Johannesburg - South Africa must increase investment and
savings if it wants to grow the economy and create jobs, according to a World
Bank report released on Wednesday.
"Modest investment rates in South Africa despite attractive
returns, and low savings rates despite favourable demographics are important
impediments that need to be resolved to achieve the full potential," World Bank
economists and authors of the report Sandeep Mahajan and Fernando Im told
reporters.
Raising investment and savings rates would have a positive
effect on high unemployment rates which require faster, more inclusive growth.
The South African Economic Update report finds that
although South Africa is an attractive place for business, this has not
translated into investment and subsequent growth.
Mahajan said two areas hold potential to improve the
situation and kickstart South Africa into annual growth of 6% to 7%.
These are the more effective integration of advanced areas
in South Africa with the less developed regions, as well as integrating the
country's advanced and developing economies.
"Savings flow from the townships to Sandton, not the other way… and this has gotten worse during financial crisis," he said.
This trend needed to be reversed. Efforts to do so would
include lowering the country's transport costs, which were "exorbitant" given
that a poor person paid between 20% to 30% of their salary on this, he said.
It would also mean improving youth skills and improving access to finance in poorer areas.
South Africa also needed to focus on better integration with
the southern African region.
"The regional bloc you have in place today hasn't been used
enough... you are operating in a global environment, you need to use all the
tools you have."
This should then be combined with more effective global
integration and greater efforts to attract foreign direct investment.
"When we think about moving from low equilibrium, these two
directions will hold a lot of promise," Mahajan said.