Transcription

1 Natioal Developmet Pla Visio for 2030

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3 Natioal Plaig Commissio Natioal Developmet Pla 11 November 2011

4 ISBN: RP270/2011

5 F orewo rd Masupatsela! We chart a ew course, we write a ew story. The Visio Statemet ad the Natioal Developmet Pla presetedheree is a step i the process of chartig a ew path for our coutry. By 2030, we seek to elimiate pov verty ad reduce iequality. We seek a coutrywherei all citizes have the capabilities to grasp the ever-broadeig people, especially the youth; life chaces that c remai stuted by our apartheid history. opportuities available. Our pla is to chage the life chaces ofmillios of our South Africa has themeas, the goodwill, the people ad the resources to elimiate poverty ad reduce iequality. It is withi our grasp. But it will ot happe uless we write this ew story; a story of peo ple, their relatioships, their dreams ad their hopes for a bet ter tomorrow. We wat our childre ad youg people to have better life chaces tha we have. At the core of this pla is a focus o capabilities; the capabilities of people ad of our coutry ad of creatig the opportuities for both. The capabilities that each perso eeds to live the life that they desire differs, but mus st iclude educatio ad skills, decet accommodatio, utritio, safe commuities, social security, trasport ad job opportuities. The capabilities that the coutry eeds to eable citizes to thrive iclude a capable state, leadership from all sectors of soci ety, a pact for mutual sacrifice ad trust. The Natioal Plaig Commissio is ot a govermet departmet. It cosists of 26 people appoited by thepresidet to adviseo issues impactig o log-termdevelopmet. This gives the commissio the licese to be hoe est, bold, cut through the siloss of govermet ad take o board the views of all Sou uth Africas. It also requires us to be humble, ever pretedig that we hav ve a moopoly o wis dom. This is a proposed developmet pla, subject to public commet ad criticism. I additio to the sweat of the commissioers who have each made huge sacr rifices over the past 18 moths, the developmet of the pla has ivolved thousads of people who have cotributed to the developmet of the proposals cotaied herei. The work of the commissio does ot stop i Our term is a five e-year oe, ad requires the commissio to deepe the plaig process, cover areas thatwe have beeuable to cover i this first pla ad provide deta ailed reports o issues outlied i our ma date. Trevor Mauel, MP Miister i the Presidecy O behalf of the Natioal Plaig Commissio 111 November 2011

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7 List of Commissioers 'D1!wr A. Mauel, MP Ola!rpeso tyrll Ramaphoaa Deputy Cha!rpet"SG Miriam Allma Maii&SI Bal!tulo Hoose Ccovadla Ato Eberhard T-mEIISop Brllflette Glt58 Truema Goba Noluthado Go.sa Phlllp Harriso Mohammed Karaa Vuyalcazl Mahlatl CJulstophar Malll:ole VIcet Maphal El1as Masllela Pascal Molol Jeifer Mo!wi~ Michael Muller Joel Netshltetuhe iluo Resbel'& VMee Tay!Of Jerry Vllalcazl J<art vo Holdt

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9 Cotets Overview Itroductio Creatig a virtuous cycle of growth ad developmet The cetral challeges Writig a ew story for South Africa Demographic treds Exteral drivers of chage A summary of the pla Coclusio Key targets ad implemetable actios i the pla Visio Statemet Chapter 1: Key drivers of chage Icreased itegratio, icreased complexity, icreased risk The scales are tippig Balace of ecoomic activity Africa Opportuities The eviromet Sciece ad techology Coclusio Chapter 2: Demographic treds Itroductio Domiat treds South Africa's demographic profile Policy Implicatios Coclusio Chapter 3: Ecoomy ad employmet Visio 2030 Key elemets of employmet creatio Employmet Scearios Structural challeges Specific ecoomic policy proposals Achievig ad sustaiig a growth acceleratio Raisig the rate of ivestmet Gaiig global market share Stimulatig domestically orietated activity South Africa as a itegral part of regioal growth

10 Natioal systems of iovatio ad learig permeate society ad busiess A resposive labour market Spatial dyamics ad rural employmet Small ad expadig firms will support dyamism ad likages Providig a stable ad eablig macroecoomic platform Sectors ad clusters Role of the state ad istitutioal capability Coclusio Chapter 4: Ecoomic ifrastructure Itroductio Challeges Regulatio The eergy sector: powerig South Africa Key policy issues ad plaig priorities Trade-offs Phasig Water resources ad services Trasport Iformatio ad commuicatios ifrastructure Chapter 5: Trasitioig to a low carbo ecoomy Itroductio Visio 2030 Key steps toward the visio The trasitio: storylies Proposed mitigatio istrumets Guidig priciples for the trasitio Phasig Chapter 6: Iclusive rural ecoomy Itroductio Visio 2030 What eeds to be doe Trade-offs ad risks for agricultural expasio Iclusive rural developmet by 2030 Chapter 7: Positioig South Africa i the world Itroductio Opportuities for South Africa The beefits of globalisatio ad regioal trade agreemets Macroecoomic coordiatio: policy-makig ad ifrastructure developmet Migratio ad the movemet of people Natural resource maagemet

11 Kowledge-sharig Policy-makig ad public debate Coclusio Chapter 8: Huma settlemets Itroductio Huma settlemets visio for 2030, o the road to 2050 Storylies Trasformig spatial arragemets ad spatial goverace Sequecig ad coclusio Chapter 9: Improvig educatio, iovatio ad traiig Itroductio Educatio ad traiig visio Progress sice 1994 The challege Achievig the 2030 visio for educatio, traiig ad iovatio Quatifiable targets for 2030 Policy proposals The sequecig of proposals Coclusio Chapter 10: Promotig health Itroductio Visio for health 2030 Targets for 2030 The challege Critical actios Summary of mai proposals Chapter 11: Social protectio Itroductio Post-1994 achievemets Coceptual framework for social protectio Visio for social protectio Overview of South Africa's social protectio ad welfare services South Africa's social protectio gap Developmetal social welfare services The status ad wellbeig of childre i South Africa Policy ad plaig priorities Policy proposals Coclusio

12 Chapter 12: Buildig safer commuities Itroductio Visio 2030 Stregthe the crimial justice system: The seve-poit pla A professioal police service - a key compoet of the crimial justice system Civiliaisig the police A itegrated approach to buildig safety Coclusio Chapter 13: Buildig a capable state Itroductio Progress so far The challege 2030 visio What eeds to be doe Stabilise the political-admiistrative iterface Make the public service ad local govermet careers of choice Develop techical ad specialist professioal skills Gettig the basics right: delegatig ad simplifyig routie tasks Improve relatios betwee the thee spheres of govermet The developmetal potetial of state owed eterprises Capable, professioal, resposive: the state 2030 Chapter 14: Promotig accoutability ad fightig corruptio Itroductio What has bee achieved sice 1994 Visio 2030 Buildig a resiliet ati-corruptio system Stregthe accoutability ad resposibility of public servats Create a ope, resposive ad accoutable public service Stregthe judicial goverace ad the rule of law Coclusio Chapter 15: Trasformig society ad uitig the coutry Cotext Problem statemet Natio-buildig visio for 2030 Creatig equal opportuities Active citizery ad the social compact

13 OVERVIEW Overview Itroductio No political democracy ca survive ad flourish if the mass of our people remai i poverty, without lad, without tagible prospects for a better life. Attackig poverty ad deprivatio must therefore be the first priority of a democratic govermet. - The Recostructio ad Developmet Programme, 1994 The Recostructio ad Developmet Programme (RDP) formed the basis of govermet s attempt to attack poverty ad deprivatio, ad to build a uited, o-racial ad o-sexist South Africa. Iformed by the priciples of iclusivity, govermet traslated the RDP ito policies, programmes ad budgets. The Diagostic Report of the Natioal Plaig Commissio, released i Jue 2011, sets out South Africa s achievemets ad its shortcomigs sice I may areas, the coutry has made remarkable progress sice the daw of democracy. The adoptio of the Costitutio, the establishmet of istitutios of democracy, the buildig of a o-racial ad o-sexist public service, ad the trasformatio of may other istitutios created the foudatio for a ew atio. The health of the public fiaces was restored. Political violece, which had claimed thousads of lives, was brought to a ed. Democracy has ot just restored the digity of all South Africas it has also traslated ito improved access to educatio, health services, water, housig, electrificatio ad social security. A sigificat proportio of schools, suburbs ad workplaces are itegrated. I short, today s South Africa looks very differet from the oe we left behid i Yet for may poor South Africas, there is still much that looks the same, highlightig serious shortcomigs i our developmet path. While we have made some progress i reducig poverty, poverty is still pervasive ad we have made isufficiet progress i reducig iequality. Millios of people remai uemployed ad may workig households live close to the poverty lie. May of these are youg people who feel that the odds are stacked agaist them, as ideed they ofte are. It is importat to uderstad why these problems persist ad to fix them. But fixig them will take time ad we caot expect people to wait quietly o the sidelies. We require urget measures to address our most pressig eeds, particularly high levels of uemploymet, especially amog the youth. South Africa has the potetial ad capacity to elimiate poverty ad reduce iequality over the ext two decades. This requires a ew approach oe that moves from a passive citizery receivig services from the state to oe that systematically icludes the socially ad ecoomically excluded, where people are active champios of their ow developmet, ad 1

14 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN where govermet works effectively to develop people s capabilities to lead the lives they desire. The success of this approach is premised o: The active efforts ad participatio of all South Africas i their ow developmet Redressig the ijustices of the past effectively Faster ecoomic growth ad higher ivestmet ad employmet Risig stadards of educatio, a healthy populatio ad effective social protectio Stregtheig the liks betwee ecoomic ad social strategies A effective ad capable govermet Collaboratio betwee the private ad public sectors Leadership from all sectors i society. A more prosperous coutry that is progressively eradicatig poverty ad iequality will also, over time, elimiate the effects of apartheid ad coloial discrimiatio that have so scarred our society. It will lay the basis for greater social cohesio, uity ad opportuity. This overview chapter covers the high-level targets of the pla, a brief summary of the diagostic documet, a summary of the proposed developmet paradigm ad a accout of demographic treds ad exteral drivers of chage. It the provides a summary of each of the chapters i the pla. The chapter cocludes with a high-level summary of the key targets i each chapter, followed by key implemetable actios i each area. Creatig a virtuous cycle of growth ad developmet It is possible to elimiate poverty ad to sharply reduce iequality by The commissio proposes that these be the guidig objectives of the atioal pla over the ext 20 years. All elemets of the pla must demostrate their effect o these two goals. But we also eed to be frak about the challeges that lie ahead. The majority of South Africas who have remaied poor have demostrated remarkable patiece, showig that they uderstad that ceturies of damage caot be udoe i a few decades. While great strides ca be made i the ext two decades, we will still oly be buildig the foudatios for the equitable ad prosperous society that we dream of. We eed to show that if all South Africas work together, we ca get much closer towards that future we all desire. The atioal pla has to attack the blight of poverty ad exclusio, ad urture ecoomic growth at the same time; creatig a virtuous cycle of expadig opportuities, buildig capabilities, reducig poverty, ivolvig commuities i their ow developmet, all leadig to risig livig stadards. Such a virtuous cycle requires agreemet across society about the cotributio ad sacrifices of all sectors ad iterests. This will traslate ito greater cofidece ad a greater field of opportuities for idividuals ad the coutry. Growth ad developmet, ad reducig poverty ad iequality, are the core elemets of this virtuous cycle. Strog leadership throughout society, atioal cosesus, social cohesio ad a capable state are its key eablers. 2

15 OVERVIEW We preset this proposed pla to society i the full expectatio that it will be ehaced ad improved through public criticism ad dialogue. The pla will oly achieve its objectives if it ejoys broad social support ad is cosesual i character. It will oly work if there is strog leadership ad focused implemetatio. Govermet ad society as a whole are resposible for improvig ad implemetig the atioal developmet pla. Success will be measured by the degree to which the lives ad opportuities of the poorest South Africas are trasformed i a sustaiable maer. Presetly, the coutry does ot have a stadard defiitio of poverty. The commissio recommeds usig a poverty lie of about R418 (i 2009 prices) per perso per moth. This recommedatio is based o a proposal by Statistics South Africa for a poverty lie for the coutry that takes ito accout the prices of a basket of food ad other essetial items. Success would mea reducig the proportio of people livig below this level from the curret 39 percet of the populatio to zero. This is a mammoth but achievable task. The proposed poverty lie should ot detract from the fact that poverty is a multidimesioal cocept, icorporatig more tha just icome, ad we have to make progress o all of these dimesios. A reductio i iequality will be achieved if the Gii co-efficiet falls from the curret level of 0.7 to 0.6 by South Africa today has oe of the world s highest levels of iequality. While the proposed reductio would mark a sigificat shift, a high level of iequality would persist i While the umbers provide importat targets, peoples views ad voices eed to be heard, their cotributios valued; the poor majority eed to be accorded the same digity ad respect as more fortuate members of society. The cetral challeges Our Diagostic Report idetified ie mai challeges: 1. Too few people work 2. The stadard of educatio for most black learers is of poor quality 3. Ifrastructure is poorly located, uder-maitaied ad isufficiet to foster higher growth 4. Spatial patters exclude the poor from the fruits of developmet 5. The ecoomy is overly ad usustaiably resource itesive 6. A widespread disease burde is compouded by a failig public health system 7. Public services are ueve ad ofte of poor quality 8. Corruptio is widespread 9. South Africa remais a divided society. Of these elemets, the commissio believes that two are critical ad iterrelated: too few people work ad the quality of educatio available to the majority is poor. While all ie challeges must be tackled i a itegrated maer, icreasig employmet ad improvig 1 A measure of the iequality of distributio. A value of 0 equals full equality ad 1 maximum iequality. 3

16 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN the quality of educatio must be the highest priorities. Failure to raise employmet ad improve the quality of educatio would sigal failure. Both require commuity ivolvemet, better public service delivery ad a higher degree of social cohesio that promotes cooperatio betwee all sectors to support ecoomic growth ad job creatio. Failure to address these challeges is likely to result i ecoomic declie, fallig livig stadards, risig competitio for resources ad social tesio. Persistetly high levels of poverty will prompt social istability, leadig to a rise i populist politics ad demads for short-term measures that lead to further tesio ad declie. South Africa must avoid such a destructive cycle. I particular, the coutry s developmet path has ot sufficietly broadeed opportuities for black South Africas, especially wome ad youth. What this meas is that save for political rights, ecoomic beefits for those with access to employmet or empowermet programmes - the socioecoomic coditios that characterised the system of apartheid ad coloialism largely still defie our social reality. It is importat to uderstad why we failed to meet key targets i the RDP, particularly the reductio of poverty ad deprivatio. Two lessos from that experiece stad out. First, whe the RDP was tabled, govermet had a overly optimistic view of the capacity of the state. The reality was a failure of coordiatio withi govermet with differet departmets workig at cross purposes ad a lack of coordiatio betwee the public sector, the private sector ad civil society. Secod, the coutry as a whole did ot aticipate the impact of exteral shocks ad chagig iteratioal coditios o its fortues. The effects of the Asia crisis i 1998, the collapse of the rad i 2001, the world fiacial crisis that bega i 2008, ad the shiftig patters of global trade ad ivestmet have bee sigificat. Writig a ew story for South Africa The coutry must write a differet story i the years ahead. I this ew story, every citize is cocered about the wellbeig of all other citizes, ad the developmet of South Africa meas the developmet of each ad every oe of us who lives here. We must build o our social solidarity, which, through history ad heritage has demostrated our aspiratio to create a carig South Africa society. I this ew story, our atio's eergies ar e focused both o attackig poverty ad o expadig a robust, etrepreeurial ad iovative ecoomy. Over the ext two decades ad beyod, commuities will eed the resources ad capabilities to become their ow egies of developmet, ad govermet must support this. We have to esure that poor people have the eviromet, services ad skills to improve their lives. At the same time, govermet must create the coditios ad eviromet for higher levels of public ad private ivestmet to create jobs ad esure risig icomes. 4

17 OVERVIEW The atioal developmet pla proposes to ivigorate ad expad the ecoomic opportuity through ivestmet i ifrastructure, more iovatio, private ivestmet ad etrepreeurialism. The ecoomy will absorb more labour especially of ew work seekers ad wage moderatio at all levels will cotribute to risig employmet. Broadeig these opportuities requires faster, more iclusive ecoomic growth ad higher levels of ivestmet. The well-off eed to accept that the old model of cosumptio is usustaiable, ad that progressive taxatio, redress measures, higher savigs ad greater iclusivity are required to develop a prosperous, uited coutry for all South Africas. The drivers of the cost of livig must be tackled to eable workers wages to go further. Youg people should have the capabilities ad cofidece to grasp the opportuities of a brighter future. This pla advaces such a approach. It seeks to develop people s capabilities to be able to improve their lives through educatio ad skills developmet, health care, better access to public trasport, jobs, social protectio, risig icomes, housig ad basic services, ad safe commuities. Broadeig these opportuities requires faster, more iclusive ecoomic growth ad higher levels of ivestmet. The commissio has draw strogly from defiitios of developmet that focus o creatig the coditios, opportuities ad capabilities that eable people to lead the lives that they desire. Developmet is the process of raisig cotiuously the capabilities of all citizes, particularly those who were previously disadvataged. Natioal capabilities that eable competitiveess iclude huma capital (built through educatio, health, skills ad work experiece), physical ifrastructure (schools, cliics, ports ad power lies), techologies, maagemet skills ad the social istitutios eeded to allow people to live decet lives. It requires shiftig from a paradigm of etitlemet to a developmet paradigm that promotes the developmet of capabilities, the creatio of opportuities ad the participatio of all citizes. Govermet s strategy to date has bee to provide a rage of social services, icludig social security. Because of the ueve capability of the state, we have excelled at doig the thigs that are easier, such as payig grats ad providig water ad electricity, ad faltered at doig the difficult thigs such as improvig educatio, promotig employmet ad buildig houses close to jobs. By default, we have had a distorted developmet effort. A more capable state, i partership with commuities, must build o the platform of social services ad social security ad cotribute towards a more balaced approach by developig the capabilities of people. This is the shift we seek. Developig ad upgradig capabilities to eable sustaiable ad iclusive developmet requires a ew approach ad a ew midset. The story we propose to write ivolves: Creatig jobs ad livelihoods Expadig ifrastructure Trasitioig to a low-carbo ecoomy Trasformig urba ad rural spaces Improvig educatio ad traiig 5

18 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Providig quality health care Buildig a capable state Fightig corruptio ad ehacig accoutability Trasformig society ad uitig the atio. Leadership, uity ad cohesio are difficult i our still-divided society. Yet these are the very thigs that help to achor successful atios ad developmet strategies. Leadership is required to wi broad agreemet for the pla, to implemet it ad to make sacrifices for a better future. A capable, efficiet ad fair state is eeded to support it. Ad parterships, based o mutual trust are vital. Uless we work together, sacrificig short-term gai for loger-term prosperity, o sigle part of South Africa society ca achieve its objectives. If we are to elimiate poverty ad reduce iequality, we eed to egage seriously with the impact of geder o people s life chaces ad opportuities. The factors that determie the life chaces of wome are geerally worse tha for me, ad they are also affected by race, geographic locatio, age ad class. We have chose to treat it as a itegrated issue that rus throughout the pla. Similarly, most aspects of this pla are aimed directly at improvig the life chaces of today s childre ad youth. A coutry with a future orietatio is a coutry that develops the capabilities of its youth. Whether still i school or ot, our pla must improve the life chaces of youg people. This is aother key cross-cuttig theme of this pla. Demographic treds What will South Africa s populatio look like i 2030? Our coutry is midway through a demographic trasitio, where first death rate s fall ad the populatio expads, the birth rates fall ad the populatio stabilises. This trasitio has profoud implicatios for populatio structure, the rate of growth of the labour force ad demad for services such as educatio ad health. Today the labour force makes up a sigificat sh are of the populatio, ad the proportio of childre ad the elderly comprise smaller shares. Iteratioally, this demographic widow is ofte associated with risig icomes, faster prod uctivity growth, higher savigs ad risig livig stadards. Alteratively, it ca lead to a frustratig ad destabilisig eviromet where youg people caot get work, cotributig to violece, crime, alcohol abuse ad other social ills. The key determiat of success is whether a coutry ca haress the advatage of havig a large umber of youg people who are able ad willig to work. To do so meas providig them with educatio ad skills, ad gettig school leavers ito work that they fid stimulatig ad through which they ca fulfil their aspiratios. Birth rates for white South Africas started fallig i the 1950s ad 1960s, while birth rates for Africas bega fallig i the late 1970s ad early 1980s. I both cases, risig urbaisatio ad better educatioal stadards were decisive factor s. As early as 1991, the birth rate for Africas fell below 2.5 (a rate of 2.1 equates to the replacemet rate for a populatio). I the early part 6

19 OVERVIEW of this cetury HIV/AIDS affected the ormal trajectory of demographic trasitio, as the death rate rose ad life expectacy plummeted. This is begiig to be reversed through the effectiveess of treatmet programmes ad the st abilisatio of ew ifectios. At preset, our populatio is growig at 1 percet a year, ad by 2030, it is projected to be growig by 0.5 percet. Key demographic observatios iclude the followig: The proportio of South Africas livig i rural areas has falle by about 10 percetage poits sice Today, about 60 percet of the populatio lives i urba areas ad slightly more tha half of the poor live i cities. By 2030, about 70 percet of people are likely to be livig i urba areas. Gauteg ad the cities of ethekwii ad Cape Tow are the fastest growig city-regios, with implicatios for plaig ad delivery of basic services. While the precise umber of immigrats i the coutry is ot kow, goig forward immigratio will add betwee 0.1 percet ad 0.2 percet to South Africa s populatio growth each year. HIV/AIDS has had a profoud effect o popu latio structure, raisig overall deaths sigificatly sice The pademic has also reduced the proportio of wome of child-bearig age (although wome are still i the majority). There are, however, sigs that the coutry has begu to tur the corer. The HIV ifectio rate has stabilised at about 10 percet. New ifectios amog youg people (aged 15 to 24) have falle. Improved treatmet has reduced the death ra te ad life expectacy is risig agai. All of these factors eed to be take ito accout i atioal plaig. Exteral drivers of chage Iteratioal ad regioal developmets affect South Africa s fortues i complex ways. The pla discusses some of these treds, as summarised below. Iteratioal political ad ecoomic developmets South Africa s policy-makers did ot adequately accout for the effects that the world ecoomy would have o the domestic eviromet. The emergece of fast-growig developig ecoomies, particularly Chia ad Idia, has already chaged global trade ad ivestmet patters, ad is reshapig iterat ioal politics. The relative declie i the ecoomic power of the Uited States, Europe a d Japa will have cocomitat effects o their political ad military ifluece. After early three ceturies of divergece, iequality betwee atios is decreasig. Urbaisatio ad idustrialisatio i Chia ad Idia are likely to keep demad for atural resources relatively high fo r a decade or more. The emergece of more global cosumers will broade opportuities for all ecoomies, icludig South Africa s. 7

20 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Globalisatio Globalisatio has icreased the complexity with which all coutries must coted. Systemic risks, such as fiacial, bakig, debt ad currecy crises, will remai ever preset. Capital is geerally more mobile tha labour, resultig i sigificat implicatios for wages. Ad while iequality betwee coutries has falle i the past decade, iequality withi most coutries (otably Chia ad Idia) has icreased. At a political level, there may be opportuities to brig about rules-based multilateral systems to shape global goverace, makig the world a more just place. South Africa will have to maage the risks that flow from greater complexity ad recogise that emergig powers may seek to exploit our vulerabilities. The rise of emergig markets also icreases competitio, placig dowward pressure o the wages of low-skilled workers i the maufacturig sector. To become more competitive, South Africa will have to cofrot some difficult choices. Similarly, the pursuit of mieral resources by fast-growig emergig coutries holds opportuities ad risks. Commodity-producig ecoomies i Africa, icludig South Africa, ca use a period of higher demad for atural resources to geerate the returs eeded to upgrade capabilities. If miig output does ot icrease, ad if the associated rets are ot extracted sesibly ad used wisely, it will represet a tragic failure for the people of the cotiet. Africa s developmet Africa s growth ad developmet icreases the si ze of the cotiet s ecoomy. This ca also provide Africa with a greater voice i global political ad ecoomic istitutios. Strog growth o the cotiet has opeed up major opportuities for South Africa firms ad idustries, which have cotributed to developmet by ivestig i telecommuicatios, bakig, miig, costructio ad retail. Oe of the biggest exports sice 1994 has bee maagemet skills, deployed i settigs that are commo to us, but less familiar to competitors from developed coutries. Several structural weakesses must be overcome if South Africa firms are to icrease the beefits they ca derive from, ad the cotributios they ca make to, growth ad developmet i Africa. Crucially, poor trasport liks ad ifrastructure etworks, as well as tariff ad o-tariff barriers, raise the cost of doig busiess ad hobble both ivestmet ad iteral trade. Weak legal istitutios ad, i some cases, poor goverace heighte the risks of ivestig. The picture is improvig steadily, but challeges remai. The political uprisigs i North Africa are a stark remider of the risks of poor goverace ad weak istitutios allowig the elite to accumulate at the expese of the people. The Souther Africa Developmet Commuity (SADC) faces sigificat challeges o may frots icludig ifrastructure, trade barriers ad goverace. 8

21 OVERVIEW Trade is always a two-way street. While South Af rica is a water-scarce coutry, may of our eighbours have a abudat supply. Securig adequate supplies of water ad food must be looked at i a regioal cotext. South Africa should ivest i ad help exploit the wide rage of opportuities for low-carbo eergy from hydroe lectric ad other atural sources i souther Africa. Climate chage Emissios of carbo dioxide ad other greehouse gases are chagig the earth s climate. Risig temperatures, more erratic raifall ad extreme weather evets are likely to take a disproportioate toll o Africa, with a icreased spread of tropical diseases ad growig losses (huma ad fiacial), from extreme weather evets. Climate chage has the potetial to reduce food productio ad make potable wa ter scarcer, with cosequeces for migratio patters ad political coflict. South Africa faces particular challeges. Parts of what was already a dry coutry have become oticeably dryer over the past 30 years. Risig temperatures ad chagig raifall patters will have cosequeces for food productio ad water supply. While adaptig to these chages, idustries ad households have to reduce their egative impact o the eviromet. This will require far-reachig chages to the way we live ad work. The impact of climate chage is global i scope ad global solutios must be foud, with due cosideratio of regioal ad atioal cotexts. Techological chage Sciece ad techology have brought ew treatmets to the sick, prologed the lives of the elderly, coected people across distaces ad provided clea water to people i remote areas. They have also created ew markets, cate rig for eeds that were at the outer edges of the huma imagiatio just decades ago, such as the Iteret. May parts of Africa that have ot see fixed-lie telephoy are widely served today by efficiet cellular phoe etworks that provide a wide rage of services. Today childre ca get access to the best maths teachers without walkig for hours. The commissio is cocered about the high domestic cost of broadbad Iteret coectivity. All i our society should be able to acquire ad use kowledge effectively. Everyoe should beefit from importat breakthroughs i sciece ad techology. Ad South Africa should cotiue to cotribute to global scietific ad techological advacemet. 9

22 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN A summary of the pla This sectio summarises each chapter i the pla, focusig o key priority areas. A ecoomy that will create more jobs South Africa eeds a ecoomy that is more iclusive, more dyamic ad i which the fruits of growth are shared more equitably. The pla evi sages a ecoomy that serves the eeds of all South Africas rich ad poor, black ad white, skilled ad uskilled, those with capital ad those without, urba ad rural, wome ad me. I 2030, the ecoomy should be close to full employmet; equip people with the skills they eed; esure that owership of productio is less cocetrated ad more diverse (where black people ad wome ow a sigificat share of productive assets); ad be able to grow rapidly, providig the resources to pay for ivestmet i huma ad physical capital. To elimiate poverty ad reduce iequality, the ecoomy must become more iclusive ad grow faster. These are twi imperatives. Govermet's New Growth Path aims to create 5 millio ew jobs by It seeks to do so by providig a supportig eviromet for growth ad developmet, while promotig a more labour-absorptive ecoomy. Its proposals are iteded to lower the cost of livig for poor households ad for busiesses through targeted microecoomic reforms, especially i trasport, public services, telecommuicatios ad food. Lowerig the cost of livig is a ecessary adjuct to raisig the stadard of livig ad ecouragig ivestmet. The commissio builds o this approach. The atioal developmet pla proposes to create 11 millio jobs by 2030 by: Realisig a eviromet for sustaiable employmet ad iclusive ecoomic growth Promotig employmet i labour-absorbig idustries Raisig exports ad competitiveess Stregtheig govermet s capacity to give leadership to ecoomic developmet Mobilisig all sectors of society aroud a atioal visio. Meetig these objectives requires leadership to drive implemetatio, ad to covice South Africas of the eed to make mutual sacrifices for loger-term beefits. It will also require a chage i the structure of the ecoomy ad the pace at which it grows. The crisp questio is how. The ecoomy eeds to meet a differet set of objectives, begiig with job creatio. It eeds to become more imble, respodig quickly to opportuities ad circumvetig risks. Furthermore, patters of owership ad cotrol have to chage. This will ot be easy. It requires carefully sequeced actios that trasform the ecoomy without destroyig its capacities. The first step is to act o the fact that South Africa has millios of able-bodied people who wat to work. I the short term, the ecoomy eeds to create jobs for millios of uemployed South Africas, may of whom are youg ad low-skilled, while upgradig skills ad kowledge 10

23 OVERVIEW for a differet ecoomy i future. Raisig employmet levels will have beefits beyod the empowerig experiece of havig a job. It will help people ivest i their childre s educatio, upgrade their homes ad maage life s risks. Work ad educatio will eable citizes to improve their ow lives. Sustaiable growth ad developmet will require higher savigs, ivestmet ad export growth. Yet the coutry faces somethig of a quadary. The thigs that drive growth are ot always the thigs that drive job creatio ad the thigs that are good for job creatio are ot always good for growth. Because the ecoomy eeds both, efforts should focus o growig exports ad buildig the likages betwee export earigs ad job creatio, which ofte occur i domestically focused small- ad medium-sized firms, most ofte i the services sector. South Africa has to exploit its existig stregths to icrease exports. This meas usig the coutry s advatages its skills, techologies, firms, mieral wealth, uderutilised labour ad geography. If the ecoomy is less competitive i oe area, it will have to do better i others. Figure 1: The quadary of growth ad job creatio Good for growth, ot great for jobs Miig, exportig maagemet services, highskill service exports Labour-itesive maufacturig mid - skill service exports, process outsourcig Good for growth, good for jobs Good for jobs, ot great for growth Public employmet schemes. homebased care, retail sector growth Risig public sector wage bill, low levels of ivestmet, fallig educatio stadards Bad for both jobs ad growth I the short term, the world ecoomy is expected to grow at a relatively slow pace. I these circumstaces, South Africa busiesses eed to thik carefully about what they produce, for which markets, usig what capabilities. As a small ope ecoomy, South Africa ca develop iche products. Capturig a small share of global demad i areas where local firms ca be competitive will have a big impact. For example, as discussed i the chapter o the rural ecoomy, South Africa produces just 197 toes of cherries per year. The global market is 4 millio toes. The coutry has the lad, weather, skills ad capabilities to grow cherry exports substatially to meet a greater share of global demad. 11

24 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The ecoomy is well edowed with mieral resources, with large global shares i platium group metals, gold, diamods, magaese, coal, iro ore ad uraium. Yet over the past decade the miig sector has failed to match the global growth tred i mieral exports due to poor ifrastructure ad regulatory ad policy frameworks that hamper ivestmet. South Africa ca beefit greatly from Asia s grow ig demad for commodities. To do so meas improvig water, trasport ad eergy ifr astructure, ad providig greater policy ad regulatory certaity to ivestors. This will eable the miig sector to deploy the skills, resources, kow-how ad capital that are availa ble, ad for govermet to raise much more tax reveue tha it does at preset. A cotetious issue is whether South Africa ca mobilise uemployed people ito productio for export markets. Some argue that the ecoomy is ot competitive i labour-itesive maufacturig because the cost structure is too high, labour laws are ot coducive to such idustries, ad the coutry lacks the maagemet acume to maage large, labour-itesive firms. This is probably true i some sectors. But i certai higher-value goods or iche markets, South Africa firms ca compete. These iclude agricultural ad agro-processig, white goods ad appliaces, ad certai iches i clothig ad footwear. Keepig costs (especially logistics costs) dow is importat for these types of exports. There are trade-offs relatig to mieral beeficiatio, because beeficiatio is ofte eergy ad capital itesive, both of which are scarce resources. There are o easy aswers. Developig high skills levels ad etwork ifrastructure takes time ad eeds to be paid for, eve as the coutr y fids ways to create jobs for millios of uemployed people. Difficult choices will have to be made. To promote large-scale job creatio, South Africa will have to fid ways to improve the fuctioig of the labour market. The commissio makes several proposals i this regard, broadly withi the framework of the existig labour relatios regime. The coutry must also fid ways to keep the cost of livig low ad grow the capabilities of the state. Our proposals to icrease employmet ad growth iclude the followig: Raise exports, focusig o those areas where South Africa already has the edowmets ad comparative advatage, such as miig, costructio, mid-skill maufacturig, agriculture ad agro-processig, tourism ad busiess services. Icrease the size ad effectiveess of the iovatio system, ad esure closer aligmet with compaies that operate i sectors cosistet with the growth strategy. Improve the fuctioig of the labour market to help the ecoomy absorb more labour, through reforms ad specific proposals cocerig dispute resolutio ad disciplie. Support small busiesses through better coordiatio of activities i small busiess agecies, developmet fiace istitutios, ad public ad private icubators. Improve the skills base through better educatio ad vocatioal traiig. Icrease ivestmet i social ad ecoomic ifrastructure to lower costs, raise productivity ad brig more people ito the maistream of the ecoomy. Reduce the regulatory burde i sectors where the private sector is the mai ivestor, such as broadbad Iteret coectivity, to achieve greater capacity ad lower prices. Improve the capacity of the state to effectively implemet ecoomic policy. 12

25 OVERVIEW Log-term growth ad ivestmet requires trus t ad cooperatio betwee busiess, labour ad govermet. I South Africa, levels of trust are low. Similarly, the labour relatios eviromet has become uduly tese ad sometimes violet. It is icoceivable that the ecoomy will evolve i a more labour-itesive maer if the preset state of tesio betwee employers ad labour persists. Promotig more rapid, job-creatig growth meas tacklig these tesios i a hoest ad ope maer. Improvig ifrastructure Ivestmet spedig i South Africa fell from a average of almost 30 percet of gross domestic product (GDP) i the early 1980s to about 16 percet by the early 2000s. Similarly, public ifrastructure spedig is at low levels by historical stadards. I effect, South Africa has missed a geeratio of capital ivestmet i ro ads, rail, ports, electricity, water saitatio, public trasport ad housig. To grow faster ad i a more iclusive maer, the coutry eeds a higher level of capital spedig i geeral ad public ivestmet i particular. Gross fixed capital formatio eeds to reach about 30 percet of GDP by 2030 to see a sustaied impact o growth ad household services. Public sector ivestmet i ecoomic ifrastructure crowds i private ivestmet. Private ivestmet is a fuctio of curret ad projected growth ad profitability. Importatly, it is also a fuctio of mutual trust ad cofidece i ecoomic policies. I recet years, the public sector has favoured cosumptio over ivestmet. The govermet s 2011 Medium Term Budget Policy Statemet ackowledges this ad aouces a shift i the compositio of expediture towards ivestmet, which is absolutely ecessary. The commissio s recommedatios o ecoomic ifrastructure cover the fiacig, plaig ad maiteace of ifrastructure. Who pays for ifrastructure? Ivestmet i some types of ifrastructure has broad social ad ecoomic beefits. But playig catch-up meas that charges have to icrease steeply i the short to medium term to make services fiacially viable. The fact that oe ew power statio (producig MW of electricity) costs about twice the etire depreciated capital stock of existig power statios (producig MW) illustrates the challege. Moreover, high levels of joblessess ad iequality make some of these services uaffordable for most of the populatio, uless they are subsidised. The commissio s view is that i the log term, users must pay the bulk of the costs, with due protectio for poor households. The role of govermet ad the fiscus is to provide the requisite guaratees so that the costs ca be amortised over time. The state must also put i place appropriate regulatory ad goverace frameworks so that the ifrastructure is operated efficietly. For ifrastructure that ge erates fiacial returs, debt raised to build facilities should be o the balace sheets of state-owed eterprises or private firms that do the work. Guaratees should be used selectively to lower the cost of capital ad to secure log-term fiace. Subsidies to poor households should be as direct ad as trasparet as 13

26 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN possible. Ifrastructure that does ot geerate fiacial returs such as schools or hospitals should be fiaced from the budget. The electricity crisis of 2008 exposed some istitutioal weakesses. Avertig such problems requires clear istitutioal arragemets, trasparet shareholder compacts, clea lies of accoutability ad soud fiacial models to esure sustaiability. We make specific recommedatios i each of these areas. As stated earlier, govermet should appoit the boards of etities ad the boards should appoit chief executives, makig the lies of accoutability clear. Public documets should st ate the etity s public iterest madate. Laws that gover regulatio are ofte cofusig, coflatig policy with regulatio. We propose ways to fix this. For ifrastructure that supports huma settlemets (housig, water, saitatio, roads, parks ad so o) the picture is similarly complicated. The plaig fuctio is located at local level, the housig fuctio assiged to the provicial level, ad the resposibility for water ad electricity provisio is split betwee those resposible for bulk services ad reticulatio. I practice, this does t work. Huma settlemets are badly plaed, ad there is little coordiatio betwee those istallig water reticulatio ifrastructure ad those resposible for providig bulk ifrastructure. Resposibility for housig should shift to the level at which plaig is executed the muicipal level. Weak capacity i poorly resourced local authorities does ot justify chaos. These problems must be fixed for effective urba developmet. Compared with the best iteratioal stadards, South Africa s iformatio ad commuicatio techology (ICT) ifrastructure is abysmal. A efficiet iformatio ifrastructure that promotes ecoomic growth ad greater iclusio requires a stroger broadbad ad telecommuicatios etwork ad lower prices. The ecoomic ad employmet beefits outweigh the costs. After carefully reviewig South Africa s ifrastr ucture plas, the commissio believes that the followig ivestmets should be prioritised: The upgradig of iformal settlemets. Public trasport ifrastructure ad systems, icludig the reewal of the commuter rail fleet, supported by statio ad facilities upgrades to ehace liks with road-based services. The developmet of the Durba-Gauteg freight corridor, icludig the developmet of a ew dug-out port o the site of the old Durba airport. The costructio of a ew coal lie to ulock coal deposits i the Waterberg, extesio of existig coal lies i the cetral basi ad, through private partership, the upgradig of the iro ore lie to Saldaha. The timely developmet of a umber of key ew water schemes to supply urba ad idustrial cetres, ew irrigatio systems i the Umzimvubu river basi ad Makatii Flats ad the establishmet of a atioal water coservatio programme with clear targets to improve water use ad efficiecy. The costructio of ifrastructure to import liquefied atural gas ad accelerated exploratio activity to fid sufficiet domestic gas feedstocks (icludig exploratio of 14

27 OVERVIEW shale ad coal bed methae reserves) to diversify our eergy mix ad reduce our carbo emissios. Procurig about MW of reewable electricity by 2030, importig electricity from the regio, decommissioig MW of agig coal-fired power statios ad accelerated ivestmets i demad-side savig s, icludig techologies such as solar water heatig. Trasitio to a low-carbo ecoomy South Africa eeds to move away from the usustaiable use of atural resources. As water becomes scarcer, ad global policy aims to price i the cost of carbo emissios, the coutry eeds a coheret pla to use water more sustaiably ad to emit less carbo. Similar approaches apply to protectig the oceas, soil ad wildlife, which are used usustaiably to the detrimet of the coutry s future. All of this eeds to be doe i a way that icreases the ability of the ecoomy to employ more labour productively. The way forward is ot obvious, or is it likely to be smooth. Large-scale ecoomic trasitios are disruptive ad costly. Chages to eergy geeratio, water coservatio ad the uses of both are likely to be challegig ad potetially disruptive for society. Maagig this trasitio i a way that reduces costs especially for the poor will require competet istitutios, iovative ecoomic istrumets, clear ad cosistet policies, ad a educated ad uderstadig electorate. Key proposals to support the trasitio to a low-carbo ecoomy iclude: Support for a carbo budgetig approach, likig social ad ecoomic cosideratios to carbo reductio targets. Itroducig a ecoomy-wide price for carbo complemeted by a rage of programmes ad icetives to raise eergy efficiecy ad maage waste better. A target of 5 millio solar water heaters by Buildig stadards that promote eergy efficiecy. Simplifyig the regulatory regime to ecourage reewable eergy, regioal hydroelectric iitiatives ad idepedet power producers. With a realistic strategy ad global parterships, South Africa ca maage the trasitio to a low-carbo ecoomy at a pace cosistet with govermet s public pledges, without harmig jobs ad competitiveess. A iclusive ad itegrated rural ecoomy By 2030, South Africa s rural commuities should have greater opportuities to participate fully i the ecoomic, social ad political life of the coutry. These opportuities will eed to be uderpied by good quality educatio, healthcare, trasport ad other basic services. Successful lad reform, job creatio ad risig agricultural productio will all cotribute to the developmet of a iclusive rural ecoomy. 15

28 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The ecoomic ad social legacy of coloialism ad apartheid mea South Africa s rural areas are characterised by uusually high levels of poverty ad joblessess, with very limited employmet i agriculture. The apartheid system forced much of the Africa populatio ito rural reserves. The result was a advaced ad diversified commercial farmig sector relyig o poorly paid farm labour, ad impoverished, desely populated commuities with limited ecoomic opportuities ad miimal govermet services. To chage this, we propose a multiproged approach. The first is to create a millio jobs through agricultural developmet based o effective lad reform, ad the growth of irrigated agriculture ad lad productio. Secod, basic services that eable people to develop the capabilities they eed to take advatage of ecoomic opportuities throughout the coutry ad so cotribute to the developmet of their commuities through remittaces ad the trasfer of skills. This icludes esurig food security ad the empowermet of farm workers. Last, idustries such as agro-processig, tourism, fisheries ad small eterprises should be developed where potetial exists. Istitutioal capacity is itegral to the success of this multiproged approach, icludig the reforms required to deal with cotested relati oships betwee idigeous istitutios ad costitutioal oes. Reversig the spatial effects of apartheid Apartheid left a terrible spatial legacy. Housig policies sice 1994, i some istaces, have reiforced the spatial divide by placig low-icome housig o the periphery of cities, far from ecoomic activity. Reversig the coutry s spat ial iheritace, eve with soud ad sesible policies, is likely to take decades. Settlemet patters should meet the eeds ad prefereces of citizes, takig ito accout broader social, evirometal ad ecoomic iterests. Travel distaces eed to be shorter. This meas esurig that a larger proportio of workers live closer to their places of work, ad that public trasport is safe, reliable, affordable ad eergy efficiet. It meas buildig deser ad more liveable cities ad tows. I rural areas, settlemet patters must balace the social, cultural ad agricultural eeds of families with the eed to provide cost-effective services to households. The commissio proposes three complemetary strategies: Icreasig urba populatio desity, while improvig the liveability of cities by providig parks ad other ope spaces, ad esurig safety. Providig more reliable ad affordable public trasport with better coordiatio across muicipalities ad betwee differet modes. Movig jobs ad ivestmet towards dese towships that are o the margis of cities. Buildig ew settlemets far from places of work should be discouraged, chiefly through plaig ad zoig regulatios resposive to govermet policy. 16

29 OVERVIEW We recogise that there are several obstacles to these proposals, icludig the costs of desificatio ad resistace to ew residetial patters. These obstacles ca be overcome with soud plaig frameworks, political will, clear policies, cosistet applicatio ad sesible fiacig arragemets. Rural spatial plaig has its ow features. Gove rmet s efforts should focus o sesible ad sustaiable lad reform, support to farmers, rollout of household services, ad appropriate ecoomic ifrastructure such as roads ad irrigatio schemes. The focus of rural developmet must be to improve livelihoods through icome geeratio, employmet, ad household ad social services. To date, rural zoig discussios have cetred o the merits of trasformig agricultural lad ito use for game farmig, golf estates ad towhouse developmet. While these debates are importat, they do ot address the bigger ecoomic issue. Farmlad is beig coverted to other uses largely because agriculture is potetially less profitable ad more risky tha property developmet. The reasos for low margis i agriculture are beyod the scope of this overview. Higher agricultural output is desirable ad the istrumets that ca promote this are broader tha zoig regulatios. We make specific proposals to raise agricultural ivestmet, output ad employmet. Improvig the quality of educatio, traiig ad iovatio The quality of educatio for the majority of black learers remais poor. Poor-quality educatio ot oly deies may learers access to employmet it also affects the earigs potetial ad career mobility of those who do get jobs, ad reduces the dyamism of South Africa busiesses. By 2030, South Africa eeds a educatio system with the followig attributes: High-quality early childhood educatio, with access rates exceedig 90 percet. Quality school educatio, with globally competitive literacy ad umeracy stadards. Further ad higher educatio ad traiig that eables people to fulfil their potetial. A expadig higher educatio sector that is able to cotribute towards risig icomes, higher productivity ad the shift to a more kowledge-itesive ecoomy. A wider system of iovatio that liks key public istitutios (uiversities ad sciece coucils) with areas of the ecoomy cosistet with our ecoomic priorities. Improvig the quality of educatio requires careful maagemet, support from all iterested parties ad time. Accordig to oe study 2 of reform i 20 educatio systems across the world, soud approaches begi to produce results about six years after reforms are iitiated, with the real sustaied divideds emergig over the log term. A urget start must be made. Actio is eeded o several frots simultaeously. The first set of proposals ivolves households ad commuities. Proper utritio ad diet, especially for childre uder age three, are essetial for soud physical ad metal developmet. The home 2 McKisey (2010). How the world s most improved schoolig systems keep gettig better. 17

30 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN ad commuity eviromet is critical for the developmet of childre s deductive abilities. The commissio makes recommedatios o child utritio, addressig microutriet deficiecies, supportig parets ad families to break the cycle of poverty, ad providig the best preparatio for youg childre. We suggest ways i which every child ca have at least two years of pre-school educatio. The secod set of proposals relates to improvig the maagemet of the educatio system. Removig layers of bureaucracy would make mo re resources available to support schools ad teachers. The geeral rule of thumb is that itervetios, both supportive ad corrective, eed to be iversely proportioal to school performace. I this way, better-performig schools ca be give the freedom to get o with the job, as log as there is measurable, cotiuous improvemet. We make specific recommedatios focused o better support to schools, deliverig the basic ecessities for a good educatio ad measurig the right thigs. We propose a campaig to improve ifrastructure i poor schools, especially i rural areas. The third set of proposals aims to improve the competece ad capacity of school pricipals. The commo feature of all well ru schools is leadership. The Departmet of Basic Educatio has recetly lauched a programme to measure the competecies of pricipals ad deputy pricipals. This survey will also help idetify weak performers, based o learer scores, ad allow for appropriate support for pricipals ad teachers. Pricipals should be selected purely o merit, be give greater powers over school maagemet ad be held accoutable for school performace. The fourth set of proposals relates to teacher performace, coverig traiig, remueratio, icetives, time o task, performace measuremet (based o learer scores), ad appropriate cotet ad pedagogical support. We make recommedatios i each of these areas, but the crux of the issue is teacher accoutability. Teachers both idividually ad collectively (at school level) must be held accoutable for learer performace, with due recogitio of the learig eviromet. The further educatio ad traiig system is ot effective. It is too small ad the output quality is poor. Cotiuous quality improvemet is e eded as the system expads iitially at a moderate ad later at a accelerated pace. The quality ad relevace of courses eed urget attetio. Whe quality starts to improve ad the employability of graduates begis to icrease, demad for these educatioal services will rise automatically. Simply icreasig the size of the sector without focusig o quality is likely to be expesive ad demoralisig for youg people, further stigmatisig the system. By 2030, the sector should cover about 25 percet of the age-relevat cohort, implyig a icrease i umbers from about at preset to about by The coutry s higher educatio system will make a critical cotributio to ecoomic ad social progress, but performace of existig istitutios rages from world-class to mediocre. Cotiuous quality improvemet is eeded as the system expads at a moderate pace. A major challege is that poor school educatio icreases the cost of producig graduates, ad a relatively small umber of black studets graduate from uiversities. Icreasig participatio 18

31 OVERVIEW ad graduatio rates, with the optio of a four-year uiversity degree, combied with bridgig courses ad more support for uiversities to he lp black studets from eedy backgrouds, is likely to yield high returs. Some uiversities have begu to do this. Though it raises costs, it icreases flow-through ad reduces dropout rates, ad should be expaded o a targeted basis. A simultaeous focus o research ad developmet (R&D) ad o the calibre of teachig would improve the quality of higher educatio, but iadequate capacity ad quality of staff will costrai kowledge productio ad iovatio uless effectively addressed. The coutry s uiversities eed to become world-class cetres of excellece at the cuttig edge of techology. They ca attract studets from abroad geeratig reveue ad icreasig the skilled resource pool. The commissio proposes that foreig studets who graduate from South Africa uiversities should qualify for a seve-year work permit to ecourage them to stay ad work here. R&D has played a importat role i helpig middle-icome coutries such as South Korea advace to high-icome status. While South Africa eeds to sped more o R&D i geeral, the istitutioal set up also eeds to improve the lik betwee iovatio ad the productive eeds of busiess. Govermet should parter with the private sector to raise the level of R&D i firms. Public resources should be targeted to build the research ifrastructure required by a moder ecoomy i lie with the coutry s developmet strategy. Quality health care for all Log-term health outcomes are shaped by factors largely outside the health system: lifestyle, utritio, educatio, diet, sexual behaviour, exer cise, road accidets ad the level of violece. The commissio makes recommedatios i each of these areas. Priority areas iclude sex educatio, utritio, exercise, ad combatig smokig ad alcohol abuse. These are social resposibilities that deserve to be take seriously by every citize, ad promoted by families ad istitutios. Good health is essetial for a productive ad fulfillig life. The Diagostic Report demostrates the starkly iterrelated challeges posed by a crumblig health system ad a risig disease burde. The public health system must be fixed. While greater use of private care, paid for either by users or health isurace, is part of the solutio, it is o substitute for improvemet of the public health system. Give the systemic weakesses i that system today, a root-adbrach effort to improve the quality of care is eeded, especially at primary level. By 2030, the health system should provide quality care to all, free at the poit of service, or paid for by publicly provided or privately fuded isurace. The primary ad district health system should provide uiversal access, with a focus o prevetio, educatio, disease maagemet ad treatmet. Hospitals should be effective ad efficiet, providig quality secodary ad tertiary care for those who eed it. More health professioals should be o had, especially i poorer commuities. 19

32 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Reform of the public health system should focus o: Improved maagemet, especially at istitutioal level More ad better-traied health professioals Greater discretio over cliical ad admiistrative matters at facility level, combied with effective accoutability Better patiet iformatio systems supportig more decetralised ad home-based care models A focus o materal ad ifat health care. At istitutioal level, health care maagemet is i crisis. The Departmet of Health has recetly lauched a programme to evaluate maagemet competece. Complemetary reforms should iclude greater delegatio of authority over staffig, shift structures ad routie procuremet. A district-based approach to primary health care is part of the pilot phase of atioal health isurace. For this approach to be successful, the health system eeds more persoel (icludig professioals ad paramedics), ew forms of maagemet authority, ad stregtheed statutory structures for commuity represetatio i health system goverace. The HIV/AIDS epidemic has illustrated South Africa s ability to make moumetal social ad political mistakes as well as its ability to correct them ad implemet a complex programme effectively. The health system s success i maa gig the epidemic over the past five years is commedable. Yet there is o room for complacecy. There is a cotiued eed for educatio, prevetio, testig ad treatmet. Reducig the rate of ew ifectios will cut this figure substatially. However, eve if there are o ew ifectios, there will still be a sizeable umber of HIV-positive people requirig treatmet, posig ogoig challeges for the tuberculosis ifectio rate, ad sustaiig the risk of drug-resistat HIV strais developig. The HIV epidemic ad its implicatios for public policy are likely to be with us for at least aother geeratio, possibly two. Buildig a atioal health isurace system is a importat objective. There are four prerequisites to its success: improvig the quality of public health care, lowerig the relative cost of private care, recruitig more professio als i both the public ad private sectors, ad developig a health iformatio system that spas public ad private health providers. These reforms will take time, require cooperatio betwee the public ad private sectors, ad demad sigificat resources. Social protectio Effective social protectio ad welfare services are a itegral part of our programme for iclusive ecoomic growth ad cetral to the elimiatio of poverty ad reductio of iequality. 20

33 OVERVIEW Social protectio plays several roles i a society. Firstly, it se ts a floor through which, through social solidarity, we deem that o perso should live below. At preset, give South Africa s extremes of uemploymet ad workig poverty, may people regularly experiece huger ad fid it difficult to meet the basic eeds of their families. Progressively ad through multiple aveues, we seek a society where everyoe is lifted above this floor. Secodly, it plays a importat role i helpig households ad families maage life s risks. Thirdly, it helps ease labour market trasitios, thereby cotributig towards a more flexible labour market ad ecoomic dyamism. Our visio is for a social security system that fulfils all these roles. Our visio is that by 2030, South Africa would have a comprehesive system of social protectio that icludes social security grats, madatory retiremet savigs, risk beefits such as uemploymet, death ad disability beefits ad volutary retiremet savigs. Part of our approach to social protectio is through a social wage, which icludes o-fee schools, free basic services ad subsidised public trasport. I additio to creatig more work opportuities i the private sector, a sigificat broadeig of public employmet programmes will also help to esure that fewer households live below a determied floor. To achieve the objectives of broader social security coverage, we propose the followig reforms: A acceptable miimum stadard of livig must be defied as the social floor, icludig what is eeded to eable people to develop their capabilities. The retiremet savigs ad risk beefit gap should be closed through reforms, icludig madatory cotributios, with cosideratio give to govermet subsidisig these cotributios for low icome or periodic workers. Social welfare services must be expaded, with more educatio ad traiig for social work practitioers ad a review of fudig for o-profit orgaisatios. Public employmet should be expaded to provide work for the uemployed, with a specific focus o the youth ad wome. The itegratio of a umber of databases i the social security eviromet with iformatio from public employmet programmes will eable commuities to coduct social audits of govermet services, leadig to better ad more effective targetig of govermet s social ad employmet programmes. Buildig safer commuities Whe people feel usafe it makes it harder for them to develop their capabilities, pursue their persoal goals ad to take part i social ad ecoomic activity. To achieve the goals set out i this pla, South Africas eed to feel safe everywhere ad have cofidece i the crimial justice system to protect them ad to act speedily ad effectively whe required to do so. By 2030, people livig i South Africa should feel safe ad have o fear of crime. Wome ad childre ad all vulerable groups should feel protected. They should have cofidece i the crimial justice system to effectively apprehe d ad prosecute crimials who violate idividual 21

34 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN ad commuity safety. The South Africa Police Service ad metro police should be a professioal istitutio staffed by skilled, disc iplied, ethical idividuals who value their work ad serve the commuity. Achievig this visio requires targeted actio i five key areas: Stregtheig the crimial justice system This requires cooperatio betwee all departmets i the justice crime prevetio ad security cluster. We believe the correct implemetatio of the recommedatios i the Review of the South Africa Crimial Justice System will go far i dealig with the system s curret weakesses. Makig the police service professioal We propose likig the police code of coduct ad a code of professioalism to promotio ad disciplie i the service. Recruitmet should attract competet, skilled professi oals through a two-track system; oe for commissioed officers ad oe for o-commissioers officers. Demilitarisig the police service The decisio to demilitarise the police force, movig away from its history of brutality, was a key goal of trasformatio after The remilitarisatio of the police i recet years has ot garered greater respect for police officers ad higher covictio rates. If aythig, it has boosted violece i the service. The commissio believes that the police should be demilitarised to tur the force ito a civilia, professioal service. Buildig safety usig a itegrated approach Achievig log-term, sustaiable safety requires a itegrated approach focused o tacklig the fudametal causes of crimiality. This requires mobilisig a wider rage of state ad commuity resources. Buildig commuity participatio i commuity safety Civil society orgaisatios ad civic participatio are critical elemets of a safe ad secure society. Local govermet legislatio provides for establishig commuity safety cetres to eable safe, healthy commuities. Establishig these cetres should be cosidered. To improve the fuctioig of the crimial justice, the sector has developed a seve-poit pla, discussed i detail i the chapter. The commissio edorses this pla. Reformig the public service A pla is oly as credible as its delivery mechaism is viable. A capable state is a essetial precoditio for South Africa s developmet. The market caot resolve all of the coutry s challeges; may require direct itervetios by a effective govermet that delivers public goods of high quality educatio, health services, ecoomic ad social ifrastructure guaratees the safety ad security of its citizes, ad provides a eablig eviromet for private ivestmet. I may coutries, plas fail either because they are ot implemeted or because implemetatio is ueve. There eeds to be a uiformity of effort ad competece across the etire public service. There is a real risk that South Africa s atioal pla could fail because the state is icapable of implemetatio. The commissio makes far-reachig proposals to remedy the ueve ad ofte poor performace of the public service. 22

35 OVERVIEW A capable state does ot materialise by decree, or ca it be legislated or created from coferece resolutios. It has to be paistakigly built, brick by brick, istitutio by istitutio, ad sustaied ad rejuveated over time. It requires leadership, soud policies, skilled maagers ad workers, clear lies of accoutability, appropriate system s, ad cosistet ad fair applicatio of rules. There are ofte blurred ad icosistet lies of overlap. The pla proposes radical reforms i several areas. Parliamet s oversight role should be ehaced, the political/admiistrative iterface stabilised, the public service professioalised, skills upgraded ad coordiatio improved. A more pragmatic approach to the itergovermetal system is required, recogisig ueve capacity. To professioalise the public service, we propose that: Heads of departmets should report to a head of the civil service o admiistrative matters. A hybrid system of appoitig heads of departmets should be itroduced, icorporatig both political ad admiistrative elemets. A graduate recruitmet programme ad a local govermet skills developmet strategy should be itroduced to attract high-quality cadidates. The Public Service Commissio should be give the power to develop ad moitor orms ad stadards for appoitmets at each level. A purely admiistrative approach should be adopted for lower-level appoitmets, with seior officials give full authority to appoit staff i their departmets. The lik betwee accoutability, leadership ist ability ad political appoitmets is most critical i state-owed eterprises. The chief executives of state-owed eterprises are appoited by Cabiet o recommedatio of the shareholder miister(s). There is clear evidece of political ifluece by the rulig party i these appoitmets, creatig cofusio ad blurrig lies of accoutability. Are chief exec utives accoutable to the political party, to the Presidet, to Cabiet, to the Miister of Public Eterprises or to the board? The commissio recommeds that, as shareholder, the govermet should appoit the boards ad the boards should appoit the executives. I this way, it is possible to have a clear lie of accoutability betwee govermet ad the board, ad betwee the board ad the chief executive. Policy istability is a cocer. The geeral cause of policy istability is that policies chage too ofte. While there are cases where policy must chage, govermet ofte uderestimates the disruptive effect that adjustmets have o service delivery. A balace has to be struck, ad at preset that balace is missig. 23

36 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The skills profile of the public service mirrors the atioal skills profile. Seior maagers at the top of the public sector are geerally skilled ad competet. But there are critical shortages of good-quality doctors, egieers, iformatio techology professioals, foresic specialists, detectives, plaers, accoutats, prosecutors, curriculum advisors ad so o. Improvemets have bee achieved i the efficiecy of service delivery pockets of govermet, otably the South Africa Reveue Service ad pilot projects i the Departmets of Home Affairs, Health ad Justice. At the heart of these reforms have bee operatios maagemet ad systems improvemets ad these eed to be systematically rolled out to more areas of govermet. The itergovermetal system requires review. So me argue that this system is too complex, weakeig accoutability for key services ad the ability of atioal govermet to itervee at provicial ad local level. Others coted that some atioally ru services are as dysfuctioal as some provicial educatio departmets. The solutio they propose is to focus o fixig the problems of leadership ad policy istability, ad weak skills. The commissio s view is that withi the preset costitutioal framework, it is possible to have more differetiatio i the powers ad f uctios of provices ad muicipalities, takig capacity ito accout. The preset system ca be improved, with clarificatios i the areas of housig, water, saitatio, electricity ad public trasport. We propose regioal utilities to provide services o behalf of less resourced muicipalities o a agecy basis, without udermiig the accoutability of the services. Large cities should be give greater fiscal ad political powers to coordiate huma settlemet upgradig, trasport ad spatial plaig. Fightig corruptio High corruptio levels frustrate society s ability to operate fairly ad efficietly ad the state s ability to deliver o its developmet madate. I Trasparecy Iteratioal s global corruptio survey, South Africa has falle from 38th place i 2001 to 54th place i 2010, out of 178 coutries. Corruptio ofte ivolves both public ad private sector participats. The perceptio of high levels of corruptio at seior levels of govermet makes the fight agaist corruptio that much harder. Political will is essetial to combat this scourge. Political will is measured by assessig the amout of moey spet fightig corruptio, the legal arseal that corruptio-bustig istitutios have at their disposal, the idepedece of ati-corruptio authorities from political iterferece ad the cosistecy with which the law is applied. Beig soft o smaller cases, or uusually tough o corruptio ivolvig political oppoets, implies icosistecy. I additio to political will, the fight agaist corruptio has to be fought o three frots: deterrece, prevetio ad educatio. Deterrece helps people uderstad that they are likely to get caught ad puished. Prevetio is about systems (iformatio, audit ad so o) that make it hard to egage i corrupt acts. The social dimesios of corruptio ca oly be 24

37 OVERVIEW tackled by focusig o values, through educatio. South Africa has some, but ot all, of these elemets i place. Govermet s procuremet policies blur the lie i matters of corruptio. Multiple ad sometimes cotradictory objectives lead to poor value for moey ad make corruptio easier. There are still gaps i the ati-corruptio arseal. First, despite their competece ad skill, istitutios like the Public Protector ad Special Ivestigative Uit are uderfuded, uderstaffed ad subject to exteral iterferece. Secod, while thousads of cases are ivestigated, very few get to court. We prop ose the establishmet of specialised teams of prosecutors ad special courts to hadle corruptio cases. Third, the state procuremet system has become overly bureaucratised, with a emphasis o compliace by box-tickig, makig the system costly, burdesome, ieffective ad proe to fraud. We propose cetralisig large ad log-term teders, makig it illegal for public servats to operate certai types of busiesses, ad makig idividuals liable for losses i prove cases of corruptio. Fially, the coutry has barely begu to tackle the associated societal factors that cotribute to corruptio. Attitudes that justify breakig the law to help family members because they are poor, or because they suffered uder apartheid, or just because they are family, must be tackled head o. If the public believes that people will oly be prosecuted if they are ot politically protected, cofidece i the ati-corruptio agecies waes ad their efficacy is compromised. No oe ca be utouchable. Iteratioal experiece shows that with political will ad sustaied applicatio of the right strategies, corruptio ca be sigificatly reduced ad public trust restored. Trasformig society ad uitig the coutry A uited people ad a more cohesive society are ot oly atioal objectives; they are also meas to eradicatig poverty ad iequality. Our strategy to ehace social cohesio is based o three themes: Reducig poverty ad iequality by broadeig opportuity through ecoomic iclusio, educatio ad skills, ad specific redress measures. Promotig mutual respect, iclusiveess ad cohesio by actig o the costitutioal imperative that South Africa belogs to all who live i it, ad that all are equal before the law. Deepeig the atioal appreciatio of the resposibilities ad obligatios that citizes have towards oe aother. The struggle agaist apartheid was first ad foremost about the costructio of a o-racial ad o-sexist democratic society, i which all people have equal rights. This is embedded i the Costitutio. Despite cosistet progress sice 1994, South Africa remais a divided society, with race still formig the mai divide. Idividual stereotypig of race ad ethicity is widespread, ad pockets of discrimiatio persist. 25

38 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Progress is ot liear. The atio has its moods, wh ich swig from geerosity of spirit to ager. The coutry s istitutioal framework ad its broad ecoomic ad social treds have cotributed to gradual deracialisatio, but progress is ot sufficiet or deep eough. Reducig poverty ad iequality, elimiatig spatial segregatio ad uemploymet, ad improvig the quality of educatio are the primary tools to build social cohesio. Uity will deepe ad become durable as opportuities expad. But South Africa s ow history ad the experieces of other coutries have taught us that a sese of uity ad social cohesio are ecessary to meet our social ad ecoomic objectives. The preamble of the Costitutio captures this balace best. It recogises the obligatio of the state to effect redress to reverse the effects of apartheid, i a cotext where all citizes feel part of the coutry ad its programmes. Achievig ad maitaiig this balace requires the cofluece of several factors, ot all of which are i govermet s cotrol. A growig ecoomy, risig employmet ad icomes, fallig iequality, a improvig educatio system, fertile coditios for etrepreeurship ad career mobility i the workplace will cotribute sigificatly to uitig South Africa s people. Programmes such as affirmative actio, black ecoomic empowermet ad lad reform are proper resposes to our legacy, but they cot ribute much more whe the ecoomy is growig ad the educatio system is improvig. Without such a eviromet, these measures ca raise the level of social tesio. I good times, atio-buildig is easier. I ba d times, whe the eviromet is less coducive to redress, progress is slower. South Africa ca ot afford a dowward spiral that frustrates redress ad sharpes social tesios. Strog leadership is eeded to promote the visio of the Costitutio. A formal social compact may help to stregthe the aligmet betwee growth ad developmet ad atio-buildig, geeratig a virtuous circle. I additio to measures that promote social equity outlied elsewhere i the pla, we propose: The Bill of Resposibility, developed by the Departmet of Basic Educatio ad others, should be popularised, ecouragig all South Africas to live the values of the Costitutio. A pledge based o the Costitutio s preamble should be developed ad used i school assemblies. All South Africas should be ecouraged to lear a Africa laguage ad govermet programmes should work to make this a reality. The Commissio o Geder Equality ad the Miistry for Wome, Childre ad People with Disabilities should joitly set clear targets for the advacemet of wome s rights ad report o progress i achievig this i a aual publicatio each August. Employmet equity ad other redress measures should be made more effective by focusig o the eviromet withi which capabilities are developed. A review of black ecoomic empowermet. While this remais the correct approach to broade owership ad cotrol over productive parts of the ecoomy, the preset model is ot achievig the desired objectives quickly eough. 26

39 OVERVIEW Redress measures i the workplace should fo cus o eterprise developmet, access to traiig, career mobility ad metorig. Coclusio To make meaigful, rapid ad sustaied progress i reducig poverty ad iequality over the ext two decades, South Africa eeds to write a ew story. At the core of this pla is a ew developmet paradigm that seeks to ivolve commuities, youth, workers, the uemployed ad busiess i partership with each other, ad with a more capable state. The aim is to develop the capabilities of idividuals ad of the coutry, ad to create opportuities for all South Africas. The commissio s draft pla is based o extes ive research, cosultatio ad egagemet. Yet it is either perfect or complete. It provides the basis for a detailed ad deep egagemet amog South Africas, based o firm proposals to solve the coutry s problems. The key igrediets for success are: The active efforts of all South Africas Growth, ivestmet ad employmet Risig stadards of educatio ad a healthy populatio A effective ad capable govermet Collaboratio betwee the private ad public sectors Leadership from all sectors of society. The coutry we seek to build by 2030 is just, fair, prosperous ad equitable. Most of all, it is a coutry that each ad every South Africa ca proudly call home. 27

40 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Key targets ad implemetable actios i the pla Each chapter i this pla cotais a rage of targets ad proposals. Some of these are geeral statemets of policy itet. Others are specific policy proposals, actios or processes that eed to occur. Below, we summarise the pla s key targets ad proposals by chapter. The list is either eve or exhaustive. Detailed iformatio is provided i each of the chapters. Overall targets of the pla By 2030, the umber of households livig below R418 a moth per perso (i 2009 rads) should fall from 39 percet to zero. The level of iequality as measured by the Gii co-efficiet should fall from 0.7 i 2009 to 0.6 i Ecoomy ad employmet Targets The uemploymet rate should fall from 27 percet i 2011 to 14 percet by 2020 ad to 6 percet by This requires a additioal 11 millio jobs. Total employmet should rise from 13 millio to 24 millio. The proportio of adults workig should icrease from 41 percet to 61 percet. The proportio of adults i rural areas workig should rise from 29 percet to 40 percet. The labour force participatio rate should rise from 54 percet to 65 percet. GDP should icrease by 2.7 times i real terms, requirig average aual GDP growth of 5.4 percet over the period. GDP per capital should icrease from about R per perso i 2010 to R per perso i 2030 i costat prices. The proportio of icome eared by the bottom 40 percet should rise from 6 percet today to 10 percet i Exports (as measured i volume terms) should grow by 6 percet a year to 2030 with o-traditioal exports growig by 10 percet a year. The savigs rate should rise from 15 percet to 25 percet. The level of gross fixed capital formatio should rise from 17 percet to 30 percet. The level of public sector gross fixed capital formatio should reach 10 percet of GDP by Public employmet programmes should reach 1 millio by 2015 ad 2 millio people by

41 OVERVIEW Actios Create a eviromet for sustaiable employmet ad ecoomic growth 1. Reduce the cost of livig for households ad costs of doig busiess through microecoomic reforms i the areas of food, trasport ad telecommuicatios. 2. Remove the most pressig costraits o growth, ivestmet ad job creatio, icludig eergy geeratio ad distributio, urba plaig approval processes, water supply ad wastewater maagemet, logistics, telecommuicatios, ad licesig for water, mierals ad evirometal permits. Regulatory certaity ad istitutioal reforms will draw competitive outcomes i etwork idustries. Gai global market share 3. Expad South Africa s positioig for offshore busiess services, ad build o the advatage provided by its telecommuicatios, bakig ad retail firms operatig i other coutries. 4. Icrease miig exports by: Givig clear certaity over property rights Icreasig rail, water ad eergy capacity. Active labour market policies 5. Broade the expaded public works programme to cover 2 millio fulltime equivalet jobs by Offer a tax subsidy to employers to reduce the iitial cost of hirig youg labour market etrats. Facilitate agreemet betwee employers ad uios o etry-level wages. 7. Give a subsidy to the placemet sector to idetify, prepare ad place matric graduates ito jobs. 8. Adopt a more ope immigratio approach to expad supply of high-level skills. Labour market regulatio 9. A approach to hadlig probatioary periods that reflects the itetio of probatio. 10. A approach that simplifies dismissal procedures for performace or miscoduct. 11. Take maagers earig above R a year out of the Commissio for Cociliatio, Mediatio ad Arbitratio (CCMA) process. Small ad expadig firms 12. Busiess icubators should be set up, icludig private-sector parterships, with rewards for success. This could iclude early-stage etrepreeurship traiig, artisa traiig ad assistig small-scale farmers ad costructio firms. 29

42 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Miig ad mierals 13. Address major costraits impedig growth of miig. These iclude ucertaities over owership, tax treatmet ad allocatio of mieral rights, the availability of electricity ad the availability, cost ad efficiecy of trasport etworks. Maufacturig 14. Support local maufacturig demostratig log-term viability by procurig locally. 15. Focus o reducig trasport logistics costs. Tourism 16. Provide regioal tourism packages to icrease value for moey for tourists. Cosider a sigle SADC visa for some types of tourists. Public-sector employmet ad public employmet schemes. Istitutioal capability ad culture 17. Address fragmetatio i govermet regardig microecoomic reform strategy ad its implemetatio. Ecoomic ifrastructure Targets The proportio of people with access to electricity should rise from 70 percet i 2010 to 95 percet by 2030, with o-grid optios available for the rest. We would eed a additioal MW of electricity by About MW of existig capacity would eed to be retired, implyig ew build of about MW. About of this capacity should come from reewable sources. Esure that all people have access to clea, potable water ad that there is eough water for agriculture ad idustry, recogisi g the trade-offs i the use of water. Reduce water demad i urba areas to 15 percet below the busiess-as-usual sceario by Complete the Lesotho Highlads Phase 2 by The proportio of people who use public trasport for regular commutes will expad sigificatly. By 2030, public trasport will be user-friedly, less evirometally damagig, cheaper ad itegrated or seamless Durba port capacity should icrease from 3 millio cotaiers a year to 20 millio by Affordable, widely available broadbad. Broadbad is curretly defied as 256 kilobytes per secod. By 2020, this defiitio should icrease to at least 2 megabytes per secod. 30

43 OVERVIEW Actios Coal 18. Esure domestic security of coal supply for existig power statios through idustry compact, more comprehesive coal field plaig (ad export permits, if ecessary). 19. Ivest i a ew heavy-haul rail corridor to the Waterberg coal field, upgrade the cetral basi coal etwork ad expad export capacity i the lie to Richards Bay. Gas 20. Eable exploratory drillig to idetify ecoomically recoverable coal seam ad shale gas reserves, while evirometal ivestigatios will cotiue to ascertai whether sustaiable exploitatio of these resources is possible. If gas reserves are prove ad evirometal cocers alleviated, the developmet of these resources ad gas-topower projects will be fast-tracked. 21. Develop ifrastructure for the import of liquefied atural gas, maily for power productio, over the short to medium term. Electricity 22. Move to less carbo-itesive electricity productio through procurig up to MW of reewable eergy, icreased hydro-imports from the regio ad icreased demad-side measures, icludig solar water heatig. 23. Move Eskom s system operator, plaig, power procuremet, power purchasig ad power cotractig fuctios to the idepedet system ad market operator ad accelerated procuremet of idepedet power producers. 24. Rig-fece the electricity distributio busiesses of the 12 largest muicipalities, resolve maiteace ad refurbishmet backlogs ad develop a fiacig pla, alogside ivestmet i huma capital. 25. Revise atioal electrificatio pla ad esure 90 percet coverage by 2020 ad 95 percet coverage by 2030 (with balace met through off-grid techologies). Liquid fuels 26. Upgrade refieries to esure they meet ew fuel quality stadards ad isist o strategic fuel stocks to esure security of supply. 27. Cotiue to import refied fuels, esurig that the growig deficit i petroleum products is met, ad defer decisio o a ew refiery to Water resources 28. A comprehesive maagemet strategy icludig a ivestmet programme for water resource developmet, bulk water supply ad wastewater maagemet for major cetres by 2012, with reviews every five years. 29. Create regioal water ad wastewater utiliti es, ad expad madates of the existig water boards (betwee 2012 ad 2017). 31

44 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Trasport 30. Cosolidate ad selectively expad trasport ad logistics ifrastructure, with key focus areas beig: Upgradig the Durba-Gauteg freight corridor, icludig a ew port at the old Durba airport site. Expadig capacity of the coal, iro ore ad magaese lies, with cosideratio give to cocessioig parts of this etwork. Buildig the N2 road through the Easter Cape. Iformatio ad commuicatios ifrastructure 31. Chage the regulatory framework to esure that Iteret broadbad capacity improves, prices fall sigificatly ad access improves. Trasitio to a low-carbo ecoomy Targets Achieve the peak, plateau ad declie trajectory for greehouse gas emissios, with the peak beig reached aroud By 2030, a ecoomy-wide carbo price should be etreched. Zero emissio buildig stadards by The istallatio of 5 millio solar water heaters by About MW of reewable eergy should be cotracted by Actios 32. Carbo price, buildig stadards, vehicle emissio stadards, muicipal regulatios ad govermet solar water heater target to drive scale i stimulatig reewable eergy, waste recyclig ad retrofittig buildigs. Set target of 5 millio solar water heaters by Broad support for a carbo budgetig approach, allowig social ad ecoomic objectives to be balaced. 34. A carbo tax should be itroduced as a istrumet to icetivise efficiecy, coupled with a rage of policy istrumets targetig specific mitigatio opportuities. 35. All ew buildigs to meet the eergy-efficiecy criteria set out i South Africa Natioal Stadard 204. Iclusive rural ecoomy Targets A additioal jobs direct jobs ad idirect jobs i the agriculture, agroprocessig ad related sectors by Maitai a positive trade balace for primary ad processed agricultural products. 32

45 OVERVIEW Actios 36. Rural ecoomies will be activated through improved ifrastructure ad service delivery, a review of lad teure, services to small ad micro farmers, a review of miig idustry commitmets to social ivestmet, ad tourism ivestmets. 37. Substatially icrease ivestmet i irriga tio ifrastructure i Makatii Flats ad Umzimvubu River Basi. 38. Create teure security for commual farmers, especially wome. Ivestigate differet forms of fiacig ad vestig of private property rights to lad reform beeficiaries that does ot hamper beeficiaries with a high debt burde. South Africa i the regio ad the world Targets Itra-regioal trade i Souther Africa should icrease from 7 percet of trade to 25 percet of trade by South Africa s trade with regioal eighbours should icrease from 15 percet of our trade to 30 percet. Actios 39. Focus trade peetratio ad diplomatic presece i fast-growig markets (Asia, Brazil ad Africa). 40. Implemet a focused regioal itegratio strategy with emphasis o: Road, rail ad port ifrastructure i the regio Reducig red tape, corruptio ad delays at border posts Usig fiacial istitutios to parter with busiesses watig to expad o the cotiet Developig regioal markets for food, eergy ad water, ad puttig i place water maagemet agreemets with eighbourig states. Huma settlemets Targets More people livig closer to their places of work. Better quality public trasport. More jobs i or close to dese, urba towships. Actios 41. Clear strategy for desificatio of cities through lad-use plaig. Stop buildig houses o poorly located lad ad shift greater resources to iformal settlemet upgradig, provided that they are i areas close to jobs. 42. Massive ivestmet to esure safe, reliable ad affordable public trasport. 43. Provide icetives to move jobs to dese towships. 33

46 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN 44. Focused strategy o the housig gap market, ivolvig baks, subsidies ad employer housig schemes. I particular, takig steps to esure that wome are ot discrimiated agaist i terms of home owership ad fiacig. Educatio, traiig ad iovatio Targets Eradicate microutriet deficiecies i childre uder 18 moths. All childre should have at least two years of pre-school educatio. This implies about 2 millio places. About 80 percet of schools ad learers achieve 50 percet ad above i literacy, mathematics ad sciece i grades 3, 6, 9. At least 80 percet of studets should complete 12 years of schoolig. We believe it is importat to icrease learer retetio rates to 90 percet, of whom 80 percet successfully pass the exit exam. Sigificatly expaded further educatio ad traiig sector, with the sector expadig as it improves the quality ad relevace of its courses. The sector should reach a participatio rate of 25 percet by This implies a expasio from at preset to by We propose improvig the further educatio ad traiig graduatio rate to 75 percet by Produce artisas a year. A additioal 1 millio learig opportuities a year for post-school workers ad the uemployed. The departmet aims to improve its average Souther ad East Africa Cosortium for Moitorig Educatio Quality results for grade 6 laguages ad maths from 495 to 600 by 2022 ad to improve average grade 8 scores i the Treds i Mathematics ad Sciece Study from 264 to 420 i The commissio supports these targets ad proposes that by 2030, grade 8 scores i the Treds i Mathematics ad Sciece Study should reach 500. Ideally, South Africa should improve its positio by 10 places or more by Icrease the higher educatio participatio rate from 17 percet to 30 percet. Erolmets i the higher educatio sector icludig private higher educatio will eed to icrease to , from i Icrease the umber of studets eligible to study maths ad sciece at uiversity to per year. The departmet has set a ta rget to icrease the umber of learers eligible for bachelors programme to by 2024, learers who pass mathematics, ad learers who pass physical sciece. By 2030, 75 percet of academic staff at uiversities should have PhDs. The preset figure is 34 percet. Produce 100 doctoral graduates per millio per year. That implies a icrease from a year i 2010 to a year. 34

47 OVERVIEW Actios Early childhood developmet ad utritio 45. Desig a utritio itervetio for pregat wome ad youg childre, to be piloted by the Departmet of Health for two years. 46. Achieve uiversal access to two years of early childhood developmet exposure before grade 1. Schoolig 47. Expertise is recogised as the oly criterio for appoitig ad promotig persoel withi the educatio sector. Uio ad political iterferece i appoitmet should be removed. 48. Icrease teacher traiig output by expadig Fuza Lushaka to attract learers ito teachig, especially those with good passes i maths, sciece ad laguages. 49. Regularly test teachers i the subjects they teach to determie level of kowledge ad competece. Lik teacher pay to learer performace improvemets. 50. Schools already operatig at a high level of efficiecy should ot be burdeed by havig to fulfil additioal ad uecessary tasks that aim to improve accoutability i schools performig weakly. Schools performig very poorly should receive the closest attetio. 51. Chage process of appoitmet of pricipals: Itroduce miimum qualificatios ad formal qualificatios Esure ew pricipals possess the etry qualificatios ad give old pricipals 10 years to acquire the qualificatios or be retreched. 52. Gradually give pricipals more powers to admiister schools, icludig fiacial maagemet, procuremet of textbooks ad other educatioal material, as well hirig ad firig educators. Further educatio ad traiig 53. Improve the system of skills plaig ad shapig the productio of skills. 54. Develop a set of strog atioal qualificatios ad support developig a variety of oformal programmes. 55. Stregthe ad expad the umber of further educatio ad traiig colleges so that the participatio rate ca grow to 25 percet. 56. Gradually expad adult educatio offered i colleges reachig 1 millio learig opportuities a year. Higher educatio 57. Build ew uiversities, oe each i Mpumalaga ad the Norther Cape. 58. Build a ew medical school i Limpopo ad a umber of ew academic hospitals. 59. Cosider extedig the legth of first degrees to four years o a volutary basis for historically disadvataged studets. 60. Provide full fudig assistace coverig tuitio, books, accommodatio ad livig allowace (i the form of loas ad bursaries) to all studets who qualify for the Natioal Studet Fiacial Aid Scheme. Studets who do ot qualify should have access 35

48 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN to bak loas, backed by state sureties ad recovered through arragemets with the South Africa Reveue Service. 61. Grat seve-year work permits to foreig studets who graduate from public higher educatio istitutios. Health care for all Targets By 2030, life expectacy should reach at least 70 for both me ad wome. The uder-20 age group should largely be a HIV-free geeratio. The ifat mortality rate should declie from 43 to 20 per live births ad the uder five mortality rate should be less tha 30 per 1 000, from 104 today. Materal mortality should declie from 500 to 100 for every live births. All HIV-positive people should be o treatmet ad prevetive measures such as codoms ad microbicides should be widely available, especially to youg people. Reduce o-commuicable diseases by 28 percet ad deaths from drug abuse, road accidets ad violece by 50 percet. Everyoe has access to a equal stadard of basic health care regardless of their icome. Actios Address social determiats of health 62. Promote active lifestyles ad balaced diets, cotrol alcohol abuse ad health awareess to reduce o-commuicable diseases. Reduce burde of disease to maageable levels 63. Broade coverage of atiretroviral (ARV) tr eatmet to all HIV-positive people, provide ARVs to high-risk HIV-egative people ad pr ovide effective microbicides routiely to all wome 16 years ad older. Build huma resources for the health sector of the future 64. Accelerate productio of commuity specialists i the five mai specialist areas (medicie, surgery icludig aaesthetics, obstetrics, paediatrics ad psychiatry). 65. Recruit, trai ad deploy betwee ad 1.3 millio commuity health workers to implemet commuity-based health care. Stregthe the atioal health system 66. Determie miimum qualificatios for hospital maagers ad esure that all maagers have the ecessary qualificatios. 36

49 OVERVIEW Implemet atioal health isurace 67. Implemet the scheme i a phased maer, focusig o: Improvig the quality ad care at public facilities Reducig the relative cost of private medical care Icreasig the umber of medical professioals Itroducig a patiet record system a d supportig iformatio techology systems. Social protectio Targets Esure progressively ad through multiple aveues that o oe lives below a social floor. The umber of public works jobs should rise from the preset level to about 1 millio i 2015 ad the to about 2 millio by Icrease the umber of social service professioals from about to by A sigle atioal grats paymets system by The phasig i of atioal health isurace. The itroductio ad expasio of a cotributory retiremet ad risk beefit system. Establish a atioal register of grat beeficiaries ad itroduce commuity-based social audits to moitor progress. Actios 68. Determie a social floor that ca be progressively realised through a social wage approach. 69. Focus o competitio, access, efficiecy ad costs of trasport, food, telecommuicatios ad other goods ad services to lower the cost of livig, especially for poor households. 70. Ehace food security ad utritio, focusig iitially o pregat wome ad youg childre. 71. Urgetly ratioalise existig beefit paymets systems. Buildig safer commuities Targets I 2030, people livig i South Africa feel safe ad have o fear of crime. They are safe at home, at school, at work ad they ejoy a active commuity life free of fear. Wome ca walk freely i the streets ad childre ca play safely outside. The police service is a well resourced professioal istitutio staffed by hi ghly skilled officers who value their work, serve the commuity, safeguard lives ad property wi thout discrimiatio, protect the peaceful agaist violece ad respect the rights of all to equality ad justice. 37

50 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Actios 72. The police service should be trasformed ito a professioal, capable istitutio with a clear madate ad defied roles ad resposibilities. This should be doe by: Itroducig a code of coduct that is liked to discipliary regulatios ad performace appraisal. Settig stadards for recruitmet, selectio ad promotio of members by a professioal body. A two-track huma resource system should be developed for the police: oe for officers ad oe for o-commissioed officers. Buildig a capable state Targets A capable ad effective state, able to e hace ecoomic opportuities, support the developmet of capabilities ad itervee to esure a risig floor of social rights for the poor. Actios Stabilise the political-admiistrative iterface 73. Create a admiistrative head of the public se rvice to whom directors-geeral report o orgaisatioal ad admiistrative matters. Put i place a hybrid approach to top appoitmets that allows for the recociliatio of admiistrative ad political priorities. Make the public service a career of choice 74. Ehace the role of the Public Service Commissio to promote ad moitor orms ad stadards to esure that oly competet ad suitably experieced people are appoited to seior positios. 75. A formalised graduate recruitmet scheme for the public service, skills strategies for seior maagemet, techical professioals ad local govermet staff. Improve relatios betwee atioal, provicial ad local govermet 76. Allow greater asymmetry i powers ad fuctios of provices ad muicipalities based o competece. 77. Develop regioal utilities to deliver some local govermet services o a agecy basis, where muicipalities or districts lack capacity. 78. Deal with fragmetatio i implemetatio i two specific areas: Public service reform (Departmets of Public Service ad Admiistratio, Cooperative Goverace ad Traditioal Affairs, Performace Moitorig ad Evaluatio, Presidecy, Natioal Treasury, Public Service Commissio). Microecoomic reform (Departmets of Eergy, Ecoomic Developmet, Trade ad Idustry, Mieral Resources, Labour, Trasport, Commuicatios, Agriculture, Forestry ad Fisheries, Public Eterprises ad Natioal Treasury). 38

51 OVERVIEW Boost the developmetal potetial of state-owed eterprises 79. Govermet (joit resposibility of shareholder ad policy miistries) should appoit the boards, ad the boards should appoit the chief executive officers. Fightig corruptio ad ehacig accoutability Targets A corruptio-free society, a high adherece to ethics throughout society ad a govermet that is accoutable to its people. Actios Fight corruptio 80. Cetralise the awardig of large teders or teders with log duratio. 81. Give greater teeth to the teder compliace moitorig office to ivestigate value for moey. 82. Take steps, both legal ad political, to pr ovide sufficiet isularity from political iterferece for ati-corruptio agecies. 83. Set up dedicated prosecutio teams, specialist courts ad judges. Develop accoutability framework 84. Make it illegal for civil servats to operate or beefit directly from certai types of busiess activity. Trasformig society ad uitig the coutry Targets Our visio is a society where opportuity is ot determied by race or birthright; where citizes accept that they have both rights ad resposibilities. Most critically, we seek a uited, prosperous, o-racial, o-sexist ad democratic South Africa. Actios 85. The Bill of Resposibility, developed by the Departmet of Basic Educatio ad others, should be popularised ad used as a pledge by all South Africas to live the values of the Costitutio. 86. All South Africas should be ecouraged to lear a Africa laguage ad govermet should help make this a reality. 87. Employmet equity ad other redress measures should cotiue ad be made more effective by focusig o the eviromet i which capabilities are developed. 39

52 40

53 VISION STATEMENT Visio statemet We, the people of South Africa, have joureyed far sice the log lies of our first democratic electio o 27 April 1994, whe we elected a govermet for us all. We bega to tell a ew story the. We have lived ad reewed that story alog the way. Now i 2030 we live i a coutry which we have remade. We have created a home where everybody feels free yet bouded to others; where everyoe embraces their full potetial. We are proud to be a commuity that cares. We have received the mixed legacy of iequalities i opportuity ad i where we have lived, but we have agreed to chage our arrative of coquest, oppressio, resistace, ad victory. We bega to tell a ew story of life i a developig democracy. We bega to share freedom ad the ucertaities of livig with it ad i it. We felt our way towards a ew sese of ourselves: Tryig, succeedig ad makig mistakes Proclaimig success ad closig our mids to failure Feelig orietated ad disorietated through our ow actios Affirmig some realities ad deyig others Proclaimig opeess to the world, yet courtig isularity Eager to live together, yet fidig it difficult to recogise shared burdes Learig to recogise ad ackowledge shared successes. Our ew story is ope eded with temporary destiatios, oly for ew paths to ope up oce more. It is a story of ufoldig learig. Eve whe we flouder, we remai hopeful. I this story, we always arrive ad depart. 41

54 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN We have come some way. We kow: What we do, ad how we do it, is as importat as what we wat to achieve. What we are, is because of who we have bee ad what we wat to become. We will cotiue to make it to make us, because we are happy with beig who we are. Who are we? We are Africas. We are a Africa coutry. We are part of our multi-atioal regio. We are a essetial part of our cotiet. Beig Africas, we are acutely aware of the wider world, deeply implicated i our past ad preset. That wider world carries some of our iheritace. We have leared a great deal from our complex past; addig cotiuously to our experiece of beig Africa. Therefore, i 2030, we experiece daily how: We participate fully i efforts to liberate ourselves from coditios that hider the flowerig of our talets. We feel loved, respected ad cared for at home, i commuity ad the public istitutios we have created. We feel uderstood. We feel eeded. We feel trustful. We feel trusted. We feel accommodative. We feel accommodated. We feel iformed. We feel healthy. We feel safe. We feel resourceful ad ivetive. We lear together. We talk to each other. We share our work. We play. We worship. We poder ad laugh. 42

55 VISION STATEMENT We are eergised by sharig our resourcefuless. We are resiliet. We love readig. All our citizes read, write, coverse, ad value ideas ad thought. We are fasciated by scietific ivetio ad its use i the ehacemet of our lives. We live the joy of speakig may of our laguages. We kow our history ad that of other peoples. We have clear values. We create rather tha elimiate; value arises from improvig through creativity that which we iherited. I have a space that I ca call my ow. This space I share. This space I cherish with others. I maitai it with others. I am ot self-sufficiet aloe. We are self-sufficiet i commuity. We all see to it ad assist so that all life s eablers are available i a humae way. Through our service we show our solidarity. We ejoy the same quality of service. We are coected through our carig. The beatig heart of our coutry is a commuity that has all the eablers of moder life: We have water. We use a toilet. We have food o the table. We fall asleep without fear. We liste to the rai o the roof. We gather together i frot of heat. What we cotribute i our taxes, we get back through the high quality of our public services. That is why we have: Good cliics ad hospitals with well traied, carig doctors, admiistrators, urses who rush to our aid with empathy ad expertise Affordable effective medicies, because they were made for all of us Good schools with well educated, traied ad carig teachers. 43

56 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Each commuity has: A school Teachers who love teachig ad learig A local library filled with a wealth of kowledge A libraria A police statio with respected ad upright police A cliic with urses who love carig for people. I our well-desiged commuity surroudigs we feel safe everywhere. There, we ejoy meetig oe aother. We fid so much pleasure i oe aother s compay. Everywhere we go i our coutry, we hear the laughter of our childre. We all have actively set out to chage our lives i ways which also beefit the broader commuity. We are a people at work. We work to create plety. Our work brigs us ever closer to our dreams. Work grouds our dreams eve the more fatastic they are. The reality of work coects us to our dreams. We work towards goals with patiece ivested i actual effort. We ivest i our efforts ad are ot waitig i disegaged expectatio. Because we are impatiet to succeed, we work with paistakig rigour. Our efforts, ot so much those of others, make us stroger. The we are patiet for the results of our efforts. This kid of patiece, gives birth to our ew work ethic. I this work ethic we groud our dreams. We have built our ow houses. We are cofidet ad self-sufficiet. We are traders. We are ivetors. We are workers. We create compaies. We set up stalls. We are studious. We are gardeers. We feel a call to serve. 44

57 VISION STATEMENT We make thigs. Out of our homes we create objects of value. We ivest ad reap good returs for our efforts. We travel to trade beyod our borders, carryig our values with us. As artists we express ad celebrate, we expose ad urture, we explore, shift ad chage frotiers. Through sports of all kids, we push the limits of our possibilities. Our philosophies ad stories have eriched the world. We respect ability, competece ad talet. Now our ecoomy is growig. Our prosperity is icreasig. We are eergised by our resourcefuless. We are coected by the souds we hear, the sights we see, the scets we smell, the objects we touch, the food we eat, the liquids we drik, the thoughts we thik, the emotios we feel, the dreams we imagie. We are a web of relatioships, fashioed i a web of histories, the stories of our lives iescapably shaped by stories of others. We love sharig our stories i our schools, places of worship, libraries, i the variety of media whatever they may be. We are ievitably ad itimately implicated i oe aother. We all assist the istitutios we have creatively redesiged to meet our varied eeds; we reach out across commuities to stregthe our resolve to live with hoesty, to be set agaist corruptio ad dehumaisig actios. We have made the rules by which we wat ourselves to live: We hold the Costitutio of our coutry as the coveat guide to a fair society Sice 1994 we ve chaged our laws to obey our Costitutio Now we live it: justice rules us, because just laws make commuity possible The law eables us to live together fulfillig our mutual obligatios ad resposibilities i the shared public spaces of our mutual affiliatio. 45

58 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN We kow that those to whom we have give the privilege to gover our lad, do so o our behalf ad for the beefit of all the people. Govermet begis i the home, grows ito the commuity, expads towards the city, flares toward the provice, ad egulfs the etire lad. We kow our leaders as we have elected them ad pledged them ito office: They are wise i the use of our wealth Wise i kowig ad uderstadig our wishes ad eeds Wise i expectig us to express ourselves to them i ay appropriate maer we have agreed to be allowable Wise i ot silecig those who criticise, but eable them, through our rules of egagemet, to be eve more rigorous i supportig a just society. Our leaders wisdom is ours, because we sese our wisdom i theirs. They do more tha respod to us: They brig ew thoughts ad ideas They share with us what they thik They ispire us, because we the seek to aspire with them With them we reew our world cotiuously. But our gift of leaders exteds far beyod politics. We have them i abudace i every aveue of life. We have come far with our cultural, religious, ad acestral traditios. Cotemporary citizes that we are, we are coscious of the itimate relatioships betwee traditio ad chage. We say to oe aother: I caot be without you, without you this South Africa commuity is a icomplete commuity, without oe sigle perso, without oe sigle group, without the regio or the cotiet, we are ot the best that we ca be. We love the lad. We greet oe aother agai. We ejoy beig visited. We are courteous ad curious. We love arguig, we debate fiercely, we cotest ceaselessly. We solve our differeces through discussio. We refrai from beig cruel, demeaig or hurtful i disagreemet. 46

59 VISION STATEMENT We feel we belog. We celebrate all the differeces amog us. We are ot imprisoed by the roles ascribed to us. Our family life stregthes the wome, me ad childre who live i it. The older share their wisdom with the youg. The youg ivigorate us with their eergy, opeess, optimism, ad questioig mids. The welfare of each of us is the welfare of all. Everybody lives loger. We experiece fulfilmet i life, livig it i the successful society we are creatig. We feel prosperous. Our coectedess across time ad distace is the cetral priciple of our atiohood. We are a people, who have come together ad shared extraordiarily to remake our society. We ply betwee our cities ad our acestral origis. Others acestral origis are beyod our coutry. Where they go, from time to time, is a piece of our home too. We discover the coutry ad the world. We live peacefully with eighbours. We have good frieds i other societies. We have welcomed people from distat lads, who have chose to live amog us. We value iterdepedece ad reciprocity. We feel hospitable. We are a commuity of multiple, overlappig idetities, cosmopolita i our atiohood. Our multiculturalism is a defiig elemet of our idigeeity. We are, because we are so may. Our may-ess is our stregth we carry it i us throughout our lives. We are safe, ot so much because we are guarded, but because of the stregth of our belogig. We ackowledge that each ad every oe of us is itimately ad iextricably of this earth with its beauty ad life-givig sources; that our lives o earth are both eriched ad complicated by what we have cotributed to its coditio. 47

60 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN South Africa, our coutry, is our lad. Our lad is our home. We sweep ad keep clea our yard. We travel through it. We ejoy its varied climate, ladscape, ad vegetatio. It is as diverse as we are. We live ad work i it, o it with care, preservig it for future geeratios. We discover it all the time. As it gives life to us, we hoour the life i it. From time to time it remids us of its eormous, ifiite power. Whe rai ad floods overwhelm, wids buffet, seas rage, ad the su beats ureletigly i drought. I humility, we lear of our limitatios. To create livig spaces withi this beautiful lad is to commesurate with our desired values. South Africa belogs to all its peoples. Now, i 2030, our story keeps growig as if sprig is always with us. Oce, we uttered the dream of a raibow. Now we see it, livig it. It does ot curve over the sky. It is refracted i each oe of us at home, i the commuity, i the city, ad across the lad, i a abudace of colour. Whe we see it i the faces of our childre, we kow: there will always be, for us, a worthy future. 48

61 CHAPTER 1: KEY DRIVERS OF CHANGE Chapter 1 KEY DRIVERS OF CHANGE I the ext few decades, the world will experiece uprecedeted chage. These iclude a explosio of urbaisatio, which will create wealth ad sharpe strais o the ecosystem; revolutioary developmets i sciece ad techology that will trasform opportuities, itroduce ew risks, ad drive wider social itegratio; ad a rebalacig of ecoomic power from developed to developig coutries that will potetially lift aother billio people out of poverty. The cumulative effects of these treds are highly ucertai. Higher levels of coectivity i the global system egagig a much larger umber of actors with differet iterests ad beliefs makes it difficult to uderstad how the system will respod i ay give sceario. Deeper itegratio over two decades has allowed threats i the fiacial, techological ad social systems to spread much more rapidly across the globe. The global impacts of the fiacial crisis that bega with the meltdow of sub-prime mortgage markets i the Uited States i August 2007 are all too apparet. But greater itercoectedess has eabled globalisatio, brigig great beefits ad presetig ew prospects, ot least a reductio i poverty. To avigate these challeges, takig advatage of opportuities while preparig prudetly for the risks, it is importat to uderstad the mai drivers ad develop a educated view of the way they iteract. Icreased itegratio, icreased complexity, icreased risk Techology has both deepeed ad accelerated the world s itercoectedess, eablig higher growth, a leap i trade, ad a eve larger surge i cross-border ivestmet. It is likely that the pace will quicke further over the ext two decades as iformatio flows, capital movemets, trade ad migratio speed up. 49

62 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Top te risks by likelihood ad impact combied Source World Ecoomic Forum, 2011 Ecoomic itegratio has accelerated i the past three decades. Betwee 1980 ad 2005, real world gross domestic product (GDP) rose about 32 percet. World merchadise imports ad exports icreased more tha seve times, while global foreig ivestmet flows grew 18-fold. 1 Air trasport, cotaier traffic ad logistical chais have dimiished distace. Better ifrastructure has hasteed the flow of people ito tows ad cities. While the world s populatio has early doubled sice 1950, the urba share has icreased from 29 percet i 1950 to over 50 percet i The Iteret, mobile telephoy ad the expoetial growth of computig power, supported by fibre optic etworks ad satellite broadcasts, have made virtual proximity almost uiversal. Global itegratio has brought beefits, spurrig sustaied growth for a geeratio. Util the 2008/09 crisis, may developig coutries were makig good progress reducig poverty. Betwee 1981 ad 2005, the share of the populatio i the developig world livig below US$1.25 a day was more tha halved from 52 percet to 25 percet. Chia cut the percetage of its citizes livig i poverty to about a quarter of its 1990 level i just two decades. Betwee 1997 ad 2007, the percetage of Africas livig o US$1.25 a day fell from 59 percet to 50 percet. Ecoomic growth, spurred i large part by exports, has bee key to reducig poverty i developig coutries. Over the past three decades, global trade grew almost twice as fast as GDP, due to revolutios i trasport ad commuicatios, ad a sharp declie i import tariffs. Globalisatio has also bee marked by egative treds. Iequality has rise. The gap betwee the rich ad the poor has grow i almost three-quarters of Orgaisatio for Ecoomic Cooperatio ad Developmet coutries over the past two decades. 2 The Gii co-efficiet, which measures iequality of distributio (0 beig total equality ad 1 beig 1 Goldi I ad Vogel T (2010). Global Goverace ad systemic risk i the 21st Cetury. Lessos from the Fiacial Crisis Global Policy, Vol 1, Issue 1, Jauary Uiversity of Oxford. 2 McKisey (2010). The Market State. McKisey Quarterly. 50

63 CHAPTER 1: KEY DRIVERS OF CHANGE the widest disparity) worseed globally from 0.44 i 1950 to 0.54 i A quarter of the populatio of developig coutries still lives o less tha US$1.25 a day, 1 billio people lack clea drikig water, 1.6 billio have o access to electricity, ad 3 billio do ot have adequate saitatio. 4 HIV/AIDS has bee devastatig i sub-sahara Africa. Global iequality Source: Brako Milaovic (2007) i Goldi ad Reiert 5 Deeper levels of itegratio have bee accompaied by ucertaity ad volatility, as show by the widespread fiacial ad the broader ecoomic cotagio after the collapse of Lehma Brothers i September Withi two years, the volume of world trade fell by a third as the crisis spread from coutry to coutry at staggerig speed. The huge sums marshalled by the Group of 20 (G20) i April 2009 to rescue the baks led to a sovereig debt crisis i Europe withi a year, with first Greece, the Irelad ad Portugal, requirig fiacial support. The crisis spread across the Eurozoe, with Italia ad Frech baks particularly exposed. The three-year recessio has bee most sharply felt i developed coutries, but developig ecoomies also felt the effects. The crisis has worseed poverty, threateed the achievemet of the Milleium Developmet Goals ad weakeed the middle classes. Global uemploymet rose 6.6 percet i 2009, while youth uemploymet saw the largest rise i decades. High youth uemploymet ad food price rises tipped several coutries i North Africa ad Syria i the Levat ito revolt agaist corrupt, authoritaria leaders, raisig questios about stability i the eighbourig oil-rich Gulf states. 3 Milaovic B (2007). Worlds Apart: Measurig Iteratioal ad Global Iequality. Priceto Uiversity Press. 4 ibid. 5 Goldi ad Reiert (2011). Presetatio made to the Natioal Plaig Commissio by the Oxford Marti School, Oxford Uiversity. 51

64 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The ext two years will cotiue to be tough, with growth depressed, global imbalaces uresolved, ad austerity affectig cofidece ad cosumptio. Cetral baks have used up their arseals, while moey pumped ito the system has caused iflatioary effects i emergig markets. The mismatch betwee regulatory capability ad market behaviour is worryig. The world is uprepared for what is happeig. Europe s crisis is due partly to political leaders ad fiace miisters eedig to cosult to reach agreemet o resposes, while markets react istataeously. The widespread egative effects of the recessio have icreased doubts about the viability of the global ecoomic order built over the past three decades, leadig to growig pressure for more iclusive, secure ad sustaiable globalisatio. Wealth ad icome disparities, both atioal ad iteratioal, threate ecoomic developmet as well as social ad political stability. Despite robust growth i some emergig ecoomies, may are trapped i a cycle of poverty. About 1 billio people, mostly i sub-sahara Africa ad South ad Cetral Asia, survive o less tha 2 percet of the world's wealth. Busiess ad govermet leaders cavassed by the Harvard Busiess Review (2011) cited icreasig ecoomic iequality ad the opaque ad fragile global fiacial systems as possible sources of a serious breakdow i the system itself. May agree, such as the demostrators occupyig Wall Street, forcig the closure of St Paul s Cathedral i Lodo, campig i the mai squares ad thoroughfares of Madrid ad Barceloa, ad clashig violetly with police i Athes. Aroud the world, people are idigat at the iequity of a system that passes the cost of failure o to taxpayers ad those depedet o jobs, while the beefits of its success are disproportioately ejoyed by traders ad seior fiacial executives. As ecoomic coditios worseed i the Uited States i 2010, ad the Europea Uio bega to face its ow crisis, the iitial success of a sychroised approach faded, batterig market setimet for most of Gideo Rachma, writig i the Fiacial Times i September 2011, oted that the gloom i the markets was worryig because there was little sig of effective iteratioal cooperatio or global leadership to deal with moutig cocer about the iteratioal ecoomy. The iadequate respose is partly due to the complex, systemic ature of the challeges. Neither govermets or the relevat iteratioal istitutios are set up to moitor or assess the risk of systemic cotagio, or to deal with systemic failure. The global effects of the fiacial crisis are oly a example of a potetially much wider problem of complex systems whose workigs are ot fully uderstood. May scietists believe that populatio pressures, urbaisatio ad risig cosumptio ad waste are pushig plaetary boudaries to breakig poit with ucertai, but potetially catastrophic, cosequeces. The most familiar example is climate chage, which poses 52

65 CHAPTER 1: KEY DRIVERS OF CHANGE huge evirometal, social ad ecoomic risks to commuities i differet parts of the world, ad potetially to humakid. Other systemic crises are etirely possible. These iclude cyber attacks o the Iteret that could cripple fiacial markets, electricity supplies, trasportatio etworks, ad supply chais; ad the outbreak of a pademic that could disrupt travel, tourism, trade, fiacial markets, ad domestic ad regioal order. Ecoomic globalisatio has outpaced political globalisatio. The pillars of the iteratioal political order suffer from democratic deficiecies as their structure, which dates from the decade after World War II, reflects the iterests of the advaced idustrial coutries that were victorious i I the Iteratioal Moetary Fud (IMF), votes are allocated o the basis of ecoomic power that o loger reflects the curret ecoomic stadig of may coutries. I additio, oly cetral bak goverors ad fiace miisters have a say, eve though IMF policies have great implicatios for educatio, health, employmet, growth, ad the eviromet. 6 Both atioal ad iteratioal istitutios eed to be overhauled. While leadig compaies are forced to adopt maagemet policies ad styles that reflect their global reach, i most coutries, the public sector is locked ito outdated atioal models that do ot allow it to deal with global challeges. Most domestic regulators have oly a atioal remit, while iteratioal istitutios have ot adapted to the pace of chage. Treaties ad covetios take too log to egotiate, are ofte ot ratified, ad whe they are, are rarely eforced. Big itergovermetal cofereces are ofte too ritualistic, log o declaratios ad short o implemetatio. 7 Bodies such as the Group of Eight (G8), G20 ad Group of 77 (G77), have severe limitatios. The origial model of the Group of Seve (G7) was exclusive ad did ot represet the ew world ecoomic order, but extedig it has resulted i uwieldy gatherigs where form trumps substace. The ew istitutios have bee set up without a overarchig structure, resultig i competitio ad a ubalaced distributio of resposibilities ad power. Global istitutios such as the Uited Natios (UN), the World Bak, the IMF ad the World Trade Orgaisatio are rarely able to take cetral roles i global problem-solvig. The iequitable distributio of power i these orgaisatios has made them hostage to power blocs ad particular ecoomic policies. A review of the goverace structures of may of these bodies is log overdue. The last four years have uderscored the eed for urget actio. Developig coutries, icludig South Africa, are i a strog positio to advace a reform ageda that had impetus eve 6 Stiglitz J (2010). Freefall: America, the markets ad the sikig of the world ecoomy. New York: W.W. Norto & Compay. 7 Rischard JF (2002). High Noo: 20 Global Problems, 20 Years to Solve Them. Basic Books: Perseus Books Group. 53

