Three+on+ASGISA+-+Makgetla,+Robinson,+Bell

Business Day, Johannesburg, 10 February 2006
=**Is growth plan the main course or just a starter?**=


 * Neva Makgetla**

THE Accelerated and Shared Growth Initiative for SA (Asgi-SA) is a bit like airplane food. It looks more sophisticated than it is, and it’s certainly tastier these days than say 10 years ago. But we still have to figure out if it’s just a starter. Is anyone actually working on the main course, or are we going to sleep hungry?

We are told repeatedly, presumably to damp expectations (and forestall comparisons with the late, unlamented GEAR), that Asgi-SA is not a development strategy but “a limited set of interventions that are intended to serve as catalysts” for faster, more equitable growth. The question is when and how a more substantial strategy will be offered.

Asgi-SA includes:


 * A collection of major infrastructure projects proposed by parastatals and provincial governments;
 * Support for activities that can create employment, starting with business process outsourcing, such as call centres, tourism and public works;
 * Substantial improvements in education and training;
 * A ragbag of measures to support the “second economy”, meaning small and micro enterprise, co-operatives and low- income housing; and
 * A promise to improve co-ordination of economic measures, without major changes in state structures or systems.

The renewed emphasis on shared growth is welcome. And no one could object to Asgi-SA’s major proposals, although some are oversold. For instance, deregulation will not do much to boost small enterprise in an economy rooted in heavy industry.

Despite its many virtues, however, Asgi-SA seems inadequate to reach its targets of halving unemployment and poverty by 2014. Its measures are useful, not transformatory. As its proponents emphasise, they don’t constitute a comprehensive strategy toward equity, employment and growth.

Critically, Asgi-SA doesn’t explore how the current economy must evolve to bring about more inclusive growth. In particular, how can the mining industry at the core of the economy — which also forms the basis for heavy chemicals and electricity — contribute to shared growth?

Economist Albert Hirschman suggested resource-based economies could achieve broader development in several ways: growth in downstream and upstream activities, expanded production to meet employees’ needs, investment of surpluses in new industries, and the use of tax revenues by the state. These possibilities shape the South African discourse on development.

The Reconstruction and Development Programme effectively saw redistribution through tax-funded basic services for poor communities as the key to raising living standards and building a more inclusive economy. Yet this approach is entirely absent from Asgi-SA, which focuses narrowly on the supply side, leaving social development out in the cold. We need to ask how the billions spent on housing, health and welfare can do more to integrate people into the economy.

For their part, trade and industry department officials often moot a classic industrialisation strategy, learning from Korea and Japan. This approach would target major industries in formal manufacturing and services to ensure they do more to achieve national aims.

In SA, in contrast to Asia, these aims must include greater equity and employment, not just higher exports and productivity. The current overvaluation of the rand means new industries would have to focus largely on local and regional demand, rather than world markets.

In contrast to either strategy, Asgi-SA does not provide much of a vision beyond the current economic trajectory, with its in-built inequalities and limited job creation. The proposed infrastructure investments support the traditional capital-intensive economic centres, especially mineral exports. Asgi-SA’s top priority sectors would create enclaves of labour-intensive services, with limited effects beyond the low-level jobs they create directly.

A more effective strategy for shared growth would start with an analysis of the kind of expansion needed in the main economic sectors to create employment and support small enterprise on the requisite scale. It would set long-term perspectives for mining, agriculture and services as well as manufacturing. In addition, the strategy would have to include proposals for the former homeland areas, which house over a third of the population.

Asgi-SA is welcome as a set of short-term interventions. Without a broader strategy to achieve shared growth, however, it will not overcome the poverty and inequality that still lie at the heart of SA’s economy.


 * Makgetla is an economist with the Congress of South African Trade Unions.


 * From: http://www.businessday.co.za/articles/opinion.aspx?ID=BD4A153005**



=From Gear to Asgi=


 * Vicki Robinson**

Mail and Guardian, Johannesburg, 10 February 2006 07:22
The Congress of South African Trade Unions (Cosatu) supports the government’s Accelerated Shared Growth Initiative for South Africa (Asgi), in principle — but says it will not succeed if it does not tackle poverty and inequality more forthrightly.

The clumsily named strategy, unveiled this week, is the government’s blueprint for achieving 6% growth. Cosatu’s central concern is that even if higher growth is achieved, it will not reduce economic inequality.

