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8/14/2019 Development Challenges SarGen GJM.ppt
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ExecutiveLegislative Coaching
Mayor Ronnel Rivera, Vice Mayor Banas, and
Councilors of General Santos City
Cong Manny, Gov Steve Solon, Vice Gov. Jinkee, Mayors
and Board Members of Sarangani
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PROVINCES WITH HIGHEST ARMED CONFLICTS
MILF/MNLF/ASG
POVERTY
INDEX RATE(2010)
POOREST
PROVINCERANK
Maguindanao 60.4 2
North Cotobato 26.1 55
Basilan 33.5 40
Lanao del Norte 46.5 10
Lanao del Sur 37.6 24
South Cotabato 26.4 54
Sultan Kudarat 41.5 17
Sulu 45.1 13
Zamboanga del Sur 34.4 36
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PROVINCES WITH HIGHEST ARMED CONFLICTS
CPP-NPAPOVERTY INDEX
RATE (2010)POOREST
PROVINCE RANK
Quezon 32.8 42
Davao del Norte 30.3 49
Albay 34.4 34
Cagayan 16.5 68
Metro Manila 4.8 75
Davao Oriental 37.2 26
Isabela 23.9 61
Davao del Sur 24.2 59
Camarines Sur 40.1 21
Agusan del Sur 52.8 5
Surigao del Sur 48.6 6
Kalinga 46.1 12
Apayao 16.8 67
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Breaking the Poverty Trap
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DEVELOPMENT Concepts
Amultifaceted process whereby the quality
of life and the humanityof individuals andgroups improves (Simon, 1990)
The creation of wealth and value for thecommunity and for individuals (Mier, 2006)
The satisfaction of human needs and
aspirations in the major objective ofdevelopment.(Brundtland Report, UNDP, 1987)
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7
Possible definitions of development
Alteration of the structure of production andemployment so that the share of agriculture declines and
industry/services share increases (measured by economic
output or GDP growth)
Enhancement of human life and the freedoms people
enjoy (measured by, among others, human development
indicators)
Sustainableuse of natural and other resources; care forthe welfare of future generations
Not just material wealth, but human satisfaction, welfare
and happiness
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Development is also a process of improving the
quality of human lives
It encompasses the three facets of the developmentprocess as follows:
1. Raising peoples living levels their incomes andconsumption levels of food, medical services,education, etc. through relevant economic growth
processes;
2. Creating and managing conditions that areconducive to the growth of peoples self-esteemthrough the establishment of social, political, andeconomic systems and institutions that promote humandignity and respect
3. Increasing peoples freedom by enlarging the rangeof their choice variables, as by increasing varieties ofconsumer goods and services
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SUSTAINABLE DEVELOPMENT
Sustainable development is a pattern of resource usethat aims to meet human needs while preserving theenvironment so that these needs can be met not onlyin the present, but in the indefinite future. The termwas used by the Brundtland Commission, which
coined what has become the most often-quoteddefinition of sustainable development as developmentthat "meets the needs of the present withoutcompromising the ability of future generations to meet
their own needs.
(Based on UNDP Definition)
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11
Source: http://go.worldbank.org/WE8P1I8250
Snapshot of Global Poverty
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12
Source: The Economist (2013).
Can we eradicate extreme poverty
worldwide?
Inequality matters
World Bank: a 1%
increase in incomes cutpoverty by 0.6% in the
most unequal
countries but by 4.3%
in the most equal
ones.
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Poverty: Deep and Deepening
Poverty incidence will get worse
before it gets better
Property of Benjamin Diokno
24
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Why is povertypersistent?
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15
Source: Balisacan (2011) drawing on data from the FIES (various years).
Poverty in the Philippines
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
19.0
19.5
20.0
20.5
21.0
21.5
22.0
22.5
23.0
23.5
24.0
24.5
1991 1994 1997 2000 2003 2006 2009
Percent
Millions
No. of poor % of poor
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TERRACES OF POVERTY:
ANNUAL AVERAGE SELF-RATED POOR
Self-Rated Poverty Question: Where would yo u place you r family in this card? (Not poo r, On the line, Poor)
*Note: The NSCB figures, wh ich c ompare income of the year to the off icial poverty line, are plotted in Jun e of the year.
55
74
67
47
6662
6867666568
635959616157
626360
515354
5053
49484952
'83'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12
10
30
50
70
% of fami l ies
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Note: Dont Know and Refused responses are not shown.Q: Nitong nakaraang 3 buw an, nangyar i po ba kahi t minsan na ang inyong pamilya ay nakaranas ng gutom at wala
kayong makain? KUNG OO: Nangyari po ba yan ng MINSAN LAMANG, MGA ILANG BESES, MADALAS, o PALAGI?
