South Africa’s new growth path


    South Africa has embarked on a bold new economic growth path in a bid to create 5-million jobs and reduce unemployment from 25% to 15% over the next 10 years.

    The plan, announced by Minister in the Presidency for Performance Monitoring and Evaluation Collins Chabane in November 2010, aims to address unemployment, inequality and poverty by unlocking employment opportunities in South Africa’s private sector.

    “The new growth path is a broad framework that sets out a vision and identifies key areas where jobs can be created,” Chabane said in announcing the plan, adding that it would place job creation “at the centre of economic policy”.

    Critical to the plan, he said, would be the partnering between key social players, business and government to address structural challenges in the economy.

    Regulatory reforms

    The government had realised that the economic growth and commodity price boom experienced over the past years had not seen revenue being sufficiently applied to promote economic spread and skills development in the country, Chabane said.

    The government also agreed that while South Africa’s economy was among the first to show signs of recovery following the global recession, regulatory reforms that encouraged employment and fought poverty were needed.

    The recession, which claimed more than a million jobs in 2009, took a heavy toll on South Africa’s economy, with households suffering from falling incomes and high levels of debt. The domestic economy further contracted by an estimated 1.8 percent as a result of a decline in consumption spending and weak investment growth.

    Chabane said the new growth path would exploit some of the opportunities that arose from the recession.

    Building an integrated African economy

    He cited China, India and Brazil as examples of countries with growth prospects similar to those of South Africa. The country could use its influence and experience to gain similar ground on the continent.

    “The new growth path commits South Africa to work with other countries on the continent to build a single African integrated economy, embracing one billion consumers, and to focus immediately on expanding economic links with the rest of the continent.”

    At least six key sectors, including infrastructure development, agriculture, mining, the “green” economy, manufacturing and tourism, had been identified as having potential to unlock employment opportunities.


    Chabane and Economic Development Minister Ibrahim Patel agreed that it would probably take more than the government and the business sector for the country to achieve the new growth plan.

    Patel’s department is behind the Industrial Action Plan, which initially paved a way for the country’s new growth path.

    “Implementation and setting clear targets will remain a critical part of our work, and that is why we will be engaging all partners from all walks of life, and Cabinet will play a big role in coordinating all stakeholder commitments in this regard,” Patel said.

    The Cabinet Economic Team is headed by Rural Development Minister Gugile Nkwinti, who is also at the centre of speeding up economic growth in the country’s remote parts through various land reform policies.

    Nkwinti said that, through agricultural and land reform programmes, several employment opportunities that supported the new growth part were already in the pipeline.

    These included a special fund that had been created to assist emerging farmers in at least five of the country’s provinces.

    “Our area of focus will be on identifying skills, with the hope of using the funding to create more self-reliant businesses through partnerships of small and big commercial farmers,” Nkwinti said.

    Steps to be taken

    The strategy has a series of micro- and macro-economic measures aimed at helping the country reach its growth targets, including:

    • Ramping up competition policy to create a more equitable marketplace.
    • Creating and implementing an effective rural development policy.
    • Stepping up education and skills development, including a review of the training system.
    • Producing 30 000 more engineers by 2014 and 50 000 more artisans by 2015.
    • Promoting small businesses and entrepreneurship by creating a single agency to consolidate funding from Khula, SAMAF and the Industrial Development Corporation.
    • Revamping black economic empowerment, including incentivising job creation.
    • Developing more focused trade policies in order to identify better export opportunities.

    Guiding principles

    The new growth path leans on recommendations made in a 2008 growth report by the Commission on Growth and Development, which suggested that policymakers target five areas for long-term economic growth, namely:

    • Remaining open to the world economy and new ideas.
    • Maintaining macroeconomic stability.
    • Sustaining high rates of saving and investment (about 20% to 25% of national income versus the current 16%).
    • Allowing the markets to allocate resources.
    • Maintaining committed, credible, and capable government.

    The report looked at countries which were able to maintain GDP growth of more than seven percent for two decades or longer in recent times, namely Botswana, Brazil, China, Hong Kong, China, Indonesia, Japan, South Korea, Malaysia, Malta, Oman, Singapore, Taiwan, China and Thailand.

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