South Africa

The Technical page explains the eight sectoral scenarios and their relationship to the Current Path and the Combined scenario. Chart 10 summarises the approach.

Chart 11 presents the mortality distribution in the Current Path for 2023 and 2043.

The Demographics and Health scenario for South Africa includes interventions to reduce the infection rate for HIV, reduce AIDS death rates as percentage of HIV infection rate, reduce the incidence of cardiovascular disease as well as for diarrhoea, diabetes, malignant neoplasm, respiratory infections, child mortality from infectious disease, maternal mortality rates, and increase the provision of improved sanitation and safe water. It also reduces malnutrition, obesity, smoking by men, the stunting rate for children under five and injuries from vehicle accidents.

The high levels of severe and acute malnutrition combined with high levels of inequality, poor health and a high disease burden constitute a long-term driver of low human productivity. As a result, South Africa’s poor human capital endowment is the most significant drag on multifactor productivity, followed by social capital. In summary, the drag that human capital has on productivity in South Africa reflects low levels of government efficiency since the country’s expenditure on health (8.3% of GDP) is above the average for upper-middle-income countries (UMICs) globally, including those in Africa. Its spending on education, also a large contributor to human capital, is at 6.6% of GDP and similarly above the global average for UMICs (4.7%) but below the average for Africa’s UMICs (5.3% of GDP, including South Africa).

Compared to non-African UMICs, Africa’s eight UMICs have much younger populations and some, including Namibia and Botswana, have been severely affected by HIV/AIDS. South Africa had a 2023 median age of 29.1 years compared to a global average for UMICs at 36.9 years, and has the largest HIV epidemic globally. Communicable diseases typically dominate in younger populations, and, as a result, South Africa (and other UMICs in Africa) underwent their epidemiological transition, when deaths from non-communicable diseases exceeded those from infectious diseases, shortly before 1990, much later compared to other countries at similar levels of development. The transition was reversed shortly after that as a result of HIV/AIDS and its significant spike in deaths from infectious diseases until 2019, when effective treatment saw AIDS deaths decline to the extent that the country again went through its epidemiological transition. This unique pattern is also visible in neighbouring Botswana and Namibia. Had it not been for that, South Africa’s mortality rates would have followed international trends, meaning deaths from non-communicable diseases would rapidly outpace those from infectious diseases as the population ages and the disease burden shifts.

The effect of HIV/AIDS in South Africa is still significant several years after the disease peaked. Average life expectancy, for example, at over 64 years in 1990, plummeted to 52 years by 2005, and by 2023, had only modestly recovered to 66 years, while the average life expectancy for UMICs globally has increased from 68.6 years to 77.1 years in that time. Resistance to the roll-out of antiretroviral treatment from President Thabo Mbeki during his presidency between 1999 and 2006 would delay the effective roll-out for several years. Eventually, during his second term, popular pressure would see antiretroviral therapy scale up, and its subsequent free rollout would cause substantial health improvement.

Discoveries of cheap, long-lasting drugs to avoid infection and the available treatments for prevention and treatment provide a positive future. The most exciting is a twice-yearly injection with a potentially affordable drug, lenacapavir, that fully protects against HIV infection. For that reason, the interventions on AIDS mortality in the Demographics and Health scenario leads to a decline to 78 000 deaths in 2043, compared to 109 000 in the Current Path. In 2023, 137 000 deaths were due to AIDS.

Still, similar to many other UMICs, South Africa faces a double burden of disease with a steady rise in more expensive non-communicable diseases such as cardiovascular disease and malignant neoplasm in the presence of significant, long-standing infectious disease prevalence.

For many years, the government has sought to address the many challenges that are faced in the health sector by, for example, committing to the Sustainable Development Goals (2015) and Universal Health Care (2019), setting three main objectives for the health system (and its reform process): (i) to ensure equity in access to health services irrespective of ability to pay; (ii) the quality of health services should be good enough to improve the health of those receiving services; and that (iii) the cost of using healthcare services should not put people at risk of financial harm. The momentum has, however, stalled in recent years with a singular focus on developing a single health system financing model, the National Health Insurance (NHI).

Because of poverty and other factors, many South Africans generally do not pursue a healthy lifestyle. Despite being a food-producing nation, a significant portion of South Africa’s population struggles with malnutrition in various forms, including undernutrition (resulting in stunting and wasting) and overnutrition (resulting in obesity). Males also smoke in larger portions than in other comparable countries. Sixty-eight per cent of women of reproductive age are overweight or obese, and 31% of men. The high prevalence of non-communicable diseases, such as diabetes mellitus, coronary heart disease and hypertension, is all linked to obesity, which is among the top 10 causes of death in South Africa. The problem is particularly severe among mothers and children. Thus, 21% of children under five are stunted.

Undernutrition increases the risk of infectious diseases. The 2018-2023 National Food and Nutrition Security Plan was developed to comprehensively respond to high malnutrition rates, but with disappointing results.

The Demographics and Health scenario models the impact of a comprehensive approach that emulates the impact of reforms that provide for competent management, administration and clinical oversight and governance; establishment of a national health information system; and steps to improve decision-making across the private and public sectors.

In 2023, infectious disease death rates per thousand people were 3.8, non-communicable death rates 4.3 and injuries 1.1. On the Current Path, the 2043 rates will be 2.5 from infectious disease deaths, six from non-communicable diseases and above 1.1 from injuries. In the Demographics and Health scenario, the rates will be lower by 17% and 8%, respectively. Deaths from injuries also decline, though modestly.

Chart 12 presents the infant mortality rate in the Current Path and the Demographics and Health scenario, from 2020 to 2043.

The infant mortality rate is the probability of a child born in a specific year dying before reaching the age of one. It measures the child-born survival rate and reflects the social, economic and environmental conditions in which children live, including their health care. It is calculated as the number of infant deaths per 1 000 live births and is an essential marker of the overall quality of the health system in a country.

In 2023, infant deaths per 1 000 live births in South Africa were nearly three times the average of UMICs globally (31.3 vs 10.6), primarily due to HIV infections and a high burden of influenza-associated mortality rates. Between 7 000 and 12 000 seasonal influenza-related deaths are estimated to occur annually in South Africa, of which half are in the elderly and about 30% in HIV-infected people. And, while the average for upper-middle-income countries (UMICs) globally can expect a near halving of infant mortality rates by 2043 (to 6.6), the Current Path for South Africa in 2043 is still extraordinarily high at 25.9 deaths per 1 000 live births. At that point, infant mortality rates in South Africa will even be above the rates for low- and lower-middle-income countries globally, mainly due to the lingering impact of HIV/AIDS.

In the Demographics and Health scenario, which includes aggressive interventions on reducing HIV/AIDS, South Africa’s rates of infant deaths per 1 000 live births will decline to 20.9 in 2043, a reduction of 19% compared to the Current Path.

South African expenditure on health has been constant at roughly 8% of GDP since 2012, slightly higher during the 2019-2020 COVID-19 pandemic. Compared with other UMICs, South Africa's expenditure on its health sector as a portion of government expenditure is high, but more is needed, given the burden of disease discussed previously. However, the country has a large and well-funded private healthcare system that serves around 27% of the population, paid through individual contributions to health insurance or medical insurance plans. The private healthcare system is sophisticated but characterised by over-servicing and inflated costs, while the public healthcare system, responsible for 71% of the population, has steadily deteriorated over time.

Evidence of the failures to address or strengthen stewardship, governance, leadership and management in the public sector is now overwhelming, with corruption and irregular expenditure endemic at all levels. According to senior medical experts writing in the South African Medical Journal in 2024, many parts of the public health system are now unable to deliver their assigned services, or an acceptable quality of care. As a result, the gap between the private and public healthcare systems is significant. For example, the amount spent on health care for each person with a medical aid scheme in South Africa is five times the amount spent on each person who relies entirely on public health facilities. The distribution of health professionals between the private and public sectors and urban and rural areas is also large.

In response, the government published a National Health Insurance (NHI) Green Paper, followed by NHI pilot projects in 2012. The NHI white paper in 2015 proposed the achievement of universal health coverage. The NHI is a centralised, national insurance fund from which the government will buy healthcare services from healthcare providers in both the public and private sectors. In May 2024, President Ramaphosa signed the NHI Bill, to be phased in by 2028. There is broad support for the plan, but concerns remain about various aspects, including the funding model, the extent of corruption and maladministration in the Department of Health and the implications for the private healthcare system.

In 2024, shortly after the elections that saw the formation of a Government of National Unity, a seven-member multidisciplinary panel of experts appointed by the Academy of Science of South Africa published its report that reflected on the widespread problems in the country’s public healthcare system, including a large number of managers in acting positions, frequent changes in senior leadership, worse health outcomes than similarly resourced countries, and overall deterioration of morale and trust. The panel recommended eight steps to address key governance issues:

1. Define and communicate a clear public value mission and mandate for each level of the health service and each governance actor.
2. Update legislation and governance structures to insulate them from vested interests and give them executive rather than merely advisory functions.
3. Delegate authority appropriately to each level and within levels of the health system.
4. Get the right people – ethical people with the appropriate competencies – into leadership and management positions within the health system.
5. Surround managers and leaders with functional, fit-for-purpose systems so that they can do their work.
6. Support managers at every level with the resources, understanding and ability to build teams and attend to the relationships that make complex systems work.
7. Harness the authentic potential of community participation to ensure appropriate, respectful and responsive health services and monitor health service outcomes and processes.
8. Act on dereliction of duty and acts of corruption and protect whistle-blowers.

The extent to which South Africa can feed, educate and create employment opportunities for its large working-age population is determined by its ability to improve its health.

Chart 13 presents the demographic dividend in the Current Path and the Demographics and Health scenario from 2020 to 2043.

