National+Integrated+Development+Strategy,+Xoli+Dlabantu

South Africa is in a strategic inflection point. It is either we achieve a strategic breakthrough that will see us attaining the true objectives that are enshrined in the Freedom Charter or we continue with maintain the Colonialism of a Special Type (CST) development path. The economic model that will be adopted from now henceforth whether it be the **//neo-classical Gear//** or the herein proposed **//developmental NIDS//** will be the key in determining the economic trends for the decades to come. **// “It is now, or never //** ”. South Africa is a capital-poor country as regards as regards both the supply of capital goods and means to finance additions to the capital stock. Many capital goods such as heavy or specialized machinery and equipment, cannot be manufactured locally, and therefore have to be imported. Our future performance will depend largely on the ability to reduce country ’ s dependence on imported capital goods and services, the export performance, the level of access to international financing and direct foreign investment on **//Rural Development//** at the least**//.//** Table.1 gives a comparison between the **//Neo-classical Gear or the developmental NIDS.//** 1. Agriculture and rural development 2. Infrastructure 3. Priority production system (selective industrial policy) 4. Continental development strategy 5. Poverty alleviation 6. Environment protection 7. Human resources and education 8. Health and medical care 9. Women in development || 1. Fiscal discipline 2. Political expenditure priorities 3. Tax reform 4. Financial liberalization 5. Exchange rates equalization 6. Trade liberalization 7. Foreign Direct Investment Liberalization 8. Privatization 9. Deregulation || The two approaches will be too hard to compare. NIDS will be results oriented and will not care much about concrete measures, whilst Gear is oriented on principles and concentrates on the ‘ **// framework //** ’ for a market economy. The ‘ **// ingredients approach //****// ’ //** will be the used approach as it the commonly used approach for models which are action oriented. “ The ‘ framework ’ represents rules of the games according to which economic agents make decisions and take actions in a given economy. In the framework approach […] an economy is conceived in terms of the functions of institutions and mechanisms (the invisible hand), and its performance is evaluated in light of the extent to which the rules of the game are established among key economic agents. In contrast, the ‘ ingredients ’ refer to tangible organizational units such as enterprises, official bureaus, and industrial projects and their aggregation such as industries, sectors or regions […] The ingredients approach conceives the economy as a collection of these components” ( Yanagihara, 1998:70-71). The Gear or framework approach is concerned with leaving the fundamentals right and leaves the rest to the market. This includes the task of wealth distribution which is only assumed to be automatically taken care of by the likewise ‘ **// assumed job creation //****// ’ //**. Job creation is not necessarily an effect of the growth cause, particularly in a country like ours where we have a historic task of addressing the persistent Colonialism of a Special Type (CST) legacy. In contrast, the ingredients approach is rather flexible in use of  measures-intervention in sectoral compositions or industrial organization are explicitly permitted- only outcome matters. Another matter that needs to be highlighted is the dire need for a selective industrial policy where industries or sectors of strategic importance to the society: petrochemicals, pharmaceuticals, and basic foodstuff production processing, steel and cement, need to be established or acquired if necessary so that they can be incubated in line with maintaining price stability. 1. **__Introduction__** The programme seeks to:  Drastically and systematically transform our persisting colonial growth path that continually reproduces racialized poverty and inequality. The globalized economy is in a deep crises which manifests itself in three distinct areas namely:  The financial crises  The economic system crises as well as,  Confidence crises. What further strategically aggravates the situation is the way that it is being resolved- massive multi-trillion dollar bailouts with **//printed money//** that has simply been printed out without any foreseeable corresponding structural arrangements that are meant to absorb the looming massive money supply. The Zimbabwean Governor of the Reserve Bank was so excited when he heard the announcement about the stimulus package and he made mention of the fact that he was actually glad that the **//whole world had eventually learnt from Zimbabwe with regards to printing money.//** What is actually alarming is that seemingly it has not dawned in our minds that there is an unprecedented inflation looming. According to our qualitative projections, the massive implies a 2 to 3 trillion dollar budget deficit that is going to be largely money financed by printing more money as is always the case. The obvious aftermath is hyperinflation as well as a protracted restrictive monetary policy that will restrict the American consumer. This will have an adverse on the whole world economy as China and India will not be able to export to the US as before. In a nutshell, the present world economic woes seem to be far from over. On a formative level, not unless the Obama administration can begin restructure its economy in the Japanese kereitsu way with commercial banks in the centre of the massive bailouts. What is evident is that the present world socio-economic formation is solving one crises with another. Even in some very influential investment circles in the US, there is a view that the time for the world export oriented developing economies is over. The US consumer cannot seem to bear the weight of supporting the world economic development. His or her disposable income is being eroded as he or she has to find alternative means of funding his or her lifestyle and moreover, posted recorded job losses are the order of the