The National Development Plan (NDP) is a joke. The National Planning Commission (NPC) is also a joke. And its 10-year review of the so-called plan is one of the worst documents I’ve ever read, with lame recommendations that will not get SA out of its deep economic crisis.
The NPC could not get its head around the fact we are dealing with a macroeconomic policy issue, and that the permanent austerity of the past decade is the main reason for the failure to meet any of the NDP’s most important economic targets.
In 2012, the NDP set bold targets to achieve an annual GDP growth rate of 5.4%, create 11-million jobs and reduce the unemployment rate to 6% by 2030. There were further targets of 30% of GDP for total investment and 10% of GDP for public investment. But from 2012 to 2022 the economy grew by 1% a year on average, and GDP per capita declined by 4.7%, dropping in six of the 11 years.
In comparison, chaotic Turkey’s GDP per capita increased by 47% in local currency units over the same period, according to the World Bank. At no time since 2012 did the SA government say how it would achieve the 5.4% GDP growth target. From the fourth quarter of 2012 to the second quarter of 2023 the number of unemployed people increased by 4-million to 11.9-million, and the expanded unemployment rate increased to 42.1% from 35.1%.
From 2012 to 2022 gross fixed capital formation, a measure of total investment, declined from 17.9% of GDP to 14.2% of GDP. The gap to achieve the NDP’s target is R1-trillion. Public investment (by general government and state-owned enterprises) declined by more than a quarter during the same period, from 6.3% of GDP to 4.1%. The gap to achieve the NDP target is almost R400bn.
The problem is that nobody was responsible for achieving the NDP’s targets. The National Treasury only cared about debt. The Reserve Bank only cared about inflation. The NDP’s targets were subordinate to other macroeconomic policy goals. Over the past 11 years not a single National Treasury Budget Review or Reserve Bank monetary policy statement explained how the government would achieve the NDP’s targets. If the two most important institutions in the economy are not responsible for achieving the NDP’s targets, the government should just admit that the so-called plan does not really exist.
In the fast-growing developmental states there were long-term visions for the economy, broken down into five-year plans with annual targets. The objective was usually to double the size of the economy every decade. Each year, these governments would adjust macroeconomic policy tools to achieve the targets. In SA, there has never been a five-year plan or annual GDP growth targets. The NDP was a vision without a plan. And a vision without a plan is just a dream, an hallucination.
Omano Edigheji, an international expert and author on developmental states, says in the fast-growing developmental states there was usually a super-ministry that set the broad policy direction and determined budget allocations to ensure they were aligned with the developmental vision and plan. “With a super-ministry that is the nerve centre of the developmental state, National Treasury becomes like an ATM,” he says.
In the words of ADRS economist Asghar Adelzadeh, the budget must fit into the national vision and plan. But in SA the so-called plan had to fit into the medium-term framework envelope. The other mistake SA made, Edigheji says, was to outsource its planning functions to part-time commissioners for whom planning was a side hustle. Without a super-ministry to lead implementation, the government in effect killed its own policy of building a developmental state.
If it does not want to follow best practices that were implemented in the Asian developmental states, it should scrap the NDP and close the pointless NPC.
• Gqubule is research associate at the Social Policy Initiative.
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