The role of capital markets in enhancing economic growth and job creation in South Africa

Abstract

This study aims to examine the role of capital markets in fostering economic growth and job creation in South Africa. It addresses structural inefficiencies, legislative obstacles, and financial exclusion. The article examines the impact of capital market expansion on firm growth, employment patterns, and overall economic stability, incorporating recent labour and growth statistics, including a projected Q2 2025 unemployment rate of 33.2% and a quarterly GDP growth rate of 0.8%. The study employs a holistic approach to examine market liquidity, regulatory change, the participation of small and medium-sized enterprises, the integration of the rural sector, and the introduction of innovative financial instruments such as green bonds and social impact investments. The analysis underscores the preeminence of large-cap companies on the Johannesburg Stock Exchange (JSE), which constrains SME involvement and diminishes the developmental influence of capital markets. The research indicates that platforms employing technology, regional financial integration, and inclusive investment strategies can transform capital allocation and address enduring socio-economic disparities. It further underscores the significance of AfCFTA-driven regional capital-market integration as a means to enhance cross-border investment and augment liquidity. It underscores the significance of aligning financial sector policy with developmental objectives to achieve sustainable and inclusive growth. Recommendations include enhancing market accessibility, simplifying regulatory compliance, and establishing impact-driven finance channels.

Keywords: {'name': 'Capital markets, economic growth, employment creation, financial inclusion, green bonds, South Africa.'}

Authors & affiliations

Masa Sylvester Motadi
University of Venda

Ngelekanyo Stanley Maduwa
University of Venda

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