While the historical legacy of apartheid and the global economic slowdown have contributed to South Africa’s poor economic growth, Centre for Development and Enterprise (CDE) executive director Ann Bernstein stated that South Africa’s economic woes were predominantly owing to government’s policy choices.
Speaking at IQ Business’s smartgrowth.co.za business conference, held in Sandton last month, Bernstein highlighted that, while government had put in place policies to address South Africa’s poor economic growth, with a current gross domestic product (GDP) below 1%, it was not at the “heart of national priority”.
She asserted that the five priorities for South Africa should be job creation, accelerated growth, focusing economic development in cities rather than rural areas, developing skills that the country needs rather than the skills it wants, and improved relationships between the private and public sectors.
South Africa’s policies to address unemployment – with the current figure at about 7.5-million people – did not take into consideration the poor level of education and the significant skills deficit, according to Bernstein.
She highlighted that policies designed to alleviate unemployment, poverty and poor economic growth were overly skills dependent and capital intensive. This was a problem that made many without jobs “unemployable”, owing to the high number of skilled jobs required to execute national plans, such as the National Development Plan.
Bernstein suggested that the private sector could provide the jobs needed to address employment challenges, but it should be allowed to provide jobs below the national minimum wage, particularly in the construction sector, which was difficult, owing to “overly powerful trade unions”.
People working in the private sector would have greater career prospects, as promotions in the sector enabled people to improve their skills and, thereby, their earning potential, she said.
Transformation was another issue identified by Bernstein, who stated that the trick was to redistribute wealth that was demographically representative of South Africa. However, while transformation had taken place, “the good stories were mainly about insiders”, which had created enrichment for partisan groups of the ruling party.
She asserted that one of the most significant problems was State-owned enterprises, owing to significant levels of corruption, as well as “cadre deployment”, often resulting in incompetent appointments.
It was important that a new approach be taken that aligned the transformation targets of the country with economic growth targets and fostered the economic inclusion of all South Africans, Bernstein stated.
She recommended that the country starts playing to its strengths and pointed out that there are many productive and world-class companies in South Africa, a rarity among developing countries. Further, South Africa had a number of credible government departments, such as the National Treasury, and world-class cities and metropolitans.
According to CDE’s Growth Agenda on cities, which was published earlier this year, urbanised areas contributed about 80% to global economic output. Bernstein stated that South Africa’s future economic growth depended on the growth of its cities, and policies must reflect this.
She pointed out that Shanghai, in China, exemplified this concept, with policies that focused on urban development resulting in the rapid transformation of the city.