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Brand South Africa welcomes the World Bank’s recently released a report which explores key development challenges and opportunities for South Africa and identified five binding constraints to tackling poverty and inequality.

The report titled ‘Systematic Country Diagnostic - An Incomplete Transition: Overcoming the Legacy of Exclusion in South Africa,’ indicates that the root causes of persistently high poverty, inequality, and unemployment are associated to South Africa’s history of
exclusion, which is rooted in land, capital, labour and product markets. This is despite advancements made since the country’s democratic dispensation in 1994.

According to the new World Bank Group Systematic Country Diagnostic (SCD) on South Africa ‘tackling the root causes of poverty, inequality, and unemployment through coordinated reforms could help South Africa make further progress toward its Vision 2030
in the National Development Plan (NDP).’

The report which was prepared in consultation with South African national authorities and other stakeholders, examines the relationship between ‘history, social, economic, financial, fiscal and environmental issues, and their impact on poverty and inequality.’
The report notes that many of the identified challenges, are linked to South Africa’s long history of exclusion and puts distinct focus to the need for large-scale job creation. The diagnostic states that ‘while South Africa underwent a successful and peaceful
political transition in 1994, too many South Africans remain excluded from participating in the economy, rendering the transition incomplete.’

Commenting on the report – Brand South Africa’s General Manager for Research Dr Petrus de Kock said: “As the World Bank report indicates, poverty has declined since 1994. This has been achieved through successful government interventions in the provision of
water, electricity, sanitation, and housing. However, inequality, especially along racial and gender lines, has increased.”

The diagnostic identifies five binding constraints that reflect the root causes in tackling poverty and inequality in the country, and recommendations:
 

• Insufficient skills - the SCD recommends focusing on children and young adults as the most critical approach to addressing this constraint.
• Skewed distribution of land and productive assets and weak property rights - the SCD suggests reforms that can strengthen the asset base of the poor, while also increasing property security for investors.
• Low competition and low integration in global and regional value chains - reform of transport-related state-owned enterprises, including greater private sector participation.
• Limited or expensive connectivity and under-serviced historically disadvantaged settlements - policy options include fostering strategic densification of cities and diversifications of land use, as well as expanding basic services in underserviced settlements.
• Climate shocks - disruptions to the economy and jobs as South Africa transitions to a low-carbon economy will need to be mitigated carefully, the diagnostic suggests.

“Reducing poverty and inequality is the overriding objective of the NDP. Evident from the World Bank’s SCD report is that we need to work as a collective and across all sectors to ensure that our policies encourage the growth and the
enhancement of the Nation Brand’s reputation both internally and externally. Several global studies indicate a correlation between the reputation of a Nation Brand and the flow of Foreign Direct Investment (FDI), as well as internal investor confidence.
 
“Thus an enhanced reputation through clear interventions to tackle corruption, inefficiency, and unethical behavior in both the public and private sectors, can go a long way towards improving domestic- and international business confidence in South Africa as
trade partner, investment destination, and catalytic market that enables trade in the Sub-Saharan African environment. Improved business confidence can lead to increased internal and foreign investment, with the consequence of creating employment and
opportunities for skills development,” added Dr de Kock.
 
Paul Noumba Um, the World Bank’s Country Director for South Africa, is quoted saying: “The Government of South Africa has done much to address its most pressing development challenges, the triple challenge of high unemployment, poverty and inequality,
but much still remains to be done. The World Bank stands ready to support South Africa in its efforts to tackle the triple challenge.”

Issued by Brand South Africa