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1
Sustainable development
THE SUSTAINABILITY OF DEVELOPMENT PROSPECTS FOR SUSTAINABLE DEVELOPMENT IN AFRICA UNLOCKING PEOPLE'S CREATIVITY ACTORS AND INTEREST IN SUSTAINABLE DEVELOPMENT 2
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The state The private sector The collective sector
CONCLUSION ENDNOTES
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Sustainable development
Sustainable development is defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs
The concept of sustainable development gained prominence with the appearance in 1987 of the report of the World Commission on Environment and Development (the Brundtland Commission). The notion was further consolidated at the UN Conference on Environment and Development, held in Rio de Janeiro in 1992, and strongly asserted at the World Summit on Sustainable Development (WSSD), held in August 2002 in Johannesburg. In furtherance of the themes that were highlighted at the Rio Conference, the Johannesburg Summit reaffirmed a global commitment to sustainable development. It reinforced the idea of collective responsibility in advancing the interdependent and mutually reinforcing pillars of sustainable development – economic development, social development and environmental protection – at local, national, regional and global levels. Also, building on other major UN conferences of the last ten years, the Johannesburg Summit provided an excellent platform for constructive engagement and partnership building, particularly on strategies to tackle poverty. An important distinguishing feature of the Summit was the multi-layered dialogue around the issues of water and sanitation, energy, health, agriculture and biodiversity as the concrete requirements for a sustainable development strategy. It was clear from the discussions, however, that while global solidarity is essential, the primary responsibility for translating the sustainable development agenda into action lies at the national and local levels. This report analyses the challenges of sustainable development in the specific context of South Africa.
THE SUSTAINABILITY OF DEVELOPMENT
The roots of the concept of sustainable development can be traced back to the writings of Mary Wollstonecraft (A Vindication of the Rights of Women) and Thomas Paine (Rights of Men), which both appeared in 1792. These writers were concerned with giving everyone power over their lives and opportunities to live according to their own values and aspirations. In modern literature, the concept emerged in the 'Limits to Growth' literature of the early 1970s, with the concern that planetary resources cannot accommodate indefinitely the high rates of economic, and particularly industrial, growth of the times. Towards the end of that decade, the International Union for the Conservation of Nature emerged as a strong advocate of sustainable development.1 However, it was the Brundtland Commission that brought sustainable development to the fore of the development literature. The Brundtland Report defined sustainable development as development that meets the needs of the present without compromising the ability of future generations to meet their own needs.2 The Report identified two issues as fundamental to sustainable development. The first was the concept of needs – in particular, the essential needs of the poor to which overriding priority should be given. The second was the idea of limitations imposed by the state of technology and social organisations on the capacity of the environment to meet present and future needs.3 In essence, therefore, two ideas are fundamental to sustainable
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development. The first is equity in both intra-generational and intergenerational terms. The second is the imperative of maintaining the integrity of a country's natural and social capital.4 Since the publication of the Brundtland report, a lively debate on aspects of sustainable development has emerged among researchers and policy makers. Beyond the initial emphasis on environmental sustainability, sustainable development is now fully accepted as multidimensional: encompassing economic, social, political, cultural and environmental dimensions. Perhaps the best example of this is Agenda 21, which was adopted at the Rio Summit. The Agenda 21 blueprint for sustainable development emphasised the social and economic dimensions of poverty, consumption patterns, population growth, health and human settlement; the need for conservation, and proper management of all natural resources. It stressed, in addition to governments, the active participation of major groups such as women, children and youth, civil society organisations and business. It also addressed the necessary means of implementation. Since the Rio Summit, a series of major UN conferences have resulted in the further elaboration of the different aspects of sustainable development.5 In particular, the (Copenhagen) World Summit for Social Development in 1995 pledged to make the conquest of poverty, the goal of full employment and the fostering of a stable, safe and just society the overriding objectives of development policy (Box 1.1, p. 4). Five years later, at the so-called Copenhagen + 5, a joint UN, World Bank, International Monetary Fund (IMF) and Organisation of Economic Co-operation and Development (OECD) report was launched. Entitled 'A Better World for All', the report outlined what it called 'Internasustainable development
tional Development Goals': seven interrelated development goals were drawn from the UN Conferences of the 1990s which, if achieved over the next fifteen years, would improve the lives of millions of people. The significance of the report arises from the fact that the donor community as a whole pledged itself to fostering sustainable growth that favours the poor, and to providing more resources for health, education, gender equality and environmentally sustainable development worldwide. In September 2000, at the 55th General Assembly of the United Nations (or the Millennium Summit), the Millennium Declaration was adopted to strengthen peace, development and human rights, and to improve the UN's ability to act on behalf of human priorities. At the 56th Session of the General Assembly, 'Follow Up to the Outcome of the Millennium Summit', in September 2001, the Millennium Development Goals (MDGs) were adopted. Thus world leaders committed to eight goals, to be attained by 2015: ● eradicating extreme poverty and hunger; ● achieving universal primary education; ● promoting gender equality and empowering women; ● reducing child mortality; ● improving maternal health; ● combating HIV/AIDS, malaria and other diseases; ● ensuring environmental sustainability, and ● building a global partnership for development. The International Conference on Financing for Development6 marked a highly significant first step in translating the MDGs into action. Stressing mutual accountability between developed and developing countries, the outcome of the
Sustainable development is now fully accepted as multidimensional: encompassing economic, social, political, cultural and environmental dimensions
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Box 1.1
Copenhagen Declaration on Social Development
and groups are included in social development, and that society acknowledges and responds to the consequences of disability by securing the legal rights of the individual and by making the physical and social environment accessible; Promote universal respect for, and observance and protection of, all human rights and fundamental freedoms for all, including the right to development; promote the effective exercise of rights and the discharge of responsibilities at all levels of society; promote equality and equity between women and men; protect the rights of children and youth; and promote the strengthening of social integration and civil society; Reaffirm the right of self-determination of all peoples, in particular of peoples under colonial or other forms of alien domination or foreign occupation, and the importance of the effective realization of this right, as enunciated, inter alia, in the Vienna Declaration and Programme of Action* adopted at the World Conference on Human Rights; Support progress and security for people and communities whereby every member of society is enabled to satisfy his or her basic human needs and to realize his or her personal dignity, safety and creativity; Recognize and support indigenous people in their pursuit of economic and social development, with full respect for their identity, traditions, forms of social organization and cultural values; Underline the importance of transparent and accountable governance and administration in all public and private national and international institutions; Recognize that empowering people, particularly women, to strengthen their own capacities is a main objective of development and its principal resource. Empowerment requires the full participation of people in the formulation, implementation and evaluation of decisions determining the functioning and well-being of our societies; Assert the universality of social development and outline a new and strengthened approach to social development, with a renewed impetus for international cooperation and partnership; Improve the possibility of older persons achieving a better life; (r) Recognize that the new information technologies and new approaches to access to and use of technologies by people living in poverty can help in fulfilling social development goals; and therefore recognize the need to facilitate access to such technologies; (s) Strengthen policies and programmes that improve, ensure and broaden the participation of women in all spheres of political, economic, social and cultural life, as equal partners, and improve their access to all resources needed for the full exercise of their fundamental rights; (t) Create the political, legal, material and social conditions that allow for the voluntary repatriation of refugees in safety and dignity to their countries of origin, and the voluntary and safe return of internally displaced persons to their places of origin and their smooth reintegration into their societies; (u) Emphasize the importance of the return of all prisoners of war, persons missing in action and hostages to their families, in accordance with international conventions, in order to reach full social development. We acknowledge that it is the primary responsibility of States to attain these goals. We also acknowledge that these goals cannot be achieved by States alone. The international community, the United Nations, the multilateral financial institutions, all regional organizations and local authorities, and all actors of civil society need to positively contribute their own share of efforts and resources in order to reduce inequalities among people and narrow the gap between developed and developing countries in a global effort to reduce social tensions, and to create greater social and economic stability and security. Radical political, social and economic changes in the countries with economies in transition have been accompanied by a deterioration in their economic and social situation. We invite all people to express their personal commitment to enhancing the human condition through concrete actions in their own fields of activities and through assuming specific civic responsibilities.' Notes See Report of the World Conference on Human Rights, Vienna, 14–25 June 1993 (A/CONF.157/24 (Part I)).
Principles and goals 'We heads of State and Government are committed to a political, economic, ethical and spiritual vision for social development that is based on human dignity, human rights, equality, respect, peace, democracy, mutual responsibility and cooperation, and full respect for the various religious and ethical values and cultural backgrounds of people. Accordingly, we will give the highest priority in national, regional and international policies and actions to the promotion of social progress, justice and the betterment of the human condition, based on full participation by all. To this end, we will create a framework for action to: (a) Place people at the centre of development and direct our economies to meet human needs more effectively; (b) Fulfil our responsibility for present and future generations by ensuring equity among generations and protecting the integrity and sustainable use of our environment; (c) Recognize that, while social development is a national responsibility, it cannot be successfully achieved without the collective commitment and efforts of the international community; (d) Integrate economic, cultural and social policies so that they become mutually supportive, and acknowledge the interdependence of public and private spheres of activity; (e) Recognize that the achievement of sustained social development requires sound, broadly based economic policies; (f) Promote democracy, human dignity, social justice and solidarity at the national, regional and international levels; ensure tolerance, non-violence, pluralism and non-discrimination, with full respect for diversity within and among societies; (g) Promote the equitable distribution of income and greater access to resources through equity and equality of opportunity for all; (h) Recognize the family as the basic unit of society, and acknowledge that it plays a key role in social development and as such should be strengthened, with attention to the rights, capabilities and responsibilities of its members. In different cultural, political and social systems various forms of family exist. It is entitled to receive comprehensive protection and support; (i) Ensure that disadvantaged and vulnerable persons
(j)
(k)
(l)
(m)
(n)
(o)
(p)
(q)
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conference was a strong expression of political will to mobilise and deploy financial resources for development and poverty eradication. According to the socalled Monterrey Consensus, 'our goal is to eradicate poverty, achieve sustained economic growth and promote sustainable development as we advance to a fully inclusive and equitable global economic system'.7 Significantly, too, the Consensus reaffirmed each country's primary responsibility for its own social and economic development, even as it acknowledged the need for an enabling international economic environment. The Implementation Plan adopted at the Johannesburg Summit also stressed the primary responsibility of each country for its own sustainable development and the importance of national policies and strategies. Similarly, it recognised the need for partnership between governments of the North and South and between governments and major groups within each country. It seems clear, therefore, that there is a global consensus, not only on the substance of sustainable development, but also on the mechanisms and processes for its pursuit. In particular, sustainable development is the outcome of the complex interaction between economic growth, interpersonal and intergenerational equity, social and political capabilities and the utilisation of environmental resources.
PROSPECTS FOR SUSTAINABLE DEVELOPMENT IN AFRICA
The milieu for sustainable development today is quintessentially that of globalisation. It has almost become a cliché to say that globalisation offers opportunities and challenges. Even so, as at Monterrey, it is recognised that developing countries and countries with economies in transition face special difficulties in responding to these challenges and opportunities.
sustainable development
This is the context in which the New Partnership for Africa's Development (NEPAD) was launched in 2002. NEPAD is a self-consciously African response to global dynamics and an acceptance of the global consensus on development. It is also a strong assertion of ownership of the African development agenda. The NEPAD document describes itself as a pledge by African leaders to eradicate poverty and to place the continent on a path of sustainable development, anchored in Africa's determination to extricate itself from underdevelopment and global marginalisation. Having spent the greater part of the last forty years negotiating the continent's development with external partners, African leaders, through NEPAD, appear to have finally recognised that primary responsibility for the continent's destiny lies with the people of Africa.8 It is a responsibility that needs to be followed through by African leaders committing effectively to responsible governance, guaranteeing basic freedoms and nurturing their citizens' creativity. In the final analysis, the sustainable development of any country can only be as effective as its people want it to be. It is fundamentally an endogenous process, generated and sustained by the energy of society and its ability to learn creatively from its own and others' history. An important lesson from history – demonstrated, for instance, by the development experience of Japan, South Korea and Mauritius – is that successful transformation has almost always been the product of a 'nationalist' project.9 It is the responsibility of a people to articulate the nature of their development problem, define their vision and seek solutions. This cannot be ceded to any external agent, however sympathetic. In the case of Africa, the great, even excessive, external interest in its development cannot always be assumed to be wholly advantageous. Indeed, it has
The Johannesburg Summit stressed the primary responsibility of each country for its own sustainable development and the importance of national policies and strategies
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often undermined the self-confidence of the continent, substituting guilt for being poor for the determination to improve its existential conditions. The real dynamic of development lies in the empowerment that comes from taking ownership.
UNLOCKING PEOPLE'S CREATIVITY
that recognises the need to tap local resources, generate initiatives and involve local people as the principal drivers of the development train and its primary beneficiaries.
ACTORS AND INTERESTS IN SUSTAINABLE DEVELOPMENT
By unlocking people's creativity, society is enabled to achieve sustainable development
Sustainable development indicates the huge pay-off from aligning economic growth and environmental conservation (broadly defined). As desiderata of longterm human progress, sustainable development also carries the imperative of nurturing people's creativity. In this context, and from a practitioner's perspective, the notion of sustainable development goes far beyond the environment/growth nexus. Sustainability must extend to political and social structures and particularly to the notion of social capital. It requires time and a long-term vision to build/restock social capital. However, by building mechanisms that strengthen the social network and the capacity of associations – and thus give greater voice to the largest possible segment of society – trust, values and ownership are strengthened. If such integrative mechanisms are harnessed to enhance human capabilities through health, knowledge, self-respect and the ability to participate actively in community and national life, then people's creativity can be deemed to have been unlocked. And by unlocking people's creativity, society is enabled to achieve sustainable development. Group solidarity, always an important characteristic of the African continent's social dynamics, represents an important pillar on which future development can be built.10 In many African communities, collective decisions are cherished and valued because they promote popular participation, consensus and social camaraderie. This enables self-empowerment
In the search for the most effective processes and the appropriate loci of action for moving any given society towards sustainable development, it is essential to look at the interests and relations between the different stakeholders, particularly the state, the private sector and civil society. The interests of these three actors vary from such concerns as longevity of tenure and national economic viability in the case of the state, through profit maximisation and secular growth for the private sector. For the collective sector, this may be seen in terms of a broad range of socio-economic and political concerns. Being able to harmonise these diverse interests in the context of a long-term future translates into a vision for the society, which at the same time constitutes the definition of sustainable development in a particular national context.11
THE STATE
Although the role of the state in the development process has varied over time and across countries, its centrality has been a constant factor in the history of successful development. However, the ongoing globalisation process is altering the nature of international relations and the authority of the state vis-à-vis the market and civil society. In particular, as globalisation circumscribes the autonomy and discretion of the state, it shapes the prospects for the practical realisation of sustainable development by shifting the substance and terms of debate, as well as
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the modalities of collaboration, between and within countries. Nonetheless, there is a measure of consensus that the effectiveness of the state is fundamental to the development process. The World Bank's World Development Report lists the following five fundamental tasks of the state (1997): ● establishing a foundation of law; ● maintaining a non-distortionary policy environment, including macroeconomic stability; ● investing in basic social services and infrastructure; ● protecting the vulnerable, and ● protecting the environment. Unfortunately, the lessons of experience do not provide an easy answer as to whether these fundamental tasks constitute an optimal role for the state. In particular, the notion of 'non-distortionary' policy is subject to some debate. It is clear, however, that a long-term strategic vision of the development process must be formulated, with the state assuming leadership, eliciting commitment and maintaining widespread enthusiasm (or at least popular support) for this vision. Within this vision, it becomes possible for a feasible and satisfactory, if not optimal, strategy of intervention to be designed.
THE PRIVATE SECTOR
tensions often arise between their worldview and the perspective of the state. The pursuit of sustainable development requires that mechanisms be put in place to reconcile divergent interests and perspectives.
THE COLLECTIVE SECTOR
The private sector covers a range of players from the transnational corporation (or branch thereof ) to the small and micro enterprise. These actors' interests are similar in their concern for profit and their need for a predictable political and regulatory framework. However, their interests may diverge with respect to their need for state support or the type of incentives they require. Furthermore, in spite of the desire of most privatesector players to be good citizens,
sustainable development
While the state may have a comparative advantage on macro issues to lead the process of developing a national agenda, it is not always the most effective site from which to identify, analyse or seek solutions to specific problems. In addition to working closely with the private sector, the state must ensure active collaboration with civil society. Community organisations, grassroots groups and nongovernmental organisations, being closer to the level of a local problem, are often much better placed to seek and implement solutions and monitor policies and programmes. CSOs (civil society organisations) and community groups have become key partners in the development process in Africa today. They provide alternative and complementary channels for the mobilisation of human and financial resources for the development process. They can also, with great effectiveness, substitute for the public sector by implementing programmes and actions that, although normally the responsibility of the state, it is unable to carry out. In short, they add a critical dimension to sustainable development by expanding the range of individual choices and human freedoms.
