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Snapshot of key economic indicators shows an economy that is in deep trouble

Recovery in the short term is unlikely, with unsustainable public finances the key barrier to growth.
At the current rate of borrowing, by 2022/23 gross national government debt is projected to amount to 86% of GDP – or R4.83tn. Image: Shutterstock

Despite former finance minister Tito Mboweni’s recurring theme of cutting down government spending, data released by Statistics South Africa (Stats SA) on June 30 shows that spending was 12% higher in 2019/2020 than the previous year. This was before the pandemic had any effect on the economy.

The charts below show that most of the spending was on resource allocation to organisations. Notably, this was in the form of grants to other government spheres.

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It is the 12% or R205 billion expense in interest paid to service public debt that is worrying.

Source: Stats SA

Two reasons immediately come to mind.

First, National Treasury projects that debt servicing will increase by R236.4 billion in 2020/21, or from 4% of GDP to 4.9% of GDP. Debt-service costs are expected to reach R301.1 billion, or 5.4% of GDP, in 2022/2.

Second, at the current borrowing rate, by 2022/23 gross national government debt is projected to amount to 86% of GDP, or R4.83 trillion.

The pandemic and the consequent excessively hard lockdowns will hamper any debt reducing mechanism. Instead the current trajectory of spiralling debt will set in.

In turn this will stunt any chance for GDP growth and revenue to recover.

Subsequently, stabilising government debt will become impossible.

Inevitably, any economic measure of boosting medium- to long-term growth will be overshadowed by increasing public debt and debt-service costs. In short, unsustainable public finances is the key barrier to recovery and growth.


Both employees and employers have been negatively impacted by the imposition of lockdowns. Even with the easing of varying restriction levels, medium and small companies across industries have closed their doors for good, obviously resulting in job losses.

It is axiomatically given that the lockdown has led to increased poverty and unemployment.

In a country that has chronic unemployment, the effects of the pandemic on employment are obvious, as the Quarterly Labour Force Survey (QLFS) for the second quarter of 2021 shows.

SA’s unemployment rate hits new record high in second quarter
SA unemployment is far worse than a bloodbath

For example, pre-pandemic unemployment was above 30%, while the 34.4% in the second quarter as shown in the figure below is the highest level on record. Further, if you consider people who have given up looking for jobs, the unofficial unemployment rate is above 43%.

Tellingly, black African women continue to be more affected than any other group: their unemployment vulnerability is 41%, or 4.2 percentage points higher than the national average.

Thus, women unemployment is the first problem.

The second one is the persistent increase in the number of young people of working age who are unemployed, including graduates. If the figures on women are worrying, how do we describe youth unemployment that is double the national unemployment rate?

Source: Stats SA’s Quarterly Labour Force Survey, Q2, 2021

If you are wondering why these two categories of unemployment (women and youth) matter, remember that in a country of high inequality and poverty, unemployment is unequal across gender.

Additionally, access to education, job opportunities and participation in the economy means closing the men-women employment gap in employment is not realistic.

We all should be worried that 27 years into democracy the structure of the economy is not able to reduce black African women unemployment.

Think of it this way – it is likely that in the not-so-distant future South Africa (if it’s not already the case), there will be in one family a generation of its women who have never been employed or had the means to generate income in the formal economy.

The same goes for the youth without work, who will gradually become adults without work.

We know that reducing women unemployment has positive effects on society. Furthermore, a reduction black women unemployment contributes to a reduction in child poverty.

As one of the precariat, a woman’s capacity to generate income is limited, and women tend to use the generated revenue not just for themselves but others too. Beyond employment, the fact that every year we are talking about women as the face of unemployment and poverty reflects the need to rebuild an economy that promotes genuine economic activity for all.

However, job creation is impossible without economic growth.


Newly released data from Stats SA shows that performance in the period under consideration points to negative growth in both the previous and revised GDP rates.

