Explainer: Ramaphosa making sunshine out of RDP and RET shadows

After a week of being the weird guy at the braai/birthday party/coffee shop/shopping mall asking every person of sufficient age: “What comes to mind when you hear the letters RDP?” it has come to light that a number of South Africans don’t know that each presidential administration has been guided by an economic policy. 

And now that the ghosts of State Capture (Molefe arrest, SAPS rot) and Radical Economic Transformation (Julius Malema’s plan to nationalise the Reserve Bank) have had their time haunting the 2025 news cycle, it seems like the perfect opportunity to unpack the economic path Cyril Ramaphosa has had to travel, and what may lie ahead.

Read more: SA Reserve Bank nationalisation debate in Parliament opens a legacy hornet’s nest

The reality is that South Africa’s post-apartheid economic story isn’t just about presidents making speeches about transformation – it’s about distinct economic eras, each with their own policy frameworks, promises and ultimately, their own report cards written in stunted GDP growth rates and lamentable employment statistics.

Starting from the negative

An uncomfortable truth for many apartheid apologists is that the old regime did the country no favours. In 1994, the newly democratic South Africa inherited what was referred to as a “technically bankrupt” economy. 

FW de Klerk’s administration had been shielding R86.7-billion in foreign debt (about $14-billion at the time), an economy crippled by sanctions, and the worst 10-year growth performance since World War 2.

More fundamentally, decades of exclusionary policies had created what would become known as the “triple challenges” – poverty, inequality and unemployment. These weren’t just statistics; they were the lived reality of millions of South Africans who had been systematically excluded from economic participation.

And then it grew, courtesy of a fully funded pension scheme. When the freedom writing was indelibly on the wall, outgoing officials made sure their own pensions and golden handshakes were bulletproof, even if it meant loading up the country’s credit card.

According to UN research, in 1989, government debt sat at R68-billion – but by 1996, it had exploded to R308-billion. Debt repayments jumped from R12-billion a year to more than R30-billion, while the Government Employees Pension Fund assets fattened up from R31-billion to R136-billion.

The great reconstruction project

When Nelson Mandela walked free, the country was hungry for redress. His Reconstruction and Development Programme (RDP) was a moral and social lifeline to jumpstart the inclusive economy.

But by 1996, fiscal reality bit hard. Enter Gear (Growth, Employment, and Redistribution), a pivot towards macroeconomic orthodoxy that prioritised fiscal discipline, deficit reduction and trade liberalisation. 

RDP was never officially scrapped, but Gear was supposed to fund it through growth.

Haters see it as a failure, but the RDP’s delivery was genuinely impressive. More than 1.1 million low-cost houses were built by 2001, benefiting around five million people. Clean piped water reached nearly 4.9 million people by 2000. Rural electricity connections jumped from 12% to 42%, with 1.75 million homes connected. Around 500 new clinics were built.

Gear delivered macroeconomic stability – the fiscal deficit was slashed to 2.2%, inflation brought down to 5.4%, and negative GDP growth was reversed.

But despite Gear’s consonant success, it failed spectacularly on its employment and redistribution vowels. The hoped-for private investment boom never materialised sufficiently. Growth was concentrated in the tertiary and financial sectors, not in labour-absorbing industries. Agricultural employment collapsed from 1.4 million to 637,000 between 1994 and 1998.

The rise of the technocrat

When Thabo Mbeki picked up the Gear baton of “jobless growth”, he articulated its structural flaws in a “Two Economies” thesis. This notion, introduced in 2003, acknowledged that macroeconomic stability hadn’t translated into widespread job creation. 

There was a “first economy” (modern, skilled, global) and a “second economy” (marginalised, informal, poverty-trapped).

This analysis led to the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) in 2005 – a targeted, evidence-based policy aiming for 4.5% annual growth from 2005-2009, then 6% from 2010-2014, with the highfalutin goal of halving unemployment and poverty by 2014.

