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Social outcomes hinge on economic growth


JOHANNESBURG – Social progress has become a crucial item on the agenda of leaders in government, business, and civil society.

The recent local and worldwide climate protests are an example of how citizens are increasingly concerned with broader environmental and social outcomes, as well as economic growth.

The recent local and worldwide climate protests are an example of how citizens are increasingly concerned with broader environmental and social outcomes, as well as economic growth. Photo: AP

Similarly, since the financial crisis of 2008, the public has become increasingly critical of a purely profit-driven approach and is demanding that business has a positive impact on society beyond just their bottom line.

The reason for this is simple: traditional measures of economic achievement, such as per capita gross domestic product (GDP) and total unemployment, are useful in providing a high-level overview of the economy, but they fail to take into account the way in which citizens live or how wealth is distributed.

Extensive research has found that although economic growth is essential for advancements in social and economic development, it does not necessarily translate into social progress.

For example, although rising income is typically correlated with improvements in access to clean water, sanitation, literacy and basic education, other fundamental human needs, such as personal security, are no better in middle-income countries than low-income ones – and is often worse.

This developmental disjoint is especially clear in South Africa, where despite solid growth in the early 1990s and 2000s our economy remains fundamentally inequitable, and unemployment levels are unsustainable and growing.

The unpleasant truth is that without rapid social progress, South Africa can expect an increase in social unrest that will threaten political and economic stability.

In the face of these shortcomings, and in order to advance social progress, it is clear that we require a new model of socio-economic development.

One such response to this is the Social Progress Index (SPI).

The SPI was developed in 2012 by the international non-profit organisation the Social Progress Imperative as a means of “redefining how the world measures success and putting the things that matter in people's lives at the top of the agenda”.

Broadly speaking, the global SPI measures the extent to which countries provide for the social and environmental needs of their citizens – as well as their economic progress.

They do this by measuring a wide range of social and economic indicators and comparing them to their closest peers in terms of GDP per capita. These include scores on a country's ability to meet the basic human needs of its citizens and their overall well-being, and its ability to provide citizens with access to social and economic opportunities.

The 2019 South African SPI is modelled on the global index and measures progress in a range of social and environmental factors such as nutrition and basic medical care, access to shelter and sanitation, personal freedom and safety, and inclusiveness.

The value of the South African SPI is that it provides an alternative measure of well-being at both a national and provincial level by consolidating multiple dimensions around health and well-being into a single, insightful score.

For example, the 2019 South African SPI found that Gauteng and the Western Cape outperform the rest of the country on most socio-economic metrics and attain a high overall score.

In contrast, North West and the Eastern Cape lag in crucial social progress indicators such as nutrition, basic medical care, and access to water and sanitation and are ranked as poor performers.

The SPI is also useful in that it breaks down individual provincial performance on each dimension. For example, the Western Cape was the best performer when it came to nutrition and basic medical care; access to basic knowledge; environmental quality; and personal freedom and choice.

The next-best performing province was Limpopo, which got the highest score for shelter; personal safety and personal rights, yet performed worst on access to information and communications.

These social and environmental dimensions provide a better measure of society's well-being and allow policymakers to look beyond purely economic indicators to develop sustainable and inclusive economic growth strategies.

In this way the SPI provides a systematic, empirical foundation to serve as a benchmark and a guide for developing inclusive growth strategies.

It is also a valuable measurement tool for leaders and change managers in business, the government and civil society on how to guide policy and programmes, such as the National Development Plan (NDP).

In the current environment it is essential that social progress sits alongside GDP as a benchmark for national performance when constructing and evaluating policies and strategic programmes like Vision 2030.

It is a gross failure of policy and methodology that rapid economic growth often comes at the expense of marginalised communities and the environment, and that it can exacerbate inequality.

With this in mind, we firmly believe that the government and business need to take urgent action to boost economic growth in the short term, but at the same time drive and support the necessary structural reform that will deliver sustainable, inclusive growth in the long term.

There is no question that profit is – and will remain – a powerful motive that drives investment, innovation, and growth, but that does not mean that shareholder value needs to be pursued at the expense of social value.

Indeed, it is only through genuinely inclusive growth that delivers benefits to all members of society that South Africa can rise again and reach its fullest potential.

Adam Craker is the chief executive of IQbusiness.



Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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