Overview of MTSF 2014-2019

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An Overview of Governments Medium Term Strategic
Framework (MTSF) 2014-2019 for the Standing
Committee on Finance
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Outline

• Background to the Medium Term Strategic
  Framework 2014-2019
• MTSF 2009-2014
• The National Development Plan
• An overview of the 2014-2019 MTSF
• Two overarching themes
• Radical economic transformation
• Improving service delivery
• Selective review of the priority outcomes

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Background

• According to a 2003 DPSA report on the Machinery
  of Government the MTSF would inform the
  business plans of Departments, as required by the
  National Treasury in terms of the requirements of
  the MTEF
• The draft MTSF itself would emerge from an
  internal government process short, medium and
  long- term priorities are drafted by departments,
  refined by clusters and FOSAD Forum of South
  African Directors-General, and finalized by
  Cabinet at the January Lekgotla
• Annual reviews
• Relevant MTSF would be reviewed at mid-year
  Cabinet lekgotla
• This would inform the MTEF and governments
  annual Programme of Action
• MTSF 2004-2009 and MTSF 2009-2014
• Relatively high-level, informed by broad
  electoral commitments and scenario planning as
  well as the internal planning process referred to
  above

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National Strategic Planning and the NDP

• Green Paper on National Strategic Planning (2009)
  lays out the rationale for more extensive
  planning
• mobilisation of society around a commonly agreed
  set of long-term goals
• Greater coherence in governments work
• Longer term planning is good for South Africa...
  will encourage a longer term view from all key
  institutions, allowing them to invest with
  greater confidence
• The Green Paper notes a change in the MTSF,
  becoming more detailed with the outcomes and
  targets being inputs into the Presidencys
  performance management work
• On the role of Parliament will need to
  develop mechanisms to oversee the planning
  process and to contribute to ensuring successful
  implementation of a national plan
• Green Paper process culminated in the National
  Development Plan 2030 Our future, make it work

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From NDP to the MTSF

• In the presence of the NDP as an overarching,
  long-term plan the MTSF process has been
  reoriented toward conversion of the NDP into
  medium-term 5 year plans
• Cabinet decided in 2013 that the 2014-2019 MTSF
  should form the first five-year implementation
  phase of the NDP
• MTSF has been aligned to the national governing
  partys 2014 election manifesto
• As with previous MTSFs the intention is that MTSF
  2014-2019 will directly inform departments
  planning and oversight of plans and performance
• Performance agreements between the President and
  each Minister will reflect the relevant actions,
  indicators and targets set out in the MTSF
• National and provincial departments will submit
  strategic plans for the period 2015-2020 to
  Parliament and provincial legislatures by
  February 2015 incorporating relevant actions and
  targets in the MTSF
• It appears that the process by which MTSF is
  developed has also remained the same
  intergovernmental process across spheres of
  government

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Initial responses to the MTSF

• The MTSF 2014-2019 was released by the Presidency
  on the 8th of August 2014 but there has been
  relatively little response to date
• A recent report by one private economic
  consultancy suggests that few in the private
  sector are aware of the MTSF and there is
  significant scepticism among those who are
• Some concerns have been expressed that the aim of
  reducing unemployment to 14 by 2019 (from 25.5
  at present) may be unrealistic
• Broader issue is the relationship between the NDP
  and MTSF
• NDP was based on wide consultation, though the
  final report was still subject to significant
  contestation
• The MTSF is an internal governmental process that
  does not involve further external consultation
  with stakeholders and citizens
• Remains to be seen whether the process from NDP
  to MTSF has addressed some stakeholder concerns
  or/and introduced new ones

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Structure of MTSF 2014-2019

• Two overarching themes radical economic
  transformation and improving service delivery
• 14 priority outcomes, building on previous MTSF
  and the NDP. Within each priority outcome there
  are
• Broad objectives and themes
• A set of specific sub-outcomes specifying
  actions required, Minister responsible, the
  relevant indicator with current baseline and the
  MTSF target
• A set of core impact indicators drawn from
  the sub-outcomes that will be used to monitor
  and evaluate performance in the relevant area
• Two perspectives particularly relevant to the
  Standing Committee on Finance
• The role of SCoF in conducting oversight over the
  activities and performance of National Treasury,
  its agencies and SARS
• The role of SCoF in conducting oversight over
  alignment of the Budget, fiscal framework,
  revenue collection and various money bills with
  policy priorities
• Remainder of the presentation discusses two core
  MTSF themes and provides a selective overview of
  the priority outcomes with emphasis on issues
  particularly relevant to the Standing Committee

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Theme 1 Radical economic transformation

• placing the economy on a qualitatively different
  path that ensures more rapid, sustainable growth,
  higher investment, increased employment, reduced
  inequality and deracialisation of the economy
  (MTSF 2014-2019)
• Emerged from 2014 election manifesto
• No technical definition of this notion contested
  because ideas of radical interventions vary
  depending on perspective
• Broad agreement on the fact that radical change
  requires multiple, mutually reinforcing
  interventions
• E.g. Changing the urban spatial distribution
  requires initiatives relating to urban planning,
  local economic development, transport
  infrastructure and services, housing, etc.

