Policy Documents

6.1 PROBLEM STATEMENT

6.1.1The processes of planning and development in South Africa
have been structurally distorted by the objectives of apartheid
and, both by design and default, have failed to meet the needs
of the majority. In recent years all parts of South Africa’s
excessively complex state system have been incapable of
implementing their stated goals. Increased waste, unused
funds and outright corruption have characterised government.
To implement the RDP, a thoroughgoing reform will be
necessary to address the following major structural
weaknesses:

6.1.1.1Excessive departmentalism leading to uncoordinated,
sometimes contradictory, decision-making by various
state agencies.

6.1.1.2The allocation of power between the various tiers of
government – local, regional and national – does not
accord with practical needs. Generally, the central
state and some regional governments have excessive
and inappropriate power.

6.1.1.3At all levels, the structures of government exclude the
majority of the population from participation in
decision-making. Bureaucrats do not consult with most
stakeholders.

6.1.1.4Decision-making remains largely unaccountable either
to the public or to monitoring structures. Typically, civil
servants act in secret. They rarely justify or explain
their decisions in public, and they often have poor
relations with NGOs, civics and other community
organisations.

6.1.1.5The potential contribution of NGOs to reconstruction
and development is reduced by the lack of an overall
framework and integrative programmes. This results in
fragmented and isolated projects.

6.1.1.6Implementation of any development programme under
circumstances of violence and corruption or clientelism
is extremely difficult. The problems worsen in
marginalised rural areas where the right-wing or
bantustan authorities hold power.

6.2 VISION AND OBJECTIVES

6.2.1The basic principles of the RDP are that it is a coherent
programme, that it builds a nation, that it is people-driven, that
it provides peace and security for all, that it links reconstruction
and development, and that it democratises the state and
society. This approach has not been attempted in South Africa,
and is a fundamental break with apartheid practices. This
imposes major new challenges in how to implement such a
programme.

6.2.2Accordingly, specific structures are necessary to implement
the RDP; their functions will be:

6.2.2.1to manage policy and the ability to determine spending
priorities within a strategic perspective;

6.2.2.2to coordinate resources and actions;

6.2.2.3to incorporate all major stakeholders in establishing,
implementing and evaluating policy;

6.2.2.4to establish legislative, procedural, institutional and
financial frameworks that ensure that policies can be
implemented;

6.2.2.5to ensure adequate funding of integrated programmes
and that resources reach the targeted communities;

6.2.2.6to facilitate the management of potential conflict over
limited resources and differing needs, and

6.2.2.7to ensure a macro-economic policy environment that is
stable.

6.2.3Financing the RDP presents both a challenge and an
opportunity to revive our economy and set it on a path to sustained
reconstruction and development. We must finance the RDP in ways
that preserve macro-economic balances, especially in terms of
avoiding undue inflation and balance-of-payments difficulties. This
requires a strategic approach that combines public and private
sector funding, taking into account the sequence and timing of
funding sources and programmes.

6.3 IMPLEMENTING AND COORDINATING STRUCTURES

6.3.1To implement the RDP will require the establishment of
effective RDP structures within national, provincial and local
governments. These structures must monitor the implementation of
the RDP, including the elaboration of planning frameworks and
coordination between departments and tiers of government.

6.3.2A prime function of these structures will be to overcome
tendencies to fragmentation of different government
departments. While not displacing the line functions of other
departments, the structures will require real powers of
coordination and an appropriate budget. The national RDP
structure should also have oversight of inter-governmental
financial transfers (national to provincial, provincial to local,
etc.) to ensure that these are in conformity with the overall
national objectives of the RDP.

6.3.3The democratic government must undertake a review of all
ministries, parastatals and other democratic government
agencies, in conjunction with the Public Service Commission
and the Financial and Fiscal Commission, in order to assess
their abilities and willingness to achieve the goals and
objectives of the RDP.

