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The National Planning Commission report presents a bleak picture of declining investment and low tax revenue, which will fuel even lower investment, leading the country into a downward spiral.
There is a “clear and present danger” of South Africa veering into a downward spiral of falling investment, which will lead to lower tax revenue and then to even lower investment, said the National Planning Commission (NPC) in a report this month.
The NPC was set up in May 2010 to develop a long-term vision and strategic plan for South Africa. The commission is chaired by Minister in the Presidency Nkosazana Dlamini-Zuma and has a total of 26 commissioners.
To get us back on track, the report calls for a number of steps, including an urgent clarification of government’s stance on property ownership.
“The approach to land distribution needs to be resolved. Lack of clarity in respect of government’s stance on property ownership is hindering investment across the board. This will severely undermine efforts to lift investment and therefore the achievement of NDP [National Development Plan] targets,” reads the report, of which City Press has a copy.
The report is titled The crossroads: accelerating progress towards the NDP’s vision 2030. It was published on September 14.
Other proposals include:
- A massive increase in the Expanded Public Works Programme, which offered 825 000 people low-paid “job opportunities” in the 2017/18 financial year. By 2023/24, this should be 1.325 million jobs, said the NPC.
- A formal target for attracting Chinese and Indian tourists. Chinese tourists must number 2 million a year by 2030 and Indian tourists must number 1.6 million. Last year, South Africa was visited by just under 100 000 tourists from both countries.
- Tapping into the Unemployment Insurance Fund (UIF) to fund employment support programmes on the basis of “safe and reasonable returns”. The UIF is realising massive surplusses every year and spends less than 2% of its investment revenue on employment and training schemes, said the NPC.
- Reforming the public service’s remuneration system to allow the hiring of more low-level civil servants and possibly introduce “performance-based remuneration”.
South Africa needs to negotiate a new “revitalisation charter”, said the report. “Recent critical action on governance gives hope and is a watershed charting us back towards the National Development Plan path.”
The report is an updated version of an Economic Revitalisation Paper that the NPC had planned to release in July. That release was cancelled on the day.
Some of its proposals have already made it into President Cyril Ramaphosa’s stimulus package, which was announced last week, including easing the rules on visas and sorting out the Mining Charter.
The report contains an assessment report of South Africa’s progress against the economic targets for 2030 set out in the NDP.
By and large, those targets have become a pipe dream, with the country failing to meet most of the interim targets that were initially set in 2012.
The main reason for this is that the NDP was predicated on economic growth rates of about 4.6%, which now seem hopelessly optimistic.
The key target of full employment by 2030, defined as an unemployment rate of 6%, is now impossible and the best possible scenario sees unemployment falling to 14% by 2030, the NPC has concluded.
The NDP had an interim target of 20% unemployment by 2015, while the current narrow official rate is 27.7%.
Another key target was to eradicate poverty, defined according to the lower-bound poverty line calculated annually by Stats SA, which is currently set at R785 per person per month.
Up to 2010, South Africa made strides in lowering poverty, measured this way, thanks to the roll-out of the social grant programme.
However, since 2010, poverty has actually increased from 36.5% to 40%. The NDP’s interim target for 2020 was 21.7%, which now also seems virtually impossible.
Apart from urgently addressing the governance of Eskom, the state also needs to intervene in the fast-deteriorating local governments, it said.
More civil servants, less pay
The NPC paper takes aim at the public-sector wage bill, but simultaneously points out that the civil service is not growing as fast as it should.
“Although public service grew by 5% over the period, South Africa’s population grew faster, resulting in a declining ratio of police, teachers and corrections officers to the population, adding further stress to service delivery.”
South Africa needs more front-line civil servants, but must pay them less, the report suggests.
“There has been excessive hiring and salary increases in high-skill managerial and bureaucratic positions, and not enough resources directed at hiring and remunerating personnel directly involved in service delivery,” read the report.
“Low-skill public-sector salaries inflated to such an extent that there is very little hiring at that level, so professional staff are not supported. Otherwise, services are obtained, but outsourced.”
The paper calls for a “pact” between the state, labour and other stakeholders to reform the public sector’s personnel strategy after 2021.
“This should be aimed at sustainable remuneration, better grading that enables staff to enter the bottom layers, staffing structures aligned to delivery and performance-linked benefits.”
Land reform
The NDP’s targets for land reform included transferring 20% of commercial farm land to black people by 2030. To reach this target, South Africa would have to transfer more farmland between now and 2030 than had been transferred by land reform or private transactions between 1994 and last year, the report said.
From the end of apartheid to last year, an estimated 9.6 million hectares were transferred, but another 13.2 million need to be transferred to reach the 2030 target, the NPC said.
Education
The NDP had set several interim targets for education that have been dramatically missed.
- One target was that 50% of Grade 3 pupils should have “acceptable literacy” in terms of the Progress in International Reading Literacy Study. In 2016, the result was 22%.
- The NDP targeted 198 000 matric mathematics passes above 50% in 2015, but the result was 53 588.
- The target for matric science passes was 186 000, but the result was 42 433.
Targets for artisan qualifications and enrolments in Technical and Vocational Education and Training colleges were also missed, although South Africa produces more university graduates than the NDP has targeted.
