Bheki Mahlobo, the economics editor of The Common Sense, joins Gabriel Makin to explain what the latest fixed investment figures say about South Africa. The fixed investment rate measures how much capital the country commits to property, plant, and equipment as a share of the economy, and Bheki argues that it is the best single predictor of the country’s growth, jobs, and politics. The rate rose from 15% of GDP in 1994 to 22% in 2008, but it has since fallen to about 14%, which is the lowest of the original five BRICS countries and far below the 25% to 30% that comparable emerging markets invest.

Bheki then shows how that decline tracks the rest of the economy. Growth averaged 3.5% a year between 1994 and 2008 but only 1.1% a year since 2009, which resulted in job creation stalling, and the ANC’s share of the vote falling from almost 70% to 40%. He explains why investment at today’s level only maintains what already exists, how government policy acts as a tax on capital, and why the National Development Plan’s target of a 30% investment rate has been forgotten. He closes with the reforms that could return South Africa to 5% growth, noting that had growth stayed at that level since 2007, South Africans would be nearly twice as rich today.