A new World Bank report describes President Cyril Ramaphosa’s plan for crafting a new social compact with business, labour and civil society as an “essential foundation” for overcoming the country’s legacy of racial exclusion, which remained the main cause of chronic poverty and worsening inequality.
Titled An Incomplete Transition: Overcoming the Legacy of Exclusion in South Africa, the report has been published jointly by the World Bank Group and UCT Press in the form of a 186-page book, which will be available for purchase at bookstores countrywide.
“Overcoming the legacy of exclusion requires a stronger social contract . . . This compact is an essential foundation on which to build the country’s future,” the book argues.
During his February State of the Nation address, Ramaphosa announced that a series of conferences and summits would be held in an effort to forge a new social compact for ensuring an economic recovery.
The President announced subsequently that South Africa was targeting $100-billion-worth of new investment over the coming five years and that, besides making South Africa an investment destination of choice, the social partners would be asked to make specific commitments for accelerating job creation.
The World Bank report is the product of extensive consultations, over the past 16 months, with both government and nongovernmental organisations, including the National Planning Commission, which entered into a cooperation agreement with the bank on the project.
The book also doubles as the bank’s Systematic Country Diagnostic (SCD) for South Africa, which means that its recommendations will be used to shape the institution’s upcoming Country Partnership Framework for the period 2019 to 2023.
World Bank senior economist Marek Hanusch stressed that the report’s diagnosis of South Africa’s difficulties in dealing with poverty and inequality threw up few surprises. However, the analysis was able to distinguish root causes of the problems from symptoms.
The five “binding constraints” or causes of poverty and inequality in South Africa were identified as: insufficient skills; the highly skewed distribution of land and productive assets; low levels of competition and integration into global and regional value chains; limited or expensive connectivity and under-serviced historically disadvantages settlements; and the risk of climate shocks.
The symptoms of these structural challenges, Hanusch argued, were the country’s low rate of growth, high levels of unemployment, currency volatility, policy uncertainty, protest action and even State capture.
“This SCD argues that overcoming the legacy of exclusion is critical for a more resilient society and economy and the foundation for reducing poverty and inequality in South Africa.”
Speaking at a launch event in Pretoria, National Treasury director-general Dondo Mogajane welcomed the broad-based nature of the bank’s consultations, which he said had ensured that the report was aligned with the National Development Plan.
It was up to government, Mogajane added, to internalise the diagnosis and use the report to tackle South Africa’s key challenges.
World Bank country director Paul Noumba Um said that the book provided a solid basis for the bank’s partnership with government. However, turning around the country would require collective action by all stakeholders, including the private sector and civil society.