Accelerated and Shared Growth Initiative for South Africa (ASGISA)
The South African government was mandated in 2004 to halve poverty and unemployment by 2014. These objectives are feasible because of steady improvement in the economy's performance and job-creating capacity. Yet, these goals will not be achieved without sustained and strategic economic leadership from government, and effective partnerships between government and stakeholders such as labour and business.
Binding constraints
Sustainable growth at around 6% requires measures to address a number of 'binding constraints'. These include:
Countering these constraints requires a series of decisive interventions.
These fall into six categories:
1. Infrastructure investment
Public-sector investment is planned to rise to around 8% of GDP. Government and public enterprise investment expenditure between April 2005 and March 2008 is planned to be about R370 billion.
Of this, about 40% will be spent by public enterprises, mainly on power generation, power distribution, rail transport, harbours and an oil pipeline. The general purpose is to improve the availability and reliability of infrastructure services in response to rapidly growing demand.
Key areas of government expenditure, incorporating all spheres, are:
provincial and local roads, bulk water infrastructure and water supply networks, energy distribution, housing, schools and clinics, business centres, sports facilities, and multi-purpose government service centres, including police stations, courts and correctional facilities. Electronic communications as a key commercial and social infrastructure will be one focus of priority attention.
2. Sector strategies
To promote private-sector investment, sector strategies are being prepared
for implementation. A broader National Industrial Policy Framework will be
submitted to Cabinet during this year.
Two sectors have been identified for immediate priority attention:
business process outsourcing (BPO) and tourism. A third sector, biofuels, is being finalised. These industries are labour-intensive, rapidly growing sectors worldwide, suited to South African circumstances, and open to opportunities for broad-based black economic empowerment and small business development.
A number of other sectors constitute the next rank of priorities, including:
3. Education and skills development
The single greatest impediment is shortage of skills, including professional, managerial and technical skills. Responses range from medium-term educational interventions to raise the level of skills in areas needed by the economy to immediate measures to acquire skills needed for the implementation of ASGISA projects.
Educational responses include a programme aimed at achieving high levels of literacy and numeracy in the lowest grades; doubling the number of maths and science high school graduates by 2008; upgrading Further Education and Training colleges; and ramping up the Adult Basic and Education Training programme.
A short-term project is the development of a scarce skills database based directly on the expected needs of over 100 individual projects.
The Joint Initiative for Priority Skills Acquisition (JIPSA) has been established to identify urgent skills needs and quick and effective solutions.
4. Eliminating the Second Economy
Government has already initiated interventions to address deep-seated inequalities and target the marginalised poor. ASGISA includes some specific responses to the challenges of exclusion and the Second Economy.
The increased levels of public expenditure will be used to promote small businesses and broad-based empowerment. Private companies will be persuaded to engage in affirmative procurement and the implementation of the relevant provisions of the BBBEE Codes of Good Practice and the relevant sector empowerment charters will be closely monitored. Infrastructure projects will be labour-intensive where feasible.
Attention will be paid to expanding and accelerating access to economic opportunities for women, including skills development and finance. On the youth front, one intervention is to target unemployed graduates for jobs or learnerships.
All of the sector strategies will have elements addressing development goals in the Second Economy. Broad Based Black Economic Empowerment will be leveraged to support shared growth. Steps will be taken to improve the regulatory environment for small businesses.
5. Macro-economic issues
Areas where macroeconomic policies or implementation can be improved are in reducing the volatility and overvaluation of the currency; ensuring fiscal and monetary policy work together to produce sustained and shared growth; and improving budgeting and expenditure management in government. One innovation to be introduced in 2006 is the development of a new capital expenditure management information system by the National Treasury.
6. Governance and institutional interventions
Institutional interventions are costly and should be kept to a minimum. Where possible, existing institutions should be levered into new functions and responsibilities.
The social partners should seek, in the context of ASGISA, to make progress towards realisation of a people's contract on economic matters. Skills problems with respect to local government and service delivery are being addressed through Project Consolidate.
The Cabinet Committee for Investment and Employment would now have ASGISA as a standing item for regular reports and problem-solving at its monthly meetings. Government will review the functioning of the development finance institutions so they may be more effectively employed in our developmental efforts. Government will ensure that investors have access to a one-stop trouble-shooting centre, probably located at Trade and Investment South Africa.
Conclusion
The implementation of ASGISA has already begun. Government will regularly review progress in implementation. Where necessary, the programme will be amended or supplemented.
Source: www.info.gov.za
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