This diagnostic note focuses on identifying binding constraints to economic growth and shared prosperity in South Africa in the period 1994-2016. This report has been commissioned by the African Development Bank (AfDB). The current AfDB country strategy for South Africa for the period 2013 to 2017 is coming to an end this year. Consequently, the Bank is formulating a new country strategy for the next five years (2018-2022) to guide its development supports in the country. The objective of the proposed study is to assess South Africa’s development constraints, and in line with the national strategic priorities, identify key areas of interventions where the Bank, in collaboration with government and other development partners, could play a role in helping the country achieve its development goals.
The diagnostic note contains five chapters, focusing on the following themes and sub-themes. Chapter one analyses South Africa’s economic growth and growth drivers. This includes an overview of South Africa’s growth model; recent economic growth patterns and key growth drivers, trade and investment dynamics, local competitiveness issues, sector opportunities to enhance economic growth and employment creation, and an assessment of the impacts of the downgrading of sovereign credit ratings by S& P and Fitch on the economy. Chapter two focuses on understanding poverty and vulnerabilities in South Africa. It provides an overview of poverty, shared prosperity and the middle class, and current and potential future measures to tackle poverty. Chapter three focuses on issues directly relevant to supporting inclusion. This includes social inclusion in health basic resources and services, education and skills, financial assets, social protection systems and the labour market and employment creation. Chapter four focuses on issues relevant to sustaining progress in South Africa. This includes an analysis of key environmental sustainability issues, infrastructure policies, macroeconomic policies to achieve higher growth and public sector management issues particularly relevant to improving service delivery. Chapter five concludes with a summary of key binding constraints to inclusive growth and provides high-level and policy recommendations to address these. The AFDB’s South African Country Strategy 2018-2022 document is available here: