Economics XMBA36 Philip Vinai

8/3/2019 Economics XMBA36 Philip Vinai

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XMBA-36

Philip Menezes

Vinaikrishnan Nair


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India South Africa&


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Brief History of South Africa

South African history has been dominated by the interaction and conflict of severaldiverse ethnic groups

The aboriginal Khoisan people have lived in the region for millennia.

South Africans are descendants of immigrants, mainly from the Netherlands andBritain, as well as slaves from the East Indies, and there are many South Africans ofIndian and Chinese origin, they are the descendants of labourers who arrived in thenineteenth and early twentieth centuries.

South Africa was under an official system of racial segregation and white minorityrule from 1948 known as Apartheid, until its first egalitarian elections in 1994,

when the ruling African National Congress came to dominate the politics of thecountry.

Independence from the United Kingdom in 1931. Union of South Africa formed onMay 31, 1910 and Republic of South Africa declared on May 31, 1961


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India-SA- Historical Relationship

Export of Slave Labor to South Africa

Impact of Mahatma Gandhi

India worked consistently to put the issue of apartheid on the agenda of the

UN.

The African National Congress maintained a representative office in New

Delhi from the 1960s onwards.


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The Discovery of Diamonds

A person of British origin Daniel Jacobs came across a particular stonewhich his children were playing with.

The stone was eventually brought to the attention of the acting Civil

Commissioner at Colesberg, Lorenzo Boyes and it was found to be a

diamond, weighing twenty-one carats and amounting to the value of fivehundred pounds.

Thus, on 13 October 1867, diamonds were discovered in South Africa, with

the very first becoming known as the Eureka diamond.

By 1871, more diamonds were found in the vicinity of the present-day

Kimberley, leading to the establishment of De Beers Consolidated Mines

under the leadership of Cecil John Rhodes.


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National Heroes of South Africa

Nelson Mandela (also first South African president to be elected from 1994

to 1999)

Walter Max Ulyate Sisulu

Oliver Tambo

Joe Slovo

Desmond Mpilo Tutu


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Political System

The Republic of South Africa is a federal state.

South Africa is a constitutional democracy with a three-tier system

Consists of National government and nine provincial governments.

The constitution of South Africa was adopted in 1996 and implementedofficially on 4 February, 1997. Under the political system of South Africa,the President is the executive head of the state elected by the parliament fortwo five year terms.

The political system of South Africa has significantly evolved since theapartheid era.


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Quick Snapshot


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Political Relations

Indias consistent support to the anti-apartheid struggle.

A number of bilateral agreements have been concluded between the twocountries.

The India-South Africa Joint Commission at the level of Foreign Ministers wasset up in 1994 to identify areas of mutually beneficial cooperation.

Prime Minister of India Dr Manmohan Singh visited South Africa from 17-19th

October 2011 to attend the IBSA summit held in Pretoria on 18th October2011.

India and South Africa have a common approach on many global issues,including UNSC reform, the future of multilateralism, climate change, South-South Cooperation and multilateral trade negotiations.


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The economy of South Africa is ranked as an upper-middle incomeeconomy by the World Bank

Economic powerhouse of Africa, leading the continent in industrial output

and mineral production and generating a large proportion of Africa's

electricity.

Abundant natural resources, well-developed financial, legal,communications, energy and transport sectors, a stock exchange ranked

among the top 20 in the world, and a modern infrastructure supporting

efficient distribution of goods throughout the southern African region.

World-class and progressive legal framework. Legislation governing

commerce, labour and maritime issues is particularly well developed, andlaws on competition policy, copyright, patents, trademarks and disputes

conform to international norms and conventions.

The country's financial systems are sophisticated and robust. The banking

regulations rank with the best in the world, and the sector has long

been rated among the top 10 globally.

Economy Overview


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Some Analysis


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\

GDPGrowth Rate

The Gross Domestic Product (GDP) in South Africa expanded 1.4

percent in the third quarter of 2011 over the previous quarter.

Historically, from 1993 until 2011, South Africa's average

quarterlyGDPGrowth was 3.32 percent reaching an

historical high of 7.60 percent in December of 1994 and arecord low of -5.90 percent in March of 2009. South Africa

has a two-tiered economy; one rivaling other developed

countries and the other with only the most basic

infrastructure. It is therefore a productive and industrialized

economy that exhibits many characteristics associated with

developing countries, including a division of labor between

formal and informal sectors and an uneven distribution of

wealth and income. The primary sector, based on

manufacturing, services, mining, and agriculture, is welldeveloped.

The Gross Domestic Product (GDP) in India expanded 6.9 percent

in the third quarter of 2011 over the previous quarter.

