Post on 15-Jan-2016
SA, the World and Africa- A Socio Economic Comparison
Presented by:Dawie Roodt11 July 2007
Through the Eyes of the World
Source: The Economist
January 20-26, 2007
Full page advertisements
The Oppositionp. 15
The Home Teamp. 17
Missing Something?
Macedonia South Africa
Taxes
Efficiency
Competitive labour
Access to markets
Stability
Infrastructure
Property rights -
But why say it?
2007:Economic Overview
GDP at Market Prices
GDP market prices, q:q seasonal
-1
0
1
2
3
4
5
6
7
8
1994 1996 1998 2000 2002 2004 2006
%
Source: StatsSA and own calculations
GDP
GDP per capita '00
20000
21000
22000
23000
24000
25000
26000
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
R
Relative size to GDP, 2007 Q1
2% 6%
16%
2%
3%
14%
10%
20%
13%
5%
9%
Agri, forestry and fishing Mining and quarrying Manufacturing Electricity, gas and waterConstruction Wholesale and retail Transport, storage Finance, real estate General gov services Personal services Taxes less subsidies
Source: StatsSA
Fiscal Policy
Background
Revenue & Expenditure:GDP
20
21
22
23
24
25
26
27
28
29
30
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
%
Trevor’s reign!
Gold
Source: SARB and own calculations
Background
Deficit:GDP
-8
-7
-6
-5
-4
-3
-2
-1
0
1
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
%
Source: SARB and own calculations
Background
State Debt:GDP
25
30
35
40
45
50
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
%
Good/Stable
Debt Trap Recovery
Source: SARB and own calculations
Monetary Policy
Interest rates
Prime
9
11
13
15
17
19
21
23
25
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
%
De Kock
Stals
Mboweni
Interest rates
Prime
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
2005 2006 2007
%
Food & Oil?
Capital Expenditure Institute Time Horizon Planned Capital Expenditure
Sasol 2013 R62.0bnEskom 2011 R150.0bnWorld Cup 2010:GautrainAcsaStadiums
201020112010
R24.0bnR20.0bnR8.4bn
Transnet (Rail, Ports, Pipelines)
2012 R78.0bn
State (National Budget) 2009 R372.0bn
Economic Impact of the 2010 FIFA World Cup
Direct expenditure of R30.4 bn R15.6bn to be spent by expected 350,000 tourists Contribute R51.0 billion to the GDP of South Africa (2006-2010) Generate the equivalent of 159 000 annual jobs Additional R7,2 billion will be paid to Government in taxes.
Source: Gauteng Tourism Authority and Grant Thornton (Financial mail)
Inflation
Inflation
CPI & CPIX
0
3
6
9
12
15
18
21
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
%
Inflation bracket
Source: StatsSA and own calculations
Debt Levels
Credit Extension
Private Sector Credit Extension excl Bill & Investments
8
13
18
23
28
33
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
%
Source: SARB and own calculations
Household debt to disposable income
Household debt to disposable income of households
40
45
50
55
60
65
70
75
1970 1975 1980 1985 1990 1995 2000 2005
%
Source: SARB and own calculations
Savings to disposable income of households
Ratio of saving by households to disposable income of households
-2
0
2
4
6
8
10
12
1970 1975 1980 1985 1990 1995 2000 2005
%
Source: SARB and own calculations
Balance of Payments
Balance of Payments
Current Account vs Financial Account
-8
-6
-4
-2
0
2
4
6
8
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
% GDPBarclays/Absa
De Beers delisting
Sanctions liftedDebt Standstill
Source: SARS and own calculations
Trade: Imports and Exports per origin, 2005
0
20
40
60
80
100
120
140
