An economic policy document published by the National Treasury, on Tuesday, focusing on economic transformation, inclusive growth and competitiveness, has generally been regarded as detailed, well-referenced and evidence-based by investors and analysts.

The plan focuses on key themes to boost private sector led economic growth in the current environment of near stagnant economic activity and rising unemployment.

The Economic Transformation, Inclusive Growth and Competitiveness Plan provides the necessary follow-on from the Economic Stimulus and Recovery Plan, which focused on the need for government to spend on more productive economic areas, with a greater focus on international norms used in successfully lifting economic growth and raising the income levels for the bulk of South African citizens.  

While the publication of the document came as a surprise to many ahead of next week’s Cabinet meeting, financial services research house Intellidex on Wednesday said the content “plays second fiddle, for now, to the politics of the intervention”.

The firm also said that, with the document likely to receive "strong resistance", it believed the document’s ultimate aim was “to be divisive and to mobilise support”.

Considering the paper’s “divisive nature”, Intellidex believed it was unlikely to be adopted by Cabinet.

This opinion came despite feedback on the paper now being gathered, with a move to a more official publication expected towards the end of September, with implementation to start in October.

A final policy document, should it be adopted by Cabinet, is expected to be completed before next year’s National Budget Speech.

“We view this paper as drawing fault lines around evidence-based policy and leadership in getting reform done,” the firm said in a statement on Wednesday, adding that the paper’s “language is hard-hitting and frank and it exudes a can do attitude, asking simply how to get faster growth”.

Intellidex said the paper was “uncompromising”, starting off by saying that South Africa’s current trajectory was unsustainable, and that it created the impression of wanting to divide people into camps; those who want to follow the evidence and those that were happy with a policy of “social compacting to death”.

The social compact the paper spoke of was one that saw government provide an enabling environment, and the private sector stand up for the social good beyond its own narrow self-interest when dealing with government policy requests, Intellidex explained.

As a result, the firm states that the paper is “going to cause political fall-out”.

Should the paper have mobilised and solidified a more robust evidence-based debate on policy, as well as additional pressure from business on President Cyril Ramaphosa on matters like land reform, then it “would have been a success”.

According to financial services company Investec, the plan would only be successful if red tape was substantially reduced.

Key to the plan’s success would be the implementation of economic growth reforms that supported the private sector and government following through on its plans of providing the necessary support to the business environment, Investec noted in a separate statement on Wednesday.

“Key therefore is continual examination of the proposed reforms to ascertain whether they are likely to promote private sector economic activity,” the company averred. 

North West University Business School economist Raymond Parsons, meanwhile, believed the success of the growth plan would hinge on practical implementation and collaboration with key stakeholders.

He suggested that the scale of the challenge was reflected in the fact that, even on the most favourable assumptions, the growth plan's scenarios envisage only moving South Africa's growth rate from 0.8% to 2.3% over the next decade.

Yet even these relatively modest economic performance expectations would require the necessary political will to take the tough decisions still needed, Parsons averred, such as with the restructuring of State-owned enterprises, stabilising South Africa's public finances and reforming the labour market.

Parsons explained that the 77-page growth plan offered “wide-ranging, constructive and fruitful ways for South Africa to make sense of its current economic malaise”. He went on to say that the paper proposed several “sensible” policies and projects urgently needed to turn the economy around.

“By prioritising economic transformation, inclusive growth and competitiveness, the plan again emphasises the extent to which fundamental economic reforms are necessary to meet the challenges of unemployment, poverty and inequality,” he elaborated, stating that South Africa has reached a “crucial fork in the road towards the goal of shared prosperity”.

Drawing on the National Development Plan, Parsons noted how the National Treasury's growth plan reiterated the extent to which South Africa's weak economic performance was largely the outcome of domestic constraints and structural rigidities which had weakened the willingness of business to invest.

To successfully get the necessary investment and economic growth South Africa requires, he suggested that the growth plan recognise the need to reduce policy uncertainty and create an overall supportive business environment, especially for small, medium-sized and microenterprises.

With this being generally familiar, but imperative policy terrain, now having been broadly endorsed by the National Treasury's growth document, Parsons noted that the country had to steadily move from drafting plans, to tangible implementation in ways that strongly boosted investor confidence and made a visible difference to lives of average citizens.

He explained that, especially with South Africa needing a capable “delivery State” as a key mechanism to ensure positive outcomes and to make its mixed economy work better, success would hinge on its consistent and effective implementation, in collaboration with key stakeholders.

The plan's framework confirmed that there could be no “quick fix” for South Africa's socioeconomic challenges, but Parsons stated that it nonetheless correctly urged that the fundamentals for a higher growth trajectory had to be laid now to reap tangible benefits later.

“South Africa therefore needs to urgently build a national economic purpose,” he said, adding that, at a practical level, the confidence-building potential of the National Treasury's growth plan therefore required early evidence of commitment, consistency and steady implementation of its key strategies.