The Collapse of the South African Economic System

As I write this, I keep asking: why aren’t we confronting the more difficult questions? Why does South Africa face such a high unemployment rate? Why are businesses closing, factories shutting down, and workers losing their jobs? Why is crime so widespread? Why does justice feel out of reach for ordinary people? These issues are not isolated; they are symptoms of a system that has been failing for far too long.

For me, the biggest question is the economy.

I believe South Africa has become too dependent on top-down economic theories and policies, giving too much control to academics. While academics excel at research and analysis, their role should end there; they should not be designing and imposing economic policies.

Economic policy must come from the ground.

Grassroots businesses, the people who open shops, run factories, hire workers, and know their customers’ real needs and diversity, must frame, develop and design economic policy. Policy must be built from the ground up, not handed down from lecture halls and research papers.

I argue that a small business owner knows what customers can afford. A factory owner knows what it costs to produce. A retailer knows what people are buying and what they have stopped buying. A worker knows what it means to survive on a particular wage. A township entrepreneur knows what happens when customers have no disposable income. These are not theories. These are lived economic realities.  

Unemployment Statistics

Official unemployment figures hover around 31–33 per cent (31.4 per cent in the fourth quarter of 2025 according to Stats SA’s Quarterly Labour Force Survey). The broader measure that includes the potential labour force and discouraged work-seekers sits near 42 per cent. I reject the idea that these numbers fully capture the crisis. When you look at how few people hold stable, productive formal work relative to the working-age population, the lived reality for many communities feels far closer to eight out of ten people without decent employment.

​Unemployment is intertwined with businesses.

South Africa cannot create jobs if businesses cannot survive. The Business Day has reported repeatedly on companies under severe pressure, business rescues, factory closures and retrenchments.

Business Day further reported that Murray & Roberts, a 123-year-old engineering and construction icon that once employed tens of thousands, entered business rescue and saw its holding company face liquidation where tens of thousands lost jobs. Its mining interests were sold in a R1.27 billion transaction that preserved roughly 2,600-2,800 jobs were at risk in its mining-related businesses.

In 2026, Business Day has also reported that 12 automotive component manufacturers closed over a two-year period, with more than 4,000 jobs lost. And this year, Business Day reported that De Beers’ decision to halt production at Venetia placed more than 1,000 jobs at risk, according to the National Union of Mineworkers.

​Our own client at AbafaziPhambili, Lixil, closed local manufacturing capacity (including Cobra and Vaal production lines) and shifted to global sourcing and new distribution centres, another loss of more than 3000 factory-floor jobs.

The Foschini Group (TFG) has already closed dozens of stores and plans to shut hundreds more across Africa in the coming years as it pivots toward online sales. This is not primarily the fault of foreign platforms such as Shein or Temu. Local retailers relied on academic market research instead of going to the ground and asking people what they actually want and can afford, the kind of clothing they want, and what is happening to household income? When policy and research stay disconnected from lived reality, local businesses lose competitiveness and jobs disappear.

​Stats SA data, after collaboration with the Companies and Intellectual Property Commission, show thousands of liquidations annually, over 2,600 in 2024 and nearly 2,900 in 2025 under the updated figures. Business Day and related reporting have tracked this steady erosion of corporate South Africa.

I lost trust when theory became disconnected from reality.

The day I lost trust in the academic approach to economics was when a senior professor who contributes to Reserve Bank policy asked me to teach him how to run a business. He had been shaping policy for years yet could not start a business or operate one himself.

I was surprised, and he said, “It is different,”  Yes, it is different.

​Understanding an economy academically and operating inside an economy are two different experiences. Theory without the daily discipline of meeting payroll, reading customers, and competing in the real market produces policies that deepen the very problems they claim to solve.

In my own short-lived academic experience in studying Inequality, I also found this gap of abstract models that could not survive contact with practical realities. The theories of inequality I encountered did not always resemble what I was seeing on the ground. When I brought practical realities into the discussion, I struggled to find academic supervision that could accommodate those realities.

I am not arguing that academics have no place in economic policy.

Academics must stick to producing education and insights. Practical people, business owners, workers, community entrepreneurs, must design, frame, and develop economic policy. Let policy be bottom-up. Let the market set prices (will be discussed in my next article). Let those who produce the products and services  negotiate wages with those who employ them. Only then will the economy begin to run more smoothly, create real jobs, and reduce the inequality that is tearing our society apart. 

Conclusion

South Africa does not need more top-down prescriptions. It needs the courage to hand power back to the people who create products and services every day. 

Let us listen to the ground, NOT the figures.

With love,

Mother of the Nation