State Financed Social Housing Model in South Africa Requires Capacity Building Injection

Introduction

Any form of housing, property investment in particular is a function of a country’s macro-economic activity, levels of its employed population, GDP growth plus budget and expenditure framework. The Gross Domestic Product (GDP) in South Africa expanded to an annualized 3.8% in the fourth quarter of 2013 (National Treasury, 2014). The GDP growth rate in South Africa is reported by the Statistics South Africa to have averaged 3.2% from 1993 until 2013.

By March 1996 the country’s GDP growth rate recorded an all-time high of 7.6% while a negative growth of 2.70% was posted in March 2009. South Africa’s export-based economy is the largest and most developed in Africa. The graph below demonstrates that even though South Africa has the biggest economy in the continent, its GDP growth is lagging behind other African countries. The countries comprising the top five ranking led by South Africa are Nigeria, Egypt, Algeria and Angola had shown exceptional economic growth in recent years. Equatorial Guinea recorded the continents’ highest GDP rate of 38% in 2004 and being the worst performing economy as reflected in the graph.

South Africa’s GDP growth rate by peer comparison had been tepid and lackluster. It is in Southern African states that SA’s GDP growth rate had been gloomy comparatively speaking and Angola’s economy has grown consistently over the measured period. Even the bottom ranked country, Comoros (in terms of economic size, investor confidence and country risk profile) is expected to contend well relative to South Africa and it has not been exposed to any negative growth rate over the last few years.

Source: GDPAfDB Statistics, SARB