By: Abram Molelemane and Nicholas Owsley
With Freedom Day approaching, it is a good time to take stock of where we have come from, and where we are going. It is now almost 20 years since South Africa became a democratic country. Since then, it is fair to say that our land has made numerous positive strides, but also that the majority of South Africans still find themselves struggling with the same economic challenges they faced prior to 1994.
Outside of the major centres we find roads still in bad shape, communities in need of proper hospitals, houses without water and electricity, bridges still hanging, our education system in turmoil, wage protests erupting constantly – the list goes on. It is apparent that the promise of 1994 – a better South Africa for all – is yet to be realised.
The New Growth Path and the NDP
Not so long ago, President Jacob Zuma delivered his State of the Nation address on behalf of the party’s National Executive Committee (NEC). In his address, Zuma emphasised how much decisive action was needed to thoroughly and urgently transform South Africa’s present economic patterns in order to realise our vision for the future.
Amongst the pressing issues Zuma discussed were the unholy trinity of unemployment, poverty and inequality. As reported in the Mail & Guardian newspaper, Zuma urged all South Africans to unite behind the National Development Plan (NDP), which sets out various measures to tackle these challenges.
He said his government was already implementing some of the key programmes of the NDP, such as the New Growth Path and the Infrastructure Development Plan. “The infrastructure development plan has introduced the national and central coordination of the building of dams, roads, bridges, power stations, schools, hospitals, two new universities and other infrastructure that will change the landscape of our country and the lives of our people,” explained Zuma.
Furthermore, he said that the government would accelerate the implementation of all 18 strategic infrastructure projects, especially those directed at the 23 poorest districts in the country. “The projects focusing on the 23 districts will ensure the provision of water, electricity and sanitation and will change the lives of approximately 19 million people,” he added.
While it all sounds good and everyone agrees that these strategies are exactly what we need to be implementing to create ‘a better South Africa for all’, talk is cheap. All but the most die-hard comrades (or Jackson Mthembu) will accede that while the intentions of the NDP and the New Growth Path are spot-on, implementation has not been quite so successful and unemployment in particular remains a massive challenge.
Ceyda Öner, an Economist in the IMF’s Asia and Pacific Department points out some fairly obvious but nonetheless sobering correlations between economic activity and unemployment. Öner says unemployment is highly dependent on economic activity; in fact, growth and unemployment can be thought of as two sides of the same coin: when economic activity is high, more production happens overall, and more people are needed to produce the higher amount of goods and services. And when economic activity is low, firms reduce their workforce and unemployment rises. In that sense, unemployment is countercyclical, meaning it rises when economic growth is low and vice versa.
Looked at in this context, the NDP championed by Trevor Manuel is right on the mark. The plan provides an outline of how to get South Africa’s population into the workplace and simultaneously create economic growth.
The document lauds skills improvement as the most vital factor in developing South Africa, and proposes major expansion in basic education, and particularly in further education and training and higher education. The document calls for a more carefully defined link between education and skills training, and the actual skills demanded in the market.
Get Our Country Working
In our South African context, few would disagree that it is through education and skills training in line with industry demands that we can achieve good employment outcomes, expanding jobs and also improved earning potential, which will add value to the economy.
As a result, there is an increased impetus for higher education, particularly in maths and science subjects, but also a shift towards giving more credit to vocational training and expanding the scope of workplace, entrepreneurship and artisanal training.
To achieve this, the NDP proposes reducing the costs of hiring young labour market entrants, and also subsidising the jobs placement sector. These measures are consistent with the objectives of Enterprise Development specialist Fetola’s Graduate Asset Programme (GAP), a new internship programme aimed at growing the business sector and simultaneously creating experiential learning opportunities for unemployed graduates by placing them into host businesses.
“Through GAP, graduates will gain work experience, but more importantly they will be able to put their skills to use and help South Africa’s businesses to flourish. This makes GAP a unique programme, because our primary focus is addressing the skills shortage at an SMME level, not simply giving the graduates work experience,” explains GAP Programme Manager Mzi Matyana of Fetola.
Entrepreneurship training also forms part of the NDP’s small-business focus. According to the NDP, small- to medium-sized businesses will account for 90% of jobs created in South Africa, especially in the domestic services sector. The GAP initiative plans to tap into existing business development and entrepreneurship support programmes such as Legends (www.golegends.co.za ) to make sure that the host businesses are thriving, increasing the potential to turn internships into permanent jobs.
Once again, the NDP is on the right track with their SME focus. According to Adcorp’s labour economist, Loane Sharp, a typical small business employs 12 people (aside from the owner-manager); a reinforcement of this sector could potentially create millions of jobs. Furthermore, it is also recognized around the world that small businesses do not just help drive economic growth and create employment, but are bases of innovation and new ideas.
According to Fetola’s Director Catherine Wijnberg, “South Africa does not have a culture of entrepreneurship when compared with India for example, but we do have a lot of talented and creative individuals and a government that is at least trying to create the right climate for entrepreneurship and small business development through the NDP and other measures, so there is certainly some hope for the future,” she adds.
With the growing civil unrest in major industries like mining and transport, it could very well be the SMME sector that ends up being our economy’s saviour – but only if we develop a climate that truly supports the SMME sector by making it far easier to start, run and grow a business than is currently the case.
In this context, one cannot fault the focus and intentions of the NDP. There are few that could argue anything other than the Government having got it right in this case. Unfortunately, as with all things actions speak louder than words– let’s see how they do when it comes to the traditional Achilles Heel of governments everywhere, namely delivery.
About the authors
Abram Molelemane is a third year journalism student at the Tshwane University of Technology. He has written for various publications such as Wealthwise magazine and Reckord newspaper. In 2011 he was nominated for the Reckord print journalist of the year award. He is currently a junior media officer at Fetola.
Nicholas Owsley graduated from the University of Cape Town in 2012 with Honours in Politics, Philosophy and Economics. His research paper, ‘ The Occupy Movement: a Polanyian Analysis of Contemporary Dissent’, was published as a working paper for the Centre of Social Science Research in December 2012. He has since moved into the world of Enterprise Development and is currently working as a Business Intern at Fetola.