Key considerations of the National Development Plan to influence the extractive policy

Written by Zandile Munyai.

Introduction

South Africa is infamously known for being the most unequal nation in the world. Owing to the country’s history of racial segregation and economic challenges, there are limited employment opportunities and “key productive assets” such as skills, education, and land. The unequal access to these opportunities contributes to the relatively poor quality of life in South Africa. The first National Development Plan for South Africa (“NDP”) was launched in 2012 by the former Minister in the Presidency, Trevor Manuel. The NDP aims to reduce poverty and inequality by 2030. The NDP was designed by the National Planning Commission to advance the growth and development of South Africa, after consulting with South African citizens, organisations and governmental departments over a period of two years.  Based on the concerns raised during consultations, the NDP sets out key considerations or imperatives as well as recommendations on how they can be met. Therefore, the ‘considerations’ refer to various issues or target areas the State wishes to address in order to meet the imperatives of the NDP. The relevant organs of state are required to review existing extractive policies and draft new policies that will ensure consistency and coherence with the imperatives and considerations outlined in the NDP. 

The importance of host state considerations

The key considerations outlined in the NDP that will influence extractive policy include economic growth and development, ensuring social justice, environmental sustainability and political rights. Firstly, the NPD aims to reduce the unemployment rate to 6 percent by the year 2030 from 24.9 percent at the time the plan was drafted and implemented in 2012.[1] Further, the NDP aims for the Gross Domestic Product (GDP) to increase 2.7 times between 2012 and 2030, which would require an annual growth rate of 5.4 percent throughout the period.[2] The creation of employment opportunities is important and promotes the economic advancement of poor South Africans.[3]

The extractives industry in South Africa is a potential ‘economic multiplier’. The capital invested for the exploration and development of natural resources, as well as the fiscal revenues and income generated from the trade of these resources, could have a positive impact on the economic activities of other sectors outside of the extractives industry. The increased economic activity in other sectors would subsequently stimulate the GDP growth, which improves the prospects of achieving the economic growth targets set in the NDP. It is important to emphasise that there is a positive relationship between the GDP growth and the increase in employment opportunities. StatsSA explains that when the GDP growth is strong, employers can employ more people and can afford to pay higher salaries. 

Secondly, the legislature must consider the promotion of social justice and cohesion in extractive policies. Mining communities and those directly affected by the extractives sector, such as mine workers, are some of the least protected people in the country. The lack of political will to improve social conditions in these communities as well as the increased conflict between the stakeholders has resulted in the violent death of mine workers in the Marikana Massacre and more recently, the violence that has erupted between the mining community and  ‘Zama-Zama's or illegal miners in Kagiso on the West Rand. Mining communities bear the brunt of mining operations which negatively affect their health, environment, homes and infrastructure. Yet, they benefit the least from the proceeds generated from mining developments. Therefore, when drafting the extractives policy, the legislature must consider effective ways to protect these vulnerable groups against corrupt mining companies and government ineptitude, as well as to improve their standard of living.

To promote social cohesion and protection, the NDP proposes to ‘ensure that no one lives below a defined minimum social floor’.[4] This will be achieved, with the help of civil society organisations, to increase the supply of social welfare service professionals such as social workers and community development workers who will offer direct support to mining communities.[5] The NDP also proposes the adoption of an institutional framework that supports an “integrated social security administration, and effective regulation and oversight of the system”.[6]

Closely related to social justice is the consideration of political factors. Without adequate policies and legislative measures in place to combat corruption in the extractives sector in South Africa, the NDP's imperatives of poverty alleviation and equality cannot, in my view, be realised.  The uncertain regulatory systems and increased political and civil unrest related to mining or exploration operations have tarnished South Africa's reputation and could scare off potential investors. The NDP does not set out new and innovative strategies to promote political stability. When drafting the extractives policy, the legislature should set out the duties and the extent of involvement of the state and other stakeholders in mining operations. Further, the policy must include appropriate sanctions that will discourage the act of corruption. All corrupt officials and corporations must be individually held liable for losses incurred due to their actions.[7]

Lastly, the environmental consideration is important because of the long-term and often irreversible impact the mining operations have on the environment. The NDP strives for zero-emission status by 2030, increased use of renewable energy and the protection of rural and agricultural livelihoods.[8] The extractives policy must include measures which regulate the production and emission of greenhouse gases and other pollutants which are harmful to the environment. The current laws which regulate environmental issues in respect of the extractive industry are well drafted. However, greater emphasis must be placed on the protection of the mining community's socio-environmental interests which are susceptible to issues such as food insecurity, loss of livestock and income due to environmental degradation.

Conclusion

The main objectives of the NDP are to reduce poverty and inequality in South Africa. The considerations which may influence the government in the drafting of extractives policies are diverse and may change over time. However, the key considerations or imperatives include social, political, environmental and economic factors. Each imperative has significant implications on the cohesion and greater functioning of the South African nation and, therefore, must be carefully regulated in policy frameworks. Extractive policies are a source of information, for transnational oil companies and investors on the political or sovereign will of the host state towards the extraction of their natural resources. Therefore, it is important that the policies are well drafted and that they clearly reflect the position of the host state. The legislature must consider obstacles to equality and poverty reductions that are unique to the extractive industry and design policy measures that address or correct these obstacles.