arabia, Iran, Kuwait, the United Arab Emirates, Qatar, Oman,
and Iraq.

Many of these countries are immensely wealthy because of their oil exports, yet
that wealth does not come from a well-developed private sector and job growth.
Because these countries depend almost exclusively on a single resource – oil – for
their growth, a collapse in oil prices could set their economics back decades.

Other emerging countries are found in Eastern Europe, in the former Soviet Union
– Latvia, Romania, Bulgaria, the Czech Republic, Hungary, Slovenia, and Slovakia.
Because of their experiences under communism, they are less developed than
countries in Western Europe and are still developing their economies to catch up.
However, the European Union aims to increase equity across European countries,
particularly those that were part of the Soviet Union, to help improve the economic
outlook and quality of life for the past Soviet countries. Kazakhstan is a former
Soviet country that is located in Central Asia rather than Europe, and it is also an
emerging country.

There are many emerging countries in other parts of the world,

including Africa (countries such as Algeria, Tunisia, Morocco, and South Africa),
South Asia (Indonesia, Sri Lanka, Bangladesh), South America (Argentina, Chile, Colombia),
and the South Pacific.

Many emerging countries have poor records of human rights, and critics claim that
their governments are placing economic growth ahead of the well-being of its
citizens. The governments of several emerging countries are known to engage in
systemic human rights violations.

Emerging Countries 2022

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 Projected Growth in Real Annual
Name
GDP Percentage

India 8.20%

Saudi Arabia 7.60%

ASean-5 (Thailand, Malaysia, The

5.30%
Philippines, Singapore, Indonesia)

China 4.40%

Nigeria 3.40%

Mexico 2.00%

South Africa 1.90%

Brazil 0.80%

Russia -8.50%

The Five Major Emerging Markets

1. Brazil

In Brazil, the business culture is open and friendly; the key is building
relationships and so, lively and heated conversations are a normal form of
expression. The companies remain hierarchical and government set work
policies are strictly followed like the timings from 9:00 am to 6:00 pm (Tu,
Lin & Chang, 2011). Moreover, an hour-long break is mandatory for lunch
and overtime pay is necessary. During the lunch break, the employees must

17
 leave the secured work areas as it is a necessity to corporate with the strict
labor laws in the country. Organizations require providing transportation and
meal vouchers to the employees. Due to high globalization, universal
standards need to be implemented.

Brazil’s economy on a relative basis grew rapidly during the early 2010s at a rate
of 7.5%. Due to political instability and trade sanctions, however, the growth rate
slowed down and became negative in 2016 (-3.5%). Brazil also experienced
considerable improvements in income levels and poverty reduction in 2003-2014,
but changes have been sluggish since 2015 due to lower economic activity.

The Brazilian economy has been affected largely by political uncertainties and
lower government expenditure. However, the outlook for the country’s future is
positive. The domestic economy grew 0.6% in 2019 and is expected to sustain the
growth through infrastructure improvements and foreign investments, along with
its reliance on agricultural commodities like soybean and coffee.

Brazil has been a significant driver of growth in Latin America as the largest
economy. The country is involved in recovering from the worst recession in its
history. This recovery has resulted in a 1.1% increase in GDP growth. 3 The
inflation rate has been reduced to 2.13%.4

Investors interested in betting on a rebound in Brazil have a wide range of options,

ranging from exchange-traded funds to several large companies like oil producer
Petrobras, which has a New York Stock Exchange-listed ADR.5

The largest Brazil ETFs include:

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  iShares MSCI Brazil Capped ETF (EWZ)
 Direxion Daily Brazil Bull 2X Shares (BRZU)
 iShares MSCI Brazil Small-Cap ETF (EWZS)6

Some ADFs for Brazil are:

 Banco Bradesco S.A. (BBD)

 Itaú Unibanco Holding (ITUB)
 Gerdau S.A. (GGB)

2. Russia
Russia has transformed from a globally isolated, and centrally planned
economy to a globally integrated, and market-based economy. Business
leaders are accepting responsibility and making their own decisions but still
being too independent is a negative; the businesses must place the
community over their individual businesses. The staff involvement is
minimal in Russian businesses and the organizations are largely hierarchical.
Space refers to power and authority; status is also very important. In Russian
businesses, formal paper trails and documentations are important. Along
with other formal settings, dressing up is also critical as first impressions
and images are significant (Lo & Hiscock, n.d.). And the work environment
is cheerful with personal artifacts and decorative touches by the employees
to consider it their second home.

Driven primarily by oil exports and a rise in oil prices, Russia experienced
exponential growth in its GDP during the period 1999-2008 (before the Global
Financial Crisis). The transition from communism to capitalism that has been

19
taking place since 1991 has boosted economic growth in the country through
economic reforms and an export-oriented trade policy.

