Pushing back the frontiers of porverty

Community sector position paper for the Growth and Development Summit

1. Problem statement and analysis

1.1 Persisting duality in the midst of progress

It is common cause that, since 1994, an important stabilisation and economic turnaround has been achieved. An economy that had experienced negative growth in all but one year in the preceding decade has seen steady if modest growth since 1994. A number of key economic sectors, threatened by de-industrialisation, have made progress. Our country's macro-economic vulnerabilities have been considerably lessened.

We acknowledge these achievements. However, as President Mbeki said in his February 2003 State of Nation address:

"there are many in our society who are unable to benefit directly from whatever our economy is able to offer…This reflects the structural fault in our economy as a result of which we have a dual economy and society. The one is modern and relatively well developed. The other is characterized by underdevelopment and an entrenched crisis of poverty."

The "dual economy and society", to which President Mbeki refers, is dramatically obvious in the divided reality of South Africa's communities. The organizations represented in the Community Sector are drawn from and active within those communities that are characterized by "underdevelopment and an entrenched crisis of poverty".

In this regard, President Mbeki refers, appropriately, not just to a "backlog", or "legacy" from the past. The President also is not referring to two economies, or two societies within our country. He speaks of "the structural fault" within our single, shared economy, a structural fault that continuously reproduces duality. In other words, any growth and development strategy must address underdevelopment and the entrenched crisis of poverty structurally, systemically, and not merely with a series of well-meaning but disjointed projects and initiatives that are disconnected from our overall economic policies.

The principal objective of the Community Sector in regard to the GDS is to lay the basis for a shared vision for growth and development that approaches the overcoming of underdevelopment and the entrenched crisis of poverty in our communities as a systemic strategic task.

1.2 A paradox - a major transfer of resources to the poor, yet deepening household income inequality and income poverty

The imperative of a thoughtful strategic approach to community poverty is starkly underlined by Statistics South Africa's comprehensive report comparing household earnings and spending for October 1995 and October 2000 ("Earnings and spending in South Africa: Selected findings and comparisons from the income and expenditure surveys of October 1995 and October 2000").

The Report confirms the impact on households of the major effort undertaken since 1994 to roll-out resources to the poor. Comparing households for 1995 and 2000, the Report shows very significant progress in the impact of "social" wage measures. The proportion of people with access to clean water climbed from 79% to 83%. Those with access to electricity for lighting rose from 64% to 72%. Those with access to telephones rose from 29% to 35%. People living in formal housing rose from 66% to 73%. We have reason to believe that these trends have continued since October 2000 in many cases, and in some cases they may have accelerated.

Major transformation in education, health-care, and social grants has also impacted favourably on the quality of the lives of the poor. All in all, this represents a very significant, state-driven resource transfer to the poor.

However, reflecting the paradox of persisting structural duality, the Statistics South Africa report also finds that, in terms of income, the average South African household became significantly poorer between 1995 and 2000. In October 1995 the average household's income was R37, 000. When inflation is taken into account, the value for 2000 was projected to be R51, 000, if average income were to remain constant. But the survey found the actual average income for 2000, at R45, 000, was well below that.

These are average figures, when households are divided into five bundles, each representing 20% (or "quintiles"), ranging from the poorest to the richest 20%, then an even more sobering picture emerges. In 1995 the poorest 20% of households received a mere 1, 9% of the total income in our country. In 2000 this pitiful share had dropped still further to 1, 6% of total income. But the slipping back in share is not only confined to the bottom 20% of households. The poorest 50% of South African households also slipped backwards in these five years relative to the richer half.

Perhaps the most concerning statistic to emerge from the Statistics SA report is that the average African household experienced a 19% fall in income, while the average white household experienced a 15% increase. In 1995 the average white household earned four times as much as its average African counterpart. In 2000 the average white household was now earning six times the average African household.

