Dr Mzwanele Ntshwanti presented Moving from Consumption-Led to Investment-Led Growth: Designing a Macroeconomic Framework That Works for South Africa at the Nedbank Investment Tribe as part of IEJ’s stakeholder engagements on its macroeconomic framework. The presentation examines South Africa’s prolonged growth crisis and proposes an integrated policy framework centred on productive investment, employment and economic transformation.
From consumption to investment
South Africa’s economy is characterised by weak growth, high unemployment, severe inequality, debt-financed consumption and insufficient investment. Structural constraints include high capital costs, financing limitations, underdeveloped capital markets and infrastructure bottlenecks in electricity, transport and water.
The proposed shift towards investment-led growth aims to create a virtuous cycle of investment, employment, productivity, exports and fiscal stability, while strengthening economic sovereignty and supporting green industrialisation.
Reorienting fiscal, monetary and financial policy
Fiscal policy should shift resources towards capital formation while protecting and expanding public investment in health, education and the care economy. Improved infrastructure, stronger SOE governance and targeted development initiatives can help expand productive capacity.
Monetary and financial policy should support employment and productive investment through countercyclical measures, development finance, concessional funding and sustainable bonds. Reforming prudential rules and recapitalising development finance institutions can help mobilise domestic finance for long-term investment.
Industrial policy, trade and human capital
Industrial and trade policy should support globally competitive, locally responsive manufacturing, with opportunities in agro-processing, steel, critical minerals and green industries. Regional value chains, climate resilience, the Just Energy Transition and infrastructure harmonisation are key components.
Labour-absorbing growth should be supported by sector-specific training, learning-by-doing and knowledge transfer, alongside greater investment in the care economy to expand women’s participation in the economy.
Conclusion
The framework calls for coherent fiscal, monetary, industrial and labour policies centred on full employment and productive investment. Strengthened state capacity, transparent procurement and professional public services are essential to delivering sustainable, broad-based development.