Eskom a poster child for where things went wrong after new SA's honeymoon period

ETM Analytics' George Glynos reviews South Africa's economic growth over the last 28 years - on The Money Show

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On this Freedom Day, The Money Show takes the opportunity to review South Africa's economic growth over the last 28 years.

The journey started off with great promise in 1994 as the world applauded the country's relatively smooth transition to democracy.

Where did it all go wrong?

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Ray White (in for Bruce Whitfield) interviews George Glynos, Head of Research at ETM Analytics.

Democratic South Africa got off to "a decent start" in 1994 says Glynos, capitalising on the goodwill shown by the rest of the world.

That goodwill came in the form of new trade relations, strong trade relations... It came in the form of investor confidence; companies wanting to participate in the new South Africa.

George Glynos, Head of Research - ETM Analytics

At the time we had quite a strong infrastructural background, good institutional integrity... so we had a number of the pieces of the puzzle that were just right for the country to be able to take advantage of that [goodwill].

George Glynos, Head of Research - ETM Analytics

Glynos says the "honeymoon period" following Nelson Mandela taking power lasted well into the late 90s.

Madiba's successor, Thabo Mbeki, was able to leverage that goodwill even further Glynos goes on.

It was in fact through Mbeki's tenure that we got to produce some pretty decent growth rates... We were producing growth rates in excess of 6% at one point... Our employment rate was steadily dropping... South Africa was the darling of emerging markets... We went deep into investment grade ratings...

George Glynos, Head of Research - ETM Analytics

When the wheels started coming off "roughly" coincided with the time that Jacob Zuma took power, he comments.

We went through the global financial crisis and it's from then on, really, that South Africa has struggled.

George Glynos, Head of Research - ETM Analytics

I think there was an element of complacency. Things had been too good for over a decade and the latter part of that decade South Africa was in fact doing so nicely that we were getting strong inward investment numbers and the GDP figures were good.

George Glynos, Head of Research - ETM Analytics

The economy was growing at such a rapid rate that we very quickly ran into the constraints of what Eskom could produce at the time... and the focus at the time was obviously predominantly on social spending to right the wrongs of the past...

George Glynos, Head of Research - ETM Analytics

The fundamental error, says Glynos, was neglecting to continue looking after the very institutions that any country would rely on to generate sustained economic growth.

Listen to Glynos' detailed review of the past 28 years on The Money Show:

This article first appeared on CapeTalk : Eskom a poster child for where things went wrong after new SA's honeymoon period