CONCLUSION
There is a measure of consensus that the effectiveness of the state is fundamental to the development process
Since its transition to democracy ten years ago, South Africa has recorded impressive achievements in the social, political and economic spheres. Indeed the basic policy framework instituted at the time, the
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Reconstruction and Development Programme, demonstrates that the country was already thinking along the lines of sustainable human development (Box 1.2). The achievements of the first five years and some continuing challenges were analysed in the 2000 National Human Development Report. That report explored the question of transformation and noted some dramatic changes
for the better, particularly in the political arena. However, it also noted some recalcitrant challenges in poverty reduction, employment and access to services. In the aftermath of the World Summit on Sustainable Development, these may be described as South Africa's sustainable development challenges. They constitute the particular focus of this report.
Box 1.2
Reconstruction and Development Programme: a sustainable development vision for South Africa
In its dying years, apartheid unleashed a vicious wave of violence. Thousands and thousands of people have been brutally killed, maimed, and forced from their homes. Security forces have all too often failed to act to protect people, and have frequently been accused of being implicated in, and even fomenting, this violence. We are close to creating a culture of violence in which no person can feel any sense of security in their person and property. The spectre of poverty and/or violence haunts millions of our people. Millions of ordinary South Africans struggled against this system over decades, to improve their lives, to restore peace, and to bring about a more just society. In their homes, in their places of work, in townships, in classrooms, in clinics and hospitals, on the land, in cultural expression, the people of our country, black, white, women, men, old and young devoted their lives to the cause of a more humane South Africa. This struggle against apartheid was fought by individuals, by political organisations and by a mass democratic movement. It is this collective heritage of struggle, these common yearnings, which are our greatest strength, and the RDP builds on it. At the same time the challenges facing South Africa are enormous. Only a comprehensive approach to harnessing the resources of our country can reverse the crisis created by apartheid. Only an all-round effort to harness the life experience, skills, energies and aspirations of the people can lay the basis for a new South Africa. The first decisive step in this direction will be the forthcoming one-person, one-vote elections. A victory for democratic forces in these elections will lay the basis for effective reconstruction and development, and the restoration of peace. But an election victory is only a first step. No political democracy can survive and flourish if the mass of our people remain in poverty, without land, without tangible prospects for a better life. Attacking poverty and deprivation must therefore be the first priority of a democratic government. How can we do this successfully It is no use merely making a long list of promises that pretend to answer every need expressed. Making promises is easy – especially during election campaigns – but carrying them out as a government is very much more difficult. A programme is required that is achievable, sustainable, and meets the objectives of freedom and an improved standard of living and quality of life for all South Africans within a peaceful and stable society. The RDP is designed to be such a programme. To reach the RDP's objectives we face many obstacles and we are setting ourselves a great challenge. Each and every expectation will not be realised and each and every need will not be met immediately. Hard choices will have to be made. The RDP provides the framework within which those choices can be made. Even more importantly, it will involve both government and the people in further identifying needs and the obstacles to satisfying those needs, and will involve both in jointly implementing realistic strategies to overcome these obstacles. The RDP is an expression of confidence in the wisdom, organisational abilities and determination of our people.'
'Our history has been a bitter one dominated by colonialism, racism, apartheid, sexism and repressive labour policies. The result is that poverty and degradation exist side by side with modern cities and a developed mining, industrial and commercial infrastructure. Our income distribution is racially distorted and ranks as one of the most unequal in the world – lavish wealth and abject poverty characterise our society. The economy was built on systematically enforced racial division in every sphere of our society. Rural areas have been divided into underdeveloped bantustans and well-developed, white-owned commercial farming areas. Towns and cities have been divided into townships without basic infrastructure for blacks and well-resourced suburbs for whites. Segregation in education, health, welfare, transport and employment left deep scars of inequality and economic inefficiency. In commerce and industry, very large conglomerates dominated by whites control large parts of the economy. Cheap labour policies and employment segregation concentrated skills in white hands. Our workers are poorly equipped for the rapid changes taking place in the world economy. Small and medium-sized enterprises are underdeveloped, while highly protected industries underinvested in research, development and training. The result is that in every sphere of our society – economic, social, political, moral, cultural, environmental – South Africans are confronted by serious problems. There is not a single sector of South African society, nor a person living in South Africa, untouched by the ravages of apartheid. Whole regions of our country are now suffering as a direct result of the apartheid policies and their collapse.
Source: ANC (1994), Reconstruction and Development Progreamme, pp. 2–4
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Endnotes
1 2 3 4 5
6 7 8
International Union for the Conservation of Nature (1980) World Conference on Environment and Development (1987) World Conference on Environment and Development (1987:43) Ohiorhenuan et al. (1998) The major UN conferences during the nineties include: the UN Conference on Environment and Development in Rio de Janeiro ( June 1992); the World Conference on Human Rights (Vienna, June 1993); the International Conference on Population and Development (Cairo, September 1994); the World Summit for Social Development (Copenhagen, March 1995); the fourth World Conference on Women (Beijing, September 1995); the Second UN Conference on Human Settlements (Istanbul, June 1996); the UN GA Special Session on Small Island Developing States (New York, September 1999); the UN GA Special Session, 'World Summit for Sustainable Development and Beyond: Achieving Social Development for All in a Globalised World' (Geneva, June 2000); the Millennium Summit (New York, September 2000); the third UN Conference on the Least Developed Countries (Brussels, May 2001); the World Conference against Racism, Racial Discrimination, Xenophobia and Related Intolerance (Durban, August-September 2001); the International Conference on Financing for Development (Monterrey, March 2002), and the World Summit on Sustainable Development ( Johannesburg, August-September 2002). Monterrey, Mexico, March 2002 Monterrey Consensus (2002), paragraph 1. It should be noted, however, that NEPAD runs the risk of being undermined by the message in the document (paragraph 144) that 'the bulk of the needed resources will have to be obtained from outside the continent'. This expectation is
9 10
11
not supported by history: external resources can only play a supplementary role. See Ohiorhenuan (1990) and Ohiorhenuan et al. (1998) A promising example of community organisation capacity building is the Ubudehe from Rwanda. Prior to colonisation, Rwanda had a highly organised traditional system of community-based development and self-reliance. This centred on collective action, known locally as Ubudehe. This practice was quite effective in mobilising communities and served to build social capital. As part of the poverty reduction strategy process, this traditional approach was revived as a key aspect of the decentralisation programme and the national unity and reconciliation process. The application of Ubedehe is based on the principle that the poor and the communities in which they live understand the problems they face and know their priorities, but do not have sufficient information and resources to design the best solutions and may not be aware of all the options available. A pilot was conducted in the province of Butare. It involved the direct funding of projects identified by communities or households. A European Commission pledge to support each community project with a maximum of $1 000 served as a guarantee of external financing to meet some of the expectations of the poor in this province. The pilot was successful and has now been taken up by the government, which intends to adopt this programme countrywide. This is a promising example in that it strengthens already-existing structures and capacities. The risk, however, lies in the way the system was revived. Tied, as it was, to project grants, it may generate a culture of entitlements rather than genuine self-help. Ohiorhenuan et al (1998)
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3
Policy making and implementation
IMPLEMENTATION GAP Human resource constraints 56 57
Macroeconomic policy and the budget Coordination between policy making and the budget
DEVELOPMENT PATH, POLICY AND PERFORMANCE
57 58
59
Pre-1994 development consensus Post-1994 development path and policies
CONCLUSION ENDNOTES
59 62
64 66
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Policy making and implementation
Despite significant achievements in policy development, growing unemployment, income poverty and inequality and shortcomings in service delivery have fuelled criticisms about the effectiveness of government policies to transform the objective conditions of the poor
The attainment of sustainable development depends to a significant degree on the extent to which a country's development strategy and related policy-making process are aligned to serve such a vision. In order to complement the overview of socio-economic development in South Africa (as summarised in Chapter 2), this chapter examines the evolution of the country's development strategy, policy making and implementation. The period since 1994 has been characterised by wide-ranging and fundamental policy and legislative reforms. During the first five years, there were remarkable achievements in a range of policy developments. Literally hundreds of policies and laws were developed, many imbued with the ethos of economic and social development and containing specific provisions to promote these goals.1 The policies developed during this period relied heavily on the major changes taking place in respect of institutional mechanisms for policy development, integration and coordination. The 1994–1999 period was characterised by the establishment of a number of largely political structures to enhance both horizontal (between national departments) and vertical (between the three spheres) coordination. A salutary lesson of the first democratic government was that structures, while important, do not guarantee successful integration. Good integration requires well-functioning processes; and the effectiveness of processes depends less on structures than on the commitment of decision-makers and managers to the goals of coordination.2 After the 1999 election, the newly
elected President quickly made it clear that he wanted his administration to function as an efficient entity in order to meet the major challenge of delivering services to the people. To this end, it was essential that government operate in an effective way across both departments and spheres. The institutional structures established during the first five years were reviewed by the Mbeki government and modified in the light of their effectiveness or lack thereof. The development of the necessary coordinating structures in this relatively short period is summarised in Box 3.1 (p. 59) and represents an important achievement of the current government. Yet, despite significant achievements in policy development, growing unemployment, income poverty and inequality and shortcomings in service delivery have fuelled criticisms about the effectiveness of government policies to transform the objective conditions of the poor. The success of the new reforms depends both on the substance of the policies and the ability of the government to implement them efficiently. On the one hand, a significant gap between the adopted policies and their successful implementation can potentially explain some of the problems experienced with the delivery of the government's main transformation objectives.3 On the other, some of the adopted policies may be responsible for the persistence of some undesirable outcomes during the past nine years, as highlighted in Chapter 2.4
IMPLEMENTATION GAP
It is widely known – and indeed acknowledged by the government – that there is
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a major gap between policy and its implementation: in respect both of broad policy intent and the implementation of legislation.5 Given the volume of official policy documents and legislation since 1994, there is clearly a case to be made for reviewing the challenges to implementation. It is, at the same time, necessary in some cases to distinguish between policy inconsistencies and contradictions and issues that relate to poor implementation.6 It is possible to identify a number of factors that have contributed to the creation of the 'implementation gap' and to acknowledge that it is likely to be the consequence of a number of factors rather than any single one. Three such factors can be identified:7 ● human resource constraints within the decentralised political framework; ● macroeconomic policy and the budget, and ● coordination between policy making and the budget.
HUMAN RESOURCE CONSTRAINTS
democracy.10 Almost all capacity-building and human resource planning during this period was directed at the two 'upper' spheres: namely the national and provincial governments. This explains, to a substantial degree, the inability of the local government sphere to deliver basic services to the poor. Even at the provincial government level, human resource development proceeded in a rather laissez faire manner, so that poorer provinces, like the Eastern Cape and the then Northern Province,11 were unable to develop and implement appropriate strategies to enhance their stock of middle-management staff. Moreover, the government's own training institute, the South African Management Development Institute (SAMDI), has not yet come to grips with the critical supply and demand questions relating to governance skills in all three spheres.12
MACROECONOMIC POLICY AND THE BUDGET
In 1994, South Africa moved in one dramatic step from the relatively centralised political framework of the apartheid era to a decentralised framework made up of the national government, nine provinces with their own governments and legislatures and over 800 municipalities (now rationalised at around 280).8 Given the considerable expenditure responsibilities and revenue assignments of all three spheres, a huge skills base is required if policy implementation is to occur effectively within such a framework.9 It is clear that the absence of highlevel policy skills and middle-level governance and management skills has been a key factor impeding implementation. There were no concerted efforts to build the human resource base at local government level during the first five years of
policy making and implementation
The Government of National Unity (GNU) inherited an economy characterised by sluggish growth, high unemployment, poverty and inequality. The government's new macroeconomic policy, Growth, Employment, and Redistribution (GEAR), was proclaimed in June 1996. Its aims were to stimulate economic growth and job creation, reduce inflation and the budget deficit, accelerate domestic savings and increase the flow of foreign direct investment. The implications of GEAR for policy implementation and service delivery were twofold. First, attempts to reduce the budget deficit from about 5 per cent to less than 3 per cent within a five-year period entailed severe restrictions on expenditure, the impact of which was felt most forcefully in government's capital investment, and thus most noticeably in social and economic infrastructure development.13
It is clear that the absence of high-level policy skills and middle-level governance and management skills has been a key factor impeding implementation
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It is important to avoid policy making through the budget
Second, the introduction of the Medium Term Expenditure Framework (MTEF) saw the emphasis in the budgeting process shift almost exclusively to restrictive expenditure and away from the encouragement of effective expenditure. The aim of government was to make the public management system more transparent, accountable and results-oriented. The great advantage of an MTEF is that it can be used both as an expenditure management tool (to promote fiscal discipline) and as a planning tool (to ensure funding for government priorities). The evidence until very recently suggests that the government has achieved considerable success with the first of these two goals. However, spending agencies (national and provincial governments) have had to ensure that they remain within their fiscal envelopes. According to Pillay (2002), this has led to the development of a 'non-spending' mindset and under-spent funds, negatively impacting on service delivery across the country.
COORDINATION BETWEEN POLICY MAKING AND THE BUDGET
There is growing evidence from developing and industrialised countries that an important precondition for effective coordination is for governments to plan for long-term policy objectives. There are several reasons why a strategic policy framework is necessary. First, by establishing a comprehensive set of goals and priorities (and ensuring that policy proposals fall within these parameters), decision makers are able to pursue their common agenda more coherently. Second, the centre can use the strategic framework as a tool to orient policy development in line ministries. This is facilitated if the government's agenda has been mapped out collectively: that is, with the involvement of all the Ministers who will be responsible for implementation
through sectoral policies. A collective priority-setting exercise provides the head of government with an opportunity to reinforce the cohesiveness of Cabinet. The centre can support that exercise by leading a planning process designed to coordinate ministerial priorities, reconcile any conflicts and seek a balance that will merge sectoral priorities and the government's main policy goals into a coherent programme for discussion by Cabinet. The budgetary process is a powerful coordination tool in all countries. It affects sectoral activities, provides an annual opportunity to set political and strategic directions for the future, and plays a critical role in the definition of the government's policy priorities. The budget is a statement, however implicit, of the government's sectoral policy priorities, in that it defines relative levels of expenditure for different programmes and activities. However, it is important to avoid policy making through the budget. Expenditure control considerations that rely too heavily on budget making carry the serious risk of allowing the budgetary framework to dominate other policy frameworks. Traditional tensions between the Ministry of Finance and line ministries underscore the need for mechanisms that systematically link the policy-making process to the budgetary process. There should be mechanisms in place to enable the centre to integrate expenditure control objectives into the government's overall programme. A number of institutional mechanisms and processes have been developed in all three spheres of South African government in order to enhance policy integration and cohesion. At the national level, these include the new Cabinet Committees, the Director-Generals' clusters and Forum and, in the Presidency, the Cabinet Office and the Policy Coordination Services Unit (Box 3.1). It
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is still too early to draw clear conclusions as to whether these institutions, particularly the structures in the Presidency, are actually playing the roles for which they were designed.
