Charles Esther
The South African economy could be worth R5 trillion more today if it had kept pace with other emerging markets over the last 15 years.
This startling gap in growth was highlighted by Investec analyst Osagyefo Mazwai.
He revealed that South Africa’s economy has only grown by an average of 1% annually during this period.
By comparison, peer economies expanded by 1.4% or more each year, and some far exceeded that.
Lost Growth Has Hit South African GDP Hard
Mazwai pointed out that had South Africa followed a more pragmatic economic strategy, outcomes would be far more favorable today.
State-Owned Entities (SOEs) such as Eskom, Transnet, and the Post Office have drained public finances while delivering underwhelming results.
Their failures have held back economic growth.
The impact is visible in GDP per capita, which is now lower than it was in 2010.
This means the average South African is worse off economically than they were 15 years ago.
Meanwhile, countries with similar economic profiles are now 50% richer per capita than South Africa.
Emerging Markets Left South Africa Behind
Emerging markets like Vietnam, India, and Brazil have experienced rapid growth, some exceeding 4.5% annually.
If South Africa had kept up at that pace, its current nominal GDP would be just under R12 trillion.
In reality, the GDP is only R7.5 trillion—35% less than what it could have been.
This shortfall represents a huge loss in both national wealth and tax revenue.
In 2024 alone, the South African government missed out on R800 billion in potential revenue due to this growth gap.
That dwarfs the recent R75 billion budget debate around proposed VAT hikes.
Mazwai explained that the R5 trillion in missing economic value would have been enough to eliminate nearly all of South Africa’s national debt.
SOEs and Welfare Spending Are Key Obstacles
Eskom’s debt sits at R400 billion, while Transnet owes R140 billion.
Both institutions continue to operate inefficiently despite years of government intervention and bailouts.
Their ongoing issues block broader economic reforms and scare off private investment.
The South African Social Security Agency (SASSA) also plays a significant role in the country’s financial strain.
SASSA currently supports around 45% of the population with various grants.
That amounts to R265 billion in annual spending.
In five out of nine provinces, there are more SASSA recipients than employed people.
Experts argue that while SASSA grants are necessary for vulnerable citizens, they also discourage job-seeking and reduce workforce participation.
Reimagining Economic Policy for Growth
For South Africa to close the gap with emerging markets, structural reforms are essential.
Investment in infrastructure, efficiency in SOEs, and reducing grant dependency must become top priorities.
Boosting productivity, creating sustainable employment, and encouraging entrepreneurship can redirect the economy toward real growth.
Policymakers need to adopt evidence-based strategies rather than rely on short-term fixes and political compromises.
This will require political will, transparency, and a focus on long-term national interest over short-term gain.
