Managing Director of the International Monetary Fund
The sense of African energy and dynamism that I described during my visit to Kenya is reinforced strongly here in South Africa. And it’s not just World Cup fever—though there are plenty of signs of that too.
By some estimates, close to 10 million people are expected to visit South Africa this summer for the football (soccer) extravaganza—a further boost to its economy and its image in the world. South Africa is a global player.
This country has long been seen as the growth hub in the south and eastern part of the continent. But this past year, as a member of the G-20 group of nations, South Africa has come to be seen as much more–an emerging market, yes. And now also an influence on how global decisions are shaped. This is a new role for Africa in the world—and a new way for Africa to be seen by the world.
I see President Zuma regularly at these G-20 meetings. It has been a special pleasure to meet him again in his homeland and to see him at work in leading the economic and political forces at play in a young country that puts forward a vision for itself in the 21st century.
From the IMF’s perspective, South Africa weathered the financial crisis well—with a set of pragmatic countercyclical policies that enabled the country to withstand its first recession in 20 years. It is no surprise that, in 2009, growth fell below the average 4.2 percent achieved during 2000-2008. But the worst appears to be over and we expect a relatively healthy 2.5 percent in 2010.
That does not mean that there are no challenges ahead. Quite the contrary, there are some big ones. And in my discussions with South Africans—over dinner with the Minister of Finance and other ministers, with business leaders over breakfast, and with a wonderful group of young students at the University of the Witwatersrand—they did not shy away from laying out what they saw as the priorities to be addressed. They include:
● Tackling unemployment. South Africa lost close to 1 million jobs last year. And, in a country of about 50 million people, unemployment is expected to peak at around 25 percent. That’s a lot of people without jobs. Too many. Growth has resumed, but job creation is as yet anemic—a problem which South Africa shares with many of the advanced countries also trying to recover from the financial crisis. Where are the jobs going to come from? It’s a huge challenge for South Africa, for Europe, and for the United States in the post-crisis world.
● Reducing inequality. A little known fact: South Africa has now surpassed Brazil as having the highest level of inequality in the world. South Africa has taken remarkable steps to address apartheid-related injustices in housing, education, and health care. But much remains to be done. With one-third of the population less than 14 years old, social tensions can only fester if these young people grow up without a clear sense of a better quality of life for them and their families.
● Building a flexible, competitive economy. A growing economy is not the only answer to meeting these challenges, but it is an indispensable ingredient. While here, I have been making the point that barriers to competition should be brought down across a number of key sectors—to strengthen South Africa’s position in global markets. Other reforms to enhance flexibility in labor and product markets can also help. A successful global player needs to build resilience to global economic shocks.
These are tough challenges. Can South Africa meet them? There is no doubt in my mind that it can.
This is a forward-looking, life-affirming society. I saw this in many places. But perhaps, above all, I saw it in Soweto where Anne and I visited an inspirational group called Grassroot Soccer.
Grassroots Soccer delivers HIV/AIDS counseling, as well as more general life skills, to youth. The group bases its work on the devastation wrought by AIDS—and the popularity of football (soccer). Over 300,000 kids have graduated from the program. As I watched those children play, I was filled with emotion—and inspiration.
Yes, South Africa is going to meet its challenges.
Cross posted on Huffington Post.