66 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN before the fiacial crisis. These coutries eed to push for more balaced represetatio ad istitutios that are attued to the challeges of social ad ecoomic justice, particularly i developig coutries. The eed for reform has log bee recogised ad the ecoomic ad fiacial crisis has brought some chages to represetatio ad votig rights o the IMF board. But a more fudametal redesig is eeded. Over the ext two decades, both govermets ad compaies will eed to adapt cotiuously as they address the risks ad opportuities of the evolvig global eviromet. Natioal govermets, especially those whose societies are characterised by high levels of iequality such as South Africa, will eed to itroduce more equitable ecoomic policies to hold o to domestic legitimacy ad adjust to a chagig ad icreasigly complex world. The scales are tippig Ecoomic policies uder review Laissez faire free-market doctries have domiated global ecoomic policy-makig for 25 years. The era of rapid ecoomic globalisatio, agaist the backdrop of the collapse of the Berli Wall i 1989, led may to believe i the triumph of a particular perspective or model, particularly i the relatioship betwee the state, the market ad the citize. A uipolar view domiated by wester (ad particularly Aglo-Saxo) ecoomic ad political orms became domiat. But the global ecoomic crisis has prompted a rethik. The crisis has icreased the focus o the role of govermet, ad i particular o govermet failure to regulate ad prevet systemic collapse. The markets are efficiet midset, which arose i the Uited States ad Britai i the early 1980s ad spread rapidly worldwide over the ext 25 years, asserted that freer markets are always better. Both traditioal ecoomic theory ad experiece show this is ot correct. Specific coditios make it possible for markets to work efficietly ad market failure is commo whe these coditios are ot satisfied. I a 2008 review of eight ceturies of fiacial crises, former IMF chief ecoomist Ke Rogoff ad Carme Reihart showed that serial default is a early uiversal pheomeo as coutries struggle to trasform themselves from emergig markets to advaced ecoomies [ad that] crises frequetly emaate from the fiacial cetres with trasmissio through iterest rate shocks ad commodity price collapses. Thus, the recet US fiacial crisis is hardly uique. The graph below highlights the experiece of the past 200 years. 54

67 CHAPTER 1: KEY DRIVERS OF CHANGE Sovereig exteral debt: Percet of coutries i default or restructurig Source: IMF, 2008 The crisis has ecouraged the search for soud perspectives o ecoomic policy. The most ifluetial critics are ot seekig to replacee maistream ecoomics or elimiate the beefits of globalisatio. They focus o the failure of ecoomists ad govermets to apply much of what used to be stadard kowledge ad practice about market failures i the last few decades. Rather tha a policy lurch to aother polar positio, the call is for efficiet market policies that also embrace priciples of social justice, empowermet, ad a balace betwee rights ad resposibilities. A commo theme emergig i the debate is the eed for a more uaced balace betwee the roles of govermets, the private sector ad the market to achieve dyamic ecoomic growth. Successful coutries such as Chia ad South Korea illustrate this. 8 Credible ad sustaiable atioal policies should be based o the specific situatio of each coutry, takig the global cotext ito accout. Ecoomic policy-makers must recogise that istitutioal failures are edemic i the workig of markets, ad that it is ot feasible to elimiate them etirely. 9 Policy-makers should aticipate the risk of failure, ad both ecourage trasparet markets that offer a appropriate balace betwee risk ad retur, ad be alert to distortios thatt are likely to lead to market failure. 8 Li JY (2011). From flyig geese to leadig dragos. New Opportuities ad Strategies for Structural Trasformatio i Developig Coutries. WIDER aual lecture. Mozambique. 9 Rodrik D (2009). Oe ecoomics, may recipiets: Has (eo-classical) ecoomics failed us? Sir Arthur Lewis Distiguished Lecture, 26 March

68 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The refusal to abdicate govermet s resposibilities to the workig of the fiacial markets protected coutries such as Germay, Caada, Australia, Idia, Brazil, Turkey ad South Africa from the worst effects of the fiacial crisis of 2007/08. Chia s uique bled of market ecoomics ad state directio steered it through the turbulet waters, albeit with high iflatio ad risig social discotet. Balace of ecoomic activity The crisis is expected to lead to a ew global cofiguratio, with leadig states i the developig world movig cetre stage to help shape it. Ideas, ot oly resources, will ifluece the outcome. The world i 2050 Source: HSBC, 2011 Over the ext two decades, several emergig market ecoomies will evolve from peripheral players ito powerful ecoomic forces. The emergig ecoomies will power global growth as they shed their role as suppliers of low-cost goods ad services ad become providers of capital, talet ad iovatio. 56

69 CHAPTER 1: KEY DRIVERS OF CHANGE Chia s 12th five-year pla tabled earlier this year showed a strikig chage i its growth strategy from a focus o ivestmet-drive, high-eergy ad low-cost maufacturig, to low-carbo idustries, ew eergy, ext geeratio iformatio techology ad highed maufacturig. Chia s goal is for these idustries to achieve a 15 percet share of the ecoomy by 2020, compared with 3 percet ow. 10 If it succeeds, this chage of directio will have profoud effe cts o the rest of the world. Vibrat growth is also expected i Idia ad South East Asia, as well as Easter Europe, Lati America, parts of the Middle East, North Africa ad sub-sahara Africa. By some forecasts, Chia will overtake the Uited States as the largest ecoomy by 2025; others put the date at 2035, or eve The global bak ad fiacial services compay HSBC predicts that by 2050, the Uited States will be the secod largest ecoomy, followed by Idia, Japa ad Germay. Brazil ad Mexico will be seveth ad eighth, South Africa will be 30th. Small-populatio ad agig coutries i Europe will be hard hit Switzerlad, the Netherlads, Swede, Belgium, Austria, Norway ad Demark are expected to drop out of the top The forecast is ot ecouragig for South Africa, which raked 28th i the world i While the Euro area, Japa, Britai ad the Uited States will still play a major role i supportig growth i the decades ahead, global growth, demad ad aggregate wealth are shiftig toward the emergig ecoomies. The World Bak suggests that by 2025, six major emergig ecoomies Brazil, Chia, Idia, Idoesia, South Korea ad Russia will accout for more tha half of all global growth, growig, o average, by 4.7 percet a year to 2025, by which time their share of global GDP will have grow from 36 percet to 45 percet. The advaced ecoomies will grow by 2.3 percet over the same period. Compaies from emergig markets are a risig force i globalisatio. As ecoomic power shifts, the emergig market ecoomies are helpig to drive growth i lower icome coutries through cross-border ivestmet ad trade. 13 Tradig patters are startig to reflect this. From 1990 to 2008, Asia s share of Africa s trade doubled to 28 percet, while Wester Europe s portio shrak from 51 percet to 28 percet. Europe accouts for 30 percet of Africa s exports ad Chia 17 percet although Europe will cotiue to be South Africa s biggest tradig parter for some years to come, the gap with Chia is expected to arrow sigificatly Ster N (2011). How should we thik about the ecoomics of climate chage? Lodo School of Ecoomics, Leotief Prize Lecture, March HSBC Global Research (2011). The World i 2050: quatifyig the shift i the global ecoomy. 12 World Bak (2010). Developmet ad Climate Chage. World Developmet Report. Washigto DC: World Bak. 13 World Bak (2011). Securig the Preset, Shapig the future. East Asia ad Pacific Ecoomic Update, Vol 1. Washigto DC: World Bak. 14 McKisey (2010). Africa s path to growth. McKisey Quarterly. 57

70 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Emergig markets ad global growth Source: HSBC, 2011 A umber of drivers are behid this ecoomic regeeratio, icludig better educatio ad ecoomic maagemet, ad greater opeess to iteratioal trade, but demographic shifts ad urbaisatio, stad out as key to improved ecoomic performace. Decliig birth rates over the past decade are chagig the demographic profile of most emergig ecoomies, leadig to lower depedecy ratios every workig perso will have fewer very old or very youg to support. Partly as a result, 70 millio people (mostly i emergig ecoomies) are expected to cross the threshold to middle-class status with aual earigs of betwee US$6 000 ad US$ each year. The secod driver is the largest urba migratio i history. Agricultural workers are leavig the lad, where they were ofte egaged oly i subsistece farmig, for urba jobs. This is leadig the developmet of ew mega- ad mid-sized cities. This year, for the first time, more tha half of Chia s 1.34 billio people were classified as urba residets. The ability to pla for these mass migratios will brig eormous pressures. Large slums are already a feature of the world s largest developig world cities. Traditioal ideas of slum clearace have bee challeged by radical ew thikig, drive by the sheer scale of urbaisatio ad its ecoomic cosequeces. Architecture for Humaity, which has upgraded slums i Brazil, Keya ad South Africa, argues that moder city desig should tolerate slums by learig from them. The effects of urbaisatio iclude growth i the wage-earig class (where jobs are available); higher demad for educatio, cosumer goods, health care ad trasport; a ew busiess class of etrepreeurs ad maagers; ad gais i output per worker. As Chia ad Idia become maufacturig ad service powerhouses, labour productivity is growig at more tha five times the rate of most wester coutries. 58

71 CHAPTER 1: KEY DRIVERS OF CHANGE Emergig markets are becomig key areas of grow th i cosumptio, productio ad, i some cases, iovatio. The policies ad strategies of all coutries ad compaies will eed to address the challege of a world drive by low-cost, high-growth compaies i may differet parts of the world. Govermets will eed to create eablig eviromets for their busiess sectors ad develop strategic policy frameworks that exploit this reality. Compaies will have to develop ew busiess models ad products that match the eeds ad wallets of the growig emergig market urba populatios. Levels of icome per capita will still be relatively low these cosumers will wield, o average, just 15 percet of the spedig power, i real dollars, of their developed-world couterparts. Chia s icome per capita today is just 6 percet of that i the Uited States. Eve with a sevefold icrease by 2050, it will grow to oly 32 percet. I Idia, icome per capita is just 2 percet of that i the Uited States. To serve these customers, compaies will eed to focus o iovatio ad seed ew busiess models. Demographic divided i sub-sahara Africa: depedecy ratio: workig-age populatio, 16-64, to the rest of the populatio. Source: World Bak, 2011 The expected global ecoomic rebalacig depeds o the ability of emergig market coutries to maitai their curret growth treds. This is ot ievitable. Cotiued ecoomic dyamism will deped largely o policy, steerig ecoomies away from lowproductivity activities, like subsistece agriculture ad iformal tradig, to sectors that lift the coutry up the sophisticatio ladder. 59

72 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN This meas wider ad deeper ivestmet i educatio ad skills traiig ad eablig employmet o high-value jobs. This is essetial if developig ecoomies are to reap the beefits of their favourable demographic make-up. The possibility of Chia s growth slowig because of excessive ivestmet, credit supply, high wages, lad prices ad eve social urest caot be ruled out. However, successful implemetatio of its 12th five-year pla, aimed at shiftig the ecoomy to higher-value maufacturig outputs, icreased domestic cosumptio ad less reliace o exports ad ivestmet, could mea it will avoid this sceario. Africa Africa is the secod most populous cotiet after Asia. Its curret populatio of early 1 billio is expected to rise to 2.2 billio over the ext 40 years. Betwee 2000 ad 2010, GDP grew at 5.6 percet a year, toppig 7 percet i 2002, 2004 ad The global ecoomic crisis has affected the cotiet, particularly resource-rich coutries. Growth i sub-sahara Africa slowed to 2.8 percet i 2009, as iteratioal baks cut back o letters of credit to exporters, demad for exports shrak ad tourism ad remittaces declied, but recovered to 5.4 percet i 2010, largely due to higher demad from Chia for commodities. 16 But the future growth path is ucertai. Africa is a highly diverse cotiet. The GDP of the 10 largest coutries makes up more tha 70 percet of the cotiet s total, ad 34 of the world s 48 poorest coutries are Africa. The average aual icome south of the Sahara, excludig South Africa, is oly US$342, ad more tha 40 percet of the people i sub-sahara Africa live o less tha US$1 a day. 17 Africa s poor ecoomic performace bega to improve i the mid-1990s. Macroecoomic reforms brought dow iflatio ad opeed ecoomies to iteratioal trade. Led by the two largest ecoomies, South Africa ad Nigeria, may coutries built prudet fiscal positios after Political ad macroecoomic stability ad microecoomic reforms cosolidated the growth path. Foreig debt as a percetage of GDP ad debt service obligatios as a percetage of export reveues have both declied dramatically to levels comparable to those of other regios, ad sovereig credit ratigs i some coutries have a positive outlook. More coutries are ow see as frotier emergig ecoomies, with relatively developed fiacial markets, icludig Botswaa, Cape Verde, Ghaa, Keya, Mauritius, Mozambique, Namibia, Nigeria, Seychelles, South Africa, Tazaia, Ugada ad Zambia. 15 Iteratioal Moetary Fud (2011). IMF Data Mapper ibid. 17 McKisey (2010). What s drivig Africa s growth. McKisey quarterly. 60

73 CHAPTER 1: KEY DRIVERS OF CHANGE Foreig direct ivestmet has icreased dramatically, from US$9 billio i 2000 to US$62 billio i Total foreig capital flows ito Africa rose from US$15 billio i 2000 to a peak of US$87 billio i Relative to GDP, that is almost as large as the flows ito Chia. The rate of retur o foreig ivestmet i Africa is higher tha i ay other developig regio. I part, this is due to improvig the busiess regulatory eviromet. A study of publicly traded compaies operatig i Africa betwee 2002 ad 2007, mostly i maufacturig ad services, foud that average retur o capital was about two-thirds higher tha that of comparable compaies i Chia, Idia, Idoesia ad Vietam. Similar treds were foud i foreig direct ivestmet, with America compaies achievig a higher retur o Africa ivestmets tha o those i other regios. Iterest i Africa s rich mieral resources accouts for much iward ivestmet, but higher ivestmet i ifrastructure ad be tter educatio have laid the foudatio for other sectors as well. McKisey s aalysis idicates that all sectors cotributed to the growth surge, icludig resources, fiace, retail, agriculture, trasportatio ad telecommuicatios. Natural resources cotributed oly 24 percet of GDP growth betwee 2000 ad Educatio eeds more attetio. Average years of schoolig are catchig up with those of the rest of the world, after havig icreased more tha fivefold sice Although primary school erolmet rates across sub-sahara Africa have doubled i the last geeratio, completio rates are still uder 70 percet, compared to over 90 percet for North Africa ad East Asia. Educatio ad preparatio for employmet are both poor i quality. Opportuities Mierals uderpi the ecoomic stregth of may coutries. Africa holds 95 percet of the world s platium group metals reserves, 90 percet of chromite ore reserves, 85 percet of phosphate rock reserves ad more tha half of the world s cobalt. There may be a gap betwee the actual edowmets ad what has bee idetified ad exploited. Substatial reserves could yet be foud. 19 There might be a cosiderable icrease i Africa s commodity exports, chagig the ecoomic map as ew resourcerich coutries emerge, ad prologig ad deepeig growth. Most Africa coutries have ot used their commodity wealth to reduce poverty. The proceeds of oil or mierals extractio have largely bee cosumed, rather tha ivested i people ad ifrastructure. Ugly ad costly political cotest for cotrol of reveues is still a serious problem i parts of the cotiet. 18 ibid. 19 Collier P ad Warholz J (2009). Now is the time to ivest i Africa. Harvard Busiess Review. 61

74 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Over the ext 20 years, other edowmets will come to the fore, icludig a demographic profile that will potetially boost both productivity ad cosumptio; ifrastructure deficits that preset ivestme t opportuities; ad large-scale agricultural ad agri-processig developmet, both for domestic cosumptio ad for export. Africa has the world s yougest populatio, ad i less tha 15 years it will be home to oe-quarter of the world s populatio uder 25 years of age. Africa will beefit from a large, mostly youthful, workig-age populatio that will have progressively fewer depedats to support as fertility rates fall further. This geeratio of youg people ca greatly expad the cotiet s productive workforce, but without educatio, skills ad programmes to promote job creatio ad etrepreeurship, it also poses a major risk. About 54 percet of Africa s youth are uemployed today, ad early three-quarters live o less tha US$2 a day. Uless this chages, the potetial for political istability is great. Recet developmets i North Africa have show the cosequeces whe youg people do ot fid work ad feel deprived of digity. 20 The rapid growth i the workig-age populatio will be matched by a dramatic rise i the umber of people livig i cities. By 2030, over 50 percet of Africa s populatio will live i cities, may of which will be megacities. Africa urba populatio Populatio (thousads) Source: UN Habitat, Brethurst Foudatio (2011). Puttig Youg Africas to work: Addressig Africa s youth uemploymet crisis. Discussio Paper. Johaesburg, South Africa: Brethurst Foudatio. 21 UN Habitat (2008). The state of Africa cities. 62

75 CHAPTER 1: KEY DRIVERS OF CHANGE Massive urbaisatio will lead to a fudametal shift i the ecoomic profiles of may Africa coutries. Although 40 percet of Africa is urbaised today, agriculture accouts for 70 percet of employmet ad 15 percet of GDP. This balace will chage, brigig the cotiet more i lie with other developig ecoomies. I Brazil, agricultural output makes up 7 percet of GDP ad 12 percet i Chia. I the G7 coutries, agricultural productio is ow less tha 3 percet of all goods produced. Urbaisatio ot oly reduces the umber of people egaged i small-scale agriculture; it also facilitates ecoomic diversificatio. The combied effects of lower depedecy ratios ad urbaisatio ought to have a further sigificat impact o the productivity of the labour force. Productivity levels have bee growig sice 2000 at a average of 2.7 percet a year. Africa will soo be the last remaiig major low-wage regio i the world. Per capita GDP i Chia is already above the global average. Chia is movig up the idustrial ladder, sheddig eough maufacturig jobs to double maufacturig employmet i other low-icome, especially Africa, coutries. I additio, Africa s extesive coastlie ad proximity to Europea ad North America markets, puts Africa-based firms i a strog positio to displace Asia competitors i labour-itesive maufacturig. Employmet ad urbaisatio will drive a huge icrease i cosumer spedig. Over 80 millio households i Africa ow ear at least the equivalet of US$5 000 aually a icrease of 80 percet i eight years. Betwee 2005 ad 2008, cosumer spedig i Africa icreased at a compoud aual rate of 16 percet, well over twice the GDP growth rate. I all but two coutries, GDP per capita icreased. May cosumers have moved from the destitute level of icome (less tha US$1 000 a year) to the basic-eeds (US$1 000 to US$5 000) or middle-icome (up to US$25 000) levels. Mirrorig the patter of urbaisatio elsewhere i the developig world, the umber of households with discretioary icome is likely to rise by 50 percet over the ext decade, to 128 millio. McKisey suggests that sub-sahara Africa s top 18 cities could have a combied spedig power of US$1.3 trillio by This has particular implicatios for baks, telecommuicatios compaies ad maufacturers of fast-movig goods. McKisey projects that four groups of idustries cosumer-facig idustries, agriculture, resources, ad ifrastructure could collectively geerate US$2.6 trillio i reveue each year by 2020, US$1 trillio more tha i McKisey (2010). Lios o the move: The progress ad potetial of Africa ecoomies. McKisey Global Istitute. 23 ibid. 63

76 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The explosio i cosumer demad is particularly evidet i mobile telephoy. I the last 10 years, the umber of mobile subscriptios rose from 15 millio to 500 millio, ad is expected to icrease to close to 800 millio by Over the ext five years, east ad cetral Africa will have the highest mobile subscriptio growth rates i the world. Nigeria is already the world s teth largest mobile market. Iteret use has also rise to about 120 millio users i Africa. The World Bak estimates that the idustry attracted US$56 billio i ivestmet i the decade to 2008, despite challegig market coditios, icludig high coectivity costs, usage charges ad poor electricity supply. Accordig to the Iteratioal Telecommuicatios Uio, the top five most expesive places i the world for fixed lie broadbad i 2010 were all i sub-sahara Africa. New fibre-optic cables ca reduce costs ad exted coectivity. A rage of mostly privately fuded cables o Africa s east ad west coasts will allow dramatically better coectivity ad will lower costs for users if itra-regioal etworks are built. Already, Africa s iteratioal badwidth capacity has icreased 120 times to over 10 terabytes per secod sice The cotiet s massive ifrastructure deficit, though debilitatig, also presets great opportuities. Africa has the weakest ifrastructure i the world average electricity costs of US$0.18 per kilowatt-hour are about double that of other developig coutries. The largest ifrastructure gaps are i eergy, with citizes i 30 of the 47 coutries i sub-sahara Africa facig regular power shortages ad power iterruptios. Power outages are resposible for a loss of betwee 1 percet ad 6 percet of potetial GDP every year. Road desity is lower i Africa tha ay other developig regio, with 152 kilometres of road per square kilometres of lad area. Bridgig the ifrastructure gap will cost about US$93 billio a year, with about 40 percet i the power sector. 24 Poor ifrastructure ad tough market coditios force compaies to develop busiess models ad products for price-sesitive cosumers. Iovatio drive by ecessity delivers solutios that may provide useful sprigboards ito other markets. The pioeerig work i mobile moey trasfers is oe of the otable iovatios i respose to poor ifrastructure. Safaricom s M-Pesa system has led this sector with a model that combies usig small traders ad mobile techology. By 2010, 14 millio Keyas trasferred US$7 billio through M-Pesa. The breakthroughs i cell phoe bakig have ot yet exteded to easig moey flows i ad out of Africa, or betwee coutries. The cost of sedig remittaces to sub- Sahara Africa averaged almost 12 percet of a US$200 trasactio, compared with less 24 ibid. 64

77 CHAPTER 1: KEY DRIVERS OF CHANGE tha 8 percet for most other developig regios. The cost of cross-border remittaces withi Africa, if permitted at all, teds to be eve higher. 25 Remittace flows ito Africa, the largest source of et foreig iflows after foreig direct ivestmet, have quadrupled i the last 20 years, reachig US$21.5 billio i 2010 i sub-sahara Africa i 2010 (World Bak, 2011). These flows uderscore the size ad importace of migratio both from ad withi Africa. About 30 millio Africas, or 3 percet of the populatio, have migrated iteratioally, icludig withi Africa. 26 Today, 500 millio people i sub-sahara Africa do ot have access to electricity, which is a prerequisite for social developmet, the ability to haress techological opportuity ad eable evirometal sustaiability. Reewable eergy sources will become icreasigly importat. Sub-Sahara Africa is particularly well positioed to develop solar ad hydro eergy, ad to produce bio-fuels. The Grad Iga project could provide sufficiet electricity for Africa ad allow it to export eergy through itercoectio liks to souther Europe. This would require three major Africa itercoectio projects: the Norther Highway (betwee Iga ad Egypt), the Souther Highway (betwee Iga ad South Africa) ad the Wester Highway (betwee Iga ad Nigeria). Agola, Mozambique ad Tazaia, amog other coutries, have the potetial to produce ethaol profitably from sugar cae o lad that is ot used for food crops. Africa also has the potetial to reduce emissios by protectig its forests. The UN s programme to reduce emissios from deforestatio ad forest degradatio is a attempt to create fiacial value for the carbo stored i forests by offerig icetives for the sustaiable maagemet of woodlads. The Greater Iga hydroelectric project has bee uder discussio for over four decades, with the first studies udertake i the 1960s. The first phase ivolved the costructio of three power statios i the Nkokolo valley. The project icludes Iga I (351 megawatts [MW]), which was commissioed i 1972, Iga II (1 424 MW), which was commissioed i 1982, ad Iga III (about MW). High voltage lies trasmit the power from Iga I ad II to Zambia, Zimbabwe, South Africa ad the Democratic Republic of Cogo (Brazzaville). The Iga III project was to be developed by the Wester Power Corridor, a joit veture of the atioal power firms of the Democratic Republic of Cogo, Agola, Namibia, Botswaa ad South Africa, but progress has stalled. The secod phase addressed the developmet of the Grad Iga power statio with a total capacity of MW, to be equipped progressively with 52 power geerators of 750 MW each. 25 World Bak (2011). Securig the Preset, Shapig the future. East Asia ad Pacific Ecoomic Update, Vol 1. Washigto DC: World Bak. 26 ibid. 65

78 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Agriculture is aother area of potetial growth. A Africa gree revolutio could raise agricultural productio to US$880 billio per year by Agriculture, Africa s largest ecoomic sector, is highly cocetrated Egypt ad Nigeria aloe accout for oe-third of total agricultural output ad the top 10 coutries geerate 75 percet. Irrigatio is critical to agricultural output ad uderlies these success stories. Africa s agricultural potetial is much larger tha its curret output. From beig a et food exporter i the early 1960s, the cotiet is ow a et importer. While more tha oe-quarter of the world s arable lad is i Africa, it geerates oly 10 percet of global agricultural output. Over 60 percet of the world s uexploited croplad is i sub- Sahara Africa, compared with 31 percet i Lati America. However, poorly regulated access to agricultural lad o the cotiet by foreig private ad state etities ca udermie sovereigty ad domestic food security, ad ecourage evirometal degradatio. Demad for food will grow by betwee 30 percet ad 50 percet over the ext two decades as the world populatio grows from 7 billio to 8 billio by 2030 (World Ecoomic Forum, 2011). Apart from growth i umbers, hudreds of millios will be wealthier, ad demadig a more varied, high-quality diet. Competitio for lad, water ad eergy will itesify, eve as the effects of climate chage will become icreasigly apparet. Huger remais widespread. More tha 900 millio people lack access to sufficiet carbohydrates, fats ad protei, while 1 billio are thought to suffer from hidde huger, because vitamis ad mierals are missig from their diet. I cotrast, 1 billio people are eatig substatially too much, spawig a ew public health epidemic ivolvig chroic coditios, such as type 2 diabetes ad cardiovascular disease. The World Ecoomic Forum s Global Risk etwork estimates that o-commuicable or chroic disease (heart disease, stroke, diabetes, some chroic lug coditios ad prevetable cacers) will icrease by 27 perc et i Africa, 25 percet i the Middle East ad 21 percet i Asia ad Pacific i the ext decade, if ot addressed effectively. 27 Give its vast utapped agricultural potetial, Africa is well positioed to address some of the world s food challeges, especially i the well watered area betwee the Tropics of Cacer ad Capricor. Attetio is eeded to address the followig: highly fragmeted productio 85 percet of Africa s farms occupy less tha two hectares (i Brazil, Germay ad the Uited States, oly 11 percet or less work o this scale); fiace, high-quality seeds, fertiliser, ad water; uderivestmet, with aual additioal ivestmet of US$50 billio required i sub-sahara Africa aloe; ad a lack of eablig coditios, such as trasport ad other kids of ifrastructure, stable busiess ad ecoomic coditios, ad traied busiess ad scietific talet. 27 World Ecoomic Forum (2011). Global Risks 2011 Sixth Editio. World Ecoomic Forum, Geeva. 66

79 CHAPTER 1: KEY DRIVERS OF CHANGE Climate chage has the potetial to exacerbate these factors ad worse evirometal damage, icreasig the scarcity ad pollutio of water, ad acceleratig soil erosio ad degradatio. Curret climate models idicate that more water will be available for agriculture i Asia ad North America, but progressively less i sub-sahara Africa, Lati America ad the Caribbea, compoudig preset challeges ad demadig iovative resposes. Africa coutries have committed themselves to icreasig agriculture s share of their budgets to 10 percet, doors are makig sigificatly icreased commitmets, ad private-sector players ad ivestmet fuds are pourig moey ito the area. The Alliace for a Gree Revolutio i Africa, for example, is workig to achieve food security for Africa by promotig sustaiable agricultural growth through smallholder farmers. Recogisig that smallholders mostly wome produce most of Africa's food today, with miimal resources ad little govermet support, the alliace supports smallholders with good seeds ad better soils, access to markets, storage ad trasport, as well as fiace, while seekig to improve agricultural policies. Africa must to do more to hold oto its skilled workers. Skilled migratio rates are particularly high. I a survey of the top five studets graduatig from the top 13 high schools i Ghaa betwee 1976 ad 2004, three-quarters had emigrated at some poit betwee secodary school ad age The UN Ecoomic Commissio for Africa ad the Iteratioal Orgaisatio for Migratio estimates that Africas left the cotiet for idustrialised coutries betwee 1960 ad Durig the followig decade, the umber rose to Sice 1990, they estimate, at least have left the cotiet each year. I 2000, oe out of every eight Africas with a uiversity educatio lived i a coutry i the Orgaisatio for Ecoomic Cooperatio ad Developmet, the highest rate amog developig regios, except the Caribbea, Cetral America ad Mexico. 29 Africa s fortues will deped largely o how educated ad skilled Africas view persoal opportuities, ad domestic ad foreig ivestors regard returs o ivestmets. Both decisios are strogly iflueced by govermet policies. Less coflict, more trasparet regulatory ad legal systems, greater opeess i trade, ad higher ivestmet i ifrastructure eabled the stroger ecoomic growth of Africa ecoomies i the first decade of this cetury. Future success depeds o these treds beig stregtheed ad accelerated. All successful coutries are raisig their game cotiuously ad the recessio is forcig compaies to operate more efficietly, cost effectively ad creatively. 28 Iteratioal Bak for Recostructio ad Developmet/World Bak (2011). Leveragig Migratio for Africa: Remittaces, Skills, ad Ivestmets. 29 Iteratioal Orgaisatio for Migratio (2010). World Migratio Report: The future of migratio: buildig capacities for chage. Iteratioal Orgaisatio for Migratio. 67

80 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN South Africa eeds to adjust its focus i light of the chagig global ecoomic ladscape. This is particularly urget i trade ad idustrial policy. South Africa eeds to redirect its attetio to pursuig export opportuities i the ecoomic power-houses of the future, may of them emergig ecoomies. These opportuities ca oly be exploited if idustrial policy supports sectors ad idustries that ca best produce the goods ad services to meet the eeds of the ew markets South Africa wishes to serve. The eviromet Market ad policy failures have resulted i the global ecoomy eterig a period of ecological deficit, as atural capital (groud water, marie life, terrestrial biodiversity, crop lad ad grazig) is beig degraded, destroyed, or depleted faster tha it ca be repleished. Waste ad carbo-equivalet emissios per capita are climbig faster every year i a ecosystem with fiite limits. Huma activity is warmig the plaet. For the past milleium, the earth s average temperature varied withi a rage of less tha 0.7 degrees Celsius ( C). For the past 150 years, there has bee a icrease of early 1 C. By the ed of this cetury, the earth could be 5 C warmer tha i the 19th cetury. To put this ito perspective: the plaet has ot bee 3 C warmer tha 19th cetury levels for 3 millio years, or 5 C warmer i the last 30 millio years. The busiess-as-usual sceario show below suggests a probability of about 50 percet of warmig of 5 C, or more, i the first part of the 22d cetury. Eve 4 C would trasform the relatioships betwee humas ad the plaet. Hudreds of millios would have to move, icreasig the possibility of severe global coflict sustaied over a log period. To have a 50 percet chace of cotaiig the icrease to 2 C, greehouse gas (GHG) emissios eed to reduce to o more tha 44 billio toes per year of carbo equivalets by 2020 ad 35 billio toes by Carbo emissios per year, Source: McKisey Ster N (2011). How should we thik about the ecoomics of climate chage? Lodo School of Ecoomics, Leotief Prize Lecture, March McKisey (2009). McKisey Global GHG abatemet cost curves V

81 CHAPTER 1: KEY DRIVERS OF CHANGE The effects of the plaet s warmig are felt mostly through water storms, floods ad iudatios, droughts ad desertificatio, ad risig sea levels. Experts o the Itergovermetal Pael o Climate Chage war of radical disruptio ad istability i a very short space of time. Uless emissios are checked soo, developmet will be reversed i may parts of the world, brigig major ecoomic declie. The risks of delay are also ot well uderstood. Because carbo ad other GHGs accumulate i the atmosphere ad persist for very log periods, it is quite likely that withi five or 10 years, ay realistic chace of cotaiig warmig to 2 C will have bee missed. 32 Climate chage is iequitable. High-icome coutries, with oe-sixth of the world s populatio, are resposible for early two-thirds of the GHGs i the atmosphere, but it is developig coutries that will suffer most from the effects of extreme weather. 33 Sice the threat to the world s eviromet ad the challege of poverty alleviatio are closely itertwied, the debate should focus o esurig that evirometal policies are ot framed as a choice betwee growth ad mitigatig climate chage. A low-carbo future is the oly realistic optio, as the world eeds to cut emissios per uit of output by a factor of about eight i the ext 40 years. I fact, the eergy-idustrial revolutio ow uder way offers excitig opportuities. As show by the agricultural ad idustrial revolutios, as well as the curret iformatio ad commuicatio revolutio, iovatio, creativity ad growth ca shape quite differet futures, with huge rewards for pioeers of ew models. The ew eergy architecture ad its relatioship to the built eviromet will spur iovatio, ad potetially attai eergy security ad a cleaer ad safer eviromet, while retaiig greater biodiversity. The political challege i the ext two decades will be to develop policies ad regulatory iitiatives that prompt improved resource maagemet ad deliver substatial clea techology idustries. This will iclude policies that help people cope with ew risks durig the trasitio, adaptig lad ad water maagemet to protect livelihoods ad threateed atural eviromets, while trasformig eergy systems. Although climate chage is the chief ecological challege, others closely liked also pose serious risks, such as water scarcity, pollutio, food productio ad safety, ad depleted fishig stocks. The earth ad its atmosphere are a itegrated ecosystem. Iteractio betwee its differet compoets is ot well uderstood. As Joha Rockström of the Stockholm Resiliece Cetre has wared, humakid risks triggerig dagerous iflectio poits if it trasgresses plaetary boudaries. Such poits ivolve iteractios betwee climate, fresh water, biogeochemic al loadig affectig the itroge ad phosphorus cycles, the destructio of biodiversity, ad ocea acidificatio Ster N (2011). How should we thik about the ecoomics of climate chage? Lodo School of Ecoomics, Leotief Prize Lecture, March World Bak (2010). Developmet ad Climate Chage. World Developmet Report. Washigto DC: World Bak. 34 Rockström J et al (2009). Plaetary Boudaries: Explorig the safe operatig space for humaity i the Athropocee i Nature, 461: Nature Publishig Group. 69

82 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The amout of water beig take from the ea rth s udergroud reservoirs, or aquifers, which are essetial for agriculture, is over 400 millio toes a day more tha is beig replaced by rai. To quatify that aother way: it would take 25 millio water trucks to carry that amout of water a covoy 30 times the earth s diameter. I additio, 90 percet of edible fish stocks have already bee fished out, while bigger fishig fleets are beig built. 35 Idustrialised food productio cotributes to climate chage ad the destructio of biodiversity. Damage to the eviromet icludes soil loss due to erosio, loss of soil fertility, saliatio ad other forms of degradatio. I may places, water extractio for irrigatio is exceedig rates of repleishmet. The threat of climate chage has led sciet ists, academics ad policy-makers to explore geoegieerig deliberate, large-scale itervetio i atural systems to couteract global warmig. Some vehemetly oppose geoegieerig research, fearig it will be a excuse to delay reducig emissios. Eve supporters agree that ew techology breakthroughs that ca couter the effects, particularly of global warmig, are o paacea. Istead, they carry potetially great risks, ad should ot be see as a alterative to emissio reductios. Debates cotiue about maagig ecological challeges. For most, the pace of chage is dagerously slow ad deeply worryig. A commo uderstadig amog coutries is emergig that low-carbo growth is the desired ed state. But this ivolves ivestmet, chage ad collaboratio. There is still little evidece that the iteratioal will is there to overcome differeces ad coclude a e ffective global agreemet. Chage is more likely to be bottom-up, triggered by perceptios at a atioal or local level, ad aggregated progressively i regioal ad global agreemets. Sciece ad techology Developmets i sciece ad techology are fudametally alterig the way people live, coect, commuicate ad trasact, with profoud effects o ecoomic developmet. Sciece ad techology are key to developmet, because techological ad scietific revolutios uderpi ecoomic advaces, improvemets i health systems, educatio ad ifrastructure. The techology revolutios of the 21st cetury are emergig from etirely ew sectors, based o microprocessors, telecommuicatios, biotechology ad aotechology. Products are trasformig busiess practices across the ecoomy, ad the lives of all who have access to their effects. 36 The most remarkable breakthroughs will come from the iteractio of isights ad applicatios arisig whe these techologies meet. 35 Marti J (2006). The Meaig of the 21st Cetury: A Vital Blueprit for Esurig our Future. Ede Project Books. 36 Hall P ad Soskice D (eds) (2001). Varieties of Capitalism: The Istitutioal Foudatios of Comparative Advatage. Oxford Uiversity Press. 70

83 CHAPTER 1: KEY DRIVERS OF CHANGE Through breakthroughs i health services ad educatio, these techologies have the power to better the lives of poor people i deve lopig coutries. Eradicatig malaria, a scourge of Africa for ceturies, is possible. Cures for other diseases edemic i developig coutries are also possible, allowig people with debilitatig coditios to live healthy ad productive lives. Access ad applicatio are critical. Sciece ad techology are the differetiators betwee coutries that are able to tackle poverty effectively by growig ad developig their ecoomies, ad those that are ot. The extet to which developig ecoomies emerge as ecoomic powerhouses depeds o their ability to grasp ad apply isights from sciece ad techology ad use them creatively. Iovatio is the primary driver of techological growth ad drives higher livig stadards. 37 As a egie of growth, the potetial of techology is huge, ad still largely utapped i Africa. Less developed coutries ot oly lack skilled labour ad capital, but also use these less efficietly. Iputs accout for less tha half of the differeces i per capita icome across atios. The rest is due to the iability to adopt ad adapt techologies to raise productivity. 38 Computig, for example, through ulockig ifrastructure backlogs ad maagig itegrated supply chais, ca trasform ecoomic performace by eablig affordable ad accessible services i educatio ad health. The combiatio of computers ad the Iteret, ad mobile devices ad the cloud, has trasformed huma experiece, empowerig idividuals through access to kowledge ad markets, chagig the relatioship betwee citizes ad those i authority, ad allowig ew commuities to emerge i virtual worlds that spa the globe. Accordig to the Iteratioal Telecommuicatios Uio, by the ed of 2010 there were a estimated 5.3 billio mobile cellular subscriptios worldwide, icludig 940 millio subscriptios to 3G services. About 90 percet of the world s populatio ca access mobile etworks, with three-quarters of mobile subscribers livig i developig ecoomies. Cellular techology has allowed Africa to leapfrog the age of fixed lie telephoy, brigig affordable access to millios of people. However, the cotiued ad equitable ex pasio of iformatio ad commuicatio techology (ICT) depeds o electricity. The real divide over the ext 20 years will be betwee those who have access to reliable electricity to power these devices ad those who do ot. Other techologies uder developmet are itervetios for cogitive ehacemet, proto cacer therapy ad geetic egieerig. Revolutioary ivetios iclude small udergroud uclear power uits called uclear batteries that will be ultra-safe ad maiteace-free; ew types of photovoltaics that will make electricity from sulight 37 Rodrik D (2009). Oe ecoomics, may recipiets: Has (eo-classical) ecoomics failed us? Sir Arthur Lewis Distiguished Lecture, 26 March Cauto O ad Giugale M (eds) (2010). The Day after Tomorrow. Washigto DC: World Bak. 71

84 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN cheaper tha that from coal; ad myriad aotechologies, some of which lower the cost ad icrease the reliability of may products eve i the poorest areas of the developig world. Maagig techological revolutios poses challeges. Certai iovatios ad discoveries will raise fraught bio-ethical issues, as geetic modificatio of food crops ad cloig of huma embryos have already doe. There is a risk that their cost, particularly i the early stages of developmet, will worse the preset iequality by limitig access to wealthy idividuals. This already happes i health care i certai G7 coutries, where the demad for very high-cost diagostic equipmet ad surgical itervetios eablig logevity ad better quality of life for older wealthy people overstretches public health care budgets, ad lowers service quality i poor eighbourhoods. Fially, resource-itesive techologies, focused o satisfyig high cosumptio demad, like holidays abroad i coastal resorts, wilderess areas, or icoic cities, icrease carbo emissios ad evirometal damage. To promote techological advaces, developig coutries should ivest i quality educatio for youth, cotiuous skills traiig for workers ad maagers, ad should esure that kowledge is shared as widely as possible across society. I a world i which the Iteret makes iformatio ubiquitous, what couts is the ability to use kowledge itelligetly. Kowledge is the systemically itegrated iformatio that allows a citize, a worker, a maager, or a fiace miister to act purposefully ad itelligetly i a complex ad demadig world. The oly form of ivestmet that allows for icreasig returs is i buildig the stocks ad flows of kowledge that a coutry (or compay) eeds, ad i ecouragig ew isights ad techiques. Adoptig appropriate techologies leads directly to higher productivity, which is the key to growth. I societies that have large stocks ad flows of kowledge, virtuous circles that ecourage widespread creativity ad techological iovatio emerge aturally, ad allow sustaied growth over log periods. I societies with limited stocks of kowledge, bright ad creative people feel stifled ad emigrate as soo as they ca, creatig a vicious circle that traps those who remai i a more impoverished space. Such societies stay mired i poverty ad depedecy. The ivestmet climate is crucial, as are the right icetive structures, to guide the allocatio of resources, ad to ecourage research ad developmet. Successful coutries have grow their ability to iovate ad lear by doig, by ivestig public fudig to help fiace research ad developmet i critical areas. There are may examples the space programme, defece ad aerospace i the Uited States, itegrated value chais, just-i-time maufacturig ad total quality maagemet i Japa, high-tech maufacturig i Sigapore, ad almost everythig i Chia today. Everyoe is ivolved big ad small, public ad private, rich ad poor. Ad these coutries, ad their leadig compaies, costatly bechmark, moitor, evaluate ad adjust. 72

85 CHAPTER 1: KEY DRIVERS OF CHANGE Coclusio The 21st cetury presets humakid with exceptioal opportuities ad uprecedeted risks. Systemic risks are a characteristic feature of the global order. The systemic likages betwee idividual risks ca either amplify the impact of harmful evets or modulate ad disperse their effects. Itercoected risks are show by the liks betwee food, fuel ad water i the cotext of climate chage; betwee illicit trade, orgaised crime, corruptio ad terrorism i the cotext of fragile states ad cybercrime; ad betwee global macroecoomic imbalaces, wide disparities i the growth paths of developed ad emergig ecoomies; ad weak systems of global goverace. It is therefore greatly importat what South Africa does to create or modify likages, regulate ad icetivise behaviour ad adopt policies o global issues. We are ot captives of irratioal or irresistible extraeous forces. The ability of govermets to avigate these challeges will be determied by their isight ito curret circumstaces, the foresight they develop about treds ad possible futures, ad the policies they adopt to fit their coutries ad ecoomies to purpose. The uiteded cosequeces of globalisatio icrease the pressure o govermet leaders to adjust global istitutios to ew realities, ad to promote a more equitable global order. It is far from clear, however, that the structural tesio betwee the accoutability of all govermets to their electorates will easily be recociled with the eed to address the challeges of the global commos i a resposible way. Times of austerity ted to arrow the visio of most people, ad make them less iclied to accommodate the eeds of others. There are sigs of this across the developed world. The ext decades will see a rebalacig of the world order, with the power of developed ecoomies shrikig ad that of developig ecoomies risig. Africa will be able to play a importat role i this trasformatio if its govermets, busiess commuities ad civil society groupigs cooperate to esure that the successes of the last decade, i particular i reducig poverty, are maitaied ad wideed. Threats to the eviromet are real ad growig, drivig the world closer to a tippig poit. Failure by world leaders to take urget actio to remedy curret treds i carbo emissios will lead to dire cosequeces for future geeratios. The beefits that are certai to flow from techological revolutio i a icreasigly coected ad kowledge-itesive world will be seized by those coutries ad compaies that are alive to the rapidly chagig eviromet, ad imble eough to take advatage of the opportuities. Those that succeed will make substatial advaces i reducig poverty ad iequality. 73

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87 CHAPTER 2: DEMOGRAPHIC TRENDS Chapter 2 DEMOGRAPHIC TRENDS Itroductio To achieve the twi objectives of reducig poverty ad iequality, it is ecessary to uderstad what the coutry s populatio looks like today ad what it will look like i the decades to come. Demography is a vital tool i helpig South Africa meet the eeds ad expad the capabilities of the youg, the middle-aged ad the old; of wome ad me; ad of rural ad urba dwellers. South Africa is a microcosm of iteratioal demographic shifts. The global populatio reached 7 billio i October Demographers predict that towards the ed of this cetury, aother 3 billio people will be added to the plaet. Most will be bor i developig coutries, the majority i urba areas, ad may i Africa ad the Idia subcotiet. Variatios i the growth rate will have sigificat geopolitical cosequeces. I 1950, for example, there were three Europeas for every sub-sahara Africa, but by 2100 there are expected to be five Africas for every Europea. While log-term chages i populatio profiles may be substatial, over the short to medium term demographic chages ted to be gradual. This gives policy-makers the opportuity to make optimal decisios: ifpolicy itervetios are iformed by curret ad projected demographic profiles, the programmes to improve health, educatio ad skills ca be properly targeted, ad services ad ifrastructure provided where eeded. Igorace of demographic profiles ca result i a serious misallocatio of resources ad iappropriate itervetios. Respodig to demographic shifts is becomig eve more importat i the face of growig pressure o food, eergy ad water supplies; greater populatio mobility; additioal demads for jobs ad social support; ad the ucertai effects of climate chage. Developed ad developig coutries are at very differet stages i their demographic trasitios. Like most developig coutries, South Africa has a urbaisig ad youthful populatio. For the ext 20 years, policies should be viewed through a youth les, reflectig the rise of a largely youthful workig-age populatio. After about 2026, however, there will be ew challeges to address as the proportio of elderly citizes rises. South Africa s trasitio is differet i two key respects. First, fertility rates are much lower tha elsewhere i Africa, ad are comparable to middle-icome coutries i Lati 75

88 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN America ad Asia. Secod, South Africa has experieced a marked deterioratio i the populatio growth rate due to a high level of HIV/AIDS-related mortality. HIV/AIDS has drastically affected South Af rica s demographic profile, but forecasts suggest that the umber of ifectios has begu to stabilise a tred expected to cotiue. This does ot mea that the effects of HIV/AIDS are fadig. With more effective treatmets that icrease life expectacy, the umber of people livig with HIV will cotiue to grow, ad public health systems must be capable of providig for their eeds. Domiat treds Populatio pyramid Age Source: Actuarial Society of Souther Africa (ASSA), South Africa s populatio growth rate is slowig, the birth rate is decliig ad life expectacy is icreasig, though off a low base because of HIV/AIDS. There is a large youth ad workig-age populatio ad proportioally, but ot umerically, fewer very old ad very youg. This demographic profile is similar to other middle-icome territories such as Brazil, Mexico, Idia ad the Maghreb states. But HIV/ AIDS has caused sigificat fluctuatios i average life expectacy ad a rise i mortality figures. Chages to the demographic profile of ay coutry usually take decades to show, but HIV/AIDS has shorteed these timeframes. 1 ASSA (2011). Demographic scearios. Upublished report prepared for the Natioal Plaig Commissio. 76

89 CHAPTER 2: DEMOGRAPHIC TRENDS There are sigificat differeces i the demographic profiles of South Africa s populatio groups across the three mai demographic drivers: fertility, mortality ad migratio. Black South Africas geerally live shorter lives ad have a higher fertility rate tha white South Africas, although the fertility rate amog the black populatio is droppig sharply. Immigratio is predomiatly from other Africa coutries, while emigratio is maily by white South Africas. If the ecoomy cotiues to expad at curret rates ad fertility cotiues to declie, the populatio will grow from 50.6 millio to 58.5 millio by If the ecoomy cotracts, the curret fertility rate is likely to stay the same, resultig i the populatio reachig 60 millio. 2 The table below sets out populatio treds based o five scearios of the most importat factors affectig the populatio, loosely structured uder potetial ecoomic coditios. Populatio tred scearios Scearios Fertility Migratio HIV/AIDS 1. Rapid ecoomic developmet Decreasig faster tha curret rate Icreased immigratio Faster roll-out of atiretrovirals (ARVs) ad icreased life HIV+ expectacy 2. Curret ecoomic developmet Curret level of decreases i fertility rates Costat proportioal immigratio based o 2005 levels 2010 ARVs protocols ad icreased HIV+ life expectacy 3. Slowig ecoomic developmet Slower decrease i fertility rates Costat proportioal immigratio based o 2005 levels 2010 levels of roll-out of ARVs ad lower icrease i HIV+ life expectacy 4. Negative ecoomic developmet Stable fertility rates Decreasig immigratio over time Slower roll-out of ARVs ad 2008 HIV+ life expectacy 5. Curret ecoomic developmet with migratio shock Curret level of decreases i fertility rates Icreased immigratio 2010 ARV protocols ad icreased HIV+ life expectacy Source: ASSA, ASSA,

90 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN South Africa has arrived at the sweet spot of demographic trasitio. The populatio has a proportioately high umber of workig-age people ad a proportioately low umber of youg ad old. This meas that the depedecy ratio the percetage of those over 64 ad uder 15 relative to the workig-age populatio is at a level where there are eough people of workig age to support the o-workig populatio. The caveat i South Africa s case is that ue mploymet ad HIV/AIDS have produced may more depedats tha would ormally be the case. Although statistically South Africa is i a positio to cash i o a demographic divided, the challeges of HIV/AIDS ad joblessess are a burde o those who are workig. Nevertheless, a large workig-age populatio presets South Africa with a major asset. If it is well maaged there is real opportuity to build a stroger ecoomy, elimiate poverty ad reduce iequality. The challege is puttig this workig-age populatio to work. This widow of opportuity will close before 2030, as the over 64s as a share of the populatio rise from 5.4 percet today to 7 percet by 2023, ad to over 8 percet by Accordig to the Uited Natios (UN), this is whe a coutry s populatio i demographic terms is regarded as old. Th e umber of South Africas over the age of 64 will rise from about 2.5 millio ow to 4.7 millio by This agig populatio will put pressure o the ecoomy, especially as a sigificat percetage of the older populatio will be livig with HIV/AIDS. Moreover, old age social security will place pressure o the state ad taxpayers. Depedecy ratios base sceario Source: ASSA, 2011 The perfect widow could be the perfect storm. A large umber of South Africas are betwee the ages of 15 ad 29. Although the coutry has ot reached the 30 percet mark, viewed as the dagerous youth bulge i developig ecoomies, this cohort will make up more tha a quarter of the total populatio util From 29 percet of the total populatio i 2010, the percetage ofyouth will declie slowly to 25 percet i

91 CHAPTER 2: DEMOGRAPHIC TRENDS A youth bulge has the potetial to destabilise coutries, especially where there is rampat uemploymet. Budgetary implicatios South Africa s projected demographic pr ofile will affect govermet spedig. Health care ad pesio provisio will have to be adjusted to accommodate the fact that: 1) People will live loger as life expectacy improves 2) Older people will form a growig percetage of the populatio 3) A greater umber of people will be livig with HIV/AIDs as treatmets become more effective 4) The umber of people requirig ARV treatmet will triple. Several factors will affect the costs associated with these shifts. These iclude the extet to which pesios are raised to keep up with cost of livig, the efficiecy of the health care system ad the cost of drugs, particularly ARVs. The umber of people eligible for social grats is expected to declie over the ext 20 years. How this will affect the fiscus will deped o whether the grat regime remais the same ad aual icreases i grat paymets. The umber of South Africas 18 years ad youger will cotiue to rise util 2013, peakig at 19.5 millio, ad the fallig to reach 19.1 millio by South Africa s demographic profile Fertility rates Iteratioally, fertility levels vary widely, ragig from a average of 1.1 childre bor to a woma i Sigapore to 7.2 i Niger. High fertility rates are geerally foud i cotexts of poverty ad powerlessess, where the ifat mortality rate is high, ad opportuity ad educatio for wome is low. Health care, educatio, old-age security, wome s empowermet, ecoomic aspiratios ad urbaisatio geerally brig dow fertility rates, which ca chage rapidly. I Thailad, the fertility rate dropped i a decade from about 6 to 2 as secodary school educatio expaded. I South Africa, the fertility rate has also dropped, although over a loger period. I the late 1960s, the rate was about 6.7, fallig to 2.9 i 2001 ad to 2.3 i It is projected to fall to 2.1 by 2030, which is close to the replacemet rate at which a populatio remais relatively costat i size. As a result, the populatio is expected to icrease by a little over 8 millio by South Africa s fertility levels differ accordig to locatio ad socioecoomic characteristics. They are highest i the maily rural provices ad muicipalities, ad 79

92 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN lowest i the most urbaised. Accordig to the 2007 Commuity Survey, the highest fertility rate by muicipality was i the OR Tambo district i the Easter Cape with a level of 4.1, while the lowest was 2.2 i the City of Cape Tow, the umgugudlovu district i KwaZulu-Natal ad Sedibeg district i Gauteg. Mortality South Africa is simultaeously affected by four epidemics, referred to as the quadruple burde of disease: HIV/AIDS Ijury, both accidetal ad o-accidetal Ifectious diseases, such as tuberculosis, diarrhoea ad peumoia, which iteract i vicious egative feedback loops with malutritio ad HIV Growig lifestyle diseases, such as diabetes ad obesity, related to relative affluece. These burdes are reflected i morbidity statistics. Total deaths i the coutry have icreased sharply, with the umbers doublig i the decade to This icrease is accouted for by two groups: the rate doubled for youg childre uder the age of five ad trebled for youg adults betwee 30 ad 34. Overall, icreased mortality sharply reduced the media age of death to less tha 45, ad to a lower age for females tha males. The highest rates for victims of homicide are see i me aged betwee 15 ad 29 years (184 per ). I some areas, such as Cape Tow s towships, this rate more tha doubles. Deaths of me from homicide outumber those of wome by more tha seve to oe. HIV/AIDs has bee a powerful shapig factor i South Africa s demographics over the past two decades. The curret estimated HIV prevalece rate is about 10.6 percet, with the total umber of people livig with HIV/AIDS havig rise from 4.21 millio i 2001 to a estimated 5.4 millio i This umber is projected to rise to 7.3 millio by The highest levels are amog youth: a estimated 16.6 percet of those aged betwee 15 ad 49 are HIV positive. 4 The impact of HIV/AIDS is most evidet i life expectacy figures. I the secod half of the 20th cetury, South Africas started to live loger, from 45 i the early 1950s to about 65 i the early 1990s. HIV/AIDS reversed this dramatically. Life expectacy for Africa me fell most dramatically (49 years by 2003), ad for Africa wome to 52 years. This rapid declie was followed by some recovery, with 5.7 years beig added to male life expectacy ad 9.7 years for wome by ASSA, Statistics South Africa (2011). Mid-year populatio estimate. 80

93 CHAPTER 2: DEMOGRAPHIC TRENDS Live expectacy Source: ASSA, 2011 The future demographic effect of this pademic is a area of some debate. Life expectacy will cotiue to be affected by HIV/AIDS, but the extet to which this will happe will deped o the efficacy ad impact of treatmet ad prevetio. The umber of ew ifectios is likely to decrease gradually, or at least to remai stable, but the umber of people with HIV/AIDS is expected to cotiue to rise, reachig 7.3 millio i 2030, while the umber of those sick with AIDS is also expected to rise from to about 1.3 millio. The icrease will happe as ARVs ad other treatmets exted the lives of those ifected with HIV. Over the ext 20 years, HIV/AIDS will accout for a smaller percetage of overall deaths, although it will remai a importat factor. The declie i life expectacy has already reversed, ad average life-spas will cotiue to icrease, but average life expectacy is still expected to oly reach 60 by 2030, 5 sigificatly lower tha other middle-icome coutries such as Brazil (71.4 years i 2009). Health experts cosulted by the commissio take a more optimistic view, arguig that if the correct policies are put i place, average life expectacy of 70 ca be achieved by HIV/AIDS has also exaggerated existig discrepacies betwee populatio ad socioecoomic groups. Although life expectacy for Africa wome is expected to average just over 60 years by 2030, the average for white wome is expected to stay at 76 for the ext two decades. For Africa me, life expectacy will average just uder 56 by 2030, while the average for white me will icrease from over 72 to over ASSA,

94 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN AIDS sick ad ew ifectios Source: ASSA, 2011 Populatio movemet Migratio Data provided by the Global Commissio o Iteratioal Migratio suggests that iteratioal migrats (chagig coutry of residece over the past five years) make up about 3 percet of the world populatio, with levels ragig from about 0.1 percet i Chia to 65 percet i Kuwait. South Africa s figure has bee estimated to be about 2.7 percet, which is modest i global terms, although Gauteg, the iteratioal migrat gateway to South Africa, has a figure of about 13 percet. The difficulty, however, is that there is o accurate meas to cout iteratioal migrats i South Africa, as may migrats live below the radar ad move regularly betwee South Africa ad their coutry of origi. At best, there are idicators for the growth i iteratioal migratio. For example, aual total border crossigs have rise by over 2 millio sice 1996, from 5.1 millio to 7.5 millio. 6 This reflects growth i tourism, but may also idicate icreased trasatioal movemet. Future migratio flows are difficult to predict because they are drive by costatly chagig social ad ecoomic factors. South Africa s ecoomic positio i Africa will affect migratio flows, as will the political circumstaces of eighbourig states ad the livelihood effects of chagig weather patters. Iteratioal migratio will eed to be uderstood as a cotigecy i the plaig process. The scale ad ature of its impact should be addressed with flexibility as sources of data collectio ad aalysis are stregtheed. I the past, iteratioal migratio was primarily a respose to poverty or political istability. The scale of migratio was ofte directly liked to the ecoomic ad icome 6 Statistics South Africa,

95 CHAPTER 2: DEMOGRAPHIC TRENDS differetial betwee a coutry of origi ad host coutry. This remais importat, but reasos for migratio are becomig icreasi gly diverse, while the practical risk ad emotioal costs of movig have reduced with the diffusio of cheap, versatile commuicatios. I future, idividuals with skills ad greater access to resources, educatio ad etworks are more likely to be iteratioal migrats tha the destitute. 7 If iteratioal treds are reflected i South Africa, migratio patters will become icreasigly complex, ivolvig diverse social groups ad a combiatio of permaet ad temporary migrats. There will be more youthful ad wome migrats, ad a growig umber of migrats movig from regios severely affected by climate chage. If properly maaged, migratio will serve as a importat istrumet to fill gaps i the labour market ad will cotribute positively to South Africa s developmet. Eergetic ad resourceful migrat commuities ca cotribute to local ad atioal developmet, ad diverse, cosmopolita populatios are ofte the focus of cultural, ecoomic ad itellectual iovatio. If poorly maaged, however, the skills ad potetials of migrats will be eglected to the detrimet of the coutry. Migratio will remai a source of coflict ad tesio, ad migrats will be icreasigly vulerable, subject to cotiued abuse, exploitatio ad discrimiatio. South Africa s immigratio policy has sought to respod to the eed for skilled immigrats (for example, the 2004 amedmets to the Immigratio Act, which facilitate the arrival of scarce skills). The coutry s political leadership has also attempted to respod to the scourge of xeophobia. I all spheres of govermet, migratio ad social policy eeds to do more to ease the etry of skilled migrats ad to couter xeophobia. It should also more effectively address the rights ad vulerabilities of migrats; support programmes to regularise migrat residece; promote cultural dialogue ad laguage trasfer; esure better ad more cosistet law eforcemet (by protectig victims ad prosecutig perpetrators); ad stregthe trasatioal ifrastructure (trasport, electroic commuicatios, bakig services). I additio, more eeds to be doe to address the specific eed of migrats i South Africa, such as educatio for childre ad treatmet for HIV/AIDS, which has spread at a disproportioately rapid pace amog immigrats because of South Africa s history of circular labour migratio. Urbaisatio Cosistet with most of the rest of the world, South Africa has experieced rapid urbaisatio. I 2008, half the world s populatio was urbaised ad by 2030 early three of every five people will live i urba areas. 8 South Africa is slightly more urba tha the global average: about 60 percet of the populatio is urbaised (accordig to the official defiitio), ad this is projected to about 70 percet by Goldi I, Camero G ad Balaraja M (2011). Exceptioal people: How migratio shaped our world ad will defie our future. Priceto, New Jersey ad Oxford: Priceto Uiversity Press. 8 Rockefeller Foudatio (2008) Cetury of the City: No Time to Lose. New York: Rockefeller Foudatio. 83

96 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The patters of urbaisatio i South Africa are complex because circular labour migratio uder apartheid has led to a itricate relatioship betwee rural ad urba areas. It is likely that urba populatios will become more permaetly settled over time, but this could chage if the ecoomic climate makes urba residece more precarious. The rate of urbaisatio may slow, as it has doe i Lati America ad parts of Asia, but it is likely that almost all of South Africa s et populatio growth util 2030 (a estimated 8 millio) will take place i urba areas, especially i major cities. The Natioal Plaig Commissio s Diagostic Report showed that differetial migratio patters largely reflect atioal pa tters of job creatio ad job loss. Betwee 2001 ad 2007, for example, Gauteg had a et gai of about 3 millio people ad the Wester Cape just over 1 millio. The Easter Cape had a et loss of about 1.4 millio ad Limpopo 1.2 millio. These treds are likely to cotiue, although possibly at a reduced rate. Although rural-urba migratio is sigificat, about 78 percet of migratio from rural areas ad small tows was to other rural areas ad small tows. Cosequetly, while the growth of large urba cetres eeds to be properly maaged, plaig must also respod to chagig patters of populatio distributio i rural areas. Iformal settlemets preset a particular challege. Most job-seekig migrats movig to cities first live i iformal settlemets, which are a affordable etry to the city. May migrats caot break ito the urba labour market ad fid it difficult to move out of shacks ito more formal accommodatio. The average residece period withi urba iformal settlemets has icreased from about two to four years i the early 1990s to 10 years curretly. Policy implicatios Opportuities The declie i birth rates is positively affectig the compositio ad distributio of South Africa s populatio, because it creates a opportuity to exploit a demographic divided. Chages i populatio structure ca sigificatly affect atioal performace, because idividual ecoomic behaviour varies with age. The youg ad the old ted to cosume more tha they produce, ad atios with a high ratio of depedats to workers devote a relatively high proportio of resources to these groups, ofte limitig ecoomic growth. I cotrast, atios with a relatively large share of the populatio i prime workig age ca experiece a boost i icome ad savigs, because the workig-age populatio teds to produce more tha it cosumes. However, demographic divideds ca oly stimulate substatial ecoomic growth where there are appropriate ecoomic ad 84

97 CHAPTER 2: DEMOGRAPHIC TRENDS labour policies that allow the youg to eter the workplace, ivestmets i health ad educatio, ad a stable ad effective govermet. The key is to idetify ecoomic policies that ca haress the beefits of a larger workigage populatio. East Asia coutries have made the most effective use of the demographic divided. The workig-age populatio of East Asia soared from 47 percet i 1975 to 64 percet i Some evidece attributes more tha 40 percet of the higher growth i East Asia compared with Lati America from 1965 to 1990 to the faster icrease i its workig-age populatio accompaied by a focus o export-orietated ecoomic policies ad ivestmet i educatio ad skills developmet. For the ext 20 years, South Africa will have over 14 millio youg people betwee the ages of 15 ad 29. The umber will peak i 2021, reachig 15.1 millio. Populatio betwee the ages of 15 ad 29 Source: ASSA, 2011 This presets a tremedous opportuity but it also costitutes a serious risk, give that joblessess mirrors age ad race fault lies. Youg black people accout for two-thirds of the uemployed below the age of 35. Uemploymet rates are highest i the 15- to 24-year-old group (46.6 percet i 2008) ad secod highest amog 25- to 34-year-olds (26.2 percet). For black youth, the uemploymet rate is 65 percet. If youths fail to get a job by 24, they are ulikely to ever get formal employmet. 10 Uresolved, this tred poses the sigle greatest risk to social stability. 9 The Ecoomist. Workig-age Populatio. Prit editio, 21 July South Africa Presidecy (2010). Huma Coditios Diagostic. 85

98 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN There is a correlatio betwee demographic bulges of youth ad coflict. Youg people are more likely to rebel if left with o alterative but uemploymet ad poverty. Geerally, homicides are committed by ma les betwee the ages of 16 ad I South Africa, this could traslate ito social disorder, widespread political urest ad icreased crime. The degree to which the demographic divided ca be baked, ad the risks avoided, depeds o policy choices ad how effectively they are implemeted. I may ecoomies a focus o exports ad foreig direct ivestmet expaded the demad for youg workers. I additio, employmet ad labour productivity were boosted by rapid icreases i public ad private ivestmet i childre. These policies, specifically policies that ope the ecoomy to free trade, alog with soud basic educatio, are a source ofgrowth that partly explais the success i East Asia. Govermet eeds to apply a youth les to policies to expad opportuities, ehace capabilities ad provide secod chaces. Areas most commoly idetified as ulockig the potetial of a demographic divided are: Better health, icludig food security Better health care Better educatio Meet demads for higher skill levels Easy labour market etry Labour mobility. Access to proper health care for childre is critical, as this ca have lastig effects o physical ad metal developmet, which ca affect childre s future productivity, earigs ad ecoomic wellbeig. Although health ad educatio are ecessary to take advatage of a youthful populatio, they are ot sufficiet. Ecoomic opportuities ad jobs are crucial. The demographic divided ca be realised oly if gaiful employmet is created for the growig proportio of people of workig age. Educatio without jobs carries risks of its ow. Expadig opportuities for higher educatio without a cocomitat icrease i employmet opportuities ca be hazardous. High uemploymet amog educated youth ca potetially lead to political upheaval ad violece. 11 Urdal H (2011). A clash of geeratios? Youth bulges ad political violece for Uited Natios expert group, Populatio Divisio, 21 July New York: Harvard Uiversity. 86

99 CHAPTER 2: DEMOGRAPHIC TRENDS Migratio solutios South Africa, like most other Africa coutries, has doe little to icrease the beefits of migratio or reduce the risks migrats face. The potetial ecoomic beefits of migratio are costraied by the lack of support for migrats i key markets. Iteratioal goverace structures are ot much help. Migratory flows are the orpha of the iteratioal system. Policy-makers are askig why people should be cofied to atio states, whe barriers to the movemet of capital ad goods have progressively falle. This is particularly pertiet because the umber of workers livig i coutries liked to iteratioal markets rose from 75 percet i 1975 to 90 percet by Bilateral agreemets betwee origi ad destiatio coutries are icreasigly fillig the gap. A 2007 survey by the Orgaisatio for Ecoomic Cooperatio ad Developmet foud that programmes i 57 of 92 coutries usig temporary employmet schemes were maaged through bilateral agreemets. A radical policy itervetio uder cosideratio i East Asia ad the Pacific focuses o ehacig the mobility of skilled workers through a framework of regioal accreditatio, ad supportig the mobility of uskilled workers by ecouragig labour-sedig ad receivig coutries to work together. 13 Coclusio South Africa s demographic profile could help to tackle poverty ad iequality. The coutry has fewer very old ad very youg relative to those of workig age, ad youg people make up over 25 percet of the total populatio. A similar profile proved to be a boo for ecoomic growth i Asia coutries. But reapig the beefits will oly be possible if soud educatio ad skills traiig are provided. Jobs must follow. If South Africa fails to do this, its large youth cohort could pose a serious threat to social, political ad ecoomic stability. Give the high HIV/AIDS prevalece, particular attetio eeds to be give to health care provisio to esure that the large umber of people of workig age are ot debilitated by disease ad ca participate gaifully i the ecoomy. 12 Iteratioal Bak for Recostructio ad Developmet/World Bak (2011). Leveragig Migratio for Africa: Remittaces, Skills, ad Ivestmets. 13 World Bak East Asia ad Pacific Ecoomic Update,

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101 CHAPTER 3: ECONOMY AND EMPLOYMENT Chapter 3 ECONOMY AND EMPLOYMENT We are a people at work. We work to create plety. We work towards goals with patiece ivested i actual effort. We ivest our effort ad are ot trapped i disegaged expectatio. The paistakig rigour of work is drive by impatiece. We wait for the results of our efforts, ot for what is give by the efforts of others. This kid of patiece, gives birth to our ew work ethic. I this work ethic we groud our dreams. We have built our ow houses. We are cofidet ad self-sufficiet. We are traders. We are workers. We are ivestors. We create compaies. We set up stalls. We are studious. We feel a call to serve. Everybody actively has set out to chage his or her ow life i a way that ot oly oeself, but also oe s family ad the broad commuity, beefits (work). Out of our homes we create objects of value. We ivest ad reap good returs for our efforts. We travel to trade beyod our borders, carryig our values with us. As artists we express ad celebrate, we expose ad urture, we explore ad shift frotiers. Through sports of all kids, we push the limits of our possibilities. Our philosophies ad stories have eriched the world. We respect ability, competece ad talet. Now our ecoomy is growig. Our prosperity is icreasig. We are eergised by our resourcefuless. 89

102 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Visio 2030 Achievig full employmet, decet work ad sustaiable livelihoods is the oly way to improve livig stadards ad esure a digified existece for all South Africas. Risig employmet, productivity ad icomes are the surest log-term solutio to reducig iequality. Similarly, active steps to broade opportuity for people will make a sigificat impact o both the level of iequality ad the efficiecy of the ecoomy. This will be achieved by expadig the ecoomy to absorb labour ad improvig the ability of South Africa s people ad istitutios to respod to opportuities ad challeges. We ca reduce the uemploymet rate to 6 percet by It will require leadership, difficult political choices ad effective implemetatio. It will require a rebalacig ad realigmet of key areas of govermet policy alogside some reprioritisatio i ecoomic policy. To achieve full employmet, the coutry eeds to create about 11 millio more jobs i the ext 20 years. We estimate that the ecoomy would have to grow by about 5.4 percet o average every year over this period to achieve this aim. This chapter outlies how the coutry ca both accelerate growth ad make it more labour absorbig. Our goal of decet work ad sustaiable livelihoods requires that every family has a acceptable stadard of livig withi their reach. That i tur meas that the ecoomy must geerate sufficiet ecoomic opportuities ad a supportive system of social protectio ad services, alog with respect for huma rights ad growig solidarity. The chapter is based o research work coducted i preparig the commissio s diagostic documet ad cosultatios that took place after the release of that documet. With regard to curret govermet policies ad programmes, the New Growth Path outlies actios that are required to take the coutry oto a higher growth trajectory. The proposals i this chapter are largely cosistet with these policies: however, they spa a loger timeframe ad the emphasis o catalysts ad actio steps may differ i some respects. 90

103 CHAPTER 3: ECONOMY AND EMPLOYMENT Objectives for employmet ad growth to 2030 The high-level umeric targets for sustaiable ad iclusive growth iclude: The strict uemploymet rate falls from 25 percet to 14 percet i 2020 to 6 percet by The labour force participatio rate rises from 54 percet i 2010 to 65 percet. About 11 millio additioal jobs is targeted by Millios No-workig age populatio Workig-age populatio (15-65) Labour force participatio rate 54% 57% 60% 65% Labour force (millio) Age depedecy Employmet target Uemploymet rate 25% 20% 14% 6% Employmet (millio) Net ew employmet eeded (millio) Depedecy ratio About 41 percet of the workig-age populatio betwee 15 ad 64 would be employed. The aim is to icrease this to 52 percet by 2020 ad to 61 percet by Real GDP more tha doubles (implyig average GDP growth of 5.4 percet betwee 2011 ad At this rate of growth, there will still be substatially more reliace o very low-icome employmet, survivalist activities ad public employmet schemes. The proportio of the populatio with icome below the poverty measure of R418 per day (i 2009 rads) falls from 39 percet i 2009 to zero i The level of iequality will fall from 0.7 i 2010 to 0.6 by The share of icome goig to the bottom 40 percet of icome earers rises from 6 percet to 10 percet. O average, the depedecy ratio (the umber of people depedig o oe wage earer) will fall from 4 to 2.5. For low-icome households, this ratio will fall from a average of 5 to 6 dow to 4 to 5. A fallig depedecy ratio will be a cetral cotributor to reducig poverty ad iequality. Key elemets for employmet creatio A cetral message of this pla is that solvig South Africa s most pressig problems ivolves implemetig all aspects of the pla. I order to raise employmet, we eed better educatioal outcomes, a healthier populatio, better located ad maitaied ifrastructure, a soud social safety et, a capable state ad much lower levels of corruptio. This chapter focuses o efforts to grow the ecoomy faster ad to make it more labourabsorbig. The chapter is based o research coducted i preparig the commissio s diagostic documet ad cosultatios that took place after the release of that documet. 91

104 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN With regard to curret govermet policies ad programmes, the New Growth Path is govermet s key programme to take the coutry oto a higher growth trajectory. At its core, the New Growth Path is about creatig the coditios for faster growth ad employmet through govermet ivestmet, microecoomic reforms that lower the costs of busiess (ad for households), competitive ad equitable wage structures ad the effective ublockig of costraits to ivestmet i specific sectors. The proposals i this chapter are largely cosistet with these policies. They do however cover a loger timeframe ad the emphasis o catalysts ad actio steps may differ i some respects. A critical complemetarity betwee the New Growth Path ad this pla is the eed to lower costs i the ecoomy, especially as these costs cotribute towards limitig employmet growth ad raisig costs for poor households. I additio to the eed to lower the cost of livig for the poor, the visio ad pla for the ecoomy has five cetral elemets, which are discussed below. Creatig a eviromet for sustaiable employmet ad ecoomic growth The capabilities of the workforce eed to be developed o a broad scale. I that cotext, earigs will eed to be realistic from the stadpoit of log-term competitiveess ad sufficiet to esure a decet stadard of livig. A stable ad costructive eviromet will be eeded for bargaiig ad labour relatios that supports ivestmet but also secures huma rights. The rate of ivestmet to GDP is expected to rise from 17 percet to 30 percet by This will happe icremetally, with substatial cotributios from a gradually expadig pool of domestic savigs as well as foreig capital. The directio of atioal resource allocatio will be importat, with a greater part of this ivestmet supportig productive sectors with competitive advatage. There are evidet bidig costraits o growth, ivestmet ad employmet creatio idetified i AsgiSA ad the New Growth Path. These must be addressed much more rigorously ad systematically tha has bee the case to date. The most urget examples iclude: eergy geeratio ad distributio, urba plaig approval processes, water supply ad waste water maagemet, the logistics platform, telecommuicatios, ad licesig for water, mierals ad evirometal permits. Regulatory certaity ad istitutioal reforms will draw forth competitive outcomes i etwork idustries. Huma developmet is a essetial part of iclusive growth. Lower livig costs (through targeted microecoomic reforms i trasport, telecommuicatios, food ad spatial plaig), better quality public services (especially i health ad educatio) ad a more comprehesive social security et will reduce pressure o households, particularly for lowicome groups with limited earigs from work. This will improve the ability to respod to labour market opportuities ad dowturs, reducig the prevalece of crises that may households experiece. 92

105 CHAPTER 3: ECONOMY AND EMPLOYMENT Macroecoomic policy helps miimise the impact of exteral shocks. Combied, these factors should ehace stability i low-icome households, eable huma capital developmet ad improve the chaces of social ad class mobility. Promotig employmet i labour-absorbig idustries A large percetage of the jobs will be created i domestic-orieted activities ad i the services sector. Some 90 percet of jobs will be created i small ad expadig firms. The ecoomy will be more eablig of busiess etry ad expasio, with a eye to credit ad market access. By 2030, the share of small- ad medium-sized firms i output will grow substatially. Regulatory reform ad support will boost mass etrepreeurship. Export growth, with appropriate likages to the domestic ecoomy will be critical i boostig growth ad employmet, with small- ad medium-sized firms the mai employmet creators. Ecoomic participatio i rural areas will rise from 29 percet to 40 percet as a result of reformed lad teure, support to farmers, expaded social services, higher agricultural output, miig social ivestmet ad tourism. Procuremet by both private ad public sectors will eable improved access for small ad medium eterprises to opportuities. Huma settlemets ad services will eed to be coducive to small ad medium eterprise expasio. Public employmet programmes are a essetial elemet of ay employmet strategy, takig o board lessos from successes ad failures i our existig programmes. Up to 1 millio opportuities will be created aually by 2015, mostly through commuity-based services. As market-based employmet expads, so these opportuities ca be reduced. However, they will be eeded i large umbers over the etire period. Promotig exports ad competitiveess To expad productio requires more active promotio of demad for South Africa products i domestic ad foreig markets. Policy will focus o developig areas of competitive advatage, where there are revealed stregths. I the process of implemetatio, it will be importat to lear from success ad failure ad to withdraw from sectors where mistakes have bee made. Playig a more pivotal role i regioal developmet will be essetial. South Africa compaies will be ecouraged to participate i regioal ifrastructure projects but also i itegratig regioal supply chais to promote idustrialisatio (see Chapter 7). The share of exports i South Africa output will rise ad the profile will be more diverse, with a growig portio of o-mieral maufactures ad services. A greater proportio of exports will be directed to emergig markets. Opportuities for icreased trade ad bilateral 93

106 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN ivestmet i Africa will develop. Offshore busiess services will be attracted, fuellig site developmets ad employmet. The impact of expaded ad diversified exports o employmet ad icomes icludes larger foreig exchage earigs, which eable the purchase of iputs for further idustrialisatio ad ifrastructure ivestmets; a impetus for productivity ad ecoomic growth throughout the ecoomy; ad the creatio of ew jobs directly plus a more sigificat proportio of employmet geerated idirectly as a result of a cocerted effort to promote likages i domestic idustries. The diversificatio of trade will reduce the strog lik to commodity cycles ad the associated volatility i the exchage rate ad earigs. This will cushio the ecoomy from ecoomic shocks, with sufficiet reserves ad fiscal space. I tur, a more stable eviromet for domestically orieted firms, which create the majority of employmet, will emerge. Moreover, stability i exports reduces the risk of a foreig debt trap, protectig critical public spedig programmes. Stregtheig the capacity of govermet to implemet its ecoomic policy The South Africa state will be capable of implemetig programmes ad policies effectively ad cosistetly, at least i the most critic al priority areas. Accoutability, combatig corruptio ad professioalisig the public service are critical. Stregtheig oversight of public etities will be essetial. There must be a chage i mid-set across all sectors of society public, private ad civil society ad icreased focus o implemetatio ad real chage. Govermet is resposible for a very wide rage of services for citizes ad busiesses, ad fuctios through a umber of spheres, agecies ad istitutios. Complexity ad stretched capacity ca blur focus, distractig attetio from the critical problems. It is therefore critical that key strategies be appropriately phased. Implemetatio of the ecoomic policies preseted here must be the top priority i the short to medium term. Demostratig strategic leadership amog stakeholders to mobilise aroud a atioal visio Give the scale ad ambitio of the task, leadership ad visio are eeded from all sectios of society, with leaders who are able to ra lly costituecies aroud log-term goals, recogisig that the beefits may be uevely distributed ad take time to realise. Similarly, leadership i govermet will be crucial i esurig a more cocerted ad coordiated effort to implemet agreed programmes. 94

107 CHAPTER 3: ECONOMY AND EMPLOYMENT Employmet scearios The proposals i this pla are aimed at creatig about 11 millio et ew jobs over this period ad thus reducig the rate of uemploymet to about 6 percet by This should be attaied at the same time as we icrease labour force participatio rates from the curret 41 percet of the workig-age populatio to 61 percet. The specific targets ad umbers for each period are outlied earlier i the chapter. Baselie sceario (sceario 1): We could cotiue alog the curret trajectory without ay major improvemets to the policy eviromet ad with poor global ecoomic coditios. While i this istace the coutry is able to meet some of its ifrastructure commitmets, the rate of ivestmet i the ecoomy is ot much improved. While more people are absorbed ito the ecoomy, the uemployme t rate oly declies from the curret 25 percet to 19 percet by Give the objective to create 11 millio jobs by 2030, there would be shortfall of 3.3 millio to meet the target, the deficit would have to be met through more tha 5 millio public works job opportuities per year i 2030 (compared to the curret ad the targeted 1 millio job opportuities). Solid mierals sceario (sceario 2): I a better global eviromet ad with good performace o ifrastructure programmes, the growth rate is much better ad more people are employed. However, ivestmet flows maily to the most profitable activities which are capital itesive, i miig, eergy, chemical ad metals. As a result, most of the jobs are created i low-paid domestically orie ted services such as retail ad busiess ad persoal services. I this istace, about 2.6 millio public works job opportuities would have to be created per year i Idicative scearios Employmet outcomes by 2030 Sectors Thousads Employmet i 2010 Sceario 1 mediocre mierals Sceario 2 solid mierals Sceario 3 diversified Agriculture Miig Maufacturig Leader & high paid services (e.g. fiace, trasport) Follower services (e.g. retail, persoal services) Costructio & utilities Iformal sector & domestic work; excl EPWP Public sector, private social services & parastatals Expaded Public Works Programme (EPWP)

108 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Sectors Thousads Employmet i 2010 Sceario 1 mediocre mierals Sceario 2 solid mierals Sceario 3 diversified Total Average GDP growth 3.3% 4.8% 5.4% Percetage workig-age populatio workig (excl EPWP) 41.0% 47.1% 54.4% 60.1% Uemploymet without EPWP 25.0% 27.7% 16.5% 7.7% Idicative scearios - Sector distributio of employmet Sectors Sceario 1 mediocre mierals Sceario 2 solid mierals Sceario 3 diversified Agriculture 4.8% 2.2% 2.6% 3.4% Miig 2.3% 1.1% 1.6% 1.8% Maufacturig 11.8% 7.9% 9.1% 9.6% Leader & high paid services (e.g. fiace, trasport) 15.4% 12.7% 15.4% 17.6% Follower services (e.g. retail, persoal services) 14.7% 17.6% 20.5% 20.9% Costructio & utilities 6.3% 4.4% 5.4% 5.9% Iformal sector & domestic work; excl EPWP 22.3% 17.2% 19.4% 21.1% Public sector, private social services & parastatals 19.3% 13.8% 14.8% 17.8% EPWP 3.2% 23.1% 11.1% 1.8% Total 100.0% 100.0% 100.0% 100.0% Maufacturig as a % excludig iformal sector & EPWP High-skill services as a % of employmet excludig iformal sector & EPWP 15.2% 9.6% 11.3% 12.2% 18.9% 15.3% 19.1% 22.3% A diversified dyamic ecoomy (sceario 3: The pla) This pla proposes choices for a path that would lead to more substatial ivestmets are i stregtheig muicipal ifrastructure ad services, educatio systems, ad i geeratig better access to capital for ew ad expadig firms. The Departmet of Trade ad Idustry develops parterships with the private sector i positioig commercial represetatio i key export markets. Substatial ivestmet is made i R&D ad the commercialisatio of South Africa iovatios. 96

109 CHAPTER 3: ECONOMY AND EMPLOYMENT The substatial commitmet to reducig the cost of productio ad livig bears fruit, ad South Africa becomes a more attractive ivestme t destiatio. Improved efficiecies ad oversight help to get uder cotrol the rapid icreases i admiistered price iflatio. A move to promote commuity-based house buildig with iovative local iputs helps expad housig, supplier idustries ad related job creatio. These actios improve wellbeig, so that although the majority of jobs created are still i low-skills services, families are able to achieve a decet stadard of livig. The fall i productio ad livig costs stimulates local productio. As these idustries expad, ad value added exports become a larger share of sales, so the Rad becomes less subject to global swigs. Chia ad Idia grow apace, ad the demad for commodities cotiues. South Africa sets up a Fiacial Cetre for Africa to attract project fiace ad becomes well established as a fiacial ad services platform. Growig support from regioal parters for this role is bolstered by substatial South Africa ivest met i major eergy ad ifrastructure projects, as well as South Africa playig a greater role i promotig regioal supply chais that uderpi agricultural ad idustrial productio i the regio. The expasio i offshore busiess services ad related likages stimulates almost jobs especially i Gauteg ad the Wester Cape. There is substatial success i promotig supplier idustries to the miig idustry that have spi-offs i supplyig global miig projects ad also lateral likages ito other uses such as water purificatio, electroics, ad robotics amogst others. Much progress is made to process some of the mierals i the coutry, through clusters such as Platium Group Metals ad the productio of about 25 percet of the global demad for fuel cells ad related techologies. Some of the precoditios for the growth path are: Stregtheig commercial trasport, telecommuicatios, eergy, ad water, especially i servicig muicipalities ad activities of a expadig small- ad medium-sized cluster of firms. The approach to achievig competitive costs ad productivity i ecoomic ifrastructure are discussed i Chapter 4. Educatio, health ad safer commuities the approach to achievig improved educatio ad health outcomes to 2030 are discussed i Chapters 9, 10 ad 12. Huma settlemets ad trasport improved aligmet of huma settlemets ad public trasport systems to the emergig forms of employmet are discussed i Chapter 8. Stregtheig the capabilities of the workforce, esurig that earigs are resposive to idustrial demads, but also sufficiet to esure a miimum stadard of livig, ad stabilizig the eviromet for bargaiig ad labour relatios i a way that is coducive to ivestmet but also to huma rights is discussed i this chapter. Promotig the expasio of global market share i domestic ad foreig markets. 97

110 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Playig a more pivotal role i regioal developmet, icludig ifrastructure ivestmet but also itegratig supply chais. Stregtheig public service capabilities ad goverace of state-owed eterprises, as discussed i Chapter 13. These improvemets have a dyamic effect, where improvemet i oe year sets off activity with ew rouds i subsequet years. A successful diversified mieral exportig ecoomy ivolves success i exportig our traditioal products, ad a growig role for activities that are liked to existig idustries i ew o- traditioal sectors. These are expaded by stimulatig likages i dyamic product areas, ad by stimulatig traded services activities where South Africa has a competitive advatage. I this case, domestically orieted services still play a importat role i employmet creatio, but the proportio is smaller cotributig over 40 percet of all ew jobs. Maufacturig employmet grows, but its share falls from 15 percet to 12 percet of formal employmet. That is, almost a millio jobs might be created i maufacturig over the 20 years, but its share falls, although ot by as much as i sceario 2. The share of high value services rises to about 22 percet of formal employmet, as compared to 15 percet i Structural challeges to full employmet I trasformig the ecoomy, South Africa face s several challeges, some of them exteral, some of them as a result of history or geography, ad some because of limited capacity. Eve where these challeges are exteral, South Africa ca ad must pla for them. Exteral drivers, such as global ecoomic developmet ad the ecoomic dowtur, ecoomic performace o the Africa cotiet, the rise of emergig markets, itesified global competitio, techological chage ad climate chage will greatly ifluece the cotext i which we operate. Global commodity prices will impact differet parts of the ecoomy differetly. A global drive to compliace o evirometal stadards will have cost implicatios; but it will i tur drive iovatio, reduce waste, improve eergy efficiecy ad promote ew ivestmet. These exteral drivers are discussed i detail i the chapter o drivers of chage. There are other structural factors that should heavily ifluece policy-makig i the drive to achieve full employmet. The first are those that are commo to ecoomies similar to our ow. The secod are challeges ad opportuities specific to South Africa. Structural challeges i similar coutries South Africa faces certai structural challeges, some of which are ot uique to this coutry. Awareess is key to overcomig these issues. Resource curse: Mieral-exportig ecoomies ted to have difficulty diversifyig their idustrial base, ad also experiece slower tha average growth ad high iequality. A exchage rate liked to commodity prices, rath er tha the sophisticatio of a atio s exports, is oe major challege. I additio to volatility, the exchage rate ca become 98

111 CHAPTER 3: ECONOMY AND EMPLOYMENT overvalued i periods where commodity prices rise, puttig a brake o o-commodity exports. Activities that are ot traded beefit, such as retail, bakig, telephoy ad housig costructio. Difficulties arise whe the boom is over ad the goods producers are left weakeed. Some firms have adapted to this cycle by producig for local or export markets depedig o domestic market coditios ad the exchage rate. This eables survival, but is ot coducive to log-term plaig ad expasio. Higher commodity prices buffer the ecoomy ad create the appearace of growth, leadig govermets ad compaies to become complacet ad uder-ivest i people ad productivity growth. If these pitfalls are cosciously avoided, ad if the mieral edowmets are used to facilitate loger term capabilities, these resources ca serve as a sprigboard for a ew wave of idustrialisatio ad services for domestic use ad exports. Middle-icome trap: May ecoomies that have achieved middle-icome status struggle to shift further upwards. Although there may be exceptios, may middle-icome coutries experieced substatial, albeit relatively slower, growth over the past decade. The key differetiator is how much the coutry ivest s i huma capital, product developmet ad techology. Global ecoomic dowtur: The global recessio ad its aftermath of slower growth have persisted sice late Global growth is ulikely to recover rapidly. Slower growth could persist, because the uwidig of imbalaces is icomplete, like excessive curret accout surpluses ad deficits, high levels of govermet debt ad the deleveragig process of busiesses ad households. The worst-case sceario is a decade of slow growth, low demad for imports, low levels of employmet growth ad low iterest rates, which fuel currecy swigs i emergig markets. At worst, slower growth i the Uited States, Europea Uio (EU) ad Japa will egatively affect growth i Brazil, Chia ad Idia because these richer coutries remai major markets for the goods produced i developig coutries. The youth bulge: May developig ecoomies are experiecig a youth bulge. A large active populatio ca cotribute to fallig poverty rates, though much depeds o whether this populatio is activated. The chages i demography, particularly the icrease i the umbers of people i the workig-age cohort, ca be a divided or a burde. The future of work: Maufacturig is becomig a proportioately smaller employer i upper middle icome ad high icome coutries, with at least three-quarters of ew employmet foud i services. South Africa is o exceptio. Most jobs are foud i domestically orieted services (such as retail, persoal services, security, domestic work, office cleaig), where productivity ad wage growth is lower. This may be eve more proouced i sub-sahara Africa, give the historical cotext withi which the ew growth trajectory is takig shape. 99

112 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Resource-itesive ecoomy: South Africa is the 27 th largest ecoomy i the world, but the 12 th largest carbo dioxide emitter. This is maily because the ecoomy is more eergy itesive ad the eergy used is highly carbo itesive. As the world takes steps to cost the egative effects of carbo, South Africa is likely to face challeges (ad opportuities) i reducig emissios. South Africa is also a dry coutry with limited fresh water resources. The coutry will have to fid ways of usig water more sesibly ad improvig both the water ad eergy efficiecy of idustry. 100

113 CHAPTER 3: ECONOMY AND EMPLOYMENT South Africa ad the curret global ecoomic crisis This pla has a 20-year time-horizo. However, the immediate effects of the deepeig global ecoomic crisis caot be igored. The Uited States has bee uable to solve its fiscal difficulties. EU leaders are uable fid a credible solutio to the sovereig debt crisis. Forecasts for developig ecoomies are more upbeat with growth of 6.3 percet forecast i 2011 through South Africa s ecoomy is expected to grow by just 3.1 percet i 2011 ad 3.4 percet ext year. A recessio i the EU, South Africa s largest tradig parter, could further dampe growth. What steps ca South Africa take to mitigate the risks i the short term? Couter-cyclical fiscal policy. Govermet eeds to build i macro-policy cushios to eable South Africa to couteract the effects of the fiacial crisis. Cotiued fiscal disciplie is importat, though a more expasioary stace might be ecessary if the EU cotracts. Moetary policy. A balacig act eeds to be struck betwee the eed to curb iflatio which is expected the breach the 6 percet target ceilig i the first quarter of 2012 ad the eed to keep the embers of ecoomic growth alive. Overvaluatio of the rad. The exchage rate has weakeed sharply agaist the dollar ad a basket of currecies of South Africa s most importat tradig parters. Cotiued accumulatio of foreig reserves remais the best way to maage capital iflows ad prevet prologed overvaluatio. Stroger social security et. A spike i uemploymet must be met with itervetios to protect the most vulerable, particularly the youg who caot fid jobs. Protect sectors with log term prospects. Short-term support measures must be provided to idustries hard hit by the cyclical dowtur. Re-orietate trade to emergig markets. Developig coutry demad has bee at the heart of the recovery i global trade. South Africa must shift its focus to opportuities o the rest of the cotiet, as well as i other developig coutries. Social dialogue. A commo frot to forge joit solutios to the risks facig the ecoomy must be foud. South Africa caot afford dysfuctioal relatioships betwee the public ad private sectors ad civil society. They urgetly eed to fid oe aother. Cofidece has collapsed i high icome coutries. Political systems are uable to come up with decisive actios. This is most evidet i the iability of the US Seate to pass a jobs bill ad the EU to come up with a solutio to the debt crisis. The lesso is stark. Uless all sectios of South Africa society work together across the political ad class spectrum we will be uable to weather the effects of the global crisis. 101

114 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Structural challeges specific to South Africa There are some structural challeges specific to South Africa: High levels of iequality ad a relatively small market. Skewed owership ad cotrol: The corporat e ladscape of South Africa has chaged remarkably sice However, it remais highly cocetrated. This poses a barrier to busiess etry ad expasio i key markets, which is critical to employmet creatio. Preset forms of black ecoomic empowermet are ot achievig all the desired objectives. Policies ad programmes that is ot coducive to huma developmet, whether i relatio to educatio, health or safety. A extreme pressure o atural resources. A eergy costrait that will act as a cap o growth ad o our optios for idustrialisatio. Spatial misaligmets whether i referece to urba/rural, or withi urba areas ad bidig costraits posed by poor physical plaig ad etwork ifrastructure. Distace from our mai markets globally ad limited market access. Implemetatio challeges. We also have may factors workig i our favo ur, such as growig middle strata, scietific capability ad istitutios, fiscal resources, capabilities i dyamic sectors that are growig globally, a strog mierals base i a co text of a commodity boom, high educatio erolmets, beig located i a high growth regio, ad the fact that the resolutio of may challeges that would ifluece our success lie withi our power to fix. Some of the implicatios for South Africa are set out below: We eed to recogise the importace of ivestig i the egie of growth (risig outputs from tradable sectors), the sources of jobs (ofte domestically orieted ad services firms) ad the likages betwee the two. Flexible huma settlemets resposive to chagig locatios of work (such as available retal stock ad good ad affordable public trasport systems). Labour-matchig services, trasitio support ad easy access to retraiig are critical. These raise the chaces of achievig cotiuous work opportuities. I the earlier years, as we expad access to employmet o a mass scale, a large proportio of workig people will be low paid. It is essetial to reduce the cost of livig i relatio to food, trasport, educatio, health ad other basic services. The eviromet must be coducive to takig advatage of opportuities that arise. Create a platform that allows people to respod to opportuities that do ot cause trauma or crisis. The loger-term solutio to skewed owership ad cotrol is to grow the ecoomy rapidly eough ad focus o spreadig opportuities for black people as it grows. Improvig stadards of educatio, better support for etrepreeurs, a focus o career mobility, workplace traiig ad fiacial iclusio are ways to deal with these structural weakesses. Govermet procuremet, licesig ad other forms of 102

115 CHAPTER 3: ECONOMY AND EMPLOYMENT ecoomic rets should help reduce racial patters of owership of wealth ad icome. Specific ecoomic policy proposals The pla s cetral goals are expadig employmet ad etrepreeurial opportuities o the back of a growig, more iclusive ecoomy. This will require far greater commitmet to deepeig the productive base, whether i agriculture, miig, maufacturig or services. By 2030, South Africa should have a more diversified ecoomy, with a higher global share of dyamic products, ad greater depth ad breadth of domestic likages. Itesified stimulatio of local ad foreig markets will be eeded, as well as stregtheig coditios to promote labour-absorbig activities. Traded activities will act as a spur to growth, as will active stimulatio of domestic opportuities ad the likages betwee the two. Specific actios will eed to be take to break out of the curret path depedecy. This will require decisive actio o the part of the state ad the other social parters. Achievig ad sustaiig a growth acceleratio The goal is to almost treble the size of the ecoomy by 2030, so that 11 millio more work opportuities are created. May coutries achieve a accelerated rate of growth, sometimes for eight years. Very few sustai it. Oly 13 coutries have grow at a average of 7 percet a year for 20 years. There is o cosesus o what accelerates growth ad how to sustai it. Some ecoomists propose a bidig costraits approach: detectig the key costraits ad elimiatig them, ad advacig to ewer, more pressig costraits. This etails a state capable of siglig out ad agreeig o the mai restrictio, dealig effectively with it ad movig o to the ext set of issues. Growth acceleratio might arise through a exteral shock that leads to risig terms of trade. 1 I Africa ecoomies, this stimulus has come from risig demad ad prices of commodities. The exteral shock ca begi such a acceleratio, but it will ot sustai growth. Growth acceleratio is realised if firms respod to these icetives. The figure below shows risig value of South Africa exports sice 2002, but fallig volumes sice This idicates poor resposiveess, cushioed by higher commodity prices. The reasos for this weak respose are likely to be the bidig costraits. 1 Risig terms of trade meas the price of exports is greater tha the price of imports. I the developmet process, a coutry starts with low-priced (commodity) exports, ad high-priced (fabricated) imports. Over time, shiftig this balace is accomplished by raisig the sophisticatio of productio ad exports. 103

116 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN South Africa exports world market share (1994 = 100) Idex Value Volue Source: Orgaisatio for Ecoomic Cooperatio ad Developmet fiacial statistics database 2 Exchage rate devaluatios, i some coutries, have had the effect of creatig a growth spurt. However, this oly works if firms ca respod to opportuities ad if labour ad product markets are flexible eough to prevet the weaker currecy from fuellig iflatio. I South Africa, these coditios do ot exist, though they ca be developed over time. South Africa s preset ecoomic capabilities do ot allow greater cotrol over the exchage rate, although reducig volatility is a critical challege that requires attetio. I this pla, the proposed approach ivolves sequecig the idetificatio of a select umber of bidig costraits to idustrial expasio, which are elimiated, the advacig to the ext roud of costraits. Liftig costraits to growth that are withi our power to ifluece ca be a effective way of spurrig growth. These must be factors that have a ecoomy-wide effect o lowerig prices or raisig productivity, or else a targeted effect o groups of activities that uderpi ivestmet i dyamic sectors. Ofte a combiatio of actios is required, as oe improvemet i isolatio of others may ot be sufficietly eablig for firms. Rapidly risig wages do ot usually precede growth acceleratio they are more likely to follow the oset of a sustaied acceleratio by two to five years. This is particularly the case if the urget focus is o access to employmet opportuities for large umbers of workers, o the back of which qualitative improvemets ca be attaied. This is a critical trade-off that South Africa society has to address. However, two qualificatios should be attached to this: expadig access to ew etrats should ot be udertake i a maer that lowers the workig ad remueratio coditios of existig employees; ad the overall dispesatio should iclude some sacrifices by maagemet

117 CHAPTER 3: ECONOMY AND EMPLOYMENT I summary, growth acceleratios are associated with risig ivestmet, risig productivity growth, icreasig exports ad risig employmet. Costraits Labour-absorbig growth will be stimulated by idetifyig major costraits that hider ivestmet ad productio i key sectors. Th ese ca be addressed i a sequeced maer. A few sigificat bidig costraits will be lifted through committed actio. The first commitmets will iclude costraits i electricity supply, water, busiess registratio, urba plaig approvals, miig licesig, ad high-skilled labour supply the elemets that stop busiess i its tracks. The rollig ature of this commitmet is iteded to support growth acceleratio ad sustai it over time, with a bias to labour absorptio. May of these are already policy commitmets, but require rapid decisio-makig ad stroger istitutioal oversight. Raisig the rate of ivestmet A labour-absorbig growth path will rely o improved ifrastructure ad etwork services that support traditioal idustries, such as miig ad agriculture ad ewer dyamic idustries ad associated likages. These services ted to accout for a large proportio of domestic costs ad ca make a substatial differece to improvig ecoomy-wide efficiecy ad cost structures. I a effort to promote a accelerated ad sustaied growth rate, these improvemets ca geerate successive productivity spurts that begi a ew roud of growth. Attaiig a rate of fixed ivestmet to GDP of 30 percet is a gradual process perhaps a decade after a iitial accelerated growth phase. If these rates of ivestmet are ot achieved, growth might be sustaied if there is a sigificat rise i the productivity of capital. The ature of ifrastructure spedig is importat. Direct beefits from ifrastructure ivestmets that lower the real cost of trasp ort services are geerally more proouced i idustrial sectors. Ifrastructure ivestmet that reduces the real cost of commuicatios etwork services exteds greater direct beefits to the services sector groupigs. However, give the liks betwee sectors ad sector groupigs, the idirect impact of lowerig etwork ifrastructure costs geerally must be cosidered. Ivestmets that improve efficiecy ad reduce the cost of trasport ad commuicatio to other productive sectors have the potetial to ehace competitiveess i a way that boosts labour, rather tha displacig it. Risig fixed capital formatio does ot guaratee growth or employmet. It will oly have this effect if output ad output per worker (or labour productivity) rises. This i tur implies fallig employmet per uit of output. Output must rise fast eough to promote et employmet growth. Fast risig employmet will deped o the expasio of highly labour itesive, domestically orieted activities. 105

118 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Risig rates of ivestmet will be sourced from: Higher levels of public-sector fixed capital formatio especially i the earlier years, with a emphasis o ifrastructure that promotes efficiecy ad reduces costs. Publicsector fixed capital formatio s cotributio to GDP should rise to 10 percet, which is cosistet with ratios durig high growth phases i other coutries. Private ivestmet stimulated by expadig cosumer markets, risig profitability, atural resources edowmets ad leveragig our positio o the cotiet. It will be attracted by improved coditios created as a result of policy certaity, ifrastructure delivery, efficiecy of public services ad the quality of labour. Foreig ivestmet will have to play a sigificat role i a cotext of curbed savigs. These ivestmets leads to risig output, icomes ad employmet growth, savigs will rise. Over time, a larger share of ivestmet should be fuded domestically, but this will deped o how well resources are used i the short term to raise productivity, icomes ad employmet. Ivestmet Raisig the rate of ivestmet will require measures to reduce busiess costs ad ucertaity ad ehace profitability, public sector commitmet to capital ivestmets ad maiteace, ad regioal itegratio to expad the cosumer base. The savigs rate will ratchet up over time. Gaiig global market share To optimise the impact of expadig exports, it is crucial to stimulate areas where there is a revealed competitive advatage ad growig global demad, where the product would cotribute to risig terms of trade, ad where potetial exists to expad domestic likages. South Africa has competitive capabilities i a rage of mierals ad fast-growig goods ad service activities, although it is ot gaiig global market share. There is a high opportuity cost to this that eeds ivestigatio. South Africa idustrial policy will trasitio from its historical approach of favourig eergy- ad capital-itesive goods productio, sometimes with limited domestic likages, towards a icreasigly diversified idustrial base. It is ofte presumed that substatial employmet might be created through trade of light maufactured goods. However, we ca oly compete i labour-itesive activities o the basis of iche products, processes ad kow-how. Trade i services deserve more attetio. Some of the fastest-growig global segmets are i fiace ad busiess services, where South Africa has capability. Tourism is aother example, which already receives substatial attetio. Demad for goods ad services arisig from services ad other ivestmet abroad by South Africa firms are ot sufficietly exploited. 106

119 CHAPTER 3: ECONOMY AND EMPLOYMENT Promotig structural chage ad stimulatig ew idustries will require state itervetio, icludig icetives, procuremet, research ad developmet, ad ifrastructure ivestmet to provide the right type of skills ad to ease access i those sectors to other markets. If the activity is traded goods, the World Trade Orgaisatio defies subsidies to support oly huma or techology developmet, or site or ifrastructure. If the traded activity is a service, there are few, if ay, limits imposed by global regulatios. South Africa has made substatial use of trade-related be efits, especially to promote the automotive ad clothig sectors, with tradable duty-free import permits liked to export performace. A more forceful approach to market access arragemets will be eeded, as well as a commitmet to commercial presece i key export markets. Global market share Opportuities to sustaiably raise the share of employmet i traded activities will be idetified ad stimulated. These will be foud i clusters cetred o agriculture, miig, maufacturig ad services where South Africa has prove competitive advatage ad iitial capabilities i dyamic products with the potetial for expaded domestic likages. Idustrial zoe developmets ad trade promotio will rely o competitive logistics, services, skills, product, capabilities ad market access. South Africa will fid it difficult to compete with low-icome ecoomies o the basis of labour cost, uless it focuses simultaeously o lowerig the cost of livig, lowerig logistics costs for these products ad cosiders subsidisig some low-skill sectors. South Africa s positioig for offshore busiess services will be stregtheed, takig advatage of its telecommuicatios, bakig ad retail firms operatig i other coutries. Strog ecoomic diplomatic presece will be established i coutries with the potetial for expaded market share. Trade will be diversified towards emergig ecoomies by improvig market access for South Africa exports, workig with regioal tradig parters to lower tariff ad o-tariff barriers, ad improvig trasport ad logistics etworks i the regio. Developig true parterships betwee busiess ad govermet will be essetial. Cooperatio ca support market peetratio globally. Domestic cluster developmet will also be supported. The tariff structure will be simplified while recogisig the eed for tariffs i specific areas. I additio, more emphasis will be give to offesive iterests by seekig greater multilateral liberalisatio from large emergig ecoomies. Protectio agaist ufair tradig practices will be a essetial barrier to udercuttig of domestic producers. Stimulatig domestically orieted activity The majority of ew employmet will arise i activities that are domestically orieted, where global competitio is less itese, ad there is high labour compoet. It may be 107

120 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN fuctioally possible to trade i these activities, but i essece, they must take place i situ. Examples iclude: housig costructio, retail, persoal services such as hairdressig or cleaig, busiess services such as office cleaig or repair. The eviromet for small-scale agricultural producers will also be improved. The active stimulatio of demad for these goods ad services, support for small firms, access to credit, easig of regulatory eviromet could help to make these activities more labour absorbig. The challege is that the productivity of these activities is lower tha the rest of the ecoomy, ad ca have the effect of dampeig potetial growth. Promotig idustrial developmet through local procuremet rules has bee used effectively i a umber of coutries. Two recet policy efforts will form a importat foudatio for promotig the role of procuremet. The Preferetial Procuremet Policy Framework Act costitutes a importat step i stimulatig local productio through public sector procuremet. This effort must be stepped up, alogside stregtheed public procuremet systems. A Local Procuremet Accord, egotiated through the Departmet of Ecoomic Developmet ad social parters, commits both the private ad the public sectors to ambitious targets i respect of the localisatio of procuremet. However, efforts to stimulate local procuremet should ot reiforce higher costs for the public sector ad busiess because this will udermie growth ad job creatio. Stimulatig domestic demad Domestically orieted idustries will be actively stimulated, as they will be the mai source of employmet creatio. Public ad private procuremet will be importat sources of demad, eablig market etry i a highly cocetrated eviromet. Small busiess support ad special sector targetig measures will be pursued ad are discussed i sectios below. South Africa as a itegral part of regioal growth Leveragig a regioal platform will be a essetial part of a growth strategy. Each market is relatively small, but together there is a substatial cosumer base that ca attract foreig ivestmet. Ecoomies of scale ad scope could be eabled through this larger market ad through regioal productio chais. South Africa s growth potetial will be tightly liked to that of the regio. Curretly less tha 6 percet of South Africa s merchadise imports are sourced from SADC, while more tha 18 percet of the coutry s merchadise exports are to other SADC coutries. Commodities are a importat driver, ad curretly accout for 32 percet of growth. Commodity ivestmets, large ifrastructure projects ad growig cosumer demad are potetial opportuities for South Africa compaies, alog with cosequet growth i cosumer demad regioally. The extet to which this potetial ca be ulocked, will 108

121 CHAPTER 3: ECONOMY AND EMPLOYMENT deped o how the cotiet deals with barriers to trade ad ivestmet, ad implemet agreemets o regioal itegratio. South Africa will have to develop strategic relatioships across the cotiet ad further afield. This will deped o trade egotiatig capabilities, as well as the ability to leverage project fiace for regioal ivestmets. Bilateral agreemets are crucial. The curret strategy rests o leveragig Africa growth, which has bee faster tha South Africa s. South Africa therefore eeds to fulfil a more active ad itegratig role withi the regio. This may etail shiftig activities that caot be produced competitively i South Africa to lower cost eviromets regioally. I Souther Africa s case, this could iclude itegratig farmers (ad itermediate iputs suppliers) withi the regio ito supply chais, ad shiftig productio of some of the more highly commoditised products. Similarly, diversifyig the sources of electricity out of South Africa could reduce risks of supply costraits, assist i correctig trade imbalaces ad help to icrease regioal demad for South Africa exports. I the area of tourism, risig costs i South Africa ca be partially offset by the packagig ad marketig of regioal tourism destiatios together with South Africa oes so that the relative attractiveess of both the local ad regioal offerigs are ehaced ad sustaied for loger. This could ecessitate a differet approach towards the developmet ad expasio of regioal trasport routes ad modes. By 2030, regioal cooperatio ad itegratio i souther Africa ad the cotiet will have produced demostrable beefits for South Africa ad its eighbours, boostig ecoomic growth ad social welfare (employmet ad icomes), as well as givig the regio greater voice ad ifluece i iteratioal forums. Progress i relatio to regioal itegratio will be reflected i the fact that the share of itra-africa trade of total cotietal trade will more tha double from curret levels of about 10 percet by The approach to achievig this result is outlied i the chapter o South Africa i the regio ad the world. Regioal opportuities South Africa will act as a spur to regioal growth, rather tha merely relyig o it. This will ivolve greater commitmet to regioal idustrialisatio ad supply chai likages, shiftig trade balaces, power purchase agreemets, the establishmet of a Fiacial Cetre for Africa, ad substatially more fiacial resources devoted to fudig projects i the regio with likages to South Africa compaies. 109

