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Last updated: 20 June 2019
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Background:
South Africa is one of the most mineral rich countries in the world, with massive gold, diamond, coal, iron ore and platinum deposits spread across the country. It has vasts amount of agricultural land and the ideal climate for the production of wheat and maize. Its climate also provides perfect conditions for wine making.
During the Apartheid years, loads of sanctions were in place against South Africa. This necessitated that South Africa locally develop or manufacture goods that could not be imported. Leading to a strong manufacturing industry within South Africa to supply the local market. The economy was however very closed and very little trade took place between South Africa and the rest of the world during the Apartheid years. Strict rules regarding the flow of money out of South Africa was in place too, leading to little money leaving the country. This in turn lead to the development of a very strong banking system in South Africa.
Most of the technical and skilled labour was made up by white people as the Apartheid regime favoured the minority population, The same goes for access to education, water, electricity, health, transport routes etc. All leading to a very skew distribution of income and quality of live in South Africa.
South Africa is one of the most mineral rich countries in the world, with massive gold, diamond, coal, iron ore and platinum deposits spread across the country. It has vasts amount of agricultural land and the ideal climate for the production of wheat and maize. Its climate also provides perfect conditions for wine making.
During the Apartheid years, loads of sanctions were in place against South Africa. This necessitated that South Africa locally develop or manufacture goods that could not be imported. Leading to a strong manufacturing industry within South Africa to supply the local market. The economy was however very closed and very little trade took place between South Africa and the rest of the world during the Apartheid years. Strict rules regarding the flow of money out of South Africa was in place too, leading to little money leaving the country. This in turn lead to the development of a very strong banking system in South Africa.
Most of the technical and skilled labour was made up by white people as the Apartheid regime favoured the minority population, The same goes for access to education, water, electricity, health, transport routes etc. All leading to a very skew distribution of income and quality of live in South Africa.
So with the background provided we will now look at South Africa's economic history since the rise of democracy. This will include GDP growth rates, inflation and exchange rate performances per president of the Republic.
The graph below provides a snapshot of the economic performance of South Africa under its various presidents (including the last few quarters under president FW De Klerk who was the last president of South Africa before a new president was democratically elected. We would like to show growth during the transition from Apartheid). Each presidents economic performance will be individually discussed below.
While looking at the economic performance of South Africa per president is useful, one should also take into account who the minister of finance during their presidency was. As economic policy is to a large extent implemented by the minister of finance. Below the same graph as the above one, but instead of looking at the growth rates per president it looks at the growth rates under the various finance ministers.
Most finance ministers had a pretty successful track record as South Africa's economy had very few periods of negative economic growth over the last 22 years. But South Africa has experienced a lot of slow to no growth. Thus not neccesarily negative economic growth, but growth that seems to be stagnating around 0. The problem with such growth is that if the population keeps increasing and the economy grows at a slower rate than the population, the average citizen in South Africa gets poorer over time. A useful measure of this is what is known as GDP per capita. GDP per capita measures the value of the economy expressed per person living in it,
Below a graph showing South Africa's annual GDP per capita (Rand value of the South African Economy per person living in it, as calculated by South African Market Insights). As can be seen from the graph during Thabo Mbeki's tenure South Africans enjoyed a surge in GDP per capita, while more recently the GDP per capita has remained relatively flat (hardly any growth from 2010 to 2015). This is partly due to low/no economic growth, while the population steadily kept increasing (thus more people sharing the spoils of the South African economy). If the population growth keeps outstripping the economic growth the country will grow poorer per person.
While the graphs above gives a good indication of South Africa's economic performance since the rise of democracy, another indicator of a country's economic performance is a country's exchange rate. In particular its exchange rate to the most traded currency in the world (the USA dollar).
A strong/appreciating local currency shows a willingness of foreign investors to invest in a country, while a weaker/depreciating currency shows a lack of willingness of foreign investors to invest in a country. I.e the higher the demand for a country's currency the stronger it will be, and visa versa. The graph below shows the average exchange rate per year under each of South Africa's presidents. While the exchange rate is influenced by a lot of factors, it is a very good indicator of economic sentiment towards a country. As can be seen from the exchange rate graph to the right, sentiment towards South Africa has been deteriorating at an increasing rate over the last couple of years, further adding to South Africa's list of economic problems, as less foreign investments into South Africa, leads to less growth and development, and the continuing cycle of stagnating economic growth.
