In 2003, SA was suffering from guilt by association. Across the Limpopo River, Zimbabwe was disintegrating in racial strife and many observers on Wall Street thought SA would also succumb to violent demands that whites yield a share of their wealth.

That March I decided to come see for myself. At my first stop, a Sunday morning tour of Robben Island, I was stunned to see retired white prison guards living quietly alongside former black prisoners, now working as tour guides at the infamous political prison. Robben Island seemed typical of the surprising attitude I saw all over the country: a steadfast national determination to reconcile and get on with the future.

Now, after many years without real progress, that steadfastness is starting to look like stagnation.

During the peak of the global economic boom, from 2003 to 2007, South African economic growth accelerated from 3% to 5%, much slower than the emerging-market average, and it has since fallen back to 3%.

The economy needs to grow at least twice that fast to solve its most basic flaw, severe unemployment. Since the African National Congress (ANC) took power in 1994, the unemployment rate has remained at about 25%, a level that would almost certainly incite unrest in other nations.

If anything, the economy looks likely to become less dynamic: a recent paper by the International Monetary Fund estimates a long-term gross domestic product growth rate of just 2%.

SA is poised to be a major disappointment in the new global era for emerging nations. In the past decade, easy money pouring out of the West helped drive a boom that lifted virtually all emerging nations in an unprecedented wave of rapid growth.

Now that the easy money is drying up, emerging nations’ growth rates are returning to their uneven, historic norm, with more losers than winners.

The "breakout nations" of this tough new age will be those that can beat the rivals, and the expectations, for their income class.

In the post-apartheid era, SA earned well-deserved credit for getting the basics of national budget control and finance right, but at a real per capita income of nearly $8000, it needs more than economic stability. SA has failed to create the conditions for dynamic innovation and competition, which it needs to become a "breakout nation".

SA is a developed market wrapped inside an emerging market. Because most white families have two cars, the ratio of cars to people is quite high, at 109 per 1000 people, even though the ratio is much lower among black people. In fact, black South Africans are about as likely to own a car as Indians are, even though SA’s average income level is five times higher than India’s.

For a developing nation, SA also enjoys rich pension holdings — more than $7200 a person, compared with $267 in Russia, but also mostly in white hands.

Economic justice remains a distant hope. Among blacks, the rate of joblessness remains abnormally high (30%), or five times the rate for whites. The income gap is as wide today as it was when the ANC took power; the standard measure of inequality, the Gini coefficient, is still stuck at 0,7% — one of the highest rates in the world.

Thus the surreal calm of SA grows more difficult to explain every year, defying the momentum of an age when the internet is accelerating the pace of social revolts, even in repressive dictatorships.

SA is a real democracy with a progressive constitution, an independent judiciary and free media. Despite the dominance of a single party, there is no censorship, no vote-rigging and no suppression of debate in Parliament or the press. The democratic tools for holding leaders accountable are all in place, but they remain largely unused.

While it is common for liberation movements to enjoy a long honeymoon, the ANC has been living off the liberation dividend for nearly two decades. The situation is reminiscent of postcolonial India, where the Congress Party led the fight for independence and traded off that achievement to remain in power from 1950 until 1977, with limited economic gain to show for it.

India’s performance was so doggedly weak that economists looking for cultural explanations came to call 3% the "Hindu rate of growth". In SA, no-one is looking to explain the "ANC rate of growth", much less protest against a system that produces such modest economic progress.

The black majority is forever grateful to the ANC for overcoming the singular evil of apartheid, so it may take a new generation to adopt a critical view. This, too, is reminiscent of India: after the fall of the old regime, the sense of relief endures, and it can take decades for a real opposition to materialise.

So SA has stabilised at a remarkably low equilibrium. The legacies of the apartheid years still distort the system. During the 1980s and 1990s, when the apartheid regime was under international sanctions, it developed one of the most top-heavy forms of capitalism on the planet, with much of the economy under state control and the rest in the hands of dominant cartels.

The ANC kept that basic structure, while replacing the whites-only National Party with itself as the ruling party, backed by its allies in perhaps the most powerful union movement in the developing world. None of these power centres — not the state, not the private companies, not the ANC or its union allies — seems to have much sense of urgency about ramping up growth. The most radical proposals focus on shifting wealth from private mine-owners to the "people" in the form of state ownership, not on busting up the power centres that stand in the way of a more competitive economy.

Why so calm? The sprawling black market for labour may be siphoning off the discontent over the official unemployment rate, and the growing welfare state eases the pain. Today, SA is the only major country with more people receiving social grants than holding down jobs; there are 16-million receiving social grants, or six times more than there were in 1998. And when it first came to power, the ANC created a modicum of upward mobility for some black South Africans, helping to ease discontent. But progress has since stalled. Most of the South Africans who were qualified for middle-class jobs have gotten them, and the rest lack the skills to compete in the global economy.

The economic picture does not undermine the stock market because SA earns so much of its profits outside the country. The top South African companies have smart managers, offer high dividends and enjoy strong profits earned mainly in foreign countries. Among the top 60 companies, 56% of their earnings come from offshore — one of the highest shares in the ­world. Going global can be a sign of corporate strength but, in a case such as SA’s, it can be read as a sign of no confidence in the local economy.

Over the past decade, SA’s savvy multinationals have been searching hard for investment options in regional neighbours such as Zambia, Mozambique and Namibia — a sure sign of where the real opportunity lies in Africa. 

This article has been adapted from his new book, "Breakout Nations: In Pursuit of the Next Economic Miracles".