Reigniting South African Growth
One of the paradoxes of Sub-Saharan Africa’s rapid economic expansion is how the region’s most sophisticated economy seems to have become decoupled from the rest of the region. South Africa needs to reclaim the economic initiative, by – literally – building the Africa of the future.
JOHANNESBURG – A paradox of Sub-Saharan Africa’s rapid economic expansion is the fact that the region’s most sophisticated economy seems not to be part of it. Since 2008, South Africa has recorded average annual GDP growth of just 1.8%, less than half the rate of the previous five years. The International Monetary Fund expects output in the rest of Sub-Saharan Africa to grow at a rate of close to 5% next year, but South Africa is projected to manage little more than 1% growth. More worrying still, the country’s unemployment rate – at over 25% – is one of the highest in the world.
South Africa needs to reclaim the economic initiative, by – literally – building the Africa of the future. Countries across the continent are racing to construct the roads, ports, power stations, schools, and hospitals they will need to sustain their growth and meet the needs of their fast-growing and urbanizing populations. And what they need most of all is expertise.
But while South Africa has highly capable architecture, construction, and engineering sectors, its current share of foreign-built projects in Sub-Saharan Africa stands at only 7%, compared to 32% for China. According to the McKinsey Global Institute (MGI), a coordinated effort by South African construction firms, banks, financial institutions, and government ministries – in partnership with their counterparts in other African countries – could triple this share, potentially creating 80,000 new domestic jobs from exports of construction services by 2030.