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The Citizen
16 hours ago
- Business
- The Citizen
This is where we would be if SA sustained an economic growth rate of 4.5%
It is enough to make you weep when you read how much better off South Africa could have been with economic growth of 4.5%. If South Africa had sustained an economic growth rate of 4.5% per year, in line with its emerging market peers, its GDP would have been just under R12 trillion in 2024 instead of the actual R7.5 trillion. Government revenue could also have been around R800 billion higher than it is. Investment strategist at Investec Wealth and Investment International, Osagyefo Mazwai, notes that although South Africa has grown over the last 15 years, averaging economic growth around 1% a year, the population has grown at a higher rate of around 1.3%. He points out that there has been a structural break in South Africa's economic performance compared to the rest of the world, with a stark dislocation in gross domestic product (GDP) per capita. 'In essence, people are worse off than they were in 2010, suggesting that economic policy has been ineffectual in addressing poverty, unemployment and inequality. 'On a per capita basis, the rest of the world is 50% richer than the average South African. Growth of 1% will not lead to the envisaged goals of lifting people out of poverty and meaningfully addressing the problems of unemployment and inequality.' This chart compares nominal GDP over the period with what it would have been if the South African economy grew at 4.5% a year to illustrate the point on the opportunity cost of foregone growth in policy formation and execution: ALSO READ: Experts say no way SA can achieve economic growth of 3% this year How does economic growth of R12 trillion sound? Mazwai says if the economy grew at 4.5%, South Africa's nominal GDP would have been just below R12 trillion in 2024, a significant number, especially considering the benefits that could have been derived from a vastly larger GDP. He points out that South Africa's economic growth rates similarly had an effect on government revenue. 'Government revenue in 2024 alone could have been around R800 billion higher, while just a few weeks ago, South Africa faced a budget impasse due to a shortfall in funding, needing to raise R75 billion in the medium term to cover the shortfall. 'That shortfall is insignificant considering how much more could have been raised had the economy grown more in line with emerging market peers. 'The cumulative figure of revenue foregone is scary, at around R5 trillion over the last 15 years. 'That is material, considering the fiscal constraints facing South Africa and demonstrates the need to ensure economic growth to boost the fiscal war chest and further enable the capacity of the state to deliver services.' ALSO READ: IMF's bad news about economic growth for SA, thanks to Trump tariffs What economic growth of 4.5% could have meant Mazwai says these statistics put this into perspective: The R5 trillion lost would be enough to clear almost 90% of South Africa's gross national debt and bring the debt-to-GDP ratio down to just below 10%, compared to the currently expected 77% ratio this year. Eskom needs R390 billion over the next decade for transmission lines, a fundamental pillar of creating greater capacity in the energy sector. Electricity is the backbone of any structural improvement, especially considering the government's goals to build domestic manufacturing capacity and create meaningful employment opportunities. The R390 billion would be a drop in the ocean had growth been 4.5% over the last 15 years. Transnet needs R160 billion to upgrade rail and port infrastructure. Our logistics networks are key in connecting the economy across its internal nodes, but also key in building additional capacity to meet the demands of external markets. Again, R160 billion would have been a drop in the ocean had growth been in line with our peers. Eskom has debt of R400 billion. With economic growth at 4.5%, the government could have bailed Eskom out 12 times. Transnet has a debt of R140 billion, and the government could have bailed out Transnet many times, too. Social grants will cost the fiscus around R266 billion this year. With economic growth of 4.5%, these would have been more than affordable and potentially materially higher than what marginalised citizens receive now, also considering that many more people would have been absorbed into the labour market. ALSO READ: Fourth quarter GDP improved but economists say its still not great – here's why With higher economic growth, South Africa would have functioned better Mazwai says these statistics are significant because they show how South Africa could have been in a better position to address the prevailing needs of the state. 'Granted, if the economy was growing at 4.5% the assumption is that Transnet and Eskom and some of the other structural enablers of the economy would have been functioning properly. 