SA’s biggest risk is not inflation, but slow implementation

The South African Reserve Bank is expected to keep interest rates unchanged when its Monetary Policy Committee meets later this week. The conflict in the Middle East has increased uncertainty around the inflation trajectory.

According to Thys van Zyl, CEO of Everest Advisory Services, the country’s biggest economic risk is not inflation, but the slow implementation of necessary reforms.

“South Africa has an inability to address structural bottlenecks quickly enough,” says Van Zyl. “The country is not losing to global shocks – we are losing to our own delay in fixing known problems. Weak logistics, energy uncertainty and slow reform are holding back growth. Every global shock exposes the same weaknesses, and each time the price is paid in lost growth.”

Van Zyl emphasises that South Africa’s weak economic performance is increasingly being driven less by global factors and more by domestic execution.

“Countries that manage inflation risk effectively do not avoid shocks – they reduce their exposure to them. South Africa does not have a resource, capital or knowledge problem, but rather an execution problem. The country knows what needs to be done, but it is doing it too slowly.”

He points out that economic growth currently remains around 1.5%, well below the levels achieved by other emerging markets.

As a net importer of fuel, South Africa remains particularly exposed to oil price shocks. If oil prices remain above $100 per barrel for an extended period, this could quickly filter through to fuel, transport and food prices.

“The issue is not only the shock itself, but how little protection we have against it. Limited strategic reserves, weak refinery capacity and insufficient diversification make the economy more vulnerable than it needs to be.”

The real cost of South Africa’s challenges is often invisible – it lies in lost opportunities.

“These are the investments that never materialise, the exports that do not happen, and the growth that never materialises. Capital does not move towards potential – it moves towards certainty.”

He adds that poor logistics alone already act as a significant drag on growth, with billions of rands in economic value lost annually. Van Zyl believes the solutions are known and achievable but require urgency.

“Private sector participation in ports and rail must be accelerated. Strategic fuel storage must be expanded. And logistics must be treated as a national growth priority – not merely an operational issue.”

He notes that even modest improvements in logistics could have a meaningful impact on growth.

“If South Africa improves its logistics efficiency, growth could, over time, move closer to 3%. Few reforms offer such a significant return.”

Van Zyl concludes that the focus must now shift from debate to implementation.

“The question is not whether inflation could rise again or whether global risks will persist. The real question is whether South Africa can improve its speed of execution.”

“Because in the modern economy, countries do not compete on plans – they compete on speed. And until South Africa combines urgency with action, we will continue to perform below our true potential.”

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