South Africa's search for dynamic growth

AS SOUTH AFRICA enters its second post-apartheid decade, the possibility that it will become a high-growth dynamic economy remains in doubt. Without an economic growth rate that soaks up labour surpluses, the republic cannot overcome massive unemployment and the sort of poverty rates that lower confidence among investors about the political future.

The ANC government is on a high – it won the bid to host the football World Cup in 2010, celebrates 10 years of democracy this year, and was re-elected with 70% of the vote in the April general election. A further boost to government confidence is the strength of the rand, which has appreciated by 50% over the past 30 months.

In response to worries that government delivery is not fast enough and that its push for ownership and participation in the economy to reflect racial demographics is also tardy, the ANC is becoming increasingly activist. The worry...