International Business

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With a population of 48 million, South Africa represents 10 per cent of Africa’s population and 45 per cent of the continent’s gross domestic product (GDP). Its GDP is almost as big as the rest of sub-Saharan Africa’s 47 countries combined. As the engine of growth for Africa, South Africa recently has been growing at 5 per cent annually. It is the largest economy in Africa, and is among the top-ten emerging economies. Before 1994, South Africa had been ruled by a white minority government that earned notoriety for its apartheid (racial segregation) policy. In 1986, international sanctions led many multinationals to divest their South African operations. In 1994, South Africa accomplished a peaceful transition of power, with a…show more content…
A number of leading South African firms listed on the New York Stock Exchange, such as AngloGold, SAPPI, Sasol and Telkom have disclosed BEE as a risk to shareholders because these firms cannot guarantee that BEE transactions would take place at fair market price. BEE also affects foreign firms. Foreign firms interested in securing government contracts in excess of €10 million are required to invest at least 30 per cent of their sales in local blackowned firms. In the case of defence contracts, the percentage increases to 50 per cent. Firms such as Sasol complain that in a country whose official unemployment rate is stubbornly high at 25 per cent (which may really be as high as 40 per cent), BEE scares away investment and deters foreign firms. Some observers noted that the scheme mainly helps the wellconnected black elite in the name of affirmative action, but fails to create jobs for the millions of poor and unemployed blacks, while lowering the quality of some public services. In other words, BEE has sliced up the economic pie differently but has done little to expand it. Labour regulations are another area attracting business complaints. Unions are given broad power to block layoffs and limit the outsourcing of contracts, making a lot of firms reluctant to hire in the first place. The
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