Are We Asking the Right Questions About Poverty Reduction?

Covid-19: Are we asking the right questions about…Poverty reduction?

By Ann Bernstein. Executive Director. Centre for Development and Enterprise (CDE)

The bottom line is that unless South Africa emerges from the Covid-19 emergency with a real plan to accelerate growth dramatically and sustainably, it may come to be seen as the nail in the coffin of our economic, social and political order whose unsustainability was already driving us towards a fiscal crisis.

To avoid this fate, we all need to recognise the limits of what a tax-and-redistribute model can achieve.

All of our focus must turn to concentrate much more squarely on the need to build an engine for much faster and much more labour-intensive growth.

Prerequisites for sustained growth include:

  1. Sound policies and institutions that support high levels of investment, prudent fiscal and monetary policies, integration into the global economy, and a commitment – by the whole of society, including the government – to prioritise long-term development over more parochial, shorter-term preferences.
  2. Getting from here to there will require the rewriting of our existing social contract. We will have to make sure that it is easier to start and run businesses and less risky to employ people.
  3. The state will have to get rid of its developmental state ambitions and deliver infrastructure, network services, skills and many other functions in partnership with the private sector and new coalitions of non-government actors.
  4. We will need to strengthen areas of capacity in our society – such as some of the metros and provinces – in order to ensure delivery and value for money in much constrained circumstances.
  5. We will need a much more determined and speedy effort to deal with corruption.
  6. The current state will need to be slimmed down and skilled up. Many low priority activities will have to be discarded in favour of a core set of actions necessary to ameliorate hardship and create the conditions needed for faster growth.

The key challenge lies in getting this new approach to work well enough that it can overcome the inevitable challenges to its legitimacy from today’s relatively privileged public servants, the ideologues and looters (not necessarily the same people) in the ruling party, and the owners and managers of the least competitive businesses.

Can we do it? We have to. The alternative is too ghastly to contemplate.

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