The spotlight on GDP is not for the next two or four years, but for the next 10 years and beyond. At -6.4% revised and -7% previously, the impact of Covid-19 in 2020 is significant. It means South Africa, already falling behind some of its peers due to the low growth of the ‘lost decade’ or the period from the 2010s, is unlikely to improve its economic performance or create conditions needed for economic growth.

Source: Stats SA

As I have argued at length previously, the strong hand of politics over economic reality means there will be no significant policy action, including the fiscal reform and bold leadership needed to drive recovery or take advantage of opportunities that can sprout from the global environment.


Daily Covid cases and new variants

The latest figures of confirmed new infections show fewer cases, however we know from daily updates that there is an upward trend in the overall number of positive cases.

It seems then that the pandemic is going to be with us for a long time.

Moreover, variants are emerging as the virus evolves and the transmissibility, vaccine efficacy and severity of the C.1.2. variant that has been detected in South Africa and seven other countries is still not known.

New Covid variant found in SA has concerning mutations
What’s known about the new Covid variant in South Africa

Still, it raises concerns about the possible implications it can have on the already strained health facilities and economy.

Source: Department of Health Covid-19 update, Monday, August 30, 2021

Unless the national vaccination programme becomes effective in terms of rollout, including getting more men to get the jab, a fourth wave might set in. Of all the African countries, South Africa is the hardest hit and the way the vaccination programme was implemented does not inspire confidence.


All the preceding points considered, it is not simply that one does not have hope for economic recovery. However, current events and the snapshots provided here suggest that a bounce-back in the short term is unlikely. The negative trend in these key indicators overshadows the country’s chances of growth.

It takes policymakers who are bold enough to tell our leaders – and we need decisive leaders who are willing to aggressively pursue policies that attract investment – to let the private sector go about its business of creating jobs, with less focus on politics and more focus on growing the economy.

And then testing how fast it can grow when restrictive barriers and bottlenecks are removed.

Bold decisions and solutions are needed, but they have to be right and they have to make the job market and economic recovery better for all.

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So many articles have been written on this topic, one wonders is there really a point in adding to our already depressive state by writing yet another one. For our own sanity, we have to reach a point of acceptance.

Yes, South Africa is in economic decline. The prospects of a turnaround in our life time are remote. Accept it. Move on and focus on other aspects of your life.

So what, the whole world is in the same boat, but unlike the rest of the world we in South Africa are resilient so we can survive. The USA is finished, they have no hope of paying their debt off, the dollar can’t last forever, so the West is finished.

Just look at that map of the provinces above, if the Northern and Western Cape were to go the independent route a part of the country
will survive without problems. So there is hope in the times of crises.

The USA is far from finished. The other difference between the USA and RSA is that the rest of the world wants to do business with USA and no one wants to do business with RSA. The only challenge to the number 1 spot held by the USA is China, but even they are having a declining economy. The USA is not going anywhere… at least not in our life time.

One Klippies too many ??

Without concentrating on these calamitous economic facts, there can be no moving on. That is the point. Everyone HAS TO cognate this fact.

We have to get rid of the ANC for there to be any possibilities for future improvement.

“We have to get rid of the ANC …” Really? And they will be replaced with what? Do you really think the majority ‘our people’ will vote for the DA? That would then assume the DA could do anything with the existing public service workforce driving the wheels of government into the quagmire of state failure. No. I see the EFF stepping into the vacuum formed by the loss of the ANC’s majority – a coalition being formed – resulting in a far more radically based socialist / communist ruling elite, with the constant threat of dictatorship (posing as a ‘democracy”) on the horizon. OK, so call me a pessimist.

Government revenue minus overstretched wage bill minus theft minus cadre deployment

= a deficit = A failed State

What a moronic statement… Accept it and move on?

The reality in SA is simply one of overpopulation, coupled with unaffordable socialist policies. Far too many people, including millions of illegal immigrants, chasing far too few jobs and a regime that insists on repeating failed socialist experiments which have worked nowhere else.