day. The modern neo-classical economics is obsessed with the inflation fetishism. It is a new found religion such that it is almost impossible to imagine the world without one and yet it continues to bring misery to ordinary people through its erosion of disposable income. What further aggravates the situation is our mandatory monetary policy regime which further erodes the consumer ’ s disposable income through the repurchase agreements raise to banks. There is nothing fundamentally wrong with the present monetary policy except for its lack of alignment to the overall development objectives of the economy. On a formative level, where a conflict exists between curbing inflation and our development objectives, the latter should prevail. The imminent environmental implosion that the world is facing cannot be overemphasised. A new economic policy without a overtones on environmental preservation measures as well as sustainable development would be futile. This economic policy will amongst other things seek to come with strong sectoral measures that will begin to address our environmental concerns. South Africa can never be a normalized democracy that promotes individual freedom, equality, and social justice if it doesn’t ’ have mass participation in the economy as well as act drastically to redress the social and spatial imbalances which are an effect of the apartheid model-type of neo-classic capitalist development. Real sustained growth requires an economy that begins to be inward-oriented and begins to address:  Vast income discrepancies,  Rural-Urban economic imbalances,  Workplace stakeholder marginalization, and  Human needs in an equitable manner. The strategy outlined below addresses the above and also:  Attains Real GDP Growth of 6,7% per annum for next coming 5 years  Containment of inflation within the 3 - 6% target range in the next coming 5 years  Create 12 000 000 mandatory jobs in the next coming 5 years  Have a favourable Balance of Payments that is going to begin to address the external inflationary pressures.  Have a full swing flying geese African revolution with South Africa on the lead echelon within 10 years.  A very diversified balanced economic portfolio within the coming 10 years.  A democratized economy that is going to begin to treat all stakeholders with dignity and respect.  Make a mark in the world economy within the coming 10 years. 1. There will be a **//two-tier interlinked approach//** to our development with institutional arrangements largely remaining as they are except for:  Minor changes in the banking system to cater for the Co-operative banks,  Changes in the monetary policy to cater for the development objectives of our economy.  Fresh mandate for SOEs to begin to foster the new values that are going to outlined in the economic programme.  Sourcing of the right human resources to man the SOEs.  Change of the incentive structure including the procurement system to induce the envisaged new value system. The National Integrated Development Strategy (**//NIDS)//** is the new development strategy and is essentially composed of:  A **Rural Development Strategy,** and  An **Industrial Development Strategy.** At the core of **//NIDS//** is the Priority Production System (PPS) where sectors and companies of national priority in realising our development objectives should be incubated by the state. The basic production factor in rural development is land. The 75% of the South African population resides in 15% of the land of the country whilst 14% resides on 86%. An average South African african adult consumes 180kg of grain per annum and there is an average 22 000 hectares of land per rural Local Municipality that is usable and yet arable. On the other hand there is vast land in the same magnitude that is used for leisure. There is even a 22 000 hectare **//very arable//** golf course. The present land restitution mechanism falls short of making any meaningful progress in supporting the new proposed rural development programme. However our Constitution states that land can be taken from a private owner if that would be for the benefit of the society at large. It should however be stated that the proposed Rural Development Programme will be for the benefit of the society and will seek to:  Ensure food security in line with the vision of the UN.  Ensure food safety  Alleviate poverty in terms commanding sufficient resources to satisfy basic needs.  Drastically redress the economic imbalances of the CST development path.  Create an appropriate rural-urban balance  Expansion of small-scale, labour intensive rural industries  Choosing appropriate labour-intensive technologies of production  Modifying the direct linkage between education and employment  Reduce population growth through reductions in absolute poverty and inequality. 1. Public Corporations (South African **//kereitsu//** model) 2. Social Production Units (Production Co-Operatives) 3. Co-Operative Banks Rural development is a national priority high impact programme that cannot be thrown to the mercy of the market. It has to be incubated by the government through establishment of dedicated rural development public corporations or transformation of already existing food production entities such as AsgiSA EC and so on. The public corporation shall be modelled a South African **//kereitsu//** formation with a Co-Operative Bank at the centre. These are the typical business units will comprise the Public Corporation: 1. ** Crop Production Unit **  Maize Production  Soya Bean Production  Canola 2. **Poultry Unit**  Chicken Rearing 3. **Tannery Unit** 4. **Wool Washing Unit** 5. **Poultry Abattoir Unit** 6. L**ivestock Abattoir Unit** 7. **Maize Milling Unit** 8. **Soya Bean Value addition Unit** 9. **Feed Manufacturing Unit** 10. **Co-Operative Bank Unit** The above mentioned business units will be the basic units of the Public Corporation and will have its foundations at Local Municipality level. Every voting station, ward, ploughing field should breathe these structures. It should be the lifeblood of the rural communities. Although these Business Units will operate individually, they will form a synergetic whole as they will be