6.3.4Democratic government and parastatal programmes must be
based on publicly-determined priorities in line with the RDP,
and appropriate priority-setting mechanisms must be
established. Each institution of government should establish a
public priority-setting exercise, whose objectives should be
measurable, achievable, have a defined time frame and be
accompanied by a plan and budget to accomplish them. A
performance audit of government programmes and agencies
must be carried out within six months of the inauguration of the
Interim Government of National Unity, and regularly thereafter.

6.3.5The RDP national coordinating body must also ensure that the
structures of civil society are involved in the programme. It
must ensure coordination between the various ministries,
parastatals, labour, civic and other organisations. It must link
with existing sectoral and development forums at national level,
in order to establish effective systems of coordination. Similar
bodies should be established at provincial and local levels. In
addition, provincial and local development forums are
important vehicles for ensuring the participation of local
communities and interest groups in the development process.
Development forums must be strengthened through the
provision of adequate resources.

6.3.6The RDP recognises that access to planning procedures and
information is unequally weighted in favour of an already
privileged group. The RDP structures must ensure that
historically oppressed communities get the resources they
need to participate meaningfully in planning processes and
decision-making. Particular emphasis must be placed on the
role of women in urban and rural areas and in micro
enterprises.

6.4 PLANNING FRAMEWORKS

6.4.1The Interim Constitution lays the basis for new relationships
between national, provincial and local government. The
intention of the RDP is to establish a national framework that
guides provincial government and allocates appropriate
powers and functions to these levels. This requires
considerable interaction and coordination between national,
provincial and local structures. The objective is to establish a
framework to which statutory authorities should relate, and to
guide both public and private investment decisions to ensure
the best cumulative results.

6.4.2The democratic government will reduce the burden of
implementation which falls upon its shoulders through the
appropriate allocation of powers and responsibilities to lower
levels of government, and through the active involvement of
organisations of civil society. By providing a coherent
framework it will be able to mobilise considerable energy
behind the RDP and ensure that it meets the practical
requirements of designing programmes in different areas.

6.4.3In order to ensure a coherent and effective implementation of
the RDP, a planning process must establish a clear hierarchy
of areas of responsibility, roles of sub-national plans, guidelines
for decision-making, strategy formulation, and procedures.
Planning guidelines must also subordinate local planning to
metropolitan/district, provincial and national development
planning (for example, by reducing the status of zoning and
town-planning schemes to the status of local plans which are
automatically overridden by higher levels of planning).

6.4.4The RDP must be based on a coordinated and coherent
development strategy. This strategy in turn must operate within
frameworks at national, provincial and local levels that:

6.4.4.1focus on the development challenges and the
strategies to meet these challenges (frameworks at
provincial and local level must address institutional,
social, economic, fiscal, cultural and physical planning
requirements appropriate to that level of authority);

6.4.4.2provide coherent and coordinated guidelines within
which appropriate statutory authorities can function;

6.4.4.3guide work programming and priorities, development
actions, participatory processes, and priority-based
budgeting, and

6.4.4.4guide both public and private investment-planning
decisions to ensure the best cumulative effects.

6.4.5RDP frameworks must be tied to the budgeting process,
and revised, updated and tabled in parliament annually. New
plan-making processes and approval procedures must be developed.
These must be simple and easy to understand and capable of speedy
implementation. The RDP requires collaborative, integrated planning
and decision-making.

6.4.6To ensure the efficacy of the RDP, a national system of
monitoring must establish a set of key indicators and measure
the impact of the RDP on these indicators. By mid-1994, the
central RDP agency must develop criteria for assessing targets
and time frames. Every possible step must be taken to ensure
that the decision-makers are held accountable for their
decisions. They must motivate publicly all decisions with sound
reasons. Affected parties must be able to appeal against
planning decisions to an independent appeals body.

6.4.7 Regulatory system for planning the RDP.

6.4.7.1A new legislative and regulatory system for
development planning is required in order to make the
RDP a reality. Current inappropriate and
unconstitutional development legislation must be
repealed.

