Skip to Main Navigation

Overview

South Africa’s political transition is known as one of the most remarkable political feats of the past century. The ruling African National Congress (ANC) had driven the policy agenda since 1994 until August 2016, when the country held the most competitive local government election in which the ANC lost majority support in four of the metropolitan cities. Political parties negotiated coalition deals that have left the ANC unseated in Pretoria and Nelson Mandela Bay. The last local government elections were held in November 2021, where the ANC’s support fell below 50% for the first time across all elections since the dawn of democracy. This result reinforced the new era of coalition politics particularly in the metros. The next general elections will be held in 2024.

After the pandemic-induced contraction of 6.4% in 2020, South Africa’s economy started to recover in 2021, with GDP growth reaching 4.9%. Growth was supported by favorable global demand and commodity prices, as well as the rebound in domestic economic activities from the 2020 recession. However, the recovery has been job-less thus far with nearly 1.9 people less people employed at the end of 2021 compared with the quarter before the pandemic struck. The pandemic shock has broadly weighed on social outcomes, with poverty rates, based on the poverty line for upper-middle income countries, estimated to have risen to levels of more than a decade ago.

The South African economy was already in a weak position when it entered the pandemic after a decade of low growth. In 2019, the economy grew by 0.1% partially caused by the resurgence of load shedding associated with operational and financial difficulties at the energy utility Eskom. From 2021, the recovery is expected to continue in 2022, with GDP growth expected at 2.1% and to average 1.7% over the medium term. Longstanding structural constraints, such as electricity shortages, continue to be binding. Important steps have been taken last year towards addressing structural hurdles to growth over the medium term, including the increase in the licensing threshold for embedded electricity generation. Commodity prices remain important for South Africa, a major net exporter of minerals and net importer of oil, however, strengthening investment, including foreign direct investment, will be critical to propelling growth and create jobs.

Key Development Challenges

South Africa has made considerable strides to improve the wellbeing of its citizens since its transition to democracy in the mid-1990s, but progress has stagnated in the last decade. The percentage of the population below the upper-middle-income-country poverty line fell from 68% to 56% between 2005 and 2010 but has since trended slightly upwards to 57% in 2015 and is projected to have reached 60% in 2020.

Structural challenges and weak growth have undermined progress in reducing poverty, which have been heightened by the COVID-19 pandemic. The achievement of progress in household welfare is severely constrained by rising unemployment, which reached an unprecedented 35.3% in the fourth quarter of 2021.  The unemployment rate is highest among youths aged between 15 and 24, at around 66.5%.

South Africa remains a dual economy with one of the highest, persistent inequality rates in the world, with a consumption expenditure Gini coefficient of 0.67 in 2018. High inequality is perpetuated by a legacy of exclusion and the nature of economic growth, which is not pro-poor and does not generate sufficient jobs. Inequality in wealth is even higher and intergenerational mobility is low meaning inequalities are passed down from generation to generation with little change over time.

Last Updated: Apr 14, 2022

What's New

LENDING

South Africa: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments
Image
PHOTO GALLERY
More Photos

In Depth

  • The World Bank
    Apr 13, 2022

    Africa’s Pulse

    Since emerging from its first recession in 25 years, economic growth in Sub-Saharan Africa is estimated at 4% in 2021, up by 0.7 percentage point from the October 2021 projections, and up from -2.0% in 2020.

  • The World Bank
    Apr 13, 2022

    CPIA Africa

    The overall 2019 Country Policy and Institutional Assessment (CPIA) score for the region’s 39 IDA-eligible countries came in at 3.1, the same as in the previous three years, in a context of moderating per capita growth. ...

  • MAdagascar Hoel

    IDA in Africa

    With IDA’s help, hundreds of millions of people have escaped poverty—through the creation of jobs, access to clean water, schools, roads, nutrition, electricity, and more.

  • The World Bank

    World Bank Africa Multimedia

    Watch, listen and click through the latest videos, podcasts and slideshows highlighting the World Bank’s work in Sub-Saharan Africa.

Additional Resources

Country Office Contacts

Main Office Contact
Postal Address
P.O. Box 12629
Hatfield, 0028
Pretoria, South Africa
+27 (0)12 742 3100
For general information and inquiries
Zandi Ratshitanga
Sr. External Affairs Officer
+27 (0)12 742 3100
For project-related issues and complaints