South Africa Economy

Driven by a combination of higher commodity prices, the relaxing of lockdowns and a recovery in global trade, Africa has had some success in overcoming the recession provoked by the coronavirus pandemic and returned to growth in 2021.

Economic zones in Africa have had a significant impact on trade volumes across the continent, as well as on job creation and foreign direct investment inflows.

The African PE industry has become increasingly complex and diverse, with the arrival of global institutional investors in recent years paving the way for some of the world’s largest firms to enter the market. Between 2014 and 2019 the total value of the 1053 PE deals reported in Africa reached $25.4bn. While deal volumes have maintained an upward trend, their value has gradually eased, suggesting growing investor interest but smaller deal sizes. Moreover, in addition to consumer-driven industries, PE fund managers have diversified their strategies to invest across a variety of sectors such as IT, renewable energy, infrastructure and real estate.

A strong mid-year performance helped lift South Africa’s economy out of recession and back into positive territory in 2017. However, factors such as high unemployment and an expanding deficit could rein in growth in 2018.

Malusi Gigaba, South Africa’s minister of finance, delivered the Medium-Term Budget Policy Statement (MTBPS) to Parliament on October 25, outlining a mix of partial privatisations and infrastructure spending aimed at spurring economic growth while still pursuing fiscal consolidation.

South Africa has recovered from its recession, though investors remain cautious given policy uncertainties and waning business sentiment.