Five years since adopting the National Development Plan (NDP) the prospects of achieving even its basic targets look more remote given the depressing growth prospects confirmed by the Finance Minister Gigaba in his maiden medium-term budget policy (MTBP2017) statement. “Five years on from the adoption of the NDP Vision 2030, the fast growth that will enable us to make substantial progress in eliminating unemployment, poverty and inequality remains elusive. We must find the wisdom, the humility and perspective to ask how must we remake ourselves in order to build the SA we want.”
This is perhaps an appropriate time and moment to reflect rationally on why we have failed to make positive progress on Vision 2030.
A tempting default position would be looking to externalities to justify our persistent policy failures but this would be disingenuous and self-defeating. What is required is an honest self-assessment under properly managed engagement conditions by all stakeholders to agree first, immediate short to medium strategic interventions to correct and reverse the current economic and governance decline and second, to agree a new framework and key focus areas for a sustainable and inclusive growth strategy and trajectory. But the starting point is the critical need to identify constraints to inclusive and job-creating economic growth and what must be done to resolve them. Such an exercise, initiated by the Treasury, was undertaken by a panel of eminent international economists, The International Panel on Growth, under its chairman Ricardo Hausmann. In their report “Accelerated and Shared Growth Initiative-South Africa (2006)” the panel issued over twenty recommendations that covered the following six growth constraints;
The volatility and level of the currency
The lack of a cost-efficient and efficient logistics system
The shortage of skilled labour
Lack of competition in the economy
The regulatory burden on small businesses
Deficiencies in the state machinery, its capacity and leadership
ASGISA became a victim of the leadership change that occurred in Polokwane and was never
executed and yet its diagnosis is still valid today.
The key issue is that the collective leadership of the political economy has failed to create an environment and economic policies that can attract sustained investment that is able to deliver inclusive and sustainable growth we require. However, this is only possible if we have a mind-set that accepts that fundamentally, it is business that can create the factories that we need for employment creation. And yet, the level and type of investment over the last two decades has failed to meet the challenges we have.
What does this say about the relationship between the state and business? Clearly there has been a serious trust deficit. Are the current “Business Initiative” efforts sufficient to reverse the trend?
Considering that the fractional leadership contestations within the governing party as it prepares for the December elective conference are normally expected to generate poisonous populist and racist rant, but the level of anti-business rhetoric coming from the president of the party and other significant leaders, certainly harms the efforts aimed at having a mutually beneficial relationship with business. In 1994, one-third of the working age population that wanted to work could not find employment.
Two-thirds of these were the young people between the ages of 15-34. In 2017 the proportions have not been lowered and the absolute numbers have increased. The government has introduced a very successful welfare grant system that also provides for children in order to alleviate poverty especially among the poor. However, in the past decade, widespread poverty remains and inequality has deepened as a consequence of increasing unemployment in a low growth and stagnating economic trajectory. And the particular nature of the unemployment that confronts us is that most of the people in this category do not have Matric and they are predominantly black and women.
It is an incontestable fact that our uniquely high unemployment is a key driver for poverty, inequality and the other social pathologies that define our communities. This reality required or dictated a response that should have been anchored in policies that provided for mass low-cost employment in manufacturing –supported by a targeted wage subsidy- and in combination with a very broad social security support directed at the unemployed. This is a classical response of a government which espouses a social democratic political philosophy that is also manifestly pro- poor as the ANC has often claimed. But none of these options are contained in the strategies and policies of the ANC-led government.
This conundrum is a reflection of the policy incoherence and contestation within the tripartite alliance. The economic policy turnover in the past ten years has given a distinct and well-grounded impression that indeed we have an ANC-led government that is out of its depth! We have moved from ASGISA, NDP, GNP, Nine Point Plan and now the 14 Point Rescue Plan. Even the ratings agencies that must analyse our growth strategy are profoundly confused. The MTBP2017 did not contain any significant improvements on the key factors flagged by the ratings agencies. There is a danger in fact that the situation now invites a downgrade.
Our profound development challenges dictate that a new approach and innovative construct to deliver the desired development outcomes. The concept of a developmental state that was properly structured, well-resourced and efficient found immediate attraction and was punted as the answer to the enormous socio-economic challenges confronting the new democratic state.
In many successful East Asian developmental states, efficient planning and execution by highly competent technocratic state machinery has been the key driver for their success
It is not the intention in this column, because of limited space, to make a comparative analysis of why certain countries succeeded while others failed in establishing efficient developmental state machineries. Rather, I intend to explore why our attempt to establish much needed developmental state machinery failed and what can be done now to get it on course again.
One of the most critical success drivers and requirements for a developmental state is the creation of new economic structures, like the National Planning Commission (NPC) in the case of SA, that are given the necessary political mandate and legislated power to manage national economic planning and effective coordination and integration of development policies, whether fiscal, monetary or social, across government. Such structures must be populated by highly competent and experienced professionals across the socio-economic spectrum.
In the case of SA the primary task of the NPC would be to relaunch the NDP, ensure its adoption by the broad spectrum of the society, identify critical landmarks for its success and manage its implementation and coordination across all departments and sectors. The NPC, in this new role, would be the ideal structure to bridge the current entrenched mistrust and nurture a new basis for cooperation isolated from political interference.
This concept of a developmental state has been used quite liberally by many politicians in the past few years to motivate their supporters and inspire them with renewed hope. But they have failed to pay attention to its crucial and key requirement for competence as its critical success factor. Its opposite, cadre deployment, was allowed to dominate appointments in all critical positions in the state machinery. It is this tendency that rendered a fatal blow to all efforts to progressively grow an effective developmental state.
Given our extraordinary development challenges, our development imperatives can be summarised in line with the main NPD themes; to grow an attractive investment climate for both domestic and foreign investment to create factories and jobs; to establish a capable state machinery to deliver services and execute development plans efficiently; and to build capacity to provide quality education for all. These mutually reinforcing themes, properly coordinated and executed, should have been able to put us on a sustainable growth trajectory that could have created opportunities for all and made a huge impact on the wellbeing of the majority poor.
Published in Business Report: https://www.iol.co.za/business-report/opinion/opinion- our-vision-
2030-is- in-jeopardy- the-nation- is-betrayed- 11802028