The NDP is an issue and topic of debate that has been the subject of many news headlines in recent months. But what is it and is it really the miracle plan that the ANC and its National Planning Committee are hoping it will be for growing the economy and solving many of the nation’s problems?
The National Development Plan (NDP) is an economic policy framework that “aims to eliminate poverty and reduce inequality by 2030” and states that “South Africa can realise these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout society.” The plan, as endorsed by the ruling ANC party has been earmarked as the centrepiece of its economic strategy.
The following with be a critical analysis and discussion of the strengths and weaknesses of the NDP according to some of its main proponents and opponents. Additionally, a look at the history of South African economic policy since 1994 will be provided and possible suggestions for some additional or alternative policies which might help eliminate poverty and inequality will be given. Lastly, an assessment of the overall success of this policy since its inception will be made.
The NDP - Background
The NDP is a policy framework geared towards the improvement of South Africa's economic growth and prospects. It aims to fulfil its objectives of reducing poverty and inequality in South Africa by 2030. The main economic objectives of the NDP are: job creation, a more equitable distribution of wealth and improving education.
One of the main drivers of the NDP is a commitment to full employment. In economic terms, this means maximising the use and allocative efficiency of scarce resources within the economy. The aim is to reduce unemployment to 6% by creating more than 5 million jobs by attacking issues such as education. Further to this is, government aims to have better integration between the various policy documents such as IPAP and the New Growth Path.
The government does admit though that it is not a perfect policy. Minister of Planning Trevor Manual advocates that implementation is key to getting things started. He also says that stakeholders need to be able to be willing to try out plans such as a youth wage subsidy so that proper assessments can be made about its viability.
Strengths and weaknesses of the NDP
The business community has generally received the policy document positively. The general consensus is that there has been enough talk, now there needs to be action. Implementation is key and the following are some strengths of the NDP highlighted by the business community:
- The plan could increase the level of investment to grow the economy,
- The country could be become more competitive globally in manufactured goods,
- The NDP is different because it is bottom up instead of the usual top down approach.
COSATU has emerged as a major critic of the NDP. The main concern cited is that everyone is not in line at the moment. “There's nothing wrong with implementing these plans now but everyone needs to be working and heading in the same direction.” This is according to COSATU’s President Sdumo Dlamini. COSATU affiliates NUMSA on the other hand have come out in stronger opposition. They have refused the policy document wholly, citing that it is exactly the same as the economic plan put together by the DA.
As a collective, COSATU has reaffirmed that is has not wholly endorsed the NDP, though it agrees with some points. According to COSATU’s Neil Coleman, the confederation has three main criticisms of the NDP. They are that “the jobs plan is problematic in that it projects many more jobs to be created by small business and in the services sector; that the NDP ignores the New Growth Path and the Industrial Policy Action Plan; and that the NDP calls for job creation through reducing the rights of existing workers.”
As with many other things in life, such a plan cannot be looked at in isolation. The NDP has to be viewed in light of other policies and plans that have come before it such the RDP, GEAR and the New Growth Path, from which the NDP was promulgated.
Reconstruction and Development Programme (RDP)
The Reconstruction and Development Programme was launched by the ANC government in 1994. The RDP was aimed to address the vast socio-economic problems facing South Africa in 1994 as Apartheid ended. One of the key aspects underlying the RDP was that it linked reconstruction and development. This was because it recognized that problems such as lack of housing, a failing education, a jobs shortage, system and health care, a failing economy are all ultimately connected in the economy.
Growth, Employment and Redistribution (GEAR)
“GEAR is a macroeconomic strategy that was adopted by the Department of Finance in June 1996. It was a five year plans aimed at strengthening economic development, broadening of employment, and redistribution of income and socioeconomic opportunities in favour of the poor. GEAR remains government policy,” (Knight, 2001).
GEAR was seen at the time by many as being in direct conflict or opposition with the goals and objectives of the RDP, such as poverty reduction and a more equitable distribution of wealth. Looking at the aim of each plan in turn shows that the NDP is still trying to achieve some of these goals such as creating jobs, reducing inequality and improving education.
New Growth Path (NGP) and other current policies
The most recent of these plans is the New Growth Path from which the NDP comes from. It sets out the government’s plan to increase employment and have a more equal society. According to Minister Patel, “the centrepiece of this plan is massive investment in infrastructure and people through skills development, together with smart government and better coordination with the private sector and organised labour”.