6.4.7.2The regulatory system must provide a basis for
defining and fast-tracking strategic reconstruction
projects, and provide for rapid granting of legal status
to widely supported, interim metropolitan/district and
provincial development frameworks.

6.4.7.3The system should be consolidated in the form of a
National Reconstruction and Development Act, and
promulgated as a matter of urgency. Simultaneously a
prototypical Provincial Reconstruction and
Development Planning Act should be developed for
consideration and adoption by each province.

6.5 FINANCING THE RDP

6.5.1The RDP will mean nothing if it cannot be financed. Two
questions arise: can we afford such an extensive programme,
and will people be required to pay more? If the democratic
government were to attempt to finance all the proposals
contained in the RDP then the answer to the first question
would be a clear ‘no’ and to the second a clear ‘yes’ – in other
words, the RDP would fail. We must remind ourselves of the
six basic principles underlying the RDP as set out in Chapter
One. These six principles distinguish the RDP from all other
programmes proposed by political parties.

6.5.2The success of the RDP does not only require finance. It also
requires labour, skills and coordinated effort in combination
with that finance. The six principles allow for this combination
by harnessing the underutilised resources of the democratic
government, the private sector, labour communities and
women, and by utilising these resources in a rational and
effective way. Only the ANC and its allies are capable of such
a programme. Finance for the RDP will come from revenues,
issuing debt (including general obligation and revenue bonds)
and grants. The largest portion of all RDP proposals will be
financed by better use of existing resources.

6.5.3However, it is clear that government policy and mechanisms of
raising finance are crucial to the success of the RDP. If they
were to cause excessive inflation or serious balance of
payments problems they would worsen the position of the
poor, curtail growth and cause the RDP to fail. Government
contributions to the financing of the RDP must, therefore, avoid
undue inflation and balance of payments difficulties. In the long
run, the RDP will redirect government spending, rather than
increasing it as a proportion of GDP.

6.5.4The financing of the programme is a national responsibility,
and provincial and local governments would not be expected to
rely on their own tax bases and resources in its
implementation, although contributions from these sources
should be made in order to enhance accountability. Allocations
from national resources will take into account the existing
inequalities between provinces and localities, and will be based
on population size, development backlogs, and other objective
criteria as may be determined by the Financial and Fiscal
Commission.

6.5.5Restructuring the national budget. Despite relatively high
levels of government spending, South Africa displays a worse
record than many poorer countries in meeting basic needs.
This situation reflects the impact of apartheid in terms of both
racially skewed spending and corrupt, unaccountable
government. In addition, low growth rates and an absence of
growth-promoting capital expenditure by the public sector
created fiscal problems. A severe imbalance exists at present
between insufficient capital expenditure and excessive
consumption expenditure.

6.5.6The RDP is, therefore, committed to a programme of
restructuring public expenditure to finance the democratic
government’s contribution to the RDP. Given the fiscal malaise
left by apartheid, careful programmes must be developed
around financing increased capital expenditure, increasing the
efficiency of consumption expenditure and improving the
revenue-recovery capacities of the government.

6.5.7The existing ratios of the deficit, borrowing and taxation to
GNP are part of our macro-economic problem. In meeting the
financing needs of the RDP and retaining macro stability during
its implementation, particular attention will be paid to these
ratios. The emphasis will be on ensuring a growing GDP,
improved revenue recovery, and more effective expenditure in
order to make more resources available. In the process of
raising new funds and applying them, the ratios mentioned
above must be taken into account.

6.5.8The democratic government must end unnecessary secrecy in
the formulation of the budget. To that end, it must change the
relevant regulations. We must establish a Parliamentary
Budget Office with sufficient resources and personnel to
ensure efficient democratic oversight of the budget.
Transformation of the parastatals and cooperation with forums
will also help ensure more efficient and open budgeting
processes.

6.5.9Efficient and open transformation of the budget requires the
development of a five-year fiscal plan as the framework for
multi-year budgets.

