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We need to fix things, not draw up yet another plan

Published on   January 20th, 2019   |   by   Isaah Mhlanga

We need to fix things, not draw up yet another plan

South Africa’s economic strategy suffers from short-termism, wherein the immediate pressing social issues derail the path to the achievement of the long-term goal.  The result is that we have had at least five economic plans since 1994 - the Reconstruction and Development Programme (RDP), the Growth, Employment and Redistribution (GEAR), the Accelerated and Shared Growth Initiative for South, the New Growth Path (NGP) and the National Development Plan (NDP).

Current debates, summits and colloquies suggest there is scramble to put together yet another plan. I wonder if this plan will contain anything new that is not in any of its predecessors. I am tempted to believe that it will not be anything new. What is needed to boost economic growth which will reduce unemployment, poverty and inequality is simply going back to basics of dealing with what we know to be problematic with our economy.

Let’s take a few of the structural problems. First, South Africa has a shortage of critical skills that are a pre-requisite for a fourth industrial economy, yet, its business as usual with the education sector. An overhaul of the education sector is required for the country to produce the skills it needs. Quite simplistically and bluntly, the education sector produce engineers that can’t build engines, teachers that can’t teach, accountants that can’t count and economists that are just good at history. Essentially, we produce the best theoretical experts but as a country, we don’t eat or export theory. We need to refocus on technical and vocational skills so that people can make things that can be consumed locally or exported competitively. If we can’t produce these skills, lets import them like we do chicken.    

Secondly, network industries such as roads, rail and telecommunications need to be upgraded and properly repurposed. Bulk rail transport that is safe, reliable and fast will reduce the cost base for goods and the majority of people across cities. However, with all its benefits for the rich, we build the Gautrain which saves a few people. This should be extended to every major city and to every major township at affordable prices. Access to telecommunications have improved significantly, however, it remains far more expensive even when compared to other African countries. Reducing this cost should boost the gig economy and improve economic efficiency for the economy as a whole.

Thirdly, for an economy to grow, it requires a health population. Our health sector is in a precarious state. I know this because in 2012, I spend a week on an operating bed because it wasn’t done properly in 2003 due to various factors which include lack of specialist medical practitioners, they get rewarded better in other countries so they leave our country. That said, I was encouraged by President Ramaphosa’s stimulus package, which included immediately filling 2200 critical medical posts, buying linen and hospital beds.

Once these three have been fixed, the productive sectors of the economy can easily be addressed. The strategy, in this regard will need to incorporate trends in the global economy. I believe countries that managed to develop did so through strong manufacturing sector before transitioning to the service sector. The latest of these countries is China, which effectively benefited from the migration of manufacturing from the US. I believe that Africa as a continent should take the opportunity to be the next manufacturing hub in the upcoming manufacturing migration from China. South Africa must refocus on its manufacturing capability, like Germany is in Europe, to grow the economy. You can count the US, the UK and Germany among others in the post war period that went through similar paths.

Whatever strategy is adopted, there must be an understanding that it’s a multi-generation strategy and it will require sacrifice from the current generation. It will not be achieved in five years or ten years. The construction of the Great Wall of China offers lessons in this regard, it was built as a wartime defence starting from 771–476 BC and its length would exceed 20 000 kilometres if dynasties and kingdoms in Northern China are included.  Historians say it took over 22 centuries and about 20% of the population to complete. Today it is one of UNESCO’s world heritage site attracting more than ten million tourists per year.   

Yes, this year and possibly the next five years’ economic growth with be lackadaisical and will not solve the unemployment, inequality and poverty. However, short-term social pressures must not derail tackling the structural impediments to foster faster economic transformation. To prevent this, politics and profits, get out of the way of doing what is in the best interest of the prosperity of the broader society in the long term.