South Africa needs to build an inclusive economy where broad-based
economic growth creates productive jobs for the unemployed; increases
productivity and earnings for the employed; and leads to sustained poverty alleviation. South Africa must simultaneously invest in partnerships with the private sector to establish a knowledge economy, close the skills gap currently constraining development and create an enabling environment for growth, investment and innovation.
Drawing on two associated ISS papers, Economics, governance and instability in South Africa and South African scenarios 2024, this policy brief presents a set of recommendations to extricate South Africa from its middle-income trap and set it on a high-road Mandela Magic growth path.
Recommendations:
- South Africa needs a labourintensive, low-wage and less regulated growth path
- government needs to continue but carefully manage its expansive social support programmes
- government must strengthen South Africa’s domestic technological innovation capacity. Partnering with the private sector can close the skills gap currently constraining development and, among others,
increased investment in research and development - focus is needed on smalland medium-sized business, the reduction of red tape, better access to low-cost finance, more business-friendly market regulations and a more flexible labour market
- broad-based black economic empowerment ought to be replaced in favour of more specific race-based initiatives