NOMPU SIZIBA: The National Planning Commission has warned again that the 2030 goals of the National Development Plan, the NDP, are unlikely to be achieved. The plan, which was released in 2011, envisaged the eradication of poverty by 2030 and set a number of targets for GDP levels and employment levels. For example, it hoped that unemployment would be around 14% by 2020. Sadly, that metric has shot through the 30% mark. And it talked about the creation of an enabling environment through good governance and strong institutions.
The country has taken several paces back since the plan was released, growing in negative terms annually on an income-per-capita basis for at least the past 10 years. And the National Planning Commission says the Coronavirus pandemic has only served to make things much worse for the country.
Well, to find out more I’m joined on the line by Miriam Altman. She’s a commissioner at the National Planning Commission. Thanks very much, Miriam, for joining us. Now, we know that, following the global financial crisis South Africa actually lost in its fortunes and governance in the period thereafter, and also led to a number of own goals with institutions like our state-owned enterprises in essence not doing so well. So what has the National Planning Commission found to have gone wrong during the 10 years leading up to 2020, that meant the country not getting anywhere near the stated NDP goals?
MIRIAM ALTMAN: The most critical thing that happened to South Africa? Of course, we were trying to make progress in getting past apartheid and creating transformation, and were building up government to be able to serve the whole population. And state capture in South Africa has had a very particular character in South Africa, which is that it has destroyed state capacity by design. Corruption doesn’t always do that. You have countries like Vietnam or Malaysia, which are considered to be some of the top corrupt countries in the world but are hugely successful as in growth, creating jobs, improving livelihoods and so on. I’m not saying corruption’s fine, but what I’m trying to say is it doesn’t mean you don’t progress as a country.
Now, in South Africa, state capture had the particular character that it actively destroyed capacity across the board. Now, the problem that we find – and this is in the paper that the National Planning Commission has issued on the report, and we had a webinar today about it – is we focus particularly on the state’s capacity to deliver, its capacity to partner. We can come up with a list of to-do’s until we’re blue in the face. The reality is we’re not making the progress we need to. What we really need to do is focus on the key locations in the economy, ranging from the infrastructure, SOE leadership, the way boards are appointed, stability and executive management, the management of procurement, the oversight of infrastructure delivery, the management of schools and education institutions. We have a problem across the board right now, and we need to focus as a country on rebuilding that capacity. That’s why we put so much emphasis on it.
NOMPU SIZIBA: Now the Coronavirus knocked the country down even further, given that we were not in a very good place at all. And the whole process of ensuring that community immunity, or herd immunity, is going to take much of this year, maybe going into next year as well, because the vaccines are coming in dribs and drabs. What does the country do in the interim to try and lift itself out of the currently depressing economic story?
MIRIAM ALTMAN: Well, the first thing is that, even if you have a vaccine, you don’t know necessarily that it’s going to cover every form of Covid. It’s not necessarily so that, once you’ve got the vaccine, you’re sorted out. So the problem – and the very sad thing – is that we are going to have to get better and better at complying with Covid health protocols. The very simple things – with mask wearing, not wearing the mask properly, distancing, disinfections, not going into rooms or to places with lots of people. That’s going to be with us for a very long time.
And now the problem is that compliance is very poor, according to Department of Labour statistics. That is something that we can do something about. It’s annoying and depressing, but it’s not as depressing as not having jobs, being poor, and losing friends and loved ones. That’s far more depressing. So that’s what we’ve got to balance out.
So the thing that we were advocating in this report is to say we need to put shoulder to the wheel. In other words, become much more vigilant in making sure that there is this compliance. What that means is it can’t be a process thing. We all have to speak up. We all, in our worlds, have to speak up. Our organisations, these large organisations that we have that have a presence in South Africa – trade unions, companies, and so on – need to be much, much more vigilant and partner around workplace support, surveillance and compliance. We need to strengthen digital services so we can get better feedback loops – it’s certainly possible; we’re just not doing it – so that you can know where the outbreaks are.
What you want to do is, you want to get early warning. Even if people go to parties – which they should not be doing, but say they do – at the very least if you have early warning, you can catch it before it spreads, as an example. It’s not ideal but these are at least ways of handling it. Now the benefit of it for the economy is that a Covid health response specifically attacks employment, because folks aren’t limiting face-to-face services for obvious reasons.
And that is in fact where most people work. Most people in the world work in different kinds of services, right? Now the problem is that this in a country like South Africa is devastating. So what we need to do is we need to really get committed as a country to making sure that, at the very least, these protocols are followed, that we’re starting to get these digital feedback loops so that we can get back to work safely. And also that we’ve got early warning when stuff comes up, and we start getting tourism moving. So even foreigners might feel comfortable to come to South Africa because we have protocols and approaches that enable protection.
NOMPU SIZIBA: Yes. Just a link to what you’ve said. The government has rightly instituted restrictions to curb the spread of the virus, as we’ve seen being done in other jurisdictions. But the problem now is that those workers that are directly affected by the restrictions are not being thrown a financial lifeline. And, of course, some businesses are really threatened with not surviving hereafter. What do you think should be done in the interim? If businesses and workers are broken during this period, it may be difficult to resuscitate them down the line – which of course would be negative for the broader economy.
MIRIAM ALTMAN: Okay. And, you know, I’m speaking in my personal capacity and I convened a group called Covid-19 Economists, and we get a lot of work – particularly around March, April, May, June – around solutions. The reality is the position of the work that we do in my group is that when the state by law – in other words, by fiat – forces you to stop earning, particularly in a country where people don’t have fallback safety nets, it is really incumbent on the state to offer support. When they’ve told you to shut down, you have no other option; you have no alternative. We don’t want to see these firms collapse.