DEVELOPMENT PATH, POLICY AND PERFORMANCE
Box 3.1
Integrated national planning cycle
Cabinet lekgotla to identify overarching strategic priorities and review progress in past year (January) Departmental business plans, MTEF and strategic plan (February – June)
Departmental annual progress review report to President's office
Policies need wide national support if they are to address the developmental needs of the country successfully. This support must come, not just from the economically powerful segment of the population and its advocacy organisations (political organisations, the media and so on) but, more importantly, from the historically deprived, excluded or marginalised sections of the population and their social and political organisations. Such broad support is needed both to maintain the political stability of the socio-economic regime, and to ensure that policy-making processes lead to the enhancement of people's quality of life, especially through unlocking the creativity of participants in development. In this context, no matter how 'efficient' a process is and/or theoretically sound a particular course of action may seem, it is likely to fall short in human development terms if it is not widely supported by the country's majority poor and their organisations. In South Africa, there has been a significant increase in the discord on policy matters amongst the Alliance14 partners and between government and other civil society organisations (e.g. churches, NGOs) during the past few years. Issues of contention include the macroeconomic policy framework, industrial policy, privatisation, trade policy and other matters. The core issue is the dynamic relationship between the orientation of government policies in these areas and their actual and expected socio-economic outcomes. Given the importance of a broad fundamental consensus on the 'how' of South
policy making and implementation
DG cluster priorities identified from departmental plans (November – December)
Annual planning cycle for government and Medium Term Strategic Framework cycle (three years)
DG clusters finalise programme of work and priorities for clusters for approval by Cabinet (February – June )
Implementation, data collected and measurement of impact (July – December)
Source: Pillay (2002)
Mid-year Cabinet lekgotla to review progress (July) All DG clusters to report on progress with priorities and action plans
Implementation (service delivery) of programmes and strategies (February – June)
Africa's socio-economic transformation, a brief review of the early 1990s transformation debate may be useful. It is generally agreed that the root of the current disagreements are located in that debate.15
PRE-1994 DEVELOPMENT CONSENSUS
With the release of Nelson Mandela in 1990, discussions on South Africa's political transition and socio-economic transformation after the expected demise of the apartheid regime went into high gear. From then until the election in April 1994, two distinct viewpoints about the post-apartheid development path received prominence. The Alliance articulated its consensus on the South African development path in the Reconstruction and Development Programme (RDP). The representatives of organised business, who sat mainly outside the ANC-led Alliance, also provided a common strategy for the postapartheid era. Anti-apartheid alliance's consensus The RDP was the result of great efforts by organised anti-apartheid forces to
There has been a significant increase in the discord on policy matters amongst the Alliance partners and between government and other civil society organisations
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The RDP's development strategy did not coincide entirely with the largely whitedominated business sector's vision for the post-apartheid era
reach a unified strategy for the postapartheid transformation prior to the 1994 election. In the preface to the final pre-election document, ANC President Nelson Mandela emphasised that the RDP was the result of many months of consultation by the ANC and its Alliance partners and with other mass organisations in the wider civil society.16 In addition, he valued the RDP as a vital step in the process of developing a detailed policy and legislative programme for implementation by the incoming government. The RDP articulates the vision and development path for South Africa's transformation in terms of six basic principles, which represent its political and economic philosophy. These are: An integrated and sustainable programme, 'to harness all our resources in a coherent and purposeful effort that can be sustained into the future'.17 This programme was expected to centre on: A people driven process focusing on 'our people's most immediate needs, and it relies, in turn, on their energies to drive the process of meeting these needs'.18 Peace and security for all, with security forces that 'reflect the national and gender character of our country. Such forces must be non-partisan, professional, and uphold the Constitution and respect human rights. The judicial system must reflect society's racial and gender composition, and provide fairness and equality for all before the law'.19 Nation building: 'We must not perpetuate the separation of our society into a "first world" and a "third world" – another disguised way of preserving apartheid. We must not confine growth strategies to the former, while doing patchwork and piecemeal development in the latter, waiting for trickle-down development.'20 Link reconstruction and development: 'If growth is defined as an increase in output, then it is of course a basic goal. However, where that growth occurs, how
sustainable it is, how it is distributed, the degree to which it contributes to building long term productive capacity and human resource development, and what impact it has on the environment, are the crucial questions when considering reconstruction and development. The RDP integrates growth, development, reconstruction, and redistribution into a unified programme. The key to this link is an infrastructural programme that will provide access to modern and effective services like electricity, water, telecommunications, transport, health, education and training for all our people.'21 Democratisation of South Africa: 'The RDP requires fundamental changes in the way that policy is made and programmes are implemented. Above all, the people affected must participate in decision-making. Democratisation must begin to transform both the state and civil society. Democracy is not confined to periodic elections. It is, rather, an active process enabling everyone to contribute to reconstruction and development.'22 Big-business consensus The RDP's development strategy did not coincide entirely with the largely whitedominated business sector's vision for the post-apartheid era. The post-apartheid vision of this powerful and organised force was articulated directly through its structures (the South African Chamber of Commerce, Chamber of Mines, Freedom Foundation, South Africa Foundation, etc.) and through political parties such as the National Party (NP) and the Democratic Party (DP). During the late 1980s and early 1990s, significant resources were ploughed into influencing the economic policy of the potential future government.23 Business's vision of the country's future and its development path was
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articulated in various documents and public statements between 1990 and 1994. Its main tenets were: Preservation of private property rights: Amid calls by sections of the Mass Democratic Movement for nationalisation and other redistribution measures, it was almost natural for business to place emphasis on the preservation of property rights.24 A number of business organisations joined the debate, putting forward strong arguments against nationalisation. These included the National African Federated Chamber of Commerce (NAFCOC) and the Foundation for African Business and Consumer Services (FABCOS).25, 26 The DP also released a policy document in 1992, entitled 'A Social Market Economy: Manifesto and Economic Proposals'. In the document, the DP committed itself to defending 'the right to own, acquire, and dispose of property'. The adoption of 'market-friendly' policies, to be reflected particularly in the limited role of the state: Nattrass (1992) has argued that business modified its 'usual evangelistic free market rhetoric' a great deal during the economic policy debates of the early 1990s. However, SACOB's Economic Options for South Africa, the DP and NP's policy proposals and numerous statements from other representatives of business continued to place the customary emphasis on 'free enterprise' and the 'free market' economy.27 SACOB's proposed reform of the economy envisaged a reduction in the role of the state through privatisation and deregulation. It also called for a reprioritisation of public sector expenditure programmes with a view to accommodating the 'new' South Africa. The DP policy proposals also included 'restricting the role of the state'. It argued that the civil service should be 'lean, economical and effective'.28
policy making and implementation
Promoting redistribution through growth: SACOB's Economic Options document warned that 'attempts to redistribute income and wealth would not reduce poverty significantly but would rather have a negative effect on the growth of the formal sector'. Suggestions for future 'wealth' taxes were strongly criticised.29 The Sanlam-sponsored Platform for Investment, published in 1993, was extremely critical of 'highly disruptive redistributionist strategies'. The Nedcor/Old Mutual Professional Economist Panel published a document in 1993, which opposed additional taxation or increased government expenditure.30 Lower taxation was advocated in many business inputs and, in late 1993, the DP went as far as to call for a middleincome tax cut in order to develop 'latent entrepreneurial potential'. Integration into the world economy: With the lifting of sanctions and prospects of South Africa normalising its relationship with the rest of the world, most representatives of business welcomed the new opportunities and challenges, although a few were cautious about opening up to international competition.31 In 1991, the NP government was being advised to adopt more flexible 'protection' measures to accommodate the General Agreement on Tariffs and Trade (GATT)32, and sections of business were calling upon government to create an environment conducive to investment in export-oriented capital projects.33 Trade liberalisation became a serious option only when sections of business began to recognise that the development prospects of industry behind high tariff walls were limited.34 Labour relations: Business representatives and spokespersons have generally emphasised the importance of a skilled workforce and the need to increase the level of skills and education among workers.35 The NP committed itself to
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The end of apartheid saw the emergence of two broad visions for the country
The Alliance has continued to refer to the RDP as the embodiment of its vision and development path for South Africa
protecting workers' and employers' rights, whilst the DP went further to espouse the need for the adoption of a model of industrial democracy wherein workers would have some share in the ownership of the means of production. The DP opposed the idea of a national minimum wage, but promoted the goals of full employment and collective bargaining at regional and industry level. Thus the end of apartheid saw the emergence of two broad visions for the country. One vision was shared by the majority of the organised anti-apartheid movements and, although powerful in terms of broad social and political acceptability, was relatively weak in terms of support from economically powerful business forces. The second vision belonged to the organised business sector and was shared by the weakened apartheid-era political parties. This vision clearly had a smaller appeal amongst the dominant social and political forces of the day, but stemmed from the strong, concentrated and organised economic forces centred in the white community, and was supported by international allies in governments, institutions and business. It also received some support from a small faction of Black business within the ANC.
POST-1994 DEVELOPMENT PATH AND POLICIES
Historically, the bond between the ANC, the trade union movement and the South African Communist Party (SACP) was expressed by a unity of purpose: namely 'the revolutionary mission of liberating black people in general and Africans in particular'.36 More substantively, there was a commitment from all partners of the Alliance, regardless of their differences, to the strategic view that the 'national democratic revolution' would fundamentally transform South Africa
into a non-racial, democratic, united and non-sexist society, as contained in the call for 'All Power to the People' and the commitment to meeting the aspirations of, especially, the poorest section of the population. This has remained the most fundamental binding principle of the Alliance.37 The Alliance's support for the RDP expressed a further commitment by all partners to the post-apartheid strategic development path. This was characterised by at least three inter-related features, namely: (a) growth through redistribution; (b) a mixed economy with a state actively committed to development, emphasising poverty eradication and service delivery, and (c) a peopledriven approach to policy making. Diverse mass-based political organisations were signatories to the RDP document, including the ANC, the Congress of South African Trade Unions (COSATU), the SACP, the South African National Civics Organisation (SANCO) and the National Education Coordinating Committee (NECC). The RDP consensus provided the ANC-led government with the opportunity to enjoy widespread support for its postelection policies, especially amongst the African population, the main constituency of these organisations. During the past nine years, the Alliance has continued to refer to the RDP as the embodiment of its vision and development path for South Africa.38 Yet, despite continued widespread support for the RDP, the government's policy orientation and policy-making process have resulted in significant levels of dissatisfaction and policy contestation within the Alliance and other civil society organisations (e.g. churches, NGOs) during this period. This is despite the fact that, in areas such as the Constitution, labour legislation and certain areas of social policy, there have been significant
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positive changes in policies, with members of the Alliance expressing satisfaction with the process and content of the changes introduced.39 In the area of economic policy, however, government's current policy framework remains the area of greatest contestation. From early in the term of the first democratic government, concerns were raised within the Alliance about the direction economic policymaking was taking. An important sign of the emerging differences within the Alliance with regard to new government's policy framework was the ANC's unenthusiastic reception of recommendations made by the Macroeconomic Research Group (MERG) in its report to the members of the democratic movement of South Africa in late 1993.40 MERG, which was established with high-level support from the ANC and shared the vision and basic principles of the RDP, produced an economic policy framework to address the inherited problems of economic stagnation, poverty, unemployment and poor access to services. Its detailed policy proposals amounted to 'a strategy in which the state would provide leadership and co-ordination for widely-based economic development and intervene directly in key areas.'41 The relinquishing of support for MERG paved the way for the production of the RDP White Paper which, together with the tabling of a number of policy proposals during the first half of 1994, led COSATU and the SACP to criticise the government implicitly for beginning to embrace neo-liberal economic policy framework and policies. The criticisms focused particularly on the RDP White Paper's downgrading of the role of government to mere management of transformation, and subsequent policy proposals regarding the privatisation of state assets and trade and financial liberalisation.42
policy making and implementation
On the other hand, the business sector as a whole appeared pleased with the general trends expressed in the RDP White Paper.43, 44 After the publication of the RDP White Paper, the government released the Growth, Employment, and Redistribution (GEAR) strategy document in June 1996. GEAR was presented to Parliament as a non-negotiable economic policy framework for the period 1996–2000. Its main pillars were fiscal contraction characterised by major cuts in the government deficit–GDP ratio; accelerated trade liberalisation, tight monetary policy; privatisation, and deregulation of financial markets. The proponents of GEAR argued that the economic benefits of implementing its measures would be felt during 1996–2001. They predicted a gradual but significant increase in the growth rate of the economy, the number of formal manufacturing jobs, the net inflow of foreign investment, exports and real private and public investments.45 Earlier in 1996, the organised business sector and COSATU also published their respective economic policy packages.46 By all accounts, the three documents revealed the closing of the gap between government and business's policy proposals on the one hand, and the rising policy differences between the ANC and COSATU on the other. The main differences continued to focus on: (a) understanding the working of a capitalist economy (e.g. efficiency through regulated or unregulated markets); (b) sources of economic growth and how to induce growth; (c) the role of government in the economy; (d) the labour market structure most suitable for the economic growth and development of South Africa, and (e) the role of foreign trade and foreign investment in achieving sustainable growth (Box 3.2, p. 64). Since the adoption of GEAR as its main economic policy framework, the
GEAR's main pillars were fiscal contraction, characterised by major cuts in the government deficit – GDP ratio; accelerated trade liberalisation; tight monetary policy; privatisation, and deregulation of financial markets
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Box 3.2
False premises
Those responsible for these premises and the government's approach were highly unrealistic, and did not take into account the following defining characteristics of the South African economy: ● its dualistic character; after 350 years of unequal power relations, unfree labour patterns, and uneven socio-economic development, it is divided into a mainly White-owned and White-controlled modern sector, and a Black underdeveloped non-formal sector; ● the deeply institutionalised inequalities in the distribution of income, socio-economic power, and property and opportunities; and ● the emergence – over the past 30 years – of a modern, first-world, capitalist enclave that is detaching itself from the Black labour market and the lumpenproletariat because they are regarded as irrelevant to the enclave's operation and profitability. All of these characteristics overlap and accentuate the 'two worlds' character of the economy: one modern, smart, professional, efficient, and globally oriented; the other neglected, messy, unskilled, downtrodden, and thriving on crime and violence. To complicate matters, political and economic developments over the past 30 years have increased the distance between these 'two worlds', and destroyed what beneficial interaction might have previously existed between them.'
'The economic and social policy approach of the new government was formulated under strong pressure from the corporate sector and its global partners, and was based on several contentious premises: i. South Africa has a high economic growth potential. ii. Integration into the benign global economy will enhance economic growth. iii. A high economic growth will unlock the labour-absorption capacity of the economy. iv. The benefits of a high economic growth rate will 'trickle down' to the poor. v. The restructuring of the economy should be entrusted to market-led economic growth. With the benefit of hindsight, we have good reason to reject all five of these premises. All five are either false, or do not apply under South African circumstances. All five have their roots in the naive optimism of the managerial elite of the corporate sector and its global partners about the benefits of the free market. All five are propagated by the corporate sector and its global partners in order to protect their vested interests, enhance their position of power and privilege, and promote their sectional and short-term financial interests. All five premises incorrectly regard economic growth, neo-liberalism, and globalisation as the panacea for South Africa's social crisis.
Source: Sampie Terreblanche (2002), pp. 424–426
lower the inflation rate to a historically low rate of 3 to 6 per cent within a relatively short period. The differences between the RDP and the current policy orientation are potentially significant in explaining the persistence of a number of undesirable trends in post-apartheid socio-economic development. The contractionary nature of the adopted tight fiscal policy, high real interest rate oriented monetary policy, and accelerated liberalisation of the economy and privatisation have produced similar developmental results to those of other countries that have adopted the same policies. As shown in Chapter 2, the results have been increases in unemployment, real cuts in important social spending, low real investment and growth and rising income disparities. It is not, therefore, surprising that some government policies are seriously contested by a number of important social and political forces in the country, including some members of the Alliance and some important churches and NGOs.
CONCLUSION
The differences between the RDP and the current policy orientation are potentially significant in explaining the persistence of a number of undesirable trends in post-apartheid socioeconomic development
64
government has moved further to institutionalise its main underpinnings. Two measures in this regard are worth mentioning: the adoption of the multi-year Medium Term Expenditure Framework (MTEF) for budgeting purposes, and the adoption of inflation targeting as the framework for monetary policy. The first has enabled the government to integrate GEAR's fiscal policy stand into an economic policy planning process that has gone beyond GEAR's original five-year plan. The adoption of inflation targeting has also allowed the government effectively to institutionalise GEAR's tight monetary policy stance: the primary objective of the Reserve Bank was to
As recently as the June 2003 Growth and Development Summit, the government has essentially reaffirmed its commitment to the macroeconomic strategy and policy framework.48 However, rising unemployment and income inequality, low domestic and foreign investment and other issues49 have made it increasingly apparent that the government needs to review some of the explicit tenets or underlying premises of GEAR. In this context, the government's current Ten Year Review process is a much needed endeavour by Cabinet. It is intended to: ● determine the degree to which the democratic dispensation has directed the purpose, intentions and content of government policy;
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●
●
●
●
●
●
identify and explain the results of the implemented policies of government; determine the impact of government policies; identify and explain factors that have affected the performance of government; identify concrete lessons that can be learnt about the transformation process; identify key challenges facing government in the next decade of freedom, and identify possible objectives that could be pursued by government to address the challenges.
The current state of socio-economic development and policy formulation in South Africa indicates that, while there is a need for improvement in the government's implementation capacity, there is also an urgent need to articulate a socioeconomic strategy and policy framework that is designed to address, in a sustainable manner, high levels of poverty, income inequality, lack of access to affordable and quality services, unemployment and the low growth rate. The challenges facing such an endeavour are explored in the remaining chapters of this report.