However, since 2014, Russia’s economy has been negatively affected by political
conflicts and trade sanctions that have been imposed by the US, Canada, Japan,
and the EU, along with fluctuations in the price of oil, which accounts for close to
52% of Russian exports. The Russian economy grew at a rate of 1.7% in 2019 and
is expected to grow faster if geopolitical tensions with trade partners like the US,
Canada, Japan, and the EU reduce.

Russia's transformation from communism to an embrace of capitalism has had a

staggering impact on its economy. A global boom in commodities had helped
Russia's stock market become one of the world's top performers until a downturn
in 2015.

The Russian economy began a recovery in 2017, experiencing a 1.5% growth in

GDP.7 However, Russia's invasion of Ukraine in February 2022 sent the Russian
economy into a tailspin. The country was dealt heavy sanctions by the international
community.
In compliance with the economic sanctions over Russia's invasion of Ukraine,
BlackRock has stopped issuing new shares of the iShares MSCI Russia ETF
(ERUS).8

The largest Russian ETFs include:

 Van Eck Vectors Russia ETF (RSX)

 iShares MSCI Russia ETF (ERUS)
 Franklin FTSE Russia ETF (FLRU)9

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 3. India
In India, it is important to build relations, through loyalty, conversation and
hospitality. Creativity and material success is given high value; the
organizations are driven more by the people as compared to processes. The
organizations are managed from top to bottom and the culture is more
flexible in management. Offices are becoming more flat and the
organizations are evolving towards a more open environment where the
panel based system is in place (Tu, Lin & Chang, 2011).
4. In India, the business initiatives include: no added transaction costs;
providing market-driven knowledge partners to overseas investors so that
they can benefit from the local opportunities; catalyzing sustainable
partnerships between local Indian and overseas Indian businesses; and to
enable value addition to the investible knowledge, skills and expertise of the
overseas Indians (Sachs, 2001).

India established itself as an emerging market after trade liberalization and other
major economic reforms in 1991. The Indian economy has been growing steadily
at relatively high rates. It averaged 7.1% in the past decade, with some fluctuations
due to political instability and economic reforms.

Essentially, India’s long-term economic growth can be attributed to the expansion

of the manufacturing and service sectors, driven by exports and foreign investment.
India is also experiencing gains both in capital and labor productivity due to
technological advancements and educational reforms. As of now, India is one of
the largest emerging markets, along with China.

21
India's economic growth rate is close to that of China—6.7% to 6.9% (2017),
respectively.1011 Investors in India have also seen some upside (positive returns)
over the past several years.

The BSE Sensex index (a measure of continuously performing stocks) has come
close to doubling since 2016, indicating good growth and confidence by
investors.12

India's large English-speaking population and technology-savvy firms such as

Infosys Technologies have been molding India into an emerging market.

The largest India ETFs include:

 iShares MSCI India ETF (INDA)

 WisdomTree India Earnings Fund (EPI)
 iShares India 50 ETF (INDY)13

4. China

China is a collectivist culture where group or larger community is more important

than the individual. The work environment is similar to the extended family where
the boss is the patriarch of the company. making relations and asking personal
details to get to know each other is normal at all levels in organizations;
relationships are built for life. The work environment is planned and revolves
around hierarchy; only executives get to have private offices while the rest follows
the American-style panel system (Popescu, 2013). The office environment may be
open but the government continues to tightly censor the information that is
disclosed to the public.

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The Chinese economy has posted an average growth rate of 10% since the
enactment of trade liberalization and economic reforms in 1978. China’s economic
growth has been propelled by government spending, expansion of its
manufacturing sector, and exports (specifically electronic equipment).

However, the country’s income per capita is still low. Although only 3.3% of the
Chinese population lives below the poverty line, 30% of the population lives below
US$5.50/day. Nonetheless, as the Chinese government focuses on increasing GDP
through consumption, disposable incomes are likely to increase, leading to
sustained economic growth.

With a population of 1.3 billion, China is the world's most populous

nation.14 China's economy has been slowing down over the past couple of years,
but it remains a major global growth driver.

The iShares China Large-Cap ETF is one exchange-traded fund that invests in
Chinese stocks.15 Investors can participate in China through mutual funds, ETFs,
and Chinese companies with listings on Nasdaq and the New York Stock
Exchange.

The largest China ETFs include:

 Global X MSCI China Financials ETF (CHIX)

 Global X MSCI China Utilities ETF (CHIU)
 Xtrackers Harvest CSI 500 China-A Shares Small Cap Fund (ASHS)16

5. South Africa

South Africa is one of the most diverse and promising emerging markets globally.
The fiscal framework encourages domestic growth and competitiveness while

23
raising the levels of employment. Taxes have been reduced and the fiscal deficit is
under control. The general legal practices are in line with the international norms
and human rights are given great significance. The trade and industry is governed
by a free enterprise economy (Lo & Hiscock, n.d.). The country has world-class
infrastructure with modern transport network and sophisticated telecommunication
facilities. Due to its economic alliance, the country has special relationships with
the European Union, and the Southern African Development Community.

