South Africa Achieving the MDG Goals
Ayodele Odusola
Ramos Mabugu
Marna Kearney
Contents
1. Macroeconomic and social policy developments (1990‐2008)
2. State of MDG achievement (1990‐2008)
3. Past and future policies for MDG achievement
4. Relevance of project for MDG policy
5. Summary and Conclusion
Macroeconomic and Social Policy Developments1990‐2008
1
1.1 Economic Reforms and Broad Economic Policies
• 1990‐1994 Political adjustment to post‐apartheid• RDP (1994)
– Address poverty and inequality– Restraint on fiscal spending, tax reduction, government debt reduction, trade liberalisation, improved social
services, and infrastructure development• GEAR (1996‐2000)
– Sustained annual real GDP growth of 6% and more.– Creating 400 000 new jobs each year– Attraction of FDI, macroeconomic stability.
• AsgiSA (2004‐)– Halve poverty and unemployment by 2014– Shared growth – growth and employment– Identified the binding constraints as key objectives
• Programmes to counter constraints include infrastructure programmes– sector investment (or industrial) strategies– skills and education initiatives– Second Economy interventions– macro‐economic issues – volatility of the currency– public administration issues
1.2 Economic Growth Performance
• Last decades of apartheid poor growth due to international isolation, civil conflict, and inadequate accumulation of human capital – real growth rate 0.8% and per capita ‐1.3% for 1985‐1994 .
• Post apartheid: real growth rate average 3.3% and 1.4% per capita for 1995‐2005. • 2004‐2007 real growth rage average 5%.• Growth is forecasted to slow due to global economic crisis, but should recover
over medium term.
1.3 Employment
• Unemployment in South Africa remains high, although employment has grown over last decade.• Most of the unemployment is for youths, women, and black group. • Latest Quarterly Survey:
– Unemployment rate in second quarter of 2009 was 23,6% ‐ y‐o‐y increase of 0.5%– Largest y‐o‐y decline in employment was agriculture (10,1%) and mining (7,8%).– Women lost the most jobs (3.3%) while men gained employment (7,2%). – All race groups have seen a decline in employment, with coloured group affected the most.
2000 Sept 2001 Sept 2002 Sept 2003 Sept 2004 Sept 2005 Sept 2006 SeptMale 51.90% 60.50% 61.60% 65.60% 61.10% 58.10% 56.70%Female 64.60% 72.50% 75.00% 75.40% 75.60% 72.10% 70.80%Total 58.00% 66.60% 68.30% 70.60% 68.20% 65.20% 63.70%
Expanded Definition Unemployment Rates 15‐24 Year Olds
Trade Policy• Trade liberalisation started in 1970’s –
introduction of export subsidies and replacement of quantity restrictions on imports.
• 1990’s General Export Incentive Scheme (GEIS)• SA signed GATT – GEIS to be phased out• In 1980 primary products was still dominant
export product• In 1990’s SA joined WTO and more substantial
trade liberalisation followed.– Substantial reduction in tariffs– Bilateral trade agreements– SA trade protocol
• Between 1991 and 2000 there was export growth as well as increase import penetration
• Employment declined under liberalisation, also shift into higher skilled labour, although findings differ
• Trade policy now:– SA’s tariff structure with too many tariff lines and
bands– Some tariff are still relatively high– High effective rates of protection– Volatile exchange rate– Impact of import penetration on employment
and real wages
1.4 Fiscal Policy
• Fiscal imbalances existed at end of apartheid: budget deficit in 1993/94 was over 7% of GDP.
• Fiscal situation improved when growth picked up in 2003, budget deficit within target of 3% of GDP. Revenue collection also improved drastically.
• Spending by government consolidated. Strong spending focus on social grants, education and health.
• Improved fiscal sustainability contributed to strong portfolio inflows and improved sovereign ratings.
• Strong build‐up of international reserves also contributed to positive sovereign ratings.
• Public sector borrowing requirement expected to increase due to large infrastructure spending requirements eg Eskom.
• Budget deficit likely to rise over next year to 3.8% of GDP.• Primary balance 3.5% of GDP in 2006/07, but expected to become
negative in future years due to high borrowing requirements.
