The RDP means too many things to too many people, argues Reg Rumney
HOW does a new roofing system fit in with the ANC’s Reconstruction and Development Programme? Or brick-building? Or the electronics industry?
Answer: All ways and not at all.
Not a day goes by without Business Mail receiving a press release that drags in the RDP by the hair or pledges support for the programme. It is tempting merely to laugh off attempts to link the RDP to various projects and institutions. But it points to a broader paradox.
After all, Finance Department director general Estian Calitz can describe the whole Budget as an instrument of the RDP.
Inasmuch as the RDP cannot work without mobilising the resources of the state and the private sector, everyone can be said to be responsible for its success or failure.
As Deputy Finance Minister Alec Erwin stressed in a pre- election seminar on the RDP, arranged by the Centre for Policy Studies, seeing the RDP as relying too much on the state is wrong. It seeks to set in motion the widest possible array of resources and organisations.
So it is not surprising that the RDP has been embraced by so many different interest groups. It is symbolic enough to stand, like the new flag, for all things bright and beautiful.
Few can doubt the RDP’s stress on meeting basic needs, on achieving socio-economic goals which must lay the foundation stone for economic growth.
From inside the country the need to try to lessen the gap between the haves and have-nots seems overwhelmingly urgent. It is the touchstone of national unity, in that any minister who disagrees with the RDP will have a tough time staying in the cabinet.
Yet foreign investors have expressed their criticism of the programme, the cornerstone of the new government’s economic policy, indirectly. Their hesitance about committing big sums for direct investment is conspicuous.
Criticism of the RDP inside the country has been muted of late. Initial critiques tended to miss their target by, for instance, focusing on cost estimates. The Budget has cleared up how much extra money the government hopes to spend on the RDP.
The government has set a target for a separate RDP fund of around R37,5-billion, to be made available from the Budget, over five years. This year’s Budget kicked off with an initial, modest R2,5-billion being put aside for this fund. That R2,5-billion is 3 percent of government consumption spending, and the government believes it can peg diversions to the fund at that level in the next four years.
Part of the misunderstanding around the RDP arises from semantics.
It should be called the Restructuring and Development Programme. Development of the wasteland left by apartheid is a necessity. But redirecting spending within the Budget is also part of the RDP.
And some of the RDP’s programmes, according to Erwin, must put right the structural legacy of the past, and he mentions affirmative action programmes, designed to broaden the economy by creating more employers and employees.
In the RDP’s broadness of vision lies one of its major flaws.
Erwin acknowledged the RDP’s potential weakness is that it explicitly proposes to mobilise resources within the government and civil society.
“That is a tremendous task, perhaps too large for our institutional and managerial capacity, whether in government or in civil society.”
The RDP presents another less obvious problem, in what, as the shaping force behind economic policy, it leaves out _ and what foreign investors might, indeed, be looking for. It is still probably too half-hearted for callous and indifferent foreign markets.
Privatisation, a fad all over the world, receives no attention as a source of finance or efficiency.
The tone is bullying at times, promising to force socially desirable investments on financial institutions rather than persuade them with incentives.
Rand Merchant Bank economist Rudolf Gouws pointed out at the same CPS seminar that while the RDP commits the ANC to create a certain number of jobs over the next five years, no government will be able to create more than a fraction of the number of jobs needed.
“In particular, it (the RDP) does not directly address a major prerequisite for creating jobs, namely vigorous private sector fixed investment, and the savings which underlie such investment,” said Gouws.
He argued that public works programmes could actually destroy jobs if they continue the past pattern of massive increases in state spending.
South Africans were neither saving nor investing at all, when the sums are done.
The RDP provided a good analysis, remarked Gouws, of what went wrong under the previous government in the socio- economic sphere. But what the RDP lacked is an awareness of what went awry in the business environment itself.
Political economist Charles Simkins also noted at the CPS seminar that consensus on what the RDP says about meeting basic needs and developing human resources was not matched by consensus on industrial policy and the financial sector.
Most worryingly, Simkins pointed to how difficult the economic circumstances were for the RDP to be implemented. He drew a parallel with the inability of the British Labour government to implement its programmes after accession to power in 1964 because of the balance of payments crisis it was faced with.
“And as far as the balance of payments is concerned, we are as good as in the hands of the International Monetary Fund, at a deeper level of conditionality than we’ve consented to in the past.
“We will simply not manage without some more balance of payments support from the international financial institutions, as far as I can see.”