The demographic dividend is the window of economic growth opportunity when the ratio of working-age persons to dependants increases from 1.7 to 1 and above.

South Africa entered a potential demographic window of opportunity around 2003 when the ratio of working-age persons (15 to 64 years of age) to dependants exceeded the ratio of 1.7. Still, the country has been unable to translate that dividend into more rapid economic growth and higher incomes. Only six other African countries are in this potentially fortunate position: the island states of Mauritius, Seychelles and Cape Verde, and three countries in North Africa (Morocco, Tunisia and Libya).

By 2023, the ratio had improved to 2:1. Still, the country had experienced a steady decline in GDP per capita for several years, given the impact of COVID-19, state capture, poor governance, poor health and an underperforming education system. Labour productivity in South Africa has been on a slow decline for over a decade. Still, there are prospects for improvements with the end of the COVID-19 crisis and expectations of improved government effectiveness and economic growth following the establishment of the Government of National Unity in 2024. South Africa’s working-age population ratio will peak at 2.2:1 in 2043, before declining. As health and education indices improve, they will reduce the considerable drag that poor human capital exerts on economic growth.

While labour's contribution to growth improves due to a healthier population, this also results in a larger elderly population (life expectancy in 2043 will be 73.7 years in the Demographics and Health scenario, instead of 70.4 in the Current Path, with female life expectancy 6.1 years above that of men).

In the Demographics and Health scenario, South Africa’s 2043 population will number 76.8 million people, around 164 000 fewer than in the 2043 Current Path. The scenario positively influences the working-age population by increasing this cohort to 69.2% compared to the Current Path’s 68.4% in 2043. A larger working-age population means South Africa’s GDP will be US$18.2 billion larger in 2043 than in the Current Path. GDP per capita will be US$310 higher.

Outside Africa, most upper-middle-income countries (UMICs) have passed their peak dividend and are already experiencing a declining ratio of working-age persons to dependants. With sufficient capital and technology, the larger pool of workers relative to dependants in Africa could accelerate rates of economic expansion.

Chart 14 shows crop production and demand in the Current Path from 1990 to 2043.

South Africa is among the few African countries achieving food security at the national level and is a net exporter of agricultural goods. Its varied climate supports one of the most diverse agrarian sectors globally, producing crops such as maize, citrus fruits, wine grapes, sugarcane, apples and pears. It also boasts a vibrant poultry and livestock industry.

The agricultural production and demand data in our analysis are initialised from data provided on food balances by the Food and Agriculture Organisation (FAO), which contains data on numerous agricultural types. However, in the model, the forecast is disaggregated into crops, meat and fish, presented in million metric tons.

The sector has been steadily increasing production over the past six decades, and export growth to other BRICS countries (Brazil, Russia, India and China) have been particularly impressive. However, 2023 proved difficult due to continued load-shedding (electricity outages), animal disease outbreaks and port congestion. Despite these setbacks, the industry demonstrates significant resilience compared to other economic sectors. These challenges include the disruptions caused by the COVID-19 pandemic and its associated lockdown regulations, the July 2021 unrest that severely impacted the food supply chain, and Russia's invasion of Ukraine, which led to increased costs of critical agricultural inputs and disrupted international trade flows of essential commodities such as fertiliser, wheat, sunflower and rice.

Agriculture in South Africa is a vital sector that plays a crucial role in the economy, food production, employment and poverty alleviation. It is the backbone of rural development, providing livelihoods for a significant portion of the population. During the budget vote in parliament in July 2024, the newly appointed agricultural minister noted that the sector contributes an average of 2.8% to the national economy (measured in GDP) and roughly 6% to total employment. Together with food production and processing, agriculture contributes up to 7% to GDP, driven primarily by citrus and maize exports. The country's status as the second-largest global exporter of citrus remains a critical factor in the agro-processing sector’s contribution to GDP. According to the BFAP 2024 baseline report, maize and soybean yields have also grown rapidly.

The success of South Africa’s agricultural sector is a result of an innovative private sector, which responds to local and international market demands. The industry includes large-scale commercial farms and agribusinesses utilising modern farming techniques and technologies to boost productivity. The commercial sector consists of approximately 32 000 farmers although only a small percentage of these farms produce a significant portion of agricultural output. Early in 2025, the Bureau for Food and Agricultural Policy (BFAP) released a comprehensive report on agriculture in South Africa for the period 1994 to 2024 that included the following summary of the sector:

‘…  livestock production, traditionally the largest subsector in our semi-arid country, has shifted from extensive (beef and mutton/lamb on rangeland) to intensive (poultry, dairy, pigs) commodities as shifts in consumer preferences were followed by farmers. This has been enabled by the successes in the field crop subsector. Maize yields have been on their way to quadrupling since the early 1990s, and the country has become self-sufficient in soybeans to the benefit of intensive livestock production, while improvements in white maize production, the country’s staple crop, have benefited lower-income consumers. Finally, the horticulture subsector has shown the importance of access to irrigation water and infrastructure to output, but also to the stabilisation of output. South African producers of fresh produce benefit from our zero-tariff access to the UK and EU markets, from our counter-seasonal access to markets due to the fact that we are largely in the same time zones as our traditional markets. It is fair to say that fruit growers across the entire spectrum of fruit represent the most successful subsector in South African agriculture. This achievement has been supported by a rapidly growing tree nut sector, as well as a range of speciality berry crops.’

In contrast, subsistence and smallholder farms—mainly located in areas under traditional authority—face challenges such as smaller plot sizes, inadequate infrastructure and poor access to critical inputs. Many farms acquired through the government’s land reform program are underperforming, with more than 50% of agricultural land classified as low to medium potential. Targeted support and infrastructure development are necessary to make these lands more productive.

The 2003 Comprehensive Agricultural Support Programme (CASP) intends to assist emerging farmers by providing resources and infrastructure to improve productivity.

South Africa's agricultural sector also suffers from rainfall variability, including droughts, severe flooding and water scarcity. The 2015/16 El Niño event, which caused the worst drought since 1904, significantly impacted maize and wheat production. Water scarcity, worsened by inadequate irrigation infrastructure and competing demands from different sectors, limits crop production, especially in regions with limited, reliable water sources. Soil degradation, driven by erosion, nutrient depletion and poor land management practices, contributes significantly to declining productivity. Moreover, insufficient investments in sustainable farming techniques and soil conservation efforts leave the sector ill-equipped to counter these challenges, leading to yield stagnation in the Current Path.

Despite production keeping pace with demand in past decades, South Africa risks becoming a net food importer in the coming years without further investments in infrastructure and agricultural yields. On the Current Path, crop demand will outstrip production beyond 2031, leading to a deterioration in food security. By 2043, South Africa will face a 15.7 million metric ton shortfall in its crop production compared to demand.

To counter these challenges, the Agriculture and Agro-Processing Master Plan (AAMP), adopted in 2022, seeks to enhance productivity, inclusivity and sustainability. By focusing on increasing yields, expanding production, improving infrastructure, and adopting sustainable practices, the plan aims to drive long-term growth and resilience in the agricultural and agro-processing industries. The Agricultural Policy Action Plan (APAP) complements these by focusing on value-chain development and smallholder support. The Comprehensive Agricultural Support Programme (CASP), initiated in 2003, also provides resources to help emerging farmers involved in land reform.

According to the Bureau for Food and Agriculture Policy (BFAP), irrigated maize yields in certain provinces, such as the Eastern Cape (dominated by large portions of land under communal tender), could reach up to 12.5 metric tons per hectare, a significant increase from current levels of 5.07 metric tons per hectare in commercial farming and 2.36 metric tons in subsistence farming. Other vital crops, such as wheat, soybeans and citrus, can increase production if infrastructure constraints, such as road access, reliable electricity and efficient irrigation systems, are addressed.

BFAP is optimistic in its medium-term outlook, noting that investments in improved irrigation systems, water management and new technologies can enable South Africa to maintain its net exporter status. In particular, the expansion of irrigated agriculture and the use of climate-resilient crops are essential for addressing the challenges posed by climate variability.

The subsequent Agriculture scenario mirrors these policies through ambitious yet feasible increases in yields per hectare, additional groundwater withdrawal, an aggressive rollout of irrigation systems, efforts to reduce food loss and waste, and the expansion of rural access roads. South Africa could significantly boost its agricultural productivity by investing in these areas. The country can also increase land under cultivation by using available state-owned land and conducting tenure reform in the former homeland areas.

By addressing these challenges and investing in critical areas such as irrigation and soil management, South Africa’s agricultural sector could increase average yields to 7.2 metric tons per hectare by 2043 (compared to 5.5 on the Current Path), enabling total crop production to rise in the scenario to 92.2 million metric tons instead of 70.2. The increase would secure South Africa’s food supply and allow for increased export earnings, reinforcing the country's role as a critical player in the SADC region’s food security.

Chart 15 presents the import dependence in the Current Path and the Agriculture scenario, from 2020 to 2043.

South Africa remains one of the few food-secure African countries, contributing significantly to the region's food supply. However, future projections are less optimistic. The Current Path is that South Africa’s reliance on agricultural imports (crop, meat and fish) will grow to 17% of its domestic demand by 2043, indicating increased vulnerability to global market fluctuations.

The Agriculture scenario presents a much more hopeful trajectory with South Africa producing a surplus equivalent to 3.4% of its demand by 2043. It illustrates that South Africa could maintain its status as a net exporter with targeted interventions. In the scenario, total agricultural exports will increase to 22 million metric tons, equivalent to US$5.2 billion, compared to the 8.1 million metric tons (valued at US$2.4 billion) in the Current Path for 2043. Additionally, imports will decrease to US$5.2 billion, compared to US$6.4 billion in the Current Path.

