South Africa's GDP growth declined to 0.6% in 2024 from 0.7% in 2023, underscoring the need for critical action and strategic reforms to unlock the country's vast capital resources and accelerate economic growth, the African Development Bank emphasized in its Country Focus report launched on Wednesday.
The report titled 'Making South Africa's Capital Work Better for its Development' comes amid global challenges, geopolitical tensions, conflicts, and political instability in several countries across the continent.
The report highlights that South Africa's economic growth remains sluggish, with GDP declining to 0.6% in 2024 from 0.7% in 2023. It attributes this slowdown to persistent power outages, the severe impact of drought on agriculture, and weaknesses in the transport and logistics sectors.
Despite these challenges, the Country Focus Report reveals South Africa's substantial untapped potential. The country's national wealth was estimated at over $3.0 trillion in 2020, encompassing human capital, financial capital, natural resources, and produced capital.
The country's Deputy Minister of Finance, Ashor Nick Sarupen, acknowledged the report's recommendations, stating, "We are committed to working closely with the private sector and development partners to drive investment in key sectors, including renewable energy, manufacturing, finance, technology, and hospitality."
He emphasized South Africa's resilience in the face of current challenges, highlighting the country's diversified economy, sophisticated financial system, and robust institutions. He stated that shocks have raised the cost of living, restricted fiscal space, and increased the cost of capital. "Yet South Africa remains resilient," Sarupen said. "We are endowed with vast natural resources, a diversified economy, and a sophisticated financial system, supported by strong institutions and a deep capital market."
He asserted that South Africa would continue to deepen reforms and efforts to improve education and health outcomes, as well as further build its human capital. Investments in skills development, vocational training, and entrepreneurship will help create self-employment opportunities, especially among young people.
"As we move forward, the support of the African Development Bank and other development partners will be crucial. Strong collaboration among key stakeholders, including the public and private sectors, as well as development finance institutions, is essential to build a South Africa where every citizen can thrive," he said
In opening remarks at the report's launch, the African Development Bank's Chief Economist and Vice President, Professor Kevin Chika Urama, emphasized Africa's potential for transformation. "If Africa commits to investing in its own development and managing assets efficiently, it can break free from external dependence and harness its enormous capital for transformative growth," Urama said.
He lamented Africa's weak tax administration capacity and inefficiencies in tax collection, retention, and utilization, which account for the underperformance in government revenue collection from both tax and non-tax sources. "Now is the time for a paradigm shift," Urama stated.
Akhona Peter and Paul Mpuga, the African Development Bank's Country Economists for South Africa, presented the report. The event was also attended by the Bank's Director General for Southern Africa, Kennedy Mbekeani, as well as development partners, senior government officials, members of the diplomatic community, and businesspeople.
As the current holder of the G20 Presidency, South Africa is playing a critical role in shaping global economic governance and championing Africa's voice on development issues.
The launch event also included a panel session that examined ways for South Africa to leverage its capital assets for development through strengthened institutions, effective economic governance, and the rule of law.
Panelists included: Yolande Smit, Chief Director for Macroeconomic Policy, National Treasury; Joseph Matola, Head of Economic Diplomacy Programme, South African Institute of International Affairs; Anders Pedersen, African Development Bank Chief Regional Power Systems Officer; Innocent Onah, African Development Bank's Chief Natural Resources Officer. Edward Sennoga, the Bank's Lead Economist, moderated the discussion.
African Development Bank Country Focus Reports serve as a vital tool for translating macroeconomic insights into country-specific analysis.
The 2025 report reveals that African countries possess vast untapped natural resources and significant scope to maximize their human capital, business capital, and fiscal resources.
