The 2007 Annual Report of the Accelerated Shared Growth Initiative of South Africa (AsgiSA) identified a need to focus on what was then called ‘the second economy’, and on mechanisms to ensure shared growth reaches the margins of the economy. It was in this context that the Second Economy Strategy Project was initiated. It reported to the AsgiSA High Level Task Team in the Presidency, but was located outside government, in TIPS
Phase One was to review the performance of existing government programmes targeting the second economy. This was completed in easry 2008.
The project commissioned research and engaged with practitioners and policymakers inside and outside government. The outcomes were presented to a Work in Progress workshop in May 2008 and to a conference, Second Economy Strategy: Addressing Inequality and Economic Marginalisation, from 29 September – 1 October 2008. A strategic framework and headline strategies arising from this process were approved by Cabinet in January 2009, and form part of the AsgiSA Annual Report tabled on 16 April 2009.
In South Africa, people with access to wealth experience the country as a developed modern economy, while the poorest still struggle to access even the most basic services. In this context of high inequality, the idea that South Africa has two economies can seem intuitively correct. The research and analysis conducted as part of the Second Economy Strategy Project highlighted instead the extent to which this high inequality is an outcome of common processes, with wealth and poverty connected and interdependent in a range of complex ways. Therefore, instead of using the analytical prism of two economies, the strategy process placed the emphasis on the role of strucutral inequality in the South African economy, focused on three crucial legacies of history: the structure of the economy, spatial inequality and inequality and development of human capital.
TIPS's work around inequality and economic marginalisation is built on the outcomes of this strategy process. The research undertaken continues to be relevant as government explores policy options to reduce inequality and bring people out of the margins of the economy. It falls into six broad categories: inequality and economic marginalisation, economic development strategies, labour markets, small enterprise development and the informal sector, rural sector and urban development.