The proposed interventions would also roughly maintain the agricultural sector’s value-added contribution to GDP, which is 2.3% in 2023, in contrast to the reduction to 1.7% by 2043 on the Current Path. The scenario illustrates the benefits that flow from strategic investments in agriculture to safeguard food security, bolster economic growth and reinforce South Africa's role as a critical food supplier in the region.

Chart 16 depicts the progress through the educational system for primary gross enrolment, primary completion, lower-secondary gross enrolment, lower-secondary completion, upper-secondary enrolment, upper-secondary completion, tertiary enrolment, and tertiary completion in the Current Path (for 2023 and 2043). The numbers reflect the percentage of of-age children that attend.

With the advent of democracy, South Africa's education system undertook the enormous task of redressing the legacy of apartheid, particularly the chronic underfunding of black learners. While post-apartheid South Africa has made notable strides in access to education, with gross enrolment rates in primary and secondary levels exceeding 100%, the quality and completion rates remain concerning, particularly at the upper-secondary and tertiary levels. Policy incoherence, poor management and corruption, aggressive teacher unionisation, an insufficient focus on technical and vocational education at secondary and tertiary levels, and neglect of early childhood development, all stymied progress. These matters are now attracting more government attention.

A 2016 comprehensive report from the University of Stellenbosch found that around 60% of South African children could not read for meaning by the end of Grade 3, and identified four binding constraints to improving educational outcomes, particularly for learners from low-income backgrounds:

1. Weak Institutional Functionality - most pronounced at the provincial level, where ineffective governance and administration impede the implementation of national policies.
2. Undue Union Influence - contributed to resistance against performance evaluations and accountability measures for teachers.
3. Inadequate Teacher Knowledge and Skills, with many teachers lacking the required content knowledge and pedagogical skills to deliver quality literacy and numeracy education.
4. Wasted Learning Time: Inefficient use of school hours and limited learning opportunities.

The COVID-19 pandemic compounded these issues, with school closures and rotational timetables exacerbating educational inequalities, particularly in poorer communities. A subsequent 2021 study painted a bleak picture, finding that 81% of Grade 4 learners in South Africa could not read for meaning in any language and suggested that learning losses due to the pandemic set reading outcomes back a decade.

South Africa’s education budget does not appear to be insufficient. In 2023, South Africa's government allocated 6.6% of its GDP to education, almost two percentage points higher than the average for upper-middle-income countries (UMICs) globally and higher than the average for UMICs in Africa. With a spending commitment equivalent to some high-performing Scandinavian countries, South Africa does worse than Kenya or Tanzania, which have GDP per capita of less than one-fifth of South Africa’s. Instead, poor management, corruption and lack of prioritisation are endemic. While throughput along the education funnel is high, the problems are overwhelmingly related to poor quality.

In recent years, there has been some progress towards addressing these challenges. The South African education system is gradually shifting towards greater coherence, with an increased focus on technical and vocational training to prepare students for the demands of the Fourth Industrial Revolution. The 2013 White Paper for Post-School Education and Training and the subsequent National Plan for Post-School Education and Training 2021-2030 envisioned a significant increase in enrolment at Technical and Vocational Education and Training (TVET) and Community Education and Training colleges. The goal is for these institutions to enrol over two-thirds of all post-school education students, thus expanding opportunities for practical, skills-based learning. Yet, in mid-2024, 16 648 out of the 22 511 public schools had no libraries, 18 551 had no laboratories, and 14 839 had no computer centres, according to a report by the Department of Basic Education titled: Education Facility Management System.

Despite its substantial budgetary allocation, the South African education system grapples with significant challenges rooted in its historical context and current systemic inefficiencies. South Africa is the most critical learning underperformer relative to GDP per capita among low- and middle-income countries.

In addition to practical matters relating to overcrowding, lack of basic facilities and teacher shortages, recommendations relating to improved education include the need for policy coherence across the various departments and levels of government (the most significant problems appear to lie at the provincial level), better management and aggressive efforts to eliminate corruption in the education sector, create a culture reflecting lifelong learning for teachers, as well as find a balance between teacher unionisation, parent involvement and government line responsibility.

The Education scenario addresses some of these shortcomings through ambitious yet attainable improvements in the South African education system, including higher intake, transition and graduation rates from primary to tertiary levels. It also emphasises gender parity, additional vocational training at the secondary level, and an increase in the share of science and engineering graduates. Perhaps most importantly, the scenario includes interventions to improve the quality of primary and secondary education.

Between 2023 and 2043, primary and lower-secondary completion rates will improve significantly. Whereas, the Current Path is that 68% of of-age children will finish upper-secondary education in 2043, the number improves to 83% in the Education scenario. Instead of 17.2% of the of-age group graduating at tertiary level, the rate will be 23.3% in 2043. 

Chart 16 highlights a positive trajectory in improving throughput. However, improvements in teaching quality, learning resources and institutional management remain elusive, as do the broader objectives of equity and economic competitiveness.

If successfully implemented, this scenario could significantly boost net enrolment rates for secondary and tertiary education, improve primary and secondary test scores, and improve quality, leading to better educational outcomes.

Chart 17 presents the mean years of education in the Current Path and the Education scenario for the 15- to 24-year-old age group from 2020 to 2043.

The average years of education among the adult population aged 15 to 24 years is a useful indicator of how the stock of knowledge in society is evolving. In South Africa, this cohort's mean years of education reached 10.3 in 2023, improving to 10.7 years in the Education scenario in 2043, compared to 10.4 years in the Current Path. These numbers are significantly higher than the 7.3-year average for Africa in 2023. The scenario includes an ambitious intervention to close the gender gap (females do better than males). In 2023, the gap was almost 1.2 years.

The establishment of the Government of National Unity (GNU) in July 2024 included new leadership in the Department of Basic Education and the promise of reform. The government's priorities now include creating safer and better schools, addressing critical issues such as infrastructure and educational quality, and making foundational changes that could influence long-term educational outcomes. These reforms are essential, as educational outcomes evolve slowly, requiring consistent investment and policy innovation.

In the Education scenario, education expenditures will account for 4.6% of GDP in 2043, compared to 4.3% on the Current Path. In this context, the increase in mean years of education reflects the impact of the government's renewed focus on educational reform, placing South Africa slightly above the average for its income peers.

Chart 18 presents the value-add by sector, for 2023 and 2043, in the Current Path compared to the Manufacturing scenario.

South Africa is often considered Africa’s most industrialised country, but Nigeria and Egypt both have larger manufacturing sectors. As a contribution to GDP, South Africa only ranks 25th in Africa, having steadily deindustrialised since the 1980s.

The foundation of South Africa’s industrial base followed the discovery of diamonds (1867) and gold (1886). The country’s growing mining sector needed tools, machinery, chemicals and food, sparking the growth of supporting industries, including steel, railways, energy and transport. After the First and Second World Wars, the country promoted import substitution. It established various state-owned enterprises that flourished behind protective tariffs and through subsidies, as the economic isolation due to apartheid led to a focus on self-sufficiency. The first Motor Industry Development Plan, launched in 1995, transformed the vehicle manufacturing industry from a domestic producer to an export-oriented manufacturing powerhouse. It stands out as an example of how export-oriented industrial policy can work. On the back of mining and vehicles, the contribution of South Africa’s manufacturing sector to GDP peaked at almost 25% in 1981, having steadily increased since independence in 1961. During this period, South Africa was under ever-more punitive international sanctions and, amongst others, developed a sophisticated domestic arms industry, developed a large oil-from-coal sector and pursued various import replacement policies. Import replacement has its limits, however, and isolated from the global financial market and the positive effects of technological transfers, the country was, by the 1980s, essentially bankrupt.

With the transition from apartheid in the 1990s, many changes occurred, including rapidly opening up South Africa’s economy and adversely affecting its hitherto protected industries. Subsequently, the country experienced significant deindustrialisation as the government removed the protection of the manufacturing sector. In addition to a more open economy and international competition, the flood of Chinese manufacturing goods into Africa undercut South African manufacturing exports in its natural hinterland. Various domestic policy measures intended to correct domestic economic imbalances, particularly stringent measures to effect black economic empowerment and associated requirements on ownership and shareholding, effectively discouraged foreign investment.

A number of documents currently frame South Africa’s industrial policies, including the National Industrial Policy Framework (NIPF) and Industrial Policy Action Plan (IPAP). The country has a history of using industrial policy to deploy trade instruments, incentives, tools and regulations, but to limited effect. In recent years, the Department of Trade, Industry, and Competition embarked upon partnerships, developing a master plan for each of eight sectors covering automotive, clothing, steel and poultry to support localisation, increased investment, exports and job retention. However, instead of improving South Africa's competitiveness, recent years have seen a protectionist approach with preferential procurement arrangements and tariffs/duties on imports. Writing for Daily Maverick in January 2025, Ray Mahlaka summarises the challenge:

‘Manufacturing in South Africa requires a new approach to policymaking. Good industrial policy is needed, which will involve incentives from the government for research, design and innovation, lowering energy and transport costs, creating pathways for investing in education and job training for a 21st-century economy, promoting access to cheaper capital for manufacturers to scale up, and helping manufacturers to sell their goods to other countries.’

The Manufacturing scenario emulates reasonable but ambitious growth in the sector through increased investment as part of a coherent and unified national framework for reindustrialisation and more expenditure on research and development (R&D). The scenario also includes an increase in female and male labour participation rates, reflecting growth in employment as part of a deliberate strategy to grow light manufacturing, and efforts to crowd in larger portions of the informal sector into the formal sector.

