Upbeat: Finance Minister Nhlanhla Nene said the growth forecast would likely be increased due to improved consumer and business confidence. Picture: REUTERS
Upbeat: Finance Minister Nhlanhla Nene said the growth forecast would likely be increased due to improved consumer and business confidence. Picture: REUTERS

SA’s hopes of fulfilling the National Development Plan (NDP) hinge on greater access to higher education and faster economic growth, says a report from the World Bank.

Poverty rates remain alarmingly high, with more than half of South Africans, or 30-million people, living below the national poverty line of R992 per month, it reads. Poverty has remained highest among female-headed households, black South Africans and children below the age of 15.

"Improving the lives of the poor could be achieved through creating quality jobs and providing better earning opportunities through developing skills and raising labour productivity," said World Bank country director for SA Paul Noumba Um.

But education opportunities are limited as low-income families lack easy access to credit and incur relatively high costs of sending a child to college, the report reads.

"This serves as a major barrier to getting sufficient levels of education to participate actively in the semiskilled and skilled labour market."

Living in a household in which the head has attained some tertiary education reduces the average risk of poverty by about 30% compared to those living in households where the head had no schooling.

In the 2018 budget, the largest reallocation of resources towards the government’s priorities was on higher education and training. The Higher Education and Training Department was expected to get R57bn in additional medium-term funding for free education.

It reflected promises to help students who were struggling to afford higher education, the chief economist of Stanlib, Kevin Lings, said.

The Department of Monitoring Planning and Evaluation said that the recommendations made in the report would help the government stay on track with the NDP.

According to the NDP, the option of a four-year university degree, combined with bridging courses and more support for universities to help black students from disadvantaged backgrounds, was likely to yield higher returns.

The Bank said slow growth alongside improvements in access to education among the poor was anticipated to slightly reduce inequality and poverty in the coming years.

However, at the current economic growth trajectory, SA would not create sufficient jobs to reach its target of reducing inequality and eliminating poverty as outlined in the NDP.

In 2017, unemployment reached record high levels of 27.7%. While economic growth surprised on the upside in 2017, it remained a paltry 1.3%.

GDP growth would be affected by the level of access the poorest groups had to economic opportunities, as well as by fiscal redistribution, the Bank said.

Finance Minister Nhlanhla Nene said the growth forecast would likely be increased due to improved consumer and business confidence. Despite this, SA had continued to stray from the goals set out in the NDP, which calls for economic growth of 5.4% per year and a 6% decrease in unemployment by 2030.

While a slight uptick in economic growth and business confidence in the first quarter of 2018 was expected to lift employment marginally, overall economic growth and business confidence remained weak and fragile, which with an enduring skills shortage hampered job creation, NKC economist Gerrit van Rooyen said.

menons@businesslive.co.za

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