Other stakeholders, including business, cautioned this week that the strategy’s success would depend on sustained political will and whether the government was able “make ­special arrangements to get special jobs done”.

Brian Whitakker, CEO of Business Trust and a member of President Thabo Mbeki’s big-business ­working group, said he had seen “a level of political commitment to this project that I haven’t seen before. But these are big plans and it’s early days. We are likely to face the usual troubles of implementation; putting this political commitment into practice is going to be key.”

In a draft document titled Cosatu Comments on Asgi, which is being finalised for discussion at the federation’s central executive committee meeting next week, Cosatu says while it supports the state’s interventionist efforts to bolster economic growth, Asgi only “pays lip-service to the issues of redistribution and inequality”.

Critically, Asgi does not explore how the economy should evolve to bring about more inclusive growth. It “lacks any systematic attempt to ensure that growth of whatever figure — 6% or more — doesn’t perpetuate the current growth path of inequality. It doesn’t address the critical question of how to ensure that the beneficiaries of growth don’t continue to be largely the same suspects”.

The document continues: “Strategies to address the economically marginalised and second economy tend to be add-ons to a largely market-driven strategy, although there are some tentative shifts in the direction of a more interventionist role for the state.”

Cosatu has been consulted three times during the drafting of Asgi — at a slide presentation on the growth plan at a presidential ­working group meeting, and in two meetings with Deputy President Phum­zile Mlambo-Ngcuka. At the second, Mlambo-Ngcuka received Cosatu’s draft response to the Asgisa framework document.

Unionists point out that, by contrast, the government has held comprehensive consultations with business, both in the presidential working group and at sector levels.

The //Mail & Guardian// understands that Asgi has never been discussed in the tripartite alliance, which means the South African Communist Party has been excluded.

Jeremy Cronin, deputy secretary general of the SACP and an African National Congress MP, gave an ambivalent response to Asgi in Parliament this week.

He welcomed the initiative, but warned that “where there is growth, you can be sure that somebody ­benefits. But growth in itself is not necessarily of benefit to all. How we assess growth, and what we identify as constraints to growth, are not class or ideologically neutral ­realities.”

He also subtly cautioned government to work equally with all interest groups, not only business. “Clearly, and quite correctly, Asgi requires that government should work constructively with all of its social partners, including business. Clearly, we must address the bottlenecks in our export and import freight logistics system, for instance. We must help to lower the cost of doing business … yes, big business.

“But we must never forget that for the poor, logistics infrastructure is a rural road, or a pedestrian-friendly pavement, or reliable and affordable public transport.”

Civil society was also not consulted on Asgi, despite Mbeki’s expression of gratitude, in his State of the Nation address last Friday, to the civil sector for their “[participation] in the [Asgisa] process”.

Hassen Lorgat, media manager at the South African National NGO Organisation (Sangoco), said “civil society were never involved”. While he acknowledged that civil society had become fragmented since 1994, the “government need[ed] to give us the space to strengthen. NGOs haven’t helped themselves by doing poorly over the past few years, but the truth is that we weren’t even given the chance to do badly in this case.”

This week Sangoco, Cosatu and the South African Council of Churches presented their sixth ­People’s Budget, an initiative launched in 2000 as an alternative to the national Budget of Finance Minister Trevor Manuel. Logart said it should also be viewed as civil society’s contribution to Asgi in the absence of direct consultation.

The 53-page People’s Budget argues that the state is still enamoured with the growth, employment and redistribution (Gear) strategy model, particularly in relation to targets for tax and government borrowing relative to gross domestic product (GDP). It calls for an increase in the budget deficit to about 5%, an increase of about 2% in the target for the tax-to-GDP ratio, an increase in tax targets, tempering of speculative inflows from portfolio investments and further reductions in real interest rates.

This week Mlambo-Ngcuka re­affirmed that Asgi is neither a new policy nor replaces Gear. Mbeki emphasised in his State of the Nation address that it was not meant to cover all elements of a comprehensive development plan, but comprised a set of limited interventions intended to identify and unblock “binding constraints” on achieving a 6% economic growth rate by 2014.

About R370-billion will be spent in the medium term on public sector infrastructure investment, expected to rise to a level of about 8% of GDP, with the aim of upgrading infrastructure in areas such as roads, electricity and service delivery.

The project will entail sizeable increases in the capital budget, of between 15% and 20% every year, with the idea being that through big-ticket infrastructure projects and massive capital spending by Trans­net and Eskom, economic activity and job creation will be boosted.