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Theme 2 Improving service delivery

• Improving the capacity of the public service is
  one of the core issues addressed by the NDP, but
  it is an issue that relates to all other specific
  functions. MTSF notes that
• backlogs remain and the quality of services is
  uneven
• challenge is therefore to improve the quality and
  consistency of services, which requires
  improvements in the performance of the public
  service, municipalities and service providers
• Measures to improve the capacity and
  developmental commitment of the state will
  therefore receive high priority over this MTSF
  period
• Local level
• national and provincial departments of local
  government will focus on improving the quality of
  targeted oversight and support available to
  municipalities
• focus on ensuring that municipalities provide and
  properly maintain an adequate core set of basic
  services including water, sanitation,
  electricity, municipal roads, refuse removal and
  traffic lights

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Theme 2 Improving service delivery

• Provincial level particular attention will be
  given to the management of service delivery,
  human resource management and financial
  management
• National level bring greater predictability and
  stability to the management of the
  political-administrative interface by
  establishing the role of administrative head of
  the public service
• Corruption Prevent public servants doing
  business with the state ensure transparency in
  public expenditure and contractual relations with
  the private sector improve capacity to
  investigate and prosecute corruption cases
  strengthen anti-corruption legislation

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Priority outcomes

1. Quality basic education
2. A long and healthy life for all South Africans
3. All people in South Africa are and feel safe
4. Decent employment through inclusive growth
5. A skilled and capable workforce to support an
   inclusive growth path
6. An efficient, competitive and responsive economic
   infrastructure network
7. Vibrant, equitable, sustainable rural communities
   contributing towards food security for all
8. Sustainable human settlements and improved
   quality of household life
9. Responsive, accountable, effective and efficient
   local government
10. Protect and enhance our environmental assets and
    natural resources
11. Create a better South Africa and contribute to a
    better Africa and a better world
12. An efficient, effective and development-oriented
    public service
13. A comprehensive, responsive and sustainable
    social protection system
14. A diverse, socially cohesive society with a
    common national identity

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Outcome 4 the economy

• Twenty pages detailing ten sub-outcomes, which
  align to the elements of radical economic
  transformation already outlined above. Informed
  by the NDP vision to accelerate economic growth
  to reduce unemployment and inequality and create
  an inclusive society (decent employment through
  inclusive growth)
• Locates existing plans (Industrial Policy Action
  Plan (IPAP), New Growth Path (NGP), Agricultural
  Policy Action Plan (APAP), Minerals Beneficiation
  Action Plan (MBAP), National Infrastructure Plan,
  etc) within a broader framework
• Aims to find a balance between creating a stable
  and supportive environment for growth and
  investment while at the same time addressing
  structural challenges in the economy and society
• Recognises that inequality is an obstacle to
  growth and investment so growth-oriented policies
  must address the distribution of ownership and
  income
• Provides a set of high-level impact/outcome
  indicators

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Impact indicator Minister responsible for reporting on the indicator 2009 Baseline Latest Baseline of the indicator 2019 target NDP 2030
  1. GDP growth (annualised and quarterly)   Finance GDP shrank by 1.5 in 2009 2.5 in 2012 5 growth in 2019 4.5 annual growth
  2. Investment rate ( of GDP)   Finance 22 in 2009 20.5 of GDP in 2012 25 of GDP 30 of GDP
  3. Public sector investment ( of GDP)   Finance 8.3 in 2009 7.8 of GDP in 2012 10 of GDP 10 of GDP
  4. Share in household income of the poorest 60 of households   Economic Development 6.1 in 2009 5.6 in 2011/12 10 10
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Impact indicator Minister responsible for reporting on the indicator 2009 Baseline Latest Baseline of the indicator 2019 target NDP 2030
  5. Employment creation   Economic Development 1 million jobs lost in downturn from 2008 to mid-2010 200 000 in year to March 2013 but over 300 000 in 2011 Annual employment growth to increase by 350 000 a year in 2014-15 and thereafter the rate of employment growth to increase, with targets set annually. 11 million more jobs, with annual targets set on a rising scale
  6. Official unemployment rate   Economic Development 24 in 2009 25 in 1st Quarter 2013 14 in 2020 6
  7. Percentage of adults working in rural areas   Economic Development 20 of the labour force 20 in fourth quarter 2012 30 40
  8. Investment in Research and Development as of GDP   Science and Technology 0.87 in 2009/10 0.76 in 2011/12 1.5 by 2019 No target specified but commitment made to increasing investment in RD
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Outcome 6 Infrastructure

