The World Bank has identified four priority areas where implementing a series of policy actions will kickstart robust economic recovery across all sectors of society.
Its recently released report titled Driving Inclusive Growth in South Africa: Quick Wins with Competitive Markets and Efficient Institutions, flags policy action on infrastructure services, greater private sector participation, creating cities as engines of growth, and efficient public spending as clear priorities.
This recovery has the potential to create the millions of jobs that South Africans need to improve their lives, exit poverty and contribute to the economy.
The organisation points out that 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 remain 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.
“The report highlights that targeted policy actions – fostering competitive markets and strengthening institutions – can spur recovery and lay the foundation for sustainable growth and shared prosperity in South Africa,” says Axel van Trotsenburg, senior managing director of the World Bank.
“It is the result of extensive engagement with experts and stakeholders to identify concrete policy options for improving the lives of millions of South Africans. It will also help inform how the World Bank can best support the country through technical assistance and lending programmes.”
To kick off the transformation process and create momentum for reforms, the report offers pragmatic and specific policy actions tailored to South Africa’s unique context.
“It provides a clear roadmap for South Africa to unlock its economic potential. By fostering competition and enhancing institutional efficiency, we can create opportunities that drive inclusive growth and improve livelihoods across the country,” says Satu Kahkonen, World Bank Country director for South Africa.
The report 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, it believes 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 aim 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 SA Minister of Finance Enoch Godongwana.
The 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.