South Africa was inducted into the BRICS association in 2010, after experiencing
negative GDP growth in 2009 following the 2008 Global Financial Crisis (-3%).
Following the financial crisis, the South African government implemented a
number of policies to boost GDP through government expenditure and
consumption. Economic growth increased in 2010-12 before slowing down in
2012-16 and rising again in 2017.

South African exports are composed primarily of commodities from mining.

Therefore, export volumes depend on the prices of commodities, which are highly
volatile. Fluctuations in export volumes explain part of the variation in GDP
growth over the last few years.

Although South African GDP per capita has been increasing over time, so has the
unemployment rate (29% as of 2019). High levels of unemployment and crime
have hindered the economy’s growth and investment potential, and are issues that
need to be addressed through policy reforms.

24
The Next 11 Economies

Jim O'Neill—the man responsible for coining the BRIC acronym to represent
emerging markets—also coined the Next 11 to represent the world economies with
the potential to become among the world's largest during this century.

The Next 11 list includes Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria,
Pakistan, Philippines, Turkey, South Korea, and Vietnam.17
These are frontier markets that are risky by nature. Since these countries are
developing, they are unstable and experience marketwide volatility.
Frontier Markets

Frontier markets are a risk-heavy investment and should be considered only if you
don't mind the amount of risk that comes with them. These countries usually are
commodity heavy, not transparent and are hard to find information on.

Many of these countries are also politically unstable, as powers within the
countries struggle to control commodities and resources. The returns could be
significant, but investing in a frontier economy should only be an option for those
with large, diverse portfolios that can handle the risk.
.

6- Research objectives

7- Definition of the case (the country under study)

South Africa is a highly diversified economy where key sector include: mining,
agriculture, fisheries, vehicle manufacturing, transportation, tourism,
telecommunication, clothing and textiles, real estate, retail, energy, and wholesale

25
trade. Unlike other emerging markets, South African has struggled to recover from
the recession greatly, and it has been due to the growth in the private and public
consumption that recovery has been made possible. Under the current policy
environment, the potential growth is estimated to be around 3.5 percent. It
generates more than 45 percent of the electricity of Africa, and its power supplier
provides 4th cheapest electricity in the globe. Further, it is also the largest producer
of platinum and chromium in the world while holding largest reserves for
vanadium, manganese, and alumino-silicates. Over the past decade, the investment
ratio has increased due to government and public corporations’ investment in the
infrastructure,

At the fourth BRICS Summit in New Delhi (2012), the leaders of Brazil, Russia,
India, China and South Africa considered the possibility of setting up a new
Development Bank to mobilize resources for infrastructure and sustainable
development projects in BRICS and other emerging economies, as well as in
developing countries. They directed Finance Ministers to examine the feasibility
and viability of this initiative, to set up a joint working group for further study, and
to report back by the next Summit in 2013.
Following the report from the Finance Ministers at the fifth BRICS summit in
Durban (2013), the leaders agreed on the feasibility of establishing the New
Development Bank and made the decision to do so. It was also agreed that the
initial contribution to the Bank should be substantial and sufficient for it to be
effective in financing infrastructure.

The New Development Bank Africa Regional Center shall be established in South
Africa concurrently with the headquarters.” (Fortaleza Declaration)

26
8- Statement of economic and statistical indicators for the country or
emerging market (the source of each statement and each table is written
below)

In 1990, the share of BRICS in world GDP was only 10% while in 2010, it rose to
more than 25%; this means that during a period or two decades, the GDP share of
the BRICS nations expanded by 150% (Table 1). Moreover, their share in the
global trade rose from 3.6% to more than 15%. In this regard, China has been the
major contributor whose share increased from below 2% to above 9%. The share
of Brazil rose from 1.8% to 1.2%; India’s share rose from 0.5% to 1.8%; Russia’s
share rose from 1.5% to 2.3%. But the share of South Africa did not change during
this time period as there is consistency. In all the member countries, the prospects
of economic growth have been boosted in particularly by trade; evidence suggests
that the tool for promoting growth of the economies and facilitation of
development in the BRICS countries has been trade liberalization (Table 2). The
table clearly indicates that the BRICS countries have experienced a rise in GDP
and forex reserves; their share in the world trade has increased and the whole
group has benefitted from the trade openness (Jadhav, 2012).

The most significant change in the BRICS countries since the 1990s has been the
coupling of the growth-oriented strategies with the economic activities that has put
the countries on high growth trajectories. This means that the favorable conditions
and development of infrastructure has made the country more attractive destination
for the FDI (foreign direct investment) (Table 3). According to the data, the
inflows of FDI in these countries have increased by around 11% rate of compound
annual growth per annum over the last decade where it was $81 billion in 2000 and
reached to $221 billion in 2010. The outflows have also a similar trend as the FDI

27
outflows have risen at a CAGR of 35% from the BRICS countries. This shows that
not only these countries are attractive destinations for the FDI, but they also have
been playing a critical role in meeting the demands of capital around the globe by
making foreign investments elsewhere.

