In an environment of accelerating but still modest growth, government policies that stimulate competition and create the fiscal space needed to build a skilled labor force from the poor population of South Africa, would create jobs and help reduce inequality, according to the South Africa Economic Update released by the World Bank today.
The World Bank expects real growth in gross domestic product (GD) to accelerate from 1.3 percent in 2017 to 1.4 percent in 2018, supported by a rise in confidence, global growth and benign inflation. For 2019, the forecast is 1.8 percent and 1.9 percent in 2020. But despite this modest rebound, growth in South Africa remains constrained and continues to lag behind its peers. Overall, South Africa is projected to remain largely below the average growth rate of 4.5 percent in 2018 and 4.7 percent in 2019 in emerging markets and developing economies.
“This outlook calls for fundamental policy action to turn the economy around through policies that can foster inclusive growth and reduce inequality,” said Paul Noumba Um, World Bank Country Director for South Africa. “Creating labor demand and fiscal space to finance improved education as well as reinforcing spatial integration will enhance the ability of the poor people of South Africa to participate meaningfully in the economy”.
The special focus section of this 11th edition of the South Africa Economic reviews the evolution and nature of South Africa’s inequality – among the highest in the world– arguing that it has increasingly been driven by labor market developments that demand skills the country’s poor currently lack. It suggests that significantly raising South Africa’s economic potential will require breaking away from the equilibrium of low growth and high inequality in which the country has been trapped for decades, discouraging the investment needed to create jobs.
Simulations assessing the potential impact of a combination of various policy interventions on jobs, poverty, and inequality suggest a scenario in which the number of poor people could be brought down to 4.1 million by 2030, down from 10.5 million in 2017. This would be driven by increasing the skilled labor supply among poor households through improved education and spatial integration as well as increasing labor demand through strengthened competition.
In this scenario, the Gini index of inequality would be reduced from 63 today to 56 in 2030. An additional 800,000 jobs would be created with higher wages for workers from poor households, and cheaper goods and services contributing to these outcomes, according to the report.
“In the short term, these policy interventions would include, getting the implementation of the recently granted free higher education right, continuing to address corruption, improving the competitiveness of strategic state-owned enterprises, restoring policy certainty in mining, further exposing South Africa’s large conglomerates to foreign competition and facilitating skilled immigration,” said Sebastien Dessus, World Bank Program Leader.
In the longer term, the report suggests that improving the quality of basic education delivered to students from poor backgrounds and reinforcing the spatial integration between economic hubs, where jobs are located, and underserviced informal settlements, would reduce poverty and inequality and support job creation.
Critical Views On Russia’s Policy Towards Africa Within Context Of New World Order
In September WhatsApp conversation with Matthew Ehret, a Senior Fellow and International Relations Expert at the American University in Moscow, he offers an insight into some aspects of Russia-African relations within the context of the emerging new global order.
In particular, Matthew gives in-depth views on Russia’s valuable contribution in a number of economic sectors including infrastructure development during the past few years in Africa, some suggestions for African leaders and further on the possible implications of Russia-China collaboration with Africa. Here are important excerpts of the wide-ranging interview:
What are the implications here and from historical perspectives that Russia is looking for its allies from Soviet-era in Africa…and “non-Western friends” for creating the new world order?
Russia is certainly working very hard to consolidate its alliances with many nations of the global south and former non-aligned network. This process is hinged on the Russia-China alliance best exemplified by the integration of the Eurasian Economic Union with the Belt and Road Initiative and the spirit of cooperation outlined in the the Feb. 4 Joint Statement for a New Era of Cooperation.
Of course this is more than simply gaining spheres of influence as many analysts try to interpret the process now underway, but has much more to do with a common vision for instituting a new system of cooperation, creative growth and long term thinking uniting diverse cultural and religious groups of the globe around a common destiny which is a completely different type of paradigm than the unipolar ideology of closed-system thinking dominant among the technocrats trying to manage the rules based international order.
Soviet Union, of course, enormously supported Africa’s liberation struggle and resultantly attained political independence in the 60s. What could be the best practical way for Russia to fight what it now referred to as “neocolonialism” in Africa?
Simply operating on a foundation of honest business is an obvious but important thing to do. The African people have known mostly abuse and dishonest neo-colonial policies under the helm of the World Bank and IMF since WW2, and so having Russia continue to provide investment and business deals tied to the construction of special economic zones that drive industrial growth, infrastructure and especially modern electricity access which Africa desperately needs are key in this process.
