Oecd Economic Surveys South Africa 2017.

Description

Table of contents Basic statistics of South Africa Executive summary Low growth and high unemployment are weighing on social progress GDP per capita is stagnating Deepening regional integration of the SADC to boost jobs and growth Share of intra-regional exports Boosting entrepreneurship and growing small businesses will contribute to creating jobs Early-stage entrepreneurial activity is low Assessment and recommendations Low growth and high unemployment are weighing on social progress and cohesion Figure 1. GDP per capita is stagnating Figure 2. OECD Better Life Index Figure 3. Poverty and inequality are high Figure 4. Social transfers reduce inequality and poverty Figure 5. Wage distribution across sectors and proposed minimum wage Figure 6. Minimum wages across a selection of countries Figure 7. Employment rate is low Table 1. Past recommendations for improving labour outcomes Low growth is set to continue Figure 8. Recent macroeconomic developments Table 2. Macroeconomic indicators and projections Table 3. Events that could hit the economy Macroeconomic policies are constrained Monetary policy and financial markets under high inflation and low growth Figure 9. Inflation dynamics Figure 10. Financial indicators Figure 11. Financial vulnerabilities Table 4. Past recommendations on macroeconomic policy and fiscal sustainability Fiscal policy and public debt: shifting the mix of spending Box 1. South Africa’s debt is sustainable but vulnerable Figure 12. Simulations of debt dynamics Table 5. Government guarantee exposure Table 6. Fiscal indicators Figure 13. Government spending and fiscal stance Table 7. Past OECD recommendations on broadening tax bases Financing higher education poses a challenge to the fiscal stance Figure 14. Government subsidies for university education Figure 15. Annual expenditure per student in tertiary educational institutions for all services Table 8. Past recommendations for making the education system more effective Deepening regional integration within the Southern African Development Community Figure 16. Size of SADC countries in terms of GDP Table 9. Past recommendations for regional integration SADC intra-regional trade is low but has great potential Figure 17. SADC intra-trade compared to other free trade areas Figure 18. South Africa trade with SADC compared to other regions Figure 19. GVC participation and contribution of trade policies Reducing tariff and non-tariff barriers would foster regional trade integration Figure 20. Tariff rates are relatively high in SADC countries Broadening the scope of the trade agreements could boost regional trade and integration Figure 21. Restrictions on foreign provision of some services are high relative to other countries Reforming business environments in the region can strengthen regional integration Figure 22. Degree of industrialisation and competitiveness of SADC countries Figure 23. Transport infrastructure compared to OECD average Figure 24. FDI position of SADC relative to other regional economic communities Boosting job creation in South Africa through more start-ups and SME growth Figure 25. Start-up activity is low Regulatory barriers constrain entrepreneurship and small businesses Figure 26. Regulatory barriers to entrepreneurship are high Figure 27. Starting a business is slower than in many other emerging economies Figure 28. Some professional services are highly regulated Figure 29. There is considerable variation in regulatory procedures across cities Table 10. Past recommendations for lowering regulatory barriers to entrepreneurship Current competition policies constitute a barrier to entry and limit growth and inclusiveness Figure 30. Regulation varies across industries, 2013 Table 11. Past recommendations for reducing the restrictiveness of regulation and improving competition A better functioning labour market will help job creation and SME growth Figure 31. Indicators of employment protection legislation Filling gaps in competencies and finance to enhance entrepreneurship Figure 32. School completion rates remain low Figure 33. Attitudes have become more entrepreneurial Figure 34. SME lending is relatively low Government programmes should be better co-ordinated Challenges for green growth Table 12. Past recommendations for greener growth Figure 35. Green growth indicators for South Africa Bibliography Annex. Progress in main structural reforms Macroeconomic policy and safeguarding fiscal sustainability Broadening tax bases to help finance requirements for stronger and sustainable growth Regional convergence and deeper trade integration Improving labour market outcomes Climate change mitigation and green growth Tackling infrastructure bottlenecks and improving business regulation to support job creation Making the education system more effective Other Thematic chapters Chapter 1. Deepening regional integration within the Southern African Development Community Introduction Figure 1.1. Size of SADC countries in terms of GDP Box 1.1. History of Regional Integration in Southern Africa Regional trade is expanding but remains limited SADC intra-regional trade is low compared to other regional communities Figure 1.2. SADC trade compared to other regions Table 1.1. Revealed comparative advantages of top 10 export products of SADC countries SADC has greater potential for intra-regional trade Greater participation in regional value chains could boost intra-trade Figure 1.3. Intra and extra-regional participation in Global Value Chains Figure 1.4. GVC participation and contribution to trade policies The development