Tuesday, December 06, 2011

Can South Africa Meet its Development Goals?


AllAfrica: South Africa: Partnerships and Implementation Capacity Are Pre-Requisites to a Successful South African Development Path
BusinessDay: SA Needs to Raise Growth to 10% to Create 5-Million Jobs, Says DBSA
IOL: Political Leaders Key to Success, Says Bank

The Development Bank of South Africa (DBSA) released a report recently to provide South Africa a perspective on what steps it needs to take to achieve its proposed development goals. The goals aim to positively affect areas like reindustrialization, climate change, and skill development. The report found that the most difficult goal to achieve would be lowering the unemployment rate from 25% to 15% by the end of 2020. The South African government hopes to meet the goal by increasing employment by 7% each year through investing in development projects (possibly infrastructure) that require the most workers.

The steady economic growth the country has experienced in recent years is not sufficient to sustain an annual 7% increase in employment. The DBSA report states that the country will need 10% annual gross domestic product (GDP) growth to support the spending necessary to meet the goal of 7% employment growth. However, the report stresses that the South African government must resist the temptation to dismiss the goal as a failure—as it has done with past development goals—and suggests lowering the 7% target to a more feasible level. The report also contains suggestions on how to bolster employment, which mainly consist of seeking more labor-intensive government investments that will create a need for more workers.

If South Africa can successfully reduce unemployment, it stands to become a more stable country economically. Economic stability will encourage investment by reducing the risk of loss due to dramatic changes in the economic climate. It will also show that the government is committed to realizing its development goals. This commitment should entice foreign investors to provide capital investments for the development goals because they would no longer fear losing government support prior to completing a project.

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