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Economic Performance

Economic growth, while not spectacular, is nonetheless robust and keeping an upward trend: between 1994 and 2003, real GDP grew at an average of about 3 percent, which was about thrice the growth rate recorded between 1980 and 1993. More recently, the growth rate for 2004 - 2006 is about 5 percent.
South Africa’s revenue collection and fiscal and debt management are considered international best practice, as demonstrated by a balanced budget and very low external and domestic debt. South Africa comfortably borrows off-shore in its own currency, and at unprecedented low sovereign risk spreads: a demonstration of investor confidence which is rare for emerging markets.

Greater integration with the rest of the world resulted in a sharp turnaround in productivity performance. Exchange controls have been gradually liberalized, and the average (un-weighted) tariff on imports into South Africa was reduced from 22 percent to around 11 percent, while virtually all quantitative restrictions were removed. This resulted in more diversified exports, reducing, in particular, the dominance of mining. However, overall export performance is disappointing: exports as a share of GDP are at around 25 percent, which is relatively low, while exports per capita are barely higher than in 1960.

SA Real GDP Growth, Inflation and Unemployment

High unemployment is the most important constraint to both poverty reduction and accelerating growth in South Africa. After the fall of Apartheid, a “perfect storm” gathered to aggravate the unemployment levels from around 15 percent to the current 26 percent, while real wages were essentially stagnant.

Challenges ahead and Government priorities

South Africa’s development strategy faces the twin challenges of accelerating growth and sharing its benefits, by broadening participation, extending opportunities to all and improving the impact of public service delivery. The recent energy crisis has impacted negatively on the economy, particularly on the mining sector and has prompted a revision of the growth rates.

Partly as a response to the ten year review, Government launched the Accelerated and Shared Growth Initiative for South Africa (ASGISA) in 2006. One of ASGISA’s main goals is to bridge the divide between the so-called “first” and “second” economies—a metaphor for the existing dualism. Its analytical framework derives from the “binding constraints” analysis, which was recently developed by a number of prominent international economists.

The current development objectives are to eradicate poverty and reduce inequality by:

• Accelerating the pace of growth, and the rate of investment in productive capacity;
• Intervening decisively to advance the involvement of the marginalized in economic activity through expanded job creation and the promotion of sustainable livelihoods;
• Maintaining a progressive social security net alongside investment in community services and human development;
• Improving the capacity and effectiveness of the state; and
• Building regional and international partnerships for growth and development.

Program to date

Between 1951 and 1966, the Bank made 11 loans to South Africa, totaling US$ 242 million, largely for expanding the country’s rail and harbor systems and for generating and transmitting electricity. The Bank ceased lending operations to South Africa in 1966 and the loans from that earlier period have been fully repaid.

In 1991, the Bank resumed activities in South Africa through a comprehensive program of economic policy advice and capacity building. After 1994, the Bank Group continued to provide policy advice, but also limited lending and grants. In addition, the Bank resumed project lending through the Industrial Competitiveness and Job Creation Project in 1997, now closed and fully disbursed. A Technical Assistance Loan for the Municipal Financial Management Technical Assistance Project (MFMTAP) was approved in 2002 for an amount of US$15 million. A request for Bank assistance on hospital revitalization resulted in the appraisal of a project in 2001, but was then put on hold.

South Africa and Lesotho have jointly implemented the Lesotho Highlands Water Project, with the South African side repaying the two World Bank loans associated with this project for a total disbursed amount of about US$90 million. The project transfers water from the highlands of Lesotho to the Gauteng region of South Africa.

Several capacity-building activities were funded through grants from the Institutional Development Fund and infoDev. In addition, the World Bank managed a number of technical assistance grants from the Cities Alliance for South Africa’s cities.

GEF program is one of the largest with a number of national and regional GEF grants for nature conservation, renewable energy, and the phase-out of toxic chemicals, for a total of just under US$80 million.

The IFC’s committed portfolio in South Africa has grown steadily to more than $200 million in 23 projects. This is IFC’s second largest portfolio in Sub-Saharan Africa, after Nigeria.

MIGAhas marketed its investment guarantee services to South African banks, development agencies and the Export Credit Insurance Corporation of South Africa. MIGA actively promotes outbound investment in Africa by South African companies. Consequently, South Africa is MIGA’s eighth largest investor country, accounting for US$206.7 million or 4 percent of the Agency’s gross exposure.

The WBI, the capacity development arm of the World Bank Group, has been active in South Africa and recently South Africa became a focus country for WBI. A detailed capacity building program has been developed focused exclusively on specific demands from stakeholders in South Africa and building partnerships with local institutions.

Country Partnership Strategy (2008-2012)

The Bank jointly with IFC and MIGA, and the South African Treasury prepared the Country Partnership Strategy (CPS), which was presented to the Board of Executive Directors in January 2008. The CPS sets out a framework for engagement with South Africa for 2008-2012. It reflects, most importantly, South Africa's own development priorities as set out in the Accelerated Shared Growth Initiative-South Africa (ASGISA) and South Africa’s unique position in the region. The Bank is working closely with IFC, MIGA and all other development partners active in South Africa. Priority areas for World Bank engagement include: urban development; private sector development; building partnerships for Africa; social protection; land reform and agriculture; and public sector service delivery.

Country Director: Ruth Kagia
Office Phone: (27-12) 431-3100
Email: rkagia@worldbank.org

Senior Economist: Rogier van den Brink
Office Phone: (27-12) 431-3132
E-Mail: Rvandenbrink@worldbank.org

Lead Operations Officer: Dirk Reinermann
Office Phone: (27-12) 431-3144
E-Mail: Dreinermann@worldbank.org

Country Officer: Eugenia Marinova
Office Phone: (27-12) 431-3121
E-mail: Emarinova@worldbank.org

Senior Communications Officer:
Mallory Saleson
Office phone: (27-12) 431-3100
E-mail: Msaleson@worldbank.org

Public Information Associate:
Mmenyane Seoposengwe
Office Phone: (27-12) 431-3103
E-mail: Mseoposengwe@worldbank.org

Senior Executive Assistant: Paula Lamptey
Office Phone: (27-12) 431-3105
E-Mail: Plamptey@worldbank.org

Senior Program Assistant:
Herawaty Anderson
Office Phone: (202) 458-8032
E-Mail: Handerson@worldbank.org