The Congress of South African Trade Unions (Cosatu) supports the government’s Accelerated Shared Growth Initiative for South Africa (Asgi), in principle — but says it will not succeed if it does not tackle poverty and inequality more forthrightly.
The clumsily named strategy, unveiled this week, is the government’s blueprint for achieving 6% growth. Cosatu’s central concern is that even if higher growth is achieved, it will not reduce economic inequality.
Other stakeholders, including business, cautioned this week that the strategy’s success would depend on sustained political will and whether the government was able “make Âspecial arrangements to get special jobs done”.
Brian Whitakker, CEO of Business Trust and a member of President Thabo Mbeki’s big-business Âworking group, said he had seen “a level of political commitment to this project that I haven’t seen before. But these are big plans and it’s early days. We are likely to face the usual troubles of implementation; putting this political commitment into practice is going to be key.”
In a draft document titled Cosatu Comments on Asgi, which is being finalised for discussion at the federation’s central executive committee meeting next week, Cosatu says while it supports the state’s interventionist efforts to bolster economic growth, Asgi only “pays lip-service to the issues of redistribution and inequality”.
Critically, Asgi does not explore how the economy should evolve to bring about more inclusive growth. It “lacks any systematic attempt to ensure that growth of whatever figure — 6% or more — doesn’t perpetuate the current growth path of inequality. It doesn’t address the critical question of how to ensure that the beneficiaries of growth don’t continue to be largely the same suspects”.
The document continues: “Strategies to address the economically marginalised and second economy tend to be add-ons to a largely market-driven strategy, although there are some tentative shifts in the direction of a more interventionist role for the state.”
Cosatu has been consulted three times during the drafting of Asgi — at a slide presentation on the growth plan at a presidential Âworking group meeting, and in two meetings with Deputy President PhumÂzile Mlambo-Ngcuka. At the second, Mlambo-Ngcuka received Cosatu’s draft response to the Asgisa framework document.
Unionists point out that, by contrast, the government has held comprehensive consultations with business, both in the presidential working group and at sector levels.
The Mail & Guardian understands that Asgi has never been discussed in the tripartite alliance, which means the South African Communist Party has been excluded.
Jeremy Cronin, deputy secretary general of the SACP and an African National Congress MP, gave an ambivalent response to Asgi in Parliament this week.
He welcomed the initiative, but warned that “where there is growth, you can be sure that somebody Âbenefits. But growth in itself is not necessarily of benefit to all. How we assess growth, and what we identify as constraints to growth, are not class or ideologically neutral Ârealities.”
He also subtly cautioned government to work equally with all interest groups, not only business. “Clearly, and quite correctly, Asgi requires that government should work constructively with all of its social partners, including business. Clearly, we must address the bottlenecks in our export and import freight logistics system, for instance. We must help to lower the cost of doing business … yes, big business.
“But we must never forget that for the poor, logistics infrastructure is a rural road, or a pedestrian-friendly pavement, or reliable and affordable public transport.”
Civil society was also not consulted on Asgi, despite Mbeki’s expression of gratitude, in his State of the Nation address last Friday, to the civil sector for their “[participation] in the [Asgisa] process”.
Hassen Lorgat, media manager at the South African National NGO Organisation (Sangoco), said “civil society were never involved”. While he acknowledged that civil society had become fragmented since 1994, the “government need[ed] to give us the space to strengthen. NGOs haven’t helped themselves by doing poorly over the past few years, but the truth is that we weren’t even given the chance to do badly in this case.”
This week Sangoco, Cosatu and the South African Council of Churches presented their sixth ÂPeople’s Budget, an initiative launched in 2000 as an alternative to the national Budget of Finance Minister Trevor Manuel. Logart said it should also be viewed as civil society’s contribution to Asgi in the absence of direct consultation.
The 53-page People’s Budget argues that the state is still enamoured with the growth, employment and redistribution (Gear) strategy model, particularly in relation to targets for tax and government borrowing relative to gross domestic product (GDP). It calls for an increase in the budget deficit to about 5%, an increase of about 2% in the target for the tax-to-GDP ratio, an increase in tax targets, tempering of speculative inflows from portfolio investments and further reductions in real interest rates.