Rising unemployment, income inequality, low investment and other issues make it increasingly apparent that government needs to review GEAR
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Endnotes
1
2 3 4 5
6 7
8
9 10 11 12 13 14
15 16
UNDP (2000). The South Africa National Human Development Report of 2000, which focused on the process of transformation, provides a detailed review of major policy and legislative changes during this period. Pillay (2002) This view is shared particularly by senior government officials. Cronin (2002) After attending a crucial Cabinet Lekgotla (retreat) in July 2002, President Mbeki argued that the challenge facing government was not to change government policies, but to ensure that they were implemented. For more on policy inconsistencies and contradictions, see Chapter 5. Pillay (2002) includes two additional factors: namely, the need for consensus and government's relationships with non-governmental partners. Discussion of these factors has been incorporated into the latter part of this chapter. The apartheid system of government included the homeland governments, consisting of 'self governing' KwaZulu, QwaQwa, Gazankulu, Lebowa, KaNgwane, KwaNdebele and 'independent' Transkei, Ciskei, Bophuthatswana and Venda. With respect to the latter, national and local governments only. Pillay (2002) The Northern Province was renamed Limpopo on 26 June 2002. Pillay (2002) For more details, see Chapters 2 and 5. African National Congress (ANC), Congress of South African Trade Unions (COSATU) and the South African Communist Party (SACP). See Cronin (2002) The negotiating process and the content of the RDP were influenced by a number of interlinked factors. Among these were: (a) the need for the ANC and its Alliance partners to present an election manifesto that articulated its vision, development strategy and policy framework; (b) the country's broad socio-economic crisis, and (c) the simultaneous unfolding of negotiations for the political transition, which included principal issues related to the postapartheid management of the economy. Before the release of the final RDP document in 1994, six earlier drafts were submitted to various participating organisations for discussion and com-
17 18 19 20 21 22 23 24
25 26
27
ment. The RDP was built on the tradition of the Freedom Charter, which was the result of an extraordinary countrywide consultation in 1955, culminating in a gathering at Kliptown where the Charter was adopted. The Charter has been a guiding document of the ANC ever since. RDP (1994) RDP (1994) RDP (1994) RDP (1994) RDP (1994) RDP (1994) Marais (1998); Bond (1996) In September 1990, the South African Chamber of Business (SACOB) led the calls against nationalisation by arguing that: 'Attempts at alienation of property or nationalisation, with or without compensation, fall in the category of measures which will cause immeasurable harm'. In its document titled Economic options for South Africa, it pointed out that: 'SACOB is convinced that the market economy based on the principles of private ownership and freedom of choice and association will best accommodate the economic requirements of both growth and employment.' (p. 1). The document goes on to state: 'Attempts at alienation of property or nationalisation, with or without compensation, fall in the category of measures which will cause immeasurable harm.' (p. 11) See South African Institute of Race Relations (1991/1992). A year later, a spokesperson for Anglo American (one of the country's six large conglomerates) was quoted as saying: 'Anglo American believes that nationalisation in the form put forward by Mr Mandela will kill initiative and investment and encourage the flight of capital and skills as surely as the raising of taxes would. His proposals would end up impoverishing the disadvantaged even further'. (Citizen, 30 September 1991) The free-market rhetoric espoused by business is exemplified in a statement made by Stuart Morris, of KPMG Aiken and Peat: 'An ideal South African government would take a leaf from the countries that have succeeded in growing their economies and improving the lives of their people. It would free the economy from controls and interference; provide massive education and training to prepare the community to play its part in the industrialisation of the country,
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28 29
30 31
32 33 34
35
36 37 38
and reduce personal and corporate tax rates to encourage the entrepreneur.' (Business Day, 10 January 1992, emphasis added) DP leader, Zach de Beer, quoted in Natal Post, 2 September 1992 Marius van Blerck, chairperson of the SA Fiscal think tank and a tax consultant at Anglo American, was amongst the leading business figures in the taxation debate. He was critical of the suggested taxes because he felt they were too costly to administer and would 'generate disproportionately negative perceptions in relation to the revenue they generate'. (Business Day, 8 April 1992) Bond (1996) The SACOB Economic Options document recognised the need for an industrial strategy that would help South Africa become 'an outward-looking export country of manufactured goods'. However, it said little about opening up the South African economy. Business Day, 28 March 1991 Anglo Chairman, Business Day, 17 July 1991 Gaby Magomola of FABCOS was one of many who argued that 'the case for protecting some industries was overstated' (Business Day, 31 January 1992). The South African funded International Freedom Foundation also attacked South Africa's protectionism as leading to 'spiralling prices, inflation, unemployment, the misallocation of resources, skewed economic development, and the creation of monopolies'. (The Star, 6 February 1992) In its policy document, SACOB even admitted that, 'in its own interest the business community will therefore need to participate actively in in-house training and education of blacks…' (p. 25). A similar theme is evident in the earlier noted statement by Stuart Morris of KPMG, Aiken and Peat, and in the policy proposals of the NP and DP. Ramathlodi (2001) See ANC (1997) In December 1997, the ANC Conference reaffirmed the role of the RDP as '[t]he basic economic and social transformation framework of the ANC.' ANC (1997:50). Similarly, COSATU, the SACP and civil society organisations (NGO umbrella organisations, churches, etc.) have continued to advocate an RDP-consistent transformation path and to consider the RDP as the Alliance's adopted developmental path for the country. In its Accelerating Transformation document, COSATU states that its 'beacon in the post-1994 period has been the Reconstruction and Development
39
40 41 42
43
44
Programme (the RDP), adopted by the tripartite alliance as the platform for South Africa's first democratic government.' COSATU (2000:5) As will be noted in a later section of this chapter, different groups in society are increasingly challenging the pace and/or the orientation of government social policy recommendations. For details, see MERG (1993). MERG (1993:281) The Star, 7 April 1995. For a critical review of the RDP White Paper, see Adelzadeh and Padayachee (1994). Writing in The Sunday Times, Kevin Davie remarks that 'all signs now are that our policy makers see that the objectives of the RDP are wholly compatible with the three words [privatisation, liberalisation, and convertibility] which so interest the money men' (9 October 1994). The RDP Monitor noted that 'the private sector, after its somewhat tentative initial endorsement, has come out in full support'. RDP Monitor (1994:5). The IMF was also satisfied with emerging ANC economic thinking. This was evident from its 1995 comments on the government's economic policy: 'It was clear by late 1993 that the most immediate problems facing South Africa were confidence related. Consequently, the African National Congress, even before it was elected to government in April 1994, voiced its commitment to eschewing policies perceived to imperil confidence – interventionist regulation, excessive fiscal and monetary spending and confiscatory tax policies – and to strengthen market forces … [but] the most telling signal of the new government's economic ideology has been its broad advocacy of free trade'. IMF (1995:89-90) However, despite the concessions to free market thinking evident in the White Paper, neo-liberals and the business sector were not entirely happy with all aspects of the document. While praising recent shifts, they continued to hammer away at any last vestiges of interventionist policy proposals. The RDP Monitor referred to 'two general elements which will disturb some'. These were the 'repeated reference to the entrenchment of trade union and labour rights' and the 'centrality of the role of the state …' RDP Monitor (1994:6). Business Day expressed its concerns about the White Paper's continuing reference to 'anti-trust' legislation, the use of the phrase 'government will support' in reference to trade and industry policy, and to 'excessive indirect taxation' (fearing that direct taxes might be raised if indirect taxes like VAT were reduced).
policy making and implementation
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45 46
Finally, the newspaper expressed concern that the inclusion of civic organisatoins in NEDLAC would delay decision-making. These and other concerns of domestic business and international financial organisations were indications that business interest groups would continue to press for further liberal reform in policy making after the publication of the White Paper. See the table on the results of implementing GEAR's 'integrated' scenario, GEAR (1996:7) COSATU published Social Equity and Job Creation, the key to a stable future. South Africa
47 48 49
Foundation published the business sector report titled Growth for All, an economic strategy for South Africa. Cronin interview (2002) Sunday Times, 13 April 2003; Business Day, 12 May 2003; Mail & Guardian, 6 June 2003 This includes the rising tensions within the Alliance and the business sector's concern about the real economic impact of the current monetary policy, which has resulted in high interest rates. The interest rate was raised four times during 2002.
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4
Poverty and inequality
ANALYSIS OF CHALLENGES TO ERADICATING POVERTY AND INEQUALITY Reducing wealth inequality
70 72
Reducing earnings inequality Overcoming labour market problems Generating a pro-poor growth path Expanding access to basic services Advancing land reform Investing in a safe environment Combating HIV/AIDS Enhancing civil society capabilities Providing a social safety net
THE WAY FORWARD Respond to the HIV/AIDS epidemic
74 75 78 80 81 82 84 85 86
89 90
Establish a comprehensive social saftey net Increase support for land reform
CONCLUSION ENDNOTES
90 91
92 94
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Poverty and inequality
What people can or cannot do and how they survive in a market economy depends to a large extent on access to the necessary financial resources and assets to meet an increasing portion of their needs
The eradication of income poverty is an indispensable requirement for sustainable development. What people can or cannot do and, more importantly, how they survive in a market economy, depends to a large extent on access to the necessary financial resources and assets to meet an increasing portion of their needs. At the same time, pronounced income and wealth inequality impedes sustainable development by contributing to a rise in poverty, distorting the utilisation of society's productive resources, frustrating the growth potential of a country1 and jeopardising the sustainability of its environmental well-being (Box 4.1).2 Chapter 2 reported on the current state of poverty and on income and wealth inequalities in South Africa, measured by changes in a number of indicators such as headcount poverty, Gini coefficient, Human Development Index (HDI), and Human Poverty Index (HPI). Among the most significant findings was the fact that about 50 per cent of the country's population currently falls below the national poverty line.3 It was also observed that a particularly high concentration of wealth persists.4 This chapter analyses the challenges South Africa faces in respect of the growing problems of rising poverty and distributional inequalities.
ANALYSIS OF CHALLENGES TO ERADICATING INCOME POVERTY AND INEQUALITY
From the perspective of the new economics of poverty and inequality, unequal income and wealth distribution become economically costly and growth-reducing
when large numbers of a country's citizens are unable or unwilling to work or engage in entrepreneurial activity, unable to save and invest, and unable to meet charges for the provision of essential services.5 South Africa's income poverty and inequality have increased during recent years, with empirical studies showing that there is a large segment of initially poor households that have either held steady or fallen behind. For example, a significant proportion (21%) of households in KwaZulu-Natal, observed in both 1993 and 1998, emerged in the second period not only as poor, but as falling even more deeply into poverty: that is to say, their ability to generate an income declined between the two periods. While still poor, just 4 per cent of the people in the sample were able to improve their situation.6 In the language of conventional empirical analysis of poverty dynamics, these households are chronically poor. Upward mobility appears to be concentrated among households that were initially better off. A substantial number of households continue to move in and out of poverty, while some appear to be falling further into poverty. Those able to get ahead in the new economic environment may be able to escape this poverty trap; but this proportion is small, and may decline in the future. If this trend persists, the result may be a continued increase in income poverty in the country. It may also result in continuing sluggish aggregate growth as large numbers of families find themselves unable to make the investments needed to meet their own full potential, or to help their children realise theirs (Box 4.1).
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While the disturbing increase in headcount poverty and income inequality doubtless reflects the persistence of trends set in motion by former apartheid governments, it may also be partly ascribed to the post-apartheid governBox 4.1
ment's difficulties in delivering on various outcomes. This chapter considers these challenges against the multitude of constraints that limit the ability of the poor to use their limited assets and endowments.
What is happening with global income inequality
2.9 times Africa's – and in 1992, 13.2 times (Maddison 2001). In the 1990s per capita incomes increased slowly but steadily in high income OECD countries, but many transition countries in Central and Eastern Europe, particularly the CIS, many parts of Sub-Saharan Africa and some countries in Latin America and the Caribbean experienced economic stagnation. At the same time, highly populated developing countries such as China and India achieved rapid growth. As a result per capita incomes have been converging in rich countries, while in developing countries the pattern is mixed. But when income data are weighted by population – to capture the relative importance of each country's performance – average incomes across countries appear to be converging. Highly populated developing countries drive such trends: fast-growing China and India are catching up with parts of the industrialised world, such as North America and Western Europe. Inequality across the world's people Some studies have tried to capture trends in true global inequality – that is, the distribution of income across citizens of the world, regardless of national borders. Income surveys suggest that when measured this way, global inequality increased between 1987 and 1998. The main forces behind this divergence were:
●
'Grotesque levels, ambiguous trends Human Development Report 2002 noted that while the definition of global income inequality is fuzzy and its trends ambiguous, there is widespread consensus on its grotesque levels. This has not changed. Incomes are distributed more unequally across the world's people (with a Gini coefficient of 0.66) than in the most unequal countries (Brazil, for example, has a Gini coefficient of 0.61). (The Gini coefficient is a measure of income inequality that ranges between 0, indicating perfect equality, and 1, indicating complete inequality.) The richest 5% of the world's people receive 114 times the income of the poorest 5%. The richest 1% receive as much as the poorest 57%. And the 25 million richest Americans have as much income as almost 2 billion of the world's poorest people (Milanovic 2002, pp. 51–92). Monitoring and containing income inequality are essential not only to increase opportunities for as many people as possible, but also to reduce social friction in areas (usually urban) with high inequality. As globalisation deepens and access to information becomes cheaper and more widely available, awareness of global inequality is increasing. People no longer compare themselves only to their fellow citizens: they are also aware of international gaps, making divergence across countries increasingly harmful – and dangerous. To reduce growing tensions, it is crucial that the tide of development lift all boats. Findings on global inequality vary considerably depending on the approach used to analyse it. Inequality can be calculated across countries (using average national incomes), across the world's people (regardless of national boundaries) and across people within countries. Inequalities across countries International inequality is generally measured by comparing national per capita incomes. Countries with the highest per capita incomes in the early 1800s are still today's richest countries, indicating persistence in the structure of international inequality. In 1820 Western Europe's per capita income was
peaking in 1970, the gap in 1995 had returned to the level in 1950 (Dollar and Kraay 2002, pp. 120–33; Bhalla 2002; Sala-i-Martin 2002). A driving factor in this debate is the measure of inequality used to draw conclusions. When measured using single summary indicators such as the Gini coefficient, incomes appear to be converging. (Because of the Gini coefficient's construction, it gives more weight to middle-income groups and less to the extremes.) Still, in recent decades there has unquestionably been a widening gap between the incomes of the very richest and the very poorest. Inequality across people within countries National income inequality is the concept used for country-level analysis. This concept is suitable for analysing the correlation between a country's policies – typically economic openness or redistribution measures – and its distribution of income. In many countries inequality in assets and especially income appears to be on the rise. Numerous studies have tried to capture trends in income distribution over time across large samples of countries. Cornia and Kiiski (2001) estimate that between the 1980s and the mid- to late 1990s inequality increased in 42 of 73 countries with complete and comparable data. Only 6 of the 33 developing countries (excluding transition countries) in the sample saw inequality decline, while 17 saw it increase. In other words, within national boundaries control over assets and resources is increasingly concentrated in the hands of a few people. Though not the case for all these countries, in many inequality began increasing during the debt crisis of the early 1980s (Kanbur and Lustig 1999). Since then inequality has soared, particularly in the Commonwealth of Independent States (CIS) and south-eastern Europe. And in many Latin American countries inequality remains extremely high. If sharp increases in inequality persist, they may have dire effects on human development and social stability (including violence and crime rates; see Fajnzylber, Lederman and Loayza 1998 and Bourguignon 2001).'
●
●
a widening income gap between the poorest and the richest people due to slow growth in rural incomes in populous Asian countries relative to rich OECD countries; faster progress in urban China relative to rural China and to India, and shrinkage in the world's middle-income group (Milanovic 2002, pp. 51–92).
But these conclusions are not entirely robust due to the limited timeframe covered and the use of purchasing power parity (PPP) rates, which are often unsuitable and do not accurately reflect international price differences. Using alternative methodologies, other analysts have reached more optimistic conclusions suggesting convergence in global individual incomes: that after
Source: Ravallion 2002; Schultz 1998, pp. 307–44; Korzeniewicz and Moran 1997, pp. 1000–39; Sprout and Weaver 1992, pp. 237–58; Maddison 2001; Milanovic 2002, pp. 51–92, 2003; Dollar and Kraay 2002, pp. 120–33; Kanbur and Lustig 1999; Bhalla 2002; Sala-i-Martin 2002; Cornia and Kiiski 2001; UNDP 2002e; Fajnzylber, Lederman and Loayza 1998; Bourguignon Reprinted from Human Development Report (2003:39)
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Control of society's wealth has long been associated with unequal power relations between social classes
REDUCING WEALTH INEQUALITY
When analysing inequality, it is important to distinguish between accumulated wealth (i.e. assets) and current income.7 It is usually the case that the distribution of wealth is highly unequal and that wealth is less equitably distributed than income. There are at least three reasons why the distribution of wealth is an important factor in explaining inequality. First, ownership of financial wealth is a significant source of income: inequity in the distribution of wealth implies a corresponding inequity in the distribution of dividends, interest, rent and other income received by wealth owners. Second, wealth provides security: a wealthier household is better able to survive interruptions in income or expensive emergencies. Finally, wealth brings its owners political and economic power in several forms – although the exact nature of that power remains controversial.8 The concentration of wealth plays an important role in the theoretical and empirical literature on sources of poverty and inequality. Control of society's wealth has long been associated with unequal power relations between social classes. This, in turn, expresses itself in terms of an exploitative relationship that results in widening income and wealth inequalities as more and more wealth is amassed by the wealthy in the process of accumulation.9 Wealth inequality also implies inequality in the vulnerability of households when encountering economic or personal crises. It has been shown that modest personal wealth makes it possible to overcome the economic problems of temporary unemployment, illness or accident, while the absence of wealth allows small crises to develop into long-term losses.10 In South Africa, the colonial and apartheid policies of forced removal, expropriation and discriminatory proper-
ty laws produced an extraordinary concentration of financial, land and physical capital in the hands of a small White segment of the population. For example, in 1998, just one Black-owned company was listed on the Johannesburg Securities Exchange ( JSE) and Black people owned 2 per cent of the economic wealth.11 Even though the South African economy is not predominantly agricultural, inequality in land ownership is clearly linked to the rise in income inequality and rural poverty.12 South Africa is, by all standards, a country with a substantial amount of natural, mineral and produced wealth. Table 4.1 demonstrates the composition of total wealth in South Africa over the past twenty years. The country's national surveys are, however, weak in terms of capturing the financial and property wealth of individuals and households, making it difficult to measure wealth inequality between different types of households and social classes accurately. However, there are strong indications that the disparity between African and White households is much greater in terms of wealth than of income. The average White family has much more home and vehicle equity and many more financial assets of all types (e.g. interest bearing bank accounts, bonds, and equity) and other properties (e.g. land). The poor (who are mainly African) have no, or negligible, net assets. In South Africa, as in many other countries, ownership of wealth by the upper class implies significant additional sources of income and entails control of many of the largest corporations and banks. The income derived from property – that is, ownership of stocks, bonds, real estate, etc. – is substantial. In 2002, for example, households' income from property amounted to R256 billion, compared to households' wage/salary income (i.e compensation of employees), which
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Table 4.1
Composition of wealth in South Africa (1960 – 2001)
1960 1970 1980 1990 2000 2001
Rand$ PPP adjusted (Rand billion 1995 prices)1 Natural capital Agriculture Mining Produced assets1 Structures Machinery and equipment Urban land Net foreign liabilities Human resources1 Total wealth 645 238 407 550 424 64 141 –79 2 874 4 070 633 275 357 927 710 118 237 –137 5 685 7 245 608 328 280 1 782 1 233 232 411 –94 6 649 9 039 569 367 202 2 326 1 588 273 529 –64 8 692 11 587 586 388 198 2 571 1 691 352 564 –35 7 780 10 937 586 390 196 2 587 1 694 361 565 –33 6 806 9 980
Per capita Rand$ PPP adjusted (Rand billion 1995 prices)1 Natural capital Agriculture Mining Produced assets1 Structures Machinery and equipment Urban land Net foreign liabilities Human resources1 Total wealth 37 13 23 31 24 4 8 –4 163 231 28 12 16 42 32 5 11 –6 255 325 22 12 10 64 44 8 15 –3 239 325 16 11 6 67 46 8 15 –2 250 333 13 9 5 59 39 8 13 –1 177 249 13 9 4 58 38 8 13 –1 153 224
Source: Quantec (2002) Note: (1) Only human resources and produced assets (structures) are adjusted for PPP. (Natural resources are already valued at international trading prices.)
