In the last weeks, South Africa’s upcoming election has been a focal point of discussions globally. The presidential election scheduled for May 29, 2024, is particularly observed by many for diverse reasons. Firstly, South Africa is currently Africa’s most advanced economy with a GDP of $373 billion. The upcoming election could have significant implications both regionally and globally.

So far, the election appears to be the most pivotal general election. It was the seventh general election since the end of white minority rule 30 years ago when Nelson Mandela led the ruling party, the African National Congress (ANC) to power. However, the ANC, despite its historical significance, has seen a decline in popularity over the years. The ANC received only 57.5% of the vote in the last general election held in 2019. Some projections suggest it may struggle to maintain a simple majority. The main opposition, the Democratic Alliance (DA), intently formed coalitions with other smaller parties, to present a united front against the ANC. Yet, the real hurdle for whoever emerges victorious will be governing a populace already fuming over the nation’s current path.

South Africa’s economy is currently in a precarious state. The country narrowly avoided a recession last year, with a 0.6% growth. The IMF predicts the country’s growth will rise to merely 0.9% this year and 1.2% in 2025, assuming power supply improves and economic reforms take effect. This indicates economic stagnation rather than significant progress. While projections from the World Bank and similar organizations are not always entirely accurate, we’ve learned that their projections can not be dismissed.

What’s more, the present economic realities in South Africa underscore the gravity of the situation. For example, South Africa has been grappling with substantial public debt. As of the latest report from the IMF, South Africa’s public debt stands at 70% of GDP, which is a significant portion of an emerging market. This ratio is projected to reach 86% by 2029 due to slow economic growth and continuous bailouts for struggling state-owned enterprises like Eskom, Transnet, and South African Airways. South Africa has also been grappling with significant currency depreciation. Currently, the South African rand is free-floating and has depreciated by about 10% against the dollar this year alone. The currency weakness has been driven by fears that the National Treasury will not achieve its budget deficit and debt-to-GDP targets for the fiscal year due to increased state support and revenue shortfalls.

The issue of rolling electricity blackouts, commonly known as load shedding, is another significant challenge for the country. South Africa’s power utility, Eskom, has struggled with maintaining a consistent power supply due to aging infrastructure and mismanagement. In 2023 alone, South Africa experienced over 200 days of load shedding, severely impacting businesses and households. These blackouts have severe implications for the economy, affecting industries, small businesses, and households alike. Which brings up the issue of unemployment and poverty. South Africa’s unemployment rate is among the highest in the world, standing at 32.6% as of the third quarter of 2023. Many young people struggle to find jobs, leading to increased social instability and discontent. This economic hardship is compounded by rising crime rates, inadequate healthcare, and a struggling education system. According to the Multidimensional Poverty Index, 63% of South Africans, approximately 37 million people, are multidimensionally poor.

Moreover, corruption remains a pervasive issue in South Africa. When President Ramaphosa, took over from the scandal-plagued Jacob Zuma, he pledged to root out corruption. However, his administration has also faced allegations of financial misconduct, which has further eroded public trust. Last year, South Africa received a score of 41 out of 100 on Transparency International’s Corruption Perception Index, one of its lowest scores ever.

The International Monetary Fund (IMF) expects South Africa to be Africa’s largest economy next year. In its World Economic Outlook report, the institution projected the country’s GDP to reach $401 billion this year. However, the new administration will have to address its challenges head-on, to pave the way for sustainable growth and development.

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