The International Monetary Fund (IMF) says that South Africa’s economy should be benefitting from a commodity price boom – but instead, it is frozen in a low-growth climate due to slow reform and policy integration from the government, and persistent problems with state-owned companies.
The global financier warned that South Africa urgently needs to introduce structural reforms if it is to see its growth trajectory increase in the coming years.
“Frequent load shedding is an impediment to conducting business in South Africa. Similarly, failures in the transportation system limit the gains from the commodity price boom. Rising inflation hurts the purchasing power of low-income households and negatively affects the country’s competitiveness and financing costs,” it said.
“Despite some important progress in addressing the scarring effects of state capture on governance and institutions, sustained efforts are needed to improve procurement processes and deter corruption. It is more urgent than ever to transform the network industries and foster competition to attract private investment, create jobs, and reverse the slide in social conditions.
These include efforts to cut costs and collect arrears, as well as a more predictable tariff-setting mechanism, it said. The financial condition of some municipalities is causing continued deterioration in service delivery and needs to be remedied.
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