North West University School of Business and Governance Professor Raymond Parsons
Photo by: Duane Daws
There is an urgent need to revive and rebuild the credibility and certainty afforded by – and more rapidly and consistently implement – South Africa’s National Development Plan (NDP), as potential downgrades by credit agencies further threaten the country’s economic growth.
North West University School of Business and Governance Professor Raymond Parsons on Friday told delegates at the Southern African Metals and Engineering Indaba that the economy was not “in a bad place” because of the NDP, but that this was rather an outcome of a failure to implement the plan with urgency.
“It is the sense of urgency that we failed in,” he said.
Despite ticking all the boxes in terms of what Parsons described as the best development plan South Africa has had so far, the country was still at the tip of a recession, with “optimistic” 0.6% growth forecast for this year.
He indicated that South Africa was already on a “slippery slope” at the time the NDP was developed and the inclusive document could have helped turn the corner three years ago.
Parsons argued that implementation of the NDP was more urgent than anyone had realised, indicating that procrastination in its implementation was the downfall in the success of the plan.
“Procrastination is the thief of time, but it is also a thief of growth and employment,” he commented.
“The onus is on us now, through the NDP, to prove the skeptics wrong. And time is running out,” he added.
South Africa narrowly sidestepped a downgrade by Moody’s Investors Service earlier this month when South Africa’s long-term foreign currency rating of two notches above investment grade, at Baa2 with a negative outlook, was affirmed.
South Africa was awaiting fellow ratings agencies Standard & Poor’s (S&P’s) and Fitch’s potential downgrading of South Africa’s credit rating to junk.
S&P’s and Fitch both held South Africa’s sovereign rating a notch lower at BBB- and one notch above speculative grade credit, S&P’s with a negative outlook and Fitch with a stable outlook.
“We are now in the clutches of credit agencies. I want [South Africa] to be in the clutches of the NDP,” Parsons urged, pointing out that the NDP mapped out all the factors deemed important by the credit agencies.
However, Business Unity South Africa CEO Khanyisile Kweyama said the NDP, since inception, had achieved several key milestones, citing the advancement of several multibillion-rand projects across a number of critical industries, including energy and transport, besides others.
While South Africa had made a lot of progress and was on the “right track”, there was still a long way to go, particularly as the country was now at a lower economic base than when the NDP was tabled and much “catch-up” was required to pursue the 5% plus growth rate envisaged in the plan.