South Africa has been stuck in a low-growth trap for the last decade, with the country’s economy unable to match the growth of its population.
Wits Business School Professor Jannie Rossouw told the SABC that South Africa is stuck in this trap due to the government’s failed economic policies.
Rossouw provided an overview of the country’s census conducted last year, which showed the country’s population grew by 20% since 2011 to 62 million people.
The average annual growth rate of 1.8% over the period was the highest since the first post-apartheid-rule census was undertaken in 1996.
This is a positive development, with the data also illustrating the country’s continued attractiveness as a destination for economic migrants and political refugees, primarily from the rest of Africa.
However, Rossouw said the growth is also fraught with danger as the economy cannot support the continued population growth.
While the population is growing at an average rate of 1.8% per annum, the economy over the last decade only averaged growth of 1% per annum.
This means South Africans are getting poorer per capita every year. “I have been warning about this problem for the last five to six years,” Rossouw said.
“The country is in a low growth trap. It is obvious that it is after a decade of low to no growth. We have been in this trap since December 2013.”
“The government’s policies over the last ten years have simply not delivered the desired results.”
Rossouw said the government’s policies have failed, and the country cannot continue as it has for the past decade.
Being stuck in a low-growth trap compounds many other issues the country is dealing with, particularly the government’s deteriorating financial health.
South Africa’s budget deficit widened further in August and September compared to a year ago as government expenditure continues to grow faster than revenue.
To finance its growing budget deficit, the government has had to increase the amount of debt it issues by R2 billion to R14 billion a week.
The National Treasury said total revenue growth was 8.7% year-on-year in August, while total expenditure grew at a stronger pace of 9.2%.
The cumulative main budget deficit in the first five months of the 2023/24 fiscal year amounts to R238.4 billion, or R254.4 billion, including Eskom debt relief.
This is much higher than the deficit of R160.7 billion in the same period in 2022/23.
The only sustainable solution to this problem is economic growth, with Rossouw calling on the government to give the private sector the freedom to start and grow businesses in the country.