South Africa’s R5 trillion loss: Investec’s Mazwai calls for urgent 3–5% growth to close global gap

South Africa’s sluggish economic growth since 2010 has left its citizens 40% poorer than the global average. Osagyefo Mazwai, investment strategist at Investec Wealth & Investment International told BizNews in an interview that the country’s GDP per capita decoupled from global peers in 2010, with growth averaging just 1% annually compared to 4.5% for emerging markets. This has resulted in a nominal GDP of R7.4 trillion today, versus a potential R11.5 trillion had growth kept pace. The R5 trillion shortfall in government revenue could have reduced national debt and funded critical infrastructure, like Eskom’s R400 billion transmission network expansion. He said key barriers to growth are energy shortages, logistics inefficiencies, crime, and an under-skilled workforce and called for urgent government action to stabilise electricity, improve logistics, reduce crime, and enhance workforce skills and to foster a business-friendly environment with less red tape. Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..Watch here.Listen here.Edited transcript of the interview.Linda van Tilburg (00:01) South Africa’s economic growth has lagged its emerging market peers, who averaged around 4.5 per cent since 2010, while South Africa had a meagre 1 per cent. That shortfall has cost the country dearly. Nominal GDP today stands at R7.4 trillion, but it could have reached R11.5 trillion had growth kept pace.So, what should South Africa do to reignite growth? Joining us in the BizNews studio is Osagyefo Mazwai, investment strategist at Investec Wealth & Investment International, whose recent analysis offers a pragmatic roadmap. Hi, Osagyefo.Osagyefo Mazwai (00:43): Thank you very much for having me, Linda.Linda van Tilburg: (00:47) You are currently doing a master’s degree at Harvard. Is that on economics and South Africa?Osagyefo Mazwai: (00:54) No, it’s rather focused on finance. It is through the Harvard University Division of Continuing Education. And I will be travelling there shortly to do my on-campus requirements to fulfil the requirements for my master’s degree in finance.Linda van Tilburg: (00:10) That’s amazing. This growth gap has widened over the past decade with our emerging market peers. So, in your view, what were the key policy or structural missteps that led us here?Osagyefo Mazwai: (01:23) It’s important that we contextualise the conversation within those growth outcomes and what they’ve actually meant. You’ve referenced the numbers where you’ve said that the economy could have been at 11 and a half trillion at this point in time. It’s currently sitting at 7.4 trillion. Now, what is of key consideration is what does that mean from a fiscal perspective? And if you look over time, the National Treasury could have collected an additional R5 trillion in government revenue. When you look at the kind of service that could have been delivered in that environment, then it says that South Africa could be on a fundamentally different economic trajectory at this time. For example, that R5 trillion makes up a significant portion of our gross national debt. And then you look at some of the immediate challenges facing South Africa. For example, there’s a need for Eskom to invest in transmission, looking at, I think, 14,000 kilometres at a cost of R400 billion over the next 10 years.If you look at various other aspects of the economy that need that kind of capital injection, and it tells you that it is growth that has to be at the centre of economic policy formation to ensure that at least one of the benefits is a stronger fiscal war chest that can then fund some of the very pressing and urgent interventions that are needed to put our economy on a firmer growth track. And you asked about some of the policy errors of the past. And I’d like to just really zone in on the structural constraints that are faced to the economy. Obviously, we’ve had challenges from an energy and a logistics perspective. And those are some of the main areas where we need the interventions to be fast-tracked.We need the government to move with a lot more haste and impetus in terms of implementing the reforms so that you do then have an improved structural capacity within the South African economy. And that will provide a fundamental basis for improving business confidence but also providing a fundamental basis for improved economic outcomes.Linda van Tilburg: (03:45) But a lot of these changes that you’re looking for are political. So, do you think there’s the political will to do this?Osagyefo Mazwai (03:54) It’s worthwhile just circling back to the pivotal election that occurred last year. And there were many things that the GNU represented, but the Government of National Unity, one of the key areas that were confirmed by the various parties that are party to it was a commitment to the structural reform programme through Operation Vulindlela. What must happen now is that the political parties represented there need to understand that there actually is no more time to waste. We don’t have time as against us now in terms of implementing it at a quicker pace. I mean, if we look at our nominal GDP per capita, you can see a stark dislocation in 2010 through to now. And on average, South Africans are around 40 per cent poorer than the rest of the world. And GDP per capita is the metric where you look at the overall living standards or the quality of life. And we’ve done the numbers. And if we’d like to close that gap within the next 10 years, South Africa’s nominal GDP per capita has to grow at around 8 per cent per annum over that 10-year period just to get to that average number. That talks to real growth of around 3 to 5 per cent, depending on the level of inflation or prevailing inflation in the economy. So it just tells you that our economic growth outcomes have to be absolutely exceptional over a 10-year period and even in that environment we only get back to the global average nominal GDP per capita. So, it just