… and Ego. The ANC has punted these failed policies since it’s birth. Now that it is in power and is watching first hand these failures destroy segments of a country once full of prospect – individual and social ego forces them to continue to push these policies because that is what they have always been peddling. In their minds, they and their ideologies can not be “wrong”, “outdated”. The problem must be with everything and everyone else.

There is no possibility of reforming the ANC. Ego will not allow it.

Exactly, That_darned_cat, your post sums it up perfectly

Now explain this to your domestic and/ or gardener. They are the ones that could make the difference but are, alas, too brainwashed by their pro-cANCer village chief/ induna/ king. You really didn’t think that the light of democracy will work in dark Africa?

Unfortunately you may be right, not for lack of trying, sure, but some things just don’t work together. Qqq

Well done with a great article, supported by facts, not just opinions. The SA economic long term picture looks bleak and the government doesn’t have the will to implement the necessary reforms. The poor fiscal position will result in deteriorating infrastructure add more pressure on taxation, which are big negatives for attracting foreign investment. So, the difficult times are still ahead! We haven’t seen anything yet. Also, the financial markets are disconnected from economic reality globally and this will add more pain and suffering in the near future when the disastrous monetary experiment of central banks, blows up!


So it seems Mrs Thatcher’s comment: “Socialism is wonderful until you run out of other people’s money” is still effective.

Yes, we must provide for the less fortunate, but it should have been prioritised with better education, fewer children and incentives to train in blue collar trades.

Instead the ANC simply used our money to buy votes. And now the chickens have come home to roost. And as we know, chickens don’t fly off, they get slaughtered.

Once our money runs out (ie that of the productive employed minority), don’t forget there is still the Chinese money. That will prove interesting. I wouldn’t be surprised if they are the ones encouraging the boiling of the frogs. Lots of bargains to be had once that (frog boiling) goes over the tipping point.

Even if the Chinese start buying up companies, they still have to deal with a workforce way less efficient and way more truculent than Bangladesh or Vietnam or India.

For decades I’ve been trying to cope with the fact that SA has more resources, both mineral and agricultural, more travel variety and destinations, amazing resorts, superb quality restaurants – in Cape Town anyway ..;-) – excellent wines, excellent banking and internet connectivity, better weather, no natural disasters, is between the East and the West on the shipping trade route, with very capable medical professionals – that are still left – world beating sportsmen and women than almost any country on earth and because of the political class, we still fail.

Initially the Nationalists with their idiotic Apartheid policy and now the ANC with their BEE schemes and corruption.

Sigh … at least a good bottle of wine is still affordable.

What happened to the $1 Billion Modderfontien mega city. The Chinese took over the area and now nowhere to be seen. SA already owes them $20 Billion. Africa now negotiates through Europe for dept relief and uses IMF loans to pay back the Chinese. Everyone wins except Africa, Angola with all its oil is taking loans from the IMF now, as is South Africa with all the minerals? Also Chinese don’t have much time for unions, strikes, lazy demanding labour and human rights. Its easier for them to invest in Zim and Congo. The only boiling frogs are unfortunately the African ones.

What happened to the $1 Billion Modderfontein Mega City? Chinese were all over that area and now nowhere to be seen? Africa now negotiates dept relief through Europe and uses IMF loans to pay back the Chinese. Egypt, Angola, Zambia and SA are all in the same boat. Everyone wins but Africa. Almost a decade ago there were 200 000 resident permits approved in Angola for Chinese nationals annually, today there are barely 50000 Chinese living there. Also Chinese don’t have much time for lazy demanding labour, unions, constant strikes and firm human rights laws. It’s easier for them to invest in Zim, Congo and Ethiopia for the time being. The frogs that are boiling are the ones that can’t repay their massive “white elephant” infrastructure debt.

