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What will South Africa's economy look like in 10 years' time?
What will South Africa's economy look like in 10 years' time?

The 7 factors that will shape SA's economy in 2030

ECONOMIC NEWS

By Lameez Omarjee - Feb 1st, 15:31

What will South Africa's economy look like in 10 years' time?  

This was the jumping-off point for Professor André Roux this week at Stellenbosch University's Business School's annual indaba in Cape Town.

Roux, head of the Futures Studies Programmes, spoke about trends shaping SA's current political, education and technology landscape, highlighting seven "tilting points" which will shape the SA economy of 2030.

1. Declining global competitiveness

SA has dropped 20 positions on the WEF's Global Competitiveness Index in just two years, said Roux, and now ranks at number 67 out of 140 countries, down from 47 two years ago.

"This is evidence that our competitiveness is being eroded compared to other countries," Roux said.

2. Dealing with a democratic surplus

By comparing the level and speed of democratisation with the level and speed of economic progress, you can determine if you have a democratic surplus or deficit, said Roux.

China, for example, has made remarkable economic progress but has not experienced an equal pace of democratisation and so has a democratic deficit, he said.

Meanwhile SA's democratisation advanced dramatically but it was not accompanied by a corresponding improvement in living conditions. The country, therefore, has a democratic surplus.

"Either way having a surplus or deficit means there is a disequilibrium. When there's a disequilibrium forces kick in to try and restore equilibrium, but these forces might not be pleasant," he said. "Democracy without economic emancipation is probably not all that wonderful for anyone."

3. Social capital

"The World Bank says social capital is the glue that gels people and institutions together. Without it we can’t get sustainable growth," Roux said.

And some surveys by groups such as Afrobarometer point to a decline in trust in important institutions, like the president.

In 2006 only 26% of those surveyed said that they do not trust the president at all or just a little. A couple of years ago, this had jumped to 66%, said Roux.

When it comes to South Africans trusting each other, a poll showed that only a third of South Africans trust "quite a lot".

4. The right skills for today

Over the past few decades South Africa's economy has moved away from relying heavily on industries such as mining and agriculture to rely more on the service sector, said Roux.

But the country's labour force and education system has not adjusted at the same speed.

"We are not producing enough people from the education system who are capable and able to take up jobs in the services sector."

Due to the past inequalities, only 60% of adults have 12 years of education. But Roux added that these numbers are changing.

5. Generating sufficient savings

South Africans are not big savers.

"There is enough evidence to show you need a certain level of savings to finance a certain level of investments which in turn will help generate economic growth," said Roux.

This, he said, requires a level of savings of around 30%. SA's rate of savings is around 16%.

"We just don't like saving and because of it we struggle to finance investment."

6. Autonomy of democratic institutions

The autonomy of SA's democratic institutions are entrenched in the Constitution and this is arguably the hallmark of SA's democracy.

But developments in recent years indicate the integrity of these institutions are being eroded, said Roux.

For example, SA's audit reporting standards were at one stage judged as among the best in the world, but in recent years this has not been the case.

SA's judicial independence has fallen from 16 to 48, out of 120 countries in a WEF ranking, said Roux. Protection of property rights, meanwhile, fell from 29 to 97 in just two years.

"It seems to suggest institutional decay, which is a real problem," he said.

7. SA's young population

The country faces a major challenge in ensuring the young working age population is equipped to find jobs. "It will go awfully wrong if millions of young people can't find a job."

While a young population could be SA's biggest asset, if not managed correctly it could become the country's biggest liability.
Fin 24 

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