eBusiness Weekly
The National Planning Commission (NPC) recently briefed President Cyril Ramaphosa on the initial findings of its review of the National Development Plan (NDP), 10 years after it was first tabled in parliament and accepted as the blueprint to make SA a better place.
Although the Ten Year Review has not been released yet, Professor Tinyiko Maluleke, deputy chair of the NPC, gave Moneyweb a bit of a preview.
“The NDP was not updated. The current NPC (this is the third commission since it was initially appointed in 2010) undertook a review of the NDP as it was tabled in Parliament in 2012, a decade ago.
The engagement with the president was an opportunity for the NPC to account to him about their strategy and work, as well as to present the initial findings of the 10-year review. The review is currently being refined,” says Maluleke.
While the NDP has good intentions and goals, the immediate question is whether SA is making progress. Or rather, why is SA not making progress? It seems people are getting poorer, unemployment is definitely worse, and inequality is as bad as ever.
“The NPD is more than good intentions and good goals. It’s a long-term plan spanning a period of nearly 20 years — with objectives and targets,” says Maluleke.
“It also provides a cross-cutting vision for the comprehensive development of the country.
“The failure relates to the failure of the state and of government to institutionalise the NDP so that it informs all short-term plans and orientates them towards the 2030 vision of the NDP. It is therefore a failure of planning and implementation. The current NPC is, among other things, seized with correcting systemic planning and implementation failures,” he adds.
“It is correct to say people are getting poorer, that unemployment is worse, and [that] inequality has not changed much. For the period under review (2012-2022), the SA economy has not performed as expected. Growth has averaged 0,99 percent for the period, with per capita GDP growth negative in five of the years under review.
“South Africans are becoming poorer. Unemployment has increased to 33,9 percent, with little improvement in overall employment. On inequality, we remain the most unequal country in the world with incomes that are highly polarised,” he says.
Inequality, poverty and unemployment
The NDP’s target for reducing inequality looks modest, aiming to reduce the Gini coefficient from 0,69 in 2010 to 0,60 in 2030.
“However, our Gini has remained unchanged since the adoption of NDP in 2012,” says Maluleke.
“Poverty in the post-1994 period was initially on a decreasing trend, then started increasing again. Using the lower bound poverty line (LBPL) as R647 per person per month in 2015 and the upper bound poverty line as R992, progress was made between 2006 and 2011 when poverty levels fell from 51 percent of the population to 36,4 percent. It was followed by income poverty rising, which affected 40 percent of the population by 2016.
“Approximately 13,3 million people were living below the food poverty line in 2015, with this number increasing to 19,4 million in 2020.
“This means that almost 32,6 percent of the population could not afford the minimum required for their daily energy intake,” says Maluleke.
The NDP set a target of reducing unemployment from 25,4 percent in 2010 to 6 percent in 2030, with interim targets of 20 percent by 2015 and 14 percent by 2020.
Everybody knows that the unemployment rate increased from 25,4 percent in 2012 to nearly 28 percent in 2018, and then significantly thereafter due to the effect of Covid-19. The unemployment rate reached a record high of 35,3 percent at the end of 2021, translating into 11,6 million unemployed people and about 3,6 million discouraged work seekers.
Underperformance
Maluleke says that SA underperformed on key targets of the NDP. Among contributing factors in this regard were the deterioration of the policy environment, challenges of leadership across society, lack of coherence in executing the NDP, poor implementation, and a turbulent regional and global environment.
Implementation of the NDP, as set out in the vision and priorities, was not achieved.
Infrastructure
Commentators lament that failing infrastructure is hampering economic growth. For instance, persistent electricity disruptions and capacity constraints of the rail network saw SA missing out on the boom in commodities.
“The NDP’s proposal is that SA needs to maintain and expand its electricity, water, transport and telecommunications infrastructure to support the economic growth and social development goals in the medium and long term by targeting a 30 percent investment-to-GDP ratio,” says Maluleke, adding that one-third of this should be delivered by the state.
“Investment as a percentage of GDP has been on a declining trend and has averaged less than 15 percent between 2018 and 2021.
This declining trend is largely as a result of weak state capacity, a decline in private investment and a slowdown in general government spending and reduced capital spending from SOEs,” says Maluleke, noting that there is a need to leverage private sector investment through private-public sector arrangements.
He says the National Infrastructure Plan 2050 (NIP 2050) was gazetted in March 2022 to address infrastructure issues and direct spending.
NIP 2050 is a strategic plan that will implement key NDP objectives to promote infrastructure delivery as it emphasises the crucial role of the energy, freight, water and digital infrastructure.
“The problem with long-term planning failures is that they lead to years of neglect of the foundational interventions, including maintenance interventions, that ought to have been undertaken year by year. By the time the big problems such as infrastructure decay and load shedding manifest, it is because planned activities have not been implemented for a long time.
“That is why the NPC is calling for the recentralisation of the NDP as the planning lodestar of the country,” says Maluleke.
Economic growth
According to the commissioners, the NPC has consistently highlighted the importance of a growing and inclusive economy to realise the goals of the NDP. The commission states that the NDP’s goals and outcomes are intended to be financed by SA achieving an economic growth rate of 5,4 percent from 2012 to 2030.
“Indeed, even where state funding may be a key catalyst, such fiscal resources are derived from the proceeds of economic growth. Economic growth, in turn, requires effective partnerships and collaboration between government and stakeholders in general and the private sector in particular.
“The commission thus recommends that SA must make every effort to increase its levels of economic growth and particularly such measures that, additionally, can promote and incentivise economic inclusion and labour absorption.
“While the NPC acknowledges that the NDP targets have not been met, SA retains immense potential to accelerate its rate of economic growth and boost its development outcomes,” says Maluleke.
The NPC’s Ten-Year Review makes wide-ranging proposals to address the economic challenges, which require the state and the private sector to take a different approach to reaching the NDP’s overall objectives of eliminating poverty and reducing unemployment and inequality.
These proposals address state capacity, skills deficiency, infrastructure backlogs, and the need for policy certainty and clarity to build trust and confidence, among others.
“As committed South Africans, the NPC recognises that the well-being of the people of this country must be the responsibility of everyone, not only the state.
This view is based on the three key components of the NDP, which is strong leadership, a capable state and an active citizenry that are interlinked to form the basis of progress,” says Maluleke. — Moneyweb
