South Africa could lift its medium-term growth rate to between 3% and 4% if the state sustains the faster execution of structural reforms now underway, Standard Bank’s chief executive told Semafor at the Semafor World Economy summit in Washington, DC, arguing that the biggest remaining obstacle was restoring the rule of law.
Sim Tshabalala said the centre in the government of national unity (GNU) was holding and helping to accelerate necessary reforms, describing the coalition between the African National Congress (ANC), the Democratic Alliance (DA), the Inkatha Freedom Party (IFP), and the Freedom Front Plus as broadly centrist. He said the coalition was maintaining policy continuity while speeding up delivery. “The faster reforms are executed, the faster the country will grow,” he said.
Tshabalala identified rule of law as the most urgent frontier for the country’s growth ambitions. “The biggest reform confronting everyone now is the rule of law. There is a direct correlation between rule of law and GDP growth,” he said.
His remarks arrived against a difficult backdrop for South Africa’s law enforcement institutions. The Madlanga Commission, set up to investigate systemic procurement failures and corruption in the police department, has highlighted widespread corruption that has undermined the rule of law. The public hearings led to the suspension of Police Minister Senzo Mchunu and resulted in criminal charges against National Police Commissioner Fannie Masemola, who is accused of obstructing investigations and enabling corrupt procurement schemes.
South Africa’s Constitutional Court is also expected to deliver its ruling on whether lawmakers acted lawfully when they rejected an independent panel finding that President Cyril Ramaphosa may have a case to answer over the 2020 theft of foreign currency from his Phala Phala game farm.
Despite these pressures, Standard Bank, Africa’s largest bank by assets, has not revised its baseline outlook for South Africa, and is still working on the assumption that the country will grow by about 1.5% this year. The bank’s medium-term forecast, Tshabalala indicated, is contingent on sustained governance improvement alongside the infrastructure gains already visible in energy, logistics, and water.
Finance Minister Enoch Godongwana has already moved to cushion the economy from rising global oil prices by cutting fuel taxes, at a cost of millions of dollars in foregone revenue, and has warned that his broader budget assumptions are under strain from the ongoing conflict in the Middle East.
