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Banking

South Africa at the centre of the sell-off

Pravin Gordhan says that he has given a counter-cyclical boost to South Africa and built up its underlying growth potential. But with capital flowing out, what more can the finance minister do to cut the country’s twin deficits?

Tributes to Nelson Mandela still abound in South Africa’s financial capital, not far from where the country’s first black president died in December last year. One such is a huge banner hanging down the outside wall of Citi’s Africa head office. There are many others.

Speaking nearby at a conference on the economy at GIBS business school in Johannesburg, Goolam Ballim, chief economist at Standard Bank, says Mandela’s funeral was the occasion for "a moment of reflection" on South Africa’s post-apartheid trajectory.

Mandela’s death came at a time when there is more optimism than ever about the economies of sub-Saharan Africa. But in South Africa, his funeral – while celebrating many advances – was also tinged with the recognition of how much of the legacy of apartheid persists.

In 2014 memories are still fresh of the police shootings during a wildcat miners’ strike in Marikana, northwest of Johannesburg, in 2012. Moreover, in the first weeks of 2014, South Africa is one of the main objects of emerging market fears of rising dollar rates. The rand fell around 8% against the dollar in January alone.

April will mark 20 years since the first democratic elections: the occasion for Goldman Sachs to produce, as it says, "a more balanced narrative" of achievements and challenges remaining, to counter what it calls hysteria in narratives on South Africa, following the Marikana incident.

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