A strong/appreciating local currency shows a willingness of foreign investors to invest in a country, while a weaker/depreciating currency shows a lack of willingness of foreign investors to invest in a country. I.e the higher the demand for a country's currency the stronger it will be, and visa versa. The graph below shows the average exchange rate per year under each of South Africa's presidents. While the exchange rate is influenced by a lot of factors, it is a very good indicator of economic sentiment towards a country. As can be seen from the exchange rate graph to the right, sentiment towards South Africa has been deteriorating at an increasing rate over the last couple of years, further adding to South Africa's list of economic problems, as less foreign investments into South Africa, leads to less growth and development, and the continuing cycle of stagnating economic growth.
The graph below combines the annual GDP per capita (in Rand terms) and the average Rand/Dollar exchange rate per year and calculates South Africa's GDP per capita (expressed in US Dollars). As can be seen from the graph to the left it's been an abysmal performance by the local currency for the last 20 odd years.
The following sections will take a look at the economic growth rates, social development, interest rates etc per president of the republic:
May 1994-June 1999: President Nelson Mandela
During President Mandela's reign as leader of the country South Africa experienced massive Foreign Direct Investment (FDI), as the country had sanctions lifted against it an foreigners and foreign businesses could invest in South Africa again. Strong FDI usually leads to a strong currency as the demand for the domestic currency increases. It also drives construction and infrastructure development (which bears fruit in later years as this lifts the capacity of an economy to handle greater growth, in terms of population and trade, The fruits of this can be seen in the strong growth experienced during Thabo Mbeki's tenure as president). Increased foreign trade was experienced too as sanctions were lifted.
During President Mandela's presidency the South African economy grew on average by 2.5% (quarter on quarter annualised data) and inflation averaged 8% per year.
14 June 1999 to 24 September 2008: President Thabo Mbeki
During President Thabo Mbeki's tenure as leader of South Africa, South Africa experienced an average GDP growth rate of 3.25% (quarter on quarter annualised) and inflation averaged 5.6%. The combination of president Mbeki and finance minister Manual proved to be the most successful economic combination in South Africa's young history. South Africa experienced 36 consecutive quarters of positive economic growth during the period in which Thabo Mbeki was president and Trevor Manual was finance minister.
It has to be said they were in charge of the country and finances during a "sweet spot" for South Africa. Demand for commodities were surging (largely driven by China), prices for commodities were surging ahead, all leading to South African companies making massive profits from the exports of commodities. Some economists have lamented the fact that SA did not grow at higher rates during this time, focusses more on improve the levels of education, and invested more into infrastructure and other less volatile and vulnerable industries, to ensure future job creation and a lesser dependence on volatile commodity markets and prices.
Thabo Mbeki was recalled by the ANC before his term was over, and a care taker president was appointed until the next general elections were held. The care taker president was Kgalema Motlanthe.
May 1994-June 1999: President Nelson Mandela
During President Mandela's reign as leader of the country South Africa experienced massive Foreign Direct Investment (FDI), as the country had sanctions lifted against it an foreigners and foreign businesses could invest in South Africa again. Strong FDI usually leads to a strong currency as the demand for the domestic currency increases. It also drives construction and infrastructure development (which bears fruit in later years as this lifts the capacity of an economy to handle greater growth, in terms of population and trade, The fruits of this can be seen in the strong growth experienced during Thabo Mbeki's tenure as president). Increased foreign trade was experienced too as sanctions were lifted.
During President Mandela's presidency the South African economy grew on average by 2.5% (quarter on quarter annualised data) and inflation averaged 8% per year.
