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The country’s GDP growth has averaged 0,3 pc since 2019.
Investors should not dismiss South Africa over its other continental peers as it has strong institutions that can buttress its economy if it focuses on accelerating growth, the head of research at Standard Chartered Bank said.
“With some institutional strength in terms of the debate around fiscal rules, its existing revenue-collection ratios, the South Africa Reserve Bank, which is a major part of the institutional strength of the country, I think there’s still a lot going for South Africa,” Razia Khan said in an interview. “All it needs now is to really focus on how to kick-start growth.”
Africa’s most industrialised economy has been hamstrung by almost daily power cuts, crime and fraying transport networks. To try combat these challenges, the authorities have instituted a number of reforms.
Data from PWC’s Private Business Attractiveness Index suggests that despite the operational challenges, South Africa is becoming a more attractive location for private business, compared to countries in the Europe, Middle East and Africa region.
It ranked 23rd out of 33 countries surveyed for the index in 2023, compared with 31st in 2021. Peers — Kenya ranked 32nd and Nigeria came last.
Still, without the growth push, South Africa’s economy is expected to lag other big regional economies that are also implementing reforms. The International Monetary Fund expects its economy to expand 0,9 percent this year, Nigeria’s 3,3 percent and Egypt’s 3 percent.
“South Africa doesn’t have that natural lever to pull — that is suddenly going to shoot the lights out from a growth perspective, and this is where the country does need to try a lot harder, having seen over a decade of growth under-performance,” Khan said.
Its gains and those of Egypt and Nigeria are going to become more critical if the continent wants to reset the Africa growth story, as some of its former superstars flounder, she said.
Among them are Ethiopia — that’s lost lustre after its recent civil conflict and Mozambique, which is battling an insurgency that is impairing its ability to explore its resource wealth.
“It’s really up to the more established, bigger African economies to reset the growth narrative,” she said. — Bloomberg.
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