• NDP identifies the need to invest in economic
  infrastructure to support the countrys economic
  and social objectives
• to deliver electricity, water and sanitation,
  telecommunications and public transport
• to diversify the countrys industrial base, raise
  exports and compete internationally
• Challenges expand provision and coverage
  maintain existing infrastructure coordinate
  investment between government and private sector
  create appropriate institutional, policy and
  regulatory environment
• Issues of possible interest to the Committee
• Sustainable financing of infrastructure plans
  given large demands in many sectors, including
  choice of appropriate financing options (e.g.
  user pays versus financing from general tax
  revenues)
• Need for pricing to incentivise investment
  without hurting growth
• The role of Regulatory Impact Assessments for
  infrastructure projects
• Aims for public investment to constitute 10 of
  GDP by 2019 (6.8 now)
• Five sub-outcomes

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• Impact indicators
• Energy Ministry
• Adequate generating capacity commissioned
• Electricity generation reserve margin increased
• Additional SA coal and gas enabled for energy
  production

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Outcome 7 Rural areas

• Vision is to have rural areas which are,
  spatially, socially and economically well
  integrated
• Economic growth, food security, jobs and improved
  access to basic services, quality education and
  health
• Aim that by 2030 agriculture will create 1million
  new jobs
• Need for leadership on land reform, communal
  tenure security, financial and technical support
  to farmers, and the provision of social and
  physical infrastructure for successful
  implementation
• Priorities
• Sustainable land reform
• Small famer development and support (financially
  and other wise)
• Growth of sustainable rural enterprises and
  industries resulting in rural job creation

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Outcome 8 Human settlements

• strive to achieve measurable progress towards
  breaking apartheid spatial patterns with
  significant advances made towards retrofitting
  existing settlements offering the majority of
  South Africans access to adequate housing,
  affordable services in better living
  environments, within a more equitable and
  functional residential property market
• Three sub-outcomes toward the above goal
• Adequate housing and improved living environment
• Develop a functional and equitable residential
  property market
• Improve institutional capacity and coordination
  for better spatial targeting (government)
• One area that may be pertinent to SCoF is the
  role of development finance institutions (DFIs)
  in providing finance for developmental housing
  initiatives and projects

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Outcome 9 Local government

• Given its role at the front line of service
  delivery, local government has a critical role to
  play in the NDPs vision but faces a number of
  key constraints. Some are addressed in general
  initiatives to improve the public service (see 12
  below) but others require specific local
  government attention.
• The five sub-outcomes are
• Members of society have sustainable and reliable
  access to basic services
• Intergovernmental and democratic governance
  arrangements for a functional system of
  cooperative governance strengthened
• Sound financial and administrative management
• Promotion of social and economic development
• Local public employment programmes expanded
  through the Community Work Programme (CWP)
• MTSF also contains an updated list of 27 district
  priority areas based on limited access to basic
  services
• National Treasury is responsible (with COGTA) for
  supporting and overseeing sound financial and
  administrative management, as per the relevant
  impact indicator

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Outcome 10 Environment

• NDP vision South Africas transition to an
  environmentally sustainable, climate-change
  resilient, low-carbon economy and just society
  will be well under way by 2030
• MTSF refers to three phases
• 2014-2019 creation of a framework to implement
  the (above-mentioned) transition
• 2019-2024 implementation of sustainable
  development programmes and targeting greenhouse
  gas emissions
• 2024-2029 final steps in the transition and
  reductions in poverty and unemployment assisting
  in South Africas emissions peaking in 2030
• Some issues possibly relevant to the Committee
• Potential short-run tradeoffs between
  environmental protection and economic objectives
• The possibility of future legislation on carbon
  taxes
• Constraints to economic activity from
  environmental limitations (e.g. water shortages)

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• Impact indicators
• NDT DTI
• Increased FDI
• Increased tourism arrivals
• Increased tourism spend
• Increased value-added exports

combines market integration, cross-border
infrastructure development and policy
coordination to diversify production and boost
intra-African trade
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Problem of excessive turnover of department heads
Identification of areas where departments/entities
are not coordinating
NT to issue guidelines for financial delegations
and support implementation of these
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Outcome 13 Social protection

• Follows from NDP vision of providing a minimum
  standard of living, while also recognising the
  developmental and transformative role of social
  protection
• The overarching challenge is to develop a
  comprehensive system of social protection by 2030
  while ensuring that the nature of the expansion
  is sustainable
• Sub-outcomes
• Strengthening social welfare delivery through
  legislative, policy reforms capacity building
• Improved quality and access of Early Childhood
  Development Services for children aged 0-4
• Strengthened community development interventions
  
• Deepening social assistance and expanding access
  to social security
• Optimal systems to strengthen coordination,
  integration, planning, monitoring and evaluation
  of social protection services
• Relatively few impact indicators for this
  outcome halve rate of stunting access to social
  assistance up to 95 for those eligible double
  number who can access labour-related social
  insurance double access to Early Childhood
  Development

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Thank you