South Africa’s medium term prospects are swaying dangerously between a possible boom and an avoidable recession.
New industrial developments in manufacturing, oil and gas have already started showing potential to take South Africa’s economy in a new direction. However South Africa needs to patch the holes in its economy before new industries can thrive in its domain.
The country has been enduring an energy crisis since 2008 that has negatively affected all industries. South Africa’s primary energy provider is the government owned Eskom, producing 95 percent of the country’s electricity. Historically a well-run and respected enterprise, however when the government nationalized the company in 2002 the wheels evidently fell off.
Instead of returning the company to its privately owned success the president has elected pursue a $100 billion nuclear deal that will plunge the country into even greater debt.
As it stands Russia is the front runner to be awarded the contract as a memorandum of understanding has already been signed between the two countries.
Russia currently has nuclear energy programs in Turkey, Belarus, Iran, India, Slovakia, Vietnam, China and the Ukraine.
One has to consider the ultimate price to be paid when handing over control of South Africa’s most valuable resource to Russia and allowing China to invest so heavily in the country.
South Africa’s industries may boom but who will the country belong to? Russia and China could end up with the lion's share, leaving South Africa as a geographical location operated by foreign interests.
This will undoubtedly put an end to any hopes the US might have of establishing a significant foothold on the African continent.
Matthew Klynsmith earned a business administration diploma at CTI in Cape Town, South Africa. He now works at Strategic Options as an associate partner. To read more reports from Matthew Klynsmith, Go Here Now.
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