122 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Natioal systems of iovatio ad learig permeate society ad busiess Cotiuous learig ad iovatio are essetial igrediets to the success of middle ad upper icome ecoomies. A substatial R&D sector, with support ito commercialisatio is essetial. However, learig, iovatio ad process improvemets ofte take place i icremetal steps o the shop-floor if there is a coducive eviromet. Stregtheig the system of labour relatios ad improvig shop-floor relatios ad commuicatio will be essetial igrediets i promotig learig feedback loops withi existig firms. Accelerated techological redudacy ad reduced product lifecycles create opportuities for ew idustrial firms to eter ew product segmets, but they also icrease the risk to established firms ad product segmets. The policies ad istitutios that will support the formatio of ew, dyamic market segmets will eed to be agile, efficiet, dyamic ad self-correctig. They will eed to help firms discover ew lies of competitive advatage. Global experiece idicates that while growth i export earigs ca ecourage higher imports, it does ot ecessarily geerate techological iovatio ad broad-based exportled ecoomic growth. I shiftig to a more dyamic ecoomy, structural chage arisig from techological redudacy must be allowed. It is uclear how South Africa will maage the implicatios of such shifts for the output ad employmet of existig, but o loger viable, firms. The best solutio is for the state to play a active role both i fudig research ad developmet ad i guidig the type of research ad developmet that the private ad public sectors coduct. Despite a excellet set of sciece istitutios, research priorities are ot always cosistet with South Africa s competitive advatage or growth strategy. Ofte we are lookig far afield, whe the base for iovatio ad ew product developmet are liked to existig idustries ad firms. A well fuctioig research capacity is critical to sustaiig growth ad improvig productivity. Chapter 9 cosiders the implicatios for the educatio system. Iovatio South Africa s competitiveess will rely o atioal systems of iovatio, permeatig the culture of busiess ad society. Iovatio ad learig must become part of our culture. This will require itervetios from the schoolig system, through to shop-floor behaviour to R&D spedig ad commercialisatio. Public policy could focus o R&D i existig areas of competitive advatage, where global markets are set to grow. These iclude high value agriculture, miig iputs ad dowstream processig, iovatio to meet evirometal ad eergy efficiecy objectives ad fiacial services, amog others. 110

123 CHAPTER 3: ECONOMY AND EMPLOYMENT A resposive labour market The labour regime eeds to be more resposive to the challege of simultaeously expadig employmet opportuities, raisig livig stadards ad reducig iequality. The labour eviromet operates i a cotext of slow growth, isufficiet levels of employmet, ad weak skills. Issues that eed attetio iclude: Improvig access to lifelog learig ad career advacemet. Stabilisig the labour eviromet, improvig dispute resolutio ad shop-floor relatios. Clarifyig dismissal ad retrechmet provisios i the Labour Relatios Act (1995) Code of Good Practice ad its maagemet. Stregtheig the labour courts ad resourcig the Commissio for Cociliatio, Mediatio ad Arbitratio (CCMA). Reviewig regulatio ad stadards for small ad medium eterprises. Addressig public employmet labour relatios, wage settig, performace ad the maagemet of essetial services. Labour relatios ivolve buyers ad sellers i a highly cotested terrai. I South Africa, there are extreme icome ad wage iequalities. Achievig desired social objectives is a challege, particularly give competig iterests of reducig mass uemploymet, raisig livig stadards ad closig the earigs gap. I the earlier phase of the pla, emphasis will have to be placed o mass access to jobs while maitaiig stadards where decet jobs already exist. Historically, race-based labour rules etreched apartheid ijustice ad icreased iequality. The cetral role of the ew labour regime was to defie ad protect agaist ufair labour practices; miimise dispute settlemet costs, esurig visibly fair outcomes; promote collaboratio betwee workers ad employers to eable idustrial expasio, with visibly fair distributio of beefits; ad overcome obstacles to skills developmet ad career mobility. Today, almost 30 percet of those i formal employmet are uioised. About 1 millio work days were lost to strikes aually i the eight years after the Labour Relatios Act was passed. I 2007, 9.2 millio days were lost ad i 2010, 20 millio days were lost, suggestig that the labour relatios eviromet has become particularly fraught. South Africa eeds to esure better workplace relatios, more protectio of the rights of vulerable workers, ad promotio of a iclusive developmet path. With these rights come resposibilities for employer ad worker orgaisatios, as well as the state. This ew sceario will require leadership, maturity ad a commitmet to risig employmet, livig stadards ad productivity. 111

124 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Wage determiatio i the private sector Wage determiatio eeds to be more coducive to employmet ad equity objectives. Some cosideratios iclude: Esurig a fair divisio of earigs i a cotext of extreme iequality Determiig affordable wages that support ecoomic expasio Recogisig the eed to achieve a social floor, icludig the social wage (e.g. free basic services, trasport costs) ad measures to reduce iflatio of basic commodities ad that of admiistered prices. From a 20 year perspective, real wage growth will eed to be liked to productivity growth although it is possible for it to veer off for a few years, it is ot feasible to sustai a labourabsorbig path uless both are growig i tadem. This is a sesitive, but critical poit. Raisig ecoomy-wide ad itra-firm productivity will help achieve risig real wages ad expadig employmet. The media icome from work was R2 800 per moth i 2010 overall, ad R3 683 per moth i the o-agricultural formal sector. The bottom 25 percet eared R1 500 per moth, the top 25 percet R6 500, ad the top 5 percet R Withi the top 5 percet, there is sigificat upward variatio. The variatio by race ad geder is substatial. Average earigs for wome are 25 percet to 50 percet less tha for me. I the bottom 50 percet of earers, the average earigs of Africa workers is oe-quarter to oe-fifth that of their white couterparts. With high depedecy ratios i low-icome households, the majority of workig people live ear or below the poverty lie. Addressig this tesio requires a appreciatio of the multi-dimesioal relatioships amog a variety of factors: Mass labour absorptio will reduce the depedecy ratio ad thus lift the pressure o the employed. State itervetios ad cooperative relatios with busiess will help reduce prices of basic commodities ad improve the social wage. Employers will eed to commit to higher rates of ivestmet, labour absorptio ad equitable sharig of the beefits of higher growth ad productivity. Measures such as etrylevel wage flexibility should be ecouraged but should ot be exploited to displace experieced workers. I other words, there should be commitmet to achieve the objectives agreed upo, withi the rules that are joitly developed. Skills supply Active labour market policies I South Africa, low-icome households live far from the cetre of ecoomic activity. The costs of searchig for ad gettig to work are high, ad iformatio about work is ofte uavailable. I this cotext, labour market services are critical, icludig those that prepare ad match work seekers with opportuities. Low-cost ad efficiet public trasport is essetial the approach to achievig this is discussed i the chapter o huma settlemets. 112

125 CHAPTER 3: ECONOMY AND EMPLOYMENT Several labour market experimets will be put ito actio from The followig proposals will stregthe labour matchig ad icrease skills developmet ad supply: Driver traiig for school leavers. Offer a tax subsidy to employers to reduce the iitial cost of hirig youg labour market etrats; ad facilitate agreemet betwee employers ad the uios o etry-level wages. Give a subsidy to the placemet sector to idetify, prepare ad place matric graduates ito work opportuities. The placemet compay will be paid upo successful placemet. Exted the o-state sector Expaded Public Works Programme s employmet icetive, aimed at icreasig employmet i o-profit orgaisatios. Expasio of learerships ad makig traiig vouchers directly available to work seekers. Employee retetio schemes, which offers short-time work durig periods of low demad. Provide access to lifelog learig that improves employability ad measures to expad further ad higher educatio throughput ad quality (as discussed i Chapter 9). Adopt a more ope approach to skilled immigratio to eable expasio of high-skill supply i the short term, i a maer that obviates displacemet of South Africas. Labour market regulatio To achieve a decet work ageda, a balace is eeded betwee eablig faster expasio i employmet opportuities ad the protectio of huma rights. There is evidece that policy itervetio is required to improve employmet creatio ad labour protectio. The mai areas that require attetio iclude: A approach to hadlig probatioary periods that reflects the itetio of probatio A approach that simplifies dismissal procedures for performace or miscoduct A effective approach to regulatig temporary employmet services Moitorig compliace to statutory sectoral miimum wages Implemetig ad moitorig health ad safety regulatios Stregtheig the CCMA ad the Labour Court i dispute resolutio ad i support for trade uios ad employers i maagig shop-floor relatios Limitig the access of seior maagers who ear above R to the CCMA, give that their employmet cotracts better regulate dismissal procedures. Approach to probatio ad dismissals Probatio allows employers to assess the suitability of employees. It is set for a specified period, ofte six moths, to determie whether a ew employee fits i based o capability, performace, persoality, culture ad other factors. Probatio is twofold. It allows the ew employee the opportuity to perform, but also gives the employer the chace to avoid udue risk. Ucertaity about the applicatio of curret provisios udermies the willigess of firms to hire iexperieced workers. 113

126 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN To ease etry ito formal work opportuities, ordiary ufair dismissal protectios should ot apply to employees o probatio, up to a limit of six moths of service. This meas that the cotract is assumed to be limited to the probatioary period, uless cofirmed otherwise. To prevet the abuse of termiatig ad re-employig just before the probatioary period expires, the period of service could iclude all previous service with the employer, whether directly or through a temporary placemet agecy. Dismissals: miscoduct or poor performace Employers are cocered by pre-dismissal procedures i cases of miscoduct or poor performace. The Code of Good Practice has a simple set of guidelies for such cases. However, experiece has ot reflected this simplicity. The old Idustrial Court developed jurisprudece uder the old Labour Relatios Act that imposed strict procedural requiremets o pre-dismissal hearigs. Despite the ameded act tryig to break from this approach; lawyers, arbitrators ad judges cotiue to apply techical ad exactig jurisprudece i applyig the ew act. Ruligs from the Labour Court have clarified that the crimial model of procedural fairess is o t cosistet with the 1996 act ad arbitrators are required to follow a less techical approach. The procedures, however, remai too strict ad formulaic, ad are icosistet with legislatio o the statute books. There is also aecdotal evidece showig that there may be excessive reversal of dismissals o procedural rather tha substative grouds. To reduce the regulatory burde, we recommed that the pre-dismissal procedure requiremets be revisited to simplify the procedures. Ay appeal or reversal of a dismissal should be ruled o substative ad ot procedural grouds, except i the case of costructive dismissal. Labour regulatio for small busiess Small busiesses highlight the obligatios of labour legislatio as oe of the mai regulatory burdes, arguig that they geerally do ot have the fiacial or admiistrative resources to comply with all regulatory requiremets. This does ot, however, imply that these busiesses should be exempt from labour regulatory requiremets, as complete exemptio may act as a perverse icetive for a race to the bottom amog small busiess ad for larger employers to reduce their workforce to circumvet labour regulatio. To reduce the regulatory burde for small a d medium eterprises, we recommed that the Code of Good Practice clearly lay out procedures appropriate to small busiess. Compliace requiremets ad reportig to employmet equity ad skills developmet regulatios for small firms should be simplified, or eve elimiated for very small firms. 114

127 CHAPTER 3: ECONOMY AND EMPLOYMENT Dismissal of seior maagers The laws o dismissal apply to all employees, regardless of their level of seiority or skill. This is despite the fact that seior maagers ad eve professioals ca be excluded from protectio from ufair dismissal as they should be adequately protected i terms of their employmet cotracts. Evidece suggests that seior maagers use free services offered by the CCMA to get large fiacial settlemets or to avoid dismissal, or both eve i a situatio of egregious miscoduct. This is a cocer, particularly for the public service. To prevet regulatory duplicatio ad to reduce the burde o the CCMA, it is recommeded that laws of ufair dismissal apply to seior maagemet, but that private mediatio ad arbitratio services, or the courts, are used, ot the CCMA. Stregtheig the Commissio for Cociliatio, Mediatio ad Arbitratio ad the Labour Court The CCMA is a idepedet istitutio oversee by a tripartite goverig body. This system was iteded to provide cheap, quick, accessible ad iformal dispute resolutio. Cases ot settled by mediatio or arbitratio are referred to the Labour Court. Labour courts are specialist courts with atioal jurisdictio ad have the same status as the High Court of South Africa. Bargaiig coucils play a essetial role i dispute resolutio withi their respective sectors. They typically hadle about cases a year. The CCMA plays a larger role for uorgaised sectors, such as domestic workers. The operatioal efficiecies of this istitutio ad the labour courts are importat for the effective operatio of the labour market. The Labour Court hadles oly a fractio of all disputes, as iteded by the ew labour regulatory regime. Eve so, the courts are ot hadlig this reduced caseload well. Oly 20 percet of reviews lodged with the labour courts i the first 10 years of the CCMA s operatio had bee fialised. It takes a average of 24 moths for a review applicatio to be heard i the Labour Court. I the Labour Appeal Court, it is reported that delays betwee 12 ad 18 moths betwee date of hearig ad date of judgmet are ot ucommo. A review of the fudig model of the CCMA ad the operatioal fuctioality of the Labour Court ad Labour Appeals Court is recommeded. Regulatig temporary employmet services Private temporary employmet ad placemet services have sigificatly cotributed to labour market matchig i the past two decades. This may partly be explaied by formal employers seekig to circumvet labour regulatios. It may also be caused by the rapid 115

128 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN expasio of services sectors, which have bee the mai source of employmet growth. Bhorat 3 estimates that people have bee placed i some work opportuity as a result of the temporary employmet services sector. These services are essetial give the fragmeted labour market, where low-icome households are geerally far from ecoomic opportuity with weak labour market etworks. Most ew opportuities are i services activities, which ofte ivolve chagig jobs periodically. These employmet services raise the chace of achievig more regularised employmet, as well as access to skills traiig for ew placemets. Such a service provides the opportuity for regulatio ad access to beefits for workers. The private labour placemet sector ad temporary employmet services eed to be effectively regulated to esure that the opportuity for labour matchig is available to vulerable workers, while protectig basic labour rights. Some basic provisios would esure that after six moths with a temporary employmet service ad/or cliet, they would be joitly ad severally liable for ufair dismissal ad ufair labour practices. The temporary employmet service would be resposible for the employmet relatioship regardig the Uemploymet Isurace Fud, the Compesatio for Occupatioal Ijuries ad Diseases Act, the Basic Coditios of Employmet Act ad the Skills Developmet Act. Labour market The labour market will become more resposive to the challege of expadig employmet, raisig livig stadards ad reducig iequality. The labour eviromet should become more stable ad mature. The most importat improvemet will ivolve stregtheig the accessibility ad relevace of the post-school traiig system, as well as active labour market policies that eable the matchig of seekers ad employers, ad that brig dow the cost of searchig ad takig o work. Private sector remueratio uderpis icome iequality ad caot oly be explaied by disparities i skill. Approaches to idetify a fair divisio of earigs will receive attetio. Public sector labour relatios will become more coducive to delivery ad employmet objectives, with wage determiatio aliged to budget processes, clearer rights ad resposibilities i respect of essetial workers, ad greater work opportuity opeed up i the lower raks of the public service. The labour market regulatory system will be stregtheed with a special eye to improvig the efficiecy of dispute resolutio mechaisms. I additio, temporary employmet agecies will be regulated. Statutory miimum wages will be more closely moitored ad implemeted to esure protectio of highly vulerable workers. 3 Bhorat H (2011). A labour market positio paper for South Africa: Six policy suggestios. Paper prepared for the Natioal Plaig Commissio. 116

129 CHAPTER 3: ECONOMY AND EMPLOYMENT Spatial dyamics ad rural employmet Rural ecoomies Rural ecoomies will be activated through the stimulatio of small-scale agriculture, tourism, ad miig ivestmets. Public sector procuremet will also be leveraged to stimulate local activity. Much will deped o stregtheig local istitutios, the flow of ifrastructure fudig, equitable social service provisio, ad addressig lad teure reform ad regulatio i respect of water ad miig. The miig charter eeds revisio to improve the approach to commuity ivestmet. As discussed i detail i Chapter 6, it is importat to locate poor ad uemployed people i better-situated lad. This will make it easier ad cheaper to access work opportuities, provide cheap ad efficiet public trasport etworks from existig towships ad ecourage busiess activity (icludig labour-itesive maufacturig) close to dese towships. These are costly ad complex reforms to implemet, requirig clearer plaig legislatio, icludig lad use maagemet reforms, firm steps to limit urba sprawl ad prioritisig urba trasport etworks that are adequately resourced ad well ru. It is possible to raise employmet i rural areas through a rural developmet strategy that focuses o raisig agricultural output, providig basic services, supportig small farmers, broadeig lad owership ad ivestig i water, trasport ad other etwork ifrastructure. A well implemeted strategy to boost agricultural output could create up to 1 millio jobs by Small ad expadig firms will support dyamism ad likages Small ad medium eterprises Small ad expadig firms will become more promiet, ad geerate the majority of ew jobs created. They will be stimulated through public ad private procuremet, improved access to debt ad equity fiace, a simplified regulatory eviromet, ad support services. Small- ad medium-sized firms will play a importat role i employmet creatio. Accordig to a FiScope survey, 4 90 percet of jobs created betwee 1998 ad 2005 were i micro, small ad medium firms. Despite this, total early-stage etrepreeurial activity rates i South Africa are about half of what they are i other developig coutries. 4 FiMark Trust (2006). FiScope South Africa: Survey highlights icludig FSM model. 117

130 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The figure below provides the top reasos that prevet small ad medium eterprises from growig their employee umbers. The mai reaso is the curret ecoomic eviromet followed by the labour eviromet, fiacial costraits ad skill challeges. Top five factors discouragig expasio of staff umbers No plas to expad, fully staffed Skills challeges Labour regulatios Fiacial costraits/cash flow Bad ecoomic coditios, declie i busiess/ workload Source: SBP s SME Growth Idex, % of sample Net ew employmet is ot typically created o a sigificat scale i existig busiesses. This is usually the preserve of ewly established busiess etities, which ted to be smaller i size. We eed to foster sustaiable busiesses with potetial for job creatio ad competitio. This will geerally require sigificat access to supply chai opportuities ad facilitative buyer-supplier relatios. Aside from creatig jobs, there are other advatages to broadeig the base of ew ad expadig firms: reduced levels of ecoomic cocetratio, higher levels of competitio, ad icreased opportuities for broad-based black ecoomic empowermet. However, there are real obstacles to creatig such a eviromet, icludig distortios created by South Africa s apartheid past i owership ad access to lad, capital ad skills for the majority of the populatio; widespread crime; a policy eviromet that traditioally favours cocetratio ad large corporatios; ad a global trade eviromet that ecourages ad rewards ecoomies of scale ad scope i both productio ad distributio. Because they have supply chais across the coutry, large firms are able to sell their products at prices smaller compaies caot match. A strategy to promote small busiess caot succeed without addressig the challege of accessig established supply chais. 118

131 CHAPTER 3: ECONOMY AND EMPLOYMENT The extet to which small-scale agriculture, microeterprises ad artisaship have weakeed is a cocer. I may developig coutries, it is these activities that provide shock absorbers for extreme poverty ad platforms for self-employmet, with the potetial to serve as rugs o the ladder of ecoomic advacemet. By 2030, South Africa will have created a ecoomic eviromet that is coducive to the dyamic formatio ad expasio of ew busiesses. This will be reflected i sigificat icreases i the umber of ew firms that are established, decreased levels of ecoomic cocetratio i most sectors, more diversified ecoomic activity, deeper supply chais with more itermediate iputs sourced from local suppliers, ad higher levels of iovatio. Key proposals are discussed below. Public ad private procuremet will be a essetial stimulator of demad for small ad expadig firms. The Local Procuremet Accord will be leveraged to promote stroger buyer-supplier relatios ad deeper localisatio. Critically, both public ad private sectors must implemet commitmets to 30 days paymets to their small- ad medium-sized suppliers. Access to debt ad equity fiace will be improved. The state s role i easig access to fiace by emergig busiesses eeds to be examied. Part of the reluctace of credit providers to led i this market arises from the high costs of additioal moitorig, advisory ad support services that are required to maage the risk of default. It may be preferable to establish a subsidy to existig baks that specifically targets these support service costs, rather tha uderwritig the pricipal debt. The role of veture capital requires exploratio. Critically, urget measures are eeded to reform the madates ad operatios of developmet fiace istitutios, i lie with iitiatives already beig udertake, ad upgrade the skills of those providig busiess advice ad services. Measures should also be take to build research capacity to address the paucity of data curretly available o small, medium ad micro eterprises ad scale up public commuicatio o available opportuities. The regulatory eviromet will be simplified. A expert pael will be appoited to prepare a comprehesive regulatory review for small- ad medium-sized firms to assess whether special coditios are required. This icludes regulatios i relatio to busiess registratio, tax, labour regulatio, local govermet regulatios. Regulatory impact assessmets will be doe o ew regulatios. Small busiess support services will be cosolidated ad stregtheed. Actio has already bee take to create a uified small busiess service delivery agecy. Publicprivate partership ca be cosidered, where the private sector is icetivised to provide small busiesses with support, with icreased paymet cotiget o success. Skills gaps will be addressed. There is a eed for early-stage etrepreeurship traiig to draw i youger people. Artisa traiig ad practical experiece ofte lead to the creatio of ew firms. We eed to improve the system of idetifyig critical skills ad istitutig measures to address the deficit through joit actio of govermet, state-owed eterprises, the private sector ad further educatio ad traiig istitutios. 119

132 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN As reflected i Chapter 9, the system of skills traiig should be reformed to provide for the eeds of the ecoomy (icludig the sectors ad activities idetified i the pla) ad of society as a whole. Black ad geder ecoomic empowermet will cotiue to be a priority. As idicated i the diagostic documet, besides the fact that may of the empowermet trasactios are debt-fiaced, the demographic distributio of ecoomic assets remais skewed ad the beefits of redistributio are shared by a small sectio of the previously disadvataged. These ad other weakesses do ot detract from the ecessity for broad-based empowermet. I additio to itesifyig pursuit of broadbased black ecoomic empowermet objectives across the variety of its dimesios, amog the actios proposed are: Coduct a comprehesive study to collate data o progress across all elemets of broad-based black ecoomic empowermet as well as a aalysis of the macro-impact of the policy o the ecoomy ad case studies of models of empowermet. Stregthe accoutability ad eforcemet mechaisms to esure compliace. I additio to small eterprise developmet, promote black ad wome s ivolvemet i emerget ad expadig idustries (referred to i this pla), as active hads-o etrepreeurs. Amog others, this would imply for istace that procuremet opportuities for black eterprises that rely o cheap imports would be discouraged i favour of buildig value-additio capacity i the ecoomy. Providig a stable ad eablig macroecoomic platform Macro ecoomy A stable ad eablig macroecoomic platform will uderpi sustaiable growth ad employmet creatio. Withi the framework of a floatig exchage rate, approaches to protectig firms from Rad volatility will be explored. Cosiderable attetio will be devoted to fiscal impact o the developmet, through improved efficiecy i govermet spedig, ad a appropriate balace betwee ivestmet ad cosumptio expeditures. A stable ad eablig macroecoomic platform will uderpi sustaiable growth ad employmet creatio. Macroecoomic policy serves as a foudatio for growth ad developmet. It must support the coutry s overall developmet strategy ad cotribute towards higher growth ad employmet. The pricipal task of macroecoomic policy is to provide a stable ad eablig platform upo which firms ad idividuals ivest, work ad cosume. A crucial role for macroecoomic policy is to miimise the cost of shocks to the ecoomy, especially i its impact o workers ad the poor. It does this by esurig relative stability i prices, ad critical variables, such as iterest rates ad th e exchage rate. There is a iheret trade-off 120

133 CHAPTER 3: ECONOMY AND EMPLOYMENT betwee stable prices, iterest rates ad exch age rates whe the price of leadig imports ad exports chage. The success of the developmet pla depeds o supportig ivestmet, especially domestic ivestmet, icetivisig savigs ad eablig firms ad idividuals to take a loger-term perspective of ecoomic opportuity. Give South Africa s ecoomic circumstaces, the preset approach of a floatig exchage rate is the most sesible istrumet to protect the ecoomy from exteral shocks. For example, if the oil price rises by 10 percet uder a fixed exchage rate regi me, the price of fuel will rise by a similar magitude. However, uder a floatig exchage rate, a appreciatio of the currecy ca offset the eed for a fuel price rise. Similarly, if the gold or platium price falls sharply, a weaker exchage rate ca smooth out the rad earigs of these commodities. The rad is a highly volatile currecy, militatig agaist a secular expasio i goods productio ad diversificatio, ad costraiig small firms. Policy should focus o miimisig the impact of this volatility o the real ecoomy. Higher reserves, higher savigs rates, a more diversified ecoomy (ad export basket), prudet ad coutercyclical fiscal maagemet, sesible mieral royalty regimes ad macroprudetial regulatios 5 all help to provide the stable platform for ivest met, growth ad employmet creatio. There are additioal steps that ca be take to help protect the ecoomy from a overvalued exchage rate whe commodity prices are high. Ruig a budget surplus ad faster accumulatio of reserves helps to we ake the exchage rate. The madate of the Reserve Bak gives it the licece to take factors such as the exchage rate ad employmet ito accout i coductig moetary policy. Rad volatility poses great difficulty for both exporters ad importers, ad militates agaist smaller- ad medium- sized firms i particular. A approach will be required to buffer small ad medium eterprises from rad volatility, ad this will be a issue cosidered by the commissio i The balace i expediture betwee cosumptio ad ivestmet will be key to deliverig higher growth ad employmet. There are sigificat choices to be made betwee public sector wages levels, the size of the public sector ad the allocatio to ivestmet. I geeral, the budget should prioritise those ivestmets that raise ecoomic growth ad that improves the capabilities of people. Developmet fiace istitutios are part of the overall fiscal armoury of the state. Their role is to parter the private sector i lowerig risk, take a log-term perspective towards ivestmet ad promote govermet s developmet objectives. Developmet fiace istitutios i the idustrial, ifrastructure, agricultural ad housig sectors form a critical part of the pla to raise growth ad employmet. Measures will have to be istituted to esure that they operate efficietly ad have soud balace sheets, i order for them to meet their developmet madate. 5 Macroprudetial regulatios gover the bakig ad isurace sectors, compellig these istitutios to keep a major portio of their assets i the coutry. 121

134 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Sectors ad clusters I order to attai the objective of full employmet, decet work ad sustaiable livelihoods it will be ecessary to take firm decisios o sectors ad clusters that will serve as a platform to lauch oto a ew growth trajectory. There are two related sets of tesios i idustrial policy: betwee govermet pickig ad supportig wiers ad a ope architecture approach where support is iformed by market-based mechaisms. I practice, most coutries try both approaches, but there is a opportuity cost where resources are limited. The sectors idetified below are those with substatial potetial for either growth stimulatio, or employmet or both. They cover areas of existig competitive advatage ad our mai resource idustries. There is evidece that there is substatial growig global demad i these areas, that they will cotribute to risig terms of trade ad that they have potetial to stimulate domestic likages. While the sectors idetified below cotai competitive advatages for South Africa ad the possibility for large-scale labour absorptio, these ad other sectors should be promoted i a maer that allows for a trasitio to a kowledge ecoomy ad optimal usage of iformatio ad commuicatio techologies. Research ito ad iitiatio of such a trasitio, ad optimal exploitatio of capabilities i which South Africa is already a leadig player i cuttig-edge techologies should happe immediately, because the impact of such iitiatives has log lead times. The agro-idustrial cluster The agro cluster ecompasses farmig activities, dowstream processig of foodstuffs ad beverages, upstream suppliers of iputs ito food maufacturig (such as packagig, cotaiers ad preservatives) ad ito fa rmig (such as fertiliser, seed ad capital equipmet). The sector favours large commercial farms, ad vertically itegrated agroprocessig. This costrais etry ad expasio of small farmers ad maufacturers. South Africa accouts for 0.6 percet of global market share i food sales, icreasigly veerig away from mass grais towards more diversified products such as edible fruits ad uts, fats ad oils, meat, ad dairy products. The fallig share of agriculture employmet is ot uusual i a developmet process, but is so i the cotext of a large labour surplus. Agriculture is still oe of the most labouritesive goods productio sectors, with substatial employmet likages. Resources are ot beig used sesibly, which requires urget attetio because this sector is oe of the few remaiig goods producers with strog direct ad idirect ecoomic ad employmet liks to the rural poor. The eglect of agriculture speaks to the eglect of rural commuities. The cotractio i formal employmet i agriculture is ot a recet pheomeo. I 1971, there were 122

135 CHAPTER 3: ECONOMY AND EMPLOYMENT 1.8 millio people employed, droppig to 1.2 millio i 1995, ad fallig dramatically to just over today (or if icludig fishig ad food & beverage processig are icluded). The umber of hectares uder cultivatio has bee fallig sice 1974, ad hectares uder irrigatio have ot expaded sice the early 1990s. 6 Compared to other regios, South Africa has a very small share of its rural populatio egaged i agriculture. These logstadig treds show that although it is possible to tur agricultural productio aroud, it will ot be easy or rapid. South Africa s commercial farmig sector has had major ivestmets (from the public sector, the private sector, ad from public-private part erships) that have resulted i ew growth ad jobs. For example, extedig the table grape idustry alog the Orage River ad the sugar idustry ito Mpumalaga (both through parterships betwee the Idustrial Developmet Corporatio ad the private sector), ad the more recet expasio of the wie idustry. Similar opportuities exist with utapped potetial, icludig the Makatii Flats ad the Easter Cape (Umzimvubu River Basi). New iitiatives, such as the role of agriculture i the gree ecoomy ad coservatio efforts i geeral, ca potetially create ew employmet opportuities i rural areas, although climate chage will ifluece which ivestmets will pay off best, ad where they should be made. Without ay major policy improvemets, the agriculture sector could cotiue to shed employmet, mostly due to lad cosolidatio ad techical chage. Of the rage of possible employmet outcomes i agriculture discussed here, the most optimistic sceario shows that about 1 millio direct ad idirect jobs ca be created. The future depeds o whether lad ca be developed to produce labour-absorbig crops. A additioal millio opportuities might be created i micro ad semi-subsistece farmig. Chapter 6 outlies proposals to stabilise icome for farmers, ad to stimulate demad for their output. 6 BFAP (2011). The cotributio of the agro-idustrial complex to employmet i South Africa. Report prepared for the Natioal Plaig Commissio. 123

136 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Agriculture ad agro-processig Key proposals iclude i the agriculture ad agro-processig sectors iclude: Substatial ivestmet i irrigatio ifrastructure, icludig water storage, distributio ad reticulatio throughout the coutry where the atural resource base allows, as well as i water-savig techology. A 50 percet icrease i lad uder irrigatio would cost R40 billio i off-farm ifrastructure over a 10 year period. Greater ivestmet i providig iovative market likages for small-scale farmers i commual ad lad reform areas. As part of comprehesive support packages for farmers, preferetial procuremet mechaisms should be put i place to esure that ew agricultural etrats ca also access these markets. Ivestmet by farmers i these areas will oly occur if they believe that their icome streams from agriculture are secure. Teure security is vital to secure icomes for existig farmers at all scales, for ew etra ts ito agriculture, ad for the ivestmet required to grow icomes. Growth i agricultural productio has always bee fuelled by techology, ad the returs to ivestmet i agricultural research ad developmet have always bee high. Policy measures to icrease itake of fruits ad vegetables ad reduce itake of saturated fats, sugar ad salt, as recommeded i the South Africa food dietary guidelies, should accompay strategies to icrease vegetable ad fruit productio. Iovative measures, such as procuremet from small-scale farmers to create local buffer stocks ad commuity-owed emergecy services, could be explored. The mierals ad metals cluster The mierals cluster ecompasses all miig ad quarryig activities, supplier idustries to the miig sector, ad dowstream beeficiatio of the mierals that are mied. The collective share of direct miig activities of South Africa s GDP has declied from 21 percet i 1970 to oly 6 percet i Over the same period, the umber of people employed directly i miig (excludig upstream ad dowstream idustries) fell from to about i 2004 ad stabilised at that level. Miig, mierals ad secodary beeficiated products accout for almost 60 percet of export reveue. The expasio of miig exports maily depeds o global demad, the availability of the mieral, prospectig ad miig techology, access to eergy ad water, ad a eablig ad trasparet regulatory eviromet. The relative competitiveess of alterative locatios is also a factor. I mierals such as platium or magaese, South Africa has the mai global deposits. Despite this clear potetial, the miig sector has failed to beefit fully from the commodities boom over the past decade or more. South Africa eeds to exploit its mieral resources to create employmet ad geerate foreig exchage ad tax reveue. 124

137 CHAPTER 3: ECONOMY AND EMPLOYMENT Give the eergy-itesive ature of miig ad mieral beeficiatio, South Africa will eed to ivest heavily i helpig the idustry to reduce its carbo footprit. Similarly, the miig sector eeds to use water more efficietly. Cocers about the impact of a resource curse should ot be cofused with a essetial commitmet to expadig mierals productio ad exports. The resource curse will be addressed partly through forward ad backward likages stimulated to expad idustrial ad services capabilities. Over the past decade, the South Africa miig idustry has performed poorly. Durig the commodity boom from 2001 to 2008, the miig idustry shrak by 1 percet per year, as compared to a average growth of 5 percet per aum i the top 20 miig exportig coutries. The miig idustry is smaller ow tha it was i This is a opportuity lost, as estimates show the miig sector could expad by 3 percet to 4 percet a year to 2020, creatig a further jobs (Miig Idustry Growth ad Developmet Task Team). The HSRC s most optimistic estimates show that miig employmet could expad to by 2024, 7 potetially stimulatig a further jobs through likages ad more if they are actively stimulated. This relies substatially o platium group metals. The cetral costraits are ucertaity i the regulatory framework ad property rights, electricity shortages ad prices, ifrastructure weakesses especially i heavy haul rail services, ports ad water, ad skills gaps. Stimulatig miig ivestmet ad productio, i a way that is evirometally soud, ad that promotes forward ad backward likages is urget, give South Africa s substatial urealised opportuity ad global market domiace i deposits. Beeficiatio or dowstream productio ca raise the uit value of South Africa exports. I this regard, resource cluster developmet icludig the idetificatio of sophisticated resource-based products that South Africa ca maufacture will be critical. Electricity is the mai costrait, as most of these activities are highly eergy itesive. As log as electricity is scarce, there will be a trade-off betwee beeficiatio ad other more labour-absorbig activities. I geeral, beeficiatio is ot a paacea because it is usually highly eergy ad capital itesive, cotributig little to overall job creatio. Substatially more attetio will be devoted to stimulatig backward likages or supplier idustries (such as capital equipmet, chemicals, egieerig services), especially as demad is certai, there is a opportuity for specialised product developmet, ad the product complemet is diverse. They are also more labour absorbig tha typical dowstream projects. Such products have the potetial for servicig miig projects globally, a advatage should the commodity boom persist. 7 Baartjes N, Auchterloie A, Sorese P ad Goode R (2007). Miig employmet scearios for South Africa to HSRC. 125

138 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Miig compaies have a explicit requiremet to participate i local developmet, ad the resources to do so i South Africa ad the regio. Local ecoomic developmet could be more substatially stimulated by the miig sector if the miig charter were better aliged to these goals. More could be doe o huma resource developmet, local ecoomic developmet or procuremet. Notwithstadig these challeges, it should be possible to create about jobs i the mierals cluster, icludig idirect jobs. Mierals cluster Proposals to grow ivestmet, outputs, exports ad employmet i the mierals cluster iclude: Address the major costraits impedig the accelerated growth ad developmet of the miig sector i South Africa. The mai itervetios iclude: esurig certaity i respect of property rights, pass amedmets to the Mierals ad Petroleum Resource Developmet Act to esure predictable competitive ad stable miig regulatory framework, secure reliable electricity supply ad/or eable firms to supply their ow plat with a estimated potetial of MW by 2015, secure reliable rail services, potetially eablig private participatio. Develop, deepe ad ehace likages with other sectios of the ecoomy. This icludes: likages with both maufacturers of iputs (capital goods ad cosumables) ad suppliers of miig-related services; dowstream producers, especially for platium group metals ad chrome ore. I this regard, a export tax could be cosidered. Provide focused research ad developmet support to eable improved extractio methods that legthe mie life, better eergy efficiecy ad less water-itesity, alterative uses of South Africa s extracted mierals, especially platium group metals, titaium ad others that have potetial for applicatio i ew eergy systems ad machiery. Idetify opportuities to icrease regioal ivolvemet ad beefit i the whole mierals cluster. This could iclude ecour agig the establishmet ad developmet of alterative providers of partially processed itermediate iputs i other coutries i the regio. Esure active egagemet o, ad resolutio to, issues raised through the miig idustry Miig Idustry Growth ad Developmet Task Team process. Improve aligmet of miig charter requiremets to esure high impact o local commuities. Maufacturig Curretly South Africa maufacturig stregth lies i capital-itesive idustries. I a cotext of high uemploymet, growth would ideally be sourced through expaded cotributio of labour. However, to compete, the coutry s cost structure requires a emphasis o productivity, products ad logistics. 126

139 CHAPTER 3: ECONOMY AND EMPLOYMENT The most importat cotributios to maufacturig expasio will be i relatio to the busiess eviromet itself. Some of the key cha lleges relate to the availability ad cost of electricity, the efficiecy of the logistics platform, the quality of telecommuicatios, ad fast risig admiistered pricig for electricity, trasport, fuel, ad fertilizer. Costraied skills supply poses great challeges. A volatile ad sometimes overvalued currecy challeges both imported iputs ad exports. Half of South Africa s maufacturig exports lie i capital-itesive processed mierals, metals ad chemicals. Itesive support to the motor idustry has had substatial effect o expadig both imports ad exports of vehicles, the stimulatio of assembly ad some backward likages, but most employmet is geerated i vehicle retail sales. Other major opportuities for maufacturig should be cosidered i relatio to clusters of activity ad are discussed i other parts of this sectio such as supplier idustries to costructio, the eergy sector, waste reutilisat io, miig iputs, dowstream processig of metals, ad others. Stimulatig maufacturig Stimulatio of these sectors will be facilitated through, amog others: Esurig a growig share of products that are dyamic, ad with potetial for domestic likages. Public ad private procuremet will be leveraged to promote localisatio ad idustrial diversificatio. R&D support for product developmet, iovatio ad commercialisatio will be itesified. Approaches to bufferig maufacturers from the effects of currecy volatility will be explored. Stregtheig etwork ifrastructure ad skills supply, ad brigig admiistered prices uder cotrol. Costructio/ifrastructure cluster The ifrastructure/costructio cluster icludes idustries producig ew ifrastructure ad costructio assets, the etwork of suppliers to those idustries, ad the etities egaged i operatig ad maitaiig this ew ifrastructure. Ifrastructure ivestmet is critical, because it creates jobs for low-skilled people, ecourages private ivestmet, lowers the cost of doig busiess, promotes spatial iclusivity ad has strog backward likages to supplier idustries. The state has committed substatial fudig (R808 billio over the ext three years) to public ifrastructure to address backlogs, but ot all of it is spet. 127

140 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Employmet has falle from i 2006 to i Of this, about 60 percet is formally employed. There have bee oly two years of substatial employmet growth i costructio over the last decade. Risig icome ad employmet combied with a stable outlook for iterest rates ca promote small-scale costructio i the residetial costructio ad housig reovatio market a key employmet driver. Similarly, more ad better quality public housig also has strog likages to local supplier idustries, promotig growth ad employmet. There is also scope for export growth particularly to other Africa markets for products that competitively meet customer eeds. Costructio/ifrastructure Key proposals to grow this sector iclude: Govermet s ability to sped its ifrastructure budget will be addressed, particularly with regard to project maagemet capacity, log term plaig ad moitorig ad evaluatio of both expediture patters ad costructio work. The civil costructio ad the supplier idustries will be supported i their export efforts with the establishmet of a Fiacial Cetre for Africa, ad more support i commercial diplomatic relatios. Support to supplier idustries such as buildig supplies, steel, glass ad cemet will be itesified. Coditios will be created for a less cyclically volatile idustry by emphasisig umerous, smaller scale, regioally dispersed projects to address backlogs that are more accessible to smaller firms ad ew etrats. Public fudig will be expaded for alterative types of low-icome housig that would geerate more demad directly ad i supplier idustries. Promote a simultaeous focus o more eergy-efficiet buildigs ad buildig techiques to reduce demads o electricity supply i the loger term. Home isulatio ad the istallatio of solar water heaters are labour-itesive activities that have strog backward likages to supplier idustries. The gree ecoomy The Uited Natios Evirometal Programme defies the gree ecoomy as a system of ecoomic activities related to the productio, distributio ad cosumptio of goods ad services that result i improved huma well- beig over the log term, while ot exposig future geeratios to sigificat evirometal risks ad ecological scarcities. Shiftig to a gree ecoomy, icludig to a low-carbo ecoom y, is about shiftig to a more sustaiable ecoomic growth ad developmet path i the log term ad therefore has implicatios for the choices we make about the structure of our ecoomy. This sectio deals with the gree ecoomy i the cotext of a ew ad growig sector withi the South Africa ecoomy. Chapter 5 cosiders how South Africa will shift oto a low carbo-emittig path. 128

141 CHAPTER 3: ECONOMY AND EMPLOYMENT The gree ecoomy ageda arises simultaeously with South Africa s eergy shortages. Aside from itetios to build coal fired plats, South Africa s imperative to dramatically expad reewable eergy sources ad to promote eergy savig is quite cosistet with the global ageda. A target to geerate MWh of reewable eergy by 2030 has bee set. Progress towards achievig this target has so far bee sluggish with about 1 percet of electricity geerated from reewable sources. The gree ecoomy ageda will be leveraged to promote deeper idustrialisatio, eergy efficiecy ad employmet. The Gree Ecoomy Accord curretly beig egotiated betwee social parters will help drive forward this ageda. The fiace sector The fiace sector icorporates all those activities liked to credit ad loas, the raisig of capital, the tradig of fiacial assets ad properties, the ivestmet ad maagemet of savigs, ad the provisio of bakig ad isurace services. Like may other areas, it has udergoe sigificat chage i recet decades, maily as a result of techological chage. There is ow a far larger foreig presece i owership as a result of mergers ad acquisitios. Fiace sector output tripled sice 1994, while the rest of the ecoomy expaded by 67 percet, ad was a importat cotributor to employmet expasio. About to people work i fiace, isurace ad related activities. Substatial employmet is a created idirectly, through property, buildig maiteace, security, persoal ad busiess services. I additio to its role as a provider of potetially dyamic itermediate services, the fiace sector has the potetial to cotribute towards greater iclusio of historically margialised groups by extedig access to bakig ad isurace services, by helpig to promote ad mobilise household savigs, ad by easig broader access to credit. While the South Africa bakig ad isurace sector is viewed as relatively sophisticated i a global cotext, baks ad isurers fid it hard to exted services to this market segmet usig traditioal chaels because of their high costs ad limited potetial for icome. The proportio of the populatio that is baked or has access to trasactioal fiacial services ad savigs facilities is expected to icrease from about 63 percet to about 90 percet by Developmets i ICT have made it possible to establish alterative virtual etworks that ca be used to deliver fiacial ad other services at much lower cost. Similarly, i the short-term isurace field; alterative, lower cost techology platforms such as the Iteret ad mobile etworks will make it easier for isurers to offer reduced premiums (for commesurately lower levels of cover), which should help to expad access. It is cocerig that South Africa s baks do ot exted sufficiet credit to busiesses, especially small, medium ad micro eterprises. Greater access to credit for firms would lead to higher levels of busiess ivestmet ad jobs. Several coutries, most otably Idia, 129

142 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN have specific quotas for credit to the busiess sector. To reduce ledig risks, public-private parterships i providig advisory ad support services should be cosidered. South Africa has ot used its sophisticated fiacial services idustry sufficietly to foster growth ad create employmet. With govermet support, these sectors ca expad more aggressively o the cotiet, with strog likages to the South Africa ecoomy. Key obstacles to expadig back office operatios iclude high Iteret charges, low badwidth ad skills costraits i maagig these types of operatios. Makig it easier for foreig compaies to brig i skilled foreig workers will also help the sector. The fiace sector Areas that should be prioritised iclude: Cotiuously broadeig access to bakig services to poorer people ad lowerig costs through a combiatio of competitive pressures ad other reducig other ifrastructure costs. Stregtheig credit extesio to productive ivestmets especially small ad expadig firms ad for workig capital. Govermet ad the private sector have to work together to fid ways of icreasig busiess ledig. Provisio of small busiess advisory ad support services fiaced partly by the state. Coclude discussio to idetify ad deploy ivestible capital for productive purposes i labour-absorbig sectors. Ecourage private firms such as costructio firms to parter with South Africa baks i providig project fiace for cotracts o the cotiet. Implemetig the otio of a fiacial cetre for the cotiet to support project fiace. Retail ad busiess services Retail ad busiess services are together the biggest employers i most middle ad high icome ecoomies. I South Africa, the formal retail sector accouts for almost 2 millio jobs i the formal sector ad aother 3 millio i iformal activities. Busiess services accout for about 20 percet to 30 percet of gross value added ad over 1 millio jobs. A umber of retailers have effectively located i the regio, ad this geerates export opportuities for fast movig cosumer goods producers if effectively leveraged. Busiess services comprise a wide set of activities from office cleaig, computer repair, real estate ad back-office processig amog others. Iformatio techology-eabled services trasacted locally ad across borders have become firmly established over the past decade, ad could be see as a ew idustry growig very rapidly. It is therefore essetial that substatially more effort be ivested i drawig this busiess to our shores. 130

143 CHAPTER 3: ECONOMY AND EMPLOYMENT Retail ad busiess I support of employmet ad growth, the followig will be pursued i the pla: The retail sector will be ecouraged to procure goods ad services aimed at stimulatig local producers, ad especially small ad expadig firms. Further ivestigatio will be coducted o opportuities for the stimulatio of sustaiable small-scale retail ad cooperative buyig, with the aim of reducig costs i towships ad rural areas, ad stimulatig related employmet. South Africa retail operatios i the regio will be ecouraged to supply stores with South Africa products, ad also be supported to develop suppliers withi the regio i support of regioal idustrialisatio objectives. Iformatio techology-eabled service exports will be promoted, with the aim of attractig Uited States, Uited Kigdomad Idia busiess process outsourcig. South Africa should become a leadig provider of iformatio techology-eabled services globally, with services itegrated ito the regio. Risig cosumptio of the lower icome groups withi South Africa ad the regio should stimulate retail employmet, ad demad for supplier idustries. Tourism cluster The tourism cluster ecompasses the rage of activities ad associated icomes that accompay people visitig our shores. The total cotributio of tourism activity to South Africa s gross value added was estimated at over 9 percet i South Africa has the disadvatage of beig far from wealthy cosumers, but we have several comparative advatages icludig atural beauty, well maaged atioal ad other parks, the domestic aviatio sector, hotel capacity ad persoal services idustry. South Africa has positioed itself as a key coferece ad sports evet destiatio. The tourism idustry is labour itesive, stimulatig of the growth of small busiesses. It ca develop other spi-offs, such as foreig direct ivestmet ad the crafts idustry. Further competitio i the airlies idustry would help lower costs of travel. Key policy issues iclude: Emphasis will be placed o icreasig the total umber of tourists eterig the coutry, ad a icrease i the average amout of moey spet by each tourist, or both. The ease of doig busiess, as well as availability of appropriate levels of tourism ifrastructure (particularly trasport ad accommodatio), will play a importat role i attractig differet types of tourists. Foreig busiess tourists arrivig by air geerate the most sigificat multipliers. Amog others, South Africa will be positioed as busiess ad shoppig cetre for the regio. South Africa ca do more to develop the regio as a iteratioal tourist destiatio by emphasisig the broader biodiversity ad rage of tourism products, ad makig it easier for tourists to travel betwee coutries i the regio. A Schege-type visa for the regio will be cosidered. 131

144 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Public-sector employmet The public service typically plays a importat role i employmet creatio. South Africa exhibits a paradox i this regard. The public sector employs about 9 percet of the labour force ad accouts for about 18 percet of formal employmet. Despite this limited umber, the public service wage bill (icludig local govermet) exceeds 12 percet of GDP very high by both developed ad developig coutry stadards. South Africa s public sector is faced with a difficult dilemma. I a skills-costraied ecoomy, the premium for skilled labour is high. This pushes up the salaries of skilled people i the public service. The public service also pays well above the market rate for low-skilled people, ihibitig its ability to create low-skill jobs. I theory, it should be possible to grow public employmet i areas such as health, policig, social welfare ad educatio. This however will eed to be balaced agaist the magitude of icreases i public sector salaries. Furthermore, opportuities eed to be idetified i etry-level services such as auxiliary urses, commuity health workers ad day-care services for pre-schools. Public employmet schemes Public employmet schemes will be a essetial part of a employmet pla to The mai opportuities will lie i commuity-based services. Realistically, it will be essetial to pla ad budget for a miimum of 2 millio opportuities aually. It should always be recogised that the emphasis should be placed o geeratig marketbased opportuities where possible. The problem of uemploymet ad uder-employmet has become too big for marketbased solutios to solve i the ext 10 to 20 years. The problem icludes both severe uemploymet ad very low levels of remueratio from market-based employmet. There is o doubt that market-based employmet is the most sustaiable source of job creatio but i eve the most optimistic of scearios, may people are likely to remai out of work. Low productivity, o-market services such as expaded public works projects i govermet costructio, care, self-help projects ad survivalist activities are geerically called public employmet schemes. The public employmet programmes should target the creatio of 2 millio opportuities aually by 2020 or earlier if possible. The cetral challege is to idetify istitutioal approaches that eable the achievemet of this scale. Few programmes have succeeded. The Commuity Works Programme, which decetralises decisio makig to the ward level, holds this promise. It is probable that most opportuities will be foud i commuity-based care such as early childhood developmet. These employmet schemes should therefore complemet social delivery programmes to stregthe commuity reach. 132

145 CHAPTER 3: ECONOMY AND EMPLOYMENT Role of the state ad istitutioal capability This pla places a high premium o makig specific choices to lauch the coutry oto a higher growth trajectory. It avoids seekig to address all the challeges all at the same time. Firm ad focused leadership by govermet will be critical i this regard. The major istitutioal challeges i the public sector are dealt with i Chapter 13. I the ecoomic sphere, amog the major stumblig blocks to efficiet ecoomic services are poor coordiatio ad itegratio, multiple priorities ad a udefied hierarchy of authority amog the plethora of govermet departmets ivolved i the ecoomic sector. While the outcomes process has helped to foster a degree of itegratio, South Africa has ot yet see the fruits of this iitiative. The coutry also eeds to clarify its mid, ad develop a firm ad cosistet view o the issue of the role of the state i the ecoomy. The realisatio of the ecoomic, ad ideed other, objectives of Visio 2030 requires log-term commitmets by all sectors of society icludig the private sector. Policy certaity is therefore critical. Specific proposals iclude: Stregthe the role of the state as service provider, as the core provider of public goods (such as ifrastructure ad other public services), as a ecoomic regulator, as a cosumer ad as a critical player i givig leadership to ecoomic developmet ad addressig market failures. Esure a clear system of hierarchy ad decisio-makig across ecoomic lie fuctio departmets ad spheres of govermet. Resposiveess o the part of the state to aticipate possible crises ad respod to them rapidly ad appropriately. Esure that there are sigificat cosequeces for ot reachig targeted impacts, whether i social or ecoomic areas of delivery. Measure performace i ecoomic services departmets o the basis of success or otherwise i facilitatig ivestmet ad buildig parterships amog the ecoomic actors. Improve trust betwee the public ad private sectors, ad esure that private actors are treated as parters i policy desig ad implemetatio ad that the private sector i tur respods to ad facilitates the realisatio of atioal objectives. Urgetly address costraits to public-private parterships icludig the istitutioal arragemets for regulatio ad executio of such parterships as well as relevat capacity i govermet departmets ad spheres. Ay direct state ivolvemet i producti ve sectors should be iformed by the balace of evidece, i relatio to stimulatig ecoomic growth ad competitiveess, creatig jobs ad reducig iequality, as well as availability ad optimal deploymet of public resources. 133

146 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Coclusio Achievig full employmet ad sustaiable livelihoods is possible. Movig oto this ew trajectory of high, sustaied ad job-creatig growth implies a break from our curret path depedecy. It requires a commitmet by all sectors of society to cot ribute to the efforts required to meet our commo objectives. There will be momets whe difficult choices will have to be made. Trade-offs ad choices Achievig full employmet, decet work ad sustaiable livelihoods will deped o choices that have to be made durig various phases to The ability to do this is a fuctio of leadership amog all social parters. The achievemet of the objectives ad targets i this pla will be to the beefit of all. But each sector of society eeds to agree o the cotributio it will make. At give momets, some may have to carry the heavier part of the load. At other momets, it would be the tur of others. Give the fact that may of the proposals i this pla will take some time to register ay meaigful impact, it is critically urgetly to itroduce the active labour market policies proposed i this chapter, to iitiate massiv e absorptio of youg people ad wome ito ecoomic activity. This will require decisiveess o the part of the state ad a strategic approach to egotiatios o the part of, ad buildig trust betwee, busiess ad labour. Role of the state The state ot oly has a role i settig the appropriate macroecoomic framework. It must also provide the right microecoomic coditios, to esure that the day-to-day decisios ad actios of people ad compaies help deliver the best social ad ecoomic outcomes. It is these frameworks ad itervetios that determie the social ad ecoomic climate that we live i, ad therefore the level of ecoomic growth ad employmet. Amog others, the state must ehace regulatio of market participatio, idetify ad resolve market failures, provide appropriate publ ic ifrastructure ad services ad help i lowerig trasactio costs across the ecoomy. The private sector Most of the jobs will be created i the private sector. This however will require South Africa etrepreeurs to be vibrat ad seize opportuities whe ad where they arise; ad to adapt themselves to the cotiuous process of techological chage. 134

147 CHAPTER 3: ECONOMY AND EMPLOYMENT Rather tha rely o ecoomic ret ad edeavourig to accumulate the bulk of the rewards of improved productivity ad geeral ecoomic performace, the private sector should embrace etrepreeurship, iovatio ad a equitable sharig of the fruits of prosperity. Worker leadership Worker-leaders have to advace ad defed th e iterests of employed workers, ad with other sectors of society, esure that iequality is reduced. At the same time, they eed to take ito cosideratio those who are presetly margialised from ecoomic activity. Allowig for greater access to the labour market for those ot active i the ecoomy ad esurig that those curretly without appropriate voice are adequately catered for is a resposibility of leaders of workers ad society at large. The first phase ( ) Movemet towards a iclusive ad dyamic ecoomy requires that the coutry should urgetly lauch the virtuous cycle that allows it to move to a ew growth trajectory. I the early years, emphasis will be o absorbig the uemployed, especially youg people, ito ecoomic activity. Higher miig exports durig this period of high commodity prices will help pay for the developmet of capabilities ad edowmets to forge a ew path i the ecoomy of the future. Urget ivestmets i rail, water ad eergy ifrastructure, alogside regulatory reforms that provide policy certaity are eeded. At the same time, the private sector should commit more ivestmets to supplier idustries for the ifrastructure programme ad i geeral ecoomic capacity while capital costs are low ad the price of imported equipmet is cheaper. Opportuities for larg e exports to sub-sahara Africa ad other destiatios i the developig world should be creatively pursued. Cocurretly, policy istrumets ad agreemets o movig to the ext phase should be iroed out. The pla idetifies a umber of steps required to move towards this ew path. These iclude the prioritisatio of actios that lift key costraits to ecoomic expasio. While govermet s resposibility is ecessarily broader, there will be a uderstadig that these actios will receive more priority tha others. I the first five years, the commitmet will be to: Doublig the aual expasio i high skills supply ad improvig educatio throughput i primary ad secodary levels. Improvig the labour relatios eviromet. Itervetios to improve labour market matchig. Esurig the supply of eergy ad water is esured ad sufficiet for a growig ecoomy, ad that the resposibility of muicipal maiteace of distributio systems are appropriately allocated ad fuded. Itesify R&D spedig, emphasisig opportuities liked to existig idustries. 135

148 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Develop the arragemets for a Fiacial Cetre for Africa. Implemet the commitmet by govermet to promote idustrial diversificatio through its procuremet programme. Chage the approach to lad teure systems that stimulates productio ad ecoomic opportuity, thereby reducig ucertaity. Expad public employmet programmes rapidly. The secod phase ( ) Subsequet to this, focus should be o diversifyig the ecoomic base. This should iclude buildig the capacities required to produce capital ad itermediary goods for the ifrastructure programme ad sub-sahara Africa. It should iclude resource cluster developmet for the miig idustry combiig productio of capital goods, provisio of egieerig services, ad beeficiatio that targets idetified opportuities. I this phase, the basis must be laid to esure more itesive improvemets i productivity. Iovatio across state, busiess ad social sectors should start to become pervasive. Cetres of learig should be aliged to idustrial clusters with potetial for domestic ad global likages. Iovatio should also focus o public service improvemets ad o goods ad services aimed at low-icome sectors. Approachig 2030 As the coutry approaches 2030, the emphasis should be o cosolidatig the gais of the secod phase, with greater emphasis o iovatio, improved productivity, more itesive pursuit of a kowledge ecoomy ad better exploitatio of comparative ad competitive advatages i a itegrated cotiet. Closer to 2030, South Africa should be approachig developed world status, with the quality of life greatly improved across the board, with skilled labour becomig the predomiat feature of the labour force, with levels of iequality greatly reduced. 136

149 CHAPTER 4: ECONOMIC INFRASTRUCTURE Chapter 4 ECONOMIC INFRASTRUCTURE Everybody sees to it ad assists so that all life s eablers are available i a humae way. Itroductio To achieve sustaiable ad iclusive growth by 2030, South Africa eeds to ivest i a strog etwork of ecoomic ifrastructure desiged to support the coutry s mediumad log-term objectives. Achievig this visio is possible if there is targeted developmet of trasport, eergy, water resources, ad iformatio ad commuicatio techology (ICT) etworks. Challeges South Africa has a relatively good core etwork of atioal ecoomic ifrastructure. The challege is to maitai ad grow it to address the demads of the ecoomy effectively ad efficietly. I the trasport ad eergy sectors domiated by state-owed eterprises (SOEs) the ecoomy has already bee costraied by iadequate ivestmet, alogside ieffective operatio ad maiteace of existig ifrastructure. I the telecommuicatios field, domiated by private operators, the cost of services is prohibitive. Large ivestmets are eeded to propel ecoomic activity, usig structured approaches to prevet iappropriate iitiatives beig favoured over urget priorities. Poor ivestmet decisios commit the state to cotiuig costs ad subsidies that hider other priority ivestmets ad, ultimately, costrai ecoomic growth. Greater use of public-private fiacig should brig about improved decisio-makig ad spedig disciplie, ad result i more rigorous assessmet, shareholder accoutability ad reportig. Improved disciplie ad coheret decisio-makig will i tur esure easier access to capital. Curret ivestmet levels are isufficiet ad maiteace programmes are seriously laggig. Govermet ca achieve better outcomes by improvig coordiatio of itegrated developmet approaches, particularly pivotal developmet poits (such as the Waterberg/Lephalale regio, Coega ad the strategic freight corridor from Gauteg to Durba) to esure full beefits for the coutry. I these cases, collaborative ivestmet ivolvig a rage of iterested parties, from busiess to provicial ad local govermets, will support better results. Precedece should be give to ifrastructure 137

150 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN programmes that cotribute immediately ad practically to greater regioal itegratio. These iclude the Africa Uio s orth-south corridor programme ad sector-specific projects (ehacig border facilities, improvig eergy ad ICT coectivity ad revisig trasport liks). To be successful, participats i strategic sectors ca use a combiatio of cooperatio ad competitio to improve the performace of SOEs. Mechaisms to esure local idustry remais regioally ad globally competitive, while meetig domestic eeds, are also required. Regulatio While some etwork idustries led themselves to competitio (power geeratio ad ICT services, for example), core compoets such as electricity grids, gas ad water pipelies, ad railway lies ted to be atural moopolies. With high fixed costs ad decreasig average costs of service provisio as more customers joi these etworks, it is ofte difficult to stimulate meaigful competitio or to ecourage multiple market etrats. I such cases, effective ecoomic regulatio is essetial. Over the past two decades, idepedet regulatory authorities have bee established worldwide to issue liceces, esure access to etworks, set prices, ad establish techical ad service stadards. South Africa has dedicated regulatory agecies for electricity, gas ad petroleum pipelies, telecommuicatios ad ports. These regulators should ultimately safeguard reliable ad competitively priced services for cosumers, ad promote affordable access for poor ad remote households. They should esure that utilities ad operators are efficiet ad fiacially viable, so that they ca ivest i maitaiig, refurbishig ad extedig these etworks. After more tha 15 years of sector regulatio, it is fittig to aalyse the effectiveess of these regulators. Although regulators have succeeded i issuig liceces, developig pricig methods ad establishig techical ad service stadards, they have ot achieved the positive outcomes iitially evisaged. Based o the performace of the ICT, electricity ad port sectors, South Africa is slippig dow iteratioal bechmark rakigs. The reliability of electricity supply has deteriorated, ad prices that were previously below ecoomically viable levels are ow risig at rates that cosumers are uable to absorb. Commuicatios quality, speed ad cost are sigificatly worse i South Africa tha i comparable atios, with a similar situatio i rail ad port performace. 138

151 CHAPTER 4: ECONOMIC INFRASTRUCTURE Regulators face two key difficulties. First, because they are resposible for esurig that cosumers have access to reliable ad quality ifrastructure, they are required to play a proactive role i guarateeig that ifrastructure plaig cosistetly promotes adequate levels of ivestmet. Govermet departmets eed to work with regulators ad utilities to esure that their licece ad price approval processes ad other strategic decisios create ivestor certaity ad ecourage ew ivestmet. Secod, because ifrastructure ivestmets ted to be capital itesive ad require large chuks of ivestmet, associated fiacig requiremets eed to be catered for through ecoomically viable pricig levels. If prices fall i real terms durig periods of low ivestmet, ew ivestmets will demad very steep price icreases. Regulators ca do more to smooth prices ad avoid such ecoomic shocks. Recetly, there has bee much rethikig about the istitutioal arragemets ad desig of etwork regulators. Regulatio works best where there is sufficiet political will to support regulatio; regulators are legally idepedet, publicly accoutable ad their decisio-makig trasparet; ad where the regulator is backed by adequate istitutioal ad huma capacity. South Africa faces challeges i all these areas. As a result, it makes sese to restrai the iitial decisio-makig discretio held by regulatory agecies, ad to support their roles with clearly defied policy, so that they operate i a more predictable policy eviromet that is well uderstood, ad supported by detailed decisio-makig rules. A far-reachig review of curret ifrastructure regulators is eeded to clarify roles ad accoutabilities, update legislatio ad subsidiary regulatios, ad reform istitutioal arragemets ad desig. A improved regulatory performace is vital for atioal developmet. Istitutioal capacity buildig remais a core challege i this area, requirig sustaied traiig to improve leadership ad techical capabilities. The quality of regulatio, however, is ot just about the regulator. The state itself must have adequate capacity ad capability to formulate effective policy; support the desig, establishmet, review ad improvemet of regulators; ad respod to issues idetified by capable regulators. Phasig The followig activities are proposed for the immediate future: Istitute a far-reachig review of curret ifrastructure regulators to clarify roles, stregthe accoutability, update legislatio ad regulatios, ad reform istitutioal desig. Establish a uit i the Presidecy (Moitorig ad Evaluatio) to udertake periodic regulatory impact reviews, ad to provide advice ad support to regulatory authorities. 139

152 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The eergy sector: empowerig South Africa Visio By 2030, South Africa will have a eergy sector that promotes: Ecoomic growth ad developmet through adequate ivestmet i eergy ifrastructure ad the provisio of quality eergy services that are competitively priced, reliable ad efficiet. Local productio of eergy techology will support job creatio. Social equity through expaded access to eergy services, with affordable tariffs ad well targeted ad sustaiable subsidies for eedy households. Evirometal sustaiability through efforts to reduce pollutio ad mitigate the effects of climate chage. Specifically, South Africa aims to have adequate supplies of electricity ad liquid fuels to avoid disruptios to ecoomic activity, tra sport ad welfare. Although likely to be higher i future, prices for eergy services will still be competitive with South Africa s major tradig parters. I additio, more tha 95 percet of the populatio should ejoy access to electricity withi 20 years. To realise this visio, South Africa s eergy system eeds to be supported by effective policies, istitutios, goverace systems, regulatio ad, where appropriate, competitive markets. Storylies I 20 years, South Africa s eergy system w ill look very differet: coal will cotribute much less to primary eergy eeds, while gas ad reewable eergy resources, especially wid, solar ad imported hydroelectricity, will play a much larger role. Electric vehicles will be widely used. The ecoomy s eergy itesity will cotiue to declie, ad eergy-efficiet optios will be widely available ad icreasigly adopted. The coutry s eergy market will be more diverse, with greater opportuities for ivestors to provide iovative ad sustaiable eergy solutios withi credible ad predictable regulatory frameworks. The eergy reality Over 70 percet of South Africa s primary eergy derives from coal, as does more tha 90 percet of electricity ad a third of liquid fuels. The ecoomy is electricity itesive, ad as a result, South Africa emits more tha its share of carbo dioxide ad cotributes disproportioately to climate chage. The high level of carbo emissios is exacerbated by the size of the eergy-itesive miig sector. I the past, domestic electricity has also bee uderpriced, resultig i eergy-itesive beeficiatio ivestmets. Eergy itesity is oe ad a half to four times higher tha the Orgaisatio for Ecoomic 140

153 CHAPTER 4: ECONOMIC INFRASTRUCTURE Cooperatio ad Developmet average (depedig o whether GDP is measured i omial or purchasig power parity terms). Adequate supply is a key cocer, especially for electricity ad liquid fuels. South Africa experieced multiple power failures betwee 2005 ad 2008, resultig i lower ecoomic growth ad widespread icoveiece. While the 2009 recessio depressed demad, supply-demad balace remais tight. Similarly, the distributio of petrol, diesel ad gas has ot always bee reliable. South Africa has a mixed-eergy ecoomy, wi th varyig patters of state owership ad regulatio across subsectors. The electricity sector is domiated by the state-owed utility Eskom (accoutig for 96 percet of productio) ad is regulated by the Natioal Eergy Regulator of South Africa, which is also resposible for the regulatio of gas ad petroleum pipelies. Private petroleum compaies (with the exceptio of PetroSA) domiate the liquid fuels sector, ad wholesale ad retail prices are regulated. I cotrast, coal prices are deregulated ad the idustry is privately owed. Private firms produce uraium, although the coutry s oly uclear power plat is owed by Eskom. There is a uclear regulator (mostly addressig safety ad licesig issues) ad the Natioal Ports Regulator. Through Traset, the state also ows ad operates most of the ports (except the Richards Bay Coal Termial a d some private termial cocessios), the atioal rail etwork, ad the petroleum pipelies that trasport petroleum crude ad product to Gauteg ad surroudig areas. The quality of market competitio ad regulatio i the eergy sector has bee far from optimal. The ecoomy requires icreased competitio i electricity geeratio, alog with better regulatio of price, supply ad quality i electricity ad petroleum products. Ieffective policy-makig ad regulatio i trasport, especially rail, has cotributed to cripplig costraits. Lack of rail capacity has blocked the expasio of coal exports. The privately owed Richards Bay Port has export ca pacity oe-third higher tha existig rail capacity from the coal fields. Perhaps the most successful achievemet i the eergy sector over the past 15 years has bee the Natioal Electrificatio Programme. I the early 1990s, two out of three South Africas did ot have electricity; ow early 80 percet of the populatio has access. The prices ad supply of paraffi, liquefied petroleum gas ad alterative household fuels, icludig sustaiable supplies of biomass ad reewable eergy sources, are far from optimal, eve though paraffi ad liquefied petroleum gas prices are regulated. Too may households rely o costly iferior fuels that also pose health risks. 141

154 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Key policy issues ad plaig priorities Policy ad plaig issues are addressed below i each of the key eergy sources, followed by a discussio o trade-offs ad phasig cosideratios to Balace domestic coal supply security with growth i exports Give fixed ivestmet ad low direct costs, coal will cotiue to be the domiat fuel i South Africa over the ext 20 years. Iteratioally, South Africa raks fifth as a coal producer ad exporter. South Africa s larges t ecoomically recoverable eergy resource is coal, which is also its top mieral export earer. A atioal coal policy is urgetly required, based o a realistic estimate of re serves, the sustaiable supply of domestic coal eeds for power, sythetic fuels ad chemicals, ad sustaiable expasio of coal export markets. A strategically egotiated wa y to reduce carbo itesity will help South Africa cotribute to mitigatig climate chage, while respodig to the imperatives of growig the ecoomy, creatig employmet ad reducig poverty. Policy ad regulatory ucertaity i the miig sector, too little ivestmet i ew ifrastructure, ad a failure to maitai existig ifrastructure have all cotributed to the coal idustry s stuted developmet. As coal reserves i the cetral basi dimiish, a ew rail corridor to the Waterberg coal field will eed to be developed withi a overall strategic ifrastructure ivestmet pla, which will also address additioal water supplies for the Lephalale area. Trasport ifr astructure for the cetral coal basi ad the coal lie to Richards Bay also eeds stregtheig. With targeted focus, rail capacity will match port export capacity by Other possibilities iclude a lik with Botswaa coal deposits, ad a tras-kalahari rail coectio, liked to expaded port capacity at Walvis Bay i Namibia. More formal structures will foster collaborative actio betwee govermet, Eskom, Traset, Sasol, idepedet power producer s ad the coal idustry to optimise domestic coal use while maximisig coal exports. Collaboratio i the earlier developmet of the railway from the cetral basi to Richards Bay ad the developmet of the Richards Bay port offers a valuable lesso. Collaboratio is also eeded to address the coal idustry fragmetatio that has accompaied black ecoomic empowermet i the sector. As a result, few smaller compaies have the fiacial muscle to sig log-term take-or-pay cotracts with Traset to icetivise ivestmets i iit iatives that address railway lie capacity expasio. Govermet ad the private sector ca work together to solve this impasse ad maximise ecoomic value from this idustry. The security of coal supply for some existig coal power statios is icreasigly uder threat. Coal miers are uwillig to sig ew log-term cotracts with Eskom, as they ca get much higher returs through exports to Idia ad other Asia coutries. A balace has to be foud betwee exports ad local supply security, with a fair deal 142

155 CHAPTER 4: ECONOMIC INFRASTRUCTURE betwee govermet ad coal idustry leaders. Detailed plaig will determie the best use of specific resources, backed by coditios set i miig liceces. It may be ecessary to istitute export permits for particular grades of coal as a temporary measure, with future eergy ivestmets iflueced by coal prices that reflect iteratioal market price, ad possible carbo taxes. Cleaer coal techologies will be supported through research ad developmet ivestmets ad techology-trasfer agreem ets i ultra-supercritical coal power plats, fluidised-bed combustio, udergroud coal gasificatio, itegrated gasificatio combied cycle plats, ad carbo capture ad storage, amog others. Explore gas as a viable alterative to coal (ad uclear) Substitutig gas for coal will help cut South Africa s carbo itesity ad greehouse gas emissios. Possibilities iclude coal seam methae, shale gas resources i the Karoo basi ad imports of liquefied atural gas. Experimets are uder way to assess the potetial for usig methae gas associated with coal deposits. Udergroud coal gasificatio techology is also beig developed. These resources ad techologies could make a sigificat cotributio to South Africa s eergy eeds, while reducig greehouse gas emissios ad carbo itesity. Accordig to the Uited States Eergy I formatio Admiistratio (2011), techically recoverable shale gas resources i South Africa form the fifth largest reserve globally. Cofirmatio of recoverable reserves is still ecessary through further drillig of test wells. Shale gas has the potetial to cotribute a very large proportio of South Africa s electricity eeds. For example, exploitatio of a 24 trillio cubic feet resource will power about 20 gigawatts (GW) of combied cycle gas turbies, geeratig about GWhours of electricity per year. This is more th a half of curret productio. South Africa will seek to develop these resources, provided the overall evirometal costs ad beefits outweigh the curret costs adbeefits associatedwith South Africa s depedece o coal, or with the alterative of uclear power. A global market has developed for liquefied atural gas imports, the prices of which are icreasigly deliked from oil prices. With South Africa eedig to diversify its eergy mix, liquefied atural gas imports ad the associated ifrastructure could provide ecoomic ad evirometally positive optios for power productio, gas-to-liquids productio (at Mossgas) ad use of idustrial eergy. Diversify power sources ad owership i the electricity sector Key elemets addressed below relate to de carboisig power sources, the eed to icrease private participatio ad ivestmet i this field, issues of distributio ad pricig, ad wideig access to affordable electricity services for the poor. 143

156 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Balace supply security, affordability ad climate chage mitigatio aspiratios i the power sector South Africa will eed to meet about megawatts (MW) of ew power demad betwee ow ad A further MW of old power capacity will be retired. As a result, about MW of ew power capacity eeds to be built. Eskom is buildig two more coal-fired power statios, each with capacity of about MW leavig a clear gap betwee future eeds ad committed ivestmets. Power geeratio plats cotribute about half of South Africa s curret greehouse gas emissios. If the sector follows the proposed carbo sceario of peak, plateau ad declie, the balace of ew capacity will eed to come from idustrial cogeeratio, gas, wid, solar, imported hydroelectrici ty, ad perhaps a uclear programme from aroud Aggressive demad-side programmes will also be ecessary. The Departmet of Eergy s Itegrated Resource Pla ( ) lays out these optios i a policy-adjusted sceario that seeks a trade-off betwee least-cost ivestmet, techology risks, water-use implicatios, localisatio ad regioal imports. The pla icludes MW of ew reewable eergy capacity by 2030 the largest evisaged i ay Africa coutry to date. Further refiemets ad regular updates of the pla will be ecessary to track demad ad eergy-efficiecy gais, ad to assess whether ew supply techologies are deliverig timely ad affordable power. To esure supply security, a back-up pla is required, with a flexible portfolio of icremetal, rapidly implemetable respose measures. Improved data collectio, stakeholder ivolvemet ad publicatio systems will be ecessary for more effective plaig. Icreasig the diversity of South Africa s electricity productio eergy mix is importat ot just for mitigatig climate chage but also for ehaced supply security. For example, combied cycle gas turbies offer flexibility i the power system ad complemet variable supply from reewable eergy sources. Furthermore, i addressig electricity supply security ad climate chage, South Africa will also explore regioal optios. Developig the regio s hydroelectric resources is a priority, first i coutries such as Zambia ad Mozambique. Botswaa, Zimbabwe ad Mozambique have cosiderable udeveloped coal reserves. The Souther Africa Developmet Commuity (SADC) has very low per capita carbo emissios. This should be weighed agaist the potetial for accelerated ecoomic developmet that lies i exploitig abudat power resources, coupled with ehaced iter-regioal electricity trade. Ultimately, South Africa s electricity pla eeds to balace decarboisatio of the power sector ad icreased use of ew ad reewable eergy techologies (alogside their associated higher ivestmet costs) with esta blished, cheaper eergy sources that offer prove security of supply. As South Africa seeks a appropriate balace betwee respodig to climate chage cocers ad employig least-cost power geeratio techologies to propel ecoomic growth, it will adopt a least-regret approach. South Africa eeds to remai competitive both i the trasitio to ad i a low-carbo future. 144

157 CHAPTER 4: ECONOMIC INFRASTRUCTURE Wide participatio ad accelerate ivestmet i electricity sector While it is govermet policy that idepedet power producers should complemet Eskom s geeratio ivestmets, South Africa has yet to see the umber ad scale of private ivestmets i other regios of the world, icludig other Africa coutries. Give the amout of ivestmet eeded, as well as Eskom s stressed balace sheet ad limited fiscal resources private ivestmet will eed to be accelerated. Rapid progress is critical i likig power expasio plas with clear allocatio of ew build opportuities betwee Eskom ad idepedet power producers. It is also importat to iitiate timely, iteratioa lly competitive biddig processes for ew capacity. There is a cetral eed to build istitutioal capacity to ru effective procuremet processes ad to egotiate robust cotracts. South Africa could lear from Keya, which has allocated resposibilities clearly ad built appropriate capacity to the extet that it has a eviable recordi competitively procurig adcotractig idepedet power producers. Give time costraits ad the costs of delayed decisios, govermet eeds to quicke its plas to establish a idepedet market ad system operator, which would address the issues above ad, preferably, also icorporate trasmissio assets. Remaiig regulatory ucertaities eed to be resolved, icludig questios of idepedet power producers sellig to customers other tha Eskom, issues of wheelig over the grid, ad rights to trade electricity. Electricity distributio A reliable electricity supply depeds o a sufficiet umber of fuctioig power statios ad a reliable grid etwork to trasport electricity to users. Muicipalities distribute about half of South Africa s electricity, with icreasig local supply failures. Previous govermet policy icluded trasferrig muicipal distributio assets to six regioal electricity distributors. Little progress was made i the past 10 years, ot least because a costitutioal amedmet shiftig resposibility for electricity distributio from local to atioal govermet was abadoed i the face of icreasig oppositio. Durig this policy hiatus, muicipal ivestmets i ifrastructure have bee iadequate, with maiteace ad refurbishmet backlogs ow exceedig R30 billio. Give these realities, a more pragmatic solutio would be to ivest i huma ad physical capital i the 12 largest distributors, which accout for 80 percet of the electricity distributed by local govermet. This is a high priority, ad the programme eeds to be drive atioally i collaboratio with these muicipalities. Eskom, together with metropolitas ad cities, could take over distributio o a volutary basis from smaller, poorly performig etities. Medium-sized muicipalities performig reasoably could cotiue with delivery. 145

158 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN To eable improved demad-side maagemet ad future eergy savigs, the ext 20 years will see smarter maagemet of electricity grids through iovative cotrol systems ad smart-meters. More distributed geeratio systems are likely, both to meet local demad ad to feed back ito the grid. Electricity prices Electricity price icreases are ecessary to fiace Eskom ad private ivestmet i ew capacity. Govermet has probably reached th e limit of its fiscal ad guaratee support for Eskom. Eskom s access to pr ivate debt is also becomig more difficult ad expesive. Failure to raise electricity prices to reflect costs will result i Eskom beig uable to meet debt obligatios. Maiteace ad ivestmet programmes will be delayed, ad, ultimately, the lights will go out. There are, however, cocers that shar p price icreases could dampe ecoomic growth ad developmet. Ivestmets i geeratio plat ad etworks are typically capital itesive ad lumpy. Maagemet of debt-to-equity ad iterest cover ratios ofte requires steep price icreases. Howeve r, after the majority of the debt is amortised, utilities could receive sigificat free cash flows. It is importat that the regulator establishes appropriate mechaisms to pre-fud capital ad to create smooth tariff paths by takig a log-term perspective, so that cosumers face more predictable ad maageable price rises. There are clear lessos from the way the Tras-Caledoia Tuel Authority smoothed water tariffs. Devisig ad targetig special tariffs for low-icome families is a further challege. Free basic electricity ad cross-subsidised tariffs are already available for may low-icome households, but eed to be applied more cosistetly ad comprehesively to shield poor cosumers from high price icreases. Sice the costs of these subsidies will become sigificat i future, ay icreases i their level, or a ew subsidy mechaism, should be assessed carefully for fiscal implicatios. Electricity prices could also be affected by carbo taxes. However, give the existig structure of the electricity market, together with Eskom s domiat positio, carbo iput taxes o power geeratio are ulikely to lower carbo itesity. The regulator ad Eskom will be forced to pass these additioal costs directly to captive cosumers, who do ot have the choice of alterative, cleaer electricity supplies. I additio, high electricity prices, urelated to carbo taxes, are already ecouragig cosumers to coserve eergy. Nevertheless, it may still make sese to have a ecoomy-wide carbo tax, coupled with coditioal exemptios i some sectors (or rebate or recyclig schemes), to sed a broad sigal to the idustry ad cosumers that they are livig i a carbo-costraied world. To achieve meaigful shifts i techologies for electricity geeratio, it is importat that this tax is itroduced alogside direct low-carbo policy actios. A coditioal carbo tax exemptio could be applied to the electricity sector, provided it 146

159 CHAPTER 4: ECONOMIC INFRASTRUCTURE progressively moves to a lower carbo geeratio mix, as madated i the Itegrated Resource Pla. This would sigificatly icrease reewable eergy ad diversify geeratio sources. Natioal electrificatio ad eergy poverty The eergy eeds of poor households are still iadequately met. Betwee a fifth ad a quarter of South Africas still have o access to the grid. The electrificatio programme has slowed ad the origial goal of uiversal access by 2014 is ot feasible. The programme will eed a thorough review of targets, plaig, techology choices, fudig ad implemetatio. Subject to costs, South Africa could aim for at least 95 percet coverage by 2030, with alterative off grid optios offered to households for whom a coectio is impractical. Eve poor households with access to electricity ca afford to use oly modest amouts, ad rely o other sources such as paraffi, gas ad fuel wood. Useful research i the 1990s aroud household eergy has had little follow-through. This work should be exteded to develop itegrated programme s to tackle eergy poverty, icludig sustaiable productio of fuel wood ad its safe combustio i efficiet stoves i rural areas. Re-assess the desirability of uclear power ivestmets Accordig to the Itegrated Resource Pla, mo re uclear eergy plats will eed to be commissioed from 2023/24. Although ucle ar does provide a viable base-load alterative, South Africa eeds a thorough ivestigatio o the implicatios of uclear eergy, icludig its costs, safety, evirometal beefits, localisatio ad employmet opportuities, uraium erichmet, fuel fabricatio, ad the dagers of weapos proliferatio. South Africa will face major challeges i fiacig the capital costs of a uclear fleet. Nuclear plats ivolve massive, lumpy ivestmets (give that a sigle uit ca ow be as large as MW). It will also be extremely challegig to build the istitutioal ad skills base for ruig ew-geeratio uclear plats. All possible alteratives eed to be explored, icludig the use of shale gas, which could provide reliable base-load ad mid-merit power geeratio through combied cycle gas turbies. Developig uclear power plats requires log lead times. A maximum of oe year remais to agree o a decisio-makig process for ew uclear ivestmets. Delay ivestmet plas i a ew petroleum refiery South Africa faces several related pressures o liquid fuels over the ext decade. Refied fuel products are eeded to ru the ecoomy. Much of the demad is o the Highveld, far from the coast. Over time, South Africa should improve the stadards of fuels, for health reasos ad more efficiet egies, thereby reducig fuel demad ad carbo 147

160 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN emissios. There are costraits o the coutry s ability to emit carbo dioxide or carbo equivalets. Fuel costs eed to reflect all costs related to the market ad the exteral eviromet. At the same time, udue fuel price icreases should be avoided, as these will have a egative impact o the ecoomy through higher costs. South Africa produces about 5 percet of its fuel eeds from gas, about 35 percet from coal, ad about 50 percet from local crude oil refieries. About 10 percet is imported from refieries elsewhere i the world. South Africa has a sizeable capital stock ad maagemet capacity to produce fuel from gas. However, gas stocks from existig fields are decliig ad to use this capital stock to the poit where it is ot commercially viable is ot advisable. Istead, feedstocks eed to be foud to support cotiued productio ad, ideally, to secure sufficiet stocks to icrease productio. Without feedstock costraits, productio ca icr ease by about a third through major ew ivestmet i the Mossgas plat. There are several optios to secure feedstoc ks. Ivestig i gas fields close to or adjacet to existig fields i the Souther Cape is the best optio, as margial costs are lower. This will also allow further exploitatio of existig fields, maximisig use of existig capital. PetroSA is best placed to le ad this ivestmet, give the existig capital it holds ad its maagemet abilities ad experiece. I the loger term, the Mossel Bay refiery could use either liquefied atural gas imports or Karoo shale gas, if it becomes available. Policy-makers face a tough decisio, because South Africa has ru out of refiig capacity. The coutry ow has to import a share of its refied fuel eeds. There are five optios to deal with this: Build a ew oil-to-liquid refiery. Build a ew coal-to-liquid refiery. Upgrade the existig refieries or allow sigificat expasio of oe or more of the existig refieries, or both. Import refied product. Build a refiery i Agola or Nigeria ad buy a share of the product of that refiery. There are o easy aswers each optio has sigificat disadvatages, risks ad advatages. To make a decisio, it is ecessary to assume where refiig margis will be i 15 years. Refiig margis are quite low, ad are likely to remai so for at least aother decade, give a surplus i refied product. If this assumptio is valid, South Africa will have to export the surplus 1 product at a loss, covered by local fuel cosumers through the basic fuel price. This is ufair, politically risky, ad ecoomically reckless. It also highlights the importace of cosiderig alteratives. 1 A surplus will arise i the early years as a ew refiery ivestmet will eed to be large eough to capitalise o ecoomies of scale ad will iitially produce more tha eeded i the domestic market. 148

161 CHAPTER 4: ECONOMIC INFRASTRUCTURE Optio Advatages Disadvatages New oil-toliquid refiery New coal-toliquid plat Upgrade existig refieries Import refied product Parter with Agola or Nigeria -A degree of fuel security -The capacity to export -Idustrial exteralities (especially i plastics) arisig from the cocetratio of refiig capacity ad expertise -Potetial to move to cleaer fuel stadards more quickly, ad at lower cost -Would allow for use of idigeous ad abudat feed stocks -Scale makes barrels per day feasible - South Africa has techology ad maagerial expertise i this area -Will use the preset oil compaies capacity ad skills set -Will allow South Africa to keep Durba as a petrochemicals hub -Will lower costs, due to ew pipelie i Durba -The risk is largely bore by the private sector -Refiig margis are low at preset, so this optio is cheaper -This will ot cosume sigificat capital, i the cotext of curret capital costraits -These coutries eed refied products ad have the iput products -South Africa will co-fiace, thereby sharig risks -South Africa would probably have to export the surplus product at a loss (or with local fuel users subsidisig exports) -The size of the project leads to icreased risk ad the potetial for sigificat macroecoomic implicatios (this would eed to be about 400 barrels per day, to achieve ecoomies of scale) -A greefields site will eed to be foud i Durba or the product will eed to be trashipped from Coega to Durba, ad the piped to Johaesburg, icreasig costs -Some existig refieries may eed to be closed, riskig loss of skills ad maagerial kow-how -The process is heavily carbo itesive ad with a carbo tax of US$25 a toe, the ecoomics look less favourable -It is a large capital-itesive ivestmet i a capital-costraied coutry -This will require sigificat govermet subsidies, either directly or idirectly -Durba is a desely populated city ad there are already evirometal cocers about the site -Oil compaies will wat to pass both risks ad costs o to the public sector ad/or cosumer -The space for a major upgrade may ot exist -Fuel security is lower with this optio give depedecies -If refiig margis rise quickly, the import bill ad curret accout deficit will be egatively affected -Political risk associated with these optios is high -The cost of buildig i these coutries is high, give limited skills, ifrastructure ad poor goverace 149

162 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The least risky ad most cost-effective optio seems to be cotiued importig of a share of refied product eeds, util the coutry reaches a stage where it ca absorb the output of either a ew refiery or a major upgrade of a existig refiery. It is evisaged that South Africa will cotiue to import, takig a decisio o the ext steps by 2016 or 2017 at the latest. Timig is importat, give lead-time requiremets to develop a ew refiery (estimated at about eight to 10 years with outputs of a ew refiery eeded by 2025 to 2028, if o other optios are implemeted). Decisios eed to cosider fuel security, employmet, the curret accout, the rad, iterest rates, fuel stadards ad competitio. Bio-fuels are also a possibility, but because South Africa is largely a dry coutry, productio is more likely to be located elsewhere i the souther Africa regio. If South Africa adopted a cosistet carbo price across the ecoomy of about R100 per toe of carbo, the carbo cost of fuel used for trasport would traslate ito a icrease of oly 5 percet at the pump compared to 20 percet for the electricity sector. This would sed a weak sigal to cosumers to coserve petrol or diesel. It would be far more effective to tax vehicle sales, based o their carbo emissio levels. This would ecourage cosumers to opt for more fuel-efficiet vehicles, cuttig emissios from liquid fuels. Over the ext 20 years, South Africa ca expect to see a shift towards electric vehicles, makig it eve more vital to decarboise electricity geeratio. Greater use of public trasport will also be ecouraged, as outlied i the trasport sectio of this report. Leverage cross-sector syergies for itegrated eergy plaig The above policy ad plaig priorities may seem sector-specific ad supply-side focused, but the eergy idustry is still predomiatly orgaised i idividual supply sectors. It is therefore ecessary ad useful to outlie actios eeded i specific sectors. However, eergy ad fuels may be substituted ad demad-side measures may substatially reduce eergy eeds. South Africa s eergy plaig system eeds to recogise these facts ad become more holistic ad itegrated. It is difficult for the Departmet of Eergy to deal effectively with these cross-cuttig issues, icludig istitutioal capacity, goverace, competitio, regulatio, ivestmet, ad ecoomic, social ad evirometal impacts. The commissio may play a coveig role i eablig these coversatios ad actios across differet govermet departmets, idustry ad cosumers. 150

163 CHAPTER 4: ECONOMIC INFRASTRUCTURE Trade-offs Key trade-offs to cosider whe deliberatig South Africa s future eergy mix iclude the eed to: Balace the desire to move to a lower carbo-itesive power geeratio mix (with more expesive ad variable reewable eergy techologies) with the imperative of maitaiig competitive electricity prices ad secure electricity supply to power ecoomic growth ad developmet. Maage the desirability of movig to a less carbo- ad eergy-itesive ecoomy with the priority of maximisig the beefits from South Africa s extraordiary mieral resources. The coutry eeds to explore credible ways to improve the eergy efficiecy of miig ad mierals processig, while expadig mieral extractio, beeficiatio ad exports. What is the appropriate mix of beeficiatio versus the less eergy- ad carboitesive export of uprocessed mierals? Balace state owership of eergy eterprises ad utilities with effective regulatio ad the structural ad market reform ecessary to achieve greater competitio ad private sector ivolvemet. Cotrast the potetial for job creatio as the eergy system is trasformed (both i terms of the ature ad volume of jobs) with possible job losses resultig from a move away from the coal miig idustry. Jobs created for a ew eergy system may require more skills, potetially supportig the iteratioal competitiveess of locally maufacturig eergy equipmet. Phasig The phasig of ecessary activities for the move to a differet eergy cotext by 2030 is icluded below accordig to short-, medium- ad log-term priorities: Short term (ext five years) Develop a atioal coal policy ad ivestmet strategy based o a realistic estimate of reserves, the sustaiable supply of domestic coal eeds for power ad idustry, ad the sustaiable expasio of coal export markets withi the cotext of dimiishig carbo itesity. Ivest i a ew heavy-haul rail corridor to the Waterberg coal field, withi the cotext of a itegrated strategic ifrastructure ivestmet pla for the Lephalale area (this will address, amog other factors, the additioal water supplies eeded). Stregthe rail ifrastructure for the cetral coal basi ad the coal lie to Richards Bay. Govermet will broker a partership betwee Traset ad the private sector for these projects. Forge a compact betwee govermet ad coal idustry leaders that balaces domestic coal eeds with export opportuities. Detailed plas will determie the optimal use of specific coal resources, backed by coditios set i miig liceces. Export permits for certai grades of coal will be 151

164 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN istituted as a temporary measure if coal supply security for domestic power productio is affected by growig exports of lower quality coal to Idia ad other easter coutries. Determie ecoomically recoverable coal seam ad shale gas reserves through exploratory drillig. Evirometal ivestigatios will cotiue to ascertai whether sustaiable exploitatio of these resources is possible. Eskom will commissio the Medupi coal power statio ad the Igula pumped storage plat. I additio, at least MW of reewable eergy will be cotracted from the private sector, supported by umerous eergyefficiecy improvemets. The Idepedet System ad Market Operator Act will be passed, followig which Eskom s system operator, plaig, power procuremet, purchasig ad cotractig fuctios will be trasferred to a idepedet SOE. Plas will also be established to trasfer Eskom s trasmissio assets ito this etity. Capacity will be built to support the developmet of dyamic, frequetly updated, idicative power ad trasmissio expasio plas ad the effective procuremet ad cotractig of idepedet power producers (icludig those able to provide reewable eergy techologies). Amed the Natioal Eergy Regulator Act (2004) ad the Electricity Regulatio Act (2006) to esure a more efficiet ad predictable regulatory eviromet. Rig-fece the electricity distributio busiesses of the 12 largest muicipalities, represetig 80 percet of muicipal distributio. Resolve maiteace ad refurbishmet backlogs ad develop a fiacig pla, alogside ivestig i huma capital. Develop a ew ad sustaiable atioal electrificatio pla. Ivestigate the implicatios of greater uclear eergy use, icludig the potetial costs, safety, evirometal beefits, localisatio ad employmet opportuities, uraium erichmet aspects, fuel fabricatio, ad the dagers of weapos proliferatio. A decisio-makig process to support the assessmet of possible ivestmets i uclear eergy (or alterative baseload optios) will be defied. Upgrade existig refieries to esure they meet ew fuel quality stadards. Imports will cotiue, esurig that the growig deficit i petroleum products is met. Petroleum refiers ad importers will hold strategic stocks of sufficiet size to esure supply security. The Natioal Plaig Commissio, i partership with the Departmet of Eergy, will covee a iterdepartmetal process to support developig ad regularly updatig itegrated eergy plas. 152

165 CHAPTER 4: ECONOMIC INFRASTRUCTURE Medium term (to 2020) By 2020, it is evisaged that coal rail capacity will match coal port export capacity. Eskom will have commissioed the Kusile coal-fired power statio by At least MW of reewable eergy will be cotracted, mostly from private idepedet power producers. Liquefied atural gas ifrastructure will be i place to power the first combied cycle gas turbies. Targetig of pro-poor tariff measures will be improved extedig comprehesively to all who qualify. Electrificatio coverage will reach 90 percet, with itegrated household eergy supply strategies allowig affordable access to complemetary eergy sources, icludig solar, water ad space heatig. A decisio will be take o whether South Africa should cotiue with petroleum product imports or ivest i a ew refiery. Log term (to 2030) By 2030, more tha MW of reewable eergy will be cotracted, icludig a icreasig share from regioal hydroelectricity. Rail ad port capacity will be further ehaced to support icreased coal exports. About MW of old Eskom coal power statios will have bee decommissioed, but close to MW of ew coal capacity will be cotracted some sourced from other souther Africa coutries (subject to South Africa s commitmets i climate chage egotiatios). Cleaer coal techologies will be promoted through research ad developmet ivestmets ad techology trasfer agreemets i, amog others, the use of ultra-supercritical coal power plats, fluidised-bed combustio, udergroud coal gasificatio, itegrated gasificatio combied cycle, ad carbo capture ad storage. The extet of ecoomically recoverable coal seam ad shale gas reserves will be uderstood. Subject to acceptable evirometal cotrols, these gas resources, supplemeted by liquefied atural gas imports, will begi to supply a growig share of power productio. This could potetially avoid the eed for further base-load uclear geeratio. Risig eergy prices, a ecoomy-wide carbo tax, ad sector exemptios, coupled with direct actio (such as the Itegrated Resource Pla i the electricity sector, scaled taxes o the sale of high-emissio vehicles, equipmet ad buildig stadards, ad targeted eergy-efficiecy programmes) will drive South Africa s eergy sector o a path of lower carbo ad eergy itesity. By 2030, 95 percet of South Africas will have access to electricity. Electric vehicles will be widely used. 153

166 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Water resources ad services Visio Before 2030, all South Africas will have affordable access to sufficiet safe water ad hygieic saitatio to live healthy ad digified lives. Stadards of service provisio will vary across the coutry, however, with differetiatio betwee desely built-up urba areas ad scattered rural settlemets. While local govermet will retai resposibility for esurig adequate service provisio i its areas, regioal utilities will provide services where muicipalities have iadequate techical ad fiacial capacities. Water supply ad saitatio services (water i pipes) deped o the availability of adequate water resources ad, if ot maaged properly, ma y damage the atural resource (water i rivers ad udergroud). For this reaso, the authorities resposible for water resource maagemet will coordiate their activities with local service providers, ad moitor ad support them. I 2030, the coutry s ecoomic ad social developmet will reflect a uderstadig of ad a aligmet with available water resources. As a result, all mai urba ad idustrial cetres will have a reliable supply of water to meet their eeds, while icreasigly efficiet agricultural water use will support productive ad iclusive rural commuities. The atural water eviromet will be protected to prevet excessive abstractio ad pollutio. Water should be recogised as a foudatio for activities such as tourism ad recreatio, further reiforcig the importace of its protectio. I additio, where rivers are shared, South Africa will esure that it cotiues to respect its obligatios to eighbourig coutries. The water reality Chages i the water sector sice 1994 are evidet i water-related policy, practice, istitutioal frameworks, role players adoutcomes. Policy shiftedfrom a focus o ifrastructure developmet to a more holistic water resource maagemet approach that addresses both the water demad ad supply. The madate for these reforms came from the priority i 1994 to esure that all South Africas gaied equitable access to at least a safe ad reliable basic water supply ad digified, hygieic saitatio. Betwee 1994 ad 2010, the umber of South Africas with access to basic water supplies icreased from 23 millio to 46.3 millio (59 percet to 93 percet of the populatio), while the umber with improved saitatio icreased from 18.5 millio to 39.4 millio (from 48 percet to 79 percet). 2 2 Departmet of Water Affairs (2010). Statistical overview of water sector. Departmet of Water Affairs. 154

167 CHAPTER 4: ECONOMIC INFRASTRUCTURE Ehaced water resource maagemet ad ifrastructure developmet uderpied this progress. Improved ifrastructure ive stmets have also formed a key part of delivery sice 1994, addressig problems resultig from earlier uderivestmet. Chages iclude establishig istitutios to focus o this task, such as the Tras-Caledo Tuel Authority, ad critical parterships withi the regio, such as the Lesotho Highlads Project. However, implemetig well crafted policies ad strategies remais a challege. Deterioratig water quality is a particular problem. Although much attetio has focused o potetial miig pollutio i Gauteg, more serious ad systemic problems are emergig as a result of poorly fuded ad maaged muicipal wastewater works, as well as the rapid expasio of miig, otably i the Mpumalaga Highveld. While sigificat progress has bee made i esurig greater access to water, backlogs still exist. The commissio s Diagostic Report also otes that access to potable water icreased from 84.5 percet i 2002 to 89.3 percet i However, variatios betwee regios are great oly 75 percet of households i the Easter Cape have access to potable water (although this is up from 56.8 percet i 2002). 3 While water restrictios due to drought have bee limited i recet years, the real test of the resiliece of the water resource maagemet system will oly come whe there is a severe drought. For example, Australia is just recoverig from a eight-year drought that highlighted may failigs i its supply ad maagemet systems. Storylies Maage, moitor ad protect water resources for growth ad sustaiability As water use becomes more itesive, maagig this resource must become more effective ad should iclude users so that they uderstad emergig costraits ad opportuities. For effective water supply plaig, developmet ad operatio, the resource ad its use should be moitored regularly. I additio, regulatig water s various uses is importat (icludig for waste disposal). To address these eeds, the resposible admiistratio eeds a clear ad coheret legislative ad policy foudatio, ad the support of appropriate scietific ad techological istrumets, uderpied by a strog research ad developmet capacity. As the atio s water resources are extesively itercoected ofte flowig across political boudaries oversight of its maagemet ad admiistratio should remai atioal. But, because may issues are locally specific, some decetralisatio of resposibilities is required. It is at local level that users ca best be ivolved. The cotext i which water resources are maaged will chage over time, both i terms of physical water availability (icludig chages associated with short-term droughts, floods ad log-term climate chage) ad as a result of societal pressures from urbaisatio ad ecoomic growth. Give this reality, it is critical that the maagemet 3 Natioal Plaig Commissio (2011). Diagostic Report. 155

168 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN approach is regularly reviewed publicly. A statutory process for this already exists, requirig a atioal water resource strategy to be produced every five years, iformed by local catchmet maagemet strategies ad local govermet s water services developmet plas (structured as part of the itegrated developmet plas). If this process is properly implemeted, priority areas for itervetio will be idetified. Some of these are already evidet there is a urget eed for a coheret pla to esure the protectio of water resources ad the broader eviromet i the Mpumalaga Highveld coal fields, upstream of the Vaal ad Loskop dams, as well as i the Lephalale area. Give pressures o the eviromet ad the rage of developmet demads, curret water allocatios i the Olifats River water maagemet area will also eed to be revisited. Local plaig should also esure that groudwater resources are optimally used, before authorities resort to large regioal ifrastructure projects to supply local eeds. Assure water supplies by ivestmet ad reuse A structured plaig process has already idetified the actios ecessary to recocile the water demads of major urba ad idustrial cetres with potetial supplies up to These plas eed to be traslated ito programmes of ivestmet that are implemeted at the right time, to avoid a situatio where supply costraits egatively affect society ad its ecoomy. Large i vestmets i regioal systems could be udertake by a specialised public agecy a atioal water resources ifrastructure agecy, perhaps modelled o the South Africa Natioal Roads Agecy Limited. This agecy would build o the foudatio provided by the Tras-Caledo Tuel Authority, which is already supportig the implemetatio of several large projects. However, the atioal Departmet of Water Affairs should cotiue to lead the plaig process, reviewig ad updatig these programmes every five years to esure coordiatio with other log-term plaig processes i ecoomic ad ifrastructure sectors. Coservatio ad demad maagemet Reducig demad, rather tha just icreasig supply, is importat. Curret plaig assumes that it will be possible to achieve a average reductio i water demad of 15 percet below busiess-as-usual levels i urba areas over the period leadig to Specific savigs estimates ca be made i differet localities. Achievig demad reductios o this scale will require active programmes to reduce water leakage i distributio etworks, ad to icrease the efficiecy of water use by domestic ad commercial water users. Agriculture uses the largest volume of water (albeit at far lower levels of reliability tha urba ad idustrial uses). As a result, the farmig sector will have to icrease the efficiecy of its water use to expad productio ad allow trasfers to other users i water-scarce areas, as well as for expasio i irrigated agriculture. The commissio proposes a dedicated atioal programme to provide support to local ad sectoral 156

169 CHAPTER 4: ECONOMIC INFRASTRUCTURE efforts to reduce water demad ad improve water-use efficiecy. Water-savig ad demad-maagemet projects should be cosidered as part of the overall rage of water supply ivestmet programmes. These ca be compared with supply expasio projects, ad should be prioritised accordigly, based o their merits. Water reuse ad desaliatio optios to meet local eeds Oe strategy to icrease the amout of water available for use, while protectig the resource, is to reuse water. There is extesive idirect reuse of water i ilad areas, where muicipal ad idustrial wastewater is reitroduced ito rivers after treatmet. Sigificat areas ad idustries are supplied from this source, with the latter icludig, otably, the platium mies of the North West Provice. There is, however, cosiderable scope for further water reuse. I coastal areas, for example, sigificat amouts of wastewater are discharged ito the ocea, istead of beig reused. Desaliatio i these areas is also possible, although this optio is ofte more expesive tha reuse. The major costrait o both reuse ad desaliatio is that cheaper solutios have bee available, but this is chagig. May muicipalities lack the techical capacity to build ad maage their wastewater treatmet systems, resultig i polluted water resources that are usuitable for use. As a result, a regioal approach to wastewater maagemet may be required i certai areas. I have bee a blue ad gree drop assessor for the past three years ad visited may treatmet plats. Oe of the biggest problems is lack of routie ad prevetative maiteace. There is a virtually o prevetative maiteace programmes i most small/medium muicipalities due to 'lack of fuds'. Most maiteace is reactive maiteace o a day-by-day basis....i would like to see the South Africa Local Govermet Associatio offer courses to procuremet offices o the eed for maiteace. NPC Jam Water supply ivestmet programmes should iclude projects to treat ad reuse water, selected o their merits. Give the limited techical capacity to desig, build ad operate such projects, or eve to commissio private service providers, settig up a structured atioal research, developmet ad operatioal capacity to support water reuse ad desaliatio would be helpful, perhaps as part of a atioal water resource ifrastructure agecy (discussed below). Istitutioal arragemets for water resource maagemet The istitutios that maage ad develop water resources should reflect the shared, public ature of water ad the eed for users ad potetial users to uderstad ad respect the limits to its use, while also beig ivolved i decisios about its maagemet ad related costs. Although curret policy ad legislatio provides a istitutioal framework to achieve this, implemetatio has bee slow. This is, i part, because the growig challeges of water costraits, ad the eed to build istitutios to deal with 157

170 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN them, are ot fully uderstood. These istitutios are eeded to moitor, protect ad admiister the use of the resource. Istitutioal developmet is particularly eeded for the Olifats River, Crocodile-west sub-catchmets of the Limpopo, the Nkomati River ad the upper ad middle Vaal sub-catchmets, where water supplies have already reached their limit, ad where water allocatios betwee users eed to be reviewed. Key policy issues The followig key policy issues guide appropriate actios to improve the maagemet, use ad coservatio of South Africa s water resources: Ivestmets to support ecoomic uses of water, icludig urba cosumptio, should be fuded by users through appropriate pricig measures, which will iclude arragemets to esure that all people ca afford access to basic water services. However, it is likely that ivestmets to support rural developmet (icludig agriculture ad rural settlemets) will require large amouts of public fudig. Policy is eeded to guide such ivestmets. Ehaced maagemet capacity will be eeded to address the icreasig pressures o water resources. This capacity is i declie, partly due to istitutioal ucertaity. New istitutioal arragemets should ackowledge limited huma resource capacity ad the eed to develop it. Istitutioal arragemets eed to be fialised, specifically o the umber of water maagemet areas to be established, ad the mechaisms through which users will be ivolved i the work of regioal istitutios. A review of existig allocatios is eeded i areas where water use already exceeds reliable availability ad the amouts ecessary to secure protectio of the eviromet. If this is ot udertake, illegal use of the resource will rise ad it may be over-allocated (formally or iformally). This will lead to reduced supply reliability, which will jeopardise existig social ad ecoomic uses, while damagig the eviromet. Because water resource availability ad demad varies widely, with may complex exteral factors, it is ot possible to establish a stadard ecoomic framework for water resource maagemet. This limits the usefuless of pricig as a istrumet of allocatio ad cotrol, ad icreases pricesettig complexities. The eed for a idepedet ecoomic regulator should be assessed with potetial beefits ad drawbacks cosidered i relatio to the curret arragemets for rule-based pricig, with stakeholder oversight. This assessmet could take place withi the proposed cross-sectoral review of ifrastructure regulators. To guide water maagemet approaches i a umber of areas, strategic plaig decisios o geeral ecoomic ad social developmet are eeded, as well as evirometal protectio. Geographic areas where this is eeded iclude: Mpumalaga Highveld coal fields a balace betwee evirometal protectio, agriculture, eergy requiremets ad water resources. 158

171 CHAPTER 4: ECONOMIC INFRASTRUCTURE Lephalale ad surrouds water requiremets ad sources for miig ad eergy ivestmets. Olifats River (Limpopo/Mpumalaga) careful cosideratio of the balace betwee miig, agriculture ad ature coservatio. The orms ad stadards for basic water supply ad saitatio services should guide the allocatio of fuds. However, i may jurisdictios, ew ivestmets routiely exceed these defied orms ad stadards, resultig i service provisio that is fiacially usustaiable. A urget review of the orms ad stadards, together with the fiacial provisios to meet these, is required. May small ad rural muicipalities lack the fiacial ad techical capacity to maage water services adequately. Regioal utilities could provide these services, with arragemets to esure that muicipalities retai their role as the political authority resposible for service oversight. Trade-offs I fialisig the steps to be take, the followig trade-offs ad issues emerge: The costs associated with evirometal protectio objectives (for example, those associated with eforcemet of pollutio stadards ad abstractio restrictios) should be set agaist social ad ecoomic eeds. Curret legislatio allows for differet levels of protectio, but i may cases water reserved for the eviromet is already used for other purposes. A balace has to be achieved betwee allocatig water for productive eeds (idustry ad urba developmet) ad less productive uses i agriculture ad coservatio, which have strog social ad evirometal values. Greater water-use efficiecy i agriculture teds to be capital ad skills itesive, but may i tur support job creatio. These gais could be difficult for ew etrats to achieve without substatial support. Ay review of orms ad stadards for basic water supply ad saitatio services should also cosider how public service provisio takes place outside formal settlemet areas, give the high costs associated with servig scattered commuities. Household grats for self-supply may be cosidered i these areas. At muicipal level, it is importat to balace the political autoomy ad exclusive service-delivery madate grated by the Costitutio with the realities of limited fiacial ad huma resources capacity. A istitutioal model could allow cotiued political oversight of local service provisio, while takig advatage of the ecoomies of scale that usig regioal service providers would make possible. A balace is eeded betwee allocatig fiacial resources to support ivestmets i higher levels of service, providig services to uderserved households, while also maitaiig ad periodically refurbishig existig ifrastructure. 159

