A comprehensive two-year research study by Harvard's Growth Lab paints a stark picture of South Africa's economic woes, spotlighting critical issues of collapsing state capacity, spatial exclusion, and ineffective fiscal policies. File picture: Ian Landsberg / Independent Newspapers Archives
The latest research from Harvard University’s Growth Lab has laid bare the severe economic under performance of South Africa under the African National Congress and President Cyril Ramaphosa.
The research identified key areas of concern that are hindering the country’s growth and inclusivity.
The report, which builds on nine papers and extensive collaboration with various stakeholders, finds that South Africa is failing to achieve its goals of inclusion, empowerment, and transformation, necessitating new strategies and tools.
The study identifies two primary issues: collapsing state capacity and spatial exclusion.
South Africa’s weakening economic performance is primarily driven by the deterioration of state capacity, which is rooted in political gridlock, ideological conflicts, patronage, such as cadre deployment and the over-burdening of state organisations.
This collapse has led to macroeconomic stress and a decline in public satisfaction.
Furthermore, the problem of spatial exclusion, exacerbated by post-apartheid housing policies, has hindered the development of inclusive cities.
Many South Africans are forced to choose between formal housing far from job opportunities and informal housing that is closer but less secure.
Effective inclusion will require a direct response to this issue through comprehensive urban and housing policies.
Harvard's report also criticises the reliance on demand-side fiscal policies, including social grants, which have been ineffective and have contributed to the country’s deteriorating macroeconomic position.
South Africa’s gross debt has escalated dramatically, impacting its creditworthiness and limiting government capacity to address other needs.
However, the report highlights a potential growth driver in the form of South Africa’s “green growth” potential.
It suggests that the country can leverage its solar and wind resources to benefit from global decarbonisation efforts.
This includes producing goods and services necessary for a global shift to cleaner energy and exporting green technology know-how.
The path to growth through inclusion, according to the report, involves recovering state capacity and empowering all members of society.
This includes improving public services like electricity provision, re-evaluating municipal governments' responsibilities, and addressing procurement issues that have hindered public investment and service delivery.
The report urges the country to implement targeted strategies and policies that focus on leveraging its human capabilities, assets, and natural endowments, while addressing the pressing issues of state capacity and spatial exclusion.
These actions are essential for the country to regain its competitive edge and achieve sustainable economic growth, the report notes.
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