Launch of new ISS country forecast
How can South Africa fulfil its potential?
GDP per capita in the Current Path and scenarios, 2019-2043 - showing the potential impact of the different scenarios
ISS
The new research by the African Futures & Innovation team at the Institute for Security Studies was published as a country study on the “African Futures” platform - a comprehensive data and knowledge hub. The unique platform offers longterm scenario analyses for all 54 countries on the continent, as well as regional economic communities and income group country categories. The thematic section focusses on 10 themes, such as Infrastructure, Agriculture, Education and Demographis, and 4 key impact areas, including Energy, Climate, Gender and Work/Jobs.
The data-based African Futures research uses the “International Futures” software model developed at the Pardee Centre, University of Denver, to distill out different scenarios. Policy recommendations suggest ambitious yet realistic interventions in key sectors of society and demonstrate their potential impact on development trajectories until 2043. The African Futures Team works in a partnership with AUDA-NEPAD, the AU Development Organisation, and the research is aligned with the AU Agenda 2063.
The report outlines South Africa’s current development path and policy recommendations to arrive at a combined “best possible scenario”. If achieved, it would enhance the country’s prospects and improve the lives of its people by 2043 significantly, compared to the current path: a further increase in GDP per capita by 34 % points and an additional decline in poverty by about 9 % points.
South African GDP per capita on current path, compared to Upper-Middle-Income Group
ISS
Here are some of the key insights contained in the new report:
- South Africa's population is epected to grow from 60.6 million in 2022 to 74.4 million by 2043, with urbanisation increasing from 68% to 75%. This will place serious pressure on urban infrastructure and services, with a need for substantial investments to accommodate the growth in a safe and sustainable manner.
- Economic growth has been modest, and GDP per capita keeps falling further behind that of other upper-middle-income countries. This reflects the need for structural reforms to address persistent inequality, unemployment and deindustrialisation. GDP per capita peaked in 2013 and is currently only expected to reach that level again in 2036.
- Poverty rates are projected to decline only modestly, from 63% in 2023 to 57% by 2043, using the World Bank US$6.85 monetary poverty line, and given the current development path. This reflects the small informal economy, high unemployment and extreme inequality.
- South Africa’s poor human capital endowment also hinders productivity growth significantly - with high levels of severe and acute malnutrition and inequality, poor health, a high disease burden, and a life expectancy 11 years below the average for upper-middle-income countries.
- Eight sectoral scenarios developed include Demographics and Health; Agriculture; Education; Manufacturing; the African Continental Free Trade Area (AfCFTA); Large Infrastructure and Leapfrogging; Financial Flows; and Governance. Each is benchmarked with suggested interventions to present an ambitious yet reasonable aspiration for its sector, impacting economic and social indicators by 2043.
- Integrating all sectoral interventions into a Combined scenario forecasts a 34% increase in GDP per capita over the Current Path.
- Coordinated and comprehensive policy actions can significantly enhance South Africa’s development trajectory. The better Governance scenario has the largest impact on poverty reduction, followed by the Agriculture scenario. The manufacturing scenario has the largest impact on GDP per capita, followed by the AfCFTA, Governance and Agriculture scenarios.
- Poverty appears stubborn and will only decline to about 47 %, even in the combined scenario. In addition to standard interventions, social grants, growing the informal sector and employment schemes need to continue.
- In the combined scenario, South Africa’s carbon emissions in 2043 will be 36 % lower than in the current path, even with an economy that is 57% larger.
The report lists specific recommendations for implementable policies
ISS
The report makes specific recommendations – among them the following:
- Stabilise and professionalise government at municipal, provincial and national level. South Africa needs leadership, accountability and implementation.
- Focus on business growth: improve employment intensity, including with a more flexible labour market. Unlock investment in the mining sector, support tourism and light manufacturing to create employment. Promote trade and investment, particularly into Africa. Pursue an export-led growth strategy. Land reform in the former homelands with appropriate infrastructure and financial support can unlock a revolution in agricultural production. Falicitate the growth of the informal sector. Climate-proof all new investments, ensure exposure to natural hazards is reduced and invest in renewables, gas and nuclear.
- Invest in human capital: Prioritise education reforms and healthcare to build a skilled and healthier workforce fit for the 21st century.
- Make South Africa safe for citizens, investors and tourists through leadership, management and prioritsation in the criminal justice system. Ensure the rule of law which is important for stability & order, protection of rights, economic development, social justice, accountability and democracy.
- Pursue social inclusion by class instead of race-based policies - that address inequality and promote opportunities for all.
In validating and discussing the findings of its analyses, the AFI Team consulted experts and other stakeholders in South Africa – and the research found an active media echo here as well.
Read the incisive report with policy recommendations here:
A recording of the public launch event at the ISS is available online: “Can the GNU deliver? Shaping South Africa's economic and development future” - Watch it here:
An informative article about the launch event and the report was published by News24:
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