South Africa’s growth problem isn’t a story problem
Discovery CEO Adrian Gore’s latest statement on South Africa’s economy makes a case that has become all too familiar: driven by anaemic growth and structural unemployment, the country has spent a decade in societal crisis, but the tide has turned. Load-shedding has ended, state logistics are recovering, credibility has been restored, and what South Africa now needs is a shift in narrative – from perpetual decline to what Gore calls “realistic optimism.”
On this account, if the country gets the story right, the confidence flywheel moves, and investment and growth follow.
Gore is right that South Africa’s growth has averaged close to 1% against population growth of 1.6% over the past decade, and right that this arithmetic is the cause of the rising unemployment rate, almost irrespective of what else happens in the economy. He is also right that operational improvements at Eskom and Transnet are real, and that a Government-Business Partnership functioning at all represents a break from the adversarial drift of the past decade.
Where the argument runs into trouble is the jump from “things have stopped getting worse” to “the growth problem is now substantially one of confidence and story-telling.” That claim can be tested against the data the Centre for Risk Analysis tracks and analyses – and the data don’t support his case.
Gross fixed capital formation – the mechanism through which growth above 1% would have to arrive – sat at 13.9% of GDP in 2024, with private-sector fixed investment alone at just 12%.
Over a decade
This is not a temporary dip born of pessimism; it is roughly where investment has sat for over a decade, through load-shedding and its resolution, through multiple confidence campaigns, and through several changes in political rhetoric.
Economies that sustain 3%+ growth over multi-year periods typically run fixed investment at 25-30% of GDP or more. National Treasury has targeted 30% since 2019, without the ratio ever moving meaningfully in that direction.
The most recent quarterly national accounts show growth decelerating into 2026, alongside capital formation that is essentially flat.
This is the problem with treating growth primarily as a confidence variable: sentiment can shift some capital that is sitting on the sidelines waiting for a reason to deploy, but it cannot substitute for the capital stock itself.
If investment has been structurally suppressed for a decade (indeed, longer) by hostile policies and legislation, municipal collapse, network industry underperformance, and a business environment that penalises long-horizon commitments, then restoring “credibility” is a necessary but not sufficient condition for re-rating investment appetite.
The data suggest that re-rating has not yet happened, roughly two years after load-shedding eased materially.
This is precisely the gap the CRA’s Fragmentation Spectrum framework is designed to make understandable – and through which businesses can manage risks and take advantage of opportunities.
Maps the country
Rather than treating South Africa’s trajectory as a binary between decline and recovery – the frame both pessimists and optimists like Gore implicitly share – the Spectrum maps the country across a range of zones defined by the interaction between state capacity, institutional coherence, and the private sector’s ability to operate despite them.
On that framework, South Africa’s recent improvements sit squarely within a zone we would characterise as functional fragmentation: real operational gains in specific parastatals and specific partnerships, occurring alongside continued deterioration in the fiscal and governance fundamentals, municipal financial collapse, a stagnant tax base, and a state whose capacity to sustain reform momentum without constant elite bargaining remains unproven.
Growth scenarios built on this framework do not treat 2%-3% growth as a narrative-driven inflection point; they treat it as conditional on specific, trackable reforms in network industries, municipal finance, and regulatory certainty around property rights and energy: reforms whose fiscal and institutional preconditions are only partially in place.
This doesn’t mean Gore’s instinct is wrong that pessimism can be self-fulfilling, or that a country convinced of inevitable decline under-invests relative to one that believes improvement is possible.
Complacency
But the flywheel he describes runs in both directions, and an optimism decoupled from the investment data risks becoming its own kind of complacency: one that allows corporate South Africa, policymakers, and politicians to claim credit for sentiment shifts while the underlying capital-formation problem, and the reforms required to fix it, remain essentially unaddressed.
South Africa does not need a better story. It needs an investment share of GDP that has not moved in over a decade to actually move, and it needs a much clearer, resolute stance from business as to what specifically is required to move it.