African countries currently need to transform the untapped resources, build basic infrastructure and get industrialized -these are necessary to become somehow economic independent. How do you evaluate Russia’s role in these economic areas, at least, during the past decade in Africa?
It has been improving steadily. Of course, Russia does not have the same level of national controls over their banking system as we see enjoyed by China whose trade with Africa has attained $200 billion in recent years while Russia’s trade with Africa is about $20 billion. But despite that, Russia has done well to not only provide trains in Egypt, and has made the emphasis on core hard infrastructure, energy, water systems, and interconnectivity a high priority in the 2019 Russia-Africa Summit and the upcoming 2023 Summit.
Generally, how can we interpret African elite’s sentiments about Russia’s return to Africa? Do you think Russia is most often critical about United States and European Union’s hegemony in Africa?
I think the over arching feeling is one of trust and relief that Russia has returned with a spirit of cooperation. According to all the messaging from Lavrov who recently completed an important Africa tour late July, I can say that Russia is very critical of the USA and EU approach to hegemony in Africa. As Museveni and the South Africa Foreign Minister have recently emphasized, they are sick of being talked down to and threatened by western patronizing technocrats, whereas we see a sense of mutual respect among the discourse of Russian and Chinese players which is seen as a breath of fresh air.
While the west is obsessed with “appropriate green technologies” for Africa while chastizing the continent for its corruption problems (which is fairly hypocritical when one looks at the scope of corruption within the Wall Street- City of London domain), Russia supports all forms of energy development from coal, oil, natural gas and even nuclear which Africa so desperately needs to leapfrog into the 21st century.
Understandably, Russia’s policy has to stimulate or boost Africa’s economic aspirations especially among the youth and the middle class. What are views about this? And your objective evaluation of Russia’s public outreach diplomacy with Africa?
So far Russia has done well in stimulating their youth policy with expanded scholarships to African youth touching on agricultural science, engineering, medicine, IT, and other advanced sectors. Additionally the Special Economic Zones built up by Russia in Mozambique, Egypt have established opportunities for manufacturing and other technical training that has largely been prevented from growing under the IMF-World Bank model of conditionality laced loans driven primarily by the sole aim of resource extraction for western markets and overall control by a western elite. Russia has tended to follow China’s lead (and her own historic traditions of aiding African nations in their development aspirations) without pushing the sorts of regime change operations or debt slavery schemes which have been common practice by the west for too long.
Sochi summit has already provided the key to the questions you have, so far, discussed above. Can these, if strategically and consistently addressed, mark a definitive start of a new dawn in the Russia-African relations?
Geopolitical confrontation, rivalry and competition in Africa. Do you think there is an emerging geopolitical rivalry, and confrontation against the United States and Europe (especially France) in Africa? What if, in an alliance, China and Russia team up together?
China and Russia have already teamed up together on nearly every aspect of geopolitical, scientific, cultural and geo-economic interest imaginable which has created a robust basis for the continued successful growth of the multipolar alliance centered as it is upon such organizations as the BRICS+, SCO, ASEAN and BRI/Polar Silk Road orientation. This is clear across Africa as well and to the degree that this alliance continues to stand strong, which I see no reason why it would not for the foreseeable future, then an important stabilizing force can not only empower African nations to resist the threats, intimidation and destabilizing influences of western unipolarists.
Sahel security crisis ‘poses a global threat’
Rising insecurity, including the proliferation of terrorist and other non-State armed groups, coupled with political instability, is creating a crisis in the Sahel that poses a “global threat”, the UN chief warned Thursday’s high level meeting on the vast African region, which took place behind closed doors at UN Headquarters in New York.
“If nothing is done, the effects of terrorism, violent extremism and organized crime will be felt far beyond the region and the African continent”, said Secretary-General António Guterres, in his remarks issued by his Spokesperson’s Office.
“A coordinated international breakthrough is urgently needed. We must rethink our collective approach and show creativity, going beyond existing efforts.”
The insecurity is making a “catastrophic humanitarian situation even worse”, he said, leaving some beleaguered national governments, without any access to their own citizens.
‘Deadly grip’ tightening
Meanwhile, “non-State armed groups are tightening their deadly grip over the region and are even seeking to extend their presence into the countries of the Gulf of Guinea.”
The indiscriminate use of violence by terrorist and other groups means that thousands of innocent civilians are left to suffer, while millions of others are forced from their homes, Mr. Guterres told the meeting of national leaders, during the High Level Week summit.
