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SA has ‘extremely bright economic prospects’ – economists

Roelof Botha expects the economy to grow by at least 5% in 2021; Azar Jammine says the global environment is helping.
Transformation needs to extend beyond simply giving previously disadvantaged individuals jobs. Image: Moneyweb

South Africa has extremely bright economic prospects, according to two prominent economists.

Roelof Botha, an economic advisor of Optimum Investment Group, said the economy is recovering off a low base but the super cycle started in 2019 and was interrupted by Covid-19, which will probably continue for quite some time.

“But India is expected to grow by 12% this year, China by above 8% and the US by close to 6%,” he said. “There is absolutely no way that the South African economy is going to grow less than 5% this year and it should be able to maintain that momentum.

“So the jobs will be coming, especially if the government is true to its word and it creates a more enabling environment for the private sector by removing the obstacles to growth – and they can start with labour legislation.”


Botha stressed that it is a fallacy that South Africa is not creating jobs, adding that 510 000 jobs were created since the second quarter of 2020, with 152 000 jobs alone created in March 2021 for highly skilled people.

“The pandemic was an unbelievable phenomenon. It’s the last thing that any country in the world needed but we are getting out of it at a rapid rate of knots,” he said.

Azar Jammine, the chief economist of Econometrix, said the economic recovery off an extremely low and depressed base has been a little stronger than anticipated as seen by the latest GDP figures.


Jammine said South Africa has also learnt that the strength of the economy is derived from the fact that the middle and higher income groups were not nearly as severely affected by Covid-19 as the lower income groups and informal economy.

He said the middle and upper income groups account for between 80% and 85% of the spending power in the country, which has meant the country’s tax revenues have not declined to the extent anticipated and the budget deficit and government’s borrowing requirements are not as large as anticipated.

Jammine said this recovery is being assisted by the global environment, which is looking more positive than it has for a decade because of the development of Covid-19 vaccines, a return to normal economic conditions far sooner than anticipated, and the world’s leading governments and central banks having embarked upon the biggest stimulus the world has ever seen.

Commodities boost

“This is feeding through into creating an expectation of a huge demand for commodities, resulting in commodity prices surging, and South Africa and sub-Saharan Africa as a whole – which are primarily dependent on commodity prices and commodity production for their wellbeing – now starting to receive the benefits.

“As a consequence, whereas the IMF [International Monetary Fund] a couple of months ago forecast very dismal economic growth for the country and the region, more recently people are becoming more optimistic that we may not fall that far behind the rest of the world,” he said.

Jammine added that Africa just lagged behind the rest of the world in the 1980s and 1990s in terms of economic growth but from around 2000 sub-Saharan Africa was the second highest growth region of the world.

Speed of recovery

He said sub-Saharan Africa is set to underperform the world economy for a short period because of the very slow rollout of vaccinations and the huge challenge countries in the region face because they have insufficient fiscal room to stimulate their economies to the same degree industrialised companies were able to do.

“The IMF sees sub-Saharan Africa growing slightly slower than the rest of the world this year and next year but after that starting to grow faster than the rest of the world because of the massive opportunities there are to start building up the infrastructure of the region to supply the agricultural and mineral resources the world desperately needs, and to provide the services that go hand in hand with accommodating this infrastructural drive,” he said.

However, Jammine warned about the danger of looking at sub-Saharan Africa in a homogeneous manner, particularly when Southern African Development Community (SADC) countries have lagged behind other parts of sub-Saharan Africa.

The two economists’ comments were made during a virtual panel discussion on Thursday that coincided with the introduction by John Deere of a range of construction equipment to the sub-Saharan African market.


Botha said the composite leading business cycle indicator of South Africa has just hit an all-time and 61-year high while the per capita income of South Africans in real terms has followed exactly the same trend, with people a lot better off than prior to the first democratic elections.

He added that virtually every key economic indicator apart from commercial aviation and tourism is currently positive.

“Unfortunately we lost a decade [under the rule of former president Jacob Zuma] but now President Cyril Ramaphosa and his new team are starting to build for the future.

“Nobody can prepare for a pandemic but you can prepare for the end of the pandemic.