In the Manufacturing scenario, the sector's contribution to GDP increases from 11.6% in 2023 (US$46 billion) to 18.8%, equivalent to US$129.1 billion in 2043, compared to 13% (US$81.7 billion) in the Current Path. The country intends to leverage its export footprint through the African Continental Free Trade Area (AfCFTA), with the BRICS+ block and through the SADC Economic Partnership Agreement (EPA) with the EU, to support new energy vehicle production and green industrialisation.

Chart 19 presents the contribution of the manufacturing sector to GDP in the Current Path and in the Manufacturing scenario, from 2020 to 2043. The data is in US$ and % of GDP.

With the exhaustion of its gold mining industry, which peaked in 1970, most attention has shifted to vehicle manufacturing, which benefits from a mix of strategic government policies, incentives, infrastructure investment and public-private partnerships aimed at boosting local production, exports and employment. The South African Automotive Industry Masterplan (SAAM35), tabled in 2018,  provides a roadmap to 2035 for the industry and focuses on building African markets as well as diversifying into electric vehicles. The plan has ambitious targets, including growing the industry by 60%, increasing local content and significantly increasing employment. In line with global shifts towards sustainable transportation, South Africa is now allocating funds to support the local production of new energy vehicles (the Electric Vehicles White Paper of 2023) and related manufacturing projects to position the country as a competitive player in the evolving automotive industry.

South Africa has also established Special Economic Zones (SEZs) like the Coega SEZ in the Eastern Cape. These zones offer tailored infrastructure and incentives for various industries, including manufacturing, providing a conducive environment for business growth and employment creation. Trade and investment partnerships such as with the European Union, are also important.

In addition to a revitalised mining sector and ongoing support to its vehicle manufacturing sector, repairing and rebuilding South Africa’s existing water, electricity and sewerage infrastructure provides large opportunities for investment in intermediate industrialisation. For example, the ESKOM Transition Development Plan 2022-2031 indicates that the total capital expenditure for transmission amounts to approximately R188 billion, of which R144 billion is for capacity expansion and R34 billion is for capital expenditure. With the demand for repairing and expanding other parts of basic infrastructure, electricity transmission offers a massive opportunity for industrialisation. Concurrent with investments in manufacturing, the country would need to reduce the carbon intensity of its products lest it fall victim to the EU’s Carbon Border Adjustment Mechanism (CBAM) that will impose tariffs on imports based on their carbon content.

The Manufacturing scenario increases the size of the country's economy by 9.3% in 2043 (to US$687 billion, instead of US$628 billion in the Current Path).

Chart 20 depicts exports and imports as a percentage of GDP from 2000 to 2043 in the Current Path and the AfCFTA scenario.

South Africa is a founding member of the African Continental Free Trade Area (AfCFTA), established in 2018 and came into legal force the following year, although it has only been operational since April 2024. Under the agreement, AfCFTA members are committed to eliminating tariffs on most goods and services over a period of 5, 10 or 13 years, depending on the country's level of development or the nature of the products. Its long-term objectives include creating a single, liberalised market, reducing barriers to capital and labour to facilitate investment, developing regional infrastructure, and establishing a continental customs union. The establishment of the Pan-African Payment and Settlement System (PAPSS) in 2022 allows payments among companies operating in Africa to be done in any local currency.

The AfCFTA scenario emulates the full implementation of the African Continental Free Trade Agreement by 2034, as regards tariff reductions per sector. Because the forecasting model applies a pooled approach to trade, we use various proxies to then estimate increases in exports in manufacturing, agriculture, services, ICT and materials^[2]. We use a multiplier on multifactor productivity growth to make up for the difference in benchmarking the results to the findings by the World Bank, which indicates that the full implementation of the AfCFTA could increase South Africa’s income by 3.8% relative to the Current Path by 2035.

Please visit the theme on AfCFTA for further conceptualisation and details on the scenario structure and interventions.

Since 1962, when the UN General Assembly took a first (non-binding) resolution condemning South Africa’s apartheid policies, calling for economic and other sanctions, the country was subject to various trade, arms, sports and financial sanctions, eventually placing significant pressure on the South African economy. Internal pressure mounted, culminating in a limited and eventually a national state of emergency in 1985. In 1977, the voluntary UN arms embargo became mandatory, and a voluntary international oil embargo followed in 1987. Meanwhile, the US and, eventually, the International Monetary Fund (IMF) were prohibited from providing loans to the country. By 1989, bipartisan support in the US favoured economic sanctions, and considerable momentum had built up in favour of disinvestment from South Africa. Large capital flight from the country contributed significantly to the unravelling of apartheid.

After the unbanning of Nelson Mandela and the ANC, the country had the option of increased participation in regional and global value chains to facilitate access to intermediate goods, attract foreign direct investment (FDI) given substantial international goodwill, and build the capabilities of local suppliers and, hence, promoted industrialisation and productivity growth. However, the absence of supportive conditions for competitiveness improvements meant that poor trade integration, rapid liberalisation and competition from China led to deindustrialisation and steadily locked South Africa into low-value production and exports. Compared to other upper-middle-income (UMIC) countries globally, South Africa is significantly more dependent on income from primary exports at around 10.6% of GDP.

South Africa’s post-apartheid trade and industrial policy has been cautious regarding trade agreements. Instead of an export orientation, recent years have seen an increased focus on localisation, thus increasing the incentive to produce for the protected domestic market over exploring new export opportunities. These policies have raised barriers for new entrants and lowered competition for incumbent firms, translating into reduced efficiencies in South Africa’s manufacturing sector and eventually reducing the country's ability to compete internationally. As a result, South Africa’s exports constitute only 29% of GDP in 2023, compared to 54% for Thailand, 63% for Malaysia, and 87% for Vietnam, and modestly above the average for Africa. Among Africa’s eight UMICs, only Algeria has a lower rate of exports as per cent of GDP.

South Africa’s declining trade competitiveness contrasts sharply with its value-added trading potential. The South African Reserve Bank highlights various reasons for the country’s disappointing trade performance, including ‘the structure of the country’s export basket (which remains dominated by commodity products), its dependence on a limited number of large but mature export markets, and the high cost and deteriorating competitiveness of the general business environment.’

The EU is South Africa’s largest trading partner, accounting for around 22% of total trade in 2021. Broken down by individual countries, China, the United States, Germany, Japan and the United Kingdom were South Africa's top export destinations. China also leads as the largest source of imports, followed by Germany, the United States, India and Saudi Arabia.

Still, in its Atlas of Economic Complexity, the Growth Lab ranks South Africa as the 68th most complex and diversified export basket out of 133 studied. The South African economy is considered "modestly complex" by international standards and ranked one position below Egypt, the most complex in Africa. An increase in the complexity ranking reflects positively on national productivity and economic sophistication. The associated analysis by the Growth Lab does, however, indicate a decline in complexity compared to a decade prior, although South Africa is still slightly above expectations given its income levels. The analysis by the Growth Lab confirms the steady deindustrialisation that occurred since manufacturing value-add peaked at 25% of GDP in 1981.

According to the Observatory of Economic Complexity, South Africa’s top exports in 2022 were gold (US$22.7 bn), platinum (US$19.1 bn), coal briquettes (US$12.7 bn), cars (US$6.89 bn) and diamonds (US$6.22 bn), mainly exporting to China (US$23.4 bn), United States (US$10.9 bn), Germany (US$9.96 bn), India (US$9.14 bn) and Japan (US$8.85 bn). In 2022, South Africa was the world's biggest exporter of platinum (US$19.1 bn), manganese ore (US$2.96 bn), chromium ore (US$2.51 bn), precious metal ore (US$1.97 bn) and titanium ore (US$656 million). That year, top imports of South Africa were refined petroleum (US$17.1 bn), cars (US$4.62 bn), crude oil (US$4.34 bn), motor vehicles, parts and accessories (US$3.76 bn) and broadcasting equipment (US$3.12 bn), mainly importing from China (US$23.5 bn), Germany (US$9.67 bn), India (US$8.32 bn), United States (US$6.11 bn) and Saudi Arabia (US$4.5 bn).

South Africa has a natural advantage in trade with the region due to its comparably advanced infrastructure. The full implementation of the AfCFTA has the potential to boost its manufacturing trade with the region, such as in vehicles, and its role as a logistics and services hub in Southern Africa.

South Africa is already a member of the Southern African Customs Union (with Botswana, Lesotho and Eswatini) and the 16-member Southern African Development Community (SADC). SADC absorbs 87% of South Africa’s exports to Africa, much of which (around 64%) is manufactured goods. However, South Africa’s services exports have stagnated since 2005 and have declined in recent years, contrary to the global trend in most other middle-income countries.

SACU is the world’s oldest customs union, formerly established in 1910, and its members maintain a standard external tariff, share customs revenues, and coordinate policies and decision-making on a range of trade issues. SACU has various trade agreements with the United Kingdom, the European Union, the European Free Trade Association (EFTA), MERCOSUR, the United States and other countries. For its part, SADC is in the process of establishing a Free Trade Area. COMESA, EAC and SADC have also established a Tripartite Free Trade Area (TFTA) effective in July 2024, fully liberalising tariff lines and eliminating non-tariff barriers. It is currently coordinated on a rotational basis among the three RECs. However, progress with trade integration in SACU, SADC and the TFTA has been below expectations.

In 2016, South Africa joined the Economic Partnership Agreement (EPA) between the EU and the SADC EPA group (Botswana, Lesotho, Namibia, Mozambique and Eswatini), which expanded market access, especially in agriculture. South Africa also benefits from the African Growth and Opportunity Act (AGOA), a unilateral preferential agreement with the US that is to lapse in September 2025, and its future is uncertain given deteriorating relations between the two countries with the second presidency of Donald Trump in 2025.

