As South Africa grapples with persistent unemployment, sluggish growth, and the lingering effects of state capture, the question of how to unlock the country’s economic potential has never been more urgent.

Adrian Saville, professor of economics, finance, and strategy at the Gordon Institute of Business Science (GIBS) and director of the GIBS Centre for African Management and Markets (CAMM), believes the answer lies in a research-backed framework that has guided countries from economic stagnation to sustained prosperity.

Saville’s optimism is grounded in data. Together with his team at CAMM, he developed a six-factor model by analysing 160 countries over six decades and identifying the key ingredients that enable nations to transition and transform their economies. “We can be objective about South Africa’s performance,” he explains. “By studying what works across different countries and time periods, we can identify our biggest challenges and opportunities.”

Saville emphasises the broader global context. “We are in a disrupted world, and a disrupted world presents a combination of challenges and opportunities,” he notes. For instance, he says, the 2024 elections saw massive political change globally, with more people going to the polls as a percentage of the population than any year in history.

In two-thirds of those elections, there was a change in leadership or governments that didn’t achieve majority outcomes. “This sets you up for a 10-year delta, because when people vote next time, they vote like they voted last time,” Saville observes. “The global political stage has been reset.”

For South Africa, a small, open, and often deficit economy heavily reliant on global trajectory and commodity prices, these international shifts matter enormously.

In this context of global uncertainty, Saville argues that countries need evidence-based frameworks to navigate their path forward. Rather than relying on political rhetoric or ideological preferences, his approach is grounded in empirical analysis of what actually works.

“It allows us to talk about other people’s relationships rather than our own,” he says with a smile. “And that allows us to have a degree of objective curiosity and observation. The CAMM six-factor model – research that has been running since 2009 – is a detailed study of economic transformation with a broad, global scope.”

Six factors to guide countries from stagnation to prosperity

The model created what Saville describes as “a treasure trove of economic and industrial intelligence”. It identifies six critical factors:

• savings and investment
• openness
• demography
• policies and institutions
• education
• healthcare

Crucially, not all factors carry equal weight. “With a coefficient of 27.5, the savings and investment factor is the most important, containing more than a quarter of the model’s explanatory power,”

Saville explains. “The openness factor is nearly as potent, correlated with just under a quarter of explanatory power.”

This weighting system provides policymakers with what Saville calls “bang for policy buck”, indicating where an amount of energy and investment ought to provide the highest relative return in prosperity terms.

From the six factors, Saville derives three key priorities for South Africa to focus on: savings and investments, public-private partnerships, and job-creating growth. While South Africa does not necessarily score well in all the other areas, focusing on these factors would have the greatest impact in the shortest amount of time.

SA’s 3 priorities

“Arguably, savings and investment is our single biggest hole,” Saville says. “If we were running the Comrades Marathon, we would be on the 10-hour bus.”

The numbers are stark. Every country that has successfully transitioned has achieved an elevated savings rate of 25% of GDP or higher. “The absence of that saving and investment leaves us in a low growth trap – trapped by our own financial dysfunction,” he explains.

The problem extends beyond aggregate figures to household behaviour. “The net saving rate in South African households is 0%,” Saville reveals. “To a large extent, that is the difference between the 15% saving and investment rate that we have, and the 25% that we require.” In the first quarter of 2025, in fact, Statistics South Africa reports that the household saving rate in South Africa actually decreased to -1.20% from -1.10% in the previous quarter.

This household savings crisis stems partly from South Africa’s inequality. “Unequal societies tend to behave as consumption frameworks,” Saville explains. “When you live in an unequal environment, you have to provide evidence that you are worthy through displays of material wellbeing. That feeds a consumption culture, which by definition is the opposite of saving.”

The solution requires both systemic change and education. “Saving is a learned behaviour, and it has little to do with people’s income levels and tax rates,” Saville argues. “If we don’t see it in policy, then surely it is the private sector that has to do it.” He suggests innovative approaches, such as financial

The second critical factor is robust public-private partnerships, which fall under policies and institutions in the framework. “There is no country that has transitioned without effective public-private collaboration,” Saville notes. “Gross domestic fixed investment is a key missing ingredient – this is the R1 trillion story.”

The importance of this investment is twofold. “Public-sector investment is the catalyst for private investment. That is the first big story. And second, your multipliers, spillovers, and linkages here are greater than any other activity that the public sector could get on with.”

3. Job-creating growth

The third focus area does not fall neatly into the six factors, but is rather a cross-cutting structural issue that Saville identifies as critical for South Africa. “Even if the South African economy were to double in size, it is not going to double the number of jobs, because South Africa’s growth tends to be capital-intensive and productivity-led,” Saville explains. In other words, even if the country improved on all six factors, the nature of its economic structure means growth would not necessarily translate into employment.

The solution lies in identifying and developing labour-absorbing sectors. Agriculture and tourism represent obvious opportunities: “Barriers to entry are relatively low and your job multipliers in tourism show that one tourist creates one job,” he notes. However, he points out that these sectors alone cannot solve South Africa’s unemployment crisis.

Saville suggests exploring additional possibilities: “Is there a reasonable prospect of South Africa becoming re-industrialised? What about business processing outsource (PBO) centres? Why aren’t we the BPO centre for Europe, for example?”

The 6 factors: South Africa’s scorecard

• Economic factors
  • Savings and investment: room for improvement
  • Demography: outstanding
  • Policy and institutions: superb policy, poor institutions
• Social factors
  • Education: depends on location
  • Healthcare: depends on location
  • Openness: good

Supporting factors

South Africa performs variably on the remaining three factors of CAMM’s six-factor framework. In demography, the country scores well, benefiting from a young, growing population. “In openness, we work relatively well,” Saville notes, though there is room for improvement.

However, significant challenges remain in both education and healthcare. He notes that only 15% of the country has access to good schools and private healthcare. Eighty-five percent of South Africans, however, are in a very different boat – and, as the majority of voters, shape the direction of the country. While healthcare and education are obviously crucial for South Africa’s long-term prosperity, Saville argues that addressing savings and investment first will provide the foundation and resources needed to tackle education and healthcare more effectively.

On policies and institutions, South Africa presents a mixed picture. “In policies, we are superb, and in institutions, we have fallen over,” Saville observes. This disconnect between policy design and implementation capability represents a critical weakness.

The path forward

Despite the challenges, Saville remains optimistic about South Africa’s potential. “Although I am frustrated by its performance, I am deeply invested in this country,” he says.

“The financial services industry has a particular responsibility here,” Saville emphasises. The industry could play a role by, for example, offering accessible courses to improve financial literacy and providing solutions that empower individuals to save, even in small increments. “Obviously, financial services providers can’t solve for all of South Africa, but they can solve for something. 

His message is clear: the tools for transformation are available and proven. Countries like Bangladesh have achieved 32% savings rates through innovative financial inclusion models. “If Bangladesh can achieve a 32% savings rate, South Africa can achieve a 32% savings rate,” Saville concludes. “How do we reconfigure and redesign the system to achieve those types of outcomes? That is the conversation we need to have.”

South Africa can move from its current trapped state to sustainable prosperity, Saville says. What is required is the collective will to implement the changes that the evidence shows are necessary.

*This article originally appeared in the 2025 Old Mutual Mindspace Thought Leaders Forum special issue. To read more and subscribe, click here.