Why the NDP no longer applies, and what to do about it
SA needs a solution to avoid vicious cycles and make the National Development Plan’s virtuous cycle feasible again, writes Dino Galetti
Until recently, the National Development Plan (NDP) was revered in public discourse and a means by which many government departments set targets. For example, as of 2016 the department of higher education allocated scholarships according to the NDP’s injunction to produce PhDs to transform SA into a knowledge-intensive economy.
Business Day columnist Tony Leon has observed that by proposing to amend the constitution on land expropriation, President Cyril Ramaphosa has contravened the NDP’s principles. What has not been noted is that the NDP is no longer applicable. I’ll summarise why and propose a solution.
Cycle 1 is taken from the NDP’s overview and summarises its underlying strategy. Its key drivers are depicted as central cogs. These generate a "virtuous cycle" supporting the economic model favoured by prior ANC governments, "trickle down with growth". To derive that cycle, one interprets "active citizenry" as businesses engaging in BEE, while "effective" governance implies both service delivery and fiscal discipline. Those drivers generate a cycle of improving conditions and opportunities that reduce poverty, deliver growth and increase employment.
WHILE THE NATIONAL DEVELOPMENT PLAN CONSIDERS ‘DEMOGRAPHICS’ … IT IGNORES ‘PSYCHOGRAPHICS’, WHAT THOSE GROUPS BELIEVE.
Unfortunately, those drivers no longer apply. In December 2017 the national executive committee was made the ANC’s highest decision-making body. Since it is factionalised, with many members focused on self-preservation, it pulls Ramaphosa and the ANC government well short of "strong leadership". Effective government was eviscerated during Jacob Zuma’s second term, when national debt was used to bankroll the supply-chain fronting of state-owned enterprises, so the debt-to-GDP ratio between 2008 and 2010 doubled to 60%. Lastly, as the mining sector’s collapse and court disputes over its charter signal, SA’s "active citizenry" are no longer able to absorb demands for BEE cessions and stay competitive.
International investors are looking elsewhere and, crucially, many local managers are wary. With good reason: studies confirm that after 24 years BEE has worsened the average income inequality between black and white families.
Consequently, the outer circle’s benefits have not materialised. Instead, unemployment reached 27.2% and expected growth is about 1.8%, far short of the NDP’s required 5%-plus, so no poverty reduction occurred. The obvious danger is that the NDP’s targets, such as creating 11-million jobs, are predicated upon this cycle. Without its framework, departments risk setting mistaken targets, or becoming rudderless.
Unfortunately, there are greater concerns. Since the opposite of each driver occurred, the opposite process is actually occurring (depicted as cycle 2). Weak leadership, ineffective government paralysed by state capture and inactive citizenry (wary investors) are reducing "capabilities" (through lack of new investment, for example), causing fewer "opportunities", increasing unemployment, lower growth, greater poverty, and decreased living standards. SA began that "vicious cycle" during Zuma’s presidency.
Still, that doesn’t invalidate the NDP, which warned that such conditions would prohibit its own success. This sentence is uncannily accurate: "Programmes such as affirmative action, black economic empowerment and land reform are most effective when the economy is growing and the education system is improving. Without such an environment, these measures can raise the level of social tension." Which is exactly what is happening. The NDP declares: "SA cannot afford a downward spiral that sharpens social tensions."
Quite so, not least because that spiral precludes the NDP’s virtuous cycle. Notice that cycle 1 of 2012 is situated in a context of "social cohesion". In 2018, after Bell Pottinger’s PR campaign and the Zuma government’s emphasis on "white monopoly capital", SA’s mood is better labelled "social division". Yet now is the wrong time for division. We have to concede that we are in a poorer financial position to undertake the NDP’s plan than in 2012. Like 1994, when Nelson Mandela’s ANC inherited a bankrupt economy, we have to start over. But if our society lacks the enthusiasm of 1994, how can it escape its spiral?