6.5.10By combining the ministries of State Expenditure and Finance
to form a single finance ministry, we will reduce duplication and
streamline decision-making.

6.5.11The democratic government must make the development of
effective and open performance auditing a top priority. Auditing of
public institutions must broaden from its narrow focus on financial
accountability to assess how well expenditures meet RDP targets.
The Interim Constitution gives the Auditor-General responsibility
for performance auditing mandated by the President. We must begin
to define the priority sectors and agencies for performance
auditing.

6.5.12The democratic government must mandate the Financial and
Fiscal Commission to review the tax structure in order to
develop a more progressive, fair and transparent structure.
Priorities will include:

6.5.12.1eliminating bias in tax against women regardless of
marital status, and recognising women’s child-care
costs and the unpaid labour they perform;

6.5.12.2reviewing personal income tax to reduce the burden
caused by fiscal drag on middle-income people;

6.5.12.3rationalising company tax breaks for health, education,
housing and other expenditures which may conflict with
RDP priorities;

6.5.12.4simplifying the unnecessarily complex company tax
system, which is biased against small and medium-sized enterprises
and leads to low effective tax rates despite a fairly high nominal
rate, and

6.5.12.5zero-rating VAT on basic necessities.

6.5.13Taxation policies should provide incentives for institutional
affirmative action programmes covering race and gender, with
respect to employment and education.

6.5.14All macro-economic allocations must be accompanied by
social and economic impact analyses on gender, race, urban-rural
dimensions, class/income distribution, regional inequalities, and
age (to encompass marginalised young people and pensioners). Future
budgetary allocations must concretely show the commitment of a
future government to women’s development and empowerment. The
budget should be gender-sensitive. It should contain a social
impact statement detailing how budgetary allocations affect women
with respect to workload, income, education and career options.

6.5.15Mobilising new funds. The democratic government should
establish a Reconstruction Fund (possibly incorporating the
wholesale financing requirements of the Electrification Fund
and Housing Bank) for elements of the RDP that can generate
income streams in the future. The Reconstruction Fund should
include some form of dedicated reconstruction bond. In
addition, it should draw on specific reconstruction levies. The
design of reconstruction levies will depend on the aims of the
RDP as a whole, especially in terms of promoting development
and growth, but could include levies on capital transfers, land
and luxury goods.

6.5.16There is a need for an overall foreign debt strategy.
The RDP must use foreign debt financing only for those elements of
the programme that can potentially increase our capacity for
earning foreign exchange. Relationships with international
financial institutions such as the World Bank and International
Monetary Fund must be conducted in such a way as to protect the
integrity of domestic policy formulation and promote the interests
of the South African population and the economy. Above all, we must
pursue policies that enhance national self-sufficiency and enable
us to reduce dependence on international financial institutions.
Further, we must introduce measures to ensure that foreign
governmental and non-governmental aid supports the RDP.

6.5.17Socially desirable investments. The democratic
government cannot fund the RDP without support from the private
sector. Financial institutions must assist both by funding
individual programmes to meet basic needs, especially housing, and
by improving their services to small-scale producers and the black
communities. The democratic government must modify regulations and
support innovative financial institutions and instruments that will
fund the RDP. It must attempt to mobilise a significant proportion
of contractual savings, within an appropriate regulatory and
financial framework, for socially desirable investments, without
affecting the risk profile or decreasing the returns on investment.
If the major financial institutions do not take up socially
desirable and economically targeted investments, the democratic
government should consider some form of legislative compulsion such
as prescribed assets.

6.5.18Other resources. The democratic government must not be
alone in accessing resources. Unemployed local labour must
be mobilised, through job banks and community-based
employment-generation initiatives. Employed workers must be
given incentives to use their skills and knowledge in the
interests of society. Creative use of local resources – such as
building materials – must be encouraged. The power of
women in households, in production and in community
structures must be fully acknowledged and rewarded. Only
through such grassroots-oriented development initiatives can
the RDP be brought to its logical fruition as a successful
programme for all South Africans.