AFRICA EUROPE AMERICA ASIA OCEANIA OTHERUNCLASSIFIED
GOOD
Rbn
Imports Exports
Summary
Problems: Debt Levels Tax levels Unemployment Crime AIDS Skills State inefficiency
Positives: Strong GDP growth State debt at more sustainable
level More stable interest rate Capital expenditure plans
South Africa, Africa and the Rest
Percentage of World GDP ‘04
2%
35%
2%2%
4%4%5%
7%
11%
1%
27%
Africa Rest of the World Brazil IndiaUK China France GermanyJapan Russia USA
Source: UNAIDS
4% of African area
23% of African GDP
22% of African Exports
20% of African Imports
GDP
Africa, South Africa, World GDP per Capita
0
1000
2000
3000
4000
5000
6000
7000
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
$
Source: UN
Countries Compared to Provinces
Country and Province GDP 2004 ($ Bn)
0 20 40 60 80 100 120 140 160 180 200 220
South AfricaEgypt
AlgeriaNigeria
GautengMorocco
KwaZulu-NatalWestern Cape
TunisiaAngolaSudan
Libyan ArabEastern CapeCote d'Ivoire
CameroonMpumalanga
KenyaLimpopo
North-WestFreestateTanzania
GhanaBotswana
EthiopiaUgandaSenegal
GabonDRC
MozambiqueMauritius
NamibiaZambia
Northern CapeMali
ZimbabweBurkina Faso
CongoBenin
MadagascarChad
GuineaSmallest 20
Source: UN
Africa Average Annual GDP Growth, 1996 - 2005
Average Annual GDP Growth, 1996 - 2005
-5
0
5
10
15
20
25
0 5 10 15 20 25 30 35 40 45Countries
%
Equatorial Guinea
Zimbabwe
Average: 4.2
Source: World Bank, Africa Development Indicators, 2006
South Africa
Mozambique
Congo
Median: 3.6
Angola
Oil-exporters
Africa’s Divergent Growth Paths
Average Annual GDP Growth, 1996-2005, % of Population
20%16%
35% 29%
Little or no growth Slow growth Sustained growth Oil-exporting
Ave: 5.5
Ave: 3.4 Ave: 1.3
Ave: 7.4
Namibia (4.0)
Malawi (3.2)
South Africa (3.1)
Source: World Bank, Africa Development Indicators, 2006
Kenya (2.8)
DRC (0.0)
Zimbabwe (-2.4)
Mozambique (8.4)
Botswana (5.7)
Mauritius (4.9)
Eq. Guinea (20.9)
Angola (7.9)
Nigeria (4.0)
Socio-Economic Development
Close-up on South Africa
Category 2004 2006
Total population (000) 46.6mil 47.4mil
Annual population growth rate (%) 1.1% -0.4% ?
Population 0-14 years(%) 33% 32%
Rural population (%) 41
Total fertility rate (births per woman) 2.8 2.7
Infant mortality rate (1,000) 53 60
Life expectancy at birth (years) 46 42
HIV rate (%) in adults (15-49 years) 15.6 20.0%
Poverty (% of pop. on less than $2 a day) 34
GDP per capita (PPP) US$ 11 192 12 760
GDP growth rate (%) 4.5% 5.0%
Children of primary school-age who are out-of-school (%) 7
Source: Unesco and World Bank Development Indicators
Social Services Expenditure
Social Services Expenditure
Budget 2006/07 Budget 2007/08
Functional allocation R260.9bn R296.6bn
% of Total Expenditure 59.2% 59.0%
% of GDP 14.6% 15.4%
Expected Overrun R2.5bn
Social Services Expenditure as % of Total Expenditure
Social Services Expenditure
40
44
48
52
56
60
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
% Expenditure
Source: Various Budgets and own calculation
Human Poverty Index (HPI): Developing Countries (HPI-1),2004
Human Poverty Index, Developing Countries (High value = High Poverty)
0
10
20
30
40
50
60
70
0 20 40 60 80 100Countries
Value
South Africa 2004
Cuba
Mali
Average: 30
Median: 27
Source: Human Development Report, 2006 (undp.org)
South Africa(1998)
Health
Healthy Spending…?
Budget 2006/07 Budget 2007/08
Functional allocation R53.5bn R60.3bn
% of Total Expenditure 12.1% 12.0%
% of GDP 3.0% 3.1%
Expected Overrun R0.1bn
2007 Budget: R7.2bn more for HIV-Aids, hospitals and salaries of health workers