The AfCFTA scenario increases total trade (imports plus exports) as a percentage of GDP from 57% in 2023 to 72% in 2043. On the Current Path, it would be 62%. The difference is equivalent to US$106.2 billion.

Implementing the Agreement will be particularly beneficial to South Africa, given its relatively high level of development and more substantial manufacturing sector compared to its regional peers. Even modest improvements in leveraging trade to drive growth would profoundly impact the South African economy. The AfCFTA should form part of a broader developmental program aimed at incentivising industrialisation and investment. Beyond addressing network inefficiencies, the government would also need to introduce targeted incentives to reduce South Africa’s high export concentration, which is currently dominated by a limited number of large firms. Policies should aim to promote small and medium-sized exporting enterprises, unlocking new opportunities for diversification and growth.

A recent paper by the South African Reserve Bank argues that the country ‘urgently needs to address the high costs of investment and trading across borders; review the impact of existing industrial, localisation and sector-specific policies on export behaviour; implement a comprehensive and well-targeted export promotion and export finance framework; and update its trade policy approach to negotiations across the continent and internationally.’

Chart 21 presents the trade balance in the Current Path and in the AfCFTA scenario, from 2020 to 2043 as a percentage of GDP.

South Africa is Africa’s largest trading nation by value when considering exports plus imports, estimated at US$223 billion in 2023 and equivalent to 57% of GDP. Nigeria and Egypt have the second- and third-highest trade by value in Africa, followed by Morocco and Algeria.

Higher exports associated with greater global and regional integration could bring substantial additional gains for South Africa, boosting growth and employment, particularly if accompanied by export diversification in both products and markets. It could also support the adoption of productivity-enhancing technology through imported intermediate goods, which have not yet widely penetrated South African markets. This could also enable increased scale economies and specialisation, leading to job creation, inclusive growth and poverty reduction. In the view of the World Bank, an outward orientation could help increase competition in South Africa’s domestic markets and it argues that international trade has contributed significantly to prosperity in many developing countries by supporting the development of new, higher-paying jobs and increasing the efficiency of firms, as well as by providing consumers with cheaper and better products.

The Bank further argues that traditional drivers of growth— household and government consumption—have been hampered by a depressed labour market and tighter fiscal policy, constraining the South African government's ability to boost aggregate domestic demand. The result is that the country has underperformed in terms of exports relative to its peers over the past two decades, including when compared to Brazil, Russia, India, China, Turkey, Thailand and Malaysia. Thus:

‘Total merchandise exports have stagnated in the years preceding the [COVID-19] pandemic with all major product groups except food products declining during the decade from 2010 to 2019. They have also continued to be dominated by minerals and agricultural products, while manufactured exports have become increasingly concentrated in resource-based products, with the exception of the automotive sector. Overall, after the 1990s, the growth of manufacturing exports has been insufficient to enable a manufacturing export-led growth path. The economic contraction during the global financial crisis, followed by a tepid economic growth, which coincided with the continuous decline in electricity supply, growing governance and policy uncertainties, and continued fierce import competition during the remainder of the decade and a half, contributed to the exit of firms and the hollowing-out of the productive base in manufacturing, including that of exporters’

Chart 21 clearly illustrates how South Africa stands to benefit significantly from the implementation of the AfCFTA, particularly in terms of its trade balance. While both the AfCFTA and Current Path scenarios show a decline in trade balance in the early years, the AfCFTA scenario demonstrates a strong and sustained recovery from around 2032.

Under the AfCFTA scenario, South Africa’s trade balance not only returns to positive territory earlier but continues to improve steadily, reaching a projected surplus of over US$17 billion by 2043. In contrast, the Current Path reflects a much slower recovery, with the trade balance only modestly positive by 2043 at around US$1.3 billion. The divergence highlights the potential of the AfCFTA to support trade-led growth, reduce trade deficits and enhance South Africa’s integration into regional and eventually global value chains.

Chart 22 presents the Current Path of access to electricity for urban, rural and total population from 2000 to 2043.

The Large Infrastructure and Leapfrogging scenario simulates the impact of improvements in infrastructure investment, policy reforms and institutional capacity to overcome the bottlenecks in energy, water, transport and municipal services, thereby driving sustainable economic growth and development. The scenario includes improved rural and urban electricity access and accelerated fixed and mobile broadband connectivity. It incorporates general investments in significant infrastructure projects (“other infrastructure”) like rail, ports and airports. It reduces electricity transmission and distribution loss and lowers the cost of adding ICT connections. The scenario models a very rapid uptake and deployment of renewable energy in the form of wind and solar to compensate for the decommissioning of coal-fired electricity generation plants in line with South Africa’s commitment to the Paris goals.

Visit the themes on Large Infrastructure and Leapfrogging for a conceptualisation and the details on the scenario structure and interventions.

In July 2024, during the presentation of the 2024/5 departmental budget policy speech, the newly appointed Minister of Public Works and Infrastructure vowed to ‘unleash a wave of infrastructure investment … to turn the country into a construction site’ with the ambitious goal of increasing the ratio of gross fixed capital formation from 14% to 30% of GDP. The need is underscored by a report from S&P Global Market Intelligence, which called on the government to prioritise South Africa’s infrastructure bottlenecks in energy, ports, rail and water. The associated inefficiencies have led to significant delays and increased costs, particularly hampering smaller firms' ability to export. South Africa's geographic distance from significant trading markets has been further exacerbated by the inefficiencies of its ports, deteriorating rail infrastructure, and high road freight and pipeline transport costs.

In response to these challenges, the government, in collaboration with businesses and unions, formed the National Logistics Crisis Committee (NLCC) to improve the operational performance of industry supply chains, including freight rail and ports; implement reforms to modernise the freight transport system for efficiency and competitiveness; and enact necessary regulatory changes or exemptions to enable efficient procurement and adequate funding for network maintenance. The NLCC oversees the implementation of the Freight Logistics Roadmap, which includes a framework for private sector participation, a Freight Road to Rail Migration Plan and a Transnet Recovery Plan. Additionally, in 2023, the Cabinet approved a Rail Policy to guide the future of freight rail and urban commuter rail.

South Africa previously made significant progress in expanding electricity access, outpacing most other African nations except for those in North Africa. In 2023, 88% of South Africans had access to electricity, a rate that is projected to reach 92% in the Current Path in 2043. By contrast, Africa's average electricity access rate in 2023 was 58%, increasing to 75% by 2043. Notably, Chart 22 highlights the significant urban-rural electricity access gap. However, by 2043, this gap is projected to shrink to less than two percentage points, compared to the 41-percentage-point difference in Africa in 2023 which declines to 34 percentage points in 2043. The Large Infrastructure and Leapfrogging scenario envisions South Africa achieving 100% electricity access by 2043, compared to 92% on the Current Path, with remarkably rapid improvements in rural areas by deploying mini-grids and renewable energy solutions.

South Africa has a large energy sector compared to other countries at similar levels of development, pointing to energy inefficiencies. For example, in 2023, South Africa’s energy sector represented 8.6% of GDP, compared to a global average for upper-middle-income countries (UMICs) of 5.6%. As a result, South Africa has suffered from chronic electricity shortages (load-shedding) since 2007, caused by poor planning, corruption, and underinvestment in construction and maintenance. The shortages eventually started to ease in 2024.

In January 2024, the Minister of Mineral Resources and Energy issued a draft Integrated Resource Plan (IRP) for public comments to solicit public comments on the security of the electricity supply. The 2023 draft IRP updates the 2019 IRP and outlines a phased approach to nuclear energy, with an additional 2 500 MW expected to come online between 2031 and 2035, followed by 1 925 MW between 2036 and 2040, and 10 075 MW projected for the period 2041-2050. Other energy production considerations include exploiting local recoverable shale and inland and coastal gas reserves (based on recent discoveries) and importing gas from Mozambique and Namibia. South Africa must also develop and extend its transmission grid, which is currently constrained in parts of the Eastern, Northern and Western Cape. The sector also faces challenges such as rampant illegal connections and the inability of many customers to afford rising electricity prices.

In August 2024, President Ramaphosa signed the Electricity Regulation Amendment Act into law, enacting far-reaching reforms in the country’s electricity sector. The Act aims to boost investment in new generation capacity to secure energy supply, establish an independent transmission system company within five years to oversee the national grid and impose severe penalties for infrastructure damage and sabotage. To this end, a separate National Transmission Company of South Africa (NTCSA) is being established and the government recently published regulations for the procurement of independent transmission projects as the first step in a massive expansion of the grid, particularly in the Northern Cape.

With electricity outages now under control, South Africa’s next major challenge is water. As a water-scarce country, South Africa has faced crises like Cape Town’s "Day Zero" between 2015 and 2018, when the city came close to running out of water. Although the crisis was averted, the country continues to struggle with national water shortages due to delays in crucial infrastructure projects. For instance, the nine-year delay in starting the Second Phase of the Lesotho Highlands Water Project, which is vital for supplying more water to the Vaal River for Gauteng, means the demand-supply situation will remain tight until 2028. Similarly, the uMkhomazi Water Project for eThekwini and surrounding municipalities has faced significant delays.

Looking ahead, the National Water Resource Infrastructure Agency Bill, once enacted, will facilitate substantially more investment in national water resource infrastructure. However, the performance of municipal water and sanitation services has sharply declined in recent years, mainly due to poor leadership at the municipal level. According to the Department of Water and Sanitation (DWS), 73% of the country’s 144 Water Services Authorities (WSAs) scored as critical or poor according to the 2023 Blue, Green, and No-drop assessment reports, increasing the risk of waterborne diseases, including cholera. Additionally, the national average for municipal non-revenue water, water “lost” before reaching customers, increased from 37% in 2014 to 47% in 2023. Municipalities with high levels of non-revenue water cannot pay water boards for treated water. They cannot afford to properly maintain and operate their water distribution infrastructure, often diverting funds intended for water services to other purposes.

