Articles for June 2021
Part 1: Fiscal dimensions of South Africa's crisis
At the start of the democratic project, South Africa hoped for a “fiscal renaissance”. After a brief period of consolidation, social spending rose, as did remuneration for public servants and expenditure on infrastructure. By the early 2000s, revenue was buoyant, the debt-to-GDP ratio was at historic lows, and the budget balance moved into surplus. But by the second decade of the millennium, growth faltered. And at the very moment that conditions demanded fiscal adjustment, government policy became increasingly incoherent.
How basic education has improved in the Western Cape
A new longitudinal study of learners in public education in the Western Cape shows a marked decline in repetition rates over the past six years. The drop in repetition has also led to more learners making it through matric. The study could have significant lessons for policymakers in terms of the interventions required to reduce dropouts.
Measuring financial inclusion: A comparative analysis of regional South Africa
Financial inclusion has become an important measure of inclusive economic growth in South Africa, as well as in other parts of the world. But if inclusion cannot be measured accurately it leaves policymakers and market participants making inadequately informed decisions. This article discusses a new quantitative method to construct financial inclusion indices for the nine provinces. The index trends are used to evaluate the state of financial inclusion in the recent past and to make recommendations for further financial sector development policy. The country has made improvements in financial inclusion since 1994. Since then, there has been increased access and usage of financial services. However, between 2015 and 2018 there was an overall reduction in financial services. The decline has been heavily influenced by economic shocks such as decreasing income in various provinces, a decrease in credit extension to the private sector, rising unemployment rate, and rising risks to financial infrastructure. In fact, financial inclusion in 2018 fell back to the level it was in 2014 after a decline that began in 2016. Financial inclusion has increased in Gauteng, Western Cape, and the Eastern Cape; however the Free-State and Northern Cape have experienced declines to below their 2015 level, while the other provinces experienced minor declines.
Inequality through the prism of the pandemic
The COVID-19 pandemic has exposed significant inequalities in terms of capacities to cope with such a major shock. There is a marked difference between urban and rural areas in the ability to comply with lockdowns, as well as between wealth quintiles. Moreover, those least able to comply with lockdown regulations are often most vulnerable to infection. Policy needs to be fine-tuned to address the effects of major spatial inequalities between and within provinces.