South Africa’s economy over 30 years of ANC rule

Presidents of South Africa

Under ANC rule, South Africa’s economic indicators trended downwards, which included the rand weakening significantly and debt reaching record levels.

The ANC started to rule South Africa on 10 May 1994 after winning South Africa’s first democratic general elections in April 1994.

When the ANC took over power from the National Party, South Africa’s economic growth rates were declining.

Between 1985 and 1990, the economy’s annual average growth rate was 1.0%. It fell further to 0.2% between 1990 and 1994.

The country was battling rising debt and a weakening currency. Simply put, South Africa was heading for bankruptcy and needed urgent economic interventions.

The International Monetary Fund’s president visited South Africa following its democratic transition and offered the country funding.

Mandela did not accept the offer. “The difficulty with you is that you impose conditions which violate the sovereignty of a country,” he said.

Instead, President Mandela and Deputy President Thabo Mbeki focussed on implementing a coherent growth and development strategy.

They planned to gradually reduce the fiscal deficit, avoid a debt trap, and limit any real increase in recurrent government expenditure.

The Mandela presidency stabilised the country’s finances and achieved an average economic growth rate of 3.0% between 1994 and 2000.

It created a solid foundation for future growth, achieved after Mbeki took over the presidency from Mandela.

Under Mbeki, with Trevor Manuel as Finance Minister, the country achieved strong economic growth and significantly reduced its debt-to-GDP ratio.

Things changed quickly after Jacob Zuma dethroned Mbeki as ANC President. Pravin Gordhan took over from Manuel as Finance Minister, after which government spending spiked.

South Africa’s strong GDP growth during the Mbeki era stopped, and the country’s debt rapidly increased.

The trend accelerated under Cyril Ramaphosa’s presidency, with many economists warning that South Africa is facing a fiscal cliff.

This year, the country’s fiscal deficit will be around 6% of GDP. This means South Africa’s debt-to-GDP ratio for the current financial year will increase to over 75%.

It raises the question of what the economic indicators say about the success of the ANC government and where the country is going.

To assess this performance, Daily Investor looked at four indicators – the rand, GDP growth, debt to GDP, and the trade balance.

The charts below provide an overview of these indicators over the last 30 years.

Rand strength

The South African rand has seen significant value deterioration over the last 30 years. In 1994, it traded at R3.00 against the US dollar.

Over the last three decades, the rand weakened by over 400% and is trading between R18.00 and R19.00 to the greenback.

GDP growth

The South African GDP growth rate was strong in the first half of the ANC’s tenure but trended downwards over the last 15 years.

The average GDP growth rate between 1994 to 2009 was 3.3%. It decreased significantly between 2010 and 2024, averaging 1.4%.

Debt to GDP

South Africa experienced a significant increase in its debt levels relative to its total annual GDP. Our debt-to-GDP ratio increased from just over 40% in 1994 to over 70% in 2020.

South Africa’s total national debt has increased from around R107 billion in 1994 to just under R4.3 trillion in 2022.

Trade balance

Commodities and resources largely drive South Africa’s exports, and the trade balance closely follows the commodity cycle.

Between 1994 and 2019, the troughs of the trade balance downturns have fallen deeper and deeper, with little change seen in the peaks of the trade balance cycle.

South Africa’s trade balance has generally been poor. However, since 2020, a commodity cycle boom has bolstered South Africa’s trade balance to unprecedented levels.


Top JSE indices