And boy, did it make an impact. For the first time since 1994, economic growth seriously addressed unemployment, with the official joblessness rate falling from over 31% in 2003 to around 22% by late 2008. The AsgiSA period (2004-2007) saw the economy expand robustly, averaging more than 5% annual growth.

Massive infrastructure investments were launched, including the Gautrain Rapid Rail Link and 2010 Fifa World Cup infrastructure. The country’s fiscal health was further strengthened, with public debt significantly reduced.

A crash felt around the world

AsgiSA’s momentum was brutally interrupted by a savage one-two combination of the 2008 global financial crisis and Mbeki’s knockout-blow political recall by the ANC in September 2008. 

The era’s darkest shadow was Mbeki’s HIV/Aids denialism, which led to an estimated 330,000 preventable deaths – a devastating human cost that overshadowed economic achievements.

Officially, the Jacob Zuma era promised a “developmental state” through various policy frameworks. The New Growth Path (2010) aimed to create five million jobs by 2020. The National Development Plan (NDP) 2030, introduced in 2012, was a comprehensive long-term vision to eliminate poverty and reduce inequality by 2030.

By 2017, “Radical Economic Transformation” (RET) was the rallying cry (alongside Zuma’s obsession with being brought a machine gun), officially aimed at fundamental changes in economic ownership. In practice, RET became a synonym for wholesale looting of state-owned enterprises.

Nine wasted years

Okay, we felt it and it was here: the 2010 Fifa World Cup was successfully hosted (though much infrastructure planning occurred under Mbeki). We also gained free higher education for poor and working-class students in 2017, but, as we have come to find, without a concept of sustainable funding plans.

This era represents the most catastrophic failure in South Africa’s post-apartheid economic history. State Capture – the systematic repurposing of state institutions for private gain – is estimated to have reduced potential GDP growth by up to 4% per year.

Key institutions were systematically weakened. SOEs such as Eskom and Transnet were crippled by corruption and mismanagement, leading to load shedding and logistics failures that continue to plague the economy. 

The country suffered multiple credit rating downgrades to “junk” status.

The NDP, widely lauded by economists, was never meaningfully implemented. Its tenets directly contradicted the political project of State Capture unfolding in real time.

Read more: Former Transnet executives in court over multibillion-rand locomotive deal

A work in constant progress

To clarify: Ramaphosa’s “New Dawn” narrative is actually called the Economic Reconstruction and Recovery Plan (ERRP). 

Introduced in 2020 in the face of another global crisis (read: Covid), the focus was on high-impact priorities: job-creating infrastructure projects, energy security, industrialisation through localisation and structural reforms in network industries.

While some progress has been made – Eskom reforms, increased private power generation, and the SRD Grant cushioning the worst of the pandemic – South Africa remains bogged down in crisis mode. 

Logistics failures and persistent energy woes drag on growth, which has averaged a dismal 0.7% over the past decade. The pandemic knocked GDP down by 6.2% in 2020, and unemployment soared to record highs: 32.7% overall, with youth unemployment topping 60%. Freight rail collapse continues to sabotage export competitiveness.

On a macro scale, the country’s economic trajectory over the past 30 years paints a sobering picture. Averaging only 1.2% annual growth since 1994, the country has chronically underperformed – trailing far behind upper middle-income peers, which grew nearly four times faster, and lower middle-income economies, which outpaced South Africa by a factor of 2.6. 

This persistent stagnation has resulted in a classic “middle-income trap”, with the nation stuck well short of its economic potential.

Meanwhile, the country’s industrial base has eroded: manufacturing’s contribution to GDP has shrunk by 13% since 1994, and mining’s share has fallen from 15.5% to just 8.1%.

Perhaps most concerning, job creation has consistently failed to keep pace with a growing labour force. The employment absorption rate stands at just 56.3%, which means that out of 100 new entrants into the workforce, only 56 find employment.

Three decades after democracy, South Africa’s economic gains remain fragile and incomplete. The challenge, now more than ever, is to break out of stagnation and ignite truly inclusive growth. DM