amounted to R496 billion.13 Overall, 37.3 per cent of households' disposable income was income from property.14 The upper class in South Africa consists of a small, wealthy and mainly White segment of the population. Its members dominate the top echelons of business and institutions and own a large proportion of all privately held corporate stock in the country. Many of the stockholding families in the upper class continue to be involved in the direction of, and are disproportionately represented on, the boards of large corporations.15 The wealth of the upper class gives it enormous corporate power and a direct influence over the economic lives of the majority of South Africans.16 At the same time, big business has historically united to promote a common agenda and has used its extensive economic power to
poverty and inequality
influence the country's politics and policies.17 Big business has also occasionally used economic threat to achieve its objectives – such as warning that it will withhold investment or move investment out of the country in order to force policy compromises.18 Steep wealth inequality, therefore, contributes to persistent and rising income poverty and inequality. Furthermore, because business power is magnified and reinforced by its political unity, pervasive forms of wealth inequality provide the real bedrock of the power of the rich to safeguard and enhance their economic and political interests. 19 South Africa's new Constitution, bolstered by important new legislation, has already eliminated the discriminatory legal foundation for unequal wealth ownership. Programmes aimed at land reform,
The wealth of the upper class gives it enormous corporate power and a direct influence over the economic lives of the majority of South Africans
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Earnings inequality grows when real earnings rise for high-income workers, but fall for those at the bottom
housing, education, small, micro and medium size enterprise (SMME) development and Black economic empowerment (BEE) are specific measures offering the potential for bringing about substantial changes in the pattern of wealth ownership. However, the main focus of transformation in the ownership of wealth has been gradually to change its racial composition. To what extent and whether these important reforms significantly reduce the overall concentration of wealth – beyond the race issue – is harder to ascertain and requires more focused attention (Box 4.2). The success of certain direct measures, such as land reform and housing programmes, is essential to achieving the more egalitarian distribution of basic forms of wealth. Other measures aimed at eliminating poverty and minimising income inequality – such as access to credit – also contribute indirectly to the reduction of wealth inequality over time. Clearly, policies that expand economic opportunities for the poor also help to expand the domain of ownership of wealth in the country. Land reform and SMME development are two important
factors, whose potential success in reducing poverty depends on the redistribution of particular forms of wealth. Challenges related to both of these issues are developed in the sections on land reform and SMME development later in this report. The desirability of minimising wealth inequality in South Africa, therefore, goes beyond its effect on reducing income inequality and poverty. Its links to a number of other socio-economic and political issues make the impact of overcoming this challenge far-reaching.
REDUCING EARNINGS INEQUALITY
Box 4.2
SMMEs and redress
and yield only limited incomes to their owners, these alone "cannot be expected to significantly shift the patterns of income distribution" (Manning, 1996, p. 65). Third, it is asserted that "even if SMMEs are a successful channel of wealth to black entrepreneurs, this does not necessarily translate into reduced income inequality" because of the unequal distribution of the benefits of enterprise expansion (Qualmann, 2000; Berry et al, 2002). Finally, Qualmann's (2000:45) analysis identifies a suite of factors that limit the effective application of SMMEs as the instrument for Black empowerment, not least that the strong pull factor for qualified and trained people in the public sector, NGOs and corporate world has reduced, albeit temporarily, the potential flow of (Black) "opportunistic entrepreneurs" for the SMME economy.'
'"It is evident that an SMME strategy undoubtedly will contribute to redressing severe inequalities inherited from the apartheid period in terms of patterns of economic ownership" (South Africa 1995). None the less, it must be cautioned that whilst SMMEs "represent one vehicle for redressing racial income inequalities, it would be dangerous for policy-makers to rely on SMMEs as the main agent for economic redistribution in South Africa" (Manning, 1996, p. 65) for at least four major reasons. First, it must be acknowledged that a reliance on SMMEs to redistribute wealth does not tamper with the core economic power of South Africa, most of which is concentrated in the hands of the large white-owned corporations (Rogerson, 1999; Kesper, 2001b). Second, as presently the majority of Black-owned businesses are very small
Source: Rogerson, C M (2002) The role of South Africa's SMME economy in sustainable development, Prepared for UNDP.
Earnings from work20 are the most important source of household income in South Africa. More than 50 per cent of total income in all households represents earnings from work.21 At the same time, there is a close relationship between trends in earnings inequality and overall household income inequality. Overall earnings inequality grows when real earnings rise for high-income workers, but fall for those at the bottom. A number of factors usually contribute to rises in earnings inequality. Among these are: a sustained slowdown in growth; change in technology that produces dualism between leading and lagging sectors; demographic changes; decline in entry level wages and labour shift from manufacturing into services, where there is a relatively low average and high variance of wages. Other factors with considerable influence on a trend rise in earnings inequality include: pursuit of flexibility in different aspects of business operations (such as flexible specialisation); the growing importance of part-time and other contingent workers, attempts to reduce wages and avoid unions; contracting out, and the restructuring of full-time into part-time jobs. All of these changes are
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likely to increase inequality in the distribution of earnings. Similarly, unemployment is a particularly important factor in wage inequality: a large unskilled army of unemployed helps keep the wages of this group low, while the earnings of the small skilled portion of the labour force continue to rise. Statistical analyses have also shown that earnings inequality is related to productivity growth and manufacturing employment; greater productivity and more manufacturing jobs both tend to create more equal earnings. Crosscountry studies have also shown that the stronger the role played by institutions in wage determination, and the greater the efforts towards education and training, the more egalitarian the distribution of skills, dampening the effects of shifts in the supply of and demand for labour. Other institutions, such as social insurance and income maintenance programmes, also affect wage distribution.22 These findings indicate that avoiding a trend increase in earnings inequality demands concerted interventions (e.g. institution building) that take into account macroeconomic issues (e.g. unemployment, inflation, growth), but go beyond achieving economic recovery and employment creation.23 For example, once employment potential expands, the extent to which a rise in earnings inequality can be avoided depends partially on whether the poor are able to benefit (through a reduction in underemployment and/or raising the earnings of labour) from rising employment opportunities. This, in turn, depends on the capabilities of the poor to integrate into the expanding sectors of the economy. If the new opportunities arising from economic growth and its employment potential are such that the capability they demand does not match the skills possessed by the poor, then, by potentially benefiting nonpoverty and inequality
poor workers, the earning inequality will increase. Much, therefore, depends on the correspondence between the structure of the new opportunities and the structure of skills possessed by the poor.24 South Africa has one of the largest earnings inequalities in the world. This is reflected in the difference between the average monthly incomes of a relatively small group of skilled employees and the majority of employed who are semi-skilled or unskilled.25 There is also clear evidence from the October Household and Labour Force surveys that earnings inequality grew and contributed to the rise in income inequality during the 1990s. Clearly, managing South Africa's industrial restructuring and the related composition of investment has important implications for the evolution of earning inequalities. A rapid move towards skills and capital-intensive structural transformation could significantly increase the already high income inequality. It could, on the one hand, lead to a relatively high rate of wage increases for the small minority of skilled employees, while at the same time producing higher unemployment, thus exacerbating income inequality and poverty among households.26 An important challenge, therefore, is to adopt a developmental process that manages technological advances and skills requirements in line with society's current skills pool and pace of economic growth. At the same time, this process needs to be supplemented with high levels of support for institutional structures that promote more egalitarian income distribution, dampen the effects of market failures and provide comprehensive social assistance to the poor and vulnerable.
OVERCOMING LABOUR MARKET PROBLEMS
Much depends on the correspondence between the structure of the new opportunities and the structure of skills possessed by the poor
The argument in the previous section (that long-term measures are needed to
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Employment is the bridge between economic growth, poverty eradication and opportunities for human development
avoid rising earnings inequalities) relates mainly to access to employment-related income. It is well recognised that employment is one of the most fundamental economic opportunities. It provides people with incomes that enable them to purchase a range of goods and services with which to enhance their and their dependants' standards of living.27 At a macro level, the main functions of the economy (e.g. production, employment and distribution) are linked directly to the labour market and specifically to employment. Analytical and empirical country studies have established a number of ways in which poverty is tied to the operation and outcomes of the labour market. This body of literature shows that employment is the bridge between economic growth, poverty eradication and opportunities for human development. The findings underscore, therefore, the importance of incorporating employment into poverty eradication strategies. The high rate of unemployment in South Africa demonstrates that the problem of poverty cannot be addressed in any meaningful way unless the unemployment issue is also tackled. For South Africa, the link between poverty and the labour market is evident at different levels of analysis: from the microeconomic level of the individual, household and community to the macroeconomic level of the national economy,
and even at the global level as it relates to the nature of the international economy and its relationship with South Africa. Thus the labour market provides an important point of entry when examining the challenges facing poverty eradication. Household poverty status and the labour market Statistical analyses of household surveys show that the probability of being poor increases when an individual is unemployed. Empirical studies have also established the degree of dependency of poor households on the employment status of household members and their related income flows. Substantively, data from household surveys – reflected in income quintiles – show that the poorest South African households rely heavily on pensions or remittances for their livelihoods (Figure 4.1). This is most pronounced in African households, where over 50 per cent of households in the first income quintile and almost 40 per cent in the second income quintile had no income earners in 2001 (Figure 4.1). A relatively large number of households, especially those in the poorer income quintiles, relied heavily on only one income earner. Again, this dependence is most pronounced for African households. This shows the extent to which households are dependent on income earners and are thus extremely vulnerable to the loss of an income or pension. Poverty and the quality of employment Sole earners supporting the poorest households are most likely to be in lowskilled, low-pay and low-quality occupations (Figure 4.2). This is compounded by the fact that these jobs are often tenuous and insecure, suggesting even greater vulnerability to job loss. Thus the type of
Figure 4.1
60 50 Percentage 40 30 20 10 0
Quintile by number of workers: all households (2001)
First quintile (bottom 20%)
Second quintile
Third quintile
Fourth quintile 4 Workers
Fifth quintile (top 20%) 5 Workers
0 Workers
1 Workers
2 Workers
3 Workers
Source: Labour Force Survey (Feb. 2001)
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employment available to, or occupied by, the poor is an additional problem faced by the 'working poor'. Moreover, it reflects a labour market structure in which a relatively large number of households (with one or more workers) in the first income quintile are trapped in poverty. The attainment of employment, its quality and conditions and vulnerability are, therefore, also important to the relationship between poverty and employment. However, there are many other labour market issues that affect poverty directly or indirectly, such as discrimination, disadvantage and other impediments. Poverty and the supply of labour In a large number of studies, supply side considerations reveal that poverty impacts directly on the supply of labour and the quality of labour supplied. For example, labour market participation and gender is a particularly striking feature in timepoverty studies, where the participation rates of rural women are directly and negatively correlated to the amount of time they must spend collecting wood or water for the household. Lack of access to education, a direct social effect of poverty, reduces earning potential. Likewise, the physical effects of poverty, where illness or poor health interfere with work, reduce not only earning potential but also the ability to purchase medical treatment. This leads cumulatively to worsened conditions and a lessened ability to work. Vicious circles of cumulative causation such as these – known as poverty traps – are found at different levels of aggregation within the labour market. Economic restructuring, the labour market and poverty The structure of a country's relationship to the world economy influences the
poverty and inequality
Figure 4.2
60 50 Percentage 40 30 20 10 0
Occupational category of head of household (2001)
First quintile (bottom 20%) Highly skilled
Second quintile Skilled
Third quintile
Fourth quintile Self-employed
Fifth quintile (top 20%) Pensioner Other
Semi- and unskilled
Source: Labour Force Survey (Feb. 2001)
way in which external economic shocks affect the poor. Studies have shown that poverty has been increasing in those countries that have adopted either the most open trade regimes, or have continued with the most closed trade regimes.28 Economic liberalisation, particularly, increases the chances of poverty owing to its negative side effects. For example, economic liberalisation can affect aggregate real wages, unemployment, underemployment, distributive conflicts, sectoral differences in the changing pattern of demand for workers and changes in relative wages. These may or may not recover over time. Where the adverse effect of reforms is unanticipated or cannot be managed in some way, the poor may be further impoverished. To the extent that this occurs, poverty may become self-perpetuating and may undermine poverty reduction efforts.29 Overall, given the link between poverty and employment, it is clear that the labour market cannot be ignored when pursuing poverty eradication goals. South Africa provides a cogent example of how the problem of poverty is, to a large extent, intractable unless labour market problems are resolved. Chapter 7 of this report is dedicated to the challenge of employment creation as part of a sustainable development strategy.
Where the adverse effect of reforms is unanticipated or cannot be managed in some way, the poor may be further impoverished
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GENERATING A PRO-POOR GROWTH PATH
South Africa provides a cogent example of how the problem of poverty is intractable unless labour market problems are resolved
The literature on poverty is replete with discussions about growth as the key to poverty eradication. Sustained poverty reduction is not possible without sustained and rapid economic growth. Two basic channels link poverty reduction to growth. These are: (a) the social provisioning channel: that is, resources generated by growth (e.g. taxes) can potentially be used by a society to provide services to the poor; (b) the personal income channel: that is, the growth of the economy, through employment, translates into higher personal income amongst the poor.30 Without the social provisioning channel and the personal income channel, faster economic growth will not be accompanied by a faster rate of poverty reduction. Given the importance of growth for poverty reduction, an important question is how to shape the character of growth in such a way that it channels a disproportionate share of resources to the poor (Box 4.3).31 Traditionally, the debate focused on the relationship between growth and income inequality, and not on the relationship between growth and poverty. For about forty years, two economic propositions have had an important influence on the design and implementation of development strategies. The first proposition argues that the degree of income inequality bears a systematic relationship to the level of income per head, rising initially as income increases and then falling with further increases in income per head. The second proposition argues that there is a trade-off between equality and average income.32 Together, the two propositions have been used to argue against policies designed to generate a less unequal society, since the first proposition suggests that policy interventions are not
needed in the long run, and the second proposition implies that they are harmful in the short term.33 More recent literature, however, has reversed the above propositions and has become more explicit in its definitions of pro-poor growth strategies. The new findings have also helped articulate new sets of policies that prioritise the reduction of poverty and income inequalities through the use of both macroeconomic policy measures and traditional welfare measures. For example, new policies are expected to restructure the growth process towards the adoption of labour intensive techniques, investment in infrastructure, education, health and other basic services. In addition, transfer policies are designed to help reduce poverty and inequality directly. This approach differs from the traditional two-track approach that assigns growth to one track, with economic policies that are not necessarily pro-poor, and social development to another track, with social services and a safety net being assigned the burden of addressing poverty and inequality. The two tracks rarely converge. In fact, in many instances, the pursuit of the social development track is explicitly or implicitly conditioned by the policies and outcomes of the growth track.34 Even with a pro-poor growth strategy in place (i.e. a growth process accompanied by reduction in poverty), relying solely on growth to reduce poverty is not enough since there will inevitably be losers. Accordingly, those workers who lose their jobs because the factories or shops that employ them cease to be competitive may merit special attention, and it may be efficient to maintain an employment insurance system that offers cash benefits, training and labour market information to the unemployed. Japan has long had such a system, and South Korea is in the process of adopting one.
