OECD commends South Africa for sound economy

The Organization for Economic Cooperation and Development (OECD) on Tuesday commended South Africa for its stable macro economic framework and infrastructural improvement under way among other various reforms. The South African government has done a lot in addressing some social and economic fundamentals, said Andreas Woergoetter, Head of Division at the OECD Economics Department. He was speaking in Johannesburg while launching the OECD South African Economic Survey for 2015. "The (SA) government has largely eradicated poverty and improved access to basic services and basic infrastructures. These include access to water, sanitation and electricity. We have also noted progress in the South African Revenue Service (SARS), since 2010 when they improved on their system more people are now paying tax," Woergoetter said. He stated that the OECD would like to engage the SA government like they have done before on how to improve various sectors where they found gaps. He emphasized, however, that they will not dictate to the government. "South Africa is one of our key partners like China and Indonesia among others. We are not here to tell South Africa what to do but to give recommendations on what we think have worked somewhere and can be used in the South African circumstances. We want to engage the government in a meaningfull discussion in a constructive way on economic policies,"he said. The OECD also noted some problems in various South African sectors,including labour unrest which is damaging the economy as well as underutilization of the Small and Medium Scale (SME) sector. Woergoetter said,"We are not saying the South African economy is doom and gloomy but is underperforming and needs to be improved. The future for South African economy is bright ... There should be more arbitration and negotiation to make it less confrontational. More needs to be done to improve the infrastructure to unleash the country's potential." He said relations between employers and employees have to be improved. The OECD also suggested a minimum wage which can be regional or national. He said, "There are some people who are not participating in the country's economic activity whether formal or informal. Putting in place minimum wage can reduce poverty but has the potential to reduce employment and therefore needs some balancing." He also encouraged the government to include the private sector in the energy generation and end the monopoly of the state-run Eskom, the country's major electricity utility. "Also high port services are eroding the country's competitiveness. There is a need to help companies to access foreign markets by reducing port costs," said Woergoetter. Simi Siwisa from the South African National Treasury said most of the things raised are known to the government and are being addressed through various interventions. These include the National Development Plan (NDP) which is the government's economic blue print, she said. "OECD has noted that the country's macroeconomic frame work is sound and the government have done a lot in addressing socioeconomic issues. "We are committed to some of the recommendations. We are currently working on some of the partnerships with OECD to get international experience and benchmark what we are doing," Siwisa said. She stated that the government is also using independent private electricity generators to improve efficiency. Energy is one of the government's priority areas, Siwisa said, adding, "We will study the report and see which recommendations are achievable without damaging our fiscal constraints." Most of the government projects are sustainable, she said. "We are currently working on reducing inefficiency in the government across the board, like in municipalities so that they can get a qualified audit report. The government has adequate system and measures which are sustainable. We have committed people in the government who are clear about the priorities,"said Siwisa. She also stated that the government is also in the process of ensuring that the servile service bill does not balloon as the report predicted. Siwisa said the government is currently working with the private sector to ensure that they also participate in the mainstream economy.