of regional value chains is hindered by structural factors Figure 1.5. First-tier suppliers in SADC and their headquarters Policies to foster regional trade integration Strengthening the institutional framework to achieve SADC objectives Reducing tariffs and non-tariff barriers would foster regional trade integration Figure 1.6. Tariff rates are relatively high in SADC countries Table 1.2. Region to region trade-weighted costs Figure 1.7. Trade facilitation index Figure 1.8. Burden of customs procedures Broadening the scope of the trade agreements could boost regional trade and integration Figure 1.9. Service export is sizeable in many SADC countries Figure 1.10. Restrictions on foreign provision of some services are high relative to other countries Box 1.2. The difficulty of defining common rules within the FTA: The case of rules of origin Box 1.3. The Origin of the Economic Partnership Agreement Figure 1.11. Trade between SADC and the European Union Reforming the Southern African Customs Union (SACU) to foster regional integration Figure 1.12. Contribution of SACU revenue to member countries’ government budget, 2014/15 Reforming the enabling environment to strengthen regional integration Favouring the development of industries at the regional level Figure 1.13. Degree of industrialisation and competitiveness of SADC countries Table 1.3. Investment incentives across SADC countries Upgrading regional infrastructure quality and availability Figure 1.14. Transport infrastructure compared to OECD average Developing a comprehensive regional investment framework Figure 1.15. SADC experienced a rapid increase of inward investment over the past 15 years Figure 1.16. FDI flows of SADC compared to other regional economic communities Further integration of the financial system will ease financing conditions across countries Table 1.4. Indicators of financial depth and size, 2014 Figure 1.17. Financial Integration Index There is scope for strengthening tax co-operation Table 1.5. Summary of major tax rates across SADC Key recommendations for deepening regional integration within SADC Bibliography Chapter 2. Lowering barriers to entrepreneurship and promoting small business growth The need for more entrepreneurship and small business growth Figure 2.1. Rates of self-employment and entrepreneurial activity are low Figure 2.2. Entrepreneurial activity is relatively low within most groups Figure 2.3. Small firms are most prevalent in business services Box 2.1. New evidence on firm dynamics in South Africa Figure 2.4. Components of net job creation by start-ups The government’s focus on small businesses is increasing Figure 2.5. Main departments and agencies targeting small business growth Table 2.1. Examples of definitions of small and medium enterprises used Lowering regulatory barriers and improving the business environment Figure 2.6. Regulatory barriers to entrepreneurship are high Lowering regulatory barriers to entry and growth Figure 2.7. Starting a business is slower than in many other emerging economies Figure 2.8. There is considerable variation in regulatory procedures across cities Figure 2.9. Some professional services are highly regulated Box 2.2. Regulation of legal services and examples of reforms Figure 2.10. There is scope to reduce the complexity of regulatory procedures Facilitating company restructuring and second chances for entrepreneurs Figure 2.11. The corporate insolvency regime is strong but the recovery is low Compliance with the tax system is costly Figure 2.12. The tax rate on small businesses rises sharply with income The informal sector needs special treatment Overcoming barriers to markets Figure 2.13. Concentrated industries are more capital intensive Box 2.3. Are zombie firms weighing on firm creation and growth rates? Figure 2.14. Large zombie firms may be adding to barriers to entry Public procurement is an underused tool to grow small businesses Table 2.2. Overview of the B-BBEE Scorecard for Qualifying Small Enterprises Engaging small firms in export and supply chains Figure 2.15. Many South African entrepreneurs export Technology is increasing information and access to markets Growing entrepreneurial competencies Figure 2.16. Attitudes have become more entrepreneurial The formal education system needs to perform better Second-chance schemes and work experience would help youth Programmes for enterprise development have been expanded Table 2.3. Summary of key government training and development programmes Table 2.4. Average expert ratings for government programmes for entrepreneurship Broadening financing options Figure 2.17. SME lending is relatively low Table 2.5. Financing programmes targeting start-ups and small businesses Improving access to credit Figure 2.18. Government loan guarantees are low Risk capital has expanded Figure 2.19. Venture capital is relatively well developed Sources of finance should be broadened Key recommendations for lowering barriers to entrepreneurship and promoting small business growth Bibliography Annex 1. Export products in SADC Table A1. List of exported products in Table 1 Annex 2. Estimates of determinants of trade flows Table A2. Estimate results Annex 3. Participation in Global Value Chains Table A3A. The origin of value added in exports – backward participation Table A3B. Destination of value added used by trading partners for exports Annex 4. Road infrastructure needs in SADC Figure A4. Corridors in Southern Africa Annes 5. Detailed information on taxes Annex 6. Determinants of entrepreneurial activity Table A6. Marginal effect of individual characteristics on entrepreneurship