In­fra­struc­ture spend,

Finweek English Edition - - INVESTMENT -

The an­swer to South Africa’s lack of em­ploy­ment cre­ation lies in get­ting in­fra­struc­ture spend go­ing again, and fast, so that eco­nomic growth will im­prove. These were the sen­ti­ments shared by Rian le Roux, chief econ­o­mist at Old Mu­tual In­vest­ment Group, at the re­lease of the lat­est Old Mu­tual Sav­ings and In­vest­ment Mon­i­tor re­search find­ings.

Le Roux said that while the Ma­tric pass rate has im­proved from about 50% in the late Nineties to the cur­rent 78.2% level, “it has done noth­ing for em­ploy­ment”, adding that this points to the fun­da­men­tal cri­sis that ed­u­ca­tion in the coun­try faces. “We need to sort out ed­u­ca­tion, now,” he said.

SA’s of­fi­cial un­em­ploy­ment rate has re­mained stub­bornly con­sis­tent at just over 25% while ex­panded un­em­ploy­ment (which in­cludes those who have given up look­ing for jobs) is at around 36%.

The re­search showed that only 52% of South Africans feel con­fi­dent about the lo­cal econ­omy. The econ­omy showed signs of dis­tress af­ter it con­tracted by an an­nu­alised 0.6% in the first quar­ter of 2014 com­pared to the pre­vi­ous quar­ter. SA’s an­nual GDP growth av­er­aged 3.16% from 1993-2014, reach­ing an all­time high of 7.6% in the fourth quar­ter of 1994 and a record low of -6.3% in the first quar­ter of 2009, ac­cord­ing to eco­nomic data provider Trad­ing Eco­nom­ics.

The In­ter­na­tional Mon­e­tary Fund, which had al­ready down­graded its eco­nomic fore­cast for SA this year to 2.3% from 2.8%, is ex­pected to re­lease its re­vised fore­cast later this month. Be­cause of the in­dus­trial ten­sions the coun­try has en­dured in re­cent months, it is ex­pected that the fore­cast will be con­sid­er­ably lower. This comes af­ter the World Bank cut the coun­try’s GDP fore­cast from 2.3% to 2% for 2014 in June.

“De­spite the Govern­ment’s con­trary com­ments, there are real fears of lit­tle more than lip-ser­vice to the Na­tional De­vel­op­ment Plan. To achieve our high growth po­ten­tial, we need to, among oth­ers, speed up so­cial and eco­nomic in­fra­struc­ture spend, ad­dress SA’s highly prob­lem­atic labour re­la­tions and ag­gres­sively ad­dress un­der­per­form­ing ar­eas in the pub­lic ser­vice in­clud­ing ed­u­ca­tion,” said Le Roux.

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