To address the poor management and maintenance of water infrastructure, the Water Services Amendment Bill will provide the 134 municipalities that serve as water services authorities with additional powers. The Department of Water Affairs and Sanitation also intends to launch a large-scale water awareness campaign.

Many of South Africa’s infrastructure problems stem from the collapse of municipal management. In response, Phase 2 of Operation Vulindlela, a turnaround program managed by the Presidency, will prioritise fixing local government (along with spatial inequality and digital transformation) with assistance from the Development Bank of Southern Africa (DBSA), a significant lender to local governments.

South Africa has the largest network of paved roads in Africa, with high road density. However, a lack of maintenance in recent years has led to significant deterioration, particularly in the Free State province. Encouragingly, since 2024, national infrastructure investment programs — including renewed road repair initiatives — have begun to reverse this trend, supported by Operation Vulindlela Phase 2 and expanded SANRAL and local government cooperation.

Other elements of the transport sector, such as rail and ports, have also deteriorated, particularly during the COVID-19 pandemic.  The decline in rail services has also resulted in a substantial shift of commuter and freight transport to roads, contributing to over 10 000 fatal crashes annually—an issue that the Road Traffic Management Corporation (RTMC) estimates costs almost 3% of the country’s GDP. Following the decline in public transport, particularly rail, the 2020 National Household Travel Survey found that taxis carry 83% of public transport users, which is associated with more significant wear and tear to roads and more traffic accidents. Efforts to reduce road deaths are guided by the National Road Safety Strategy (NRSS) 2016 -2030. The rail freight system has been plagued by long delays in moving critical bulk minerals, containers and vehicles, while port terminals and strategic border crossings suffer from congestion. South Africa’s ports, operated by state-owned Transnet, have been among the world’s worst-performing and least competitive. In 2023, Cape Town and Ngqura (in the Eastern Cape) ranked 405th and 404th globally, respectively. In mid-2024, an internal report revealed that coal shipments had plunged to a three-decade low due to inefficiencies at Transnet, which cited a lack of locomotives and spare parts, along with infrastructure faults and signalling system issues.

In addition to the parameters on electricity, energy and roads, the Large Infrastructure and Leapfrogging scenario also emulates the impact of a stream of infrastructure projects coming on line at municipal and state-owned enterprises such as Eskom, Transnet and the Airports Company South Africa, in line with the commitment from government to invest in infrastructure as optimism about the domestic economy gains momentum. Already, in 2024, investment in infrastructure increased including road repair, roll-out of internet, building of bridges, expansion of high-voltage power lines in the Western, Eastern and Northern Cape, amongst others. These improvements have far-reaching implications, extending beyond the energy sector. Enhanced infrastructure would also bolster other sectors, such as increased trade under the AfCFTA scenario and improvements in agricultural productivity. The systemic benefits of these infrastructure investments are further amplified in the Combined scenario, which captures the synergistic effects across multiple sectors.

The advancements that follow the implemention of the Large Infrastructure and Leapfrogging scenario translate into tangible economic benefits: South Africa’s GDP per capita in 2043 would be US$321 (or 2%) higher than the Current Path, and an additional 480 000 people would be lifted above the poverty line of US$6.85 per day. The scenario projects the South African economy to grow to US$649 billion by 2043, which is US$20 billion more than the Current Path. Strategic investment in energy production and related infrastructure will ensure long-term energy security, closing the demand-supply gap that would otherwise stifle economic growth. 

The elements that constitute the Large Infrastructure and Leapfrogging scenario are discussed in the text that accompanies Chart 22. Under the Integrated Resource Plan (IRP), South Africa had scheduled 11.3 GW of coal power capacity at seven plants for retirement by 2030. However, the country's ongoing energy crisis, characterised by frequent power outages, led to a decision to delay the decommissioning of several plants beyond their original retirement dates (Camden, Grootvlei, Hendrina, Arnot and Kriel power stations). In March 2025, the government also granted limited exemptions to several other coal-fired power plants, allowing them to operate under relaxed environmental standards until 2030 (Lethabo, Kendal, Tutuka, Majuba, Matimba and Medupi power stations). Additionally, Duvha and Matla power stations received exemptions valid until their planned decommissioning in 2034. As a result, South Africa will likely miss its binding 2030 carbon emissions targets under the Paris Agreement. ​

Chart 23 illustrates South Africa’s worsening energy security situation on its Current Path, showing that without intervention, energy demand will steadily exceed production, exacerbating power shortages, load shedding, and economic inefficiencies. Since South Africa exports large amounts of coal (which is included in the energy production depicted in Chart 23), the actual situation in respect of the country’s energy insecurity is significantly worse. Accordingly, the Large Infrastructure and Leapfrogging scenario emulates the impact of various measures to close this gap, significantly increasing renewable energy production while also diversifying into gas and other renewable energy production. The result is a significant improvement in the country’s energy security that is sufficient to accommodate more rapid economic growth.

Instead of 73% of energy production coming from coal in 2043, as projected in the Current Path, the scenario reduces this share to less than 42% and declining rapidly thereafter.

A major pillar of this transition is a large-scale expansion of solar and wind power. A Green Cape report published in April 2025 forecasts that 6 GW of new private solar PV and 3.5 GW of new private wind capacity will be installed by 2030. Investment in grid infrastructure is critical if this scenario is to be achieved, particularly in the Eastern, Northern and Western Cape, where transmission constraints otherwise would hinder deployment. The decentralisation of power generation through distributed solar PV installations and battery storage solutions will accelerate energy access, particularly in rural areas. To this end, the Cabinet approved the South African Renewable Energy Master Plan (SAREM) in March 2025 as a blueprint for green industrialisation and a pathway to a more sustainable and equitable future.

One of the most significant shifts in South Africa’s energy landscape is the increasing role of private-sector and residential solar PV installations. Johannesburg, Cape Town and Durban have introduced net-metering incentives, allowing households and businesses to sell excess solar power back to the grid, further accelerating adoption. The 2022 removal of the 100 MW generation capacity limit allowed businesses to develop large solar farms without requiring a license from the National Energy Regulator of South Africa (NERSA), which proved particularly impactful in unlocking growth in energy from solar. After the lifting of the generation capacity, the private sector has invested billions of rands in private solar farms. Mining companies such as Anglo American, Gold Fields and Sibanye-Stillwater have announced or commissioned large-scale on-site renewable energy projects to power their operations. Companies in the manufacturing sector, retail and commercial property developers, including shopping malls, have expanded their solar PV capacity, hedging against rising energy costs and price volatility. Municipal-level initiatives, such as the City of Cape Town’s 2023 initiative to buy excess solar power from private producers, are setting a precedent for decentralised energy generation and municipal energy security.

The regulatory shift demonstrates the investment potential of appropriate policies that enable industries and households to scale up renewable energy generation independently, while also reducing pressure on Eskom’s ageing coal fleet.

The scenario does not include additional nuclear energy as our modelling indicates that an aggressive roll-out of renewables could plug South Africa’s energy production gap, but our analysis did not explore the country’s baseload needs, which may force the government to pursue additional nuclear energy. The Large Infrastructure and Leapfrogging scenario, therefore, presents only one of many possible scenarios for transforming South Africa’s energy sector and ensuring sustainable economic growth and long-term prosperity.

South Africa has been considering additional nuclear energy capacity since 2006 with construction initially slated to commence in 2010 but, after numerous false starts, in 2017 the Western Cape high court set the various agreements that had been signed with Russia, USA and South Korea aside on procedural grounds, forcing government to start is processes afresh.

The IRP 2019 included a provision for 2 500 MW of new nuclear capacity to be added post-2030. This plan was reaffirmed in the draft IRP 2023, which maintains the 2 500 MW target, positioning nuclear power as a complementary source to renewables for ensuring grid stability and reliable electricity supply. A new IRP 2025 is currently nearing completion. In the meanwhile, in August 2024, the Ministerial Determination for the procurement was withdrawn to allow for further public consultation after legal challenges to the procedure.

Eventually, the emergence of Small Modular Nuclear Reactors (SMRs) presents a potential flexible, scalable and cost-effective solution. South Africa was once a pioneer in SMR technology, having developed its own Pebble Bed Modular Reactor (PBMR). However, due to financial constraints, international pressure, technical hurdles and policy shifts, the PBMR project was halted in 2010 before reaching commercialisation. Today, there is renewed interest globally in SMRs. In the United States, advanced SMR designs by companies such as TerraPower, X-energy and Nuscale Power have achieved significant technical milestones, advancing through licensing and initial deployment phases. Although some projects have faced cost challenges, these developments demonstrate the technological maturity and potential of SMRs to deliver clean, reliable energy at scale.

South Africa’s government is now exploring options to revive aspects of the PBMR program as part of its long-term energy strategy. However, SMR technology still faces several challenges, including regulatory hurdles, political scepticism and high initial costs. Should these barriers be overcome, SMRs could revolutionise South Africa’s energy landscape, contributing meaningfully to long-term energy security and economic sustainability.

In anticipation of the IRP 2025, the Minister of Electricity appointed a panel of independent international experts to advise on the procurement of additional nuclear generation capacity at an affordable scale and pace. Two potential sites for the construction of new nuclear plants — Thyspunt near Jeffrey’s Bay and Duynefontein adjacent to Koeberg — have already been identified and pre-licensed.

In parallel, the government has approved the life extension of the Safari-1 research reactor at Pelindaba, which has been in operation since 1965, and initiated the development of a new multi-purpose reactor on the same site. This facility is intended to replace Safari-1 in supporting nuclear research, medical isotope production and industrial applications.

