South Africa's economic policy choices were failing to deliver the economic growth and development required to deal with the country’s high levels of joblessness and poverty, several contributors to an economic outlook dialogue hosted by the Gordon Institute of Business Science (Gibs) argued on Wednesday.

In strident commentary, Efficient Group economist Dawie Roodt asserted that policies designed to stimulate domestic growth were, in fact, achieving the opposite result.

Investment Solutions head of market and economic research Chris Hart concurred, attributing much of South Africa’s prevailing sluggish performance to policy decisions that were crimping a strong recovery and a return to higher levels of economic growth.

The comments came in the same week that the International Monetary Fund revised downwards its 2012 outlook for South African growth, from the 3.6% forecast in September to 2.5%.

The economists argued that the focus on poverty alleviation at times served to perpetuate the problem.

"The best solution to create economic growth is to focus on creating small businesses. But government policy is making it difficult for small businesses to start up. Even household savings are hampered by red tape. A regulatory holiday may be a good idea,” Hart suggested.

“The core economy is strong, but not geared to create jobs. One is secure if you are inside of it. However, if you are on the outside, it is increasingly difficult to get in. Examples of policies such as the Consumer Protection Act, Financial Intelligence Centre Act and others make this difficult."

Arguments were also made for a greater focus on integrating with fast-growing African economies.

Goldman Sachs banking division head for Africa: natural resources investment Nana Sao pointed to the Walmart/Massmart deal as being encouraging, as it demonstrated how South Africa could be used as a gateway to Africa.

“For the first time in many economic cycles, there is a renewed confidence in the rising African middle class,” he said.

Gibs economics professor Adrian Saville pointed to six ingredients for economic recovery, including savings that lead to investments; an increasing number of young people becoming economically active; improving healthcare and education; quality institutions; stable policies and an openness to ideas, goods and people.

Countries such as Bangladesh, China, Egypt, India and Indonesia already embodied these attributes and, therefore, had superior growth prospects.

“South Africa does not need any new plans or policies. We just have to get on with putting the basic principles in place, of which the most important are education, healthcare and policy stability and execution,” he said.

But South Africa also faced external challenges with the sovereign debt crisis in Europe posing an immediate headwind to 2012 economic growth prospects, making government’s ambitious plans of creating five-million jobs by 2020 increasingly unrealistic.

That said, South Africa's strong national balance sheet was a positive. Its debt to gross domestic product ratio was about 32.3%, Japan's stood at 197.5%, Canada's at 84%, while the US officially stood at 62.3%, but its actual ratio could be far worse.

Economic strategist Abdullah Verachia said South Africa could learn from China, owing to it having a culture of saving in both the corporate and private world, the government being able to respond rapidly to market dynamics and China  also being able to leverage on economics of scale.

Hart agreed, pointing out that savings is the backbone of economic growth.

In light of an increasingly real threat of a ratings downgrade, the upcoming Budget to be delivered by Minister of Finance Pravin Gordhan on February 22 would be one of the most important to date.