'The numbers indicate the potential for vastly greater capacity to invest in the productive elements of the South African economy, such as in infrastructure, education, healthcare and the salaries of teachers, nurses and doctors.' He also notes that business confidence has been unusually correlated with the performance of state-owned enterprises (SOEs) in the post-pandemic environment, and therefore, SOE reform momentum must be sustained or increased. 'Business confidence is the key leading indicator of economic growth and employment creation. The unemployment rate would be closer to around 20% compared to the current 32.9% had the economy been growing at 4.5%. 'In other words, a third of those presently unemployed, according to the narrow definition of unemployment, would have jobs.' ALSO READ: Absa foresees economic growth of 2.1%, but Trump and budget can disrupt it But there have been some victories so far for the economy However, Mazwai says none of this should detract from some of the victories seen of late, such as: The formation of the government of national unity (GNU) and subsequent political stability and increased policy certainty, although the recent budget impasse showed that these are nonetheless fragile. The increased momentum of Operation Vulindlela in addressing the various structural impediments in the economy. The next steps are critical for addressing water infrastructure and local government inefficiencies. Improvements in the electricity supply and logistics network. Mazwai says there has been some stagnation in the recovery of SOEs, which may be cause for concern, although the worst of SOE performance appears to be behind us. However, he says a reacceleration in trend improvement is important for business confidence to grow. ALSO READ: Economic activity still moving sideways but optimism increases Recovery in PMI could mean higher economic growth 'We recently saw a modest recovery in the S&P Global Purchasing Managers Index (PMI), to a neutral level of 50. There must be a trend improvement in PMIs, which are typically linked to economic outcomes. 'Should PMIs continue to improve, the economy should continue on its path of recovery. This will likely be driven by the continued success of Operation Vulindlela.' Looking at GDP projections, Mazwai says data released so far suggest that while growth was likely weak in the first quarter, a persistent upward trend in PMIs can result in a marked acceleration in growth outcomes. 'PMI improvement will largely be a function of continued improvement in SOE performance. At present, the economy, by our estimates, is tracking at 1.3% for the year, which is well above the 0.6% seen in 2024 and 0.8% in 2023. 'This can then lead to more meaningful employment creation and a trend reversal in GDP per capita from the pattern of decline since 2011.' ALSO READ: World Bank has simple answer to improve South Africa's economic growth What SA can do to keep momentum going to grow He suggests that South Africa follow these steps to keep the momentum going and put South Africa on a firmer growth trajectory:
The South African
20 hours ago
- Sport
- The South African
FIVE dream signings to make Orlando Pirates champions of Africa
Orlando Pirates aren't far away from becoming a consistent force on the continent. They do, however, need a bit of surgery. Makhehlene Makhaula is still a highly effective defensive midfield operator, but Pirates might need a long-term contingency plan because he'll be 36 in November. Although it's an absurd suggestion, Pirates might need to make an audacious move for a player of Teboho Mokoena's calibre. Not Mokoena himself, but a domineering central midfield general to go alongside Thalente Mbatha, or free up Mbatha to get higher up the pitch more often. The Buccaneers have wrapped up the signing of Chippa United and Bafana midfield playmaker Sinoxolo Kwayiba. The 25-year-old is part of Hugo Broos' latest South Africa squad to contest friendlies in June. Kwayiba bagged six goals and an assist from 25 league appearances for the Chilli Boys this season. The Gqeherba-born star is in the latest Bafana squad. Sinoxolo Kwayiba celebrates a goal for Chippa United against Cape Town Spurs. Image: Football SA Although the Buccaneers are blessed with options at the sharp end with Tshegofatso Mabasa, Evidence Makgopa and Boitumelo Radiopane, they might be looking at a different style of number 9. Fiston Mayele is a popular name in the media, but will they go for a guy on the wrong side of 30, especially with a rumoured price tag of R12 million? What did Makgopa and Mabasa do to offend Hugo Broos? According to Soccer-Laduma , Orlando Pirates will soon seal a deal for Polokwane City right-back Thabang Matuludi. The same publication sounds less optimistic about their chances of snapping up Bafana winger Oswin Appollis. The 23-year-old reportedly has his heart set on Kaizer Chiefs. Is this a blessing in disguise for the Buccaneers? Broos explains why he likes Selepe for Bafana Can Pirates take the next step and claim Caf Champions League and Betway Premiership glory? Let us know by leaving a comment below or sending a WhatsApp to 060 011 0211. Also, subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
IOL News
21 hours ago
- IOL News
Public Works rejects 'untruthful narratives' on prison maintenance, reveals budget shortfall