172 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN I some rural areas (for example, aroud Sekhukhue ad Bushbuckridge), water ca be made available oly through large ad costly distributio works. Decisios about such schemes eed to be take i the cotext of the future of these settlemets, give that they are ulikely to be viable without substatial ogoig operatig subsidies. Phasig Betwee 2011 ad 2015, the followig actios are required to achieve the 2030 goals: The atioal water resource strategy should be reviewed by mid-2012, ad approved as a roadmap to guide the developmet of the sector. It should the be reviewed, alog with the water resource ivestmet programme, every five years to esure that it adapts to chagig evirometal, social ad ecoomic circumstaces. Future istitutioal arragemets for water resource maagemet will be defied by mid-2012, with implemetatio by 2015 at the latest, if istitutioal memory is to be retaied ad cotiuity i maagemet esured. The istitutioal arragemets could iclude: A atioal water resource ifrastructure agecy (by 2013) that will develop ad maage large ecoomic ifrastructure systems. Natioal capacity to support research, developmet ad operatio of water reuse ad desaliatio facilities by A dedicated atioal water coservatio ad demad maagemet programme by 2012, with clear atioal ad local targets for 2017 ad 2022, ad sub-programmes focused o muicipalities, idustry ad agriculture. A comprehesive ivestmet programme for water resource developmet, bulk water supply ad wastewater maagemet established for major cetres by early 2012, with reviews every five years. This programme will iclude the followig major ivestmet projects, with clear target completio dates cofirmed ad resposibilities for fiacig ad implemetatio clearly allocated: Complete the Lesotho Highlads Project Phase 2 by 2020 to supply the Vaal system. Augmet supplies to the KwaZulu-Natal Midlads regio (ethekwii ad Msuduzi muicipalities ad surrouds) by completig the Sprigrove dam, followed by ivestmets i reuse ad the raisig of Hazelmere dam o the Mdloti River. Decide o the ext major augmetatio, either through desaliatio, reuse or developig a ew dam o the Mkomazi River, i time for water to be available i Complete Wester Cape water reuse ad groud water projects by

173 CHAPTER 4: ECONOMIC INFRASTRUCTURE Defie regioal water resource ivestmet programmes (for example, raisig Clawilliam dam i the Wester Cape) by 2012, supported by clear implemetatio targets. Cost regioal bulk water distributio programmes by early 2012 ad submit for budgetary cosideratio ad evaluatio by 2012, so that ivestmet programmes with clear implemetatio targets ca be established ad implemeted from Create regioal water ad wastewater utilities, icludig expadig madates of existig water boards (betwee 2012 ad 2017). Trasport Visio By 2030, ivestmets i the trasport sector will esure that it serves as a key driver i empowerig South Africa ad its people, eablig: Improved access to ecoomic opportuities, social spaces ad services by bridgig geographic distaces affordably, reliably ad safely. Ecoomic developmet, by supportig the movemet of goods from poits of productio to where they are cosumed, facilitatig regioal ad iteratioal trade. Greater mobility of people ad goods through trasport alteratives that support miimised evirometal harm. The state will fuctio as capable avigator. It will oversee a trasport system that serves the iterests of society; establish a holistic view of atioal trasport realities; ad prioritise, pla ad provide basic ifrastructure where eeded. Govermet should recogise where competig service providers would best meet trasport eeds, ad eable licesig where appropriate, all withi a framework of strog, effective regulatio of public ad private trasport. Crucially, i atioal, provicial ad local govermet, those resposible for fulfillig madates i the trasport sector must have the competece ad the ecessary leadership to achieve these goals. The trasport reality South Africa s modes of trasport iclude road, rail, air, sea (ports) ad pipelie. While the coutry has worked hard sice 1994 to overcome its trasport problems, its ecoomic geography presets may trasport challeges. As a trasport-itesive coutry, the trasport compoet per uit of output is above the global average. About 34 percet of the coutry s gross value-add is cocetrated i Gauteg, far from the ports ad ed markets. A sigificat proportio of gross value-add is also cocetrated i mieral deposits i the iterior, at the ed of log corridors that lead to ports. Effective, reliable, ecoomical ad smooth-flowig trasport corridors are eeded. 161

174 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Existig corridors are serviced by outdated railway techology (proe to operatig failures), poor iter-modal likages, 4 ad ports characterised by high costs ad substadard productivity relative to global performace. About 96 percet of South Africa s bulk commodity exports are trasported by sea. Although rail is the ideal mode of trasport for large, uiform freight travellig further tha 400 kilometres, about 89 percet of all freight (measured by total toes) is coveyed by road. This strais a road etwork sufferig sigificat maiteace backlogs. Poor road safety adds a huge cost to society. South Africa suffers from a high accidet rate, with high icidece of death ad ijury ad damaged ad lost cargo. Educatio, proactive eforcemet ad a chage i behaviour are a importat part of the solutio. Social ad ecoomic exclusio caused by the coutry s apartheid legacy is evidet i the log distaces may people travel from where they live to where they work. Providig suitable meas for people ad goods to move as efficietly, safely ad cost effectively as possible is importat. Mobility broades social ad ecoomic access, alleviatig poverty. A strog ifrastructural etwork supports air travel. Sigificat ivestmets to date will provide the capacity to hadle passeger volumes to Air trasport, however, poses challeges for wider developmet. Trasport costs to destiatios withi Africa are prohibitive, i cotrast to travel beyod the cotiet, where etwork desity ad cross-subsidisatio of itercotietal flights keep prices dow. I future, the sigificat levels of carbo emissios resultig from air travel may substatially reduce travel for busiess ad leisure, ad may egatively affect the tourism sector. 4 The facilities where people or goods trasfer from oe mode of trasport to aother that is best suited to the eeds of that leg of a jourey (for example the trasfer from rail to truck of cotaiers, followig their trasport by rail for log-distace travel, ad by truck, for the short distace to the fial delivery destiatio). 162

175 CHAPTER 4: ECONOMIC INFRASTRUCTURE Storylies The movemet from where South Africa is to where it wats to be i 2030 is guided by three cosideratios: Not all trasport dreams ca be fulfilled: priorities are key Trasport decisios ivolvig large log-life systems usually have high costs. Ifrastructure ivestmets ca lock-i decisio-makers ad ivestors, limitig future optios. Although may trasport priorities exist, careful rakig agaist clear criteria is ecessary. Focus should be placed o reasoable choices that allow safe, affordable ad effective trasport, rather tha tryig to achieve all trasport dreams, icludig those uduly iflueced by strog iterests outside the formal policy ad prioritisatio process. Plaers ad implemeters eed to guard agaist adoptig trasport approaches from other atios that are ot aliged with South Africa s priorities. Trasport as a eabler: gettig South Africa to work Movig towards 2030, South Africa s trasport system will support ecoomic developmet, job creatio ad growth, providig equitable access to opportuities Last but ot least, is the issue of a lack of ifrastructure maiteace by all society (govermet, private big busiess ad every idividual of South Africa). I see every day ad believe that we South Africas do ot look after our assets very well; we have a midset of buyig or buildig ew thigs all the time istead of maitaiig what we have. We must chage this metality, whereby we see govermet, private busiess ad every idividual adoptig a reewed midset i lookig after the ifrastructure we curretly have. NPC Jam ad services for all ad reducig poverty. Istead of focusig o the trasport mode ad categorical positios such as rail is the future, emphasis will be placed o total system efficiecy to maximise the stregths of differet modes, cut iefficiecies ad reduce disparities, with the least evirometal, social ad ecoomic cost. The optios idetified, particularly public trasport ad o-motorised modes, may foster a differet culture. Modes ad ifrastructure that ecourage social iteractio, healthy practices ad street-level movemet create a sese of space ad social iclusio that South Africa eeds. I additio, optios may go beyod trasport solutios aloe. Chages to the spatial ecoomy could provide solutios, for example, establishig more ecoomic opportuities where people live, or creatig ew settlemets close to cetres of work. A modal shift from private trasport i the log term Behavioural chage is critical i reducig evirometal, social ad ecoomic cost, by shiftig user ad supplier decisios about movemet, travel modes ad sources of 163

176 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN eergy. While some forms of private trasport, such as the car, will still be used i 2030, a marked chage to public trasport will emerge through cocerted effort, strog leadership, cosistet messages ad actios, ad public system alteratives that work. By 2030, public trasport will be user-friedly, less evirometally damagig, cheaper ad itegrated or seamless. Better moitorig of emissios ad apportioig cost to origi is also likely to be a major cotributor i movig to a low-carbo future. Key policy ad plaig priorities Create workable urba trasit solutios with public ad private compoets Sigificat ivestmet i the public trasport system is eeded to exted bus services, refurbish commuter rail, lik high-volume corridor services ad itegrate all these ito a effective service. Govermet eeds to lead chages to the trasport system if ecoomies of scale ad the evirometal ad efficiecy beefits of public trasport are to be maximised. Private cars provide idepedece at the cost of cogestio ad pollutio. Workable urba trasit combies public ad private compoets. Urba trasit solutios i South Africa face major challeges: low-desity cities, apartheid geography, ad public trasport servig commuters who do ot have reasoable alteratives or eough icome to ow a private car. The solutios should exted services to captive trasport users, while wiig custom from those who do have choice. It is importat to cut through the fragmeted ad coflictig iterests of multiple trasport authorities ad public ad private service providers each with separate fudig sources ad madates. Trasport beefits from subsidiaries, where the lowest level of govermet capable of effective delivery is give authority ad aliged fudig. Govermet policy to devolve trasport maagemet to local govermet will succeed if there is a simultaeous stregtheig of istitutios ad aligmet of legislatio, policy ad practice. Where metropolita muicipalities are adjacet, a regioal trasport authority may be appropriate to support itegratio. A balace of icetives, both carrot ad stick, will provide mobility i cities. Public trasport subsidies ca effectively icrease affordability for low-icome commuters. Moutig costs for private car users (tolls, higher fees ad projected higher fuel costs), alogside prioritisig the movemet of public trasport vehicles o roads, might push car users ito secod place. This should ecourage icreased use of public trasport. To be sustaiable, public trasport services eed to provide users with capacity ad coveiece. Capacity, coverage, frequecy ad safety performace of public trasport must be improved for existig users before commuters with other optios will be prepared to switch to public trasport. Eve with greatly expaded public trasport, city dwellers will still have to use cars. Trasport authorities will eed to pla ad ivest i road ad trasport ifrastructure costructio, maiteace ad oversight ad 164

177 CHAPTER 4: ECONOMIC INFRASTRUCTURE itegratio with public services while maximisig flow ad usig techology, such as itelliget traffic sigallig. The commuter rail fleet eeds to be reewed. It provides the lowest-cost service i metropolita areas, but it lacks reliability, puctuality ad passeger comfort. The service is precariously placed, with the forced retiremet of aged rollig stock forcig the operator to withdraw services, placig more pressure o trais i operatio. New techology is eeded to achieve a oticeable chage i service levels. As this would result i icompatibility with the existig etwork, a trade-off eeds to be made greater safety, reliability ad the separatio of commuter ad freight etworks, with much lumpier ivestmets, or compatibility with the existig etwork ad placig ew equipmet, whe available, at its most vulerable parts. The Gautrai has show public trasport is a optio for commuters who ca afford to use cars. The airport lik has bee quickly ad successfully adopted, although this is ot evidet o the Pretoria-Johaesburg route, which has a small reach ad a weaker lik with commuters departure ad destiatio poits. Authorities may eed to add additioal feeder services to make this lik work, icreasig the already cosiderable cost. The bus rapid trasport system has demostrated the potetial of high-quality mass trasit systems, while also showig it is critically importat to alig social iterests with techical solutios. The Johaesburg bus rapid trasport project icorporated taxi owers a milestoe i formalisig the taxi idustry as a trasport operator. Durig 2011, however, strikig drivers halted this trasport system. As public trasport must be depedable, authorities will have to create reliable services by placig commuters iterests above the sectaria cocers of trasport providers, while also allowig these services to be ecoomically sustaiable busiesses. Bus rapid trasport problems are a priority, give the sigificat fiacial ad spatial ivestmets made to date ad the potetial such a system represets for public trasport. Public trasport ivestmet icreased at 15 percet per year from I the short term, to harvest these ivestmets, future asset maagemet ad icreased use of existig assets must be a priority, with a focus o doig more with what the coutry has. It is crucial to stregthe goverace of the sector ad operatioal efficiecy. Stregthe ad optimise freight corridors The greater part of South Africa s bulk freight moves o the existig atioal road ad rail etworks, from mies to ports or processig plats, from farms to cities ad from the coast to the Highveld. Plaig should prioritise improvig the capacity, efficiecy ad sustaiability of these corridors. South Africa is a trasport-itesive ecoomy, with comparative advatages i resources rapidly eroded by high trasport costs. 165

178 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Icreasig the capacity of the mai corridors ad simultaeously improvig the performace of the ports ad ilad termials is a priority. Cosiderig the importace of freight corridors, future ecoomic activities must be substatially differet, allowig for a reductio i climate impact i particular. I the short term, South Africa s mieral sector has a greater ability to drive higher rates of growth tha other sectors i the ecoomy provided that ifrastructure bo ttleecks ad regulatory ucertaities are removed. Limited capacity o existig rail lies movig mieral commodities, particularly coal, magaese adiro ore, is stiflig growth. Policy ad plaig priorities eed to be iformed by actual experiece ad the performace of Traset s capacity expasio programmes, which have failed to deliver capacity. The capacity expasio for the Richards Bay coal termial sits idle, because capacity o the lik does ot match expasio. Give the magitude of these capacity costraits, ad the huge fiacial ad orgaisatioal resources eeded to improve corridor performace, a ew approach is required to coordiate the efforts ad iterests of multiple role players. Essetially, this meas buildig effective parterships betwee the public ad private sector. Howeve r, if the terms offered by the icumbet SOE are restrictive, parterships will be o better tha outsourcig agreemets by publicly owed moopolies, structured at the expese of users. Competitio betwee providers is therefore a key objective. The Waterberg coal fields eed to expa d to trasport coal for domestic power geeratio ad to coect to existig export facilities i Richards Bay. Plaig priorities will eed to take accout of Botswaa s iterest i establishig access to the Atlatic Ocea via the port of Walvis Bay. By 2030, the Durba-Gauteg freight corridor should be a model for how to stregthe ad optimise freight corridors. As the corridor that hadles most of the coutry s highvalue freight, it is the first priority. It is also the most strategic corridor to achieve a shift of freight from road to rail by overcomig rail s mai drawback lack of flexibility by improvig the performace of termials o either ed. It could demostrate that the istitutioal model eeded for corridor improvemet rests with aligig the iterests of cities with authorities across all tiers of govermet, as well as the trasport operators that coect the iterveig space. Traset ad its parters i this project are makig progress with this emergig istitutioal model. Success factors iclude urestricted access ito the termials for freight, removig bottleecks o the road ad rail routes, ad expadig termial capacity. Plaig priorities iclude ew access routes ito the Port of Durba, allowig for segregatio of freight from other traffic, ad buildig ew hubs or ilad termials aroud Gauteg for improved road-rail trasfers. At least three ew Gauteg hubs will replace existig ier-city hubs as they reach full capacity. Higher rail desity ad throughput to achieve scale ecoomies will require rail aligmet, together with upgraded techology to move ad cotrol trais. Traset has developed plas that will address the capacity of Durba s port. Further cotaier capacity to meet South Africa s eeds over the loger 166

179 CHAPTER 4: ECONOMIC INFRASTRUCTURE term will be provided by costructig a ew termial o the site vacated by movig Durba s airport to La Mercy. As idicated by the Port Regulator, South Africa ports perform poorly, operatig at levels below comparative operatios, with costs that are sigificatly higher tha the global average. These gateways for iteratioal trade are hiderig the atio s developmet objectives. Poor performace is largely due to the absece of competitio i termial operatios ad Traset s busiess model, which uses surpluses geerated from ports to fud ivestmets elsewhere. The trade-offs obscured withi the Traset group must be addressed if port prices are to be competitive. Provide log-distace passeger trasport optios Urba mobility gets people to work ad helps overcome the historical spatial legacies of race ad class segregatio. Cosideratio is eeded o how this imperative plays out across the coutry, ad what this meas for plaig priorities. It is critical to recogise that South Africa does ot have the luxury of beig able to implemet all plas. The guidig priciple is to give precedece to solutios that support the flow of people ad goods where there is umet demad. Log-distace trasport alteratives iclude travel by itercity bus, taxi, private trasport, air travel ad limited itercity passeger trais. I this cotext, where should scarce public resources be directed? South Africa s largest sigle public asset is its road etwork. With a replacemet value of R1.7 trillio, preservig it is a top priority. Natioal ad provicial roads are the prime meas of coectig people ad movig cargo from small settlemets ad secodary tows to the cetres of ecoomic activity. I the short term, before expasios are cosidered, road maiteace campaigs i muicipalities ad rehabilitatig provicial road etworks are eeded to prevet further deterioratio. While the roads are preserved, istitutioal capacity should be stregtheed to maage road traffic. I additio, a thorough upgrade of road traffic safety is eeded, together with eforced compliace with stadards by public ad private operators, ad widescale road safety educatio. Ultimately, success will be evidet i road users chagig their behaviour. Over the loger term, ad i light of evirometal harm caused by may modes of trasport, the proposed expasio of passeger rail services will eed to be carefully assessed. Rail is costly, ad South Africa would have to practically start from scratch due to the age of its log-distace passeger fleet. But, this could be a opportuity for citizes to have a say i trasport choices. Focus o the specifics associated with iteded users (icome ad affordability costraits) would be importat, together with assessig alteratives, specifically road-based optios. This would beefit decisiomakig o all sigificat projects requirig public fuds or state guaratees, placig the costs ad beefits uder public scrutiy before fialisatio. 167

180 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Rural access ad mobility To achieve a meaigful level of rural access ad mobility, plaig should differetiate services accordig to local requiremets. Where populatio cocetratios are located i areas with little productive ecoomic activity, priorities will mostly relate to providig services that eable easy access to basic eeds ad state support (for example, service poits for public health care ad grat support). Scheduled public trasport services could be provided to esure access. People ted to move from isolated rural homes, settlig at trasport odes or alog trasport corridors to access services. These movemets provide further opportuities for improved ecoomies of scale for public trasport. Give limited resources ad urba migratio, subsidised services should be limited to such places. Phasig Leadig up to 2030, trasport authorities will be challeged to traslate the visio for gettig South Africa to work ito effective trasport. Providig sustaiable trasport services that are efficiet ad iclusive is iextricably liked to the eed for spatial chage i South Africa s cities ad related trasport corridors. Users will adjust to pricig that is supported by greater trasparecy, wi th full costs associated with each service, icludig costs liked to evirometal impact. Key themes are discussed below : Cosolidatio ad selective expasio Greater emphasis will be placed o asset maagemet, icreased use of existig assets, extedig ecoomic ifrastructure through joit private ad public projects ad expadig public commuter rail trasit services. Give scarce resources, some eeds will have to be deferred. The state will eed to maitai public cofidece that improvemets will spread by achievig excellece i meetig priority eeds. Decisios o project selectio will be drive by tightly focused criteria. Priorities iclude: Improve streamliig of assets ad istitutioal arragemets for public trasport (icludig the powers ad fuctios of role players). Use of assets eeds to be cosolidated ad ratioalised, ad existig assets should be used better. First, public trasport ad ifrastructure must be maaged better by removig duplicated fuctios, refiig powers ad fuctios, imposig accoutability ad ehacig goverace ad decisio-makig processes. Thereafter, streamliig istitutioal arragemets i metropolita areas ca be achieved by settig up regioal trasit authorities. It is crucial to esure that all parts of the existig road-based commuter services fuctio properly, as may commuters deped o bus ad miibus taxi services. Large public ivestmets have bee made, offerig a glimpse of how better performig public trasport ca improve people s commute. Trasport authorities should focus o eforcig sectorwide compliace ad ecouragig cotracted operators ad idepedet 168

181 CHAPTER 4: ECONOMIC INFRASTRUCTURE service providers to ivest ad provide a more commuter-friedly experiece. Reew the commuter rail fleet, with a regio-by-regio shift to curret geeratio high-capacity rollig stock, supported by statio upgrades ad improved facilities to ehace liks with road-based services. Stabilisig existig services is crucial, because complete fleet reewal could take up to 15 years. Expad capacity for mieral exports through targeted focus o metal ores ad coal, ad strategic freight corridors for souther Africa ad iteratioal trade. Private-sector parterships (primarily with Traset ad the South Africa Natioal Roads Agecy Limited) are essetial to upgrade corridors. Where SOEs are uable to meet demad for freight services, the state should vigorously ecourage private-sector ivolvemet. The Natioal Ports Act (2005), which stipulates that all ew developmets should be cocessioed, eeds to be more strigetly eforced so that all operators (public or private) perform or are replaced. Itesive applicatio of iformatio techology to trasport systems will icrease use ad flow rates through ew railway sigallig ad highway traffic cotrol systems. These are strategic ivestmets that ca be deployed more rapidly tha buildig ew fleets or roads to boost the use of existig ifrastructure : I step with evolvig lad-use chages Guided by plas for the urba form, actios will focus o achievig the mutually reiforcig effect of trasit-led growth. This will help icrease cocetratio i urba settlemets, while improvig the ecoomic scale for trasport modes. Oce the istructioal reforms for public trasport have bee completed, regioal trasit authorities should be established : Eergy efficiecy Emphasis will be o icreasig eergy efficiecy ad the resiliece of trasport etworks, drawig o progress i establishig reewable eergy resources. Use of lightweight materials i freight adpasseger vehicles shouldbe icreasigly preferred, because of their lower lifecycle eergy requiremets ad greater loadcarryig capacity : Mid-life upgrades Reviewig real progress towards the 2030 visio should guide the tactical adjustmets that stakeholders will eed to make to overcome problems. Plaig should provide for refits to trasport systems to icorporate techological improvemets. 169

182 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Iformatio ad commuicatios ifrastructure Visio By 2030, ICT will uderpi the developmet of a dyamic iformatio society ad kowledge ecoomy that is more iclusive ad prosperous. A seamless iformatio ifrastructure will meet the eeds of citizes, busiess ad the public sector, providig access to the wide rage of services required for effective ecoomic ad social participatio at a cost ad quality at least equal to South Africa s competitors. Withi this visio, the uderlyig ICT ifrastructure ad istitutios (a ifostructure ) will represet the core of a widespread digital commuicatios system. This ecosystem of etworks, services, applicatios, cotet ad iovatio will support ecoomic growth, developmet ad competitiveess; create decet work, atio-buildig ad social cohesio; ad local, atioal ad regioal itegratio. Public services ad educatioal ad iformatio products will be accessible to all, ad will build o the iformatio, educatio ad etertaimet role evisaged for public broadcastig. The huma developmet o which this is premised will have created a e-literate (olie) public to take advatage of these techological advaces ad drive demad for services. Multicastig ad istat olie traslatio, digitisatio ad ICT applicatios will make it easier for people to commuicate ad obtai iformatio usig differet laguages. Mobile govermet (m-govermet) services, delivered through mobile devices, will grow ad coverge with more traditioal e-govermet services. Orgaisatios will have immediate access to data for performace moitorig ad improvemet, while istat log-distace commuicatio will be as easy as meetig i perso. ICT will cotiue to reduce spatial exclusio, eablig seamless participatio by the majority i the global ICT system, ot simply as users but as developers of cotet ad applicatios, busiess process outsourcig ad iovators. The ICT reality ICT has chaged radically over the past two decades. I 1993, mobile phoes had oly just etered the geeral market ad computers sat o desks. I cotrast, a rage of surveys published aroud suggests a mobile phoe peetratio rate of about 70 percet, accoutig for multiple SIM cards held by idividuals. These figures highlight a reality: More South Africas 29 millio use mobile phoes tha radio ICT ca be used as a tool to fight poverty, icrease employmet, educatio ad etrepreeurship. People use broadbad for differet reasos, but maily for commuicatio, work ad research... With uiversal access people will ot eed to call their muicipality, go to home affairs or social welfare, they ca do everythig olie. NPC Jam 5 ICT Africa household survey idicated a SIM-card peetratio rate of close to 65 percet of the populatio, with at least 10 percet of respodets idicatig they had multiple SIM cards (Esselaar et al, 2010). A 2010 survey idicated a mobile phoe peetratio of 75 percet (Hutto, 2011). 170

183 CHAPTER 4: ECONOMIC INFRASTRUCTURE (28 millio), TV (27 millio) or persoal computers (6 millio). Oly 5 millio South Africas use ladlie phoes. 6 Despite the uptake of mobile phoes, growth i South Africa s ICT sector has ot brought affordable, uiversal access to a full rage of commuicatios services. Accordig to the Departmet of Commuicatio, itervetios to address ICT gaps sice 1994 have icluded establishig tele-cetres (providig access to traiig, equipmet ad services) i rural areas, providig Iteret kiosks at Post Office cetres, fudig traiig for schools, settig up cyber-laboratories at schools, ad other related measures. However, the performace of most state itervetios i the ICT sector has bee disappoitig. South Africa has lost its status as cotietal leader i Iteret ad broadbad coectivity. 7 Pricig of services ad equipmet remais a sigificat barrier to the expaded use of mobile phoes ad fixed lies, with limited etwork competitio further icreasig costs. Policy costraits, weakesses i istitutioal arragemets, coflictig policies betwee resposible departmets, regulatory failure ad limited competitio all cotribute to this issue. The ability of the regulator, the Idepedet Commuicatios Authority of South Africa, to eable a more ope market has bee hampered by legal bottleecks, limited capacity ad expertise. 8 The last comprehesive policy review was i Storylies ICT developmets will cotiue to trasform ecoomic ad social activities, ad how idividuals ad commuities commuicate ad fuctio. Its impact o each sector of society ad each area of service delivery will deped o how uptake is addressed. A sigle cohesive strategy is essetial to esure the diffusio of ICTs i all areas of society ad the ecoomy. Like eergy ad trasport, ICT is a eabler it ca speed up delivery, support aalysis, build itelligece, ad create ew ways to share, lear ad egage. I future, the state s primary role i the ICT sector will be to facilitate competitio ad private ivestmet ad to esure effective regulatio where market failure is apparet. Direct ivolvemet will be limited to itervetios eeded to esure uiversal access, such as the itroductio of smart subsidies (discussed below), ad to help margialised commuities develop the capacity to use ICTs effectively. 6 Developmet Bak of South Africa (2011). Commuicatios Ifrastructure. Paper commissioed by the Natioal Plaig Commissio, 4 April Pretoria: Developmet Bak of South Africa. 7 Esselaar S, Gillwald A, Moyo M ad Naidoo K (2010). Towards Evidece-based ICT Policy ad Regulatio. South Africa ICT Sector Performace Review 2009/10, Volume 2, Policy Paper 6. Available at: ector_performace_review percet20_2010_-_vol_2_paper_6.pdf. 8 Gillwald A (2011). SA Telecoms still a way to go. Egieer IT, Jauary Available at: 171

184 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Policies ad plaig priorities Implemet a eablig, coordiated ad itegrated e-strategy The visio will be realised oly if it is supported by a coordiated, eablig ICT strategy ad pla. A atioal e-strategy will cut across govermet departmets ad sectors. It will aim to create sector growth ad iovatio through policy coordiatio that drives public ad private ivestmets i areas su ch as etwork upgrade ad extesio, particularly i broadbad, service delivery ad applicatio developmet, ad local cotet developmet. This will require a review of the market structure, ad aalysis of the beefits ad costs of ifrastructure duplicatio, facilities or service-based competitio, ad optios for ifrastructure sharig. It will also eed a commo carrier etwork, with possibilities of structural separatio of the vertically itegrated icumbet backboe operator. Carefully applied ope-access policies ca icetivise sharig ad commo use of certai layers of the etwork, without discouragig private log-term ivestmet. It will also require targeted public ivestmet, possibly through publicprivate parterships. The strategy will iclude plas to develop the specialised istitutioal capacity required for the policy resposiveess ad effective regulatio of the sector. I additio, it will focus o demad-side stimulatio (by promotig e-literacy, educatio ad traiig, ad examiig ICT rebates ad icetives, ad the eeds of key developmet sectors such as health ad educatio), as well as the supply-side of ifrastructure ad istitutios. The atioal e-strategy will also esure that South Africa egages effectively ad coheretly o issues of regioal itegratio ad harmoisatio iteractig with various istitutios, icludig global ICT goverace agecies, such as the Iteratioal Telecommuicatios Uio ad the World Trade Orgaisatio. A ICT sector that eables ecoomic activity ICT is a critical eabler of ecoomic activity i a icreasigly etworked world. As a sector, ICTs may provide importat direct opportuities for maufacturig, service provisio ad job creatio, but their mai cotributio to ecoomic developmet is to ehace commuicatio ad iformatio flows that improve productivity ad efficiecy. For this reaso, a coutry that seeks to be globally competitive must have a effective ICT system, as this ifostructure provides the backboe to a moder ecoomy. A immediate policy goal is to esure that atioal ICTs adequately support the eeds of the ecoomy, allowig the participatio of parties beyod the public sector. At preset, there are effective duopolies i the mobile phoe market ad the overwhelmig domiace of Telkom, the historical icumbet i the backboe ad local access markets. This domiace has bee relatively ieffectually regulated, ad has resulted i very high iput costs for busiess, icreasig the costs of services. It has also ihibited ivestmet i growth areas withi ICT, such as busiess process outsourcig ad offshore iformatio techology-eabled services. 172

185 CHAPTER 4: ECONOMIC INFRASTRUCTURE Affordable, widely available broadbad for ecoomic ad social developmet The iheret efficiecy of ICTs ad their ability to circumvet blockages i iefficiet systems already esures that they are widely used, eve uder less tha ideal coditios, by busiesses or idividuals that ca afford them. If ICTs are also to perform a developmetal fuctio, a adequate rage of ifrastructures, services ad cotet must be available at the lowest cost ad highest quality to the wider commuity. This is ot simply a social itervetio it is a ecessary coditio to grow ad stabilise the atioal ecoomy, give that the lik betwee ICT peetratios with ecoomic growth oly takes effect whe a critical mass, estimated to be 40 percet with voice ad 20 percet with broadbad, is reached. 10 The digital divide the gap betwee those who have access to services ad the demad from those who are excluded by uavailability or prohibitive service costs has to be arrowed. Past uiversal access strategies have failed to distiguish betwee the real access gap ad the market efficiecy gap. The real access gap refers to households or idividuals who ca be reached oly by providig permaet subsidies or some sort of support. The market efficiecy gap refers to the differece betwee the share of households reached i a efficiet market ad what is actually achieved uder existig coditios. The digital divide ca be partially addressed through more competitive (efficiet) markets ad effective regulatio that eable operators to meet the demad for affordable services, reducig the umber of households or idividuals requirig support. Further strategies that eable access through smart subsidies, which require a oce-off itervetio, should be favoured over strategies requirig permaet subsidies. 11 The rapidly evolvig ature of ICTs meas that it is vital that such projects are regularly reviewed ad refocused, which will require the state s ivestmet ad support. Demad stimulatio ad job developmet Improvig equitable access to ehaced ICT services will require actios to stimulate demad. At the most fudametal level, strategies eed to improve e-literacy through basic ad secodary schoolig, tertiary, adult educatio ad supplier traiig. These strategies will support the productio of multiligual, relevat ad local cotet for public programmig ad iformatio services, whether educatio or etertaimet, ad develop olie ad mobile govermet services ad applicatios. This will icrease demad for ICT services, as cotet ad applicatios become icreasigly relevat to the eeds ad iterests of the wider commuity. Costructig ad maitaiig etworks will cotiue to geerate a substatial umber of lower-level job opportuities, such as diggig treches or spaig cables ad 10 World Bak, IfoDev Regulatory Toolkit,

186 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN istallig basic hardware, as etworks ad associated facilities expad. For the ICT sector to grow i the loger term, however, it will require sigificat umbers of differetly skilled people to fill the rage of specialised job opportuities created. The educatio system will eed to prepare for th is. The state will play a cetral role i developig a forceful supply-side policy through ivestmet i educatio critical to the public s ability to adjust to chage brought about by techological iovatio ad to meet the chagig eeds of the ecoomy. The state, market structure ad istitutioal arragemets Experiece elsewhere has demostrated that private-sector participatio ad competitio, coupled with effective regulatio, have geerally delivered lower prices ad improved quality ad speed of services. South Africa eeds to express a uambiguous commitmet to itesifyig competitio. As oe elemet of this, local loop ubudlig eeds to be speeded up. Spectrum allocatio is perhaps the biggest regulatory bottleeck i the proliferatio of rapidly deployable wireless techologies to meet the diverse eeds of the society ad ecoomy. The spectrum that will become available with the shift from aalogue terrestrial broadcastig to digital should be swiftly allocated to esure services expad with emergig techologies i this bad. Mechaisms for allocatig radio frequecy spectrum eed to be smarter (for example, spectrum auctios ad reverse bids for uderserviced areas), with robust ad trasparet goverace. Spectrum should be fully tradable oce allocated. Regulators should ot be too restrictive i dictatig which techologies should be used with which spectrum, but regulatios should be crafted to discourage spectrum hoardig, where licesees buy spectrum ad do ot use it or exploit it oly i certai geographical areas. Spectrum policy should favour competitio, but icumbets should ot be excluded from gaiig access to bads they eed to build etworks usig ew techologies. I lie with global treds, spectrum liceces should be techology eutral, so they ca be adapted to meet rapidly chagig techological developmets withi the sector without high regulatory costs. The state eeds to have sufficiet istitutioal agility ad competece to deliver i this rapidly chagig sector. Govermet s primary role will be to esure public policy promotes market access, ad to create effect ive istitutios to esure competitio, ad regulate operator behaviour ad market failure. Istitutioal capacity buildig ad competecies Esurig istitutioal capacity ad idividual competecies is oe of the critical success factors to esure positive policy outcomes. To achieve the goals outlied above, establishig a eablig policy ad regulatory eviromet will deped o adequate istitutioal capacity ad competecies to effectively regulate this dyamic ad complex 174

187 CHAPTER 4: ECONOMIC INFRASTRUCTURE sector. It will be importat to clarify the istitutioal arragemets to remove some of the tesios i the sector. Most fudametal is the structural coflict of iterest that exists betwee the state s role as a competitive player i the market (through its majority share i Telkom), ad as a policy-maker for itself ad its competitors. Better distictio of roles ad fuctios, more coheret approaches ad clearer strategies will be required to avoid uiteded policy outcomes. The successful developmet of the sector will also deped o more skilled policy itervetio based o more effective public cosultatio to deal with the dyamic ature of the sector, ad mechaisms to esure required istitutioal autoomy of the regulator to implemet agreed policies idepedetly of state ad idustry iterferece or capture. Accoutability will be esured through trasparetly applyig the admiistrative justice system ad through more specialised parliametary oversight. Agility i goverace ad regulatio esures that ew forms of ICT coectivity ca be made available securig optimal kowledge sharig, commuicatio, ad social ad ecoomic participatio withi South Africa ad beyod its borders. Trade-offs The followig trade-offs ad choices apply: There is a eed to esure sufficiet large-scale ivestmet (through both public ad private fuds) to allow for extesio of ICT ifrastructure that supports the ecoomy, society ad the objectives of greater iclusivity ad sustaiability. This must be balaced agaist the eed to esure that specific strategic goals of access ad service provisio ca be met, eve i uderserviced areas ad margialised commuities. Give that the state is capital costraied, with may urget priorities, willig ad capable private ivestors are eeded. Creatig a collaborative partership with defied social resposibilities may be appropriate. Alteratively, where private ivestmet is able to create the coectivity, public ivestmet could focus more o eablig the demad by supportig e-literacy ad cotet delivery or reducig ivestmet risk by becomig the achor. Low thresholds to market etry ad competitive markets require less itesive access regulatio, which will drive dow prices ad improve quality ad choice for users. But it may threate the viability of curret service providers or SOEs. Balacig the effect of greater competitio i the sector could reduce prices, but it might costrai surpluses available for services or ihibit ew ivestmets. Ecouragig cost-savig efficiecies i the sector through regulated prices could result i job losses amog preset service providers. If prices are lowered, however, this could also potetially swell demad ad create other jobs elsewhere i the ICT sector ad the broader ecoomy. Allowig etwork competitio to exted etworks ad services, with likely duplicatio of resources ad ifrastructure i a resource-costraied 175

188 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN eviromet, eeds to be weighed agaist a sigle commo carrier backboe with fair ad ope access to the facilities by a competitive services sector. Ope Reach ad British Telecom are a successful example of structural separatio of the icumbet ito separate facilities ad services compoets. I broadcastig ad related iformatio, settig local cotet quotas that promote local productio may also icrease costs for iformatio ad services provisio, ad make regulated services uable to compete effectively agaist cotet deliverers o uregulated services. Makig critical spectrum available to operators to deploy ew techologies to grow their busiess, or waitig for a full spectrum audit ad coductig comprehesive allocatios or auctios of the etire reassiged spectrum with the associated losses that delays brig to growig the ecoomy. Phasig Phasig of priorities for a move to a eablig ICT reality by 2030 is discussed below. Short term: There is a clear ad urget eed for a full policy review, which has ot bee doe i the ICT sector sice I the ext five years, South Africa eeds to develop a more comprehesive ad itegrated e-strategy that reflects the cross-cuttig ature of ICTs. This should lik policy objectives to specific strategies. It would iclude plas to allocate a ew spectrum that will become available with the switch to digital broadcastig, ad would set out a strategy for uiversal access, with clear targets ad moitorig ad evaluatio idicators. I additio, it would outlie demad stimulatio itervetios such as e-literacy programmes, skills developmet ad istitutioal capacity-buildig strategies, ad other geeric demad-side itervetios to promote ICT diffusio requirig iterdepartmetal ad public ad private coordiatio. For sector policy specifically, evidece suggests that atioal objectives of affordable access to the array of services ecessary for effective citizeship, ad globally competitive iput prices for busiess, are best achieved through effectively regulated competitive markets. The followig areas require attetio: Adjust the market structures ad remove legal costraits to eable full competitio i services. Fast-track local loop ubudlig. Review istitutioal arragemets to esure the existece of resourced regulatory agecies able to ecourage market etry ad fair competitio ad to regulate market failure. Implemet a service ad techology-eutral flexible licesig regime to allow flexible use of resources i dyamic ad iovative sectors, especially 176

189 CHAPTER 4: ECONOMIC INFRASTRUCTURE for spectrum that should be made available urgetly for ext geeratio services. Free spectrum for efficiet use, to drive dow costs ad stimulate iovatio. Spectrum ca be allocated with set asides or obligatios to overcome historical legacies ad iequalities i the sector, but this should ot delay its competitive allocatio. Esure access to low-cost high-speed iteratioal badwidth with ope access policies. Facilitate the developmet of high badwidth backboe/backhaul etworks. Review SOEs to determie if they are fulfillig their purposes, costraiig competitio, squeezig out private ivestmet or ot egaged i efficiet expasio. Examie the ability of the market to sustai ifrastructure (facilities) competitio ad whether the beefits outweigh the duplicatio of facilities i a resource-costraied eviromet. Idetify alteratives to ifrastructure competitio through structural separatio of the atioal backboe from the services offered by the historical icumbet to create a commo carrier with ope access policies to esure access by service competitors. Cosider iefficiecies of ifrastructure duplicatio ad ecourage or prescribe sharig ad reductio of expesive trechig by creatig commo rights of way for competig operators to lay dedicated lies. The implemetatio pla derived from this policy review will iclude a comprehesive short-, medium- ad log-term ivestmet strategy based o the eeds of the sector: Coduct a geographical iformatio assessmet of existig etworks ad future rollout coordiatio. Cosider public ad private roles. Review istitutioal arragemets to create a eviromet coducive to ivestmet ad to esure the effective regulatio of the sector. It would also idetify the eed for specific demad-side strategies i other sectors ad idetify the istitutios resposible for developig ad puttig them ito operatio. This will iclude targeted traiig to meet South Africa s specific eeds, with developmet of e-workers ad e-cosumers to grow services ad create decet employmet, such as busiess process outsourcig ad offshore iformatio techology-eabled services from abroad. 177

190 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Medium term: The commissio supports the target proposed by the Departmet of Commuicatio by 2020, there should be 100 percet broadbad peetratio. All schools, health facilities ad similar social istitutios will be coected ad idividual citizes will have affordable access to iformatio ad services, as well as voice commuicatio at appropriate poits. Broadbad is curretly defied as a miimum coectio speed of 256 kilobytes per secod, but it is expected that by 2020 this will be at least 2 megabytes per secod. Because there is substatial ucertaity about the pace of techological developmet ad the level of services that will be available i 2020, it is appropriate to bechmark South Africa s performace agaist other coutries, rather tha to set firm umerical targets. By 2020, through strategic ivestmet ad regulatory guidace, the costs associated with access to services by the commercial, public ad commuity sectors should place South Africa s relative costs i the upper quartile of coutry-specific ICT costs worldwide. With both plaig ad delivery, South Africa should regai its positio as the leader i both quality ad cost of ICT services i Africa. Log term: The ogoig implemetatio ad refiemet of the e-strategy will esure that ICT supports, rather tha limits, the global competitiveess of South Africa ad its ecoomic performers. By 2030, govermet will make extesive use of ICT to egage with ad provide services to citizes. All idividuals will be able to use a core of ICT services ad ejoy access to a wide rage of etertaimet, iformatio ad educatioal services. By 2030, the e-strategy collaboratios betwee state, idustry ad academia will also create iovatio systems, icludig software ad applicatios icubators, local cotet ad multimedia hubs ad research ad developmet etworks. These systems will be used to pla for ad respod to the wider eeds of the global ICT ecosystem, of which South Africa will be a itegral part. 178

191 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY Chapter 5 TRANSITION TO A LOW-CARBON ECONOMY We ackowledge that each ad every oe of us is itimately ad iextricably of this earth with its beauty ad life-givig sources; that our lives o earth are both eriched ad complicated by what we have cotributed to its coditio. Itroductio South Africa has take major steps to formulate ad implemet measures to adapt to ad mitigate climate chage. These steps are iformed by the coutry s commitmet to reduce its emissios below a baselie of 34 percet by 2020 ad 42 percet by This commitmet will preset challeges for the ecoomy, which depeds o fossil fuels, ad will require the desig of a more sustaiable developmet path. The approach to mappig out the trasitio to a low-carbo ecoomy is iformed by the eed to reach broad cosesus o the challeges ad trade-offs ivolved i implemetig South Africa s climate policy. The commissio udertook a year-log process egagig stakeholders o climate ch age, icludig three high-level workshops ad five roudtable discussios with idividual stakeholder groups. These cosultatios iformed this chapter. There are differeces of opiio o how South Africa should move to a low-carbo ecoomy, at what pace ad how the costs ad beefits are apportioed. However, there are several sigificat areas where cosesus has bee reached. We will cotiue to egage i wide-ragig discussio with all stakeholders to promote further agreemet o climate chage measures ad how to deal with the trasitio. Visio 2030 By 2030, South Africa s trasitio to a low-carbo, resiliet ecoomy ad just society is well uder way. Havig udertake the difficult steps to adjust, all sectors of society are actively egaged i buildig a competitive, resource-efficiet ad iclusive future, ad the coutry is startig to reap the beefits of this trasitio. South Africa has reduced its depedecy o carbo, atural resources ad eergy, while balacig this trasitio with its objectives of icreasig employmet ad reducig iequality. Developmet iitiatives, especially i rural commuities, are icreasigly resiliet to the impact of climate chage, with mutual beefits betwee sustaiable developmet ad low-carbo growth quickly idetified ad exploited. The state has sigificatly stregtheed its 179

192 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN capacity to maage the ogoig iteralisatio of evirometal costs, ad to respod to the icreasigly severe impacts of climate chage. Key steps towards the visio To achieve this visio South Africa will eed clear log-term strategies for both adaptig to the effects of climate chage through adaptatio policies ad reducig its carbo emissios to a sustaiable level through mitigatio policies. Adaptatio South Africa s primary approach to adaptig to the impact of climate chage is to stregthe the atio s resiliece. This ivolves decreasig poverty ad iequality, icreasig levels of educatio, improvig health care, creatig employmet, promotig skills developmet ad ehacig the itegrity of ecosystems. This strategy requires esurig that local, provicial ad atioal govermet embrace climate adaptatio by idetifyig ad puttig ito effect appropriate policies ad measures. Adaptatio policies ad measures iclude: adequate support for the vulerable; equitable disbursemet of fiacial assistace; sigificat ivestmets i ew adaptive techologies ad techiques i the water, biodiversity, fisheries, forestry ad agricultural sectors; early warig systems for adverse weather, pest ad disease occurrece; disaster relief preparedess; ad sigificat ivestmet i coservig, rehabilitatig ad restorig atural ecosystems to improve resiliece. Gee baks should also be expaded to coserve critically edagered species that are icreasigly vulerable to climate chage. Mitigatio South Africa s level of emissios will peak aroud 2025 ad the stabilise. This trasitio will eed to be achieved without hiderig the coutry s pursuit of its socioecoomic objectives. This ca be attaied through adequate iteratioal fiacig ad techological assistace, ad a carefully aliged domestic policy ad regulatory eviromet. Key cotributors to stabilisig emissios iclude: a commitmet to udertake mitigatio actios; a appropriate mix of carbo pricig mechaisms; policy istrumets that support mitigatio; a expaded reewable eergy programme; a advaced liquid ad bio-fuels sector; a effective mix of eergy efficiecy ad demad maagemet icetives; proactive local govermet climate chage programmes i areas such as waste maagemet ad street lightig; regulatio to promote gree buildig ad costructio practices; ivestmets i a efficiet public trasport system; ad a robust ad trasparet moitorig, reportig ad verificatio system. Additioal ivestmets i research ad developmet, maufacturig, traiig ad marketig are also critical. 180

193 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY These actios will eed to take place i the cotext of a agreed iteratioal framework for mitigatio that imposes a absolute costrait o greehouse gas (GHG) emissios iteratioally from 2030 to This will help mitigatio to become a key compoet of policy ad plaig. By 2030 a substatial proportio of the low-carbo ifrastructure should be i place or at a advaced stage of plaig, particularly i the eergy ad trasport sectors. South Africa will eed to allocate research ad developmet resources strategically to low- carbo techologies, buildig o existig areas of competitive advatage. This will help the coutry to establish a vibrat market for low-carbo products ad services for both domestic use ad for export to souther Africa coutries. The coutry will also eed to esure sigificat strategic streamliig of carbo-itesive ivestmets. The trasitio: storylies Startig poit There are may medium- ad log-term beefits to be gaied from pursuig low-carbo growth, particularly give the liks betwee climate chage actio, job creatio, poverty reductio ad ecoomic competitiveess. Give South Africa s startig poit, however, the coutry faces a particularly challegig trasitio to a resiliet, low-carbo ecoomy ad society. From a mitigatio perspective, South Africa is oe of a relatively small umber of coutries with abudat coal, miimal hydroelectricity ad little productio of atural gas. South Africa s eergy emissios accout for over 70 percet of its total emissios ad coal accouts for the bulk of eergy supply. The coutry also holds some of the world s richest deposits of mierals, with miig ad processig demadig substatial eergy. The impact of these atural edowmets has bee heighteed through historical policies that created a mierals ad eergy complex a political, ecoomic ad istitutioal structure that lies at the heart of South Africa s ecoomy, ad creates a fudametal structural challege i movig towards a lower carbo ecoomy. I additio, South Africa s apartheid legacy has resulted i uacceptably high levels of poverty ad iequality, which also have structural characteristics. The pace ad process of movig to a low-carbo ad climate-resiliet ecoomy must be desiged i such a way that it also cotributes to the objectives of overcomig poverty ad iequality. South Africa has a systemic shortage of skills ad capacity. The structural failure of the educatio system ad cotiued high levels of poverty ad uemploymet have resulted i a poorly skilled workforce, which will require decades to trasform. I additio, state capacity to admiister regulatory processes is low. The trasitio to a low-carbo ad resiliet ecoomy requires a capable state to lead, eforce the regulatio of GHG emissios, ad respod to the impacts of climate chage. The trasitio to a low-carbo ecoomy depeds o the coutry s ability to improve skills i the workforce, at least i the early phases of the trasitio. 181

194 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN As oted i the Diagostic Report ad the Climate Chage Respose White Paper, South Africa accepts the sciece used by the Itergovermetal Pael o Climate Chage ad the resultig goal to limit global warmig to below 2 C above pre-idustrial levels. It is clear that actio to address the causes ad impact of climate chage by a sigle coutry, or a small group of coutries, caot take place i isolatio. This is a global problem requirig a global solutio, through the cocerted ad cooperative efforts of all coutries. The world is ot curretly o the right path to achieve this. Give that the effects of climate chage will fall most heavily o the poor, South Africa eeds to urgetly stregthe the resiliece of its society ad ecoomy, while developig ad implemetig ways of protectig the most vulerable. Mitigatio policies ad measures Over the past few years, South Africa has icreasigly stated its ambitio to act resposibly to mitigate the effects of climate chage. Domestic ad iteratioal statemets iclude, amog others: the Log Term Mitigatio Scearios ( ); the Mitigatio Potetial Study; Cabiet s visio of a peak, plateau ad declie trajectory (2008); ad South Africa s Copehage Pledge (2009). The Natioal Climate Chage Respose White Paper clarifies this ambitio through quatifyig the busiess-as-usual trajectory, agaist which the efficacy of South Africa s collective actios to reduce GHG emissios is measured. This mitigatio effort aims to achieve the peak, plateau ad declie trajectory of the Copehage Accord, which serves as South Africa s log-term 2050 mitigatio visio. Achievig this is possible oly with iteratioal support. This is challegig for domestic plaig because it is uclear if the ecessary fiacig ad techology developmet ad trasfer support will be received i full, i part, or ot at all. This is problematic as short-term decisios eed to be made about large capital-itesive ifrastructure ivestmets that will commit the ecoomy to a particular emissios path. It is likely that several such decisios will have to be take before we kow the extet or ature of the support South Africa will receive. While the Log Term Mitigatio Scearios provided a useful startig poit, more detailed aalysis is eeded to determie the optimal mix of mitigatio actios to achieve the desired emissio reductio outcomes for each sector ad sub-sector of the ecoomy. This work is eeded to esure that actios support job creatio ad take accout of other relevat coditios related to the specific sector, sub-sector or orgaisatio cocered. I the absece of more detailed aalysis, certai stakeholder groups are apprehesive about what this commitmet will really mea for South Africa i terms of ecoomic growth ad jobs. Iitial fidigs from a commissio study o the role of the miig ad mierals beeficiatio sector idicates that eve uder strog assumptios of eergy itesity improvemets ad full implemetatio of the Itegrated Resource Pla 2010, which covers the period 2010 to 2030, the sector sigificatly exceeds its emissios levels evisaged for the years 2020 ad 2025 (based o curret proportioal emissios cotributios). This sector is curretly beig 182

195 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY prioritised by ecoomic policy for its cotributio to ecoomic growth ad employmet creatio. Give this ad the curret realities of iteratioal climate mitigatio policy, it will be challegig to hoour the commitmet to reduce South Africa s emissios without compromisig the overridig priorities to create jobs, address poverty, improve public health ad grow a iteratioally competitive ecoomy, without substatial iteratioal assistace. However, it is i the coutry s best iterests that a absolute global emissios costrait is put ito effect sooer rather tha later. Give these variables, more work is eeded to uderstad how best to pla ad maage the trasitio to a just, resiliet ad low-carbo ecoomy. New ad iovative policy approaches will be required, eedig flexibility i the short ad medium terms, while esurig aligmet with a absolute carbo emissios limit i the log term. A just trasitio The poor ad vulerable are, ad will cotiue to be, disproportioately affected by climate chage. Millios of people are employed i eergy-itesive idustries ad the miig sector is a major cotributor to South Africa s foreig exchage earigs. A judicious process of trasitio is therefore o-egotiable. I additio, the poor ad vulerable must specifically be protected from the trasitioal costs associated with mitigatio, such as icreased costs of eergy, food ad trasport, job losses i carboitesive idustries, ad demad for differet skills. Build resiliece Oe of the mai challeges of climate chage is the high level of ucertaity about the exact impacts, its costs ad the outcome of fial global agreemets. Buildig the resiliece of both the ecoomy ad society is oe of the best ways to maage this upredictability. I this cotext, ecoomic resiliece refers to a ecoomy that is competitive iteratioally, has a high level of eergy, water, food ad atural resource security, has strog iovative capacity, ad is drive by a skilled ad flexible workforce. A resiliet society will be appropriately healthy, educated ad prosperous. 183

196 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN I thik we have't cosidered solar power, ot solar paels, but heliostats, solar power towers. Together with hydro ad wid power it ca make a sigificat impact o our depedecy o coal ad uclear resources. I will ot give extesive details but I will say if Spai ca power households usig a heliostat i a climate with less itese sulight, why ca't we? I was able to boil water usig a heliostat made of foil i my back yard whe I was a udergrad at uiversity. The pricipal works ad the resource is beamig dow o us everyday whether we choose to haress it or ot. To this ed I would use the eergy geerated to split water from the ocea usig the Deuterium to power fuel cells rather tha use our valuable fresh water. With these chages i place it should actually cut the cost of electricity i the log ru. I am proudly South Africa, I believe that we as South Africa have the resources ecessary to improve the lives of every South Africa. We should ot wait for the developed world to show us the way forward whe i fact we ca lead. NPC Jam To esure that the trasitio is just, resiliece should be built ito all aspects of plaig ad policy. A regioal perspective is also critical, as South Africa s eighbours face similar adaptatio challeges, ad their success is itegral to our ow. Cooperative regioal developmet plaig processes should poit out possible parterships that tackle both adaptatio ad mitigatio challeges, to the beefit of all coutries ivolved. Some govermet departmets have already made sigificat progress i siglig out projects for implemetatio. Other projects are more difficult ad costly, ad will require careful cosideratio of how they should be fiaced, icetivised ad maaged. The White Paper sigles out a umber of flagship projects, icludig job-geeratig programmes such as Workig for Eergy, Water ad Fire; acceleratig the Natioal Water Coservatio ad Water Demad Maagemet Strategy; ad eergyefficiecy itervetios i the residetial housig sector through schemes such as the Natioal Sustaiable Settlemets Facility of the Departmet of Huma Settlemets. The Departmet of Eergy's solar water heatig programme will be expaded with support from the Departmet of Trade ad Idustry to icrease the domestic supply of parts for solar water heatig. There are also iitiatives uder way to icrease reewable eergy ad eforce madatory eergy-efficiecy requiremets for idustry. I trasport, a ehaced public trasport ad govermet vehicle efficiecy programme will be implemeted. Private sector iitiatives such as the Carbo Disclosure Project show a similar commitmet to takig actio. 184

197 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY Structural chage, trade-offs ad lock-is The Log Term Mitigatio Scearios show that South Africa caot achieve the post declie portio of the peak, plateau ad declie visio withi its curret ecoomic structure, which is cetred primarily o eergy- ad carbo-itesive activities. Structural trasformatio of the ecoomy is ecessary ad will require techological ad ifrastructural iovatio ad developmet. Trasformatio will ievitably ecessitate short-term trade-offs ad will have implicatios for idustries uable to shift to ew productio approaches ad techologies. Educatio ad traiig are therefore essetial for fosterig iovatio. The key challege is de-likig ecoomic activity from evirometal degradatio ad carboitesive eergy, while remaiig competitive ad reducig uemploymet, poverty ad iequality. To pla for the trasitio, a better uderstadig is eeded of the ature of competitiveess i the ew global ecoomy, as well as impedimets to trasitio, ad how to overcome these. How South Africa s existig set of edowmets is used i buildig a low-carbo ecoomy ad society is critical. Ideally, ecoomic activity will expad, while cosumptio of o-reewable atural resources i the form of fossil fuels ad egative evirometal impacts such as water cotamiatio will be reduced. These chages may require a more radical rethik of the scope of actio required to trasform the ecoomy. A shift to a gree ecoomy ad more sustaiable practices i geeral should ot be see i oppositio to developmet, job creatio ad ecoomic growth. Nor should it be see as a ice-to-have or merely a additioal sector of the ecoomy. With all the developmet challeges i SA the oly way to really advace evirometal sustaiability is to tie it clearly to huma ad ecoomic developmet. For some the lik is obvious, but sadly may people still see the two as opposig. Whe makig ew policy ad proposig chages this lik should be show clearly. Oly if people are coviced that it is about people first ad foremost will they really be willig to make the ecessary chages. NPC Jam Moey ivested i the curret ecoomic structure rus the risk of beig a suke cost if spedig is ot aliged with the coutry s future goals. There is the additioal risk that South Africa is locked ito a ecoomic pathway that could udermie its competitiveess ad flexibility i takig up future opportuities. Policy istrumets ad mechaisms will eed to factor i the log-term costs. Areas of existig ad possible future lock-is ad trade-offs that require ivestigatio iclude electricity, trasport, liquid fuel supply, the coal sector, ad expadig eergy-itesive idustry. Some examples iclude: 185

198 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The extet to which eergy itesity eeds to be costraied, if at all, durig the trasitio. Future eergy sources the extet of the use of coal, uclear, hydro, gas, bio-fuels ad reewables. The impact of hybrid techologies, which combie covetioal fossil geeratio with reewable eergy. The potetial role of uclear power. How to best use some or all of the mieral sub-sectors ad smelters to facilitate the trasitio, ad whether there is still a role for them i the log term. The use of market mechaisms for mitigatio. The impact the evisaged trasitio may have o lad use. Maage the trasitio The costs of proactively buildig a just, low-carbo ad resiliet ecoomy ad society are likely to be far lower tha the costs of a uplaed respose. However, the trasitio will ot be easy. Give South Africa s startig poit, it is likely to be both challegig ad cotested, with difficult choices alog the away. Plaig must therefore follow rigorous ad trasparet processes, with full stakeholder egagemet, ad decisios based o a detailed aalysis of the evidece. The state s guidig role While the resposibility for the trasitio should be bore collectively by all stakeholders, the state will have to facilitate ad guide the process. It has the costitutioal ad moral imperative to act i the iterests of the atio, fialisig a atioal approach that balaces the difficult trade-offs with issues of equity ad resposibility to its citizes, future geeratios ad regioal ad global parters. Govermet has a key role to play i developig the ecessary skills ad istitutioal ad cultural capacity to support this trasitio. The scale ad sigificace of this role should ot be uderestimated. Isufficiet capacity ad poor goverace could jeopardise efforts to meet the coutry s climate commitmets. Existig istitutios should be restructured ad further capacitated to advace key areas of the trasitio. The desig ad implemetatio of the coutry s climate chage policy would beefit from public iput. I may cases, this participatio is ieffective or superficial. It is govermet s role to esure participatio is meaigful ad that there is sufficiet public support for the chose policy. Ivolvig busiess etities i mitigatio ad adaptatio is critical as projects are more likely to succeed if busiess etities work closely with govermet i desig ad implemetatio. 186

199 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY Govermet itervetio may also be eeded to ecourage research ad developmet i low-carbo ad adaptive techologies. South Africa does ot have the resources to support leadership i all possible areas of techological developmet, so it is importat that decisios are iformed by the coutry s atural edowmets, skills ad areas of existig capacity ad competece. Alig ad maistream existig policy A crucial costrait that affects the state s ability to lead is a lack of coordiatio betwee govermet departmets. Iformatio o the availability of measures to support ivestmet i low-carbo ad clea techologies, as well as where such measures are eeded, is scattered across atioal govermet departmets, provices, muicipalities ad agecies. The relevat madates of these istitutios ted to be loosely defied, ofte resultig i a duplicatio of roles. Aligig ad coordiatig existig ad future policy is therefore essetial. The Climate Chage Respose White Paper proposes a log-term framework for istitutioal coordiatio to implemet the Natioal Climate Chage Respose Policy. This oversight ad coordiatio fuctio at a meta-departmetal level is critical. Ecoomic policy departmets, i particular, should be appropriately represeted ad ivolved i future plaig. There is a risk that the govermet s climate policy may go uimplemeted if actios are ot uderstood i the cotext of addressig South Africa s key challeges of poverty ad iequality. Maistreamig mitigatio ad adaptatio cosideratios ito the activities of all govermet departmets ad across local, provicial ad atioal govermet is ecessary to achieve the trasitio as efficietly as possible. Build a evidece base The challege i climate chage is more about lookig at the itegrated system ad optimizig the resources withi the system. I this system we eed to simultaeously thik of eergy, water, food security, waste maagemet, populatio growth, lad utilizatio, ecoomic growth, etc. This requires our govermet to forget the silos ad itegrate the policies ad programmes to maage the system. NPC Jam Plaig for the trasitio requires a foudatio of trustworthy data ad aalysis, either of which is reliably ad trasparetly available i South Africa. I particular, there is a eed for thorough ad i-depth aalysis o the ecoomic implicatios of reachig the coutry s mitigatio ambitio, ad the optios to achieve the required structural chage. Collectig reliable data o all aspects of climate chage is a priority. This requires data collectio mechaisms, icludig urgetly settig up madatory moitorig, evaluatio ad reportig processes for all relevat stakeholders. 187

200 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Moitor, report ad verify Uderstadig South Africa s progress agaist atioal goals is critical i movig towards the evisaged ecoomy ad society especially give the umber of relevat mitigatio variables. The Climate Chage Respose White Paper proposes mechaisms through which this ca occur. It is importat that South Africa s system of moitorig, reportig ad verifyig is compatible with systems evolvig iteratioally, to simplify the process of receivig iteratioal support for mitigatio actios. Proposed mitigatio istrumets Carbo-budget approach South Africa is oe of a commuity of developig coutries actively cosiderig a carbo budget for the ecoomy. A carbo budget sets the amout of carbo that ca be emitted i a give amout of time. This would provide directio ad certaity to busiess ad govermet. Give how iteratioal ad domestic ecoomic ad policy eviromets are evolvig, however, it is importat that the carbo budget be subject to regular moitorig ad review of targets. This flexibility is ecessary for South Africa to desig ad implemet policy resposively, i the cotext of a clear log-term policy directio. A well-desiged carbo budgetig system would: Bechmark South Africa s total carbo budget agaist the atioal GHG trajectory rage. Cosider the cumulative ature of the carbo budget over the etire period uder the atioal GHG trajectory rage. Use a bottom-up approach (iitially), while still cosiderig the log-term limitatios of South Africa s emissios space. Provide flexibility for achievig reductios i differet sectors of the ecoomy ad over time. The last poit is particularly importat give that South Africa s eergy- ad carboitesive sub-sectors face the greatest challege i reducig their emissios. The carbo budgetig approach to mitigatio must efficietly ad appropriately apportio carbo space to the sectors ad activities that add the greatest value, usig a trasparet set of criteria ad idicators that iclude developmetal criteria. This will help to maitai ad build South Africa s competitiveess i a low-carbo future. Although this is critical for achievig a sustaiable outcome, it will ot be easy give the ifluetial iterests i some of the most carbo- ad eergy-itesive sectors. 188

201 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY Commit to a domestically established mitigatio target A additioal proposal that emerged from the stakeholder process is for South Africa to commit to a domestic mitigatio target to sigal the coutry s resolve to trasitio to a low-carbo ecoomy ad build the cofidece eeded to ulock further iteratioal support ad ivestmet. This target would be implemeted regardless of the exteral fiacial support South Africa receives ad would be developed from a soud evidece base ad i the cotext of the log-term 2050 peak, plateau ad declie trajectory. It should be sufficietly ambitious to be viewed as a serious cotributio to limitig global warmig to less tha 2 C but would eed to take ito accout the coutry s socioecoomic ad developmetal priorities. How this commitmet could be expressed is still uclear, but it should be aliged with the carbo-budget approach for policy cosistecy ad implemetatio. Carbo pricig Iteratioal experiece shows that the most effective way to achieve a just ad maaged trasitio to a low-carbo ecoomy is to iteralise the social ad evirometal costs of GHG emissios. Iteratioal best practice has also established that adequately pricig GHG emissios is oe of the most effective ways to ecourage polluters to chage their behaviour. Natioal Treasury, i its 2010 discussio paper o reducig GHG emissios, proposes a carbo tax approach. The commissio supports this. Treasury is also developig a discussio documet o potetial market-based pricig mechaisms. If South Africa is to maage the trasitio i the least disruptive way possible it will eed to itroduce a broad-based carbo-pricig regime that covers all relevat sectors at oe cosistet price. This approach will eed to iclude a rage of temporary icetives ad support mechaisms. This regime may eed to be aliged with a carbo budget for specific sectors. Some of the reveue could be used to subsidise low-icome households ad fud rebates for clea techologies, further stregtheig the price icetives. Over the log term, the rebates, supportig policies ad icetives will be phased out, leavig a carbo price that will be close to the social cost of carbo iteratioally. South Africa's propesity for chage i the way it produces ad cosumes goods is related to the mechaisms we structure to icetivise all sectors of society to work collectively to address evirometal sustaiability - we eed tax breaks for gree busiesses ad for people who miimise their carbo footprit. Govermet caot charge people the same muicipal rates for recyclig collectio services as those for sedig tos of waste to ladfills. NPC Jam 189

202 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN There is some debate as to whether the tax ca be effective whe the electricity geeratio sector i South Africa is subject to regulated pricig. A highly ucompetitive ad moopolistic structure challeges the effective applicatio of a pricig istrumet. Give that electricity represets the source of most of South Africa s atioal emissios as well as much of its mitigatio potetial, it is critical that the sector is subject to a appropriate carbo price, though the effect may oly be realised i the medium to log term. A possible way of dealig with this would be to provide a tax rebate to the sector, with the Itegrated Resource Pla remaiig the primary mitigatio istrumet. The pla provides for buildig geeratio plats that will icreasigly icorporate lower emissios techologies because of the carbo price cosideratio. As see i other coutries (most recetly, Australia), the itroductio of a carbo price must be hadled carefully. Cautio is particularly eeded i South Africa s cotext of risig electricity prices. The carbo price would eed to be phased i to protect the ecoomy ad cosumers from further cripplig icreases. Ultimately cosumers will face a icreased cost through the tariff mechaism to ecourage a chage i cosumer behaviour, while the poor would be give relief uder the household eergy poverty itervetios. This mechaism would eed to be reviewed as the electricity sector becomes icreasigly competitive i structure. Additioal policy istrumets should also be cosidered to support idustry to achieve mitigatio Be brave ad tax cars that are heavy o petrol ad tax them heavily - do't be shy about it. The tax should be high eough to cause a major swig away from large luxury vehicles, to smaller, lighter (but safe) cars. Sorry, guys, but o oe drivig i a city NEEDS a 4x4, ad uless you're itedig to fight i Afghaista over the weeked, o oe eeds a Hummer. Ba the importatio of "ego" vehicles that chew petrol. I a coutry sufferig massive poverty ad iequality, it is ot appropriate to flaut a Maserati. NPC Jam targets, especially i sectors where the price is isufficiet to chage ivestor or cosumer behaviour. For example, i the trasport sector, accelerated emissiositesity pealties for motor vehicles at the poit-of-sale could be implemeted. Fiacig Fiace for the trasitio will come from a combiatio of measures icludig realigig existig budget lie items to the coutry s mitigatio ambitios ad its resiliece ad adaptatio priorities; domestic sources such as carbo pricig; ad iteratioal aid. Usig public sources of fudig to leverage private ivestmets is critical if adequate resources are to be mobilised. It is crucial that curret govermet spedig is aliged with the requiremets of the visio for mitigatio ad adaptatio, to esure soud fiscal maagemet ad prevet lock-i through ivestmet i ifrastructure that is icosistet with these objectives. To address this, there is a eed to esure that policy, plaig ad regulatios are aliged to the climate chage 190

203 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY respose at every level. This icludes the phased removal of existig subsidies ad icetives that perpetuate a high-carbo ecoomic structure. It is ot clear how the ecessary iteratioal fudig ca be accessed or how much is eeded. However, some fiacig has started to flow, ad it is importat that South Africa positios itself favourably to receive this assistace. The carbo budget process should help ad ecourage govermet departmets, sectors ad firms to access ad secure such aid through developig atioally appropriate mitigatio actios, the clea developmet mechaism, ad adaptatio fuds or other mechaisms as they become available. These proposals should be uderpied by South Africa s objectives of reducig poverty ad iequality. It is aticipated that limited domestic reveue sources will be geerated by the carbo pricig system. Other climate-related taxes ad levies should be applied i aligmet with soud fiscal policy ad priciples o govermet ivestmet i climate chage. Guidig priciples for the trasitio The commissio proposes that the followig priciples should augmet those set out i the Climate Chage Respose White Paper ad guide all aspects of the trasitio, from policy, to process, to actio: Just, ethical ad sustaiable Recogise the aspiratios of South Africa as a developig coutry ad remai midful of its particular startig poit. Global huma solidarity Protect ad promote the iterests of South Africa s citizery, i the cotext of global huma solidarity. Ecosystems Ackowledge huma wellbeig as depedet o the wellbeig of the plaet. Strategic plaig Apply a systems perspective, while esurig a approach that is dyamic, with flexibility ad resposiveess to emergig risk ad opportuity, ad effective maagemet of trade-offs. Trasformative Address all aspects of the curret ecoomy ad society, requirig stregth of leadership, boldess, visioary thikig ad iovative plaig. Maage trasitio Build o existig processes to attai gradual chage ad a phased trasitio. Opportuity focus For busiess, growth, competitiveess ad employmet creatio, ad for South Africa to attai comparable equality ad prosperity. Full cost accoutig Iteralise exteralities through full cost accoutig. Effective participatio of social parters Be aware of mutual resposibilities, egage o differeces, seek cosesus ad expect compromise through social dialogue. Balace evidece-collectio with immediate actio Recogise the basic tools eeded for iformed actio. 191

204 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Soud policy-makig Coheret ad aliged policy that provides predictable sigals, while beig simple ad implemetable, feasible ad effective. Least regret Ivest early i low-carbo techologies that are least-cost, to reduce emissios ad also positio South Africa to compete i a carbocostraied world. A regioal approach Develop parterships with eighbours i the regio to promote mutually beeficial collaboratio o mitigatio ad adaptatio. Accoutability Lead ad maage, as well as moitor, verify ad report o the trasitio. Phasig The trasitio to a low-carbo, resiliet ecoomy ad society requires careful phasig of strategic plaig, evidece gatherig, ad ivestmet. While the aim is to reduce emissios immediately ad provide relief for those already affected by evirometal impacts, importat work is simultaeously eeded to lay the groudwork for future emissio reductios ad climate resiliece, through ivestmet i low-carbo ad climate-resiliet ifrastructure. Attetio to phasig ad sequecig will therefore be a importat part of the climate chage plaig process. Certai sectors will require carbo space ow while they build the low-carbo ifrastructure of the future. The phasig required is outlied below. By 2015: The roles ad istitutioal arragemets idicated by the Climate Chage Respose White Paper have bee established, istitutioalised, legislated, staffed appropriately, ad have developed processes ad systems to carry out their madate. There is a comprehesive, trusted ad expadig evidece base for climate chage policy-makig i relatio to adaptatio ad mitigatio. South Africa s mitigatio commitmet is defied ad actios are beig take to achieve it. A process to uderstad the implicatios of mitigatio effort betwee sectors ad ecoomic activities withi a limited carbo space has bee established through the carbo-budget approach. This guides ifrastructure spedig, aticipatio of lock-i ivestmets ad busiess plas for appropriate mitigatio actios. Policy ad regulatio are aliged to the commo purpose of a just trasitio. Potetial policy ad ivestmet lock-is have bee idetified, the trade-offs maaged ad suke costs avoided. A carbo tax is i place, ad a wider suite of mitigatio policy istrumets that target specific mitigatio reductio opportuities aliged with the carbo-budget approach. 192

205 CHAPTER 5: TRANSITION TO A LOW-CARBON ECONOMY Flagship mitigatio ad adaptatio projects established i the Climate Chage Respose White Paper are well uder way. South Africa is startig to access iteratioal assistace for adaptatio ad mitigatio actios. Climate chage issues are well represeted at forums for regioal cooperatio. Two further itegrated resource pla s are complete ad iclude carbo costraits appropriate to South Africa s overall mitigatio effort ad the price of carbo. Sigificat ivestmet programmes are i place for climate-related research ad developmet, ad skills developmet. Istitutioal capacity is startig to emerge, based o a just ad resiliet lowcarbo ecoomy ad society. By 2020: The carbo-budget approach has evolved ito a importat ad trusted plaig tool, iformig ogoig policy developmet ad implemetatio, ad feedig ito South Africa s iteratioal commitmets. Plas to stregthe state capacity are startig to pay off, ad rigorous skills developmet itervetios are active across the coutry. Aual data o emissios levels ad climate impact feeds ito policy ad regulatory processes. Iteratioal assistace has bee secured for a umber of mitigatio projects, settig the path for aligmet with global mitigatio objectives. Resiliece plaig is itegrated ito all plaig processes i the coutry. Plaig is startig for the post-2030 period, with a strog regioal perspective. A culture of eergy efficiecy i society is well established. By : Ivestmet i low-carbo ad climate-resiliet ifrastructure i the previous decade is startig to pay off. The state is well capacitated ad comfortably maages its policy, regulatory ad support fuctios. South Africa has secured substatial iteratioal assistace ad is aliged with objectives defied i its visio of mitigatio. The trasitio has bee recociled with South Africa s efforts to address poverty ad iequality. Ideed, the beefits of buildig resiliece are evidet i the strides towards a flourishig ad prosperous South Africa. The carbo-budget approach has matured ad is aliged with iteratioal best practice, guidig the allocatio of absolute carbo costraits i the iteratioal climate mitigatio policy framework. South Africa is well positioed to meet its commitmets, give the early adoptio of a carbo budget framework. 193

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207 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Chapter 6 AN INTEGRATED AND INCLUSIVE RURAL ECONOMY South Africa, our coutry, is our lad. Our lad is our home. We sweep ad keep clea our yard. We travel through it. We ejoy its varied climate, terrai ad vegetatio. It is as diverse as we are. We live ad work i it, o it with care, preservig it for future geeratios. We discover it all the time. As it gives life to us, we hoour the life i it. From time to time it remids us of its eormous, ifiite power whe rai ad floods overwhelm, wids buffet, seas rage, ad the su beats ureletigly i drought. I humility, we lear of our limitatios. Itroductio Sice 1994, the mai challege for rural developmet has bee the eed to combat margialisatio of the poor. This required chages i access to resources (lad, water, educatio ad skills), rural ifrastructure ad other govermet services. Some progress has bee made, with sigificat shifts i the extet ad degree of poverty. The Natioal Icome Dyamics Study 1 revealed that the rural share of poverty fell from 70 percet i 1993 to 57 percet i The improvemet i household welfare is geerally ascribed to the large icrease i social grat expediture. Farm workers also ejoy greater rights, both as workers ad teats, ad receive better wages. Access to basic services has icreased, although at a slower pace tha i urba areas, ad is ot fully realised. Sice 1994, about 6 millio hectares of agricultural lad have bee redistributed 3.4 millio hectares through lad redistributio ad 2.4 millio through the restitutio process. Of lad claims lodged sice 1994, 95 percet have bee settled. Rural areas, however, are characterised by greater poverty ad iequality tha urba areas, with may households trapped i a vicious cycle of poverty. 1 The Presidecy (2009). Natioal Icome Dyamics Study. 195

208 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Visio 2030 By 2030, South Africa s rural commuities should have greater opportuities to participate fully i the ecoomic, social ad political life of the coutry. People should be able to access high-quality basic services that eable them to be well ourished, healthy ad icreasigly skilled. Rural ecoomies will be supported by agriculture, ad where possible by miig, tourism, agro-processig ad fisheries. The visio icludes better itegratio of the coutry s rural areas, achieved through successful lad reform, job creatio ad poverty alleviatio. The drivig force behid this will be a expasio of irrigated agriculture, supplemeted by dry-lad productio where feasible. I areas with low ecoomic potetial, quality educatio, health care, basic services ad social security will support the developmet of huma capital. I areas with some ecoomic potetial, o-agricultural activities (such as agro-idustry, tourism, small eterprises or fisheries) will boost developmet. Access to basic social ad ifrastructural services is a high priority for may rural households, ad these are addressed i the huma settlemets ad social protectio chapters. This chapter focuses o developig rural ecoomic opportuities, without which services are ulikely to be sustaied i the log term. What eeds to be doe The commissio proposes a differetiated rural developmet strategy: Agricultural developmet based o successful lad reform, employmet creatio ad strog evirometal safeguards. To achieve this, irrigated agriculture ad dry lad productio should be expaded, begiig with smallholder farmers where possible. Quality basic services, particularly educatio, health care ad public trasport. Well fuctioig ad supported commuities will eable people to develop the capabilities to seek ecoomic opportuities. This will allow people to cotribute to developig their commuities through remittaces ad the trasfer of skills, which will cotribute to the local ecoomy. I areas with greater ecoomic potetial, idustries such as agro-processig, tourism, fisheries (i coastal areas) ad small eterprise developmet should be developed. The differetiated strategy should be ehac ed by esurig access to basic services, food security ad the empowermet of farm workers. Istitutioal capacity is itegral to success, especially i the reforms required to resolve cotested relatioships betwee idigeous ad costitutioal istitutios. 196

209 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Agriculture As the primary ecoomic activity i rural areas, agriculture is the mai focus of this chapter. Agriculture has the potetial to cr eate close to 1 millio ew jobs by 2030, a sigificat cotributio to the overall employmet target. To achieve this, South Africa eeds to: Expad irrigated agriculture. Evidece shows that the 1.5 millio hectares uder irrigatio (which produce virtually all South Africa s horticultural harvest ad some field crops) ca be expaded by at least hectares through the better use of existig water resources ad developig ew water schemes. Covert some uder-used lad i commual areas ad lad reform projects ito commercial productio. Pick ad support commercial agriculture sectors ad regios that have the highest potetial for growth ad employmet. Support job creatio i the upstream ad dowstream idustries. Potetial employmet will come from the growth i output resultig from the first three strategies. Fid creative combiatios betwee opportuities. For example, emphasis o lad could beefit from irrigatio ifrastructure; give priority to successful farmers i commual areas; ad support idustries ad areas with high potetial to create jobs. All these will icrease collaboratio betwee existig farmers ad beeficiaries of lad reform. Develop strategies that give ew etrats access to product value-chais ad support from better resourced players. The table below depicts how this ca be achieved. The employmet creatio potetial of South Africa agriculture Target group Subsistece farmers with <0.5 hectares Small-scale farmers with betwee 0.5 ad 5 hectares of lad Small-scale farmers with >5 hectares of lad Better use of redistributed lad Primary jobs created Secodary jobs created Assumptio The livelihoods of oe i 10 of the farmers i this category are improved The livelihoods of half the farmers i this category are improved These farmers employ themselves ad two others Redistributio beeficiaries employ themselves ad two others; oe i 10 restitutio beeficiaries become selfsufficiet. 197

210 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Target group Primary jobs created Secodary jobs created Assumptio Labour-itesive wiers Critically, this requires ivestmet i irrigatio, support to smallholder farmers ad their ability to grow their busiesses. Labour-extesive field crops This reflects a high road or optimistic sceario ad assumes that the curret declie i employmet i commercial farmig is halted. Labour-extesive livestock This reflects a high road or optimistic sceario ad assumes that the curret declie i employmet i commercial farmig is halted. Total Note: The employmet multiplier betwee agriculture ad its upstream ad dowstream idustries has bee take at 0.5 for small-scale farmers (a coservative estimate). Creatig jobs i agriculture will ot be easy. It will require credible programmes, soud implemetatio, sigificat resources ad stroger istitutios, such as agriculture departmets i local ad provicial govermet. The effectiveess of extesio officers depeds o performace, capacity ad level of priority give by provicial agricultural departmets. Whether this service is correctly located should also be cosidered. Despite these challeges, with the right approach it is possible to reverse the declie i the agriculture sector, promote food productio ad raise rural icome ad employmet. White commercial farmers, agribusiesses ad orgaised agricultural idustry bodies ca help brig these objectives to fruitio. Jobs ad livelihoods i commual areas Traditioally, agriculture was a livelihood asset to the rural poor whe other sources of icome fell away. This role was always uder developed because of apartheid, but it is dimiishig further owig to icreases i social grats ad employmet opportuities elsewhere. Agriculture, however, has the potetial to expad if the ecessary eviromet ca be created. Better lad use i commual areas has the potetial to improve the livelihoods of at least people. 198

211 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY The table below shows South Africa households with access to lad. About jobs are available, based o the followig assumptios. First, assume that plots of less tha half a hectare are largely vegetable gardes ad that the farmers with more tha 20 hectares farm i commercial areas. This leaves some households who farm at some scale. Of these, about have access to betwee half a hectare ad five hectares, while about have access to betwee five ad 10 hectares. Some farmers with more tha five hectares already have access to irrigatio ifrastructure. Others farm i areas where irrigatio is possible. There must be at least small-scale farmers i the commual areas with access to more tha five hectares of dry lad, ad who do ot farm i areas that ca be irrigated. If these each employ two workers, about jobs will be created. If half the farmers o betwee half a hectare ad five hectares beefit from better livelihoods a further job opportuities will be created. If the livelihoods of oe i every 10 of those with access to less tha half a hectare improve, a total of at least potetial ew job opportuities will come directly from agriculture. South Africa households access to agricultural lad Hectares Number (weighted) % < Ukow Total Source: Statistics South Africa, A further livelihood opportuities are created if lad reform beeficiaries are properly supported. By 2009, the lad redistributio ad restitutio programmes had trasferred lad to beeficiaries (about households) ad 1.6 millio beeficiaries ( households) respectively. If about oe i three beeficiaries of the redistributio programme farms o a small scale ad employs at least two workers, jobs are created. Assumig that at least oe i 10 beeficiaries of the restitutio programme improves their livelihood provides jobs, which boosts the livelihoods of almost people. A large umber of the beeficiaries, maily of the restitutio programme, have ot bee able to settle o the lad or use it productively. I part, they have lacked ifrastructure, iputs ad techical support. 199

212 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN To realise opportuities, security of teure is required. Ivestmet by farmers will occur if they believe icome streams are secure. This requires ifrastructure ad fuctioig market istitutios, icludig isurace markets. Lad reform beeficiaries i commercial farmig areas have to fud lad purchase up frot, makig it almost impossible to farm profitably because of high debt burdes. Alteratively, if the lad is give as a grat, the state has to provide the fudig through the fiscus. Sice the state has limited meas to provide post-settlemet support, a possible solutio would be to use the Lad Bak, iitially established to address the difficulty of etry ito commercial farmig. The bak was allowed to use explicit ad evetually implicit subsidies from govermet to provide mortgage loas for up to 40 years. A stepped programme of fiacig would address most fiacig problems of lad reform beeficiaries. This ca be achieved through givig successful applicats a retfree probatio for two or three years. If farmers prove capable, they will move to a logterm lease of about 40 years with the full commercial retal phased i over four years. Part of the retal fee applied to a sikig fud held at the Lad Bak will evetually give them full title. Lad access i commual areas is treated as though lad rights ad the use of differet forms of lad are udifferetiated. I practice, lad rights for agricultural purposes differ depedig o how people use the lad. Securig teure for ivestmet is importat whe lad is used to grow crops. The focus should be o cooperatig with traditioal leaders i securig teured irrigable lad that will lead to fully defied property rights, which allows for developmet ad gives prospective fiaciers the security they require. Expad commercial agriculture Expadig commercial agriculture has the potetial to create direct jobs ad a further idirect jobs. This ca be achieved by pickig wiig agricultural subsectors where the expasio i productio ad further value-addig processes are sustaiable over the log term. Expasio is ot oly drive by higher levels of productivity, but also supported by foreig ad domestic market demad. Without boosted demad, icreased productio will depress domestic prices, which is bad for employmet creatio i the sector. The sectio below deals with potetial wiers, grouped ito the followig categories: large labour-itesive idustries; smaller labour-itesive idustries; ad large existig idustries with sigificat value-chai likages. The figure 2 below presets a overview of the idustries by mappig the relatioship betwee curret growth rates ad depedece o labour. 2 BFAP (2011). The cotributio of the agro-idustrial complex to employmet i South Africa. A report prepared for the Natioal Plaig Commissio. 200

213 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Agricultural growth ad employmet potetial Source: Bureau for Agricultural Policy, Large labour-itesive agriculture Citrus There are about hectares of citrus trees i South Africa. The employmet requiremet to produce citrus fruit is estimated at oe worker per hectare, hece about workers are employed o citrus farms. 4 Direct dowstream labour requiremets for citrus are estimated at oe labourer per cartos packed: with about 100 millio cartos packed per year, some jobs are created i packig plats for a period of six moths, or fulltime equivalets. I additio, there are labour requiremets for trasportatio, warehousig, port hadlig, research ad developmet, ad processig. From 2000 to 2010, the area uder citrus icreased by 28 percet, from to hectares. Almost hectares of citrus have bee redistributed by the lad reform programme, but 70 percet of these orchards are i distress. Rehabilitated, they would provide about additioal o-farm jobs. 3 BFAP (2011). The cotributio of the agro-idustrial complex to employmet i South Africa. Upublished report prepared for the Natioal Plaig Commissio. 4 I this ad subsequet subsectios it is importat to recall that there are few sigle-commodity (mooculture) farms i South Africa, hece these employmet umbers caot be aggregated. For example, citrus farms also produce other types of fruit ad livestock products, wie farms ofte also produce wheat or deciduous fruit, ad so o. 201

214 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Table ad dried grapes There are about hectares of table ad dried grapes plated i the coutry, with a employmet requiremet of 1.6 workers per hectare (about workers are employed o these farms). This represets a expasio of hectares sice 2000, idicatig that additioal jobs were created. Total exports of fresh grapes icreased from 37.2 millio cartos (of 4.5 kilograms) i 2000 to 51 millio cartos i If this output ca be repeated over the ext 10 years, it holds sigificat potetial to expad the idustry. The sigle greatest challege i peetratig ew markets remais market access through trade egotiatios ad saitary ad phytosaitary agreemets. As with the citrus idustry, South Africa eeds to remai iteratioally competitive to create ad maitai its market share. The opportuity to expad table ad dried grape vieyards lies maily i the Orage River regio. At preset water rights are available for a extra hectares, of which about are expected to be plated for table ad dried grapes over the ext decade. Subtropical fruit The critical factor expected to determie the future expasio of subtropical fruit productio is lad reform. The baaa idustry is a example. The area uder productio has declied from to hectares over the past decade. Farms have either become uproductive or producers are ot willig to reivest, choosig to move productio to Mozambique ad exportig to South Africa. Although there are o cofirmed statistics, idustry experts argue that up to half the traditioal South Africa crop is ow exported from Mozambique ito South Africa by South Africa producers. With a labour multiplier of two workers per hectare, this idustry ca make a sigificat cotributio to creatig jobs if oly oe-third of the area ow uderused ca be revived by ijectig the ecessary techical ad fiacial support. Similarly, the avocado idustry has a lot more to offer i employmet creatio. While the hectares uder baaa productio have bee decliig, the area uder avocado productio has expaded rapidly over the past decade. The high demad for avocados has led to a waitig list of about two years at urseries. The idustry argues that productio could expad by a further 70 percet (9 275 hectares) over the ext decade. With a labour multiplier of almost two labourers per hectare ad upstream ad dowstream likages of about 1.3 jobs per hectare, roughly jobs ca be created over the ext 10 years. About tos of avocados are ow produced, of which more tha 50 percet is exported, 10 percet processed ad the rest sold ito the fresh market. 202

215 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Vegetables The vegetable idustry could be oe of the largest cotributors to job creatio ad the improvemet of livelihoods if the potetial growth i demad i South Africa ad the souther Africa regio is take ito cosideratio. The demad for vegetables has grow cosistetly (about 30 percet over the past decade) ad as per capita icome rises, this tred is projected to cotiue. However, the rate of icrease i demad could be much faster ad the productio of vegetables could expad sigificatly if access to rural markets is established, trasparet electroic tradig platforms are put i place ad markets i eighbourig coutries are accessible. It is estimated that, apart from potatoes, the demad for vegetables is 25 percet below its potetial. This figure ca be added to the icreasig tred i demad of 3 percet a year, which implies that the expasio of commodities such as tomatoes, oios ad carrots could reach roughly 60 percet over the ext 10 years. Small-scale, labour-itesive agriculture This category icludes idustries such as macadamias, peca uts, rooibos tea, olives, figs, cherries ad berries. I sheer size, these idustries do ot compete with existig labour-itesive idustries. However, their potetial for expasio is by far the highest. Relative to South Africa s productio potetial, the size of the export market is vast, assumig that market access ca be established i some of the key growig markets. For example, the world productio of cherries amouts to about 2.2 millio toes, of which South Africa produces oly 170 toes. This implies that market size or demad growth is ofte a lesser factor. Despite the huge market potetial, the realities of expadig productio eed to be cosidered, sice these products demad very specific growig coditios. The quality of the fruit is the key issue i export markets. For example, whereas peca ut yields i KwaZulu-Natal are about 1 toe per hectare, they reach up to 4 toes i the Norther Cape, ad the productio of cherries is highly depedet o sufficiet cold weather durig witer. It is estimated that roughly jobs could be created i these smaller, labouritesive idustries uder ideal coditios. Smaller or iche idustries are attractive because ecoomies of scale, which are foud i the big established idustries, may ot be preset. As a result, producers might be more iclied to use labour tha ivest i machiery. Large, o-labour itesive idustries with sigificat value-chai likages The grai, oilseed ad livestock idustries ca be classified as large ad o-labour itesive, yet they have sigificat upstream ad dowstream likages due to their sheer size. A umber of these idustries have sigificat growth potetial, particularly poultry. Over the past five years, South Africa has imported o average toes 203

216 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN of chicke meat, or about 15 percet of local cosumptio. Over the past decade, productio has icreased by 45 percet ad idustry experts argue that over the ext 10 years, productio could grow by a further 40 percet. The demad for chicke meat will cotiue to grow rapidly. Over the past decade, demad has icreased by 68 percet ad curretly stads at about 32 kilograms per perso per year. Idustry experts argue that demad could grow to 45 kilograms per perso by 2020, brigig the total demad for chicke meat to about 2.3 millio toes. The demad for aimal feed will grow rapidly over the ext decade as more aimal protei is cosumed. The area uder soybeas is projected to at least double from curret productio levels. Market potetial is ample i the aimal feed idustry ad the sigificat expasio i processig facilities provides the ecessary dowstream likages to create sustaiable jobs. Usig soybeas i the food chai also shows sigificat potetial for expasio. Yellow maize has room to expad give the icreased demad for aimal feed, followed by suflower ad caola oils. Oly a margial icrease i the area uder white maize ad wheat productio is expected over the log term, largely because i the competitio for arable lad, the expasio of grai ad oilseed productio will take place where the fastest growth i demad is aticipated, amely aimal feed. Trade-offs ad risks for agricultural expasio The first major risk to the programme is that teure security for black farmers i the commual areas ad uder the lad reform programme will ot be adequately addressed. As log as these farmers (especially wome farmers) do ot have secure teure, they will ot ivest, ad agricultural productio will ot grow at the rate ad patter required for growth i employmet. The secod is that govermet spedig, especially o ifrastructure ad geeral farmer support services, will ot be targeted to small-scale farmers, ad will ot be icreased. At the same time, attetio must be give to the bureaucratic systems required to esure that all farmers i South Africa ca access domestic ad foreig markets with food that is fresh, safe a d socially ad evirometally friedly. Biosecurity risks ad mitigatio measures must be give priority. Third, i most areas, additioal water ca oly be made available if there is a cocerted programme that improves the efficiecy of existig irrigatio, reallocates the water that is made available ad supports ew etrats to esure that they ca use the water effectively. This will require a substatial support programme that would best be itroduced i partership with existig farmers. Last, the expasio of agricultural productio evisaged i this pla takes place withi the curret structure of farmig by large-scale commercial farmig merely beig expaded. Uder those circumstaces, the potetial to create additioal jobs is limited. 204

217 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Recommedatios To expad agriculture ad create a additioal 1 millio jobs i the sector, the commissio makes the followig recommedatios: Substatially icrease ivestmet i water resource ad irrigatio ifrastructure where the atural resource base allows ad improve the efficiecy of existig irrigatio to make more water available. Ivest substatially i providig iovative market likages for small-scale farmers i the commual ad lad reform areas, with provisios to lik these farmers to markets i South Africa, ad further afield i the sub-cotiet. This will require ifrastructure to improve the time ad place utility of farm products through road, rail ad commuicatios ifrastructure that gets the products from the farm gate through the differet stages of the value chai. Iformatio o buyig ad sellig prices ad supply ad demad treds eeds to be provided to farmers, traders, processors ad cosumers. Likig farmers to markets will also require ew forms of itermediaries, such as cooperatives, to assist small producers create ecoomies of scale i processig. This will require ifrastructure for processig ad all forms of value additio to raw commodities. Fially, it requires the ifrastructure to operate cold chais. If this is ot achieved, these farmers will be excluded from markets for high-value produce ad rural cosumers will cotiue to pay higher prices for food tha their urba couterparts. Likig farmers to existig markets is ot eough. A substatial proportio of agricultural output is cosumed i the food away from home market i South Africa. While this icludes restaurats ad take-away outlets, which are hardly relevat i most rural areas, it also icludes school feedig schemes ad other forms of istitutioalised caterig, such as food service i hospitals, correctioal facilities, ad emergecy food packages where the state is the mai purchaser. As part of comprehesive support packages for farmers, preferetial procuremet mechaisms should be put i place to esure that ew etrats ito agriculture ca also access these markets. Create teure security for commual farmers. Teure security is vital to secure icomes for all existig farmers ad for ew etrats. Ivestigate the possibility of flexible systems of lad use for differet kids of farmig o commual lads. Ivestigate differet forms of fiacig ad vestig of private property rights to lad reform beeficiaries that does ot hamper beeficiaries with a high debt burde. There should be greater support for iovative public-private parterships. South Africa s commercial farmig sector is full of examples of major ivestmets that have resulted i ew growth, ad ew job opportuities. These iclude the expasio of the table grape idustry alog the Orage River, expadig the sugar idustry ito Mpumalaga, ad the more recet expasio of the wie idustry, which led to icreased employmet as a result of the export boom of the past two decades. More opportuities exist. Examples of regios with utapped potetial iclude the Makatii Flats ad the Easter Cape, while ew iitiatives such as the role of agriculture i the gree ecoomy ad coservatio efforts i geeral ca 205

218 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN potetially create ew employmet opportuities, although climate chage will affect what ivestmets will pay off best, ad where they should be made. Icrease ad refocus ivestmet i research ad developmet for the agricultural sector. Growth i agricultural productio i South Africa has always bee fuelled by techology, ad the returs o ivestmet i agricultural research ad developmet have always bee high, partly because South Africa has specialised i adaptig techology from all over the world to its circumstaces. This should agai become the focus of agricultural research for all scales of farmig i research coucils, uiversities ad the private sector. The cosequeces of idustrialised agriculture ad the coutry s uique ecosystems also demad that serious attetio is paid to advaces i ecological approaches to sustaiable agriculture. This icludes greater attetio to alterative eergy, soil quality, miimum tillage, ad other forms of coservatio farmig. Improve ad exted skills developmet ad traiig i the agricultural sector, icludig etrepreeurship traiig. This should iclude the traiig of a ew cadre of extesio officers that will respod effectively to the eeds of smallholdig farmers ad cotribute to their successful itegratio ito the food value chai. The value of farmer-to-farmer skills trasfer ad commercial farmers must be ecouraged to cotribute to developig a ew geeratio of farmers. Every effort must be made to de-racialise the agricultural sector. For these extesio officers to be successful, it is ecessary to ivestigate whether extesio ad other agricultural services are appropriately located at provicial level. Iovative meas for agricultural extesio ad traiig by the state i partership with idustries should be sought. Makig lad reform work Lad reform is ecessary to ulock the potetial for a dyamic, growig ad employmet-creatig agricultural sector. Th e commissio therefore makes the followig proposal for a workable ad pragmatic lad reform scheme. The proposed model is based o the followig priciples: Eable a more rapid trasfer of agricultural lad to black beeficiaries without distortig lad markets or busiess cofidece i the agribusiess sector. Esure sustaiable productio o trasferred lad by makig sure that huma capabilities precede lad trasfer through icubators, learerships, appreticeships, metorig ad accelerated traiig i agricultural scieces. Establish istitutioal arragemets to moitor lad markets agaist udue opportuism, corruptio ad speculatio. Brig lad trasfer targets i lie with fiscal ad ecoomic realities to esure that lad is successfully trasferred. Offer white commercial farmers ad orgaised idustry bodies the opportuity to sigificatly cotribute to the success of black farmers through metorships, chai itegratio, preferetial procuremet ad meaigful skills trasfer. 206

219 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Proposed model Each district muicipality with commercial farmig lad i South Africa should covee a committee (the district lads committee) with all agricultural ladowers i the district, icludig key stakeholders such as the private sector (the commercial baks, agribusiess), govermet (Departmets of Rural Developmet ad Lad Reform, the provicial departmets of agriculture, water affairs ad so o), ad govermet agecies (Lad Bak, the Agricultural Research Coucil ad so o). This committee will be resposible for idetifyig 20 percet of the commercial agricultural lad i the district, ad givig the commercial farmers the optio of assistig i its trasfer to black farmers. This ca be doe as follows: Idetify lad readily available from the followig categories: lad already i the market; lad where the farmer is uder severe fiacial pressure; lad held by a absetee ladlord willig to exit; ad lad i a deceased estate. I this way, lad could be foud without distortig markets. Obtai the lad through the state at 50 percet of market value (which is closer to its fair productive value). The 50 percet shortfall of the curret ower is made up by cash or i-kid cotributios from commercial farmers who voluteer to participate. I exchage, commercial farmers are protected from losig their lad i future ad they gai black ecoomic empowermet status. This should remove the ucertaity ad mistrust that surrouds lad reform ad the related loss of ivestor cofidece. A stepped programme of fiacig would address most of the fiacig problems of lad reform beeficiaries, give the implemeters reassurace that beeficiaries have the ecessary skills for successful farmig ad spread the cost of the programme betwee the future earigs of the farmer ad the pockets of the taxpayer. Developig o-agricultural activities Aalysis of South Africa s ecoomic developmet shows that rural areas are maily locatios of primary sector idustries. I South Africa, miig is vital for job creatio. The spill-over beefits related to tradig ad services from miig as a source of developmet ad how this ca be used to develop local ecoomies eeds to be ivestigated, as too little is kow of miig value chais ad how they ca address spatial developmetal iequalities. As the experiece of the Free State goldfields ad some Norther Cape miig areas shows, however, log-term ivestmets should be carefully scrutiised for closure risks. The traditioal approach to rural developmet ad improvig farm icomes i poor coutries helps farmers move up the value chai by supportig forms of agro- 207

220 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN processig. But i South Africa, a highly cetralised, vertically itegrated agro-processig sector already exists for staple foods: maize, wheat, sugar, suflower oil, tea, flour, peaut butter, cigarettes, beer, fruit juices, caed goods, ad so o. These value chais ted to exclude small, ew or black farmers but there is o poit settig up parallel agro-processig iitiatives ad igorig existig idustry giats. The scope for small-scale maufacturig ad agro-processig targetig local cosumers i poor commuities is limited. This does ot mea there are o opportuities, but those that do exist ted to take the form of iche opportuities, rather tha those at the kid of scale that ca create large umbers of jobs, or at the scale required to sustai group projects or cooperatives. Oe optio may be to egage with busiesses, as part of a broader social compact, to gai their cooperatio for log-term small-holder developmet. This has already bee doe, with some positive results, by the sugar ad brewig idustries. Opportuities exist i higher value, higher volume exteral markets, both atioal ad beyod. Ad strategies are icreasigly targetig these markets. For example, the vertically itegrated agro-processig value chais: timber, beas, sugar, horticulture ad cotto; the tightly coordiated horticulture value chais tied to supermarkets; ad the iche products targetig wealthier markets: desiger crafts, essetial oils, mushrooms, rooibos tea, goat s milk cheese ad so o. To take advatage of these opportuities, strategies eed to be developed for ecoomic cooperatio or associatio that give poor producers greater collective market power i value chais, create syergies ad access to iformatio, allow them to achieve the miimum supply volumes required for participatio ad egotiate improved levels of market access ad better terms of participatio. Developig parterships with other commercial players i the value chai is a potetial strategy. I certai rural areas (for example, Wild Coast, Port St Joh s, Tzaee, fishig villages, Waterberg) tourism offers opportuities to ehace people s livelihoods. These beefits deped o istitutioal support ad the level of ivolvemet of local commuities. Aother iterestig optio is the craft market, because globally ad i South Africa, the size of the creative arts idustry is projected to grow. For coastal areas, marie fisheries are a importat sector for subsistece ad employmet. Subsistece fishers rely o marie resources as a basic source of food. They are largely depedet o low-cost resources that are importat to the social fabric of their societies, ad have a log history of depedecy o these resources. There are about , cocetrated o the east ad south coasts. Small-scale ad artisaal fishers have relatively small, low-cost operatios, but ofte fish high-value resources. Idustrial fisheries target large-scale harvestig of maily offshore resources that are caught usig expesive, high-tech boats, gear ad equipmet. Large-scale idustrial fisheries are small i umber, but employ about people, ad their terms of employmet are ofte better relative to other idustries. 208

221 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Most fishig resources are optimally harvested or over-exploited. Accommodatig ew etrats by icreasig the allowable catch of most resources is ot viable. Two fudametal issues eed to be resolved. The idustry is relatively trasformed for historically disadvataged idividuals ad black ecoomic empowermet i geeral, but those historically ivolved i fishig have frequetly bee igored. The tred is to favour allocatig may rights of small value, rather tha fewer rights of substatial value. This icreases the umber of participats, but also decreases the average gai per participat ad icreases the difficulties of eforcemet. It is fudametal that fishig rights are ecoomically viable ad ot allocated i a way that threates compliace. If sustaiability is ot maitaied, the fishery collapses ad everyoe loses. Urealistic expectatios have bee created by promises of rights. Natural resources are limited ad probably already fully exploited or eve over-exploited. Small-scale fisheries caot be regarded as a way to boost employmet. Idustrial capital-itesive fisheries offer better salaries ad better coditios of employmet, ad are more trasformed tha small-scale low-capital fisheries. Reducig the rights allocated to idustrial fisheries to award them small-scale operatios simply cuts jobs. There is a serious eed for research to determie the relative values of differet sectors i terms of employmet, salaries ad coditios of service, ad cotributios to tax. Recommedatios To expad o-agricultural activities i rural areas, the commissio recommeds the followig: Develop strategies for ecoomic cooperatio or associatio that give poor producers greater collective market power i value chais, create syergies ad access to iformatio, allowig them to achieve the miimum supply volumes required for participatio, egotiate improved levels of market access ad/or better terms of participatio. Idetify other potetial parters i the agro-processig value chai to support smallholder developmet. As a specific example, ecourage supermarkets to ope up value chais by parterig with local producers i rural areas. Develop ad icetivise the developmet of iche markets to promote smaller producers. Allocate ecoomically viable fishig rights. Review fisheries policies to determie the best way to allocate rights to maximise employmet. Huma capital, social security, food security ad basic services The rural strategy also aims to eable the poor to escape from rural poverty by relocatig to cities with easier access to services ad secure employmet. To achieve 209

222 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN this, specific attetio should be paid to improvig the huma capital of residets i these areas. See the chapters o educatio, health, social security ad huma settlemet for recommedatios. This sectio will deal maily with household food security. Food security Malutritio is the direct outcome of food isecurity. I South Africa, growth falterig amog ifats ad youg childre is widespread, with oe i five youg childre beig stuted. Microutriet malutritio, particularly deficiecies of vitami A, iro ad zic, affects the health, growth ad learig ability of youg childre, ad the productivity of the populatio. At the same time, ad ofte i the same commuities ad households, obesity cotributes sigificatly to the icidece of chroic diseases, icludig diabetes, cacer ad coroary artery disease. Food security exists whe everyoe has access to sufficiet, utritious ad safe food at all times. This implies that food is available (atioally ad locally) ad that people have the meas to access it through purchase or other legal meas. It is ecessary to make a clear distictio i policy discourse betwee atioal food selfsufficiecy, food security ad access to food by poor people. South Africa is food secure atioally, ad has bee for a umber of decades. This meas that it ears a trade surplus from agricultural exports ad is able to cover the cost of food imports from those exports. The coutry has also produced eough of the staple cereal (maize) for all but three of the past 50 years (the exceptios beig the devastatig droughts of 1984, 1992 ad 2007). The compositio of the maize harvest is chagig, however, with more yellow tha white maize plated. This reflects the tred towards higher cosumptio of aimal proteis ad of wheat, rice ad potatoes as the preferred staple as the populatio urbaises ad becomes more affluet. I this regard, the atioal food security goal for South Africa should be to maitai a positive trade balace for primary ad processed agricultural products ad ot to achieve food self-sufficiecy i staple foods at all costs. I additio, regioal approaches to food security should be ivestigated. First, as South Africa agriculture becomes more specialised ad efficiet, there may be a tred away from the productio of staples to higher value crops. As there is oly limited correlatio betwee climatic evets i South Africa ad coutries to the orth of the Zambezi, regioal cooperatio may offer greater supply stability ad resiliece to droughts. Regioal ecoomic itegratio is best served whe there are complemetary iterests ad advatages betwee the parties, which may also be the case i food productio. Regioal expasio of productio, as see i recet years, is favourable. South Africa should beefit from the opportuities this brigs for trade, food stability ad valuechai cosolidatio i the South Africa market. 210

223 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY Job creatio ad agricultural productivity is eeded to address food isecurity at household ad idividual level i rural areas. Household food security is determied by the ability to access food, ot the availability of food. Other strategies iclude measures to lesse the impact of retail food price icreases o the poorest households; usig ad expadig existig public works programmes for rural ifrastructure developmet; ad esurig that all eligible households have access to social grats ad that the most vulerable groups (particularly the elderly ad chroically ill) have access to utritioal services. Public works programmes ad social grats are addressed i other sectios of the pla. Poor households feel the effects of retail food price icreases much more severely tha better-off households. It is estimated that South Africa households i the lower icome deciles (1-3) sped about 35 percet of their icome o food, while i the upper deciles food spedig is equivalet to about 3 percet of household icome. Furthermore, rural households pay more for a basic food basket tha their urba couterparts, because of the low volume of sales ad limited competitio, high trasport costs ad lack of adequate storage facilities. Research shows that while icreased agricultural productio ca cotribute to improved utritio, it is also possible to have sigificat improvemet i agricultural productivity without correspodig improvemets i utritioal status. The food security strategy must therefore focus specifically o esurig that icreased agricultural employmet ad rural icomes traslate ito improved utritio. This is particularly importat where wome of child-bearig age participate i agricultural productio ad i upstream ad dowstream ecoomic activities. Special utritioal services may also be required for households with a shortage of ablebodied persos, child-headed households or households with chroically ill or elderly members. Supplyig utritioal services durig atural disasters or other emergecies has ot received much attetio. I urba areas, basic food support activities implemeted by commuity orgaisatios ad supported by o-govermetal orgaisatios, such as FoodBak South Africa, are i place. Although services are ucoordiated ad ueve, the demad for services outstrips supply ad emergecy services are ot well developed. Recommedatios The atioal food security goal for South Africa should be to maitai a positive trade balace ad ot to strive for food self-sufficiecy i staple foods at all costs. Opportuities for regioal food security strategies that could cotribute to greater supply ad price stability should be ivestigated. Household food security strategies should iclude usig ad expadig existig public works programmes. I particular, the commuity works programme for rural ifrastructure developmet should be used, esurig all eligible households 211

