GDP not true reflection of state of nation
The state of the nation address is generally an opportunity for the president to spell out the economic and social development plan for the country and take stock of progress made over the past year.
The monitoring and evaluation framework for public service details 12 key outcomes against which progress will be measured and benchmarked. These include quality basic education, long healthy lives for citizens, personal safety, decent employment through inclusive growth, and a skilled and capable workforce.
Similarly, the national development plan (NDP) is a living policy document that also broadly details the government’s economic and development wish list towards 2030. But we are yet to fully use the monitoring and evaluation framework as a benchmarking tool to measure year-on-year progress against the NDP.
Economist and statistician Simon Kuznets famously fathered gross national product (GNP) as a measure of a country’s national income and was awarded a Nobel prize for his work on economic growth. However, he warned that GNP must not be used as a measure of economic welfare.
At January’s World Economic Forum meetings in Davos, one of the plenaries — Agenda in Focus: Beyond GDP — examined whether GDP is still a relevant measure for economic growth and development. At the meetings
IMF head Christine Lagarde and Nobel-winning economist Joseph Stiglitz argued in separate sessions that GDP is a poor indicator of progress and social development.
The Social Progress Imperative, whose advisory board is chaired by renowned economist and Harvard Business School professor Michael Porter, partnered with IQ Business to develop the provincial level social progress index (SPI).
This provides a way for social development outcomes and public welfare to be measured and an opportunity to measure such progress against the NDP targets.
A provincial localised strategy for driving the development agenda recognises that the challenges facing the nine provinces are nuanced and cannot be broadly included under the national agenda.
This falls squarely in line with the plans for a local government decentralisation model presented by the president at the previous state of the nation address.
In 2019 the index showed that all but three provinces had materially underperformed in the provision of advanced education. The Western Cape red-flagged personal safety as a key underperforming area, while it outperformed the other provinces in access to basic knowledge and nutrition as well as basic medical care.
At his first state of the nation address in February 2018, President Cyril Ramaphosa emphasised the need to strengthen the efforts towards early childhood development, and that the industrialisation process needed to be underpinned by transformation, bringing young people to the centre of the economic agenda, as well as introducing the minimum wage later in the year, among many others.
Many of these plans spoke of improving economic opportunities, improving access to those opportunities and improving standards of living. Yet economic measures such as
GDP fail to adequately reflect any improvements or regression in these developmental areas of interest.
The true state of the nation is reflected in the trends with regard to the social, developmental and economic well-being of its citizens. With GDP numbers continuously trending downward, unemployment trending upwards and inequality and poverty at unsustainable levels, it will never be more important than it is now to have a tool that can track the work government does, and double up as a decision-making tool for resource prioritisation towards a progressive and capable state.