South Africa Economic Outlook - September 2023

In search of South Africa’s lost demographic dividend, and the entrepreneurial ecosystem needed to find it

Johannesburg, 2 October 2023 — PwC South Africa is pleased to share its ninth South Africa Economic Outlook report for 2023. 

This edition of the South Africa Economic Outlook focuses on South Africa’s lost demographic dividend and the entrepreneurship needed to win it back. South Africa has the highest youth unemployment rate in the world due to slow economic growth and the large number of young people — the potential demographic dividend — not having the skills required to find or create their own jobs. This situation is in critical need of intervention. 

PwC’s Megatrends research warns that, if countries are unsuccessful in addressing youth unemployment, they are likely to face increasing social unrest. Our economic scenarios for South Africa suggest that the youth unemployment rate will continue to rise unless we do something different. As a society, we need to find the lost demographic dividend that could have come from having more young people in jobs, and the benefit that this could have on social stability, household income and the economy as a whole. 

Lullu Krugel, PwC South Africa Chief Economist, says: 

“In recent years, South Africa’s social issues have come to the front of public conscience with greater ferocity. With much introspection, larger pockets of society have realised that in order to mitigate and fix the issues being faced by our communities today, a collective effort is needed, as we share a collective responsibility to address issues. Fixing them, however, is a far greater challenge than it was a decade or two ago, given the growth of economic disparity, the rise in social and political polarisation, and the growing lack of trust that the public has in institutions.”

In this report, we conduct a simulation that brings the current youth and graduate unemployment rates back to the levels seen in 2008. This scenario — with the demographic dividend coming to fruition — would see an extra 1.8 million jobs for young South Africans. We then conducted a Socio-Economic Impact Assessment (SEIA) to quantify the economic value of the potential income for the South African economy. Our analysis found that this could boost the country’s total household spending by R137 billion (around 3.1%) and create another 300,000 direct, indirect and induced jobs. This spending can also add another R36 billion to tax revenues.

Marthle du Plessis, PwC Africa Workforce of the Future Platform Leader, says: 

“Increasing youth employment requires skills development. However, for millions of young people in South Africa, these skills are hard to come by as countless communities lack access to crucial opportunities, which makes preparing for the world of work an almost impossible task. Bridging the skills gap is a complex problem that requires all stakeholders — government, the private sector, education institutions and community organisations — to work together and make the country a more resilient, inclusive and entrepreneurial economic space.”

Our recent report Catalysing Township Revival through Entrepreneurship Development makes it clear that we as a society need to invest in our young people in preparing them for the jobs of today and the jobs of tomorrow. This, in turn, will lead to greater economic growth and shared prosperity across geographies and sectors. There is clearly an urgent need to create millions of jobs to take advantage of the demographic opportunity and avoid a deepening of the country’s demographic crisis. The scale and speed needed to address this requires a radical approach that is focused on empowering a massive number of new entrepreneurs at community level. 

We believe that entrepreneurialism needs to permeate through all our townships and cities. However, winning this entrepreneurship challenge will require a coordinated effort across society (government, the private sector, education institutions, community organisations, etc.) to build momentum, fully develop, and hyper-scale this ecosystem towards creating massive amounts of jobs. 

A different kind of public and private sector leadership is needed to inspire the youth to make this happen. It is not possible to reap the demographic dividend without the necessary leadership to drive and inspire young people. And this requires leaders from across society that can help create and let flourish an entrepreneurship ecosystem. The ecosystem’s leadership structure can take many different organisational or legal forms. However, the key factor in its success is staffing these structures with the right people, who have the right capabilities.

Key content in this report includes:

  • Demographic shifts: Megatrends are impacting the social stability challenges that the world (and South Africa) faces.
  • Macroeconomic outlook: Youth unemployment is set to continue rising — unless we do something different.
  • Finding the lost demographic dividend: An estimated R137bn in extra household income if we could get the youth unemployment rate back to 2008 levels.
  • Closing the employment gap: Entrepreneurialism needs to permeate through all our townships and cities.
  • Taking the lead: Leadership skills needed to help the entrepreneurship ecosystem flourish.
  • How PwC is helping its clients make a positive societal impact in South Africa, and also how we are involved in upskilling and entrepreneurship programmes in the country. 


Contact us

Rianté Padayachee

Rianté Padayachee

Media and Communications Specialist, Strategy& South Africa

Tel: +27 (0) 11 797 5727

Verena Koobair

Verena Koobair

Integrated Content Lead, Strategy& South Africa

Tel: +27 (0) 11 797 4873