Sameera Casmod | sameerac@radioislam.co.za
6 May 2025 | 11:16 CAT
2-minute read

Image: Getty Images

Efficient Group’s chief economist, Dawie Roodt, has raised the alarm about the state of South Africa’s economy, warning that the country is heading towards serious financial failure with mounting debt and excessive state spending. Roodt has highlighted the need for urgent intervention to avoid a recession.

Speaking to Radio Islam International, Roodt said that, in addition to the dangers posed by South Africa’s unsustainable debt burden, the lack of economic growth is particularly concerning and has far-reaching consequences for state financing, the country’s debt-to-GDP ratio, and deficit-to-GDP ratio.

“My main concern is lack of economic growth. We can maintain high levels of state spending. We can increase borrowing as well. But if [we] don’t have economic growth, then all that becomes unsustainable,” he said.

South Africa’s economy grew by 0.6% in 2024, slightly below the 0.7% recorded in 2023. According to Roodt, the projected growth rate for 2025 is 1%—a target the country is unlikely to reach, largely due to ongoing political instability.

“If you look at the political side of things, that makes things even worse in South Africa. We’ve got a government of national unity that’s on, then it’s off, then it’s on again. And that all those sorts of things contributing to a mood of uncertainty in South Africa. And that, of course, exacerbates the low levels of economic growth in South Africa,” Roodt said.

Roodt suggests that in order for South Africa to progress, maintain current debt levels, improve unemployment levels, reduce poverty, and grow per capita GDP, efforts must be made to grow the economy at a rate of 3% consistently and continuously for several years. In addition, Roodt recommends political stability and reform.

“Let’s assume things settle in the GNU. And they get their act in order and start showing political maturity. Do you have confidence in the policies of the cabinet as a whole in their strategy, in their approach as we get closer to Budget 3.0, that they have the plan to be able to ensure the growth? No,” Roodt explained.

He outlined four main reasons for this: the ANC is still the dominant party in the cabinet; its socialist ideology is archaic; its policies, such as the Expropriation and NHI Bills, are wide of the mark; and there is pervasive state incompetence and corruption.

“A combination of those four things makes it nearly impossible for this economy to grow much faster,” Roodt warned. “What we need to do to create a state that is efficient…is to create an environment that is conducive and attractive to investments—local and international,” he added.

Listen to the full interview on Sabaahul Muslim with Moulana Sulaimaan Ravat.