Economic growth in South Africa is possible With just a few small policy changes

By Richard Firth, CEO, MIP Holdings

In South Africa it feels like we are in a constant struggle between politics and progress. Decades of painfully slow economic growth have resulted in a mountain of regulations that hinder business development and draconian labour policies that make it extremely difficult for companies to access the skills they need.

In a country with extremely high levels of poverty and unemployment rates, the only solution is economic growth, but the easiest way to achieve this is being hampered by policies like BBBEE. If companies grow, employment will naturally grow, creating a cycle of growth. There is no way to circumnavigate this chain, as South Africa’s latest statistics prove.

The economy grew by just 0.1% in the first quarter of 2025. At least it wasn’t the 0.1% contraction predicted by Bloomberg, but with economic growth at less than half the rate of population growth, we are essentially in a recession. South Africa’s GDP figures have been extremely poor over the past ten years, and unemployment has continued to rise. The official unemployment rate in the first half of 2025 rose from 31.9% to 32.9%, and the unemployment figure including those that have given up looking for work has risen to 43.1%.

MIP’s fintech administration solutions currently administer a combined approximate 24,000,000 beneficiaries in the South African market. With this broad view we can see that there are many more low-income earners in the economy than what the official unemployment rate shows. The combined number of policies in the South African market shows that many more people are earning an income that what the authorities give credence to. If this is the case, then the “informal economy” is booming but very reliant on the success of the “formal economy”.   

Strategic shifts

South Africa is not the only middle-income country facing these problems, but it’s one of the few that is not actively pushing a growth agenda. Countries like China have aggressively pursued economic growth, while Singapore’s solid economic and political policies allowed the Southeast Asian country to jump up to the higher-income bracket in a very short space of time.

In fact, in 2013, Singapore’s economy was smaller than South Africa’s ($300B compared to $400B) and the country was facing labour shortages due to an aging population. Thanks to a series of strategic shifts, long-term planning, and adaptation to global trends, Singapore’s government grew its economy to $500B in 2024, compared to South Africa’s $403B in the same year.

Singapore did this by pursuing a three-prong approach that allowed the country to build a resilient, high-value economy. Firstly, the government of Singapore decided to focus on skills. Initially, the country imported the best intellectual capital and management capital available, using this as a basis from which to upskill its population through a programme called SkillsFuture which promotes lifelong learning and vocational training. This is in complete contrast to what the South African government legislated in the same period with completely different outcomes. Surely, every proud South African wants a job!

Importing skilled people from all over the world helped inform the next policy that proved vital to Singapore’s growth: English as the lingua franca of the country. Making English the official language of business in Singapore removed language barriers for companies wanting to trade with other English-speaking economies – more than half the world. English is spoken in 88 countries and is also the language of the United Nations and European Union, making English the dominant language of business on the planet and the language that is needed to programme 99.9% of all computers in the world.

The third vital strategic imperative that allowed Singapore to become the economic powerhouse it is today was the implementation of a zero-tolerance policy for corruption. Politicians’ salaries were increased to ensure that they would have no reason to be tempted into unethical deals, and today, the Transparency International Corruption Perceptions Index (TI-CPI) has ranked Singapore the third least corrupt country in the world out of 180 countries.

What we can learn from Singapore

Skills are vital. As long as we continue to push people into positions they are not equipped for to fill a quota, South African businesses will not be able to grow at a pace that can have long-term benefits for the country.

Unlike Singapore, which imported the skills it needed to kick-start its growth, South Africa is exporting its expertise. The United Nations’ International Migrant Stock report shows a steady outflow of skilled South Africans. In 2020, 900 000 South Africans lived abroad, and this number surpassed 1 million in 2024. This translates to an average of 74 people leaving every day between 2020 and 2024. It has reached such concerning levels that the Allianz Risk Barometer for 2025 showed that the shortage of skilled workers has become one of South Africa’s biggest risks.

Similarly, despite the fact that English is one of South Africa’s official languages, the government is pursuing a policy that will result in fewer South Africans being fluent in English. The Bela Bill (Basic Education Laws Amendment Act) proposes that school governing bodies determine language policies, and that these policies must be limited to one or more of South Africa's official languages and consider the broader community's language needs.

What the Bela Bill ignores is the fact that fluency in English is essential in the business world. Business contracts and communications are conducted in English, and most programmers primarily code in English. If you cannot speak English well, how can you write complex business logic and algorithms in an English programming language? You cannot speak Zulu or Afrikaans or Xhosa in the US or China, two of the largest economies in the world. Even in China, the predominant programming language is English.

Singapore also proves that eliminating corruption guarantees improved economic growth.

In a world that only continues getting more competitive, South Africa is lagging further and further behind. We need to ask our politicians to stop being selfish, and put the South African people first. We have to take off our “freedom fighter” veneer and start thinking economy first in everything that we do. We must focus on growing our economy, and to do that, we have to forget about everything else and generate jobs. If we look to Singapore as an example, we could change our economy into a global powerhouse in one short decade.

Let’s build a new and powerful “Rainbow Nation”!