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Investment, growth and development in South Africa

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Abstract

This paper examines the economic impacts of an accelerated energy transition in South Africa. Using an integrated macroeconomic modelling framework, it compares a Current Policies scenario with an Enhanced Policies scenario consistent with South Africa’s net-zero objective. Results indicate that GDP could be around 1.5% higher by 2035, driven mainly by energy investment, with net gains in energy sector employment and reduced fossil fuel import dependence, without accounting for avoided climate damages. Realising these gains depends on investment mobilisation at scale and effective policy implementation. The paper therefore explores some institutional, policy and financing conditions relevant to the delivery of South Africa’s second NDC and sets out priority actions to strengthen institutional co-ordination, sequence interdependent reforms and investments and manage the distributional and political economy consequences of the energy transition.

Suggested Citation

  • Oecd, 2026. "Investment, growth and development in South Africa," OECD Environment Policy Papers 54, OECD Publishing.
    • Handle: RePEc:oec:envaac:54-en
    DOI: 10.1787/eef5522d-en
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    JEL classification:

    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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