Equality is needed for growth, but so is proper implementation of policy
Bottlenecks need to be removed, with a greater focus on efficiency than on restructuring
As President Cyril Ramaphosa accelerates “Thuma Mina” and his quest for investment, a question I often encounter in my interactions with investors — domestic and foreign — is where SA’s growth will come from, and when will it come? This question is usually accompanied by doubt over the government’s commitment to create an environment conducive to investment.
Investors see and appreciate the National Development Plan (NDP), Industrial Policy Action Plan (Ipap) and national infrastructure plan, among others, whose growth prospects are well-articulated. However, it is not only communities that consider service delivery and implementation to be illusive — investors do too. Policy uncertainty has been triggered by contradictory political statements, with the result that there is a lack of credibility on promises to deliver. “Ever-pending” policies are already affecting current and prospective investments.
When politicians talk to investors they often, correctly, raise transformation imperatives and their accountability to the voters as a binding constraint. What politicians must realise is that there is no conflict between the policy certainty needed by investors and the transformation that is demanded by previously disadvantaged South Africans. The responsibility rests with them to provide visionary, ethical leadership and to generate and enforce clear policies.
Transformation and the participation of the majority of the people in the economy are key to achieving inclusive growth. The Group of 20 conducted a study in 2014/2015 that indicated a very clear positive correlation between equality and growth. As access to skills, capital and land improves for most of the population (women and youth in particular) greater growth is enabled. The governing ANC has been grappling with these issues, but the sooner they are settled the more traction we will see in the economy.
Having provided policy clarity, the focus at a strategic level should be on a disciplined approach towards policy and project implementation and execution, or what is politically known as “service delivery”. The one thing that is as commonplace in SA as contradictions and concerns around policy, is poor implementation of those policies. If you have been in government you will know that the existing systems require urgent modernisation to link planning, implementation and monitoring.
From 2014 the presidency piloted a programme called Operation Phakisa to deal with the rigidities in the implementation of programmes. This was an adaptation of the Malaysian approach called “Big Fast Results”, which tackles implementation bottlenecks by creating a platform for multistakeholder engagements to find solutions. This is premised on the understanding that for efficient implementation stakeholders must commit themselves to the removal of obstacles.
This methodology, once refined properly, must be developed and integrated throughout the government. The presidency’s monitoring and evaluation department will at some point have to share the lessons learnt in the implementation of the methodology to help adapt the government’s approach more generally. The lessons learnt should help to deal with three primary bottlenecks.
The government needs to deal urgently with the bureaucratic red tape and policies and regulations that stifle implementation of projects and service delivery throughout the system. The extended turnaround periods for big investment projects are extremely frustrating. To get a water licence can take anything from three to five years if all things are constant, to mention just one example. The government needs to rethink its bureaucratic culture, discipline and approach, as well as the cost of red tape.
There are pockets of excellence where re-engineering of processes has taken place successfully, and these can be rolled out across government. Innovations at the Companies and Intellectual Property Commission’s real-time online processing of applications, the SA Revenue Service’s e-filing system, and the new home affairs ID and passport application processes are examples. In several instances collaboration with the private sector seems to bring in the “magic”. The digital age requires the discipline of efficiency (speed and quality) and adaptation. If this discipline is not embedded from the top, that is from cabinet level, it is unlikely that a coherent efficiency culture will ever permeate the system.
The second major bottleneck to implementation arises from chapter three of the constitution, which provides for co-operative governance among the three spheres of government. When the constitution was drafted political considerations for the restructuring of government trumped socioeconomic considerations, but this now needs to be reconsidered.
The local sphere of government has a major responsibility to implement programmes and projects, as it relates to people directly where they live and do business, but ironically this is the weakest sphere of government. Most municipalities in their current form have no capacity to promote investment and economic development. Compounding the challenges relating to the separation of powers between spheres of government is the complexity in implementing the co-operative governance required by the constitution.
Countless programmes and projects have failed because of such conflicts, which extend beyond politics and leadership to structural constraints, alignment and collaboration across all spheres. There are widespread redundancies in processes within spheres of government, territorial conflicts of ownership, and procurement conflicts. The consequence of these structural issues is a huge increase in the costs of projects and general development.
For instance, building a fast rail link between Johannesburg and Durban, first contemplated many years ago, could easily take more than 20 years to implement, if it ends up happening at all. The costs of such projects can escalate by more than 1,000% in that period, as we have experienced with many projects. It would be demoralising to get into the detailed statistics of SA’s failed or delayed social and economic projects.
The third obstacle is incompetence and corruption, which seriously compound our problems and are unfortunately often ignored for reasons of political expediency instead of objectively dealing with the challenge. This issue already takes much of the space in media coverage today.
The implementation experience in SA requires a serious rethink, with an emphasis on local capabilities and think tanks. The state-owned enterprises will need to be aligned with the new approach. But a new implementation approach will not be possible if we don’t resolve the bottlenecks and focus more on regional economic development models and planning that incorporate the higher education institutions and research agencies.
The shift in the implementation approach should happen as a matter of urgency to allow for improved turnaround in critical investment projects that are key to stimulating inclusive growth and job creation.
• Dr Mfeka, a former economic adviser to the presidency, is a development economist and director at SE Advisory.