The Department of Public Works and Infrastructure has responded to claims regarding the lack of maintenance for prison facilities, revealing a significant budget shortfall. Image: Armand Hough Independent Newspapers The Department of Public Works and Infrastructure (DPWI) has strongly rejected what it calls 'misrepresentations and untruthful narratives' presented to the Portfolio Committee on Correctional Services, following widespread criticism over alleged failure to maintain prison infrastructure, including in KwaZulu-Natal. During a presentation to the Portfolio Committee on Correctional Services last week, the Department of Correctional Services (DCS) revealed that it paid over R842 million to the Department of Public Works and Infrastructure (DPWI) in the 2024/25 financial year for maintenance services, but claimed no work was done, prompting MPs to question whether the DCS had requested a refund. The MPs also raised concern about the worsening state of correctional facilities, including the closure of the kitchen at Westville Correctional Service Medium A in KZN as it needs refurbishment which will cost R12 million. However, DPWI spokesperson Lennox Mabaso said the department "rejects and takes serious exception to the misrepresentations and untruthful narratives presented before the DCS Portfolio Committee.' Mabaso expressed that the department was 'deeply concerned' about the information presented to the committee. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading DPWI Director-General Sifiso Mdakane disputed that R842 million had been received, stating that financial records showed the amount received from DCS for accommodation charges in 2024/25 was R672 million. 'It is unfortunate to learn of this through the media when recently, the ministers of the two departments met and resolved that the accounting officers must lead a task team to resolve all the matters including payments, budget and state of facilities,' Mdakane said. According to the DPWI, the DCS occupies 12,282 properties at a cost of R14.33 per square metre, while the approved finance model sets the cost at R53.60 per square metre — a shortfall of nearly R2 billion annually. 'The R14.33 per square metre basic user charge paid by the Department of Correctional Services is insufficient to cover any basic services related to property management, ownership, or custodianship as per the DPWI mandate,' Mabaso said. He added that more than R520 million of the R672 million received from DCS went to municipalities for property rates, with only R152 million spent on maintenance and repairs. 'In fact, over a period of four years, the DCS has paid the DPWI R2.6 billion while the DPWI has spent R4.4 billion to service the Department of Correctional Services,' said Mabaso. 'This translates to a staggering R1.8 billion budget shortfall.'
The South African
3 days ago
- Business
- The South African
GOOD news for retiring South African expats in 2025
The two-pot savings scheme offers retiring South African expats one big advantage over regular citizens. Retiring South African expats are able to access their two-pot savings immediately, thereby sidestepping the three-year lock-in rule. As we've already reported, ever since the two-pot retirement system was introduced back in September 2024, fund member have withdrawn billions in funds. This is despite financial advisors decrying the long-term effects of saving efficacy. The scheme allows members to make one withdrawal from their savings pot every single year. Many are making lumpsum withdrawals to simply make ends meet or pay off debts. Which are clear signs of financial strain … Many retirees have worked their entire lives to live somewhere exotic like Mauritius when the turn 60. Image: File Nevertheless, retiring South African expats are not subject to the same restrictive three-year lock-in rules that govern the savings portion of regular residents. Expats who have formally ceased tax residency can access their retirement savings without delay. As such, the Retirement Matters Committee of the Actuarial Society of South Africa (ASSA) reports that 75% of applications in Q2 of 2025 were repeat claims. Up until February 2025, 2.6-million South Africans accessed part of their retirement savings. Therefore, it's plain to see that retiring South African expats are eager to obtain cash as soon as possible after ceasing tax residency. Furthermore, the South African Revenue Service (SARS) says R47 billion has paid to fund members since the scheme's start on 1 September 2024. In turn, this yielded R12 billion in tax revenue for the government. Surprisingly, this is more than double the R5 billion initially projected by the National Treasury when it introduced the scheme. However, something retiring South African expats should remember is their withdrawals – while not time limited – are not tax exempt. In fact, administrative withdrawal fees, and cross-border transfer regulations can make such transactions more costly. SARS insists that 'tax liability remains even after severing ties with the country.' Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1. Subscribe to The South African website's newsletters and follow us on WhatsApp, Facebook, X and Bluesky for the latest news.
