South Africa’s economy has stagnated over the past five years while its population has continued to grow steadily. Government debt has also skyrocketed, and inequality remains high.
This was revealed by the World Economic Forum (WEF) in its Future of Growth report, which outlines the competitiveness of economies worldwide.
The report showed that South Africa’s economy is not competitive globally. It is below average on three of the four key indicators that the WEF considers vital to economic prosperity.
Sustainability was the only indicator where South Africa scored above the global average, falling significantly short on innovativeness, resilience, and inclusiveness.
The country does not fare any better on traditional indicators of economic prosperity such as economic growth, GDP per capita growth, government debt, and life expectancy.
All of these indicators have deteriorated, with South Africa’s economy stagnating while its government debt has skyrocketed and population boomed.
This is emblematic of the country’s troubles and the difficulty its delegation will have in convincing business leaders at the WEF conference in Davos to invest in the country.
In the build-up to the conference, Finance Minister Enoch Godongwana said the delegation would not hide the challenges the country was facing but would rather show Davos that the country was progressing in addressing them.
Godongwana admitted that questions have arisen about how South Africa will garner investor confidence, given the serious challenges impeding the economy, such as an electricity and logistics crisis.
“We are not hiding the challenges,” Godongwana said, adding that “the message we’ve got to communicate to investors is that South Africa is an investment destination.”
He said that the delegation of both government and private business “understand those challenges very well” and have been working together to deal with them back on home soil.
An impeding factor for investment could also be pointed to the worrisome state of the country’s finances, the debt-to-GDP ratio, and the trade deficit.
“Right now, we have got a challenge because our growth levels are insufficient to cope with higher levels of debt,” he said.