South Africa’s economy: Talk is not enough to drive real change

As the Money Summit unfolds at the Sandton Convention Centre, a plethora of people are offering “insightful conversations” aimed at moving the economy forward. The question is: are these conversations translating into real change, or are we merely rehashing the same old talking points while the economy flounders?

South Africa’s economic reality remains dire. The country’s GDP growth rate for the second quarter of 2024 was a dismal 0.4%, far from the robust growth we need to address our deep-seated socio-economic problems. Gulam Bim, the chief economist at Standard Bank, acknowledged during the summit that “the economy has not come through as it should”, while expressing cautious optimism about a potential easing of the interest rate. Bim noted that we could see a rate cut by the end of the month, with further cuts extending into 2025. Yet, will a few interest rate reductions be enough to spur meaningful growth?

The data suggests otherwise. As of the second quarter of 2024, the unemployment rate among South Africans aged 15 to 34 has soared to 46.1%, starkly overshadowing the national unemployment rate of 33.5%. This is not a problem that can be solved by minor adjustments in the interest rate or vague talk of “unleashing the animal spirits of entrepreneurs”. Even if businesses begin to invest again, who will benefit from this investment? Without targeted policies to ensure that marginalised groups, particularly the unemployed youth, are integrated into the formal economy, any economic growth is likely to exacerbate the inequalities entrenched in our society.

Moreover, while Bim expressed hope that the political centre could hold, the country remains politically volatile. The government’s continued failure to implement long-term, coherent economic policies undermines business confidence. South Africa’s history of stop-start economic interventions leaves much to be desired. A critical question arises: can a government plagued by corruption scandals and internal divisions truly push forward the bold reforms needed to reignite the economy? 

The summit’s discussions have also spotlighted personal finance, particularly that many South Africans, even in the middle class, are drowning in debt. This is not surprising, given that the average debt-to-income ratio is more than 72% as of 2023. Bim argued that despite these problems, “we’ve not seen a very substantial surge in non-performing loans”, thanks in part to South Africa’s social safety net. But this statement downplays the severity of the situation. The reality is that many households are barely keeping their heads above water, and relying on government transfers is hardly a sustainable long-term strategy. As of 2024, more than 20 million South Africans rely on social grants. While these grants provide critical relief, they do little to promote financial independence or long-term wealth creation.

The larger issue here is not just about the financial literacy of individuals, which Bim believes has been democratised through access to social media. Although it’s true that more people have access to financial advice today, this is no substitute for structural changes that would allow for real financial empowerment. A well-functioning economy requires people to have jobs, higher wages and opportunities to generate wealth — not just better financial advice on how to manage their mounting debt. If anything, this emphasis on financial literacy serves as a convenient distraction from the real, systemic failures of the economy.

Furthermore, Bim’s optimism that load-shedding is largely behind us and that we’re seeing early momentum in logistics also deserves scrutiny. Although Eskom has made progress in reducing power cuts, the country’s energy infrastructure remains fragile, and long-term solutions are still not in place. In fact, a 2023 report by the Council for Scientific and Industrial Research showed that load-shedding cost South Africa R60 billion to R120 billion in that year alone. Can we really say that power rationing is a thing of the past when infrastructure upgrades remain woefully underfunded?

What’s most alarming is the continued disconnection between the summit’s discussions and the lived realities of most South Africans. When we speak of “economic growth” in these settings, whose growth are we really talking about? The elite, who attend these summits in luxury, or the millions of South Africans left behind? South Africa has one of the highest levels of income inequality in the world, with a Gini coefficient of 0.67. Without addressing this, no amount of dialogue will fix the economy’s core structural issues.

It is easy to be hopeful about small signs of recovery, such as improvements in the logistics sector or the promise of rate cuts, but these are Band-Aids on a festering wound. What South Africa needs is bold, decisive leadership that can tackle corruption, invest in education and skills development, and create an inclusive economy that benefits everyone — not just the wealthy few.

As the Money Summit concludes, we must ask ourselves: are we willing to confront the uncomfortable truths about our economy, or will we continue to hold “insightful conversations” that lead nowhere? Real change will require more than just dialogue; it demands action, accountability and a commitment to building an economy that works for all South Africans. Without this, we are doomed to repeat the same cycle of stagnation, no matter how many summits we hold.

Thabo Motshweni is a PhD student in the department of sociology at the University of Johannesburg and a research fellow at the Centre for Sociological Research and Practice.