Nationalise! Expropriate! The Pillars for Economic Transformation according to the ANCYL

As the African National Congress Youth League (ANCYL) starts its 24th National Congress, the focus will be on the elections, especially since everyone in South Africa has a view on Julius  Malema. The policy debates will be reduced to the background, but potentially have a bigger impact on public policy in South Africa, than the outcome of elections. This article summarises the discussion document titled A clarion call to economic freedom fighters: Programme of action for economic freedom in our lifetime.This article seeks to understand the argument, an important first step to debating the issues at a later stage. The proposals focused on youth are contained in a separate document.The discussion document can be downloaded at the ANCYL website.

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The Little Guy and the National Planning Commission

Cover of the diagnostic report by the NPC. Will the “little guy” find the links?
A problem well-defined is a problem half solved. The expectations from the diagnostic report of the National Planning Commission (NPC) are that it would  define the problems facing our society in a way that stimulates discussion, and through a process unites us in defining the problem and the plan to resolve them. In that spirit,I am arguing that the section on enterprise development in the Diagnostic Report will require a recognition of realities of uneven market power in South Africa as a foundation to define the problem and develop solutions. At the core is that the NPC must take a stance to back the “little guy” in the economy, and all people excluded from the economy. It should do this initially through defining the problem, however it has not yet embedded in the way the NPC approaches the definition of the problems we face.
The NPC provides a useful way of describing the surface manifestations of low levels of entrepreneurial activity in South Africa. It notes in this regard that:

  • Small business contributes 40% of GDP and employs 60% of workers in South Africa
  • Notes that only 2% of adult population are involved in start-up activity
  • Highlights that South Africa has relatively low levels of entrepreneurial activity

It then summarises the policy response as follows:
Factors that hinder the development of  Small, medium and micro enterprises (SMMEs) include inappropriate regulation, lack of access to finance and external factors such as crime. Furthermore, because they have supply chains across the country, large firms are able to sell their products at prices smaller companies cannot match. A strategy to promote SMMEs cannot take hold without addressing the challenge of accessing established supply chains.
 

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Treasury launches Jobs Fund

 

The Jobs Fund - National Treasury funds, DBSA implements

Minister Pravin Gordhan has launched the Jobs Fund, first mooted in President Jacob Zuma’s State of the Nation Address. The fund  targets 150 000 jobs I three years and  has three unique characteristics:
 

  1. Co-finance projects with the potential of job creation, supporting both existing and new programmes.  The fund thus seeks to gear additional funding into the programme
  2. Grants instead of loans – Importantly, the funds provide grants for projects, signalling a shift in government to directly fund projects through grants and supporting venture capital. There will be no repayment or financial return sought, although funds that  are  not spent for the  purpose for which they were allocated,  or  are misappropriated, will be reclaimed by  the  National Treasury.
  3. Supporting existing and new programmes – The fund is designed to provide for a range of different partnerships, including for existing government programmes and new programmes.

Details on the application forms and criteria can be found at http://www.jobsfund.org.za/
The fund has a wide ambit, covering four areas:

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Book Launch – Poor economics by Abhijit Banerjee and Esther Duflo

Banner from the Poor Economics Website
 
“Revolutions need love” argued Minister Trevor Manuel in his introduction to Professor Abhijit Banerjee. Minister Manuel passionate reference to the link between love and revolution was as a reference of reverence to Albertina Sisulu – an outstanding and passionate leader of the South African revolution. In fact, the setting of Constitutional Hill – an old women’s prison – in a room decorated with powerful images of the female freedom fighters incarcerated at the jail providing a powerful backdrop to  the South Africa  launch of a book called “Poor Economics: A radical rethinking of the way to fight global poverty”.  Professor Banerjee, the speaker for the evening, is co-author with Esther Duflo of a hotly debated book. It has become a major talking point in the online channels focussed on development, especially as it challenges other mainstream attempts to make development issues real and popular.
I am hoping to have time to read and write a review of the book. The launch lecture however was exceptionally interesting, demanding and humbling. One description of the book given by Minister Manuel was that it was like learning to understand how the internal combustion engine works before learning to drive. Minister Manuel opinion was that the book told us that about how the engine of public policy worked, and through in turn the drivers of public policy became better drivers.  In a telling admission Minister Manuel indicated that there many issues that went beyond the econometric modelling that guided the frontend of public policy.  The Minister would have been more accurate to argue that the book tells policy makers not only why the engine is broken, but also questions if econometric modelling is the appropriate engine!
Banerjee highlighted four areas in development policy where slogans and ideology have driven policy choices. The book he argued was a reaction to this overly ideological context that informs anti-poverty policy. He argued that this focus on ideological solutions was a rhetorical stance, but more worryingly that public policy failures could be explained through the powerful; imposing their solutions on poor communities. The examples covered health, education, health, hunger and microcredit.
The details for each of these areas is different, but the storyline  is remarkably the same across the different areas discussed. Policy development is initiated by government officials; often on the advice of multilateral institutions; to solve a particular problem. The solution is praised as an innovative approach to the problem, but often reflects a particular stance on a problem, with a premade solution. The solution is often unlikely to work because:

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A "politically immature" note on non-racialism and inequality

 
The Ahmed Kathrada Foundation hosted a public symposium on the prospects of non-racialism in South Africa. It provided a demanding set of inputs, and left this “politically immature” writer, with the sense that an important discussion on race in South Africa is starting. Here are some initial  thoughts on an issue I need to spend more time engaging with.
 