1.5 Monetary Policy
• Inflation target set of 3‐6% for CPIX in 2002.
• Monetary Policy Committee (MPC) meets on even months to decide on interest rate movements.
• Benefits of inflation targeting:– Clear objective for monetary policy– Anchor for inflation expectations– Formalised and transparent approach to
inflation management– Improve accountability
• Inflation rate have been within the target for past number of years, only during last few months have the inflation rate moved above the target
1.6 Economic Constraints and Vulnerabilities
• High unemployment, especially youth
• Lack of skills• Insufficient infrastructure• Current account deficit• Large government borrowing
requirement• AsgiSA binding constraints
– Volatility of the currency– Cost of logistics– Shortage of skilled labour– Service delivery by government– Lack of competition– Regulatory burden
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
yrs
%
%Domestic borrow ing of Total debt
%External borrow ing of Total debt
State of MDG Achievements in South Africa1990‐2008
2
2.1 MGD 1 – Poverty and Hunger
• Strong spending on social grants resulted in an improvement in per capita income.• However, gap between richest and poorest still widens, especially within black group.• Gini coefficient increased from 0.672 in 1993 to 0.685 in 2006.• In 1993, 61 per cent of inequality was between race group, by 2006 inequality between race
groups had declined to 40 per cent. Over the same period, inequality within race groups has become much more prominent.
• Severe malnutrition for under 5‐years declined from 88 971 cases in 2001 to 30 082 cases in 2005.• This situation is expected to continue due to continued increased spending on social grants and
education, as well as policies to improve economic growth and employment.
2.2 MGD 2 – Primary Education
• Attendance at primary schools improved.• Completion rate of grade 7 improved from 96,3% in 2004 to 98.01% in
2006.• Self declared youth literacy rates remain above 96% from 2002 to 2006.• Functional literacy rates increased from 85,86% in 2002 to 89,61% in
2006.• Policies that will strengthen this goal include among other :
– No fee schools– Free transport– Primary School Nutrition Programme
2002 2003 2004 2005 2006Male 96.41 96.92 97.93 98.06 97.92Female 97.05 97.87 98.53 98.37 98.42Total 96.72 97.36 98.21 98.21 98.16GPI 1.01 1.01 1.01 1.00 1.01
Attendance at education institutions of 7 to 13 year olds 2002 to 2006
2.3 MGD 3 – Gender Equality
• Primary school level more boys than girls have been enrolled.• Secondary school and tertiary level more girls than boys have been
enrolled. Somewhat declining ratio for secondary schools, while tertiary situation has improved.
• Gender parity for literacy.• 1/3 of the Members of Parliament are women, and 43% of cabinet.• 19,8% executive managers, 10,7% directors of 372 companies surveyed
are women.• However, majority of poor are women, and likely to be in informal sector.
1999 2000 2001 2002 2003 2004 2005 2006Primary 0.97 0.96 0.96 0.96 0.95 0.95 0.95 0.95Secondary 1.15 1.13 1.12 1.1 1.09 1.1 1.08 1.08Tertiary 1.17 1.17 1.24 1.18 1.7 1.22
The ratio of girls to boys (GPI) based on enrolement 1999 5to 2006
2.4 MGD 4 – Infant Mortality
• General decline in under 5 mortality• Immunisation coverage increased
from 78% in 2002 to 83% in 2006.• Policies:
– Training of health workers to deal better with childhood illnesses.
– Expanding of school health services.– Free basic health services.– Improved provision of basic services.
2.5 MGD 5 – Maternal Health
• 1998 MMR 150/100 000 in 2002 124/100 000• MMR still considered high for a middle income country
• Inquiry into the Maternal Deaths –recommendations:– Protocols to be developed and training given accordingly
– Management of communicable and non‐communicable diseases
– Referral routes and emergency transport– Education for contraception use, etc....
