South Africa needs to spend much more on infrastructure to ensure higher economic growth, according to a top economist.
South Africa needs to spend much more on infrastructure to ensure higher economic growth, according to a top economist.
Speaking at a teach-in at Rhodes University on the theme of the global economic crisis, Prof Johan Fedderke echoed the comments of a previous speaker at the teach-in.
The day before, the CEO of the Airports Company of SA Monhla Hlahla had pointed out that South Africa’s defence against the global crisis increased infrastructure spending and was largely a result of good luck in being the host of the 2010 Soccer World Cup, rather than good planning.
Fedderke is the director of Economic Research Southern Africa at the University of Cape Town and pointed out that just to maintain a growth rate of 3.6% South Africa had to spend 1% of its Gross Domestic Product (GDP), the main measure of economic wealth, on telecommunications and electric power infrastructure.
South Africa has been spending much less, but to get much higher growth rates we will have to spend much more.
“For 6% growth you have to spend at least 2.4% of the GDP,” he said. Illustrating the importance of growth, Fedderke noted that South Africa ranks in the top ten countries in the world in spending on social welfare, yet poverty is rife – there are almost 2 million unemployed citizens in the Eastern Cape alone, and poverty is all too visible in Grahamstown.
Despite South Africa’s fiscus being one of the most distributive in the world, not much has changed in terms of poverty and inequality in South Africa since 1994.
The economic growth of Africa as a whole had been left behind since 1820 by surging economic growth in the rest of the world, and most African countries are becoming worse off every year.
Rhodes University’s annual teach-in lecture series is being hosted by the Department of Political and International Studies and the Centre for Economics Journalism in Africa this year.
