Assessing Development Strategies to Achieve the MDGs in The Republic of South Africa

South Africa was readmitted to the international community after successful free elections in April 1994 following years of international isolation imposed on the country due to its racially motivated apartheid policies. Trade liberalization has been accompanied by responsible monetary and fiscal management and this has largely allowed South Africa to continuously experience moderate economic growth since 1994. Inflation has been within target, and the budget deficit has been falling in recent times. Since 1994, the government has channelled substantial resources into social programs and services. Despite these impressive policy reforms, the economy has failed to grow in sufficient amounts to make inroads into the high unemployment and poverty (Hoogeveen and Özler, 2004). Following the 2004 elections the government has outlined five key development goals in the Government's Contract with the People of South Africa, namely: · Reduce poverty by half through economic development, comprehensive social security, land reform and improved household and community assets; · Provide the skills required by the economy, build capacity and provide resources across society; · Reduce unemployment by half through new jobs, skills development, assistance to small businesses, opportunities for self-employment and sustainable community livelihoods; · Massively reduce cases of TB, diabetes, malnutrition and maternal deaths, turn the tide against HIV and AIDS, strive to eliminate malaria and improve services to achieve a better national health profile; and · Reduce preventable causes of death, including violent crime and road accidents. Furthermore, government adopted the UN Millennium Declaration alongside other countries as an unprecedented declaration of solidarity to rid the world of poverty. This declaration is encapsulated in the Millennium Development Goals (MDGs). Heads of states agreed in 2000 to use the MDGs to work together to reduce poverty by 2015 or earlier. The MDGs provide an indication of the results that the country wants to obtain (outcomes) based on certain inputs (resources), outputs (understanding of activities and changes) and impact (change/effect of intervention). Some of the outcomes indicators as expressed by the MDGs are closely related to the rights that are mentioned in the Constitution. This paper is linked to the project entitled “Realizing the Millennium Development Goals through Socially Inclusive Macroeconomic Policies” which aims to answer three key questions relating to South Africa achieving its MDGs, namely what is the likelihood of South Africa achieving the goals under current policies and investments? What changes in South Africa’s strategies and policies are required to achieve these goals? What are the costs of the different strategies, policies, and investment alternatives? This project is a joint collaboration between UNDP, UN-DESA and the World Bank. The benefits of this project are more than providing the answers to the questions mentioned above. The methodology used is a comprehensive framework to evaluate developmental policies as it links the various developmental objectives and may be applied to other policy questions and strategies within South Africa for example evaluating the success and cost of AsgiSA, as well as the Medium Term Strategic Framework (MTSF) and the New Growth Path policy. The capacity building objective of this project is also very important for South Africa as it enables South Africa to build its own capacity in this field. In conformity with the brief provided by UN-DESA, this Country Background Report includes an overview of the main reforms, macroeconomic policy, economic performance and vulnerabilities, social policy and MDG achievement in South Africa. The report is divided into nine sections. The first section provides a brief introduction. The second section offers details of economic reforms and policy during the period 1994 to 2008, as well as an overview of the performance of the economy during the same period. The third section discusses the economic constraints and vulnerabilities within the South African economy. The fourth section provides a brief summary of the status of achieving the MDGs in South Africa, attempts to identify gaps in achieving the MDGs as well as policies that may assist South Africa to achieve the MDGs. The next section, section five, provides a brief description of the methodology used and section six discusses the data used and data problems experienced. Section seven is the main section of the report and provides the results of the General Equilibrium Analysis the analysis of which attempts to answer the questions listed above. Section eight discusses the results relating to the poverty reduction goal. The last section, section five provides a brief conclusion and policy recommendations.