CAPE TOWN, February 28, 2025 — A new World Bank report titled “Driving Inclusive Growth in South Africa: Quick Wins with Competitive Markets and Efficient Institutions” asserts that a robust economic recovery, shared across all sectors of society, can be achieved in the immediate future by implementing a series of policy actions in four priority areas: infrastructure services, greater private sector participation, creating cities as engines of growth, and efficient public spending. This recovery, in turn, has the potential to create the millions of jobs that South Africans need to improve their lives, exit poverty, and contribute to the economy.
Over the past decade, South Africa has struggled to expand its economy, growing by only 0.7% per year, which is four times slower than other middle-income countries. As a result, real GDP per capita is now around the same level as it was in 2007. Economic opportunities also remained deeply unequal, with two-thirds of South Africans living in poverty and 40% of adults, primarily young people and women, either unemployed or discouraged from looking for a job. This figure represents the world’s highest unemployment rate.
“The report highlights that targeted policy actions – fostering competitive markets and strengthening institutions – can spur recovery and lay the foundation for sustainable growth and shared prosperity in South Africa,” says Axel van Trotsenburg, Senior Managing Director of the World Bank. “It is the result of extensive engagement with experts and stakeholders to identify concrete policy options for improving the lives of millions of South Africans. It will also help inform how the World Bank can best support the country through technical assistance and lending programs.”
To kick off the transformation process and create momentum for reforms, the report offers pragmatic and specific policy actions tailored for South Africa’s unique context.
“The report provides a clear roadmap for South Africa to unlock its economic potential. By fostering competition and enhancing institutional efficiency, we can create opportunities that drive inclusive growth and improve livelihoods across the country,” says Satu Kahkonen, World Bank Country Director for South Africa.
It asserts that by delivering high-quality and affordable infrastructure services, South Africa can reduce existing constraints on businesses and increase households’ disposable income. It also encourages measures to foster private sector growth to promote innovation and competitiveness which will enhance job creation. By making cities engines of inclusive growth, the country can shrink economic distances and provide opportunities for all. Finally, the report highlights the need to improve the efficiency of public spending to increase the value for money of government interventions in the economy.
"We have clear evidence of the tangible outcomes of reforms that reduce economic bottlenecks. This is best exemplified by the first phase of Operation Vulindlela, which among its key interventions was reforms to regulation that deepened competition in sectors like electricity, rail and telecoms. The next phase will go even further and aim to accelerate reforms in key network industries. We are delighted to have the benefit of this new report to broaden our approach to inclusive growth," says Honorable Enoch Godongwana, Minister of Finance Republic of South Africa
For each priority, the report identifies quick wins selected for their technical feasibility, minimal political constraints, potential for significant impact, and timely implementation. This menu reflects inputs from a group of international experts led by Nobel laureate in Economic Sciences Michael Spence, and representatives of South Africa’s government, private sector, academia, and civil society
South Africa has a unique opportunity to revitalize its economy. The country’s policymakers recognize that improving the economy is essential for winning public trust. The World Bank’s new study provides in-depth analysis and practical recommendations to assist South African policymakers in addressing obstacles to inclusive growth and, most importantly, take action to pave the way for a brighter future for all citizens.
Contacts:
World Bank:
In South Africa: Lavinia Engelbrecht, +2773 267-6073, lengelbrecht@worldbankgroup.org
In Washington: Daniella van Leggelo-Padilla, (202) 473-4989, dvanleggelo@worldbank.org
About the World Bank Group: The World Bank Group has a bold vision: to create a world free of poverty on a livable planet. In more than 100 countries, the World Bank Group provides financing, advice, and innovative solutions that improve lives by creating jobs, strengthening economic growth, and confronting the most urgent global development challenges. The World Bank Group is one of the largest sources of funding and knowledge for developing countries. It consists of the World Bank, including the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). For more information, please visit www.worldbank.org, www.miga.org,and www.ifc.org.
