South Africa’s policy challenges continue: the mining sector and a new strategy for state-owned enterprises

SOUTH AFRICA - Report 15 Jun 2020 by Iraj Abedian

The mining sector made up 9% of the South African economy during Q4 2019 and 2.6% of the country’s employment share of the economy during the same period. Despite making a relatively smaller share of the economy compared to sectors such as finance, which makes up 20% of the economy (Q4 2019), or even relative to the sector in earlier decades (mining at its peak made up 21% of the economy’s share in 1980), it is still a very important sector in the South African economy. Yet, it has experienced struggles in the past years due to a range of challenges including policy uncertainty as well as periods of low commodity prices.

Statistics South Africa (Stats SA) released the latest high-frequency data for mining production, and just as expected, the mining sector has been hit hard by the Covid-19 economic crisis. On a year-on-year basis, mining contracted by a staggering 47.3% and by 34.1% on a month-on-month basis in April, which was the first full month of South Africa’s hard lockdown of Level 5.

Meanwhile, President Ramaphosa has launched a new strategy towards reforming the country’s state-owned entities (SOEs) – this time he has established and appointed members of the Presidential State-Owned Enterprises Council (PSEC). The Council will be tasked with supporting government to “reposition state-owned enterprises as effective instruments of economic transformation and development” according to the President.

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