Nation At Cross-Roads: South Africa’s Economic Struggle Between Growth and Demise

By Aksah Italo
Published on 10/30/25

South Africa remains Africa’s largest economy at 443.64 billion US dollars, yet growth is fragile, uneven, and increasingly exposed to domestic and international pressures. Thirty years after the end of apartheid, the country’s cities pulse with financial activity and construction, but structural weaknesses in governance, energy, and social cohesion reveal cracks beneath the surface.

Statistics South Africa reported that the economy grew 0.8 percent in 2024, with mining, trade, and manufacturing leading the way. Mining output increased by 4.4 percent year-on-year, led by iron ore and platinum group metals. Diamonds, chromium ore, and coal also recorded gains, though gold, manganese ore, copper, and nickel production declined.

Retail trade maintained its upward trajectory, rising 5.6 percent, buoyed by textiles, clothing, and general dealers. Yet, sectors like food, beverages, and pharmaceuticals reported falling sales. Manufacturing, electricity generation, wholesale trade, and rail freight transport all weakened year-on-year.

Growth was uneven across provinces. Six of the nine regions recorded expansion, led by Limpopo, Gauteng, and the Western Cape. The finance sector remained the strongest contributor, highlighting the concentration of economic activity in a few industries. Consensus forecasts had projected GDP growth of 1.7 percent, with expectations of a gradual rise to two percent and above in the coming years.

Yet beneath this narrative of growth lies an unsettling truth. South Africa, once a beacon of post-apartheid hope, is now facing a steady erosion of public services, economic stability, and social cohesion.

The country long ruled under apartheid where a majority of the black dominated population lived in the segregated land, deprived of access to high quality jobs, education and sanitation. In the early 20s the exploitative labour jobs provided by black Africans on white controlled farms was the contributor to the economic boom.

The optimism of the early 1990s, when Nelson Mandela led the country into a new democratic era, has dimmed. Back then, South Africa brimmed with potential. Blessed with mineral wealth, a skilled workforce, and a diversified economy. The world hoped it would become Africa’s success story, a model of development and democracy.

For a while, that dream seemed within reach. The narratives created seemed very symbolic, if not promising. The African National Congress (ANC), under Mandella took power, where over seven million residents have been destitute, homeless and squatting.

The ANC expanded access to education, sanitation, energy, medical services and created a growing black middle class. Townships like Soweto transformed into vibrant suburban centers. The country even hosted the 2010 FIFA World Cup, a moment that signaled its global arrival.

Yet these headline figures conceal deep structural vulnerabilities. Public services, particularly electricity and transport, are under severe strain. Eskom, the government-owned utility, epitomises these weaknesses. Years of deferred maintenance, mismanagement, and corruption have transformed a once-reliable grid into one prone to rolling blackouts.

In 2023 alone, South Africans endured 5,858 hours without power. The roots of the crisis date back to a 1998 white paper warning that the national energy surplus would vanish by 2007, a warning ignored. South Africa's president Cyril Ramaphosa is holding emergency meetings to address the country's deepening energy crisis.

Homicide rates remain alarmingly high, and with only 20 percent of murder cases reaching court, public faith in justice has collapsed. For many of the people, finding jobs that will sustain their lives has become improbable, if not impossible, especially for those who haven’t had access to education. Even once-proud state institutions have faltered. The national airline, South African Airways, collapsed in 2020. Transnet, the state freight monopoly, carries 25 percent less cargo than in 2015.

Despite the ANC’s early efforts to integrate the black population into the economy, inequality remains among the highest in the world. The unemployment rate hovers at 34 percent, and poverty has risen from 55.5 percent in 2020 to 63 percent in 2024.

President Ramaphosa insists reforms are underway. “We are steadily removing obstacles and implementing economic reforms,” he said recently.

Yet, the gap between promise and performance continues to widen. South Africa’s fiscal landscape illustrates the difficulty of policy implementation amid political fragmentation. The deficit rose to five percent of GDP in 2024 from 4.4 percent in 2023, and public debt climbed to 76.1 percent. Food inflation surged to 5.7 percent. In a striking example of governance challenges, the government scrapped a planned VAT increase from 15 to 16 percent in 2025 after coalition disputes. The move, designed to raise roughly 4 billion US dollars, was abandoned, exposing the tension between fiscal discipline and political compromise.

Internationally, South Africa faces renewed risk. The United States, South Africa’s largest trading partner after China, recently imposed 30 percent tariffs on aluminium and vehicle exports, threatening to undermine competitiveness. The South African Reserve Bank warned these tariffs could threaten up to 40,000 jobs, particularly in the automotive sector, which anchors broader manufacturing. SARB recommended accelerating structural reforms, diversifying export markets, and fully implementing the African Continental Free Trade Area agreement to safeguard industrial output and maintain global supply chain integration.

Bilateral merchandise trade between South Africa and the United States has expanded notably over the past decade, reaching 15.2 billion dollars. Today, South Africa’s exposure to the US market is significant in both scale and sectoral importance. In 2024, the United States accounted for 7.5 percent of South African exports, led by platinum metals (33%), motor cars (16%), and aluminum (5%).

Domestic social tensions have also resurfaced, particularly among white South Africans. The Afrikaner settlement of Orania continues to pursue autonomy, framing itself as a haven for cultural preservation. Separately, claims of discrimination against white farmers have drawn international attention, including U.S. offers of refugee status, although courts have dismissed allegations of “white genocide” as unfounded. These developments reflect anxieties over land reform, affirmative action, and perceived exclusion from the economic mainstream, adding another layer of complexity to policy and economic planning.

Despite setbacks, South Africa retains considerable strengths. The country still stands on vast mineral wealth, entrepreneurial energy, and a sophisticated financial system. Solar and private energy initiatives are flourishing, driven by citizens who have lost faith in public utilities. Private security and self-managed districts are filling the gaps left by the state. As the wealthy emigrate to countries such as the U.S and the poor bear the brunt of instability, South Africa’s challenge is existential.

Now, many are arguing on how to make economic reforms fast enough to prevent collapse and to rekindle the spirit of synergy that once promised its people. The broader continent faces similar headwinds. The African Economic Outlook Report released last year reveals a 477.2 billion dollar financing gap to meet sustainable development goals. The IMF’s approval of 20 billion dollars in Special Drawing Rights (SDRs) as hybrid capital for African economies is a start, but far from sufficient.

An economist, Kingsley Moghalu, aptly observed, “Overcoming Africa’s prosperity paradox will require breaking down structural barriers to prosperity, addressing security, electricity, energy poverty, and access to affordable finance.”

Many other economists also caution that South Africa has long been adept at coming up with promising plans for reforms, but inconsistent execution continues to impede progress.

Even as reform-based initiatives continue to tick along incrementally, many agree that there is growing urgency for South Africa to revivify internal unity to strengthen external engagement and build much faster strength on overcoming domestic challenges.