224 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN have access to social grats ad that the most vulerable groups (particularly the elderly ad chroically ill persos) have access to utritioal services. Ivestigate measures to close the urba/rural food price gap. This will cotribute substatially to esurig greater food security for people i rural areas. Measures that should be ivestigated: solutios to improve efficiecies, icludig better access to price iformatio for farmers, effective commuicatio betwee trasport compaies ad wholesalers, educatig packers ad retailers o safe food hadlig, ad cost-effective packagig to lesse losses after harvestig. Suitable arragemets to esure safe pregacy ad child birth, ad to eable workig mothers to breastfeed exclusively for the first six moths must be put i place for farm workers. Effective utritio educatio of health workers, mothers ad other caregivers should be a atioal priority. Food fortificatio should be exteded to iclude home-based fortificatio of foods for youg childre, icludig makig fortified mixes (for example, as lowcost spreads or powders) widely available. Liks betwee agriculture ad utritio ca be stregtheed, particularly i producig, processig, preparig ad cosumig utriet-rich foods, such as legumes ad other vegetables. Policy measures to icrease itakes of fruits ad vegetables ad reduce itakes of saturated fats, sugar ad salt, as recommeded i the South Africa dietary guidelies, should accompay strategies to icrease vegetable ad fruit productio. Special utritioal services may also be required for households with a shortage of able-bodied persos, child-headed households or households with chroically ill or elderly members. Provisio for utritioal services durig atural disasters or other emergecies has ot received much attetio. Iovative measures, such as procuremet from small-scale farmers to create local buffer stocks ad commuity-owed emergecy services, could be explored. Farm worker empowermet ad labour relatios The relatioship betwee farmers ad farm workers is difficult. Far better relatios are eeded to achieve the beefits of agricultural expasio, higher employmet ad better livig coditios. A threat to ormalisig labour relatios is the lik betwee housig ad employmet o farms. This meas that farm workers remai highly vulerable to evictio if they demad better wages ad coditios, or try to get supplemetary parttime work away from the farm. Govermet itroduced legislatio soo after 1994 to protect farm workers from ufair evictios. The legislatio failed to slow dow evictios, largely because it required workers to go to court to challege them ad because evictios liked to dismissals are permitted. Farm workers did ot have the resources to challege ufair dismissals or illegal evictios. I 2009, the Departmet or Rural Developmet ad Lad Reform 212

225 CHAPTER 6: AN INTEGRATED AND INCLUSIVE RURAL ECONOMY embarked o a three-year programme to provide legal assistace to farm workers facig evictio, to moitor evictios ad to mediate solutios. Labour laws always deped maily o uios to moitor ad report violatios. Labour ispectors caot maitai a overview of all places of employmet, ad some farm owers i South Africa refuse to allow them access to farms. Oly 13 percet of farm workers belog to a uio, compared to 40 percet for the rest of the formal sector. Optios should be ivestigated to empower farm worker orgaisatios to stregthe their ability to egotiate o a equal footig with farmer orgaisatios. Govermet should ivestigate the possibility of usig the proposed employmet (wage) subsidy, by specifyig coditios, ot oly to icrease employmet o farms, but as a meas to stregthe workig ad livig coditios for farm workers. Iclusive rural developmet by 2030 I 2030, there will be itegrated rural areas, where residets will be ecoomically active, have food security, access to basic services, health care ad quality educatio. Achievig this visio will require leadership o lad reform, commual teure security, ifrastructure ad fiacial ad techical support to farmers, ad buildig the capacity of state istitutios ad idustries to implemet these itervetios. 213

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227 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD Chapter 7 POSITIONING SOUTH AFRICA IN THE WORLD We are Africas. We are a Africa coutry. We are part of our multi-atioal regio. We are a essetial part of our cotiet. Beig Africas, we are acutely aware of the wider world, deeply implicated i our past ad preset. Itroductio Over the past three decades, the world has become icreasigly itercoected. Global trade i goods ad services has expaded, kowledge has bee more widely dissemiated ad techology trasfer has icreased. Activities that were previously cosidered to be atioal or domestic i character have become fuctioally itegrated. This itegratio has icluded the harmoisatio of atioal policies; stadardisatio of bakig, fiacial ad legal activities; adoptio of commo customs ad tariffs procedures; ad the arragemet of global ad regioal supply chais withi a worldwide productio structure. Because of this process of itegratio, coutries have become icreasigly iterdepedet ad more exposed to fiacial, ecoomic or social crises of a global character. Uder these coditios, it has become very difficult for ay oe coutry, or group of coutries, to maage crises or develop policies i isolatio. I light of these developmets, public policy-makig ad the provisio of public goods has take o a more global aspect. Recurret upheavals i the world ecoomy, especially the curret crisis, have forced a eed to recosider atioal, regioal ad global policies. Accordig to the World Ecoomic Forum, the fiacial crisis that bega i 2008 may be at least as bad as the depressio of the 1930s. The crisis has exposed the full extet of the world ecoomy s systemic weakesses ad cooperative deficits, uderliig how existig regioal ad iteratioal istitutios ad arragemets have become out of step with global realities. 1 The World Ecoomic Forum argues that evets over the past decade have exposed a popular ad diplomatic cosesus o the eed to make fudametal chages to the 1 World Ecoomic Forum (2010). Everybody's Busiess: Stregtheig Iteratioal Cooperatio i a More Iterdepedet World. Geeva: World Ecoomic Forum. 215

228 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN way i which the world is govered, as well as a marked shift i the balace of power, ad a rapidly closig capability gap betwee developed ad emergig coutries. As a result a greater proportio of global productio, trade ad ivestmet will cotiue shiftig towards Asia, Lati America ad Africa. While the Europea Uio (EU) ad the Uited States are still likely to accout for more tha a quarter of world output by 2020, emergig ecoomies, especially Idia ad Chia, will experiece the most growth. Africa will remai a relatively small but growig cotributor, supported by commodity demad ad improved policies. The cotiet will, however, remai vulerable ad reliat o cotiued growth i Chia ad Idia. Opportuities for South Africa The shift of global power towards developig coutries provides South Africa with a opportuity to maximise its regioal ad iteratioal ifluece over the ext 20 to 30 years. Policy-makig should be drive by the objectives set out at the iaugural meetig of the Natioal Plaig Commissio i May 2011: to grow the ecoomy, reduce poverty ad improve the quality of life of all South Africas. I other words, govermet s global ad regioal policy-makig stace should be South Africa-cetric. Policy-makig should improve the coutry s fuctioal itegratio i the regio, o the cotiet, amog developig coutries especially with key states like Brazil, Idia ad Chia ad i the world, with measurable outcomes. I the cotext of recurret crises ad global realigmet, South Africa will have to recosider all existig aligmets ad affiliatios, ad establish strategic relatioships amog idividual parters based o strategic political ad ecoomic priorities. Policymakig should be guided by the followig priciples ad objectives: Focus o what is practically achievable,without over-committig to possibilities of regioal ad cotietal itegratio. Foreig policy should be regularly evaluated to esure that atioal iterests are maximised. 2 Remai a ifluetial member of the iteratioal commuity, at the forefrot of political ad ecoomic developmets as they ifluece the politics of the cotiet ad beyod. Deepe 3 cooperatio with Brazil, Russia, Idia ad Chia as part of the BRICS group, while promotig regioal ad global itegratio. This requires a thorough review of the coutry s curret ad future regioal ad iteratioal commitmets. Stabilise the regioal political ecoomy through icreased itegratio ad cooperatio. This requires commuicatig the beefits of deeper regioal ad global itegratio to the South Africa ad souther Africa public. 2 Departmet of Iteratioal Relatios ad Cooperatio (2011). Buildig a Better World: The Diplomacy of Ubutu. White Paper o South Africa s Foreig Policy. Departmet of Iteratioal Relatios ad Cooperatio. 3 The referece to deepe is a ackowledgemet that existig agreemets o trade i goods ad services are at differet stages of developmet. 216

229 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD Achieve measurable outcomes related to food, water, eergy, educatio, health, trasport ad commuicatio ifrastructure, atioal defece, adjustmet to climate chage ad ecoomic growth to beefit all South Africas. To achieve maximum beefits for the people of South Africa, govermet eeds to remai cogisat of the differeces betwee political ambitios, otios of solidarity ad domestic realities. Deepeig South Africa s itegratio should proceed o three frots: Regioally, i sub-sahara Africa. Cotietally, i the cotext of Africa s progressio towards political ad/or ecoomic uio. Globally, stregtheig relatios with BRICS ad esurig that Africa remais a importat part of global productio ad value chais ad prevetig a remargialisatio of the cotiet. Deepeig South Africa s role i the regio starts with a hoest appraisal of the cotiet ad the world. Policy-makers also eed to be clear about the political, ecoomic ad itellectual leadership role that South Africa ca play i Africa. I this respect, govermet may have to review some of the origial Abuja Treaty proposals, especially the stages of itegratio evisaged i the agreemet. Sub-Sahara Africa ad the global political ecoomy South Africa s iteratioal relatios are guided by the promotio of wellbeig, developmet ad upliftmet of its people, protectig the plaet for future geeratios ad esurig the prosperity of the coutry, the regio ad Africa. To achieve these objectives requires a critical ad pragmatic evaluatio of existig iteratioal relatios, ad utaglig the spaghetti bowl of overlappig regioal affiliatios ad commitmets. 217

230 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The spaghetti bowl of regioal formatios i Africa UMA Algeria Mauritaia Libya Morocco IGAD Tuisia Somalia CEN-SAD Djibouti Eritrea Suda Egypt Ethiopia Keya Ugada EAC Tazaia CEMAC Cameroo Cogo Rep. Equitorial Guiea Gabom Cetral Africa Republic Chad ECCAS São Tome ad Pricipe Burudi DRC GEPGL Rwada Agola Mauritius Seychelles Malawi Zambia Zimbabwe Swazilad Botswaa Lesotho Namibia South Africa SACU SADC Mozambique UEMOA Burkia Faso Bei Mali Niger Seegal Togo Côte d Ivoire Guiea Bissau Gambia Nigeria MRU ECOWAS Cape Verde Ghaa Liberia Guiea Sierra Leoe COMESA Comoros Madagascar IOC Réuio Source: Ecoomic Commissio for Africa Assessig these etaglemets should help govermet to better maage the dyamics of atioal iterests ad global realities i a fast-chagig iteratioal eviromet. Policy-makers would the have a clearer sese of the coutry s iteratioal affiliatios ad commitmets, eablig them to better idetify areas of resposibility ad accoutability, ad to adjust the coutry s diplomatic footprit accordigly. Regioal itegratio is a process that ivolves both govermets ad civil society. Although orgaisatios such as the Souther Africa Developmet Commuity (SADC) ad the Commo Market for Easter ad Souther Africa (COMESA) have structures to egage busiess, labour ad other civil society represetatives, these are ot always fully egaged i egotiatig processes. Sice both the major beeficiaries ad the major oppoets of ecoomic itegratio are ofte located outside of govermet, particularly i busiess ad labour, their egagemet, while it ca slow dow reachig a accord, ca speed up implemetatio. I this sese, regioal itegratio is politically 218

231 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD ad techically complex, ad requires cosiderable support from a rage of iterested parties. South Africa eeds to be clear about the types of formatios that are ecessary for achievig specific atioal, regioal ad global objectives. Five types of regioal formatios stad out: Political uio The full political ad ecoomic itegratio of two or more states, effectively creatig a sigle etity or coutry. Germay, reuified after the collapse of the Berli Wall, is a example of political uio. Ecoomic uio The full itegratio of the ecoomies of two or more coutries. I additio to elimiatig iteral trade barriers, adoptig commo exteral trade policies, ad abolishig restrictios o the mobility of factors of productio amog member coutries, a ecoomic uio requires its members to coordiate their ecoomic policies. Customs uio The elimiatio of iteral trade barriers amog member states ad the adoptio of commo exteral trade policies toward o-members. Commo market Member states elimiate iteral trade barriers amog themselves ad adopt a commo exteral trade policy toward o-members. A commo market goes a step further tha a customs uio by elimiatig barriers that ihibit the movemet of factors of productio amog its members, especially labour, capital ad techology. Free trade areas ad regioal trade agreemets The elimiatio of trade barriers (tariffs, quotas, ad o-tariff barriers) amog member states. Free trade areas are widespread, with 489 regioal pacts i place accordig to the World Trade Orgaisatio. Whe the objectives of regioal itegratio are cleared defied, ad the process is maaged strategically, sigificat beefits ca be achieved through regioal trade agreemets. While the creatio of such agreemets has geerally bee the mai iceptio poit for regioal itegratio, Africa s attempts i this area have had mixed success. A liear path to regioal itegratio, such as the oe depicted i the accompayig image, may ot be appropriate or workable. 219

232 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN A liear path to regioal itegratio 1. Free Trade Area 2. Customs Uio 3. Commo Market 4. Moetary Itegratio 5. Ecoomic Uio 6. Political Uio To take full advatage of the realigmet of global politics ad trade, South Africa may eed to redefie its existig agreemets,startig with the Souther Africa Customs Uio (SACU) ad SADC parters. These agreemets should be tested for their validity ad coherece ad, for global bilateral ad multilateral parters, affiliatios ad commitmets. This may etail hard bargaiig ad potetial trade-offs ivolvig shortterm realigmets, gais ad losses. At a summit of SADC heads of govermet i Widhoek i March 2001, there was emphasis o improvig the efficiecy ad effectiveess of SADC policies. The summit also prepared a regioal strategic developmet pla, with proposals to moitor progress towards targets. A critical review of the progress o these commitmets is eeded. Such a review would iform a discussio of how South Africa sees developmets i the regio over the ext 20 to 30 years. For South Africa, the SADC remais a importat groupig. Curret efforts are focusig o the wider COMESA-East Africa Commuity-SADC groupig, which promises to brig together 26 coutries that accout for 58 percet of Africa s GDP ad 57 percet of its populatio. Trade creatio ad diversio are key drivers of Africa itegratio, ad South Africa s cotietal parters beefit sigificatly from the coutry s bilateral trade agreemet with global parters, especially with the EU. I geeral, however, Africa regioal blocs are costraied by several factors, icludig variatio i iitial coditios, compesatio (who should beefit from what), lack of political commitmet, overlappig memberships, lack of harmoisatio, ad poor private sector ad civil society participatio. It is difficult to separate South Africa s role i the global political ecoomy from the coutry s role o the cotiet. The beefits of globalisatio ad regioal trade agreemets Cross-border trade i goods ad services teds to eable tradig parters to beefit from their ow ad their eighbours comparative advatages. Regioal trade is best facilitated by a framework that icludes physical trasportatio etworks ad stadardised cross-border procedures. A good road will ot help trade that is blocked by 220

233 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD cumbersome or malicious disruptio at customs. Fuctioal itegratio would iclude the creatio of adequate warehousig ad logistic facilities; efficiet procedures at customs ad border posts; ad the stadardisatio of govermet policies ad regulatios to avoid duplicated processes ad delays. All these factors also cotribute sigificatly to the creatio ad maagemet of efficiet supply chais. Efforts to stregthe regioal trade ca draw o iteratioal best practice. I the Asia- Pacific Ecoomic Cooperatio regio, the Australia Treasury created a stadard busiess report programme to reduce regulatory burdes i member coutries by elimiatig duplicated data etry ad maximisig the use ad reuse of iformatio across govermet agecies. South Africa, drawig o iteratioal ad regioal experiece, should ecourage further cross-border itegratio ad cooperatio, the harmoisatio ad stadardisatio of policies ad regulatios, ad cooperative arragemets betwee customs admiistratios ad other state agecies. Trade facilitatio frameworks The Maputo Corridor, a trade route coectig orth-easter South Africa, Swazilad ad south-wester Mozambique with the port of Maputo, is a example of relatively successful itegratio ad coordiatio that has ivolved the public ad private sectors. Its direct beefits have icluded: Stimulated trade through adequate ifrastructure, ad reliable ad trasparet practices ad procedures. The opeig up of South Africa markets to Mozambica producers ad access to global markets through sigificat improvemets i the Maputo Port. Job creatio through icreased ecoomic activity i Maputo ad alog the corridor, with the ability to shift to higher value-added idustry sectors. Icreased access to iteratioal tourism. Improved icome geeratio through the ecouragemet of private ivestmet. Public-sector savigs through the use of private ivestmet i ifrastructure developmet. Such practical trasatioal cooperatio has become a defiig feature of globalisatio. The Maputo Corridor cofirms that the ability to compete i the world ecoomy depeds ot oly o trasport systems,but just as much o trade facilitatio frameworks. Such frameworks eed to: Esure the physical capacity to support trade ad its uderlyig supply chais. Provide appropriate regulatios, icludig customs procedures that esure that trade flows abide by the rules ad regulatios of differet jurisdictios. Eable accouts to be settled ad mitigate risks through a etwork of bakig, fiace, legal ad isurace arragemets. 221

234 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Above all, a trade facilitatio framework has to be durable, buildig traders trust i its log-term stability ad viability. South Africa eeds to take ito accout the social ad historical patters of coflict, rupture ad cotiuity o the cotiet. Africa is home to may ladlocked coutries with small populatios, may of which have fragile goverig structures. Policy-makig should be less cocered by otios of ideological or political solidarity, ad cocetrate istead o specific gais to reduce poverty ad iequality i South Africa. At the same time, South Africa will work to promote greater regioalisatio, create supportive istitutios ad stregthe cooperatio, which will promote the growth ad developmet of all ecoomies i the regio. Regioal trade agreemets are typically drive by three basic objectives to: Promote market itegratio Develop regioal ifrastructure Stregthe stability, predictability ad trasparecy i regioal goverace. While COMESA ad the Ecoomic Commuity of West Africa States (ECOWAS) have made sigificat advaces i this area, similar progress has yet to be made across Africa. Policy-makig eeds to begi with what actually exists, ad proceed with a clear uderstadig of the types of regioal formatios that South Africa would like to create or be part of. If the ultimate objective is to accelerate cotietal itegratio as a step towards a uited Africa, the discussios about cotietal diversity are eeded particularly the differeces betwee South Africa ad frail, weak or collapsed states. Such a discussio would raise importat questios about leadership. Challeges for itra-africa trade Despite the existece of several free trade areas, customs uios ad commo markets, the level of itra-africa trade remais amog the lowest i the world. Oly about 10 percet of Africa trade is withi the cotiet, compared to about 40 percet i North America ad about 60 percet i Wester Europe. 4 There is widespread acceptace that Africa eeds to become more competitive i global markets, ad that itra-africa trade must grow for there to be a measurable declie i poverty rates ad arrowig of iequality. More trade amog Africa coutries will lead to more Africa trade with the rest of the world. Free trade requires reliable delivery of goods ad services, itact ad o time. While there is a urget eed to establish durable ad trustworthy ifrastructure liks across Africa, the cotiet s coasts ad ports are comig uder icreased pressure from maritime piracy. Accordig to the Iteratioal Maritime Bureau of the Iteratioal Chamber of Commerce, Africa coasts are the most vulerable to piracy. The seve 4 Ezekwesili O (2010). Ca Africa trade with Africa? Meetigs Cetre. World Bak Blogs. 9 October Available at Accessed 31 October

235 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD locatios show i the chart below accout for 82 percet of the 266 icidets of maritime piracy reported betwee Jauary ad Jue 2011 ad more tha half of these were off the coast of Somalia. 5 Reported acts of iteratioal piracy Source: Iteratioal Maritime Bureau, 2011 Give the urgecy of the matter, policy-makig should address formal legal istitutioal arragemets, such as the Uited Natios Covetio o the Law of the Sea ad the Suppressio of Ulawful Acts agaist the Safety of Maritime Navigatio Covetio. South Africa should also isist that its tradig parters harmoise domestic legislatio i accordace with the priciples of the latter covetio. While sigificat attetio has bee focused o the coast of Somalia, there is icreased cocer over the spread of piracy alog the coast of West Africa ad specific threats to South Africa waters. This problem is especially acute i the cotext of icreased port cogestio. Africa s shippig volumes have bee risig more rapidly tha the global average, with icreasig direct costs (port cogestio pealties or surcharges) ad idirect costs (ivetory, idle ships, ad trucks). With about 95 percet of South Africa s trade volume seabore (about 80 percet by value), the coutry depeds o the efficiecy of its seve commercial ports. South Africa ports hadle a estimated 200 millio toes of freight a year. This is equivalet to about 3.5 percet of world sea trade volumes or 6 percet of global toe-miles (a idustry measure reflectig the weight of a shipmet ad the distace it is hauled), placig South Africa amog the top 15 iteratioal maritime tradig atios. 6 5 Chart ad data draw from Iteratioal Maritime Bureau (2011). Piracy ad Armed Robbery agaist Ships. Report for 1 Jauary 30 Jue Joes T (2004). The South Africa Maritime Idustry: A Overview. Howard College: Uiversity of KwaZulu- Natal. Istitut fur Schiffahrtswirtschaft ad Logistik (2002). Shippig Statistics Yearbook Breme: Istitut fur Schiffahrtswirtschaft ad Logistik. 223

236 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The First Africa Uio Coferece of Miisters Resposible for Maritime Trasport, held at Abuja i February 2007, expressed a wide rage of cocers about the low level of cooperatio amog Africa admiistrators i the area of maritime safety, security ad evirometal maagemet. The meetig also highlighted delays i updatig maritime legislatio, uderdeveloped ports ad lack of ifrastructure ivestmet. The Abuja Treaty of 1991 prioritised effective ecoomic itegratio as a major precursor to political uio. Regioal itegratio i Africa would beefit from followig the precedet set by the Associatio of Southeast Asia Natios, where ecoomic itegratio preceded politics ad moey followed opportuity. I much of Africa, fiace is a major challege because demad outstrips supply. Fiacial itegratio (creatig a commo currecy for the cotiet) has log bee a pillar of Africa uity ad remais a target set by the Associatio of Africa Cetral Bak Goverors for It is probably more feasible to build o moetary uio i existig regioal ecoomic commuities. As the Asia experiece has demostrated, ecoomic itegratio through regioal ecoomic commuities, as a first-order priority, will attract fiace. Trade withi the SADC is relatively low. Most coutries trade more with South Africa tha they do with the other member states. South Africa supplies products ragig from agriculture to domestically maufactured or assembled products, ad also imports sigificat volumes of goods from the regio. South Africa firms have a major presece, i the form of foreig direct ivestmet, i most SADC coutries. A trade arragemet also exists betwee South Africa ad SACU, whose members are Botswaa, Lesotho, Namibia ad Swazilad. Of the latter, all but Botswaa are also members of the Commo Moetary Area,ad the rad is legal teder i these coutries. Give its relatively advaced ifrastructure, roads, ports, ad commuicatio etworks, South Africa is a coveiet lik for the lad-locked coutries i souther Africa with the rest of the world, ad a importat hub for trade i the regio. If maaged strategically, South Africa ad its parters i the regio ca cotiue to gai sigificatly from regioal ecoomic itegratio through streamlied trade agreemets (followig the uravellig of the spaghetti bowl of affiliatios ad alliaces). Movig from the geeral to the specific, policy-makers should focus o four key areas to advace the objectives of regioal ad global itegratio: macroecoomic coordiatio, the movemet of people, maagemet of atural resources ad kowledge-sharig. Macroecoomic coordiatio: policy-makig ad ifrastructure developmet South Africa s ecoomy is sigificatly stroger ad more diverse tha that of its immediate eighbours. South Africa is the epicetre of ecoomic activity i the regio. I 2004, South Africa GDP reached US$150.7 billio more tha half the 224

237 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD US$219.3 billio recorded 7 by all the SADC member states. Cosequetly, South Africa s ecoomic vibracy is i the iterests of the regio as a whole. It is also i South Africa s iterests that political ad ecoomic relatios are deepeed with coutries i souther Africa by stregtheig trade pacts, ad expadig or creatig ifrastructure liks. Policy-makig should idetify opportuities for cooperative projects i trasport, telecommuicatios, water, eergy ad other mutually beeficial areas. I may cases, these projects will achieve commo goals more effectively through cooperatio tha they could by relyig solely o atioal itervetios. Examples of such cooperatio iclude the Lesotho Highlads Water Project Phase 2 ad the further developmet of the Orage-Sequ River to meet Namibia s water eeds. Iitiatives such as the Africa Reaissace Fud, as well as the establishmet of more formal arragemets ad istitutios for South Africa to provide support to eighbourig coutries, will cotribute to this process. There is sigificat scope for greater cooperatio i agriculture. Neighbourig states typically specialise i similar crops ad share similar climates; good harvests usually result i oversupply, while drier years result i uder-supply. There are ofte opportuities for deficits i oe regio to be met by surpluses i others, but this requires complemetary ad cooperative policy approaches. Such steps ca promote broader ecoomic itegratio, icludig steps toward a commo currecy. Curret experiece i Europe has demostrated how difficult currecy itegratio ca be, but South Africa should also be aware of the potetial beefits. Over the past three decades, several states i Africa ad i the Easter Caribbea have used forms of outsourcig (to regioal orgaisatios) as a way to reduce cost, ad icrease the quality of public service ad the provisio of public goods. I sub-sahara Africa, the Baques des Etats d l Afrique Cetrale ad the Baque Cetrale des Etats de l Afrique de l Ouest have pioeered multi-coutry cetral bakig. The Orgaisatio pour l Harmoisatio e Afrique du Droit des Affairs i Cetral ad West Africa has harmoised busiess law amog member coutries. Selective expasio of existig regioal moetary uios could serve as useful buildig blocks towards a cotietal commo currecy. However, give the widespread lack of fiscal disciplie ad stable macroecoomic policies that would advace such a course, o such steps are likely i the immediate future. South Africa s fiacial system is highly developed, especially whe compared with its regioal eighbours. This disparity ad uevely developed fiacial systems i geeral would produce wiers ad losers i a commo currecy system, as suggested by the accompayig table. 8 7 Ezekwesili, Masso P ad Pattilo C (2004). Sigle Currecy for Africa? Fiace ad Developmet. Iteratioal Moetary Fud. Available at /exteral/pubs/ft/fadd/2004/12/pdf/masso.pdf. Accessed 1 November

238 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Weighig idividual gais agaist costs Some ecoomics would gai ad others would lose from the proposed Africa regioal ad subregioal moetary uios. Full moetary uio amog either West Africa Moetary Zoe or Ecoomic Commuity for West Africa States members would be udesirable for most members. Commo Market for Easter ad Souther Africa East Africa Commuity Ecoomic Commuity of West Africa States Souther Africa Developmet Commuity West Africa Moetary Zoe Gaiers Agola, Ethiopia, Malawi, Seychelles, Suda, Zambia, Zimbabwe Keya The Gambia, Ghaa, Nigeria, Sierra Leoe Agola, Botswaa, Democratic Republic of Cogo, Malawi, Mozambique, Seychelles, Tazaia, Zambia, Zimbabwe Nigeria Sigificat losers Egypt, Kheya, Madagascar, Mauritius, Namibia, Swazilad, Ugada Bei, Burkia Faso, Cote d lvolre, Mali, Niger, Seegal, Togo Lesotho, Namibia, South Africa, Swazilad The Gambia, Ghaa, Guiea, Sierra Leoe I other areas, there is sigificat cooperatio i the provisio of regioal public goods. The Africa Uio ad ECOWAS have become importat providers of security; ad the West Africa Telecommuicatios Regulatory Agreemet has promoted harmoisatio ad itegratio of telecommuicatios i West Africa. The SACU agreemet is uder review. While the weight of South Africa s ecoomy has effectively reduced potetial risks i the customs uio, its curret structure is ot ecessarily the best optio for South Africa or its eighbours. A immediate priority is the developmet of more effective fiacial trasactio mechaisms to facilitate physical trade. Bak letters of credit do ot operate well betwee Africa coutries, requirig most trade trasactios to pass through a third, o-cotietal currecy. This type of itervetio should be led by the private sector ad oly limited state or iterstate actio would be eeded. Migratio ad the movemet of people The relatively urestricted movemet of labour across the regio ad the cotiet ca cotribute sigificatly to more iclusive ecoomic growth. Migrats have played a importat role i South Africa s ecoomic developmet ad regioal itegratio sice the late 19 th cetury ad it is likely that this tred will cotiue. While exact figures o immigratio flows are elusive, ad uemploymet o the cotiet is much higher tha commoly assumed, South Africa s relatively stable ecoomy makes the coutry highly attractive for immigrats. 226

239 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD Immigratio is cotroversial i South Africa ad some other coutries i the regio. A systematic promotio of regioal ecoomic growth would result i lower levels of migratio drive by desperate ecoomic circumstaces. The UN High Commissio for Refugees estimates that there are 12 millio iterally displaced people i Africa as a result of coflict ad/or differet levels of state failure. I additio, there are may evirometal refugees who have bee forced to leave their homes because of evirometal disruptio (atural ad huma) that jeopardises their existece. It has bee estimated that by 2020, there will be 50 millio evirometal refugees, the vast majority of these i the developig world, especially i Africa. 9 Natural resource maagemet Africa is richly edowed with atural resources. This edowmet is, however, uevely distributed. There are vast tracts of uderutilised lad; i may places, resources especially water are barely used or are uderused. I some places, local atural resources are uable to sustai growig populatios ad suffer degradatio as a result, as show i the accompayig figure. Over the past several decades, North Africa migrats have fled to Europe, owig i part to the desertificatio of the Sahel. Give the weaker ecoomy i Europe ad moves to tighte EU immigratio cotrols, some of these migrats may ow move south. 9 Agece Frace-Presse (2011). 50 Millio Evirometal Refugees by 2020, experts say.22 February Available at Accessed 13 October

240 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Projected populatio growth ad water stress i Africa, Source: Uited Natios Ecoomic Commissio for Africa, Much of Africa s atural resource scarcity is ecoomic rather tha physical. While most of sub-sahara Africa uses oly a small proportio of its available water, it suffers regularly from droughts, because people have o way to capture ad store water for use i dry periods. Ecoomic water scarcity refers to the ways i which huma, istitutioal ad fiacial capital limit access to water to meet huma eeds. Africa has water, but it will ot be used effectively without the appropriate ivestmets i ifrastructure. Similarly, while there are extesive areas of uused arable lad, this lad is ulikely to be developed without capable istitutios,fiacial resources ad the ifrastructure eeded to trasport produce to markets. 10 Uited Natios Ecoomic Commissio for Africa (1999). Global Evirometal Outlook Lodo: Uited Natios Evirometal Programme, Earthsca. 228

241 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD A focus o regioal itegratio would address ecoomic scarcity through targeted policy itervetios ad public ivestmet, as is already occurrig uder the Comprehesive Africa Agriculture Developmet Programme of the New Partership for Africa s Developmet. A emergig challege is the extesive iterest show by exteral ivestors i acquirig large tracts of lad for commercial agriculture. While such ivestmet may reduce ecoomic barriers to the effective use of atural resources ad create ew market opportuities, capital-itesive agriculture may ot address poverty ad could result i displacemet of poor people, addig to migratio pressures. This highlights the eed for greater regioal coordiatio ad the sharig of iformatio. Kowledge-sharig Regioal itegratio ad the provisio of public goods across atioal boudaries ca be improved sigificatly by sharig kowledge ad iformatio. This is true i areas such as health, climate, atural resource maagemet, research ad developmet, ad iovatio more geerally. I health, for example, kowledge-sharig ca help poor coutries that lack medical, techological ad fiacial resources to respod to outbreaks of disease. Oe of the most importat causes of the spread of HIV/AIDS i Africa (ad elsewhere, for that matter) is a lack of access to iformatio ad kowledge. I geeral, poor coutries lack the resources to prevet the spread of commuicable diseases through surveillace, research ad treatmet. Policy-makers ca look at global best practice to fid ways of creatig early-warig systems. Istitutios such as the Uited States Cetres for Disease Cotrol, the Uited Kigdom s Royal Society for Hygiee ad Tropical Medicie, ad the Frech Istituts Pasteur play importat roles i the sharig of research, kowledge ad iformatio. They also help to create trasatioal early-warig systems. Policy-makig ad public debate The success of regioal itegratio policy higes o several key factors at each level of egagemet. Domestically, govermet eeds to take the pulse of public opiio cocerig greater opeess to the regio especially the freedom of movemet. The idea of Africa citizeship was raised at the Cotietal Coferece o Acceleratig Africa s Itegratio ad Developmet i the 21 st Cetury i Jue 2007, which suggested a move towards removig all visa requiremets for Africa citizes. Policy-makig has to cosider the implicatios of opeig South Africa s border to the rest of Africa give the coutry s ow ecoomic ad social developmet problems. 229

242 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Amog the key questios that eed to be addressed through public debate ad govermet policy are: What will be South Africa s core areas of advatage withi a more itegrated regio, ad what sacrifices will have to be made to support itegratio? How appropriate (ad relevat) are South Africa s curret regioal affiliatios, ad to what extet do they further the coutry s atioal iterest? What would be a more appropriate relatioship betwee SACU ad the SADC? How do the two overlap? How would itegratig the two beefit South Africa ad its eighbours? Although greater regioal itegratio is a policy goal, is there sufficiet support i South Africa (or i the other coutries of the regio) for regioal itegratio, as implemeted through SADC ad similar orgaisatios? What is the most appropriate sequece to follow i the programmig of trade, sectoral cooperatio, macroecoomic ad currecy itegratio? South Africa may have to make strategic trade-offs to give effect to regioal cooperatio ad itegratio. For example, it may be ecessary to cede certai atioal opportuities for regioal beefit o the assumptio that regioal growth will beefit the South Africa ecoomy. But regioal growth may beefit oly limited sectios of the domestic ecoomy, especially i fiacial ad professioal services, ad possibly at the expese of labour-itesive lower-wage segmets. Similarly, freer trade withi the regio may beefit South Africa busiess at the expese of its eighbours. To what extet is South Africa willig to make cocessios to protect the iterests of its weaker eighbours? Should regioal itegratio place South Africa iterests first? The role of the Natioal Plaig Commissio Regioal itegratio is a log-term objective. Full ecoomic covergece caot realistically be achieved withi 20 years. It is also ot clear that more limited macroecoomic policy, moetary ad fiscal covergece ca be achieved by 2030 ad ideed, whether it would be desirable. However, relatively free trade ad movemet of people is achievable ad should, if properly implemeted, brig et beefits. These issues are the subject of ogoig egotiatios betwee coutries. South Africa might also wat to examie existig commitmets, as illustrated by the spaghetti bowl aalogy, to re-evaluate the depth of the coutry s commitmets to particular atioal or regioal egagemets. The details of iteratioal bargaiig are outside the madate of the plaig commissio. Cosequetly, the commissio will focus o: Fidig areas of comparative advatage for South Africa i a more itegrated regio. Idetifyig projects ad programmes i sectors where practical opportuities provide icetives for cooperatio (such as eergy ivestmets ad agricultural developmet). 230

243 CHAPTER 7: POSITIONING SOUTH AFRICA IN THE WORLD Idetifyig areas, such as the developmet of effective fiacial trasactio mechaisms, where the private sector may have to take the lead. Addressig questios such as: What type(s) of leadership should South Africa provide i the regio ad i Africa? What implicatios would such leadership have o otios of sovereigty? What are the sources of power that led South Africa the authority to lead efforts to promote regioal itegratio ad deepe South Africa s presece i the world? Followig this, the commissio should: Egage with plaig authorities with similar madates i the regio to idetify areas of commoality ad review effectiveess of curret regioal plaig approaches. Support existig programmes of regioal ifrastructure developmet. Restart the grad debate of 2007, at least withi the commissio, o the feasibility of regioal ecoomic commuities ad/or a Uited States of Africa approach. Ivestigate whether Chia s ascedacy will result i Africa s further margialisatio. Coduct research ito itra-africa trade ad what trade-offs may be forced for greater cotietal good. Promote public discussio to improve South Africa s uderstadig of the beefits ad challeges of greater regioal itegratio, ad of the appropriate sequecig of itegratio. Coclusio Regioal itegratio is a complex process that requires thoughtful cosideratio ad plaig. I deepeig South Africa s commitmets to the regio, to Africa ad to egagemet i the global political ecoomy, policy-makers eed to address the core objectives of growig the domestic ecoomy, reducig poverty ad improvig the quality of life of all the coutry s citizes. To esure that atioal iterests are maximised requires strategic thikig about existig relatios with the world aroud us. It also requires pragmatism cocerig macroecoomic coordiatio ad itegratio, ifrastructure developmet, the volutary ad ivolutary movemet of people, ad effective maagemet of atural resources. The way forward requires a sigificat amout of cosultatio ad deliberatio at all levels. 231

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245 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS Chapter 8 TRANSFORMING HUMAN SETTLEMENTS We have received the mixed legacy of disparities i opportuity ad i where we have lived, but we have agreed to chage our arrative of coquest, oppressio, resistace, ad victory. I our well desiged commuity surroudigs, we feel safe. Itroductio Where we live ad work matters. Apartheid plaig cosiged the majority of South Africas to places far away from work, where services could ot be sustaied, ad where it was difficult to access the beefits of society ad participate i the ecoomy. A great deal of progress has bee made sice 1994, but South Africa is far from achievig the goals set out i the Recostructio ad Developmet Programme of breakig dow apartheid geography through lad reform, more compact cities, decet public trasport ad the developmet of idustries ad services that use local resources ad/or meet local eeds. For this reaso, the commissio proposes a strategy to address the challege of apartheid geography ad create the coditios for more humae ad evirometally sustaiable livig ad workig eviromets. The iefficiecies ad iequities i South Africa s settlemet patters are deeply etreched. Bold measures are eeded to reshape them. By 2030, these measures will have chaged the course of developmet, makig it possible to achieve all of the coutry s goals by Huma settlemets visio for 2030, o the road to 2050 By 2050, South Africa will o loger have: poverty traps i rural areas ad urba towships; workers isolated o the periphery of cities; ier cities cotrolled by slumlords ad crime; sterile suburbs with homes surrouded by high walls ad electric feces; households spedig 30 percet or more of their time, eergy ad moey o daily commutig; decayig ifrastructure with power blackouts, udrikable water, potholes ad blocked sewers; violet protests; gridlocked roads ad ureliable public trasport; ew public housig i barre urba ladscapes; ew private ivestmet 233

246 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN creatig exclusive eclaves for the rich; fear ful immigrat commuities livig i cofied spaces; or rural commuities dyig as local productio collapses. Istead, the coutry will have: productive farms; well maaged villages, tows ad cities; tolerace, democracy, fairess ad respect for the atural eviromet; citizecetred services; secure water ad food supplies; diverse ad cleaer eergy supplies; more walkig ad cyclig; security barriers comig dow i suburbs as people reclaim their streets; a mix of housig types ad teures to meet differet eeds; eergyefficiet homes; fewer private cars o the roads ad decet public trasport; public spaces where people from differet social groups mix; well maitaied ifrastructure supportig dyamic busiesses ad vibrat ecoomies; recycled waste geeratig reewable eergy; youg people actively egaged i local decisio-makig; immigrat commuities makig a cotributio; resiliet plaig systems that ca maage risk ad ucertaity; tows ad cities with public art, performace ad heritage gardes; evirometally friedly lifestyles; rural area s fully itegrated ito the ecoomy; ad ew techologies used i buildigs for ifrastructure ad govermet. By 2030, most South Africas will have affordable access to services ad quality eviromets. New developmets will break away from old patters ad sigificat progress will be made i retrofittig existig settlemets. I rural areas, targeted ivestmet ad istitutioal reform will drive a revival of rural South Africa towards This visio is achievable if govermet builds o its experiece ad works proactively with people. The importace of space The physical ad social eviromet i which we are bor ad grow up is oe of the most importat determiats of every perso s wellbeig ad life chaces. This eviromet has a bearig o access to opportuities, good schools, useful social etworks, public services ad safe eviromets. Separatio betwee social groups, log distaces betwee jobs ad housig, ad poor public services exacerbate poverty ad iequality. Locatio affects commuities, local ecoomies, labour markets ad ifrastructure etworks. Busiesses are also affected by where they are situated. Access to markets ad suppliers determies their survival ad profitability. This is hugely sigificat for South Africa s society, ecoomy ad eviromet. 234

247 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS Storylies The commissio s Diagostic Report oted five mai challeges: Dysfuctioal settlemet patters across the coutry Challeges facig tows ad cities Ucertai prospects of rural areas Challeges of providig housig ad basic services ad reactivatig commuities Weak spatial plaig ad goverace capabilities. Spatial dislocatios at a atioal scale South Africa has a reasoably balaced spatial structure, with ecoomic activity distributed across four metropolita regios ad a etwork of cities, large tows ad service cetres, all liked by established etworks of coectig ifrastructure. However, the coutry also has a dysfuctioal ad iequitable settlemet patter. May people still live i poverty traps, icludig the former homelads, where less tha 30 percet of adults are employed (compared with 55 percet i the cities), ad oe i two households deped o social grats or remittaces, compared with oe i six i cities. Logistics ad commuicatio lies are log because of sheer scale, makig ifrastructure maiteace difficult ad movemet of goods ad people costly. Some etworks are old ad ureliable. A umber of itercoected itervetios are eeded to tackle these issues. These iclude ecoomic solutios, istitutioal reforms, chages to lad maagemet systems ad ifrastructure ivestmet. This chapte r focuses o the geographic ad developmet aspects of these policies. The ladscape has chaged sice The Gauteg city-regio has reiforced its atioal domiace ad attracted growig migratio. The coastal city-regios have performed less well, especially i terms of job creatio, largely because the maufacturig idustry has failed to gai tractio. The performace of smaller cities has bee ueve, depedig o their domiat idustries. May small tows ad rural areas have stagated or declied, as agricult ure ad miig have struggled. Parts of the former homelads are chagig their ecoomic structure, supported by icreased spedig from social grats. This is occurrig alog major trasport corridors, i developig tourism areas, ad alog atioal borders where trade ad trasport are growig. 235

248 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Populatio desity ad settlemet types i South Africa Source: Coucil for Scietific ad Idustrial Research The evirometal impact of developmets is a cocer, particularly the destructive ature of extractive idustries, fuelled by cheap ad dirty eergy sources. The result is severe depletio i soil quality ad loss of biodiversity. Low-desity developmet that is spread out is eergy itesive ad causes pollutio. Gree ifrastructure eeds to be cosidered, icludig sustaiable electricity geeratio ad trasmissio, trasportig ad storig captured carbo, ew trasport techologies (etworks for chargig or fuellig vehicles usig electricity, hydroge or bio-fuels) ad atural systems to hadle storm water draiage ad water recyclig. Although some techologies are ot costeffective i the short term, South Africa s plas eeds to take a log-term view ad cosider the possibility that techology will radically trasform ifrastructure, mobility ad the developmet of cities, tows ad rural areas. Although the followig sectios separate rural ad urba areas, i reality the distictios are icreasigly blurred. Forced removals ad restrictios o migratio have led to dese settlemets i rural areas, while historic labour cotrols led to circular migratio betwee rural ad urba areas. Although there are specific rural ad urba challeges, the iterdepedecies are cosiderable, ad South Africa eeds a itegrated approach to these atioal territory issues. 236

249 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS South Africa idex of multiple deprivatio (2007) Source: Wright ad Noble, Tows ad cities Most South Africas live i tows ad cities. Urba areas geerate 85 percet of all ecoomic activity. The urba system is a complex etwork. Noe are perfect ad they all vary i relatio to huma activity, istitutios ad resources. It is importat that a oesize-fits-all approach is ot take govermet ad the private sector should uderstad the distict challeges ad potetial of differet areas ad respod with a locatio-specific approach. Tows ad cities are coected i varyig degrees ito wider urba systems ad their developmet reflects global ad local forces. Ecoomic activity is becomig cosolidated i the largest cities. Other activities are decetralisig, partly as a result of iformatio ad commuicatio techology (ICT) ad lower trasport costs, which creates opportuities for smaller urba cetres. A major tred is the developmet of city-regios that exted beyod idividual muicipalities. This offers opportuities but also complicates urba plaig ad maagemet. The Gauteg city-regio ad embryoic city-regios aroud port cities are importat, requirig ew collaborative approaches. 1 Wright G ad Noble M (2009). The South Africa Idex of Multiple Deprivatio 2007 at Muicipal Level. Report prepared for the Departmet of Social Developmet. 237

250 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Tows ad cities are affected by a rage of challeges: Despite slower urbaisatio tha i other parts of Africa, aother 7.8 millio people will be livig i South Africa cities i 2030 ad a further 6 millio by 2050, puttig pressure o muicipalities to deliver services. A large proportio of ew urba residets will be poor, reflectig a pheomeo referred to as the urbaisatio of poverty. The umber of youg people i cities is growig particularly rapidly. These youth are largely i the workig-age category ad maily uemployed or ivolved i margial eterprise. This requires a positive respose, as disechated youth are both a hazard ad a lost resource to society. Recet political discourse refers to a rig of fire aroud metropolita regios. South Africa s tows ad cities are highly fragmeted, imposig high costs o households ad the ecoomy. Sice 1994, desities have icreased i some urba areas ad there has also bee partial regeeratio of ier cities, but, overall, little progress has bee made i reversig apartheid geography, ad i some cases the divides have bee exacerbated. Trasportatio etworks are key to the sp atial trasformatio of South Africa s urba areas. There has bee sigificat progress i some cities i deliverig ew public trasport ifrastructure, but the major shift from supportig private cars to icetivisig public trasport is yet to happe, ad isufficiet attetio has bee give to itegratig modes of trasport ad coordiatig across muicipalities. The ecological limits to urba growth are begiig to emerge, with varyig degrees of water stress, food isecurity ad power shortages. Future developmet depeds o the ability of tows ad cities to shift to become less resource itesive. But the cocetratio of people, idustries ad ifrastructure i urba areas also presets opportuities to use resources more productively. There are also real opportuities to create greeer urba spaces, eve i the desest areas. Tows ad cities are ot productive eough ad do ot geerate sufficiet jobs. While most of the larger cities have performed better smaller cities ad tows, their growth has bee disappoitig. Maufacturig especially has performed poorly. There is also little support for the iformal ecoomy, while towship ecoomies are uable to retai local spedig power. May of the challeges are ot a result of a vacuum i policy, but rather isufficiet istitutioal capacity ad lack of strog istrumets for implemetatio. 238

251 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS The commutig burde A sigle mother of four childre aged betwee three ad 12 lives i Tembisa with her mother. She speds early five hours each day commutig to ad from work i the Pretoria suburb of Brummeria, where she is a office cleaer. The joureys cost early 40 percet of her mothly salary of R She leaves home at 05:00 to be at the office at 07:30, startig with a 2 kilometre walk to the taxi stad, which takes her to the trai statio. I Pretoria, she takes aother taxi to Brummeria. After leavig work at 16:00, she may ot get home util 19:00, as the trais are ofte late. She speds over R700 a moth o trasport ad early 100 hours o the road. Gauteg s spatial fragmetatio Source: South Africa Cities Network 2 Rural areas The atioal accoutig system uderstates the importace of rural areas to South Africa s future. Despite populatio shifts from rural to urba areas, the health ad wellbeig of the etire populatio still depeds o rural goods ad services food, water, mierals, eergy, biodiversity, atural ad cultural experieces, labour ad lad ad this will become icreasigly clear i the ext few decades, as resources become more costraied. 2 South Africa Cities Network (2011). Towards Resiliet Cities: 2011 State of the Cities Report. Johaesburg. 239

252 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Iteratioal experiece also shows that rural areas play a role i urbaisatio. Early o, cities have limited capacity to deal with large iflows of low-skilled migrats, so it is importat to provide security ad services i rural areas, ad support agriculture. As urbaisatio grows, rural areas cotiue to provide the goods, services ad markets essetial for the atioal ecoomy, but th ey also icreasigly provide space for ecoomic activities that caot survive i expesive urba eviromets. I South Africa, these iteratioal observatios apply, but there are also characteristics specific to the coutry as a result of South Africa s coloial ad apartheid history. Historically, rural populatios were able to subsist without support, growig their ow food, buildig their ow housig ad usig local resources of water ad eergy. Over time, as rural people were crowded ito reserves ad homelads, the productive base of may rural areas was udermied. Today, 40 percet of South Africa s populatio lives i rural areas, of which a very small proportio is self-sufficiet or sigificatly ivolved i agriculture. Over the past two decades, the productive ecoomy of rural areas has declied further, with a sharp drop i agricultural employmet. 3 Agriculture may ot have the capacity i the short to medium term to provide sustaiable livelihoods o a sufficiet scale for rural households ad to stem out-migratio. However, rural areas caot be writte off idiscrimiately as spaces of social reproductio ad retiremet with o ecoomic prospects. There are rural areas i South Africa that have experieced sigificat ecoomic growth. I some places, especially ear large metropolita markets or alog trasportatio corridors, agriculture has expaded, ad other areas have potetial that could be ulocked if policy shifts are implemeted. There are also sigs of ecoomic vibracy i parts of the previous homelads, i sectors such as retail, trasport ad costructio, as icreased state grats ha ve expaded local circulatio of moey. The ecoomic base of rural areas, ad whether agriculture ca support more people, is examied elsewhere i the pla. This chapter focuses o the spatial aspects of rural developmet. These caot be divorced from other critical issues istitutioal developmet, lad teure reform, o-agricultural employmet ad resource rights. Each eeds to be addressed i a comprehesive programme to restore rural areas, clearly outliig the role of the state ad local govermet, as well as capacity requiremets. 3 The reasos for agricultural declie are debated, but it is apparet that the scale of the problem caot simply be explaied by iheret problems with the sector. Sice the mid 1980s, govermet policies have bee biased agaist agriculture to eradicate the privileges afforded to white farmers ad the iduced iefficiecies of subsidisatio. This was ot, however, replaced by policies to accelerate growth ad developmet of the sector. 240

253 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS There are at least five spatial issues to be cofroted i developig rural South Africa: Differet types of rural settlemet Rural areas are usually divided ito differet types of villages, tows ad iformal settlemets i commercial farmig areas ad former homelads. This shows a eed for differetiated plaig resposes, but says othig about the type of people, level of poverty ad ecoomic activity i each category. Typologies should be developed further to support policies that allow for more sesitive ad differetiated itervetios, resposive to social, ecoomic ad demographic coditios ad aticipated populatio shifts, as well as to goverace arragemets, particularly to the role of traditioal authorities. Over time, istitutioal arragemets i rural areas should evolve to reflect differeces i rural settlemets, avoidig the oesize-fits-all approach of local govermet. Particular attetio must be paid to rural desificatio i parts of the previous homelads, where rural settlemets are growig rapidly i areas where access to lad is possible ad trasport services are good. Populatio desities i these places are approachig those of urba areas, but the ecoomic base ad the ifrastructure ad goverace arragemets to maage this chage are lackig. Lad registratio systems, for example, caot deal with the icreasigly complex forms of iformal ad semiformal teure i these areas. The appropriate type ad locatio of ifrastructure Ifrastructure ulocks the developmet potetial of rural areas. Appropriate levels, form ad locatio are importat, give that ifrastructure ivestme t is less cost effective i lower desity areas with small ecoomies. The questio is ot whether ifrastructure should be provided, but what levels ad forms of ifrastructure should be provided, where it should be located ad how it should be fuded. Spatial dimesios of lad reform There has bee much discussio about why lad reform ad redistributio sice 1994 have failed to achieve desired outcomes, but little attetio has bee give to spatial locatio. Successful agricultural productio requires suitable lad that is well located i relatio to major markets ad agro-processig chais. While may lad reform iitiatives have bee i areas that are margial to markets, there are possibilities for more vibrat peri-urba agricultural spaces, with the productio of commodities such as flowers, dairy, vegetable ad hydropoics. A difficult but importat issue is the challege of lad teure ad goverace i former homelad areas, where large areas of high-potetial agricultural lad remai grossly uderutilised. Local systems of food productio ad distributio Agricultural productio should be prioritised to boost job creatio ad local ecoomic developmet, which will gradually develop a sustaiable competitive idustry. Programmes providig techical, marketig ad fiacial support would stregthe local producers, reduce vulerability to exteral shocks ad reduce trasportatio costs, while icreasig local jobs ad icomes. To develop local systems of food productio requires a focus o the ifrastructure that coects producers with markets. Local food productio could also beefit from the 241

254 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN protectio ad developmet of local commoages. 4 Commoages offer advatages for job creatio, providig farmig icubators ad welfare safety ets. However, may are mismaaged, obsolete or cotrolled by relatively affluet groups. Spatial coflicts i rural areas I future, scarce resources will result i more acute coflicts. I some areas, it is likely that tourism, agriculture, miig ad biodiversity will be i coflict over access to lad ad water. Th e role of traditioal authorities i spatial decisios about lad use will also come uder scrutiy if ew agricultural developmet proposals are implemeted. Mechaisms to resolve these challeges eed to be foud. Providig housig ad basic services ad reactivatig commuities Sice 1994, more tha 3 millio subsidised housig uits have bee built for poor families. Access to basic services has expaded 97 percet of households have access to water ad almost 75 percet have access to saitatio ad electricity. 5 Despite these achievemets, access to adequate housig, reliable electricity, safe water supplies, accessible public trasport ad hygieic ad digified saitatio facilities remais a daily challege for may South Africas, particularly i poor rural ad periurba commuities. These challeges will oly be resolved if their uderlyig causes are addressed. Priority areas iclude: Affordability of services for poor households Poorly maaged muicipalities, with limited huma ad fiacial resources Not eough bulk capacity to supply all the etworks from which households get their services Ucotrolled use by some households. There are particular problems i the distributio of electricity, the quality of water supply, the itegratio of ew public trasport etworks, ad the reductio of waste to ladfill, which require urget attetio. Muicipal spatial plaig is ofte iadequately liked to ivestmet decisios aroud bulk ifr astructure, ad there is a urget eed for muicipalities i growig areas to adopt growth maagemet strategies to prioritise ifrastructure ivestmet i places where gr owth is desired (for example, aroud public trasport etworks). The model for service delivery etreched after 1994 has produced a depedet ad iactive citizery. Households ad commuities have become passive recipiets of govermet delivery. May are o loger actively seekig their ow solutios or fidig ways to parter with govermet to improve their eighbourhoods. Although govermet has a clear resposibility to provide services, alterative policies of service 4 Commoage refers to shared use. 5 The Presidecy (2010). Developmet Idicators. 242

255 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS provisio are eeded that satisfy popular expectatios, while buildig active citizeship ad expadig citize capabilities. The problem of depedecy is most severely represeted i housig. May households have beefited from houses provided by the capital subsidy programme, but the harsh reality is that the housig backlog is ow greater tha it was i New approaches are eeded, with idividuals ad commuities takig more resposibility for providig their ow shelter. The capital subsidy programme has had uiteded cosequeces ad re-eforced apartheid geography. Fiacig has mostly focused o idividual houses ad igored public spaces. To stretch limited subsidies, public ad private developers ofte sought out the cheapest lad, which is usually i the worst locatio. The capital subsidy regime has also geerally resulted i uiform housig developmets, which do ot offer a rage of housig ad teure types to support the eeds of differet households. It has also failed to meet the eeds of a large segmet of the populatio that requires retal houses, forcig may ito backyard shacks o private properties. The commissio is of the view that public fudig should therefore be directed towards the developmet of public ifrastructure ad public spaces that would sigificatly improve the quality of life of poor commuities who caot afford private ameities. Icreasigly, govermet should take o a eablig role i relatio to housig. Some form of subsidy may still be required, as the vast majority of South Africa s populatio is uable to access private fiacig, but this subsidy should also support commuity ad idividual iitiatives ad the developmet of well located sustaiable commuities. The commissio ackowledges the positive directio that huma settlemet policy has take sice the itroductio of the Breakig New Groud policy i The policy suggested utilisig housig as a istrumet for the developmet of sustaiable huma settlemets, i support of spatial restructurig. Breakig New Groud argued forcefully for better located housig projects, more di verse housig forms, iformal settlemet upgradig, accreditig muicipalities for housig delivery, ad likig job creatio ad housig. This approach was reiforced recetly with the creatio of a Departmet of Huma Settlemets ad with the Presidet s Delivery Agreemet o Sustaiable Huma Settlemets ad Improved Quality of Household Life (Outcome 8). Particularly importat elemets of Outcome 8 are: the commitmet to upgrade households i well located iformal settlemets with the assistace of the Natioal Upgradig Support Programme (NUSP); the emphasis o affordable retal accommodatio; ad, the mobilizatio of well located lad (especially state-owed lad) for affordable housig. The commissio believes that the full implemetatio of Outcome 8 will make a major cotributio to shiftig housig delivery from its focus o providig a sigle form of accommodatio to meetig a diversity of housig eeds. However, there are further shifts that are eeded ad there are urget matters relatig to implemetatio that must be resolved: 243

256 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Target settig i muicipalities ad provices still focuses maily o deliverig umbers rather tha dealig systematically with the deficiecies i the implemetatio system ad producig viable huma settlemets. The capital subsidy remais a very limited istrumet for achievig objectives of huma settlemet strategy, especially the eed for better located settlemets with a diverse rage of housig ad teure types, ad high quality public eviromets. Despite the ew focus o iformal settlemet regularizatio ad upgradig at atioal level, there is still a high level of ambivalece towards iformal settlemets across spheres of govermet, ad the capacity ad implemetatio mechaisms to achieve the atioal objectives are still poorly developed locally. Despite a BNG emphasis o affordable ier city housig as part of a broader urba reewal strategy, muicipalities ha ve cotiued to focus attetio o housig developmets o greefields where targets are more easily met. Ier cities have cotiued to develop as a mix of slum-lordig for the low icome sector ad exclusive developmets for the wealthier i scattered pockets of urba regeeratio. Fiacig ad regulatory arragemets have hidered household mobility, fixig residets withi specific places at a time whe the spatial circumstaces of households (e.g. places of work ad schoolig) chage regularly. Weak spatial plaig ad goverace capabilities Reewed effort is eeded to esure that atioal, provicial ad local govermet work together i reshapig the built eviromet to achieve smarter ad fairer developmet. South Africa s itergovermetal system of spatial plaig has bee slow to develop ad coordiatio has ofte bee poor. The complex divisio of powers ad fuctios betwee the three spheres of govermet has cotributed to the problem ad, i additio, ambiguities i the Costitutio about who is resposible for spatial plaig have created ucertaity. The curret plaig system has reified muicipal ad provicial boudaries makig it almost impossible to udertake cross-border plaig, or to secure collaboratio betwee oe provice ad aother, or betwee muicipalities. This has seriously bedeviled developmet plaig as may developmetal issues (e.g. eviromet, trasportatio, ecoomy) straddle political boudaries. There are added complicatios withi each sphere of govermet. Spatial plaig is dispersed across atioal miistries, 6 ad is subject to parallel ad sometimes coflictig legislatio. The legislatio that regulates lad-use maagemet is largely ureformed ad dates back to apartheid. Without a guidig framework for atioal spatial 6 These iclude Rural Developmet ad Lad Reform, Huma Settlemets, Cooperative Goverace ad Traditioal Affairs, Ecoomic Develo pmet ad Evirometal Affairs. 244

257 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS developmet, miistries ad state agecies sometimes operate at cross-purposes. For example, policies o the use of surplus state-owed lad are icosistet. Provicial lad-use maagemet fuctios overlap with muicipalities, creatig cofusio ad coflict. Provices are largely resposible for overseeig key ecoomic activities, such as agriculture, tourism ad evirometal maagemet, but lack of capacity has delayed developmet ad reduced the quality of the provicial growth ad developmet strategies that offer a istrumet for coordiatio. The divide betwee maagig developmet ad the eviromet is a serious desig flaw i the plaig system, makig it difficult to strike a reasoable balace betwee cotedig cosideratios. Muicipal itegrated developmet plas vary i quality. Iefficiecies i processig plaig applicatios have sometimes deterred job-creatig ivestmet. The plaig system does ot distiguish betwee the procedural requiremets of small muicipalities that receive oly a few large applicatios ad big metropolita authorities that get may. Additioal difficulties for the plaig system iclude: Ambiguity ad cotest aroud the developmetal role of traditioal authorities Poor cross-boudary coordiatio Autoomous trasport systems Lack of muicipal powers to acquire ad swap lad parcels Disparate fudig streams, which complicate itegrated developmet Plaers lack uderstadig of ecoomic priciples, market forces ad commercial realities to egotiate better outcomes. Muicipal plaig resposibilities were recetly clarified by a Costitutioal Court judgmet, but urget actio is eeded to bolster the capacity of local govermet to fulfil these fuctios effectively. Soud spatial goverace requires strog professioals ad mobilised commuities. May muicipalities struggle to appoit qualified plaers, who are i short supply ad are ofte ot cosidered a priority. As a result, quality stadards are sometimes poor, ad because opportuities are limited, too few people study plaig. The lack of capacity aggravates a lack of citize egagemet i eighbourhood plaig ad developmet. There are few examples of commuities mobilisig to iitiate their ow plaig ad problem-solvig, ad these efforts are ofte stalled due to govermet s lack of capacity to egage ad respod. 245

258 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Trasformig spatial arragemets ad spatial goverace The complexities ad scales of spatial chage Trasformig huma settlemets is a large ad complex ageda requirig far-reachig policy chages ad shifts i household, busiess ad istitutioal practices. A icremetal approach withi a log-term strategic visio will prevet orgaisatioal overload ad political failure. Sequecig will esure that each set of reforms has cumulative effects for further reforms ad provide the basis for systemic chage over time. Oe of the reasos for the complexity is that plaig eeds to happe at iteratioal, regioal, coutry ad local level. The proposals below seek to address this. Before describig specific proposals, however, it is importat to set out key priciples. Overarchig priciples for spatial developmet We propose that all spatial developmet should coform to the followig ormative priciples ad should explicitly idicate how they would meet the requiremets of these priciples: Spatial justice The historic policy of cofiig particular groups to limited space (ghettoisatio ad segregatio) ad the ufair allocatio of public resources betwee areas must be reversed. Spatial sustaiability Sustaiable patters of cosumptio ad productio should be supported, ad ways of livig promoted that do ot damage the atural eviromet. Walkable eighbourhoods, for example, reduce the eed to travel ad limit greehouse gas emissios. Spatial resiliece Vulerability to evirometal degradatio, resource scarcity ad climatic shocks must be reduced. Ecological systems should be protected ad repleished. Spatial quality The aesthetic ad fuctioal features of housig ad the built eviromet eed to be improved to create more liveable, vibrat ad valued places. Spatial efficiecy Productive activity ad jobs should be supported, ad burdes o busiess miimised. Efficiet commutig patters ad circulatio of goods ad services should be ecouraged, with regulatory procedures that do ot impose uecessary costs o developmet. These priciples eed to be icorporated ito operatioal priciples that provide guidace o: itegratig rural ad urba areas; accommodatig social diversity withi the built eviromet; creatig more dese settlemet without raisig the cost of lad ad housig for the poor; itegratig trasportatio systems ad lad use; broadeig the ecoomic base of tows ad cities through supply of reliable ifrastructure, suitable lad ad property, coectivity, skills ad logistics; buildig commuity ivolvemet ad parterships; geerally supportig the developmet of vibrat, diverse, safe, gree ad 246

259 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS valued places; ad esurig that goverace arragemets ad leadership deliver equitable ad efficiet decisio-makig. Makig the case for a spatial visio South Africa eeds a spatial visio to iform developmet policy, specifically to: Tackle iherited spatial divisios South Africa s spatial structure perpetuates exclusio. Distorted growth patters caot be igored. They also worse ecoomic ad logistical iefficiecies. Ulock developmet potetial May places are ot growig ecoomically because of a lack of ifrastructure, iadequate skills, poor iovatio capacity ad weak goverace. The locked-i potetial of these areas could be released through targeted ivestmet i ecoomic ad social ifrastructure ad istitutioal support. Guide ad iform ifrastructure ivestmet ad prioritisatio A spatial ivestmet framework is eeded to support growth ad iform the log-term ifrastructure ivestmet strategy. Maage cotemporary ecoomic ad demographic shifts Ecoomic dyamics is produced by cocetratig productive activity, etrepreeurs, workers ad cosumers i a place without cogestio. Facilitate coordiatio betwee parts of govermet ad other agets Spatial policy could be used to brig differet actors ad iterests together to defie a commo future bidig all spheres ad sectors. Develop a atioal spatial framework Spatial policy seeks to coordiate ad coect the pricipal decisios that create ad shape places to improve how they fuctio. Spatial policy does ot operate i isolatio uaided it caot trasform the coutry s ecoomic geography or promote growth. However, spatial policies ca make a sigific at differece, especially whe they are itegrated with plas for tagible ivestmet that are sustaied over time, ad carefully adapted to the eeds ad opportuities of specific places. Spatial policy ca be used to stregthe ties with eighbourig states by guidig measures to improve cross-border ifrastructu re coectios, esure better itegratio ad maagemet of a wider etwork of huma settlemets ad support the sharig of ecoomic assets to secure ecoomies of scale. To achieve this, a trasatioal spatial framework for souther Africa should be developed, which might evetually be itegrated withi a Africa-wide spatial framework. This is, however, likely to be a complex process, politically ad istitutioally, ad should ot delay the cocurret preparatio of a atioal spatial framework (NSF) for South Africa. 247

260 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The developmet of the NSF for South Africa eeds to ivolve govermet, busiess ad civil society sectors to create a shared perspective. I idetifyig key elemets of a commo visio, lessos ca be leart from a earlier attempt to address such cocers the Natioal Spatial Developmet Perspective. It focused o the tough choices facig costly public ivestmets, but it took a arrow view of the developmet potetial of differet places. Recet data has highlighted some uaticipated treds that illustrate the eed for a ogoig process of spatial maagemet. Give the complexity of the task, ad the eed for a fully participatory process that properly ivolves departmets ad agecies with a madate for spatial developmet, the commissio does ot preset a NSF i this chapter. We suggest some of the key elemets for iclusio i the framework ad propose the istitutios ad processes ecessary for the work to start. The challege of spatial disparity is oe of the most difficult issues that a NSF would have to cofrot. Ecoomic developmet teds to be ueve, with some places growig more quickly tha others. Natioal spatial policy eeds to support the major cetres of competitiveess where jobs ca be most efficietly produced. However, there are opportuities ad growth dyamics to be ulocked withi curretly laggig regios. It is critical that South Africa: develops goverace capabilities ad creativity i all regios, ad i laggig regios i particular; ivests i coective ifrastructure (for example, road, rail, ICT, fiacial ad busiess services) that would ehace the itegratio of these regios with the ecoomic core; ad also ivests i ifrastructure ad services that ehace labour mobility i search of jobs (for example, educatio, traiig ad trasportatio). The developmet of a NSF, as well as ogo ig spatial maagemet, must be supported by a properly itegrated system of atioal spatial data. There are a umber of iitiatives, i the public ad private sectors, to collect ad aalyse data at atioal level, but these are ot well itegrated ad there is duplicated effort. A NSF caot ad should ot address the details required withi provicial ad muicipal spatial developmet frameworks. It ca, however, offer broad priciples for provicial ad local developmet. A importat priciple is spatial differetiatio. Spatial plaig should recogise ad respod to differeces betwee places. Spatial typologies used by govermet usefully differetiate betwee differet categories of settlemet, but they are ot sufficietly uaced ad do ot adequately capture the fie-graied differece withi each category. For example, there are cosiderable differeces i iformal settlemets. Those closer to urba cetres ofte house youg uemployed males lookig for jobs, while those towards the urba periphery ofte have a more stable populatio with a higher percetage of wome ad a greater eed for social services. The framework should also deal with areas that are of atioal importace ad develop specific programmes to support them. Territorial plas of this ature work best whe they are supported by a spatial fud that ca direct support to specific areas to address specific spatial objectives. This eeds to be seriously cosidered for South Africa. The 248

261 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS developmet of such a fud would eed to be part of a broader process that iterrogates the fragmeted fiscal arragemets for spatial developmet (i housig, ifrastructure ad eighbourhood developmet). The proposed atioal schema for spatial targetig (provisioally mapped) is illustrated ad discussed below. Natioal competitiveess corridor The corridor of logistics hubs, road, rail, fuel ad other ifrastructure, icludig ad coectig Gauteg ad ethekwii, is vitally importat to the future of the atioal ecoomy, ad should be desigated as a atioal competitiveess corridor. It accouts for about 46 percet of GDP, ad would build o the Departmet of Trasport s 2050 Visio for the Durba-Gauteg Freight Corridor. Nodes of competitiveess These iclude clusters of localities that accout for at least 5 percet of GDP or jobs, which have experieced higher tha average growth sice 1994, or which have the potetial for high growth i future. Esurig their efficiet developmet is of atioal importace ad special attetio must be give to creatig ad retaiig ecoomic value. The Cape Metropolita regio, which produces about 11 percet of GDP, ad ethekwii, which produces about 9 percet, are obvious cadidates (although the latter is already icorporated withi the corridor). With their ports ad idustrial ad agro-processig hubs, the Easter Cape s two metropolita regios could also ehace atioal ecoomic prospects. Collectively, these regios cotribute about 4 percet of GDP. These regios have ot performed optimally sice 1994, but with targeted support, their performace ad cotributio could be improved. Rural restructurig zoes These rural areas have large populatios that are experiecig chage (for example, ew settlemet formatio). Such areas eed maagemet, istitutioal developmet, lad ad teure reform, ifrastructure provisio ad ecoomic stimulus. They iclude the more desely populated parts of the previous homelads, where there is populatio dyamism ad sufficiet umbers of people to provide the basis for viable markets. There may also be areas with agricultural, tourism or miig potetial. Almost all provices have areas that fall withi this category, but the zoes ca oly be desigated after careful cosideratio agaist a set of criteria. 249

262 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Proposed atioal schema for spatial targetig Resource-critical regios These regios have highly valued atural resources that provide ecosystem lifelies to the coutry ad may require specific policies to esure their sustaiability. They may iclude areas of highly valued mieral resources (the platium belt); areas of great importace for biodiversity (the Wester Cape); ad critical water productio areas (various catchmets alog the Easter Escarpmet). Regios with competitio betwee developmet ad eviromet, or betwee competig evirometal uses (the Mpumalaga Highveld) may also fall uder this category. Trasatioal developmet corridors These corridors are critical to creatig a itegrated souther Africa ecoomy, which require specific itervetios aroud ecoomic stimulus ad trade ad trasport etworks. The corridors betwee Gauteg ad Zimbabwe, Botswaa ad Mozambique are likely to be recogised as the primary trasatioal developmet corridors. Special itervetio areas These areas require particular forms of state support for specified periods. They iclude: Job itervetio zoes Areas that have lost more tha 20 percet of their jobs over the past decade, with sigificat losses to the atioal ecoomy. The state may seek to stimulate the growth of ew sectors, develop ew skills or, i extreme cases, promote out-migratio. Areas of cocer iclude agricultural 250

263 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS districts i the Wester Cape, the Free State goldfields, the Newcastle- Dahauser regio i KwaZulu-Natal, ad the Far West Witwatersrad. Growth maagemet zoes areas of rapid aticipated growth that may require special plaig ad maagemet. For example, rapid ew growth is aticipated i the Waterberg regio i Limpopo as a result of ew miig developmet ad related idustry, such as petrochemicals, ad aroud Saldaha i the Wester Cape due to resource-related port ad idustrial developmet. Gree ecoomy zoes These are zoes with prove potetial to create gree jobs, where short-term state itervetio could leverage sigificat private developmet. For example, areas i the Norther Cape offer potetial for solar ad wid eergy. Each of these zoes should have a itegrated programme of related actios to help realise potetial or deal with idetified problems. Ivestmets will vary i ature ad scale betwee areas, therefore a matrix likig spatial itervetio areas with forms of itervetio is required. Support is likely to target bulk ifrastructure, capital for lad assembly, public trasport, other coectig ifrastructure, busiess developmet, skills ad capacity buildig, ad programmes to ehace iovatio. The areas for spatial targetig idicated above will be desigated by atioal govermet. Provicial ad muicipal authorities should also be empowered to desigate areas for special attetio, ad itegrated fudig could allow for this. As a cofidece-buildig actio to couter scepticism of the govermet s determiatio ad ability to reshape the couty s huma settlemets, relevat muicipalities should establish a few trasformatio zoes, to act as catalysts ad demostratio projects for urba itegratio ad desificatio. Specifically, projects could regeerate ru-dow ier city areas; develop growth magets o large vacat sites that have the potetial to accommodate job-creatig ivestmet ad larger residetial populatios i accessible locatios; ad cemet likages betwee peripheral towships ad urba cores. The istitutioal arragemets for supportig these zoes eed further cosideratio, but may ivolve public-private parterships. Stregthe the spatial plaig system A pla-led system is eeded to brig focus ad allow log-term public iterests to guide the developmet of places. It will take time to create this capability, drawig o a fuller uderstadig of the limitatios of curret arragemets ad icorporatig the lessos of good iteratioal practice. The short-term priority is to make the existig system work better. This icludes capacity buildig, istitutioal coordiatio ad legislative chages. At the same time, the process of puttig the elemets of a more robust plaig system i place should begi. 251

264 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN To support a NSF, the followig eed to be cosidered: A atioal spatial fud to promote the visio ad ratioalise existig fudig streams for spatial developmet. 7 A atioal observatory for spatial data assembly ad aalysis. Establish a iterdepartmetal spatial coordiatio committee i the Presidecy with the ecessary oversight to: Formulate the NSF. Resolve the resposibilities for spatial plaig withi atioal govermet, remove duplicatio, ad recommed which departmet or agecy should be resposible for overseeig spatial plaig. My cocer lies with the cumbersome muicipal plaig ad approval procedures. I some cases, we fid a situatio where 'ormal' lad-use applicatios take betwee moths to be discussed at Portfolio Committees the we oly get resolutios from the Coucil after four to five moths. Surely oe of the issues to be addressed is to speed up these processes buildig more capacity at muicipalities utilisig studets i eed of practical traiig? NPC Jam Resolve a mediatio process for serious spatial coflicts. Create a robust set of spatial idicators as part of a spatial goverace evaluatio framework to measure the extet to which spatial objectives are beig practically achieved. Covee the legislative reform process outlied below. Promote spatial plaig ad lad-use maagemet legislative reform: Legislatio o lad-use maagemet, as required by the Costitutioal Court, eeds to pave the way for a thorough re view of the plaig system. By 2016, further legislatio should be preseted to Parliamet to address cross-cuttig aspects of spatial plaig, which will facilitate simpler, more efficiet decisiomakig o developmet applicatios. This should resolve the curret fragmetatio withi the plaig system, which divides sectors, for example, lad-use maagemet, evirometal maagemet, trasportatio plaig ad heritage. Reform the curret plaig system to require all muicipal ad provicial plas, icludig itegrated developmet plas, to be traslated ito spatial cotracts that are bidig across spheres of govermet. Make provisio i legislatio for cross-boudary plas that would promote collaborative actio i areas icludig biodiversity protectio, climate chage adaptatio, heritage ad tourism ad trasportatio. I developig a more effective system of goverace for city-regios, reform the plaig system to esure itegrated, city-regio-wide coordiatio of plaig. 7 This would ot be a ew fud, but a cosolidatio of the fudig streams withi the built eviromet ito a more coheret fudig strategy to allow proper sequecig ad developmet of elemets i the overall built eviromet. 252

265 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS Promote possible regioalisatio of plaig ad service delivery: Muicipal boudaries are a iadequate basis for plaig ad service delivery. A atioal spatial visio should address this through a cosultative process, based o a proposed demarcatio of regios. I this process, the democratic accoutability of regioal structures should be give careful cosideratio. Start a atioal coversatio about cities, tows ad villages South Africa would beefit from greater public awareess, mutual uderstadig ad discussio of the future of its villages, tows ad cities. Uleashig citize s popular imagiatio, creative thikig ad eergies are fudametal to tacklig the formidable challeges ad opportuities that settlemets face. To achieve this, the media (radio, televisio, ewspapers ad ew social media) ad civil society orgaisatios could stimulate a coversatio at atioal ad local levels about eighbourhoods, tows ad cities. People from diverse sectors of society will be ecouraged to come forward with ew ideas, creative desigs ad alterative proposals to improve ad restructure their livig ad workig eviromets. This should iclude, for example, youg people i towships, artists i ier cities ad the elderly i rural areas. Muicipalities, provices ad atioal departmets will facilitate ad egage i the debate, ad icorporate the emergig ideas ad suggestios ito their strategic plas. Broad debates aroud urba ad rural futures should be complemeted with focused coversatios o specific issues, for example, the future of the previous homelads, the developmet of the Easter Cape metropolita regios, the goverace of the Gauteg city-regio, ad gree ecoomy potetial i the Norther Cape. If we ask the majority of youg school goig people from rural areas where they wat to study ad be i their adult life, most of them will say Gauteg. The result is over populatio i urba areas. I thik more developmet eed to go to rural areas. Urbaisatio is good i the sese that cities act as a focal poit where public services ca be provided easily to a greater umber of people at a lesser cost. It also acts as a vehicle by which people ca work to brig themselves out of poverty. It is a meas by which wome ca be empowered to make their ow decisios as they are free to act as their ow agets, whereas i rural areas they have little meas of empowerig themselves. Urba migratio is caused by a sese that the grass is greeer o the other side ad the wish to have a better stadard of livig, ot ecessarily that people wat to live i the big cities. This, i most cases, eds up beig a disappoitmet. NPC Jam 253

266 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Bolder measures to make sustaiable huma settlemets To fudametally reshape huma settlemets by 2050 (with sigificat progress by 2030), South Africa eeds: To address iequities i the lad market that make it difficult for the poor to access the beefits of life i tows ad cities. Stroger measures to recofigure tows ad cities towards more efficiet ad equitable urba forms. Housig ad lad policies that accommodate diverse household types ad circumstaces. Muicipalities that put ecoomic developmet ad jobs at the heart of what they do ad how they fuctio. Most state ivestmet goes ito household services. Over time, the state should shift its role from a direct housig provider to a housig facilitator, developig public goods through ivestmet i public trasport, other ecoomic ad social ifrastructure, quality public spaces ad jobs. I the first five-year period ( ), we propose the followig steps: Develop a more coheret ad iclusive approach to lad All muicipalities should be ecouraged to formulate a specific lad policy, as part of their itegrated developmet pla, showig how vacat ad uder-used lad will be developed ad maaged to achieve wider socioecoomic ad evirometal objectives (withi the iitial focus o well located vacat ad uder-used state-owed lad to support affordable housig). 8 Muicipalities should examie how poorer people access lad ad accommodatio, ad the develop ways to support ad regularise these processes to give people more security. Govermet departmets resposible for lad ad taxatio should work together to develop istrumets to capture some of the icrease i lad values resultig from public ivestmet i ifrastructure, helpig to recoup some of the costs of this ivestmet to use for public beefit. Admiistrative procedures for lad developmet should be scrutiised to elimiate uecessary iefficiecies, without compromisig the eed for careful evaluatio of proposals. Muicipalities should report o turaroud times. 8 The Housig Developmet Agecy has idetified hectares of well located lad, maily owed by the state. Assemblig eve half of this lad ad developig it at 60 dwellig uits per hectare could provide housig uits, which would accommodate a large portio of aticipated household growth. It would also make a sigificat impact o the reshapig of cities. 254

267 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS Radically revise the housig fiace regime Prevet further state support for housig i poorly located areas ad prioritise developmet i ier cities ad aroud trasport hubs, corridors ad ecoomic odes. Shift state ivestmet from support fo r top structures to icetivise the acquisitio of well located lad ad support the developmet of the public eviromet eeded for sustaiable huma settlemet. Shift housig fudig away from buildig sigle houses to supportig the developmet of a wide variety of housig types with differet teure arragemets (icludig affordable retal ad social housig). Ecourage housig developmet as part of a mix of activities ad lad-use types. Revise the regulatios ad icetives for housig ad lad use maagemet Stregthe the lik betwee public trasportatio ad lad use maagemet with the itroductio of icetives ad regulatios to support compact mixed-use developmet withi walkig distace of trasit stops ad prioritise higher desity housig alog trasit routes. 9 Icetivise ew private housig developmets to iclude a proportio of affordable housig. Support the growth of housig i the gap market by addressig obstacles i supply (lack of serviced lad ad delays i regulatory approval) ad demad (provisio of affordable loas by fiacial istitutios). Require all ew developmets to be cosistet with a set of sustaiability criteria (to be developed urgetly ad collaboratively across the spheres of govermet). Require all local spatial developmet frameworks to icorporate a growth maagemet approach that would alig areas of populatio ad ecoomic growth with ivestmet i bulk ifrastructure. Itroduce a proactive elemet ito laduse maagemet systems by allowig muicipalities to proactively rezoe lad to achieve specific objectives such as desificatio alog trasit routes. 10 Work towards icreased household mobility ad greater spatial flexibility by reviewig the restrictios o the sale of govermet provided houses ad givig cosideratio to alteratives to fixed locatio subsidies such as housig vouchers or grats for purchasig buildig materials. 9 This is geerally kow as trasit-orieted developmet. 10 For example, New York udertakes proactive zoig to provide a icetive ad framework for private ivestmets to achieve the objectives of local plas. 255

268 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Recogise the role played by iformal settlemets ad ehace the existig atioal programme for iformal settlemet upgradig by developig a rage of tailored resposes to support their upgrade Sigificatly expad the atioal programme o iformal settlemet upgrade ad muicipalities to itroduce local level programmes. Develop legal istrumets to regularise iformal settlemets (for example, the use of special zoes i lad-use maagemet schemes) ad to recogise rights of residece. Agree o miimum health ad safety stadards ad the progressively upgrade these stadards as regularised iformal settlemets are brought ito the maistream urba fabric. Focus o developig commuity orgaisatio to support participatory regularisatio ad upgrade programme. Esure that fudig arragemets ad programmes chael resources ito commuity facilities, public ifrastructure ad public spaces, ad ot just ito housig. Support the trasitio to evirometal sustaiability Local actios by villages, tows ad cities are vital to complemet atioal measures to mitigate ad adapt to climate chage, reduce greehouse gas emissios, ad use scarce resource more efficietly. Special attetio must be give to the protectio of poor ad vulerable groups. Specific spatial proposals iclude: All spheres of govermet should itroduce commo sustaiability criteria for decisios o ifrastructure ivestmet to give priority to gree ifrastructure, sustaiable mobility ad to ecourage more sustaiable developmet practices. I the immediate future, urget attetio must be give to supportig forms of trasport that do ot produce emissios (walkig ad cyclig), or that produce low emissios per capita relative to the private motor car (trais, buses ad miibuses). Muicipalities should itroduce more measures to reduce the demad for electricity ad water, cut water leakages, ad elimiate waste goig to ladfill, ad discourage high-cosumptio lifestyles (for example, stepped tariffs). Natioal govermet should cosider icetive structures to promote this. Withi the plaig system, stadards ad istrumets to deal with evirometal hazards, risks ad vulerability should be stregtheed, especially for poor commuities i margial locatios. All spheres of govermet should aim for a zero-carbo buildig stadard by 2030, by esurig that all ew buildigs meet the eergy-efficiecy criteria set out i the South Africa Natioal Stadard 204 dealig with eergy efficiecy i buildigs. These regulatios would be progressively stregtheed util the 2030 target is met. 256

269 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS Muicipalities should be ecouraged to explore the cotributio of urba areas to food security (for example, home ad rooftop gardes), ad should also be supported i lauchig urba greeig programmes. Support rural spatial developmet The efficiet operatio of food productio chais is predomiatly a rural cocer. Providig ifrastructure ad services i rural areas presets added challeges, because of the extra costs while lad-use plaig systems for maagig growth ad developmet are geerally lackig. Guidig priciples for provisio of ifrastructure i rural areas Sesitivity to the differetiated ature of rural areas, with some places justifyig high levels of ivestmet because of social eed ad developmet potetial. Spatial plaig processes ca assist with such judgemets. Priority should be give to coective ifrastructure that stregthes the likages betwee urba ad rural areas ad to ifrastructure that supports the provisio of basic uiversal services (for example, water). Soft ifrastructure is also critical to rural developmet, icludig support for good goverace, eterprise ad youth developmet. Iovative forms of service ad ifrastructure provisio should be developed where covetioal, fixed ifrastructure may be uaffordable. Ivestmet i ICT should be give priority, because it has locatioal flexibility ad potetial for sigificat ecoomic ad social returs. Lad reform programmes should reflect the importace of locatio ad coectivity for farm viability. Ivestigate ad respod to shiftig settlemet patters Shiftig settlemet patters should be ivestigated to alig public ivestmet i ifrastructure ad services with these treds, ad to develop appropriate systems of lad teure ad growth maagemet. Special attetio must be give to areas of desificatio alog trasport corridors withi previous homelads. Small tow developmet strategy A strategy should be developed to ehace the developmetal role of small tows i rural ecoomies, with a focus o ecoomic viability, sustaiig public services, skills developmet, the gree ageda ad coectig ifrastructure. These strategies also eed to Take a lead from Brazil. Make o itervetio without Iteret coectivity as the first priority. Coectivity takes away the eed for proximity. As a persoal aecdote, the more I have improved my Iteret usage, the less I wish to travel. Persoally, I ow trade actively i 80 coutries, but very rarely leave the City of Cape Tow. NPC Jam 257

270 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN cosider appropriate mechaisms to deal with step migratio through small tows to larger cetres. Spatial itervetios to support agricultural developmet Strategies should be developed to support local productio etworks. These should iclude attetio to the ifrastructural requiremets i support of value chais, proposals to reactivate a traditio of local commoages, ad strategies for itesificatio of agriculture i peri-urba areas, which could complemet the use of urba growth boudaries to restrict urba sprawl. Build a active citizery to rebuild local place ad commuity It is impossible to develop ad maitai sustaiable huma settlemets i a participatory way if commuities are disorgaised ad fractured, ad if they have little cofidece i their muicipalities (as is the case i may expadig iformal areas). It is importat to promote, though collaborative govermet ad commuity actio, a people-cetred approach that helps commuities ad idividuals to geerate icome, improve skills, icrease safety, reduce food isecurity ad ehace health through improvemets i social ad ecoomic ifrastructure. Commuities should cotribute to practical problem-solvig ad upgradig schemes, ad hold muicipalities accoutable. The plaig system should ecourage properly fuded, citize-led eighbourhood visio ad plaig processes, drawig o methods successful i other coutries. It is crucial that youg people are ivolved i the process. Public works programmes should be tailored to commuity buildig ad local eeds i at least four broad areas: a) the ecoomy of social care, b) gree ifrastructure, c) cultural services, ad d) public facilities such as schools, cliics, roads, parks, commuity cetres ad libraries. I the log term, every muicipality should promote citizeship educatio ad traiig to stregthe commuity orgaisatio, plaig ad project maagemet skills ad competeces, perhaps through some kid of citizeship academy ru by a o-govermetal orgaisatio or educatioal istitutio. Local commuities should work with muicipalities i developig local arts, culture ad heritage precicts. Natioal govermet should provide a fudig flow to support this. To promote mutual uderstadig, commuity cohesio ad itegratio of people from differet atioal ad cultural backgrouds, forums for dialogue ad liaiso should be established at eighbourhood ad muicipal levels. They could help local commuities beefit from the skills, eterprise ad iteratioal etworks of ew arrivals, ad reduce xeophobia ad migrat exclusio. 258

271 CHAPTER 8: TRANSFORMING HUMAN SETTLEMENTS Sequecig ad coclusio Spatial trasformatio is a log-term project. There is massive ivestmet i fixed assets i all kids of ifrastructure, as well as housig, factories ad offices. Shifts i spatial form may proceed at a glacial pace i areas where developmet pressures are low, ad somewhat faster i areas of ecoomic dyamism ad populatio i-migratio. However, while spatial trasformatios are ot a quick fix, there are possible solutios if supported by strog policies, cosistet implemetatio ad political will. Future geeratios will beefit if the trajectory of curret patters of developmet begis to chage ow. New spatial arragemets could fudametally trasform job ad livelihood prospects. Spatial trasformatio will reduce travel time ad cost betwee home ad work, ad icrease mobility for poor households to access better job ad educatio opportuities. This i tur will reduce poverty ad iequality. The outcomes of spatial chage may take decades to be fully realised, but the shift i trajectory ca happe relatively quickly. There proposed itervetios ca be fully implemeted i five years. Positive outcomes from these reforms should be evidet withi 10 years, providig the basis for real trasformatios i the rural ad urba ladscape over the subsequet decades. 259

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273 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Chapter 9 IMPROVING EDUCATION, TRAINING AND INNOVATION We are Africas. We are a Africa coutry. We are part of our multiatioal regio. We are a essetial part of our cotiet. We feel loved, respected ad cared for at home, i commuity ad i public istitutios. We lear together..we love readig. Each commuity has: a school, teachers who love teachig ad learig, a local library filled with the wealth of books, a libraria. All our citizes read, write, coverse, ad value idea ad thought. We are fasciated by scietific ivetio ad its use i the ehacemet of our lives. We live the joy of speakig may laguages. Itroductio Educatio, traiig ad iovatio are cetral to South Africa s log-term developmet. They are core elemets i elimiatig poverty ad reducig iequality, ad the foudatios of a equal society. Educatio empowers people to defie their idetity, take cotrol of their lives, raise healthy families, take part cofidetly i developig a just society, ad play a effective role i the politics ad goverace of their commuities. Foudatioal skills i areas such as mathematics, sciece, laguage, the arts ad ethics are essetial compoets of a good educatio system. Lifelog learig ad work experiece improves productivity, eablig a virtuous cycle that grows the ecoomy. 261

274 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Quality educatio ecourages techology shifts ad iovatio that are ecessary to solve preset-day challeges. Educatio, traiig ad iovatio are ot a solutio to all problems, but society s ability to solve problems, develop competitively, elimiate poverty ad reduce iequality is severely hampered without them. Schools are the buildig blocks for learig ad socialisatio. The values leart at school permeate society. The quality of the schoolig system impacts sigificatly o further educatio, college, higher educatio ad society s ability to iovate. Higher educatio is the major driver of the iformatio/kowledge system, likig it with ecoomic developmet. However, higher educatio is much more tha a simple istrumet of ecoomic developmet. Educatio is importat for good citizeship ad erichig ad diversifyig life. Quality higher educatio eeds excellece i sciece ad techology, just as quality sciece ad techology eeds excellet higher educatio. Good sciece ad techology educatio is crucial for South Africa s future iovatio. The humaities are importat for uderstadig some of the difficult challeges the coutry faces such as trasformatio, violece, corruptio, educatio, service delivery, iovatio, the gap betwee the rich ad the poor, ad the issue of race. 1 Uiversities are key to developig a atio. They play three mai fuctios i society. Firstly, they educate ad trai people with high-level skills for the employmet eeds of the public ad private sectors. Secodly, uiversities are the domiat producers of ew kowledge, ad they critique iformatio ad fid ew local ad global applicatios for existig kowledge. Uiversities also set orms ad stadards, determie the curriculum, laguages, ad kowledge, ethics ad philosophy uderpiig a atio s kowledge-capital. South Africa eeds kowledge that equips people for a society i costat social chage. Thirdly, give the coutry s apartheid history, higher educatio provides opportuities for social mobility ad simultaeously stregthes equity, social justice ad democracy. I today s kowledge society, higher educatio uderpied by a strog sciece ad techology iovatio system is icreasigly importat i opeig up people s opportuities. However, uiversities o loger have a moopoly o kowledge productio globally. Other orgaisatios, such as sciece coucils, o-govermetal ad privately fuded research istitutes, state-owed eterprises (SOEs), the private sector, ad eve some govermet departmets, have become sites of ew kowledge productio ad applicatio. The framework i which the kowledge productio system operates ad its relatioship to iovatio ad idustry eed to be recofigured. A greater uderstadig withi govermet is required to ackowledge the importace of sciece ad techology ad higher educatio i leadig ad shapig the future of moder atios. Govermet departmets eed to work together to develop a broad eablig framework ad policy that ecourages world-class research ad iovatio. 1 ASSAF (2011). The state of the Humaities i South Africa: Status, prospects ad strategies. Pretoria: Academy of Sciece of South Africa. 262

275 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION A strog educatioal system spaig early childhood developmet, primary, secodary, tertiary ad further educatio is crucial for addressig poverty ad iequality. The psychosocial wellbeig of learers from early childhood to higher educatio is also cetral to the success of a good quality educatio system. Other govermet policies, such as the provisio of housig, basic services ad social security, are therefore critical for buildig a educatio system that beefits all learers. This chapter builds o the visio for educatio, traiig ad iovatio. The proposed actios are based o five cross-cuttig, iterdepedet ad implemetable themes: Lay a solid foudatio for a log ad healthy life ad higher educatioal ad scietific achievemet. This relates especially to early childhood developmet, basic educatio, further educatio ad traiig, ad higher educatio. Build a properly qualified, professioal, competet ad committed teachig, academic, research ad public service core. This relates to quality early childhood learig, schoolig, further educatio ad traiig, higher educatio, ad the atioal system of iovatio. It requires a coordiated pla to produce high-level professioals to lead the public ad private sectors, ad the cuttig-edge kowledge capacity eeded for icreased iovatio ad socioecoomic developmet. Build a strog ad coheret set of istitutios for deliverig quality educatio, sciece ad techology iovatio, traiig ad skills developmet. Develop world-class cetres ad programmes i the atioal system of iovatio ad the higher educatio sector over the ext 20 years. The Departmet of Higher Educatio ad Traiig ad the Departmet of Sciece ad Techology should lead ad cosolidate this process. Expad the productio of highly skilled professioals ad ehace the iovative capacity of the atio. This relates to higher educatio, the atioal system of iovatio, SOEs ad idustry. Create a ew atioal framework of commo objectives ad operatios recogisig that ew kowledge ad iovatio arise from may sites i moder society. Develop a commo uderstadig withi govermet i particular the Departmet of Higher Educatio ad Traiig, Departmet of Sciece ad Techology, Departmet of Trade ad Idustry, Public Eterprises, Treasury, Ecoomic Developmet o how to promote the role of sciece ad techology ad higher educatio i shapig society, the future of the atio ad the growth path. Create a educatioal ad atioal sciece system that serves the eeds of society. Icrease participatio rate i higher educatio to more tha 30 percet, double the umber of scietists ad icrease the umbers of Africa ad woma postgraduates, especially PhDs, to improve research ad iovatio capacity. This will help to accelerate the trasformatio of South Africa s scietific ad academic commuities to better reflect the populatio. Develop Africa laguages ad icorporate idigeous kowledge systems i educatio ad research. The foudatios for achievig the above actios should be fully established withi the first five years of the pla to allow for expasio i the subsequet period. 263

276 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Educatio ad traiig visio We eed to esure all childre ca access ad beefit from a high quality educatio. This requires a rage of early childhood developmet services ad programmes that support the holistic developmet of youg childre. These services eed to be flexible, so that they ca be resposive to the eeds of childre, families ad commuities. Some services will eed to be targeted directly at childre, others will provide support to their primary caregivers. To overcome our apartheid legacy it is essetial that everybody has access to services of a cosistetly high stadard regardless of who they are ad where they live. This will require that specific cosideratio be give to the most vulerable childre those who are livig i poverty or with disabilities. We evisage schools that provide all learers with a excellet educatio, especially i literacy, mathematics ad sciece. The educatio system eeds to improve costatly. The post-school sector eeds to meet the wide rage of educatio ad traiig eeds of people over 18. Together with the higher educatio system it will play a sigificat role i producig the skills ad kowledge the coutry eeds to drive its ecoomic ad social developmet. It will also be a iclusive system that provides opportuities for social mobility, while stregtheig equity, social justice ad democracy. Key features of the educatio traiig ad iovatio system i 2030 To achieve this visio by 2030, we will eed to focus o the followig issues: Early childhood developmet Early childhood developmet is critical for esurig that childre are able to reach their full potetial. Measures will eed to be put i place to esure that wome are able to pla their pregacies ad that teeage pregacy is o loger a issue. Pregat mothers will eed access to emotioal ad material support to esure a healthy pregacy. Childre will eed to be urtured so that they grow up healthy, well ourished, physically fit, cared for i a stable home eviromet so that they ca lear to iteract ad commuicate with those aroud them. Measures will eed to be i place to eradicate deficiecies i microutriets amog babies youger tha 18 moths ad to esure all childre have sufficiet food ad utritio. If these objectives are achieved it will be possible for childre to grow up i stimulatig eviromets that support learig ad where they are ot held back by their geder or the socioecoomic status of their family. 2 2 Biersteker L & Motala S (2011). Ehacig outcomes for Childre 0-5 years through Early Childhood Developmet as a Core Compoet of the Natioal Developmet Pla. Iput paper prepared for the Natioal Plaig Commissio. 264

277 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Schoolig Teachers are cetral to educat io ad teachig should be a highly valued professio. Teachers must have a good kowledge of the subjects they teach. It is particularly importat that there are high quality teachers of maths ad sciece. We should aspire to a future where teachers are recogised for their efforts ad professioalism. Bodies such as the South Africa Coucil for Educators ad specialist maths, sciece ad other subject-specific associatios eed to play a leadig role i the cotiuig developmet of teachers ad the promotio of professioal stadards. There eeds to be a istitutioal structure, icludig bursary programmes for existig teachers, that promotes good teachig by attractig, ivestig i ad retaiig the best teachers. Teacher remueratio should be li ked to their performace while takig ito accout mitigatig factors such as the school eviromet ad the socio-ecoomic status of learers. 3 To develop ad sustai this professioal culture, schools eed to be well ru by skilled ad dedicated pricipals who foster a vibrat but disciplied eviromet that is coducive to learig. The curriculum will eed to be tailored to the eeds of South Africa society. This will require pricipals ad maagemet teams to fulfil their roles as leaders i implemetig the curriculum. 4 The importace of Africa laguages or mother togue is emphasised ad itegral to educatio, to sciece ad techology, to the developmet ad preservatio of these laguages. Educatio istitutios must have the capacity to implemet policy ad, where capacity is lackig, immediate measures eed to be take to address it. The iterests of all stakeholders eed to be aliged to support the commo goal of achievig good educatioal outcomes that are resposive to commuity eeds ad ecoomic developmet. Districts should provide targeted support to improve practices withi schools, ad esure commuicatio ad iformatio sharig betwee authorities ad schools. Schools eed to share best practice. Parets eed to be give meaigful iformatio o their childre s performace. This requires teachers to carry out assessmet practices that eable learers to compare their performace with their couterparts i other schools i the district. It eeds to be 3 Va der Berg S, Taylor S, Gustafsso M, Spaull N & Armstrog P (2011). Improvig quality educatio i South Africa. A report prepared for the Natioal Plaig Commissio. 4 Taylor N (2011). A five year pla for South Africa schoolig. A report commissioed by the Natioal Plaig Commissio. 265

278 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN easy to idetify areas where improvemets i teachig ad learig are required. This meas policy-makers ad districts eed to be able to access iformatio that helps them determie the rate ad extet of progress i differet sectors of the educatio system, icludig the reasos for uderperformace ad schools requirig itervetio. Most importatly, it requires that adequate ad appropriate capacity exists to support schools that are performig poorly. By 2030, the schoolig system is characterised by learers ad teachers who are highly motivated; pricipals are effective maagers who provide admiistrative ad curriculum leadership; parets are ivolved i the schools their childre atted; schools are accoutable to parets; committed ad professioal teachers have good kowledge of the subjects they teach; schools ad teachers are supported by kowledgeable district officials; the admiistratio of educatio (icludig appoitmet ad discipliig of teachers) is the preserve of the govermet, with uios esurig that proper procedures are followed; learig materials are readily available; basic ifrastructure requiremets are met across the board; ad high speed broadbad is available to support learig. Laguages ot oly carry kowledge, but also create ew ad better kowledge. Laguage policy eeds to be iformed by a greater appreciatio of labour market imperatives. Learers eed to receive high-quality istructio i both their mother togue ad Eglish from early i the foudatio phase. Ifrastructure backlogs eed to be addressed so that all schools meet the basic ifrastructure ad equipmet stadards set by the atioal Departmet of Basic Educatio. This requires targeted actio to address the lack of basic ifrastructure, such as libraries, books, sciece laboratories, sports fields, electricity ad ruig water. Further educatio ad traiig ad skills developmet A expaded system of further educatio ad traiig ad skills developmet eeds to offer clear ad meaigful educatioal ad traiig opportuities for youg people who have obtaied a low pass i the Natioal Seior Certificate, as well as older people who wish to develop their skills, adults who left school early or had o access to educatio ad youg people betwee the ages of 16 ad 20 who have completed grade 9 ad left school. Curricula eed to be desiged to respod to the specific learig eeds of these differet groups i order to help them develop their life opportuities. College should provide people betwee the ages of 18 ad 45 with ogoig access to learig opportuities ad qualificatios, icludig geeral vocatioal certificates, techical or occupatioal qualificatios ad awards, higher certificates ad other programmes. These courses should correspo d with higher educatio, the Natioal Seior Certificate for adults, ad high school for those who have started high school ad wish to complete the Natioal Seior Certificate. 266

279 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Techical high schools have a key role to play i addressig the eeds of youg people who leave school at grade 9 ad wish to pursue a vocatio: the Natioal Certificate Vocatio is for those who choose ot to udertake a techical Seior Certificate. A diverse set of private, workplace ad commuity-based providers should be supported to offer targeted work-based traiig, as well as commuity ad youth developmet programmes. This will require strog regulatory bodies that aalyse demad, esure a suitable rage of courses is available, ad moitor quality. 5 Sector Educatio ad Traiig Authorities (SETAs) should play a more effective role i the productio of skills that are required to meet the immediate eeds of employers. Higher educatio Each uiversity should have a clear missio that sets out its uique cotributio towards kowledge productio ad atioal developmet. Uiversities are a itegral part of the post -school system, but are also the apex of the educatio, traiig ad iovatio system. School ad college teachers are ofte products of the uiversity system. The schoolig, colleges ad higher educatio systems should be better articulated ad allow for mobility of learers ad staff betwee these differet parts of the educatio system. Istitutios eed to be efficiet, characterised by higher kowledge productivity uits, throughput, graduatio ad participatio rates. I 2030, 75 percet of uiversity academic staff should hold PhDs. PhD graduates, either as staff or post-doctoral fellows, will be the domiat drivers of ew kowledge productio withi the higher educatio ad sciece iovatio system. Uiversities eed to idetify their areas of stregth ad develop cetres of excellece i respose to the eeds of their immediate eviromet, the Africa regio ad global competitiveess. There eeds to be a coheret atioal pla for higher educatio that icludes the promotio of iovatio ad the developmet of kowledge. This eeds to be developed i collaboratio with higher educatio istitutios, sciece coucils, SOEs, private idustry ad research istitutes. The pla should be appropriately fuded, icludig fudig for poorly resourced istitutios. It should also be closely liked to the atio s log-term eeds i terms of huma resources developmet ad kowledge productio. The higher educatio system should be diverse so that each istitutio ca build o its stregths ad expad areas of specialisatio. This differetiatio should be eablig ad developmetal based o a recogitio that higher educatio has to fulfil may fuctios 5 Allais S, Lolwaa P & Marock C (2011). Further Educatio ad Traiig ad Skills Developmet. A report prepared for the Natioal Plaig Commissio. 267

280 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN ad o oe istitutio ca serve all of societies eeds. However, differetiatio eeds to take place i a cotext that takes accout of social justice ad equity imperatives, this meas that historically disadvataged istitutios must be give adequate support ad icetives to develop their ow areas of excellece i both research ad teachig. Uiversities should be welcomig ad supportive eviromets for black ad female studets ad researchers. They eed to make sigificat progress i geder ad racial trasformatio i order to reduce geder ad racial disparities so that wome ad Africas each make up more tha 50 percet of research ad teachig staff. Private higher educatio istitutios ca play a greater ad better-defied role i the higher educatio ladscape, if the state provides effective ad eablig regulatio. The regulatory system must esure these istitutios are well ru, provide stimulatig learig eviromets for studets ad adhere to high stadards of corporate goverace. We evisage a diverse atioal iovatio system that cosists of a rage of world-class cetres ad programmes specialisig i areas that address atioal priorities, icludig Africa laguages ad idigeous kowledge systems. These should draw o the may sites of kowledge ad iovatio withi society. Their staff must be well qualified. Their participatio ad throughput rates will eed to improve. They should provide a welcomig eviromet for youg, black ad female staff. Progress sice 1994 Great strides have bee made i educatio. Access to educatio at various levels has improved ad race ad geder disparities have bee largely elimiated. I 1996, 22.5 percet of five-year-olds were erolled i a early childhood developmet istitutio. I 2007, 80.9 percet were erolled. Uiversal access ad geder parity were almost achieved i schoolig by About 99 percet of childre complete grades 1 to 9. Sice 1996, the umber of schools without water has decreased from to ad the umber of schools without electricity has dropped from to The percetage of classrooms with more tha 45 learers has decreased from 55 percet to 25 percet. The ifrastructure of colleges received a sigificat improvemet followig the ifrastructure recapitalisatio grat aouced i the 2005 budget. School fudig policies have bee pro-poor, resultig i 60 percet of all schools beig desigated as o fee schools. The atioal school utritio programme feeds about 6 millio childre i schools across the coutry. I historically white schools, about 56 percet of learers are black. The race profile of higher educatio istitutios has chaged: 32 percet of all studets i 1990 were Africa; by 2009 this had icreased to two-thirds. 268

281 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION This is the foudatio o which South Africa must build a educatio system for The challege Although progress has bee made i all subsectors of the educatio ad traiig system, there are severe problems that must be solved to achieve the visio for educatio, traiig ad iovatio. Early childhood developmet May South Africa childre grow up lackig food ad utritio, which does ot provide a good platform for cogitive developmet ad full participatio i society. Nowhere is this more evidet tha i South Africa s poor schoolig outcomes ad low skills base. Childre i the 0-4 age group have the highest mortality rates i the South Africa populatio ad uacceptably high levels of stutig ad exposure to violece ad eglect. This impacts adversely o their developmet. South Africa is also oe of the 20 coutries with the highest burde of uder-utritio. There are 2.8 millio households ad 11.5 millio idividuals who are vulerable to huger, over 72 percet of whom live i rural areas. A average South Africa eats less tha four out of ie food groups agaist the dietary diversity orm of seve out of ie. Childre, pregat ad breastfeedig wome ad those livig with tuberculosis ad HIV/AIDS are most at risk. Natioally, stutig affects almost oe i five childre (18 percet), with higher levels of stutig i rural areas (24.5 percet), ad urba iformal areas (18.5 percet). About oe i 10 childre (9.3 percet) are uderweight, reflectig the severity of child uder-utritio. Microutriet deficiecy is also a problem. Oe i four wome lacks vitami A ad about a third of wome ad childre are iro deficiet. A third of preschool childre are vitami A deficiet, 21.4 percet are aaemic ad 5 percet suffer from iro-deficiecy aaemia. Access to early childhood developmet cetres remais low. I 2009 about a quarter of childre aged two atteded early childhood developmet cetres compared to early 60 percet of those aged four. 6 Schoolig Despite may positive chages sice 1994, the legacy of low-quality educatio i historically disadvataged parts of the school system persists. This seriously hampers the educatio system s ability to provide a way out of poverty for poor childre. The grade promotio of learers who are ot ready i the primary ad early secodary phases leads to substatial dropout before the stadardised matric examiatio. 6 Biersteker & Motala,

282 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN I the Souther ad East Africa Cosortium for Moitorig Educatioal Quality III (2007) survey of grade 6 mathematics ad readig, South Africa performed below most Africa coutries. A alarmigly high proportio of grade 6 learers had ot mastered eve the most basic readig ad umeracy skills. Of the 15 coutries i the study, South Africa had the third highest proportio of fuctioally illiterate learers (27 percet), ad the fifth highest proportio of fuctioally iumerate learers (40 percet). 7 Most childre are i the historically disadvataged part of the educatio system, which still serves maily black ad coloured childre. Learers i these schools typically exhibit low proficiecy i readig, writig ad umeracy. The schools that historically served white childre produce educatioal achievemet closer to the stadards of developed coutries. Literacy ad umeracy testig withi the Natioal School Effectiveess Study demostrates that grade 5 learers i historically black schools are performig cosiderably worse o average tha grade 3 learers i historically white schools. 8 Two factors are largely resposible for the failigs of the school system. The primary cause is weak capacity throughout the civil service teachers, pricipals ad systemlevel officials, which results ot oly i poor schoolig outcomes, but also breeds a lack of respect for govermet. The mirror image of this weakess i the techical core is a culture of patroage that permeates almost all areas of the civil service. Nepotism ad the appoitmet of usuitable persoel further weake govermet capacity. 9 Further educatio, traiig ad skills developmet May parts of this sector are severely uderperformig. There are ot eough public istitutios providig learig opportuities i this sector, despite the millios of youg people who are eager to lear. Although there are some strog istitutios, the college sector is small ad weak. Public colleges erol a equivalet of oe-third (roughly ) of the learers erolled i higher educatio whe ideally the situatio should be the other way roud. Private istitutios, icludig o-govermetal orgaisatios, struggle to operate i the post-1994 policy eviromet due to lack of fudig ad existece of a regulatory system that does ot support the developmet of istitutios. The success rate i FET colleges is extremely low. This is demostrated by the 4 percet throughput rate i 2009 of the cohort that started the ew Natioal Certificate Vocatio i The drop-out rate i colleges is estimated to rage betwee 13 percet ad 25 percet per aum, the highest dropout levels are i Level 2 of the Natioal Certificate Vocatio Va der Berg, Taylor, Gustafsso, Spaull & Armstrog, Taylor S (2011). Ucoverig idicators of effective sc hool maagemet i South Africa usig the Natioal School Effectiveess Study. Stellebosc h Ecoomic Workig Papers No. 10/11. 9 Taylor, Departmet of Higher Educatio ad Traiig (2011). Gree Paper o post-schoolig. 270