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Box 4.3
'"The contribution of the SMME economy towards poverty alleviation and income redistribution is also the subject of growing controversy. Although a number of critical studies are questioning the potential of the SMME economy to attain the goals of extensive employment creation, most observers concur that the SMME economy can be a positive factor in contributing towards poverty alleviation" (Rogerson, 1999; Kesper, 2001b). For example, Dorfling (2001:93) argues that because of the sheer size of the micro-enterprise and informal economy and the fact that many of those involved are female heads of households, disabled people and rural families who are struggling to survive, "the sector plays a particularly important role in terms of income generation and poverty alleviation". A contrary view emerges in the analysis of the Global Entrepreneurship Monitor in which it asserted that necessity entrepreneurs would not be "an effective route to poverty alleviation" because of their limited capacity to generate incomes (Driver et al, 2001:51). A critical factor in determining the positive contribution towards poverty reduction that might be made by the SMME economy, especially of micro and infor-
SMME'S and poverty alleviation
mal enterprise, is the policy and support environment offered by local as well as national governments. The international experience shows that policy support and a less hostile attitude of local governments can allow greater informal income and livelihood opportunities and thus making the lives of the poor a little less poor (Mead, 1999). It has been argued that current national support programmes offer little in the way of support for survivalist enterprise, women entrepreneurs and rural SMMEs. For these groups of survivalist enterprise at the coalface of poverty alleviation, the most effective level of policy intervention and support is at the local level rather than the national scale of government (Rogerson 1999). Important opportunities exist for local governments to enact a range of measures to support survivalist enterprises as part of local economic development initiatives for poverty alleviation. In particular, for groups of urban survivalist enterprise, engaged in for example the business of street hawking or the running of retail spazas, the activities of local government can exert a profound impact upon the economic health of these kinds of enterprise and on the wider coping strategies of poor households (Lund, 1998). The establishment of formal markets, appropriate policies towards land use zoning and improved infrastructure provision, among others, are key issues for local government intervention which can impact positively upon the workings of survivalist informal enterprise and enable a contribution towards poverty alleviation (Rogerson, 1999). The gains to poor women street traders of a changing policy environment represent documented examples of how the poor can be a little less poor and that informal enterprises of South Africa's SMME economy can contribute towards poverty alleviation (Skinner, 1999, 2001). The critical significance of policy support for survivalist enterprises is once again highlighted by South Africa's HIV/AIDS crisis with the chronic nature of the implying additional long-term costs that households and extended family networks are forced to cover. Among the coping mechanisms used by the poor to weather economic shocks and smooth income flows are the running of small enterprises which thus play a positive role in assisting the affected to offset some of the added financial burden which is caused by HIV/AIDS (Ebony Consulting International, 2001; Grant, 2001).'
Source: Rogerson, C M (2002) The role of South Africa's SMME economy in sustainable development, Prepared for UNDP.
Tourism and poverty
'In the international context, one of the most distinguishing facets of South Africa is the strong commitments made towards tourism assuming a developmental role (Ashley and Roe, 2002; Ashley and Ntshona, 2002). More especially, a strong emphasis in South African planning is upon job creation and enterprise development in support of the country's previously neglected black communities. For example, as an integral part of the national government's programmes for poverty alleviation, the DEAT operates a Poverty Relief Programme. The central aim is to catalyse longterm sustainable work opportunities through improving tourism potential, creating new facilities or infrastructure, and encouraging communities to provide better services. DEAT's poverty relief priorities seek to integrate with and firmly support broader national government initiatives. Other important national initiatives that link tourism and poverty alleviation have been launched as part of South Africa's Spatial Development Initiatives (SDI) Programme (Rogerson 2001a, 2001b). At least four different sets of interventions may be recognised as designed to make tourism a vehicle for poverty alleviation in South Africa. First, there have been substantial investments made in improving the infrastructure for tourism development in areas of South Africa with untapped potential. In particular, for many poor rural communities marked by underdevelopment and poverty, access to tourism opportunities is fundamentally constrained by the absence of infrastructure needed to attract investment by tourism developers or to access tourism markets (Viljoen and Naicker, 2000). The initial incorporation of tourism in the Spatial Development Initiatives programme, which aims at unblocking investment opportunities, was associated with commitments made to poverty alleviation (Rogerson, 2001b). The Lubombo SDI and the Wild Coast SDI represent two good examples of infrastructure improvement which is linked to the opening up of new tourism opportunities for rural communities in these areas. In addition, the Maputo Development Corridor, the West Coast Investment Initiative and even the Gauteng SDI also have incorporated substantial commitments towards infrastructural improvements that allow poor communities to participate in tourism (see Rogerson, 2001a, 2001b; Rogerson and Sithole, 2001). A second stream of interventions that link tourism and poverty alleviation relate to the search for new market niches and the development of new tourism products that involve poor communities. In relation to tourism product development, the attention given to cultural tourism offers considerable job and enterprise opportunities for many poor communities. For example, cultural villages offer both direct and indirect employment and entrepreneurship opportunities in many rural areas of South Africa (Jansen van Veuren, 2001a, 2001b, 2002). The most important indirect spin-offs relate to the selling of rural handicrafts as well as cultural performances (Rogerson and Sithole, 2001). Another aspect of cultural tourism is the initiatives to promote "township tourism" in places such as Soweto, Alexandra (Johannesburg) or Khayelitsha (Cape Town). In the growth of these areas as new tourism spaces the focus is often on the political struggle for democracy in South Africa. Once again, this new alternative form of tourism creates a range of indirect livelihood opportunities, including the provision of food, drinks as well as craft retailing. Nature tourism is a further critical area for expansion that is linked to poverty alleviation in many rural areas (Viljoen and Naicker, 2000). Certain South African ecotourism enterprises, such as Wilderness Safaris and Conservation Corporation Africa, have demonstrated a commitment to expand the benefits of tourism development to local communities (Kirsten and Rogerson, 2002; Spenceley et al, 2002). Promotion of small businesses and the informal sector as well as community involvement in the ecology is an important element of the activities of these enterprises. More broadly, in the
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Box 4.3 (continued)
investment projects promoted through the SDI programme there is a strong "empowerment" component in tourism development with the focus upon the maximisation of the benefits of private sector investment for local communities (Rogerson, 2001c). The key factor in the success of these pro-poor initiatives is, however, the financial viability of the core business (Poultney and Spenceley, 2001). Of equal importance for long-term sustainable development is the establishment of tourism projects which are environmentally sustainable as well as offering economic and social benefits through local communities (Norton, 2001). Indeed, sustainable management is essential for "pro-poor tourism should always be sustainable" (Green and Sibisi, 2001:1). This highlights the importance for sustainable (pro-poor) rural tourism of initiatives for communitybased natural resource management (Mayoral-Phillips, 2001). Third, the improvement of the skills base of poor communities through various training initiatives is another important policy intervention (Mafisa, 2001). DEAT has facilitated the establishment of the Tourism and Hospitality Education and Training Authority (THETA) which functions as the overarching training authority for the tourism industry. The THETA is devising a National Training Strategy for accreditation, setting of standards and disbursement of levies. The critical issue of job creation is addressed through a Learnerships programme which DEAT facilitates. Most of these learnerships target students and unemployed youth and aim to improve their employment prospects in tourism through a combination of structured learning and structured workplace experience (DEAT, 2000b). Skills training focuses upon a range of occupational categories in which an expansion of job opportunities is anticipated relating to tourism expansion in both rural and urban areas of South Africa. The introduction of various new forms of ownership and institutional arrangements for tourism projects is a further vital aspect for poverty alleviation. The core emphasis has been upon direct involvement of communities in the ownership and operations of tourism projects. The South African experience shows that if communities have land ownership as an asset base there is a potential for strong economic and social empowerment with considerable benefits flowing for poor communities. Correspondingly, where the land rights situation is unclear, communities may still benefit from tourism, albeit to a lesser extent (Ashley and Ntshona, 2002). Through the SDI policy programme much attention was given to the development of new 'empo-tourism' models which sought to move away from a corporate responsibility approach to one that is anchored on the underlying rights and abilities to add value to such deals (Elliffe et al, 1998). These new models are being implemented through so-termed "Community Public Private Partnerships" which aim to revitalise depressed rural economies through linking "resource rich" communities with private investors interested in the sustainable utilisation of natural assets (Elliffe, 1999). One of the most advanced CPPP projects is the Makuleke tourism initiative in Limpopo which arose as a consequence of the victory of the local community in a land restitution case. The Makuleke community is involved in a joint venture with the private sector in developing new game lodges and other tourism products in an area which is functionally part of Kruger National Park (Mahony and Van Zyl, 2001).'
Source: Rogerson, CM (2002) Tourism in South Africa: Potential economic driver, potential for poverty alleviation. Prepared for the UNDP.
Of course, such programmes need to be carefully designed so that they can achieve an effective balance between protection and incentives. In South Africa in the early 1990s, the Reconstruction and Development Programme (RDP) correctly prioritised the importance of achieving growth through redistribution, and the government's role in actively investing in social services and infrastructure to eradicate poverty. However, the current strategy and policies for achieving growth through increased exports and competitiveness are pursued through the adoption of new production technologies that are increasingly capital intensive. This strategy seems objectively anti-poor as, on the one hand, the gap between economic growth and employment growth is widening and, on the other, given their capabilities, the poor are not able to integrate into the current processes of
economic expansion. Chapters 7 and 8 of this report elaborate on these issues and show how the South African economy can be steered towards achieving sustained growth with reductions in poverty and inequality.
EXPANDING ACCESS TO BASIC SERVICES
It has become increasingly evident that the poor are unable to meet charges for the provision of essential services, especially in the light of rising unemployment. Access to free or subsidised essential services – especially water, energy and housing – could be a complementary measure to release some of the financial constraints on poor households. At the same time, it is important to minimise the trade-off between food and non-food essentials in a large number of poor households in the country, especially in an environment of rising basic prices (Box 4.4).
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Furthermore, lack of access to affordable services can lead to 'time poverty', which further constrains the ability of a household to use its time generating a livelihood. Time spent on unpaid work in the home sharply diminishes a household's capacity to generate income. It has been estimated that the time demands of securing drinking water and fuel wood diminish the median household's available uneducated labour power by some 20 per cent.35 Chapter 5 presents a more detailed discussion of the challenges facing the country in the delivery of quality and affordable services.
ADVANCING LAND REFORM
Box 4.4
How many South Africans are vulnerable to food insecurity
'According to the 1999 October Household Survey, about 1.13 million households with children under 7 years old went hungry due to lack of money to buy food. This is about 11% of all households. The situation is even worse in rural areas, where 16% of households with children under 7 years old went hungry as a result of their inability to purchase food. Another 2.3 million households with people aged 7 years and older could not afford to purchase food and consequently went hungry. This represents about 22% of South African households. Thus about 33% of all households in total went hungry in 1999. As expected the ratio is relatively higher in rural areas where 26% of households with people aged 7 years and older went hungry as a result of lack of money for food.'
Source: Bonti-AnKomah, S, (2002) Food Security in South Africa and implications to Sustainable Development, prepared for the UNDP.
Historical evidence suggests a strong link between redistributive land reform and a reduction in poverty. History also shows that the success of land reform programmes is closely linked to their integration with a broader package of basic services, such as water and electricity and training and extension support for productive activities. However, since the mid-1980s, land reform programmes in South Africa have increasingly conformed to market-led approaches. They have failed to transfer significant amounts of land to the poor, and have sometimes exacerbated inequalities in resource distribution. At the same time, the global processes that have shifted the basis of land reform programmes from redistributive to market-based considerations have also induced a reduction in state spending on basic services. In South Africa, many necessary elements have been put in place to achieve land reform and link it to other developmental interventions that will allow for sustained development and economic growth, especially in the rural areas. However, the overall result has been an extremely slow pace of land redistribution, and weak accommodation of redispoverty and inequality
tribution with other social measures that might make land reform successful. The budgetary allocation to the Department of Agriculture and Land Affairs (DALA) has remained relatively small, at about one-third of a per cent of the total national budget, and is set to continue at this level in the medium term.36 From the budget allocated to the DALA, the share allocated to the actual payment of grants under the land reform and restitution programmes is about 50 per cent (Table 4.2). Consequently, grants have been inadequate for the purchase and redistribution of a reasonable amount of arable land. The productive use of the distributed land depends on a support system that includes the provision of infrastructure, training, credit and market access as complementary measures. Without these, beneficiaries may not be much better off than they were
Table 4.2
Restitution and land reform grants (1998–2005)
Restitution grants Land reform grants Value (R1 000) 358 274 173 008 156 623 332 431 251 463 209 247 230 314 % of DALA budget 49.6 25.3 20.3 34.2 26.1 19.8 20.2 Value (R1 000) 12 088 122 196 205 590 186 528 242 951 265 441 305 873 % of DALA budget 1.7 17.8 26.7 19.2 25.2 25.1 26.8
Budget year 1998–99 1999–2000 2000–01 2001–02 2002–03* 2003–04* 2004–05*
Source: Derived from Department of Finance, 2002 * predicted
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Poor people, particularly those living in rural areas, often rely heavily for their sustenance on a range of environmental goods and functions
before gaining access to the land.37 The DALA's Quality of Life report found that production levels were very low among land reform beneficiaries, with less than 10 per cent using the land for agriculture, and many not using the land at all. Fully 80 per cent of beneficiaries said they had participated with the expectation that they would be able to plant crops and generate an income; yet only 22 per cent said they had managed to do this. The time of poorer women beneficiaries, in particular, was taken up by collecting natural resources for survival rather than organising systematic production on the land.38 In addition to land redistribution, tenure security in common property areas is important for sustainable development for a number of reasons. Communal land rights minimise individual risks associated with natural resources that vary widely over space and time. They also serve to reduce inequalities through common user rights, hence preventing social destabilisation.39 They provide residents with a legal basis to challenge top-down development projects that may not suit their needs. Land-based livelihoods, especially in communal areas, extend well beyond agricultural production.40 Value may also be derived from indigenous or wild resources, livestock systems and indirect and non-use values related to aesthetics, spirituality and ecological functions. These are best understood in an integrated way, with the components reinforcing one another. In the past, the fact that rights were not legally recognised was one of the factors that prevented communities from challenging the appropriation of benefits from 'development projects' on communal land by homeland politicians and traditional authorities. It also prevented settled communities from challenging the dumping in their areas of people who were forcibly removed under apartheid.41
A lack of clarity and certainty on tenure rights is clearly a constraint on private and public investment. Major government funded public works programmes have been thwarted by tenure uncertainties.42 In one instance, a settled community collected counterpart funds for the construction of a school, but lost the opportunity because of confusion over land allocation responsibilities.43
INVESTING IN A SAFE ENVIRONMENT
Environmental conditions relate to three key dimensions of poverty: (a) livelihoods: poor people tend to be most directly dependent on natural resources, and are therefore the first to suffer when these resources are degraded; (b) health: poor people suffer most when water and air are polluted; and (c) vulnerability: poor people are most often exposed to environmental hazards and environment-related conflict, and are least capable of coping when they occur. Poor people, particularly those living in rural areas, often rely heavily for their sustenance on a range of environmental goods (natural resources) and functions (ecosystem services). Natural resources can be a primary source of livelihood or may supplement household daily income. Ecosystems – forests, agro-ecosystems, grasslands, freshwater systems and coastal ecosystems – provide essential services that contribute to the productive activities of rural and urban poor people in numerous ways. These services are public goods, which provide indirect values that are not consumed or traded in the market place. They are, however, vital to the livelihoods of poor people, especially in the more marginal environments or where poor people have limited access to external technology and other inputs. The disease burden from environmental risks is much greater among the poor. Water-related diseases, such as
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diarrhoea and cholera, mainly affect children in poor communities. Other diseases, such as malaria, are linked to a wide range of environmental conditions or factors related to water contamination and inadequate sanitation. Indoor air pollution, caused by the burning of traditional biomass fuels (e.g. wood, dung) for cooking and heating, affects mainly the poor. Environmental degradation has a much greater impact on the poor than on the rich. The overwhelming majority of those who die from air and water pollution each year are poor people. They are also most affected by the floods, storms and harvest failures brought about by global warming. All over the world, it is poor people who generally live nearest to dirty factories, busy roads and dangerous dumps, while the loss of biodiversity is most severe for poor rural communities. Some environmental degradation truly reflects global concerns, such as global warming and the depletion of the ozone layer. Others are international, like acid rain. Yet others are more localised, though they may often occur worldwide, like urban air pollution, water pollution or soil degradation. However, even though poor people feel the impact of global environmental degradation, local environmental damage affects the lives of poor people even more. This includes the unequal health and livelihood impacts of water pollution, air pollution, domestic solid waste and industrial hazardous waste, soil degradation, deforestation and loss of biodiversity. In South Africa, the relationship between poverty and the environment needs to be understood in terms of the country's political history. Forced removals, overcrowding in the so-called homelands, discriminatory urban policies that contributed to inefficient resource flows and inequitable access to environmental services, unjust land-use practices
poverty and inequality
(poor communities located alongside polluting industries), the migratory labour system and a protectionist approach to nature conservation all contributed to environmental degradation and the alienation of people from their land and resources. Other key features of the povertyenvironment interface in South Africa are the skewed power relations that deny the poor access to environmental resources and services such as clean water, productive land and natural resources.44 In brief, the poor have been, and continue to be, 'left out' of the processes of economic growth and development due to historical and geographical circumstances, and also because of the social exclusion that results from unequal power relations between rich and poor, men and women, and the way in which institutions function to reproduce patterns of wealth and poverty.45 The commonly held perception is that poverty is mainly a rural phenomenon and that the poor are largely responsible for the degradation of land and resources. Poverty in rural areas and the human response to securing food, shelter, and generating livelihoods undoubtedly contribute to environmental degradation. In addition, research for the National Spatial Development Perspective Report (1999) indicates that, although there is a severe poverty gap in the rural districts of the former homelands, the highest poverty gap46 is measured in the large metropolitan areas. Conditions of extreme poverty and human deprivation are evident in many of the informal settlements around and within South Africa's cities. However, as in many developed nations, the unsustainable consumption and production patterns of the wealthy minority in South Africa may be a greater threat to environmental sustainability than the unsustainable practices of the poor.47
The overwhelming majority of those who die from air and water pollution each year are poor people
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In a recent study of 700 South African households affected by HIV/AIDS, more than half of the affected families did not have enough food to stave off starvation
Although poverty is a countrywide scourge, its interface with the environment is perhaps most visible in rural areas. A large proportion of South Africa's rural poor is directly dependent on natural resources for subsistence purposes. The use of such resources provides an important, albeit largely unrecognised, buffer against poverty, as well as opportunities for employment in the informal sector.48 But for the poor, 'the environment' can also be viewed as a hazard (e.g. through processes of desertification) and a threat to human health and well-being (e.g. through poor air quality). As producers, consumers, harvesters and main caretakers, women have been particularly vulnerable to the degradation of natural resources, the subsequent destabilisation of their livelihoods and income-generating abilities, and the added burden of unremunerated work. Consequently, addressing poverty is not only critical in terms of safeguarding South Africa's environmental heritage and resource base, but also in terms of meeting constitutional imperatives. These are contained in the Bill of Rights, which includes the right to an environment that is not harmful to health and well-being, and the right to equitable access to all of South Africa's natural resources. Chapter 6 of this report elaborates on the relationship between socio-economic development and the environment in South Africa. It also identifies major environmental challenges.
