Government, led by Deputy President Phumzile Mlambo-Nqcuka is next year to launch a 'joint initiative on priority-skills acquisition', bringing together business and labour leaders to speed up key skills development in South Africa, it emerged yesterday.

Briefing journalists on the findings of the World Bank and Department of Trade and Industry's Investment Climate Survey, deputy head of policy-coordination and advisory services in the presidency Goolam Aboobaker said that the initiative - an element of the broader accelerated and shared growth initiative (Asgi) - would seek to ensure a coordinated approach to skills development, assess and identify areas of need and to examine why the Seta's are, in general, underutilised.

“The initiative will also seek to identify areas of priority in light of the huge investments in infrastructure that will take place over the next few years,” he said.

According to the survey, workers' skills, followed by exchange-rate instability, labour regulations and crime, are viewed by companies in South Africa as the biggest obstacles to growth.

DTI policy chief Ravi Naidoo said yesterday that the report would be used as a key source for the Asgi, but also as a springboard from which to launch other, more specific, surveys.

One of the key issues to emerge is the slow take-up of skills-development programmes, and the Setas, in particular, Naidoo said.

In fact, whereas, in Brazil, 77% of skiled workers have been involved in firm-level training, South Africa's comparative figure is only 44,6%.

“South Africa could do much more,” Naidoo said.

Climate positive, but challenges remain

Nonetheless, he said that the overall findings of the study are a “fairly positive” reflection of the situation in South Africa, although they do reflect a number of challenges to be addressed.

The study covers a number of factors influencing the country's attractiveness to potential investors, including legal and socioeconomic infrastructure, regulation and the cost of business.

It was originally authorised by cabinet in 2003 but data was collected last year.

Similar surveys have been conducted in over 50 low- and middle-income countries around the world.

In the South African survey, data, gained from 803 companies, is compared to data on Kenya, Senegal, Brazil, Lithuania, Malaysia and China.

According to the survey, most firms believe that the courts are able to protect their property rights and court cases are resolved quickly.

The cost of power is low by international standards.

Tax rates are low and have been declining over time.

The burden of regulation is comparable to the burden in most middle-income countries.

Few firms report paying bribes to obtain government services or win government contracts.

Finally, Naidoo said that most of the large formal firms in the Investment Climate Survey did not see access to finance as a serious concern and few reported that they were credit-constrained.

Labour productivity is far higher in South Africa than in the most productive low-income countries in Sub-Saharan Africa, such as Senegal and Kenya.

Further, South Africa compares favourably with other middle-income countries such as Lithuania, Brazil, Poland, and Malaysia-all of which, other than Brazil, have higher per capita income than South Africa.

Productivity is also over three times higher than in China, although it is slightly lower than in the most productive cities in that country.

Although many areas of the investment climate are favourable, some problems remain, the survey shows.

Naidoo said that Asgi would seek to tackle these and other issues, towards its targets of average yearly growth of 4,5% from 2006 to 2009, and then an acceleration to six per cent from 2010 to 2015.

On the high emphasis placed on exchange-rate volatility, Naidoo pointed out that the survey was conducted at the end of a period when the rand was one of the most volatile currencies in the world, but has since stabilised significantly.

Going forward, World Bank country director Ritva Reinikka said that, based on the findings of the survey, further studies would be conducted, including on small, micro and medium-sized enterprises and the services sector.

She added that the World Bank views the most important issue in promoting growth in South Africa as being job creation.

“It is also important that the government realises that the export sector will be key in achieving its target of 6% growth,” she added.

She said that she was surprised by the small size of the local manufacturing sector, as well as the capital-intensive focus of South African SMMEs.

In most other comparable countries this sector is far more labour-intensive, Reinikka said.