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Zuma’s endorsement awaited for joint government, business NDP action plan

Busa special policy adviser Professor Raymond Parsons

Busa special policy adviser Professor Raymond Parsons

Photo by Duane Daws

2nd December 2013

By: Terence Creamer

Creamer Media Editor

  

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Business Unity South Africa (Busa) expects Presidential sign-off either before the end of the year or in early 2014 on actions plans that have been jointly developed with government relating to organised business’ role in implementing the National Development Plan (NDP).

Busa special policy adviser Professor Raymond Parsons says the plans have been a work in progress since early 2013, when joint task teams were established to deal with five specific areas highlighted in the plan, which aims to eliminate poverty (using the controversial poverty line of  R418 a person a month) and reduce inequality by 2030.

The five areas comprise infrastructure, the labour market, South Africa’s regulatory frameworks, inclusive growth and basic education and skills development and were selected following a high-level engagement between government and business in early 2013. The assembly of the task teams followed on from interactions between President Jacob Zuma and Busa president Jabu Mabuza on the sidelines of the World Economic Forum in Davos, Switzerland, where Mabuza had criticised government for failing to take business’ concerns seriously.

Speaking at a briefing convened to offer Busa’s economic and business outlook for 2014, Parsons said the aim was to convert government’s appeal for NDP partnerships into specific programmes of action in an effort to avoid the implementation failures associated with previous socioeconomic programmes.

Despite ongoing resistance from sections of the labour movement, the African National Congress (ANC) adopted the NDP in late 2012 and government departments have been directed to align their policies and budgets to the plan. However, the Congress of South African Trade Unions (Cosatu), and the National Union of Metalworkers in particular, continue to raise serious objections.

But in an interview with Business Day, Minister in The Presidency Responsible for the National Planning Commission Trevor Manuel said the commission had followed an evidenced-based methodology to tackling South Africa’s challenges and that the opposition to aspects of the plan had been elevated to a suggestion that the whole plan be rejected.

In the same newspaper, Cosatu’s Neil Coleman said the federation’s criticism was not a “blanket objection”. Nevertheless, he stressed that its objections were substantial and that it had reached an agreement with government and the ANC that only the areas of agreement would be implemented, with the contentious issues to be “further thrashed out”.

While accepting that the NDP was “neither perfect nor complete”, Busa reiterated its support for the plan. It also called for contradictory residual policies to be fully aligned to the NDP, including those aspects of the New Growth Path and the Industrial Policy Action Plan that were not fully aligned with the plan.

“The NDP sets out a clear roadmap and firm proposals to tackle South Africa’s socioeconomic challenges,” Parsons said, describing it as better than previous plans mainly for its more holistic approach to tackling poverty, inequality and unemployment.

He also dismissed the persistent criticism that the plan had been developed by independent experts who had failed to adequately consult, arguing that the National Planning Commission had held detailed consultations that had resulted in several compromises.

For Busa, the NDP offered a framework for South Africa to tackle domestic constraints to higher levels of economic growth, and to extricate the country from its current modest growth trajectory, which had been lowered even further as a result of global economic developments since 2008. A longer-term analysis showed that, aside from a few short “windfall episodes” South Africa’s growth rates had remained subdued since 1994, at between 3% and 3.5%.

Parsons argued that, while two-thirds of South Africa’s growth challenges might have been externally derived in the immediate aftermath of the global economic crisis, domestic obstacles had since become dominant features. Busa listed these to include an inadequacy of infrastructure, especially electricity, highly indebted consumers, protracted industrial action and uncertainty surrounding South Africa's economic policy framework.

“Policy uncertainty has been an important factor explaining the relatively weak performance of private investment,” Parsons said. He added that the NDP should “trump” all other policies when contradictions emerged so as to provide the confidence required for higher investment by local and foreign investors.

Achieving the NDP investment target of 30% of gross domestic product (GDP) and an average 5.4% a year growth rate by 2030, required increases in both domestic savings and net foreign capital inflows, Busa asserted. Corporate savings would be particularly important to stimulate, owing to the fact that government was likely to remain a net dis-saver for some years yet, while household savings were negligible.

“For that reason we need to create and sustain an environment conducive to higher levels of corporate profitability, so that there is both an increased domestic ability to finance investment and an increased willingness to undertake investment.”

Busa anticipated that the external and local environment would remain difficult in 2014, during which South Africa was due to hold its fifth general election since the advent of democracy. It was, therefore, forecasting GDP growth of only 2.8% for next year and 3.2% for 2015.

However, there were signs of recovery in developed economies and, while the threat of quantitative-easing tapering created serious vulnerabilities in the near term, it would also be a sign that the recovery was increasingly sustainable. For South Africa, the focus needed to be to move out of its low-growth “groove”, which was “entirely inadequate” for dealing with the country’s socioeconomic problems.

Busa was convinced that the country’s fortunes could be dramatically improved through efforts aimed at freeing up the energy market, promoting on-the-job training opportunities, “sanitising” policies that contradicted the NDP and by setting firm NDP implementation timeframes.

The actions plans on the five selected areas could result in “strong collaboration” between government and the private sector to ensure that South Africa improved its competitiveness and addressed its domestic constraints to faster growth.

Edited by Creamer Media Reporter

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