In President Jacob Zuma's first address to the South African Parliament on the state of the nation this week, he promised to create half a million jobs in the next six months. It would seem this is to be done by going on a R787 billion spending spree in the hopes of attracting private investment.
Perhaps President Zuma was drawing inspiration from U.S. President Barack Obama, who promised last November to create 2.5 million jobs within two years. But similar promises made elsewhere in Africa in recent years do not augur well for Zuma's hopes.
In Kenya, after the 2002 elections, President Mwai Kibaki also announced the creation of half a million jobs. The government went on to lay off tens of thousands of civil servants, even though the economy grew an average of six percent between 2004 and 2007.
In 2005, President Hosni Mubarak of Egypt promised during an election campaign to create 4.5 million jobs over six years, or 750,000 a year. How desperately Egypt needed that to happen – with one-fifth of its people living on less than one dollar a day, its economists say it needs to grow at more than six percent a year just to absorb its hundreds of thousands of graduates. By the government's own estimates, it was able to create only 390,000 jobs last year.
The assumption that government can create sustainable employment borders on the absurd. Granted, a leader should be optimistic, holding the bar high for a nation's performance. But South Africa's own record of job creation doesn't measure up. Between 2004 and 2007, 950,000 jobs were created, mainly as a result of an infrastructure and public works boom.
Foreign direct investment (FDI) is by no means the panacea for a developing country whose economy is in contraction. South Africa is the third-largest destination of FDI on the continent, after Morocco and Egypt, yet investment projects created only 10,000 jobs in 2007. In Egypt, the figure for the same year was 11,500 jobs.
What governments can do is to facilitate and stimulate job creation through sound fiscal and monetary policy, which would include removing bureaucracies associated with starting and registering businesses, ensuring the protection of property rights and building social capital by investing in sectors such as education and health.
One does not need to look far over South Africa's borders to see the effects of the global recession. Botswana has grown consistently over the last 40 years and has been praised for its resource management and curbing of corruption. Yet the African Development Bank has just approved a loan of U.S. $1.5 billion for budget support as a direct result of the falling prices of commodities, principally of diamonds.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
The government appears to hope that the 2010 World Cup soccer tournament will generate a demand for goods and services justifying public investment. Here again, the track record is murky. Historically cities hosting the Olympic Games have experienced inflated housing prices, a loss of jobs and high debt levels. This is not to say that the World Cup cannot boost the South African economy. But its benefits will depend on quality of economic governance.
The South African government should be responding to the global economic crisis by anticipating a slowdown and shifting resources across sectors accordingly. President Zuma should have assured the South African people that his government is engaged in careful and focussed strategic planning, not wishful thinking.
Nancy Dubosse works for the economic governance programme of the Institute for Democracy in South Africa.
