Because political stability can cause a business to decide if the country is a good fit for them, it is important to look at historical political issues within a country in order to decide the future climate. Between the years of 1948 and 1993, South Africa went through an apartheid. During this period, the National Party of the government enforced racial segregation. This meant that blacks within the country were segregated from education, healthcare, public services, and various other public services. This was in order to keep white control of the country. After years of civil unrest and violence, there was finally a multi-racial democratic election within the country. This election was won by Nelson Mandela and sparked a new constitution for the country.
Since then, the country has had elections. Despite this, more than half of investment professionals see political instability. In fact, 77% of privately held businesses are putting off further investment until after the 2014 elections
The Republic of South Africa is made up of three branches, judicial, executive, and legislative. Each branch also is located in different capitals, Pretoria administrative capital, Cape Town legislative capital, and Bloemfontein- judicial capital (CIA factbook). There are 13 parties that make up the National Assembly of Parliament. The top four parties are African National Congress (ANC), Alliance (DA), Congress of the People (Cope), and AssemblyInkatha Freedom Party (IFP). The ANC holds the majority of this Parliament with “264 of the 400 National Assembly seats and the party control eight of the country’s nine provinces” (South Africa Info). The only other party to control a province is the Alliance who holds 67 seats at the national assembly (CIA factbook). All the other parties are significantly less represented in comparison to these two dominating political parties.
The United States and South Africa both have a democratic system where all the citizens 18 or older have rights to vote for their leader. Since 2008, Barack Obama has been selected as the president of United States of America twice and he is the 44th president in line. South Africa’s president, Jacob Zuma, has been in the power since 2009, when he was selected by the population and the National Assembly. Since that South Africa’s democracy is relatively young Zuma is only the 4th president of their history. South Africa’s next presidential election is taking place this year. Meanwhile United States is not until November 2016.
There are some differences between the election processes in the United States verses South Africa. For example, the United States president serves a four-year term and the president of South Africa serves a five year term. The United States is driven by The Electoral College System. South Africa, on the other hand, is driven by the proportion of votes each party receives. The similarities is that both countries allows citizens to vote when they are 18 years or older and of course the democracy.
The economic system which has a combination of a free-market economy and a planned economy is called a mixed-market economy. Unlike the United States, who has a free-market economy, South Africa has a mixed-market economy because they have aspects of both of these. They have aspects of a planned economy in that there is substantial government intervention which provides things for the collective needs and products used by the economy. They have aspects of the free-market economy in that they have a strong private sector that in joint with state-owned enterprises, provides individual household needs.
When comparing the United States’ business laws to South African business laws, it is obvious that there is a greater amount of regulation in the U.S. South Africa has 2 Commercial and company laws while the U.S. has 27. South Africa has the Companies Act of 1973 and the Competition Act of 1988. These regulate everything that is involved in a business. The most well-known Commercial and company laws of the United States are those involving copyrights, patents and trademarks. While the U.S. has 2 civil procedure codes, South Africa has 3 land and building laws. The U.S. has no land and building laws and South Africa does not possess civil procedure codes. In South Africa, the only banking and credit law in practice is the Banks Act of 1990 which regulates and supervises businesses that take deposits from the public and the matters connected within. Currently in the U.S., there are 20 banking and credit laws. The Right to Financial Privacy Act of 1978 and the Fair Credit Billing Act are found in this category.