- A new World Bank report titled “Driving Inclusive Growth in South Africa: Quick Wins with Competitive Markets and Efficient Institutions” asserts that a robust economic recovery, shared across all sectors of society, can be achieved in the immediate future by implementing a series of policy actions in four priority areas: infrastructure services, greater private sector participation, creating cities as engines of growth, and efficient public spending.
- This recovery, in turn, has the potential to create the millions of jobs that South Africans need to improve their lives, exit poverty, and contribute to the economy.
Over the past decade, South Africa has struggled to expand its economy, growing by only 0.7% per year, which is four times slower than other middle-income countries. As a result, real GDP per capita is now around the same level as it was in 2007. Economic opportunities also remained deeply unequal, with two-thirds of South Africans living in poverty and 40% of adults, primarily young people and women, either unemployed or discouraged from looking for a job. This figure represents the world’s highest unemployment rate.
To kick off the transformation process and create momentum for reforms, the report offers pragmatic and specific policy actions tailored for South Africa’s unique context.
It asserts that by delivering high-quality and affordable infrastructure services, South Africa can reduce existing constraints on businesses and increase households’ disposable income. It also encourages measures to foster private sector growth to promote innovation and competitiveness, which will enhance job creation. By making cities engines of inclusive growth, the country can shrink economic distances and provide opportunities for all. Finally, the report highlights the need to improve the efficiency of public spending to increase the value for money of government interventions in the economy.
“We have clear evidence of the tangible outcomes of reforms that reduce economic bottlenecks. This is best exemplified by the first phase of Operation Vulindlela, which, among its key interventions, was reforms to regulation that deepened competition in sectors like electricity, rail, and telecoms. The next phase will go even further and aims to accelerate reforms in key network industries. We are delighted to have the benefit of this new report to broaden our approach to inclusive growth,” says Honorable Enoch Godongwana, Minister of Finance Republic of South Africa.
For each priority, the report identifies quick wins selected for their technical feasibility, minimal political constraints, potential for significant impact, and timely implementation. This menu reflects inputs from a group of international experts led by Nobel laureate in Economic Sciences, Michael Spence, and representatives of South Africa’s government, private sector, academia, and civil society.
South Africa has a unique opportunity to revitalize its economy. The country’s policymakers recognize that improving the economy is essential for winning public trust. The World Bank’s new study provides in-depth analysis and practical recommendations to assist South African policymakers in addressing obstacles to inclusive growth and, most importantly, take action to pave the way for a brighter future for all citizens.
Link to the full report HERE
Author: Bryan Groenendaal
