South Africa has the potential and capacity to eliminate poverty and reduce inequality over the next two decades, the inaugural report of the National Planning Commission (NPC), which was released in Pretoria on Friday, asserts.

But, the 430-page National Development Plan also indicates that the two objectives could only be met by 2030, if yearly growth rates of 5.4% were achieved, unemployment was reduced from 25% to 6%, savings rates rose from 15% to 25% and the level of gross fixed capital formation as a proportion of gross domestic product (GDP) increased from 17% to 30%.

Premised on a poverty line of R418 per person a month, the document suggests that plans should be put in place to reduce the proportion of citizens living below that level from 39% currently to zero by 2030.

Success in reducing inequality, meanwhile, would be measured by a reduction in South Africa’s current Gini coefficient (the key measure of income distribution inequality) from 0.7, which was one of the worst globally, to 0.6 over the same period.

Minister in The Presidency Responsible for the NPC and chairperson of the 26-person commission Trevor Manuel acknowledges that achieving the objectives would require and entirely new and more collaborative approach to service delivery, as well as increased participation by citizens, a more effective and capable government and faster economic growth.

He called on South Africans to “write a new story” focused on “attacking poverty and on expanding a robust, entrepreneurial and innovative economy”. Achieving these aims would involve creating jobs and livelihoods, expanding infrastructure, transitioning toward a low-carbon economy, transforming urban and rural spaces, improving education and training, providing quality healthcare, building a capable State, fighting corruption and enhancing accountability, by transforming and uniting society.

The creation of jobs is a central theme of the ‘National Development Plan’, which was handed over to President Jacob Zuma and Deputy President Kgalama Motlanthe at a function held at the Presidential Guesthouse.

11M MORE JOBS BY 2030

“In 2030, the economy should be close to full employment,” the document states, which would require the five-million jobs target set out in the New Growth Path (NGP) to be backed by a vision to generate 11-million jobs by 2030.

Against the backdrop of low growth levels, with GDP expected to expand by only 3.1% in 2011, as well as the uncertain global economic environment, serious questions are already being posed about the credibility of the NGP jobs target.

But Manuel and his 25 commissioners, including deputy chairperson Cyril Ramaphosa, argued that the objective could be met if it were backed by strong leadership who could convince South Africans to make “mutual sacrifices” for longer-term benefits.

The report sets a target of reducing the unemployment rate from 27% currently to 14% by 2020 and just 6% by 2030. Such a target was premised on raising total employment from 13-million to 24-million over the period, as the poulation increase from aroun 50-million to closer to 60-million by 2030. That target was also premised on average yearly GDP growth of 5.4%.

“The crisp question is how,” the report acknowledges. It answers by stating that South Africa needs to exploit its existing strengths to increase exports. “This means using the country’s advantages – its skills, technologies, firms, mineral wealth, underutilized labour and geography.”

CHERRY-PICKING NICHES

The report outlines those areas that are good for growth and jobs, such as labour-intensive manufacturing and process outsourcing, as well as those areas that were good for growth, but less so for jobs, such as mining and the export of high-skills services.

But it also stresses that a rising public sector wage bill, lower levels of investment and falling education standards were “bad for both jobs and growth”.

Niche export industries should be targeted, the report argues, highlighting the potential, for instance, of cherry growing. “South Africa produces just 197 t of cherries a year. The global market is 4-million tons. The country has the land, weather, skills and capabilities to grow cherry exports substantially to meet a greater share of global demand.”

A key theme of the report was an aspiration to gain global market share across a range of sectors, including mining. However, it stressed that for resources exports to rise, certainty over property rights was required, while rail, water and energy capacity would have to be increased.

INFRASTRUCTURE THRUST

In fact, improved infrastructure was viewed as key to supporting the job-creation thrust, particularly as economic infrastructure had the potential to crowd in private investment. But the report also argues that, in the longer term, payment from such infrastructure should be paid primarily by users – a principle that had become highly contested as the Gauteng toll roads, which had been financed using debt, moved towards implementation.

Key economic infrastructure programmes and implementation dates were also outlined for energy, transport, water and information communication technology infrastructure.

Other actions highlighted in the report include:

• Creating an environment for sustainable employment and economic growth;
• More active labour market policies, including the expansion of public works programmes to two-million full-time equivalent jobs by 2020;
• Streamlining of labour market regulation;
• Support for expanding small businesses;
• Addressing the constraints to the expansion of minerals and mining, manufacturing and tourism; and
• Addressing current fragmentation in government regarding microeconomic reform strategy.

Speaking at the launch, Motlanthe said the advisory report, which would eventually be taken to Cabinet for adoption, offered a framework for the prioritisation of government programmes and would inform the trade offs that might need to be made between competing objectives.

Ramaphosa added that at its core the report was a vision for a country that was on a “journey” to rid itself of its “horrible past” by outlining ways in which to eliminate poverty and reduce inequality.