 

Critical conversations from the Ahmed Kathrada Foundation


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The silent majority did not vote! Comparing population estimates with the voter roll

Over 15 million potentially eligible voters did not cast their vote in the recent local government elections. This analysis compares the mid-year population estimates with the voters role.
A development worker in Cape Town pointed out that there was a significant gap between the potential number of voters, and those on the voter’s role. It piqued my interest, and I asked a couple more community activists about this. They all confirmed the view that in their areas, the level of voter registration was low. Could this view from the ground be correct? The proposition is that they may exist – in the words of one of the community workers – “an excluded majority” not even on the voters roll. To explore this question, we have compared the voters roll with population estimates.
In sum, this exploration seeks to find out what proportion of the population are on the voter’s roll. In undertaking this analysis, only official data has been utilised. These are:

  • Indepedent Electoral Commission (IEC) reports on voter turnout by province were generated using the IEC’s report generator;
  • Statistics South Africa’s Mid-Year Population Estimates (2010). The cut-off point in the data is at 20, which means that potential voters between 18 and 20 are not counted in these results. Including 18-20 year olds in the analysis would potentially increase the size of the so-called “silent majority”.

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Youth unemployment as a poverty trap

This presentation provides a conceptual argument that high levels of youth unemployment are a manifestation of a deeper poverty trap in South Africa. Argues that the expansion of social security, community works and building assets are potentially viable responses that must be included in a discussion on youth unemployment. Importantly, there are young unemployed people who simply lack information, or are holding out for a better paying job. However, the majority of young unemployed South Africans have little or no prospect of finding work. Providing regular income and work to these unemployed young people requires that as a society we create mechanisms for economic inclusion.
 

 
 

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A voice for small business – Interview with Carl J Lotter

Carl J Lotter
Carl J Lotter

The potential for social media to support activism is hotly debated. Carl J Lotter, is pioneering an approach on social media platforms to provide a “voice” to small business in South Africa. I have joined the groups on Facebook and Linkedin and have found the discussions informative, and having huge potential. We asked a couple of questions to Carl, about the initiative.

How many members have signed up for the “Voice of Small Business in South Africa” across social networks?

My total contacts in Linkedin & Facebook are 3500. Total for Voice for small business 832

Congrats on the large number of people signing up on the networks. Why do you think such a large number of people have signed up?

Many share my concern that given all that we know about business from studies undertaken and experience at the cold face, government has been unable to deliver support as the voices among small business is a cacophony of many voices and government does not know how to respond.

Why have you started this initiative?

My formation has been in banking and I have seen and continue to see only lip service paid to this vital aspect of economic development even in face of all the research done around the world. One common outcome of this research has been that jobs and wealth can only be created through small business. Government holds the key and ZA government has acknowledged this in policies at the Department of Trade and Industry and in the New Growth Path. I started this initiative to bring this sector and government together just like what happened around the World Cup. It is the only way for success for SMME and for government policy to benefit the economy.

Do current structures in organised business, not already provide a voice for small business?

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Making Local Government Work for the People: South Africa Far Behind International Trendsetters

[boxleft] This article first appeared on SACSIS

 
 
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The “toilet wars” have made apparent the ridiculousness of the major political parties in South Africa. The Democratic Alliance (DA) even allowed a legal process to work its way up to the Constitutional Court to defend its decision to build unenclosed toilets. On the other hand, the African National Congress (ANC) was quick to wail “mea culpa” when it was found that one of its municipalities had also built unenclosed toilets. The difference in how both parties responded to the public outcry is important and hides a deeper truth.
 
Some politician sitting somewhere in an office, who probably never visited the site, facilitated the decision making process. In his or her insulated discussion, they would have justified the decision to build open toilets by arguing that more toilets could be built within the budget, or that an open flush toilet is more sustainable than a pit latrine in the long-term.
The alternative explanation is that local councils, even large metropolitan councils, lack the ability to carefully evaluate project plans and approve projects with an accurate understanding of the details of each project.  It leads to a situation where municipal governments are genuinely surprised to find out that projects are completed “to spec” and that the specification does not specify the building of walls around a toilet. Sadly, any student of “development” will recognise this as another tale of significant silliness by bureaucrats and politicians. It leaves us all with that incredulous feeling asking “What where they thinking?” or responding with acronyms such as “WTF!”

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Is Cape Town or Johannesburg the best metropolitan government in South Africa?

Political parties have been arguing that the city they govern is the best run in South Africa. A cold hard look at available data shows that there is not much difference between Johannesburg and Cape Town, who occupy the first or second spot in most indices. There is thus no definitive answer to the question, as to which metropolitan municipal government is the best, however voters should be circumspect in assessing the claims of political parties. The argument that Cape Town is exceptional however does not have a solid backing from the data reviewed.

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