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Challenges Of The Economic Infrastructure In South Africa

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Introduction

The National Development Plan has 14 outcomes and these outcomes were assigned to be undertaken by different expects from different fields. Such as economists, health experts, development experts, sustainable living experts and so forth. The one outcome that stands out the most it is the 6th outcome which reads “An efficient, competitive and responsive economic infrastructure “. A breakdown of the three objectives “Efficient, competitive and responsive economic infrastructure”. Efficiency refers to the optimization of resources to best serve each person in that economic state. There is no specific threshold that determines the efficiency of an economy, but indications include goods being produced at the lowest possible cost and labor performed with the greatest possible output. Competitive means that being able to trade with other economies. The economic infrastructure is a precondition for providing basic services such as water and electricity, telecommunication and public transport. The South African government wishes to accomplish completely this by 2050. The Department of planning and monitoring and evaluation it states that the first phase of which is from the year 2014 to the year 2019 they would have achieved dynamic economic inclusivity and the country should launch a virtuous cycle that allows economic growth. The government is going to commit its resources in ensuring that there is sufficient supply of energy, water and electricity as well as transportation to ensure that the supply of needed goods and services is achieved.

The emphasis on absorbing unemployment into the economy through mining to dominate the market with commodity trading. This will imply that there will be an urgent investment into rail systems and all kinds transportation needed for the movement of goods and services. Currently policies that ensure the supply of sufficient energy resources this will ensure that the economy is growing the intended direction. The second phase would focus on diversifying the economy make it more flexible. This means building capacities required for intermediary goods for the infrastructure program it will include resource cluster in the mining industry combining the production of capital goods and beneficiation targets identified opportunities. In this phase the country will lay down foundations for more intensive improvement in productivity, including infrastructure delivery and services. Regulation, funding, and investment improved.

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Regulation governed by corporate governance is of particular concern in developing economies, where the infusion of international investor capital and foreign aid is essential to economic stability and growth. These regulators are confronted with two challenges firstly to make sure that there is adequate levels of investment to ensure that customers get reliable services. Secondly ensuring that price levels are managed in a way that creates certainty and mitigates against shocks. The quality of regulation, however, is not just about the regulator. The state itself must have adequate capacity and capability to formulate effective policies; support the design, establishment, review and improvement of regulators; and respond to issues identified by capable regulators. A capable state, with functioning, well-run utilities, departments and municipalities, will help ensure efficient regulation. In an interview reported that South Africa has so many positive economic growth attributes that it is difficult to believe that it cannot succeed in achieving high economic growth going forward. An assessment of these attributes reveals that it has virtually unlimited natural resource treasures, among the richest of any nation in the world. It has a multi-talented multi-ethnic indigenous population with all the necessary skills to manage and exploit these resources. Rob simple support the statement that regulations sometimes hinder potential investors into the economy. The need for foreign direct investments is necessary as again Rob states South Africa has so many positive economic growth attributes that it is difficult to believe that it cannot succeed in achieving high economic growth going forward.

An assessment of these attributes reveals that it has virtually unlimited natural resource treasures, among the richest of any nation in the world. It has a multi-talented multi-ethnic indigenous population with all the necessary skills to manage and exploit these resources. “The expanded offer in the administration division was for the most part determined by outside interest in South African saving money. This could change, contingent upon who purchases the Barclays share in Barclays Africa Group. Toward the beginning of April, London-based Barclays plc affirmed its designs “to offer down its 62% stake in Barclays Africa (ABSA) throughout the following a few years, to a level at which it can deconsolidate it, likely underneath 20%”, as indicated by the Johannesburg every day daily paper, Business Day”. This further supports the lack of regulation master class because the decrease in Decline in investment interest in Africa and South Africa. So the role of regulators needs to be regulated and improved to enhance the investor confidence in South Africa.

Proposals to improve regulation

The following is proposed for the immediate future: Institute a far-reaching review of current infrastructure regulators to clarify roles, strengthen accountability, update legislation and regulations, and reform institutional design. Explore the possibility of further consolidation of regulators. Establish a monitoring and evaluation unit in the Presidency to undertake periodic regulatory impact reviews and provide advice and support to regulatory authorities.

The economic challenges

The fragility of South Africa’s economy lies in the distorted pattern of ownership and economic exclusion created by apartheid policies. The effects of decades of racial exclusion are still evident in both employment levels and income differentials. The fault lines of these differentials are principally racially defined but also include skill levels, gender and location. The emerging nexus in South Africa of tourism, poverty alleviation and local economic development (LED) interventions. The South African experience of evolving a strong pro-poor focus in LED planning is distinctive in the international context of writings on LED. Pro-poor LED is increasingly the outcome of the application of measures and programs that are linked to the approach of pro-poor tourism in both rural and urban areas of South Africa.

