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Johannesburg - Solutions on how South Africa could dig itself out of its its current low growth hole are likely to take centre stage when the World Bank presents its 10th edition of South Africa Economic Update in Pretoria on Friday.
The presentation will be made at the Department of Trade and Industry (the dti) and is likely to tout private investment as South Africa's saviour yet again.
The bank will provide updated reports on recent economic developments in countries and highlight the role of innovation in productivity, growth, job creation as well as poverty reduction.
The report will propose interventions the World Bank recommends for policy makers to harness South Africa’s innovation potential, which will be proposed to boost both productivity and inclusiveness.
In January the bank’s ninth update focused on well-targeted private investment, which could create additional jobs.
The report, Private Investment for Jobs, analysed the effectiveness and efficiency of investment tax incentives in various economic sectors.
These incentives were one of several policy tools the government has used to accelerate industrial development in the past decade to promote additional investment and job creation against the shortcomings of a commodity-driven growth model, the report notes.
Private investment focus
That report found that in recent years, private investment has increasingly gone into less productive sectors, generating negative total factor productivity growth.
Since 2012, the report shows that capital went to sectors such as mining, electricity, transport and other services that recorded a decline in their capital productivity and away from sectors recording increases in capital productivity such as agriculture, manufacturing, construction, trade and finance, thus reducing average capital productivity.
The latest report is sure to touch upon job creation yet again. In January, the World Bank’s update stated that the country’s National Development Plan (NDP) targeting the creation of 11 million jobs to reduce the high unemployment rate to 6% by 2030, as progressing at a snail’s pace.
To meet the NDP target, the report estimates that the economy would have to produce at least 600 000 new jobs on average, annually.
However, the report reveals that the pace of job creation in the past decade has been too slow with about 310 000 jobs having been created on average every year.
Just more than 265 000 jobs were created by the private sector, and about 50 000 by the public sector between 2005-2015.
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