2.6 MGD 6 – HIV/Aids, Malaria...
• 2006 antenatal survey show a decline in HIV & Aids prevalence. 30.2% in 2005 to 29.1% in 2006.• Prevalence in age group <20 declined to 13.7% in 2006 from 15.9% in 2005.• Number of malaria cases declined from 51 444 cases in 1999 to 12 098 cases in 2006. • Extreme drug‐resistant TB remain a challenge. • Policies:
– SA has Comprehensive Plan for HIV and Aids– Voluntary counselling– 303 788 patients enrolled for ARV treatment– DDT, artemisinin‐based contamination therapy, collaboration with neighbouring countries,etc.– Various policies to improve basic health care
Age Group (Years)
HIV Positive 2005 95% CI
HIV Positive 2006 95% CI
<20 15.9 (14.6‐17.2) 13.7 (14.6‐17.2)20‐24 30.6 (29.0‐32.2) 28 (29.0‐32.2)25‐29 39.5 (37.7‐41.3) 38.7 (37.7‐41.3)30‐34 36.4 (34.3‐38.5) 37 (34.3‐38.5)35‐39 28 (25.2‐30.8) 29.6 (25.2‐309.8)40+ 19.8 (16.1‐23.6) 21.3 (18.4‐24.1)
2.7 MDG 7 ‐ Environment
• Apartheid left challenges for environmental sustainability
• Since 1994 environmental issues have become increasingly more important– Protected area network– Cross‐sectoral programmes eg Working for Water Project– Abundant energy resources, but lack policies on managing these
– No data on energy resources, use, and emissions• Water, sanitation and access to basic services improved drastically: 59 % of the population in 1994 to 94% of the population in Mach 2007.
2.8 MDG 8 – Global Development
• New Partnership for Africa’s Development (NEPAD)• Member of the India Brazil South Africa Dialogue Forum(IBSA)
• Member States of the World Trade Organisation (WTO)• Member of the G‐20• SADC and SACU• “Programme of Action for the Least Developed Countries (2001‐2010)”
• Various other initiatives
Past and Future Policies for MDG Achievement
3
3.1 MGD Gaps and Public Policy
• High level of inequality
• Constraints to economic growth
• Insufficient skills
• Quality of education
• Quality and accessibility of health care – cost of health care – skills shortages
• Environmental challenges
3.2 Government Spending• Budget Speech 2009 government
renew promise to do the following:
– Protect the poor– Provide sustaining employment
growth and expanded training opportunities
– Build economic capacity and promoting investment
– Address the barriers to competitiveness that limit an equitable sharing of opportunities
– And, in doing this maintain a sustainable debt level as not to constrain future development.
• Government has various policies at a national and departmental level that aims to promote growth and that should ultimately aid SA to achieve its development objectives
Relevance of Project for MDG Policy
4
4.1 Relevance of the Project for SA
• Provides a clear set of MDGs implications of the country’s macroeconomic policies
• Generate discussion on the issues among policy makers, analysts and observers
• Raise advocacy on MDG oriented projects
• Generate new research on this issue
• Provide opportunity to enrich dataset on this issue
4.2 Policy Issues
• Will current government expenditure trends allow SA to achieve its development goals? What are the gaps?
• How should government change expenditure trends to close the MDG gaps identified? For example, will the current spending on social grants ultimately close the inequality gap?
• Microeconomic issues such as the environmental sustainability of the current growth trajectories may be investigated.
4.3 MGD Indicators and Data
• SAM 2000, 2005 as published by Statssa• SAM 2008 as published by Quantec – used by most institutions in South Africa
• Various surveys including linked IES and LFS 2000, IES 2005, GHS 2008 which contain additional information on social grants and access to basic services, LFS, community survey
• SARB data on National Accounts• Quantec Industry Database• SARS Trade Statistics• Departmental surveys: Health, Education
5
Summary and Conclusion
• General conclusion is that South Africa is on track to achieve most of the MDG goals
• There are, however, some challenges that remain:– High population growth with high rates of urban migration– High unemployment with high growth in labour force participation
– High income inequality• This program will potentially assist to determine the MDG gaps and the government policies necessary to close those gaps.
• This program will also aid to identify data gaps in South Africa and strengthen modelling capacity.