283 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Traiig providers, further educatio ad traiig colleges have very weak relatioships with workplaces, leadig to iappropriate or icomplete traiig. It is estimated that approximately 65 percet of college studets are uable to fid workplace experiece, which is valuable for all studets ad a requiremet for completig N diplomas. Despite spedig large amouts of moey, levy-fuded istitutios the Sector Educatio ad Traiig Authorities have ot made a major cotributio to resolvig the problems i skills developmet. Further problems iclude fragmeted data systems, which lead to poor plaig, ad the lack of reliable iformatio o the umber of private providers ad their output. There are also goverace problems i further educatio ad traiig colleges, ad some of the sector educatio bodies. The qualificatios framework has proved iappropriate for the sector s learig ad traiig eeds. This has resulted i formal educatio ad traiig istitutios usig their old qualificatios, which have officially bee rewritte ito a outcomes-based format. Higher educatio The Shaghai JiaoTog Academic Rakig of World Uiversities 2008 placed South Africa higher educatio betwee 27 ad 33, alog with the Czech Republic, Hog Kog, New Zealad ad Irelad. For a developig coutry, this is a exceptioal ratig, but it ca do better ad is uderperformig i a umber of key areas. There are some istitutios withi the system that cotiue to show sigs of istability ad dysfuctio. 11 Studies have show that while the South Africa higher educatio system fuctios relatively well, higher educatio faces major challeges: low participatio rates, high attritio rates, a curriculum that does ot speak to society ad its eeds, the absece of a eablig eviromet that allows every idividual to express ad reach full potetial, ad poor kowledge productio that ofte does ot traslate ito iovatio. While kowledge productio is the ratioale of higher educatio, highquality kowledge productio caot be fully realised with a low studet participatio rate, a curriculum or eviromet that is alieatig ad does ot articulate the visio of the atio, ad a academic staff that is isufficietly qualified (oly 34 percet of academic staff hold PhDs). 11 Badsha N & Cloete N (2011). Higher Educatio: Cotributio for the Natioal Plaig Commissio s Natioal Developmet Pla. 271

284 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Istitutio Erolmet Istitute for Scietific Iformatio publicatios Uiversity of Sao Paulo PhD output % Academics with PhDs South Africa Source: Badsha ad Cloete, 2011 The World Bak characterises the South Africa higher educatio system as mid-level performer i terms of kowledge productio, with low participatio ad high attritio rates ad isufficiet capacity for the level of skills productio that is required. Globally, Africa s proportio of publicatio output is decliig, although South Africa is still the domiat producer o the cotiet. However, as is the case with ICT coectivity, South Africa s lead is beig eroded, particularly by North Africa. 12 Percetage share of publicatios i Africa Global competitiveess rakig South Africa 37 South Africa 54 Egypt 27 Russia 63 Nigeria 12 Brazil 58 Idia 51 Chia 27 Source: Web of Sciece, Thompso Reuters, 2010; World Ecoomic Forum, 2010 Natioal system of iovatio I compariso to its populatio, South Africa s sciece ad iovatio system is small by iteratioal stadards. The atural scieces produce the most accredited research outputs (36 percet of the coutry s total output), followed by the humaities (21 percet) ad medical ad health scieces (20 percet). From 1995 to 2007, the proportio of all scietific output produced by uiversities icreased from 80 percet to 86 percet, which meas that uiversities are icreasig their domiace as kowledge istitutios i South Africa. Local research ad developmet sped agaist GDP i 2007 was 0.92 percet; by compariso, Norway speds 1.62 percet. 12 Gillwald A (2010). The poverty of ICT policy, research ad practice i Africa. 272

285 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Field/ disciplie/ category Norway South Africa Full-time researchers Scietific publicatios PhDs per millio people While South Africa has excelled i some areas such as registerig plat cultivars, there has bee little icrease i public sector research persoel, PhD graduates ad research outputs. The followig statistics from Higher Educatio Maagemet Iformatio Systems, however, show that South Africa has bee makig progress i some key areas but eeds to accelerate the developmet of key skills. Degree type Natural sciece Egieerig Africa studets made up 48 percet of the 2009 egieerig graduates. These statistics are ecouragig over time ad with adequate ivestmet i the respective programmes, there will be a icrease of studets from master s to doctoral studies. Kowledge productio capacity is ot evely distributed i South Africa. The higher educatio sector ca be differetiated ito three groups: high kowledge-producig, medium kowledge-producig ad low kowledge-producig istitutios. 13 Ne w kowledge is also produced i may other sites, for example, the sciece coucils, SOEs ad private idustry. It is critical for these compoets to work together i the atioal iterest. Massive ivestmets i the higher educatio system have ot produced better outcomes i the level of academic performace or graduatio rates. While erolmet ad attaimet gaps have arrowed across differet race groups, the quality of educatio for the vast majority has remaied poor at all levels. The higher educatio therefore teds to be a low-participatio, high-attritio system. South Africa s participatio rate 14 of 17 percet is sigificatly lower tha that for comparable middle-icome coutries, although much higher tha the average of six percet for sub-sahara Africa coutries. Africa studet umbers grew by a average of 6.2 percet per year betwee 2000 ad 2009, agaist 1.1 percet for white studets. Two-thirds of all studets i higher educatio i 2009 were Africa, compared to oly 32 percet i Kowledge productio is measured by a combiatio of iput ad output variables, cosistig of idicators such as master s ad doctoral erolmets ad graduates, proportio of staff with doctorates, proportio of PhD graduates to permaet staff ad Istitute for Scietific Iformatio-accredited publicatio output. 14 Erolmet as a proportio of the year-old cohort. 273

286 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Notwithstadig this sigificat progress, the participatio rate for Africa ad Coloured studets is still oly at 13 percet. The Natioal Pla for Higher Educatio 15 set a goal of 20 percet participatio by Graduatio rates remai uacceptably low ad below the bechmarks set i the Natioal Pla for Higher Educatio. At postgraduate level, graduatio rates are decliig. Achievig the 2030 visio for educatio, traiig ad iovatio The challeges outlied above ad i the Natioal Plaig Commissio s Diagostic Report are ot ew. I the educatio sector, the respective departmets are aware of these problems ad have plas i place to address may of them. The aim of our proposals is to ackowledge ad build o departmetal plas ad, where ecessary, to recommed a differet way of approachig the problems. We propose a set of quatifiable targets for 2030, followed by a outlie of critical reforms ecessary to achieve the set targets. Quatifiable targets for 2030 Early childhood developmet Early childhood developmet is defied i the Childre s Act (2005) 16 as the process of childre developig their emotioal, cogitive, sesory, spiritual, moral, physical, social ad commuicatio capabilities from birth to school-goig age. Delays i cogitive ad overall developmet before schoolig ca ofte have loglastig ad costly cosequeces for childre, families ad society. The most effective ad cost-efficiet time to itervee is before birth ad i the early years of life. The day widow from coceptio to two years is a particularly sesitive period i child developmet. Ivestmet i early childhood developmet should be a key priority. Research shows well plaed ad targeted ea rly childhood developmet iitiatives to be a cost-effective way of esurig that all childre have a childhood that is free of factors that impede their physical ad cogitive developmet. The focus should be o childre uder the age of five. By 2030, all childre should start their learig ad developmet at early childhood developmet cetres. These cetres should be set up ad properly moitored. Eradicate child uder-utritio The beefits of ivestig i early itervetio programmes iclude improvemets i school erolmet rates, retetio ad acad emic performace, declie i atisocial behaviour ad higher rates of high school completio. Elimiatig aaemia has bee show to icrease adult productivity by betwee 5 percet ad 17 percet. Attetio should focus o establishig the most effective itervetio ad appropriate delivery 15 Departmet of Educatio (2001). Natioal Pla for Higher Educatio. Pretoria: Departmet of Educatio. 16 Republic of South Africa (2006). Childre s Act, Govermet Gazette, No Vol

287 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION mechaisms. The feedig schemes at schools have cotributed greatly to reducig uder-utritio. I 2030, feedig schemes i schools should cover all childre i eed ad provide food that is high i utritioal cotet ad rich i vitamis, particularly vitami A. Eradicate vitami A deficiecy amog childre Reliable research is eeded to uderstad the extet of the vitami A problem. The 2007 Lacet Series highlighted the day widow of opportuity from pregacy to 23 moths as a critical period i the developmet of the child. There is a eed for a pilot iitiative to idetify a effective delivery mechaism for a programme targeted at this age group. Uiversal access to two years of early childhood developmet Differet kids of itervetios are required for differet age groups. Capacity eeds to be developed to provide relevat developmet activities to the total projected 4 millio childre i the 0-3 age cohort ad early 2 millio i the 4-5 age group by Capacity eeds to be developed to effectively moitor ad regulate the sector as well. Schoolig targets About 80 percet of schools ad learers achieve 50 percet ad above i literacy, mathematics ad sciece i grades 3, 6, 9 The Departmet of Basic Educatio uderstads the eed to improve the quality of outcomes at differet grades for mathematics, literacy ad sciece. It has set ambitious targets for For laguage ad umeracy i grade 3 ad grade 6, the target is that 90 percet of learers should perform at the required level. However, the performace stadard is ambiguous, referrig oly to miimum competecies i differet subjects. We propose that the acceptable level of performace be defied as 50 percet ad above, ad the target of learers ad schools performig at this level by 2030 be set at 80 percet. If 80 percet of schools ad learers achieve results above 50 percet o average, it will demostrate cosiderable improvemet. Secodary school completio rate is 77 percet i the Uited States, 87 percet i the Uited Kigdom ad 93 percet i Japa. 275

288 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Icrease the umber of studets eligible to study maths ad sciece at uiversity to per year The departmet has set a target to icrease the umber of learers eligible for bachelors programme to by 2024, learers who pass mathematics, ad learers who pass physical sciece. These targets are very ambitious, more tha doublig the results achieved i We propose a target of learers eligible for bachelors programme with maths ad sciece by South Africa improves its positio i iteratioal educatio rakigs The departmet aims to improve its average Souther ad East Africa Cosortium for Moitorig Educatio Quality results for grade 6 laguages ad maths from 495 to 600 by 2022 ad to improve average grade 8 scores i the Treds i Mathematics ad Sciece Study from 264 to 420 i The commissio supports these targets ad proposes that by 2030, grade 8 scores i the Treds i Mathematics ad Sciece Study should reach 500. Ideally, South Africa should improve its positio by 10 places or more by About 80 percet of every cohort of learers successfully completes the full 12 years of schoolig South Africa loses half of every cohort that eters the school system by the ed of the 12-year schoolig period, wastig sigificat huma potetial ad harmig the lifechaces of those cocered. We believe it is importat to icrease learer retetio rates to 90 percet, of whom 80 percet successfully pass the exit exam. Further educatio ad traiig ad skills developmet The Departmet of Higher Educatio ad Traiig has idetified the eed to massively icrease learig opportuities after school. The Gree Paper o post-schoolig proposes creatig differet types of istitut ios to meet the high demad for educatio ad traiig. The departmet proposes to establish Commuity Educatio ad Traiig Cetres which will icorporate the curret public adult learig cetres. The commissio supports the visio for a expaded post-school sector. We also believe that improvig the performace of the post-school system will result i far greater gais tha merely icreasig the umber of learers. Icrease graduatio rate of further educatio ad traiig colleges to 75 percet Throughput i the Natioal Certificate Vocatio programme was as low as 4 percet i 2009 ad the graduatio rate was about 40 percet i This is uproductive ad frustratig for learers. We propose improvi g the graduatio rate to 75 percet by This would have a major impact o the atio s skills profile. Lifelog learig also eeds to be promoted to complemet further educatio. All sectors of society eed to 276

289 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION set up lifelog learig iitiatives to esure that citizes have ample opportuities to develop their skills ad gai a deeper uderstadig of the ever-chagig eviromet i which they live. Produce artisas per year Oe of the targets set for 2014 i the delivery agreemet siged by the Miister of Higher Educatio ad Traiig is to produce artisas per year. This target ca be met with cocerted effort ad adequate fudig. We propose a target of by 2030, subject to demad. The Departmet of Higher Educatio ad Traiig has recetly siged a Skills Accord with uios ad the private sector. Oe of the elemets of the accord is a commitmet by busiesses to provide more itership opportuities. This is oe of the areas that have costraied the productio of artisas. The commissio welcomes this developmet. Icrease participatio rates i further educatio ad traiig colleges to 25 percet About 3 percet of 20 to 24 year olds participate i further educatio ad traiig. This is very low give the large umber of youg people who are either employed, or i educatio or traiig istitutios. There is high umet demad for learig opportuities. A participatio rate of 25 percet would accommodate about 1.25 millio erolmets compared to the curret A additioal 1 millio learig opportuities per year Private providers already play a sigificat role i post-school educatio ad traiig. The Departmet of Higher Educatio ad Traiig proposes establishig Commuity Educatio ad Traiig Cetres which will icorporate the curret public adult learig cetres. These istitutios, combied with erolmet i workplace-based programmes, should meet the target of 1 millio learers. This will icrease the participatio rate i post-school educatio ad traiig (excludig higher educatio) above 40 percet. Higher educatio, sciece ad techology The followig targets are proposed for the higher educatio, sciece ad techology sector. Icrease uiversity sciece ad mathematics etrats to By 2030, sciece ad mathematics should be revitalised through the icreased umber of school leavers who are eligible to study sciece ad mathematics-based subjects at uiversity. The umber of people embarkig o careers i sciece ad techology should be at least three times the curret levels. 277

290 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Icrease graduatio rates to more tha 25 percet by 2030 Achievig a 25 percet graduatio rate will require a icrease i the umber of graduates from the combied total of for private ad public higher educatio istitutios to a combied total of by As part of this target, the umber of sciece, techology, egieerig ad mathematics graduates should icrease sigificatly. Icrease participatio rates to more tha 30 percet Erolmets i the higher educatio sector icludig private higher educatio will eed to icrease to , from i This is a 70 percet icrease. The plaed ew uiversities i Mpumalaga ad the Norther Cape ad the ew medical school i Limpopo will cotribute to the expasio of capacity i the higher educatio sector. Produce more tha 100 doctoral graduates per millio per year by 2030 South Africa produces 28 PhD graduates per millio per year. This is very low by iteratioal stadards. I compariso the Uiversity of Sao Paulo has studets ad produces PhD graduates per year. To achieve the target of 100 PhD graduates per millio per year, South Africa eeds more tha PhD graduates per year agaist the figure of i If South Africa is to be a leadig iovator, most of these doctorates should be i sciece, egieerig, techology ad mathematics. South Africa eeds to icrease the percetage of PhD qualified staff withi the higher educatio sector from the curret 34 percet level to over 75 percet over 20 years; double the umber of graduate, postgraduate ad first-rate scietists ad icrease the umber of Africa ad wome postgraduates, especially PhDs to improve research ad iovatio capacity ad ormalise Portugal produces 569 PhDs per millio, the Uited Kigdom 288 per millio, the Uited States 201 per millio, Australia 264 per millio, Korea 187 per millio ad Brazil 48 per millio. South Africa produces just 28 per millio. staff demographics. A learig ad research eviromet eeds to be created that is welcomig to all, elimiatig all forms of discrimiatio ad other itoleraces withi the system. A few world-class cetres ad programmes should be developed withi both the atioal system of iovatio ad the higher educatio sector over the ext 20 years. These should be i areas of comparative ad competitive advatage, icludig idigeous kowledge systems. 278

291 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Efforts should be made to establish South Africa as a hub for higher educatio ad traiig i the regio capable of attractig a sigificat share of the iteratioal studet populatio. Policy proposals These targets are idicators of what South Africa should achieve by May icremetal, yet bold, steps will eed to be take betwee ow ad 2030 to achieve these targets. This sectio outlies actios ecessary to overcome the challeges discussed earlier. Commitmet from govermet, teachers, uios, the private sector ad the rest of society will be vital for success. The proposals are orgaised accordig to the five themes, ad detailed actios are outlied for each. Lay a solid foudatio for a log ad healthy life ad higher educatioal ad sciece achievemet Early childhood developmet is oe of the most uderdeveloped sectors of educatio. There are may areas that eed attetio, icludig ifrastructure, plaig, advocacy, huma resources ad fudig. We propose that the followig be give priority attetio: Desig ad implemet a utritio itervetio for pregat wome to prevet low birth weight ad put i place targetig mechaisms for wome at risk. The health sector is a possible delivery mechaism for this iitiative. This should be first piloted over two years before atioal rollout. Implemet a 18 moth postatal support programme for vulerable caregivers to esure positive utritio, microutriet provisio, immuisatio ad care. A similar iitiative to the utritio itervetio discussed above should be iitiated ad piloted. This iitiative could be implemeted through the health system or early childhood developmet structures. The most appropriate delivery system should be idetified through a pilot. Itroduce a school readiess programme fo r childre betwee three ad five to ecourage their early developmet by promotig school readiess, health ad utritio. The cetres should be urgetly created ad their activities icreased icremetally so that by 2030, all childre have access to two years of quality preschool learig exposure. Pilot home ad commuity-based early childhood developmet itervetios i selected districts. Progressively expad if these prove to be successful over a period of five years. Develop ad implemet orms ad stadards for the fudig ad maagemet of early childhood developmet sites. 279

292 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Implemet a strategy to improve the qualificatios of early childhood developmet workers ad develop traiig for ew types of extesio workers. Ad address career-pathig ad coditios of service for all early childhood developmet workers. Build a properly qualified, professioal, competet ad committed teachig, academic, research ad public service cadre Three broad categories of actio are eeded to improve our educatio system. They all require uprecedeted mobilisatio ad collaboratio across society. Build a political cosesus I the first istace, to build techical capacity i educatio requires a political cosesus. There should be a atioal educatio pact, ideally mobilised by the Presidet. Participats should iclude political parties, govermet, uios, the private sector, professioal bodies icludig the South Africa Coucil for Educators ad subject-specific associatios, studet orgaisatios, associatios of goverig bodies ad commuity groups. The pact eeds to be built o the idea that all parties stad to gai, but oly if all parties are willig to make cocessios, all parties eed to be able to mobilise those they represet behid this priciple. Parties to the pact should commit themselves to work together to advace the goals of improvig the quality of educatio i South Africa. The goal of the pact should be to build a professioal civil service for the school sphere i which: There are clear career paths for educators two paths beyod the level of deputy pricipal: 1) Maagemet, which starts with a pricipalship ad proceeds to district istitutioal maagemet ad goverace advisor, seior maagemet i the district, provicial istitutioal maagemet ad goverace advisor, seior maager i a provicial or atioal office. 2) Academic, which starts from school head of departmet, to deputy pricipal, to district curriculum advisor, seior curriculum maagemet i the district, provicial curriculum advisor, ad to seior curriculum maager i a provicial or atioal office. Expertise is recogised as the oly criterio for appoitig ad promotig teachers ad pricipals. The appoitmet ad promotio of teachers ad district officials are accepted as the resposibility of govermet. Uios role should be i esurig that proper processes are followed, ot who gets appoited

293 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION The followig are achieved withi five years: Competecy stadards for all educator jobs Competecy assessmets for etry ito all educator jobs Traiig programmes for all educator jobs Orgaisatioal developmet ad staff traiig i ie provicial offices, district offices, ad poorly performig schools. This pact has beefits for everyoe. Teachers would beefit from: A clear system of career pathways, marked by competece stadards. Leadership i provices ad districts able to help school pricipals maage schools more effectively, ad to support classroom teachers i improvig their teachig skills. All officials ad teachers will receive cotiuous traiig. Pricipals ad teachers i uderperformig schools will receive traiig, metorig ad support. The cocessios that teachers will have to make for this scheme iclude: Etry ito the professio ad promotio will deped o passig competecy tests. Pricipals ad teachers i uderperformig schools will receive traiig durig the Jue vacatio, ad o-site metorig ad support for a full year. Traiig courses will be followed by competecy tests. The results of these tests will lead to oe of three outcomes: certified competet, idetified as beig i eed of further developmet, or removed through formal procedures. All strikes must occur withi the law. Crimial behaviour will be prosecuted, ad teacher idisciplie will be puished. There will be o political solutios to icidets of lawlessess ad idisciplie. Govermet will have to commit to improvig the maagemet of the educatio sector, esure policy stability, a better workig eviro met (icludig security i schools) ad ogoig support. Govermet will have to agree to respect teachers professioal expertise ad seek their opiio o educatioal matters, ivests more i the support services teachers eed such as libraries/classroom assistats i retur for teachers attedig traiig durig vacatio ad the traiig beig liked to assessmets. The pact restates elemets of good educatio admiistratio ad icludes proposals already uder cosideratio by the Departmet of Basic Educatio. Oce siged by all stakeholders, o aspect should be subject to further egotiatio i the Educatio Labour Relatios Coucil. Govermet should play a leadig role i implemetig the pact. 281

294 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Techical mobilisatio It is estimated that approximately 80 percet of our schools are uderperformig. This traslates to about schools. Iteratioal experiece shows that system wide improvemets i educatio systems ca be implemeted i a umber of ways, icludig puttig together multi-discipliary teams that assess the fuctioality of a school, develop a turaroud pla ad oversee its implemetatio. As a atio we eed to mobilise our techical capacity to support the improvemets i educatio alog the followig lies: Assemble a member group of professioals with differet areas of expertise ad task them with assessig the levels of fuctioality i each school, develop a pla for addressig the weakesses, ad oversee the implemetatio of the turaroud pla for each school. Professioals from differet govermet departmets with appropriate expertise, atioal ad provicial departmets of educatio, educatio researchers / specialists, retired pricipals ad teachers from better performig schools where this ca be doe without disruptig learig, will be part of the team. Each uderperformig school will be assiged a team of three to five highly skilled professioals for a period of six moths, ad oe metor thereafter to work with the school maagemet team to implemet the turaroud pla over a three year period. The team of three to five per school will be made up of a mixture of skills sets ragig from fiacial maagers, accoutats, educatio specialists, maagemet cosultats, egieers, ad academics. Members of the team will be draw from public ad private educatio istitutios, maagemet cosultig firms, busiesses, traiig providers, uios ad professioal bodies, o-profit orgaisatios ad faith-based groups. The metors will either be retired pricipals, local busiess persos or specially recruited orgaisatioal developmet specialists. After the iitial six moths follow-up work oversee by the metors will iclude ifrastructure developmet, i-service traiig for teachers ad pricipals, ad implemetatio of ew maagemet systems. The group of professioals assembled eeds to be large eough to cover all targeted schools withi a period of five to six years. Each team will work with two schools i oe year, meaig that, i total, up to schools could be covered each year. For this iitiative to work ad be affordable, the differet professioal services firms across the disciplies, o-govermet orgaisatios, traiig providers, professioal bodies ad other compaies would eed to agree to deploy their staff to work with govermet o this iitiative free or at reduced rates of betwee 40 ad 50 percet of their ormal charge out rates i exchage for a commitmet from govermet to provide work o this iitiative for a period of six years. 282

295 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION This iitiative should be led by the atioal Departmet of Basic Educatio workig with provicial departmets of educatio. As far as possible officials of the atioal ad provicial departmets of educatio should be part of the schools teams. Give the amout of work ad the umbers of people ivolved, ad to prevet corruptio, this scheme caot be maaged by govermet egotiatig with idividual firms ad professioals. Broad terms of the scheme will be egotiated with represetative bodies of the differet profes sios to make sure that desig is broadly acceptable ad firms would have to sig up to participate ad be allocated to schools. Cosolidatio of improvemets The third category of actios is iteded to cosolidate ad esure sustaiability of the improvemets. These actios are log term i ature. They recogise that teachers ad pricipals are cetral to the fuctioig of a school. These actios focus o improvig the quality of teachig ad school maagemet. Expad Fuza Lushaka Bursary Scheme Fuza Lushaka is a importat ew strategy to attract learers ito the teachig professio, especially those with good passes i maths, sciece ad laguages. It should be stregtheed ad expaded. I additio, measures are eeded to esure that Fuza Lushaka graduates are immediately absorbed ito schools. Provide more support to professioal bodies To ehace teachers subject kowledge a d their pride i the professio, greater support should be give to teacher associatios that specialise i specific subjects, such as the Associatio for Mathematics Educatio of South Africa. The Easter Cape has recetly established a associatio of Eglish teachers. Other coutries have associatios of computer sciece, sciece ad Eglish teachers. These orgaisatios could provide professioal developmet opportuities, dissemiate iformatio about best practices ad provide updates o cuttig-edge research. South Africa would beefit immesely from havig such orgaisatios i key subject areas. Chage the pay structure to attract ad retai good teachers Bursaries aloe will ot attract eough top-achievig cadidates ito teachig. The flat wage gradiet i teachig deters highly skilled people from eterig or stayig i teachig. The performace of teachers is oly oe of the thigs that impacts o the performace of learers. As a result, performace-based icetives ofte prove highly cotroversial. 283

296 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN However, it is possible to idetify some idicators of improvemets i teachers performace that ca be used to reward teachers for ehacig their skills. Remueratio ad promotio systems should take such idicators of a teacher s level of expertise ad commitmet ito accout. Each year, there should be a opportuity for teachers to take a examiatio focused o the curriculum that they teach. Withi each educatio bad, there should be a test for every subject. Teachers takig part should write the test correspodig to the subject ad highest bad i which they teach. For foudatio-phase teachers, a more geeric test will be appropriate. For accurate budgetig, a fixed umber of teachers should receive a fiacial bous, paid out over about three years, so that teachers are tested regularly, but ot too ofte. It should also be recogised that there are o-ecoomic ways of rewardig good performace, ragig from public awards to exchage programmes ad sabbaticals. School maagemet for istructioal leadership A targeted approach will eed to be take to the applicatio of the recommedatios, as ot every proposal will be appropriate for every school. Schools that are already performig well should ot be expected to fulfil additioal tasks that are desiged to deliver improvemets i poorly performig schools. Very low-performig schools should receive the closest attetio. This priciple is accepted by the Departmet of Basic Educatio. Visible idicators of the quality of school leadership should be moitored. For example, i schools where curriculum coverage is a problem, pricipals should report regularly o this issue. Esure that appropriately qualified ad competet people become pricipals High-quality pricipals eed to be attracted, traied ad supported. Chages should be itroduced to appoitmet processes for pricipals icludig admiisterig a competecy test for all cadidates. Miimum qualificatios for becomig pricipals should be itroduced ad recruitmet processes should esure that cadidates meet these criteria. Servig pricipals should be give a period of 10 years to acquire the qualificatios, failig which they should face retrechmet or demotio. Pricipals should gradually be give more powers to admiister schools, icludig fiacial maagemet, procuremet of textbooks ad other educatioal material, as well as hirig ad firig educators. These delegatios are ecessary so that pricipals ca be accoutable for the performace of their schools. The commissio supports the Departmet of Basic Educatio iitiative to itroduce performace cotracts for pricipals. These cotracts should be used as a meas to help pricipals who strive for excellece to fid ways to improve their performace year o year, icludig beig used as a way of idetifyig traiig eeds. However, if pricipals repeatedly fail to meet performace targets, moitorig iformatio idicates poor performace, ad ivestigatios based o iterviews with school stakeholders cofirm that the pricipal is ieffective, the the pricipal should be replaced. 284

297 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION Clarify the role of districts ad improve their capacity to support schools A clearer uderstadig of the fuctios of districts is required. Lack of capacity may limit what ca reasoably be delegated to district offices. Sice it takes time for professioal capacity to be built up i districts, the focus should be o improvig the availability of itervetio tools that ca be used by district officials ad other bodies that support schools. Promote costructive parterships Teacher uios are crucial to improvig the educatio system. Govermet should look at effective ways of workig with uios to reach their members. Experiece i other coutries shows that without a critical level of professioal expertise amog uio leaders, it is difficult to get uios to move beyod the issue of salary icremets to the core professioal cocer of improvig the quality of educatio. Sposorig advaced studies for uio leaders could form part of the costructive partership. Geerate ad draw support from civil society School goverig bodies have a strog legislative madate to fulfil the goverace fuctio of schools, icludig extesive resposibility i fiaces ad settig iteral school policies. May goverig bodies are sigificatly hampered by parets lack of expertise ad social status relative to school staff. Additioal support should be give to goverig bodies to eable them to fulfil their madate i promotig the effective maagemet of schools. School goverig bodies should atted compulsory courses oce elected. Exterally admiister ad mark the aual atioal assessmet i oe primary school grade I a miimum of oe primary school grade (perhaps grade 6), the aual atioal assessmet should be exterally admiistered ad marked to esure that there is at least oe reliable system-wide measure of quality for all primary schools. Preset the aual atioal assessmet results i a accessible format The assessmet results should be made accessible to parets ad the commuity i a way that makes the data easy to iterpret. Esure high-quality laguage istructio i the foudatio phase High-quality teachig of studets first laguage ad Eglish is vital durig the foudatio phase. Effective support materials eed to be available for teachers ad learers durig the trasitio to Eglish as the laguage of learig ad teachig. The 285

298 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Departmet of Basic Educatio should actively participate i the iteratioal market for skills, icludig recruitig teachers from other Eglish-speakig coutries. Build a strog ad coheret system for deliverig quality educatio, sciece ad techology iovatio, traiig ad skills developmet Puttig strog systems i place for developig skills will help to improve the quality of life, huma capital developmet ad competitiveess. It will be ecessary to develop world-class istitutios ad programmes withi the atioal system of iovatio ad the higher educatio sector over the ext 20 years. Improve systems for skills plaig ad shapig the productio of skills I the Delivery Agreemet with the Presidet, the Departmet of Higher Educatio ad Traiig has committed to improvig skills plaig. This should both iform fudig allocatios ad improve the supply of relevat skills to the labour market. The commissio supports this iitiative. The educatio ad traiig system should be able to respod to the skills eeds that are idetified. This requires improved capacity, drawig o both public ad private providers of traiig. It should iclude a focus o buildig relatioships with workplaces, ad the developmet of both traiig curricula ad skilled traiers. The followig are cetral to improvig skills plaig: Establish a atioal skills plaig system to coduct labour market research ad produce differet skills scearios, which should iform traiig providers. It is importat to uderstad the coutry s log-term huma resource eeds. The focus should be o improvig geeral educatio with a icreased percetage of learers attaiig grade 12 with good passes i mathematics, sciece, ad Eglish. A greater umber of idividuals should be able to access post-school educatio, ad attai qualificatios at a itermediate or higher level. There should be a icrease i sciece ad techology graduates, as outlied i the Natioal Huma Resource Developmet Strategy. Develop the capacity of the levy-grat istitutios. The scope of the Sector Educatio ad Traiig Authorities must be refied to remove overlaps i govermet istitutios. The authorities should focus o skills developmet for existig busiesses, icludig skills developmet for people workig i the sector ad uemployed people who wish to obtai employmet i the sector. Traiig should cover levels of the Natioal Qualificatios Framework required by the sector. Traiig for start-ups ad emergig busi esses, rural developmet, adult basic educatio ad traiig, ad commuity developmet should be supported by moey from the Natioal Skills Fud ad maaged by relevat departmets or agecies, such as the Small Eterprise Developmet Agecy, Kha Ri Gude ad the Natioal Youth Developmet Agecy. This would eable the Natioal Skills Fud to focus o large skills developmet programmes that form part of a broader 286

299 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION programme. This would simplify the grat fudig mechaism by supportig fewer but larger programmes. Icrease likages betwee post-school educatio ad workplaces buildig o the commitmets i the Skills Accord. Likages betwee istitutios of learig ad the workplace eed to icrease. This should help with lecturer developmet, curriculum developmet, exteral assessmet, ad placemet of learers. However, as placemet opportuities will be limited, careful cosideratio should be give to which qualificatios require work experiece. Sector authorities should play a more active role i eablig these likages by briefig further ad higher educatio ad traiig providers, fosterig relatios betwee istitutios of learig ad of work, ad fudig iterships ad other work experiece programmes. Improve fudig modalities ad systems. The recommedatios above have implicatios for what should be fuded by the fiscus ad the levy-grat. A sigle system, with a sigle fudig formula, should icorporate both sources of moey. Icrease access to career guidace ad placemet services. A key area that requires further developmet is how idividuals ca access the iformatio ad support they eed to make appropriate subject choices. Iitiatives such as life orietatio ad career fairs should be expaded ad liked to studet support services i the college sector. Further effort is eeded to demostrate to employers the beefit of participatig i these activities, particularly i recruitmet opportuities ad raisig the profile of their sector. Develop a diverse rage of providers of further educatio ad traiig The state eeds to develop ad support a coordiated system for providig a diverse rage of further educatio ad traiig opportuities, through a rage of state providers complemeted by private providers. The star tig poit must be stregtheig existig istitutios, with a focus o the college sector, public adult learig cetres ad techical high schools. A oe-size-fits-all model is iappropriate at this poit. Not all istitutios ca or should offer all types of traiig. We propose a highly differetiated system. A careful aalysis is eeded of all further educatio ad traiig colleges, as well as the stroger public adult learig cetres ad colleges that fall uder departmets other tha the Departmet of Higher Educatio ad Traiig. Placig urealistic expectatios o these istitutios will oly make it harder for them to perform. However, some do have the capacity to expad ad diversify. 287

300 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Critical actios to achievig the objective of a expaded, stregtheed ad diversified istitutioal ladscape iclude: Develop a set of strog atioal qualificatios ad a variety of o-formal programmes. Stregthe ad expad further educatio ad traiig colleges by addressig their ifrastructure ad other istitutioal challeges chief amog which is the traiig of college lecturers. Gradually expad adult educatio offered i colleges. Build ew public colleges. Build a strog ad streamlied quality assurace ad qualificatio system A strog ad simple quality assurace ad qualificatio system is essetial to support public provisio ad to eable ad regulate private provisio. Improvemets eed to be made to the cofiguratio ad roles of regulatory istitutios, icludig the three quality coucils ad the South Africa Qualificatios Authority. The quality coucils are the primary bodies with a direct role i goverig curricula, assessmet ad certificatio. The Coucil for Higher Educatio, Umalusi, ad the Quality Coucil for Trades ad Occupatios are resposible fo r defiig three sub-frameworks of the Natioal Qualificatios Framework, ad checkig the quality of the provisio, assessmet ad certificatio of qualificatios, as well as maitaiig a database of learers achievemets. The levels o the Natioal Qualificatios Framework cause ogoig cofusio. They could be simplified by replacig the framework s levels with clearly desigated qualificatios, such as atioal certificates, diplomas ad degrees. The relatioships betwee key qualificatios could be clarified by mappig the qualificatio types agaist each other. This could be doe without substatial chages to the three curret subframeworks. A simpler orgaisatio of qualificatios would make it easier to clarify the cofiguratio of quality coucils, which is problematic ad eeds to be re-examied. If levels o the Natioal Qualificatios Framework are removed, there should be o problem with Umalusi quality assurig post-school qualificatios that are ot part of the uiversity system. If levels o the Natioal Qualificatios Framework remai, the demarcatio of quality assurace bodies does ot eed to be cofied to these levels. Regardless of the cofiguratio of quality coucils, the approach to quality assurace eeds to chage. There should be exteral assessmet for all atioal qualificatios. The state should cotiue to assess the Natioal Certificate Vocatio ad Nated courses, as well as the courses that replace Nated. The state must also take resposibility for assessig the Natioal Seior Certificate for adults, ad the Further Certificate Vocatio. Quality coucils should provide quality assurace for this assessmet, ad accredit assessmet bodies where appropriate. Quality coucils should ot accredit or register 288

301 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION idividual assessors, or should they use idividual moderators ad verifiers to provide quality assurace for assessmet decisios. Expad the productio of highly skilled professioals ad ehace iovatio capacity A commo policy framework should be developed o the critical role of sciece ad techology ad higher educatio i shapig society, the future of the atio ad the growth path. This should be doe with the ivolvemet of the Departmets of Higher Educatio, Sciece ad Techology, Trade ad Idustry, Public Eterprises, Treasury ad Ecoomic Developmet. Ehace the iovative capacity of the atio The sciece ad iovatio system is small but becomig more racially iclusive. The key challege lies i buildig the base of sciece, techology, iovatio ad skilled huma resources. South Africa should ivest i people ad acquire the best equipmet available. Higher educatio is oe of the mai cotributors to developig sciece, techology ad iovatio, which i tur improves atioal developmet. School teachers, as well as staff ad programmes i Dialedi schools, should be evaluated to esure they have adequate kowledge of sciece, techology, egieerig ad mathematics. All sciece ad mathematics teachers should have access to i-service support to esure cotiuous professioal developmet. Higher educatio istitutios should exted the legth of their sciece, techology, egieerig ad mathematics degrees to four years, ad redesig the first-year of the course to make it more accessible. Where ecessary the extesio of legth of degrees should be wideed to other disciplies. Immigratio requiremets should be relaxed for highly skilled sciece ad mathematics teachers, techicias ad researchers. Oe wa y of doig this is to grat 7 year workig permits to all graduates from foreig cout ries. The movemet of people, ideas ad goods should be ecouraged across the East ad Souther Africa Commuity regio. The Natioal System of Iovatio eeds to fuctio i a coheret ad coordiated maer with broad commo objectives aliged to atioal priorities. The Natioal System of Iovatio, the higher ad further educatio system, SOEs ad private idustries should create a commo overarchig framework to address pressig challeges. Special cosideratio should also be give to dedicated programmes i water, power, marie, space ad software egieerig, i which South Africa has both comparative ad competitive advatage. Compaies that focus o such programmes should provide itership programmes for experietial learig specifically i maufacturig ad services. 289

302 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Addressig the declie of the humaities Oe of our coutry's greatest comparative advatages is i the humaities. Our emergig idetity, laguages, ethics, morality, idigeous systems, struggle for liberatio, Codesa, costitutio, the creatio of a o-sexist ad o-racial society ad the discovery of humakid are major humaist projects which lik our heritage ad our future as a society. Our educatio from basic to tertiary ad through the sciece ad iovatio system should ivest ad build capacity ad high level expertise i these. Ehace the etrepreeurial capability of the atio Courses should be desiged, itroduced ad taught to promote ad istil a culture of etrepreeurship i society. I this way, etrepreeurship complemets the iovatio system. Coordiate ad steer a differetiated system I the past, differetial treatmet of uiversities was used as a policy of racial discrimiatio. Today differet uiversities have differet stregths i terms of teachig, research, ad the studets ad commuities they serve. Withi the ext five years, ways eed to be foud of buildig o these differet stregths to develop a differetiated system that allows all uiversities to build o their ow areas of stregth ad respod to the eeds they idetify. Govermet ad higher educatio istitutios will eed to reach formal ad bidig agreemets o the priciples that guide ad uderpi the coordiatio ad fudig of this differetiated system. Differetiatio should be eablig ad developmetal for all istitutios. This will form the basis of agreemets ad compacts at a system-wide ad istitutioal level. Agreemet should also be reached o the sactios to be applied to istitutios that do ot adhere to agreemets. Based o these agreemets, a miisterial statemet should be issued o the agreed scope of activities of each of the 23 uiversities for a five-year period. South Africa should set participatio rate targets at five-year itervals to promote icreased uiversity erolmet. We propos e aimig for participatio rate of over 30 percet by This target will eed to be traslated ito istitutio-level targets ad broke dow ito five-year itervals, takig ito accout the lead time required to build ifrastructure, fudig ad staff capacity. Agreemets should be reached o a plaig model that builds ad stregthes the curret erolmet plaig approach. Target s for erolmets ad graduates will cover a rage of skills, from high-level research traiig at doctorate level, to shorter term, career-focused diplomas ad certificates. De cisios will eed to be take about which type of istitutio cotributes most effectively to which skill level. Specific plas for priority professioal sectors such as health, egieerig ad built eviromet, ad teachig eed to be icluded, alog with major ifrastructure eeds, icludig provisio for ew facilities to trai medical ad other health professioals. 290

303 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION The model should also address South Africa s eed to icrease traiig i a umber of scarce skills. There eed to be closer liks betwee ecoomic ad educatio plaig, stroger icetives for developig scarce skills ad a expasio of the public sector with private post-secodary sectors focusig o educatio ad traiig i iche areas. Plas ad resources are eeded to icrease career-focused higher educatio certificates ad diplomas. There eeds to be better coordiatio betwee the Departmets of Higher Educatio ad Sciece ad Techology to support kowledge productio. The low output rate from doctoral programmes will make it difficult for higher educatio istitutios to replace the agig cohort of researchers. A ew future scholars programme aimed at attractig youger researchers eeds to be developed. This is ecessary for research ad developmet, but also to icrease the proportio of academic staff with doctorates ad meet the icreasig demad for professioal PhDs i the fiacial ad services sectors. Govermet will eed to provide a overarchig policy framework to coordiate the effective ad efficiet productio of kowledge across uiversities, sciece coucils, SOEs ad the private sector. This will esure that kowledge productio is i lie with atioal priorities. Build a eablig ad high quality differetiated system South Africa eeds to stregthe research excellece through performace-based grats. More weight should be give to buildig departmets, ad cetres or etworks of excellece. Give that performace-based grats, ca etrech historical privilege ad disadvatage, capacity-buildig grats should be provided with clear targets for improvemet i five-year itervals. The role of sciece coucils should be reviewed i light of the worldwide tedecy to alig research coucils with uiversities. Progressive differetiatio requires that all higher educatio istitutios provide high quality educatio ad skills traiig, uderpied by commo stadards for studet facilities, libraries, laboratories, computer access ad staff qualificatios. Adequate resourcig will be eeded to eable historically disadvataged istitutios to achieve these stadards ad overcome historical backlogs. The curret high studet dropout rates highlight the eed to focus o improvig the quality of teachig ad learig support throughout the higher educatio system. The respose eeds to focus o improvig the quality of higher educatio, through flexible curricula, ecouragig excellece i teachig, providig techology to support teachig ad learig, cotiued support for academic developmet ad the professioalisatio of teachig i higher educatio. Specific attetio should be give to makig the higher 291

304 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN educatio eviromet more welcomig for black studets, studets from poor backgrouds ad wome. A differetiated system ca oly fulfil its promis e if it provides studets with a rage of flexible pathways for developig their skills ad opportuities. This requires atioal guidelies to facilitate studet mobility. The quality assurace framework will eed to be reviewed i light of a expaded ad diversified system. The Higher Educatio Quality Committee should develop ad maage a core set of quality idicators for the higher educatio system. A atioal graduate trackig system should also be cosidered as a proxy for quality. A differetiated system guided by evidece-b ased plaig ad performace moitorig will require maitaiig ad stregtheig the curret Higher Educatio Maagemet Iformatio System, ad the additioal capacity to aalyse atioal treds ad chages betwee ad amog istitutios ad istitutioal groups. Fud a eablig, high quality differetiated system The Miisterial Committee for the Review of the Fudig of Uiversities is cosiderig revisios to uiversities fudig framework. Such revisios should be based o the eeds of a differetiated system, with adequate provisio for both teachig ad research. As the quality assurace ad moitorig system matures, greater emphasis should be placed o icetivisig graduate output. Such a shift would be i lie with the iteratioal tred towards greater emphasis o output-based fudig. The higher educatio departmet would have to put measures i place to esure that the risk of this approach discouragig uiversities from takig studets from deprived backgrouds is reduced. All studets who qualify for the Natioal Studet Fiacial Aid Scheme should have access to full fudig through loas ad bursaries to cover the costs of tuitio, books, accommodatio ad other livig expeses. Studets who do ot qualify should have access to bak loas, backed by state sureties. Both the Natioal Studet Fiacial Aid Scheme ad bak loas should be recovered through arragemets with the South Africa Reveue Service. Service-liked scholarships should be available i areas such as teachig ad social work. Cosideratio should be give to extedig the Natioal Studet Fiacial Aid Scheme to qualifyig studets i ot-for-profit regi stered private colleges as a icetive for private sector expasio. Whe resources allow, access to fiacial aid ad bak loas could be exteded to studets qualifyig for other registered private colleges. Fudig for higher educatio as proportio of GDP has declied margially over the last few years from 0.76 percet i 2000 to 0.69 percet i To preserve the quality of 292

305 CHAPTER 9: IMPROVING EDUCATION, TRAINING AND INNOVATION higher educatio, additioal fudig will be eeded to support a icrease i participatio ad kowledge productio. Support istitutios i chroic distress The higher educatio departmet should idetify istitutios that are facig ogoig crises despite earlier recovery itervetios. Dedicated support should be provided to these istitutios to develop ad implemet comprehesive reewal plas over five years. The plas should idetify a viable ad sustaiable academic path for the istitutio, with a appropriate programme ad qualificatio mix. If measurable progress towards achievig the objectives is ot evidet after five years, cosideratio should be give to reviewig the status of the istitutio. The sequecig of proposals First five-year period The overarchig goal i the first five years is to icrease the system s effectiveess. Icreasig the schoolig success rate, ad improvig throughput i further ad higher educatio will deliver far more positive results tha merely expadig access. Withi the first five years of the pla, the foudatios o which to implemet the above actios should be established. Durig this period, there will eed to be research ad experimetatio o differet delivery models withi the early childhood developmet sector, together with traiig programmes for early childhood developmet practitioers. I schoolig, the focus will eed to be o egotiatig a pact ad mobilisig popular support behid it. There will eed to be professioal support available to help uderperformig schools develop ad implemet turaroud plas. There will eed to be a broader approach to buildig capacity by traiig district officials, pricipals ad teachers to address gaps i both subject kowledge ad admiistrative skills. There will also eed to be a focus o istitutioalisig the aual atioal assessmets, ad ivestigatig ad the itroducig ew icetive structures for teachers. I further educatio ad traiig, istitutios will be stregtheed by improvig traiig for college lecturers, establishig satellite colleges ad buildig ew colleges where ecessary. The madates of SETAs should be cl arified ad give more focus, with their physical, fiacial ad huma resource capacity beig developed to eable expasio. I higher educatio, attetio will eed to be focused o buildig the capacity ad quality of the atioal system of iovatio, as well as icreasig the umbers of higher educatio staff qualified with PhDs. Extesio of degrees to four years ad support measures for udergraduate studets, icludi g a structured bridgig programme, will eed to be itroduced. 293

306 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Secod five-year period At the begiig of the secod five-year period, a evaluatio process must take place to iform decisios for the ext phase. Activities from the first phase will cotiue, with focus o icreasig erolmets i early childhood developmet, ad further educatio ad traiig, itesifyig support for udergraduate studets, ad addressig fudig issues i the atioal system of iovatio ad higher educatio. Third ad fourth five-year periods All activities from the previous phases cotiue. The remaiig proposals should be implemeted durig this phase, but attetio should ow focus o massively expadig erolmets i all parts of the educatio ad traiig system icludig FET ad higher educatio at both udergraduate ad postgraduate levels. Coclusio Helpig people to develop their skills ad ehace their capabilities is a essetial part of a sustaiable strategy for tacklig poverty. Educatio, traiig ad iovatio are cetral to this. Highly educated ad traied idividuals have much better chaces i the labour market ad a atio with highly educated citizes, particularly i sciece, egieerig ad techology, ad the humaities is more competitive ad will be able to participate i the kowledge-drive ecoomy of the future. The atioal ecoomy beefits whe there is a critical mass of highly skilled people as the curret skills shortages have raised the cost of may vital skills. 294

307 CHAPTER 10: PROMOTING HEALTH Chapter 10 PROMOTING HEALTH Health policy was oce thought to be about little more tha providig ad fudig medical care oly academics discussed the social determiats of health 1. This is chagig. While medical care ca prolog survival ad improve progosis, the social ad ecoomic coditios that make people ill are critically importat for the health of the populatio. Uiversal access to medical care is clearly oe of the social determiats of health. 2 Itroductio There are three major perspectives to be cosidered i assessig the South Africa atioal health system ad offerig recommedatios to promote health ad prevet ad maage problems. Demographics ad health treds i demography, vital statistics ad the burde of disease-specific morbidity ad mortality. Health systems issues such as health fiace, workforce, ifrastructure, iformatio, techology ad goverace. This provides isight ito the capacity of the health system to respod to challeges preseted i the first perspective. The evirometal/social determiat perspective, which ivolves the social ad ecological determiats of health, icludig climate chage ad global treds. Uderpiig the atioal health system philosophy are two iterliked ideas: the equalisig priciples of primary health care ad the decetralised, area-based, peoplecetred approach of the district health system. Primary health care emphasises globally edorsed but widely eglected values, such as uiversal access, equity, participatio ad a itegrated approach. It emphasises the importace of prevetio ad usig appropriate techology. Primary health care priciples cotiue to be importat cosideratios for health policymakers. South Africa has a log history of commitmet to primary health care. The first 1 The social determiats of health are the coditios i which people are bor, grow, live, work ad age, icludig the health system. 2 Wilkiso RG ad Marmot M (eds) (2003). Social Determiats of Health: Solid Facts. Geeva: World Health Orgaisatio. Secod Editio. 295

308 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN attempts to establish a commuity-orieted primary care approach, based o a etwork of decetralised health cetres, dates back to the 1940s. Although these efforts were ever fully realised because of apartheid policies, the importace was recogised i the Africa Natioal Cogress (ANC) Natioal Health Pla of The key compoets of primary care iclude ehaced access to ad use of first-cotact care, a patiet-focused (rather tha disease-focused) approach, a log-term perspective, comprehesive ad timely services, ad home-based care whe ecessary. Accordig to the World Health Orgaisatio, the six elemets of the district health system iclude: service delivery, health workforce, health iformatio, medical products, vaccies ad techologies, soud health fiacig, ad good leadership ad goverace. These elemets aim to achieve better health outcomes i terms of equity ad quality, resposiveess, social cohesio, fiacial risk protectio ad improved efficiecy. Attetio throughout this chapter has bee paid to measures which prevet ill health ad death. I particular we focus o idetifyig the social determiats of disease as a critical prevetio strategy. Health promotio ad welless are also critical to the prevetio ad maagemet of lifestyle diseases, i particular the major o-commuicable diseases amog the poor. These diseases are likely to be a major threat over the ext years ad require careful attetio. The moitorig ad prevetio i the public health services of other commo diseases such as breast ad cervix cacers i wome, ad prostate ad lug cacers i me, require more cosideratio by the state. Govermet, aware of the deficiecies i may sectors, has recommitted itself to trasformatio. Govermet has adopted a ambitious outcomes-based strategy that seeks to improve the effectiveess i relato to key atioal objectives. The formal i expressio of this is i a atioal charter: The Negotiated Service Delivery Agreemet, which reflects the commitmet of key sectoral ad itersectoral parters ivolved i the delivery of idetified outputs to achieve a log ad healthy life for all South Africas. As part of this commitmet, the atioal Departmet of Health s strategic pla for 2009 to 2014 adopted a 10 poit pla to improve the performace of the atioal health system. The departmet has idetified four strategic outcomes for the health sector: icrease life expectacy, decrease materal ad child mortality, combat HIV/AIDS ad decrease the burde of disease from tuberculosis. This chapter outlies the visio for health i 2030 ad a set of quatifiable targets to be achieved. The visio is rooted i our aalysis of the curret challeges ad proposed actios to overcome these. 296

309 CHAPTER 10: PROMOTING HEALTH Visio for health 2030 We evisage that i 2030, South Africa has a life expectacy rate of at least 70 years for me ad wome. The geeratio of uder-20s is largely free of HIV. The quadruple burde of disease 3 has bee radically reduced compared to the two previous decades, with a ifat mortality rate of less tha 20 deaths per thousad live births ad a uder-five mortality rate of less tha 30 per thousad. There has bee a sigificat shift i equity, efficiecy, effectiveess ad quality of health care provisio. Uiversal coverage is available. The risks posed by the social determiats of disease ad adverse ecological factors have bee reduced sigificatly. This visio will oly be achievable if the major problems that curretly exist i the three perspectives are addressed effectively. Targets for 2030 Average male ad female life expectacy at birth icreased to 70 years as a cosequece of progressive improvemet i evidece-based prevetive ad therapeutic itervetios for HIV The achievemet of this target requires the followig: All HIV-positive idividuals o ARVs Cosistet codom use Effective microbicide routiely available to all wome 15 years ad older Uiversal availability to pre-exposure prophylaxis with ARVs. As a result, mother-to-child HIV trasmissio rates should drop below 2 percet atioally, ad ew HIV ifectios reduced more tha four times amog youg wome aged betwee 15 ad 24 years i the period leadig to To moitor progress, health authorities should set mid-term targets towards the 2030 objectives. Progressively improve tuberculosis prevetio ad cure Progress should be moitored by trackig the followig idicators: Tuberculosis rates amog adults ad childre compared with global targets for sputum coversio Successful treatmet completio Progressive declie i latet ifectio rate amog school-age childre Tuberculosis cotact idices decrease Number of latetly ifected people receivig six moths isoiazid treatmet first-lie atituberculosis medicatio i prevetio ad treatmet. 3 Refers to four disorders that cotribute mostly to morbidity ad mortality i South Africa amely, HIV/AIDS, Tuberculosis ad sexually trasmitted dise ases materal ad child mortality, o-commuicable diseases, ad violece, ijuries ad trauma. 297

310 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Reduce materal ad child mortality Reduce materal mortality from 500 to less tha 100 per live births Reduce ifat mortality from 43 to below 20 per live births Reduce uder-five child mortality from 104 to below 30 per live births. Reduce prevalece of o-commuicable chroic diseases by 28 percet Cardiovascular diseases Diabetes Cacer Chroic respiratory diseases. Risk factors liked to these o-commuicable diseases iclude tobacco smokig, physical iactivity, raised blood pressure, raised blood glucose, obesity, ad raised cholesterol. Reduce ijury, accidets ad violece by 50 percet from 2010 levels Motor vehicle accidets Violet crimes Iter-persoal violece Substace abuse. Factors to moitor ad cotrol iclude roadwo rthiess of vehicles, driver behaviour, alcohol ad substace abuse, geder based violece, access to firearms ad weakesses i law eforcemet. Complete health systems reforms There is a a revitalised ad itegrated health system Evidece-based public ad private health delivery system Clear separatio of policy makig from oversight ad operatios Authority is decetralised ad admiistratio devolved to lowest levels Cliical processes are ratioalised ad there is systematic use of data icorporatig commuity health, prevetio ad evirometal cocers Ifrastructure backlogs addressed icludig greater use of ICT. Primary health care teams provide care to families ad commuities Primary health care teams are established throughout the coutry with requisite complemet of doctors, specialists, physicias ad urses Each household has access to a well-traied commuity health worker Schools receive health educatio provided by teachers ad primary health care teams 298

311 CHAPTER 10: PROMOTING HEALTH Primary health care teams have adequate resources for the services they eed to deliver. Uiversal health care coverage Everyoe has access to a equal stadard of care regardless of their icome A commo fud eables equitable access regardless of what people ca afford to pay or how frequetly they eed to make use of health services. Fill posts with skilled, committed ad competet idividuals Icrease capacity to trai health professioals Trai more health professio als to meet the requiremets of the re-ivigorated primary health care system Lik traiig of health professioals to future diseases, especially differet categories of o-commuicable diseases Follow the lead of the Muicipal Systems Act 2000 (as ameded) ad set procedures ad competecy criteria for appoitmets of hospital maagers Set clear criteria for the removal of uderperformig hospital maagers. The challege Challeges i the health system fall uder three broad perspectives: demographics ad health, health systems, ad social determiats ad ecology. Demographics ad health The health challeges facig South Africa are well kow. The coutry faces a quadruple burde of disease (HIV/AIDS ad related diseases such as tuberculosis; sexually trasmitted diseases; materal ad child morbidity ad mortality; violece ad ijuries ad may o-commuicable diseases maily related to lifestyle). I 2007, South Africa represeted 0.7 percet of the world s populatio, but accouted for 17 percet (about 5.5 millio people) of the global umber of HIV ifectios. Life expectacy declied from 1994 to 2009, from about years to 53.9 years for me ad from years to 57.2 years for wome. South Africa is also oe of very few coutries i which materal ad uder-five child mortality have icreased sice I 2000, the leadig causes of morbidity i terms of disability-adjusted life years 4 lost were: HIV/AIDS (31 percet), iterpersoal violece (7 percet), tuberculosis (4 percet), road traffic ijury (3 percet) ad diarrhoeal diseases (2.9 percet). The leadig risk factors were: usafe sex (32 percet), iterpersoal violece (8 percet), 4 A idex that measures the disease burde i terms of the umber of years lost due to disease, disability ad morbidity. 299

312 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN alcohol harm (7 (2.9 percet). percet), tobacco smokig (4 percet) ad excess bodyweight Treds i death otificatios icreased rapidly, doublig over a decade to per year by This tred was most serious amog ifats ad youg wome, treblig i the 0-4 ad age groups to early per year over the same period, mostly due to HIV. It has also cotributed to the mortality of me, particularly i the age group. I youg me, there was also a sustaied icrease i excess mortality due to ijury. Commuicable diseases such as tuberculosis escalated, imitatig the HIV epidemic, with a up to six-fold icrease of death rates amog youg wome ad fourfold icrease i youg me. There was also a similar rise i o-commuicable disorders, such as cardiovascular disease, ad predisposig factors such as obesity, hypercholesterolemia (abormally high levels of blood cholesterol) ad diabetes mellitus. As a result, it is likely that cardiovascular disease will become a icreasig, if ot the leadig, cause of death by Evidece poits to a declie i usafe sex, resultig largely from the icrease i codom use amog youth. Safe sex ad the widespread adoptio of atiretroviral treatmet suggest that the icreasig prevalece of HIV has begu to level off ad may sigificatly declie by Iterpersoal violece, however, is ot showig sigs of log-term declie. It is about twice the global average ad particularly severe amog wome the homicide rate of itimate parters is six times the global average. Road traffic accidets cotributed to about a quarter of all ijury-related deaths i 2000 ad cotiue to rise. These risks are exacerbated by social determiats, such as widespread poverty, uemploymet ad icome iequality; patriarchal otios of masculiity that emphasise toughess, risk-takig, ad defece of hoour; exposure to abuse i childhood ad weak paretig; access to firearms; widespread alcohol misuse; ad weakesses i law eforcemet. There has bee a ecouragig declie i the prevalece of self-reported tobacco smokig by over 40 percet sice 1995, which is expected to cotiue. However, dietrelated o-commuicable ailmets such as obesity, diabetes ad cardiovascular disease accout for a large proportio of South Africa s disease burde ad may rise further, especially amog poorer Africa wome. Studies have show that dietary trasitio is liked to icreases i o-commuicable diseases as a result of icreased itake of foods high i sugar, salt ad tras-fats. There have bee marked chages i diet amog the majority black Africa populatio i South Africa, with a rapid trasitio from a traditioal diet based predomiatly o urefied maize with vegetables ad occasioal aimal protei, to a diet cosistig largely of refied ad processed foods with high cocetratios of sugar ad salt. I South Africa, 25 percet of the coutry s health care spedig is devoted to cardiovascular disease. The World Health Orgaisatio estimates suggest that ocommuicable diseases have caused 28 percet of South Africa s total disease burde. Although there are o reliable calculatios of costs icurred by o-commuicable 300

313 CHAPTER 10: PROMOTING HEALTH diseases i South Africa, comparative data from other middle-icome coutries suggest that total costs are very high, as are costs imposed o the health sector. Childhood malutritio is aother major challege affectig may childre (see sectio o early childhood developmet i Chapter 9 dealig with improvig educatio, traiig ad iovatio). Health systems The overall performace of the health system sice 1994 has bee poor, despite the developmet of good policy ad relatively high spedig as a proportio of GDP. Services are fragmeted betwee the public ad private sectors, which serve 83 percet (41.7 millio) ad 17 percet (8.3 millio) of the populatio respectively. Imbalaces i spedig betwee the public ad private sector have skewed the distributio of services, which has bee detrimetal to both sectors ad has led to cost escalatio. Evidece suggests multiple system failure across a rage of programmes, icludig materal ad child health, HIV/AIDS, tuberculosis ad others, with a devastatig combied impact. At the heart of this failure is the iability to get primary health care ad the district health system to fuctio effectively. The fudametal importace of full commuity participatio ad the role of civil society has bee uderplayed ad the focus o people first Batho Pele has dimiished. The culture of valuig ad respectig the expressed eeds of commuities has faded, replaced by a top-dow approach. The health system is fractured, with pervasive disorder ad multiple cosequeces: poor authority, feeble accoutability, margialisatio of cliical processes ad low staff morale. Cetralised cotrol has ot worked because of a geeral lack of disciplie, iappropriate fuctios, weak accoutability, lack of adherece to policy, iadequate oversight, feeble istitutioal liks betwee differet levels of services (especially hospitals) ad defesive health service levels icreasigly protective of turf ad budgets. Good policies are frequetly ot implemeted i remote health facilities ad district facilities, partly due to weakesses i the relatioships betwee medical staff ad their patiets. The essetial values of primary health care have either ot bee practised or give low priority. May health professi oals have become less cocered about carryig out their resposibilities ad duties to their patiets, their professio ad society, tha about persoal beefits such as pay ad workig coditios. Resources have bee iequitably distributed ad crises ad curative services are respoded to rather tha preveted. To address these issues, i 2009 the Departmet of Health recommitted itself to a revitalised primary health care approach based o a reivigorated district health system. A comprehesive health service requires that primary ad district health systems are liked to regioal ad cetral hospitals. Give that the core busiess of the health sector 301

314 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN is cliical services that are both prevetative ad curative, it is importat to provide the ecessary eviromet for this to take place. This meas the bureaucratic process eeds to support the cliical process, ad ot operate at the expese of the cliical process as it does at the momet. The itegrated maagemet team should ideally be led by a practisig cliicia, particularly at the level of health care delivery. Critical to this maagemet model is decetralisatio of authority with ehaced budgetary cotrol. Social determiats ad ecology The weakesses i South Africa s health systems are exacerbated by the burde imposed by multiple epidemics of commuicable ad o-commuicable diseases. Health ad health services have bee shaped by powerful historical ad social forces, such as vast icome iequalities, poverty, uemploymet, racial ad geder discrimiatio, the migrat labour system, the destructio of family life ad extreme violece. Progressive policies were formulated i the first years of the democratic dispesatio ad the public health system was trasformed ito a itegrated, comprehesive atioal health system. However, poor leadership, icosistet maagemet ad iadequate capacity meat that implemetatio ad health outcomes fell short of expectatios. There was a misguided attempt to chage everythig simultaeously, whe may aspects of the system were ot faulty. There are crucial issues that have ever bee satisfactorily addressed, such as the substatial huma resources crisis facig the health sector ad massive uemploymet. It is iteratioally recogised that societal risk coditios are more importat tha idividual risk factors i the spread of a disease. The World Health Orgaisatio Commissio o the Social Determiats of Health report, made three major recommedatios that are especially relevat for South Africa give the challeges we face: Improve the coditios of daily life the coditios i which people are bor, grow, live, work, ad grow old. Tackle the iequitable distributio of power, moey, ad resources the structural causes of those coditios of daily life globally, atioally, ad locally. Measure the problem, evaluate actio, expad the kowledge base, develop a workforce traied i the social determiats of health, ad raise public awareess. Critical actios I this chapter we propose actios aroud seve broad areas that are cetral to the attaimet of the visio ad targets set out earlier. They are: addressig the social determiats affectig health ad disease; stregtheig the health system; prevetig ad reducig disease burdes ad promotig health; fiacig the health system; improvig quality by usig evidece; addressig huma resources issues; ad implemetig effective parterships i the health sector. 302

315 CHAPTER 10: PROMOTING HEALTH Address the social determiats affectig health ad disease The 2008 World Health Orgaisatio Commissio o Social Determiats of Health, Closig the Gap i a Geeratio: Health Equity through Actio o the Social Determiats of Health, provides actio areas that are used to guide the proposals below. Implemet a comprehesive approach to early life Efforts should build o existig child survival programmes ad extedig itervetios i early life to iclude social/emotioal ad laguage/cogitive developmet. Detailed proposals are preseted i the early childhood developmet part of this pla. Collaboratio across sectors The health sector should egage with parters ad departmets to esure that the egative impact of other policies o health outcomes is uderstood ad miimised, while promotig policies that result i positive health outcomes. The likages betwee policies dealig with huma settlemets, urba plaig ad urba desig, trasport, basic services, educatio, eergy, trade, agriculture ad food security, rural developmet, social protec tio, ad eighbourhood policig should be fully assessed ad uderstood, ad their desig should take ito accout their impact o health. Poverty is a sigificat health determiat. Successfully addressig poverty will have a positive impact o the atio s health. Promote healthy diets ad physical activity We eed to esure that there is a lifestyle chage i behaviour i South Africa, with healthier diets ad more exercise. The best place to istil this culture is at school. We propose that by 2020: Physical educatio should be compulsory i all schools. Every primary ad high school i South Africa should employ a qualified physical educatio teacher. Every primary ad high school should have access to adequate facilities to practice school sport ad physical educatio. All schools should be supported to participate i orgaised school sport activities at local, district, provicial ad atioal level. Health departmet officials should coduct regular visits to schools i which healthy dietary practices are taught ad ecouraged. 303

316 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN To esure that a culture of welless is also established i commuities ad at work, we propose that by 2025: Every ward across the coutry should have adequate facilities for commuities to participate i basic exercise ad sportig activities. Employers should be icetivised to provide opportuities to employees to egage i physical exercise ad to have access to iformatio about healthy dietary practices. Stregthe the health system The Developmet Bak of Souther Africa facilitated a cosultative process to draw up a roadmap for health i Its mai recommedatios were to: Establish a coheret ad visio-based executive decisio-makig process. Promote quality, icludig measurig ad bechmarkig actual performace agaist stadards for quality. Defie a appropriately specialised, more accoutable operatioal maagemet model for health service delivery, icludig revised roles ad resposibilities for the atioal departmet, provices, districts ad public hospitals. This should also cover goverace ad capacity requiremets. Brig i additioal capacity ad expertise to stregthe a results-based health system, particularly at the district level. This should iclude revised legislatio to make it easier to recruit foreig skills, parterships betwee the private ad public sector, deploymet ad traiig fo r district health maagemet teams. Implemet a atioal health iformatio system to esure that all parts of the system have the required iformatio to ef fectively achieve their resposibilities. Establish a huma resource strategy with atioal orms ad stadards for staffig, liked to a package of care. Develop a implemetatio strategy ad parterships to leverage fudig, icrease health sector efficiecies ad accelerate implemetatio of the atioal strategic pla. We agree with these recommedatios ad support the Miister of Health s efforts to implemet them. I additio, we propose that the followig be give attetio to stregthe health systems. Leadership ad maagemet Health services eed to be revitalised so that they are specifically directed to patiet eeds. To improve services for commuities ad patiets, roles ad resposibilities eed to be revised for the atioal departmet, provices, districts, public hospitals ad primary health care facilities. Natioal, provicial ad district orgaisatioal structures should also be reviewed to better support the reewed focus o primary health care. Techical capacity at atioal ad provicial level should be stregtheed to provide overall guidace o activities that improve levels of health, such as effective implemetatio, moitorig ad assessmets of policies, as well as active egagemet 304

317 CHAPTER 10: PROMOTING HEALTH i the commuity to address social ad ecoomic factors that act as barriers to achievig good health. Fuctioal competece ad commitmet to quality service eed to be a priority. Commuicatio ad coordiatio mechaisms should be improved withi departmetal spheres, across clusters ad with private parters to prevet silo fudig ad operatio. Accoutability to users There should be a effective goverace ad maagemet framework from atioal to local levels with emphasis o user/commuity-level accoutability. Cetralised guidace, techical support ad moitorig should be aliged with resposibility ad effective decisio-makig that are devolved ad decetralised. Greater attetio should be give to collaboratio withi ad betwee atioal, provicial ad district or local strategies ad plas. Appropriate delegatios ca cosolidate the resposibilities of chief executive officers ad district maagers. Additioal capacity ad expertise To stregthe a results-based health system, pa rticularly at district level, parterships with the private ad o-profit sectors eed to be boosted. Metors ad traiers should be used to improve capacity i district health maagemet, health cliics ad hospitals, ad commuity-based outreach primary health care. The key focus of the traiig ad metorship should be o rollig out best practice. Office of Stadards Compliace Maximum support is eeded for the Office of Stadards Compliace i promotig quality, icludig measurig, bechmarkig ad accreditig actual performace agaist stadards for quality. There should be a specific focus o achievig commo basic stadards i the public ad private sectors. Health iformatio systems Several actios are eeded to achieve maximum potetial syergy betwee atioal, district, facility ad commuity health iformatio systems: Credible data is ecessary to iform decisio-makig ad regular moitorig across the system. The developmet ad maagemet of effective data systems should be prioritised. The atioal health iformatio system should seamlessly itegrate with the provicial, district, facility ad commuity-based iformatio systems. These systems should lik to secure olie electroic patiet records ad other data structures, such as fiacial, pharmacy, laboratory ad supply chai maagemet 305

318 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN systems. It should also lik with other govermet, private sector ad o-profit databases. Establish atioal stadards for itegratig health iformatio systems. Challeges experieced i itegratig data betwee differig software ad fiacial systems highlight the importace of establishig atioal stadards for health data. There should be regular idepedet data quality audits, possibly by the Office of Stadards Compliace. Develop huma resources for health iformatio. The atioal health iformatio system skills audit highlighted the eed for cotiuig traiig ad developmet of staff i this field to replace existig ad-hoc traiig. Stregthe the culture of iformatio use. At commuity level, mobile phoes (mhealth systems) ca improve commuity-based data collectio by professioal teams, icludig commuity health workers, to make reliable data istatly available. At facility level, the flexibility of the district health iformatio system software should allow data to be added accordig to local eed, to track ad moitor local priorities. Accommodate expasio of data reportig through a iovative approach. The icreasig demads o health workers for data should be addressed through a structured approach usig setiel sites; complemetary use of routie data ad regular iexpesive aual facility surveys to update basic iformatio data o staff, ifrastructure, equipmet, maiteace, ad other iformatio that does ot chage ofte. A atioal task team should discuss, revise ad approve the atioal iformatio data system every two years, ecouragig districts ad provices to take part ad make subm issios. Two areas requirig urget icorporatio ito the data system are reports o huma resources ad fiaces. Improved access to digital iformatio should focus icreasigly o web-based ad mobile data etry ad retrieval liked to the existig district health iformatio system, which should be cotiuously ad icremetally moderised. Ivest i improvig data quality. This depeds o the cotiuig allocatio of fulltime staff at atioal ad provicial level, as well as commitmet from district iformatio officers ad supervisors. Prevet ad reduce disease burdes ad promote health Although it is importat to provide comprehesive care, particularly quality primary health care ad commuity outreach, there is a eed to have a itegrated focus o three mai itervetios to reduce the major disease burdes. Prevet ad cotrol epidemic burdes through deterrig ad treatig HIV/AIDS, ew epidemics ad alcohol abuse. Improve allocatio of resources ad availability of health persoel i the public sector. Improve health systems maagemet by improvig calibre of care, operatioal efficiecy, devolutio of authority, he alth worker morale ad leadership ad iovatio. 306

319 CHAPTER 10: PROMOTING HEALTH Fiacig the health system I 2005, the World Health Assembly passed a resolutio o sustaiable health fiacig, uiversal coverage ad social health isurace. The resolutio oted a wide mix of fiacig mechaisms across coutries, but asked coutries to commit to progressively extedig a pre-paymets system. This measure was aimed at icreasig security of services, protectig agaist fiacial risk, prevetig catastrophic health expediture ad movig towards uiversal systems. Health system typologies Occasioally, policy-makers ad coutries relook at the log-term directio ad ature of their health systems ad chart a fudametally differet approach for the road ahead. South Africa is at such a jucture, where the proposals for a atioal health isurace (NHI) system represet a profoud break with the past ad the potetial evolutio of a substatially differet system. Chages we make ow may set the foudatios for a ew health system for the ext 50 years. South Africa has a trasitioal or pluralist health system, cosistig of a tax-fuded health system for the majority ad a system of medical schemes for a relatively small proportio of the populatio (17 percet, 8.3 millio beeficiaries). 5 However, give the large iequities i icome, spedig withi the private system amouts to about half of total health spedig. This high level of spedig i the private sector attracts scarce skills away from the public sector: a large proportio of South Africa s specialists, pharmacists, detists, optometrists ad physiotherapists work i the private sector. South Africa s level of public health spedig (4.1 percet of GDP) is fairly average i global terms, but its high level of HIV/AIDS ad burde of disease 6 gives the coutry a additioal cost burde that has bee estimated at aroud 0.7 percet of GDP. 7 It is uusual for middle-icome coutries to sped more tha 6 percet of GDP o health, while coutries with higher icome, such as the Uited Kigdom, sped about 8 percet of GDP o health services. As coutries become more developed ad richer, their health systems ad fiacig systems typically move away from these trasitioal systems towards more uiversal systems, i which a large proportio of health fudig is public. I advaced coutries, there are three mai types of health system: Natioal health service: Uited Kigdom, Spai ad Swede. Services are predomiatly tax fuded ad delivery is maily through the public sector. Natioal health isurace: Fiacig is predomiatly public, but delivery is typically by a mix of public ad private providers. There is a rage of sub-optios 5 Coucil for Medical Schemes (2010). Aual Report 2010/11. Pretoria: Coucil for Medical Schemes. 6 World Health Orgaisatio (2009). Mortality ad burde of disease estimates for WHO member states Geeva: World Health Orgaisatio. 7 Guthrie T, Ndlovu N, Muhib F ad Hecht R (2010). The log ru costs ad fiacig of HIV/AIDS i South Africa. Cape Tow: Cetre for Ecoomic Gover ace ad AIDS i Africa Cape Tow. Haaker M (2011). Fiscal implicatios of HIV/AIDS i South Africa. Washigto: World Bak. 307

320 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN here, but oe of the mai differeces lies betwee the sigle-payer models (Australia ad Caada) ad the multi-payer models, which typically emerge ad build o occupatioal social health isurace scheme arragemets (Hollad ad Germay). Private health isurace: The Uited States model of private health isurace is geerally cosidered oe of the most expesive ad iefficiet, ad is beig reviewed uder the Obama health reforms. Whe social isurace systems reach uiversal coverage, the distictios betwee health isurace ad health service systems may become blurred. I South Africa, the term NHI may be ope to misiterpretatio, as it will ot be a typical isurace system. It will be predomiatly based o public provisio at first, ad maily fuded through geeral tax reveues. Evolutio towards NHI NHI is a commo ed-poit for health fiacig reforms across the world ad over 100 coutries either have or are movig towards such systems. I may coutries, NHI has evolved over decades through the progressive elaboratio of social health isurace. As ecoomies stregthe ad a growig proportio are employed i the formal sector, a relatively low percetage of remaiig uisured people are subsidised to brig the etire populatio ito the isurace system. South Africa is workig towards this objective of achievig uiversal coverage. This approach has to be tailored to the South Africa cotext: Progressive iclusio of private providers ito the publicly fuded system is likely to be much more gradual give their substatially higher uit costs. The Gree Paper already talks of a trasitio of 14 to 15 years. I the early years, the system will have to focus substatially o stregtheig the public health service, similar to a atioal health service-type system. The system will ivolve substatial cross-subsidisatio i the early decades, due to high levels of uemploymet ad icome iequality. South Africa health fiacig umbers South Africa will sped about 8.7 percet of GDP o health services i 2011/12 (R255 billio), of which about 4.2 percet (R122 billio) will be i the public sector, 4.3 percet through private fiacig streams (R126 billio) ad 0.2 percet through doors. The largest public stream is through provicial departmets of health (3.8 percet of GDP) ad the largest private stream is through medical schemes (3.6 percet of GDP). 308

321 CHAPTER 10: PROMOTING HEALTH Health expediture i SA public ad private sectors Rad millio 07/08 08/09 09/10 10/11 11/12 12/13 13/14 Aual real % chage 07/08-13/14 Public sector Natioal Departmet of Health Care 1,210 1,436 1,645 1,736 1,784 1,864 1, Provicial departmets of health 62,582 75,120 88,593 98, , , , Defece 1,878 2,177 2,483 2,770 2,961 3,201 3, Correctioal services Local govermet (ow reveue) 1,625 1,793 1,829 1,865 1,977 2,096 2, Workmes Compesatio 1,287 1,415 1,529 1,651 1,718 1,804 1, Road Accidet Fud ,029 1, Educatio 1,833 2,134 2,350 2,503 2,653 2,812 2, Total public sector health 71,439 85,154 99, , , Private sector Medical schemes 65,468 74,089 84,863 96, , , , Out of pocket 14,694 15,429 16,200 17,172 18,202 19,294 20, Medical isurace 2,179 2,452 2,660 2,870 3,094 3,336 3, Employer private 1,041 1,172 1,271 1,372 1,479 1,594 1, Total private sector health 83,383 93, , , , , , Doors or NGOs 3,835 5,212 6,319 5,787 5,308 5,574 5, Total 158, , , , , , , Total as % of GDP Public as % of GDP Public as % of total govermet expediture (o-iterest) Private fiacig as % of total Public sector real rad per capita 10/11 prices 2,131 2,300 2,512 2,635 2,766 2,812 2, Public per family of four per moth real 10/11 prices The ext table compares South Africa with a selectio of middle-icome coutries usig World Health Orgaisatio data. 8 Usig 2007 data, South Africa s public spedig o health services was close to the global average (3.2 percet for upper-middle icome coutries). Upper-icome coutries spet o average 6.1 percet of GDP o publicly fuded health services. However, the govermet share of the total i South Africa (41.4 percet) was sigificatly below average (55.2 percet for middle-icome coutries ad 62 percet for upper-icome coutries), meaig that health spedig i South Africa is more uequal tha i most other middle-icome coutries. 8 World Health Orgaisatio (2010). World Health Statistics Geeva: World Health Orgaisatio. 309

322 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Govermet health expediture i selected middle-icome coutries Coutry GDP per capita (curret US$) Gov health expediture as % of GDP Per capita gov health expediture (PPP it $) Total health expediture as a % of GDP Gov health expediture as % of total health expediture Lifeexpectacy Chile 9, Mexico 9, Russia 9, Turkey 8, Veezuela 8, Uruguay 7, Brazil 7, Malaysia 7, Argetia 6, Botswaa 6, South Africa 5, Costa Rica 5, Namibia 4, Peru 3, Thailad 3, Chia 2, Morocco 2, Nigeria 1, Idia 1, Vietam Low icome Lower middleicome Upper middleicome High icome ,631 2, Govermet speds about R922 per moth o health services per family of four, which is roughly 14.7 percet of the mai budget (excludig iterest costs). A similar family covered by a medical scheme speds betwee four ad five times as much per moth. South Africa has ot quite met the Abuja declaratio health spedig target of 15 percet of govermet spedig. Health fiacig system compoets Although the broad descriptio of a atioal health system is importat, of more sigificace are the detail ad desig of the fiacig system through which varied optios emerge. The costs of NHI deped o the type of system, for example, the ature ad type of beefits, the extet to which private providers (private hospitals) are used, the ature of reimbursemet mechaisms, how much purchasig is active or passive, the degree of geuie competitio, the relative power of purchasers ad providers, usage levels of services ad how successfully demad is maaged. 310

323 CHAPTER 10: PROMOTING HEALTH Reveue collectio Sources of fuds: households, firms, govermet, doors (tax base) Mechaisms of health care fiacig/cotributio mechaisms: (type of reveue stream) Tax direct/idirect, persoal icome tax, value added tax, borrowig Social isurace, NHI Private isurace, medical schemes User fees out of pocket Commuity fiacig Doatios/grats. Types of collectig agecy: Govermet, parastatal, private Poolig Risk pools Coverage ad compositio of risk pools ad degree of fragmetatio Number ad ature of purchasig authorities. Resource allocatio Degree to which eed based (risk equalised) Needs-based resource allocatio formulae (e.g. risk-adjusted capitatio). Purchasig Trasfer of pooled fuds to providers Active vs passive purchasig; cotractig; iformatio systems Beefit package Budgetig, allocative efficiecy Paymet mechaisms. The rough cost estimates provided i the Gree Paper o the NHI are briefly portrayed i the table below. Public health spedig will icrease from R100-R110 billio at baselie to R255 billio i real terms by 2025 (R574 billio i omial terms). As a percetage of GDP, this is a icrease from about 4.2 percet to 6.2 percet. However, the actual costs will vary depedig o the way i which the NHI is implemeted, ad wider health system isssues, such as icreasig the supply of doctors. 311

324 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Gree Paper cost estimates of NHI R millio Real Baselie arrow* Baselie broad Gap 2 Nomial Baselie arrow* Baselie broad Gap 2 * Narrow refers to atioal provicial Departmets of Health Broad icludes all other health-related services i other departmets ad etities The fiacig of a health care system does ot deped solely o its cost projectios. It is subject to may other factors, such as relative prioritisatio of differet sectors (health services versus educatio, icome support, ifrastructure, job creatio), the overall fiscal stace of the coutry, its ecoomy, th e ability of the sector to covicigly show value for moey ad political choices. Examiig iteratioal comparisos suggests that certai coutries provide iadequate levels of fudig for health services. For example, i Idia, util fairly recetly, the level of public sector health fudig was close to 1 percet of GDP, despite very high levels of materal ad child mortality. At the other ed of the spectrum, poorly coceived health systems ca bakrupt compaies ad govermets. The Uited States health care system costs close to 14 percet of GDP, yet may people are ucovered ad the coutry has comparatively poor health outcomes. I Germay, madatory cotributios cost 15 percet of payroll ad have, at times, bee cosidered uaffordable for the coutry ad the ecoomy. Cost spirals i health systems are easily set off ad ca be very difficult to cotrol. It is importat to desig health systems with log-term sustaiability. Cost cotrols May mechaisms eed to be put i place withi health systems to improve efficiecy ad cotrol costs. For example, primary care gate-keepig; demad maagemet strategies such as appropriate self care, user fees; ratioig, diagostic ad therapeutic protocols, preferred providers; maaged care; reimbursemet strategies (capitatio or 312

325 CHAPTER 10: PROMOTING HEALTH global budgets istead of fee-for-service) ad others. The World Health Report 9 estimated that betwee 20 percet ad 40 percet of health spedig globally is wasted through iefficiecy ad made diverse recommedatios for greater efficiecy. Fiacig mechaisms Distict fiacig mechaisms could be used to geerate fuds for the health system ad for NHI. Some commo fiacig mechaisms for health care iteratioally iclude: Tax direct/idirect, persoal icome tax, value added tax, borrowig Social isurace, NHI ofte via proportioal payroll cotributios/taxes Private isurace; medical schemes User fees out of pocket Commuity fiacig Doatios/grats. Typical criteria used for assessig fiacig mechaisms are: feasibility, effectiveess, efficiecy, equity, sustaiability, structurig of cotributios (which ca be more progressive or regressive depedig o the model used), extet of coverage, ad fiscal decetralisatio versus cetralisatio. Geeral tax icome Geeral tax reveue is a source of fiacig for health care i may coutries, particularly i coutries with advaced atioal health service systems (the Uited Kigdom, Swede, Spai ad Italy). Types of taxes that uderlie geeral tax icome iclude persoal icome tax, value added tax ad compay tax. Taxes o alcohol ad tobacco also cotribute to the geeral reveue pool. Geeral taxatio teds to be effective ad e quitable. I South Africa, the South Africa Reveue Service is a competet atioal reveue authority. Persoal icome tax is a particularly progressive form of raisig reveue as the level of icome determies the amout of the cotributio, with the poorest ot beig taxed. It is therefore more progressive tha collectig comparable resources through NHI cotributios as these are based o fixed cotributios accordig to the requiremets of the NHI ad ot by icome. Value added tax is a key source of geeral tax i most coutries. I may coutries with uiversal health care systems, value added tax is at a higher level tha i South Africa. However o firm decisio has bee take o icludig VAT as a additioal source of fudig for the NHI. 9 World Health Orgaisatio (2010). The World Health Report: health systems fiacig: the path to uiversal coverage. Geeva: World Health Orgaisatio. 313

326 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Private health isurace Private health isurace is ot a effective system for providig uiversal health care fiacig because it is volutary, uses risk ratig meaig that some people may be excluded from access or charged prohibitive fees, excludes may persos ad because cotributios are ot liked to icome. South Africa s medical schemes are ot typical private health isurace vehicles, ad have already bee through several sets of reforms. They are o-profit etities ad risk ratig is prohibited. Medical schemes i South Africa are a well established fiacig mechaism used by 8.3 millio beeficiaries. Govermet itself has three schemes for govermet workers the Govermet Employees Medical Scheme is the secod largest medical scheme i the coutry, with 1.4 millio beeficiaries ad aual cotributios of R13.2 billio. Occupatioally liked restricted medical schemes cover 3.1 millio beeficiaries ad have gross cotributios of R37 billio i 2010/ Social health isurace Private health isurace cotributios are volutary, ofte risk rated ad ot liked to icome, while social isurace cotributios are typically madatory, icome liked (typically as a percetage of icome) ad ot risk rated. They are therefore more progressive tha private schemes, although they typically provide a more limited set of beefits. Payroll taxes I some coutries, NHI is fuded predomiatly through payroll taxes. However, oce coverage becomes uiversal, the advatages of payroll taxes agaist geeral taxes become less sigificat ad the more progressive ature of geeral taxes make them a preferable reveue-raisig istrumet. User fees Out-of-pocket paymets are a regressive form of health fiacig ad ca seriously detract from access to health services. The World Health Orgaisatio recommeds that out-of-pocket paymets should ot costitute more tha 15 to 20 percet of health fiacig reveue, 11 advisig that the risk of catastrophic health expediture where health costs seriously damage a households fiacial situatio becomes miimal below these levels. I South Africa, user fees cotribute about 8 percet of reveue, maily for 10 Coucil for Medical Schemes, World Health Orgaisatio,

327 CHAPTER 10: PROMOTING HEALTH private services. The public sector derives oly 1.8 percet of its expediture from reveue ad has exemptios for various groups. Although user fees should ot be a major compoet of health care fiacig, it is ot yet clear where they should be applied. Oe view is that there should be o user fees at all (except for miimal exceptios such as o-south Africas, services outside the package). Aother view is that user fees do have some role i cotrollig uecessary demad for discretioary services, ad this ca be desiged to avoid catastrophic health expediture (defied as more tha 10 percet of household icome). We support the broad priciple of uiversal coverage outlied i the Gree Paper o NHI ad the process uder way i govermet to ivestigate the most appropriate mechaisms for fiacig NHI to achieve uiversal coverage. The success of atioal health isurace will deped o the fuctioig of the public health system. The commissio supports attempts to improve how the health system operates, startig with the auditig of facilities. Measures also eed to be put i place to reduce iefficiecies i the private health sector to reduce costs. This icludes revisitig the Health Professios Coucil s decisio to bar private hospitals from employig doctors. This decisio has led to a private hospital model i which hospitals use icetives to attract doctors ad specialists to establish practices withi hospital premises. 12 Hospitals ivest i ifrastructure ad equipmet to attract doctors ad geerate de mad for doctors services by referrig patiets, while doctors geerate demad for hospital beds. This model leads to overservicig that drives the cost of private health care. Huma resources i the health sector There is a disparity i the distributio of health persoel, drive by differeces i service coditios betwee the public ad private sectors. This issue is liked to the fudig of health. There are further difficulties i plaig for huma resource developmet, because the PERSAL system i the public sector ad the health coucil registratio system i the private sector are ot providig accurate statistics. The commissio proposes a umber of actios to overcome the huma resources challeges at differet levels of the health sector. Commuity-based health care A core compoet of the re-egieerig primary health care strategy is the proposal to place much greater emphasis o populatio-based health ad health outcomes. This icludes a ew strategy for commuity-based services through a primary health care outreach team, based o commuity health workers ad usig advocacy o major 12 Matsebula T ad Willie M (2007). Private Hospitals i Harriso S, Bhaa R ad Ntuli A (eds) South Africa Health Review. Durba: Health Systems Trust. 315

328 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN health campaigs such as the provisio of health iformatio ad respodig to issues idetified by commuities. Commuity health workers ca successfully udertake a rage of itervetios i materal, eoatal ad child health (MNCH), as well as acute ad chroic disease maagemet. Although commuity health workers activities i South Africa have bee limited to a few areas, especially HIV/AIDS care ad prevetio, commuity workers are performig a wide rage of tasks i a growig umber of coutries, especially i relatio to materal, eoatal ad child health. Research has accumulated evidece of the effectiveess of commuity health workers i providig comprehesive health care, icludig treatmet of commo, acute, maily childhood illesses. Policies permittig commuity-level workers to use atibiotics to treat peumoia have bee cotroversial, because health professioals are cocered that atibiotics might be misused or over-used. However, i Ethiopia ad Nepal, the quality of care has remaied high. Supportive atioal policies are eeded to allow commuity health workers to admiister atibiotics for specific childhood diseases, alog with stregtheed regulatory ad quality cotrols for the distributio ad appropriate use of atibiotics. Commuity health workers have bee successful i various capacities, from approaches that emphasise commuity-cotrolled, part-time workers (Thailad, Rwada) to those where commuity health workers are formal members of sub-district health teams (Ira, Brazil). I all the coutries where commuity health worker programmes ejoy success, commuity participatio occurs through structures that are itegrated ito the wider health system. The umber of tasks a commuity health worker ca reasoably perform depeds o a variety of factors, the most importat beig the ratio of commuity health workers to families, the duratio ad quality of their traiig, ad the extet ad quality of their supervisio. 13 The Re-egieerig Primary Health Care policy proposes six commuity health workers for each primary health care outreach team, each commuity health worker coverig 250 households, or about people. Lessos leared from low- ad middle-icome coutries suggest that the ecessary ratios for commuity health workers to families should be as may as 1:500 families for full-time workers, or 1:10-20 for part-time workers. The shortage of traied staff ad commuity workers to provide health-promotig, disease-prevetig ad curative services is a major hidrace to service delivery. These workers also eed supervisio. I the early stages of a commuity health worker programme, whe total umbers are small, it may be most cost-effective to prioritise recruitmet ad allocatio of commuity health workers to the eediest areas. As i other coutries (Brazil, Rwada, Thailad, Bagladesh), this model should rapidly icrease the poor s access to health care ad result i improved health outcomes. This 13 World Health Orgaisatio, Guthrie et al,

329 CHAPTER 10: PROMOTING HEALTH would be especially so if the ratio of commuity health workers to populatio icreases to esure that all households are regularly visited ad health problems detected early. I several coutries, high ratios are achieved through a two-tier system, where the ratio of full-time commuity health workers is 1: households, ad full-time commuity health workers supervise part-time commuity health workers with more limited traiig. The ratio of full-time to part-time commuity health workers averages 1:10 to 1:20 i coutries where this system operates successf ully. We propose serious cosideratio be give to this two-tier system. If we opt for a ratio of 1 full-time commuity health worker for every 20 part-time commuity health workers, we will eed just over commuity health workers. Ad if we opt for the ratio of 1 full-time for every 10 part-time commuity health workers we will eed over 1.3 millio. This cadre of commuity-based workers wo uld udertake a rage of health care activities, spaig the full breadth of rehabilitative/palliative care, treatmet, prevetive ad promotive itervetios. They would form the base of the health pyramid. I additio to rederig health care more accessible ad equitable, this primary health care system will create more jobs ad idirectly improve health by reducig the prevalece ad depth of poverty. To achieve this model of commuity-based health care, the power of coservative professioal coucils will eed to be curtailed. The scope of practice for o-doctors, especially commuity health workers ad urses, will have to be elarged. Accelerate productio of appropriately skilled urses The core of the primary health care outreach team will cosist of a professioal urse, staff urse ad commuity health workers. This will require substatially icreased umbers of traied urses ad sigificat stregtheig of their skills to carry out ad support primary health care. Because primary health care icludes promotive ad prevetive compoets, the key activities of public health, these urses (or at least the professioal urse leadig the outreach team) will eed to be substatially competet i public health. Ideed, i several coutries, commuity urses (professioal urses with public health traiig) lead may aspects of district health work. Prioritisig the traiig of more mid-wives ad distributig them to appropriate levels i the health system could have a immediate positive impact o materal, eoatal ad child health, which would reduce materal ad child mortality. The above requiremets demad a rapid expasio ad reorietatio of ursig traiig. The policy decisio to reope ad expad urse traiig colleges is a welcome step i the right directio. However, revita lisig these istitutios must be accompaied by curriculum review that icludes advisers exteral to the curret urse traiig bodies (Nursig Coucil ad Sector Educatio ad Traiig Authorities), with expertise i public 317

330 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN health ad experiece i coutries that have implemeted a comprehesive, districtbased approach. Doctors ad specialist support teams Accordig to the Re-egieerig Primary Health Care documet, family physicias as part of the district specialist support team i lie with atioal policy ad guidelies, should take the primary resposibility for developig a district specific strategy, implemetatio pla for cliical goverace ad provide techical support ad capacity developmet for the implemetatio of cliical goverace tools, systems ad processes for cliical service quality i the district health system that icludes the commuity-based services, primary health care facility services ad district hospital services. Family physicias should also take overall resposibility for the moitorig ad evaluatio of cliical service quality for the etire district. 14 I may coutries, the emphasis of family physicia traiig ad practice has bee o idividual patiet care i a well-resourced cotext. I several coutries that have promoted doctors as leaders of the district health team, these professioals have udergoe traiig i five speciality areas (medicie, surgery icludig aaesthetics, obstetrics, paediatrics ad psychiatry) ad are also ecouraged to obtai a public health qualificatio or traiig, or both. This arragemet should be cosidered, rather tha employig orthodox specialist family physicias. Recetly, the Miister of Health aouced the formatio of district specialist teams. It is clear from several assessmets ad research studies that patiet care i may district hospitals is poor. There is too little emphasis o prevetio, primary health care ad quality of care i district hospitals ad cliics. The curret output from specialist traiig schemes is out of step with what South Africa eeds. Such traiig ecourages cotiued productio of system specialists, most of whom will seek ad fid employmet i teachig istitutios or the private sector (or overseas), but does ot address the eeds of the majority of the populatio, who live beyod the reach of the major city teachig cetres, ofte i remote rural areas. Priority should also be give to developig specialists who improve the quality of care i their speciality area i district hospitals ad surroudig health cetres ad cliics, as well as improvig the plaig, maagemet ad moitorig of district services i their field. To address this challege, there eeds to be a major chage i the traiig ad distributio of specialists. It will require the accelerated productio of commuity specialists i each of the five specialist areas. Traiig would iclude compulsory placemet i regios uder the supervisio of provicial specialists. Those i placemets would be based at a regioal hospital, but would examie ad improve the stadard of health care across a system or withi a regio icludig prevetive work, quality of 14 Departmet of Health (2011). Natioal Health Isurace i South Africa. Policy Paper. Govermet Gazette No Govermet Notice No August

331 CHAPTER 10: PROMOTING HEALTH care at primary care cliics ad district hospitals, ad supportig the referral ad trasport etwork. Rapidly icrease ivestmet i health persoel developmet Brazil s health system has ispired some of South Africa s key policies, particularly Reegieerig Primary Health Care. Brazil has more tha 2.5 millio workers employed i the health sector. For direct employmet i formal skilled jobs, this represets about 10 percet of the workforce a far greater proportio tha South Africa s. These umbers have bee achieved by sigificat ivestmet i health research ad developmet, icludig expasio of traiig, especially for urses ad techicias, upskillig of public health ad auxiliary persoel (problem-solvig ad reflective thikig), ad attractive icetives to promote curricular reform i udergraduate programmes. I stark cotrast, there has bee stagatio i South Africa s productio of doctors ad, util recetly, a declie i the umber of urses. Traiig i public health, a core compoet of primary health care, is miimally supported by govermet fudig, with most schools of public health relyig heavily o exteral door ad research fudig. Most categories of health professioal s with the exceptio of urses are disproportioately located i the private sector. To implemet policies that are more appropri ate to the health ad health care eeds of South Africa, there eeds to be a massive ad focused ivestmet i traiig health persoel. Govermet could icetivise the productio of appropriate traied persoel i sufficiet umbers withi a realistic, but short, time frame. Review maagemet positios ad appoitmets ad stregthe accoutability mechaisms Evidece suggests that, otwithstadig stagatio i public health persoel umbers from the late 1990s, atioal ad provicial maagemet has grow. The percetage growth of maagemet posts has greatly exc eeded that of posts for service delivery. Recetly, reviews have bee udertake of maagemet persoel ad their competecies to stregthe ad ratioalise health service maagemet. Statutory structures eed to be bolstered ad resourced for commuity represetatio i health system goverace it is widely ackowledged that these structures mostly fuctio poorly. If greater accoutability to commuities could be secured through such mechaisms, it is likely that the quality of maagemet ad service delivery would improve. Equip health persoel to lead itersectoral actio The Re-egieerig Primary Health Care policy states that: It is well recogised that may of the factors that impact o health are outside of the health sector. Much of the work of the commuity-based services team is liked to improvig social determiats 319

332 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN at the commuity level. However there are may other factors that eed itervetio at other levels. 15 Itersectoral actio is a feature of most successful commuity health worker programmes, although its implemetatio takes several differet forms. I Ira, commuity health workers are the key players i itersectoral activities, while i Brazil, commuity health workers act primarily as health care workers ad refer cliets where ecessary to other sectors for assistace. The Re-egieerig Primary Health Care documet suggests that there should be alig(met) (of) the itersectoral programme at district level through the muicipal itegrated developmet plaig process with that of the provicial ad atioal clusters with specific time boud targets. 16 However, it is ot clear who will assist commuity health workers ad lead this work i districts ad wards. This could be the role of evirometal health officers, yet the curret traiig ad activities of these officers suggests that they are ill-equipped to lead such work i disadvataged commuities. This is a area for priority cosideratio. Esurig that this importat aspect of re-egieerig primary health care is successfully addressed requires idetifyig the key cate gories of health ad health-related persoel, their respective roles, ad the elaboratio of appropriate ad practical traiig programmes for them, combied with a facility for ogoig metorig ad support i the field. These actios are likely to require active erolmet of the skills of o-govermetal orgaisatios with good credetials i this type of work. It is critical for the health sector to play a active advocacy role i other key sectors with policies that affect the social determiats of health, such as safety ad security, trade, water affairs, educatio, ad so o. Some Europea coutries have successfully pursued itegratio by esurig that the highest level of govermet actively promotes healthfriedly policies by isistig o a health i all policies approach. Stregthe huma resource maagemet Huma resources eed to be stregtheed at all levels by icreasigly esurig accreditatio of this fuctio, cotiuously reviewig remueratio ad puttig ito operatio icetive schemes such as the occupatio-specific dispesatio to boost services i uderserved areas. Effective performace maagemet frameworks are a importat aspect of huma resources maagemet. Fulfillig these frameworks ad retaiig staff should receive as much attetio as producig ew professioals. Poor maagemet at facility level is the most cited reaso for doctors leavig the public sector, so fixig maagemet will help address this retetio problem. Recruitig skilled professioals from abroad is very difficult i South Africa, owig to cosiderable red tape i beig grated a work permit ad registerig with statutory bodies. I a worldwide kowledge-based ecoomy, South Af rica is strugglig to compete for this scarce resource. This matter requires urget attetio. 15 Departmet of Health, Departmet of Health,

333 CHAPTER 10: PROMOTING HEALTH Collaborate with traditioal healers With more tha 28 millio cosumers of traditioal medicie i South Africa ad about traditioal medicie practitioers, Africa traditioal medicie is oe of the major service idustries i this coutry. Raw medicial plats, prescriptios ad herbal medicies add up to a idustry worth R2.9 billio. The Traditioal Health Practitioers Act (2007) provides for atioal policy o traditioal medicie, although there has bee limited actual itegratio of traditioal medicie ito the atioal health care system ad structured relatioships with the Africa pharmaceutical idustry. It is importat for the Departmet of Health, particularly its huma resources directorate, to develop a policy framework for how traditioal medicie fits ito the health workforce. Improve quality by usig evidece Give the escalatig costs of services i both the public ad private sector ad the high proportio of GDP that goes to health service fudig, it is essetial to create a culture of usig evidece to iform plaig, resource allocatio ad cliical practice. The quality of plaig ca be improved through evidece-based evaluatio, plaig ad implemetatio. The health workforce, ad particularly those i leadership, eeds to be ecouraged to become familiar with usig evidece i all aspects of practice. Empirical evidece o which to base predictios for specific health plas ad targets should be regularly reviewed, ad data ad scearios to refie targets for 2030 cotiuously updated. At district level, this implies effectively usig the district health expediture review ad plaig process. Meaigful public-private parterships i the health sector Meaigful public-private parterships i the health sector are importat, particularly i the cotext of the NHI. To achieve this, South Africa eeds robust debates betwee public ad private sector parters, icludig civil society orgaisatios. Key issues would deped o whe ad how parters approach this debate i the short to medium term, ad it is likely that they will eed to iclude legal ad goverace frameworks, the public-private partership policy eviromet, the socio-political dimesio of such parterships, public-sector capacity, ad the busiess ad fiacial implicatios of partership implemetatio. The priciples to maage these parterships should guide best practice purchasig, provisioig, procurig ad soud fiacial maagemet of health services to create icetives for improvig access, greater equity, higher quality, more iovatio ad servig the poor with efficiecy. 321

334 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Itegratio betwee ad withi public ad private sectors Summary of mai proposals Cetral to the proposals i this chapter is greater iter-sectoral ad iter-miisterial collaboratio. Address social determiats of health Most of the recommedatios relatig to the social determiats of health are dealt with i other chapters ad relate maily to provisio of quality services. Itroduce school health educatio. Promote a active lifestyle, balaced diet, cotrol alcohol abuse ad health awareess to reduce o-commuicable diseases. Reduce exposure to harmful eviromets by maagig greehouse gas emissios at acceptable levels. Reduce disease burde to maageable levels Esure all HIV positive idividuals are o atiretroviral treatmet Promote cosistet codom use Effective microbicide routiely available to all wome 15 years ad older Uiversal availability to pre-exposure prophylaxis with atiretroviral treatmet Reduce materal mortality to appropriate target levels Reduce mother to child trasmissio of HIV-1 rates to below 2 percet atioally Icrease prevetio ad successful treatmet of tuberculosis Reduce violet crime ad ijuries from car accidets 322

335 CHAPTER 10: PROMOTING HEALTH Provide quality pre-birth ad postatal services through a primary health care approach. Build huma resources Accelerate the productio of appropriately-skilled urses by reopeig ursig colleges, accompaied by curriculum review. Accelerate productio of commuity specialists i each of the five mai specialist areas (medicie ad surgery, icludig aaesthetics, obstetrics, paediatrics ad psychiatry. Recruit, trai ad deploy betwee ad 1.3 millio commuity health workers to implemet commuity-based health care. Itroduce polices to allow commuity health workers to admiister atibiotics for specific childhood diseases ad stregthe regulatory ad quality cotrols for the distributio ad appropriate use of atibiotics. Stregthe atioal health system Put i place appropriate delegatios esurig that maagemet teams deliverig services are led by a practisig cliicia. Determie miimum qualificatios for hospital maagers ad esure that all maagers have the ecessary qualificatios. Improve goverace by resourcig ad stregtheig statutory structures for commuity represetatio i health system goverace. Elimiate health ifrastructure backlogs ad icrease the use of ICT to treat ad maage health coditios. Implemet the NHI scheme Implemet the NHI scheme i a phased maer Improve the quality ad care at public facilities Reduce the relative cost of private medical care Icrease the umber of medical professioals Itroduce a patiet record system a d supportig iformatio techology systems. 323

336 324

337 CHAPTER 11: SOCIAL PROTECTION Chapter 11 SOCIAL PROTECTION We live i a coutry where everybody feels free, yet bouded to others. The welfare of each of us is the welfare of all. Itroductio As the world s 27th largest ecoomy, with abudat atural resources, South Africa has great potetial. It is the world s 24th most populous coutry, with the umber of youg people expected to grow from 32 millio i 2010 to 39 millio i This youthfuless is a asset, because the labour force will cotiue to make up a sigificat share of the populatio, though the proportio of the elderly is expected to icrease margially. Such demographic coditios are ofte associated with risig icomes, faster productivity growth, higher savigs ad better livig stadards. South Africa s level of huma developmet does ot reflect its atural wealth ad abudace of labour. Too few people i South Africa have work, ad the levels of poverty ad iequality are very high. Why is it that South Africa is ot able take advatage of its atural resource edowmets ad positive demographic features? There is o sigle explaatio for all South Africa s problems. The iequitable distributio of icome is partly due to low levels of formal employmet that exclude a large sectio of the populatio from actively takig part i the ecoomy. The root cause of icome iequality is the socioecoomic distortio itroduced by apartheid, which costraied the developmet of skills for the majority of the populatio ad kept them trapped i poverty. The mismatch betwee the skills of the majority ad the type of work available meas that South Africa is ot usig its greatest resource: its people. Ecoomic exclusio has dire cosequeces for the welfare of idividuals, commuities ad the coutry. Uemploymet exacerbates iequality, because the majority of those without work are i the poorest two deciles of the populatio. 1 The youth are disproportioately affected, as are wome. Eve educatio is a ureliable hedge agaist uemploymet: 1 Klase S ad Woolard I (2008). Survivig uemploymet without state support: uemploymet ad household formatio i South Africa. Joural of Africa Ecoomies 18(1):

338 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN uemploymet levels are high amog matriculats ad eve amog those with tertiary educatio. Structural factors make job creatio difficult. Addressig structural costraits is a priority, but structural chage takes time. I the iterim, large umbers of South Africas will remai uable to participate meaigfully i the ecoomy yet have o access to other meas of support. The Natioal Plaig Commissio s Diagostic Report discusses ie itercoected but distict problems facig the coutry. To address these, the commissio focuses o two overarchig goals: to eradicate poverty ad reduce iequality. These goals ca be achieved by buildig capabilities that eable idividuals to take part i the formal ecoomy ad i other parts of society. Workig towards this would eable a better appreciatio of how social security, social welfare, educatio, health, housig, eergy ad trasport policy ca coordiate to beefit idividuals ad commuities, as well as the ecoomy. I this chapter, we review achievemets sice 1994, outlie a coceptual framework for social protectio, offer a comprehesive visio for 2030, discuss gaps i the curret system icludig lookig at welfare services, ad propose actios that eed to be take. Post-1994 achievemets By developig coutry stadards, South Africa has built up a comprehesive social protectio system. Elemets of the system iclude: social assistace cash grats; statutory social isurace arragemets; access to free basic services, such as water ad eergy for poor households; free housig for people below a specified icome bracket (curretly R3 500 per moth); subsidised housig for those earig betwee R3 500 ad R7 000 per moth; free educatio i 60 percet of schools i poor commuities; a school utritio programme; ad free health care for pregat wome ad childre uder six years of age. Millios of South Africas beefit from these programmes. These policies eable South Africa to ejoy relative stability. Although service delivery protests ad xeophobic attacks agaist foreig atioals do occur, poverty would be deeper ad social urest more widespread if these programmes did ot exist. South Africa eeds to pay careful attetio to the desig of policies betwee ow ad 2030 to esure that the coutry is kept workig, idividuals are egaged i meaigful activity, ad citizes are protected from the worst effects of poverty. If apartheid destroyed opportuities for the majority of the populatio ad trapped them i poverty, the challege for the ext 20 years is to rebuild the opportuity structure ad help idividuals develop the capabilities to live the life they wish to lead. At the cetre of our social policy is the eed to eable idividuals to ear a icome, look after themselves ad their families, ad build a asset base. 326