A HUNGER PLATEAU:
ANNUAL AVERAGE HUNGER,
PHILIPPINES
Moderate
Hunger
Severe
Hunger
TotalHunger
11.0
8.3
10.811.4
10.1
7.0
11.8
14.3
16.717.9
18.519.119.119.919.9
4.12.6
4.6 4.22.5 1.5
3.0 3.0 4.0 3.4 4.0 4.0 3.3 3.74.3
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
5
10
15
20
7.0
5.8
6.2 7.37.6
5.5
8.711.0
12.614.414.615.1
15.816.115.6
% of househo lds
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18
Source: Data adapted from De Joyos and Lessem (2011).
The poor get hit harder by crises and
shocks
Example: Food price shocks hit the poor harder because itconstitutes a large share of their spending
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
East Asia and the
Pacific
Cambodia Indonesia Lao PDR Philippines Thailand Vietnam
Population Average Among extreme poor
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20Source: Figure adapted from Balisacan (2011). Scenarios based onauthors calculations.
Economic growth is weakly
translated into poverty reduction
-5
-4.5
-4
-3.5
-3
-2.5
-2
-1.5
-1
-0.5
0
Ravallion(2001),41
DevelopingCountries
WorldBank(2009),East
Asia1990-2006
World
Bank(2009),
Thailand1990-2006
WorldBank(2009),
Indones
ia1990-2006
World
Bank(2009),
Vietna
m1990-2006
WorldB
ank(2009),
Philippines1990-2006
Balisacan
andFuwa
(2004),Philippines1988-
1997
Balisacan(2007),
Philippines1988-2003
Percent change in poverty incidence arising from 1% change in mean income
At 3% growth, and at 1.5% poverty elasticity of
growth, it will take the Philippines 360 years to
eliminate poverty.
At 8% growth, and at 1.5% poverty elasticity of
growth, it will still take the Philippines 130 years to
eliminate poverty.
At 10% growth (approximating Chinas) and 5%
poverty elasticity of growth (approximating
Thailands), it will take 24 years to eliminate
poverty in the Philippines.
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21
Rising prices of basic commodities and
the gradual erosion of purchasing
power
21
Source: Bureau of Agricultural Statistics, Department of Energy
0
10
20
30
40
50
60
70
80
90
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Galunggong (per kg) Well Milled Rice (per kg) Diesel (per liter)
Average prices
(before 2003):
Galunggong Php31
Rice Php 16
Diesel Php 9
Average prices
(after 2003):
Galunggong Php57
Rice Php 27
Diesel Php31
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The Basic Sectors
Farmers and Landless Rural Workers
Fisherfolk
Indigenous Peoples
Urban Poor
Workers in the Informal Sector
Disadvantaged Groups (who also cut across all sectors:- Women
- Youth and Disadvantaged Students
- Persons with Disabilities
- Senior Citizens and Veterans
- Victims of Disasters and Calamities
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POVERTY PROJECTIONS, 2006- 2016
Magnitude of Individuals (millions)
MDG
Target
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
4.5% growth
6.0% growth
MDG
Target
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25
Schizoprenic economy?
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Philippines is ranked 138 out of185 economies in ease of doingbusiness.
1
12
18
79
99
128 133 138
163
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C
Y
C
Y
BEP = Y = C
O
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Poor governance turned off investorsFDIs were low compared to its ASEAN neighbors, hit rock bottom in 2001
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Poor governance turned off investorsFDIs were low compared to its ASEAN neighbors, hit rock bottom in 2001
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Starting a Business
DB 2013 Rank 99 DB 2012 Rank 99 Change in 0Rank
Indicator Vietnam East Asia & Pacific OECD
Procedures (number) 10 7 5
Time (days) 34 36 12
Cost (% of income per capita) 8.7 22.4 4.5
Paid-in Min. Capital (% of income per capita) 0.0 13.4 13.3
It requires 10 procedures, takes 34days, and costs 8.7 % GNI per capitato start a business in Vietnam.
In the Phi l ippines, it takes 16 proc edures , 36
days , and 18.1 % GNI per capita to start a
business.
In Thailand, it takes 4 p rocedures ,29 days ,
6.7% GNI per capit a to start a bu sin ess.
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VOICE AND ACCOUNTABILITY
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POLITICAL STABILITY
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GOVERNMENT EFFECTIVENESS
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REGULATORY QUALITY
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RULE OF LAW
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CONTROL OF CORRUPTION
Corruption prior to 2010
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37
Corruption prior to 2010
Source: Transparenc
International, Global
Corruption Baromete
(2010)
Improvement from
129thin the
Transparency
Internationals
Corruption Index t105th(out of 176) i
2012.
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Where are the worlds
youth?
