Business Past Present and Future Portfolio

WEEK 1

Natural Resources

Southern Africa is a vast area with a wealth of natural resources. Gold, Diamonds, Coal, Iron and many other precious metals and minerals can be found here in abundance. In the 19th century these commodities were highly sort after by foreign speculators. It can be argued that the most highly sought after of all was gold, as most currencies at that time were backed by this precious metal.  Colonial wars have been fought to gain control over these valuable assets. Most notably the Anglo- Boer wars; it has even been suggested that British imperialists conspired to plunge the country in to conflict for their own personal profit (Pakenham, 1979); when four provinces became unified the South Africa we know today was absorbed into the British Empire.

BRICS Club Membership

South Africa still relies heavily on trade with Europe and the USA, however in 2011 South Africa joined the BRIC club of emerging economies (Herview, 2011). Strengthened trade links with the other member countries has enabled South Africa to open new export markets for its produce.

SACU Membership

As a member of the Southern African Customs Union South Africa has long established trade agreements with neighbouring countries.  There are no trade barriers such as excise duty between the member states allowing South Africa to trade freely within the union. Through a revenue sharing agreement, taxes that are collected on imports into the union from other countries are invested into regional development projects (Grynberg, 2012).

Sanctions

Because mining was very labour intensive it was in the interest of the foreign conglomerates who dominated the mining industry to keep wages to a minimum; this was achieved through the policies of the white minority government that denied the black workforce basic rights, such as being able to vote, and join trade unions. When the national anti- apartheid movement began to attract international attention, people in other countries began boycotting South African produce, such as fruit. They also boycotted companies that had financial interests in the country, such as Shell Oil and some banks. South Africa’s trading partners felt public pressure to isolate South Africa economically in an effort to end racial discrimination; an example of this is that South Africa needed to import oil; so the supply of oil from other countries was greatly reduced by means of international sanctions.  It can however be argued that this had a reverse effect because it forced South Africa to develop technology to extract oil from the coal which it had it great quantities.

HIV/AIDS

Along with the human cost the HIV/AIDS pandemic has also affected the economy. Economic growth is slower because many people are too sick to work, many more are having to care for sick relatives or orphaned children. Via a programme known as Prepfar, the government of the USA has provided USD 3 billion in aid to help South Africa train doctors, build clinics and supply medication; 2.4 Million South Africans are now taking anti-retroviral drugs (McNeil, 2014). An improved quality of life for treated HIV patients also has a positive effect on the economy.

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References

Herview, S., (2011) South Africa Joins Brics Club,
Available online at: www.theguardia.com/world/2011/apr/south-africa-joins-bric-club
[Accessed on 17th  October 2014].

McNeil, D., (2014) Aids Progress In South Africa Is In Peril. 
Available online at: www.nytimes.com/2014/08/26/health/aids-south-africa-sucess-pepfar [Accessed on 17th October 2014].

Packenham, T., (1979) The Boer War. 1st ed. London: George Weidenfeld & Nicolson Ltd.

Grynberg, R., (2012) SACU Revenue Sharing Formula.
Available online at: www.africaportal.org/dspace/articles/sacu-revenue-sharing-formula-towards-developmental-agreement [Accessed on 20th October 2014].

Week 2

Fugger

The House of Habsburg was once one of the most powerful royal dynasties in Europe. In medieval times the lands of central Europe composed the Holy Roman Empire and the throne was occupied by Habsburgs. They also acquired territories in the Far East and the Americas. If King’s needed to raise money to hire troops they could increase taxes, but this would take too long, so they would turn to a banker, or in this case a banking family (Clark, 1966)

The Fugger’s amassed their initial wealth from the trade in textiles. Through the initiative of Jakob Fugger the family business branched out into financial services. “Often referred to as the bankers to the Hapsburg’s” (MacDonald, 2004) the Fugger’s provided loans to fund wars and expeditions. As security the Fugger’s were given mineral rights in provinces throughout the Empire.

The Fugger’s also handled remittances from the sale of indulgences for the Papacy. The pinnacle of their socio-political influence was funding the election campaign of Charles V for Emperor. (Grell, 2008). At the Vatican today the Fugger legacy lives on in the form of the Swiss Guard, whom they founded and financed. When the protestant reformation began to gather pace, the Fugger’s and the Church were criticised for their potentially corrupt financial, political and religious practices. (Blendinger, 2014)

Habsburg fortunes eventually began to turn, costly counter- reformation and holy wars, defending the Empire and bad financial decision making led to their demise. The success of the two great dynasties was so intertwined that the Fugger financial empire also collapsed.

Welser        

Another family of wealthy merchants were the Welser’s, they too were providing financial services to the Habsburgs. The financier’s social position was elevated through convenient marriages between Welser’s and prominent nobles. In exchange for loans, Emperor Charles V granted mineral rights in the new world. The Welser’s funded an expedition to explore what is now Venezuela (Ossian, 2006); this turned out to be an expensive venture, they underestimated the climate, terrain and will of the indigenous people to protect their land. When Charles V abdicated the territory was returned to the crown. The Welser’s had exploited the land but also exhausted their finances, as a result their Business became bankrupt in 1614. (Oxford Dictionary of The Renassiance, 2003)