{"id":807626,"date":"2025-01-20T13:00:00","date_gmt":"2025-01-20T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=807626"},"modified":"2025-01-20T12:34:38","modified_gmt":"2025-01-20T10:34:38","slug":"ramaphosa-hunting-south-africas-big-four","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/807626\/ramaphosa-hunting-south-africas-big-four\/","title":{"rendered":"Ramaphosa hunting South Africa&#8217;s &#8216;big four&#8217;"},"content":{"rendered":"\n<p>President Cyril Ramaphosa&#8217;s &#8220;fairy tale&#8221; 3% economic growth target for South Africa faces a challenging reality and four big issues that won&#8217;t be easily overcome.<\/p>\n\n\n\n<p>The 3% target set by the president\u2014with buy-in from businesses and other partners\u2014is a bold ambition and sits in the face of most projections between 1.5% and 2% in the near term,<\/p>\n\n\n\n<p>The International Monetary Fund (IMF) this past week laid out its expectations, seeing just 1.5% GDP growth for South Africa in 2025, moving up only slightly to 1.6% in 2026.<\/p>\n\n\n\n<p>According to the Bureau of Economic Research (BER), while a 3% target is not impossible, it is more likely that economic growth will average just below 2% from 2026 to 2029.<\/p>\n\n\n\n<p>Although this is faster than the decade before the Covid-19 pandemic, it is still not enough.<\/p>\n\n\n\n<p>The BER&#8217;s Impumelelo Economic Growth Lab said that while growth is set to increase in 2025, this could prove to simply be a &#8220;camel hump,&#8221; with challenges maintaining the upward trajectory.<\/p>\n\n\n\n<p>This is because much of the cyclical support is expected to fade beyond 2025, it said.<\/p>\n\n\n\n<p>It added that the government&#8217;s track record of slow implementation and delays could lead to a loss of momentum on the reform front, hampering progress.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Ramaphosa&#8217;s &#8216;big four&#8217;<\/h2>\n\n\n\n<p>Overall, there are four issues Ramaphosa&#8217;s administration needs to tackle to even think of seeing 3% growth. <\/p>\n\n\n\n<p>There are:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Electricity shortages;<\/li>\n\n\n\n<li>Logistics challenges;<\/li>\n\n\n\n<li>Water constraints; and <\/li>\n\n\n\n<li>Governance failures.<\/li>\n<\/ul>\n\n\n\n<p>The BER noted that load shedding has caused deep damage to the economy, with the country unable to expand the local mining, manufacturing and construction sectors.<\/p>\n\n\n\n<p>Although the lifting of load shedding was a boost for businesses in 2024, the BER said that businesses need to be sure that there is a stable supply of electricity before committing to long-term investment. <\/p>\n\n\n\n<p>Moreover, the nation&#8217;s ports and rail system has been weak, with the nation&#8217;s freight rail capacity having been on a long downward trend since 2018.<\/p>\n\n\n\n<p>Municipal water supply problems have also underscored local government weaknesses. <\/p>\n\n\n\n<p>Water is a critical input for several activities, and the lack of water has been a major drag on consumer and business confidence.<\/p>\n\n\n\n<p>The BER added that ongoing service delivery issues and governance problems are also massive constraints. <\/p>\n\n\n\n<p>Broader governance issues, such as the FATF greylisting, have harmed South Africa&#8217;s ability to perform fast and unburdened cross-border transactions.<\/p>\n\n\n\n<p>The BER said that tackling these issues via reforms could lift economic growth above 3%.<\/p>\n\n\n\n<p>This would see household consumption increase due to improved job growth and positive real wage growth (adding 0.6%), investment (adding 0.6%), and exports (adding 0.7%).<\/p>\n\n\n\n<p>For 2025 alone, tackling these issues would see South Africa&#8217;s GDP rise from the BER&#8217;s projected 2.2% to 3.3%<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><a  data-lightbox=\"post-image\" href=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/01\/image-49.png\"><img loading=\"lazy\" decoding=\"async\" width=\"658\" height=\"369\" src=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/01\/image-49.png\" alt=\"\" class=\"wp-image-807631\" srcset=\"https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/01\/image-49.png 658w, https:\/\/businesstech.co.za\/news\/wp-content\/uploads\/2025\/01\/image-49-300x168.png 300w\" sizes=\"auto, (max-width: 658px) 100vw, 658px\" \/><\/a><figcaption class=\"wp-element-caption\">Source: The BER<\/figcaption><\/figure><\/div>\n\n\n<h2 class=\"wp-block-heading\">Not likely to happen<\/h2>\n\n\n\n<p>That said, the rise to over 3% is not within the BER&#8217;s forecast, with a clear programme of action from Operation Vulindlela and the government to tackle the nation&#8217;s constraints still pending.<\/p>\n\n\n\n<p>The BER said that Operation Vulindlela, a joint initiative between the National Treasury and the Presidency, will need to be reinvigorated to ensure that the accelerated programme can be achieved.<\/p>\n\n\n\n<p>Phase one of Operation Vulindlela showed that a dedicated reform programme could deliver huge results, with significant progress in the electricity sector.<\/p>\n\n\n\n<p>However, a poorly scoped and vague reform objective could do the opposite and present a risk to the outlook.<\/p>\n\n\n\n<p>The BER said that implementation is the key. Any further delays will make 3% increasingly difficult to reach.<\/p>\n\n\n\n<p>This was echoed by the IMF&#8217;s most recent review of South Africa&#8217;s outlook (October 2024), where it warned that, while the country&#8217;s trajectory is positive, risks are tilted to the downside and any resistance or delays to implementing reforms could see the growth path falter.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/energy\/807525\/7-days-of-jet-fuel-left-at-or-tambo-what-you-need-to-know\/\">7 days of jet fuel left at OR Tambo \u2013 what you need to know<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>President Cyril Ramaphosa&#8217;s lofty promises don&#8217;t stand a chance unless South Africa&#8217;s &#8216;big four&#8217; can be toppled.<\/p>\n","protected":false},"author":95,"featured_media":648009,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[14829],"class_list":["post-807626","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-ber"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/807626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=807626"}],"version-history":[{"count":7,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/807626\/revisions"}],"predecessor-version":[{"id":807651,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/807626\/revisions\/807651"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/648009"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=807626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=807626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=807626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}