under one corporate structure. They will operate provincially as independent structures which are led by he GCEO (Group Chief Executive Officer) who will report to the Board of Directors. The GCEO will lead a team OF CEOs who will subsequently lead their own functional area managers. The Public Corporation will be a systematic organisation whose mandate will be to:  Foster growth  Create employment  Stabilise employment and  Economically empower the poor. The Public Corporation ’ s core value shall be:   individual freedom,  equality, and   social justice This might sound contradictory given the public nature and control but these will be fostered through the procurement system. The reason for this stance is the nature of national priority of the Rural Development Programme. Of the 10 strategic business units, 2 namely;  The crop production and  The Co-operative Bank, will be a partnership with the land owners who will provide land for cultivation. These two business units will share their profits with individual landowners according to the yield in their individual fields. At Local Municipality level, the Crop Production Unit will generate a revenue of R 2.2 billion and a net profit of R 700 million within a year. This amount will be shared between landowners and the Public Corporation. For every operation at local municipality level, a 10% **//levy//** on gross profit should be charged by the local municipality as a means of generating revenue for the local municipality concerned. At the same level, the corporation will need 500 tractors to cultivate the afore mentioned hectares. The tractor manufacturers will be companies who are prepared to comply with the terms of the procurement policy of the corporation. They also have to agree with the fact that they will have to establish their assembly production units in every Local Municipality with maintenance points in the farmers ’ support centers. This will lead to massive rural spin-offs with still-makers, rubber manufacturers as well plastic manufacturers investing in these endeavors. Preferably, Denel will have to transform some of its business units to cater for this need. However, other manufacturer will be welcome on condition that they are prepared to change their production relations so as to align them to the corporation ’ s procurement policy. Every effort should be made to ascertain that the procurement policy is applied along the value chain. The Maize Milling Unit has a potential of generating R 99 million per annum at local municipality level and the revenue will and all other surplus funds belong to the **//corporation surplus fund.//** Among other responsibilities, the public corporation will have a social responsibility of making sure of existence of clinics in every 5 kilometer as per the UN requirements. These clinics should be fully sponsored by the public Corporation. There will be 9 farmers ’ support centers that will be nodal areas for future development at municipality level with 3 in every town. One of the main motives behind concentrated expressions on Rural Development is to curb rural-urban migration. **//In this regard, the Government should open a State groceries store that will operate only in the rural areas (preferably from the farmers//** **// ’ //****// support centres) //** so as to market the corporation ’ s items as well as sell foodstuffs at affordable prices. At the core of the procurement policy of the public Corporation shall be Social Production Enterprises (SPEs) which will begin to ensure stakeholder equality through state, collective, or mixed ownership of means or factors of production. Because of the two-tier system nature and the **//development economics approach//** to the proposed programme, there should be an extensive use public finance institutions to fund the programme. State development finance institutions should be remodelled to cater for these new societal needs. **//Initially//**, the Rural Development Programme should be funded through Public Finance mechanisms with **//special emphasis on the extensive use of Zero-Coupon or Revenue Bonds//** for risk management. With time, the Co-Operative Bank should take over to fund the process. This implies that there should be changes in the Banks Act of 1990, so as to unlink Co-operative Banks to a major bank and actually allow the Co-Operative Bank to take over a commercial bank but not the other way round. Secondly, the Co-Operative Bank Bills(COBBs) should be among the money market instruments that qualify as liquid assets in terms of prudential banking requirements. Thirdly, the Co-operative Bank should be given immunity to soul rights to daily issue and underwrite Euro-commercial papers and 25% of the proceeds should be redirected to infrastructural development in rural areas. The Co-Operative Bank must be owned by the landowners and workers. In this note it is important to emphasise the importance of a drastic land restitution programme so as to expand the beneficiary base. Furthermore, with the funds that will be sourced from the financial markets, the state institutions, it should be of utmost priority that the infrastructure development should be of utmost priority before even thinking about ploughing any piece of land. Lastly, the borrowed funds should be recouped from the revenues that will be generated from the operations of the Public Corporation. One of the most critical concerns of a Rural Development strategy of this magnitude ( cultivation of 10 million hectares of redundant land) is the accompanying environmental implications. In this regard together with a need for a structural approach to price stability, there shall be a 6 year extensive production programme and 7th year rest arrangement. It is only the state institutions and the Co-Operative Bank that will be allowed the right to lend to the co-operatives. When co-operatives lend to one another, it should be only solidarity basis on strictly short-term or money market instruments without interest costs. The lending policy of the Co-Operative Bank shall be no more than 6 years to maturity. In actual fact, it should prudentially correspond with the 6 year cultivation mechanism. The interest rates should be structured to decrease with the time towards the sixth year.  