Award-winning economist Dawie Roodt said South Africa became a crumbling economy with crumbling infrastructure.
He shared his views on South Africa’s economy and the current trajectory in a discussion on the Truth Report podcast.
Roodt said in 1994, after its peaceful democratic transition, South Africa occupied the moral high ground on many fronts.
According to World Bank data, South Africa’s gross domestic product (GDP) was 28% of the total African GDP in 1994.
At the time, the country’s GDP was $154 billion, significantly higher than Nigeria’s $80 billion and Egypt’s $52 billion.
Fast forward thirty years, and the situation looks very different. South Africa’s GDP of $400 billion is only slightly larger than Egypt’s $389 billion.
Over the last three decades, the size of South Africa’s economy has increased by 261% in US Dollar terms.
In comparison, Egypt’s economy grew by 750%, Algeria’s by 620%, Kenya’s by 1,742%, Ghana’s by 1,521%, and Tanzania’s by 1,203%.
Even Zimbabwe, which suffered a complete economic collapse during the 2000s, outperformed South Africa with economic growth of 641% over three decades.
To put South Africa’s lackluster 261% economic growth since 1994 in perspective, the average growth of all countries in Africa over this period was over 1,000%.
This slow growth means that South Africa’s GDP dropped from 28% of total African GDP in 1994 to only 15% of total African GDP in 2024.
“Not only did we lose the moral high ground in South Africa, but we also lost the financial high ground. We are now a tiny economy,” Roodt said.
South Africa needs to understand its place
Referring to the negotiations with the United States, Roodt said that South Africa needs to know its place. “We are a minnow,” he said.
South Africa needs access to the United States market for growth, and it requires investments from the United States to support local economic development.
He said many people only focus on the tariffs which the Trump Administration imposed on South African exports. However, this is not the only thing he can do.
Roodt explained that approximately 20% of South Africa’s debt is funded by Europe and the United States.
If the Trump Administration imposes sanctions on U.S. pension funds that buy South African bonds, it could cause chaos in the local financial market.
Although Roodt does not support President Donald Trump’s tariff decision, he warns that there can be much more to come unless South Africa plays ball.
However, he is sceptical that the government will do what is needed to resolve the problems by doing the right things.
He explained that this goes well beyond satisfying the United States’ demands to reduce the current tariffs.
It includes protecting private property rights, encouraging free trade, ensuring the rand is a trusted currency, and creating a safe environment.
However, while the ANC is in control of the government, it is unlikely that pro-growth policies will be implemented.
“What needs to be done is easy to understand. However, the ANC is not there and they will not do what is needed,” he said.
Source: BusinessTech
