Our future - make it work

1. Our future - make it work NATIONAL DEVELOPMENT PLAN 2030 Prof Mohammad KaraanGOSA February 2013

2. National Planning Commission Background 2010 Apr President Zuma appoints the Commission Jun Diagnostic Report published Nov Draft National Development Plan released Public consultation Aug Handover to President and Nation Sep Cabinet adopts the Plan Dec ANC Conference adopts the Plan Focus on implementation 2011 2011/12 2012 2013 onwards

3. The National Development Plan is: • Shaped by vision of the Freedom Charter & Constitution • A plan for the whole nation • A product of wide consultation • Endorsed by all major political parties

4. Diagnostic of the SA Economy • Under apartheid, the economy was oligopolistic: • strong mining sector and • sophisticated financial services sector • Ownership and control patterns largely unchanged & contribute to high levels of poverty and inequality • Low skill jobs have declined & high skill jobs grew significantly • Loss of low skill jobs has raised inequality • Too few skills to compete with advanced economies & high cost structure to compete with developing countries • Our weak economic performance is largely attributed to poor export performance since the early 1980s • St Francis Presentation to South African Clothing Textile Workers Union

5. Elements of a Decent Standard of Living Nutrition Clean environment Housing, water, sanitation, electricity Adecent standard of living Recreation and leisure Transport Education and skills Employment Health care Safety and security

6. Broad Goals of the Plan - Build a united country - Resolve historical injustices - Uplift the quality of life of all South Africans - Accelerate social and economic change - Eradicate poverty and unemployment and Reduce inequality - Expand the economy and distribute its benefits equitably

7. Objectives and Targets of the Plan Eliminate poverty and reduce inequality - Reduce unemployment Key Targets for 2030 - Improve quality of education - Provide quality public services (water, sanitation, electricity, etc.) - Inclusive rural economy - Better built environment - Critical infrastructure - Effective & affordable public transport

8. Explaining the slow progress on jobs Harder to do Greater impact

9. Proposed measures to create jobs • Promote manufacturing in areas of competitive advantage • Grow agricultural output and focus on agro-processing • Improve the functioning of the labour market to make it easier for young work seekers to get jobs • Better coordination and implementation of economic policies • Partnerships with business to increase investment in labour intensive areas • Lower the cost of living and of doing business • Undertake small business reforms Presentation to South African Clothing Textile Workers Union

10. Storylines of a premise • Zeno’s paradoxes • Visionary Industrial Policy (Ha-Joon Chang) • :Doesn’t matter if the cat is black or white, if it catches mice it’s a good cat” (Deng Xiaoping) • 3 kids and a flute (AmartyaSen) • The Next decade: demography & tech shift

11. Doesn’t matter if the cat is black or white, if it catches mice it’s a good cat” (Deng Xiaoping) THE CASE FOR AGRICULTURE • Economic growth premised on agric and manufacturing (Linsey Whitfield) • Labour intensive exports Hecksher-Ohlin Theory, Sameulson • Urbanisation does not advance productivity (Chang & Lin) • Two sectors (capitalist, non capitalist) Arthur Lewis. • Tech change drives trade specialisation. Paul Krugman • Opportunity of technical innovation from advanced commercial agriculture. • Growth in cities depend on rural markets and rural growth depend on urban markets. • Subsidisingagric is a political response to the unequal benefits of economic development • Rich nations: positive capital flows to agric; Poor nations: Neg capital flows • Labour absorption capacity • Influences human settlement patterns • Africa expansion potential • Sustains rural areas • Can address the homeland question • Multifunctionality

12. Broad proposals • Job creation (11m jobs) • Regional growth • Solve Land reform • Water & conservation • Advance the Green economy • Improve labour markets • Spatial inequities • Uneven public service

13. An inclusive rural economy-proposals- • Expand irrigation • Develop communal areas • Jobs upstream & downstream • Linking smaller farmers to markets • Tenure security in communal areas • Umzimvubu valley and Makathini flats • Invest in Adaptive research • Improve and expand training

