By Mduduzi Mbada,
In contributing towards the realisation of the kind of society we want, as articulated in the Freedom Charter and our constitution, in February 2020, we presented the Growing Gauteng Together (GGT2030) plan of action that will endeavour to deliver the province of our dreams in terms of the economy and social security. The GGT2030 is about taking forward the implementation of the ten-pillar programme of transformation, modernisation and reindustrialisation of the Gauteng economy.
The GGT2030 plan of action also seeks to develop a sustainable capable state, where millions of people will be empowered to take charge of their destiny. It is about building a sustainable future for all and a society characterized by equality, social justice, prosperity, no crime and gender-based violence and improving the quality of life of its citizens. This is a society free of any form of discrimination and injustice.
The development of the GGT2030 Plan of Action was scientific. It was guided by the Indlulamithi Scenarios 2030, specifically, the Nayi Le Walk scenario, which identities social and economic drivers that can significantly improve the lives of citizens with pro-poor income distribution, inclusive growth, and meaningful social cohesion.
The modelling and development of GGT2030 policy interventions were also done using SA-Linked National-Provincial – which is linked macro-micro model for South Africa developed by the Applied Development Research Solutions (ADRS), which considers the what-if question.
Before the Covid-19 pandemic, we had to analyse major trends such as the demographical shifts that were already taking place globally; Inequality and urbanization which were on the rise; the Fourth Industrial Revolution (4IR) that was already reshaping the way human beings live and work and climate change that was cited as the new existential threat to all of humanity. The importance of understanding global trends is necessary because any successful nation or state should develop measures to anticipate and respond effectively to these trends.
This includes developing responses to the novel COVID-19 pandemic, which has resulted in a global paradigm shift and fundamentally changed life as we have come to know it. The COVID-19 pandemic has brought to the fore the issues of poverty and inequality in both the developed and developing countries. It has, therefore, become imperative for countries to respond not only to the health challenges presented by the Covid-19 pandemic but to purposefully address issues of poverty, inequality and developmental imperatives in their respective regions in response to the pandemic.
The COVID-19 pandemic has brought trauma and shock to the global system and South Africa is not immune. Gauteng as the economic hub of the country, contributing almost 34% to GDP, has had to drastically adjust and lead a comprehensive response to the impact of the COVID-19 pandemic.
True to the nature of pandemics, like volcanos and earthquakes, we know they will happen, but we do not know when, where, and how they will occur. In response to the challenges brought by the COVID-19 pandemic, we have remodelled the GGT2030 plan of action as part of the reconstruction and recovery of our economy. The remodelled GGT2030 is a response to both the social and economic challenges brought on by COVID-19 pandemic. It was done by understanding three scenarios related to the spread of the COVID-19 pandemic specifically in SA. Firstly, under the Low Scenario, about 0.5% of South Africans (i.e. about 300,000) will be infected by COVID-19. Secondly, the Moderate and High Scenarios consider the possibility of COVID-19 infecting close to 1% and 2% of the population (about 600,000 and 1,200,000) respectively. The Low and Moderate Scenarios assume that the pandemic will be contained during the third quarter of 2020, and the economy will begin to recover during the fourth quarter of 2020.
The modelling exercise assisted in introducing new bold policy measures to curb any further social and economic distress in society. Specifically, this includes the introduction of an unemployment grant for all those who have become unemployed, it also includes making public works the employer of last resort for the unskilled-unemployed. This is because, in 2020, EPWP if expanded it will cater for 35% of the unskilled unemployed before expanding the service to all unskilled-unemployed by 2030, with the increase of the daily rate to R 160. We should also introduce a new caregiver grant of R 500, which is allocated for family members that take care of a child who receives either a child support grant or a care dependency grant and an immediate increase of the monthly child support grant to R 500.
With regards to Macro-Economic Policy Reform, there is a need to refocus and realign policies to support growth and employment as evidenced by the easing of monetary policy. This includes a rise in current government expenditure, an increase in investment to stimulate economic services and social infrastructure. This will also require an improvement in the ease of doing business in the province, and an increase in labour productivity of some sectors, the ten growth sectors and an increase in competitiveness in some sectors such as the financial services sector, real estate and business services.
Therefore, the re-modelled GGT2030 also brings the possibility of an expansion of the tourism sector, growth in the trade, catering and accommodation services sector, growth in exports for the agricultural sector, a rise in labour productivity and increased competitiveness of strategic sectors.
