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This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.

Experts warn on Asgisa

Mail & Guardian
Business
Johannesburg, South Africa
26 September 2006 07:17

Experts have warned that South Africa's economic growth plan may not be feasible, Business Report wrote on Tuesday.

It quoted them as saying the initiative had "serious macro inconsistencies".

The warning came from Harvard economists Jeffrey Frankel and Frederico Sturzenegger, and from Ben Smit, director of the Bureau for Economic Research at Stellenbosch University.

Frankel and Sturzenegger are members of a panel of experts convened to work with South African economists to study the country's economic growth constraints and opportunities.

The panel was convened at the request of the Treasury.

In a draft working paper, they say the accelerated and shared growth initiative of South Africa (Asgisa) focuses on "capital deepening", a big increase in economic infrastructure, which the government expects to generate economic growth and create jobs.

But international and local experience suggest that capital is not "where the key to growth accelerations lies", says the paper.

"Capital at most explains about a third of growth accelerations."

Compounding the problem is the fact that South Africa needs more investment to generate growth than other countries.

The paper also asks how the "sizeable increase in public investment" anticipated by Asgisa will be funded.

Should the money come from domestic sources, interest rates would rise. If it was drawn from abroad, further pressure would

This resource is hosted by the Nelson Mandela Centre of Memory, but was compiled and authored by Padraig O’Malley. Return to the Nelson Mandela Centre of Memory site.