Will South Africa meet the National Development Plan’s (NDP) objective of having small and expanding firms create 90% of the 11 million jobs targeted for 2030?
The National Development Plan was formulated against the backdrop of the crippling global financial crisis (GFC) of 2008 which had a profound impact on many countries. Many economies experienced a decline or complete reversal of growth; millions of people lost their jobs and were thrown into the streets as they failed to pay their mortgages. It will take years for many countries to fully recover from the effects of the GFC and while the jobs lost may be regained, the suffering caused will never be reversed and the time lost will never be recovered.
The NDP puts forward proposals for driving social and economic transformation over a long period of time while taking into account the effects of the GFC and other key forces shaping society. Such forces include demographic changes, urbanisation, the rapid growth of Africa and opportunities this presents, technological changes, globalisation, climate change and the shift of economic power from the west to the east. Taking these forces into account, the NDP responds to South Africa’s challenges inherited from centuries of colonialism and decades of apartheid government rule.
No magic wand will miraculously solve South Africa’s challenges. A multi-faceted approach involving all critical stakeholders is required. For this reason, the NDP proposes actions in a number of areas. Some highlights of the main actions recommended in the NDP are provided in this article.
Economy and infrastructure
The South African economy needs to grow by 5.4% per year over the next 15 years and create more than 11 million new jobs. To achieve this, the nation will need to address a number of challenges to ensure better education outcomes, a healthier population, better located and maintained infrastructure, a sound social safety net, a capable state and much lower levels of corruption.
Higher levels of GDP growth require higher levels of investment. Investment as a share of GDP needs to rise to 30% by 2030. This can be achieved through increasing domestic savings as well as attracting foreign investment. Focus will need to be directed towards removing constraints to growth, such as energy generation and distribution, urban planning approval processes, skills development, water supply and waste water treatment and licensing for water, the logistics platforms, telecommunications, minerals and environmental permits.
South Africa will need to focus on sectors and clusters that enable the country to grow in a faster and more inclusive manner. These include the agro-industrial cluster, the minerals and metals cluster, manufacturing, construction and infrastructure, green economy, the finance sector and retail and business services.
The projected demand for some of South Africa’s main commodities over the long-term, indicates that they have the potential to contribute to growing our share of exports and stimulate the growth of domestic sectors linked to the export sectors.
The Plan shows that a large percentage of the jobs will be created in domestic-oriented activities and in the services sector. Based on employment trends, the NDP projects that as many as 90% of the new jobs will be created in small and expanding firms and the share of output in small and medium sized firms will grow substantially. The success of these enterprises requires that attention be paid to creating a supporting regulatory environment.
Rural areas must become vibrant economies based on their potential, enabling economic participation in rural areas to rise from 29 to 40%. This can be achieved through reforming land tenure, supporting smallholder and emerging farmers, expanding social services, expanding infrastructure, higher agricultural output, mining social investment and building vibrant tourism enterprises.
The NDP is based on the idea that development is essentially about how we upgrade our endowments continuously and for the benefit of all citizens. In the context of the NDP, endowments include human capital such as education, skills and health as well as physical capital such as schools, clinics, roads and ports and power stations which are required to provide the opportunities for people to live the lives that they desire. Endowments also include technologies, management capabilities and a range of social institutions. If we are not able to continuously upgrade our endowments, we are unlikely to progress as a country.
Enabling everyone to play a role in the development of the country will to lead to more equitable growth and a fairer sharing of the fruits of growth. People are able to upgrade themselves and improve their position through work and earnings if they are part of the development process. Failure to directly involve all of the country’s people in the growth process leads to higher levels of inequality.
Youth unemployment is recognised as a major challenge facing the country. There is a need to improve access to lifelong learning opportunities and career advancement, stabilise the labour environment by improving dispute resolution and workplace relations, strengthen the labour courts and ensure the Commission for Conciliation, Mediation and Arbitration has access to adequate resources as well as review regulation and standards for small and medium enterprises.
The most important task is to strengthen the accessibility and effectiveness of the post-school training system. This needs to be accompanied by policies to match job seekers with employers, thereby bringing down the cost of searching for and starting work.
Some of the measures proposed in the NDP to help young people find work include: driver training for school leavers, a tax subsidy for employers to reduce the initial cost of hiring young people entering the labour market and facilitating agreement between employers and the unions on entry-level wages.
Subsidies to help the placement sector prepare matric graduates for work and place them into work opportunities are also proposed alongside extending the Expanded Public Works Programme’s employment incentive to the non-state sector, aimed at increasing employment in non-profit organisations.
The NDP outlines the investment required in terms of physical infrastructure covering sectors such as energy, roads, rail, ports and Information and Communications Technology (ICT), as well as how to finance the investment.
Education and training
The NDP sets out a broad vision and framework for improving education outcomes, enhancing productivity and contributing to economic growth and living standards. It acknowledges gaps and quality challenges across the education system from early childhood development (ECD) and Grade R, to basic education, to the post-school education and training system and includes the research and innovation system. It focuses on improving access as well as quality of education.