339 CHAPTER 11: SOCIAL PROTECTION Coceptual framework for social protectio Employmet creatio is the most effective form of social protectio. Efforts should always focus o creatig jobs. Our social policy must create a bridge betwee our 2030 visio of a ecoomy close to full employmet ad the curret problem of high uemploymet. The mai thrust of social policies should be to eable ad support labour market participatio ad provide protectio agaist labour market risks icludig loss of employmet. Social protectio is also essetial to protect the old ad the youg, as well as adults of workig age who are uable to work because of structural uemploymet, illess or disability. The curret reality is that labour markets do ot work for may people i South Africa ad we should ot uderestimate the legth of time it will take to fix the problem. We should also be midful of the fact that, give the low skills base from which we are startig, may jobs are likely to pay low wages. Social protectio policies will have to eable ad support participatio i the labour market by arrowig the gap betwee wages ad the cost of livig for those employed i low wage jobs. It should eable a degree of security i ormal times ad serve as a safety et i times of crisis. For this to happe, we eed to determie the type ad level of support eeded to keep everyoe above a miimum threshold. If people fall below this threshold it will become icreasigly difficult for them to build their capabilities ad expad their opportuities. For this strategy to work ad eable people to build their capabilities, other policies have to work ad reiforce each other. Social protectio is broader tha the traditioal cocept of social security. It icorporates developmet strategies ad programmes desiged to esure, collectively, at least a miimum acceptable livig stadard for all citizes. 2 I particular, we eed to esure that educatio ad traiig, health, trasport, huma settlemets, lad use maagemet ad ecoomic policies work together more effectively. The world is ot stadig still. As discussed i the chapter o the drivers of chage, the ecoomy is beig reshaped by globalisatio, climate chage, techology ad the rebalacig of the world. This meas we have to accelerate the process of buildig capabilities if we are to become more competitive. Five fuctios of social protectio Protective Measures are itroduced to save lives ad reduce levels of deprivatio. Prevetive Acts as a ecoomic stabiliser that seeks to help people avoid fallig ito deeper poverty ad reduce vulerability to atural disasters, crop failure, accidets ad illess. 2 Taylor Committee (2002). Trasformig the Preset - Protectig the Future. Report of the Committee of Iquiry ito a Comprehesive System of Social Security for South Africa. Pretoria: Departmet of Social Developmet. 327

340 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Promotive Aims to ehace the capabilities of idividuals, commuities ad istitutios to participate i all spheres of activity. Trasformative Tackles iequities ad vulerabilities through chages i policies, laws, budgetary allocatios ad redistributive measures. 3 Developmetal ad geerative Icreases cosumptio patters of the poor, promotig local ecoomic developmet ad eablig poor people to access ecoomic ad social opportuities. These fuctios ad objectives fit well with South Africa s developmetal approach to eradicatig poverty ad reducig iequality. 4 Social protectio as a right Uder Sectio 27 of the Costitutio, South Africa recogises social security as a basic right: all South Africas have the right... to social security, icludig, if they are uable to support themselves ad their depedats, appropriate social assistace. 5 A huma rights approach requires that a uderstadig is reached of what costitutes the social floor, or miimum social protectio below which o oe should fall. The floor of essetial goods ad services ca vary betwee idividuals, depedig o their age, geder, socioecoomic status, health ad abilities. Visio for social protectio By 2030, the majority of workig age South Africas are employed. Everyoe ejoys a high stadard of livig. There is a defied social floor ad households who have ot achieved the basic stadard of livig are assisted. Problems such as huger, malutritio ad microutriet deficiecies that affect physical growth ad cogitive developmet, especially amog childre have all bee addressed. Vulerable groups such as poor wome ad people with disabilities ejoy the full protectio provided uder the Costitutio. Social protectio also serves to protect agaist short-term shocks ad chroic vulerabilities caused by labour market failures. This visio will be attaied through a combiatio of public ad private provisio of services. The state will cotiue to bear primary resposibility for esurig this is achieved. It will also develop a eablig eviromet, create coditios for social parters to cotribute, ad esure vulerable groups are protected. 3 Devereux S (2010). Buildig Social Protectio Systems i Souther Africa. Paper prepared i the framework of the Europea Report o Developmet Taylor V (2008). Social Protectio i Africa: A Overview of the Challeges. Research Report prepared for the Africa Uio. Upublished Report. Available at /03/Taylor2008AUSocialProtectioOverview.pdf (Accessed 2 Jue 2011). 5 RSA (1996) Costitutio, Chapter 2, Sectio 27 (1)c. 328

341 CHAPTER 11: SOCIAL PROTECTION Overview of South Africa s social protectio ad welfare services 6 Social security system The figure below shows the basic architecture of South Africa s curret social security system. There are five major social assistace grats: the Child Support Grat, the State Old-Age Pesio, the Disability Grat, the Foster Care Grat ad the Care Depedecy Grat. The eligibility criteria for the grats differ. Govermet is also resposible for three primary social isurace mechaisms: the Uemploymet Isurace Fud, the Compesatio Fuds ad the Road Accidet Fud. The state regulates volutary fuds, icludig volutary isurace schemes, such as medical schemes ad retiremet fuds. Social security i South Africa I South Africa, social assistace grats refers to o-cotributory ad icome-tested beefits provided by the state to certai categories of people, such as people livig with disabilities, the elderly, ad childre i poor households. Beefits are fiaced by geeral tax reveues. The elderly i South Africa have two mai sources of icome: state old-age pesios ad private pesios. May people are ot able to save adequately for retiremet because of low earigs durig their workig life ad rely o govermet pesios. The mai goal of the Child Support Grat is to esure that the primary caregivers of childre livig i poverty are able to fiace the basic eeds of those childre. Based o the umber of beeficiaries, the grat is the largest cash trasfer programme i South Africa. Grat coditios iclude icome criteria ad childre s school attedace. O average, the grat accouts for 40 percet of household icome i the poorest quitile, 6 Leibbradt M & Woolard I (2011a). A coceptual framework for Social Security i South Africa i the light of the curret situatio as well as future treds. Upublished paper prepared for the Natioal Plaig Commissio. 329

342 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN ad about 5 percet overall. Evidece shows that, i the absece of social assistace, South Africa s poverty ad iequality would be higher. The Compesatio Fuds provide medical care ad icome beefits to workers who are ijured at work or who develop occupatioal diseases. These are statutory fuds with madatory membership ad cotributios, but they are effectively restricted to the formal ecoomy. The Road Accidet Fud provides compesatio for the loss of earigs, loss of support, geeral damages, ad medical ad fueral costs for the victims of road accidets caused by the egliget or wrogful drivig of aother motorist. Membership is madatory for all vehicle owers. The Uemploymet Isurace Fud provides short-term uemploymet isurace. It pays beefits i the evet of uemploymet, illess, materity, adoptio ad death. Beefits are oly paid i the period immediately after the loss of employmet, with a maximum beefit legth of 238 days. All formal-sector workers ad their employers must each cotribute a levy of 1 percet of the employee s salary (up to a certai icome threshold, curretly R per year) to the fud. Credits are accrued at the rate of oe day of beefits per six days worked. This social isurace mechaism is effectively limited to the formal sector ad the 1 millio domestic workers employed by private households. I additio to the statutory fuds, there are volutary fuds providig social isurace, icludig private health isurace (medical aid) ad private retiremet fuds. These are geerally liked to formal sector employmet as a beefit of may formal employmet cotracts. While the medical schemes ivolve some sharig of risk by redistributig from the healthy to the sick, there is o redistributive compoet i private retiremet fuds. Social assistace After the ed of apartheid, policies o social grats evolved i a way that maitaied ad modified some iherited grats such as pesios, disability ad foster care. The state maiteace grat was removed ad replaced with the Child Support Grat. The Old-Age Pesio ad the Disability Grat are regarded as quite geerous, equatig to 1.75 times the average per capita household icome. The Child Support Grat is much smaller tha the adult grats or the Foster Care Grat. The immediate objective of cash trasfer programmes is to alleviate hardship amog vulerable groups. Woolard ad Leibbradt 7 ad Bhorat ad va der Westhuize 8 demostrate that such grats are critical fo r reducig poverty. The grats also reduce iequality i a eviromet where uemploymet worses iequality. I terms of coverage ad gaps, simulatios based o survey data suggest that about three-quarters 7 Woolard I ad Leibbradt M (2011). The role of cash trasfers i reducig poverty ad iequality i South Africa over the post-apartheid period. Upublished paper produced for the Natioal Plaig Commissio. Souther Africa Labour ad Developmet Uit, Uiversity of Cape Tow. 8 Bhorat H ad va der Westhuize C (2011). Pro-Poor Growth ad Social Protectio i South Africa: Explorig the Iteractios. Upublished paper produced for the Natioal Plaig Commissio. Developmet Policy Research Uit, Uiversity of Cape Tow. 330

343 CHAPTER 11: SOCIAL PROTECTION of the elderly are eligible for the Old-Age Pesio, almost all of whom are receivig it. About 6 percet of the workig-age populatio receives disability grats. While 60 percet of childre who are withi the age ad icome bracket covered by the Child Support Grat receive a child grat of some form. A 2008 survey estimates that 70 percet are eligible for the Child Support Grat o the grouds of household icome. This idicates that there are may childre who are ot receivig grats to which they are etitled: some estimates put the umber at 2.9 millio. 9 Orphas are amog the most at-risk segmets of the child populatio. A high proportio of pateral orphas are receivig grats, particularly the Child Support Grat, but a low proportio of materal orphas are receivig grats. This supports evidece foud i Case, Hosegood ad Lud 10 that the probability of a child receivig a grat decreases whe the mother is abset. Usurprisigly, orphas who have lost both parets are the most likely to be receivig the Foster Care Grat. What is uexpected is that, aside from pateral orphas, orphas are less likely to receive the Child Support Grat tha childre with both parets. This may be a result of the more complex documetatio required without the child s mother as caregiver. Social isurace The cetral plaks of the curret system of social isurace are the Uemploymet Isurace Fud ad the public works programmes. The Uemploymet Isurace Fud provides essetial support to workers who have lost their icome. For the first ie moths of 2010/11, the fud received a average of ew claims per moth. Average mothly beefit paymets amouted to R466.8 millio to beeficiaries, accordig to the Budget Review The fud curretly has a large ad growig surplus. I 2010/11, fud expediture was about R8.1 billio, while reveues were R14.4 billio. Despite this, the fud s coverage is limited. Give that there were uemployed i early 2011, the implicatio is that less tha 5 percet of the uemployed were receivig uemploymet beefits at ay give time. Part of the explaatio lies i the fact that 55 percet of the uemployed report that they have ever worked ad thus have ot cotributed to the fud. Furthermore, 44 percet of uemployed people who have previous work experiece have bee uemployed for more tha a year ad would have exhausted their beefits if they were ever eligible for them. While the fud clearly has a importat role to play i providig replacemet icome ad a degree of security to the short-term uemployed, the vast majority of the uemployed fall outside 9 Leibbradt M, Woolard I, Fi A ad J Arget (2010). Treds i South Africa icome distributio ad poverty sice the fall of apartheid. Orgaisatio for Ecoomic Cooperatio ad Developmet Social, Employmet ad Migratio Workig Papers No Paris: OECD. 10 Case A, Hosegood V ad Lud F (2005). The Reach ad Impact of Child Support Grats: Evidece from KwaZulu-Natal. Developmet Souther Africa 22 (4):

344 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN this system. The fud is curretly focused o givig beefits to members, but to esure its sustaiability the focus should be o helpig people retur to active employmet. Proposed state coverage of lifecycle risks Source: Smith, A comprehesive social security system should cover people at differet phases of their lives. Although South Africa has may of the ecessary elemets, there are critical gaps, as show i the figure above, most otably the lack of protectio for may workig-age people. South Africa s social protectio gap Despite the stregths of South Africa s socia l grats system, grats target people who are ot expected to be ecoomically active: childre, the elderly ad those with disabilities. For those who are willig ad able to work, but who are locked out of the ecoomy, there is o meaigful level of social protectio. Oly 3 percet of the uemployed have access to uemploymet beefits at ay give time. 12 This meas that able-bodied uemployed people i South Africa have little choice but to deped o goodwill trasfers from those with access to icome through employmet or some form of social grat. 11 Smith S (2011). Towards itegrated ad comprehesive social security i South Africa critique of the Social Security ad Retiremet Reform. 12 Klase S ad Woolard I (2008). Survivig uemploymet without state support: uemploymet ad household formatio i South Africa. Joural of Africa Ecoomies 18(1):

345 CHAPTER 11: SOCIAL PROTECTION I effect, the massive ecoomic burde of uemploymet i South Africa is beig bore primarily by workers ad by those who have access to social grats meat for other purposes. Depedece o wage earers compouds existig wage pressure i the ecoomy, ad depedece o social grat recipiets dilutes the ati-poverty effects of such grats, pushig households that are already poor eve further ito poverty. Lack of social protectio for the able-bodied uemployed is a critical social protectio gap, exacerbatig poverty ad iequality ad dilutig the effects of other forms of social protectio. The critical policy questio is how to address this gap. There are a rage of complemetary istrumets for doig so, but the focus i this sectio is o the vital role of public employmet. Absece of cotributory coverage of the iformal sector The most sigificat omissio i the reform proposals beig cosidered by govermet is that the iformal sector does ot have a way to make paymets towards cotributory schemes through savigs. The formula for determiig cotributios ad beefits eeds to take accout of volatile ad broke cotributio patters ad develop a equivalet co-cotributio icetive to the cotributio subsidies for formal workers. A social security system that does ot allow everyoe the opportuity to participate i improvig their basic social security etitlemets through cotributios implies that these idividuals are deied access ad left outside the ambit of essetial beefits uless they are able to migrate to the formal ecoomy. This is iappropriate i a ecoomy i which govermet tries to ecourage etrepreeurship ad small busiess iitiatives. The problem caot be addressed by formalisig the iformal labour market. Occupatioal schemes use employer matches i South Africa, but little is kow about their effectiveess, as most employers make retiremet scheme membership a coditio of employmet. The curret proposals evisage a cotributio subsidy for low-icome formal sector employees. This icetive should be exteded to the iformal sector too. Public employmet programmes 13 Icome support is a vital part of social protectio for the uemployed, but i South Africa s particular cotext there is a bigger picture. The deeply structural ature of uemploymet meas that large umbers of the uemployed have ever worked, or have ot worked for log periods of time. This has devastatig social ad psychological effects ad completely disrupts established social patters. 13 Philip K (2011). Addressig a key social protectio gap: support for the uemployed. Upublished paper prepared for the Natioal Plaig Commissio. 333

346 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Where possible ad appropriate, public employmet programmes should provide opportuities to work. Work provides people with a earigs floor ad the digity of beig productive, rather tha depedet. For may, it provides the first experiece of employmet, itroduces them to the skills ad disciplies of work, provides structure i their lives, validates their ability to cotribute to their commuities, ad provides access to social etworks. For youg people, workig ad earig is also part of the trasitio to adulthood. Access to public employmet opportuities provides a bridge betwee social grats ad the sustaiable employmet evisaged i the New Growth Path, creatig a mechaism that allows uemployed people to become a productive part of the ecoomy while structural chages required to create sustaiable employmet take effect. Without this mechaism, the social tesios arisig from high uemploymet are likely to hider medium- to log-term growth ad developmet objectives. At the same time, the impacts of the assets ad services provided also cotribute to wider social policy goals, particularly if there is a strog focus o food security, care ad educatioal support. I may parts of South Africa, the established patter was that whe youg me started workig they saved to pay ilobolo, got married ad started families. With curret levels of uemploymet, this is o loger possible for may youg people. This has profoud implicatios for the family as a istitutio, as well as for paretig. Uemploymet potetially cotributes to the growig pheomeo of abset parets, especially fathers. It is estimated that less tha a third (32 percet) of childre live with both their biological parets ad a quarter of childre do ot live with either of their biological parets. The role of public employmet i social protectio Despite its importace i addressig the social protectio gap for uemployed people, public employmet has ot always bee cosidered part of social protectio. It has bee thrust ito the policy area by Idia s Natioal Rural Employmet Guaratee Act i 2005, through which the state guaratees 100 days of work to every rural household that eeds it. Over 55 millio people are ow part of the scheme, which has become a cetral pillar of Idia s social protectio system. The itroductio of a employmet guaratee has systemic implicatios: Itroducig a right to work chages power relatioships, ehaces the agecy of citizes ad their ability to hold govermet accoutable, which stregthes democracy. A employmet guaratee cotributes to the social protectio floor i society providig icome security to households, as well as creatig a floor i labour 334

347 CHAPTER 11: SOCIAL PROTECTION market stadards that gives workers a real alterative to exploitative coditios of work. This is a substative cotributio to the progressive realisatio of decet work i society. Chapter 3 argues that uemploymet will be a challege for may years, eve if the best scearios are achieved. The extet of margialisatio, especially amogst the youth, tears apart the social fabric. The public employmet programmes to date reach betwee 3 ad 6 percet of the uemployed. These programmes eed to be expaded to reach a average of 30 to 50 percet of the uemployed by 2014, ad to cover about 2 millio people per aum by 2020, or earlier if possible. This will require effective measures to expad the programme. Existig strategies to scale up public employmet South Africa has a existig commitmet to public employmet i the Expaded Public Works Programme. I phase oe, from 2004/05 to 2008/09, it exceeded its target of achievig 1 millio work opportuities. The target was cumulative over five years. This was low relative to the umbers of uemployed people. However, the evaluatios showed that the first EPWP created very short term opportuities, with fallig stipeds. The evaluatios also called ito questio the highly complex set of objectives, such as traiig, that were largely ot achieved. A ew expaded public works programme (EPWP II) was itroduced i The EPWP II kept to the objective of itesifyig labour use o ifrastructure projects. However, the overall approach was to simplify the objectives of the programme, ad to decetralise decisio makig. Employmet icetives were itroduced for muicipalities ad for o-profit orgaisatios. The EPWP II targets were raised to reach 2 millio opportuities per aum by This would traslate ito 4.5 millio work opportuities, averagig 100 days per opportuity, over five years to 2013/4. The ifrastructure compoet of EPWP is meat to double from about opportuities i 2009 to by EPWP social sector ad related activities, such as home-based care ad early childhood developmet for childre uder five are meat to expad from about opportuities to about by Most of these will be stimulated by the EPWP employmet icetive, bolstered by grats offered by provicial departmets of social developmet. No-profit orgaisatios ca apply for support to cover labour costs up to a value of a EPWP wage (approximately R60 per day i 2011). I the ew phase, a ew compoet called Commuity Work Programme was added. The ew programme has bee simplified ad decetralised. The focus of the programme was iitially o testig approaches so that they could be scaled up quickly ad target areas of greatest eed. The Commuity Work Programme is very cost effective with a madatory 65 percet labour-itesity at site level. The programme is also desiged as a respose to the structural ature of uemploymet, ad offers 335

348 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN participats regular access to part-time work to provide a ogoig earigs floor, which allows greater security tha icome from oce-off, short-term employmet. Key features of the Commuity Work Programme Provide a earigs floor through regular part-time work two days a week or eight days a moth o a ogoig basis. As a govermet programme put ito effect by o-profit agecies, it avoids further burdeig local govermet while stregtheig developmetal capacity i civil society. Work must be useful work that cotributes to public goods ad services i the commuity. The work is idetified ad prioritised by commuities i ways that build commuity participatio ad cotribute to commuity developmet. These assets ad services cotribute to poverty reductio ad local developmet through their impact o food security, care for vulerable people, schools assistace, ad evirometal rehabilitatio. The programme aims to have a presece i every muicipality by 2013/14. At the July 2011 Cabiet Lekgotla, the target was icreased to 1 millio participats by March Developmetal social welfare services Statistical idicators pait a disturbig picture of risig violece, icreasig umbers of low-icome households ad other social determiats requirig urget attetio. Amog these social cocers are heighteed levels of addictio, icreasig crimiality amog youg people, high levels of gag-related violece i schools ad commuities, ad sexual violece agaist childre ad wome, especially i ecoomically deprived areas. Demographic treds ad huma developmet idicators poit to a coutry with sigificat levels of social fragmetatio, uacceptable levels of social alieatio ad the breakdow of social istitutios. I the absece of fully fuctioig families, households, commuities ad eighbourhoods, social welfare istitutios i most coutries step i to provide services to improve social fuctioig ad itegratio. The combiatio of poor ad iadequate state social welfare services ad high levels of poverty ad iequality produces social problems ad high-risk behaviour that udermies huma developmet ad social cohesio. High levels of domestic violece are ofte amplified by poverty ad uemploymet. Alcohol abuse is aother factor that is both a cause ad maifestatio of stresses i households ad commuities. Poor social services ad ieffective policig reiforce the sese of powerlessess i poor commuities. Poor-quality educatio limits social mobility, further straiig basic social 14 Philip K (2011). Addressig a key social protectio gap: support for the uemployed. Upublished paper prepared for the Natioal Plaig Commissio. 336

349 CHAPTER 11: SOCIAL PROTECTION relatios that may societies take for gra ted. The impact of youth uemploymet ad HIV/AIDS has worseed matters. Give the challeges of dealig with social fragmetatio ad the demographic cotext, govermet has adopted a developmetal social welfare approach to social service provisio, i lie with the Costitutio ad the 1997 White Paper o Social Welfare. It icludes a focus o the social ad ecoomic developmet of idividuals, families ad commuities. This approach icorporates raisig commuity awareess of social cocers ad itroducig strategies to reduce ad prevet social pathologies. Resposes i the social welfare field iclude early itervetio through commuity developmet strategies ad statutory itervetio, icludig residetial ad alterative care arragemets for those i eed, such as orphaed ad vulerable childre, victims of violece ad people with metal health coditios. It also icludes treatig perpetrators of crime ad those with alcohol ad substace addictios, ad rehabilitatig ad reitegratig them ito family ad society. Services for victims of crime especially crimes agaist childre, youth ad wome are iadequate, as are services for people with a rage of metal health coditios. The distributio of both public ad private social welfare services remais skewed alog racial ad icome lies, with the wealthy havig access to private services. I social welfare services, the state has adopted a partership model of service provisio ad relies maily o o-govermetal welfare orgaisatios to provide professioal social services. However, the fudig of these orgaisatios has declied steadily sice 1994, reducig the rage ad compromisig the quality of services at the same time as demad for such services has icreased. Such orgaisatios are uable to respod to the scale ad complexities of South Africa s poverty, social fragmetatio ad lack of social support systems. Icreasigly, the burde of care has falle o the poorest commuities ad o wome ad the elderly, ofte leadig to a sese of powerlessess ad social isolatio. Respodig to the social breakdow of families, commuities ad society requires a rage of geeric ad specialist educatio ad traiig that is ot available to poor commuities. The iadequacy of South Africa s social welfare services to provide the quality of care required is reflected i the iadequate supply of social work, commuity developmet, ad child ad youth care professioals. It is estimated that the coutry requires close to social service professioals to respod to the coutry s social welfare eeds. Curretly, there are approximately qualified social workers registered with the South Africa Coucil of Social Service Professios. Problems i the supply of qualified social service professioals are also liked to poor workig coditios ad a lack of fudig for social services. Efforts to icrease the supply of professioals led to govermet declarig social work a scarce skill. However, structural coditios i the educatio ad health sectors affect the ability of tertiary istitutios to produce 337

350 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN social work, commuity developmet ad social developmet professioals, as well as specialists such as school psychologists. 15 South Africa eeds to cofrot the reality that social services are critical for improvig social itegratio ad huma developmet. The curret model of shiftig the burde of care, treatmet ad rehabilitatio to the o-govermetal sector ad the poorest commuities is ot workig. The scale of social fragmetatio ad loss of purpose requires more systematic egagemet with both govermetal ad o-govermetal social service providers. Statutory services for childre, youg offeders, the elderly, people with metal health problems ad people livig with disabilities eed wellcoceived state ad commuity itervetios. Complex social problems require professioal itervetios to deal with the symptoms ad uderlyig causes of social pressures, most evidet i schools, workplaces ad eighbourhoods that are plagued by gag warfare ad households afflicted by violece, icludig the abuse of wome ad childre. Urget ad systematic attetio is required to deal with these issues. The status ad wellbeig of childre i South Africa A estimated 3.6 millio childre are materal, pateral or double orphas. This is expected to peak at 5 millio i The umber of double orphas childre who have lost both their parets has early doubled from to i the past five years. 16 Oly 27 percet of Africa childre live with their biological parets, compared to 48 percet of coloured childre ad about 80 percet of white ad Idia childre. Childre ot livig with their parets are cared for almost etirely by relatives, highlightig the importace of exteded kiship etworks i providig family care i a cotext of high rates of mortality ad labour migratio. The distace betwee biological parets ad their childre may have a ifluece o the extet to which resources such as remittaces ad social grats are used for their wellbeig. These childre may also be at greater risk of physical, emotioal ad sexual abuse. 17 The icreasig morbidity ad mortality rates amog adults as a result of social ills, poverty, violece, crime ad car accidets has resulted i growig umbers of orphas ad vulerable childre. These childre are society s resposibility. The complexity of carig for this group requires a holistic approach that ivolves buildig parterships with all idividuals ad orgaisatios that ca help i carig for them. 15 Taylor, V (2009). Meetig the Demad for Social Se rvice Professioals i South Africa, Cocept paper prepared for the Cape Higher Educatio Cosortium, Cape Tow 16 Departmet of Social Developmet (2011). Gree Paper Natioal Family Policy for South Africa. 17 Statistics South Africa. Social Profile of South Africa 2002/

351 CHAPTER 11: SOCIAL PROTECTION Child-headed households Child-headed households make up oly 0.6 percet of all households i South Africa, a proportio that remaied virtually uchaged from 2002 to More tha half of these households had oe or more of their parets livig, which may idicate that such households develop due to labour migratio. 18 The spatial distributios of adult ad child populatios i South Africa are strikigly differet, with childre disproportioately represeted i rural ad o-metropolita areas. The Natioal Iformatio Data System shows differet distributios of childre i households across differet area types, with a greater proportio of childre situated i traditioal authority areas (42 percet of childre compared to 29 percet of adults), ad a smaller proportio of childre livig i urba formal households (41 percet of childre compared to 53 percet of adults). 19 Child poverty Usig a poverty lie of R515 per perso per moth reveals that 67 percet of childre are defied as poor, while 54 percet of the total populatio is defied as poor. Child poverty rates differ greatly by populatio group: usig the upper threshold of R949, about 88 percet of Africa childre are poor, 60 percet of coloured childre, 29 percet of Idia/Asia childre ad 10 percet of white childre. Child sexual abuse Child sexual abuse is a sigificat problem. I later life, there is a cosiderable burde of disease from frequet childhood abuse. However, there is iadequate icidece or prevalece data o child abuse, because o reliable atioal represetative surveys have bee coducted. Data from the South Africa Police Service is ot reliable, as it is oly based o reported cases, i a area where there is sigificat uder-reportig. This lack of data makes it difficult to kow what services are eeded. Child protectio Alterative care refers to services ad protectio of orphas ad vulerable childre outside their paretal homes. These childre become wards of the state. Alterative care ecompasses temporary safe care, foster care, ad child ad youth care cetres. Accordig to the Social Pesio System, there were foster childre receivig foster care grats i March Foster care cases have to be supervised to support foster parets ad esure that childre are well cared for. Guidelies ad protocols have bee developed to esure that childre receive effective foster care services. 18 Hall K ad Wright G (2010). A profile of childre livig i South Africa i Studies i Ecoomics ad Ecoometrics. Volume 34(3): Ibid. 339

352 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Child ad youth care cetres iclude govermet ad privately operated childre s homes, temporary places of safe care, shelters for street childre, secure care facilities, schools of idustry ad reform schools. There are 345 established ad registered cetres accommodatig about childre uder the age of 18. Fudig for services All provices rely heavily o ot-for-profit orgaisatios to deliver services. The average percetage of the total social welfare programme budget trasferred to such orgaisatios for 2011/12 is 51.3 percet, slightly dow from 51.8 percet for 2010/11, usig adjusted estimates. By 2013/14, this percetage is set to fall further, to 50.8 percet. 20 The subsidies provided by provicial departmets to ot-for-profit orgaisatios do ot cover the full cost or scope of the services. The Childre s Bill Costig Report recommeded a shift to a child-cetred services model of full fudig rather tha the existig model of partial subsidisatio, especially for ot-for-profit orgaisatios such as child ad youth care cetres that provide services to childre placed i their care by a court order. The atioal Departmet of So cial Developmet has completed a revisio of the policy o fiacial awards for service providers, however it does ot commit to full fudig, eve for services madated by legislatio. Policy ad plaig priorities There are five gaps i the system that require attetio: Geeral shortcomigs i coordiatig ad implemetig a umber of govermet policies. Uderperformace i educatio ad health is amog the most documeted, leavig people worse off despite the existece of policy. Aother example is the umber of childre who are eligible for icome support but ot receivig it. Lack of protectio for uemployed people of workig age (18 to 59). The eed to promote youth employmet. The social isurace system, i particular the retiremet savigs aspect. The eglect of social welfare services. Policy coordiatio Policies that affect the lives of citizes should be plaed with a full uderstadig of their likages ad how they affect daily life ow ad i future. Failure to coordiate results i each departmet producig differet plas based o their priorities without takig ito accout other complemetary policies. This leads to further fragmetatio 20 Budleder D & Proudlock P (2011). Fudig the Childre s Act: Assessig the adequacy of the 2011/12 budgets of the provicial departmets of social developmet. 340

353 CHAPTER 11: SOCIAL PROTECTION ad wastes resources, ad it is frustratig for those who have to implemet policy ad deliver services. Better coordiatio of policies is eeded. For example, the impact of good utritio o a child s physical ad cogitive developmet has log-term impacts o health, educatioal performace ad labour market participatio. Health is also iflueced by the type of dwellig people live i, access to clea water ad saitatio, the type of eergy they use, the levels of pollutio they are exposed to, ad their lifestyles. The provisio of services such as water, saitatio ad eergy depeds o ifrastructure plaig, but impacts o social developmet. The lack of coordiatio is ofte cited as a major impedimet to speedy ad efficiet delivery of services. Policy implemetatio Govermet programmes ivolve both explicit ad implicit trasfers to households ad idividuals. Cash grats are examples of the former, while educatio, health care ad security are examples of the latter. While cash grats ivolve a cocrete trasfer that ca be measured, i-kid beefits deped o the quality ad efficiecy of a service ad ot o the fiacial cost. Poor implemetatio ca therefore devalue the true beefits of ay fiacial trasfer far below its actual budgeted cost. Achievig a social floor Cocepts such as a social wage ad social floor have bee used i South Africa debates to adjust crude distributioal idicators to reflect a more balaced picture of distributioal fairess. It is geerally recogised that there is a eed to idetify a crucial package of social beefits capable of geeratig the levels of social iclusiveess to radically trasform ecoomic developmet i South Africa. South Africa eeds to work towards defiig a social floor below which o oe should fall. More importatly, the coutry eeds to make sure that policies that make up the social protectio package are implemeted effectively ad efficietly. To achieve the required objectives, the package should be prioritised to achieve allocative efficiecy ad eable social iclusivity withi available resource costraits. Measures should also be take to promote operatioal efficiecy ad esure effective ad efficiet implemetatio. Effective implemetatio of existig policies o school utritio, educatio, health, basic services, social security, housig ad trasport would go a log way to provide social protectio to vulerable idividuals. Whe oe or more of these fail, the results are ofte devastatig. The pricipal task i achievig the visio for 2030 is to esure that policies are fulfilled. Those etrusted with policy implemetatio should be held accoutable for policy failures. 341

354 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Policy proposals The commissio makes eight key policy proposals: 1. Commitmet to achievig a social floor a social floor should be defied outliig a acceptable or decet stadard of livig. 2. Iformal sector cotributory scheme Social security reforms curretly cosidered by govermet should iclude measures to brig the iformal sector ito the madatory cotributory scheme. 3. Close the social isurace gap The commissio supports the social security reforms beig cosidered by govermet, especially relatig to madatory retiremet cotributios. 4. Public employmet Expad public employmet programmes that have the capacity to absorb large umbers of uemployed people. 5. Promote opportuities for youth employmet. 6. Social welfare services Expad social welfare services, review fudig to ot-forprofit orgaisatios, ad trai more welfare professioals ad commuity workers. 7. Social audit Use social audits to ehace accoutability i the welfare system. 8. Natioal register Cosider itegratig all databases of people who receive differet forms of social security services. Commitmet to achievig a social floor A social floor should be defied ad a first measuremet itroduced. This will ivolve techical aalysis ad public cosultatio. It is evisaged that the social floor measure will be simple, ad reflect the ability of households to achieve a miimum stadard of livig through their ability to access items such as utritious food, public trasport, shelter, educatioal ad health services. The gap will be idetified, ad policy implicatios of closig the gap assessed. Progress will be measured by the experiece of households, rather tha expediture. This will ivolve: Specificatio of a acceptable social floor i terms of outcomes i respect of health, educatio, trasport, shelter, food ad other cetral livig costs. The ability of households to achieve this stadard. The miimum package of publicly delivered trasfers, goods ad services that are eeded to eable households to develop their capabilities ad access opportuities. Iformal sector cotributory scheme Govermet is cosiderig a progressive proposal to iclude low-icome workers i the cotributory retiremet scheme. The proposal does ot iclude people i the iformal sector. A simplified arragemet for self-employed idividuals is metioed, but o details are give. We caot afford to exclude this sector of the ecoomy ad modellig of the likely uptake eeds to be doe. Oe of the iheret weakesses i ay policy 342

355 CHAPTER 11: SOCIAL PROTECTION decisio cocerig matchig cotributios is the lack of data to determie the impact that chages i the effective rate of retur will have o cotributio levels. Close the social isurace gap Govermet has embarked o a ambitious social security reform process that has bee uder way for some time. The reforms cover the followig areas: Improve the o-cotributory social assistace system, icludig better goverace; higher meas test thresholds; ad aligmet with tax beefits associated with old age, disability ad child support. Ehace admiistrative coordiatio ad beefit aligmet of the Uemploymet Isurace Fud, Road Accidet Fud ad Compesatio Fuds. A cosolidated istitutioal framework should support coheret policy implemetatio, itegrated social security admiistratio ad effective regulatio ad oversight of the system. Adopt a madatory arragemet providig pesio, death, disability ad uemploymet beefits, supported by compulsory cotributios by all workers earig above a miimum icome threshold. Regulatory reform of the pesios ad life isurace idustry to improve customer protectio, stregthe fiacial soudess, ad achieve better value for moey for lower-icome cotributors, wome ad people livig with disabilities. The commissio broadly supports these proposals, particularly those dealig with madatory savigs for retiremet, death, uemploymet beefits ad disability. This will close a cospicuous gap that has led to may workig people havig to sigificatly lower their stadard of livig at retiremet. Public employmet: a social protectio measure for the workig-age group The commissio proposes that the scale of public employmet should be bechmarked agaist the scale of uemploymet, achievig a coutercyclical effect similar to a employmet guaratee. The target should be to achieve 100-days of work opportuities for 50 percet of the uemployed, per year usig the expaded defiitio of uemploymet. The sectoral programmes i the Expaded Public Works Programme should cotiue to be implemeted wherever the relevat outputs are required, while the Commuity Work Programme target should be based o a ratio of uemploymet levels to populatio levels per muicipality, so that it is targeted towards areas of greatest eed. These targets have to be assessed i relatio to the absorptive capacity of public employmet. If uemploymet levels are extremely high, it is possible that a ceilig will be reached beyod which it is ot possible to absorb greater umbers i meaigful ways. There will eed to be scope for iovatio i idetifyig forms of work that cotribute to the public good, ad to expad the rage of work over time. Key opportuities exist i care work, where there are still high levels of umet demad; food 343

356 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN security, as part of a zero-huger approach; developig a more itegrated approach to evirometal rehabilitatio ad evirometal services; ad commuity safety. There are may utapped areas i which public employmet ca sigificatly cotribute to improvig the lives of citizes. Proposals from the health sector have show the eed to massively icrease the umber of commuity health workers to betwee ad 1.3 millio for effective primary health care. Similar proposals are made i the early childhood developmet sector, where the scope of expasio is much larger if the eeds of childre from early childhood to school-goig age are to be met. Public employmet ca also play a role i providig security guards i schools ad other commuity facilities. Appoitig two admiistrators per school would lesse the admiistrative burde o teachers ad allow them to sped more time teachig. The social welfare sector has also idetified the eed for auxiliary workers to udertake some of the work performed by highly traied professioals. The 50 percet target should be phased i, with the 2013/14 targets as the first milestoe. Assumig that over the period to 2030, wider ecoomic policies start to brig uemploymet levels dow, the absolute umbers of people that costitute the 50 percet target should also drop. The first priority is to achieve the curret targets for 2013/14. If the recet target of 1 millio for the Commuity Work Programme is icluded, the revised goal for the Expaded Public Works Programme is about 1.75 millio work opportuities per year, which is close to 50 percet of uemployed people. To achieve this target would require the i stitutioal presece of a commuity work programme i every muicipality. This would create a implemetatio platform that could expad ad cotract i respose to the scale of eed. The implemetatio model for boostig public employmet is a crucial factor ad has bee a critical costrait i the sectoral Expaded Public Works Programme. The commuity work model s importace lies ot oly i its scalability, but also i the way social mobilisatio is made itegral to the rollout process, usig o-profit agecies to implemet the programme ad creatig ew forms of partership betwee govermet, civil society ad commuities. The type of public employmet that the commissio advocates is ot just icome trasfer i disguise. It is about iculcatig a ew midset that empowers people to cotribute to their commuities. Youth employmet Policies aimed at tacklig youth uemploymet eed to address its specific causes. The geeral aim to reduce uemploymet is aimed at the etire workig age populatio. The uemploymet rate for youth teds to be sigificatly higher tha for the rest of the populatio. This is due to: 344

357 CHAPTER 11: SOCIAL PROTECTION The formatio of a queue i a cotext of high uemploymet: older work-seekers ted to get jobs before ew etrats to the labour market. Youg people lack experiece ad the skills eeded to search for jobs. Youg people may lack the foudatio skills ad capabilities sought by employers. Policies to reduce uemploymet will differ depedig o the locatio, educatioal attaimet ad age group. A large umber of uemployed youth have less tha a matric certificate, ad our proposals focus o this group, as well as those who stopped studyig after completig matric. The cetral policy proposals iclude: Improve access to quality educatio (details are i the educatio, traiig ad iovatio chapter). Expad work opportuities ad iterships i the lower grades of the public service. Expad opportuities i commuity care services ad public employmet programmes. Support small-scale agriculture already half of the subsistece producers are uder the age of 29. They should be supported to expad this productio to a small marketable yield. Fiacial support should be made available for social mobilisatio programmes that draw youg people ito positive group activities. Some active labour market policies should be implemeted over the comig years to test their impact. Address the skills deficit i the social welfare sector I the immediate ad medium term, we eed to icrease the supply of four categories of social service professioals to respod to the demad for appropriate basic social welfare services. These categories iclude social workers, auxiliary or assistat social workers, commuity developmet workers, ad child ad youth care workers. Curret estimates of qualified social workers registered with the South Africa Coucil for Social Service Professioals (SACSSP) ad approved to practice are set at Uiversities should icrease the umbers of studets admitted to study social work by 5 percet each year util 2030 ad provide support to assist social work graduates i obtaiig employmet ad developig professioal experiece. Auxiliary social workers require adequate levels of educatio ad traiig to work uder the guidace of qualified social workers. Tert iary istitutios providig such traiig should be required to comply with the miimum stadards ad requiremets set by the SACSSP. The accepted ratio for auxiliary soci al workers to social workers is 5 to 1: a social worker should ot have more tha five auxiliary social workers providig assistace. This is to avoid compromisig the quality of supervisio ad the quality of care provided by the auxiliary social workers. Icreasig welfare service provisio to 345

358 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN meet curret eeds ad demads requires a phased approach to brig approximately auxiliary social workers ito the system. Auxiliary social workers could be recruited from uemployed youth who have passed grade 12 but ot qualified for etry to uiversity. A system eeds to be desiged for auxiliary traiig ad practice as part of a credit buildig system that could from the basis for a social work degree after a miimum of five years practice as a auxiliary. This would help to address the shortages i social work capacity i the medium term, ad also provide a career path through which the umbers of professioal social workers could be icreased i the loger term. Commuity developmet professioals are eeded to esure efficiet service delivery at local commuity levels with regard to buildig commuity structures, respodig to crime prevetio, youth ad adult cotiuous learig, ad the promotio of sport, recreatio ad the facilitatio of commuity cohesio. It is estimated that commuity developmet workers are employed i provicial ad local govermet settigs across South Africa. The quality of their educatio ad traiig eeds to be assessed ad aliged with the miimum requiremets for professioal service delivery. Research is eeded to determie the future demad ad supply side issues related to commuity developmet practice. The curret supply ad employmet of child ad youth care workers is iadequate to meet the statutory requiremets required by the Childre s Act of Child ad youth care professioals who meet the miimum requiremets are eeded to provide statutory ad o statutory services. The Childre s Act of 2005 (as ameded) makes provisio for residetial care arragemets where there are more tha six childre outside the child s family eviromet ad a rage of programmes that must be offered. These iclude the receptio, care ad developmet of childre; the receptio ad temporary safe care of childre; the receptio, developmet ad secure care of childre; the receptio ad care of street childre; ad early childhood developmet programmes. Traiig ad educatio of child ad youth care workers is ecessary to esure appropriate care ad developmet of childre with disabilities or chroic illesses, therapeutic ad developmet programmes, treatmet itervetios for addictio to depedecy-producig substaces ad treatmet of childre with psychiatric coditios. Social audits A essetial feature of ay well fuctioig democracy is the ability of citizes to hold govermet accoutable for its efficiet ad equitable delivery of public services, icludig social protectio. May social protectio programmes have a grievace procedure or a complaits mechaism, which allows both beeficiaries ad obeeficiaries to raise cocers ad have them addressed. Without ecouragig a culture of complait, it is importat that legitimate errors are corrected, bad practices are exposed, ad the rules ad procedures of each programme clearly explaied to avoid 346

359 CHAPTER 11: SOCIAL PROTECTION uecessary cofusio. A idepedet complaits or grievace mechaism is recommeded for all social grat programmes to improve trasparecy, efficiecy ad equity, ad expose corrupt practices. A social audit is a mechaism for decetralised, collaborative ad democratic goverace that ivolves commuities directly i programme moitorig ad evaluatio activities. The simplest form of social audit is a public assembly where all the details of a programme are read out. More elaborate social audits iclude ivitig citizes to scrutiise programme documets ad paymet records, collaboratively ivestigatig discrepacies ad followig up o grievaces raised, ad reportig back o remedial actios take to a specially coveed commuity meetig. This ot oly esures greater trasparecy ad collective accoutability, but also empowers poor ad vulerable people by givig them a voice i the implemetatio of programmes ad delivery of services. Citizes are empowered through social audits, by beig icluded i the maagemet of social programmes, by havig access to iformatio that is usually cocealed, ad by ifluecig the desig ad improvig the implemetatio of social protectio programmes. Social grat programmes i South Africa could beefit from social audits, ot oly because this would ehace the effectiveess of these programmes, but also because it would empower poor ad vulerable citizes ad deepe the process of democratic iclusio. Establish a atioal register of welfare ad social service recipiets A system that is itegrated ad captured oto oe database, with all idividuals ad households o some form of state-supported welfare, appears to be a ideal system worth implemetig. Brazil ad Idia have developed uiversal iformatio systems. We propose that such a system be developed for South Africa. South Africa already has a sigificat advatage of possessig a uique idetifier for almost all state admiistrative support systems citizes idetity umbers. This uique idetifier ca be used as a mechaism for capturig a idividual's iformatio across a rage of state services. For example, the followig systems could form part of a iitial attempt to merge the differet state databases: Labour Cetre data o Uemploymet Isurace Fud claimats ad ew jobseekers. South Africa Social Security Agecy data o all grat recipiets. Uemploymet Isurace Fud data o all employed cotributors ad uemployed claimats. Sectoral Educatio Traiig Authority data o all learers beefittig from skills levy fuds for traiig. 347

360 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Participats i Expaded Public Works Programme ad Commuity Work Programme projects sice iceptio. Idiget registers used by muicipalities to provide free basic services. Natioal Housig Subsidy Scheme database. Usig the idetity umber of the idividual recipiet of ay of these state services, the process of idetifyig the scale, magitude ad reach of social protectio offered by the govermet ca begi. Although this will potetially be a fairly costly ad labouritesive exercise, it will streamlie ad icrease the efficiecy of the coutry s social assistace programme ad welfare provisio. Coclusio If South Africa is to make real progress i elimiatig poverty ad reducig iequality, it will eed to provide its people with the secure foudatio from which they ca expad their capabilities ad improve their life opportuities. Social protectio has a critical role to play i providig this miimal security, as do a rage of social welfare services desiged to provide targeted support to vulerable groups. 348

361 CHAPTER 12: BUILDING SAFER COMMUNITIES Chapter 12 BUILDING SAFER COMMUNITIES I our well desiged commuity surroudigs we feel safe everywhere... Each commuity has a police statio with respected ad upright police... The law eables us to live together fulfillig our mutual obligatios ad resposibilities. Itroductio Safety is a core huma right. It is a ecessary coditio for huma developmet, improvig quality of life ad ehacig productivity. Whe commuities do ot feel safe ad live i fear, the coutry s ecoomic developmet ad the people s wellbeig is affected, hiderig their ability to achieve their potetial. The Natioal Plaig Commissio s Diagostic Report (2011) uderlied the reality that high crime levels have slowed South Africa s social ad ecoomic developmet. Violet crime, cotact crime ad property crimes are so commo that may South Africas live i fear. Whe people feel usafe it makes it harder for them to pursue their persoal goals, ad to take part i social ad ecoomic activity. Although recet crime statistics released by the South Africa Police Service show a dowward tred, especially i murder rates, the figures are still uacceptably high. While the police service is commeded for the declie i murder rates, the cause of the overall tred eeds to be aalysed, ad strategies that produce results i geeral, ad specifically i cotact crimes, should cotiue to be used. For people livig i South Africa to feel safe, this tred eeds to be escalated. Safety ad security are directly related to socioecoomic developmet ad equality, affectig the developmet objectives of ecoomic growth ad trasformatio, employmet creatio, improved educatio ad health outcomes, ad stregtheed social cohesio. Although there are liks betwee South Africa s high poverty rate ad high crime levels, crime is liked to more tha poverty. Most poor people do ot resort to crime. It is orgaised sydicates that lauder moey, deal i drugs ad smuggle gus. These moblike crimials are ot ecessarily from poor commuities, as is evidet from the Palazzolo, Agliotti ad alleged fraudster Krejcir cases. 349

362 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Visio 2030 I 2030, people livig i South Africa feel safe ad have o fear of crime. They are safe at home, at school, at work ad they ejoy a active commuity life free of fear. Wome ca walk freely i the streets ad childre ca play safely outside. The police service is a well resourced professioal istitutio staffed by highly skilled officers who value their work, serve the commuity, safeguard live s ad property without discrimiatio, protect the peaceful agaist violece ad respect the rights of all to equality ad justice. How to achieve it Achievig this visio requires a well fuctioig crimial justice system, i which the police, the judiciary ad correctioal services work together to esure that suspects are caught, prosecuted, covicted if guilty, a d securely icarcerated. There are five priorities to focus o to achieve a crime-free South Africa. Stregthe the crimial justice system A safe South Africa will ot be achieved without a strog crimial justice system. This requires cooperatio betwee all departmets i the justice crime prevetio ad security cluster. We believe the correct implemetatio of the recommedatios i the Review of the South Africa Crimial Justice System will go far i dealig with the system s curret weakesses. Make the police service professioal A professioal police service is essetial for a strog crimial justice system. We propose likig the police code of coduct ad a code of professioalism to promotio ad discipliary regulatios. Recruitmet should attract competet, skilled professioals through a two-track system. Demilitarise the police service The decisio to demilitarise the police force, movig away from its history of brutality, was a key goal of trasformatio after The remilitarisatio of the police i recet years has ot garered greater respect for police officers ad higher covictio rates. If aythig, it has boosted violece i the service ad see a icrease i murders of police. The commissio believes that the police should be demilitarised to tur the force ito a civilia, professioal service. Build safety usig a itegrated approach Achievig log-term, sustaiable safety requires a itegrated approach focused o tacklig the fudametal causes of crimiality. This requires mobilisig a wider rage of state ad o-state capacities ad resources at all levels ad active citize ivolvemet ad coresposibility. Build commuity participatio i commuity safety Civil society orgaisatios ad civic participatio are critical elemets of a safe ad secure society. Local govermet legislatio provides for establishig commuity safety cetres to eable safe, healthy commuities. Establishig these cetres should be cosidered. 350

363 CHAPTER 12: BUILDING SAFER COMMUNITIES Stregthe the crimial justice system: The seve-poit pla Public cofidece i the crimial justice system is a ecessary ad importat step i prevetig crime ad icreasig levels of safety. The likelihood of crimes beig committed is icreased if the system is regarded as iefficiet. Cofidece is eroded by perceptios that crimials escape the law, arrests will ot lead to covictios, or prisoers escape easily from the courtroom or correctioal facilities. The most effective deterret to crimiality is a efficiet ad effective crimial justice system. The 2007 review of the crimial justice system, led by advocate Johy de Lage (the Deputy Miister of Justice), recommeded a seve-poit pla that was adopted by Cabiet. The pla set out how to establish a ew, moderised, efficiet ad trasformed system. It icluded settig up a ew coordiatig ad maagemet structure at every level, from atioal to local; greater cooperatio betwee the judiciary ad the magistracy, the police, prosecutors, correctioal services ad the Legal Aid Board; ad other iitiatives such as empowerig commuity police forums. The Office for Crimial Justice System Reform bega implemetig the pla as recommeded. The pla cotais seve fudametal ad far-reachig trasformative chages to the crimial justice system ad requires full implemetatio i a itegrated ad holistic maer to achieve the stated outcomes. The pla cotais seve critical chage areas: Adopt a sigle visio ad missio leadig to a sigle set of objectives, priorities ad performace measuremet targets for the crimial justice system by the justice crime prevetio ad security cluster. Establish, through legislatio or by protocol, a ew ad realiged sigle coordiatig ad maagemet structure for the system, flowig seamlessly from cabiet to each court. Appoit a perso from the executive as head of the structure with coordiatio ad maagemet fuctios, but ot executive powers. Make substatial chages to the preset court process i crimial matters through practical, short- ad medium-term proposals to improve the performace of the courts, especially the regioal courts. Put ito operatio key priorities idetified for the compoet parts of the system, which are part of (or affect) the ew court process, especially as it pertais to improvig capacity. Establish a itegrated ad seamless ati oal crimial justice system iformatio ad techology database or system, or both, cotaiig all iformatio relevat to the crimial justice system. Review ad harmoise the template for gatherig iformatio relatig to the crimial justice system. Moderise, i a itegrated ad holistic way, all aspects of systems ad equipmet. This would iclude fast-trackig the implemetatio of curret projects ad moderisatio iitiatives. Ivolve the public i the fight agaist crime by itroducig chages to commuity policig, icludig expadig its role to deal with all matters i the system, such as policig ad parole boards. Accordig to the Departmet of Justice ad 351

364 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Costitutioal Developmet i 2008, fiacial ad admiistrative ifrastructure should be provided to give commuity police forums teeth. The de Lage review committee referred to the pla as a package that must be implemeted as a whole. The Departmet of Justice ad Costitutioal Developmet has bee reportig o the pla to Parliamet as part of its aual performace pla report. The pla is icluded i the departmet s strategic pla ad the Medium Term Expediture Framework. However, the Sout h Africa Police Service, Correctioal Services ad Home Affairs did ot make specific referece to the seve-poit pla i their strategic objectives, although they referred to some aspects of it. The police service highlighted ehacig iformatio systems ad iformatio ad commuicatio techology (ICT), icludig itegratio of systems across the justice, crime prevetio ad security cluster. This partial implemetati o does ot give effect to the strategy as iteded by the de Lage review. The seve-poit pla caot be left to oe departmet to put ito actio. It must be coordiated, with dedicated budgets ad a implemetatio pla ivolvig all departmets i the cluster. It eeds to be executed i tadem with stipulated timeframes ad iteded outcomes. Without coherece, the seve-poit pla s purpose will be defeated ad resources wasted. The commissio therefore recommeds the followig: Departmets i the justice, crime prevetio ad security cluster alig their strategic plas with the seve-poit pla immediately. A project maager is appoited urgetly to the Office for Crimial Justice System Reform to coordiate the pla s activities ad programmes. Dedicated budgets for each participat ig departmet be established ad outcomes reported o i relatio to the pla. The cluster should moitor ad report o the pla s implemetatio. A evaluatio of the implemetatio of the pla should be doe aually ad assessed agaist the overarchig objectives of the pla. A professioal police service a key compoet of the crimial justice system The South Africa Police Service aims to develop professioalism ad disciplie amog its members. This approach should be welcomed ad supported. Professioalisig requires very clear steps, some of which have already bee take, such as developig a code of coduct. This code should be itegrated with police huma resource systems ad o-adherece should have cosequeces for police members. The professioal obligatios of the police should be spelt out more clearly to avoid blurrig of roles ad fuctios. For example, police perform fuctios that should be the resposibility of the Departmet of Social Developmet (mediatig domestic disputes ad relocatig homeless people). While these social challeges have a security dimesio, the primary resposibility for addressig them should lie with social workers, with police playig a supportig role. 352

365 CHAPTER 12: BUILDING SAFER COMMUNITIES Professioal police coduct themselves i a way that upholds the itegrity of the police service. They are kowledgeable about the law ad their roles, carry out their fuctios competetly ad uderstad their resposibility to serve commuities. I this way, they will ear the respect ad support of South Africas. The commissio recommeds the professioalisatio of the police by eforcig the code of coduct ad a professioal police code of ethics, appoitig highly traied ad skilled persoel ad establishig a professioal body to set ad regulate stadards. Code of coduct I the short term, the code of coduct should be icluded i the discipliary regulatios ad performace appraisal system of the police. The police service ad the metropolita police authority provide all their members with a copy of the code of coduct. Members are required to sig a copy of the code, which is kept i their persoal file. Discipliary cases ivolvig a breach or breaches of the code should be dealt with as a priority. Police service members charged with miscoduct uder the code should be required to leave their statio immediatel y util allegatios are tested ad cases fialised. A professioal police code of ethics dealig with police fuctios should be developed ad prescribed through regulatios. The South Africa Police Service ad metropolita police should be viewed as professioals, workig i a skilled occupatioal group with a prime fuctio to protect the public. They are the oly agecies madated to use ecessary coercive force. Ethics ad ethical coduct should play a importat role i maitaiig the public perceptio of policig as a professioal istitutio. The ethics code should state that the officer s fudametal duties are to the Costitutio, to serve the commuity, safeguard lives ad property without discrimiatio, protect the peaceful agaist violece ad the weak agaist itimidatio, ad respect the costitutioal rights of all to equality ad justice. The code should also prescribe the off-duty obligatio of police officials to hoour the badge as a symbol of public trust. Iteral ad exteral oversight bodies ca request a review of the professioal ethics of a idividual, uit or sectio of police ad law eforcemet agecy. Sactios could be imposed, icludig the withdrawal of commissio. Madated oversight bodies will moitor adherece to professioal ethics ad recommed appropriate sactios where ecessary. The Idepedet Police Ivestigative Directorate ad the po licig board would also play a role. Police officials ad law eforcemet members should be traied ad tested i applyig professioal ethics. 353

366 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Natioal policig board A atioal policig board should be established, with multi-sectoral ad multidiscipliary expertise. It will set stadards for recruitig, selectig, appoitig ad promotig police officials ad police officers. The board will also develop a professioal code of ethics ad aalyse the professioal stadig of policig, based o iteratioal orms ad stadards. Selectig for excellece ad professioalism A professioal police service coforms to miimum stadards, set by a professioal body, for recruitmet, selectio, appoitmet ad promotio. Provisio ca be made for a two-stream system of recruitmet. As soo as possible, all officers should udergo a competecy assessmet ad be rated accordigly. This ratig differs fr om police rak. For example, if you are a captai, you remai a captai, but the competecy test determies if you meet the competecy stadard for a captai. Officers who do ot meet the stadard should ot be promoted or appoited to a higher level util they meet the required level of competece. A two-stream system should be developed i the ext five years to create a high calibre of officers ad recruits who are capable of beig traied for effective professioal policig. The basic police stream would allow for the recruitmet ad selectio of o-commissioed officers, who could progress through traiig ad competece gaied from experiece to a warrat officer or ispector, or ay level below a commissioed officer. There should be objective testig agaist set stadards to reward experiece ad competece. No-commissioed members should be supported ad metored by commissioed officers. Peer sactio will promote professioal orms ad stadards, ad is a effective couter to corruptio ad uprofessioal behaviour. Such outcomes are possible oly if officers are respected ad commad mutual respect. I the officer stream, commissioed officers are selected o criteria ad stadards set by a professioal body. Direct recruitmet to the officer s st ream is based o set criteria, followed by further traiig ad testig for cadidate officers. Officers are commissioed whe all criteria are met. The basic stream ad officers stream ca be flexible to allow aspirig officers to work towards meetig the criteria for cosideratio to the officers corps. Similarly, officers ca lose their commissios if they fail to live up to stadards. The Natioal Commissioer of Police ad deputies should be appoited o a competitive basis. A selectio pael, established by the Presidet, would select ad iterview cadidates for these posts. Clear ad objective criteria should be established to esure that the icumbets are respected ad held i high esteem by the police service ad the commuity. 354

367 CHAPTER 12: BUILDING SAFER COMMUNITIES The whole thrust of my suggestio is to tur the SAPS ito a successful orgaisatio that is a employer of choice amog South Africas (aim for recogitio as umber oe sought after employer amogst South Africas). People eed to aspire ad study/work hard to achieve a place i the SAPS ad the be richly rewarded for their good service ad sacrifice as a SAPS member. NPC Jam Traiig for professioalism Reew focus o stregtheig the capacity ad stadig of detectives ad specialised ivestigators, particularly i the fields of foresics, ballistics ad crimescee ivestigatios. These specialised uits should be deployed whe ad where they are most eeded durig peak crime periods ad i high-risk areas. Re-establish specialised uits, staffed with highly traied ad professioal police officers, to respod to chagig crime treds (cyber crime, huma traffickig, crimes agaist wome ad childre, iteratioal crime sydicates ad so o). Techology developmet has greatly iflueced crime patters ad the commissio of crime. Bak robberies ca ow also be committed usig computers aywhere i the world. Social etworks lure victims ad people are draw ito Pozi schemes through itricate ad sophisticated iteratioal schemes. Police traiig eeds to keep abreast of these developmets. Superior istructio stadards ad parterships with the private sector ad uiversities will icrease police competece. Deploy officers accordig to crime patters ad treds. Officers should be available to direct operatios, ivestigate crime ad supervise staff outside office hours. Office hours should ot apply to policig to esure that seior staff are always available to resolve crime matters with speed ad efficiecy. Civiliaisig the police Civiliaisig a highly militarised ad politicised police force was a key objective of trasformatio immediately after the 1994 electios. It was cosidered ecessary to professioalise the police, establish a rapport with commuities, develop cofidece ad trust i the police ad promote positive commuity-police relatios. Civiliaisatio of the police required the chagig of police isigia, military raks ad force orders. From 2000, the police service gradually started revertig to a semblace of a paramilitary force. This process was formalised with the reitroductio of military raks i This took place agaist the backdrop of icreasig violet crime, high levels of commuity frustratio ad fear, ad a poli ce perceptio that they would commad greater respect from commuities if they had military raks. However, ot oly are these argumets icosistet with the case for professioalisig the police service, but they are also udermied by evidece of a icrease i murders of police sice the remilitarisatio of the service. 355

368 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The police will ear the respect of commuities if they are efficiet ad effective. Military raks might create fear, but they do ot istil respect. Critically, they do ot lead to a greater rate of arrests ad covictios. Istead, militarisatio ca cotribute to icreased violece by police ad udue heavy-haded coduct, deterrig effective ivestigatios. This was evidet i the Idepedet Complaits Directorate 2011 report, which showed a 800 percet icrease i torture by the police. The police should ot be coflated with the army. They should discharg e their fuctios with cofidece ad with regard for civil ad crimial law ad, above all, the Costitutio. The commissio recommeds that the police are re-civiliaised. Demilitarisig the police should be doe immediately. Police culture should be assessed to icrease a professioal respose to the public. Competece, ot military raks, will commad respect. A itegrated approach to buildig safety The commissio s diagostic made it clear that We eed a itegrated solutio a effective, itegrated strategy is eeded to to achieve safety ad security i address the pervasive problem of violece. It South Africa. All agecies added that, i discussig crime, there is always should be part of a atioal the dager of focusig too much o policig as workig group to idetify impact the oly solutio. There is o doubt that more areas, pla, implemet, ad visible policig gives citizes a sese of moitor iovative resposive protectio, but reducig crime will require a solutios. NPC Jam combiatio of itervetios, icludig those origiatig from outside the crimial justice system. It is ecessary to move from a arrow law eforcemet approach to crime ad safety to a focus o idetifyig ad resolvig the root causes of crime. To achieve this, a wider rage of state ad o-state capacities will eed to be mobilised at all levels, which requires shiftig to a itegrated approach, with active citize ivolvemet ad coresposibility. A holistic view of safety ad security Crime results from several iterrelated societal elemets that predispose some idividuals or groups to certai types of crime. A study by the World Bak i 2010 cofirms that there has bee a growig cosesus amog policy-makers that violece is ot simply a security issue but that it has deep social ad ecoomic roots ad cosequeces. A effective ad efficiet respose to violet crime requires a holistic approach to commuity safety that takes the causes of crime ito cosideratio ad respods to specific triggers or causal factors. This approach is ofte cosidered too complex, time cosumig ad log term. There is o kow quick fix, however, because sustaiable commuity safety is log term, it requires coordiated efforts, high levels of aalysis of crime patters ad treds usig crime itelligece ad leadership to 356

369 CHAPTER 12: BUILDING SAFER COMMUNITIES commad ad direct policig resposes. Other departmets, local govermet ad civil society also eed to itervee. Crime prevetio ad commuity safety are demadig the temptatio always exists to fall back o a more police, bigger gus approach. Short-term results are either sufficiet or sustaiable i the log term. To develop a framework for commuity safety ad crime prevetio, the iterrelated factors set out below eed to be cosidered: Uderlyig root causes, such as poverty, iequality, uemploymet, ad a variety of temptatios ad motivatios to egage i crimial activity. Although research has show the complex relatioship betwee these factors, it is clear that the higher their cofluece, the more likely people are to be motivated to commit crimial offeces. Lack of social cohesio, iadequate care of childre, ad a failure to accept ad iteralise good societal orms. Crime ad victimisatio ofte arise whe there is opportuity ad motive. For example, the availability of targets (vulerable people or properties), the availability of weapos (tools of crimial trades), situatioal factors (such as spatial or evirometal desig) ad the availability of accomplices (orgaisatioal requiremets). A effective safety strategy will eed to take a systems view of all these factors ad pipoit the itervetios that will have the greatest impact i improvig safety, with the best retur o huma, techical ad fiacial resources. Crucially, it is also ecessary to idetify which agecies ad istitutios across govermet departmets, civil society ad the private sector are best placed to lead ad cotribute to these itervetios. Itegrated strategies ad plas have bee mooted before ad several attempts have bee made to implemet a more holistic approach to commuity safety ad crime prevetio. This icludes the Natioal Crime Prevetio Strategy of 1996 ad its variatios. Although this strategy icorporated cuttig-edge iteratioal thikig ad was widely recogised as soud, it was ever fully istitutioalised as a holistic ad comprehesive strategy that focused o all fa ctors that produce crime ad isecurity. I March 2000, the Natioal Crime Combatig Strategy superseded this policy ad advocated a very differet approach, focusig more o crimial justice resources. As a result, police were iappropriately evisaged as a all-purpose agecy, rather tha a highly specialised resource to be deployed strategically. This has led to a police agecy that is stretched beyod its capacity, with a madate that is impossible to fulfil, ad disechated police officers with fragile authority ad legitimacy. The challege is to esure that a itegrated strategy is followed from plaig to cosistet implemetatio, with moitorig by, ad support from, all relevat role players. Leadership, coordiatio, moitorig, reportig ad accoutability are key elemets for success. The crimial justice system is curretly the primary focus, cocetratig o existig ad would-be offeders. It fuctios primarily through puishmet, which aims 357

370 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN to deter future crimiality ad, i the case of imprisomet, prevet further crimiality by puttig offeders out of actio. The police play a vital role i protectig citizes by iterveig, usig reasoable coercive force where ecessary, to stop harmful actios, support victims ad brig offeders before court. A effective crimial justice system improves safety, while other departmets address socioecoomic coditios of huma developmet. This is emphasised i the commissio s diagostic, which poits out that a effective crimial justice system is a ecessary coditio to effectively promote safety ad security, but it is isufficiet o its ow. More is required for sustaiable ad effective solutios to crime ad isecurity. The coordiatio of these multi-agecies is critical to sustai the gais of a itegrated strategy. A sigifica t declie i crime should be evaluated ad the reasos examied, so that it ca be sustaied, repeated ad icreased. The commissio recommeds the followig: Commuity safety desigs should address the safety of wome, childre ad vulerable groups. The police service should develop safety plas that deal with safety risks ad accout for the icrease i safety ad reductio of fear alogside crime statistics reports. Crime statistics will provide the quatitative basis for reportig by the police service ad metropolita police, ad commuity safety levels will provide the qualitative safety idicators. Idepedet service providers eed to coduct cotext studies ad opiio surveys to gather iformatio o perceptios of safety ad fear of crime. These fidigs should be factored ito policig plas, local govermet developmet plas ad the crimial justice system as a whole. The relatioship betwee drugs, alcohol ad violece requires a i-depth study. Specific projects should be developed by the JCPS cluster to address these issues i a comprehesive ad decisive way. Implemet strategies kow to work A coordiated ad holistic approach to safety ad security is achievable. Some aspects of this approach were see durig electios sice 1994 ad the 2010 soccer World Cup. Safety ad security strategies for these eve ts ivolved successfully aligig resources with appropriate solutios across the security spectrum. Furthermore, the roles of the agecies ivolved i safety ad security were clearly defied ad madates ad protocols uderstood. Equally importat was the recourse give to citizes for iefficiecies or delivery gaps. Commuity cooperatio ad support for ay safety strategy are extremely importat. Commuity participatio i commuity safety Civil society orgaisatios ad civic participatio are critical elemets of a safe ad secure society. Commuity problem-solvig durig the xeophobic violece of 2008 is a example of o-state itervetios ad mobilisatio resolvig coflict ad potetial 358

371 CHAPTER 12: BUILDING SAFER COMMUNITIES crimiality. At the time, the state police acted as the stabiliser, while civil society ad other state departmets were the problem-solvers. The partership was egotiated through coordiatig structures at various levels of the state, icludig commuitybased agecies (church orgaisatios or civic associatios). A sustaiable strategy requires greater clarity o various roles ad a resourced coordiatig mechaism that will brig state ad o-state policig agecies together to secure commuity safety ad build commuity cohesio. The state is best placed to play this role ad accout to citizes. The Muicipal Systems Act (2000) provides for local govermet to promote a safe ad healthy muicipal eviromet. Commuity safety cetres, promoted by the Secretariat for Police ad provicial departmets of commuity safety, should be revisited to give effect to this provisio. Local muicipalities eed to work closely with all state ad ostate bodies to establish their safety e eds ad, withi their madates, develop strategies to icrease safety. Safety audits or safety barometers should be developed with commuities, especially the vulerable, to iform a local govermet respose to safety. This could iclude better street lightig, removig rubbish dumps ad hazardous waste, ad muicipal by-laws to icrease commuity safety ad welless. These iitiatives should ivolve the youth ad could be ru by sectors, such as educatio, sports, arts ad culture, ad social welfare, coordiated by commuity safety cetres. Local govermet should use its madate more creatively ad iovatively to achieve commuity safety. It is at local level that We should be more ivolved as commuity i crime prevetio! NPC Jam commuities feel empowered to take part ac tively i makig their eviromet safer ad more secure. Spatial plaig of the physical eviromet should be developed by cosultig commuities, ad desigig for safety ad crime prevetio should be regulated at local level. Specialised skills for safety desig could be sourced where capacity is lackig. Uiversities ad techical colleges should develop courses to promote urba desig that will take accout of safety i future housig developmets ad carry out corrective desigs i established housig developmets. The Commuity Safety Voluteer Programme has bee implemeted i Gauteg, the Wester Cape ad KwaZulu-Natal with some success. The programme uses voluteers as marshals at schools, cliics, railway statios ad parkig lots. I the Wester Cape, voluteers were also highly effective i the Child Safety Programme. The programme developed a rapid respose system to track missig childre. Whe the Departmet of Commuity Safety i the Wester Cape wated to shut the School Safety Voluteer Programme, pricipals, teachers ad learers protested because the commuity felt safer with the voluteers. 359

372 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The commissio recommeds the followig: The police service ad metropolita police should further develop the Commuity Safety Voluteer Programme as part of a commuity empowermet programme for safety. Voluteers should be deployed to at-risk sc hools, health cliics, pesio ad grat paymet poits, taxi raks, parkig spaces ad areas with poor street lightig, public cogestio, ope fields or geerally usafe areas. These voluteers are ot substitutes for visible policig ad they do ot carry out ay police fuctios. They oly provide safety to the public through visibility ad safety i umbers ad where they themselves are ot put at risk. The voluteers are also cotact-poits for the police ad other departmets, providig up-to-date accouts of commuity eeds, fears ad feedback. The programme should be icluded i the budgets of local govermets, the metropolita police ad provicial departmets of commuity safety. Existig capacity, skills ad experiece i some provices like Gauteg, the Wester Cape ad KwaZulu- Natal should be exteded. The capacity to deliver this programme eeds to be developed i all ie provices. Coclusio As part of a overall safety strategy, thes e proposals should be implemeted alogside carefully cosidered ad effective law eforc emet itervetios drive by the crimial justice system. Cotiuig to stregthe the cost-effectiveess of the system icludig the police, prosecutors, courts ad prisos is a core part of ay safety strategy. Law eforcemet provides the istitutioal madate required to improve safety. However, it does ot, ad caot, provide a total respose. Commuities eed to be mobilised to play a active role i commuity safety. The private sector plays a importat role, ad already supports local iitiatives, providig techological support with closed-circuit televisio cameras or iformatio techology. Private security iitiatives have bee carryig out joit operatios with police ad takig part i joit patrols ad check poits with eighbourhood watches. These iitiatives should be supported ad exteded. The proposals will eed dedicated budgets ad regular cost-beefit aalysis to esure that the public get the ecessary retur o ivestmet of public resources. Accoutability checks should be udertake by commuity police forums to esure the police are accoutable to the commuity they serve. The commuity forums should provide feedback to the police o public perceptio of safety ad fear of crime. The proposals to mobilise ad itegrate the kowledge ad capacity eeded to shape ad implemet safety solutios require overall leadership, which will allay public fears ad icrease perceptios of safety. Govermet will eed to icrease reportig o safety outcomes ad progress to istil cofidece i its ability to protect the public ad 360

373 CHAPTER 12: BUILDING SAFER COMMUNITIES create coditios for everyoe to ejoy freedom of movemet ad safety. Such iitiatives, as part of a itegrated strategy, ca reverse the cycle of crime that has become such a costat feature i South Africa, skewig the arrative about our capabilities ad our potetial as a atio. Safety ivolves the crimial justice system, local govermet, the commuity, private sector ad role players ivolved i ecoomic ad social developmet. Achievig a safe ad secure society i 2030 will require a itegrated approach to make safety ad security a reality for all South Africas i

374 362

375 CHAPTER 13: BUILDING A CAPABLE STATE Chapter 13 BUILDING A CAPABLE STATE We feel loved, respected ad cared for i public istitutios. What we cotribute i our taxes, we get back through the high quality of our public services that is why we have: good cliics ad hospitals with well traied, carig doctors ad admiistrators, urses who rush to our aid with empathy ad expertise; affordable effective medicies, because they were made for all of us; good schools with well educated, traied ad carig teachers. Each commuity has: a school, teachers who love teachig ad learig, a local library filled with the wealth of books, a libraria, a police statio with respected ad upright police, a cliic with urses who love carig for people. Itroductio I this chapter, we idetify critical itervetios to build a professioal public service ad a state capable of playig a trasformative ad developmetal role i realisig the visio for South Africa s Natioal Developmet Pla will require collaboratio betwee all sectios of society ad strog leadership by govermet. I a society with deep social ad ecoomic divisios, either social or ecoomic trasformatio is possible without a effective state. The state provides the istitutios ad ifrastructure that eable the ecoomy ad society to operate. Its ability to carry out these fuctios has a profoud impact o the lives of all South Africas. 363

376 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Progress so far Sice 1994, South Africa has made sigificat progress i buildig the structures of a democratic state. The fragmeted govera ce structures of apartheid have bee cosolidated ito a system desiged to serve developmetal objectives. The compositio of the public service ad local govermet has bee trasformed to better represet the etire populatio. The itroductio of democracy provides a basis for greater accoutability of the state to its citize s. The state has successfully restructured public fiaces, created a effective tax syst em, ad built a idepedet ad credible reserve bak. The state has made sigificat progress i the provisio of basic services such as housig, water ad electricity. The foudatios for a capable state have bee laid, but there are major cocers about the weakesses i how these structures fuctio, which costrai the state s ability to pursue key developmetal objectives. The challege I the diagostic documets, the Natioal Plaig Commissio highlighted the ueveess i state capacity, which leads to ueve performace i local, provicial ad atioal govermet. The ueve performace of the public service results from the iterplay betwee a complex set of factors, icludig tesios i the politicaladmiistrative iterface, istability of the admiistrative leadership, skills deficits, the erosio of accoutability ad authority, poor orgaisatioal desig, iappropriate staffig ad low staff morale. The weakesse s i capacity ad performace are most serious i historically disadvataged areas where state itervetio is most eeded to improve people s quality of life. There have be e may idividual iitiatives to address these problems, but there is a tedecy to jump from oe quick fix or policy fad to the ext, rather tha pursuig a log-term sustaied focus o tacklig the major obstacles to improvig the performace of the public service. These frequet chages have created istability i orgaisatioal structures ad policy approaches that further strai limited capacity, exacerbatig the problem of ueve performace. The temptatio of quick fixes has diverted attetio from more fudametal priorities, particularly the deficit i skills ad professioalism affectig all elemets of the public service. At seior levels, reportig ad recruitmet structures allow for too much political iterferece i selectig ad maagig seior staff. The result has bee uecessary turbulece i seior posts i the public service ad reduced cofidece i the leadership, which udermies the morale of public servats ad citizes cofidece i the state. At juior levels, there has bee isufficiet focus o providig stimulatig career paths that esure the reproductio of skills ad foster a sese of professioal commo purpose. The state lacks a clear visio for where the ext geeratio of public servats will come from ad how specialist professioal skills will be reproduced. Weak maagerial capacity ad a lack of leadership prevet these issues beig addressed promptly. 364

377 CHAPTER 13: BUILDING A CAPABLE STATE South Africa has struggled to achieve costructive relatios betwee the three spheres of govermet. A lack of clarity about the divisio ad coordiatio of powers ad resposibilities together with the lack of coheret ad predictable mechaisms for delegatig or assigig fuctios has created tesios ad istability across the three spheres. There is o cosesus o how this is goig to be resolved ad there is a lack of leadership i fidig appropriate solutios. These coordiatio problems are ot uique to South Africa. They are made more difficult by gradual missio creep as each govermet agecy is expected to fulfil multiple objectives. The key issue is how they are dealt with. At preset, there is o clarity o who has resposibility for mediatig disputes ad overcomig coordiatio problems visio If we are to address the twi challeges of poverty ad iequality, a state is eeded that is capable of playig a trasformative ad developmetal role. This requires well ru ad effectively coordiated state istitutios staffed by skilled public servats who are committed to the public good ad capable of deliverig cosistetly high-quality services for all South Africas, while prioritisig the atio s developmetal objectives. This will eable people from all sectios of society to have cofidece i the state, which i tur will reiforce the state s effectiveess. What eeds to be doe South Africa is a log way from this desired ed-state, ad some fudametal steps eed to be take or South Africa is ulikely to achieve may of the other objectives set out i the rest of the pla: high-quality public services, improvig ad maitaiig ifrastructure, ad the coditios for ecoomic developmet all require a professioal public service ad a capable state. South Africa eeds to focus reletlessly o buildig a professioal public service ad a capable state. The experiece of other coutries shows that this caot be doe overight. Measures will have to be stregtheed over time. There are five key areas where targeted actio is particularly importat: Stabilise the political-admiistrative iterface A focus o skills ad professioalism will be ieffective uless the political-admiistrative iterface is clarified to esure a clearer separatio betwee the roles of the political pricipal ad the admiistrative head. The curret emphasis o political deploymet eeds to be replaced by a focus o buildig a professioal public service that serves govermet, but is sufficietly autoomous to be isulated from political patroage. Make the public service ad local govermet careers of choice South Africa eeds to focus o buildig a skilled ad professioal public service from both the top ad the bottom. At the top, recruitmet ad maagemet should be based o experiece ad expertise, while at juior levels, the state eeds to focus o 365

378 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN producig the skills ad expertise that will be ecessary for future public service cohorts. Develop techical ad specialist professioal skills The state eeds to reivigorate its role i producig the specialist techical skills that are essetial to fulfil its core fuctios, ad provide appropriate career paths for techical specialists. Improve relatios betwee the three spheres of govermet South Africa caot afford to cotiue with the curret level of cofusio about how resposibilities are divided, shared ad moitored across local, provicial ad atioal govermet. We eed to recogise the wide variatio i capacity, particularly at muicipal level, ad devolve greater resposibilities where capacity exists, while buildig capacity i other areas. Where capacity is more limited, particularly i may rural muicipalities, muicipalities should be allowed to focus o their core fuctios ad ot be burdeed with too may extra resposibilities. These challeges ca oly partly be resolved by clarifyig roles ad fuctios. It is ievitable that there will be disagreemets about how resposibilities are divided or shared, but atioal govermet eeds to itervee to mediate disputes ad eable cosesus to emerge. State-owed eterprises The major state-owed eterprises (SOE) eed clear public iterest madates, ad straightforward goverace structures that eable them to balace ad recocile their ecoomic ad social objectives. This icludes esurig there is greater stability i SOE boards ad that the chief executive is clearly accoutable to the board. New iitiatives have ofte bee ad hoc, with resposes to idividual problems beig implemeted without adequate cosideratio of the cumulative effect. This has resulted i public servats becomig icreasigly overburdeed with paperwork ad ew iitiatives. Iitiatives targeted at preveti g malfeasace ofte focus o restrictig the scope for discretio, but this has the uiteded cosequece of limitig the scope for iovatio. The dager is that the pricipal objective of public servats becomes followig rules, whereas it should be about gettig thigs doe. We eed reforms that will eable people to do their jobs by stregtheig skills, ehacig morale ad clarifyig lies of accoutability. Stabilise the political-admiistrative iterface All democratic regimes have to balace the eed for public servats to be resposive to the priorities of the govermet of the day with the eed for the public service to treat citizes equally ad ot discrimiate o grouds of political allegiace. There has to be a clear demarcatio betwee the roles ad resposibilities of public servats ad their political pricipals. Where the public service is too isulated from political pressures, this is likely to lead to cocers that it is failig to serve the iterests of the govermet ad is therefore ot fulfillig its democratic madate. However, where the public service is isufficietly isulated, stadards ca be udermied as public servats are recruited o the basis of political coectios rather tha skills ad expertise, or access to state 366

379 CHAPTER 13: BUILDING A CAPABLE STATE resources ad services becomes defied by political affiliatio rather tha citizeship. Coutries have sought differet ways to balace these two extremes. Followig the ed of apartheid, there was good reaso to give political pricipals wideragig ifluece over the public service to promote rapid trasformatio of a public service that had become closely associated with the apartheid regime. Havig achieved sigificat improvemets i the represetivity ad focus of the public service, attetio ow eeds to shift to esurig the public service is adequately equipped to play its part i trasformig society. The 2011 Muicipal Systems Amedmet Act itroduced a prohibitio o muicipal maagers or those directly accoutable to a muicipal mager holdig political office i a political party, suggestig there is growig recogitio of the eed to achieve a clearer demarcatio betwee the admiistrative ad the political. May of govermet's best-performig istitutios are characterised by stability of leadership ad policy approach. However, the lack of clarity about the divisio of roles ad resposibilities betwee political pricipals ad admiistrative heads ofte serves to udermie this stability. Although public servats work for elected leaders, their role is o-partisa ad the potetial to forge a collective professioal idetity as public servats requires that this distictio is kept clear. I South Africa, the curret approach to appoitmets blurs the lies of accoutability. The requiremet for cabiet to approve the appoitmet of heads of departmet makes it uclear whether they are accoutable to their miister, to cabiet or to the rulig party. Where the miister makes appoitmets below the level of director-geeral, it becomes uclear whether these officials report to the director-geeral or to the miister. This makes it overly difficult for directors-geeral to carry out their day-to-day resposibilities i ruig the departmet. Reforms are eeded to simplify ad clarify the lies of accoutability, to esure that directors-geeral are accoutable to their miister o policy matters, ad that departmetal staff are accoutable to their director-geeral. This icludes resposibilities for huma resources fuctios, which curretly reside with miisters ad are either reluctatly delegated to the director-geeral or ot delegated at all. I may other coutries, a clearer distictio is draw betwee the powers ad resposibilities of political pricipals ad admiistrative heads. This demarcatio eeds to be clarified i South Africa to stabilise the political-admiistrative iterface. This ca be doe either through a desigated head of the public service or a idepedet public service commissio, or a combiatio of the two. I South Africa, we recommed a combiatio, with certai fuctios allocated to a career public servat i his/her capacity as head of the public service ad others beig allocated to a stregtheed Public Service Commissio. The commissio should promote the skills, values ad ethos of the public service, while operatioal accoutability for admiistrative fuctioig falls to the head of the public service. Seior officials should cotiue to be accoutable to their political pricipals for policy matters. This would make it easier to distiguish clearly betwee the head of departmet s accoutability to the miister for policy issues ad o-political accoutability for issues relatig to the admiistrative fuctioig of the departmet. 367

380 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN This approach will be most successful as part of a broader commitmet to buildig a public service based o skills ad professioalism. This requires elected leaders to shift their attetio away from operatioal details towards their core strategic fuctio of esurig their departmet fulfils its objectives. I the loger term, a focus o attractig ad recruitig the best cadidates to build a skilled ad professioal public service will beefit elected leaders, because their departmets will be better equipped to pursue key policy objectives. To stabilise the political-admiistrative iterface, we propose the followig: A stregtheed role for the Public Service Commissio i promotig orms ad stadards, ad moitorig recruitmet processes. Create a admiistrative head of the public service to whom directors-geeral report o orgaisatioal ad admiistrative matters. A hybrid approach to top appoitmets that allows for the recociliatio of admiistrative ad political priorities. A purely admiistrative approach to lower-level appoitmets, with seior officials give full authority to appoit staff i their departmets. Stregthe the role of the Public Service Commissio I may Orgaisatio for Ecoomic Cooperatio ad Developmet coutries, public service commissios fulfil a advisory ad oversight role, esurig that orms ad stadards are followed correctly, without themselves beig ivolved i selectio processes. I other cases, the public service commissio plays a more active role. For example, i the Uited States, the commissio is resposible for appeals, while i much of South Asia it has direct resposibility for recruitmet. I South Africa, the Public Service Commissio is assiged a advisory ad oversight role, which icludes promotig the values of the public service ad ivestigatig breaches of procedures ad practices. The role of the Public Service Commissio should be stregtheed to make it a robust champio of a meritocratic public service by promotig ad moitorig key orms ad stadards. Cosideratio should also be give to whether its madate should be exteded to iclude the primary resposibility for settig key orms ad stadards, especially for recruitmet processes. The powers of the Public Service Commissio are set out i Chapter 10 of the Costitutio where, like the Chapter 9 istitutios, its madate is outlied i terms of the cotributio it ca make to protectig ad supportig democracy. This gives the commissio the idepedece that comes from reportig to ad beig accoutable to parliamet. However, the Report of the ad hoc Committee o the Review of Chapter 9 ad Associated Istitutios chaired by the late Professor Kader Asmal raised the cocer that the reports produced by the Public Service Commissio could oly be as effective as the will of the executive to act o those proposals. It would be couterproductive to give the Public Service Commissio a far-reachig direct role i recruitmet, because a overly cetralised recruitmet system would 368

381 CHAPTER 13: BUILDING A CAPABLE STATE make it more difficult for departmets to recruit their staff ad would udermie the ability of departmetal heads to formulate a strategic directio for their ow departmets. However, cosideratio shou ld be give to whether the commissio should play a direct role i the recruitmet of the most seior posts. For example, the chair of the Public Service Commissio, together with the proposed head of the public service, could covee the selectio pael for heads of departmet ad their deputies. This would allow for a trasparet process that could reiforce cofidece i the way heads of departmet are appoited. Proposal 3 suggests how such a role could be recociled with the eed to esure seior public servats cotiue to be accoutable to their political pricipal for policy issues. Stregtheig the role of the Public Service Commissio would help esure that recruitmet ito the public service is based o merit. However, its credibility will deped o the commissio beig see to have a strog, idepedet chair who carries crossparty support ad commissioers who are appoited o o-political grouds. The appoitmet of commissioers becomes a litmus test for the govermet s commitmet to retaiig the idepedece of the Public Service Commissio. Ufortuately, i may coutries it becomes a battlegroud, with the idepedece of the public service commissio havig to be defeded repeatedly. This will be easier to achieve if politicias are cofidet that the recruitmet processes are deliverig highcalibre staff. The model is ulikely to succeed if it achieves the objective of prevetig iappropriate political iterferece i appoitmets, without also attractig the best people ito the public service. A admiistrative head of the public service The role of the Public Service Commissio should relate to the promotio or settig of orms ad stadards, ot oversight of daily operatioal matters. We propose the creatio of a admiistrative head of the public service to whom directors-geeral would report o operatioal ad admiistrative matters. May coutries have such a post, icludig Sigapore, Keya, Ghaa ad the Uited Kigdom. A seior public servat could be assiged as head of the public service i his/her capacity as the head of a existig govermet departmet, most likely either the Departmet for Public Service ad Admiistratio or the Presidecy, with the heads of other govermet departmets reportig to this official o orgaisatioal ad admiistrative matters. Measures have already bee take to foster stroger coordiatio through bodies such as the Forum of South Africa Directors-geeral, cluster meetigs ad the creatio of the Departmet of Performace Moitorig ad Evaluatio. It would therefore be a atural progressio to alig the admiistrative oversight of seior public servats with these existig structures by locatig the fuctio withi the Presidecy. Heads of departmet would report to the head of the public service o admiistrative matters, while reportig to their miister or political pricipal o policy matters. At provicial level, a equivalet post could be located i the Office of the Premier. Cosideratio should also be give to whether the resposibility of the provicial head could exted to 369

382 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN playig a oversight role i relatio to the recruitmet ad performace of muicipal maagers i that provice. A hybrid approach to top appoitmets While directors-geeral ad heads of departmet should report to a admiistrative head o routie orgaisatioal matters, it is still essetial to esure they are accoutable to their political pricipal o policy issues. Political pricipals eed to be able to have cofidece i their head of departmet, while the admiistrative head of the public service has cofidece i their maagerial abilities. To esure a ogoig role for political accoutability, a hybrid model could be cosidered. A selectio pael coveed by the Public Service Commissio ad the admiistrative head of the public service would draw up a short-list of suitable cadidates for seior posts, from which the political pricipal would select a preferred cadidate. This model has bee used i Belgium. While it does legthe the selectio process, it allows idepedet oversight to esure that cadidates are suitably qualified, while also esurig that the fial selectio is compatible with the priorities of the political pricipal. I the loger term, this process could be combied with greater job security for directors-geeral ad heads of departmet. The curret short-term three year cotracts are ecessary whe heads of departmet are political appoitmets, but they do cotribute to orgaisatioal istability ad make it more difficult to build a experieced seior maagemet cadre, as some experieced people are lost to the public service uecessarily. However, greater se curity of cotract is oly desirable if people ca be removed if their performace does ot meet the required stadard. This meas greater job security should oly be cosidered oce there is cofidece that performace maagemet mechaisms are robust. Give seior maagers authority over operatioal matters The Public Service Act (1994) situates a umber of huma resources fuctios with political pricipals. This icludes matters relatig to orgaisatioal structure, appoitmet, promotios ad trasfers, performace maagemet, ad the obligatios, rights ad privileges of employees. Political pricipals are able to delegate these fuctios to their director-geeral or head of departmet at their discretio. I may cases, the political pricipal chooses ot to delegate these powers. This creates a tesio with the Public Fiace Maagemet Act (1999), which holds the accoutig officer resposible for fiacial issues, meaig maagers are aswerable for issues over which they have limited cotrol. It also leads to istability, as the degree of delegatio ca vary with each chage of miister. Th is meas seior maagers caot delegate authority to their lie maagers o a sustaiable basis if a future miister recetralises powers, the director-geeral s scope to dele gate will also be udermied. We therefore recommed greater ad more cosistet delegatio of authority for admiistrative 370

383 CHAPTER 13: BUILDING A CAPABLE STATE matters from political pricipals to their heads of departmet, ad from the head of departmet to maagers. This devolutio of powers should iclude delegatig greater authority for appoitmets to the appropriate lie maagers. It is ot ucommo for a departmet to take ie moths to fill a vacacy, as the bureaucrati c process has bee made far too complicated the approval of the head of departmet is ofte required at five differet stages, rather tha simply oce at the begiig ad oce at the ed. As a result, departmets ofte avoid recruitig altogether, particularly for more juior posts, which leads to a icreased reliace o cosultats ad stymies the developmet of a ew geeratio of skills ad experiece. These overly complex procedures have ot bee effective at prevetig iappropriate appoitmets. Ideed, they may have made the problem worse overly complex procedures make it harder to attribute resposibility ad icrease the temptatio to circumvet official processes. A effective recruitmet process gives lie maagers the scope to recruit the people they eed ito fuded posts withi a reasoable timeframe. It also has to esure that recruitmet processes are geared towards recruitig the best people. The more rigorous approach to appoitig heads of departmet, together with the proposed stregtheig of the role of the Public Service Commissio i shapig orms ad stadards for recruitmet, provides adequate protectio to allow maagers the freedom to recruit withi those orms ad stadards. Make the public service ad local govermet careers of choice A professioal public service is oe where people are recruited ad promoted o the basis of merit ad potetial, rather tha coectios or political allegiace. The public service should attract highly skilled people, bidig them together by cultivatig a sese of professioal commo purpose ad a commitmet to workig towards developmetal goals. To achieve this, South Africa eeds a two-proged approach to buildig a more professioal public service from the top ad the bottom a approach that places the developmet of skills ad professioalism at the heart of the pla for improvig the public service. It eeds to icrease the pool of skilled people by esurig that the public service ad local govermet become careers of choice for graduates who wish to cotribute to the developmet of the coutry, ad high-level staff are recruited o the basis of their suitability for the job. If we are to develop ad maitai a professioal, people ad service orietated public service we eed to esure that the public service becomes a callig of excellece ad a career which should be sought after ot for its fiacial gais ad security but because it is the have for passioate patriots who wat to serve ALL South Africas. NPC Jam The public service will ot be effective if it is elitist ad aloof. Public servats eed to have a i-depth uderstadig of the sectios of society with which they work. A highly 371

384 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN skilled public service should also be represetative of, ad coected to, the commuities it serves. There is a serious ambivalece towards skill i the public service. The skills that staff possess are ot always valued, ad status or coectios are ofte prized more tha expertise. The Departmet for Public Service ad Admiistratio has highlighted as oe of its 10 strategic priorities the eed for effective etry ito the public service ad huma resource developmet stadards to esure cadre developmet. This will require a shift from isolated traiig iitiatives to a log-term approach that focuses o recruitig people with relevat aptitude ad developig their skills over the course of their careers. It also requires mechaisms for aticipatig shortfalls i specialist ad techical skills, so that the state ca take a proactive role i developig professioal expertise. The tedecy has bee to value people who already have relevat experiece ad expertise. Where these skills are ot available iterally, departmets ofte rely o outside cosultats. This is a short-sighted approach that does ot address where the ext geeratio of seior public servats will come from. Departmets eed to place greater emphasis o potetial. Recruitmet should focus ot just o the skills people have today, but also those they could develop while workig for the departmet. This requires a recruitmet ad o-the-job developmet strategy that is more closely liked to a visio of how public servats experiece ad expertise will develop durig their careers. While graduates with potetial struggle to idetify how they ca embark o a career i the public service, departmets have become top heavy because of their iability to fill more juior posts. This is a usustaiable situatio. To build a skilled ad professioal public service, we eed to attract taleted people from a diverse rage of backgrouds. Jobs should be sufficietly stimulatig ad challegig to esure people are costatly developig their skills. Recruitmet ad promotio processes eed to place a overridig emphasis o skill ad experiece; ad the state eeds to focus o its role i producig ad ehacig skills. This requires a clear visio of public service career paths. Below, we set out key proposals for how this ca be achieved through: A formalised graduate recruitmet scheme for the public service A career path for local govermet Makig adequate experiece a prerequisite for seior posts A log-term perspective o traiig ad maagemet. A formalised graduate recruitmet scheme for the public service South Africa eeds a strategy for recruitig dedicated youg people ad esurig that their skills are developed, with career progressio liked to performace. Graduates leavig uiversity i 2011 are part of the pool from which middle ad seior maagers will be draw i 2030, while childre startig school i 2011 will form the cohort of aspirig etrats ito the public service i To improve capacity ad performace, 372

385 CHAPTER 13: BUILDING A CAPABLE STATE we eed a strategy that will ot oly attract youg people with potetial, but also retai them by developig their skills ad sustaiig their morale. Vital to achievig this is the eed to develop a sese of professioal commo purpose, so that public servats feel motivated by workig together i the public iterest. The public service has pockets of excellece, where recruitmet is highly competitive ad people aspire to work, but i geeral, it is ot the employer of choice for may graduates. The best etrats ted to be coc etrated i a few departmets, while may departmets struggle to recruit the best people. Multiple itership schemes have bee itroduced. I the best cases, these provide a etry poit for promisig people ad ca be the start of fruitful careers. However, these schemes are liked to specific departmets ad, ievitably, they will work best ad be most attractive i departmets that are already performig well. I additio, because each itership scheme employs small umbers of people, they are ot widely kow ad are too small-scale to trasform perceptios of the public service as a career opportuity. There eeds to be a mechaism for recruitig high-calibre applicats ito all govermet departmets. We recommed iitiatig a formalised graduate recruitmet scheme to attract taleted graduates ito govermet by offerig stim ulatig ad rewardig career paths. This scheme should coexist with, rather tha replace, other routes ito the public service. May coutries have formalised systems fo r etry ito the public service. These schemes vary i their level of cetralisatio. Some, such as the Idia Admiistrative Service, pursue a overly cetralised approach, with emphasis o a mobile cohort of elite civil servats who ca be deployed aywhere across govermet. The difficulty with this is that public servats are moved too ofte ad ever maage to build a detailed kowledge of how thigs work i a particular departmet. This has cotributed to the formatio of a state that produces elegat policy documets, but struggles with implemetatio. The Uited Kigdom s Civil Service Fast Stream places recruits i specific departmets. This has two major advatages. Graduate recr uits ca gai experiece from a rage of jobs withi oe departmet. As they progress through their career, they develop a stroger uderstadig of how the departmet works. It also allows greater autoomy for departmets ad graduate recruits: recruits ca be give a opportuity to shortlist their preferred departmets ad offered a post i a particular departmet, rather tha havig to accept the ucertaity of beig posted aywhere i govermet. South Africa eeds to esure that it ot oly recruits high-calibre people, but that these people develop experiece i the early stages of their career ot just of high-level policy formulatio but also of the challeges faced i implemetatio. A formalised graduate recruitmet programme should ot oly expose recruits to a rage of posts withi the atioal departmet, but also ivolve a exteded placemet i the equivalet departmet at provicial level. Provicial departmets would beefit from the secodmet of staff with kowledge of the policy priorities ad operatig methods 373

386 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN of the atioal departmet, while the atioal departmet would beefit from its staff developig a detailed kowledge of the workigs of provicial govermet ad the challeges faced at provicial level. I time, as the scheme develops, cosideratio should also be give to placig recruits directly with provicial departmets. A graduate recruitmet programme recruits people o the basis of potetial, ad therefore eeds to provide adequate mechaisms for learig ad support. The most importat skills will be leart o the job ad it is vital that graduate recruits are give focused areas of resposibility that eable them to develop specific expertise ad take resposibility for particular projects early i their career. Those goig ito divisios ad departmets that fuctio well may eed o further support. If the scheme is to work i those departmets where it is curretly eeded most, however, there eeds to be a cetral strategy for providig traiig, metorig ad support throughout the first years o the scheme. A commo approach to recruitig ad traiig graduates across departmets would also eable ew etrats to share experieces, providig a eutral forum i which they ca discuss challeges. Over time, a cetralised graduate recruitmet programme could help improve coordiatio betwee govermet departmets by eablig staff to form etworks across departmets. I other coutries, such etworks have bee vital i creatig a ethos of public service. The diagostic documets highlighted the importace of a public service that is both skilled ad represetative. There is o iheret tesio betwee these two objectives, betwee a meritocratic recruitmet system ad a represetative public service. Affirmative actio has already achieved a great deal i terms of producig a public service that is broadly represetative of the coutry s populatio, although Africas are better represeted i more juior posts. Th e difficulties with affirmative actio are ot with the policy itself, which is a essetial if limited tool i the project of trasformatio. Rather, problems have arise i circumstace s where other aspects of the public service are operatig imperfectly. Affirmative acti o places greater emphasis o potetial rather tha just prior performace, such as formal qualificatios ad exam results, makig it particularly importat that there are strog maagerial ad huma resources processes for selectio, metorig, traiig ad career developmet. A formalised graduate recruitmet scheme liked to coordi ated systems of traiig, metorship ad o-the-job learig could provide a strog mechaism for improvig the effectiveess of affirmative actio ad realisig its full trasformative potetial. For the scheme to succeed, departmets must have cofidece i the calibre of applicats recruited. It should begi with a select umber of outstadig recruits i the first years ad the pool could be icreased gradually. Recruitmet should be based o a rigorous meritocratic process. It will be beeficial to look at mechaisms used i other coutries, which frequetly iclude a rage of assessmets such as exams, group exercises ad iterviews. A formalised recruitmet scheme could be marketed widely with targeted recruitmet programmes at uiversities. These should iclude recet recruits talkig to studets at 374

387 CHAPTER 13: BUILDING A CAPABLE STATE their alma mater about their experiece of beig a public servat. These recruitmet drives should also be liked to the promotio ad extesio of existig iterships to provide studets ad recet graduates with experiece of workig i govermet. Itership schemes could also target people from disadvataged backgrouds to promote the objectives of affirmative actio. A career path for local govermet A distict strategy is eeded to esure high-calibre people are recruited ito local govermet. It is i the iterests of all spheres of govermet to esure sufficiet capacity exists to implemet core govermet priorities ad resposibilities, particularly esurig everyoe has access to high-quality basic services. Yet, skills shortages are most critical i local govermet, especially i rural muicipalities. Like atioal govermet, muicipalities also require a flow of promisig graduates if they are to maage their core fuctios. Tacklig this deficit should be a priority for atioal govermet, but imposig a solutio o local govermet will ot be effective. Itership programmes have bee set up to deal with specific skills gaps. For example, itership schemes exist for both fiacial ad egieerig posts i muicipalities. However, there is o overarchig mecha ism for recruitig graduates ito local govermet. The autoomy accorded local govermet meas such a scheme would eed to be differet to a programme for a tioal govermet. This is ot uusual may coutries allow local govermet sigificat autoomy i recruitig staff. I the Uited Kigdom, difficulty i gettig high-calibre graduates iterested i joiig local govermet resulted i the Natioal Graduate Developmet Programme for local govermet as a parallel to the Fast Stream fo r the atioal civil service. The scheme is ru cetrally, but local govermets ca choose to participate. Recruits are employed by the local govermet they work for but receive traiig over a period of two years through the cetral scheme. A advatage of this approach is that it could start gradually, with a small umber of muicipalities ad a small umber of recruits. The scheme would develop o a demadled basis if it provides people who are valued by muicipalities, the demad for graduates will icrease. Similarly, if graduate s have a positive experiece, more recruits will be attracted. Muicipalities will eed to provide adequate traiig ad support for recruits. However, give that the eed for the scheme arises partly from the curret shortfall i the performace ad capacity of muicipalities, there also eeds to be a realistic strategy to provide exteral support ad traiig. As with the atioal equivalet, it will be importat to have regular evets to brig the recruits together to share experieces. A graduate recruitmet scheme for local govermet could help build this sphere s capacity. 375

388 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Make adequate experiece a prerequisite for seior posts Skills, motivatio ad a professioal ethic should be recogised ad valued at all levels of the public service ad local govermet. It is essetial that taleted people are recruited ito the public service, but it is also essetial to recogise that may skills are developed o the job. The public service has become icreasigly top-heavy, with sta ff beig promoted rapidly ad a shrikig proportio of staff i more juior posts. As a result, staff are ofte promoted too rapidly, before acquirig the experiece eeded for seior posts. Where the authority ad experiece attached to posts has bee dowgraded over time, salaries are high for the work required. For example, deputy director used to be cosidered a seior post, but today it is ofte treated as a juior post people ca eter almost straight out of uiversity ad o a salary higher tha that of the best ew etrats i may developed coutries. Startig salaries are also sigificatly higher tha equivalet etry-level posts i the private sector. This creates three mutually reiforcig problems. It icreases the pressure o more seior staff ad, i tur, icreases the proportio of work that is cotracted out to highly paid cosultats. This hiders the scope to develop capacity, because policy work becomes about commissioig cosultats ad maagig cotracts, ot egagig directly i policy aalysis. This is likely to lead to a wideig gap betwee policy formulatio ad implemetatio. The dowgradig of mid-level posts also icreases the ambitio of middle maagemet to be promoted to seior maagemet levels as rapidly as possible. This creates serious problems. Rapid promotios mea people are throw ito maagemet positios whe they are still gettig to grips with their policy brief. Taleted youg people who are promoted too quickly are likely to become frustrated. I this eviromet, the ability to supervise juior staff ad urture their professioal developmet is also lost, limitig the ability of the public service to reproduce the skills it eeds. It is essetial that a formalised graduate recruitmet process is liked to a clearer ad more graduated approach to career developm et. Overly rigid recruitmet criteria ca make recruitig ad retaiig good staff uecessarily difficult, ad so it is couterproductive to place strict requiremets for particular grades. It will be more costructive to focus o icreasig the attractiveess of mid-level posts. Promotios eed to be made more difficult, but mid-level ad juior posts eed to be more fulfillig, so that staff ca build their skills, experiece ad uderstadig before risig to more seior posts. Those with a clear aptitude for maagemet should ot be preveted from risig rapidly, but such cases should be exceptioal, with promotios placig much greater emphasis o experiece ad depth of expertise. 376

389 CHAPTER 13: BUILDING A CAPABLE STATE Gradual promotios are more likely to be accepted where staff feel stretched ad valued i their curret job. They are also more likely to be accepted if staff are cofidet that cosistet ad trasparet criteria are applied to promotios, with a clear career path to which they ca aspire. This will be difficult to achieve as log as the perceptio exists that seior posts are ot always allocated o the basis of relevat expertise ad experiece. If skills ad professioalism are to improve, it is essetial that the way seior public servats are appoited ad maaged is addressed. These appoitmets must ot oly be based o merit, but also see to be based o merit. A log-term perspective o traiig ad maagemet To get career paths right, traiig ad ma agemet eed to address shortcomigs i routie aspects of the public service. The public service lacks a visio for how promisig graduates who joi i their mid-20s will become skilled ad experieced public servats by their mid-30s. The public service caot expect its ew recruits to have all the ecessary skills, so it must icorporate a visio of how public servats ca develop their skills over the course of their career. Greater clarity about career paths ad a less hierarchical approach will be beeficial, but traiig ad good maagemet will also be essetial. Good traiig serves multiple objectives. It fosters a sese of professioal commo purpose ad a shared uderstadig of basic priciples, provides a way to commuicate specific iformatio, gives people a chace to develop specific skills or kowledge, ad allows a reflectio space ad a eutral eviromet i which workers ca discuss ad share challeges they face i the workig eviromet. A oe-size-fits-all approach to traiig will ot be able to achieve these objectives. Doe well, ivestig i people s skills is a excellet way to make them feel valued ad improve staff morale. Whe doe badly, it becomes a bureaucratic burde. To be effective, traiig must be empowerig ad led by demad. Traiig should be tailored to the eeds of the idividual, with a miimum core that focuses o buildig a commo uderstadig of the role of the public service. We evisage a miimal core traiig fuctio with a degree of stadardisatio, followed by a much broader rage of optios allowig idividuals to take traiig that suits their specific eeds. Implemetig a effective traiig programme requires good maagemet ad strog huma resources capability with specialists who uderstad their role ad, critically, its limitatios. Huma resources is pricipally a advisory fuctio desiged to provide maagers with expert support ad eable them to do their job. It is i this eablig role that huma resources fuctios are curretly weakest. Effective maagemet is about makig thigs work. Too ofte, policies are formulated without adequate cosideratio of how they will be implemeted. Good maagemet should tur aspiratioal policies ito implemetable strategies. Good maagers do ot impose stadardised solutios, but work closely with their staff to develop a commo 377

390 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN uderstadig of how processes work ad how they ca be simplified to esure that everybody kows their resposibilities ad how these cotribute to the wider objectives of the departmet. This helps staff feel more empowered, with a better uderstadig of their ow role. Good maagers seek ways to delegate resposibilities ad, where ecessary, work to build the capacity of their staff to fulfil those fuctios. Yet, the daily routies of good maagemet are ofte missig. To address this, cosideratio should be give to how maagers ca become more accessible to their staff. This is particularly importat for maagers with direct resposibility for service delivery who should esure that they are regularly iteractig with staff at the coalface, i order to develop a uderstadig of the challeges faced at the poit of delivery ad to eable the routie flow of iformatio. There ca be o doubt that good maagemet is essetial for makig optimal use of the fiacial, huma ad physical resources that are available. However, there is o quick or easy solutio for improvig maagemet stadards. The quality of maagemet depeds, i part, o the productio lie of skills to create a adequate pool of experieced people from whom maagers ca be draw. It also requires that maagers are clear about their roles ad the powers available to them, ad that they are adequately supported i carryig out their job. Maagers are rarely empowered ad ecouraged to use the discretio ad flexibility that is potetially available to them. Greater clarity about the divisio of resposibilities betwee political pricipals ad seior maagers will make it easier for maagers to uderstad ad exercise their powers effectively. For maagers, miimal core traiig should iclude uderstadig their powers ad the degree of discretio that is available to them withi the rules. This requires targeted traiig to esure that maagers uderstad the resposibilities of their grade ad the tools ad support mechaisms that are available to them i fulfillig their resposibilities. Beyod this core miimum, there eeds to be a diverse rage of traiig provided. This could iclude leadership traiig for top maagers, icludig a coachig or metorig fuctio that allows maagers to draw o the experiece ad expertise of retired maagers, as well as peer review mechaisms through which maagers are able to support oe aother. It should also iclude access to a wide rage of courses from exteral providers, icludig academic ad other sources. 378

391 CHAPTER 13: BUILDING A CAPABLE STATE Makig it work 1 Makig it work the importace of improvig maagemet ad operatios systems I Jauary 2008, the Departmet of Home Affairs bega a reform process that reduced the time a citize would wait for a idetity book from over four moths to less tha six weeks. This was achieved by promotig greater collaboratio, clearly outliig achievable ad relevat targets, frequetly measurig performace, ad esurig employees uderstood the etire process ad the importace of their role i it. The idetity documet productio process was simplified. Seior staff became more visibly ivolved, which boosted morale ad fostered a culture of uity ad service. The result was a clea audit, improved service ad citizes growig recogitio of the departmet s achievemets. The South Africa Reveue Service is a leadig govermet istitutio. Its trasformatio from a uwieldy set of iteral directorates to a itegrated ad autoomous body greatly icreased reveue collectio. Its successes i wideig the tax et ad esurig tax compliace ca be attributed to high-level support, ad buildig a motivated ad skilled staff base. The istitutio was quick to realise that collectio would improve if they were see as proficiet at catchig tax evaders, while providig a efficiet service to those who complied. It simplified procedures ad tailored its actios to local coditios. The South Africa Reveue Service ow has a cosultig divisio which is assistig other govermet departmets i improvig their systems. The difficulties faced by public hospitals are well kow, but there are importat lessos from reform processes i idividual hospitals. These have bee most effective where they were iclusive ad focused o achievig visible improvemets. Without chagig resource levels or staffig, processes ca be refied by addressig cetralised cotrol ad silo structures, ad focusig o key health objectives. Pilot programmes have show that relatively simple chages to operatioal systems i outpatiet departmets ad pharmaceutical dispesaries ca sigificatly reduce waitig times. 1 These examples are based o: -Hausma D (2010). Reformig without hirig or firig: idetity documet productio, South Africa Iovatios for Successful Societies, Priceto. -Natioal Plaig Commissio (2011). Istitutios ad Goverace Diagostic. -Smith L (2003). The power of politics: The performace of the South Africa Reveue Service ad some of its implicatios. Policy: Issues ad Actors 16(2). -vo Holdt K, Smith M & Molaba M (2011). Trasformi g hospital fuctioig: a assessmet of the surgical divisio trasformatio project at Chris Hai Baragwaath Hospital, Service Delivery Research 379

