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Short term delivery of social safety nets essential while tackling long term structural transformation to overcome inequality and poverty in South Africa

21 September 2010

The conference Overcoming Inequality and Structural Poverty in South Africa: Towards inclusive growth and development currently taking place at the Birchwood Hotel in Boksburg, Gauteng aims to ignite debate about how to tackle the neglected issue of inequality in South Africa, and create space for anti-poverty practitioners to learn from each other about what strategies are helping to alleviate poverty, and what more can be done to rid South Africa of poverty. Deputy President Kgalema Motlanthe in his video-delivered opening address said he looked forward to substantive engagement on the issue after the conference, as poverty and inequality were the biggest crisis and most stubborn problem in South Africa today, and pragmatic action was needed to transform our society.

Current situation

In the first presentation after the opening addresses, Murray Leibbrandt of SALDRU, said that while, in the last sixteen years, we have made some small gains in reducing poverty, inequality – the gap between rich and poor – has widened. In real terms this means that while the poorest of the poor are marginally less poor, the richest are substantially richer, while those in between are poorer than they were at the end of apartheid – and this picture applies across racial groups, so that for example the gap between rich and poor ‘white’ South Africans has widened at a similar rate to the gap between rich and poor ‘black’ South Africans. The wealthiest 10% of our society earned 54% of GDP in 1993, and by 2008 their share had risen to 58%.

In so far as South Africa has a growing economy, the growth path is not addressing inequality, and inequality destroys social cohesion and creates conflict Neva Makgetla from the Economic Development Department said that international evidence showed that inequality also slows growth.

Seeraj Mohammed of CSIDRP, at Wits University pointed out that the structure of the South African economy has not changed very much since the end of apartheid. The formal economy is still very concentrated in the minerals and energy sector, but this sector is not generating jobs, and Neva Makgetla pointed out that mining and agriculture had shed 1 million jobs since the end of apartheid, and beneficiating minerals creates few jobs and uses a lot of electricity.

Isobel Frye (SPII), Neva Makgetla (EDD) and Kate Philip (TIPS)

Most growth comes from a growing private security sector (which polices the boundaries between the haves and the have nots) and the financial sector, which Neva Makgetla said generates profit but does not create jobs. And while the conventional economic wisdom in South Africa is that the work force must be more flexible to encourage employers to create jobs, Claudia Serrano of Chile said that the evidence is that labour flexibility simply creates labour vulnerability and further vulnerability for poor households unless comprehensive unemployment insurance packages provide a safety net for workers. Also, as several participants pointed out, increased labour flexibility is impossible without a massive improvement in our educational outcomes, on which our schooling system has failed to deliver.

Murray Leibbrandt also argued that in South Africa today, the poorest of the poor are not slightly better off because of improved access to jobs nor better remuneration for labour; rather social welfare programmes (like child grants and pensions) rolled out to the poor are creating a safety net which alleviates poverty, but does not change the fundamentals needed to overcome poverty in South African society.

Applying models from other developing countries not always appropriate

Adam Habib, Deputy Vice-Chancellor of the University of Johannesburg said that while there may be lessons to be learned from other middle income, developing countries that have made more headway in tackling poverty and inequality, it is important to emphasise that the structure of the South African economy makes certain strategies unfeasible for South Africa. For example, Kate Philip of TIPS pointed out that in other developing countries, the poor can enter the (albeit informal) economy by small scale production and sale of locally produced goods in local markets. The South African informal economy however is not based on small scale production for local markets, but is mostly retail-based and not productive i.e. based on purchasing mass produced goods and reselling them in poor areas e.g. spaza shops, shebeens, cellphone airtime containers, etc.

Because under apartheid the poor were deliberately moved to land that could not be productive, and the poorest South Africans are still living in such areas, the spatial geography of apartheid exclusion is still very much with us today. At the same time, even when the South African poor are able to produce, there are no local markets – poor South Africans buy a very small basket of goods, manufactured by corporate monopolies and distributed through supermarket monopolies. In terms of economies of scale, the quality of mass produced products and marketing strategies, small scale producers are simply not able to compete.

Therefore, as Kate Philip argued, the opportunities for addressing poverty and inequality in South Africa are much more constrained than in other middle income developing countries. At a macro-level, the picture is extremely bleak and we will not be able to address poverty and inequality without extensively restructuring the South African economy. If we are to do it properly, effectively and meaningfully, such restructuring needs to be done carefully with a great deal of thought and insight so as to build on what is working in the economy and implement changes without massive social disruption.

Structural transformation is also about changing spatial geography in the unproductive former Bantustans, productive rural areas where most land is white-owned, and in urban areas where the poor live in informal settlements, slums and RDP housing developments built on the peripheries of cities making it difficult for the poor to get to where the jobs are.

At the same time, as Adam Habib said, the political will to restructure the economy and spatial geography is threatened by economic elites who will not relinquish power voluntarily, and where there is the will to restructure society, Kate Philip pointed to a lack of confidence among policy-makers, which was required to take the leap of faith. This means that the poor carry the burden of not only their own survival, but in mobilising to push hard for the necessary structural transformation. Adam Habib said that without such mobilisation of the poor, however, accountability and transparency would not be achieved. Unless you confront power, development won’t happen.

However, in contrast to the bleak picture at the macro level, there are some very hopeful possibilities being explored at a micro-level. KingGeorge Mohlala, Lebo Ramafoko and David Cooper described how various communities across the country have succeeded in reducing absolute poverty by working together to create self-help schemes. The government has also piloted a Community Works Programme (CWP) which provides financial and intellectual support to such self-help programmes. In communities where pilot CWP projects have been rolled out, communities identify their most pressing needs, identify a team of people to tackle those needs and shares the work out among community members, such that everyone involved has a guaranteed minimum days of work with some remuneration for such work.

The CWP projects often link up with existing poverty alleviation programmes in the communities, create a labour pool to build such programmes and allow community members to earn an income – often for the first time in their lives. The types of work typically undertaken in CWP projects include health projects (especially home based care), education projects (e.g. teacher support through classroom assistants), construction projects (e.g. building, renovating and maintaining public infrastructure – roads, drains, fencing, public buildings, etc), and agriculture and food security (e.g. food gardens and food co-operatives). Typically 65% of CWP funds are spent on labour while 35% covers provision of materials and project management.

However, even though such labour-intensive self-help schemes do make a difference in alleviating poverty and according to the self-testimony of those in the projects build self esteem and dignity, they do not change the structure of the economy. And unless they build power to tackle the macro-issues and push for structural transformation, the scale of such projects cannot bring about the fundamental shift needed to overcome poverty and inequality. Such projects have a limited scope because they push the burden of change onto the poor, while the wealthy and middle classes carry none of the burden for change.

3 Comments leave one →
  1. 8 October 2010 9:14 pm

    Indeed, a fantastic and very useful summary – thanks so much. Wish I’d seen it earlier in the week when I was writing an article on related issues.

  2. surudec permalink
    22 September 2010 10:50 am

    Great summary of the issues and first day, allowing us in the provinces to keep to keep up with debates.
    Barbara Manning
    Visibility & Communications
    Sustainable Rural Development in the Eastern Cape (SURUDEC) Programme
    based at RULIV, East London
    043-704 8836
    078 8013921


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