Considering the rising importance of the BRICS countries, the trend in growth of
the labor force is also very critical. According to the International Labor
Organization, the data collected in 2012 states that more than two-fifths of the
world’s population is constituted of the BRICS and what is more important is that
it has an even higher percentage share in the labor force that is economically active
(Gammeltoft, 2008). Amongst the members, China has the highest share for both
population and the economically active labor. India falls second on population but
its economically active percentage is lower than that of Brazil and Russia.

Table 1 Key statistics from emerging and developed economies

From: Research Opportunities in Emerging Markets: an Inter-disciplinary

Perspective from Marketing, Economics, and Psychology

UK USA Japan South China India Brazil Turke

Korea y

19 20 19 20 19 20 19 20 19 20 19 20 19 20 19 20
75 12 75 12 75 12 75 12 75 12 75 12 75 12 75 12

Popul 56 63 21 31 11 12 35 50 91 13 62 12 10 19 39 74
ation, 6 4 2 8 6 50 2 37 8 9
total
(milli

28
 UK USA Japan South China India Brazil Turke
Korea y

19 20 19 20 19 20 19 20 19 20 19 20 19 20 19 20
75 12 75 12 75 12 75 12 75 12 75 12 75 12 75 12

on)

GDP 1.1 2.5 4.9 14. 1.9 4.7 0. 1.1 0. 4. 0. 1. 0. 1. 0. 0.

(const 1 3 4 14 8 1 10 7 16 52 17 39 37 14 14 63
ant
2005
US$)
(trilli
on)

GDP 19 39 22 45 17 36 28 23 17 33 28 11 34 57 36 84
per 77 79 88 03 64 91 51 30 2 45 1 23 35 30 89 83
capita 2 6 6 8 7 2 3
(const
ant
2005
US$)

% 18 .. 59 .. 6.
pop. .6a .2 79
at $2 3
a day

29
 UK USA Japan South China India Brazil Turke
Korea y

19 20 19 20 19 20 19 20 19 20 19 20 19 20 19 20
75 12 75 12 75 12 75 12 75 12 75 12 75 12 75 12

(PPP)

Avera 2.1 2.8 2.4 6.9 9. 5. 3. 4.

ge 7 2 2 3 52 89 18 22
annua
l GDP
growt
h%

1. Source: World Development Indicators 2014

2. aFor 2011; 2012 data not available

Table 1 provides some key economic statistics for developed countries, recently
emerged countries, and emerging markets for purposes of comparison. Emerging
markets are large, growing swiftly, and exhibit variation in standards-of-living
across their population. Clearly, developed countries such as the USA, UK, and
Japan have much higher per-capita incomes than emerging markets in the lower
panel of the table. South Korea has had remarkable increases in income over the
period of 1975 to 2012, and we label it as an emerged economy. However, the
rates of growth during the 1975–2012 period has been much higher for emerging
and recently emerged economies, compared with developed countries. China has
had much stronger per-capita growth than India in the same period--starting with a

30
per-capita income which was much lower in 1975, China has almost three times
India’s per-capita income in 2012. Even though average per-capita incomes in
emerging markets have risen considerably in the past few decades, a large portion
of the population still remain below the poverty line (defined by the World Bank as
those earning less than $2 a day). Countries like India and China (and to a lesser
extent Brazil) have a significant mass of the poor. Given their large populations,
these shares constitute large numbers of people and this segment will remain
important consumers of basic goods.

https://link.springer.com/article/10.1007/s40547-015-0044-1#Sec12

The report notes that South Africa is substantially outmatched economically

compared to the other nations in the BRICS. The authors state that, “with a GDP of
approximately one-sixteenth of China’s out-put, an annual growth rate of 2.8 per
cent in 2010 (compared to 10.3 per cent for China, 9.7 per cent for India and 7.5
per cent for Brazil) and a population of 50 million (compared to China’s 1.3 billion
and India’s 1.2 billion), South Africa has significantly less economic power than
the other members” (“South Africa in the BRICS,” 2). The authors further note that
South Africa’s nominal GDP of US$286 billion, is also significantly lower than
Brazil valued at $1 Trillion, India valued at $2Trillion, Russia valued at $1.6
Trillion and China $5.5 trillion. The table below demonstrates a better example of
these discrepancies.
Many experts and analysts argue that integration into BRICS causes concern for its
foreign policy, given that it may be difficult for the country to justify its foreign
policy positions among the other, much wealthier countries in the forum and
difficult for all members to reach a consensus, considering their differing national,
regional and strategic interests”. The authors go on to note that the South African