Health Spending as % GDP
Health Spending from 1995
2
3
4
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
% GDP
Source: Various Budgets
Public Expenditure on Health Comparison (2003-04)
Public Health Expenditure as % GDP
0
1
2
3
4
5
6
7
8
9
0 20 40 60 80 100 120 140 160Countries
% GDP
Source: Human Development Report, 2006 (undp.org)
South Africa (‘04&’06)
Myanmar
Iceland
Average: 3.5
Median: 3.0
CubaMalawi
South Africa (’07)
Male Life Expectancy at Birth, 2004
Male Life Expectancy at Birth, 2004
30
35
40
45
50
55
60
65
70
75
0 10 20 30 40 50Countries
Age
Sierra Leone
Average: 51
Source: Africa Development Indicators, World Bank, 2006
South Africa
Swaziland
Tunisia
South Africa (2006)
Public Health Expenditure (2003) vs. Life Expectancy at Birth (2000-05)
Health Spending vs Life Expectancy
0
4.5
9
30 60 90
Life Expectancy (years)
Hea
lth E
xpen
ditu
re (%
GD
P)
Malawi
South Africa ('07)Cuba
Singapore
Namibia
South Africa
Source: Human Development Report, 2006 (undp.org)
Physicians
Physicians 1990-2004
0
100
200
300
400
500
600
0 20 40 60 80 100 120 140 160 180
Countries
per 100,000
Source: Human Development Report, 2006 (undp.org)
South Africa 2004
Malawi
Average: 147.0
Cuba
Median: 109.0
South Africa(2001)
Public Health Expenditure (2003) vs. Physicians 2004)
Health Spending vs Physicians
0
4.5
9
0 300 600
Number of Physicians, per 100,000
Hea
lth E
xpen
ditu
re (%
GD
P)
Malawi
Cuba
Saint Lucia
Canada
South Africa 2004
South Africa (2001)
Source: Human Development Report, 2006 (undp.org)
Percentage of People ages 15-49 Infected with HIV, 2005
HIV Prevalence (% Ages 15-49)
0
5
10
15
20
25
30
35
0 20 40 60 80 100 120 140 160 180
Countries
%
Source: Human Development Report, 2006 (undp.org) from UNAIDS (Joint United Nations Programme on HIV/AIDS). 2006
South AfricaJapan
Swaziland
Average: 2.0
Zimbabwe
Number of HIV Positive and Cumulative HIV Deaths
Total HIV+ and Cumulative Aids Deaths
0
1
2
3
4
5
6
Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 Jan-15
Mil
Total HIV+ Cumulative Aids Deaths
Projection
Currently 250 000 on antiretrovirals- Shortfall 800 000! ( Economist)
Source: Centre for Actuarial Research and South African Medical Research Council, 2004
Estimated HIV Prevalence Amongst Antenatal Clinic Attendees, by Age
Age group (years)
2000 prevalence
%
2001 prevalence
%
2002 prevalence
%
2003 prevalence
%
2004 prevalence
%
2005 prevalence
%
<20 16.1 15.4 14.8 15.8 16.1 15.9
20-24 29.1 28.4 29.1 30.3 30.8 30.6
25-29 30.6 31.4 34.5 35.4 38.5 39.5
30-34 23.3 25.6 29.5 30.9 34.4 36.4
35-39 15.8 19.3 19.8 23.4 24.5 28.0
40+ 11.0 9.8 17.2 15.8 17.5 19.8
Source: Avert international AIDS charity
Tuberculosis Cases – Prevalence per 100 000 People, 2004
Tuberculosis Cases Reported
0
200
400
600
800
1000
1200
0 20 40 60 80 100 120 140 160 180
Countries
Per
100
,000
peo
ple
Source: Human Development Report, 2006 (undp.org)
South Africa
Iceland
Djibouti
Average: 200
Zimbabwe
Median: 83
AIDS
People infected with Aids
20%
68%3%1%
4%
4%
Asia Africa Eastern Europe & Central Asia Caribbean Latin America High Income Countries
Source: UNAIDS
Summary
Low/average spending on health Very low life expectancy Lack/losing skilled medical personnel HIV and Tuberculosis:
Top prevalence rates in the world Appears to escalate Lack of commitment from Government (Department of Health)
Impact on economy
Serious competence and planning deficiency
PROBABLY THE WORST RUN DEPARTMENT!