Let’s investigate further. Interestingly, a parallel vicious cycle has arisen, not from the ANC’s actions but from what its voters believe. Cycle 3’s key drivers thus stem from the finite capacities of voters. The first such constraint is voter patience — one is allotted a certain time to deliver one’s promises. The second is ageing. Any revolutionary party’s core voters gradually pass on and young voters have to be attracted. Rhetoric about the persistence of apartheid’s legacy is partly an attempt to convince younger voters of the continuing relevance of the ANC as a revolutionary organisation. The catch is that such claims need to fit actuality, or voters might reject them. Some young authors already complain the Born Frees were born into chains, for example through underfunded education.
Perceiving such erosion of voter confidence, the ANC is faced with a choice: change direction or increase the rhetoric about racism and impending radical economic transformation. It has so far chosen the latter. It then has to be seen to deliver on its promises and makes a (populist) gesture to buy time. But since radical economic transformation is no way to grow an economy, after that gesture reality sets in. In land expropriation, for example, even if pursued moderately so capital flight is avoided, without training and funding, beneficiaries will be unable to make their land productive.
The ANC will be faced with the same choice, and again be pressured into a populist response. Yet poverty and unemployment will persist, and may worsen as foreign investment diminishes, so more voters will switch to the EFF. That "vicious cycle" is deepening. It leads to a coalition government with controlling power wielded by the EFF. Still, it’s notable that this cycle too was predictable from the NDP’s warnings.
We thus need a solution that avoids both vicious cycles and makes the NDP’s virtuous cycle feasible again. Let’s consider a gap in the NDP. While it considers "demographics" — physical attributes of SA’s population groups — it ignores "psychographics", what those groups believe. Doubtless that’s because in 2012 it was assumed that the government was the central engine of reform. Thus, while the NDP committee conceded SA is "a divided nation", they felt their plan could repair that division en route. Its supporting solution was to promise engagement with society "after" the plan was passed. But the initial cycle has been undone by state capture, so that is overdue, especially since Ramaphosa emphasises his "New Deal" turnaround plan needs public participation to succeed.
The problem is that current vicious cycles can make public participation counterproductive. That too was predictable: later in the NDP, cycle 1 adopts two further drivers: "sacrifice" and "rational consensus". Those are impossible in our current climate (cycles 2 and 3), since the ANC’s rhetoric makes good citizens active in the wrong ways. For example, unions are steeped in the rhetoric of white monopoly capital and have witnessed BEE fronting by elite workers, hence they resist lower wage offers at Eskom, or refuse necessary reduction in capacity at Impala Platinum. No rational consensus is possible, nor willingness to sacrifice. Cycles 2 and 3 deepen, keeping SA companies on the brink.
What the government should do, as promised in the NDP, is develop a companion document focused on psychographics, to encourage a sense of nationhood in our public. Such a document is analogous to a marketing communication strategy, which guides product cycles by influencing consumer (voter) attitudes. It would ask: how can we make our population willing to make the "sacrifices" needed to turn SA around?
Of course, such a virtuous cycle needs a "positioning statement". One candidate is prefigured in the NDP, which acknowledges the need to "unite South Africans around a common programme" as a "prerequisite … for successful national development". Indeed. No country has achieved wealth without a programme of unity (for the US it was the "great American dream", and without it their national unity is dissolving; for China it is the goal of a Chinese renaissance). SA has a ready-made statement: "We are the Rainbow Nation." As with all good positionings, it rests on truth. We are still the only country that transcended institutionalised racism. If the ANC can make South Africans of any colour, upon walking into a meeting, ask "How do we make this happen together?", we’ll be ready to attempt the turnaround. Then, of course, the promises have to be delivered. We come full circle and revert to cycle 1, as planned.
Would this solution work? At least it is empirically supported. Cycle 2 has occurred, was predictable from the NDP’s warnings, and is exactly negative to cycle 1. Just so, cycle 3 is a psychographic extrapolation from cycle 2, which has also occurred. But cycle 4 is both extrapolated from cycle 1 and is negative to cycle 3. Put simply, it supports the NDP’s basic model and states what to change to get there. Nation-building offers a way to restore relevance of the NDP, extract the ANC from its vicious cycles and harmonise the virtuous cycles needed to turn SA around.
• Galetti, most recently post-doctoral researcher at Yale, was creative director at Ireland’s biggest ad agency and senior writer and strategist for SA’s Democratic Party in 1994.