Unfortunately, success in terms of significant resource transfer to the poor, achieved over the last 9 years, can itself be undermined by income poverty. For instance, Telkom achieved the roll-out of a remarkable 2, 67 million new lines, mostly to poor households, within the 5-year period of its fixed-line exclusivity (see Telkom, Financial Statement 2001-2). Sadly, only 667,039 of the new lines delivered were still in service by the end of the period, according to the same Telkom Financial Statement. Presumably, the bulk of the more than 2 million cut-offs were associated with household income poverty.

The correct strategic response is, clearly, not just the quantitative rolling out and redistribution of more resources to the poor.

1.3 Jobs, resource redistribution and sustainable livelihoods and communities

The disappointing income statistics noted above, reflecting deepening income inequality and poverty, are directly related to growing unemployment. According to Statistics South Africa, using the narrow definition of unemployment (excluding those too discouraged to seek work), joblessness rose from 16% of the labour force in 1995 to just over 30% in September 2002. During this period, the number of unemployed has risen from around two million to over four million. If discouraged workers are included, close to seven million are out of work.

The Community Sector proposes the following 7 systemic strategic responses for a sustainable growth and development trajectory that pushes back the frontiers of poverty:

2. Job Creation and Job Retention

Job creation and retention must be the key priority of our society. The Community Sector strongly supports, amongst other things, proposals for Expanded Public Works Programmes (PWPs). However, PWPs, if not located in a wider developmental strategic context, can simply reproduce the "structural fault", the duality within our economy and society. The Community Constituency believes that Expanded Public Works Programme if part of it could be located within an overarching strategic framework-which is the National Youth Service Programme, it could give serious impetus to this innovative initiative, the country's Cabinet has adopted. It must therefore target the special groups and the poor (certain Expanded Public Works Programme's initiatives can be specifically assigned to youth, women and the disabled for their direct participation and role in this regard). There needs to be strong requirements in awarding of tenders for prospective bidders and empowerment credentials with specific reference to special groups should be a determining factor. This must include incentives for major labour absorption projects.

For this reason, the Community Sector believes that even greater attention needs to be paid to transforming key sectors of the formal economy, ensuring that they are much more labour absorbing. We believe that government, particularly with its forthcoming multi-billion rand infrastructural spending (as envisaged in the Medium Term Expenditure Framework), should emphasise labour intensity as a critical criteria in drawing up tenders for infrastructural projects. The formal private sector needs to understand the imperative of transforming, where appropriate (and we accept that there may be industries or sectors where it is not) in the direction of increased labour intensity. Labour absorption - and more specifically a deliberate choice in favour of more labour intensive techniques - ought to be accorded a high priority in the proposed BEE "balanced scorecard", and must be the major consideration in awarding tenders for infrastructural projects. (in addition the issue of youth participation in the newly formed BEE structures be affirmed) (The other important issue, which require emphasis, is the issue of enterprise development and support. The barriers put before youth by financing institutions especially banks arising out of conservative standards that are normally put forward before giving any assistance to youth including blacklisting of youth especially those that have incurred some debts when they were studying).

The Community Constituency wants the Growth and Development Summit to look at the parastatals as key instruments for job creation and advancing social delivery and development.

The Community Constituency wishes to see all major projects being selected and for which tenders are awarded should strongly reflects employment equity and in their project planning, design and implementation (especially physical infrastructure) ensure that people with disability are involved not only in advisory capacity but in the implementation

3. Breaking out of the "either jobs/or welfare" paradigm

With up to 7 million people unemployed, and with an unemployment rate between 30-40%, we need to be practical and sober. We should not relent, for one moment, in the pursuit of creating many more jobs and retaining existing jobs, but we also need to be realistic about our own situation. We are not going to achieve anything approaching full employment in the near future. Nor can we afford to think in conventional ways about income - that it either derives from employment in the formal sector, or from some stop-gap and regrettable, if necessary, social welfare measures.