The government also plans to streamline the structures of the state to facilitate delivery. Lindiwe ­Msengana-Ndlela, Director General in the Department of Local and Provincial Government, said national, provincial and local government were being restructured so that every tier would bear responsibility for service delivery failures.

“National will no longer be able to shift the blame on to local government by claiming that its function is to develop policy while local implements,” she said.

Several new task teams have been established to meld the various spheres of government, and this year will see a raft of new laws to ensure that “the public service and the state is the kind of vehicle we need to meet our service delivery targets”, said Geraldine Fraser-Moleketi, Minister of Public Service and Administration.


 * From: http://www.mg.co.za/articlePage.aspx?articleid=263813&area=/budget_2006/bud_insight/**



=Gear was a reversal of RDP; Asgisa is more of the same=

Business Report, Johannesburg, February 10, 2006

 * By Terry Bell**

Ten years ago to within a week, this column's first edition dealt with how the government would probably manage to take the steam out of threatened mass protests over privatisation.

The means was a national framework agreement on privatisation. It contained nothing new and was, in fact, a reiteration of the established government positions.

However, at the closed Cosatu executive meeting at which the agreement was discussed, the SA Municipal Workers' Union (Samwu) was the only affiliate that refused to endorse it, noting that despite slight differences in terminology, nothing had changed.

The framework agreement was hailed as a breakthrough by most of the union leaders, while critics in several unions claimed it would "take the steam out of protests about privatisation". The latter were proved right.

None of the Cosatu leaders was present at the formal launch of the agreement in Cape Town as they were in urgent discussions with Swazi trade unionists about the deteriorating situation in Swaziland.

Looking back on that column now, there is a feeling of deja vu. And looking through the nearly 500 subsequent columns, a single quotation springs to mind: the more things change, the more they stay the same.

Published in 1849, that remark has been vindicated ever since, especially in the relationship of labour to capital. This week it had particular resonance when weighed against happenings and reactions within the labour movement almost exactly a decade ago.

Last Friday yet another acronym was created with the official launch of Asgisa (the accelerated and shared growth initiative of South Africa), which, crucially, promised to create more jobs and halve poverty by 2014.

Again it was hailed by a majority of union leaders. The National Union of Metalworkers of SA proclaimed it as a major breakthrough signalling the creation of more jobs.

Alliance partner the SA Communist Party, also "welcomed the broad strategic perspectives" outlined in Asgisa.

But Samwu again begged to differ, pointing out that Asgisa merely repeated much the same mantra as the Gear document 10 years ago, that growth came before redistribution.

"Gear replaced the RDP [reconstruction and development programme], which was based on redistribution leading to economic growth, with the trickle-down theory of growth leading to redistribution," says Samwu general secretary Roger Ronnie.

Gear turned on its head the economic policy perspective adopted by the three main labour federations in their Social Equity and Job Creation proposal published only weeks before the Gear announcement.

This has not changed with Asgisa. Alan Hirsch, the chief director of economic policy in the presidency, made that clear earlier this week. Speaking on radio he noted: "The faster we grow, the more jobs we can create."

This concept, that growth equals job creation equals wealth redistribution, is the basis of Gear, which at the time was described by then Nedbank chief economist Edward Osborne as "a cascade of improbabilities".

That charge is being levelled again 10 years on, both within the unions and by economists such as Sampie Terreblanche. This week he saw the redistributive promises as improbabilities and dubbed Asgisa "a growth strategy to enrich the rich further".

Ronnie says: "It also tends to continue to promote the myth of two economies when what we have is a single economy that favours the rich and increasingly marginalises the poor."

Addressing the nation last Friday, President Thabo Mbeki admitted that the rich had got richer when he noted: "Our nearly 12 years of freedom have been very good for business."

In an echo across the past decade, critics also claim that the redistributive promises cannot be met, and that having social democratic aims within a neo-liberal system is contradictory.

But Cosatu leaders, concerned this week with the further deterioration of the Swaziland situation, are still cautiously supportive of Asgisa.

They certainly did not agree with Terreblanche's blunt assessment: "Just as the 'r' in Gear was just an exercise in propaganda, so too is the first 's' in Asgisa." Perhaps the next 10 years will prove who is right.


 * From: http://busrep.co.za/index.php?fSectionId=553&fArticleId=3105404**

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