31
Government has stated they are now focusing it’s foreign policy on Africa
specifically and increasing trade with India and China. Being a member of the
BRICS could prove to be challenging for South Africa’s economic objectives as
the authors note the forum is more political in nature combining many countries
that would traditionally be viewed as economic adversaries.
Discussion and formation of an opinion whether South Africa would have
been better advised to develop and strengthen economic ties in Africa
South Africa clearly demonstrates a desire to improve economic ties in Africa as
it’s one of the countries core objectives. Entering into the BRICS may not have
been the best approach to achieve this goal especially considering China’s interest
in Africa regarding the continent (albeit with soft and financial power) and taking
what they please without regard for long-term African needs: sustainability and
good local governance. China has been characterized as having a conquering
mindset and such predatory actions on the scale of China’s afro-influence could
destabilize any fragile structural reform that exists, going so far as to say China is
playing the part of neo-colonist. It makes one questions whether South Africa
should focus more in building infrastructure and investing in Africa as opposed to
involving in the BRICS, as China’s political influence will be more prevalent and
apparent in South Africa as time progresses. Even so, Weisbrod and Whalley state
that Chinese investment has resulted in modest, but significant GDP growth in
African countries. Fundamentally opportunistic, China enjoys much economic
success in Africa despite the critics’ claims that Chinese influence is coercive and
decidedly unscrupulous (contrary to People Republic of China (PRC) party
rhetoric). The manner in which the PRC forms partnerships with the leader who is
in power regardless of their local governing tactics is considered a major
international foul. One study reports growing Chinese influence in Africa in all
modes – economics, security, and governmental ties – but states that their methods

32
could endanger advancing democratic reform and harm U.S. Activity. Though
they did not until recently publicize just how much aid monies they dedicated to
Africa (Brautigam,1) .Under public pressure to play the international donor game,
the China White Paper was released revealing some figures, a sign some take as a
China moving in the direction of good nation behavior. There is a growing belief
in Africa that the Chinese model is more appropriate and effective at changing the
situation of both national economies and the lives of the population.

Evaluating an Emerging Market – South Africa

By UniqueWritersBay August 28, 2017 Uncategorized 0 Comments

South Africa as an Emerging Market

South of the Sahara, South Africa is the dominant market and is considered an
emerging market alongside Egypt and Morocco in the north and Nigeria in the
west of Africa. As a Republic, South Africa has major industries in textiles,
fertilizer, electronics, motor vehicles, and motor vehicle parts. The country has a
climate, soil, minerals, and ports that can be harnessed into further developing and
growing the economy. South African’s rise to the status of an emerging market can
be credited to the rise of the local consumer, a growing middle class, a youth
bulge, and most importantly the improved macroeconomic management.

Read also Concepts of Emerging Markets – PowerPoint Presentation

Back in the mid-20th century, the apartheid policies by the then government and
policies were unfavorable to international businesses, which led to most of them
pulling their operations from South Africa to other more stable parts of the world.
The hostile political environment that threatened the economy further led to
significant brain drain as most educated South African nationals of all ethnicities

33
relocated from the country in search of greener pastures. However, by the late
1980s the apartheid government had realized the error of their ways and in 1990
released Nelson Mandela a lead freedom fighter and political prisoner. South
Africa gained its independence from colonial rule in 1994 and elected Nelson
Mandela as president a move that was applauded by the international community.
Mandela, a champion of peace and reconciliation and his team of South African
leaders saved the country, which was at the brink of war, managed to reassure its
citizens, raised its standards of operation, and encouraged consumers and
businesses alike to once again trade with the country.
Read also Sample Negotiation Plan For An Emerging Market – Asia
When South Africa hosted the 2010 World Cup, it significantly improved its public
relations besides benefiting from the infrastructural upgrade that took place and
economically from the tourists that flocked in. In the last decade, political tensions
have been subdued and armed conflict is unlikely with politicians contesting
unfavorable conditions by leaning towards political protests as opposed to
paramilitary campaigns. As a nation that is navigating the difficult political terrain
rather well, South Africa is likely to prosper; investors would be encouraged to
maintain agility in order to safeguard their investments.

Read also Emerging Market Research Paper – Brazil

Country Demographics
South Africa has a population of 50 million with a population density of 41 people
per kilometer squared, a rather small population compared to other emerging
markets. Nevertheless, the annual rate of growth of 1.32% is positive(Gauteng
Provincial Treasury, 2013). The larger the population of a country, the larger the
larger the engine for development and economic growth the country has. There are
significantly large numbers of the South African population living with HIV

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(Human Immunodeficiency Virus) and community crime in the country is rated as
high. In 2005, the Human Development Index (HDI) showed some regress due to a
decline in the country’s life expectancy that was directly linked to the high
prevalence rates of HIV. Regarding human development, this is an area that South
Africa as an emerging market has to actively keep up with other emerging markets.

