Cyril Ramaphosa the worst president for economic growth in democratic South Africa

President Cyril Ramaphosa has been the worst president for economic growth in democratic South Africa. The country’s economic performance over the last 15 years crushed the progress made by Nelson Mandela and Thabo Mbeki. 

The head of the Social Research Foundation, Dr Frans Cronje, said earlier this year that the ANC did much more in restoring economic stability and raising living standards than it was given credit for. 

In the first decade of democracy in South Africa, the ANC’s support grew steadily to a peak of 70% in 2004. 

This was due to South Africans’ rapid rise in basic living standards. “There are direct ties between living standards and the behaviour of ANC voters,” Cronje said. 

“The ANC in its first decade in power does much better at restoring economic stability and raising living standards than it was ever given credit for,” he said. 

“You will continue to read, including in the business press, that the ANC has presided over an era of service delivery failure, which is plainly wrong on its facts.”

Before the country’s first democratic elections in 1994, South Africa’s economic growth rates were declining.

The economy’s annual average growth rate was 1.0% between 1985 and 1990, falling 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.

Then-President Mandela and Deputy President Mbeki focussed on creating and implementing a policy framework to reduce government debt and grow the economy. 

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

The Mandela administration was able to stabilise the economy and achieve a steady growth rate of 2.7%. 

Cronje said the basic living standards of many South Africans increased significantly and rapidly during the first decade of ANC rule. 

The share of households without electricity declined sharply from 49% in 1996 to 19% in 2006, while the number of people employed nearly doubled from 7.48 million to 14.5 million. 

Another improvement for many South Africans was the rapid growth of the state’s welfare system, as the number of people receiving social grants shot up from 2.4 million in 1996 to 14.9 million in 2010. 

However, this trend stagnated as President Zuma came to power in 2009, and by the end of his tenure in 2018, living standards had begun to decline. 

This decline is closely tied to the country’s dismal economic performance since the 2007/2008 financial year. 

South Africa’s economy flourished under Thabo Mbeki. The government managed to run consistent budget surpluses, and the economy grew strongly at an annual rate of 4.1%. 

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 despite rhetoric from the president and finance minister pledging fiscal discipline. 

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

However, the main issue is South Africa’s lack of economic growth, with many economists saying that the country’s growth crisis is manifesting as a fiscal crisis. 

Standard Bank chief economist Goolam Ballim said at the company’s Economy 2024 event that Ramaphosa has a repair job on his hands and has not acted with the urgency the situation demands. 

Many of his policies are good and, if implemented, will resolve many of the country’s crises. 

The graph below, courtesy of Standard Bank and Ballim, shows the economic performance of South Africa under the five presidents it has had in the democratic era.