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The role of education in economic development

To understand the importance of education for the economy, we first have to understand what economic development is. It refers to the process where a country’s poor living conditions improve for the better, which ultimately results in improved economic and social conditions for the population. Education is one of the primary resources of change; its role is to help people acquire knowledge and skills, which can, in turn, be used to acquire jobs. 

Households with educated people stand a better chance of lifting themselves out of poor living conditions than households without educated people in them. Consistent income offered to the working class ensures financial security for the working class, their families and their communities. Because of its contribution to economic development, education is viewed as human capital. Any type of investment made in education builds opportunities for national economic development. 


The current state of skills development 

As a developing country, education in South Africa is still a huge challenge with many cities and rural areas still grappling with the lack of poor infrastructures such as school buildings, transportation roads to the schools, electricity, food and other basic necessities. 

There’s also a huge gap in skills development areas, with both soft skills and hard skills lacking in various fields. This adds to the current state of unemployment, which is at a high of  29.1 percent,  with a 0.1 percent increase in the third quarter of 2019, according to Stats SA. Skills development is critical in ensuring that South Africans have access to quality skills and training, which will equip them with the necessary skills to enter the workforce. 

The Skills Development Act 97 of 1998 seeks to empower South Africans with skills necessary in the workforce. It also has a responsibility to improve the quality of life of the people who are already working and to improve their productivity levels. It seeks to increase the levels of investment in education and training in the labour market. 

Lastly, the act aims to improve on the return of investment, promote self-employment and improve the delivery of services within the workforce. However, work in the skills development sector has not yielded any notable results, and there are a number of setbacks, as mentioned above, which have a huge impact on the progress of economic development. 

The question here is, are there any future plans to find solutions to these issues? 

 

Solutions and how they impact economic development

When the minister of finance, Tito Mboweni, held the 2020 budget speech at the National Assembly, he outlined a few plans geared towards the revamping of the education system in the country. He outlined that the budget for education infrastructure is allocated at R5.2 billion over the medium term. Furthermore, in 2017, the National Treasury allocated funds to the Department of Basic Education (DBE) in order to address the backlogs in the eradication of inappropriate school structures and the provision of basic services (water, sanitation and electricity) to schools. This is done through the Infrastructure Delivery Division (IDD). The programme is part of the schooling 2025 plan aimed at improving learning outcomes and bringing better access to education. The IDD conceived this programme as a medium-to-long-term initiative, with the goal of eliminating the backlog in schools’ infrastructure. 

DBSA acts as an implementing agent for the construction of new schools under the programme, and thus far, we have been able to complete the construction of 111 schools. The schools have been completed in phases based on when the handover to contractor took place and the size and scope of the school. The overall success in this programme has opened up opportunities for the Bank to also support other provincial departments of education with the realignment, construction and refurbishment of storm-damaged schools. 


Reaching the economic development goal

The slow pace in this sector has made a significant impact on economic development. However, between the public, private sectors and DBSA, a lot of work is being put into place to ensure that there are notable improvements and movements in the education infrastructure area. This, in conjunction with the skills and development initiatives, will help the country achieve its educational goals and add to the economic development of our country.
 

To understand the importance of education for the economy, we first have to understand what economic development is. It refers to the process where a country’s poor living conditions improve for the better, which ultimately results in improved economic and social conditions for the population. Education is one of the primary resources of change; its role is to help people acquire knowledge and skills, which can, in turn, be used to acquire jobs.