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39Source: Mahurkar and Mendoza (Forthcoming) using data fromBLES.DOLE.GOV
About 1.2 million young workers will
join the labor force each year from
2010 to 2040
0
20
40
60
80
100
120
140
160
2010 2015 2020 2025 2030 2035 2040
Total Population Working Age
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BPO: Bright spot, but with some
challenges
First calls were taken in 1997; today the sector employs638,000 people and enjoys revenues of $11 billion, about 5%
of the country's GDP.
Philippines now employs about 400,000 people at call
centres, vs Indias 350,000.
BPO industry could add another 700,000 or so jobs by
2016 and generate revenues of $25 billion. At that point, the
industry would make up nearly a tenth of GDP and be bigger
in value than the remittances from the 10m Filipinos working
overseas.
Indian companies Infosys and Wipro, as well as scores of other Indian firms, operate in the
Philippines not because of cheap labour, but because a Filipino accent commands a premium.
Challenge: To move up the value chain (more sophisticated back-office jobs, such as knowled
process outsourcing and legal-process outsourcing, where India still leads.
11
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Overseas Remittances
For the Philippines, thecontribution of exports laborto the economy is moresignificant than that ofmerchandise exports.
Despite the global crisis, thegrowth of OFW remittancesremained positivebutgrowth slowed sharply. Froma growth rate of 25% in2005, its growth slowed
drastically to 4.1% in 2009.Its growth will likely slow tosingle digit levels in the nextthree years.
Property of Benjamin Diokno
11
11/09/10
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OFW Remittances (US$B)2004-2012
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43
Why is growth not inclusive?
REPRODUCTIVE HEALTH
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SOCIAL SAFETY NET
(POLICIES TO PROTECT)
PUBLIC GOODSREPRODUCTIVE HEALTH
POLICY
POVERTY REDUCTION
POLICIES (POLICIES TO
EMPOWER)
INFRA AND PPPs
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CITIESRural
Areas
Rural
Areas
Rural
Areas
Rural
Areas
Industrial Location Theory: Firms locate/relocate where profits are
maximized and cost are minimizedP = f ( L, L, K, e .. )
URBAN ECONOMIC
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REGIONAL GROWTH CENTERS OF THE PHILIPPINES
URBAN ECONOMIC
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FDI: Improving but still not
catching up
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other electronic8
43%
10 revenuestreams
45%
coconut, petroleum,chemicals, tobacco,minerals, machineries, etc.
12%
RP Merchandise Export Structure 2012US$32.2B; % share
Source: National Statistics Office
INTERNATIONAL ECONOMICS
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RP Country Markets 2012US$32.2B; % share
Increase
penetration;expandproductrange
Source: http://tradelinephil.dti.gov.ph
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Imbalanced Foreign investments
Arsi Balisacan: 60% of the countrys GDP is concentrated
in three regions in Luzon.
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PPPs biased towards Luzon
5
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The Economy on the Supply Side
The economy grew
a bit faster during
election years
(2010 and 2013)
The impact of the
Great Recession
was broad-based:
all sectors
contracted, with theindustrial sector
sharply down.
5
Property of Benjamin Diokno
6
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The Industrial SectorManufacturing has lost steam
Manufacturing, thesource of many decentjobs, contracted themost.
Electricity, power and gasdeclined. Bad omen forfuture growth, though itprovides opportunitiesfor future investment.
Mining grew the fastest,
but its contribution tooutput is the lowest. Itcould be a growthindustry in the future.
Property of Benjamin Diokno
7
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The Services Sector
The real estate sector was the worst hit during the recentglobal crisis, due to depressed demand for housing.
Banking and finance has been the fastest growing sector inthe past; it slowed drastically in 2008 (Legacy and otherproblems), recovered mildly, but not fully.
Property of Benjamin Diokno
8
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Demand side: most spending items down
The economy is largely consumer-led. Personal consumptionexpenditures grew, on average, by 5% in the past, though it slowedslightly in 2012.
Capital formation peaked in 2010 and 2013both election years.Largely negative in other years. High and consistent investment, say at25% of GDP, is needed for faster growth.
Property of Benjamin Diokno
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5656
Medium-Term Fiscal Path 2010-2016(as of July 9, 2010)
15.6 16.1 16.9 17.6
18.5 19.4 20.2
19.5 19.4 19.5 19.6 20.5 21.4
22.2
3.9 3.3 2.62.0 2.0 2.0 2.0
0.0
5.0
10.0
15.0
20.0
25.0
2010 2011 2012 2013 2014 2015 2016
Fiscal Position
PercentofGDP
Revenues Dis burs em ents Deficit
30
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Fiscal house in disarrayGMA run large deficits from 2001-04; huge deficits have reemerged in recent years
Property of Benjamin Diokno 11/24/10
31
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High and rising public debtAs the world economy recovers, interest rates would rise, leading to higher debt service
Property of Benjamin Diokno 11/24/10
ld b d
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World Competitiveness Scoreboard 2010Lagging behind its ASEAN-5 neighboring countries
Rank Country Score
1 Singapore 100.00
10 Malaysia 87.228
26 Thailand 72.233
35 Indonesia 60.745
39 Philippines 56.526
POVERTY ALLEVIATION MODEL
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Health
Education
Housing
Recreation
Food
Other
Entitlements
Household
Decision
Those who have less income
should have more entitlements.
