This resource is hosted by the Nelson Mandela Foundation, but was compiled and authored by Padraig O’Malley. It is the product of almost two decades of research and includes analyses, chronologies, historical documents, and interviews from the apartheid and post-apartheid eras.
10 Policy Coordination
As a result of political stability and sound policies, economic growth has revived, bringing to an end the stagnation that characterised the 1980s. Our strategy will build firmly on the foundations established since 1994, leading to accelerated growth, increased job creation and a significantly improved distribution of income and opportunities.
The higher growth path depends in part on attracting foreign direct investment, but also requires a higher domestic saving effort. Greater industrial competitiveness, a tighter fiscal stance, moderation of wage increases, accelerated public investment, efficient service delivery and a major expansion of private investment are integral aspects of the strategy. An exchange rate policy consistent with improved international competitiveness, responsible monetary policies and targeted industrial incentives characterise the new policy environment.
A strong export performance underpins the macroeconomic sustainability of the growth path. Private sector employment creation is reinforced by small business promotion, land reform and emergent farmer support, greater labour market flexibility and labour-based public sector infrastructural development projects.
Accelerated economic growth associated with stronger employment creation is the key to continued progress towards an equitable distribution of income and improved standards of living for all. Employment creation provides a powerful vehicle for redistribution, supported by government housing, water supply and sanitation, health, education, welfare and social security services.
Success in a more open and complex economic environment requires consistent and integrated policies. Timing, sequencing, and packaging of reforms are important, as is the clear commitment of social partners to an agreed policy framework. World competitiveness nowadays depends as much on comparative advantage in the public policy arena as it relies on technology, human resources and physical capital.
Government has a clear policy coordination role. There are trade-offs amongst policy options and competing claims by different interest groups which need to be nationally resolved. Whilst institutions have been developed to aid this process, and Government is committed to an open and consultative approach, the ultimate responsibilities for a credible and coherent policy framework lies with Government. As a first step in this process, Government calls for a clear commitment by both business and labour to the broad principles set out in this document.
Within Government, especially in the fields of monetary, fiscal, trade, industrial and labour policies, there is also a critical need for coordination. Inconsistent approaches in any of these areas have the potential to destabilise the credibility of the overall macroeconomic framework. Effective coordination of economic policy at Cabinet level has accordingly been given the highest priority by Government, together with supporting arrangements within key administrations and between Government, the Reserve Bank, the business sector, organised labour and other key constituencies. The strategy set out in this document seeks to remove uncertainty, give clear direction to the economic course on which South Africa is headed, and invite Government's social partners to join in the building of a competitive fast-growing economy.