South Africa Economic Update, Edition 15

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - South Africa is facing a severe learning crisis in its education system, which is critical for developing the next generation's skills and driving inclusive growth [21][33] - The report emphasizes the need for urgent reforms in the basic education sector to address the learning crisis, financing constraints, and inefficiencies in public spending [35][40] Summary by Sections Part 1: The State of the Economy - South Africa's GDP growth was estimated at 0.8% in 2024, which is below the average growth rate of 4.1% for middle-income countries [24][45] - The fiscal deficit reached 6% of GDP in 2024, the highest level since 2009, leading to an increase in public debt to 74.9% of GDP [26][28] - Economic growth is projected to gradually improve towards 2% over the next three to five years, driven by infrastructure improvements and a favorable external environment [27][44] Part 2: The Overdue Reform and Emerging Priorities in the Basic Education Sector - The learning crisis has worsened, with the percentage of Grade 4 learners unable to understand reading material increasing from 78% to 81% between 2016 and 2021 [35][38] - The government traditionally spends about 4.3% of GDP on basic education, which is higher than most upper-middle-income countries, but real spending has declined from R338 billion to R323 billion over the last five years [40][41] - Three key actions are proposed for better learning outcomes: focusing on foundational learning, leveraging the private sector for education delivery, and improving efficiency in public spending [36][39][41]