This week Mlambo-Ngcuka reÂaffirmed that Asgi is neither a new policy nor replaces Gear. Mbeki emphasised in his State of the Nation address that it was not meant to cover all elements of a comprehensive development plan, but comprised a set of limited interventions intended to identify and unblock “binding constraints” on achieving a 6% economic growth rate by 2014.
About R370-billion will be spent in the medium term on public sector infrastructure investment, expected to rise to a level of about 8% of GDP, with the aim of upgrading infrastructure in areas such as roads, electricity and service delivery.
The project will entail sizeable increases in the capital budget, of between 15% and 20% every year, with the idea being that through big-ticket infrastructure projects and massive capital spending by TransÂnet and Eskom, economic activity and job creation will be boosted.
The government also plans to streamline the structures of the state to facilitate delivery. Lindiwe ÂMsengana-Ndlela, Director General in the Department of Local and Provincial Government, said national, provincial and local government were being restructured so that every tier would bear responsibility for service delivery failures.
“National will no longer be able to shift the blame on to local government by claiming that its function is to develop policy while local implements,” she said.
Several new task teams have been established to meld the various spheres of government, and this year will see a raft of new laws to ensure that “the public service and the state is the kind of vehicle we need to meet our service delivery targets”, said Geraldine Fraser-Moleketi, Minister of Public Service and Administration.
All the (deputy) president’s economists
A team of United States and British economists has been recruited to an international panel advising the government on the Accelerated Shared Growth Initiative for South Africa:
- Ricardo Hausmann, the panel leader, is professor of the practice of economic development at the John F Kennedy school of government at Harvard University. His research interests include macroeconomic stability.
- Dani Rodrik is professor of international political economy, also at Kennedy. He has published widely on international economics, economic development and political economy.
- Abhjit Banerjee is the Ford Foundation professor of economics at Massachusetts Institute of Technology (MIT) and director of the Poverty Action Lab.
- Robert Z Lawrence is a professor of international trade and investment at Kennedy and a senior fellow at the US’s National Bureau for Economic Research. He has published widely on the effect of World Trade Organisation rules and the importance of free trade.
- Federico Sturzenegger is visiting professor of public affairs at Harvard. He has held various government jobs, including responsibility for the design of debt, fiscal and exchange rate policy in the controversial 2001 International Monetary Fund package.
- James Robinson is professor of government at Kennedy and a faculty associate at the Weatherhead Centre for International Affairs.
- Roberto Rigobon is associate professor at MIT’s Sloan School of Management. He researches international, monetary and development economics.
- Philippe Aghion, Harvard economics professor, has published on unemployment, debt and bankruptcy reform.
- James Levinsohn is professor of economics and public policy at Michigan University. His research focuses on the econometric analysis of international trade.
- Jonathan Leape, senior economics lecturer at the London School of Economics, has been a director of the Centre for Research into Economics and Development in Southern Africa (Crefsa) since 1990.
- Lynne Thomas is Crefsa’s research officer and resource coordinator.
- Laurence Harris is a professor of economics at the University of ÂLondon.
- Bailey Klinger is a teaching fellow at the John F Kennedy school of Âgovernment.
Mbeki’s eagle eye
A troika of laws, task teams and focus groups has been introduced to reorganise all tiers of government, with the aim of strengthening the Presidency and enabling national government to set goals from the centre and monitor provinces and municipalities.
Minister of Public Service and Administration Geraldine Fraser-Moleketi said this week discussions on the future of provinces were on-going. Their existence “was not something there was unanimity on”.
Lindiwe Msengana-Ndlela, Director General of Local Government, said a review was under way on the structure and role of provincial govern-ments in supporting municipalities and on their ability to “support, implement and oversee national development priorities”.
This would be submitted to the Cabinet lekgotla in June. Other planned measures are:
- A review of the Public Service Act to bring all civil servants under one salary structure and to give government a stronger hand over municipal managers.
- The Intergovernmental Relations Act, to be implemented in all provinces this year, replicates the president’s Coordinating Council at provincial and local levels, empowering the president and premiers to consult across government on the national policy implementation.
- The Local Government: Municipal Employment Bill, to be introduced this year, allows for the deployment of civil servants across all tiers of government.
- A monitoring and evaluation system of all arms of government will be implemented under Joel Netshitenzhe, the government’s former communications chief.
- The economic, employment and investment cluster has introduced five economic focus groups, driven by national departments, “to ensure implement-ation of the programme of action”.