392 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Develop techical ad specialist professioal skills Govermet s strategy for admiistrative a d policy skills eeds to be accompaied by a strategy to esure the availability of key techical ad specialist professioal skills. Services caot be delivered without people with the ecessary specialist skills whether it is urses, doctors, egieers, plaers or artisas. Govermet lacks may key professioal skills, ad is sufferig the cosequeces of its iability to reproduce expertise. This shortage is particularly severe at muicipal level, where muicipalities require egieers to build, maitai ad operate ifrastructure. Eve whe these fuctios are cotracted out, muicipalities still eed to have the techical expertise to commissio ad oversee cotractors. Efforts to exted access to basic services have ot bee accompaied by a comparable focus o esurig the emergece of skilled professioals. This problem has arise partly because the state has retreated from its core role i traiig ad producig professioals. This cotrasts with the apartheid era, whe govermet played a active role i producig professioals. I the past, graduate egieers ad traiee techicias could eter the public service ad obtai sufficiet recogised experiece, uder the guidace of a qualified professioal, to eable them to qualify for registratio as egieerig techicias ad professioal egieers. The public sector s positio as the iitiator of may major ifrastructure projects meat it was best placed to pla such recruitmet ad traiig programmes. May of the coutry s techical professioals were traied i this way ad supplied ot just the public sector but also broader idustry. May of these etrats were o pub lic sector bursaries, with a obligatio to work to pay them back. Although such bursaries may still be fuded, they ca o loger be provided with the required professioal traiig post-graduatio, ad graduates are ofte lost to the public service as a result. This route is virtually o-existet ow, because so much work is cotracted out, ad there are too few qualified professioals able to provide the ecessary directio ad supervisio. This has a egative impact o the etire ecoomy. Simply focusig o the productio of key skills is isufficiet if professioals are ot empowered to do their jobs. The wider problem of ambivalece towards skill i the public service is particularly acute whe it comes to professioals. Too ofte, professioals i govermet istitutios feel udervalued. Tesios arise because professioal coduct caot easily be moitored through stadardised systems for performace maagemet. I fields such as egieerig where public safety ad related fiacial risks are ivolved, it is importat that oly professioally registered persos are permitted to udertake certai tasks i the implemetatio of projects. The professio eeds to play a strog role i moitorig, regulatig ad maitaiig its professioal stadards through professioal coucils ad associatios. It is essetial that this role is protected ad promoted. 380

393 CHAPTER 13: BUILDING A CAPABLE STATE We propose the followig: Stregthe the state s role i developig techical skills Career paths for techical specialists. Stregthe the state s role i developig techical skills These specialist skills will ever be produced i adequate umbers without a clear strategy for traiig ad recruitmet. This requires a proactive strategy to produce ad develop skilled professioals combied with a work eviromet i which professioal expertise is recogised ad valued. The productio of techical skills is a log-term commitmet. Govermet eeds to be proactive i aticipatig skills shortages ad esurig there are appropriate traiig programmes with adequate capacity to produce the techical skills required i future. This will eed coordiated plaig by govermet, i cojuctio with traiig istitutios ad professioal coucils ad associatios. Icreased outsourcig has resulted i a reduced emphasis o more juior posts, yet without these, there ca be o productio lie for producig experieced professioals. This is a major problem. The solutio eeds to start with appreticeships, where ew etrats ca lear practical techical skills to alleviate shortages of artisaal skills. Bursaries should be made available o a competitive basis for those appretices with the aptitude ad icliatio to egage i further formal traiig. Graduate traiig schemes for those who lack ecessary experiece should be liked to the loger-term staffig eeds of departmets, so that traiees have a clear sese of how their career could develop if they perform well. For appreticeships ad graduate traiig schemes to work effectively ad reproduce expertise across geeratios, experieced professioals i the same field eed to metor traiees. Where there is a shortage of such professioals withi relevat departmets, iovative steps will eed to be take to locate suitable metors. This could ivolve parterships with professioal associatios ad firms, or employig retired professioals o a part-time basis. Career paths for techical specialists To retai experieced professioals, it will be importat to have a specialist techical career path that eables idividuals with high levels of expertise to cotiue as practitioers, without havig to divert ito maagemet careers. This will eable retetio of experieced professioals who ca focus o project work ad traiig less experieced staff. Those appoited to maagemet positios that require professioal expertise should have sufficiet techical kowledge, alog with relevat maagemet experiece, to uderstad the techical challeges faced by techical specialists ad to secure their respect. At the same time, support divisios such as huma resources, supply chai, 381

394 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN stores ad systems should play a supportig ad eablig role to operatioal lie maagemet drive by professioals. Gettig the basics right: delegatig ad simplifyig routie tasks South Africa s focus has bee o devolvig resposibility to departmets ad muicipalities, so that miisters, premiers, mayors, departmetal heads ad muicipal maagers ca make, ad take resposibility for, key decisios. If this model is to be effective, greater attetio eeds to be give to the support fuctios, particularly i the areas of maagemet ad huma resources. I the absece of effective support fuctios, this model has cetralised resposibility at the top of govermet departmets ad muicipalities. As a result, may are over-cetralised, with cetral maagemet seekig to retai cotrol of operatioal uits, ad reluctat to delegate fuctios like procuremet ad supply chai maagemet, hirig ad firig, ad huma resources services to maagers lower dow i the system. This is partly because may political pricipals have ot fully take advatage of the opportuity to delegate resposibility for admiistrative matters. This has several perverse results: it slows dow decisio makig ad implemetatio of decisios, poor decisios are ofte made that are out of touch with operatioal realities, support services become uaccoutable because they operate at a remote cetralised level ad their poor fuctioig udermies the ability of maagers lower dow the lie, who caot hold those support services to accout ad properly maage their domais. Accoutability is weakeed, whe paperwork has to be siged by multiple people or at multiple stages i the process. It should be clear who has take a procuremet decisio ad o what grouds. It is importat that resposibility ca be traced to the perso who made the decisio. Streamlied processes could still maitai checks ad balaces, while clarifyig accoutability ad makig it easier for departmets to take decisios. Procuremet guidelies, issued by the Natioal Treasury i lie with the Public Fiace Maagemet Act, provide scope for a accoutable ad straightforward process. While they defie certai resposibilities ad lies of accoutability, authority for procuremet ca still be delegated where efficiet supply chai maagemet systems have bee put i place. A well desiged ad effectively supported cotrol system allows frot-lie maagers to have some procuremet authority ad to take resposibility for the impact of supplies, equipmet ad maiteace. Support service fuctios, such as huma resources, procuremet ad fiace, should be accoutable to the appropriate operatioal lie maagers. This will eable lie maagers to take resposibility for operatios, icludig staffig, disciplie, expediture agaist budget, equipmet ad supplies. The cotrol framework iforms the degree of delegatio, with, for example, strict expediture limits for supplies ad procuremet at differet levels of the orgaisatio. I additio, procedures ad cotrols should be more trasparet. This helps to make wastage ad 382

395 CHAPTER 13: BUILDING A CAPABLE STATE corruptio more visible to the direct users of supplies ad services, which is a importat deterret to corruptio or epotism. Delegatio eeds to be accompaied by effective audit mechaisms. South Africa s approach of decetralisig maximum authority to miisters ad their heads of departmets will ot be effective uless it is accompaied by greater delegatio withi departmets. For this delegatio to be effective, departmets eed good maagers ad high-calibre employees i key support fuctios such as fiace ad huma resources. These support fuctios are ofte costraiig whe they should be eablig. Huma resources officers eed to provide expert advice to maagers to help them do their jobs effectively, esure th ey follow appropriate procedures ad get the most out of their staff. These fuctios are ot just about the eforcemet of rules, but also about usig discretio. Staff eed to have sufficiet cofidece i their ow abilities to trust their judgemet ad delegate. Effectiv e delegatio makes it easier for everyoe to do their jobs ad ehaces staff morale, particularly for middle maagemet who are give the authority to make day-to-day decisios. Haress the eergy ad experiece of citizes Delegatio ad simplificatio of authority presets a opportuity to stregthe mechaisms of routie accoutability, eablig the state to be more resposive to citize cocers. The spate of service delivery protests across the coutry stems partly from citizes frustratio that the state is ot resposive. There is a disjucture betwee the commuicatio of commuity grievaces ad the state s ability to address them. This is ufortuate, as citizes are best placed to advise o the stadard of public services i their commuities ad to suggest possible itervetios. To build a state that is both capable ad serves the eeds of citizes, the eergy witessed i service delivery protests ad the expertise that comes from the daily experieces of usig public services must be haressed to esure that problems with service delivery are recogised early ad the state kows how to respod. I its diagostic chapter o istitutios ad goverace, the Natioal Plaig Commissio set out two forms of accoutability. I the stadard hierarchical model, juior civil servats are accoutable to their superiors; the public service is accoutable to its political pricipals, who are i tur accoutable to the electorate. I the bottomup approach, mechaisms exist for citizes to hold public officials accoutable at the level at which services are delivered. These approaches are mutually reiforcig ad work best i tadem. Bottom-up approaches are oly likely to be effective where there is high-level commitmet to citize egagemet. Citize groups caot be expected to have the time or resources to fulfil a complete moitorig role. They ca, however, draw attetio to shortcomigs, highlightig issues that require attetio. Seior public servats ad miisters caot realistically kow everythig, ad citize egagemet ca play a importat role i brigig issues to their attetio. 383

396 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The Departmet of Performace Moitorig ad Evaluatio has primary resposibility for the first form of accoutability each miister is held accoutable to the Presidet through a performace agreemet, the implemetatio of which is moitored by the departmet. This top-dow accoutability would be ehaced by a improvemet of everyday bottom-up mechaisms of accoutability that would eable citizes to commuicate their grievaces ad seek redress at the poit of delivery. This routie accoutability would eable citizes to provide ogoig isights o service delivery, ot oly durig formal public participatio processes. It is vital that citizes kow their rights, ad have the ability ad icliatio to claim these rights. The Batho Pele priciples were itroduced i 1997 to ecourage public participatio ad promote resposive goverace. Notable amog these priciples is that govermet departmets should iform citizes about the level ad quality of public services they will receive so that they are aware of what to expect ad that citizes should be give full ad accurate iformatio about the services they are etitled to. These priciples emphasise trasparecy ad iformatio as key to accoutability. Traslatig trasparecy ito resposiveess, however, ca oly work if the iformatio is available at the poit of delivery ad if the officials are empowered to act. Delegatig authority ca make procedures more trasparet to direct users. I additio, it empowers officials to take up grievaces. Officials with operatioal maagemet authority will be better able to resolve may of the basic, everyday cocers of the people they iteract with. If they are faced with a problem they caot take resposibility for, they ca advise citizes o where best to take up their complait. Simplified processes help facilitate commuicatio betwee citizes ad the state. This does ot take away from the importace of top-dow accoutability structures; o the cotrary, effective routie accoutability to citizes should stregthe these as it provides a effective iformatio chael. To achieve this, basic iformatio about what citizes ca expect should always be available. Whe eterig a public buildig, citizes should be able to see what service they ca expect, ad where to go ad to whom they ca talk if they do ot get that service. Stregthe the ability of parliamet ad provicial legislatures to play a oversight role I ay democracy the lik betwee the legislature ad the executive is importat for esurig that the executive is held to accout, that policies are subject to rigorous debate ad that questios get asked whe thigs go wrog. Sectio 55(2) of the Costitutio states that the Natioal Assembly should maitai oversight over the executive ad hold it to accout. 384

397 CHAPTER 13: BUILDING A CAPABLE STATE I moder complex societies parliametarias ievitably face difficulties i assimilatig eormous quatities of iformatio. However, there are serious cocers about whether parliamet is curretly fulfillig its role adequately i the buildig of a capable, accoutable ad resposive state that works effectively for its citizes. Parliamet eeds to provide a forum for rigorous debate ad parliametarias eed to be bold i champioig the cocers of citizes. It eeds adequate support, particularly i the form of specialist policy ad research staff to support parliametary committees ad brief parliametarias. The fuctioig of parliamet is ot helped by the separatio of the admiistrative ad legislative capitals, which creates iefficiecies i the use of time ad fiacial resources. It also makes it more difficult for miisters to divide their time betwee their miistries ad parliamet. Give their limited legislative capacity, provicial legislatures eed to be particularly robust i their accoutability fuctio to esure provices perform their core fuctio i the delivery of basic services equitably, effectively ad hoestly. Provicial legislatures eed to shie a light o issues of poor ad ueve performace. This will ot happe as log as provicial legislatures are see primarily as a rug o the way to the atioal level. If provicial legislatures are ot see to fulfil this accoutability fuctio, it is ievitable that questios will be asked about their utility to the goverace of the coutry. At both the atioal ad provicial level more could be doe to provide adequate support for our elected represetatives, but these measures will ot fulfil their objectives uless legislatures show a geuie will to hold the executive to accout. This requires parliametarias to embrace their leadership role, ad political parties to ecourage ad empower them to do so. Improve relatios betwee the three spheres of govermet South Africa s itergovermetal framework is still relatively ew: the ie provices were formed i 1994 ad the curret local govermet system of wall-to-wall muicipalities was established i South Africa is still comig to terms with this setup, ot least because the provicial system was the result of egotiatio ad compromise. As a result, a great deal of attetio has bee focused o debatig whether the basic structures set out i the Costitutio are the right oes, or whether fudametal restructurig is required. This has deflected attetio from the much more pressig questio of how to make these structures work effectively. While it is true that the govermetal system is the result of compromise, this is ot uique to South Africa. No coutry ca expect to draw up its govermetal framework idepedetly of the politics of the time. Furthermore, South Africa s basic approach of decetralisig resposibility for implemetatio while maitaiig atioal oversight ad usig cetralised fudig mechaisms to achieve redistributio is ot out of lie with the approach take by may other coutries. 385

398 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Followig the trasitio to democracy, the system of local govermet required a major structural overhaul to move from a system desiged to serve the iterests of a miority to oe that could serve all South Africas. As part of costitutioal egotiatios, muicipalities were give a comparatively high degree of autoomy. The challege is to esure that these structures deliver for all South Africas, but there is cocer that the way resposibilities are divided is creatig ew forms of fragmetatio rather tha servig atioal developmetal objectives. The Costitutio sets out the distributio of powers ad fuctios betwee the three spheres of govermet, but o writte documet ca lay out every feature of the itergovermetal system. The Costitutio provides a set of high-level priciples for how the govermet system should operate, ot a maual for turig those priciples ito reality. It takes time ad experiece to idetify the best way of realisig these priciples. It is therefore usurprisig that South Africa has frequetly witessed distrust ad coflict betwee the differet spheres. This has replaced efforts to collaborate o overcomig obstacles. The costs of such chroic ucertaity are eormous. This paralysis has led to key decisios ot beig take, as a wait-ad-see approach takes hold. For example, the protracted debate o whether to trasfer resposibility for electricity distributio from muicipalities to regioal electricity distributors resulted, usurprisigly, i muicipalities uder-ive stig i the maiteace ad upgradig of ifrastructure for electricity distributio. The experiece of other coutries does ot suggest that there is a optimal approach to dividig powers ad fuctios, but it does suggest that buildig effective relatios betwee the differet spheres of govermet requires cosiderable time, effort ad will. The curret arragemet of the three spheres of govermet provides foudatios o which to build, but the coutry will eed to focus o issues that require urget ad sustaied attetio if the spheres are to work together more effectively. There are five particular issues that eed to be addressed if South Africa is to move its itergovermetal relatios oto a more costructive plai: Improve clarity i a differetiated system Regioalisatio as a respose to capacity costraits A more coheret set of powers for metropolita muicipalities A more focused role for provices A proactive approach to idetifyig ad resolvig problems. At the heart of these differet priorities is the eed to clarify the divisio of roles ad fuctios, ad esure disagreemets are resolved quickly ad effectively. This will make coordiatio ad cooperatio easier, reducig the umber of areas of potetial coflict. There is o doubt that the three spheres of govermet eed to cooperate with oe aother, but the system curretly relies too much o cooperatio without payig attetio to the coditios eeded for effect ive cooperatio to emerge. This makes it extremely difficult to achieve costructive itergovermetal relatios. Cooperatio requires a basis of trust ad mutual uderstadig. 386

399 CHAPTER 13: BUILDING A CAPABLE STATE The proposals we make here focus o this questio of how best to improve performace withi the existig system as this is where we believe gais are most likely to be achieved. However, as log as the curret levels of coflict persist, it is ievitable that more fudametal questios will arise, particularly with regard to provices ad district muicipalities. These are issues that may eed to be revisited, ad South Africa will eed to tread carefully i order to strike a balace betwee stability ad evolutio. Improve clarity i a differetiated system South Africa s local govermet system ha s sigificat powers ad resposibilities. However, the system has to meet very differ et eeds i differet parts of the coutry with differet levels of capacity, ragig from metropolita muicipalities with substatial fiacial, admiistrative ad techical resources to rural muicipalities that have limited scope to geerate their ow reveue ad lack the capacity to carry out complex tasks. A coheret approach to local govermet caot be a oe-size-fits-all approach. The tred i South Africa has bee towards greater differetiatio i the treatmet of muicipalities. I recogitio of these realities, the Costitutio allowed for differetiatio i the assigmet of powers ad fuctios to muicipalities through the distictio betwee Category A ad Category B muicipalities: the former beig the metropolita muicipalities that are resposible for all local govermet fuctios ad the latter beig local muicipalities where powers ad fuctios are shared betwee the local muicipality ad a district muicipality that ecompasses several local muicipalities. There has also bee differetiatio i the powers assiged to Category B ad C muicipalities; for example, i the provisio of bulk ifrastructure ad etwork services such as water ad saitatio. The fudig model for local govermet is based o a differetiated approach that recogises the wi de variatio i reveue-raisig capacity at local govermet level, as well as levels of access to basic services. The icreased use of coditioal grats has allowed for further differetiatio through the targetig mechaisms developed for each grat. This suggests that the itergovermetal framework allows for the allocatio of powers ad fuctios to evolve over time withi broad costitutioal priciples. This allows for a pragmatic approach to differetiatio that is a ecessary respose to the wide variatio i local govermet capacity, but the opportuities this provides have ot always bee used effectively. The way i which differetiatio is doe has ofte created cofusio, istability ad coflict. The allocatio of resposibilities to local govermet is determied by the provicial member of the executive coucil for local govermet, although powers ad fuctios ca oly be take away from muicipalities where they lack the ecessary capacity ad where the Muicipal Demarcatio Board has assessed that capacity. This ievitably results i istability, because it creates a ad hoc approach to the assigmet of powers ad fuctios. A future member of the executive coucil, or eve the same 387

400 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN perso at a later date, is able to reassig powers ad fuctios. This illustrates the eed for a more systematic ad predictable approach to assigig powers ad fuctios. A more systematic approach to dealig with the variatio i the levels of capacity that exist withi local govermet eeds to take ito accout two possible reasos for ueve capacity: The first set of reasos is exteral to the govermet system ad relates to the ecoomic, demographic ad geographic coditios of the locality. For example, urba ad rural muicipalities eed to carry out differet fuctios because of their differet ecoomic ad populatio patters. The secod set of reasos relates to admiistrative capacity. The capacity of local govermet to accomplish its core objectives has bee most restricted i some of the poorest areas where effective local govermet is urgetly required to play its trasformative ad developmetal role. This distiguishes betwee areas where a differetiated role is ecessary because of log-term ecoomic, demographic or geographic features ad cases where differetiatio is ecessary as a time-boud measure because of capacity costraits withi the muicipality. I the latter case, differetiatio eeds to be accompaied by a realistic log-term strategy to build the muicipality s capacity. This requires that the capacity exists to provide targeted support. I some cases, this may eed to be liked to short-term mechaisms to esure adequate service delivery i the iterim. It is essetial that districts ad provices have the capacity to play this role; capacity that they too ofte lack. Differetiatio is ot without risks. It could formalise secod-class muicipalities, which would be cocetrated i the most historically deprived parts of the coutry. This is why it is essetial to distiguish betwee log-term ad time-boud capacity costraits ad, i the case of the latter, have a realistic strategy for buildig capacity together with a graduated devolutio of powers ad fuctios. This requires that other spheres of govermet have the capacity to take o these fuctios where ecessary, but also the ability to build capacity i the muicipality to egage i a phased hadover of powers ad fuctios. If this is to be accomplished successfully, it is also essetial that the approach to differetiatio does ot overcomplicate the itergovermetal system. A coordiated ad cautious approach to diffe retiatio should make the roles of all spheres of govermet easier by allocatig powers ad fuctios that better reflect the capacity levels that exist. Regioalisatio as a respose to ueve capacity The wide variatio i the challeges faced by local muicipalities ad their capacity to meet those challeges meas there is a vital role for other levels of govermet. Ideed, the two-tier system of local govermet was desiged to address the limited capacity of may ewly created rural muicipalities, with district muicipalities providig support to local muicipalities. Origially, district muicipalities played a role i redistributio, 388

401 CHAPTER 13: BUILDING A CAPABLE STATE coordiatio ad plaig, as well as the delivery of bulk services for rural muicipalities. Accordig to the 1998 Muicipal Structures Act, the fuctios of district muicipalities related to: plaig, bulk ifrastructure, supportig local muicipalities ad providig services where a local muicipality lacked the capacity to do so. Their role has subsequetly bee exteded to give districts resposibility for key muicipal services such as water, saitatio, electricity ad health, while their redistributive role has bee reduced. The 2000 amedmet to the Muicipal Structures Act made districts resposible for key muicipal services, but with the optio of devolvig resposibility to local muicipalities. This has created cofusio, ucertaity ad sometimes resulted i stalemate. I some cases, the local muicipality has the relevat ifrastructure, but the district is receivig the fuds ad is o more willig to trasfer the fuds to the local muicipality tha the local muicipality is to trasfer cotrol of the ifrastructure to the district. This results i a situatio where fudig is beig paid to the wrog tier, adversely affectig the quality of basic services. Eve where district muicipalities have udisputed resposibility i techical areas such as water supply, they have ofte failed to put i place the capacity eeded to udertake these roles. Where district ad local muicipalities are both providig the same service, despite oly oe of them beig authorised to do so, it will be ecessary either to esure that oe stops performig the fuctio ad trasfers its staff ad assets to the tier that is authorised to provide the service, or to allow both muicipalities to perform the fuctio with fudig shared betwee them. This would require agreemet o the divisio of service jurisdictios ad fudig. The two-tier system of local govermet is clearly ot operatig as smoothly as it could. District muicipalities have frequetly lacked the skills ad capacity to provide the forms of support to local muicipalities that were origially iteded, ad lack of clarity about how powers ad fuctios are divided betwee the two tiers of local govermet has created scope for cofusio ad coflict. However, the basic logic for the two-tier system remais relevat i may parts of the coutry where local muicipalities lack the capacity to carry out key fuctios ad are uable to recruit the ecessary techical expertise. District muicipalities play their most importat roles i areas where the capacity of local muicipalities is weakest, ad those local muicipalities are poorly equipped to take o extra fuctios from the districts. There is a much more limited role for districts i secodary cities ad cosideratio should be give to establishig sigle-tier muicipalities i these areas. I such cases it is possible either to cosider a local muicipality operatig as a sigle authority with plaig ad bulk services resposibilities separate from the district, or the majority of muicipalities i a district beig amalgamated ito a sigle authority. South Africa eeds to move towards a more differetiated approach to districts that will better accommodate the gaps they eed to fill i differet parts of the coutry. 389

402 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN A differetiated approach to local muicipalities etails a differetiated approach to the role of district muicipalities. The Muicipal Structures Act (1998) allowed scope for flexibility i the divisio of resposibilities betwee districts ad local muicipalities, depedig o specific local circumstaces. For example, i the former homelad areas, local muicipalities fulfil fewer tasks with more fuctios beig carried out by the districts ad Eskom, while secodary cities assume a large rage of fuctios that, elsewhere, are carried out by the district. I rural areas, water boards, the regioal equivalet of Eskom, could play a greater role where districts struggle to develop the capacity required. However, if utilities ar e egaged as service providers, which is allowed for i curret legislatio, care must be take to esure that political accoutability remais with muicipal structures. Greater attetio should also be give to the role they could play i providig specific types of techical expertise. For example, if local muicipalities are uable to recruit their ow techical specialists, specialists could be recruited at district level or from a regioal utility to provide services to a set of local muicipalities. A more coheret set of powers for metropolita muicipalities Metropolita areas play a vital role i drivig ecoomic growth ad developmet. The clusterig of physical ifrastructure ad fiacial, academic ad socio-cultural istitutios i metropolita muicipalities makes urba goverace vital for shapig the pace ad trajectory of broader atioal developmet. Metropolita muicipalities cotai some of the highest levels of wealth i the coutry, but also high levels of poverty ad service delivery backlogs. These muicipalities produce much of the coutry s ecoomic wealth, ad therefore eed to protect ad ehace their ecoomic status. They also eed to protect the iterests of the poor ad margialised. This challege is made particularly pressig due to the impact of apartheid o the spatial patter of South Africa s cities may of the poor are located far from places of work i historically deprived areas with limited access to basic services. Iward migratio puts strai o physical ifr astructure ad basic services, but it also presets a opportuity. Urbaisatio requ ires ew housig, exteded services ad improved public trasport. The way i which metropolita muicipalities respod to these challeges ca either tackle or reiforce the spatial divisios of apartheid. However, the scope for creatig sustaiable huma settlemets depeds o the availability of well located lad, a commodity that is scarce i most South Africa cities. As a result, the fragmeted spatial legacy remais, makig it more difficult for metropolita muicipalities to provide services. To develop cities that are more liveable, more ecoomically dyamic ad more resposive to the eeds of all sectios of society, metropolita muicipalities eed to take a more itegrated approach to the challeges of developmet. The potetial ecoomic dyamism of a metropolita muicipality caot be fully achieved without also cosiderig where people live ad how they get to work. This meas that these 390

403 CHAPTER 13: BUILDING A CAPABLE STATE muicipalities eed to thik holistically about issues such as housig, trasport ad spatial plaig. If this is ot doe, housig will cotiue to be built o poorly positioed lad o the edge of cities, without adequate access to public trasport. It is importat that metropolita muicipalities are give more comprehesive cotrol over the core built eviromet fuctios that lie at the heart of urba plaig. Differet spheres of govermet have ot cooperated effectively aroud built eviromet fuctios relatig to housig, state-owed lad ad trasport ifrastructure. Despite the eed for metropolita muicipalities to take a overarchig view of these built eviromet fuctios, oe have bee give full accreditatio for housig, while oly five metropolita muicipalities ad two districts have received level 2 accreditatio. This shows that the Costitutio ad relevat legislatio allow for the ecessary shifts i powers ad fuctios, but these shifts are ot beig doe. The problem is lack of leadership ad imagiatio o how best to overcome the stalemate. As discussed i the ext sectio, there is a lack of a positive visio for the provices that ecourages them to devolve greater resposibilities to the local level by icreasig their resposibility for strategic coordiatio ad policy oversight. Trasferrig more fuctios to metropolita muicipalities is a ecessary step towards improvig the coordiatio of urba goverace, but it is ot sufficiet. These muicipalities ted to have greater admiistrative ad fiacial resources tha other muicipalities, but they also risk beig overloaded with additioal fuctios ad larger boudaries if chages are implemeted too swiftly. As a result, a coheret approach is required to phase i extra fuctios together with a log-term pla for developig the ecessary admiistrative ad fiacial capacity. I the loger term, cosideratio eeds to be give to the variatio betwee metropolita muicipalities, as what is appropriate for the largest metropolita muicipalities may ot be appropriate for the smaller oes. For the largest metropolita muicipalities, it may also be appropriate to cosider their curret positioig i relatio to the provices. Expadig the powers ad fuctios of the metropolita muicipalities should be a itegral part of a differetiated approach to local govermet. The complex set of challeges faced by these muicipalities meas that careful cosideratio eeds to be give to esurig that they have a coheret set of fuctios eablig them to take a holistic approach to ecoomic ad social issues. This ivolves deepeig their role to make it more comprehesive. Metropolita muicipalities eed a broader set of powers to be able to take a coordiated approach to the built eviromet fuctios of housig, trasport ad spatial plaig. This requires greater devolutio of powers ad fuctios from provices, icludig full assigmet of resposibilities i areas such as housig ad public trasport. This would allow the provices to focus o priorities outside metropolita muicipalities, while cocetratig o their core service delivery fuctios ad playig a more strategic role i the provice s overall developmet trajectory. 391

404 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN A more focused role for the provices Provices have bee a perpetual issue i debates about the goverace structures i post-apartheid South Africa. This cotroversy arises because the fuctio of provices was egotiated as part of the iterim costitutio, ad is fuelled by wide variatios i livig stadards ad govermet performace provices that icorporated substatial former homelads cosistetly perform worse tha others. However, uequal access to services ad ueve govermet capacity would have bee a issue uder ay system of govermet ad ay istitutioal arragemet. Eve if provices did ot exist, implemetatio would still have had to make use of the same structures. Provicial demarcatios make the persistet legacy of apartheid o both livig coditios ad istitutioal capacity highly visible, but they are ot the cause of these differeces. The real issue is how provices ca best cotribute to buildig more costructive itergovermetal relatios. It is this questio that is the most pressig priority, ad oe that requires urget a d focused attetio. Itergovermetal relatios will ot improve without a positive visio for the role of the provices. A differetiated approach to assigig po wers ad fuctios to local govermet requires that provices devolve resposibility to local govermet, where orgaisatioal, fiacial ad huma capacity exist. Sectio 156(4) of the Costitutio requires that resposibilities be devolved where fuctios are best admiistered locally ad muicipal capacity exists. Yet, provices are ofte reluctat to reassig fuctios to the local level. Costat debate about the role ad relevace of the provicial sphere of govermet has led to chroic levels of istability ad ucertaity. I this cotext, it is usurprisig that the provices have bee reluctat to devolve their powers ad fuctios. This has made it more difficult for provices to focus o their core role i the delivery of essetial services, especially educatio ad health. There is also little clarity o the role of the provices i relatio to the task of ecoomic developmet. While i recet years, more effort has bee expeded i the provices i attedig to this issue, there is little clarity o how this should be doe ad how it should relate to atioal iitiatives. Devolvig more authority to muicipalities with adequate capacity would eable provices to cocetrate more effectively o these key areas that costitute some of the most pressig challeges facig the coutry. Provicial govermet would also be better able to focus o providig support to those muicipalities where capacity is weakest. The capacity of provicial govermets therefore eeds to be stregtheed, so that they ca play this capacity-buildig role for local govermet. As with the relatioship betwee provices ad muicipalities, differetiatio i the allocatio of resposibilities from the atioal to the provicial sphere, that takes ito accout capacity, would stad govermet as a whole i good stead. 392

405 CHAPTER 13: BUILDING A CAPABLE STATE A proactive approach to idetifyig ad resolvig problems Clearer mechaisms are eeded for the allocatio of powers ad fuctios. This caot be doe with a oe-size-fits-all approach, but rather by esurig the powers ad fuctios of local govermet are cosistet with its levels of capacity. This meas that the flexibility allowed for i the Costitutio is appropriate it is essetial that the allocatio of powers ad fuctios is allowed to evolve over time, ad is tailored to the pace of capacity developmet. However, the curret levels of ucertaity are seriously damagig the capacity of local govermet to fulfil its developmetal madate. The challege is ot to try to elimiate all coordiatio problems overight, but rather to esure that there is a adequate way of addressig these problems as ad whe they arise. This requires leadership from atioal govermet, particularly from the Departmet for Public Service ad Admiistratio, the Departmet of Cooperative Goverace ad Traditioal Affairs, Natioal Treasury, ad the Departmet of Performace Moitorig ad Evaluatio. These departmets eed to work closely together to esure there is aligmet betwee powers ad fuctios, plaig processes ad budgetary allocatios. I may cases, these departmets will ot be able to resolve assigmet issues o their ow, but will eed to work with the relevat sector or provicial departmets. They also eed to work together to idetify coordiatio problems ad use their collective ifluece to esure disagreemets are resolved promptly. Where there is lack of clarity about the respective resposibility of differet atioal departmets ad how they coordiate with oe aother, this ca create kock-o effects o the other spheres of govermet. These questios have to be judged o a case-by-case basis. I geeral, a more streamlied approach is preferable to havig large umbers of miistries ad agecies with overlappig madates, but stability is also importat as this allows more scope for departmets to fid ways of cooperatig ad workig together. For example, there are mu ltiple departmets with resposibility for micro-ecoomic issues, ad more could be doe to improve clarity about their respective roles ad how they relate to oe aother. The developmetal potetial of state-owed eterprises State-owed eterprises have a vital role to play i advacig key atioal objectives, particularly through providig ecoomic ad social ifrastructure. If this is doe i a equitable ad cost-effective way, SOEs ca cotribute to both ecoomic growth ad overcomig spatial iequalities. I 2030, South Africa eeds to be served by a set of efficiet, fiacially soud ad well govered SOEs that address the coutry s developmetal objectives i areas where either the executive arms of govermet or private eterprises are able to do so effectively. These eterprises must deliver a quality ad reliable service at a cost that eables South Africa to be globally competitive. To live up to these expectatios, SOEs will require clear public iterest madates, which are cosistetly eforced. 393

406 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN To improve the performace of SOEs, thei r task eeds to be simplified. Askig eterprises with limited capacity ad resources to address too may differet priorities at oce is settig them up to fail, particularly whe they have to work through complex or upredictable goverace structures. SOEs eed to focus o their mai policy priorities. Efforts to improve the performace of SOEs have ot bee particularly successful. Istead, they have bee burdeed with overly complex objectives ad goverace structures ad, i may cases, perpetual ucertaity about their log-term trajectory. SOEs eed a stable ad straight forward goverace structure that allows them to focus o their log-term objectives. The challege is to develop better ways of workig, so that the multiple ad competig priorities that are recogised i formal documets ca be prioritised more effectively i practice. Three broad sets of reforms will esure sustaiable improvemets i the performace of SOEs: A clear madate Each SOE eeds a well defied ad trasparet madate that sets out its role ad how its activities serve the public iterest. A clear ad straightforward goverace structure This ivolves clearly idetifyig ad maagig govermet s differet roles i policy makig, owership of utility assets, ad regulatio of prices ad quality of utility services. Careful cosideratio eeds to be give to how these differet roles are allocated to esure a sustaiable balace betwee short-term ad log-term priorities ad coordiatio betwee differet policy priorities. Deal with capacity costraits Where all parties are operatig withi severe capacity costraits, models are eeded that are tailored to existig levels of capacity, eve as capacity is built over time. This requires a log-term strategy to develop the forms of policy ad techical expertise that SOEs eed to carry out their madate. Madates clarify the role of SOEs While cosiderable attetio has bee give to the trasformatio of SOEs, less attetio has bee give to the trasformative or developmetal role that they ca play. As these are publicly owed bodies, ay aalysis of how to improve their goverace arragemets should build o a clear uderstadig of what each eterprise eeds to achieve. SOEs eed to have a madate that is clearly uderstood ad effectively eforced. The closest thig to this madate at the momet is the stakeholder compact required by the Public Fiace Maagemet Act. The most importat fuctio of the madate is to specify why the SOE is eeded. Give that these eterprises exist to serve the public iterest, it is importat that the madate is precise about the ature of the public good that the SOE provides ad how it serves the public iterest. For the large SOEs ivolved i ecoomic ifrastructure provisio, their madate should also clearly iclude the imperative of fiacial viability ad sustaiig their asset base ad balace sheet i order to maitai ad expad services. Attetio also eeds to be give to the rage of developmet fiace istitutios. Greater clarity about the respective iche 394

407 CHAPTER 13: BUILDING A CAPABLE STATE filled by each developmet fiace istitutio ad improved coordiatio betwee these agecies could help to maximise their developmetal impact. I formulatig a public iterest madate for a SOE, it is importat to recogise that: The reaso some SOEs were created may ot be relevat today, because the character of both govermet ad the market chages over time. This would arise if the gap they were set up to fill has either ceased to be of policy sigificace or ca ow be dealt with i a equitable ad sustaiable way without public sector ivolvemet. The focus of a SOE s activities may have shifted, expaded or cotracted over time. This may be a appropriate adaptatio to chagig circumstaces, but it may also be missio creep, where a SOE expads ito activities that may ot serve the public iterest or distract from its core purpose. The madate of each eterprise should be reviewed periodically. This is a importat iteral exercise for each SOE to esure there is clear cosesus about its pricipal objectives ad how these are to be met. It is also a importat exteral exercise for the state to esure that idividual SOEs are held accoutable for how they use public resources i promotig the public iterest. The reewal, refiemet or revocatio of each SOE s public iterest madate will eable a clear cosesus about what costitutes success. Review processes should also allow for the possibility that ew eterprises may eed to be created to atted to umet public iterests. While such reviews are importat, they should ot be doe too frequetly, as the activities of may SOEs require predictability to make log-term ivestmet decisios. These review processes will esure that cosesus emerges betwee idividual SOEs ad their respective policy departmets o how the eterprise furthers the public policy objectives of the relevat departmet. The madate of each SOE should be scrutiised by the appropriate policy miistry ad parliametary committee. The fial versio should be publicly available o the websites of the SOE, the relevat policy miistry ad the shareholder miistry, so that each etity ca be assessed o how it is fulfillig its public iterest madate. This will help to stregthe other stakeholders with a iterest i improvig performace. Other reforms could iclude improved traspare cy ad flow of iformatio, such as comprehesive aual reports ad fiacial statemets, makig performace cotracts available ad publishig results, ivestmet ad coverage plas, prices, costs ad tariffs, service stadards, bechmarkig ad customer surveys. Iformatio eeds to be credible, coheret ad timely. A clear madate ca provide the basis for a more detailed assessmet of the SOE s performace. A shareholder compact or performace cotract usually lays out the shareholder miistry s objectives for the utility. Performace cotracts are egotiated agreemets, clarifyig objectives ad addressig tariffs, ivestmets, subsidies, ad o-commercial (social or political) objectives ad their fudig. Performace cotracts are widespread, but their effectiveess is ot guarateed. They have ot always reduced 395

408 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN the iformatio advatage that maagers ejoy over owers, which ofte allows maagers to egotiate performace targets that are easy for the utility to achieve. Cotracts ca also be icomplete ad fail to aticipate evets ad cotigecies. Govermet ca reege o commitmets, icludig promised budgets for social programmes. Performace cotracts are ot a paacea ad should oly be used if govermet is willig to deal with the challeges of iformatio asymmetry, effective icetives ad credible commitmets. Clarify ad simplify goverace structures It is essetial that SOEs have clear goverace arragemets. Clarifyig the existig goverace arragemets could help SOEs operate effectively ad make it easier to recogise whe they are ot fulfillig their madates. The goverace structure of SOEs arises from the eed to treat these eterprises differetly to executive govermet departmets or privately owed commercial eterprises. They exist to serve the public iterest, but they are also expected to geerate at least some of their ow reveue through their busiess activities. The goverace structure eeds to recocile their commercial objectives with their public iterest objectives. There is o sigle model curretly applied. Some large SOEs ivolved i ecoomic ifrastructure ad idetified pre-1994 for privatisatio were separated from their policymakig miistry ad placed uder what became the Departmet of Public Eterprises as the SOE shareholdig miistry. I these cases, the Miister of Public Eterprises represets the iterests of govermet as the shareholder, while the relevat policy miistry has the mai iterest i the services delivered by the SOE. The divisio of resposibilities ca help to create a healthy tesio that esures adequate attetio is paid to both the services provided by the SOE ad its fiacial sustaiability. Desigig effective shareholder compacts ad moitorig the performace of large SOEs is ot a simple task. This professioal competece is best located i a cetral departmet, either the Departmet of Public Eterprises or a divisio withi the Natioal Treasury. The joit miistry model requires that: The shareholder miistry should be resposible for esurig SOEs are viable ad fiacially sustaiable, ad that their assets are maitaied ad reewed. The policy miistry should be cocered with whether the SOE is servig key policy objectives. Smaller SOEs, with o substatial commercial purpose or base, could report directly to their policy miistries. For this divisio of resposibilities to be effective, there eeds to be coordiatio ad clarity aroud policy priorities ad soud fiacial maagemet. The policy ad shareholdig miistries eed to work together to frame the objectives ad performace 396

409 CHAPTER 13: BUILDING A CAPABLE STATE measures embedded i the shareholder or performace compact. However, effective coordiatio is ot easy to achieve ad, where it is missig, split reportig lies ca easily cofuse the lies of accoutability. If the split reportig model is to work effectively, it will eed to start from a clearer delieatio of each departmet s resposibilities, to make it easier to determie the specific issues that eed coordiatio ad how this should take place. I some coutries, icludig New Zealad, the two departmets are joit shareholders with joit resposibility for appoitig the board. This could help to istitutioalise coordiatio ad esure more effective recociliatio of differet priorities, especially if the performace cotract is desiged joitly by the two miistries. Effective goverace also requires stabilit y i the powers ad appoitmet of the boards of SOEs. Ufortuately, may of Sout h Africa s SOEs have see frequet chage i board compositio ad leadership. Give that the powers of owership are exercised by politicias, there is a risk that appoitmets, both to boards ad seior maagemet, will be politicised, potetially destabilisig the performace of the SOE. The chief executives of SOEs are appoited by Cabiet o the recommedatio of the Miister of Public Eterprises. This udermies the powers of the board. To achieve greater stability i the goverace of SOEs, it is essetial that there is more stability of SOE boards ad clearer accoutability lies of chief executives to the board. The shareholder ad policy miistries should joitly appoit the boards ad the boards should appoit their chief executives. This eables a clear lie of accoutability betwee govermet ad the board, ad betwee the board ad the chief executive. The relatioships betwee SOEs ad idepedet regulators have frequetly proved problematic. Sector regulators eed to be draw ito the process whe shareholder ad policy miistries desig performace cotracts. The coditios for a regulator to be effective have teded to be oerous ad adequate regulatory capacity caot be built overight. For idepedet regulators to be effective, they must have clearly defied powers ad adequate huma ad fiacial resources to fulfil these powers. Address capacity costraits Clearer goverace structures ad more focused madates will reduce the burde o limited huma ad fiacial resources. However, there also eeds to be a coheret logterm strategy to develop the forms of policy ad techical expertise required by SOEs ad to esure that they are fiacially soud. SOEs require a rage of skills, icludig admiistrative, policy, maagerial ad techical. Govermet eeds to have a clear strategy fo r how these skills are goig to be produced ad developed over time. To develop this strategy, the skills eeds of idividual SOEs eed to be idetified. Alogside reviewig ad clarifyig the madate of idividual SOEs, it is essetial that there is a skills audit ad a assessmet of whether curret approaches are adequate for developig the ecessary skills. Where gaps exist, 397

410 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN govermet eeds to develop traiig strategi es to esure a ew geeratio of skills is developed. Salary levels have rise rapidly i may SOEs, particularly at seior levels; but there is o evidece that high salaries eable these etities to obtai ad retai the best people. Ideed, excessively high salaries ca create perverse icetives, icludig icreasig the temptatio to use seior posts for political deploymet, rather tha idetifyig the best perso for the job. High salaries are a costly ad ieffective alterative to developig the skills base ad esurig workig eviromets recogise ad value professioal skills. Istability i policy approaches ad orgaisatioal structures aggravates the difficulty of attractig ad retaiig appropriate people to address the challeges of strategic directio (typically the role of the board) ad of operatioal effectiveess (seior maagemet). I most cases, leaders lay the foudatio for future success i their first three years i office, ad oly deliver that success subsequetly, meaig that stable leadership will be importat if major improvemets i performace are to be achieved. SOEs eed a log-term fudig strategy that is reliable ad cosistet to esure they are able to recover their operatig costs, ad provide for the capital replacemet ad expasio eeds required to ehace their public iterest madate. However, there is ofte a mismatch betwee the fudig dyamics of govermet ad the eterprises it ows. Nowhere is this mismatch clearer tha i the case of Eskom. From its establishmet i 1923, Eskom has repeatedly faced fudig challeges i replacig ad expadig existig ifrastructure. Some SOEs ca look to private ivestmet. Mixedcapital eterprise arragemets also ecourage icreased stakeholder ivolvemet. These ca be established either by sellig a miority or o-cotrollig equity stake to private ivestors or through private debt markets. Shareholders ad bod-holders ca provide additioal pressure to perform well. Credit agecies provide fiacial disciplie over maagers, who fear a credit dowgradig ad a icrease i capital costs. Eve where private fiace is used, govermet has a critical role to play i creatig the ecessary coditios to attract ad secure ivestmet. SOEs that provide goods ad services for which a charge ca be levied should ideally recover their operatig costs through some form of full-cost pricig. However, the pricig of these goods ad services has public cosequeces, because they are provided for a public purpose ad govermet may have a iterest i subsidisig the provisio of some goods. Commercial resposibilities should be clearly separated from social goals through trasparet mechaisms, such as fiscal trasfers ad subsidies for service provisio to poor households. For example, Eskom has a madate to provide reliable ad competitively priced electricity to miig, idustry ad busiess, but it also has a madate to exted affordable access to electricity services to poor households. The former should geerally pay a tariff that reflects the full cost, whereas the latter may be eligible for subsidies for their coectio fees ad possibly a portio of their eergy cosumptio costs. It ca be disastrous to the fiacial sustaiability of SOEs to mix up these madates ad provide services at below cost if the gap is ot covered by a explicit subsidy. Clarity o how social madates will be fuded or subsidised is essetial. 398

411 CHAPTER 13: BUILDING A CAPABLE STATE No-commercial ad social programmes should be clearly separated from the core ecoomic services provided by the SOE. The former require trasparet public fudig flows, while the latter should be fuded through cost-reflective tariffs. Capable, professioal, resposive: the state i 2030 Betwee ow ad 2030, we eed to move towards a state that is more capable, more professioal ad more resposive to the eeds of its citizes. Progress eeds to be pursued most rapidly i those areas where state capacity is curretly at its weakest. We have set out key proposals to ulock opportuities, tackle major problems ad put South Africa o the right path for buildig a state that is capable of promotig the key atioal objectives of elimiatig poverty ad reducig iequality. 399

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413 CHAPTER 14: PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION Chapter 14 PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION Everybody assists the istitutios we have creatively redesiged to meet our varied eeds; we reach out across commuities to stregthe our resolve to live with hoesty, to be set agaist corruptio ad dehumaisig actios. Itroductio As the Diagostic Report of the Natioal Plaig Commissio otes, poor goverace ca fatally udermie atioal developmet. Evidece gathered by the commissio idicates that South Africa suffers from high-levels of corruptio that udermie the rule of law ad hider the state s ability to effect developmet ad socioecoomic trasformatio. The performace of state systems of accoutability has bee ueve eablig corruptio to thrive. Corruptio is ot specific to the public sector; the private sector has bee tolerat of ad egages i corrupt practices. Although the etire coutry is harmed by corruptio, the costs fall most heavily o the poor through the impact o the quality ad accessibility of public services. Overcomig the twi challeges of corruptio ad lack of accoutability i our society requires a resiliet system cosistig of political will, soud istitutios, a solid legal foudatio ad a active citizery that is empowered to hold public officials accoutable. What has bee achieved sice 1994? Corruptio, which is ofte perceived as a post-1994 pheomeo, was also widespread i the apartheid era. Research by the Istitute for Security Studies provides extesive evidece of grad corruptio before 1994, cocludig that whe the apartheid state was at its most repressive, it was also at its most corrupt. 1 This i o way excuses corruptio today, but South Africa caot hope to tackle corruptio without uderstadig its origis. I the democratic era, several sigificat steps have bee take to couter corrupt practices ad put i place accoutability mechaisms. Appreciative of the role of trasparecy i creatig a accoutable, resposive govermet, the drafters of the Costitutio icluded the right to access iformatio ad the right to admiistrative 1 Va Vuure H (2006). Apartheid grad corruptio. Report prepared for the secod Natioal Aticorruptio Summit. Cape Tow: Istitute for Security Studies. 401

414 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN justice i the Bill of Rights. These rights are crucial to eablig the achievemet of the other socioecoomic rights eshried i the Costitutio. To give effect to these rights, the Promotio of Access to Iformatio Act ad the Promotio of Access to Justice Act were passed i These laws provide a foudatio for ope, trasparet ad accoutable govermet ad, together with the Prevetio ad Combatig of Corrupt Activities Act (2004), form a solid legislative basis to fight corruptio. I additio to progressive laws, South Africa has created a umber of istitutios that play a importat role i combatig corruptio. These iclude the oversight istitutios established i terms of chapter 9 of the Costitutio to stregthe costitutioal democracy, such as the Auditor-Geeral ad th e Public Protector, which have played a importat role i combatig corruptio ad holdig public officials to accout. Several ati-corruptio agecies are operatig with solid skills ad political commitmet. Visio 2030 Our visio for 2030 is a South Africa which has zero tolerace for corruptio, i which a empowered citizery have the cofidece ad kowledge to hold public ad private officials to accout ad i which leaders hold themselves to high ethical stadards ad act with itegrity. This South Africa has a resiliet ati-corruptio system i which aticorruptio agecies have the resources, credibility ad powers to ivestigate corruptio, ad their ivestigatios are acted upo. How will South Africa achieve its Visio 2030? The commissio has sigled out four areas of focus i which policies should be implemeted to move towards a accoutable state ad zero-tolerace of corruptio: Buildig a resiliet ati-corruptio system The focus of ati-corruptio efforts should be o creatig a resiliet ati-corruptio system that ca operate freely from political iterferece ad is supported by both public officials ad citizes. A resiliet system is oe where the desigated agecies have the capability ad resources to ivestigate cases of corruptio, leaders take actio whe problems are brought to their attetio, citizes resist the temptatio to pay bribes because they recogise that their idividual actios cotribute to a bigger problem, the private sector does ot egage i corrupt practices, citizes are empowered to speak out agaist corruptio ad the media fulfils its ivestigative ad reportig fuctio to expose corruptio i the public ad private sector. Stregthe accoutability ad resposibility of public servats South Africa public servats should be made legally accoutable as idividuals for their actios, particularly i matters ivolvig public resources. Create a ope, resposive ad accoutable public service State iformatio, icludig details of procuremet, should be made opely available to citizes. Furthermore a iformatio regulator should be established to adjudicate appeals whe access to iformatio requested is deied. 402

415 CHAPTER 14: PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION Stregthe judicial goverace ad the rule of law Reform aspects of the judicial goverace system to esure the idepedece ad accoutability of the judiciary. Establish clear criteria for the appoitmet of judges ad scale up judicial traiig to improve the quality of judges i our courts. Cosideratio should be give to the extesio of commuity service to law graduates i order to icrease legal represetatio for the poor ad speed up the admiistratio of justice i the lower courts. Buildig a resiliet ati-corruptio system The commissio proposes the followig: Stregtheig the multi-agecy ati-corruptio system Stregthe protectio of whistle-blowers Cetralise the awardig of large teders or teders with log duratio Give greater teeth to the teder compliace moitorig office to ivestigate both corruptio ad the value for moey aspect of teders. Stregthe the multi-agecy ati-corruptio system South Africa has a umber of agecies madated to fight corruptio. These iclude the Special Ivestigatios Uit, the Public Protector, the Public Service Commissio, the Auditor Geeral, the Assets Forfeiture Uit, the Directorate for Priority Crimes Ivestigatio, ad the Idepedet Police Ivestigative Directorate. Some have argued that the multiplicity of ati-corruptio agecies udermies the fight agaist corruptio by dividig resources ad has resulted i a ucoordiated approach to tacklig corruptio. There has bee much debate about whether South Africa should have a sigle aticorruptio agecy. 2 Hog Kog s Idepedet Commissio Agaist Corruptio is ofte cited as a model for a sigle-agecy system because of its well-publicised success i fightig corruptio. The Idepedet Commissio Agaist Corruptio model has bee adopted i a umber of coutries icludig Australia, Botswaa ad Sigapore. While Idepedet Commissio Agaist Corruptio has bee a great success i Hog Kog, there are doubts about whether the model ca be trasposed to South Africa. Its success has largely resulted from the specific coditios existig withi Hog Kog, icludig a relatively well-regulated admiistrative culture alogside a large, ad agai, well-resourced police force uder a political ad legal framework which supports aticorruptio activities. 3 While there are ogoig efforts to develop South Africa s admiistrative capacity ad improve the crimial justice system, as detailed i other chapters i this pla, the coutry does ot have the istitutioal foudatio i place to make the ICAC model a viable optio. 2 Camerer L (1999). Tacklig the Multi-headed Drago Evaluatig prospects for a sigle ati-corruptio agecy i South Africa. Istitute for Security Studies Occasioal Paper Ibid. 403

416 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Rather tha focusig o the umber of ati-corruptio istitutios, the emphasis should be o stregtheig the ati-corruptio system. A fuctioig ati-corruptio system requires sufficiet staff ad resources wi th specific kowledge ad skills; special legislative powers; high level iformatio sharig ad co-ordiatio; ad operatioal idepedece 4. Idepedece etails isulatig istitutios from political pressure ad iterferece. A sigle agecy approach is less resiliet i this respect because if the loe ati-corruptio body faces political capture, the idepedece of the etire system is compromised. A multiplicity of agecies provides checks ad balace, that are essetial i the South Africa cotext, ad develops a systemic resiliece agaist iterferece. Stregtheig the ati-corruptio system requires icreasig the specialist resources of ati-corruptio agecies, improvig coordiatio ad cooperatio betwee agecies ad esurig that the idepedece of each of the agecies is maitaied. There should be greater emphasis o prevetig corruptio through public educatio drives. This should cover how it affects the delivery of services essetial to citize s daily lives ad the mechaisms through which cases of corruptio ca be reported. While South Africas are highly aware of the evils of corruptio they must be ecouraged to make the coectio betwee the seemigly petty icidets of corruptio they participate i daily, such as the cold drik to a police officer to avoid a traffic fie, ad the grad corruptio they see reported i the Suday ewspapers. The aim should be to create a shift i attitudes towards corruptio. Greater citize participatio i ati-corruptio efforts should be ecouraged by amogst other thigs stregtheig the protectio of whistle-blowers. A idepedet media also has a role to play i public awareess by ivestigatig ad reportig o cases of corruptio. No effort to tackle corruptio ca succeed without political will ad support for aticorruptio agecies. Political will refers to more tha public statemets of support, ad icludes a commitmet to actig o that support by providig sufficiet resources ad takig actio agaist corrupt officials. Political parties must strive to maitai a highlevel of ethical coduct amogst their members. Political leaders must remai coscious of the impact of their behaviour o the hoour ad itegrity of the political office they hold. Stregthe protectio of whistle-blowers Protectio for whistle-blowers is essetial to create a culture of disclosure of wrogdoig. While the Protected Disclosures Act (2000) provides some protectio for whistle-blowers, it does ot do eough. I fact, the percetage of people who idetify themselves as prepared to blow the whistle has dropped by 10 percet over the last four years. 5 4 Ibid. 5 Ipsos Markior (2010). Whistle blowig, the Protected Disclosure s Act, accessig iformatio ad the Promotio of Access to Iformatio Act: Views of South Africas,

417 CHAPTER 14: PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION Several weakesses eed to be addressed: The scope of protectio i law is too arrow. For example, the Protected Disclosures Act is limited to whistle-blowers i a formal permaet employmet relatioship, excludig citize whistle-blowers. It excludes all persos i other commercial relatioships with the relevat orgaisatio. This eedlessly restricts the scope of protectio to the employmet relatioship. Cosider a employee who makes a disclosure about a cliet to her employer, ad the employer trasfers the employee rather tha atagoisig the cliet. Such a employee would ot be protected. The rage of bodies to which a protected disclosure may be made is too arrow. There is o public body tasked with providig advice ad promotig public awareess, ad o public body dedicated to moitorig whistle-blowig. The possibility of coditioal amesty for whistle-blowers implicated i corruptio is ot clear. Adequate security for whistle-blowers has ot bee established. Physical ad ecoomic protectio may be required i some cases. Opiios vary o what costitutes adequate protectio. I respose to these gaps, the commissio recommeds the followig: Expad the scope of whistle-blower protectio uder the Protected Disclosures Act to iclude those outside the traditioal employer-employee relatioship. Permit disclosure to bodies other tha the Public Protector ad the Auditor- Geeral ad stregthe measures to esure the security of whistle-blowers. Cetralise the awardig of large teders The law goverig public procuremet i South Africa has become icreasigly complicated over the past decade. It is ow so complex that there is reaso to believe that it is impedig effective govermet. Whe eve hoest ad competet bureaucrats fid it difficult to uderstad what their legal obligatios are ad how to comply with them, the law requires simplificatio. The award of ay teder is govered by umerous layers of law. Which of these layers applies i ay give case depeds o the cotext ad the circumstaces. The complexity of procuremet law also frequetly works to the detrimet of those who wi cotracts to provide goods ad services to the state. Orgas of state seekig to escape cotractual obligatios ow frequetly argue that the process resultig i the cotract did ot live up to the stadards set by procuremet law. It is ofte alleged by such orgas of state that a competitive teder process did ot occur, that the relevat sigatory to the cotract was ot properly authorised, or that the process was icosistet with the law. The law of procuremet i such istaces provides a expediet route of escape for those wishig to dodge their obligatios. The commissio proposes a review ad reform of procuremet procedures. This would iclude legal reforms to simplify procuremet, which esure that accoutability 405

418 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN mechaisms remai i place ad that the law retais proper safeguards for detectig corruptio ad maladmiistratio. The eed for swift, effective service provisio ad a fuctioig oversight mechaism must be carefully balaced. I additio, a tiered system of review for teders, depedig o their value, with differetiated safeguards ad procedures sh ould be cosidered. Such a system could have automatic safeguards built i, so that teders above a certai amout are subjected to special review by the Auditor-Geeral ad the Parliametary Stadig Committee o Public Accouts, with a public hearig to exercise oversight over the teder award process. Give greater teeth to the teder compliace moitorig office to ivestigate both probity ad the value for moey aspect of teders The practice of outsourcig ad tederig for services has icreased cosiderably i the last decade. The vast rage of teder opportuities i the public service has also come with icreased opportuities for corruptio as both officials ad cotractors use the teder system to erich themselves. The govermet is coscious of these challeges ad has put i place some measures to itroduce greater accoutability i supply chai maagemet practices. The Office of the Accoutat Geeral i the Natioal Treasury is resposible for promotig ad eforcig the effective maagemet of reveue ad expediture i departmets, as well as moitorig the proper implemetatio of the Public Fiace Maagemet Act (1999) ad the Muicipal Fiace Maagemet Act (2003) by state istitutios. This icludes settig ad moitorig orms ad stadards with respect to procuremet practices. While this moitorig fuctio is vital, the commissio proposes stregtheig the office to ivestigate the value for moey of teders. This would etail, for example, beig empowered to audit the bill of quatities for projects to esure that the uit costs of materials is ot excessive ad that the state istitutio i questio derives the maximum utility from the service procured. Stregthe accoutability ad resposibility of public servats There are three geerally accepted priciples of the state s liability to pay the litigatio costs of a fuctioary. The first is that the litigatio costs are paid i circumstaces where the state or the fuctioary is beig sued or charged i other words as a defedat or a accused. The secod is that the coduct of the fuctioary that is the subject matter of the litigatio is coduct that falls withi the course ad scope of the fuctioary s employmet or state fuctio. The third is that if the state does fud the litigatio ad the court determies that the coduct was ot i the course ad scope of the fuctioary s employmet or state fuctio, it is etitled to recover those costs from the fuctioary. I practice, there have bee serious departures from these priciples that have resulted i the state payig uecessarily for costly litigatio ivolvig fuctioaries. 406

419 CHAPTER 14: PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION The State Liability Amedmet Act (2011) makes provisio for the priciple of accoutability of public servats. The commissio recommeds that: The provisios i sectios 13 (a) ad (b) of the act be strictly eforced ad moitored by the Public Service Commissio. A accoutability framework should be developed likig the liability of idividual public servats to their roles ad resposibilities ad job descriptios i proportio with their fuctios ad seiority. It should be made illegal for civil servats to operate or beefit from certai types of busiess. Restrait of trade agreemets should be cosidered for seior civil servats ad politicias i all spheres of govermet. Exit iterviews ad proper record keepig would eable this practice. Create a ope, resposive ad accoutable public service The importace of trasparecy to public accoutability has bee demostrated i theory ad i practice. Dissatisfactio about lack of access to iformatio o service delivery has emerged as a factor i public protests. I developig coutries such as Idia, Bagladesh ad Mexico, the right of access to iformatio is used as leverage by commuities to help them claim socioecoomic rights. Sectio 32 of the Costitutio eshries the right of access to iformatio. I practice, requests for iformatio are routiely igored, despite the existece of the Promotio to Access to Iformatio Act, which aims to give effect to this sectio. There is edemic lack of compliace. 6 There are may reasos for the lack of effective implemetatio of the Promotio of Access to Iformatio Act, icludig wilful eglect, lack of appreciatio of the importace of the right, a istitutioal culture of risk averseess ad/or secrecy ad a lack of traiig. The Asmal report o Chapter 9 istitutios idetified this as a serious challege ad diagosed the absece of a useable eforcemet mechaism as oe of the primary obstacles. 7 Ulike most moder access to iformatio laws, the act does ot create a specialist adjudicatory body, such as a iformatio commissioer or commissio. The Asmal report recommeded that such a body be established to dispese quick, accessible ad iexpesive access to justice for those appealig decisios to withhold iformatio, or so-called deemed refusals where o aswer comes i respose to a request. 6 The South Africa Huma Rights Commissio s 2009/10 report states that A aalysis of compliace with sectio 32 reports for multiple levels of govermet over the decade sice PAIA s passage ito law has provided clear evidece of poor levels of compliace with its provisios. These levels of compliace poit to a low level of awareess, a lack of accoutability for o-compliace ad the importace (or lack thereof) accorded to PAIA i the sector. (Page 158). 7 Asmal et.al. (2007). Report of the ad hoc committee o the Review of Chapter 9 ad associated istitutios. Report to the Natioal Assembly of the Parliamet of South Africa. 407

420 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The commissio proposes the followig: The Protectio of Persoal Iformatio Bill that is beig discussed i Parliamet seeks to establish a iformatio regulator coverig certai aspects of iformatio ad persoal data. This body should be equipped with the ecessary resources to do its job properly ad idepedetly. The body should strike the right balace betwee its resposibilities to protect persoal data, while providig recourse to those claimig their right of access to iformatio. More ope data should be made available. Ope data is iformatio that is made actively available without a request from a idividual. This is also provided for i the Promotio of Access to Iformatio Act, but geerally ot implemeted due to lack of expertise. Some departmets ad muicipalities have made a effort to make some iformatio availabl e. The Departmet of Mieral Resources has attempted to put all ew order miig liceses o its website. Although may liks are broke, the site attempts to make the data geerally available. I additio, compaies that hold those rights should make the iformatio available. Other examples of iformatio that should be made available would be beeficiary lists for housig projects, ofte a source of deep tesio i commuities, teder iformatio, ad evirometal impact assessmets. Stregthe judicial goverace ad the rule of law Without a reliable, hoest, efficiet court system, there ca be o access to justice as eshried i the Costitutio o cofidece o the part of ivestors ad other major players i the ecoomy, ad little prospect of holdig powerful private ad public actors to accout. South Africa s rule of law is geerally i good shape, although more could be doe to realise the trasformative promise of the Costitutio. Challeges such as iefficiecies i the court admiistratio that deude people of the right to access to justice, ad judicial appoitmets that call ito questio the impartiality of selectio processes, must be addressed. For the Costitutio, ad the law i geeral, to be a aget of chage, rather tha a obstacle to socioecoomic trasformatio, the law must be iterpreted ad eforced i a progressive, trasformative fashio. This requires a judiciary that is progressive i its judicial philosophy ad legal icliatios. The selectio ad appoitmet of judges is of crucial importace, ot just to the rule of law ad the idepedece of the courts, but to socioecoomic trasformatio. At preset, there is little or o cosesus i the Judicial Service Commissio (JSC) or i the legal fraterity more geerally, about the qualities ad attributes eeded for the bech. Judicial goverace cocers both the idepedece ad the accoutability of the judicial brach of govermet, ad ecompasses issues such as judicial selectio ad appoitmet, ad judicial ethics, the leadership ad maagemet of the judiciary, ad the admiistratio of the courts. The selectio ad appoitmet of judges is the 408

421 CHAPTER 14: PROMOTING ACCOUNTABILITY AND FIGHTING CORRUPTION resposibility of the JSC, a body established uder the Costitutio; the admiistratio of the courts falls uder the Departmet of Justice. The previous chief justice established a body to examie judicial reforms, ad its forthcomig report will deserve serious cosideratio. It is importat for the JSC to lead a process to build cosesus o the qualities ad attributes of the ideal South Africa judge. 8 The criteria should ecompass a rage of qualities ad attributes, icludig a progressive judicial philosophy ad a uderstadig of the socioecoomic cotext i which the law is iterpreted ad eforced. While the JSC published a list of criteria for judicial appoitmets i September 2010, these criteria are quite broad ad will require further developmet, ad a clearer uderstadig of their meaig ad applicatio. The traiig of judges also requires attetio. The Judicial Traiig Istitute is yet to get off the groud. It eeds to be lauched soo to improve the lives of South Africas, ad to esure that the South Africa Costitutio ad jurisprudece retai their iteratioal stadig. Further reforms that ca be cosidered iclude the compositio of the JSC itself, which is argued by some to be too large to fuctio effectively, ad to be hamstrug by political iterests. The JSC s icreasig role i eforcig the Judicial Code of Coduct is oe example of how its role is expadig, ad cosideratio should be give to whether it is optimally structured to fulfil its various roles ad resposibilities. Access to justice ad speedier resolutio of court cases require more attetio. This is particularly importat for workig people who struggle to get time off from work to atted court. I additio to the burde of log court rolls, which lead to uecessary delays ad postpoemets, may poor people caot afford the costs of trasport to courts. The cost of justice for the poor ca preset a major barrier to accessig justice; it ca also lead to uiteded miscarriage of justice whe bail caot be afforded ad the accused ot adequately represeted. Law gra duates should be viewed as a resource for the promotio of the rule of law. A audit of uemployed graduate law studets should be doe to esure proper placemet i much-eeded areas. The commissio proposes the followig: Accelerate reforms to implemet a judiciary-led idepedet court admiistratio. The JSC should lead a process to establish clear criteria for appoitmet of judges, with emphasis o the cadidates progressive credetials ad trasformatory judicial philosophy ad expertise. Scale up judicial traiig dramatically ad as quickly as possible. 8 Cowe S (2010). Judicial Selectio: A Timely Debate. Available at (accessed 3 August 2011). 409

422 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Cosider whether the curret form ad structure of the JSC is adequate to allow it to fulfil its costitutioal madate. Cosider the extesio of commuity service to law graduates. This will icrease access to legal represetatio especially for the poor ad speed up the admiistratio of justice i the lower courts. Coclusio Accoutable goverace requires leadership. For istitutios to be trasformative ad capable, they must be well led at all levels. Leadership i the public service is essetial for the atioal developmet pla ad for South Africa. Leadership that is devoted ad dedicated, capable ad committed, ad self-sac rificial ad ot self-servig. South Africa eeds a atioal coversatio about the qualities of leadership that are required i all areas of public life. The first atioal pla provides a excellet opportuity to provoke that coversatio ad to idetify the leadership attributes that are essetial to build a just ad equal atio. 410

423 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY Chapter 15 TRANSFORMING SOCIETY AND UNITING THE COUNTRY We feel we belog. We celebrate all the differeces amog us. The welfare of each of us is the welfare of all. Cotext The success of this pla will be judged o its ability to chage relatioships betwee people, betwee people ad the state, ad withi the state itself by drawig attetio to the way i which decisios are arrived, seekig justice i each decisio. The pla is about physical chage, brought about by focusig attetio o policy ad implemetatio, but it is equally about relatioships. The fudametal relatioships that defie us as South Africas are vitally importat. These relatioships will bid us together i movig towards a shared future. The first elemet that bids South Africas together is a shared history. Our rich Costitutio is a testamet to that history. It is a social compact that carefully defies our togetheress ad accords rights ad exacts obligatios from each of us. South Africas have made sigificat progress i uitig the coutry sice The ed of apartheid restored the digity of all South Africas. Free ad fair democratic electios are held regularly. The legal framework that uderpied apartheid has bee abolished. South Africa is a uique coutry, whose people walked away from the precipice of war ad bloodshed to create a democratic state based o a Costitutio that is respected. I additio to the legal ad istitutioal uderpiigs of a iclusive state, we have also made sigificat progress i extedig services such as educatio ad housig to millios of South Africas. The ecoomy has performed better, with risig icomes ad employmet, though ot as fast as desired. May schools, suburbs ad places of worship are itegrated. 411

424 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Problem statemet South Africas have made progress sice 1994 i uitig the coutry, yet society remais divided. Iequality ad iequity cotiues. Opportuity cotiues to be defied by race, geder, geographic locatio, cl ass ad liguistic backgroud. Iequality hardes society ito a class system, imprisoig people i the circumstaces of their birth. Iequality corrodes trust amog fellow citizes, makig it seem as if the game is rigged. 1 That these differeces exist is ot surprisig. That they remai so stark 17 years after the ed of apartheid is disturbig. The domiat explaatio has two dimesios: The ecoomy has ot performed as well as expected, ad implemetig govermet policy i educatio, housig, trasport, health ad social welfare services has ot reversed the iheret privilege attached to race. Historic privilege ad deprivatio cotiue to defie opportuities. The geeratios of ivestmet i the skills ad opportuities of white people give may a deep reserve of huma ad social capital o which to draw. While the black middle class has recetly bee able to develop these reserves, may black South Africas livig i historically deprived areas have bee deied this opportuity. South Africa s Costitutio is a social compact. The essece of this compact ca be foud i Chapter 2 of the Costitutio, which declares that everyoe is equal before the law ad has the right to equal protectio ad beefit from the law ad, i the followig clause, that the coutry may pass laws that protect or advace people disadvataged by ufair discrimiatio. These two clauses form the ub of the complex compromise that brought democracy ad freedom i I tryig to avigate this complex challege, the followig markers are useful: South Africa belogs to all who live i it ad we seek to build a society where opportuity is ot defied by race or geder, class or religio. Some form of redress is essetial to help solve the problem of uequal opportuity. There is broad acceptace of the logic that without correctig the wrogs of the past, we caot uite aroud commo goals. Itervetios have icluded affirmative actio, black ecoomic empowermet, progressive taxatio, preferetial procuremet ad lad reform. Removig the shadow of apartheid meas developig the capabilities of the historically disadvataged to take advat age of the opportuities that democracy, opeess ad the ecoomy afford. This meas that educatio, traiig ad skills developmet are critical, as is work experiece, because it affords the opportuity to lear, progress, ear a icome, access credit ad make a home. Other basic services such as health, water, saita tio, public trasport, safety ad social security are all vital to address deprivatio. 1 Packet G (2011). The broke cotract: Iequality ad America declie. Uited States of America: Coucil o Foreig Relatios. 412

425 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY Resolvig these divisios will take but are a ecessary process, because a uited ad cohesive society is a critical precoditio for peace, security ad prosperity. To that ed, South Africas should: Foster a feelig of belogig, with accoutability ad resposible behaviour. Esure that differet cultures are resp ected ad equal citizeship for all is guarateed, thus reversig the apartheid legacy of devaluig ad erasig the heritage of black South Africas. Build trust, which is associated with stroger ecoomic performace. Craft ad implemet a social compact based o mutual beefit ad mutual sacrifice. Societal divisio impedes formig a cosesus to develop, chage or eve implemet policy. Natio-buildig ad social cohesio matter both as a ed-state ad as a facilitator. A balace eeds to be foud betwee healig the divisios of the past, broadeig ecoomic opportuities (particularly to black people) ad buildig a sese of iclusio ad commo purpose amog all South Africas. The aim is ot to create a meltig pot where idividual, religious, cultural ad other differeces disappear, but rather a society with a shared South Africa idetity, without detractig from our diverse multiple idetities. The objectives i this pla ca be attaied oly if South Africas appreciate the difficulties ad opportuities, ad commit to workig together. The startig poit is the Costitutio. There is cocer that society does ot live up to costitutioal obligatios, givig a particular iterpretatio to the relatioship betwee the state ad the people, perhaps premised o a iterpretatio of the Bill of Rights. May clauses i the Bill of Rights (Chapter 2 of the Costitutio) are styled: Everyoe has the right to followed by the state must take reasoable legislative ad other measures, withi its available resources, to achieve the progressive realisatio of these rights. The iterpretatio that has developed from these clauses is that the people demad ad the state delivers. Iactio o the state s part ivites mass protests. It is importat that the govermet is expected to fulfil its resposibilities. But, equally, South Africas must ot forget their resposibilities ad roles as resposible ad active citizes that shape society. The value that citizes attach to rights ad resposibilities are directly related to whether they perceive the society to be just ad fair. All istitutios i society, especially govermet, must be see to be fair ad just at all times. The behaviour ad coduct of those i the public eye seds a clear sigal of the bouds that defie commuity. Whe a perso gets away with druk drivig or solicitig a bribe, the social cotract breaks dow. People are likely to coduct themselves ethically if they see justice served o those who break the law. Too ofte, govermet failures, such as iability to protect a spouse from abuse or failure to deliver school books o time, creates a climate that 413

426 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN makes lawlessess acceptable. Justice ad the feelig of beig treated justly are critical elemets of iclusio ad atio-buildig. There is a growig scourge i South Africa society of ope displays of opulece. The offesiveess of this behaviour is particularly marked because of South Africa s high levels of iequality. High levels of uemploymet, a feature that skews icome distributio eve more, exacerbate the effects of cospicuous cosumptio. This idicates a eed to focus o icetive systems i society. Successful societies are balaced ad their icetive systems appropriate to the cotributio of idividuals i society. Great displays of wealth by people ot kow to be productively employed, or hoestly etrepreeurial, distort icetives i society. The ability to egage other people, especially uemployed youth, at reasoable icomes is redered futile. I the iterests of sustaiable democracy, every South Africa, especially those able to ifluece public discourse, should disclose the origis of their icome ad wealth. Failure to take part volutarily or lyig should be socially uacceptable. Natio-buildig visio for 2030 I 2030, South Africas will be more coscious of the thigs they have i commo tha their differeces. Their lived experieces will progressively udermie ad cut across the divisios of race, geder ad class. The atio will have ad will be more acceptig of multiple idetities. This South Africa will iclude the followig: A sese of iclusiveess that touches all South Africas, icludig the poor. This meas tacklig the factors that lead to uequal opportuity ad takig extraordiary measures i educatio ad skills developmet, especially of black people ad the poor. To redress the past requires icreasig the rate of ecoomic growth, icreasig the labour absorptio of the ecoomy, promotig etrepreeurialism ad providig stimulatig ad rewardig career paths for all workers, icludig those at the bottom of the icome spectrum. Icreased iteractio betwee South Africas from differet social ad racial groups. Broad-based kowledge ad support for a set of values shared by all South Africas, ad those embedded i the Costitutio. A mobilised, active ad resposible citizery. The proposals that follow flow from the premise that developig capabilities requires partership ad cooperatio betwee commuities, govermet ad places of work. A capabilities approach to developmet is critical to broadeig opportuities, a essetial elemet of the atio-buildig process. The developmet of capabilities, either of idividuals or of the coutry as a whole, requires a midset chage towards govermet deliverig services to active citizes ivolved i their ow empowermet. 414

427 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY Govermet does provide parts of the foudatio, but there are other requiremets too. A govermet ca build a soccer field, but it eeds a commuity to orgaise the football league, coach childre ad cheer o the players. As a coutry we ivest i skills ad opportuities of idividuals ad commuities because we wat people to live together as equals. Whe we seek to make it easier for people to access employmet, we do ot just wat to esure that they have access to the meas of subsistece, but also that they ca develop the sese of empowermet that comes with a degree of ecoomic security ad the sese of cotributig actively to society. To build a truly iclusive atio, the coutry eeds to fid ways to promote a positive cycle, where a effective state ad active citizes reiforce ad stregthe each other. This positive cycle bega for the majority of the populatio i 1994, whe South Africa started to grapple with the legacy of uequal access to services ad opportuities. The Recostructio ad Developmet Programme embarked o the dautig task of extedig basic services to all South Africas. Access to electricity, water ad housig make it easier for people to live healthy lives, ad allows childre more time to study ad develop socially through play. Educatio edows a atio with skills ad makes it more productive. These services matter, ot oly for their ow sake, but also for what they eable citizes to do. Kowig you ca access quality health care ot oly eables a healthy life, it also removes the fear ad isecurity that could come from suddely beig throw ito debt by medical expeses. Educatio opes up ew opportuities, ot just i terms of employmet, but also through the icreased cofidece that literacy brigs. South Africa s experiece sice 1994, however, has demostrated that providig quality public services is ot easy. Historically, the relatioship betwee the state ad the majority of South Africas has bee oe of adversity, ad the post-1994 public service has ot always played its role i helpig to dispel old perceptios. Govermet eeds citizes to speak out whe thigs are goig wrog. This accoutability mechaism is most effective where everyoe depeds o the same public services. Where the middle class opts out of public services, it o loger takes a iterest i improvig their quality. Ivestig i people s capabilities makes them more empowered. As people s skills ad opportuities develop, they are able to play a meaigful role i society, ad are better able to stregthe the work of the state by speakig out agaist malpractice or poor performace. Creatig equal opportuities Equal opportuity is about ullifyig factors such as geder, ethicity, place of birth, ad family backgroud, so that these do ot ifluece life chaces. Success i life should deped o people s choices, effort ad talets, ot their circumstaces at birth. The discrimiatio suffered by black people i the past crucially iflueces their life chaces 415

428 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN i the preset. 2 The Costitutio lays the basis for equalisig life chaces ad for redress. This should begi with esurig that everyoe has access to quality basic services, quality healthcare ad quality educatio (see the chapter o educatio for proposals to address iequity by improvig the quality of teachig ad learig ad ifrastructure). Chapter 9 o improvig educatio, traiig ad iovatio, icludes a fuller set of proposals for improvig the quality of teachig ad learig ifrastructure. These iclude: Specific proposals to deal with ifrastructure backlogs ad the provisio of a eablig eviromet at all educatioal istitutios, particularly those i historically disadvataged schools. Clear proposals to improve school performace i poor schools, focusig o teacher developmet, school accoutability ad paretal ivolvemet. Cotiuig to skew fudig i educatio to schools i poor commuities ad to studets from poor families. Rightig the wrogs of the past South Africa is highly uequal i outcomes ad opportuity. There is a rage of reasos for this failure. The ecoomy has ot grow rapidly eough to esure that all of society ca progress. Educatio problems ad low labour absorptio has resulted i failure to create a eviromet for a adequate share of the beefits to accrue to the poor or historically disadvataged. I additio, certaities have ot bee provided that are ecessary to give those with capital the comfort to take log-term ivestmet decisios. How does South Africa break this cycle ad eter a more virtuous oe of risig cofidece, ivestmet, employmet ad icomes, ad fallig levels of iequality? Give the coutry s history of lackig cofidece, govermet eeds to provide the catalyst for the virtuous cycle to begi. It ca do this by makig sure that what is i its ow power works better. Removig the obstacles to faster ecoomic growth, icreasig the pace of ivestmet i ifrastructure, improvig service delivery (especially quality educatio) ad buildig cofidece would provide the impetus for the private sector to ivest ad to take a log-term perspective whe it ivests. This will ot be rapid. Buildig trust ad cofidece are always log-term goals ad the result of paistakig efforts. The quality of leadership is critical to spark ad accelerate chage i areas that govermet cotrols, to iduce behaviour chage i others. Oly by reducig poverty ad iequality through broadeig opportuity ca the coutry achieve real uity ad cohesio. The resources, skills, talets ad assets of all South Africas eed to be used to achieve social ad ecoomic objectives. The coutry has much more to gai if a wi-lose debate shifts to a wi-wi debate, focusig simultaeously o growig the cake ad redistributig it. Most of the policy 2 Betley K & Habib A (2008). Racial redress ad citizeship i South Africa. Cape Tow: HSRC Press. 416

429 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY recommedatios to achieve a virtuous cycle of cofidece ad trust, a growig ecoomy ad a broadeig of opportuities are dealt with i other parts of the pla. The rest of this chapter deals with specific issues about implemetig employmet equity, black ecoomic empowermet ad lad reform. It also discusses broader proposals to support atio-buildig ad ways i which the values eshried i our Costitutio ca be popularised. Employmet equity ad workplace opportuity Employmet equity i the workplace is a key elemet of the coutry s plas to broade opportuities for the historically disadvataged. Sice 1994, it has also bee oe of the more successful programmes, cotributig to a risig black middle class. It is a policy premised o the fudametal acceptace that opportuity was distorted by apartheid ad so has a firm moral ad costitutioal basis. For at least the ext decade, employmet equity should focus o providig opportuities to youger people from historically disadvataged commuities. More specifically, race should cotiue to be the mai determiat of selectio. The Employmet Equity Act (1998) states that if two cadidates have the same qualificatios, similar competecies ad experiece, the the black perso or woma should be selected. The act does ot ecourage the appoitmet of people without the requisite qualificatios, experiece or competece. The act would ejoy broader support ad appeal amog citizes if these provisios were implemeted more cosistetly ad fairly. The itet of the act is for firms to develop their ow huma potetial, spedig time ad resources metorig ad developig their staff. Staff traiig, career-pathig ad mobility i the workplace will grow both the perso ad the firm. South Africa employers sped too little o traiig their staff ad ivestig i their log-term potetial. The Skills Accord, facilitated by the Departmet of Ecoomic Developmet ad siged recetly, is a step i the right directio. If more firms trai staff, the ecoomy does better ad the icetive to job-hopis reduced. Short-term solutios, such as overpayig for scarce skills, are couterproductive to the loger-term developmet of both the idividual ad the firm. The preset icetive structure embodied i the Skills Developmet Act (1998) may eed to be reviewed to esure higher spedig o staff developmet. Career mobility ad risig icomes are more likely i a ecoomy that is growig rapidly. Selectig good quality black ad female cadidates will be easier if the educatio system is producig ever greater umbers of skilled black ad female work etrats. 417

430 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Black ecoomic empowermet Black ecoomic empowermet largely focuses o broadeig owership ad cotrol of the meas of productio. It aims to de-racialise the top echelos of the busiess commuity. A thrivig ecoomy creates more opportuities for etrepreeurs ad for the growth of small busiesses. The preset model of black ecoomic empowermet has ot succeeded to the degree that was iteded i broadeig the scope of owership ad cotrol of large firms. The model is flawed, largely because black people i geeral do ot have the capital to acquire owership or cotrol of major parts of the ecoomy. This has ecouraged debtdrive deals that are oly likely to work whe the ecoomy is growig rapidly ad firm profitability is expadig sigificatly. Because this has ot bee the case, may debtdrive deals provide a veeer of empowermet. Eve i cases where black people are preferre d i the awardig of liceces to extract rets, such as i the miig or telecommuicatios sector, lack of capital raises the cost of capital for other participats or leads to a excessive reliace o debt, thereby udermiig ivestmet i capacity ad productio. South Africa faces a difficult dilemma. It is a savigs-shy coutry. To raise ivestmet i, for example, miig, to boost employmet ad exports, private capital is used. The owers of private capital are largely still white, or foreig. While the preferetial awardig of liceces is a useful techique to force the etry of black people ad wome ito the ecoomy, o its ow it is isufficiet to make a substatial differece to broader owership patters i the ecoomy. Similarly, developmet fiace istitutios use black ad female owership as criteria i awardig loas to busiess. This is a correct approach, but it comes at a cost, because it potetially reduces the et ivestmet i firms ad idustries, which reduces overall growth ad job creatio. Although black ecoomic empowermet is a soud policy istrumet, it poses sigificat challeges i sustaiably meetig the objectives of the programme. Solutios are ot easy to fid. Despite these difficulties, the broad policy approach should cotiue, evolvig to fid better models of empowermet. I implemetig black ecoomic empowermet, policy has to remai true to its itet to broade owership ad cotrol of productio to black people ad wome, without udermiig overall levels of ivestmet or employmet creatio. 418

431 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY Lad reform The Costitutio protects property rights ad prevets cofiscatio of property without due compesatio, but it also provides a legal, political ad moral basis for redress measures such as lad reform. Flowig from the Costitutio, the White Paper o lad allows for lad redistributio, lad restitutio ad teure reform. The priciples uderpiig lad reform are three-fold: De-racialisig the rural ecoomy Democratic ad equitable lad allocatio ad use across race, geder ad class A sustaied productio disciplie for food security. Overall progress has bee slow. I 1994, the target for redistributio based o all three pillars was 30 percet of lad redistributed i five years. I 2011, oly 4.1 percet of lad has bee redistributed, most of which was state lad. Lad reform is as much about redress as it is about improvig livelihoods ad digity. Ufortuately, the redistributio of productive lad is eve slower. Sice 1994, oly 3.7 percet of agricultural lad has bee allocated through lad redistributio. Chapter 6, dealig with a itegrated ad iclusive rural ecoomy, provides specific proposals to raise agricultural productio ad effect lad reform i a way that focuses o the capabilities of farmers ad commuities to ear a icome, rather tha just redistributig lad. The chapter also makes specific recommedatios o lad teure i commual areas, which balace traditioal authority with greater certaity for femaleheaded households to ivest i farmig. Livig free from discrimiatio The Costitutio stipulates that either the state or ay perso may discrimiate agaist ayoe else o the basis of race, geder, sex, pregacy, marital status, ethic or social origi, colour, sexual orietatio, age, disability, religio, cosciece, belief, culture, laguage or birth. However, the hist orical legacy of discrimiatory legislatio meas that there is much work that still eeds to be doe to tur these costitutioal priciples ito reality. The relatively comprehesive legislatio o o-discrimiatio meas that i may cases, the problem is ieffective implemetatio ad eforcemet. No-sexism Geder discrimiatio remais a major problem i several social ad ecoomic settigs, icludig the workplace, the family ad educatioal istitutios. This exists i spite of a large set of state istitutios icludig a dedicated miistry ad legislatio devoted to esurig wome s equality alogside vibrat geder activist orgaisatios. Reported icidets of corrective rape show that, i spite of legal protectio, gays ad lesbias are subject to widespread discrimiatio. 419

432 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN The istitutios dedicated to promotig geder equity have ot bee fuctioig optimally. The madate of the Commissio of Geder Equality overlaps with that of the Miistry of Wome, People with Disabilities ad Childre, for example, the moitorig ad evaluatio fuctio that is the madate of the miistry ad the statutory madate of the Geder Equality Commissio, which results i role cofusio ad political coflicts over authority. The Natioal Geder Policy does ot set clear priorities ad targets from which a programme of actio could be developed. The geder maistreamig approach is provig too difficult to put ito operatio, because it demads a high level of geder expertise ad high-level political commitmet to carry through. The Natioal Plaig Commissio calls for clarity o the roles ad resposibilities of the differet compoets of atioal geder istitutios. I additio: There is a eed for sustaied campaigs that focus o chagig attitudes ad behaviour i relatio to racist, homophobic ad xeophobic tedecies, as well as stregtheig the campaigs for o-racialism ad geder equity ad agaist geder violece. The Commissio of Geder Equality ad the miistry eed to develop joit targets, idicators ad timelies for moitorig ad evaluatig progress towards geder equality. These will eed to be realistic ad appropriate, ad should be shared ad accomplished through proper geder maistreamig i departmets. Gaps ad problems i legislatio eed to be addressed. The Traditioal Leadership ad Goverace Framework Act (2003) etreches patriarchal values ad limits wome s participatio i traditioal goverace. Rather tha a separate Geder Equality Bill, the Electoral Act (1998) could be ameded to require political parties to esure geder parity i electoral lists. Local govermet eeds to be stregtheed i its capacity to iclude wome at represetative level, as well as i shapig budgetary priorities. Wome are frequetly margialised i local politics ad excluded from decisio-makig processes. Wome s participatio i itegrated developmet pla processes is ueve. No-sexism will be eabled through the role of families, schools ad media i empowerig people to questio ad challege prejudice ad discrimiatory practices. No-racialism All South Africas eed to accept that it is ot possible to have grow up i the coutry before 1994 without developig racial leses. Not admittig to racism i South Africa society would be sweepig it uder the carpet. Sustaied campaigs eed to focus o chagig attitudes ad behaviour i relatio to racist ad xeophobic (Afrophobic) tedecies. This could iclude holdig dialogues at commuity (ward) level, where 420

433 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY commuities discuss their experieces of racism, ad how they propose the problems ca be addressed. The Departmet of Arts ad Culture, i partership with civil society bodies ad o-govermetal orgaisatios operatig i this area, could ru such a iitiative. The Costitutio recogises 11 official laguages, ad promises them equal status ad use. I the South Africa of 2030, Eglish will be the geeral laguage of learig, commerce ad admiistratio. Give the ievitably growig importace of Eglish, lies of iclusio ad exclusio will be shaped by the degree of competece that idividual South Africas possess i this world-domiat laguage. Withi a geeratio (by 2030), every South Africa should be fuctioally literate i Eglish. Most South Africas will cotiue to make daily use of laguages other tha Eglish. It is absolutely vital that these laguages, used i family ad social etworks, also grow ad flourish. This will oly happe if other laguages are cherished by their laguage commuities, ad cotiue to be vital i both the spoke ad writte word. If stories are still told, poems writte, sogs sug, the the laguage will live, ad its speakers will become multiligual citizes. Both govermet ad society will eed to take active steps to esure that this happes, as set out i the sectio o policy measures below. For example, govermet would fud arts ad culture programmes that seek to promote South Africas kowledge of oe aother s cultures. A secod challege is to ecourage those for whom a Batu laguage is ot a mother togue to develop at least a coversatioal competecy i oe of these laguages. Sice few o-africa South Africas speak ay Africa laguage, this will erich the experiece of the laguage learers. Both govermet ad society should promote ad celebrate this form of multiligualism. The role that kowig each others laguages ca play i promotig uderstadig ad developig social cohesio is vitally importat. The commissio therefore proposes as policy that every South Africa should study oe of the ie official black laguages at school. Attetio could also be give to ecouragig adults who do ot speak a Africa laguage to lear oe. Equality before the law The Bill of Rights states that all South Africas are equal before the law. Yet i practice, people experiece the law differetly. Uppe r middle-class households are ofte better served by muicipal, provicial ad atioal govermet tha their workig-class couterparts. Schools provide a better educatio to middle-class learers; streets ad parks i middle-class areas are better maitaied; ad refuse collectio ad other muicipal services are superior. The weal thy ad those whose legal expeses are sposored experiece better equality before the law, because they ca afford better lawyers. The chapters o accoutability ad buildig a capable state have practical proposals that will help poor people access justice. The suggestios iclude: Exted commuity service to law graduates. This will icrease access to legal represetatio especially for the poor ad speed up the admiistratio of justice i the lower courts. 421

434 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Trai civil servats, especially those i the frot lie, to improve their ability to do their job. Develop a accoutability framework that directly liks idividual public servats to their roles ad resposibilities ad job descriptios i proportio to their fuctios ad seiority. Fosterig costitutioal values The Costitutio, which is the supreme law of the lad, ot oly established a ew South Africa but also has a trasformative fuctio uusual i comparative foudig documets. Ulike most costitutios, it does ot simply ited to stabilise the coutry, securig existig patters ad power relatioships. Its project is to trasform South Africa. I other words, the Costitutio demads chage... If each of us chooses to select the value system adopted i our Costitutio, we shall be makig a brave ad bold choice that will eable us to overcome our history ad to attai the costitutioal visio of a society based o equality, freedo m ad digity... the 1996 Costitutio lies i huma beigs uderstood as idividual, moral agets who are the bearers of both rights ad resposibilities. 3 Ideed, key igrediets i buildig a South Africa that has a uity of purpose are these commo costitutioal values that iclude huma digity, o-sexism, o-racialism, supremacy of the Costitutio ad the rule of law. These priciples ad fudametal covictios should act as: Geeral guides to behaviour Edurig beliefs about what is worthwhile; ideals for which oe strives Broad stadards by which particular actios are judged to be good, right, desirable or worthy of respect. 4 It is importat to lay dow a political philosophy that goes beyod political offices, istitutios ad laws, ad istead focus o creatig attitudes, beliefs, habits ad practices of the civic commuity that are the cultural bedrock for the collective exercise of power. The Costitutio ad its values are importat, because it: Creates a ew South Africa idetity. Eables South Africa to overcome its history ad to attai the costitutioal visio of a society based o equality, freedom ad digity. Eables South Africas, throw together by history ito this shared geographical space, to have a commo currecy that makes life meaigful, ad provides ormative priciples that esure ease of life, lived side by side. 3 James W ad Hadlad A (2002). Shared aspiratios: the imperatives of accoutability i South Africa s electoral system. South Africa: HSRC. 4 Halstead JM ad Reiss MJ (2003). Values i sex educatio: from priciples to practice. Lodo: Routledge Falmer. 422

435 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY The values i the Costitutio caot be legislated. Laws ot uderstood ad owed by people are always perceived to be a impositio. As a cosequece, oe of the geeral weakesses is a climate of lawlessess, show by the way people drive, the levels of iterpersoal violece, ad theft ad other crimes. I this cotext, it is to be expected that legislatio that is corrective, especially regardig equality provisios, is likely to be observed either cyically, or ot at all. This challege must be met, because it relates to equity, but perhaps eve more importatly because it relates to mutual respect ad respect for the law. This impasse will clearly ot be resolved by passig more laws. The family, commuities, schools ad the media all have a role to play i brigig up people who respect the rule of law ad abide by costitutioal values. A partership betwee Lead SA ad the Departmet of Basic Educatio has produced the Bill of Resposibilities, which simply shows the resposibilities that come with the rights outlied i the Costitutio. The Bill of Resposibilities urges youg people to accept the call to resposibility that comes with the may rights ad freedoms that I have bee privileged to iherit from the sacrifice ad sufferig of those who came before me. I appreciate that the rights eshried i the Costitutio of the Republic of South Africa are iseparable from my duties ad resposibilities to others. This Bill of Resposibility is desiged to chage behaviour. Although this bill targets youth, govermet should broade the campaig to all South Africas, icludig adults. Bill of Resposibilities My resposibility My resposibility i esurig the right to equality My resposibility i esurig the right to huma digity My resposibility i esurig the right to life My resposibility i esurig the right to family or paretal care My resposibility i esurig the right to educatio My resposibility i esurig the right to work My resposibility i esurig the right to freedom ad security of the perso My resposibility i esurig the right to ow property My resposibility i esurig the right to freedom of religio, belief ad opiio What it meas Treat every perso equally ad fairly, ad do ot discrimiate ufairly. Treat people with reverece, respect ad digity. Sactity of huma life, protect ad defed my life ad that of others. Hoour, respect ad help my parets, ad my family. Atted school regularly, to lear, ad to work hard, cooperate with ad respect teachers ad fellow learers. Work hard ad do our best i everythig we do. Livig a good ad successful life ivolves hard work, ad aythig worthwhile oly comes with hard work. Solvig ay coflict i a peaceful maer, o bullyig. Not to take what does ot belog to me without permissio, givig geerously whe able to. Respect the beliefs icludig religious beliefs ad opiios of others. 423

436 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN My resposibility My resposibility i esurig the right to live i a safe eviromet My resposibility i esurig the right to citizeship My resposibility i esurig the right to freedom of expressio What it meas Coserve ad preserve the atural eviromet, protect aimal ad plat-life, prevet pollutio ad o litterig. Obeyig the laws of our coutry, esurig that others do so as well, ad cotributig i every possible way to makig South Africa a great coutry. No spreadig of lies, ad to esure others are ot isulted or have their feeligs hurt. These values flowig from the Costitutio should form the commo basis across all commuities ad i all areas of life to empower families ad commuities that are able to be critical, democratic, o-sexist, o-racist ad tolerat. Such values will help people to celebrate diversity as a matter of course ad to actively egage with the pressig developmet eeds ad challeges of South Africa s societies. The role of family Everyoe must be give a opportuity to uleash their full potetial ad ejoy their rights as they practice their resposibilities. NPC Jam Family ca be defied as a social grouprelated by blood, marriage, adoptio or affiliatio. This defiitio allows for all forms of families, icludig sigle-headed families, cohabitatio, multigeeratioal families ad the uclear family. The family i geeral is resposible for the reproductio of idepedet, productive, good ad resposible people. The pressures put o may families mea they caot be expected to fulfil this role o their ow: Apartheid spatial geography meas that people live far away from work. This limits the time available to perform all the fuctios of the family. There is a high icidece of HIV/AIDS ad icreasig umbers of orpha-headed households. 5 Iterpersoal violece, raked as the secod highest cause of morbidity i South Africa, is more prevalet i poor households. 6 I a patriarchal society, families may ot ecessarily assert the o-racial ad o-sexist values of the Costitutio. The commissio suggests that a full review of the state of the South Africa family should be udertake by From the review, legal ad social measures ca be crafted to make families fuctioal ad able to foster costitutioally based values of democracy, tolerace, diversity, o-racalism, o-sexism, equity, ad so o. The review must also explicitly cosider geder relatios i ecoomic, paretig ad family 5 Natioal Plaig Commissio (2011). Diagostic Report. 6 Ibid. 424

437 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY roles, draft geder charters for both me ad wome, ad raise the role ad umber of social workers (see the chapter o social protectio). Fosterig costitutioal values usig schools ad the school curriculum The real difficulty is that people have o idea of what educatio truly is. We assess the value of educatio i the same maer as we assess the value of lad or of shares i the stock-exchage market. We wat to provide oly such educatio as would eable the studet to ear more. We hardly give ay thought to the improvemet of character of the educated. - Mahatma Gadhi Schools have a importat role to play i buildig social cohesio, particularly give ear uiversal school erolmet. Schools, ulike families, ca eable the fosterig of commo values across laguage, culture, religio, race, class ad space. Together with teachig arithmetic, readig ad writig, schools should help to produce iquirig mids people who are empowered to questio ad challege prejudice wheever ad wherever they ecouter it. It is therefore importat that childre lear at school to: Appreciate diversity through respect ad tolerace Kow how to cope i a ever-chagig eviromet Help trasform the atioal character of South Africa by teachig that rights come with resposibilities. The questio is ot whether values should be taught i schools, but which values, or whose values, should we teach. 7 I a democratic South Africa, schools should promote the values embedded i the Costitutio. The costitutioal value of huma digity achievig equality ad advacig huma rights ad freedoms equity iforms the South Africa Schools Act (1998). The widely cosulted 2002 Schools Values Maifesto further articulated which values should be taught ad how. Values flowig from the Costitutio that should permeate the educatio system are: democracy, social justice ad equity, equality, o-racism ad o- sexism, ubutu, huma digity, a ope society, accoutability, resposibility, the rule of law, respect ad recociliatio. The maifesto ad the Bill of Resposibilities outlie methodologies to further foster values i school childre. To effectively itegrate these values, all teachers must apply them i their everyday practice ad iteractios with colleagues, learers, the school maagemet team ad parets. Teachers should have cotiuous school-based professioal developmet ad teacher support programmes must be istituted. The latter aim to develop teachers cotet ad pedagogical kowledge ecessary for teachig values i their learig areas ad across the curriculum. Pre-service teacher educatio should develop syllabuses that promote iteralisig democratic values i the curriculum, as well as ecourage ispiratioal leadership qualities i the traiee teacher, ad the uderstadig that actios speak louder tha words. 7 Koh A (1997). How ot to teach values: a critical look at character educatio. Phi Delta Kappa. 425

438 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN I additio, teachers ad studets who live these values must be rewarded. Those who do ot, or who resist, should be puished or expelled if ecessary. All schools should use democratic priciples ad be guided by the Costitutio ad the Bill of Resposibilities to develop ad implemet a school-specific, all-ecompassig value policy ad commuicate it widely. The process is as importat as the outcome, because it will help the school ad the school commuity develop a commo uderstadig of what values are madated by the Costitutio ad the atioal curriculum system. The values that the local school commuity wats taught to learers are paramout, ad stakeholders, icludig teachers, departmet officials, school goverig boards, commuities ad parets, should be cosulted. All schools should be required to recite the Preamble of the Costitutio at assembly, i a laguage of their choice. The preamble embodies the values that eed to be fostered: We, the people of South Africa, Recogise the ijustices of our past; Hoour those who suffered for justice ad freedom i our lad; Respect those who have worked to build ad develop our coutry; ad Believe that South Africa belogs to all who live i it, uited i our diversity. We therefore, through our freely elected represetatives, adopt this Costitutio as the supreme law of the Republic so as to: Heal the divisios of the past ad establish a society based o democratic values, social justice ad fudametal huma rights; Lay the foudatios for a democratic ad ope society i which govermet is based o the will of the people ad every citize is equally protected by law; Improve the quality of life of all citizes ad free the potetial of each perso; ad Build a uited ad democratic South Africa able to take its rightful place as a sovereig state i the family of atios. Promotig values usig media The media has a impact o the values that people hold ad the lives they aspire to. Radio, televisio, film, ad the other products of the culture-idustries provide the models of what it meas to be male or female, successful or a failure, powerful or powerless. Media culture also provides the materials out of which may people costruct their sese of class, of ethicity ad race, of atioality, of sexuality, of us ad them. 8 8 Keller D (1995). Media culture: Cultural studies Idetity politics betwee the moder ad the postmoder. Lodo: Routledge. 426

439 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY Media should be haressed, so that it plays a positive role i atio-buildig, but strog measures should exist to esure that cotet does ot tilt towards propagada. This is a real dager. Previously i South Africa, as i other coutries, the rulig elite have used media as a tool to drive particular agedas. At preset, some researchers suggest that th e South Africa Broadcastig Corporatio is subvertig its madate ad iculcatig values that oppose those i the Costitutio. I South Africa, may locally produced televisio programs portray a black middle class focused o material cosumptio ad idividual gai... The costructio of the atio put forth by some South Africa televisio programmig ca mask edurig racial ad ecoomic iequalities... These material effects play a role i reassertig hierarchical relatios of power, especially alog race, class, ad geder lies. 9 The legislatio does eable electroic media to promote progressive values. The challeges, however, iclude: The legislatio ad policy regime has bee developed over 17 years. It is o loger comprehesive. There is miimal regulatory pressure o the commercials ad advertisig idustry udermiig values ad re-eforcig cosumerist stereotypes. The idustry has a self-regulatig body, the Advertisig Stadards Authority. The self-regulatig body must therefore esure that all advertisemets also drive appropriate values, as dictated by the Costitutio. I respose to these problems, the commissio suggests the followig: To esure there is o abuse i the form of propagada ad that the value- ad atio-buildig attempts are effective, the Idepedet Commuicatios Authority of South Africa s moitorig ad compliace divisio must be stregtheed. Curretly, by the authority s ow admissio, it lacks capacity. This should be put i place before the ageda o deepeig value iculcatio ca eve be explored. The curret broadcastig policy review process should esure that the atiobuildig ad value iculcatio madate is stregtheed, beyod esurig laguage ad accessibility. This all-ecompassig values framework withi the broadcastig policy review process must cover advertisemets ad private, commercial ad satellite services. The reproductio of stereotypes must be challeged. Media drives Costitutio Friday o the first Friday of every moth. Media (icludig social media) ca spread uderstadig ad kowledge of shared values. It ca also act as a platform for South Africas to celebrate, egage with each other ad voluteer cotributios to create their South Africa. 9 Ives S (2007). Mediatig the eoliberal atio: Televisio i post-apartheid South Africa. ACME Editorial collective. 427

440 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Etertaimet should become edutaimet. I both radio ad televisio, it must drive a theme of active ad resposible citizery ad have costitutioal values as a base. Edutaimet eed ot be borig. Empower the media to cotiue holdig govermet ad other public figures to accout through iformig citizes, ad to cotiue challegig rather tha eforcig stereotypes. Media must also be at the forefrot of sedig the correct icetives for citizes livig costitutioal values. Promotig social cohesio across society Daily iteractios o a equal basis build social cohesio ad commo uderstadig. This will be promoted effectively whe South Africas share more public spaces, as we did briefly durig the 2010 soccer World Cup. At the momet, the coutry is divided by services, with ecoomic wealth gradually replacig race as the key driver of differetiatio. Improved public services, icludig public trasport used by all, will make it easier for South Africas to break out of their commuities ad share commo experieces. The work of schools, media ad families i creatig actively egaged, critical citizes, with a culture of tolerace ad commitmet to huma rights, will come to othig if society particularly public figures cotiues to sed the wrog sigals. It will fail, too, if govermet does ot icrease opportuities for people to egage with oe aother. This is liked to the eed for local govermet to provide gree spaces ad commuity sport ad recreatioal facilities to eable iteractio. Uity i diversity The key to the coutry s uity is embracig the reality that all South Africas have may idetities, ad yet are South Africa. The Costitutio recogises 11 official laguages, all of which must be promoted o other costitutio goes as far i recogisig diversity. The Costitutio, ad the values it sets out, is based o South Africa s diversity. I pursuit of this, ad as a remider of shared roots, govermet opted to take three very importat steps i adoptig a coat of arms. All the imagery used is distictly South Africa ad the motto, i a distict break with the Lati that is so frequetly used, is from oe of the extict Sa laguages. It says,!ke E: /KARRA //KE, meaig uited i our diversity. Beig South Africa has ever bee premised o the otio of a meltig pot that fuses everybody ito some amalgam. With diversity as a foudatio, South Africas eed to work cotiually to brig this diversity ito uity. This uited atio will ot be created automatically, or will it remai i a state of uity if its fault-lies are forgotte or papered over. The fosterig of costitutio al values ad the Bill of Resposibility through schools ad the media will help esure that South Africa celebrates its diversity ad multiple idetities. 428

441 CHAPTER 15: TRANSFORMING SOCIETY AND UNITING THE COUNTRY Active citizery ad the social compact For these ad other proposals i the pla to become reality, all South Africas must cotribute ad work towards realisig the visio. Active citizery requires showig ispiratioal leadership at all levels of society. Leadership here does ot refer to oe perso, or eve a tight collective of people. I every aspect of life, dyamic leadership should be ecouraged. I particular, pare ts, leaders of the commuity ad public figures should demostrate leadership qualities that iclude: Ability to lead by example ad to follow rules that apply to everyoe Hoesty, itegrity ad trustworthiess Capacity to maage chage ad drive a ew ageda, commuicatig with people, keepig them iterested ad iformed Ability to make upopular decisios. Leadership should mobilise commuities, or parts of commuities, to take charge of their future, raise grievaces ad assume resposibility for outcomes. Govermet eeds to elist commuity-based orgaisatios to re-eergise South Africa. There are importat questios that eed to be raised as part of the challege of atiobuildig. For example, the state is obligated to provide housig ad commuity ifrastructure, services such as water, el ectricity ad refuse removal, as well as commuity facilities. Govermet is expected to deliver ad the people to wait. Would democracy ot be better served, for example, by govermet focusig o the overall eviromet, with commuities actively ivolved through social housig programmes? The focus eeds to shift from housig to commuities. I the iterests of shared resposibility for developmet, South Africa must pay attetio to the way that disputes are settled. It is vital to promote values of resposible citizeship ad solidarity. Liked to active citizery ad solidarity is the recogitio that for the visio to be attaied, sacrifices may be ecessary. Trasformatio does ot deped o highly techical processes, but rather o the participatio of citizes. Citizeship must be activated i every area of public service. I a umber of istaces, this is provided for i legislatio (for example, educatio ad local govermet). I additio, there are iformal arragemets i policig (commuity police forums) ad health (oversight committees). South Africa will ejoy the full beefits of democracy whe there is full ad dyamic oversight ad participatio by commuities. 429

442 NATIONAL PLANNING COMMISSION: NATIONAL DEVELOPMENT PLAN Road to trasformig society ad chagig relatios Livig positive values embedded i the Costitutio (e.g. uited i our diversity, social solidarity) Divided commuities: Effects of apartheid i distortig opportuity Broad social compact 2012 Reductio i iequality of opportuity 2021 Reductio i iequality of outcomes 2025 Risig livig stadards, fallig poverty ad iequality 2030 What uites us: Our commo sese of humaity Our shared history ad experiece Just relatioships betwee people, people ad the state, ad withi the state 430