“Women and children in particular are bearing the brunt of insecurity, violence and growing inequality”, he said, with human rights violations, sometimes committed by security forces mandated to protect civilians, “of great concern”.
And the crises are being compounded by climate change, said the UN chief, with soil erosion and the drying-up of water sources, “thereby contributing to acute food insecurity and exacerbating tensions between farmers and herders.”
“Against a global backdrop of turmoil on energy, food and financial markets, the region is threatened by a systemic debt crisis that is likely to have repercussions throughout the continent.”
The conventional international finance remedies are not helping, the UN chief said bluntly, with more and more countries forced to channel precious reserves into servicing debt payments, leaving them unable to pursue an inclusive recovery, or boost resilience.
“It is absolutely necessary to change the rules of the game of the financial reports of the world. These rules of the game are today completely against the interests of developing countries, and in particular the interests of African countries”, said Mr. Guterres, “with debt problems, with liquidity problems, with inflation problems, with instability, necessarily posed by this profound injustice in international financial and economic relations.”
Democracy, constitutional order
The UN chief called for a “renewal of our collective efforts to promote democratic governance and restore constitutional order” across the whole Sahel, which stretches from Senegal in the west to northern Eritrea and Ethiopia in the east, a belt beneath the Sahara of up to 1,000 kilometres.
The rule of law and full respect for human rights are indispensable for ensuring security and sustainable development, Mr. Guterres said.
Addressing national leaders and senior politicians from the region, he said the UN “stands ready to work alongside you, with urgency and solidarity, for a peaceful, stable and prosperous Sahel.”
South Sudan: Extended roadmap for lasting peace deal, a ‘way point, not an end point’
Since 2018, the Revitalized Agreement between the key players in South Sudan’s long-running civil war has provided a framework for peace, the Head of the UN mission there, UNMISS, told the Security Council on Friday – “despite continued outbreaks of intercommunal violence”.
UN Special Representative Nicholas Haysom said that although key provisions of the Agreement are set to end by February, the parties agreed in August on a Roadmap that extends the current transitional period by 24 months.
While a welcome development, he reminded that “there is no alternative to the implementation of the peace agreement”.
“Let me underscore that the roadmap is a way point, not an end point”, he said.
Inclusive political process
The UNMISS chief flagged the importance of an inclusive political process and the opening of civic spaces as “essential conditions” for a robust and competitive electoral process.
He then outlined some steps underway – from President Salva Kiir and first Vice-President Riek Machar’s agreement to resolve the parliamentary impasse, to the graduation of the first class of joint armed forces recruits – for which budgetary resources, integration and deployment, are vital to allow a broader security sector transformation.
“Failure to address these critical issues…have the potential to reverse the gains made,” Mr. Haysom warned.
He went on to describe violence on the regional level, marked by cycles of cattle raiding, abduction, and revenge killings along with fighting in Upper Nile state that has displaced thousands of people.
The Special Representative reported that while conflict-related violence is also increasing, UNMISS continues to support prevention through policy frameworks and other areas.
“The Mission is strengthening its support to the justice chain in each state…to address crimes that risk destabilizing the peace, including those involving gender-based violence,” he told the ambassadors.
Mr. Haysom said that UNMISS has managed to accomplish a “double pivot” in its focus and operations, by channeling resources towards the political process; proactive deployment to violent hotspots; and expanding its protection presence for civilians.
He assured that South Sudan’s natural resources have “tremendous potential” for either conflict, or cooperation.
“It is always political that can make the difference”.
Turning to the humanitarian situation, he acknowledged that food security continues to deteriorate, leaving some 8.3 million people in need and outstripping available funding.
Noting that the Humanitarian Response Plan is only 44.6 per cent funded, he urged donors to fulfil their pledges.
He asserted that the next few months would be “a litmus test” for the parties to demonstrate their commitment to the Roadmap, warning against “delays and setbacks”.
In closing, the Special Representative reaffirmed the importance of the international community’s support.
“Our collective task now is to support the parties in fulfilling their obligations to the people of South Sudan as per the timing of the Roadmap,” he concluded.
Meanwhile, Lilian Riziq, President, South Sudan Women’s Empowerment Network discussed a broad-based and inclusive process for all key participants, underscoring the need for a new transitional governance process.
She underscored that election timelines are indispensable, noting that four years on, levels of revitalized agreement implementation have not brought security or ended humanitarian misery.
She also highlighted ways that precious oil revenues in South Sudan, have been heavily misused.
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