Growing South Africa’s economy so jobs can be created and people can be raised out of poverty is the government’s ‘most urgent task’, President Cyril Ramaphosa said in his state of the nation address on 6 February 2025.
A target of at least 3% growth has been set. It’s been a while since South Africa’s gross domestic product (GDP) – a key measure of the country’s economic performance – has grown by 3%. In 2023, GDP growth was 0.7% and the IMF projects 2024’s at 0.8%. 2025 is expected to be better at 1.5% growth – still not 3%.
Electricity supply
State power utility Eskom has been a major barrier to economic growth because of its underperforming power stations. But in 2024, the country began to see some light at the end of loadshedding’s long dark tunnel. And then, after managing 10 months of uninterrupted power supply, a stage 3 alert was called on 31 January. It lasted only 37 hours, a mere blip compared to what we’ve gone through before.
A few weeks later, stage 6 loadshedding was announced after a number of unit failures at the Camden, Majuba and Medupi power stations. Eskom cited a loss of nearly 3,900MW (on top of the more than 7,000MW that was offline due to planned maintenance). Electricity and energy minister Kgosientsho Ramokgopa described the return of loadshedding for the second time in less than a month as a setback.
Energy availability
On the whole, Eskom’s power stations seem to be performing relatively well. The energy availability factor – the average percentage of installed capacity that’s in working order and ready to run if needed – has improved compared with this time last year and it is definitely better than in 2023, South Africa’s worst year of loadshedding. But it is still below 60%. Is there any other country where people watch their power stations like this?
Solar installations
In his state of the nation address, Ramaphosa praised South Africans for their resilience. Our ‘boer-maak-’n-plan attitude’ manifested during the long years of loadshedding, with people taking matters into their own hands by installing an estimated 6,178MW of rooftop solar power capacity. This is the equivalent of two power stations.
Energy supply
We can’t talk about electricity without mentioning how it gets to us. Areas with some of the best solar and wind resources – namely the Eastern Cape, Western Cape and Northern Cape – have run out of grid capacity.
Eskom needs to increase capacity and build more transmission lines. In its 2024 annual report, the power utility said it was exploring ways to increase its transmission line build rate to 1,400km a year. It’ll have to kick things up more than a notch to meet that goal: last year, for example, only 74km of lines were built.
Freight rail network
Another strain on the economy has been the collapse of freight rail transport. Ramaphosa noted that private rail operators now have access to the freight rail network, allowing them to increase the volume of goods transported by train. The infrastructure remains state owned. ‘This will ensure that South African minerals, vehicles and agricultural produce reach international markets, securing jobs and earning much-needed revenue for our fiscus,’ he said.
Unemployment
The unemployment rate in the last quarter of 2024 was 31.9%, slightly lower than the 32.1% recorded for the same quarter in 2023. But it’s still high. Young people are the most affected, with 60% of the labour force in the 15 to 24 age group unemployed. Many of them are likely searching for their first job but are struggling to find one, which is heartbreaking. The unemployment rate for those aged between 25 and 34 is 40%.
National debt
A big chunk of the country’s money is spent on servicing debt: R389-billion in 2024, according to the National Treasury. That’s more than was spent on basic education (R323-billion), health (R274-billion) or on peace and security (R250-billion).
The government’s debt-to-GDP ratio was 74.7% in the 2024/25 financial year. The debt-to-GDP ratio measures a country’s total debt as a percentage of its GDP, which helps assess its ability to repay its debt. A decade ago, the government said it wanted to prevent debt from rising to 40% of GDP – a mark that has long been passed.
Government spending
Government expenditure has exceeded revenue every year since democracy except in two years: the 2006/07 and 2007/08 financial years. Since the global financial crash hit in 2008, it has been pretty much downhill.
So what will the government do to fix the situation? Increase VAT? Raise taxes? Cut spending? We’ll just have to wait for the rescheduled budget speech to find out. In the meantime, we might just turn these charts into an interactive dashboard to help us keep track of the state of the nation with data.
- If you find the work we do at The Outlier valuable, please consider becoming an Outlier Supporter. Your contribution means we can do even more for you.