In its Position Paper to the GDS, Government grapples with this challenge in ways that begin to point a way forward, but which, without appropriate qualification, could seem to be self-contradictory. Government (page 2) argues that the first of its nine substantive strategic programme priorities is the:

"Progressive broadening of the income security net…"

This refers, amongst other things, to the very welcome extension of the Child Support Grant, progressively up to the age of 14 years. This, and other measures, will certainly increase by many hundreds of thousands the number of currently poor and destitute individuals receiving social security transfers.

However, on the very same page of Government's Position Paper, we are told:

"The cross-cutting commitment to job creation is in line with the imperative articulated by the President `…to act to ensure that we reduce the number of people dependent on social welfare, increasing the numbers that rely for their livelihood on normal participation in the economy.' "

An implicit assumption could be that there is a direct, zero-sum trade-off between "normal participation in the economy" on the one hand, and "social welfare" transfers on the other - the more of the former the less of the latter.

Unfortunately, this is not straight-forwardly the case in our society. The deep-seated, structural marginalisation of a large proportion of our population is a key impediment to any sustained job creating growth in the formal sector. We need to be thinking in a different paradigm:

• In the first place, we need to break out of a "welfare" paradigm. We must approach, in practice, social security and other resource transfers to the poor as active, transformational catalysers for overcoming social exclusion and for promoting varying degrees of participation in the economy. In other words, we must see social security and other resource transfers to the poor as active components of our growth and development strategy, and not as, perhaps necessary and humane, but basically costly subtractions from what we could "otherwise do". Social security transfers need to be actively integrated into a range of other developmental endeavours so that payments become, for instance, seed money to access training, to purchase a bike, to promote mobility to jobs, to form the modest basis for establishing a household or communal vegetable garden, or marketing co-operative, etc., etc.; and
• In the second place, "normal participation in the economy" needs to be understood in terms much broader than just formal sector jobs - in particular, we need to promote the idea and the reality of sustainable communities and, at the household level, of sustainable livelihoods in urban, peri-urban and rural settings.

In this regard, the Community Constituency will spearhead campaigns to ensure significant coverage for the Child Support Grant and other social security measures the democratic state seeks to broaden. The constituency will use its location, access to communities to strongly campaign for better use of existing measures.

4. Sustainable communities and sustainable livelihoods

To a degree that is perhaps unprecedented internationally, a significant proportion of our people find themselves, structurally, in double jeopardy. Centuries of dispossession, and a century and a quarter of intense industrial development premised upon coerced labour reproduced in over-populated "reserves", and later in "dormitory" townships, has resulted in a great majority of our people being absolutely reliant on the labour market and waged labour for their livelihoods. And yet, many of them are either marginalized on, or entirely excluded from that market at the same time. In most, if not all, other developing countries, and even in much more advanced industrial economies (France, Italy), the proportion of small-scale peasant family farms, for instance, and other quasi-subsistence operations is far greater. South Africa's particular industrial development path has all but eroded this social cushion.

A sustainable growth and development strategy must address this challenge as an absolutely central priority. Among the key proposed measures to promote and foster sustainable communities and sustainable livelihoods are:

5. An accelerated land reform process

• Land reform needs to focus on rural, peri-urban and urban land;
• Land reform for agricultural purposes should not be exclusively predicated on creating a new stratum of commercial farmers assessed as viable in terms of conventional market criteria. Land reform must aim at providing the access to the most basic means of production - land- for a broad range of income generating and developmentally viable productive activities. Agriculture for sustainable community and household livelihoods, including township vegetable gardens, must also be given priority;
• Land reform measures, like the Communal Land Tenure Bill, need to be accompanied by infrastructural support, agricultural extension, and other training and facilitating efforts. The commoditisation of communal land, without such support measures, can result in rapid social differentiation leading poorest households to opt to sell their land rather than use it for productive activity thereby deepening rural poverty and dependency.