“Although the virus will be with us for many years, the pandemic will end and things are really looking bright,” said Botha.

Jammine said Africa beyond the SADC region is a potential source of great economic growth for South Africa, including the ability to export and supply a lot of expertise to the region.

Botha believes construction companies are “going to have a field day over the next one or two decades in Africa on condition there is a little bit more political stability than we have become used to”.

Structural weaknesses

Jammine said major structural weaknesses of the South African economy include an over concentration of power in the hands of government, resulting in very strict over regulation of the economy; organised labour that is very inhibitive and resistant to innovative ideas because of the fear of job losses due to technological progress; and a business sector highly concentrated in a small number of very large companies that tend to restrict entry into business.

Jammine is cautiously confident about South Africa’s economic prospects in the next year or two for a variety of reasons, including a booming world economy.

However, he said the prospects for South Africa’s economy after that will depend on how successful the government is in changing the calibre of management within the public sector to support Ramaphosa and the country.

“In the absence of sufficient transformation – in the broader notion of transformation and not just giving previously disadvantaged individuals [PDIs] jobs – I think we run the risk of returning to a very low growth scenario,” he said.

Jammine explained that proper transformation involves beating corruption; improving the capacity of the state machinery, including municipalities; and improving educational outcomes, especially in a technologically progressive world.

He stressed that improving the capacity of the state machinery is a huge challenge.

“How do you take away those people who have been put into those positions due to their connections and replace them with people due their qualifications and ability?” he asked.

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It will be difficult to grow the economy to it’s full potential without electricity. Load shedding is killing the economy. No mention of getting rid of BEE?

Load shedding is punted to add some R100Bn in the next five years for self generation with new thresholds.

I think the 5% mentioned here makes sense of you consider that it’s coming off the low of 2020. A hotel in Sandton that uses to cost R4000 a night is now going for R1500. When that price shoots back to R4000 you’ll see where the 5% comes from.

The caveat is that the 5% quoted is most likely Nominal. But we should not let that get in the way of a good headline.

Doing some quick instamaths, if the current 4.4% inflation rate can be believed, then real growth is a paltry 0.6% – potentially. So back to where we were 2 years ago.

V Shape recovery folks!

Despite this and other serious impediments imposed on us by the ANC, South Africa manages to hobble along. Let’s remember to cheers South African people’s resilience, work ethic and willingness to hustle. The economically productive base have been carrying an immense load and continues to do that.

Sadly BEE is going nowhere. BEE, cadre deployment, AA and Tribal systems is how the ANC stays in power. It’s no longer democracy. It’s a numbers game. Thousands of Cadres (and others) are all aware that their jobs and luxury lifestyles is solely due to the ANC and their racist policies. They can’t risk any change in the pillars of powers because it would mean losing their positions.

It’s vote buying by stealth on a grande scale.

Just put the name “Roelof Botha” and you know exactly what is coming.

Agreed, he is also the same guy who was so pro Gauteng e-tolls. When asked why motorists should pay, but taxis are exempt, he had no difficulty in justyfing it. This is the same billion Rand industry which only paid R5 million in tax last year. I therefore take what he says with a pinch of salt.

Rightly so, his father was the paterfamilias of conjurers

Correct. If ever there was an apologist for the current regime, it must be this economist. New jobs created? What?! With unemployment at a record high, how is this even a faint possibility? The rand strengthening? Only in the short term. Our inflation differential will ensure a weakening of our currency – without even taking into consideration all the other negatives, chiefly Eskom and BBBEE. President Matamela building for the future? The only future they are interested in is short-term and lining their own pockets. The race card gets hammered onto the table, repeatedly, by the current regime, and simple merit takes a backseat to the cold logic of fiscal policy and implementation.


Be as negative as you want – let’s see where that gets you

Thanks, Roelof.

Keep stroking yr positivity crystals…..

Thanks no-solutions-skurwe-brak

Ask the ANC NEC for solutions.

It’s called reality guy (or girl?).

Extremely bright future but everyone else listed in the article even brighter judging by the percentages. Hard to figure out if this is merely sugar coating the brown stuff


South Africa: cANCer%

Bravo! Botha hit the crack pipe early this week it seems. How do you grow a gangster state (apart from the growth of that gangster state)?

