South Africa’s economy is 37% smaller than it would have been had the country tracked its emerging-market peers and sustained annual growth of 4.5% since 2010, a report by Investec Wealth & Investment International said.
It calculated that matching those expansion rates would have lifted the country’s nominal gross domestic product to almost R12 trillion ($670 billion) last year, from R7.5 billion. The slow growth partly coincided with an era of endemic government corruption — known in South Africa as state capture — under former President Jacob Zuma, which his successor Cyril Ramaphosa estimates cost the economy at least R500 billion.
The inertia caused by power outages, crime, disintegrating infrastructure and foreign-policy missteps dragged growth down to an average of about 1% a year over the past 15 years, the report said.
“The cumulative figure of revenue foregone is scary,” Osagyefo Mazwai, investment strategist at Investec Wealth & Investment International, said in the report.
“That is material, considering the fiscal constraints facing South Africa and demonstrates the need to ensure economic growth to boost the fiscal war chest and further enable the capacity of the state to deliver services.”
Stronger growth would have also boosted government revenue. According to the report, receipts in 2024 alone could have been around R800 billion stronger, putting the country in a better position to tackle critical infrastructure investments, such as in electricity transmission, ports and rail.
Instead, South Africa is grappling high gross national debt, with the debt-to-GDP ratio expected to peak at 77% this year. And with population growth at 1.3% outstripping real economic growth, people “are worse off than they were in 2010, suggesting that economic policy has been ineffectual in addressing poverty, unemployment and inequality,” the report said.
“On a per-capita basis, the rest of the world is 50% richer than the average South African,” Mazwai said, adding continued growth of 1% “will not lead to the envisaged goals of lifting people out of poverty and meaningfully addressing the problems of unemployment and inequality.”
The way out of the current quandary is the implementation of growth-friendly reforms, he said.
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Updated: June 2025 Thursday
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