Our fragile economy demands leadership with strategic foresight

Economic prosperity for any nation is not an outcome achieved on the basis of one policy focus and strategy. It is a result of a carefully chosen and managed set of development drivers and priorities in a complex system with a causal network of linkages that must work together to deliver the economic growth and prosperity we all desire. The state is a just a complex system within another complex regional, continental and global system. The challenge is to manage this complexity in a balanced way. No government has managed this challenge optimally and on a sustainable basis in the context of a dynamic and changing environment. Governments that have managed to be sensitive to this complexity and responded with carefully weighted policy choices and strategies have been able to make progress on the developmental front. The budget is a mediated outcome that allocates resources to strategic choices that have been made.

Pali Lehohla, the statistician-general, has expressed concern about the challenge of translating statistical evidence into policy and strategy. This paper seeks to highlight the development paradoxes and conundrums that are manifested by the disjuncture between statistical evidence and policy in some key areas. The fundamental requirement for successful strategy development is that it must respond to the reality and facts that are available. It must be evidence-based and not a product of some ideological bias.

In the 21^st century world of instant communication and free movement of capital across borders at the switch of a button, the ability for democratic nations to maintain political stability and a positive investment climate that can attract investment that creates economic growth is the biggest challenge. In a South Africa which has a low savings rate, a declining Business Confidence Index (at 90.3, it is the lowest since 1985), extraordinarily and structurally high unemployment and racialised wealth inequality (10% of the population owns 95% of the wealth), a labour participation rate that is at least 20% lower than competitor countries, a youth population that is Not in Employment or Education or Training (NEET), a stable and positive investment climate is a priceless commodity.

And, it is the responsibility of government, and especially the president, to lead a co-ordinated effort to protect this commodity at all times.

However it was the president who, on his own, made the reckless and dangerous decision to fire former Finance Minister Nhlanhla Nene, a respected official, in what is now called the “9/12 disaster” that caused the biggest damage to investor climate since December 2015 notwithstanding the fragile state of the economy and the low investment appetite.

The reality we must confront is that about 22 million adults do not have matric and only 34% are employed (Stats SA 2015). Yet this and the hard figures cited above have not resulted in a fundamental shift and rethink of the assumptions underpinning SA’s economic policy and strategy. The economy has been pushed onto a skills-intensive and capital-intensive growth trajectory. We need to urgently create jobs to deal with the type of unemployment that we have.

What needs to be done for this demographic is to achieve the level of labour flexibility that can lead to the creation of low-wage mass employment opportunities as the way forward, even with strategic and targeted state wage subsidies to achieve decent wages.

The other paradox is that we currently have three separate policy documents that are intended to address national development policy and strategy: The New Growth Path (2010), The Industrial Policy Action Plan (2009) as revised and The National Development Plan (2012). A comparative review by Professor David Kaplan (UCT) reveals that there are contradictory assumptions on the constraints hindering growth in SA. The policy confusion in these documents also betrays the ideological gridlock and conflicting policy positions of the key members of the governing tri-partite alliance and contributes to a negative impact on investor perceptions and decisions. The NDP has been adopted by the governing party as the flagship for development since 2012 and yet there is still contestation within the tri-partite alliance about some of its key provisions.

South Africa is in a classical Middle Income Trap (MIT). Countries that are in the MIT are not able to make a timely transition from a resource-driven growth into a production-driven growth. The main reason for this deficiency is the lack of higher level skills and slow investment in manufacturing.

The question of the lack of skills points to another conundrum in the education policy and strategy. The lack of focus on quality education and what must be done to improve it is central to the challenge of the under-performing public education system and lack of skills. For example, a recurring weakness and feature of the public education system is the high dropout rate affects children from mostly poor and black families. More than 50% of pupils in grades 9 and 10 are lost to the system due to this culling process that is designed to eliminate poor performers from sitting the final Grade 12 examinations. The objective here is to improve examination outcomes for political purposes. But unfortunately this practice only serves to swell the unemployment numbers and it is the black children from poor families whose futures are stunted.

The role of the South African Democratic Teachers Union (Sadtu) in obstructing all efforts to introduce performance management and accountability in schools has contributed to the low quality of teaching and leadership in poorly performing schools. Education administration is the responsibility of the department of basic education but, in many instances, Sadtu plays a decisive role in decision-making. It has stymied efforts in this regard since 2008.

We are currently facing very disruptive and destructive student protests under the banner of #FeesMustFall. The issue under contestation has been highlighted consistently by the Council on Higher Education at least for the past 10 years. We should have developed strategies to deal with the funding challenges in an incremental fashion. We did not! This goes to the heart of the failure of leadership and strategic foresight in the ruling party.

The August local elections outcomes have emphatically demonstrated that the people have had enough with the arrogance and corruption that have infested the ANC. I have previously suggested that the erosion of values, internal factional lobby conflicts and leadership paralysis are too deep for the party to avoid collapse. The glaring truth is that our fragile economy demands leadership with strategic foresight. The ruling party is pathetically lacking in this crucial requirement.