Eddjucation
Bas(e)ing the Outcome…
Budget 2006/07 Budget 2007/08
Functional allocation R92.0bn R104.7bn
% of Total Expenditure 19.5% 20.8%
% of GDP 5.2% 5.4%
Expected Overrun R1.5bn
2007 Budget: R8.1bn more for additional teachers
Education expenditure comparison (2002-2004 as available)
Expenditure on education as % GDP
0
1
2
3
4
5
6
7
8
9
10
0 20 40 60 80 100 120
Countries
% G
DP
Source: Human Development Report, 2006 (undp.org)
South Africa (’06 & ’07)
Equatorial Guinea
Lesotho
Average: 4.7
Zimbabwe
Education Spending as % GDP
Education : GDP
4
5
6
7
8
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
% GDP
Source: Various Budgets
Pass Rate of SCE and Education Spending
Pass Rate and Education Spending
40
45
50
55
60
65
70
75
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
%
5
6
7
8
% GDP
Pass Rates Education Spending
Source: HSRC
Learners and Educators in Ordinary Schools
Learners and Educators
11.6
11.8
12.0
12.2
12.4
2001 2002 2003 2004 2005
Number (mil)
350
360
370
380
390Number ('000)
Learners Educators
Source: 2001-2005 SNAP Survey (www.education.gov.za)
Number of Schools and Educators in Ordinary Schools
Number of Schools and Educators
26.0
26.5
27.0
27.5
28.0
2001 2002 2003 2004 2005
Number ('000)
350
360
370
380
390
Number('000)
Schools Educators
Source: 2001-2005 SNAP Survey (www.education.gov.za)
Pass Rate of SCE and Matriculation Exemption
Pass Rate vs Matric Exemption
8.0 8.26.2 6.4 6.4
8.19.3
11.713.9 12.9 11.6
16.6
0
20
40
60
80
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
%
Pass Rates Matriculation Exemption
Source: HSRC
53.4 54.4
47.4 49.3 48.9
61.7
68.9 70.773.368.3
57.9
66.7
Learners Presenting For Standard and Higher Grade Exams
Subject Year SG HG HG as % Tot
Accounting 2002 100199 41216 29.1
2003 106621 39548 27.1
2004 112948 43442 27.7
2005 120129 42727 26.2
Biology2002 200608 98468 32.9
2003 199432 86813 30.3
2004 204073 96081 32.0
2005 219838 111619 33.6
English (Second language)2002 22408 362534 94.2
2003 18535 355965 95.1
Source: HSRCSource: HSRC / Department of Education
Learners Presenting For Standard and Higher Grade Exams
Subject Year SG HG HG as % Tot
Mathematics2002 226295 35518 13.6
2003 223156 35994 13.9
2004 236155 39939 14.5
2005 259099 44053 14.5
Physical Science2002 103044 51047 33.1
2003 100166 52215 34.3
2004 105245 55969 34.7
2005 119491 62337 34.3
Source: HSRC / Department of Education
Case Study: Flow of Pupils from Grade 1 to Grade 12
Flow Through for 1991 Pupils
100.0 99.095.5
88.8 89.4
80.678.0
85.8
75.9
69.3
58.8
40.3
30
40
50
60
70
80
90
100
1991Gr1
1992Gr2
1993Gr3
1994Gr4
1995Gr5
1996Gr6
1997Gr7
1998Gr8
1999Gr9
2000Gr10
2001Gr11
2002Gr12
Source: HSRC Note: Repeaters and drop outs not indicated
1 207 066 learners
486 786 learners
Home Schooling?
1995 to 2006: 31.7%31.7
Grade 1 and Grade 2 Pupils
Grade 1 and Grade 2 Pupils
900
950
1000
1050
1100
1150
1200
1250
1300
2002 2003 2004 2005
Number ('000)
Grade 1 Grade 2
Source: Department of Education
- 9.4%- 15.1%- 13.1%- 21.3%
Adult Literacy Rate (2005)
Adult Literacy Rate
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100Countries
% o
f P
op
ula
tio
n
Source: Human Development Report, 2006 (undp.org)
South Africa: 82.2
Mali
Estonia
Average: 79.5
Median: 87.4
South Africa (1991): 82.1
Pupils-Teacher Ratio in Primary Education (Newest data available)
Pupils-Teacher Ratio
0
10
20
30
40
50
60
70
80
0 20 40 60 80 100 120 140 160
Countries
Ave
rag
e n
um
ber
of
pu
pils
Source: UNESCO
South Africa 2004
Central African Republic
Libya
Average: 26.7
Median: 23.0
South Africa (2006)
Summary
Above average spending on education Below average teacher : pupil ratio Ordinary schools, change between 2001-2005:
Learners: 4.1% Educators: 7.9% Schools: -3.2%
Weaker higher grade enrollment Low critical subject enrollment Obvious efficiency problem but improving
Protection
Military
Military Expenditure, % of GDP (2004)
Military Expenditure per country
0
2
4
6
8
10
12
0 20 40 60 80 100 120Countries
% GDP
Source: SIPRI (Stockholm International Peace Research Institute). 2006c.
