World Bank: SA's economic growth held back by 'excessive' regulations and BEE policies

The World Bank has said that South Africa should end its “excessive” regulatory burden, and that government needs to overhaul its Black-ownership (BEE) laws. 

The Bank elaborated that government needs to remove policies that cause the economy to remain stagnant. 

The World Bank said that allowing these changes would take the country off the "wrong growth trajectory", provide more money per capita, and help improve the unemployment rate. 

“The burden of institutions has become excessive, not only for businesses and citizens but also for public administration,” the World Bank said.

Black empowerment policies and direct-support programmes, such as grants, tax rebates and labour training, have become so cumbersome that they smother the implementation capacity of the public administration, especially local officials, and open spaces for corruption, according to the Bank. 

“The burden of several industrial and labour policies can be reduced by adjusting them to the reality of the market, for example, by generalising the use of the equity-equivalence investment programmes by the Department of Trade and Industry, instead of the hard, complex conditions associated with Black economic-empowerment policies,” the World Bank said.

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Infrastructure

Moreover, the World Bank suggested that government should rebalance its economic model by making it easier for foreign and domestic investors and young workers to enter the market.

Lastly, the World Bank asserted that by delivering high-quality and affordable infrastructure services, South Africa can reduce existing constraints on businesses and increase households’ disposable income.

The bank argued that a robust economic recovery, shared across all sectors of society, can be achieved in the immediate future by implementing a series of policy actions in four priority areas: infrastructure services, greater private sector participation, creating cities as engines of growth, and efficient public spending. 

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