Chart 24 presents the percentage of the population and number of people with access to mobile and fixed broadband in the Current Path and in the Large Infrastructure and Leapfrogging scenario, from 2020 to 2043.

Over the past decade, South Africa's online presence has expanded significantly. In 2023, 66% of the population had access to the internet, a significant increase from the 10% recorded in 2009, although still short of the National Development Plan (NDP) pathway, which envisions a fully connected society by 2030. According to the Digital Quality of Life Index (DQL) 2023 (an index that ranks countries according to internet affordability, quality, e-infratructure, e-security and e-governance), South Africa ranked 1st out of 25 African countries surveyed and overall 72nd out of 121 countries globally.

With four fixed broadband subscribers per 100 people in 2023, South Africa slightly surpassed the African average of 3.3. The Current Path is for 25 subscriptions per 100 people in 2043, still above the average of 23 for Africa. In the Large Infrastructure and Leapfrogging scenario, fixed broadband subscriptions will increase to 29 per 100 in 2043. This increase, over the Current Path, will boost high-speed, reliable internet access across the nation and is particularly important for business and government. This expansion will assist in bridging the digital divide towards equitable access for all communities.

In parallel, mobile broadband has shown remarkable penetration, with subscriptions already high at 131 per 100 people in 2023. This figure will reach saturation rates of 164 subscriptions per 100 people by as early as 2029. Mobile broadband remains a pivotal element of South Africa’s connectivity strategy, providing essential links for many in remote areas and promoting widespread internet usage throughout the country.

Chart 25 presents the trends in FDI, aid, and remittances as a percentage of GDP in the Current Path from 1990 to 2043.

South Africa has historically been a significant source of outward remittances within the Southern Africa Development Community (SADC) region, especially during the 1970s and 1980s, when its mining sector heavily relied on migrant labour from neighbouring countries. This reliance drove high remittance outflows as workers returned money to their home countries. However, starting in the 1990s and continuing into the early 2000s, these outflows declined due to the downturn in the mining sector, broader economic challenges, a reduction in the demand for foreign labour and high remittance costs (making it expensive for migrant workers to transfer money home). This decline in remittances reached its lowest point between 2015 and 2019. South Africa has recently also received some inward remittances (although dwarfed by outflows) as skilled outward emigration grew.

Remittance outflows from South Africa have slightly increased again following the initial decline during the COVID-19 pandemic. This resurgence is partly due to the recovery in employment and economic activity, along with improvements in policies and financial mechanisms that have made sending money across borders more accessible and cost-effective. Additionally, renewed economic ties and continued migration are expected to drive further increases in remittance outflows in the coming decades. The Current Path suggests that with ongoing policy enhancements and technological advancements in the remittance sector, South Africa’s role as a key source of remittances within the region will continue to grow, providing critical financial support to neighbouring countries.

South Africa received little development aid owing to its status as an upper-middle-income economy, and it is unlikely that this trend will change. In 2023, the country received aid equivalent to 0.2% of GDP. In the Current Path, assistance to South Africa declines. While aid remains important for a number of health programs (such as for HIV/AIDS), it does not play a significant role in South Africa.

Traditionally, European countries such as the United Kingdom, Netherlands, Belgium, Germany, Luxembourg as well as the United States, Japan, China and Australia have been the largest foreign investors in South Africa. Most of their investments are in the financial, mining, manufacturing, transportation and retail sectors. In recent years, FDI flows from China have surpassed those of the United Kingdom, which historically held a dominant position as a significant investor in South Africa due to its strong historical ties. Investment from China is mainly in mining and infrastructure.

Declining investor confidence has dramatically impacted the South African economy, where actual gross fixed capital formation by the private sector is significantly below that of peer countries. Although it attracted more FDI after transitioning to democracy in 1994, inflows slowed after 2000 as evidence of poor management and corruption started to affect foreign interest..

The Ramaphosa government has been actively pursuing domestic and international investment as part of its broader economic recovery plan to stimulate economic growth. It hosted investment summits in 2018, 2019 and 2022 — against a target to raise US$100 billion in new investment over five years. These targets have fallen foul of COVID-19 and ongoing challenges in infrastructure, poor investment climate and instability, with large riots in KwaZulu-Natal and Gauteng in July 2021 that accompanied the brief incarceration of former president Jacob Zuma. Other policies include the Critical Infrastructure Program (CIP), an incentive scheme to bolster infrastructure investment, and the establishment of five Industrial Development Zones (IDZs) and six special economic zones (SEZs). The latter focuses on industrial development, and the IDZs offer duty-free import of production-related material and various other incentives.

Currently, South Africa attracts limited FDI, although more than 180 Fortune Global 500 companies are present in South Africa, and the country is globally more connected to the international financial system than any other African country. Accessing capital at a reasonable cost is indispensable for South Africa, a country with a low national savings rate. In 2023, South Africa received FDI inflows of roughly 1.8% of GDP, below the average for Africa’s eight UMICs. The average for UMICs globally in 2023 was 3.1%. Without unlocking sustained high levels of domestic and foreign investment, South Africa will not escape its recent history of a slow economic growth trajectory.

The Financial Flows scenario reduces outward financial flows to emulate a reduction in illicit financial outflows. It includes an aggressive intervention on increased inward flow of investment stocks and portfolio investment. The South African scenario does not include interventions on additional aid (owing to its income status) or changes to remittances.

Visit the theme on Financial Flows for our conceptualisation and details on the scenario structure and interventions.

In the Financial Flows scenario, FDI inflows to South Africa increase significantly to 4.7% of GDP in 2043 compared to 2.2% of GDP in 2043 on the Current Path. The impact of the Financial Flows scenario is to increase South Africa’s stock of FDI in 2043 to US$357 billion (53% of GDP) compared to the Current Path of US$203 billion (32% of GDP). The stock of FDI in South Africa was US$118 billion in 2023 (30% of GDP).

These elevated levels of FDI will require policy certainty, regulatory oversight, an improvement in South Africa’s credit rating, removal of its “grey listing” by the Financial Action Task Force related to money laundering and terrorist financing and a reduction in the regulatory burden and cost of doing business.

South Africa can expect substantial economic benefits if these levels of FDI can be achieved, including accelerated economic growth that could also lead to higher living standards. The impact of the Financial Flows scenario is an economy that is US$39 billion larger in 2043 and a positive increase in per capita income of US$610 in 2043 compared to the Current Path. Extreme poverty (using US$2.15) decreases marginally (by 120 000 persons) in 2043. While the direct poverty reduction impact is limited, the broader benefits of increased FDI include higher productivity and industrial expansion, strengthened local business supply chains and enhanced trade integration with global markets.

Chart 26 presents government revenue in the Current Path and the Financial Flows scenario, from 2020 to 2043. The data is in US$ and % of GDP.

Wagner's law, or the law of increasing state activity, is the observation that public expenditure increases as national income rises. It is reasonable to expect that government revenues will increase as a per cent of GDP in the Financial Flows scenario compared to the Current Path.

Measured as a percentage of GDP, government revenue in South Africa stood at 25.1% (equivalent to US$98.3 billion) in 2023. In the Current Path, government revenue will reach 29.4% (equivalent to US$184 billion) of GDP in 2043. In the Financial Flows scenario, however, government revenues will increase by 0.11 percentage points of GDP to US$196 billion (equivalent to 29.5% of GDP) in 2043, slightly below the average for upper-middle-income countries in Africa or UMICs globally. Increasing revenues will add additional capacity to the government. Much of the increase (US$12 billion) is due to the effect of more inward investment on growth.

By addressing policy barriers, strengthening governance and improving financial stability, South Africa can realise the full potential of foreign investment and accelerate economic growth. In doing so, the country secures its position as Africa’s leading financial hub, ensuring a more prosperous and globally competitive economy.

Chart 27 presents the Current Path of government effectiveness for South Africa from 2002 to 2043.

The Government Effectiveness Index, undertaken and published by the World Bank, represents the quality of public services, policy implementation, regulatory independence and credibility of government commitments.

South Africa’s governance challenges are well documented. Issues such as state capture, corruption, weak institutional capacity and regulatory inefficiencies have constrained economic growth, hindered public service delivery and eroded public trust. Governance effectiveness has steadily declined (see Chart 27) since the World Bank started to collate and release its index for the country in 1996, with the consequences reflected in rising fiscal pressures, high crime rates, infrastructure decline and sluggish investment growth.

The line graph shows the extent to which South Africa’s governance effectiveness declined, particularly during the presidency of Jacob Zuma. Under President Cyril Ramaphosa, efforts to improve government effectiveness gained some traction, but progress has been hampered by internal ANC political battles, COVID-19 disruptions and weak accountability mechanisms. Post-2021, political infighting, particularly at regional and metropolitan levels, has led to governance instability and inadequate oversight that has eroded public confidence in government.

Despite these challenges, South Africa remains one of the strongest governance effectiveness performers in Africa, also ranking above the average for upper-middle-income countries (UMICs) globally. However, it lags behind African peers such as Mauritius, Seychelles, Botswana and Rwanda on governance effectiveness, economic freedom and public sector efficiency. Mauritius consistently maintains the highest governance effectiveness scores, and projects continue to improve through 2043. Botswana, Namibia and South Africa share similar historical governance trends, but South Africa doing the worst amongst the three.

A 2023 Statistics South Africa report found that public trust in government was low, with the highest satisfaction rates among those utilising higher education services (90%), while the lowest satisfaction levels were reported in public housing services (61%).

