This is what South Africa could look like in 2022 under Ramaphosa

Economic growth and investment in South Africa is set to rebound following several years of economic and political decline, say economists in a new PwC report.

The country remains a promising investment destination with a bright future, and retained many strong fundamentals and positive factors for investment in spite of the above-mentioned declines. The country is certainly in a better place now than where it was when previous rating actions took place in late-2017, the report said.

“Our economists see a 75% probability of improved economic growth in South Africa over the next five years under the leadership of President Cyril Ramaphosa, compared to the preceding years,” PwC said.

PwC economist Christie Viljoen, said: “South Africa, like other emerging markets, has a critical need to attract foreign investment while at the same time driving economic transformation. At the time of writing this report, the most likely scenario is that President Ramaphosa is able to make the necessary changes and reforms to help economic growth accelerate to 3% by 2022.”

The report argues that the time is right for investing in South Africa, for both domestic and international investors, as president Ramaphosa takes over leadership of the party and government. There is a high probability that the South African economy will be in a much healthier position over the next five years compared to the start of 2018.

South Africa experienced a decline in economic and political conditions during 2014-2017, but was nonetheless able to hold onto some key strengths. The past three months have also seen dramatic changes in South Africa’s economic and political landscape with the election of Cyril Ramaphosa as leader of the ANC and president of South Africa.

The country’s citizens, foreign investors and financial markets have welcomed these changes, and stakeholders are at present focussing on a more positive outlook for South Africa’s economics and politics.

In the report titled “Investment decisions: Why South Africa, and why now? Forward-looking scenarios for the Ramaphosa presidency (2018–2022)”, PwC first considers the country’s decline in 2014-2017 and the positive fundamentals that were retained despite the challenges faced by South Africa.

This is followed by an assessment of the game-changer event – the election of Cyril Ramaphosa – and the positive changes enacted within the first 40 days after this election.

The first several months of president Ramaphosa’s party presidency has already delivered tangible results in some of these areas, PwC said.


The rand exchange rate – which has been increasingly sensitive to domestic political developments over the past few years – welcomed the election of and forthright words from the country’s new leader. The South African currency appreciated from R13.70/$ in mid-December 2017 to around R11.60/$ by mid-February.

“A firmer rand improves the outlook for South African consumers through lowering the cost of imports and associated inflation. Indeed, the SARB was able to lower its inflation forecasts during January in part due to a stronger rand,” the report said.

The actual pace of economic growth over the next two to five years – a key factor in solving South Africa’s triple challenges – will be very dependent on the reforms that the new ANC leadership can implement, the report said.

Five scenarios

Within this context, PwC considered the possible future scenarios for South Africa over a five-year horizon (towards 2022). The five scenarios are pathways to different potential future states by 2020 under the guidance of president Ramaphosa as ANC and national president, as well as a significantly revamped cabinet.

“The scenarios enable the reader to look backwards from 2022 at the potential pathways that South Africa followed in the preceding five years,” Viljoen said.

From a quantitative perspective, the scenarios provide projections for economic growth and the rand exchange rate. The outlook for GDP growth in 2018 is still quite opaque due to the uncertainties about how quickly President Ramaphosa can implement his reforms, Viljoen said.

The ‘downside’ and ‘worst-case’ scenarios see little to no improvement in job creation and economic growth, respectively, in South Africa’s economic growth rate due to limited further reforms after the new administration’s initial successes.

The ‘baseline’ scenario – entitled #Ramaprogress – sees more success in job-creating growth based on notable reforms under the president’s New Deal agenda.

This translates into real economic growth rising to 2% in 2020 and 3% by 2022. As fiscal dynamics improve, no further downgrades are seen in the sovereign’s credit ratings. Meanwhile, the ANC improves its performance in the 2019 national elections and ends a recent decline in support.

The ‘upside’ and ‘best-case’ scenarios see even greater reform success that accelerates economic growth even further.

At present, PwC sees a 25% probability of the next five years delivering economic growth of less than 1.5%. This indicates a one-in-four chance that the election of President Ramaphosa will have no significant impact on the local economy.

Overall, PwC sees a 75% probability of improved economic and political outcomes over the next five years, compared to the preceding several years.

These scenarios include different projections for economic growth and the exchange rate, and will have varying implications for different industries and investment decisions.

Read: How many South Africans are set to get ‘ultra-wealthy’ under Ramaphosa in the next 5 years

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