Historically, from 2000 until 2011, India's average

quarterlyGDPGrowth was 7.45 percent reaching an

historical high of 11.80 percent in December of 2003 and arecord low of 1.60 percent in December of 2002. India's

diverse economy encompasses traditional village farming,

modern agriculture, handicrafts, a wide range of modern

industries, and a multitude of services. Services are the major

source of economic growth, accounting for more than half of

India's output with less than one third of its labor force.


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\

Inflation Rate

The inflation rate in South Africa was last

reported at 6 percent in October of 2011.

From 1981 until 2010, the average inflation

rate in South Africa was 10.00 percentreaching an historical high of 20.80 percent

in January of 1986 and a record low of 0.10

percent in January of 2004

The inflation rate in India was last reported at

9.36 percent in October of 2011. From

1969 until 2010, the average inflation rate in

India was 7.99 percent reaching an historicalhigh of 34.68 percent in September of 1974

and a record low of -11.31 percent in May of

1976. Inflation rate refers to a general rise in

prices measured against a standard level of

purchasing power.


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Business Confidence

In South Africa, business confidence eased to 38 in

the fourth quarter of 2011 from 39 in the third

of 2011. In South Africa, the RMB/BER (Rand

Merchant Bank/Bureau for Economic Research)Business Confidence Index measures the level of

optimism that senior executives in the companies

have about current and expected developments

regarding sales, orders, employment, inventories,

selling prices etc.

In India, business confidence declined to 145.2 in

July of 2011 from 145.3 in April of 2011. In

India, the NCAER (National Council of Applied

Economic Research) - MasterCard WorldwideIndex of Business Confidence measures the level

of optimism that people who run companies have

about the performance of the economy and how

they feel about their organizations prospects.

Survey incorporates four indicators: overall

economic conditions six months from now,

financial position of firms six months from now,investment climate and capacity utilization level.


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Unemployment Rates

The unemployment rate in South Africa was last

reported at 25 percent in the third quarter

of 2011. From 2000 until 2008, South

Africa's Unemployment Rate averaged 26.38percent reaching an historical high of 31.20

percent in March of 2003 and a record low of

23.00 percent in September of 2007.

The unemployment rate in India was last reported

at 9.4 percent in 2009/10 fiscal year. From

1983 until 2000, India's Unemployment Rate

averaged 7.20 percent reaching an historicalhigh of 8.30 percent in December of 1983

and a record low of 5.99 percent in December

of 1994.


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Commercial & Economic Relations


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Commercial & Economic Relations

Commercial relations have flourished since the establishment of diplomatic

relations in 1993.

On the trade front, value of bilateral trade has trebled.

Both sides agreed to work towards a target of USD 10 billion in bilateral

trade by 2012.

The trade target was revised to USD 15 billion by 2014 during the visit of

Commerce and Industry Minister in January, 2011 to South Africa as the

bilateral trade target.


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Trade Relation with India

India has become the 6th largest trading partner to the South Africa in AsiaRegion

Trade of more than US $2 billion in a year.

Sectors covering trade agreements

Technology

Telecommunications,

Small business enterprises(SMEs)

South Africa has set up the India-South African Commercial Alliance.

South Africa has also adopted the New Delhi Agenda for Cooperation.

Indo- South Africa Bilateral Trade potential to touch US$ 10 Billion.


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Figures on Bi-lateral Trade

Year 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011

EXPORT 1,526.87 2,241.61 2,660.75 1,980.28 2,058.50 3,985.02

IMPORT 2,471.80 2,470.14 3,605.35 5,513.58 5,674.50 7,140.55

TOTAL

TRADE

3,998.67 4,711.75 6,266.10 7,493.87 7,732.99 11,125.57

Source: Ministry ofCommerce in USD Million


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Indian Industries in South Africa

Large Indian companies including Tata Group (automobiles, IT, hospitality, and ferrochrome plant)

Indian Oil Corporation,

Apollo Tyres, Bharat Biotech,

Ashok Leyland, Murugappa Group,

UB Group (breweries, hotels), Mahindra (automobiles),

Pharma Companies Ranbaxy & CIPLA

Indian banks State Bank of India

Bank of Baroda Bank of India

EXIM Bank

ICICI Bank


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South African Industries in India

SAB Miller (breweries)

ACSA (upgradation of Mumbai airport)

SANLAM and Old Mutual (insurance)

ALTECH (set top boxes)

Adcock Ingram (pharmaceuticals)

Rand Merchant Bank (banking).

The International Marketing Council (IMC) of South Africa has an office in

Mumbai.


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Future Trade Relations

Exports from India to South Africa Vehicles and components

Transport equipment

Drugs and pharmaceuticals

Engineering goods

Footwear,

Dyes and intermediates

Chemicals

Textiles

Rice

Gems and Jewellery

Import from South Africa to India Gold,

Steam coal

Copper ores , phosphoric acid, manganese ore, aluminum ingots & other minerals.


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Thank You

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Economics XMBA36 Philip Vinai