Solutions to save the SA economy
Fin24 - Jul 25th 2017, 11:55
Low economic growth, recorded since 2011, is dragging down the employment rate which is negatively impacting the youth the most, a survey revealed.
The Organisation for Economic Co-operation and Development’s (OECD) economic survey for South Africa, which was released on Monday, shows that the poverty rate which makes up a third of the population is high compared to other emerging economies.
The survey suggests bold structural reforms be implemented to address some of the challenges. Among other suggestions include improved inter-regional trade with the Southern African Development Countries (SADC) and support for entrepreneurship, which is low compared to other emerging economies.
The survey proposes specific solutions for different challenges.
Among the solutions proposed by the OECD include having limited annual wage increases in the public sector and civil servants should be redeployed to priority areas. Public spending should be spent more effectively to “free up” resources for infrastructure and education.
Government should also “deepen” the implementation of public procurement reforms and enforce sanctions for breaches if the Public Financial Management Act. State-owned enterprises must also “respect” the procurement and expenditure rules.
To address the skills shortages and improve access to higher education, a scheme for universal student loans should be set up by banks and government guarantees. The OECD also promoted the implementation of the national minimum wage to help reduce inequalities. Further, apprenticeship and internship programmes must be created to improve youth employment.
Labour disputes should also be better handled through streamlined conciliation and labour arbitration. Also the number of appeals and time allowed should be limited.
Fostering regional integration to broaden economic opportunities
To address the limited inter-regional trade the OECD suggests non-tariff barriers should be reduced on intra-regional trade in the SADC region. Simplified rules to be adopted for customs procedures. Further, information technology at custom posts must be upgraded and interconnectivity of systems in the region should be improved.
The OECD proposes that competition rules be harmonised across the region to promote it. Special economic zones must be provided using better infrastructure to link up with local economies.
A regional fund for infrastructure should be created and private sector participation should be increased.
Lowering barriers to entrepreneurship and improving the business environment
The OECD suggests reforms be created to reduce the red tape burdening entepreneurs and small businesses.
Sectors such as telecommunications, energy, transport and services should be opened to improve competition.
Second-chance programmes for early school leavers should be developed. Entrepreneurial education should also increase.
Financial and non-financial support for start-ups an small businesses must be reviewed. Fin24.com
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