{"id":820544,"date":"2025-04-13T13:00:00","date_gmt":"2025-04-13T11:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=820544"},"modified":"2025-04-13T13:01:59","modified_gmt":"2025-04-13T11:01:59","slug":"dawie-roodt-warns-that-south-africa-is-in-deep-trouble","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business-opinion\/820544\/dawie-roodt-warns-that-south-africa-is-in-deep-trouble\/","title":{"rendered":"Dawie Roodt warns that South Africa is in deep trouble"},"content":{"rendered":"\n

Renowned economist Dawie Roodt warned that South Africa\u2019s fiscal trajectory is unsustainable as the government spends too much on non-productive things.<\/p>\n\n\n\n

Roodt highlighted that around 65% of government spending is consumed by salaries, debt-service costs, and the social grant ecosystem.<\/p>\n\n\n\n

Speaking to BusinessTech, Roodt argued that the country is entrenching a culture of state dependency rather than fostering economic self-reliance and growth.<\/p>\n\n\n\n

In the 2025\/26 budget tabled by Finance Minister Enoch Godongwana on 12 March 2025, consolidated government expenditure is expected to hit R2.59 trillion.<\/p>\n\n\n\n

This spending includes R822.8 billion for salaries, R424.9 billion for debt-service costs, and R422.3 billion for social development.<\/p>\n\n\n\n

“It’s simply not sustainable for several reasons,” said Roodt. \u201cFirst and foremost, it ultimately shows the massive dependency on the state.”<\/p>\n\n\n\n

Godongwana noted in his budget speech that nearly 28 million beneficiaries will access social grants in South Africa.<\/p>\n\n\n\n

“The truth is that ours is one of the most comprehensive social safety nets among emerging economies,\u201d he said.<\/p>\n\n\n\n

He added that the government is committed to addressing poverty and inequality, while keeping state spending sustainable.<\/p>\n\n\n\n

However, Roodt called the current trajectory completely unsustainable, citing the growing gap between grant recipients and taxpayers.<\/p>\n\n\n\n

A small tax base and slow economic growth compound the strain, making it difficult to fund other services.<\/p>\n\n\n\n

Roodt said that this sizeable current expenditure also boosts consumption expenditure in the country, to the detriment of investment.<\/p>\n\n\n\n

He argued that the government is redirecting money that would be better used for private-sector investment toward short-term consumption.<\/p>\n\n\n\n

Adding to the financial pressure is a ballooning public sector wage bill, now over R315 billion more than a decade ago.<\/p>\n\n\n\n

A Centre for Risk Analysis report showed that South Africa has the third-highest government wage bill as a share of GDP among 20 major economies.<\/p>\n\n\n\n

The public sector wage bill is 3.5% higher than the Organisation for Economic Cooperation and Development (OECD) average.<\/p>\n\n\n\n

\u201cSouth Africa\u2019s wage bill is about 10.5% of the GDP and towers over economic powerhouses such as the United States, United Kingdom, Australia, and Japan,\u201d the report noted.<\/p>\n\n\n\n

This places significant pressure on an already constrained fiscus, especially with rising debt servicing costs and public sector wage increases, with further raises being pushed for.<\/p>\n\n\n\n

There is a growing risk of funding being diverted from other departments and national priorities, such as infrastructure, to service the country\u2019s debt and to foot the public sector wage bill.<\/p>\n\n\n\n

Meanwhile, debt service costs continue to climb, driven by high public debt, rising interest rates, and weak economic growth.<\/p>\n\n\n\n

With expenditure outpacing revenue, debt has surged from 23.6% of GDP in 2008\/09 to a projected 76.2% in 2025\/26.<\/p>\n\n\n\n

Godongwana warned that debt servicing costs are more than South Africa spends on health, the police, and basic education.<\/p>\n\n\n\n

“We must reverse this trend and prevent the cost of debt from taking away resources that could otherwise be spent on our pressing social needs, or to invest in growth,” he said.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n\n\n\n

How did we get here?<\/h2>\n\n\n\n

Looking at social grants, Roodt said, “We got here because of high levels of unemployment and poverty. People depend on the state because they don’t have a choice.\u201d<\/p>\n\n\n\n

Songezo Zibi, chairperson of the Standing Committee on Public Accounts, wrote that the government has grown bigger since 2009 without comparable economic growth.<\/p>\n\n\n\n

“Instead, we have compensated for the failure to grow the economy by placing more people on the dole to help them survive what would otherwise be crushing poverty and hunger,\u201d he said.<\/p>\n\n\n\n

“Therefore, our most important task is to grow the economy so that we can reduce debt service costs and transform millions of grant recipients into income tax payers.\u201d<\/p>\n\n\n\n

Regarding South Africa’s ballooning wage bill, Roodt attributes this to the power of organised labour and the coalition between the state and COSATU and the SACP.<\/p>\n\n\n\n

This Tripartite Alliance, which is left-leaning and communist, forced the state to pay civil servants well above what they’re supposed to be getting.<\/p>\n\n\n\n

An analysis by Daily Investor showed that the average government employee earns nearly double the average salary in South Africa per month. <\/p>\n\n\n\n

The median public-service average monthly earnings have exceeded the national average by at least 50% since 2019. <\/p>\n\n\n\n

“Many civil servants are overpaid and underworked in South Africa,” Roodt said, highlighting the inefficiency of the state.<\/p>\n\n\n\n

Roodt warned that this spending pattern poses severe long-term economic stability and growth risks, negatively impacting investments and fiscal accounts.<\/p>\n\n\n\n

If this trajectory continues, he predicts rising long-term interest rates, increased inflation, and hindered economic growth.<\/p>\n\n\n\n

Roodt said rebalancing the budget through reduced current expenditure, a lower tax burden, and improved state efficiency is necessary.<\/p>\n\n\n\n

However, these measures are politically challenging in a state with a large public sector and a population heavily reliant on grants.<\/p>\n\n\n\n

Ultimately, Roodt attributes the country\u2019s economic challenges to political factors, especially among left-leaning parties.<\/p>\n\n\n\n

He said the current governance and policy approaches hinder sustainable economic progress and suggested that a shift in political ideology is necessary for long-term stability.<\/p>\n","protected":false},"excerpt":{"rendered":"

Dawie Roodt has said that South Africa\u2019s fiscal trajectory is not sustainable, warning that salaries, debt-service costs, and the social grant system are absorbing too much government spending.<\/p>\n","protected":false},"author":101,"featured_media":713044,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[1629,1459,1366,7681,853],"class_list":["post-820544","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-opinion","tag-budget","tag-dawie-roodt","tag-social-grants","tag-songezo-zibi","tag-south-africa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820544","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\/101"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=820544"}],"version-history":[{"count":8,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820544\/revisions"}],"predecessor-version":[{"id":820596,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/820544\/revisions\/820596"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/713044"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=820544"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=820544"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=820544"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}