ANC policies have crushed South Africa’s economy, says Stanlib economist

ANC policies have crushed South Africa’s economy

South Africa’s business confidence has suffered under poor government economic policies over the past 15 years, according to Stanlib chief economist Kevin Lings.

Since 2008, confidence among businesses has only reached positive territory three times, never consecutively. The result is stagnating investment, slowing economic growth, and rising unemployment.

Corporates sitting on R1.5 trillion

South African companies are holding over R1.5 trillion in cash, equivalent to about 20% of GDP. Despite strong balance sheets and low debt levels, businesses are reluctant to invest locally. Lings noted that elevated interest rates make keeping cash in money markets more attractive than committing to fixed assets.

“This shows that companies are generating earnings and controlling costs, but they clearly do not want to deploy cash in expanding business or investing in the local economy,” Lings said.

Historical context

In the mid-2000s, business confidence peaked and GDP growth averaged 4% per year, creating over 500,000 jobs annually. Lings said that policy choices over the past 15 years have steadily eroded this confidence.

“Business confidence does not just go away. It was destroyed through the policy choices we made. Those policy choices have destroyed the confidence and we have not bothered to resurrect it,” he explained.

Consequences for growth and employment

The lack of corporate investment is contributing to stagnant growth and high unemployment. Lings warned that South Africa’s ultraconservative corporate behavior is both a risk and a lost opportunity.

“When you look globally, South African corporates stand out for conservatism in managing balance sheets. The negative side is that companies could generate more returns with minimal increase in risk,” he said.

Outlook

Without policy reform to restore business confidence, Lings predicts South African corporates will continue hoarding cash rather than investing in local projects. This approach threatens growth, job creation, and overall economic performance.

{Source: DailyInvestor}

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