The borrowing shows that the ANC regime have long run out of SA money; they are borrowing other peoples’ and essentially wasting it on non-productive spending; grants and wages. I wonder how long this can last, the slide to junk ends in a fiscal cliff. I suspect that much of the ZAR denominated “borrowing” is from SA insurance and pension funds (Future Growth, PIC etc). There are going to be Zim like, sooner than we would like.

It’s interesting how the ‘economic structure’ is blamed for the lack of employment opportunities. It is as if there is the expectation that a magical wand can be waved by politicians (perhaps even businesses) and the economic structure will be whole and functioning again. A quick fix solution to all our problems; employment will be gone, women will have jobs and the youth will be employed. It completely ignores the years and years that the citizens of SA demanded something for noting. Yes, bad politics, bad policies, bad execution all played a role, but the real culprit still remains our attitude. We still ignore the hard work required to get an economy going and working. We still pamper our attitude of entitlement. We still want government to take what we didn’t work for and hand it over in ever growing numbers. A better performing ANC government will not help, unless we understand that we can’t demand short term solutions all the time. Somewhere along the line we’ll have to understand that we have to put in the effort to improve ourselves, to become more employable, to be more relevant to the 21st century. After all, you can only employ so many ditch diggers and domestics. We, at the least, need people who can read and write and do some math. And that starts before grade 1, with a citizenry who is willing to work, over a long period, to earn what they want. Are we willing to do that?

Brilliant article Mamokgethi. The answer to your conclusion of ” … we need decisive leaders who are willing to aggressively pursue policies that attract investment …” is obviously a no, so the only future is one that tracks this massive downward trend you so clearly show. Where will it end? I strongly suspect a full blown tribal civil war, mass emigration and UN planes flying in food. History has shown us the template, we’d be fools to ignore it

Unfortunately the collective ‘we’ are fools. It will happen.

Look on the positive side, ZAR strengthened pretty well. @Magnus your timing sucks but your observations spot on.

Its great.

Who does not want an opportunity to change your ZAR’s to Crypto. It’s going too go through the roof!!

How much longer can all this carry on? The ANC will hand the next govt a shambles, that’s for sure. Especially if they last another 4 years.

The country seems to lack the intellectual firepower to save itself.

Socialism and communism aren’t just political beliefs, they’re stupidities. And our government is replete with their believers.

What is the rand doing at 14? 50 sounds like a more realistic number to me.

It would be comical if it wasn’t so tragic!! 50% unemployment, an economy crying out for investment and this lot pursue policies such as EWC and massive social security taxes on a small minority of taxpayers. Monty Python and the Amalgamated Network of Corruption!!!

Indeed Darth, but at least Monty Python’s flying Circus was funny! We have an ANC full if clowns but they are in no way funny !!

The world has come full circle: Noblity lived like kings while their subjects suffer. Then democracy arrived … now polititians live like nobility while their citizens suffer. One party states (communism, religious orientation) also have the leaders living like kings.
As long as the RSA leaders think that to drink liquer that costs more per bottle than the minimum monthly salary is their right, they are the problem, not the solution that the masses need. And it has been said decades ago: “You have to respect numbers. Ignore the masses at your peril!”
But they are so conceited about how noble their intentions are that the facts must be wrong! The end of the “dream” cannot be near! Let’s just print more money … and kick the bucket down the passage.

In a few years two types of people will exist: The poor and those with money overseas.

It is never going to get better unless the ANC is fought out, voted out or the country splits up. There is not enough money for the millions plus the illegals

South Africa is facing serious challenges. Politicians have failed to rise up to the occasion. The world is full of case studies where we can draw lessons and avoid committing the same pitfalls. SA have good people and excellent policies on paper, but we have failed to implement because there is no political will.

No the ANC’s policies don’t even look nice on paper, they sound nice before any notion of second thought is put in.

Really, really irks me to see the “impact of the pandemic”…
When it should say “impact of idiotic, random rules with no thought behind them”!!!

End of comments.



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