So the view that’s been put forward by private actors like the unions and business is to say, we’ve really got to continue something like the Ters, giving the labour support; we have to be continuing support or these industries, particularly the labour-absorbing ones where you’ve got a lot of people. We really cannot afford to lose more. We’ve lost a lot of economic capacity over the past period of years, and we cannot afford to lose these businesses.
NOMPU SIZIBA: Are you therefore supportive of South Africa going deeper into debt in the interim, because the economy is barely moving? The fiscus is not getting what it needs and, obviously, in order to cover the gaps, it has to go to the bond markets to borrow more money.
MIRIAM ALTMAN: The thing is that I don’t think we should fetishise what the debt-to-GDP ratio is. But, having said that, we have other options. And the only option is not just to borrow more money but, by the way, we could be investing in revenue services to improve revenue-collection capacity – not just about raising taxes. It’s about supporting the revenue service, which we well know was built up beautifully by Pravin Gordhan and then destroyed.
Now you’ve got Edward Kieswetter there. We need to put the effort in to further modernise, digitise and so on, to give him support so he can get better at tax collection. That is, if you’ve can say there’s low-hanging fruit – that has to be it.
NOMPU SIZIBA: One of the things that the National Planning Commission found all those years back, when you guys drafted the NDP, is that you found that successive post-apartheid governments hadn’t really done their best in implementing policy. And obviously it does look right now as though we run that danger yet again with the current Economic Reconstruction and Recovery Plan. Your thoughts?
MIRIAM ALTMAN: When we’re doing the diagnostic, or we’re saying we’re not where we need to be, the reality is that we have really significant constitutional commitments. Turning South Africa [around] is not a small project. Anyone who thinks it is just doesn’t know what that’s about. And also there seem to be entrenched interests and the government wasn’t orientated around this kind of delivery.
I’m not trying to make excuses, because I, of all people, have been trying to offer constructive support in turning it around. But the reality is, it is not a small project to turn a bureaucracy around when it was orientated into totally different directions.
Having said that, we did make quite a lot of progress in the 2000s. And then we know that it flatlined, if not went backwards. What we’re doing in this report – and I would really urge people to read it, read the full report, not the executive summary but the full report because we make very precise recommendations on each of these areas. They are not just the usual list of “we need to procure energy” and “we need to release spectrum”, and we need to do this and that.
I don’t know how many times we can bang our heads against the wall, saying the same thing over and over. The issue is we identified areas that we can all agree on, like energy, like education, like infrastructure, and where you actually probably have the right policies in place in many cases. It’s not to say that that’s the be-all and end-all. But when you’re stuck, that’s a good way to get momentum.
So we [need to] find something where there are a few things that everybody can agree on. Secondly, where you actually probably have policy and rules that are already in place, but there isn’t the follow-through. So what we asked all the researchers to do, those who are in the various teams that worked with us – is to ask: “Why is that?” Don’t just give us policy advice. We’re less interested in policy advice than understanding why we’re stuck.
So what we do in our recommendations, we are really focused on the institution, and we try to highlight and elucidate the main location that, if you could strengthen the leadership accountability and so on, you would start to see movements – of the boards, of the key monopoly infrastructure, SOEs, the capacity of the revenue services, the top six. Cocteau’s rule is “back to basics”.
The top six municipalities are supposed to look a certain way, and they just don’t. So you can’t stabilise the finances of municipalities. You know, 50% of the capital budgets of municipalities has been spent. You’re not going to fix that until you’ve got the leadership in place.
I was head of strategy at Telkom, responsible for the turnaround. I was working with Sipho Maseko when he first started. That was the most critical thinking as to why we’ve made progress. You had a new board that was a highly capable board. You had Sipho Maseko, who’s probably one of the most driven people you’ll ever meet. He started putting an executive team in place. I was the first one, but he brought in an executive team. And probably largely with the same staff in place and a little bit of change in the leadership, that company went from failing to growing in a very short space of time.
So I’m not speaking abstractly about these things. It sounds abstract to many people, but what we try to do is be super-specific about the locations and precisely what needs to be seen, and to know, because you can say something should get delivered, but the big question is who’s going to do it. Because, once you have that person in place like, say, Andre de Ruyter at Eskom – whatever the issues are, we’ve got load shedding – but the point is, you’ve got a solid person who is sleeping, dreaming, and worrying about it.
Now I can take an interest in energy, but I don’t need to know the detail when I know that he’s there and he’s building it up. You will never succeed by having a committee. You have to get the accountabilities located in the right place. That was key to their thinking at Telkom and why we made progress.
It may sound abstract to some people, but it’s actually the most practical and simple thing you can think of. It’s just that in many cases you have entrenched interests, you have people who covet and don’t want to lose their jobs or their positions. You have a lot of people jockeying for position.
There needs to be a lot more force in saying – when we put in place a new board of Eskom, when we’re putting in place the leadership around Prasa, Transnet, and so on, the municipalities, schools and the like – we are going to be committed to the right kind of leadership and keep developing that kind of capability. In one of the top messages of the webinar that we had today, I can say the biggest differentiator between countries that progress and countries that don’t is the strength of institutions and the investment in people.
So people ask why we haven’t progressed. Well, if you look at the metrics around people in South Africa, there’s a problem around nutrition, education, digital access. The strength of institutions was specifically hollowed out. Firstly, they were orientated towards separate development before the democratic government. And then in the past decade, they were hollowed out. So the issue is not to say they can’t make progress. You have to dust yourself off and move on, and move forward. But the strength of institutions and investment in people is the biggest differentiator.
If you look at China, Vietnam, even countries like Colombia, Malaysia, if you look at any of those countries, that is the critical differentiator. When people are thinking, why don’t we succeed, this is why.
NOMPU SIZIBA: That was Miriam Altman. She’s a commissioner at the National Planning Commission.