Professor Dumisa looks at the economies of seven countries, which include four African countries and three major countries who are also members of BRICS.
By Professor Bonke Dumisa
South Africa is widely regarded as the economic powerhouse of the African continent. There are academic debates about whether South Africa is the largest economy in Africa, with some arguing that Nigeria and Egypt overtook the country a long time ago.
Officially, the Nigerian and the Egyptian economies are ranked ahead of South Africa; with Nigeria ranked the 31st largest economy in the world, followed by the Egyptian economy as the 33rd largest economy and the South African economy ranked the 36th largest economy, albeit that South Africa having a marginally higher GDP than Egypt.
The academic debates on this are mainly based on the allegations that Nigeria simply changed their statistical reporting format – a paper entry – which instantly pushed up their GDP figures.
Let me look at the economies of seven countries, which include four African countries and three major countries who are also members of BRICS.
South Africa has averaged a 0.61% economic growth rate from 1993 to 2023, reaching an all-time high quarterly economic growth rate of 13.7% in the third quarter of 2020, and a record low of -17.0% in the second quarter of 2020. The country has one of the highest unemployment rates in the world, and with its official unemployment at 32.9% and the expanded unemployment rate at around 42%. Its GDP is at $400 billion. It is ranked the 36th largest economy in the world.
India has averaged about 6-7% GDP economic rate between 2006 and 2023, with a high of 8.7% in 2022 and a low of -6.6% in 2021. In 2015, India was recognised as the Most Rapidly Growing economy in the world. Its unemployment rate stands at 5.98% while its GDP stands at $3.7 trillion. India is ranked the fifth largest economy in the world.
China averaged a 1.64% GDP economic growth rate from 2010 to 2023, with a high of 11.8% in the second quarter of 2020, and the lowest economic growth rate of -10.3% in the first quarter of 2020. It is important to mention that the lowest point in 2020 was during the first phase of the Covid-19 pandemic.
China had to shut down its entire economy at the time when the whole world branded the the epicentre of or the primary source of the Covid-19 virus. Its 11.8% quarterly growth rate in the second quarter of 2020 was equally directly linked to the beginning of the easing of the Covid-19 pandemic restrictions when the country started easing their borders.
China had a 8.97% average economic growth rate between 1989 and 2023. Its unemployment rate stands at 5.2% in the urban areas, although its youth unemployment is significant at about 20.8%. China has a GDP of $17.73 trillion and is ranked the second largest economy in the world.
Brazil has averaged a 2.45% economic growth rate between 1991 to 2023. Their unemployment rate is at 14.4%. Their GDP is at $2.08 trillion. They are ranked the 10th largest economy in the world.
Nigeria has averaged about 2.66% from 2011 to 2023. Its unemployment rate stands at 9.79%. The GDP is at $504bn. Nigeria is globally ranked the 31st largest economy in the world.
Egypt has averaged an 4.18% GDP economic growth rate between 1992 and 2021. Its unemployment rate stands at 10.26%. The country’s GDP is at $387bn. Egypt is ranked the 33rd largest economy in the world, higher than South Africa despite it having a lower GDP than South Africa. This is an academic debate for another platform.
Rwanda has averaged an 7.2% economic growth rate in the past 10 years. Its unemployment rate stands at a mere 1.6%. The country’s GDP stands at $9.5bn. Rwanda is ranked the 146th largest economy in the world. It is interesting how many people easily compare the achievements of this 146th-ranked country with those of the 36th-ranked South Africa.
COMPARISONS OF THE SA ECONOMY WITH THOSE OF THE OTHER SIX COUNTRIES
The most conspicuous statistical figure which distinguishes South Africa from the other six African countries is that South Africa has the highest unemployment rate compared to them. This may be the root of most of South Africa’s economic problems.
Most economic studies show that South Africa is one of the most unequal societies in the world, which can be traced back to the apartheid past. Most studies on the gini-coeffient show that the previously advantaged race(s) is still the mostly economically advantaged and that the black African population is still the worst economically disadvantaged. This is at the core of the country’s economic challenges.
The significantly high unemployment rate in South Africa means that many people who could be contributing in the economic growth of the country, are instead waiting for government hand-outs. This means the government is forced to focus more fiscal allocations to social service delivery targets instead of focusing on increasing expenditures on what will accelerate the economic growth of the country.
The need to increase social welfare expenditures has played a major role in pushing up corruption levels in South Africa. Most housing projects which were meant to alleviate homelessness, have instead enriched only a very few politically-connected individuals, and a lot money not accounted for houses allegedly built according to government expenditures thought such houses were never built. This is just one of those glaring examples of how the very high unemployment rates have been exploited to the detriment of real economic growth.
The porous borders of South Africa have resulted in many people who actively participate in its economy although not necessarily playing their part in paying their dues to the South African government. Therefore, the money which circulates within such businesses does not find its way into the economic growth of the country.
Eskom’s load shedding – which has at its core corruption involving staff members and Eskom’s service providers, lawlessness and widespread criminality, including the involvement of police in some of that criminality – has all contributed significantly in destroying economic growth levels in the country and there is no political will to deal decisively with these barriers to economic growth.
*Prof. Bonke Dumisa is an independent economic analyst