South Africa Has the Ingredients for Economic Lift-Off. So Why Is It Still Grounded?

Economic growth in South Africa has been moribund for nearly two decades now. The growth of the economy is slower than the growth in the population, meaning South Africans get poorer every year, on a per capita basis.

But the basic building blocks for an economic lift-off exist, if you believe the analysis of Charlie Robertson, the chief economist of Renaissance Capital, a London-based investment bank focused on emerging markets.

Robertson argues in his book, The Time-Travelling Economist, that countries escape poverty when three conditions are met. Literacy must become widespread (Robertson defines this as meaning more than 70% of people in the country must be literate), electricity must be abundant and reliable and usage must be above 300kWh per person per year, and fertility must fall low enough to boost savings and investment (Robertson says the fertility rate should fall to about three children per woman).

On paper, South Africa qualifies on all three counts.

Start with literacy. South Africa has a literacy rate of between 90% and 95% (depending on how literacy is defined). On a basic threshold measure, South Africa clears the bar. It is not a country where most adults cannot read or write.

But headline literacy is not the same as functional skill. A global study on reading comprehension conducted every five years and last done in 2021, the Progress in International Reading Study (PIRLS), found that 81% of Grade 4 learners in South Africa cannot read for meaning in any language. That statistic is devastating. It suggests that the schooling pipeline is not producing the depth of skill required for a competitive industrial economy.

Electricity is the second ingredient. South Africa’s per capita electricity consumption is over 3 000 kWh per year, well above Robertson’s threshold for industrial take-off.

The problem has not been scale, but reliability. A decade of load-shedding hollowed out growth, deterred investment, and forced firms to divert capital into private generation instead of expansion. The encouraging sign is that Eskom has recently reported improvements in its energy availability factor, with year-to-date figures above 64% and periods exceeding 70%. That suggests the system is more stable than at the peak of the load-shedding crisis. Whether this stabilisation can be sustained will determine whether electricity once again becomes a platform for growth rather than a brake on it.

The third ingredient is fertility. South Africa’s fertility rate has fallen to around 2.2 births per woman. That is below the three births per woman threshold Robertson argues is necessary for a country to developmentally lift off. In theory, this should produce a demographic dividend. Fewer children per household should mean more capacity to save, invest, and spend on education and skills, Robertson argues.

Yet the dividend has not materialised, partly because of the unemployment crisis South Africa has. The expanded unemployment rate remains near 40%. If adults cannot find work, lower fertility does not automatically translate into higher savings or capital formation. It simply means fewer dependants in households that are still under economic strain.

This is where the Robertson framework becomes uncomfortable for South Africa. The country appears to have the structural ingredients for lift-off, yet growth has remained anaemic for nearly two decades. Real GDP growth has averaged well below the rates needed to make a serious dent in unemployment.

The missing link is investment and execution.

Gross domestic savings as a share of GDP has hovered around the mid-teens in recent years, reported at roughly 16% of GDP in 2024. High-growth emerging markets often sustain savings rates well above 25% of GDP during take-off phases. Without a deep pool of domestic savings, and with persistent policy uncertainty, capital formation remains weak.

Common sense tells you that you cannot industrialise in the dark. But it also tells you that you cannot industrialise with a workforce that leaves primary school unable to read for meaning. Nor can you generate rapid capital accumulation if large proportions of your working-age population sit without work.

But South Africa’s challenges are not insurmountable, and the country meets Robertson’s basic prerequisites to supercharge economic growth. Fertility is already low, most children are in school, and electricity capacity exists in scale. The country does not need a demographic miracle or a vast new energy discovery. It needs sustained reform.

If power supply stabilises permanently, if logistics bottlenecks are eased, and if early-grade educational outcomes improve materially, then the Robertson ingredients could finally combine in the way economic history suggests they should.

South Africa is not missing the recipe. It is struggling to cook the meal.

Whether the next decade becomes one of lift-off or continued drift will depend on the political choices made now. The ingredients for a prosperous South Africa are on the table. The question is whether they will finally be put to use.