14 June 1999 to 24 September 2008: President Thabo Mbeki
During President Thabo Mbeki's tenure as leader of South Africa, South Africa experienced an average GDP growth rate of 3.25% (quarter on quarter annualised) and inflation averaged 5.6%. The combination of president Mbeki and finance minister Manual proved to be the most successful economic combination in South Africa's young history. South Africa experienced 36 consecutive quarters of positive economic growth during the period in which Thabo Mbeki was president and Trevor Manual was finance minister.
It has to be said they were in charge of the country and finances during a "sweet spot" for South Africa. Demand for commodities were surging (largely driven by China), prices for commodities were surging ahead, all leading to South African companies making massive profits from the exports of commodities. Some economists have lamented the fact that SA did not grow at higher rates during this time, focusses more on improve the levels of education, and invested more into infrastructure and other less volatile and vulnerable industries, to ensure future job creation and a lesser dependence on volatile commodity markets and prices.
Thabo Mbeki was recalled by the ANC before his term was over, and a care taker president was appointed until the next general elections were held. The care taker president was Kgalema Motlanthe.
24 September 2008 to 9 May 2009: President Kgalema Motlanthe
During President Kgalema Motlanthe tenure as leader of South Africa, South Africa experienced an average GDP growth rate of -2.2% (quarter on quarter annualised) and inflation averaged 9.9%. Sadly he presided over the country during the global financial crisis set on by the subprime mortage crisis in the USA and never had much influence over policy or the implementation thereof. and to a large extent economic policy set out by South Africa, could not prevent this slump in growth during the financial crises as the whole world was affected by this, and South Africa is an extremely open economy (I.e a large part of its economy comes from trade with and from the rest of the world).
It has to be said that South Africa's financial system coped extremely well during the financial crisis. This is largely due to the fact that South African banks and consumers did not have large scale exposure to sub prime mortages in the USA. Strict financial controls on SA citizens and companies investing and taking money offshore shield our banks and citizens from large exposure to the sub prime mortgage market.
9 May 2009 to 15 February 2018: President Jacob Zuma
Under Jacob Zuma's rule, South Africa experienced an average GDP growth rate of 2.1% (quarter on quarter annualised) and inflation averaged 5.23%. This during a period in which commodity prices dropped off a cliff, then rose to new heights and dropped back down to multi year lows. Unfortunately SA did not diversify enough away from commodities during the good times, and it's economy is still very much linked to the fortunes of resources and commodities.
Sadly the recent drops in commodity prices are used as an excuse for poor economic growth, yet we never experienced massive economic growth when commodity prices were sky high. Cant have your bread buttered on both sides, so if we were to blame commodity prices for poor economic performance, the question has to be asked why did we not perform better with high commodity prices?
24 September 2008 to 9 May 2009: President Kgalema Motlanthe
During President Kgalema Motlanthe tenure as leader of South Africa, South Africa experienced an average GDP growth rate of -2.2% (quarter on quarter annualised) and inflation averaged 9.9%. Sadly he presided over the country during the global financial crisis set on by the subprime mortage crisis in the USA and never had much influence over policy or the implementation thereof. and to a large extent economic policy set out by South Africa, could not prevent this slump in growth during the financial crises as the whole world was affected by this, and South Africa is an extremely open economy (I.e a large part of its economy comes from trade with and from the rest of the world).
It has to be said that South Africa's financial system coped extremely well during the financial crisis. This is largely due to the fact that South African banks and consumers did not have large scale exposure to sub prime mortages in the USA. Strict financial controls on SA citizens and companies investing and taking money offshore shield our banks and citizens from large exposure to the sub prime mortgage market.
During President Kgalema Motlanthe tenure as leader of South Africa, South Africa experienced an average GDP growth rate of -2.2% (quarter on quarter annualised) and inflation averaged 9.9%. Sadly he presided over the country during the global financial crisis set on by the subprime mortage crisis in the USA and never had much influence over policy or the implementation thereof. and to a large extent economic policy set out by South Africa, could not prevent this slump in growth during the financial crises as the whole world was affected by this, and South Africa is an extremely open economy (I.e a large part of its economy comes from trade with and from the rest of the world).
