In 2004 the South African
government committed to halving poverty and unemployment by 2014
under the Accelerated and Shared Growth Initiative for South
Africa (AsgiSA). This is a realistic challenge but it is going
take a great deal of hard work and effort on the part of the
government to achieve this goal. So where are we now, three years
into the challenge?
Last month a set of key development
indicators were released by the government in a report called the
"Development Indicators Mid-Term Review". The report
provides pointers to the evolution of our society up to the middle
of this government's term, two-and-half years after the April 2004
elections. It reveals statistics on various challenges facing
South Africa and according to the report we are on our way to
winning the war on poverty and unemployment and achieving the 2014
goal.
Poverty
The report indicates that since
2000 there has been a considerable decrease in poverty in the
country, with the poorest citizens seeing a notable improvement in
their income. Since 2002, strong overall income growth, including
the expansion of social grants, has resulted in a rise in income
of the poorest 10 and 20 percent of the population. At present,
nearly 12 million people receive social grants, and 3.2% of gross
domestic product (GDP) is spent on social grant assistance.
Possibly the most significant
indication that poverty is decreasing at a steady pace is the
decline in the percentage of population living under R3000 per
annum. Since 2001 the headcount poverty rate has decreased from
51% to 43%. This has largely been attributed to the expansion of
social grants, and more jobs created in the economy.
Using Excel’s forecast function
based on the trend between 2001 and 2006, it appears that the
percentage of South Africans living in poverty will be drop to
around 30% by 2014 – not quite half, but a significant dent!
Further statistics show that the
number of people in Living Standards Measures (LSMs) 1 to 3 has
decreased and those in higher LSMs have increased. Between 2000
and 2005, the LSM data shows a significant decrease in the number
of people in the poorest categories (LSM 1-3), with a marked
reduction in the number of people living in LSM 1. The growth in
number of people living in LSM 4-10 can be considered a good
indication of the growing middle class in the country.
Despite a definite decrease in
poverty, the indicators show that inequality on the other hand has
not decreased in recent years. The report reveals that while the
number of people living below the poverty line has decreased, the
increase in income for the poor has not matched that of the better
off. It was noted in the findings that inequality has changed in
nature over the last few years.
Inequality between races has
declined. In 1993, 61% of inequality was between race groups;
however, by 2006 inequality between race groups had declined to
40%. However, over the same period, inequality within race groups
has become much more prominent.
Given what the report reveals about
the definite decline in poverty it is not a case of the rich
getting richer while the poor get poorer. Yes, the rich are
getting richer but the poor are getting less poor, but at a slower
pace.
So it would appear that despite the
increase in inequality within race groups, the percentage of South
Africans living in poverty could drop from 47% in 2004 to around
30% in 2014. Obviously there are many, many variables in this but
it is an indication of a fairly successful poverty reduction
programme that is moving in the right direction.
But what about the other goal the
Government has set out for the next six years? Will we be able to
halve the amount of unemployment that existed in 2004?
Employment
The "Development Indicators
Mid-Term Review" indicates that in terms of employment we are
on track to reaching our goal. The target is to have 16 million
people employed by 2014. The report states that if the employment
creation performance achieved since March 2004 is maintained, the
target will be met.
However, this is granted that the
growth rate continues to improve, especially in areas with higher
rates of labour absorption. A particularly strong growth in the
number of employed was seen in the two years to September 2006
when over one million additional people were employed. Since 2004
the number of people employed has increased from 11.39 million to
12.8 million people.
The government’s goal is to
decrease the unemployment rate to 14% by 2014. Since 2003
unemployment has been falling at a steady rate. The report shows
that if unemployment continues to fall at the rate achieved since
January 2003, we could halve unemployment by 2014. This is
however, dependant on a further acceleration of the rate of
economic growth to 6% between 2010 and 2014, increased investment
in labour-intensive sectors, as well as further expansion of
public works programmes and other second economy interventions.
Narrow definitions of unemployment have decreased from 31% to 25%
while broad definitions have decreased from 42% to 37% since 2003.
It is clear that if changes in
poverty and employment continue at the current rate, we could get
close to meeting the goals set out by AsgiSA. Furthermore, from
what was found in the mid-term review, we should be able to meet
the AsgiSA target that has been set for the economy. The economy
has been growing continuously for the last eight years and at a
faster rate than the country's population. The goal is GDP growth
of 4.5% per annum from 2005 to 2009 and then 6% per annum until
2014.
Since 1999, the economy has grown
continuously and growth continues to tend towards a higher level.
Since 2004, growth has averaged at over 4.5%, which means we are
on target so far to reach our goal for 2009. Furthermore, if
economic growth continues to grow at the current pace, we will
reach the 2014 target. However, faster growth is putting new
strains on the economy, including shortages of material and
skilled labour.
Another goal for the economy for
2014 that seems to be on track is that of capital investment. Not
only is this increasing, it is also creating a platform for
further growth. The AsgiSA target for capital investment is to
reach 25 percent of GDP per year by 2014. The report indicates
that since 2002 fixed investment has been rising and that since
2004 it has begun to accelerate. This lays the basis for strong
GDP growth as long as funds are efficiently invested. The
statistics show that in 2000 we were at a gross fixed capital
formation of 15% while 2006 saw a gross fixed capital formation of
19%.
However, it is pointed out that
while private-sector and state-owned enterprise investments are
strong, the rate of government investment remains relatively slow.
The report states that to continue the strong upward trend in
investment, capacity to invest must improve urgently in all
spheres of government.
The “Development Indicators
Mid-Term Review” evidently shows that we are heading in the
right direction in terms of reaching our 2014 targets. The current
rates of progress will however have to continue in all sectors and
the government will have to address those areas, such as
inequality, that are in need of improvement.
It is not impossible to reach these
targets and events such as the 2010 FIFA World Cup and
Government’s R400bn infrastructure investment programme will
help to speed up our progress.
Please note that the forecasting
was performed by South Africa: The Good News and was not included
in the 'Development Indicators Mid-Term Review'
.
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