14. A ‘NEW DEAL’ FOR AGRICULTURE • Market expansion • Aggressive trade regime • Technology shift R&D system • Water efficiency • Expansion into developing areas • Human capital incubators • Infrastructure investment Presentation to South African Clothing Textile Workers Union

15. The identification of “winners” Three approaches to identify industries that can contribute to significant growth in employment: • Large export industries with high labour requirements • High volume imports that can be substituted with locally produced goods • Growing small industries with high labour requirements

16. The employment creation matrix

17. Summary

18. Food security • In most years, South Africa is food secure at the national level, and has been so for a number of decades

19. Food Security • Maintain positive trade balance • Regional strategies • Public works programmes • Nutritional education • Farming-nutrition link • Product development

20. LAND Proposals • Inspired by the Green paper (proactive acquisitions, LMC) • Focus on people, not land (incubation) • Intended to remove uncertainty and get closure • Purpose to integrate support measures • Make the 30% target • Reduce failure rate • Build investor confidence • Reward commercial farmers who contribute • Remove land price speculation • Avoid land market distortion

21. A PRAGMATIC LAND REFORM SCHEME First, each district municipality where there is commercial farming land in South Africa should convene a committee (the District Lands Committee) with all agricultural landowners in the district as well as key stakeholders such as the private sector (the commercial banks, agribusiness) the government (Departments of Rural Development and Land Reform, the Provincial Department of Agriculture, Water Affairs where relevant, etc.), and government agencies (Land Bank, ARC, etc.) This Committee will be responsible for identifying 20% of the commercial agricultural land in the district, and then for giving the current commercial farmers the option of assisting in the transfer of this 20% of agricultural land to black farmers. They go about this in the following manner: To identify land they would first look around their district for land that is readily available from any of the following categories: land that is already in the market; land where the farmer is known to be under severe financial pressure, land held by an absentee landlord willing to exit, in an estate, etc. In this manner 20% of the land could comfortably be found without distorting markets. Upon identification, the land is obtained by the state at 50% of market value (which is closer to its fair productive value). The 50% shortfall of the current owner is then made up by cash or in-kind contributions from the commercial farmers in the district who volunteer to participate. In exchange, they are absolved from losing their land in future and they gain BEE status. This should remove the scourge of uncertainty and mistrust that surrounds land reform and the related loss of investor confidence. A stepped programme of financing would address most of the financing problems of land reform beneficiaries, gives the implementers of land reform the comfort that beneficiaries have the necessary skills for successful farming, and spreads the fiscal cost of the programme between future earnings of the farmer and the pockets of the taxpayer. This can be done for example by giving successful applicants a two or three years rent-free probation period and if they successfully demonstrate that they are capable of farming they then move to a long-term lease of say 40 years with the full commercial rental phased in over four years and a part of the rental fee applied to a sinking fund held at the Land Bank that eventually gives them full title to the land.

22. Land acquisition at 50% concern • 50% state subsidy • Other 50%= private contributions and/or development finance, targeted subsidies (CASP, etc) • Private contributions: Landbank bonds, extension, mentoring, incubation, marketing, harvesting, collective buying, guarantees, schemes, financing, other concessions, education, • Landbank 30-40yr mortgage • Landbank bonds: 10yr guaranteed return for land reform • BEE status for commercial farmers who contribute • Willing sellers still get market price !

23. A perspective on labour unrest and the minimum wage • Migrant labour dilemma • Service delivery protests • Marikana • De Doorns • Cost of living • Debt and conspicuous consumption • ‘The grapes of wrath’ Presentation to South African Clothing Textile Workers Union

24. The consequences • R105 pd is the threshold • Lay-offs and mechanisation • Unionisation drive • Productivity push • Competitiveness • Winners and losers • Trade policy • A new deal? Presentation to South African Clothing Textile Workers Union

25. Presentation to South African Clothing Textile Workers Union