South Africa plans for 5.4% growth, rail expansion to boost jobs

South Africa needs economic growth of 5.4 percent a year and expansion in railways and ports to reduce poverty and create jobs in a country where one in four are unemployed, the National Planning Commission said.

Government spending on infrastructure may add to growth, helping to cut the jobless rate to 14 percent by 2020 and 6 percent by 2030, the commission, led by Trevor Manuel, said in its national development plan released in the capital, Pretoria, today. That requires 11 million new jobs by 2030.

South Africa, which has the biggest economy on the continent, has struggled to address poverty and inequality that characterized apartheid rule even after 17 years of democracy. The government estimates the economy will expand 3.1 percent this year and 3.4 percent in 2012.

“Persistently high levels of poverty will prompt social instability, leading to a rise in populist politics and demands for short-term measures that lead to further tension and decline,” the commission said. “South Africa must avoid such a destructive cycle.”

The National Planning Commission, which is made up of 26 business leaders, economists, politicians and academics, was set up by President Jacob Zuma 18 months ago to draw up the 20-year plan for the economy. The report must still be submitted to Cabinet.

The document outlines proposals to boost “labor-intensive manufacturing” through development finance, stripping “the regulatory burden” on businesses in some areas, and investing in infrastructure.

‘Straight and Narrow’

The plan is “to keep us on the straight and narrow,” Cyril Ramaphosa, deputy chairman of the commission, said in an interview in Pretoria today. “It all revolves around poverty and inequality. Those are the two central ills this country has.”

The commission recommends expanding export routes to capitalize on South Africa’s wealth of natural resources, which include the world’s largest reserves of platinum and chrome, as well as vast deposits of coal and iron ore.

“In effect, South Africa has missed a generation of capital investment in roads, rail, ports, electricity, water sanitation, public transport and housing,” the commission said. “To grow faster and in a more inclusive manner, the country needs a higher level of capital spending in general, and public investment in particular.”

Amongst proposed projects are building new rail lines to access coal in the northern Waterberg region, expanding the existing Richards Bay coal line, and building a freight corridor from the commercial hub of Gauteng province to the port of Durban. The commission also recommends building a new “dug- out” port.

The plan endorsed greater exploration for shale gas and liquefied natural gas and procuring 20 gigawatt of renewable electricity to ramp up energy supply and foster economic growth.

“We can just go for growth or we can just go for redistribution,” Ramaphosa said. “You need both, you need to find a middle path.”