6. Fostering a country-wide cooperative movement

Based, in part, on earlier communal traditions, through the bitter years of apartheid oppression, black communities and households have developed and sustained numerous survival strategies. Key among these have been various forms of cooperative endeavour - hundreds of thousands of burial societies and stokvels (the banks and insurance companies of the township poor), sewing circles, cultural and sporting cooperatives, and, in later decades, minibus cooperatives federated into voluntary "mother-bodies".

Over the last decade, production, marketing and savings cooperatives have mushroomed in hundreds of communities. Worker-owner cooperatives are involved in such diverse activities as citrus farming in Limpopo, pineapple farming and marketing in the Eastern Cape, poultry farming in many localities, the collection of waste products for recycling in Ethekwini Metro, community vegetable gardens in diverse localities (including Khayelitsha, Ivory Park, and Elsies River). There are bakery cooperatives that service poor schools and access funding via government's school feeding programmes. There are housing brigade cooperatives. An important initiatives could be Youth Brigades Cooperatives on HIV/AIDS focusing on integrated community home based care and other essential interventions emanating from Cabinet Social Cluster i.e. Social Grants Registration, information about access to basic services, including broader local development initiatives.

An important feature of many cooperatives, both historically and currently, is the central role of women, youth, people with disability and the poor in managing and sustaining them.

Some of these cooperatives function like any other small or medium enterprise, competing on the market. Others are less market-oriented, and are more focused on self-sustainability, or on localised barter, and yet they too make a major contribution to fostering sustainable communities and household livelihoods. Success should not be measured solely in market-terms.

There is a very substantial cooperative movement within our country, but it is all too often neglected, or disregarded. Typically, cooperatives, by their very nature, depend on localised initiative and enterprise. They cannot be created by legislation or by a government fiat. However, they can be greatly encouraged and sustained by a supportive legislative, infrastructural, investment and policy environment.

The Community Sector expects the GDS to:

• Encourage the passing of legislation that facilitates the establishment and running of cooperatives;
• Agree to the development of a programme of support that provides real resources and services to cooperatives, and in some cases gives priority to cooperatives over other enterprises in terms of access to resources and services. Government clearly has a central role to play in this regard, but business and labour need also to identify ways they can contribute to the development of a massive cooperative movement in this country;
• Ensure that Sector Education and Training Authorities and other public and private entities involved in promoting SMMEs, play an active role in promoting cooperatives, where appropriate, and that training and skilling is developed to help empower the cooperative movement;
• Ensure that SETAs are sensitive to the needs of special groups, especially in their initiatives and employment opportunities,
• Ensure establishment of inclusive Provincial Skills Forums
• Adopt Youth Solidarity Fund concept, (as a vehicle to demonstrate youth contribution to matters of growth and development and contribution in strengthening the resource base for youth development)
• Look at integrated, multi-modal, accessible public transport, especially for disabled persons, which is an investment on strategic public assets.
• Endorse and incorporate into a broader growth and development strategy, the 2002 NEDLAC-convened Financial Sector Summit resolution on facilitating the formation of cooperative banks.
• Set target of 5% for economic development spending to go to people with disability
• That by 2005, 2% of public servant be people with disability, including review of all employment equity policies
• Adopt the National Youth Service as an overarching strategy, whose component part is PWP. (Learnrships, internships, co-operatives etc)
• The Community Constituency wants GDS to explore innovative ways of strengthening existing service delivery and instruments of social dialogue to oversee the implementation of agreements, especially at local level, thus giving meaning to building organs of people's power.

7. Financial sector transformation - and community investment

It is the understanding of the Community Sector, that this Summit is not a stand-alone event, but must be seen in continuity with a series of Sector Summits - both those that have already convened, and those that are still to follow.

The Community Sector played a very active role in last year's NEDLAC-convened Financial Sector Summit. Apart from the important cooperative banks resolution mentioned above, the Financial Sector Summit committed all participants - government and parastatals financial institutions, private sector financial institutions, and union-controlled pension funds, to ensure significant community investment measures.