COMBATING HIV/AIDS
About 12.6 per cent of South Africans (5.58 million) are currently estimated to be suffering from HIV/AIDS.49 HIV/AIDS has had a disproportionate impact on poor communities, permanently trapping many of its victims in poverty. The magnitude and far-reaching consequences of the HIV/AIDS pan-
demic mean that the disease is no longer a crisis only for the healthcare sector, but presents a major challenge to all sectors. Many studies in South and southern Africa have clearly demonstrated that HIV/AIDS contributes to a rise in poverty, and that poverty reduces the ability of poor people living with HIV/AIDS to cope with the disease.50 AIDS generates new poverty as people lose employment and housing tenure. Household incomes fall due to the loss of wage earners and rising spending, particularly on medical care and funerals. In both Thailand and Tanzania, households are reported to spend up to 50 per cent more on funerals than on medical care.51 Not only do household outputs and incomes decline, but household members, particularly women, have to make hard choices on the allocation of their time between production, meeting household needs, child care and care of the sick. In a recent study of 700 South African households affected by HIV/AIDS, more than half of the affected families did not have enough food to stave off starvation. Two-thirds of the households reported a loss of income as a result of the disease and larger proportions of household income being spent on health care and funerals.52 The poverty that results from AIDS interacts with other dimensions of poverty to generate a vicious downward cycle. Under these conditions, AIDS not only increases poverty, but also widens the gap between the rich and the poor. Households may cope by selling assets: land, bicycles, radios, cattle and other goods. If they dispose of productive assets such as cattle or land, they reduce their chances of recovering and rebuilding. The tendency is for such households to be unable to cope and to collapse. From a social sustainability perspective, key concerns include changes in family structures and social networks.
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The increasing pressure on grandparents to care and provide for growing numbers of orphaned children is placing a heavy burden on those who are already vulnerable. The number of households whose primary caregivers are under the age of eighteen years is also increasing. This has the knock-on result of decreasing school attendance and retarding efforts to build human capital. Other social implications include the abandonment and abuse of people living with HIV/AIDS, stigmatisation, poor morale and stress. Encouragingly, the link between poverty and HIV/AIDS has been emphasised in South Africa and the government has urged action to deal with the root causes of poverty. However, various factors still impede the implementation of a coherent and unified strategy. Whilst there have been positive attempts by various government departments to develop and implement policy responses to the epidemic,53 little progress has been made with mainstreaming HIV/AIDS into all sectoral policies – in government, business or civil society institutions – and identifying practical strategies to address the epidemic. The magnitude and dimensions of the epidemic demand the urgent adoption of a multi-sectoral and multi-stakeholder approach.
ENHANCING CIVIL SOCIETY CAPABILITIES
Non-profit organisations (NPOs) were deeply engaged in the struggle against apartheid. Because political parties were banned, activists used other bodies – usually NPOs – as catalysts to apply pressure on the government. In the post-apartheid period, NPOs have had to redefine their objectives towards the reconstruction of the new society and, in so doing, gear their work to the redress of the social imbalances caused by apartheid.54 Despite the fact that several NPOs had to close in the
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period following 1994,55 the NPO sector is still made up of a wide spectrum of organisations, and is currently playing a critical and vibrant role in the social and economic development of South Africa. NPOs create new opportunities for the large numbers of people who work in these institutions and benefit from their services. This is particularly important in respect of the fight against poverty. The Vulamehlo Women's Club, for example, creates skills and employment through food production. Another example is the Siyakhula Development Project, where unemployed people are given basic skills training in fields as diverse as plumbing, carpentry, mechanics, welding, gardening and security services. Thereafter, Siyakhula supports and encourages its graduates to contract small jobs to underserviced communities at minimum cost. Mutual aid structures such as 'stokvels' and 'burial societies' are widespread and are significant actors in the economic life of South African communities. These structures assist members with credit requirements or special financial needs, such as the costs of traditional funerals. Many of these voluntary associations use revolving credit mechanisms, although some have become sufficiently established to be able to secure credit through more formal channels. In addition, social coping mechanisms improve the ability of individuals and groups to enhance their economic potential – such as support for single mothers and after-school care groups. A wide range of development and housing organisations has evolved, creating employment opportunities by facilitating the physical development of infrastructure and housing.56 Other organisations impart skills or assist with access to capital, equipment and information technology for people in specific circumstances, such as small to medium-scale business enterprises, rural
Mutual aid structures such as 'stokvels' and 'burial societies' are significant actors in the economic life of South African communities
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Volunteer-based organisations are an important source of employment for Black people and women
development initiatives and infrastructure provision to marginalised communities. One such organisation, KhulaStart, was established in 2000 and is partially operated by volunteers arranged by the United Nations Volunteers (UNV). KhulaStart provides group loans without personal collateral security, with the aim of kick-starting small and medium-scale business ventures. Volunteers were used to establish the organisation, to train the eighty or more staff members and to provide field support.57 Volunteering is also an important economic force in South Africa, focusing on the marginalised sectors of society and on those special needs groups that tend to be overlooked by government and the corporate sector. It also builds social capital amongst marginalised communities and demographic groups by empowering them to set their priorities and shape their destiny. Many unemployed people have immersed themselves in the volunteer sector and, in so doing, have gained important social recognition, skills, networking, improved self-image and often the opportunity to move into more formal, paid positions. Alternatively, this capacity may remain within volunteerbased organisations, potentially in leadership positions, thus enhancing the sustainability prospects of the organisation.58 This 'skills incubator' effect bodes well for South Africa, given the demographic profile of volunteer-based organisations. If supplemented with muchneeded funding and skills development, it could provide important, socially responsible future leadership in all sectors of society. Volunteer-based organisations are an important source of employment for Black people and women, both of whom have been historically, socially and economically marginalised in South Africa (Box 4.5).59 NPOs in South Africa, including volunteer organisations, are currently in need of support to enhance their sustain-
ability and services. Some important interventions are needed to ensure that NPOs continue to play a direct role in poverty reduction and in unleashing the potential of communities to enhance overall developmental initiatives.
PROVIDING A SOCIAL SAFETY NET
Given the high percentage of the population living below the poverty line, South Africa's social assistance system of grants is an especially important aspect of addressing income poverty.60 Low or non-existent incomes contribute directly to poor access to health care, education, housing and social infrastructure, since the poor have difficulty affording these services.61 However, the success of a policy can be judged by its ability to focus benefits on its target group.62 Focusing on a specific target group also has the advantage of making it easier to identify the impact of a policy.63 A major objective of the government's transfer programme is to address poverty, particularly poverty among the black population. But have government transfer programmes been designed in a way that will impact positively on their targeted group A way of answering this question is to: (a) identify the distribution of eligible individuals for a given social grant (targeting beneficiaries); (b) estimate the impact of a given programme on head-count poverty (targeting head-count poverty), and (c) estimate the impact of a given programme on the poverty gap (targeting the poverty gap). Targeting beneficiaries In terms of the distribution of eligible individuals for the main current programmes, Africans, who constitute the overwhelming majority of the poor in the country, are the main beneficiaries of the current old-age pension programme, the
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child support grant and the disability grant programme (Table 4.3). Their total share of the above programmes (and current policies) is 79 per cent for the old-age pension, 94 per cent for the current child support grant and 85 per cent for the disability grant. The distribution of beneficiaries for the above grants in terms of race and family type is sensitive to the means test.
The means test refers to the income level criteria in terms of which the eligibility for income support of prospective grant beneficiaries is assessed. Those who qualify under the means test subsequently become recipients of grants. If the means tests are removed, the share of Africans in 'total potential number of eligible persons' for different grants is expected to drop. If all else remains unchanged, the
Box 4.5
Volunteering in South Africa
grammes, the building of educational facilities and job related skills development. It is also in the philanthropic sector that the most direct environmental programmes exist, protecting the rights of animals and aiming to conserve natural areas and resources. Participation By participation we refer to those organisations that are involved in the governance process either through representation on government bodies or through representation on other consultative bodies. Current participative organisations include school governing bodies, parents associations and ratepayers associations. Advocacy and campaigning Advocacy and campaigning tends to refer to the lobbying of government for purposes of changing policy and legislation. South African volunteering organisations are territorial and generalist in nature. This tends to deplete their lobbying "power" resulting in the volunteering activities of non-profit organisations seldom focusing primarily on advocacy and campaigning. There are a relatively large number of organisations that fall under the participation activity due to their main function being concerned with governance such as civic associations or rate payers associations, although part of their function is lobbying. There is also a growing number of influential organisations that are concerned with issues of human rights or sectoral policy concerns such as those of business, labour or the environment. These include HIV/AIDS lobby groups, business lobby groups, prisoners' rights organisations, workers unions, environmental and animal rights lobbies and educational groups. However, as many of these organisations' main activities are focused on the education of people concerning their rights and provision of legal representation, with only a small amount of time being spent on campaigning, they tend to be categorised under philanthropy and service to others. It is for this reason that only 1% of organisations are specifically involved in this type of activity.'
'The United Nations Volunteer Programme (1999) classifies volunteer activities into four groups: mutual aid or self-help, philanthropy or service to others, participation, and advocacy and campaigning. South African volunteering organisations are distributed as follows: Mutual aid or self-help These volunteers or members are the main recipients of the volunteering themselves. These are predominantly kinship groups such as burial societies, rotating credit associations such as stokvels, religious groups, health groups, disability support groups and sports and cultural groups. Volunteering of this type is a major catalyst to the growth and maintenance of social capital in the country through the development of strong community values, maintaining and furthering cultural norms and pursuits, empowering marginalised groups (such as women and children) and developing the infrastructure for the growth of economic capital through access to financial services, collective employment endeavours and employment opportunities within the most underdeveloped communities in urban and rural South Africa. Philanthropy or service to others The primary beneficiary of the volunteering in this category is a third party and not a member of the group. The culture of Ubuntu and South Africa's missionary heritage helps to explain why this type of volunteering is so substantial. The contribution of philanthropic activities to sustainable development in South Africa is based on both supporting and developing the social and economic fabric of communities through assisting marginalised groups, aiding in the fight against poverty and hunger and increasing the economic survival prospects of many thousands of people. Philanthropy NPOs offer care, shelter, feeding and clothing to children, the disabled and the elderly and financial and material assistance through soup kitchens, feeding schemes, shelters and job creation projects. Furthermore, economic capacity is developed through philanthropic adult education pro-
Source: Bev Russell (2002), 'The contribution of the South African Volunteering Sector to Sustainable Development.'
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main group benefiting from the removal of the means tests will be individuals within the higher-income white community. Alternatively, when the means tests are removed, the share of pensioners from the 'Couple with No Children' family group increases by 4 per cent, while the share of 'Single Parent' families declines by 2 percentage points (Table 4.3). In the case of the child support grant, the share of 'Single Parent' families in 'total number of eligible persons' when the means test is applied (71 per cent) is about four times the share of 'Couple with Children' families (18 per cent). Without the means test, however, beneficiaries of the grant are almost equally distributed among the above two family types (Table 4.3).
Table 4.3
The distribution of beneficiaries among provinces also shows sensitivity to the removal of the means test (Table 4.3). When means tests are removed, the proportions of the total number of eligible persons for different types of grant for the two provinces with the highest portions of their population in poverty (i.e. Eastern Cape and Mpumalanga) decline between 0 and 6 per cent, depending on the grant programme. Addressing head-count poverty and the poverty gap Table 4.4 shows the combined impact of different grant programmes on head-count poverty.64 The current policy for the old age pension, child support and disability
Distribution of Government Grants by Gender, Race, Family Type and Provinces (2002)
Current Policy1 Child Support National 3,804,741 48% 52% 94% 5% 0.2% 1% 11% 0% 18% 71% 4% 24% 1% 5% 23% 9% 7% 7% 20% Old Age Pension 1,950,259 28% 72% 79% 8% 11% 2% 43% 26% 17% 14% 9% 21% 2% 6% 21% 9% 12% 5% 14% Disability Grant 1,111,429 48% 52% 85% 11% 2% 2% 54% 8% 20% 18% 9% 19% 3% 11% 23% 9% 10% 4% 11% Current Policy without Means Test2 Child Support 8,257,727 47% 53% 86% 7% 5% 2% 5% 0% 48% 47% 7% 18% 2% 7% 22% 8% 12% 8% 17% Old Age Pension 2,341,077 28% 72% 70% 8% 20% 2% 41% 30% 17% 12% 11% 19% 2% 6% 19% 8% 16% 6% 13% Disability Grant 1,588,628 50% 50% 78% 10% 8% 3% 47% 11% 27% 15% 11% 16% 4% 10% 22% 8% 14% 4% 10%
Gender
Male Female
Race
African Coloured White Indian
Family type
Single Couple with no children Couple with children Single parents
Province
Western Cape Eastern Cape Northern Cape Free State KwaZulu-Natal North West Gauteng Mpumalanga Limpopo
Source: Adelzadeh (2003a) Note: The table is a result of running an integrated simulation model of government's tax and transfer programmes (Adelzadeh (2001a)). (1) Current policy refers to the preparation and running of simulations using the current tax and transfer legislation. For the child support grant, the current legislation on eligibility condition, including the age requirement of 0 and 9, is applied. The means test has been kept at 1999 prices. (2) current policy without means test refers to the removal of means test, and not other requirements, from the current grant policies; (3) Family type should not be mistaken with household type.
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grants is expected to reduce poverty rate by 3.8 per cent. The number of poor people moving out of poverty due to government's grant programme depends on the conditions attached to each programme's eligibility and entitlement conditions.65 A more inclusive and generous grant programme leads to a larger number of poor moving out of poverty.66 Of the three important grant programmes, the old age pension programme is the most effective in reducing head-count poverty, followed by the disability grant programme and the child support grant. The significant differences in the relative effectiveness of grant programmes on head-count poverty are due mainly to the large difference between the amount of the child support grant and the other two grants. The amount of the child support grant is about onefourth of the grant amount for the old age pension and disability grants. An additional way of measuring the effectiveness of government grant programmes is to estimate the percentage reduction in the poverty gap as a result of the transfers. The last column of Table 4.4 shows the percentage reduction in three different measures of the poverty gap associated with the combined effects of the three main government transfer programmes. Using a national poverty line of R569 per month per adult equivalent, the disbursement of the three grants among all the eligible individuals can reduce the poverty gap by 7.0 per cent. Table 4.4 shows that the government's grant programme is relatively more effective in reducing extreme poverty reflected in the higher reduction of the poverty gap when measured by one or two dollar per day per person, using the rand-dollar purchasing power parity exchange rate. Clearly, not all poor grant recipients move automatically out of poverty as a result of receiving a government grant. Given the depth of income poverty in
poverty and inequality
South Africa, the income of a large number of households receiving grants remain below the poverty line. This is especially the case since on the one hand, the child support grant is relatively small and does not cover poor children aged between 9 and 18, and on the other hand, the poor adult males, aged between 18 and 64, and poor adult females, aged between 18 and 59, are left out of the social security grant programme. As it stands, only about 30 per cent of the poor were eligible for receiving government grants in 2002. This implies that, even if there were to be a full take-up of grants, more than 16 million poor people fell outside the social security support system. Overall, 21 million people continued to live below the national poverty line in 2002. The above findings indicate that the current social assistance system of grants in South Africa, although essential to addressing poverty, has limited impact on reducing head-count poverty or the poverty gap. The system is not designed to lift all or the majority of the poor out of poverty. Nor is it appropriately financed to achieve such an objective, with the result that it is able to target only a fraction of the poor.