Use of total income to purchase
entitlements is a function of
household decision
Y + E = TY
POVERTY ALLEVIATION MODEL
derived from govt, NGO & business
ImprovedQuality of
Life
GOAL
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Eliminate poverty within the decade and bring
prosperity within reach of every Filipino
Achieve Macroeconomic Stability
Pursue Comprehensive Development
Institutionalize Good
Governance
A FRAMEWORK FOR STRATEGIC INTERVENTION
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A FRAMEWORK FOR STRATEGIC INTERVENTION
Integrated Strategy Development Model
IAD
Ideology
Maturity & Unity
Values Orgn
ECONOMIC DEVELOPMENT ENVIRONMENTAL DEVELOPMENT
SOCIO-POLITICAL OR PEOPLE DEVELOPMENT
Prosperity & Equity
Values Orgn
Markets
Productivity & Quality
Area Industry
Agency
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Policies and Reforms to Promote High
and Inclusive Growth
Habito (2010):
1. Quality appointments to government posts and zero tolerance for corruption;
2. Strong and credible transparency and accountability systems; and intensified
decentralization;
3. Wider and deeper public participation in governance; and streamlined government
procedures to lower cost of business and speed up public services;
4. Democratization of the economy through asset reforms and competition policies;
5. Boost tax revenues by improving ICT systems in BIR, prosecuting tax evaders and reformiexcise taxes on alcohol and other products;
6. Narrow the infrastructure gap;
7. Enterprise development with a focus on MSMEs.
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Policies and Reforms to Promote High
and Inclusive Growth
Balisacan (2011):
1. Create productive employment opportunities, including through Infrastructure to promot
connectivity, especially between leading/urbanizing & lagging/rural areas; and Institution
facilitating transactions in the marketplace (in order to lower the cost of doing business)
2. Reduce the high inequity in access to opportunities (i.e. High priority on education, health
including family planning services)
3. Rebuilding institutions, including civil service, & good governance in pursuit of inclusive
growth
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Selected References
Balisacan, A. 2011. What does it really take to move the Philippines out of poverty? Presentation to theMindanao Bridging Leaders Program, 21 July 2011.
Collier, P. 2007. The bottom billion: Why the poorest countries are failing and what can be done about it. Oxf
Oxford University Press.
De Joyos, R and R Lessem. 2011. Food shares in consumption: New evidence using Engel curves in the
developing world. Mimeo. *Available at: https://mywebspace.wisc.edu/rlessem/web/engel.pdf+.
Economist. Poverty: Not always with us. June 2013. *Available at:
http://www.economist.com/news/briefing/21578643-world-has-astonishing-chance-take-billion-people-out-extreme-poverty-2030-not].
Habito, C. 2010. An Agenda for High and Inclusive Growth in the Philippines. Manila: ADB. *Available at:
http://www.adb.org/documents/reports/agenda-high-inclusive-growth/agenda-high-inclusive-growth.pdf].
Mahurkar, P and RU Mendoza. 2012. Anatomy of Anti-Poor Growth: Insights from Recent Employment Tren
Mimeo. AIM Policy Center.
Mendoza, R.U. 2011. Why do the poor pay more? Exploring the poverty penalty concept. Journal of
International Development 23(1):1-28. Mendoza, R.U. 2013. Why PH competitiveness is improving. Rappler.
Mendoza, R.U. 2013. Does investment grade matter for inclusive growth? Rappler.
Sen, A. 1999. Development as Freedom. New York: Knopf.
Virola, Romulo, et. al. 2010. The Pinoy Middle-Income Class is Shrinking: Its Impact on Income and
Expenditure. Paper presented during the 11thNational Convention on Statistics (NCS), EDSA Shangri-La Hotel,
October 4-5, 2010.
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We can t solveproblems by using thesame kind of thinkingwe used when we
created them. Albert Einstein(1879-1955)
Food for Thought
The task of government is to harness the energies
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The task of government is to harness the energies
the people into a material force for growth and
development. What is required is a partnership
among communities, government and the private
sector.
Nelson Mandela
We will not suffer the future. We will
shape it. We will not simply grow. Wewill manage our growth. We Will mak
change. But to shape our future, we
need a new vision of government