Jacob Zuma. Picture: GCIS
Jacob Zuma. Picture: GCIS

President Jacob Zuma's second term cost SA’s economy R470bn, Nedbank chief economist Dennis Dykes said in Business Day on Tuesday.

“We have calculated that SA lost around R470bn of GDP stemming from the corruption, maladministration and misguided policies of the second Zuma administration starting in 2014,” Dykes said.

There was an estimated loss in tax revenue of R140bn, which would have reduced the budget deficit in 2019 to about 2.4% of GDP compared with the projected 4% in the October medium-term budget statement, while government debt would now have been less than 49% of GDP versus 56% of GDP, or about R250bn lower, Dykes said.

The amount lost in the latter half of Zuma’s term is bigger than Eskom’s debt. The embattled power utility is in a deep financial crisis, with a more than R419bn in debt that it is unable to service from its own revenue.

“If government now had this extra latitude, Eskom’s debt overhang could more easily have been addressed,” he said.

Nedbank examined the economic performance of countries with similarly structured economies over the same period, looking at actual performance compared with estimated potential.

Dykes comments come a day before finance minister Tito Mboweni’s maiden budget, in which he is expected to lay bare the country’s finances, which could include a rescue plan for Eskom and the possible absorption of some of its debt by government.

In 2018, a research paper compiled by Bureau for Economic Research (BER) economist Harri Kemp found that the SA economy could have been up to 30%, or R1-trillion, larger and created 2.5-million more jobs had the country kept pace with other emerging markets and sub-Saharan African economies over the past decade.

Kemp estimated that the government could also have collected R1-trillion more in tax had the economy performed closer to that of its peers and had tax collection remained efficient.

Read Dennis Dykes’s analysis in full here