Transcript make it work

NATIONAL DEVELOPMENT PLAN
2030
Our future make it work
Prof Mohammad Karaan
GOSA
February 2013
National Planning Commission
Background
Apr
President Zuma appoints the Commission
Jun
Diagnostic Report published
Nov
Draft National Development Plan released
Public consultation
Sep
Handover to President and Nation
Cabinet adopts the Plan
Dec
ANC Conference adopts the Plan
Aug
Focus on implementation
2010
2011
2011/12
2012
2013 onwards
2
The National Development Plan is:

Shaped by vision of the Freedom Charter & Constitution

A plan for the whole nation

A product of wide consultation

Endorsed by all major political parties
3
Diagnostic of the SA Economy

Under apartheid, the economy was oligopolistic:

strong mining sector and

sophisticated financial services sector

Ownership and control patterns largely unchanged & contribute to high levels of
poverty and inequality

Low skill jobs have declined & high skill jobs grew significantly

Loss of low skill jobs has raised inequality

Too few skills to compete with advanced economies & high cost structure to
compete with developing countries

Our weak economic performance is largely attributed to poor export performance
since the early 1980s

St Francis
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Elements of a Decent Standard of
Living
Nutrition
Clean
environment
Recreation
and leisure
Housing,
water,
sanitation,
electricity
A decent
standard of
living
Transport
Education
and skills
Employment
Health
care
Safety
and
security
Broad Goals of the Plan
- Build a united country
- Resolve historical injustices
- Uplift the quality of life of all South Africans
- Accelerate social and economic change
- Eradicate poverty and unemployment
and Reduce inequality
- Expand the economy and distribute its
benefits equitably
6
Objectives and Targets of the Plan
Eliminate poverty and reduce inequality
Key Targets for 2030
- Reduce unemployment
- Improve quality of education
- Provide quality public services
(water, sanitation, electricity, etc.)
- Inclusive rural economy
- Better built environment
- Critical infrastructure
- Effective & affordable public transport
7
Explaining the slow progress on
jobs
Redistribute
assets (e.g.
Housing)
Broaden reach of quality
education
Greater impact
Harder to do
Redistribute
money
Create work for unskilled people
8
Proposed measures to create jobs

Promote manufacturing in areas of competitive advantage

Grow agricultural output and focus on agro-processing

Improve the functioning of the labour market to make it easier
for young work seekers to get jobs

