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South Africa's development path and the Government's programme of action

Alan Hirsch, head of the economic sector in the Presidency's Policy Coordination and Advisory Services

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Late in 2003 the policy unit in the Presidency produced and distributed widely a preliminary assessment of the performance of the South African government during the first decade of freedom. While the overall assessment of Towards a Ten Year Review was that government had performed reasonably well, the report also suggested that for the next period, government had to review its priorities and step up its performance. The social transition from a racially/spatially divided society to a free society was not an easy transition. Poverty persisted and unemployment grew as the number of new jobs failed to keep up with the number of people liberated into the job market. Discussions within government focused on two questions: firstly, how to increase the rate of growth above an average of 2.8% per year so that the economy could pay for an improved quality of life; and, how to address the challenge of the “second economy”—those marginalized people who were unlikely to benefit from an improved rate of growth without government and its partners reaching out to them.

The body of this article is intended to take the reader through some of the thinking done in government in an attempt to address these two challenges.

Election and Manifesto

The third democratic South African elections resulted in a decisive victory by the ruling party. The mandate of the successful party had the following key points, which became priorities for government:
  • Reduce unemployment by half by 2014

  • Reduce poverty by half by the same date

  • Provide the skills required by the economy

  • Ensure that South Africans are able to exercise their constitutional rights with dignity

  • Government services should be provided with compassion

  • Government services should improve, including services which will reduce the major preventable causes of death, including health and crime prevention services

  • Reduce the number of serious and priority crimes and cases awaiting trial

  • Position South Africa as an effective progressive force in global relations.
Achievements and weaknesses

In the first ten years of democratic government, our achievements were considerable. From a perilous set of national accounts, we achieved macroeconomic stability and credibility—inflation fell to the lowest level since 1959, and interest rates are at their lowest level in 20 years. The economy moved from protectionism to competitiveness through trade and competition policy reforms. South Africa is now experiencing its longest period of continuous growth in recorded history.

Education was unified into a single coherent system, and a comprehensive national skills development strategy was implemented. While social investments in health, education and training grew, we were also able to expand the social security system with the equalisation of social pensions, the improvement of disability payments, and the introduction of a child support grant. Overall, social expenditure rose from 44% of the national budget in 1993 to 57% in 2002/03.

However, the performance of the economy is still not strong enough to effectively roll back the poverty, inequality and unemployment that have accumulated for decades of apartheid, and centuries of colonialism. Unemployment is very high at 28 percent, and the current average growth rate of about 2.8% per year will not enable the unemployment rate to be halved by 2014. Poverty and inequality have resulted in about one third of the population living below the poverty line. Many of these families are, effectively, trapped in poverty—parents lack the education and resources to enable their children to escape poverty.

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