Expansion is required in ECD, upper secondary schooling, technical and vocational education (TVET) and higher education to cater for growing learning needs. While South Africa has almost universal enrolment up to the mandatory schooling age of 15, there is an extremely high dropout rate over the next three years with less than 40% of a cohort which started school 12 years previously passing Grade 12.
Less than 20% of an age cohort enter university and, while the technical education sector has been expanding, it remains much smaller than the university system – meaning more than 70% of those who pass Grade 12 do not move into post-school education.
Expanding access while improving quality requires focusing on the supply and quality of educators at all levels including ECD practitioners, teachers and lecturers. Initial training of educators must be strengthened as well as the continuing training and assessment of teacher knowledge.
The management of teachers – creating positive incentives to teach – also needs more attention to maximise actual instruction time by fighting absenteeism and non-teaching when in school, as well as boosting the motivation and morale of teachers.
The NDP proposes a critical programme to build the next generation of university lecturers, while also ensuring the necessary gender and racial shifts and ensuring that they have the capacity to train college lecturers as the sector expands. Support for research is necessary to build innovation.
In addition to improving human resources, adequate infrastructure and quality learner and teacher support materials are required to ensure effective learning, building on recent initiatives of supplying workbooks and approaches to textbook provisioning.
The NDP is clear that additional resources will not be enough. Governance, accountability and management systems along the whole education pipeline – from ECD to higher education – will determine whether resources are used well and whether the education outcomes improve.
Early childhood development
The early learning and development of South Africa’s children should be a top priority. This sets the strongest foundation for what happens later in life in both classroom and the workplace. Dedicated resources should be channelled towards ensuring that all children are well cared for from an early age and receive appropriate emotional, cognitive and physical development stimulation.
Plans for ECD infrastructure and services need to differentiate between the needs of urban and rural areas. ECD services should be flexible and responsive to the needs of children, families and communities. Some services need to be targeted directly at children while others at their primary caregivers. It is also essential that everybody has access to services of a consistently high standard, regardless of who they are and where they live. All children from 0 to three years should have access to quality ECD programmes with a strong focus on nutrition and education, provided primarily by government.
The NDP proposes a number of actions necessary to ensure every child has access to quality programmes. They include the following:
• A nutrition programme for pregnant women and young children, followed by a childhood development and care programme for all children under the age of three
• Increasing state funding and support to ensure every child has access to two years of early childhood development exposure before Grade 1
• Strengthening coordination between departments, as well as the private and non-profit sectors
• Standardising the guidelines, norms and standards for ECD programmes
• Exploring the introduction of home and community-based ECD interventions
• Training of ECD practitioners, upgrading their qualifications and developing clear career paths
• Providing support to NGOs and other intermediary agencies to support community-based programmes
Human settlements and spatial transformation
Where people live and work matters. Apartheid spatial planning has led to the majority of South Africans living far from places of work, with poor access to basic services and low levels of participation in the economy. This has not changed very much since we attained our democracy.
There are no quick fixes for changing this and there are powerful interests concerned with maintaining the situation as it is. The considerable existing investment in fixed assets such as houses, roads, water schemes, schools, means that transformation will invariably be incremental as these assets cannot be moved to desirable locations without significant cost.
More people need to live closer to their places of work; but better quality public transport is also needed to ensure that people can access work opportunities affordably. Some amendments are proposed to the human settlement policy framework to allow for greater levels of flexibility to accommodate people’s individual choices. The NDP also includes proposals to address the challenges in rural areas and address urban inefficiencies and urbanisation challenges.
South Africa needs a spatial vision and framework to:
• Tackle inherited spatial divisions – South Africa’s spatial structure perpetuates exclusion
• Unlock development potential – many places are not growing economically because of a lack of infrastructure, inadequate skills, poor innovation capacity and weak governance
• Guide and inform infrastructure investment and prioritisation – a spatial investment framework is needed to support growth and inform the long-term infrastructure investment strategy
• Manage contemporary economic and demographic shifts – economic dynamics are produced by concentrating productive activity, entrepreneurs, workers and consumers in a place without congestion
• Facilitate coordination between parts of government and other agents – spatial policy could be used to bring different actors and interests together to define a common future binding all sectors locally, provincially and nationally
All spatial development should ensure that the historic policy of confining particular groups to limited space and the unfair allocation of public resources between areas, is reversed and that the needs of the poor are addressed as a matter of priority.
Sustainable patterns of consumption and production should be supported and ways of living promoted that do not damage the natural environment. Vulnerability to environmental degradation, resource scarcity and climatic shocks must be reduced and ecological systems should be protected and replenished.
The appearance and functional features of housing and the built environment need to be improved to create liveable, vibrant and valued places that allow for access and inclusion of people with disabilities. Productive activity and jobs should be supported, and burdens on business minimised.
A fundamental reshaping of the colonial and apartheid geography may take decades, but by 2030 South Africa should observe meaningful and measurable progress in reviving rural areas and in creating more functionally integrated, balanced and vibrant urban settlements.
Compared to most countries on the African continent, South Africa has a large social protection system made up of different elements. The first is the social assistance programme – child support, foster care, disability grants and old age pensions – which covers more than 15 million citizens out of a population of 54 million people.
