News / Africa

S. Africa Economy Falls in First Quarter

Mine workers sing and dance outside the Lonmin's platinum mine in Marikana near Rustenburg, South Africa, Thursday, Jan. 30, 2014. The Association of Mineworkers and Construction Union (Amcu) on Thursday rejected a 9% wage offer from leading platinum prod
Mine workers sing and dance outside the Lonmin's platinum mine in Marikana near Rustenburg, South Africa, Thursday, Jan. 30, 2014. The Association of Mineworkers and Construction Union (Amcu) on Thursday rejected a 9% wage offer from leading platinum prod

Multimedia

Audio
Joe DeCapua
South Africa’s economy shrank more than one-half a percent in the first quarter of the year. It’s the worst performance since the global recession five years ago. Most of the decline is blamed on the country’s prolonged platinum mining strike.
 
The decline in South Africa’s economy follows a nearly four-percent growth rate in the last quarter of 2013. However, the platinum mining strike is now in its fifth month. The government has made a new pledge to mediate the labor dispute, saying mining companies “have not done enough to address the well-being of workers.”
 
David Shapiro, a director at Sasfin Securities, said the strike has been a big drag on the economy.
 
“Platinum today is one of our biggest exports. In fact, it certainly exceeds gold. You know, gold production in South Africa has fallen dramatically over the last decade or so. Not for any reasons other than we’ve run out of cheap gold and it’s more difficult to get to the gold. So platinum today is a major mineral export.”
 
He described the strike as a major worry. It’s unclear how quickly the mining sector would bounce back once the strike does end.
 
He said, “When we talk about mines, if you keep them closed for that long there are all kinds of issues even if labor does come back to work. These are deep underground mines and require a lot of attention. So you can’t neglect them. And even if they came back to work it’ll take some time to fire them up again.”
 
Local economies are formed where mines are located.
 
“People live around the mines and of course they earn their income there. The go out and spend it either on entertainment or they buy groceries. So every industry around the mine also starts to suffer as a result,” said Shapiro.
 
Many of the miners in South Africa are migrant workers. Mine companies offer them either a housing allowance or actual housing. Shapiro said the decision they make can have long-term financial effects.
 
“A lot of these miners decided to accept a payment, an allowance, instead. And what they did is instead of buying a decent house or renting a decent house, they would send most of the money back home and then rent shacks. And when I say shacks – literally shacks -- living in really dire circumstances, terrible conditions. And that started strike action,” he said.
 
Because of the strike, the miners are not being paid, and are not able to send any money back home. In addition, there are also tensions between trade unions representing the miners. And while miners demand higher wages, demand for platinum is currently down.
 
South Africa’s economy has also been affected by a slowdown in China’s economy. Shapiro said from 2000 to 2010, the country benefitted greatly from China’s expansion and demand for natural resources, such as iron ore, copper and coal.
 
“Now that China is slowing down emerging countries, such as South Africa, which are major exporters of minerals, are also starting to feel the pinch. So, that’s contributed, as well.”
 
Shapiro also said manufacturing in South Africa has declined as it imports cheaper goods. At the same time, families are under greater pressure to pay back loans and have cut back on buying consumer goods.
 
Despite the first quarter’s bad news, the Sasfin Securities director is optimistic. But he said South Africans are looking to the government to tackle some big issues.
 
“We’re a rich economy,” he said, “It’s a problem we can overcome. Yes, we’ve got a lot of people that are unemployed here. That’s a throwback from apartheid. Skills development here is very low. But it’s an economy that is blessed with so many natural resources. We have a massive array of minerals here. We have natural beauty, which should attract tourism. It’s a country that should be flourishing. We shouldn’t be where we are.”
 
Three mining companies are negotiating with AMCU, the Association of Mineworkers and Construction Union. However, little progress has been made so far regarding a pay hike.

You May Like

Video For West Ukraine City, Conflict Far Away Yet Near

Physically and culturally close to Western Europe, Lviv feels solidarity with compatriots in country’s east but says they need to decide own future More

West African Women Disproportionately Affected by Ebola

Women's roles in families and the community put them at greater risk for contracting the disease, officials say More

Video NASA's MAVEN Spacecraft Arrives at Mars

Mars Atmosphere and Volatile Evolution craft will measure rates at which gases escape Martian atmosphere into space More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
NASA’s MAVEN Probe Enters Mars Orbiti
X
September 22, 2014 9:20 PM
NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video NASA’s MAVEN Probe Enters Mars Orbit

NASA’s newest Mars probe, called MAVEN, has successfully entered its designated orbit around the Red Planet. Scientists will use its sophisticated instruments to try to learn what happened to the atmosphere Mars had a few billion years ago. VOA’s George Putic has more.
Video

Video For West Ukraine City, Conflict Far Away Yet Near

The western Ukrainian city of Lviv prides itself on being both physically and culturally close to Western Europe. The Russian-backed separatists in the eastern part of the country are 1,200 kilometers away, and seemingly even farther away in their world view. Still, as VOA’s Al Pessin reports, the war is having an impact in Lviv.
Video

Video Saving Global Fish Stocks Starts in the Kitchen

With an estimated 90 percent of the world’s larger fish populations having already vanished, a growing number of people in the seafood industry are embracing the concept of sustainable fishing and farming practices. One American marine biologist turned restaurateur in Thailand is spreading the word among fellow chefs and customers. VOA Correspondent Steve Herman reports from Bangkok.
Video

Video Chinese Admiral Key in China’s Promotion of Sea Links

China’s President last week wrapped up landmark visits to India, Sri Lanka and Maldives, part of a broader campaign to promote a new “Maritime Silk Road” in Asia. The Chinese government’s promotion efforts rely heavily on the country’s best-known sailor, a 15th century eunuch named Zheng He. VOA's Bill Ide reports from the sailor’s hometown in Yunnan on the effort to promote China’s future by recalling its past.
Video

Video Experts Fear Ebola Outbreak ‘Beyond Our Capability to Contain’

Each day brings with it new warnings about the deadly Ebola outbreak already blamed for killing more than 2,600 people across West Africa. And while countries and international organizations like the United Nations are starting to come through on promises of help for those most affected, the unprecedented speed with which the virus has spread is raising questions about the international response. VOA's Jeff Seldin has more from Washington.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.Colonel Steve ‘Spiros’ Pisanos left Greece and came to the U.S. to learn to fly. He flew fighters for the Allies in World War II, narrowly escaping death multiple times.

AppleAndroid