The Biggest Industries In South Africa

South Africa is located in the southernmost tip of the African continent, where it is a member of the Commonwealth of Nations and the Southern African Development Community. This country has a gross domestic product (GDP) of $280.37 billion that when adjusted for purchasing power parity is equal to $758.12 billion. With a total population size of over 54.95 million individuals, the average GDP per person (as adjusted for purchasing power parity) is $13,591. As of the first quarter of 2015, South Africa reported a total labor force size of 20.994 million individuals and has an unemployment rate of over 25%.

The economy of South Africa is considered the most industrialized in Africa and is the second largest on the continent. The economy here has been growing at a significant pace since the end of the 1990’s and this country has managed to more than quadruple its foreign reserve amount. This country exports a total of $69.1 billion worth of goods and imports a total of $73.7 billion. This imbalance in exports versus imports means that South Africa has a trade deficit of $4.57 billion.

Today, the economy and workforce of this country rely on several sectors, including: agriculture and food processing, tourism, financial services, services industry, business process outsourcing, and industrial manufacturing and mining. Nearly two-thirds of the workforce is employed in the services sector. This article takes a closer look at the biggest industries of the manufacturing sector of the economy of South Africa.

History Of The Industrial Sector

The industrial sector of the economy of South Africa began with diamond mining in the last half of the 19th century. Shortly after the discovery of diamonds here, gold deposits were also located, leading to the serious growth and development of the mining sector. Historians refer to the period that followed the mining sector growth in South Africa as industrialization. Since the beginning of the industrialization of this country until present time, other natural resources have taken over importance in the mining sector and the manufacturing sector has moved toward automobile manufacturing. Today, neither mining nor manufacturing contribute significantly to the national GDP. These sectors do, however, provide a large number of jobs and the majority of exports leaving South Africa. In 2010, the government of this country announced its plan to increase manufacturing capabilities here. The focus of this industrial policy has been on three specific products: transportation equipment, metals, and capital goods.

The Mining Sector

The mining sector in South Africa produces a number of raw natural resources, the vast majority of which are exported. Some of the primary products extracted and exploited by the mining sector include: gold, platinum, diamonds, uranium, chromium, zirconium, and vermiculite. Mining companies here employ the greatest number of workers of any other sector in this country. Additionally, the mining sector is reported to be the 5th largest contributor to the national GDP, despite being hit hard by the global economic recession.

The Manufacturing Sector

The manufacturing sector accounts for 14% of the national GDP, making it the 4th largest contributor in the economy. The primary goods produced by the manufacturing sector of South Africa include: food processing, textiles, electronics, chemicals, technology, and automobiles.

Of these specialized goods, the most important to the economy is the automobile industry. This section of the economy makes up 12% of all the manufactured goods exported and contributes 6.7% of the national GDP. Additionally, 29% of all manufacturing companies in South Africa are dedicated to the automobile industry. This industry is primarily focused on the manufacturing of foreign vehicles, although some national makes and models are produced here as well. This sector of the industry was first established during the 1920’s, but significant growth did not begin until in the late 1990’s. Since then, it has become a mainstay in the economy of this country. This sector of the manufacturing industry of South Africa produces both automobile parts and finished vehicles, with finished vehicles making up the largest part of production efforts. Many car and truck companies have decided to make South Africa their primary manufacturing hub. As a result, this sector provides over 300,000 jobs and exports finished vehicles to more than 50 different countries around the world. Additionally, this country is responsible for manufacturing 84% of all motor vehicles produced throughout the African continent.

The Export Economy

As previously mentioned, the mining and manufacturing sectors are the biggest export contributors in the country. South Africa has the 33rd largest export economy in the world. The top destinations for exports from this country include: China ($6.81 billion worth of goods imported), the US ($5.47 billion), Germany ($5.26 billion), Botswana ($3.71 billion), and Namibia ($3.53 billion).

The most widely exported good from South Africa is platinum at 8.7% of all exported products and a value of $6.03 billion. This particular product, however, is classified under the precious metals category of exports. Despite containing the most widely exported good, this category is classified as only the 4th largest export category in terms of percentage and total value ($8.55 billion).

The largest export category in South Africa is its mineral products category, which is responsible for $14.6 billion worth of exports. Approximately 36 specific products are classified under this category. The most widely exported mineral products include: coal briquettes (5.5% of all exports, $3.81 billion), iron ore (5.2% of all exports, $3.58 billion), refined petroleum (2.4% of all exports, $1.65 billion), and manganese ore (2% of all exports, $1.4 billion). The second largest combined category of exports is transportation at a total value of $9.99 billion. The second most widely exported product from this country belongs to this category: cars. Exported cars make up 7.6% of all exports at a value of $5.23 billion. The third largest category of exports is the metals category, which exports $8.88 billion worth of products every year. The most widely exported product within this category is ferroalloys, which make up 4.9% of all exports leaving South Africa.