South Africa: PEST Analysis and Marketing Implications

However, despite these slight improvements, the instability that defines the South African political system has detrimental effects on the future growth of the country’s business sector. Political uncertainty has decreased the confidence of business leaders across the nation and worldwide. While the new regime has strived to eradicate the corruption that afflicted the country under President Zuma, the divisions forged during that time are stalling the
country’s trajectory as one of the most powerful in Sub-Saharan Africa. Since 1994, despite robust economic growth following the end of apartheid, the South African unemployment and poverty rates have remained high with severe income and wealth inequality. According to the Global Competitiveness Index5, the country’s
institutional environment (76th), financial markets (44th), and goods market efficiency (54th) are all rated as weaker than last year. Economic growth has decelerated in recent years, slowing to just 1.5% in 2014. Unemployment, poverty, and inequality—among the highest in the world—remain a challenge. Official
unemployment is roughly 25% of the workforce and runs significantly higher among black youth. Even though the country's modern infrastructure supports a relatively efficient distribution of goods to major urban centers throughout the region, unstable electricity supplies retard growth. Rather than incentivizing foreign investment into the country—which would help support the struggling economy—South African leaders are hesitant to let the
world in. For example, while the South African Government supports investment in principle and takes active steps to attract foreign direct investment (FDI), investors and market analysts are concerned that its commitment to assist foreign investors is insufficient in practice. Some of their concerns include a belief that the national-level
government lacks a sense of urgency when it comes to supporting investment deals and even pushes for even more limited relationships with other countries. This is a typical characteristic of weak governments who try to make themselves seem strong by taking highly visible and restrictive measures against foreigners, and especially foreign businesses.…