Better coordination and implementation of economic policies

Partnerships with business to increase investment in labour
intensive areas

Lower the cost of living and of doing business

Undertake small business reforms
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Storylines of a premise
 Zeno’s
paradoxes
 Visionary
Industrial Policy (Ha-Joon Chang)
 :Doesn’t
matter if the cat is black or white, if it catches
mice it’s a good cat” (Deng Xiaoping)
3
kids and a flute (Amartya Sen)
 The
Next decade: demography & tech shift
Doesn’t matter if the cat is black or white, if it
catches mice it’s a good cat” (Deng Xiaoping)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
THE CASE FOR AGRICULTURE
Economic growth premised on agric and manufacturing (Linsey Whitfield)
Labour intensive exports Hecksher-Ohlin Theory, Sameulson
Urbanisation does not advance productivity (Chang & Lin)
Two sectors (capitalist, non capitalist) Arthur Lewis.
Tech change drives trade specialisation. Paul Krugman
Opportunity of technical innovation from advanced commercial agriculture.
Growth in cities depend on rural markets and rural growth depend on urban
markets.
Subsidising agric is a political response to the unequal benefits of economic
development
Rich nations: positive capital flows to agric; Poor nations: Neg capital flows
Labour absorption capacity
Influences human settlement patterns
Africa expansion potential
Sustains rural areas
Can address the homeland question
Multifunctionality
Broad proposals
 Job
creation (11m jobs)
 Regional growth
 Solve Land reform
 Water & conservation
 Advance the Green economy
 Improve labour markets
 Spatial inequities
 Uneven public service
An inclusive rural economy
-proposals-
 Expand
irrigation
 Develop communal areas
 Jobs upstream & downstream
 Linking smaller farmers to markets
 Tenure security in communal areas
 Umzimvubu valley and Makathini flats
 Invest in Adaptive research
 Improve and expand training
A ‘NEW DEAL’ FOR
AGRICULTURE
1.
2.
3.
4.
5.
6.
7.
Market expansion
Aggressive trade regime
Technology shift R&D system
Water efficiency
Expansion into developing areas
Human capital incubators
Infrastructure investment
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The identification of “winners”
Three approaches to identify industries
that can contribute to significant growth
in employment:
Large export industries with high labour
requirements
High volume imports that can be
substituted with locally produced goods
Growing small industries with high labour
requirements
The employment creation matrix
Summary
Target group
Small scale farmers with
>5 ha of land
Small scale farmers with
between 0.5 and 5 ha of
land
Subsistence farmers
with <0.5 ha
Better use land
redistribution land
Primary
jobs
created
75 000
165 000
Secondary Assumption
jobs
created
37 500
These farmers employ themselves and two
others
82 500
The livelihoods of half of the farmers in this
category are improved
83 000
41 500
70 000
35 000
Labour intensive
winners
200 000
100 000
Labour extensive field
crops
Labour extensive
livestock
Total
10 000
5 000
40 000
25 000
643 000
326 500
The livelihoods of one in ten of the farmers in
this category are improved
Redistribution beneficiaries employ themselves
and two others; one in ten restitution
beneficiaries become self-sufficient
Critically, this requires investment in irrigation,
support to smallholder farmers and the
opportunity to grow their businesses
The total is 969 500
Food security
 In
most years, South Africa is food secure at
the national level, and has been so for a
number of decades
Net exports ($1000)
Net maize exports (tons)
5000
2000
4000
3000
Thousands
2000
1000
1000
0
-1000
500
-2000
0
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
Thousands
1500
-500
-3000
-4000
Food Security
 Maintain
positive trade balance
 Regional strategies
 Public works programmes
 Nutritional education
 Farming-nutrition link
 Product development
LAND Proposals
Inspired by the Green paper (proactive
acquisitions, LMC)
2. Focus on people, not land (incubation)
3. Intended to remove uncertainty and get closure
4. Purpose to integrate support measures
5. Make the 30% target
6. Reduce failure rate
7. Build investor confidence
8. Reward commercial farmers who contribute
9. Remove land price speculation
10. Avoid land market distortion
1.
A PRAGMATIC LAND REFORM SCHEME
First, each district municipality where there is commercial farming land in South Africa
should convene a committee (the District Lands Committee) with all agricultural landowners
in the district as well as key stakeholders such as the private sector (the commercial banks,
agribusiness) the government (Departments of Rural Development and Land Reform, the
Provincial Department of Agriculture, Water Affairs where relevant, etc.), and government
agencies (Land Bank, ARC, etc.) This Committee will be responsible for identifying 20% of the
commercial agricultural land in the district, and then for giving the current commercial
farmers the option of assisting in the transfer of this 20% of agricultural land to black farmers.
They go about this in the following manner: To identify land they would first look around their
district for land that is readily available from any of the following categories: land that is
already in the market; land where the farmer is known to be under severe financial pressure,
land held by an absentee landlord willing to exit, in an estate, etc. In this manner 20% of the
land could comfortably be found without distorting markets. Upon identification, the land is
obtained by the state at 50% of market value (which is closer to its fair productive value). The
50% shortfall of the current owner is then made up by cash or in-kind contributions from the
commercial farmers in the district who volunteer to participate. In exchange, they are
absolved from losing their land in future and they gain BEE status. This should remove the
scourge of uncertainty and mistrust that surrounds land reform and the related loss of
investor confidence. A stepped programme of financing would address most of the financing
problems of land reform beneficiaries, gives the implementers of land reform the comfort
that beneficiaries have the necessary skills for successful farming, and spreads the fiscal cost
of the programme between future earnings of the farmer and the pockets of the taxpayer.
This can be done for example by giving successful applicants a two or three years rent-free
probation period and if they successfully demonstrate that they are capable of farming they
then move to a long-term lease of say 40 years with the full commercial rental phased in over
four years and a part of the rental fee applied to a sinking fund held at the Land Bank that
Land acquisition at 50% concern
50% state subsidy
 Other 50%= private contributions and/or
development finance, targeted subsidies (CASP, etc)
 Private contributions: Landbank bonds, extension,
mentoring, incubation, marketing, harvesting,
collective buying, guarantees, schemes, financing,
other concessions, education,
 Landbank 30-40yr mortgage
 Landbank bonds: 10yr guaranteed return for land
reform
 BEE status for commercial farmers who contribute
 Willing sellers still get market price !

A perspective on labour unrest
and the minimum wage
1.
2.
3.
4.
5.
6.
7.
Migrant labour dilemma
Service delivery protests
Marikana
De Doorns
Cost of living
Debt and conspicuous consumption
‘The grapes of wrath’
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The consequences
 R105
pd is the threshold
 Lay-offs and mechanisation
 Unionisation drive
 Productivity push
 Competitiveness
 Winners and losers
 Trade policy
 A new deal?
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Presentation to South African Clothing Textile Workers Union
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