Read also Canada And Morocco Demographics

Inflation
As of June 2015, South Africa together with Brazil and Turkey displayed currency
fundamentals that were the weakest amongst the emerging markets. At the
beginning of 2015, the rand registered a 9% decrease against the dollar and has
continually shown weakness throughout the year. According to the South Africa
Reserve Bank (SARB) has forecasted that inflation expectations are anchored at
the 6% mark, which is the upper limit of the target range of 3-6%, by SARB. All
indications are however pointing at a worse inflation breach than the current
forecasts by SARB, which indicate a temporary inflation breach only in the first
and second quarter of 2016(Overberg Asset Management, 2015). Analysts are
however, adamant that the inflation breach will occur much earlier, as in the last
quarter of 2015 and is likely to persist for a prolonged period of time.

As the dollar has been getting stronger, the foreign exchange reserves have
continually weakened which has led to a fall of South Africa’s gross reserves by a
rate of -1.3% monthly, a situation that is likely to continue in volatility over the
next few months. From April 2015, the gross reserves have fallen from $47.043
billion to $46.446 billion(Overberg Asset Management, 2015).

35
Gross Domestic Product and Liquidity of Local Debt
South Africa had a GDP of $ 475 billion as of the year 2011(Gauteng Provincial
Treasury, 2013). The size of South Africa’s GDP experienced very little growth
since before the 1980s and currently shows no real potential for becoming a
potentially large economy. This reality indicates that South Africa’s categorization
as an emerging market that joined BRICS (Brazil, Russia, India, China and South
Africa) may have more to do with politics than it would economic figures and
facts.

With a current account deficit of 5.1% of the GDP, South Africa had one of the
largest current account deficit among the emerging markets, as of quarter 4 of the
year 2014(Overberg Asset Management, 2015). This makes South Africa rather
vulnerable and this vulnerability is further increased by the magnitude of foreign
ownership of its financial assets, making a change in sentiment a potential risk
factor. More than 40% of South Africa’s domestic bonds are in the ownership of
foreign investors and out of all the emerging markets, South Africa’s bond market
has one of the highest levels of foreign ownership. Since South Africa imports all
its oil it was expected that the deficit would improve, but this large current account
deficit appears to be worse especially in light of the significant drop in oil prices in
the past year.

Political and Economic Risks

South Africa like many other African countries has a much bigger lower income
earning population, bigger than the growing middle class, which is capable of
mobilizing and opposing unfavorable policies. The constant wage adjustments
push and pull between government and public sector unions poses as a potential
political risk. For instance, the wage agreement signed in 2012 stipulated that

36
increase in wages would be calculated based on the consumer price inflation (CPI)
and in the case where the CPI falls below the average projected, deductions of the
difference would be made in the next year. In 2014, the actual CPI was recorded at
5.6% but the public sector wages were calculated against the CPI projected at
6.2%, which caused tensions with the public sector unions. In 2015, the public
sector unions and the government agreed on a 7% wage increase but while making
the pronouncement, the government quoted a 6.4% increase lower that what was
agreed upon (Overberg Asset Management, 2015).These kinds of recurring
tensions and problems could potentially lead to the cancellation of the latest wage
agreement that was signed in May of 2015, as the worst-case scenario.

Read also Ecological, Legal, Environmental, Technological, Economic,

Political, Factors Affecting Businesses
Market Efficiency
The fact that the financial market of a developed market is liquid and trades
a higher volume, makes it a lot more efficient than that of an emerging market.
While comparing the U.S and South Africa, it is easier to see why the developed
U.S market is more efficient than that of the emerging South African market. The
liquidity levels differ greatly and the trading volumes differ significantly. These
differences can be explained in terms of GDP levels where South Africa had a
GDP of $475 billion in 2011 while the U.S had a GDP of $13.2 trillion, that same
year(Gauteng Provincial Treasury, 2013).
Read also Case Study : Emerging Markets – Ozon, The Amazon of Russia
While both countries may experience market efficiency individually and
domestically, by comparing them the reasons why the developed market is more
efficient than the other become more evident. They become evidently different in
terms of supervision & regulation of the markets, accounting standards

37
&regulations and the legal framework conditions, where the U.S markets has more
advanced and refined versions while South Africa may still be in the
developmental processes. As the world’s largest economy the U.S stock market
pulls participation from all over the world while South Africa’s may mostly attract
national investors(High & Honikman, 1995).

South Africa and Nigeria

There are numerous similarities between South Africa and Nigeria, two emerging
markets in Africa. The economic growth of these two markets is pegged on fresh
foreign investments as the two countries tap into international capital markets in
order to develop infrastructure that is expected to sustain the growth patterns they
are currently experiencing(Udo, 2013).

In the recent past, Nigeria an emerging market has experienced the force of the
people who caused unrest in opposition to unpopular policies, for example the
increase in utility tariff, fuel subsidies removal, and problems with service
delivery. In South Africa, organized labor is considered quite strong and in the past
has been able to realize various successes in wage negotiations over the years.
Both of these countries just like several other African countries have a much
stronger force of change in politically relevant group which is formed the poor
majority than it has in the growing middle class. The low-income earners who
reside in urban areas and make up the majority of the population have a greater
ability to mobilize and influence changes(Udo, 2013).

