While everybody seems to favour the pursuit of inclusive growth, this concept is rarely clearly defined in the policy debate. Inclusive growth is often confused or conflated with pro-poor growth or broad-based growth. A recent definition from researchers at the UNDP integrates the latter two concepts to include employment, poverty and inequality. A derivative Inclusiveness Index shows that South Africa has a very low degree of inclusiveness compared to other developing countries and that its growth since 1996 has not been inclusive.

Nearly half the working-age population and nearly two-thirds of the unemployed live in areas designated as townships under apartheid spatial laws. Originally developed as “labour dormitories”, they have been challenging to develop as more vibrant local economies and residential areas. What can the government – and the private sector – do to stimulate growth, entrepreneurship, and employment in these peri-urban areas?

In developing countries, agricultural growth is generally employment intensive and pro-poor but this sector in South Africa has been subject to a drastic decline in tariffs, pricing, infrastructure and other forms of support. This has not been compensated for by alternative measures such as expenditure aimed at facilitating small-scale agriculture and effective land reform. The result has been poor economic performance and rapidly declining employment in commercial agriculture with little sign of revival in the small-scale sector.

The economy remains highly concentrated and existing firms have substantial advantages over entrants and smaller rivals. These firms can use their power to block rivals, also by influencing regulations in their favour. Changing the structure and the ownership of the economy simultaneously requires a package of measures to tackle the abuse of market power by large firms, change regulations to open up markets, and effectively support the development of the capabilities of smaller firms.