South Africa - First 20 Years of Democracy (1994 - 2014)

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South Africa’s Key economic policies changes (1994 - 2013)

South Africa successfully held its first democratic elections in April 1994 and the African National Congress (ANC) won with a majority vote to head the government of national unity. In order to rebuild and transform the economy after years of apartheid regime’s economic isolation and financial sanctions which were enforced by the international community, Reconstruction and Development Programme (RDP) which was part of the election platform of the African National Congress in the 1994 elections was chosen as the primary socio-economic programme. The broader aim of this socio-economic policy was to establish more equal society through reconstruction and development as well as strengthening democracy for all South Africans. The RDP identifies five major policy programmes outlined in The White Paper on the Reconstruction and Development Programme (1995) as follows: create a strong, dynamic and balanced economy; Develop human resource capacity of all South Africans; Ensure that no one suffers racial or gender discrimination in hiring, promotion or training situations; Develop a prosperous, balanced regional economy in Southern Africa; and Democratise the state and society. In short this policy was aimed to address and redress the inherited gross inequalities of apartheid, socially, economically and spatially. As was first articulated in the original 1994 RDP document the ANC government sought " to mobilize all our people and our country’s resources towards the final eradication of apartheid and the building of a democratic, non-racial and non-sexist future".

RDP was successful in some areas such as social security in which the government established a very extensive welfare system. The system catered for the aged, disabled, children in need, foster parents and many others too poor to meet their basic social requirements. Under this programme, free health care programmes were implemented for pregnant women and small children, and free meals were provided for between 3,5 to 5 million school children.

Although the RDP was viewed as the cornerstone of government development policy, it did not deliver as it was thought particularly in terms of economic growth which impacted negatively on the policy itself. It was indicated that the new government experienced some difficulties in the implication of the RDP such as a fiscal constraint due to the poor fiscal and economic legacy it inherited after fifty years of Apartheid and twenty years of the Total Strategy; secondly, an organisational constraint due to the lack of an efficient public service and a distressful inability of the new government to build the necessary state capacity, and thirdly, the inability of the new government to prioritise the RDP and to integrate it as the guiding principle of its socio-economic policies. To sum up these challenges, it appears that RDP ignored the gathering of new taxes, rather focusing, far too narrowly on fiscal prudence and the reallocation of existing revenues. In addition, the government suffered from lack of sufficiently skilled managers, while policy co-ordination and implementation methods used were not proven successful.

When faced with these constraints Government introduced a macroeconomic policy framework called the Growth, Employment and Redistribution (GEAR) strategy in 1996 to stimulate faster economic growth which was required to provide resources to meet social investment needs. The policy encompassed most of the social objectives of the RDP but was also aimed at reducing fiscal deficits, lowering inflation, maintaining exchange rate stability, decreasing barriers to trade and liberalizing capital flows.

Under GEAR policy, fiscal deficit, inflation and government consumption targets were all slightly met, reporting figures of 2.2%, 5.4% and 18% respectively by the end of 2000,, bringing about greater macroeconomic stability, better reporting and increased accountability. Additionally, management of public finances improved drastically under GEAR and the only success seen with regard to GDP was that the negative growth rate of the early nineties was reversed. Lastly, tightening of the monetary policy, restructuring all government levels led to a reduction in government expenditure. This policy was largely criticised especially by Congress of South Africa’s Trade Unions (COSATU) for its neo-liberal approach.

However, despite these achievements, private investment, job creation and GDP growth indicators were disappointing. Low levels of economic growth and private investment were insufficient to contribute to the reduction in unemployment; and the policy achieved very little success with the distribution of wealth.While the GEAR strategy was sufficient for the achievement of macroeconomic objectives, it clearly fell short with regard to the social challenges of the country, most notably poverty reduction and employment creation as was envisaged.

GEAR was replaced in 2005 by the Accelerated and Shared Growth Initiative for South

Africa (ASGISA) as a further development on the first two developmental strategies followed post 1994.Acknowledged the challenges of prolonged poverty driven by unemployment, and low earnings, and the jobless nature of economic growth, ASGISA envisioned the following aims: Reduce poverty by 2010, and halving unemployment by 2014 from the 28% in 2004 to 14% by 20122; and also recognized that the policies implemented to address these issues needed to be at the forefront of economic policy decision making. ASGISA builds on the foundations of the RDP’s goals of building a united, democratic, non-sexist and non-racial society, and a single integrated economy. While there was some reasonable level of success, the level of Implementation and future of the programme was uncertain as no official word came from the government regarding the fate of ASGISA,

After the fall of president Thabo Mbeki ASGISA was replaced with New Growth Path (GNP) which was announced by Jacob Zuma during which he announced in his ‘State of the Nation' address in 2010. GNP recognised that structural unemployment remains extremely high; Poverty continues to afflict millions; Oppression of workers continues; and that the inequalities are now deeper than ever before.  In this regard, the GNP was envisioned toaccelerate growth in the South African economy, and to do so in ways that rapidly reduce poverty, unemployment and inequality. To help overcome these structural challenges and contribute to the achievement of higher levels of economic growth GNP was seen as a necessary policy.

In early 2013 the government has introduced the National Development Plan (NDP)-2030 as South Africa's long-term socio-economic development roadmap. This policy was adopted as the cornerstone and blueprint for a future economic and socio-economic development strategy for the country as of 2012/13 at Mangaung in December 201. NDP is viewed as a policy blueprint for eliminating poverty and reducing inequality in South Africa by 2030. In order to address the country's socio-economic imbalances, NDP identifies, the key constraints to faster growth among other things and presents a roadmap to a more inclusive economy.

Goals and objectives

As a long-term strategic plan, the NDP serves four broad objectives:

  • Providing overarching goals for what we want to achieve by 2030.
  • Building consensus on the key obstacles to achieving these goals and what needs to be done to overcome those obstacles.
  • Providing a shared long-term strategic framework within which more detailed planning can take place in order to advance the long-term goals set out in the NDP.
  • Creating a basis for making choices about how best to use limited resources.

References:
• Harsch, E., (2001), “South Africa tackles social inequities,” Africa Recovery, Vol.14, No.4
• Heymans, C., (1995), A Lifelong Task. The RDP in Perspective. Indicator SA, Vol. 13, No.1, pp.57-64.
• Marais, H., (2001). South Africa. Limits to Change. The Political Economy of Transition . London & New York: Zed Books, Ltd.
• African National Congress (ANC, (1994). Reconstruction and development programme: A policy framework Johannesburg: Umanyano Publication.
• Visser, W., (2004). “Shifting RDP into GEAR”: The ANC Government’s Dilemma in Providing an Equitable System of Social Security for the “New” South Africa. Paper Presented at the 40th ITH Linzer Konferenz [online] Available at Accessed on 15 October 2013.
• South African History Online. Trevor Manuel unveils GEAR,From: South African History Online, [online] Available at www.sahistory.org.za [Accessed 4 November 2013]

Last updated : 01-Mar-2017

This article was produced for South African History Online on 06-May-2014

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