According to Standard Chartered Bank, investors shouldn’t dismiss the economy of South Africa over its other continental peers!

South Africa’s economic outlook has faced significant challenges in recent years. From sluggish growth to persistent inequality, the country’s financial landscape has often painted a picture of struggle. However, a recent statement by Standard Chartered Bank‘s head of research, Razia Khan, offers a glimmer of hope, urging investors and citizens alike to avoid writting the economy of South Africa off.

She emphasizes that investors should not overlook the country over its other continental peers, once it possesses robust institutions that can support its economy, particularly if it prioritizes boosting growth.

“With some institutional strength in terms of the debate around fiscal rules, its existing revenue-collection ratios, the South Africa Reserve Bank, which is a major part of the institutional strength of the country, I think there’s still a lot going for South Africa. All it needs now is to really focus on how to kickstart growth”, said Khan during an interview.

Despite facing challenges like frequent power cuts, crime, and transportation issues, South Africa has implemented various reforms to address these issues. Data from PwC’s Private Business Attractiveness Index indicates that the country is increasingly attractive to private businesses compared to other countries in the Europe, Middle East, and Africa region. Having even ranked 23rd out of 33 countries surveyed, in 2023, a notable improvement from its 31st position in 2021. A major highlight compared to Kenya’s 32nd position and Nigeria’s last-place ranking.

However, without a significant push for growth, South Africa’s economy is expected to lag behind its regional peers that are also implementing reforms. The International Monetary Fund forecasts a 0.9% increase to the country’s economy this year, whilst for Nigaria and Egypt the growth is expected to be 3.3% and 3%, respectively.

Khan emphasized that SA needs to intensify its efforts to stimulate growth, as it lacks a “natural lever to pull that is suddenly going to shoot the lights out from a growth perspective”, which according to her has “seen over a decade of growth underperformance”.

Moreover, she stressed the importance of South Africa, Egypt, and Nigeria’s economic progress in reshaping Africa’s growth narrative. As former economic powerhouses like Ethiopia and Mozambique face challenges, where an insurgency is hindering its development of natural resources, the responsibility falls on them.

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