The NDP was developed and is being managed by the National Planning Commission. With that said, such a policy discussion cannot be complete without looking at IPAP and TPSF which are run by the Department of Trade and Industry. IPAP is aimed promoting growth in industrial production through the manufacture and export of more value added goods. TPSF on the other hand is a tariff policy aimed at strategically protecting those industries that may still have challenges with competing on the global market such as the local textile industry.
As already stated, the NDP is still trying to achieve goals such as creating jobs, reducing inequality and improving education. With that in mind, the NDP has to also been in the context that it is a very broad plan that deals with many aspects of the economy such as trade, industrial development, job creating, national health concerns, rectifying the problems of the previous Bantu Education system. This means that the plan has to improve on work done through the RDP, GEAR and AsigSA, and at the same time align itself with current policy instruments that are in place such as IPAP and TPSF. As it stands, the ANC government is in support of both the NGP and NDP and also says that these are in line with policies such as IPAP. The DA on the other has come in opposition of this citing that policies such as IPAP and NDP are not in line with each other. The reason given are that IPAP is reliant on protectionism and government intervention, whereas NDP is based on the fact the government is there to promote growth and let the market do the actual work of growing the economy.
Current statistics and policies
Looking at the current state of the South African economy, it can be seen that the unemployment rate remained above 25% in the final months of 2012. The country continues to face high unemployment, poverty and inequality with growth expected to slow from 2,5% as previously estimated to 2%. This is all within the context of a volatile domestic and global economic environment. National government debt increased to nearly 39% of GDP between 2011 and 2012, with current inflation figures recently went about the 6% target-ceiling.
Suggested alternative solutions
I think it may be a good idea for the NDP to find way of incorporating the tourism industry more into its framework. Tourism is a strong driver of economic growth in the world and it could be quite effective in driving growth within the country since it is an industry that usually has a multiplier effect in the economy. A famous example of where tourism has been effective in pushing growth is between 2002 and 2010 when South Africa was preparing to host the FIFA Soccer World Cup.
Internationally, it can be seen that 9% of global GDP is in tourism. More than 1 billion world travellers cross borders every year. It is good for creating jobs in industries such as travel, hotels, construction, conservation, marketing, broadcasting, and the information technology sector. PPP’s in tourism are usually quite effective in growing infrastructure and creating employment.
The important thing here is to manage global perceptions and national branding. Africa has always been seen in a negative light globally. Southern Africa is quite peaceful; the region has already started benefiting from some of the disturbances found in the north in places such as Egypt and Tunisia. The Internet and ICT sector have been very good agents of change and information dissemination over the last decade which is helping to improve Africa and South Africa's image around the world.
Economic growth, poverty reduction and job creation remain key goals of economic policy in South Africa. The South African government has made significant progress in growing the economy since 1994 by providing housing, basic services, health care and land reform. The lives of millions of South Africans have been greatly improved. But much remains to be done.
South Africa is still a divided economy with high levels of inequality. Considering the current economic growth outlook, 2% growth is insufficient to significantly reduce unemployment or improve inequality. The informal sector has seen much job creation but at the same time many have been lost in the formal sector. Millions of people still need adequate housing, basic services and land. South Africa needs growth.
Ironically, some of the strongest criticisms of this plan come from allies of and/or members of the ANC. COSATU and the SACP have long been opponent of the NDP and other such past policy documents, yet the ANC knows that it cannot succeed in the implementation of any of these programmes without have such allies supporting their cause.
The South African government continues to face protests from the homeless, poor and unemployed over an apparent lack of housing, jobs, access to proper sanitation and healthcare. It may be time for the nation to look into investing more in industries such as tourism and the ICT sectors as a means to spur growth.
The biggest challenge facing South Africa is balancing its opposing goals of attracting foreign investment and fiscal policy as well as the pressing needs of its people such as land, education, jobs, housing, and health care. These are all defined as rights in the nation’s constitution.
Ultimately, the NDP seems to be more of a diagnostic report of the economy and what needs to be, but remains less of an actual strategic or tactical plan of action. It is idealistic in its approach, failing to provide proper, practical solutions and ways to actually achieve its proposals.