It also brings into sharp focus the need to improve industrial policy levers s such as industrial financing incentives as an instrument that can potentially drive industrialization and potentially reduce the trade deficit in the province. In the next five years, we will spend R60 billion – infrastructure spend to create 100 000 jobs and develop 50 black industrialists. Through Industrial Financing Incentives, total annual investment in the manufacturing sector will increase by R 10 billion during the next 11 years; Special Economic Zones (SEZ) and African integration programmes, will increase total exports by an additional 1.5% after 2020 and catalyse economic growth, employment opportunities and promote entrepreneurship; and the government’s Proudly SA and localisation policies will gradually reduce the import dependency ratios of some sectors by 20% over the next 11 years. Specifically, the Tshwane Automotive SEZ will be one of the biggest since 2010, with a supplier park and a factory producing 200,000 vehicles a year for the Ford Motor Company by 2022. This will be made possible with a scale of investment of over R20 billion by the private sector matched by R3.7 billion by government. The R1.7 billion spending on the build phase alone will be dedicated towards SMMEs, sourced from the Tshwane area and Gauteng at large.
The collaboration of government with the private sector, through the Public-Private Growth Initiative (PPGI), is another initiative that can increase investment both provincially and nationally. This will be achieved through the increased private sector increased investment in the South African economy by R 500 billion over the next 11 years, as their contribution to the broader socio-economic development of the country. With Public Investment Cooperation (PIC) investing R 20 billion in the manufacturing sector for the period between 2021 and 2025 (5 years) will contribute to growth and employment.
We are also working with the Development Bank of South Africa (DBSA) and the Presidency infrastructure division to unlock development in key nodes of the City Region. By funding the bulk infrastructure needed in the post-apartheid cities such as Lanseria, Vaal River City and the Western Corridor, wherein we are investing in an Agro-processing SEZ, as well as implementing accompanying investments in the revitalisation of 15 industrial parks, 12 Agro-Parks and five agro-processing facilities we envisaged significant growth and employment prospects.
Overall, the roadmap to inclusive growth in the province should be deliberate in its efforts of targeting the poor and improving service delivery services to improve the living conditions of poor families in the province. This should also lead to improvements in total employment, the decline in inequality as measured by the Gini coefficient, a decline in government expenditure relative to its debt ratio and improved profits for businesses.
Under the modelled six-pillar policy scenarios, it is projected that the poverty rate will decline by almost 50% from 28% to 15% and that there will be a significant improvement in the delivery of social services (education, health, land reform, housing, etc.) and economic infrastructure across the country (roads, bridges, transportation, etc.) This will particularly improve the living conditions of poor families.
When the GGT2030 is fully implemented, the size of the economy is expected to more than double over the next 11 years, from its current size of about R 1 trillion to a little above R 2 trillion, in 2010 prices. The unemployment rate will be reduced by almost two-thirds from the 36% (Mild COVIT-19 scenario) and 42% (Severe Scenario) in 2020 to 13% by 2030. Per Capita GDP is expected to increase by 70% in real terms (from about R 68, 000 currently to about R 115, 000 in 2030. The provincial poverty rate is expected to reduce by more than 40% over the next decade from 20% (Mild Scenario) and 21.3% (Severe Scenario) in 2020 to 11.5% in 2030. The high-income inequality in the province, measured by the Gini index, is expected to decline by 12 percentage points over the next 11 years. The decline will be from its current value of 70% to 58% by 2030. This will be achieved through a 4 billion per annum spend in buying goods and services from 2000 township enterprises, support 50 black industrialists, supporting 50 emerging black farmers and 20 black agro-processors and supporting of 500 cooperatives in the care economy and the creation of 250 000 sustainable and decent jobs.
The implementation GGT2030 with discipline, and the right kind of skills, including investing in knowledge as a strategic resource, will contribute to the South Africa of our dreams by 2030, it is also plan of action that will contribute towards a South Africa that truly belongs to all who live in it by 2055, the centenary of the Freedom Charter, where poverty and inequality are not the key defining features of social relations but by March towards a prosperous and united South Africa.
Mduduzi Mbada, is the Head of Policy: Office of the Premier, Gauteng Provincial Government, Republic of South Africa