The second is the social insurance programme which caters for people who lose their jobs; compensates for injury suffered while at work and covers medical and other costs of victims of road accidents. The well-known providers of the different aspects of social insurance are the Unemployment Insurance Fund (UIF), Compensation for Occupational Injuries and Diseases and the Road Accident Fund (RAF).
The coverage of the UIF and the Compensation of Occupational Injuries and Diseases is limited to formal sector and formal workers. While the RAF covers all victims of accidents, the top income earners are served by a large and economically important occupational and private social protection system providing retirement, medical and contingency benefits. A large private funeral insurance system caters for lower income groups.
Social protection has an important function to play in any country. It protects households against adverse events which often cannot be foreseen – commonly referred to as the safety net function. It also serves as a preventative measure by protecting people from experiencing a crisis or falling into poverty.
Social protection systems also assist households in risk management and support the functioning of the labour market through funding the job search – and in the process make the movement from school to work, and from work to school, a lot smoother.
The NDP identifies a number of critical shortcomings and challenges with regard to the current social protection system. There is a need to improve the administration of the social assistance programme and address the exclusion of the long-term unemployed or the unemployed who have not previously contributed to UIF. At the moment, there is no social protection for the bulk of those in their productive years (18 to 59). There is also a lack of support for caregivers of children. In the case of social, occupational and private social protection, coverage is slow and costly.
Because of the contributory nature of social insurance schemes and the requirements for documentation and regularity, informal workers – a group that is believed to be growing strongly in numbers – is largely excluded.
Government is taking steps to close the medical insurance gap. It is implementing a national health insurance system to deal with the coverage and quality problems in the currently tax-funded public health system serving the bulk (about 85%) of the population.
As part of further improving social protection, the NDP calls for a determination of a decent standard of living which every household should be able to achieve. The fragmented governance and management of the social protection system, with a large number of funds, departments and regulators responsible for different aspects, needs to be resolved.
The NDP realises the limits of income support on its own. It calls for measures to lower the cost of living by addressing the cost and effectiveness of key social and household services such as transport, water, electricity, sanitation, education and health care as well as prices of foods consumed by poor households.
Building a capable and developmental state
The success of the NDP depends on government playing a developmental and transformative role in society. South Africa requires well-run and effectively coordinated state institutions staffed with highly skilled public servants who are able to create and implement impactful policies that tackle the challenge of poverty, inequality and unemployment.
The NDP proposes that the role of the Public Service Commission be strengthened to ensure that public servants adhere to norms and standards and to monitor the recruitment processes in government.
An administrative head of the public service whose responsibility is to manage the career progression of department heads should be established. There should be a hybrid approach to the appointment of top management that balances administrative and political priorities, while a purely administrative process should be followed for lower level posts giving senior administrators full authority over staff appointments.
The public service should attract highly skilled people and cultivate a sense of common purpose and a commitment to developmental goals. The NDP proposes that a formal graduate recruitment scheme for the public service to attract dedicated young people should be established to develop skills and build an ethos of public service. A separate strategy is required to attract high calibre talent into local government that ensures that citizens have access to high quality basic services. The NDP recommends that more emphasis be placed on experience and the expertise required for operating effectively at senior management levels.
The government’s role in developing technical skills must be strengthened through a clear strategy to produce skilled professionals combined with providing a work environment in which professional expertise is recognised and valued. The public service needs career paths that enable experienced technical specialists to continue as practitioners without being diverted to a management career.
The energy and experience of citizens should be harnessed, allowing for citizens to hold public officials accountable at the level at which services are delivered. Greater delegation of powers and responsibilities within departments is required to enhance staff morale, particularly for middle managers.
The link between the legislature and executive is critical. Parliament needs adequate support to ensure that it can play its role effectively. And the Presidency should play a stronger role in bringing different departments together to ensure more effective coordination.
There is a need to improve the clarity of responsibility of different spheres and ensure that funding and planning reflects these differences. To address the lack of capacity in some municipalities, the creation of regional utilities should be considered.
The powers to implement housing and land transport functions should be devolved to metropolitan municipalities and provinces with a clear focus aligned to their powers and functions. Leadership from several national government departments is required to identify and resolve on-going problems.
Creating an enabling environment for local government that strengthens rather than merely adds additional regulatory and legislative burdens is necessary. There must be a proactive approach to improving intergovernmental relations and a long-term approach to building capacity. Citizen participation must be mainstreamed to ensure that citizens are truly involved in the development of Integrated Development Plans (IDPs) with government going directly to communities.
State-owned companies are critical in providing economic and social infrastructure and require clear mandates and simpler tasks. Governance structures need to be clarified and simplified. The powers and resources of independent regulators of state-owned companies must be clearly defined. Capacity constraints must be addressed through clear strategies for the development of skills and consistent funding models.
The different chapters of the NDP are interrelated and progress must be made in all areas in the Plan. The actions to realise the goals of the NDP require that all South Africans work together and take a long-term view of development.
It requires a commitment to excellence and constant learning and improving. While it is necessary to respond to short-term challenges, they should not be allowed to distract us from the long-term goals. Consistency over a long period of time will deliver the results.