September 20, 2016 Print

South Africa remains mired in poverty more than two decades after the end of apartheid, and the government’s efforts at poverty relief do nothing to create new economic opportunities for people struggling to build better lives. The Centre for Development and Enterprise (CDE), an Atlas Network partner based in Johannesburg, has published “The Growth Agenda: Priorities for Mass Employment and Inclusion,” a set of seven thorough studies that explain “the priority areas in which reforms are required in order to achieve higher and more inclusive growth.”

The studies point out that South Africa’s poverty crisis is largely one of the government’s own making, first with decades of apartheid’s racial divide that amounted to an official policy of vast economic inequality, followed by two decades of crony capitalism in which those who already had resources continued to prosper and those without continued to lag far behind. Between 35 to 55 percent of the South African population — 18 to 27 million people — are poor, far higher than the norm for other developing countries that are categorized by the World Bank as “upper middle income,” which average only 17 percent poverty. About 35 percent of the work force, 7.6 million people, are unemployed.

“Even allowing for the malign legacies of apartheid and rapid global change, much of the responsibility for our current malaise lies with our policy-makers,” CDE explains. “Poor policy choices have been made in a number of critical areas, including labour-market regulation, fiscal policy, energy, education, housing and healthcare. A hopelessly inappropriate approach to governing and managing SOEs, cadre deployment in the civil service, and the over-regulation of firms and their business dealings, have all contributed to South Africa’s economic woes. And current trajectories in all these areas are increasingly in the wrong direction.”

By focusing on short-sighted poverty alleviation programs rather than structural reforms that would provide struggling families with new economic opportunities, South Africa has created an underclass that I trapped in dependency with little hope of escaping.

“Under the status quo, SA essentially administers and ameliorates poverty,” said Ann Bernstein, CDE’s executive director. “Genuine inclusion is about moving beyond opportunities for the highly skilled and the politically connected. Too many South Africans are poor, with poverty managed through social grants and subsidies for over a third of the population who remain excluded. This is totally inadequate. It’s time we took action to steadily eliminate SA’s extraordinary high poverty rates through genuinely inclusive growth, based on mass employment.”

In order to present a manageable set of goals for reform, “The Growth Agenda” devotes each of its component studies to one of five “catalytic priorities” that can untangle the regulatory policies currently impeding widespread growth in South Africa: Rebalancing the approach to transformation away from elite enrichment to growth-driven inclusion and empowerment; making sure that growth is much more labor-intensive; reconfiguring the skills production system; resetting the state-business relationship; and embracing South Africa’s urban future.

“We're really saying that you have to create jobs and have an economy that creates jobs for the work force you actually have — not the one you wish you have, or you fantasize you have, but the one you actually have,” Bernstein explained at a Hudson Institute event, “South Africa: Growth, Jobs, and the Future of Democracy,” held in Washington, D.C. “And that means our economy has to fire on all cylinders. And we're doing all sorts of things to make that more difficult at the moment, so we're heading for zero percent growth. But a country like South Africa needs to open the door to low-skilled manufacturing. We need to be as labor-intensive an economy as possible.”