The Community Sector expects the GDS to:

• Endorse this resolution and incorporate it into a broader growth and development strategy.
• Agree on ways to advance all the agreements in the Financial Sector Summit, and particularly that on the promotion of developmental investment, which in our view lies, at the heart of a follow up work programme the GDS must mandate.

8. Urban densification, multi-income settlements, accessibility and mobility

The persisting reality of economic and social dualism in our society, and the paradox of deepening income poverty and inequality despite major resource transfers to the poor (all noted in our Problem Statement above) are significantly influenced by our social geography. South Africa's spatial reality is still dominated by zones of more or less absolute peripheralisation (typically in deep rural, often former Bantustan, areas), semi-peripheral zones (sprawling squatter camps and townships that serve, essentially, as dormitories), and developed enclaves - middle and upper-class suburbs with well-serviced cultural, recreational, commercial, transport and adjoining industrial facilities.

With important exceptions, many of the significant resource transfers to the poor in the last few years have (unwittingly) reproduced these spatial realities, with all of the attendant consequences.

For instance, there has been an impressive housing construction programme, with over 1, 4 million new units constructed, with the assistance of government subsidies. However, the great majority of this new formal housing for the poor has been located in the same distant townships (this is where land is relatively cheap and available). Townships have tended to remain dormitory settlements, distant from places of work and shopping.

All of this has had a direct impact on, for instance, public transport. Over the last decade, we have battled to find resources just to subsidise, maintain, and to render safe and secure the mass transit modes (commuter rail, buses and mini-buses) that provide a life-line from these distant dormitory settlements. There has been little budget left over for the expansion of transport service and for major qualitative improvement. Generally, the commuting experience of the great majority of public transport users has deteriorated, despite rising fares. The answer, once more, is not necessarily pouring more and more money and resources into the same spatial settlement patterns and the transport infrastructure that supports this social geography.

A sustainable growth and development strategy must, as a matter of priority, adopt a systemic and transformational approach to our social geography, including:

• Priority to urban densification - including the identification of vacant land, and/or the purchase of land adjacent to current suburbs, and the construction/upgrading of affordable inner city accommodation
• The fostering of mixed, multi-income settlement patterns to promote sustainable communities
• The fostering of more multi-functional spatial patterns in which townships and rural areas break the mould of their apartheid defined roles as "dormitories" for the working class and "dumping grounds" for the marginalized, and become also centres of productive economic activity.
• Settling the poor closer to places of work, commerce and recreation and/or moving these realities closer to the poor, and promoting inter- and intra-settlement mobility;
• Integrating public transport planning and implementation with the above objectives;
• Integrating all of the above objectives, consciously and systematically, into local level IDPs.

9. Community Sector commitments

In the Community Sector, we are well aware that pushing back the frontiers of poverty by fostering sustainable communities and sustainable households will not be accomplished only through government and private sector investment and facilitation.

Much of the work needs to be done (is already being done) by a wide range of faith-based, civic, political and sectoral community formations. The Community Sector pledges to work with the widest range of these community-based formations to:

• Secure partnerships between community formations, the private sector, and the different spheres of government, including local public institutions and facilities (schools, hospitals and clinics, police stations, social security pay-points, etc), to implement strategic policies and programmes informed by our overall growth and development perspectives;
• Promote active citizenship (and therefore sustainable communities) by encouraging participation in a wide range of emerging democratic and participatory structures - school governing bodies, community policing forums, neighbourhood watches, commuter forums, ward councils, AIDS counseling and home-based care groups, etc.
• Encourage locally based institutions - like churches, schools, libraries, sports bodies - to open up resources and facilities to the community, for mutually benefiting developmental activities. To encourage these entities to source their requirements (eg. school uniforms, school meals, maintenance and gardening, transport) as much as possible, and where feasible, from locally based cooperatives and micro-enterprises; and
• Generally, to foster a culture of vuk' uzenzele - direct voluntary action - in all the communities of our country.