It has to be said that South Africa's financial system coped extremely well during the financial crisis. This is largely due to the fact that South African banks and consumers did not have large scale exposure to sub prime mortages in the USA. Strict financial controls on SA citizens and companies investing and taking money offshore shield our banks and citizens from large exposure to the sub prime mortgage market.
9 May 2009 to 15 February 2018: President Jacob Zuma
Under Jacob Zuma's rule, South Africa experienced an average GDP growth rate of 2.1% (quarter on quarter annualised) and inflation averaged 5.23%. This during a period in which commodity prices dropped off a cliff, then rose to new heights and dropped back down to multi year lows. Unfortunately SA did not diversify enough away from commodities during the good times, and it's economy is still very much linked to the fortunes of resources and commodities.
Sadly the recent drops in commodity prices are used as an excuse for poor economic growth, yet we never experienced massive economic growth when commodity prices were sky high. Cant have your bread buttered on both sides, so if we were to blame commodity prices for poor economic performance, the question has to be asked why did we not perform better with high commodity prices?
24 September 2008 to 9 May 2009: President Kgalema Motlanthe
During President Kgalema Motlanthe tenure as leader of South Africa, South Africa experienced an average GDP growth rate of -2.2% (quarter on quarter annualised) and inflation averaged 9.9%. Sadly he presided over the country during the global financial crisis set on by the subprime mortage crisis in the USA and never had much influence over policy or the implementation thereof. and to a large extent economic policy set out by South Africa, could not prevent this slump in growth during the financial crises as the whole world was affected by this, and South Africa is an extremely open economy (I.e a large part of its economy comes from trade with and from the rest of the world).
It has to be said that South Africa's financial system coped extremely well during the financial crisis. This is largely due to the fact that South African banks and consumers did not have large scale exposure to sub prime mortages in the USA. Strict financial controls on SA citizens and companies investing and taking money offshore shield our banks and citizens from large exposure to the sub prime mortgage market.
15 February 2018 to current: President Cyril Ramaphosa.
Former deputy president of South Africa, Cyril Ramaphosa was formally swarn in as South Africa's 5th president since the dawn of democracy. He is seen as more pro business and less populist than Zuma, and as a consequence the currency market responded very favourably to the news of him becoming the president of the ANC in December 2017 and ultimately the president of South Africa in middle February 2018.
President Ramaphosa's reign as South Africa's president has not gotten off to a great start, with the first set of economic growth rate figures under his watch coming in at -2.2% in the first quarter of 2018.
President Ramaphosa's reign as South Africa's president has not gotten off to a great start, with the first set of economic growth rate figures under his watch coming in at -2.2% in the first quarter of 2018.
Update: 11 September 2018
Sadly for president Ramaphosa the economy he inherited from President Jacob Zuma and his corrupt Gupta friends and ministers has continued its decline and is now in a recession after Statistics South Africa released GDP numbers for Q2:2018 which came in at -0.7%, while the Q1:2018 GDP figures was revised downwards from -2.2% to -2.6%
For the 2nd quarter in a row the agriculture sector has shown strong declines, and even with it small weight in the overall economy, its massive declines have a significant impact on the overall quarter on quarter growth rates as published. One wonders whether the decline in the agricultural sector will continue, especially with the ruling party's land expropriation with compensation? Time will tell. But we can tell Mr President one thing. If property rights cannot be protected in South Africa, we will become the next Zimbabwe or Venezuela.
The rot continues for the South African Rand with it hitting 12 month lows against the Dollar as fear of emerging market contagion spread across financial markets after the collapse of Venezuela's economy collapses, Turkey's in turmoil and Argentina requiring the help of the IMF. While none of this is President Ramphosa or his administrations fault, he is at the helm of South Africa and current economic conditions in South Africa will be recorded in history as taking place under his watch and his performance as President in terms of South Africa's economic performance will reflect events that is outside his or his government's control.
For the 2nd quarter in a row the agriculture sector has shown strong declines, and even with it small weight in the overall economy, its massive declines have a significant impact on the overall quarter on quarter growth rates as published. One wonders whether the decline in the agricultural sector will continue, especially with the ruling party's land expropriation with compensation? Time will tell. But we can tell Mr President one thing. If property rights cannot be protected in South Africa, we will become the next Zimbabwe or Venezuela.
