World Economy

Governance Deficit Hobbling South Africa Economy

Governance Deficit Hobbling South Africa EconomyGovernance Deficit Hobbling South Africa Economy

Renowned global economist Jeffrey Sachs says South Africa is battling to grow its economy because it isn’t spending enough on education, health and infrastructure, and the problem is being compounded by a worsening governance deficit.

Sachs, the director of Columbia University’s Earth Institute and author of The End of Poverty, said South Africa scored badly on governance indicators, partly because of increasing corruption in public institutions and the inability of government to get the most out of its investments, Fin24 reported.

“South Africa lags well behind where it should be in education, especially on quality,” Sachs told City Press this week in Johannesburg when he attended the annual Old Mutual Wisdom Forum, where he was the keynote speaker.

“I think many people think the money is misdirected, that there is not a lot of confidence that the right money is being collected or that it’s being used effectively.”

Most economists are forecasting very little South African economic growth this year after a year of political battles between the presidency and Finance Minister Pravin Gordhan, lower prices for key commodities such as gold and platinum, and the country’s worst drought since records began.

While government spends 16% of its expenditure on education–the biggest item on the budget and one of the highest rates of education spending in the world–the country’s education system ranks badly globally because of concerns about its quality.

Captains of industry complain that graduates are often ill-suited for the work environment.

Sachs said this deterred investment because investors would be looking for an education system that produced a quality workforce that was able to compete among the best in the world.

“Investors domestically and internationally ask: ‘Is this country going to be competitive in three years, in five years? Am I confident that there is going to be a skilled workforce for new sectors of the economy? Will this be a cutting edge, competitive economy?’ “When there is concern about that, of course potential investors here decide to hold back their funds or put them somewhere else, and foreign investors decide not to put as much money in,” Sachs said.

Corruption was also dogging the country’s best efforts to attract investment, he said, indirectly referring to allegations of corruption swirling around the Gupta family and President Jacob Zuma.

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