Various other indices provide additional context to South Africa’s low and declining score on government effectiveness. For example, South Africa’s competitiveness stood at 61st spot (out of 64 countries surveyed) on the International Institute for Management Development (IMD) World Competitiveness Ranking. The country does poorly on matters relating to government adaptability, the lack of business dynamism and its rigid labour market, and suffers from onerous administrative burdens.

Recognising the governance crisis, the South African government has introduced several reform initiatives such as:

• Professionalisation of the public service as guided by the National Framework Towards the Professionalisation of the Public Sector, approved by Cabinet in 2022. The efforts at merit-based recruitment, reduced political interference and inefficiencies in government departments are, however, constrained by ANC policies on cadre deployment and racial quotas (discussed elsewhere), although, from 2023 onward, the government began enforcing mandatory minimum qualifications and competency assessments for senior management positions.
• Operation Vulindlela - a flagship initiative between the National Treasury and the Presidency that accelerates structural reforms to streamline business regulations, improve state-owned enterprise performance, reform local government, and accelerate public land release in electricity, water, transport, digital communications and visa and immigration systems.
• Public Procurement Act (2024): Signed into law but awaiting proclamation for implementation by the President. The legislation will standardise procurement processes, combat tender corruption, and increase transparency in government contracts.
• A May 2025 promise to review the 1998 White Paper on Local Government Local Government to address the manifold issues facing muncipalities including limited funding, lack of skills and transparency. A final draft is to be submitted to Cabinet in March 2026.

While these efforts signal a commitment to improving governance effectiveness, the lack of consequence management remains a major obstacle, as does the widespread practice of cadre deployment according to which officials at local, provincial and national level are appointed based on their political support of the ANC and not on merit.

Cadre deployment is, however, only one element in a determined effort to redress past inequities, most prominently under the rubric of Black Economic Empowerment (BEE), subsequently termed Broad-Based Black Economic Empowerment (B-BBEE). There is wide agreement in South Africa on the need for such efforts, but in time the B-BBEE requirements on ownership, management control, skills development, enterprise and supplier development and socio-economic development have become more intrusive to the extent that they serve as an effective deterrent on government effectiveness and foreign investment, the latter because it applies to any company operating in South Africa, including those with foreign ownership or control. The Employment Equity Amendment Act, signed into law in April 2023, comes on the back of previous legislation and aims to accelerate transformation in the workplace. The Act empowers the Minister of Employment and Labour to set sector-specific numerical targets for designated employers with more than 50 employees. In 2025, the Department published 18 sectoral targets including for agriculture, mining, manufacturing and finance, based on national and provincial demographics.

Without stronger accountability measures and enforcement, governance effectiveness is unlikely to recover to its 1996 levels. reforms—such as public sector professionalisation, economic liberalisation, anti-corruption measures and merit-based employment—can improve South Africa’s governance effectiveness, foster economic growth and rebuild public trust in institutions.

Chart 28 presents the composite governance index for the Current Path versus the Governance scenario, for 2023 and 2043. 

The forecasting model includes a conceptualisation of governance as consisting of three dimensions: security, capacity and inclusion. Each dimension is represented by an index (0 to 1), where higher scores indicate stronger governance outcomes. The composite governance index averages these three indices to assess overall governance performance. In addition, the Governance scenario also includes an aggressive increase in welfare transfers to unskilled workers to reduce inequality and poverty. Visit the theme on Governance for a full conceptualisation and details on the composition of the scenario.

South Africa already has a progressive tax regime and has one of the largest social welfare transfers, including social grants and related support programs among emerging economies given its extraordinarly high rates of inequality and unemployment. The additional transfers to unskilled workers in the Governance scenario increases to US$12.55 billion by 2043. The transfers are funded by increases in household taxes on skilled labour.

Security remains one of South Africa’s most pressing governance challenges, largely due to high violent crime rates, a dysfunctional criminal justice system and weak law enforcement institutions. According to data from the Global Burden of Disease, South Africa consistently ranks among the ten countries internationally with the highest homicide death rates among adult men and women. Homicides serve as a useful proxy for broader violence patterns in a society and negatively impact social capital and translate into a drag on growth. In the 2023 Global Peace Index (a composite index drawing on a variety of measures), South Africa ranked 156 out of 163 countries.

The persistent lack of security acts as a major deterrent to investment in South Africa. In its 2023 report, Safety First: The Economic Cost of Crime in South Africa, the World Bank estimated that crime costs the economy at least 10% of GDP annually, in terms of stolen property, protection costs (encompassing security and insurance), and missed economic opportunities. High crime rates damage the economy, contribute to the misallocation and inefficient use of resources and undermine progress towards the country's development objectives. Numerous studies have been done which indicate that well-designed and implemented policies that target priority crimes, murder in particular, can yield positive results in the medium term, but little progress is being made. Improvements are possible within the current budget allocations to the criminal justice system, given appropriate leadership and prioritisation.

The Governance scenario improves South Africa’s score on the security index by 14% in 2043. Instead of performing the worst amongst Africa’s UMICs, South Africa will do better than neighbouring Namibia. It reflects the impact of determined governance action, such as enhanced law enforcement capacity, data-driven policing, targeted crime reduction strategies and tackling organised crime, which has thrived on the declining capacity of the policy and justice institutions.

Better governance capacity follows from improvements in government regulatory quality, reduced corruption, increased economic freedom and higher government effectiveness.

For example, the 2023 edition of the Transparency International Corruption Perception Index ranks South Africa 12th least corrupt in Africa, and 72nd out of 180 globally. This is following five years of decline, placing it now comparable to Benin, Bulgaria, Ghana and Senegal, and significantly below neighbouring Botswana and Namibia.

South Africa does relatively well when compared to other countries in terms of economic freedom. Its score is similar to that of neighbouring Namibia and Botswana, which is high compared to most African countries and above most comparable UMICs globally. The Fraser Institute Index of Economic Freedom ranks South Africa at 94th globally, doing poorly on the size of its government and freedom to trade internationally but well on its legal system and protection of property rights. According to the Institute, economic freedom exists when property is acquired by individuals without force, fraud or theft and is protected from physical invasions by others. In this framing, individuals are free to use, exchange or give their property as long as their actions do not violate the identical rights of others.

The government revenue-to-GDP ratio is a good indicator of government capacity. At 25% in 2023, South Africa’s ratio was comparable to the average of upper-middle-income countries (UMICs) globally, but public service delivery is constrained by policy inconsistencies, inefficiencies in state-owned enterprises (SOEs) and endemic corruption.

The country has an advanced and formalised revenue collection system, meaning that South Africa’s tax-to-GDP is amongst the highest in Africa but service delivery has deteriorated, particularly in energy supply (Eskom), water management and local governance. As a result, South Africa’s government capacity is below that of Namibia, Botswana, Algeria, Libya and Mauritius, though it outperforms Gabon and Equatorial Guinea. The State Capture Commission (Zondo Commission) which concluded in 2022, extensively documented the extent of state capture under former President Jacob Zuma and revealed the extent of governance decay, yet prosecution of implicated individuals has been slow, reinforcing public perceptions of weak accountability mechanisms.

Under the Current Path, capacity is projected to increase modestly to 2043, reflecting gradual institutional strengthening but continued governance inefficiencies. Under the Governance scenario, where regulatory reforms, anti-corruption measures and public sector professionalisation are implemented, the capacity index rises by 10% in 2043, indicating significant improvement. The current administration’s push for public sector professionalisation is a step in the right direction, but political instability and factional battles within the ANC remain a challenge.

South Africa consistently performs relatively well on inclusion, owing to its liberal constitution, independent judiciary, strong civil liberties, press freedom, regular free and fair elections and democratic institutions. Its score on the inclusion index is consistently among the highest in Africa and ranks as the second highest amongst UMIC’s globally. The intervention in this dimension is therefore a modest 1% improvement by 2043, reflecting continued improvements in gender empowerment, political participation and representation. South Africa already outperforms its regional peers, including Botswana, Namibia and Mauritius.

South Africa’s Government of National Unity (GNU), formed after the highly contested 2024 elections, is a testament to the country’s democratic resilience in spite of its manifold challenges. However, political fragmentation is deepening, with coalition governments becoming more common in metropoles and municipalities, often leading to governance instability and pointing to the need for reform. Voter registration, a key indicator of support for democracy, has, for example, declined from 80% in 2014 to 70% in 2024, while voter turnout has fallen to 58.6% in the latest elections, reflecting a growing trust deficit in political institutions.

Eventually, South Africa’s relatively high ranking on inclusion is insufficient to offset weaknesses in security and capacity:

• Without accountability mechanisms and effective enforcement, governance effectiveness will struggle to reverse its ongoing decline.
• The slow pace of anti-corruption efforts and ongoing political instability within the GNU pose risks to long-term governance improvements.
• Failure to address security concerns deters foreign and domestic investment, exacerbating economic stagnation.

The Governance scenario reflects the effect of targeted institutional reforms that improve South Africa’s score on the composite governance index by 8% by 2043 compared to the Current Path, overtaking Namibia and bringing it closer to Botswana’s governance standards and halving the gap with Mauritius—one of Africa’s strongest governance performers.

The Governance scenario increases the size of South Africa’s economy by almost 9% (equivalent to US$54.3 billion) in 2043 when compared to the Current Path. GDP per capita will be US$840 larger, and 2 million fewer South Africans will be considered extremely poor in 2043.

There is much that South Africa can do to improve governance, such as:

• Strengthening governance capacity through professionalisation of the civil service, improving SOE management and reducing regulatory inefficiencies.
• Tackling organised crime and corruption through judicial independence, intelligence-led policing and effective prosecution.
• Enhancing service delivery to restore public confidence in government institutions.
• Fostering economic growth by creating an enabling business environment, reducing bureaucratic bottlenecks and investing in infrastructure.