“I think there’s a bit of a historical emotional debate that’s happened in South Africa over the last very short term period,” Colin Coleman from Goldman Sachs international told CNBC Africa on Monday.
Read the full report here.
“We felt it was a good moment, particularly with April 27 2014 coming, to look back at the 20 years and ask the Nelson Mandela South Africa what has South Africa done with its freedom in the past 20 years and it is quite a remarkable picture that emerges.”
Goldman Sachs released a report on Monday entitled “Two decades of Freedom: What South Africa is doing with it, and what now needs to be done,” which is a comparative and comprehensive look back at the last 20 years in South Africa.
“The things that come out of the report are extremely strong, and therefore in looking back over a longer period of time, perhaps there’s some perspective. That perspective gives you a lot of hope and inspiration for fixing the things that remain,” Coleman explained.
The report also detailed how South Africa’s GDP has almost tripled from 136 billion dollars in 1994 to 385 billion dollars in 2013.
Inflation also fell from the average of 14 per cent to around six per cent, as well as the dramatic rise in the emerging middle class.
“It’s quite remarkable when you look back at 1994. We had a bankrupt state, a junk investment grade status credit rating, a very small economy, and we had some very worrying fiscal ratios,” said Coleman.
“The fiscal, monetary authorities and the government as a whole have done a tremendous job in turning that around. Today we’ve 3.3 per cent growth rate through that 19-year period, we have a 400 billion dollar economy, [and] a very deep financial market. We [also] have a significant rise in the consumer environment.”
Coleman added that South Africa’s current success has however been due to a combination of aspects, especially due to government support of the 16 million people currently living in poverty and on the grant system.
Social grant beneficiaries have since increased from 2.4 million people in 1994 to 16.1 million people in 2013.
“The wage inflation has been a real three per cent through the period, and the combination of that and social grants have assisted the rise in the middle class, the generation of empowerment plus the public sector transformation. This has seen effectively more black South Africans going into the public sector, has supported this creation of the middle class,” said Coleman.
He added that the dynamics are such that the country can now support its lower income group, as well as its emerging middle income group.
“That [support] hasn’t however been without indigestion being caused particularly in the consumer and credit world,” Coleman explained.
“You’ve seen that of the new 10 million in the middle and upper class, you’ve seen people getting over indebted, and to some extent that’s created this effect where – of the nine and a half million South Africans that have some kind of consumer impairment – there may be roughly 10 upper cent of those that will become permanently indebted in the future. Assisting those people is an important part.”