Business bashing by ANC stunts SA’s long-term growth prospects
• Gigaba’s economic outlook hints that National Development Plan’s Vision 2030 has dimmed
Five years since adopting the National Development Plan (NDP), the prospects of achieving even its basic targets appear to be increasingly remote, given the depressing growth outlook confirmed by Finance Minister Gigaba in his maiden mediumterm budget policy 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,” Gigaba said.
This is perhaps an appropriate time to reflect rationally on why we have failed to make positive progress on Vision 2030. A tempting default position would be look 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, firstly, on immediate short- to medium-term strategic interventions to reverse the current economic and governance decline and, secondly, to agree on a new framework and key focus areas for a sustainable and inclusive growth.
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 to deliver the inclusive and sustainable growth we require. However, this is only possible if we have a mind-set that accepts that fundamentally, it is business only that can create the factories that we need for employment creation. What does this say about the relationship between the state and business? Clearly, there is a serious trust deficit, but are the current business initiatives sufficient to reverse the trend?
The level of antibusiness rhetoric coming from the president of the governing party and other significant leaders has stymied efforts to create a mutually beneficial relationship.
In 1994, one-third of the working age population that wanted to work could not find jobs. Two-thirds of these were young people between the ages 15 to 34. By 2017, the proportions had not changed, but the absolute numbers had increased.
The social grant system has been remarkably successful in alleviating extreme poverty, but inequality has deepened as a consequence of increasing unemployment in a low-growth and stagnating economy. Most of the unemployed do not have matric and are predominantly black women.
It is an incontestable fact that our uniquely high unemployment is a key driver of poverty, inequality and the other social pathologies that define our communities. This reality required 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 combined with broad social security support directed at the unemployed.
This would be the expected response of a government that espoused a social-democratic political philosophy and was pro-poor, as the ANC so often claims. But none of these options is contained in the strategies and policies of the ANC-led government.
This conundrum is a reflection of the policy incoherence and contestation for position within the tripartite alliance. The economic policy turnover in the past 10 years has given the distinct impression that the government is way out of its depth. We have moved from Asgisa to the NDP, GNP, the Nine Point Plan and now a 14-Point Rescue Plan. Even the ratings agencies that analyse our growth strategy must be profoundly confused. The medium-term budget did not contain any significant initiatives to deal with the key factors flagged by the ratings agencies, and there is now a distinct danger of another credit rating downgrade.
Our profound development challenges demand a new approach 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 socioeconomic challenges confronting the new democratic state. Indeed, in many successful East Asian developmental states, efficient planning and execution by highly competent technocratic state machinery has been the key driver of success.
One of the most critical success drivers and requirements for a developmental state is the creation of new economic structures, such as 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 co-ordination 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 socioeconomic spectrum.
The primary task of the NPC would be to relaunch the NDP, ensure its adoption by the broad spectrum of society, identify critical landmarks for its success and manage its implementation and co-ordination 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 co-operation isolated from political interference.
The 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 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.
Our development imperatives can be summarised in line with the main NDP themes; to grow an attractive investment climate for both domestic and foreign investment to create factories and jobs; to establish 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 co-ordinated 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 poor majority.
THE CONCEPT OF A DEVELOPMENTAL STATE HAS BEEN USED QUITE LIBERALLY BY MANY POLITICIANS