Post #388

South Africa Is a Unique Country [ Policy Review ] 🇿🇦What sets South Africa apart from the rest of Africa? 🚩 South Africa is unique not only because there is only one South Africa in the world. There is a second factor as well. Like many African countries, South Africa today mainly exports raw minerals abroad — but for SA this was not always the case. ⚙️ Until the 2010s, South Africa had its own strong mineral processing industry, especially in metals. With large metal deposits, the country built its own plants and exported not raw materials but refined metal products. 📉 However, from the 2010s onward, South Africa has ironically begun to slide back toward the all-African norm, as deindustrialization set in. The chart shows how, starting in 2009, exports of metal ores steadily caught up with exports of refined metals, and from 2017 onward, raw material exports permanently exceeded exports of processed products. This situation resulted from several factors. ⏩ First, there was rapid expansion of processing capacity in China and other Asian countries with cheaper labor than in South Africa. South Africa found itself in the so-called “middle-income trap,” where further investment is constrained by relatively high wage levels. ⏩ Second, currency. In the 2010s, the rand depreciated several times, making exports more profitable than domestic processing. Exports made more rand per tonne of ore, while wages and local expenses remained the same. ⏩ Finally, electricity issues. Electricity is a key input for metallurgy. In the 2010s, the state-owned utility Eskom repeatedlyraised tariffs at double-digit rates following years of lack of investment in new generation capacity in the 2000s. 🔽 As a result, SA now finds itself in a paradoxical situation. A country that 20 years ago would not lament exploitation and resource extraction is now turning into a kind of raw material appendage for China’s processing industry. #PolicyReview ➡️ Follow to stay informed - @devilsbelow