South Africa’s Economic Growth Requires Competent Leadership and Private Sector Collaboration

South Africa must foster competent leadership and leverage private sector involvement to unlock its economic potential, according to Saki Zamxaka, Group CEO of the Gauteng Growth and Development Agency (GGDA). Speaking at the 11th SA-EU CEO Dialogue hosted by The European House – Ambrosetti, Zamxaka emphasized the need to build a $1 trillion economy by 2044, up from its current $400 billion.

Achieving this ambitious goal requires South Africa to sustain a 5% annual GDP growth rate over the next two decades or accelerate to 10% annually to meet the target in 10 years.

Key Drivers for Economic Growth

1. Competent Leadership

Zamxaka highlighted the importance of having qualified leaders in government to drive meaningful economic reform. Leadership must prioritize decisions that support growth, reduce inefficiencies, and encourage innovation.

2. Public-Private Partnerships (PPPs)

The fiscus is under immense pressure, and the government cannot tackle infrastructure challenges alone. Zamxaka advocated for streamlined PPPs to involve private sector investment in sectors such as:

• Energy
• Water
• Logistics

Unlike protracted traditional models, he emphasized efficient, impactful partnerships that benefit all stakeholders.

3. Liberalization of Policies

Private sector involvement hinges on policy reforms that ensure profitability for investors. This includes fair regulatory frameworks and concessions in historically state-controlled areas.

Current Challenges in Infrastructure and Investment

Low Investment-to-GDP Ratio

South Africa’s investment as a percentage of GDP stands at less than 15%, far below the necessary 25% required for growth.

According to Jacko Maree, Deputy Chairman of Standard Bank, achieving this would demand significant commitment and policy liberalization to attract local and foreign direct investment.

Infrastructure Failures

Ongoing infrastructure issues, such as delays in moving containers and unreliable energy supply, deter investors. Addressing these bottlenecks is crucial for making South Africa an attractive destination for foreign direct investment (FDI).

Funding Gaps

Zamxaka pointed out that over-reliance on the National Treasury is unsustainable. He advocated for innovative funding mechanisms, including leveraging historical state assets, licensing, and concessions.

Examples of Private Sector Involvement

1. Transnet Collaboration

Recent PPP initiatives involving Transnet demonstrate the potential for state-private sector collaboration to improve logistics infrastructure and efficiency.

2. Energy Investment

While PPP projects in the energy sector often face delays, innovative solutions and private investments are beginning to emerge as viable alternatives to state-funded projects.

Global and Regional Impact

Former Finance Minister Trevor Manuel, now Chairman of Old Mutual, underscored that resolving infrastructural inefficiencies would significantly boost South Africa’s appeal to foreign investors. He noted that delays in logistics, such as container movements, are key deterrents.

A Path Toward Growth

South Africa’s economic future hinges on competent leadership, effective public-private partnerships, and a commitment to policy liberalization. These steps will enable the country to overcome its infrastructure challenges and achieve ambitious GDP growth targets, positioning itself as a competitive global player.

By fostering collaboration and creating an environment conducive to investment, South Africa can make meaningful progress toward building a $1 trillion economy.