Cape Town – South Africa is teetering on the brink of a financial meltdown that could plunge the nation into a deep recession, according to Dawie Roodt, chief economist at the Efficient Group.
In an explosive interview with BizNews, Roodt painted a dire picture of a country crippled by political instability, a loss of market confidence, and a government unable to enact critical economic reforms.
At the heart of South Africa’s growing crisis, Roodt believes, is political dysfunction and the weakening authority of the ANC-led government. He said Finance Minister Enoch Godongwana, though competent, has lost credibility in the eyes of the markets.
“I think the minister is an okay minister of finance – he understands what’s going on. But I think the financial market lost confidence in him, certainly,” Roodt said.
He warned that the coalition’s fragility — marked by tensions between the ANC and the Democratic Alliance (DA) — has created a political vacuum that threatens economic stability.
Describing the current political environment as anything but stable, Roodt noted that even the ANC’s own coalition partners opposed the budget — a move that signals growing fractures within the unity government.
“It seems to me as if they are trying to patch things up. And the coalition part of the ANC voted against the budget for example. Now, you can’t call this a stable political environment. It’s certainly not. So maybe they should get a fresh mandate. Maybe we should go to the polls again,” he said.
With opinion polls from the Social Research Foundation showing dwindling support for the ANC, Roodt suggested that fresh elections might be the only way to restore a clear mandate. However, he dismissed the likelihood of the ANC regaining a majority, predicting gains for the MK Party, the Economic Freedom Fighters (EFF), and the DA. Intriguingly, he noted that many South Africans appear to favour a political alignment resembling the current ANC-DA coalition, hinting at an opportunity for a new centrist party to fill the gap.
The economist’s most chilling warning centred on the economy’s trajectory. Without urgent restructuring, South Africa faces a catastrophic bond market collapse, he warned.
Interest rates
“One day, we’re going to wake up and see bond yields go to 15%, 20%, 25%,” Roodt predicted.
Such a shock would devastate the rand, sending it into freefall and doubling petrol prices overnight. The fallout would hammer financial markets, with banks and insurance companies taking a severe hit, eroding household wealth and triggering a spending freeze.
“The Reserve Bank will have to increase interest rates,” he added, forecasting a deep recession and widespread economic hardship.
Roodt blamed the government’s failure to curb spending and implement growth-oriented policies. He criticised a recent 5.5% pay hike for public sector workers — well above the 3% inflation rate — as a sign of entrenched interests blocking reform.
“The beneficiaries of the system are well entrenched in cushy jobs,” he said, warning that the state’s profligacy is unsustainable.
To avert disaster, Roodt urged two immediate steps: ideological reforms to boost economic growth and a drastic reduction in state spending.
“Do it while you’re still in charge,” he implored, “rather than wait for the financial markets to force you.”
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Compiled by Betha Madhomu
