Ten years on, most of the economic targets set out in the National Development Plan (NDP) have not only been missed, but are moving in the wrong direction.
Insufficient progress has been made towards achieving the plan’s goals by its 2030 deadline, according to the most recent review of the NDP, adopted in 2012.
The review was released on Tuesday. But the scheduled event to present its findings was cancelled an hour after it was set to begin. The reason given for the cancellation was that the review, which lays bare the extent to which South Africa’s economy has regressed, had yet to be presented to cabinet.
When the NDP was conceived, it forecast that the economy would need to grow by 5.4% a year to achieve the overarching goal of eradicating poverty and reducing inequality and unemployment by 2030.
“These goals were based on the all-inclusive approach of achieving positive investor sentiment, better-located and maintained infrastructure, improved educational outcomes, a healthier population, a sound social safety net, much of which would be enabled by a capable state and good governance approaches,” the review notes.
“Given that much of this was not realised, the economy has not performed as expected during the period under review.”
According to the review, South Africa’s growth has averaged 0.99% in the past decade, with GDP per capita growth negative in five of those years.
“South Africans are becoming poorer. Unemployment has increased to 32.9%, with little improvement in overall employment.”
The NDP’s goal was to reduce unemployment from 25.4% of the labour force in 2012 to 6% in 2030. It also aimed to reduce income inequality, but the country’s Gini income measure remains unchanged compared with 2012.
To achieve average annual GDP growth of 5.4%, the NDP set the target of 30% investment as a percentage of GDP by 2030. But, from 2012 to 2019, gross fixed capital formation as a percentage of GDP averaged 19.6% “largely as a result of a decline in private investment, a slowdown in general government spending and reduced capital spending from SOEs [state-owned entities]”.
Worse still, investment fell even further from 2018 to 2021, averaging only 14.7% of GDP. Public sector investment fell from 6.8% of GDP in 2012 to only 4.1% in 2021. The 2030 target is 10%.
The National Planning Commission — the custodian of the NDP — has proposed that the government, in concert with the private sector and other social partners, agree to “a well-coordinated economic strategy”, which it refers to as an “economy roadmap”.
During the course of his tenure, President Cyril Ramaphosa has put out a number of such plans, including the economic recovery and reconstruction plan and the Eskom compact.
The key elements of the proposed economy roadmap include implementing the Energy Action Plan, strengthening SOEs, reducing red tape, dealing with economic crimes and rebuilding state capacity.