The biggest impediment to ‘bright prospects’ is ANC corruption, mismanagement and policies.

LOL — The jobs “created ” for highly skilled people only means that those people move between jobs and is not an indicator of new work.

With EWC and National Health plan floating about i beg to differ.

Yes… And they want to disarm you also!! No licence for self protection. Remember who you are dealing with and paying taxes to…

Roelof Botha expects the economy to grow by at least 5% in 2021

What opioid is this guy on? We all want some

We will probably grow by 5% and maybe more >> but from what base?

He was referring to the corruption industry. Corruption will grow by 5% this year.

There is an abject refusal of labour leaders, such as Baloyi of NUM, to allow for any change of the status quo for fear of job losses. This myopic fear of change prevents progress of any kind. The principle is one of enforced stagnation that will inevitably bring uncontrollable changes and far greater job losses. Even as the power black-outs accelerate us all towards catastrophic collapse, these individuals are digging their trenches to prevent any form of rescue. This is an issue for urgent attention, not to appease but to educate about the facts and the reality. There needs to be an enabling of alleviation of the labour camp stranglehold on progress in this regard. Surely, the first issue is to adopt total transparency and accountability for the massive, rampant corruption that the labour leaders point to. There is no trust on both sides and unfortunately for very good reasons.

Yep!!! The third paragraph sums it up.

Relative to other economies we wont have “extremely bright economic prospects”.

How optimistic???You still have “gubment” with all of its fully enacted FAILING POLICIES at work. So it seems that there is a lot of rhetoric flowing over the fake news airways.

Very good article and make no mistake, Roelof Botha, is a good economist. He was one of the few who predicted the much stronger rand based on the current account surplus amongst other.

I read as much of what he writes as I can find. I really hope he is correct … but what I see around me and what I read are not the same. There seems to me to be a disconnect but I am no economist. It’s as if we live in different countries.

Agreed – we need more Roelof’s in this world!

We really don’t, Roelof.

Lol.. cause if we believe things will get better – then they will suddenly get better……

Just like in a fairy tail.

We’ll see, won’t we

The stronger rand is because of a weaker dollar pound and euro. money creation from those countries. in 2020 40% of all USD was created out of nothing.

A case of coulda , shoulda, woulda, but wonta until #VoetsekANC is removed. Their Marxist Leninist policies and calibre of politician are growth killing.

Lol! I know you all love to bitch about the ANC but the reality our biggest problem is that a handful ot generally white males earn R150k a day, not a week or month but a day, while the vast majority are unemployed or earn nothing. We dont have consumers anymore and that out biggest problem. Increase salaries and create chance for us to stimulate the economy naturally.

Probably because the value added is multiples of their remuneration.

Now do an earnings calculation for tenderpreneurs and ANC cadres – who comprise a different demographic. You may find the ROI for South African’s is negative.

This means that with double the current corruption, zero electricity, 80% unemployment and Ebrahim Patel in charge of our wardrobes we can achieve double digit growth.

Exactly two months ago JZ handed in his 21 page document of nonsense (he was given strict timelines) to the Constitutional court in the case brought by the Zondo commission asking for him to go the jail for 2 years. Two months. And the Concourt has been quiet since then. Nothing in two months

This worries me

Not as much as it worries the SAPS constable delegated to arrest him…

This proves what I have always said, it is a constipated constitution. The bench has become locked in the bathroom. Immobile.

“Lies, damned lies, and statistics” – Strange how most people “on the ground” are not yet seeing any of these prospects. The trends I’m seeing (working for a large corporate) is a lot of immigration. Salaries are still down on pre-pandemic levels (and will likely stay that way for at least another year), as well as cost cutting and headcount freezes the order of the day currently.

your world are small

Your English are terrible

I’ll take that one on the chin – no excuses – bad mistake

Do better, Roelof.

And what about the incompetent government, corruption, violent protests, unions, racism, crime, bankrupt SOE’s, and the problems I forget about because it is the new normal???