Political, Economic and Technological trends of South Africa as an Emerging

Market
South Africa is likely to attract short-term capital inflows from foreign investors
but with increased volatility in foreign exchange reserves, there is a likelihood of

38
raised interest rates by the U.S Federal Reserve Bank, which may cause a
dwindling in the appetites of the foreign investors. Insufficient economic reforms
and power constraints may affect South Africa’s already weakened economic
potential. This is especially so because of the country’s low credit rating,
contingent government liabilities, government indebtedness, large current fiscal
and account deficits. South Africa depends largely on ‘hot money’, which refers to
portfolio capital inflows and seems to be losing out on the more long-term and
steady foreign direct investment, mainly because of its large current account
deficit. Despite all of this, South Africa’s credit rating stands at BBB, this is a level
above the speculative grade giving the country a stable outlook, as a downgrade is
not likely. The country is likely to maintain this positive status.
Since the robust yearly increase of 3.8% and monthly increase of 1.2%, there is an
expectation that manufacturing production will show a softening bias. This is
despite the shrinking of the manufacturing sector by -1.5% in April 2015 caused by
weak demand conditions from consumers and in the mining sector(Overberg Asset
Management, 2015). This demand conditions are however, temporary, since a
projected increase of 5% in mining output is expected.

In terms of infrastructural developments, South Africa is making progress, for

instance Transnet Freight Rail; a state-owned enterprise, under their
recapitalization program got into a loan facility agreement with China
Development Bank. Under this program, Transnet intends to buy 1,064
locomotives and this loan, amounting to 30 billion rand; 60% of the 50 billion
required amount will be used in the purchase of 591 locomotives(Overberg Asset
Management, 2015). The loan has a maturity of 15 years and carries a grace period
of 4years. In as much as the locomotives will be manufactured by China North Rail
and China South Rail, it will be instrumental in developing the drive skills and

39
manufacturing capacity of South African rail since stringent requirements have
been in place to ensure the localization and supplier development targets are met.
More importantly, this arrangement is expected create more opportunities for local
jobs.

Read also Importance Of Emerging Markets To Domestic And Global

Markets
Further depreciation of the rand is expected since the US dollar has been
strengthening and if it manages to break the 30-year resistance line it is currently
testing it will get even stronger, weakening the rand to the level of R13/$(Overberg
Asset Management, 2015).

With diversification and a more flexible labor market, South Africa will grow
significantly. In order to improve their chances of thriving, companies will need to
develop risk management strategies that are tailored to specific local contexts and
business activities.

The African Markets: Moving Ahead

Africa markets are one of the best places to do business in. Here's why...

Africa’s rapid economic growth is creating substantial new business opportunities

that are often overlooked by global companies. The African market today in
undoubtedly one of the most lucrative and profitable business destination. Analysts
project that industries, agriculture, resources, and infrastructure – together could
generate as much as $2.8 trillion in revenue for African countries annually by the
year 2025 – or $1 trillion more than what it generates today. Africa’s collective

40
GDP, at over $1.5 trillion in 2020, is now roughly equal to the large economies of
Brazil or Russia. While Africa’s increased economic momentum is widely
recognised, less known are its sources and likely staying power.

Natural resources directly accounted for just 24 per cent of the continent’s GDP
growth from 2010 through 2020. Experts believe that the key to Africa’s growth
surge were improved political and macroeconomic stability and microeconomic
reforms.

It is forecast that future economic growth in Africa will be supported by the

continent’s increasing ties to the global economy. Rising demand for commodities
is driving buyers around the world to pay dearly for Africa’s natural riches and to
forge new types of partnerships with African producers. And Africa is gaining
greater access to international capital; total foreign capital flows into Africa rose
from $15 billion in 2000 to a peak of over $120 billion in 2019.

Today the rate of return on foreign investment in Africa is higher than in any
other developing region. Early entry into
African economies provides opportunities to
create markets, establish brands, shape industry
structure, influence customer preferences, and
establish long-term relationships. Business can
help build the Africa of the future.

The rise of the African urban consumer also will

fuel long-term growth. Today, 40 per cent of
Africans live in urban areas, a portion close to China’s and continuing to expand.
The number of households with discretionary income is projected to rise by 50 per

41
cent over the next 10 years, reaching 128 million. By 2030, the continents’ top 18
cities could have a combined spending power of $1.3 trillion.

In recent times, there has been a scramble for the resources and markets of Africa.
China, India and Brazil, among others, are competing with African countries’
traditional trading partners, from Europe and America, to win access to the
continent’s commodities. China and India in particular are funding and building
economic and social infrastructure projects across the continent.

BRICs countries – Brazil, Russia, India and China – are expected to play a
significant role in the future growth of Africa.

