The Archive

Articles

Accessible, evidence-based analysis on growth and inclusive development in South Africa.

The politics of economic change

The political settlement forged around South Africa’s transition from apartheid to democracy created the conditions for a corporate restructuring of the economy characterized by high profitability, despite low investments. This has involved power entrenchment in large incumbent businesses groups and coalitions of rentieristic interests, which have undermined effective industrial policy implementation and the development of inclusive growth-oriented coalitions. Persistent high unemployment and inequality have fuelled dissatisfaction and contestation over the core objectives of a more developmental state. Industrial policies have also been undermined by the fragmentation of the state.

20 JAN 2022

The good news in 2021 is in the agricultural sector

The year 2021 has ended positively for South Africa's agricultural sector. Farmers experienced a unique season characterized by bumper yields, and higher agricultural commodity prices, particularly in the grains and oilseeds industries. Improved farmers' incomes have boosted spending on agricultural equipment. On the downside, the unrest and looting in July were disruptive, but the cooperation amongst agricultural and logistics role-players ensured a continuous flow of agricultural exports. The primary agriculture sector could show positive growth in 2021,building from an excellent year of 13,4% year-on-year growth in 2020. Going into 2022, the early indicators about the agricultural growth prospects are positive.

15 DEC 2021

The MTBPS makes a start: now we need the policies for growth

South Africa’s national budget is one of the most redistributive in the emerging markets, but our rising debt to GDP ratio threatens future economic growth and thus the country’s capacity to both create new jobs and to maintain the social wage. National Treasury will have to continue to provide support in the short term to the vulnerable, whose position has been greatly exacerbated by the pandemic. But without implementing the necessary reforms to put the country on a path of sustainable growth, this will not only simply be papering over the cracks but may significantly increase the debt burden.

01 DEC 2021

The case for a Universal Basic Income Grant

The Covid pandemic has greatly exacerbated existing poverty and unemployment in South Africa. What are the best policies to alleviate it? Targeted social grants may aim to reach the poorest of the poor but there are many inefficiencies in the targeting method. A Universal Basic Income Guarantee is more costly, yet simpler to implement, will reach those in need more quickly, and is financially feasible.

24 NOV 2021

The MTBPS clears some fiscal space but it is still a path through a swamp

Treasury did the best it could in this month’s Medium Term Budget Policy Statement. Half the revenue windfall was used for fiscal consolidation and the other half on spending increases. But real cuts to expenditure are still pending, and cabinet backing is yet to be negotiated. Achieving consolidation next year will be even harder as the commodity boom wanes and election politics wax.

17 NOV 2021

COVID-19: the measure of learning losses

How much learning did primary school children in poorer schools lose due to the lockdowns resulting from the Covid-19 pandemic? Three different studies on early-grade reading from no-fee schools across South Africa show that in 2020, grade 2 students lost between 57% and 70% of a year of learning, and grade 4s between 62% and 81%. There is also evidence from the grade 4 sample that girls and those with stronger initial reading proficiency have been most negatively affected. The key question for education authorities now is how to mitigate the long-run implications of these losses.

10 NOV 2021

The EU Green Deal: how will it impact South African agricultural exports?

The European Union (EU) is the second most important market for South Africa's agricultural products, accounting for 27% of the country's total agricultural exports. Despite South Africa transitioning from the Trade Development Cooperation Agreement (TDCA) to the Economic Partnership Agreement (EPA) to secure continued and improved market access in the EU, a new set of regulations under the EU Green Deal and its Farm to Fork Strategy are set to impose additional compliance costs that will likely negate the benefits of existing preferential trade arrangements. We present a set of challenges, opportunities, and risks that both government and the private sector need to address if South Africa aims to increase agricultural exports to the EU.

27 OCT 2021

Why South African agricultural products face frontiers in African markets

South Africa's export-oriented agricultural sector is heavily reliant on the African continent, accounting for over 40% of annual exports. The African Continental Free Trade Area (AfCFTA) is expected to propel South Africa's market presence beyond the South African Development Community (SADC) region. However, we argue this optimism might be misplaced, given specific structural challenges that will likely limit the potential for South Africa to increase agricultural exports in untapped African markets.

13 OCT 2021

Is South Africa's trade policy failing the agricultural sector?

South Africa's agricultural exports have grown significantly over the past two decades. Yet agricultural private-sector role players typically argue that the government has not done enough to open up new markets for ever-increasing produce. This failure has limited the country's scope to grow exports beyond existing traditional markets in the European Union (EU) and the African continent. In markets outside these regions, private-sector players argue that the growth in South Africa's agricultural exports has primarily been driven by productivity gains whose competitive advantage overcomes the costs of high tariff and non-tariff barriers. However, a review of South Africa's trade agreements paints a different view, suggesting that private-sector role players might be downplaying the achievements of the past two decades.

06 OCT 2021

What would it cost to subsidize a universal pension plan?

A key objective of social security policy is to increase participation in contributory savings arrangements that provide funded incomes in retirement. This is the second of a three-part series on pension fund coverage. The first estimated the size of the pension coverage gap. In this article, the fiscal costs of co-funding universal coverage are examined. In the third part of the series, a tax reform that might pay for a pension plan subsidy is suggested.

22 SEPT 2021

What is the size and distribution of the pension contribution gap?

Out of 16 million employed people under the age of 65, about seven million contribute to pension or provident funds. Most of those who are not covered earn below the tax threshold, including workers in the informal and agricultural sectors. This first of a three-part series quantifies the pension coverage gap. The second and third parts will examine the fiscal costs of co-funding universal coverage and how this might be paid for.

15 SEPT 2021

A measure of relief: how the Covid-19 grants have dented poverty and inequality

The Covid-19 pandemic not only had devastating impacts on health when it hit South Africa in early 2020. It also caused severe economic hardship. What was its impact on poverty and inequality, and what were the effects of the COVID-19 social relief policies? This article, based on a UNU-WIDER/SA-TIED research paper that uses a static tax–benefit microsimulation model known as SAMOD, measures the incomes of people just before and after the first few months of lockdown and evaluates the relief policies put in place. The COVID-19 measures had a substantial effect in reducing poverty and inequality. Our results may lay the foundation for the role that longer-term social grant policies could play in effectively reducing poverty in South Africa.

08 SEPT 2021

How the COVID-19 grant has reached the once forgotten

The COVID-19 grant is the first in South Africa to explicitly target the unemployed. By the end of 2020, the grant had brought some six million previously unreached people into a welfare net that had previously excluded them on the assumption they could find work. How have the grants impacted poverty and inequality? And what are the implications for long-term policy?

25 AUG 2021

How to fund higher education in South Africa: a public-private-university partnership may be the answer

Higher education is both a private and public good – for society, an investment in the future, for the individual, a chance to improve their lives. But the current model of student funding is neither financially nor fiscally sustainable. It is unlikely that government can fund the “missing middle” – students from households with incomes between R350 000 and R600 000 a year. What then to do? A loan scheme involving universities, government, and the private sector may enable students to graduate and to start re-paying only once their income reaches a certain level.

28 JUL 2021