A new report from the World Bank, titled "Driving Inclusive Growth in South Africa: Quick Wins with Competitive Markets and Efficient Institutions," outlines strategies to stimulate job creation and inclusive growth in South Africa. The report suggests that by focusing on four key areas—infrastructure services, increased private sector involvement, urban development, and efficient public spending—South Africa can achieve a robust economic recovery.
Over the past decade, South Africa's economy has grown at a rate of only 0.7% annually, significantly slower than other middle-income countries. This stagnation has resulted in a real GDP per capita similar to that of 2007. Economic inequality persists, with two-thirds of the population living in poverty and 40% of adults unemployed or discouraged from seeking work.
"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."
The report provides specific policy recommendations tailored to South Africa's context to initiate reforms. "The report 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.
Key recommendations include delivering high-quality infrastructure services to reduce business constraints and increase household income, encouraging private sector growth to enhance innovation and competitiveness, developing cities as engines of inclusive growth, and improving public spending efficiency.
"We have clear evidence of the tangible outcomes of reforms that reduce economic bottlenecks... We are delighted to have the benefit of this new report to broaden our approach to inclusive growth," states Honorable Enoch Godongwana, Minister of Finance Republic of South Africa.
The study identifies quick wins based on technical feasibility, minimal political constraints, significant impact potential, and timely implementation. Inputs were gathered from international experts led by Nobel laureate Michael Spence alongside representatives from various sectors within South Africa.
This report presents an opportunity for policymakers in South Africa to address economic challenges effectively. The World Bank aims to support these efforts through technical assistance and lending programs.