South AfricaMauritius
Oman
Average: 2.3
Median: 1.7
South Africa (’07)
Police and Crime
2007 Budget: R2.4bn more to get 190 000 police by 2010
Murders (per capita) by Country (1998-2000)
Total Recorded Homicides Completed
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0 10 20 30 40 50 60Countries
Per 1000
Source: UN Survey of Crime Trends and Operations of Criminal Justice Systems, 2000
South Africa ’98-’00
Colombia
Qatar
Jamaica
Venezuela
South Africa (2006)
Reported Crime Figures for the financial years 1994/95 to 2006/07
Crime Categories, per 100 000 population
0
50
100
150
200
250
300
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Rat
io p
er 1
00 0
00
Rape and attempted rape Murder Aggrevated Robbery
Source: Institute for Security Studies (issafrica.org) / saps.gov.za
Crime and Policing Facts:
2000: SA murder rate 3rd of 63 countries. (Behind Swaziland and Colombia) Murder rate per 100 000:
1994/05: 66.9 2005/06: 39.5 World average: 5.5
Policing Expenditure % GDP: 2.0% (1994), 1.8% (2003) % budget expenditure: 6.7% (1994), 7.9% (2003), 7.8% (2007 est)
Security personnel outnumber police officers 3:1 2006: Almost 300 000 security officers (1996: 100 000) 2006: SAPS employment complement 155 000, of which around (only) 105 000
officers
Source: Institute for Security Studies (issafrica.org) / SAPS Annual Report / own calculations /
UN Survey of crime trends and operations of criminal justice systems
Police (per capita) by country (2000)
Police (per capita) per Country
0
1
2
3
4
5
6
7
8
0 10 20 30 40 50Countries
Per
100
0 p
eop
le
Source: United Nations Office on Drugs and Crime, Centre for International Crime Prevention
South Africa
Costa Rica
Montserrat
Average: 2.9
Median: 2.6
Summary
Average number of police officers Security personnel outnumber police officers 3:1= (police efficiency?) 8 out of 10 businesses affected by crime Murders per 100 000 almost 8 times higher than world average! President Mbeki’s stance on crime?
Lack of commitment…Questionable statistics…Be scared, be very scared!
Fiscal Efficiency
Revenue Sources (Est. 2006/07)
29%
25%28%
4%
4%
10%
Individual Tax
Company Tax
VAT
Excise Duties
Fuel Levy
Other
Contribution to Fiscus
Budget Revenues (per $ GDP) by Country, 2006
Dollar Revenue per Dollar GDP
0.0
0.2
0.4
0.6
0.8
1.0
1.2
0 20 40 60 80 100 120 140 160Countries
$
Source: Nationmaster: CIA, World Factbook
Libya
Kuwait
Afghanistan
South Africa
Average: 0.32
Median: 0.29
Collection cost: 1.3% of revenue; US 0.5%
Company Tax Rate, per Country (2006)
Company Tax Rates
0
5
10
15
20
25
30
35
40
45
0 10 20 30 40 50 60
Countries
%
Source: worldwide-tax.com
South Africa
Bulgaria
Egypt
Average: 26.6%
Median: 29.0%
Ireland
USA
South Africa + STC (’06)
South Africa + STC (’07)
Individual Tax Rate, per Country (2006)
Individual Marginal Tax Rates
10
20
30
40
50
60
0 10 20 30 40 50
Countries
%
Source: worldwide-tax.com
South Africa
Russia
Denmark
Average: 35.4%
Median: 36.0%
USA
Ireland
VAT Rate, per Country (2006)
VAT Rates
0
10
20
30
0 10 20 30 40 50
Countries
%
South Africa
Ireland
Denmark
Singapore
Source: worldwide-tax.com
Average: 16.7%
Median: 18.0%
Fiscal Efficiency: Revenue Summary
Average tax red tape Individual tax rate: above average (high marginal rate, low
threshold) Company tax rate: above average VAT rate: below average
Financial Management
Auditor General: 12% of state departments received clean audit reports (2005/06) Qualified audit reports of state departments:
2005/06: 32% 2004/05: 21%
Large number of qualifications fell into level two: Lack of basic financial control
Generally deficient financial control, and deteriorating……..leading indicator of corruption?
Asset Allocation
Asset Allocation Reason
Equities Demand/Rand
Bonds Inflation/Supply/Interest Rates
Cash Short Interest Rates
Property Property Cycle
– Heavy Overweight
– Overweight
– Neutral
– Underweight
– Heavy Underweight
Local Equities, 2006Economic Sector MC EAA JSE Sector
Mining and Quarrying 32% 34% Mining, Platinum, Gold, Coal
Finance, prop and bus. serv 30% 30%Banks, Insurance, Life Ass, Media & Pht, IT, Property, Support Serv
Manufacturing 12% 12%Auto, Basic Ind, Beverages, Chem, Elect, IT Hard, Pharm & Bio, Steel & Other
Personal Service 6% 5%Cyc Serv, Health, Leisure Ent, Non-cyc Serv, Person Care
Transport, storage and comm. 6% 6% Telecomm, Transport
Trade, hotels and restaurants 6% 4%Cyc Cons, Food & Drug, Gen Retail, House Goods, Non-cyc Cons
Electricity, gas and water 4% 3% Oil & Gas
Agri, Forestry and Fishing 3% 1% Food Prod
Construction 2% 5% Const & Build
100% 100%
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