One way to visualise an economy is to think of it as a pie. Doing so invites discussion about how to grow the pie, so there is more to share, speaking to policies that stimulate growth, or strategies to divide the pie (speaking to inequality, equity and the calls for redistribution).
Broadly speaking, a pie is baked in an oven where a chef combines the ingredients according to a recipe. The recipe specifies the ratio of the ingredients, and once this is set, pies can be made until one runs out of an ingredient, chefs, oven capacity or energy. When a constraint is hit, the remaining ingredients — or factors of production — will be unused: more delicious pies cannot be made until the biting constraint is alleviated.
There is no single recipe for pies, but many great pie recipes have aspects in common, whether that is the temperature at which they should be baked or the ratio of pastry to filling. Similarly, economists broadly agree on the characteristics of the best recipe for economic success. Studies have found this to include things like the rule of law, property rights, attractive investment policies and policies that support the free market. Case studies abound: just consider the pies of North and South Korea, or the Maduro diet in Venezuela.
Apple pies are made out of apples, sugar, flour and spices. In this analogy, the ovens could be fixed capital investment, with the power to run them being analogous to our electricity generation capacity, entrepreneurial talent standing in for the chefs, regulations and intellectual capital playing the role of the recipe with things like land, minerals and labour being the ingredients, the apples, sugar and flour.
We have low levels of capital formation in SA, a low savings rate and recent rates of foreign direct investment indicate that our economy is not currently internationally attractive, with risks of crime, regulatory uncertainty and questions regarding the value of our property rights weighing on investors’ minds. This is exemplified by many of our domestic firms searching for investment opportunities internationally.
GDP is strongly correlated with electricity production since much economic activity is dependent on electricity. In 1987 our electricity production per capita was double the world average. Electricity production per capita peaked in 2007 at 5270kWh per person, when it was higher than Italy and 80% above the world average. By 2023 this had fallen 28%, to a level only 3% above the world average.
With no reports of the transmission grid build required suggesting that it is on track, and no plans or funds to replace the coal-fired power stations that will reach the end of their operational lives over the next decade, one wonders whether the bonuses paid to Eskom staff were a reward for good performance, sensible planning and forecasting for the future, or a bribe to keep the lights on, raising the question of how long this will last.
You’d have thought we had a surfeit of entrepreneurial talent the way we have gone about exporting our entrepreneurs, ranging from Elon Musk and Roelof Botha to the skilled professionals, miners and tradespeople who have helped build the Australian and Canadian mining industries. It is telling that most SA-born dollar billionaires have emigrated. These are the job creators our unemployed have been crying out for.
A labour force can be measured in terms of quantity and quality, which can be thought of as the number of workers and their experience, skills and training, which determines their productivity. We have an extremely high rate of unemployment, but closer inspection shows there are large differences between workers depending on their education level. The recent Trends in International Mathematics and Science Study (TIMSS) and National Senior Certificate (NSC) results for maths are instructive regarding our future labour force and its international standing.
All students who write the NSC write either mathematics or mathematics literacy — a far easier paper. With not all schools offering mathematics, some competent pupils don’t have an option and are forced to study maths literacy. About 12.7% of the 2024 class achieved either 50% for maths or 80% for maths literacy — with the latter arguably being equivalent to those who could obtain 40% for higher grade maths before 2008, roughly demonstrating the minimum level of reasoning ability required for most tertiary academic studies.
To decide whether this is to be celebrated, first note that since about 40% of our school pupils drop out before matric, this equates to just more than 7% of the initial school intake, and that over the past three years there has been a 36% increase in the number of pupils achieving this benchmark, with no clear driver for this apparent improvement.
We remain an outlier in this respect: almost all countries have seen their pupils’ performances decline in recent years, with much of this attributed to the damaging and persistent effects of Covid mitigation strategies. Since the syllabus and teachers remain unchanged, this leaves the most likely explanation for the higher pass rates being grade creep.
The performance of well-resourced schools such as Bishops, Rondebosch and Wynberg high schools in Cape Town put the national result in perspective. About 70% of the pupils at those schools achieved at least 50% for maths or 80% for maths literacy in 2024. This would have been unheard of a few years ago, and should leave one wondering what fraction of pupils at no-fee schools are really equipped for academic studies.
The performance of SA pupils in the 2023 TIMMS study presents evidence that the quality of our school leavers (and thus our future labour force) are not on track to be globally competitive. Less than 5% of our grade 9 pupils achieved the grade 8 high benchmark in the 2023 TIMSS study (despite the SA pupils who were tested being a year older than those in other countries), with just more than 5% of grade 4 pupils meeting the high benchmark.
The proportion of pupils in countries such as England and Turkey achieving the high benchmark was eight times higher, with pupils in Asian countries such as Japan and South Korea being 15 times more likely to demonstrate that level of mathematical ability. These are the pupils who will form the matric classes over the next decade, and then be the new entrants into our labour market — a market that will have an even lower demand for unskilled labour.
A Kenyan who owned a lot of farmland in his country once asked a rhetorical question that has nagged ever since: “Why is it that South Africans strive for land? Land has to be worked, and no South Africans seem to want to work.”
Zebediela — once the largest orange farm in the southern hemisphere but now producing no oranges — is a great case study for teaching all South Africans this lesson, especially those politicians who are doubling down on the need for changes to the constitution. Without apples, there can be no apple pie for anyone.
With no meaningful growth foreseeable in the number of chefs, ovens, energy or ingredients, it is hard to see why the SA economic pie will grow. With many constraints biting, our mineral resources will remain in the ground, and the potential of our natural resources will remain unrealised.
Repeated reports of dismal growth prospects may explain why many politicians appeal to their voter base with talk of pie redistribution. While our unemployment rate remains one of the highest in the world, this is the only way they can see the lives and livelihoods of their supporters improving. This may be so in the short term, but if the golden goose is used to make golden goose pie ...
Any politician who promises more worker rights or jobs for the unemployed should be pointedly asked what is being done to rebalance our economy. Until the biting constraints are alleviated, no more factor inputs can be employed, and it is that which pushes out our production possibility frontier.
With the number of mouths to feed forecast to grow faster than the size of the pie, shrinking slices of pie are being baked into our collective future. For those who are already hungry, more hunger is nothing to look forward to or celebrate.
• Becker, a retired actuary and recently qualified maths teacher, is founder of MyTutor.chat.
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