Oxford handbook of SA’s economy aims to help policymakers

President Cyril Ramaphosa says he hopes the newly launched Oxford Handbook of the South African Economy will provide valuable lessons that will help the country on its journey of economic recovery.

“We expect economics to give us the evidence base to develop policies that will bring millions of excluded people into meaningful participation in the economy,” said Ramaphosa.

The president was addressing the virtual launch of a 1,000 page, 47-chapter Oxford Handbook of the South African Economy co-hosted by the universities of the Witwatersrand and Johannesburg on Wednesday evening.

The handbook has been put together by leading academics, economists, anthropologists and scientists including Presidential Economic Advisory Council [PEAC] members who collaborated to produce a voluminous study of the structure of the country’s economy.

Printed by the Oxford University Press, the publication looks at sectors like energy, agriculture, environment, trade industry, regulation, labour market, income distribution, social policy and climate change.

Ramaphosa said the handbook comes at a time of great upheaval in the global economy. 

“While the economy expanded by 4.9% in 2021, the impact of the [Covid-19-19] pandemic continues to be felt throughout the economy and society.”

Ramaphosa said the handbook analyses the past and offers advice for the future for policymakers.

“Economic theory predicts that developing economies will converge towards the performance of richer countries. Capital will flow from where it is abundant to areas of the globe where it is less available, and earn higher returns in those regions of relative capital scarcity.”

He said in the case of SA, the past decades had brought periods of divergence.

“In 1970, GDP per head in SA stood at just over half that of the average G7 level, at 53%. By the end of the 1980s, SA’s relative GDP per head had shrunk to a third of the G7 average and by 1994 it was closer to a quarter.

“Though there were periods of improvement towards 2009, the ratio fell back to 26% by 2018. By way of contrast, China clocked in at 2% of the G7 average in 1970 and surged to a third by 2018.”

Ramaphosa said with an economy stuck in low gear, battered institutions and declining productivity, an important strand of economic policymaking over the past four years has been on fixing the fundamentals of the economy.

To unleash the energy of the private sector, especially the small and informal segments where the majority of jobs are created, Ramaphosa said the government had created a red-tape reduction team in the presidency to remove regulatory impediments to entry and growth.

“Another major constraint on growth and employment are the relatively low skills levels in the country and the inadequate outcomes of our education system. The resultant skills gap is also a significant contributor to inequality and undermines efforts to end intergenerational cycle of poverty,” said Ramaphosa.  

He said the only sustainable way to bridge the skills gap is to dramatically improve the performance of all levels of education system.

He said another innovation is the digital work accelerator as a co-ordinated public-private initiative to enhance digital skills and create digital jobs. “To ensure that skills training is linked directly to the demand in the economy, we are pioneering a fundamentally different approach to skills development for unemployed youth.”

He believes the economy is highly concentrated with economic activity clustered in a few, and mostly urban, centres.

“I came into office with a clear determination to raise the level of investment in the economy. I set a target of R1.2-trillion in new investment over five years.”

Ramaphosa said over the course of four years he had managed to raise new investment to the value of R1.14-trillion.

“Through a social compact, we would like the private sector to commit to even higher rates of investment so that we are able to reach the target set by the National Development Plan, which calls for fixed investment at 30% of GDP by 2030,” he said.

Ramaphosa also said infrastructure development is an important driver of economic growth.

On climate change, he said the commitments the country had made to avert a climate crisis carry with them significant risks.

“These include risks to our energy security, scale of industrialisation, levels of employment and economic activity in coal-dependent communities,” he said. 

However, he said the risks of not undertaking an ambitious and just transition are far greater.

Ramaphosa said he was also encouraged that the handbook also dealt with social security and social development, hunger, stunting and food security, gender and work, migration, health, and household dynamics.

He emphasised the important of focusing on building state capacity, saying, “The role of institutions has gained prominence in explanations of economic performance across nations.”

He said strengthening the capacity of the state has been a top priority for his administration.

“We are taking steps to professionalise the public service, strengthening criteria for recruitment and advancement, and building a culture of career-long learning and development.”

One of the editors of the book, Prof Fiona Tregenna, said: “We really hope that it will serve as a resource for students, policymakers, industry and co-operate work, and others interested in the South African economy.”

UJ vice-chancellor Prof Tshilidzi Marwala said: “As economies open up again and life seems to returns to what we once knew, there seems to be a resurgence of feelings that accompanied the new dawn.”

Wits vice-chancellor Prof Zeblon Vilakazi said the book brings about the tools needed for a successful future.

“It is imperative that as we build our future that we are mindful of our mistakes that we have done in the past,” said Vilakazi.

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