The global recession and its recovery have been nourishing these so-called South-
South ties and recent reports that:
• By 2025, BRIC-Africa trade will have increased threefold, to over $750 billion
from $155 billion in 2010.
• BRICs share of Africa’s total trade will increase from one-fifth today to one-third
in the next five years.
• BRICS foreign direct investment stock in Africa will swell to more than $150
billion from around $80 billion today.

Notably, a host of companies from the BRIC are now playing a larger role in the
international arena. In 2019 alone, 231 (or 11.5 per cent of the total) companies
listed in the Forbes Global 2000 originated in the BRICs – up from only 83
companies (four per cent) in 2015. Undoubtedly, the writing is on the wall –
BRIC-Africa partnership is going to shape the future of global economy in years to
come.

42
Companies and businesses from BRIC operating in Africa are outpacing
American and European rivals through lower prices, faster action, and a
greater willingness to work in difficult environments.

However, there’s a great deal of negative publicity surrounding many African

countries, and that tends to be all that people hear about. But in reality there are 54
countries on the continent and in many of them, there are an enormous amount of
positive things happening. There are extraordinarily promising possibilities in
agribusiness, infrastructure, and tourism.

The best possibilities are in the southern half of the continent, countries
like Mozambique, South Africa, Mauritius, and Namibia. Ghana has enormous
potential in its ports, fisheries, and tourism, as does Botswana.

As more and more opportunities present themselves, Africa is sure to emerge as

one of the most profitable places to do business with – those who do not take
notice of Africa’s tremendous potential in the coming years surely risk getting left
behind in the race.

9- The conclusions of the research in the light of the data you provided

10- A list of the references used in the research and their sources

Best wishes

43
References:

Free Example Of The Brics Nations Essay | WOW Essays

Emerging Financial Markets Case Studies | WOW Essays

BRICS

Brics Countries - Definition, Purpose, Statistics, Criticism, List

(wallstreetmojo.com)

BRICS+ (brics-plus.com)

BRICS Expansion: Five New Members in 2023? - Impakter

Home - BRICS (sabricsbusinesscouncil.co.za)

Brics (slideshare.net)

https://www.investopedia.com/terms/e/emergingmarketeconomy.asp

https://corporatefinanceinstitute.com/resources/economics/emerging-markets/

South Africa

44
BRICS information portal (infobrics.org)

Brazil, Russia, India, China and South Africa (BRICS) (investopedia.com)

What is BRICS | Africa Facts (africa-facts.org)

Emerging Market in South Africa, Essay Example | essays.io

Evaluating an Emerging Market – South Africa (uniquewritersbay.com)

The Emerging Markets of Africa (africa-business.com)

How South Africa is stacking up in the emerging market... (dailymaverick.co.za)

South Africa- Stuck in the Middle, Case Study Example (essays.io)

South Africa SWOT Analysis Market Research Report | Market Research

Reports® Inc.

https://ccsi.columbia.edu/sites/default/files/content/docs/publications/EMGP-
South-Africa-visual-report.pdf

https://ccsi.columbia.edu/sites/default/files/content/docs/publications/EMGP-
South-Africa-Report-2016-FINAL.pdf

https://worldpopulationreview.com/country-rankings/emerging-countries

https://www.thebalancemoney.com/top-emerging-market-economies-1979085

https://www.igi-global.com/dictionary/analyzing-government-research-emerging-
economies/9679#:~:text=Van%20Agtmoel%20of%20the%20International,percent
%20of%20the%20world%20economies.

file:///C:/Users/TOSHIBA/Downloads/EssayonEmergingMarkets.pdf

Emerging Markets: What They Are, Criteria and Lists | Indeed.com

45
https://www2.deloitte.com/content/dam/Deloitte/za/Documents/africa/
DeloitteZA_Is_South_Africa_the_next_Brazil_Sep2017.pdf

https://www.brookings.edu/blog/africa-in-focus/2019/04/03/africas-emerging-economies-to-take-the-
lead-in-consumer-market-growth/

Executive summary

As its name suggests, South Africa is the southern most country on the continent.
A former colony of European powers, south Africa still struggles with income
equality between black and white citizens that until the late twentieth century was
institutionalized and strictly enforced.

In 2011, according to census data, white Africans earned six times more money
than their black countrymen. Rates of unemployment are higher and levels of
education are lower among black and mixed-race south Africans. South African’s
GDP accounts for almost a third of Africa’s nominal. Developed sectors include
manufacturing and agriculture. Though SA is famous for its diamond mines and
extracts 90 percent of the worlds supply of platinum, coal, is the most important
resources mined. SA generates 90 percent of its electricity from coal. The financial
sector accounts for more than 20 percent of GDP and is the third largest source of
employment.

https://repository.up.ac.za/bitstream/handle/2263/3654/
Klein_Emerging(2007).pdf?sequence=1

46