“The track record of economists in predicting events is monstrously bad. It is beyond simplification; it is like medieval medicine.” – Nassim Nicholas Taleb


Moving On…

Roelof Botha will have a 3-egg omelet on his face by the end of the year and I’m happy to be proven wrong on this.

Until the electricity supply is secured there cannot be much growth in this country. B-BBEE is another major stumbling block.

Not to mention the government in general, who can’t do the simplest thing, like opening up broadband frequency spectrums for example.

There will be boom times around the world but South Africa as usual will get the beggar’s share of it because our government is ALWAYS behind the curve, never ahead of it.

LOL Ja rite ou Roelof, jou ou ANC apologeet.

Jy moet regtig werk aan jou standaarde.

sê hom Daantjie, sê hom …

What does Nasdaq7 think?

”But India is expected to grow by 12% this year, China by above 8% and the US by close to 6%,” he said. “There is absolutely no way that the South African economy is going to grow less than 5% this year and it should be able to maintain that momentum”

My view – why not – if we can add something to the growth in China (which we obviously does with our mineral exports), why won’t we ”grow”.

We will obviously start from a very low base at first, but methinks the inventory built up required will give us a lift! Dollar Rand en-route to 10 now!

Population growth has made a mockery of the mainstream economists, like Botha, for decades. Yet they still focus on half the solution, that of job creation.

The country has created millions more people than the economy can carry.

The population growth rate has come down but millions of people in SA have children they cannot afford.

The economists are blind to the people side of things.

100%, the Ivory Towers now have rose tinted laminated windows, and the Zol is more effective up there, perhaps piped through the ducted aircon all day!!!

“Jammine said Africa beyond the SADC region is a potential source of great economic growth for South Africa…”

Really? Then have all the major retailers failed and left with their tails between their legs?

Just LUV the way these mental mass debaters just put down an easy to follow storieeee-line and walla. It is easy to draw a bridge try building it. Unfortunately the REAL world is way more complex than easily constructed theories.

This definitely does not match with my daily experience from down here, over regulation and such costs, corruption, a bureaucratic slow and lazy government service, load shedding, militant workforce, Covid infinitum etc..etc..

Dont WANT to be negative but you also need to get REAL, acknowledge the problems and deal with them, which is currently not happening.

Pie in the sky. No evidence that this will ever happen!

Institutions –> result in Economic Growth. Proven. I have the Academic paper to prove this.

Institutions matter! and are needed for economic growth.

ANC/Jacob Zuma have destroyed every single Institution in this country…
We see many on life support … Eskom, SARS, Transnet, etc.

No chance of long term economic growth until these weakened institutions are stronger again.

I would love to see a running 10-year reconciliation of:
1. Economic Growth compared to the base year taking the real-time value of money into consideration.
2. Job losses per annum vs job creation and newcomers into the market.
3. Retrospective actual performance vs Government predictions. Initial and not adjusted.
4. Year on yer vs each year against the base year and average.
5. Government expenditure year on year.
6. Current Account Deficit Year-on-year
7. Unaccounted for Governmental expenses as per Auditor General’s report year-on-year.

I am sure it will make interesting reading.

Two pieces of wisdom comes to mind here:

The psychology of bad decision making is rooted in confidence, based on incrementally bad behaviour without adverse outcomes.

Democracy is a belief in the collective wisdom of individual ignorance.

You must be smoking something, Roelof Botha! Luckiky we live in the information eara and everyone can see what is going on in the global economy. Dark days ahead that will be much worse than the 2008 fin CRISIS. Buckle up, after greed comes sorrow!

I’ve always admired AJ’s insights because they tend to make sense, and this one is no different. We should heed his sage advice instead of blindly following the herd.

The world bank forecasts a 3.5% for SA. This higher number is more a consequence of the -7% slump the previous year. nothing to get exited about. Other developed countries like the USA exceeds this growth number easily.

5% growth, but from what level…. And after losing what % of REAL growth over the last xx years?

And sure we’re “creating” a few hundred thousand jobs… But again after shedding how many more prior to this.

Anyone running a business will tell you – we’re all trying to claw our way back to where we were before the lockdown nonsense.

End of comments.





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