Inclusive growth is central to achieving South Africa’s developmental goals, namely the reduction of unemployment, poverty and inequality, transformation of the economy.
The National Developmental Plan purports that of the average 5.4% of annual economic growth required to achieve these developmental goals, the national growth record shows that this target has rarely been achieved since 1961.
Stagnation of the global economy combined with poor choices made by our policy-makers over the decades – manifesting as large public expenditure and public debt – have been inimical to rapid growth.
Instead of making growth the overriding goal of economic policy, South Africa has: raised the price of some key inputs into the production process that are provided by the state and SOEs; made the business environment more complex, costly and unpredictable, reducing growth of existing firms and the emergence of new ones; and inhibited investment through policy uncertainty, inappropriate policies, and the weakening of ownership rights to assets and property.
The bottom line is this: South Africa needs accelerated growth that is urban-led, private sector-driven, enabled by a smart state, and targeted at mass employment.