Follow NDP to revive the economy, not academics
JOHANNESBURG – The World Bank has suggested as a rule of thumb that physical infrastructure investment must be at least 6 percent to 8 percent of gross domestic product (GDP) in order to support sustained rapid economic growth.
South Africa’s National Development Plan (NDP) is not ambiguous on the set targets for growth, and our targets on infrastructure spend must be consistent with the recent State of the Nation Address (Sona) that highlighted high-speed rail trains and smart cities.
Infrastructure spend poses an opportunity, as it potentially fosters aggregate economic output, given its contribution on its own to GDP, and not only as an enabler for trade, but also an accretion to other sectors of the economy.
For South Africa to play a significant role in the newly established African Continental Free Trade Agreement, devotion must be to address these infrastructure gaps and fully achieve Goal Nine of the UN Sustainable Development Goals, and Aspiration One of Agenda 2063 of the African Union.
Literature suggests that the government would need to accelerate and intensify efforts to mobilise domestic and external financing resources for infrastructure development in Africa.
Goal Nine: Build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation.
Aspiration One: A prosperous Africa based on inclusive growth and sustainable development.
Prudency in attracting foreign-direct investment to finance the required growth is key, particularly in South Africa.
Fuelling economic growth by excessive capital accumulation, policymakers risk suffocating the possibility of steadier and more resilient future economic growth that comes from greater efficiency and productivity of using scarce factors of production.
However, the lack of entrepreneurship and engineering prowess in the new Advisory Council is concerning if South Africa is to be a construction site, as was suggested in the Sona by the incumbent president.
Hard questions have to be asked for the situation in South Africa:
- What infrastructure investment to GDP is required to achieve rapid growth, as suggested by the NDP?
- What impedes us in achieving this target?
- What are the costs of inefficiency and lack of agility to the overall economy by both private and public sector?
These are practical questions that need answers if rapid growth is to be achieved, and the council seems to be abstract-orientated in composition, as it is dominated by off-the-beaten track academics.
We need less convoluted theories and models, but focused-engineering targets driven by ruthless patriots to rectify South African realities that can enhance an entrepreneurship spirit, as totem of our time.
African economies are expected to prosper over the coming decades, but this will be achieved only by prudent investment in education, infrastructure and technology.
If the latter two are not misplaced, then most part of the Advisory Council might be anachronistic for the current times and the situation of the South African economy.
Bongani Mankewu is an associate of the infrastructure development and engagement unit at Nelson Mandela University.