illustrates that this is an urgent matter, and growth has to be at the very centre of policy formation.Linda van Tilburg: (05:46) There are a couple of issues that are a problem with growth. President Ramaphosa says there can be transformation and growth, but there’s a debate that says it can’t. There needs to be changes to Black Economic Empowerment rules. Do you agree with either?Osagyefo Mazwai: (06h00) I think that we don’t really want to speak to that policy position because we do believe that transformation and meritocracy can be kind of policy or initiative that actually intertwined. You do need meritocracy within government to implement the reforms, and you can still achieve the transformation mandate. The transformation mandate is a critical pillar of improving the lives of all South Africans. But then again, it just brings us back to that point around GDP per capita, which gives you a sense of the overall living standards. And obviously there’s been policy error between 2010 and now, where you see GDP per capita dislocate to this extent from the global average. And on average, South Africans are 40 per cent poorer than the rest of the world from a nominal GDP per capita perspective.Linda van Tilburg: (07:00) If you could pull a lever right now to promote growth and unlock growth over the next, say, 12 to 18 months, what would that be?Osagyefo Mazwai: (07:08) I think that the critical areas are the network industries. That is the departure point because for us to be able to attract investment, then there has to be stable electricity. You have to have a well-functioning logistics network. You have to have dealt with the issues related to crime. Those are some of the critical areas. And then you also have to deal with the question around education. Is South Africa’s labour force well equipped to participate in the formal economy and within those sectors where there is investment happening? Those are the very critical areas. So again, I just want to repeat it is the network industries in the main. We’re looking at logistics and energy. We must capacitate the workforce but also need to deal with the challenges related to crime.Linda van Tilburg: (08: 05) The government might tell you from platforms, we are dealing with that. So, what would you say to them?Osagyefo Mazwai: (08:10)I think that the reality is that, as I’ve mentioned, there needs to be a greater sense of urgency when related to the interventions. Because as I’ve just said, we just don’t have the luxury of time. If we say that we need exceptional growth over a 10-year period just to get back to the global average, then every second that we lose means that it’s going to take longer to get back to that global standard and that global average. And we do need to lift the living standards of the people of South Africa. That is the true transformative agenda, is lifting those living standards.Linda van Tilburg: (08:55) So, if these changes that you’re looking for can be realised in other words, if the government actually fast-tracks some of these structural changes, what kind of growth could we look at?Osagyefo Mazwai: (09:06) The real GDP growth rate that we’re looking for is somewhere between 3 and 5 per cent, that’s the environment where you have meaningful employment creation. And one of the things that I forgot to mention was related to increasing business confidence and really that’s related to creating a more business-friendly economic environment. And that talks to, to some extent, reduction of red tape, loosening up regulatory frameworks to encourage foreign direct investment to happen.Linda van Tilburg: (09:44) You talked about the other emerging markets. So, who’s a good example for South Africa?Osagyefo Mazwai: (10:02) I’d imagine that in the main, we want to compare ourselves to emerging commodity exporters. But one example that we can bring up is the story of India and the development of that economy over time. And we saw a seismic shift in thinking, I think around 1991, where there was a greater focus on implementing policy that was pro-growth and through that pro-growth adoption of policies, then you did see India transforming the economy. You’ve seen that economy growing, exceeding those above 4 per cent levels and you’ve seen the net result for society in general from an India perspective. But there’s many countries around the world where you’ve seen that focused on growth and that does lead in general to the upliftment of people in general.Linda van Tilburg: (10:54) What role can the private sector play to encourage growth in South Africa?Osagyefo Mazwai: (10:55) I think that, at least from our perspective, what was the driving forces behind us developing this work related to the kind of GDP growth that South Africa needs to meaningfully address some of the economic challenges that confront us and also looking at the opportunity costs of not being growth centric. And one of the main or underlying drivers was we’d like to play a constructive role in trying to develop the narrative around what South Africa can be. And it’s worth mentioning that we avoid being overly prescriptive on interventions because I think the interventions are well understood. But what is critical is that, and there’s a nuance here, it’s quite an important point where we say that you’d like to light a fire under those implementing economic policy, but you’d also like to light a fire or ignite a fire in them to motivate and encourage that this can be done. We just all need to roll in the right direction, have a broad societal consensus that GDP growth has to be at the centre of policy formation. And that’s what South Africa can be in a fundamentally different economy in 10 years’ time. And if we’re going at three to five per cent, then you’ve set the basis for a much more robust investment environment where capital is looking to participate within the South African context.

South Africa’s R5 trillion loss: Investec’s Mazwai calls for urgent 3–5% growth to close global gap

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