Two studies are presented of Alexandra Township, Johannesburg and the Madikwe Game Reserve in North West Province as examples of pro-poor tourism as a form of pro-poor LED. It is argued that the growth of pro-poor tourism initiatives in South Africa suggests that the country is currently a laboratory for the testing and evolution of new approaches towards the planning of LED that potentially will have relevance for other countries in the developing world. An economist and a labor lawyer from adcorp answered in an interview when he was asked about the economic challenge that is unemployment “although it is true that, prior to 1994, Black South Africans were not properly represented in official statistical surveys, the best available estimates suggest that South Africa’s unemployment rate increased from about 7% in the mid-1970s to 13% in the mid-1990s and 25% in the late 2000s.

To the South African government this is an inconvenient fact, since it implies that current high levels of unemployment are largely a post-apartheid phenomenon and not, as many officials and academics would prefer it, a legacy of apartheid in addition to what” Mr. Sharp said above he says that as we have argued above, this would largely entail (a) unravelling the post-1994 changes that have caused the unemployment rate to nearly double over that period; and (b) bringing millions of informally employed people into the formal sector. This essentially requires revising two areas of the Labor Relations Act of 1995 (“LRA”), namely collective bargaining procedures and protections against dismissal.

Structural challenges specific to South Africa

The former minister of finance and his team came up with strategic 14 point plan to fight the structural challenges of South Africa, these are listed below

  1. Fiscal policy
  2. Financial sector and tax policy
  3. Leverage public procurement
  4. Recapitalization of state-owned entities and government guarantees
  5. Broader SOE reforms
  6. Private sector participation (PSP) Framework
  7. Costing developmental mandates
  8. Energy
  9. South African Airways
  10. Telecommunications
  11. Postbank licensing
  12. Minerals and Petroleum Resources Development Act Amendment Bill
  13. Broad-based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry
  14. The Regulation of Land Holdings Bill

Lowering standard of living for the poor

A framework is developed to analyze the effects of a biofuel consumer tax exemption and the interaction effects with a price contingent farm subsidy. The National Development Plan makes several proposals in the areas of regulatory reform, infrastructure investment, competition law and the quality of public services to address these structural features, thereby contributing to lower costs for businesses. Reducing the cost of living for the poor is essential for achieving a social floor and enhancing peoples’ lives and their opportunities to effectively participate in society and the economy. The main cost drivers for poor household are food and energy and, given the apartheid spatial legacy, the cost of transport. Poor households feel the effects of food price increases much more severely than more affluent households. Furthermore, rural households pay more for a basic food basket than their urban counterparts because of the low volume of sales, limited competition, high transport costs and lack of adequate storage facilities in rural areas. Reducing the cost of living for the poor requires a stable food inflation environment; provision of adequate, subsidized and reliable public transport; and a predictable energy price path. The poor provision of public services, including education and health care, places additional cost burdens on poor households by forcing many to pay for private provision. Improving the provision of public services is important for lowering costs for poor households.

Key elements employment creation

According to Amadeo (2006) there are four ways that employment could be stimulated the first is to reduce Interest Rates, Expansionary monetary policy is when a central bank, such as the Federal Reserve, uses its tools to stimulate the economy. This often means lowering the fed funds rate in order to increase the money supply. The action increases liquidity, thereby giving banks more money to lend. As a result, mortgage and other interest rates decline. With cheaper credit, consumers can borrow and spend more, allowing businesses to expand to meet the increased demand. Companies hire more workers, whose incomes rise, allowing them to shop even more. The second is to spend on Public works create jobs because it puts people right to work. The federal government can quickly fund construction projects already in the approval pipeline. It can hire contractors, send money to the states, or hire workers directly. That was one reason why the American Recovery and Reinvestment Act ended the Great Recession in 2009. It spent $87 billion in shovel-ready construction projects. The third way to stimulate employment is by Unemployment benefits create so many jobs because the unemployed must spend all the benefits received. They buy necessities such as groceries, clothing, and housing right away. Retailers and manufacturers respond to the added demand by hiring more workers to keep up. These benefits also help keep the unemployed from becoming homeless. It is more difficult for them to find a job if they lose a steady address. The forth factor is through Tax cuts create jobs by letting families or businesses keep more of the money they earn. The idea is that consumers will buy more things, thereby stimulating demand. Businesses use tax cut money to hire much-needed workers.

All tax cuts are not created equal when it comes to job creation though. A Congressional Budget Office study found that, for example, the Bush tax cuts created 4,600 jobs for every $1 billion in foregone tax revenue. Payroll tax cuts did better. They created 13,000 new jobs for every $1 billion spent. Companies use the tax savings in one of four ways. All of them increased the demand needed to drive job growth for the following four reasons:

  • Reduce prices.
  • Increase employee wages.
  • Buy more supplies.
  • Hire more workers directly.

The importance of considering ecological sustainability issues in any city’s infrastructure plans and investments. The South African government’s current and planned investment in urban infrastructure, both to enhance economic growth and to contribute to poverty reduction, and what this implies for Cape Town. Governments in many countries have sought to accelerate the time taken to make decisions on major infrastructure projects, citing problems of ‘delay’. Despite this, rarely has the time variable been given careful empirical or conceptual attention in decision-making generally, or in infrastructure decision-making specifically.

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