Eyewitness News
5 days ago
- General
- Eyewitness News
Tired of waiting, Limpopo villagers lay their own water pipes
In the villages of Ha-Matsa near Louis Trichardt, residents have never had access to treated drinking water. Instead, they rely on untreated fountain water and boreholes. While they wait for the government to finish long-awaited water projects, residents are making their own plans to get water. Accessing clean water is a daily struggle in Ha-Matsa's villages, which are home to nearly 5,000 people. Ha-Matsa has one municipal borehole and two reservoirs, but it is not pumping enough water and it takes almost five days to fill the reservoir. Some households have drilled private boreholes, but most of them have dried up. 'Even though we can get sick from sharing water with animals, we don't have a choice,' said resident Constance Khakhu, who lives with a leg disability. She drilled a 60-metre borehole in 2010, but it dried up after four years. She extended it by 30 metres but 'only found mud'. Another resident, Elina Davhana, said her family's borehole also dried up within five years. Some residents walk more than two kilometres to buy water from residents with functioning boreholes, where a 20-litre container costs between R3 and R5, and a drum costs R90. Others hire donkey carts to transport water. There are also residents who own trucks and deliver water to others, charging about R1,200 to fill a 2,400-litre tank. MAKING A PLAN There is a nearby mountain spring, with untreated water, where residents use a community-managed rotational system to share the limited supply. In response to the ongoing shortages, residents raised R12,000 — about R50 per household — to buy pipes and connect directly to the spring. With help from unemployed local young people, they laid a basic piping system linking the spring to old communal taps installed during apartheid. The system has been running for three years and was recently upgraded with larger-diameter pipes to improve water pressure. But maintenance is a challenge. Frequent pipe bursts require constant repairs. When we recently visited the village, some residents were seen walking more than 3.5km to fix damaged pipes, while others pushed wheelbarrows to collect water from homes with functioning boreholes. 'It's not easy to maintain because the pipes are low quality,' said community coordinator Khathutshelo Matsa. 'We're asking for donations so we can buy stronger pipes and extend the system.' Residents have also built a small stone-and-cement wall at the spring to collect and filter out leaves and unwanted materials debris before the water flows downhill. They want to fence off the area to prevent animals from contaminating the water, but say several requests for municipal assistance have gone unanswered. UNFINISHED GOVERNMENT PROJECTS Ha-Matsa traditional authority leader Khosi Vho Philemon Matsa said the community feels abandoned. 'Our people are risking their health using water shared with animals because their pleas for help have been ignored.' Vhembe District Municipality spokesperson Matodzi Ralushai said the villages are included in the municipality's medium-term plan to drill new boreholes this financial year. Ralushai said the villages will also benefit from Phase 4 of the Mutshedzi Water Treatment Plant project, which started in 2021 and was supposed to be completed by June 2025 at a cost of R664-million for the entire project. He said that the project is progressing well and the revised completion date is 30 August 2024. The project has faced several challenges, including 'a four-month delay in budget maintenance approval, late delivery of construction materials by foreign suppliers, and heavy rainfall during February, March and April 2025. There was also community unrest in Dzanani, which was not related to the project but still disrupted progress,' Ralushai said. He said that as a temporary measure, water is being supplied through water tankers. An additional borehole in the nearby village of Manyii was meant to supplement Ha-Matsa's supply, but cable theft and vandalism have delayed the plan. This article was published with the Limpopo Mirror.
