The World Bank has released a new report titled "Driving Inclusive Growth in South Africa: Quick Wins with Competitive Markets and Efficient Institutions." The report suggests that South Africa can achieve robust economic recovery by implementing policy actions across four priority areas. This recovery could potentially create millions of jobs, aiding citizens to escape poverty and contribute to the economy.
Over the last decade, South Africa's economic growth has been slow, averaging only 0.7 percent annually—four times slower than other middle-income countries. Consequently, real GDP per capita is similar to its level in 2007. Economic opportunities remain unequal, with two-thirds of South Africans living in poverty and 40 percent of adults unemployed or discouraged from seeking employment. This rate represents the highest unemployment rate globally.
South African policymakers recognize the importance of improving the economy to gain public trust. The World Bank's study provides an analysis and practical recommendations for addressing obstacles to inclusive growth, aiming for a brighter future for all citizens.
The report outlines specific policy actions tailored to South Africa’s context along four priorities expected to drive inclusive growth:
1. Improving public spending efficiency to increase value for money.
2. Delivering high-quality infrastructure services to alleviate business constraints and boost household income.
3. Transforming cities into engines of inclusive growth by reducing economic distances.
4. Stimulating private sector growth to enhance job creation through innovation and competitiveness.
The policy recommendations reflect inputs from international experts led by Nobel laureate Michael Spence and representatives from South Africa’s private sector, government, academia, and civil society. A key recommendation emphasizes the need for more competitive markets and efficient institutions rather than increased funding or regulations.
For each priority area, quick wins are identified based on technical feasibility, minimal political constraints, significant impact potential, and timely implementation possibilities. These include coordinating social grants and labor programs better; expanding e-procurement use; opening power transmission and transport logistics to private operators; making transportation agency financing conditional on results; simplifying investment incentives; and enabling mobile phone-based financial transactions without bank accounts.