The rot continues for the South African Rand with it hitting 12 month lows against the Dollar as fear of emerging market contagion spread across financial markets after the collapse of Venezuela's economy collapses, Turkey's in turmoil and Argentina requiring the help of the IMF. While none of this is President Ramphosa or his administrations fault, he is at the helm of South Africa and current economic conditions in South Africa will be recorded in history as taking place under his watch and his performance as President in terms of South Africa's economic performance will reflect events that is outside his or his government's control.
Update: 23 January 2019
So with South Africans heading to the polls in 2019, im sure the current President of the ANC, Cyril Ramaphosa will be hoping for a sweeping victory at the polls. In fact we believe he needs it to remain the president of the ANC and the country. Anything less will see the Zuma fanction in the ANC move to have him recalled so that they can continue to loot the coffers of the state. On the positive side the state capture commission of inquiry has opened up a lot of hidden corruption within the ANC which the president can use to show that the ruling party is serious about addressing corruption.
Another positive for the current president is the fact that South Africa's economy exited its recession with 3rd quarter 2018 growth coming in at 2.2%
Another positive for the current president is the fact that South Africa's economy exited its recession with 3rd quarter 2018 growth coming in at 2.2%
Update: 6 March 2019
Following the release of yesterday's GDP numbers by Statistics South Africa for the 4th quarter of 2018 and the revised numbers for the 3rd quarter of 2018, we updated the interactive graphics above and we provide a short summary of the GDP per president below:
While the last two quarters of 2018 has turned positive for South Africa and its sitting President Cyril Ramaphosa the above shows that the average quarter on quarter annaulised growth rate since President Ramaphosa is still very low. In fact it is the 2nd lowest of all of South Africa's Presidents. With only Kgalema Motlanthe achieving lower growth rates. Unfortunately for him, he was in charge of South Africa during the financial crisis and the ensuing recession that his South Africa.
Readers should note there is a difference between the GDP for 2018, which is reported at 0.8% and the 1.4% quarter on quarter annaulised. The 0.8% shows by how much the economy has grown from 2017 to 2018. While the 1.4% quarter on quarter annaulised shows what growth for a full year would be if the growth from Q3:2018 to Q4:2018 was to continue for a full year.
- President Thabo Mbeki: 3.25%
- President Nelson Mandela: 2.5%
- President Jacob Zuma: 2.4 %
- President Cyril Ramaphosa: 0.2%
- President Kgalema Motlanthe: -2.2%
While the last two quarters of 2018 has turned positive for South Africa and its sitting President Cyril Ramaphosa the above shows that the average quarter on quarter annaulised growth rate since President Ramaphosa is still very low. In fact it is the 2nd lowest of all of South Africa's Presidents. With only Kgalema Motlanthe achieving lower growth rates. Unfortunately for him, he was in charge of South Africa during the financial crisis and the ensuing recession that his South Africa.
Readers should note there is a difference between the GDP for 2018, which is reported at 0.8% and the 1.4% quarter on quarter annaulised. The 0.8% shows by how much the economy has grown from 2017 to 2018. While the 1.4% quarter on quarter annaulised shows what growth for a full year would be if the growth from Q3:2018 to Q4:2018 was to continue for a full year.
Update: 20 June 2019
Unfortunately for President Cyril Ramaphosa, the economy is not heading in the direction that he would be hoping for. The first quarter of 2019 saw the economy decline by -3.2% compared to the fourth quarter of 2018. While he inherited a pretty broken economy from former president Jacob Zuma, it can be fixed, if enough political will and leadership is shown in order to implement pro growth policies, which flies largely in the face of pro social policies which a lot of ANC factions are fighting for. It is also within government's rights to adjust the mandate of the South African Reseve Bank (SARB) as it's mandate is set by National Treasury. We do believe SARB can and should take a more accommodative monetary policy stance towards economic growth and not just fixate on inflation targeting, especially when inflation is largely driven by factors outside consumers control.