PRETORIA, May 14, 2018 — South Africa can achieve more inclusive and sustainable development with coordinated reforms across a broad range of areas that maximize development impact and address constraints to reduction in poverty and inequality, according to the World Bank Group’s new Systematic Country Diagnostic for South Africa, released today.
Prepared in close consultation with government and other key stakeholders, this Diagnostic, An Incomplete Transition: Overcoming the Legacy of Exclusion in South Africa acknowledges the progress made since 1994 and suggests a selected range of policy options to eliminate poverty and boost shared prosperity.
“With this Diagnostic, the World Bank Group has identified five binding constraints to addressing the legacy of exclusion which persist despite South Africa’s progress in granting political and civil rights to its citizens and in increasing access to basic services and social assistance,” said Paul Noumba Um, World Bank Country Director for South Africa. “We stand ready to support South Africa in its efforts to reduce poverty, unemployment and inequality and ensure inclusive and sustainable growth."
This Diagnostic finds that due to continued historical disadvantage entrenched in the education system, insufficient skills, are among the most binding constraints to fighting unemployment, poverty and inequality. Identified policy interventions focus on children and young adults as the most critical.
The second identified constraint is the skewed distribution of land and productive assets, and weak property rights. The Diagnostic suggests that strengthening tenure security and capacity for land reform among possible solutions.
The third constraint, is low competition and low integration in global and regional value chains. The Diagnostic proposes implementing sustainable mechanisms to embed competition principles in policy formulation.
Fourthly, limited or expensive connectivity and under-serviced historically disadvantaged settlements also constrain efforts to reduce poverty and inequality. Fostering strategic densification of cities and diversifications of land use and expanding basic services in underserviced settlements are seen among possible solutions.
Climate shocks are the final identified constraint. Disruptions to the economy and jobs as South Africa transitions to a low-carbon economy will need to be mitigated carefully. In addition, climate change puts further pressure on the country’s scarce water resources which require long-term planning and strategic adaptation.
“It would be easy to assume that addressing South Africa’s biggest constraints is the responsibility of government alone. That would be a mistake. We hope all stakeholders can embrace the contribution business can make in tackling these issues. The private sector has a huge role to play in creating jobs, growth, and a more equal economy,” said Saleem Karimjee, International Finance Corporation Country Manager for Southern Africa.