Why South Africa Lags Behind Emerging Markets GDP Growth Rates

South Africa’s economy grew at 1.1% last year, far behind the global average of 3.2% and even below that of advanced economies, which expanded by 1.7%.

Its emerging market peers, as a whole, expanded by 4.2%, roughly four times faster than South Africa's growth.

Sub-Saharan Africa grew at 4.0% in 2025, a full 2.9 percentage points ahead of South Africa’s growth. Emerging Asia (excluding China) grew at 5.4%.

Why is that?

South Africa is eight years into the Ramaphosa era. The Government of National Unity (GNU) has been in power for almost two years. Ministers, left and right, talk about reform progress. Sometimes that is all they talk about. The State of the Nation Address dwelt on little else. Business often praises the reforms the ministers talk of. South Africa has deep, liquid, and sophisticated capital markets. Tech and the private sector are cutting edge. The top end of the education system is world class. The infrastructure is the envy of its peers. Public opinion is centrist and pragmatic. The natural resources are limitless.

How do you take that and add to it “massive and sweeping reforms” and get 1.1% growth?

The answer is, of course, obvious: the reforms are neither sweeping nor massive.

Take property rights. In response to comments from the new American ambassador, the Secretary General of the African National Congress (ANC) has said that private tech investment in South Africa is safe. Well, that’s not true. Under the Expropriation Act, the intellectual property in those firms can be nationalised without market-related compensation.

Or foreign policy, there’s a lot of fluff and bluster about middle powers and a multipolar world. That’s all good and well. But there is no trade or investment deal with Washington or Beijing of a scale necessary to move the fixed investment rate by much. Both those powers are very frustrated at how hard it is to get anything done with the South Africans. As a consequence, there has been no leveraging of South Africa’s command of the Simonstown choke point. As the disruption of shipping traffic around the Iran war has again showed, it would be elementary for South Africa to trade the importance of Simonstown for massive investment concessions.

On empowerment, two-thirds of the public now see through the current policy as a fraud. The public further supports amending the policy to stop taxing investment on arrival and stripping out race. The government has an empowerment policy review underway, but a wandering albatross reports that officials in the key ministries are sabotaging the prospect of real reforms.

On electricity, there is little urgency to burn much more coal. That’s critical to both the stability of the GNU and the prospects for a future ANC to regain its majority. The power plants are standing in the veld. They are connected to the grid. With great haste, they need to be refitted.

On labour, there is a welcome policy review underway. But as with the empowerment policy review, the slowness and internal sabotage are crippling the prospects that it feeds into greater numbers of jobs.

Then there is infrastructure such as ports and rail. Hand it over to private management in its entirety. It’s a fantasy that the government and its state-owned companies could have a hand in turning things around. The private sector will do it in short order.

Lastly, there are state schools. As this newspaper has reported, just a third of children in these institutions can read properly by the end of Grade 3. The solution is to move with haste to put these schools under a charter-type model of private management.

That’s the list: amend the Expropriation Act, let national interest inform foreign policy, follow public opinion in empowerment, burn coal, rush the labour reforms, hand over the railways and ports, and let schools go the charter route if they choose to.

A sufficiently expansive reform project, one that can take the growth rate to 4%, would read a lot like that list. Anything short of that is settling for a fraction of what South Africa’s emerging market peers get right in expanding their economies.