South Africa lagging behind other African countries economically
South Africa has unfortunately been the second slowest-growing economy in Africa over the last decade, and it has been consistently underperforming the continent’s average economic growth rate. According to a report from McKinsey’s Global Institute titled Reimagining Economic Growth in Africa recently released, only the Central African Republic has grown slower than South Africa over
South-African Economy Shrinking
South Africa has unfortunately been the second slowest-growing economy in Africa over the last decade, and it has been consistently underperforming the continent’s average economic growth rate.
According to a report from McKinsey’s Global Institute titled Reimagining Economic Growth in Africa recently released, only the Central African Republic has grown slower than South Africa over the last decade, with Africa’s most developed economy growing at less than 2% per annum on average.
Ranking alongside Africa’s ten worst economies and had the slowest growth among all major economies, McKinsey now classes South Africa as a “slow grower” when ranking the continent’s economies.
Partially, this is caused by the long-term decline in commodity prices over the last decade, and McKinsey points out this trend may increase with demand due to the global renewable energy transition.
The more concerning thing is that Foreign Direct Investment (FDI) in South Africa fell at the fastest rate of all African countries, apart from Nigeria. According to the firm, the country “has consistently underperformed Africa’s average growth rate over the last 20 years,” with corresponding below-average investment, exports, as well development rates.
Back in 2004, South Africa’s contribution to the total African GDP was 25%. At that stage, it had the largest economy in Africa. Ever since, its contribution has plummeted to only 14%. As a simple reason, South Africa’s economy grew at a lower rate than the rest of Africa.
South Africa’s sluggish economic growth has even seen it lose its crown as Africa’s largest economy to Nigeria. The economic struggles have very real consequences, including high unemployment and a rise in absolute poverty, however, the biggest factor behind the country’s economic woes this year is an unstable power supply and subsequent load-shedding.
South Africa still dominates the continent economically, making up 32% of all exports to African countries at $35 billion – five times higher than Nigeria. It corporates dominate the continent, with 40% of all companies with revenue above $1 billion headquartered in the country.
