South Africa’s infrastructure deficit, particularly in energy and logistics, has affected growth.
South Africa’s economic growth has been sluggish since 2008, failing to meet expectations. While it remains Africa’s largest economy, its growth rate lags behind many of its peers. The country is grappling with global inflation, energy shocks, currency volatility and high interest rates, compounded by stagflation, soaring unemployment and rising inflation. Exacerbating these problems is the withdrawal of USAid support and the potential loss of benefits under the African Growth and Opportunity Act (Agoa).
Productivity is central to any economy, enabling greater output with the same or fewer resources. From 2015 to 2021, the World Bank ranked South Africa 80th out of 170 nations for productivity growth. Over this period, South Africa’s productivity — measured as GDP per employed person — grew at only two-thirds of the global average. This stagnation is concerning, as higher productivity not only buffers economies against shocks and aids recovery but also raises wages and improves living standards.
But South Africa’s productivity has stagnated for 15 years because of persistent issues such as load-shedding and logistical bottlenecks. While the easing of load-shedding may offer some respite, logistics remain a serious impediment. Transnet’s inefficiencies have placed South Africa’s ports among the worst globally, with Cape Town ranking last out of 405 ports in the World Bank’s Container Port Performance Review. Four of the country’s ports feature in the bottom 15 by performance indicators.
The government needs to refocus on economic growth and repair its strained relations with the US while strengthening ties with the European Union to bolster exports. South Africa’s industrial policy has overly emphasised localisation and sectoral protection at the expense of export-driven expansion. By failing to embrace global markets, it has ceded ground to competitors. South Africa has been losing the battle for export-led growth by choosing short-term protectionist policies over long-term competitiveness.
Economic growth is crucial for managing South Africa’s debt crisis. Over the past seven years, GDP growth has averaged just 0.8% annually, underscoring the need for a new growth model, one that is difficult to conceive yet essential to implement. The economy must pivot towards export-led growth, because productivity, rather than labour or capital accumulation will be the primary driver of long-term prosperity.
To boost productivity, South Africa needs to revise its trade policies. Growth will not come from shielding local industries from competition but from fostering global competitiveness. While the World Trade Organisation’s trade liberalisation policies have enabled technological transfer and innovation, South Africa has failed to capitalise on these opportunities, instead resorting to tariffs and subsidies that provide short-term relief but hinder long-term progress. Sustainable growth requires a robust manufacturing sector capable of competing globally.
There is a persistent fallacy that economic growth is driven purely by demand. While increasing domestic demand has been a key government strategy, long-term growth depends on supply-side factors. South Africa’s economic prosperity hinges on its ability to produce, not just consume. The key determinants of this capacity are labour, capital investment (in machinery, infrastructure, and technology) and, crucially, productivity—how efficiently these inputs are converted into outputs.
To secure sustainable growth, South Africa must protect and enhance its productive capacity by prioritising export-oriented policies. The country’s declining export-to-GDP ratio highlights its diminishing global competitiveness. While other nations drive growth through exports, South Africa lags behind. The failure to transition from a resource-based economy to a manufacturing-driven, export-oriented model has only deepened its economic woes. Manufacturing still accounts for just 30% of exports, an alarmingly low figure for a country seeking industrialisation.
South Africa represents a mere 0.6% of global GDP — focusing solely on the domestic market ignores the vast opportunities in international trade.
Beyond trade policies, South Africa must address its infrastructure deficit, particularly in energy and logistics. Eskom’s failures have significantly hampered industrial productivity, while Transnet’s inefficiencies have crippled trade. Without significant investment in energy security, rail networks and port facilities, South Africa will struggle to compete in global markets.
Innovation is another area requiring urgent attention. South Africa has lagged in research and development, with limited government incentives for technological advancement. A shift towards digitalisation, automation and artificial intelligence could unlock significant productivity gains. The government must encourage private-sector investment in these areas while improving the country’s education and skills base to match the needs of a modern economy.
Ultimately, productivity is the most reliable driver of long-term economic growth. It enhances per capita income and defines a nation’s ability to innovate, invest and convert inputs into higher-value outputs.
Failure to act decisively will entrench the country’s economic stagnation further. The government must abandon macroeconomic gimmicks in favour of a coherent, long-term growth strategy. This requires structural reforms, improved governance, and a renewed commitment to integrating South Africa into the global economy.
Ashley Nyiko Mabasa is an executive manager in the office of the deputy minister of mineral and petroleum resources and holds master’s degrees in labour and economic sociology and of public policy focused on municipality and data governance.