JOHANNESBURG, SOUTH AFRICA—
South Africa's economic growth since the fall of apartheid has been significant, according to a new report
from investment banking firm Goldman Sachs.
The company combined several barometers to look at what has happened in South Africa's economy since 1994.
"South Africa in the last year has tended to have a motional, somewhat negative reaction both domestically and internationally," said Colin Coleman, managing director of Goldman Sachs in Sub-Saharan Africa. "And my view is that we needed to kind of get some perspective on the past 20 years as to what's been achieved in order to get a better balance in the debate."
Among the advances made in the economy since 1994, the gross domestic product (GDP) jumped from $136 billion to $400 billion and the number of households with electricity went from nearly 60 percent to 85 percent.
"When you look back at what Nelson Mandela inherited in May when he became president, it was really bitter pill, because you had an indebted nation that had no money," Coleman said. "There was growing below-population growth with huge unemployment, huge racial disparities, a very volatile political social environment. Effectively, that gave way to a golden period of growth, low inflation, bringing the debt down and an extraordinary performance until the global financial crisis."
Among other changes: tax receipts increased from $114 billion to $814 billion and the Johannesburg stock market cap went from $3 billion to $50 billion.
In a country where local economic forecasts are not always positive, business leaders and economists said it is refreshing to see a long-term look at improvements made.
"There's often a lot of doom and gloom talk about South Africa, but what the report did point out is some fairly of significant achievements over the last 20 years," said Joanne Yawitch, chief executive of the National Business Initiative, an organization made up of corporations and businesses that work on nationwide initiatives. "In particular, there has been an increase in productivity, an increase in employment, there has been a huge increase in the number of people in the middle class. Quite a substantial improvement in the quality of life of a great number of people, as well as some significant problems."
However, the report is not all positive. It points to the struggling education system, a consistent unemployment rate that has hovered around 24 percent, and 70 percent of the unemployed being under age 34. There are also stark racial inequalities in terms of income, with 85 percent of blacks poor, while 87 percent of whites are middle to upper class.
There have been criticisms of the report. Firstly, that the report relies too heavily on general data, rather than cultural or empirical evidence.
"I don't think that there is an adequate enough analysis or understanding of the real drivers of poverty in South Africa," said Tracy Ledger, a PhD research fellow at the Public Affairs Research Institute at Wits University in Johannesburg.
She notes that increased wages are a result of the higher cost of living that demands the wage hikes.
Yawitch agrees, to an extent, with the criticism, noting there were some difficult-to-quantify issues that were not included, such as corruption and violence, which are key to damaging the economy. Overall, though, she said it is refreshing to get a long view.
"I think the reality certainly for me - I mean I grew up under apartheid and have spent 20 years in this democracy - is that life in South Africa is a lot better for most people than it ever was," Yawitch said. "But there are very, very big things that still have to happen. And I think that's what the report draws our attention to, is that it's a long journey and that we've made progress and must carry on."
In reaction to the report, South Africa's finance minister said the country needs to focus on providing better opportunities in education and helping young South Africans find work.