Merger of the already existing rural development entities and adoption of the above mentioned model.  Engagement of local municipality ward councillors so as to involve the landowners.  Change the existing legislation. NB. **The above mentioned strategy knows no boundaries. If it can be harnessed with zeal and passion it is an economic tsunami that is ready to unleash an African Revolution.** South Africa remains at the forefront of industrial and general economic progress of the African Continent. The idea is to adopt a flying geese approach to continental industrial development with us heading the **//geese on flight formation followed by other geese or economies within the continent.//** The flying geese (FG) model intends to explain the catching-up process of industrialization of latecomer economies from the following three aspects: Intra-industry aspect: product development within a particular developing country, with a single industry growing over three time-series curves, i.e., import (M), production (P), and export (E). Inter-industry aspect: sequential appearance and development of industries in a particular developing country, with industries being diversified and upgraded from consumer goods to capital goods and/or from simple to more sophisticated products. International aspect: subsequent relocation process of industries from advanced to developing countries during the latter's catching-up process. This implies that all of our nation’s efforts should be directed towards harnessing the existing technologies within our boundaries and begin to ask such questions as : **//Is it worth compromising our economic policies to opening our economy if we cannot harness the foreign technologies and begin to develop proprietary technologies to impact on our developmental path. Are our academic institutions loose formations with no national cause. If they have one, how do we begin to measure that against its peers like China, India and Brazil?//**  Our imposed CST developmental state continually makes us very vulnerable to crude oil fluctuations. What ’ s frustrating is the price mechanism that is based on a unilateral legalised cartel and speculation on financial markets. What ’ s even more frustrating is the failure to understand how Sasol with different technology altogether should use the same pricing mechanism as that of crude oil. The point however is that oil remains the main driver of external inflation in our country, and as such its production is and remains of strategic interest as before the 1994 elections, and as such it needs to be acquired back by the state **//as a matter or urgency//**. Furthermore, we need to increase its capacity use serve the country. This means we need to build more National Refineries so as to cater for our national needs. We also need to increase our efforts to source alternative sources of energy.  Platinum is the future source of fuel and we have the world ’ s largest reserves followed by Zimbabwe. This implies that we need to tap in those technologies as well as bring them under urgent government incubation.  We also need to encourage a massive commercialisation of the pure science research papers in our Universities. At the core of this will be a trade union that will strike a deal with the government to open an angel fund so as to pilot these researches in order for the trade union to own the technologies. That is how we can be assured that our technologies will remain our closely guarded possession in future. This will start National Research Council working closely with that trade Union so as to immediately tap into all the research papers in universities. On that same note, the government should begin to instruct the trade union concerned to begin to take over redundant factories in the pre-1994 Industrial Development Zones (IDZs). The factory floors should be modelled around the afore mentioned Social Production Enterprises (SOE). The government should through its development financiers fund the process.  The government should also start to instruct the incoming SOE agency to designated a few SOE that will pilot co-management of state institutions. This is important because, not until we have adopted the Japanese Joint- Labour-Management committee micro-economic model will we ever see heightened worker productivity in our country.
 * __ National Integrated Development Strategy (NIDS): An Ingredients Approach to economic development. __**
 * __ NB: __**** This is but a kernel draft. Sectoral policies as well as policy co-ordination components have been omitted. **
 * __ Foreword __**
 * Table1: Comparing the NIDS Recommendation with Gear. **
 * NIDS Recommendation ** ||
 * Gear ** ||
 * Gear ** ||
 * __ Vision __**
 * __ Core principles/ Mission __**
 * 1. **** Growth through redistribution. **
 * 2. **** Mandatory employment. **
 * 3. **** Price stability **
 * 4. **** Favourable Balance of Payments. **
 * __ Recent developments __**
 * __ Discrepancies in the South African economy __**
 * __ Environmental Revolution __**
 * __ Points of departure __**
 * __ Strategic objectives __**
 * __ Strategies __**
 * __ The Rural Development Strategy __**
 * __ The Development Model __**
 * __ Pillars __**
 * __ The Public Corporation Procurement Policy __**
 * // Social Production Enterprises are, “economic entities dedicated to the production of goods or services in which work has its own meaning, without social discrimination nor privileges associated with one’s position in a hierarchy, in which there is substantive equality between its members, planning is participatory and operate under either state, collective, or mixed ownership.” In order to qualify as an EPS and thus for preferential treatment for low-interest credits and state contracts, companies must fulfil a list of requirements, such as to, “privilege the values of solidarity, cooperation, complementarity, reciprocity, equity, and sustainability, ahead of the value of profitability.” //**
 * __ Environmental and lending Policy __**
 * __ Way forward __**
 * __ The Industrial Development Strategy __**
 * __ Minerals and Mining __**