THE WAY FORWARD
Only about 30 per cent of the poor were eligible for receiving government grants in 2002. This implies that more than 16 million poor people fell outside the social security support system
There is growing acceptance of the view that high absolute poverty, pronounced income inequality and a high concentration of wealth ownership increase inefficiencies and reduce the growth potential of a country. Moreover, even though, by
Table 4.4
Poverty Effects of Government Transfers (2002)
Poverty rate Poverty gap –7.0% –12.2% –12.0%
National Poverty Line International Poverty Line { $2 per day $1 per day
–3.8% –11.0% –14.1%
Source: Adelzadeh (2003a) Note: The table shows the difference between before and after government transfers.
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The poor remain poor because they cannot borrow against future earnings, invest in inputs for production, or accumulate assests for future production, including education
definition, growth creates more income, the poor may not benefit from this increased income unless they are empowered – not only economically, but also socially and politically. Delving below income poverty and inequality statistics, this chapter has analysed a number of the underlying proximate forces engendering poverty and inequality in South Africa. These include: highly skewed wealth distribution; an extremely large earnings inequality; weak access to basic services by the poor, unemployed and underemployed; a declining employment outcome of economic growth; environmental degradation; HIV/AIDS, and an inadequate social security system. This chapter's analysis indicates that these challenges are not mutually exclusive. The vicious cycle of poverty clearly reflects the underlying links between the above factors. Sustained human development in South Africa will depend on the effective interruption of this cycle. The combination of the above factors has also been viewed as a series of multiple market failures in which markets do not work very well for the poor.67 The poor remain poor because they cannot borrow against future earnings, invest in inputs for production or accumulate assets for future production, including education. They are unable or unwilling to engage in entrepreneurial activities because the costs of failure are too high.68 They are unable to insure themselves against risks and lack information about market opportunities. Finally, they are deprived of many of the public goods necessary for such activities (such as property rights, public safety and infrastructure) and incur high costs in terms of time and expense when trying to obtain these goods. The analysis in this chapter provides the foundation for understanding the complex links between poverty and the main themes of the rest of the chapters of this report. The development of
specific public and private interventions to address the challenges of sustainable development in South Africa needs also to take into account the analyses of these later chapters. Meanwhile, the following recommendations can help address some of the issues analysed in this chapter.
RESPOND TO THE HIV/AIDS EPIDEMIC
A comprehensive response to the HIV/AIDS epidemic should include the adoption of a multi-sectoral and multistakeholder approach that includes the following: (a) Prevention: no matter how bad the epidemic, some people are not infected and new cohorts become sexually active all the time. Thus expanding measures that help stop more infections are highly desirable. (b) Treatment and care: large numbers of people continue to fall ill and require care. The national approach to HIV/AIDS must be to expand access to anti-retroviral drugs, the only hope for people living with AIDS. In some settings, home-based care will need to be developed. The private sector may, through medical aid schemes, take care of their workers and their families but, for the bulk of poor South Africans, the state will have to be the source of treatment and care. (c) Mitigating the impact of HIV/AIDS: the country needs to plan for the loss of skills at all levels and for the increase in the number of orphans due to HIV/AIDS. It is important to point out that all of this requires leadership from the highest levels.
ESTABLISH A COMPREHENSIVE SOCIAL SAFETY NET
In March 2002, the report of the Committee of Inquiry into a Comprehensive System of Social Security for South Africa was delivered to Cabinet. It provides a comprehensive attempt to bring together the different elements of a fragmented social security system in order to
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provide recommendations that could ultimately lead to comprehensive social protection. This report supports the main conclusions and recommendations of the Committee's report, particularly the Committee's position that an appropriate social security system for South Africa must prioritise the needs of people without any, or with insufficient, income, and must encompass those engaged in the informal sector. This, for example, implies the extension of the child support programme to poor children between 9–18 years, who are not currently covered by the grant. It also implies extension of the social security system to provide income support to poor adults aged between 18–59 years and assistance for households where no one is employed. In addition to expanding the scope for eligibility for social grants, the real value of social grants (after adjustment for inflation) also needs to increase in the medium term. The combination of both measures is needed to ensure that the government's social grant system effectively contributes to the fight against income poverty.
INCREASE SUPPORT FOR LAND REFORM
these expressions into programmes and projects, even if they sometimes do not take the form desired by government officials and politicians. In rural areas in particular, participatory strategies for resource management should be formulated with local resource users. Most critical is the need for grassroots organisations that are able to articulate the demand for land and related services. This is related to the success of decentralisation, both of the decisions and implementation of land reform, as well as broader integrated planning. At present, there is a tendency for local councillors to be responsive to political parties and hierarchies above them rather than to their constituencies at local level. The element of public participation, and the imperative that municipal councillors be in regular contact with a wide range of interests in their constituencies, should be strengthened. NGOs and other civil society organisations should be raising gender awareness in the activities and vision concerning land reform. Advance tenure reform In the communal areas, the best solution for natural resource use and management is the participation of resource users in appropriate local-level structures they themselves have designed. These multistakeholder structures can help unite local communities by involving traditional leaders, local councillors and resource users in managing and deciding on the use of resources in their areas. The principles of the 1997 White Paper on Land Policy should be followed in the process of constructing these institutions, as well as in their ongoing functioning. These principles stipulate that there should be full participation by women and by poorer sections of the community. It may be necessary for the state to monitor this process and provide capacity building and empowerment support as required.
In addition to expanding the scope for eligibility for social grants, the real value of social grants also needs to increase in the medium term to ensure that the government's social grant system effectively contributes to the fight against income poverty
For the land reform programme to succeed, the government needs to increase the share of the budget for this programme, so that it can meet the target it set in the RDP and policy documents within an accelerated timeframe. The state has an important role to play in creating the conditions for the creative participation of civil society in the process of land reform. But responsibility must also be placed at the door of civil society itself. The trend towards decentralisation and integration of government planning at the local level should be encouraged and expanded. Autonomous expressions of the popular will should be encouraged, and mechanisms should be designed to integrate
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NGOs and other civil society organisations should be raising gender awareness in the activities and vision concerning land reform
Land reform projects should be conceptualised from the perspective of the development of an area as a whole, including the impact it will have on nonbeneficiaries
The specific type of land ownership should also be left to the local resource users to decide upon. There should be no preconceived bias for or against communal or individual tenure or any mixture of the two. The state should accept and legalise decisions made by local stakeholders, on condition that the process followed was inclusive, transparent and democratic and did not diminish the rights of the poorest sections of the population. A legal framework based on these principles should be constructed in line with constitutional imperatives. The ecological maintenance of communal lands requires methods of conservation that provide immediate benefit to the livelihoods of resource users. Therefore, conservation programmes should be designed with the aim of integrating productive activities into conservation measures. This will provide people with short-term motivation for conservation activities with long-term benefits. On commercial land, there should be a moratorium on evictions while legislation is reviewed to provide stronger rights for farm dwellers. An anti-eviction programme should be linked to land redistribution, so that farm dwellers liable for eviction are provided with land and resources they consider equivalent or better than their current standard of living. Farm owners who evict dwellers should be liable for some of the costs of alternative accommodation and resettlement. Increase the pace of land redistribution Land reform will make a contribution to large-scale improvements in the living conditions of the population only if the programme transfers significant resources to the dispossessed. Increasing the pace of land redistribution may demand that farm owners be recruited to contribute land and transfer their skills in exchange for tax breaks, special subsidies,
preferential loans or reduced interest rates. While a demand-driven approach to land reform may encourage potential beneficiaries to organise and identify land they would like to purchase (under a 'willing buyer, willing seller' approach), it limits the amount of land available for resettlement at any one time. To counter this problem, the state could adopt aspects of a supply-led approach: meaning it should purchase land wherever this is available with the aim of redistributing it as soon as possible to members of the locality who want land, or even to people from elsewhere who wish to settle. This requires that the state have first option to buy when land is sold. Insofar as agricultural production is identified as the land use option, redistribution must be coupled with a restructured extension support system. Where land reform is linked to agricultural production, the state should consider ways of nurturing growth by providing subsidised services and protection from international competition, as well as from competition from White farmers who have monopolised agricultural production in South Africa. To be successful, land redistribution has to be integrated into broader development programmes. Land reform projects should be conceptualised from the perspective of the development of an area as a whole, including the impact it will have on non-beneficiaries. The decentralised planning and implementation framework currently under construction is a positive step in this direction and should be encouraged and enhanced. Land reform also needs a stronger flow of resources to the local level to implement projects and build and sustain the necessary support structures.
CONCLUSION
This chapter analysed a number of proxi-
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mate forces that continue to engender poverty and inequality in South Africa. It also begins to bring into focus the complex links between the five main sustainable development challenges to South Africa. The chapter presented a few of the Report's overall policy recommenda-
tions aimed at combating poverty and distributional inequalities. Policy recommendations on combating poverty through expanded access to services, labour market measures, environmental policies and economic growth are outlined in Chapters 5 to 8 of the Report.
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Endnotes
1
2 3
4
5
There is a large and growing literature on each of these issues. In the rest of this report, the importance of these issues to understanding and overcoming the challenges facing SHD in South Africa has been highlighted. This issue will be explored in more detail in Chapter 7 of this report. The poverty line used is R533 per adult equivalent per month: Adelzadeh (2001); Mlambo (2001). Klassen (1997) estimated that almost of half of South Africa's population was categorised as poor, and that one-fifth was earning less than $1 per day. Leibbrandt et al (2001:22) show that 6 per cent of South Africa's population captures over 40 per cent of its income. Attempting to track trends in inequality, Budlender (2000:93) suggests that inequality may have increased between 1994 and 1998. May et al (2000a) calculate that the UNDP Human Development Index for South Africa shows significant spatial and racial differences within the country. They demonstrate that, while White South Africans had an HDI similar to that of Canada or Israel, the HDI score for Black South Africans was lower than that for Egypt and Swaziland. A provincial comparison shows that the score for the Limpopo province was lower than that of neighbouring Zimbabwe. The new economics of inequality includes a microeconomic component: see Bardhan, Bowles and Gintis (2000). This has grown from the economics of imperfect information. Beginning with the idea that costly and asymmetric information leads systematically to missing and/or non-price rationed capital and insurance markets, the microeconomic literature has focused on the inequities and inefficiencies that result in economies with initial wealth inequality (e.g. poorer agents may initially be unable to finance productive projects that offer higher expected returns than do the projects of initially wealthier agents who do get financed). These theoretical insights have been buttressed by an empirical literature that has shown that initial inequality is related to lower levels of aggregate growth over time: e.g. Alesina and Rodrik (1994). Particularly striking in this regard is the work of Deininger and Squire (1998), which employs a new, better quality inequality data set to show that initial land ownership inequality appears to be strongly related to the subsequent rate of economic growth.
6 7 8 9
10 11 12 13
14 15
16
17
18
19
Carter et al (2002) Ackerman (2000:33) Ackerman (2000:33) For example, in agricultural economies the rise in land ownership inequality is linked to rural poverty. Oliver et al (1995) SAIRR (1998:158); Business Day, 10 February 1998. See also Maseko (2001:229). Bonti-Nkomah (2002) and May et al (2002) Property income refers to dividend receipts, interest receipts less interest payments, rent receipts less maintenance cost, mortgage interest and consumption of fixed capital and the profits of non-corporate business enterprises – after consumption of fixed capital and after inventory valuation adjustment. Reserve Bank (2002:S–131) September These features of the South African upper class conform closely to the findings of Domhoff (1998) for the United States. There are a number of ways in which corporate decisions with regard to employment, investment and the choice of technologies affect the lives of people inside and outside of the company. Clawson et al (1992) South African big business has historically been able to go beyond the individual member's corporate interest or sector by articulating and actively lobbying for its long-term strategic 'class' interests. This has occurred in areas such as the choice of development path for the country, the issue of nationalisation, macroeconomic policy and privatisation. It has established bilateral and multilateral channels of dialogue with top government officials to ensure that the country's policy-makers are well aware of its positions. (See Chapter 2) A recent example is the reaction of the big mining houses on the leaked policy proposal that suggested that, within the next ten years, the composition of ownership of the mining sector should change to include 50 per cent black people. In its presentation to Parliament, the Chamber of Mines, which represents the interests of the main mining companies in South Africa, threatened to withhold a substantial amount of investment in the sector if the proposal was legislated. It is important to note that the relationship between wealth, economic power and political influence is not unique to South African society, past or present. Domhoff (1998:116)
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20 21 22 23
24
25
26 27
28 29 30 31 32
33 34 35 36 37
concludes in his survey of the structure and influences of the American upper class: 'The upper class is based in the ownership and control of profit-producing investments in stocks, bonds, and real estate. In other words, the nationwide upper class rooted in the corporate community is a capitalist class as well as a social class. Its members are not simply concerned with the interests of one corporation or business sector, but with such matters as the investment climate, the rate of profit, and the overall political climate.' This includes employed and self-employment, direct and indirect sources of income. Adelzadeh, et al (1998) Freeman (1993) Harrison and Bluestone (1990) argue that economic recovery is not always sufficient to reduce adequately the rise of wage inequality and polarisation. There are a number of reasons why the poor may not be able to integrate fully into and benefit from increased economic activities. Among these are: a nutrition-based barrier; the insideroutsider problem; market failures of various kinds; mismatch of skills; cultural stereotyping of occupations, and women's struggle to combine productive and reproductive activities. Osmani (2002) The 2003 Human Development Report estimates that the income or consumption share of the richest 10 per cent is 65 times that of the poorest 10 per cent in South Africa. UNDP (2003:284) For more on this topic, see Chapter 7 of this report. It is understood that employment is not valued for its potential income only, but also because it allows people an opportunity to make a productive contribution to society, exercise their skills and enjoy self-respect, dignity and empowerment. Chapter 7 of this report elaborates on this dimension of employment. UNDP (2003:284) Carter, May and Padayachee (2002) Osmani (2002) McKinley (2001:202) The two propositions are associated with Kuznets, Simon (1955) and Okun, Arthur (1975), respectively. Griffin and Ickowitz (2001) UNDP (2000:10) Carter et al (2002) Department of Finance (2002:136) Deininger (1998:5-6). The Asian experience indicates that technical progress in small-scale
38 39 40 41 42 43 44 45 46
47 48 49 50 51 52 53
farming can bring widespread livelihood-based improvements and prolonged poverty reduction alongside growth. Lipton (1996) Cross and Hornby (2002:33–34) Cooper et al (1996:596–97) Shackleton, Shackleton and Cousins (2000) Claassens (2000:130) Adams, Cousins and Manona (2000:124) EDA (1999:7) Parnell (2002); Aliber (2001); Urquhart (2001) Bernstein (1992); Cousins (2000); Glavovic et al (2002) The poverty gap index indicates the extent of the difference between actual income and income required to sustain a minimum standard of living. Satterthwaite (1999); Aliber (2001); Urquhart (2001) Shackleton et al (2000) Department of Health (2001) Loewenson, Rene and Whiteside, Alan (2001) World Bank (1997) Research conducted by the Kaiser Family Foundation over the past year. For example, in 2001, the Department of Social Development initiated a social relief programme that targeted vulnerable children affected by HIV/AIDS by providing school fees and uniforms to enable them to continue with school despite their circumstances. This responsibility is now provided for fully by the Department of Education. The Department of Social Development has developed a comprehensive HIV/AIDS programme offering social development services to vulnerable groups and those infected and affected by HIV and AIDS. Services range from home-based care and support, to poverty relief and comprehensive social security: Department of Social Development (2003). The departments of Agriculture, Land Affairs and Education have developed comprehensive programmes designed to address vulnerability to HIV/AIDS as a result of poverty. Other departments, including Education, Agriculture, Land Affairs and Public Works, have initiated HIV and AIDS programmes involving vulnerable communities. These programmes are guided by the Department of Public Service and Administration (DPSA) Impact and Action Project, initiated in January 2000, which aims to ensure that the public service is able to sustain quality services despite the progression of the AIDS pandemic. The DPSA has developed regulations to guide departments on the minimum requirements to manage HIV/AIDS effectively in the
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54 55 56
57 58
59
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workplace and ensure a coordinated public response: DPSA (2002). Russell (2002) Camay and Gordon (1999) A number of very successful women's housing development groups have made important inroads into the drastic housing shortage in South Africa. For example, the Ilingelethyu Homeless Initiative assists people to build their houses; while the Sheredon Park Community Housing Initiative helps build housing for those still living in shacks. UN Volunteers (2001:9) Source: anecdotal evidence from AIDS studies conducted with the help of organisations operating in this sector. According to Russell (2002), women make up 59 per cent of total full-time employees, and 81 per cent of full-time employees are black. Interestingly, however, there appears to be a slightly larger number of male volunteers, the large majority of whom are also black (70%). This is particularly so because of the growing
61
62 63 64 65 66 67 68
gap between the economically active population and the level of employment, and because a significant portion of the employed receive very low incomes. For example, the official number of unemployed in 2002 was 4.7 million compared to 1.8 million in 1995. Moreover, in 2001, work-related income for more than 27 per cent of the employed (about 3.5 million) was below the poverty line of R533 for an adult person per month. Report of Committee of Inquiry into a Comprehensive System of Social Security for South Africa (2002:58) Cornia and Stewart (1995); Grosh (1995) Sen (1995) For the rest of this section, a national poverty line, discussed in Chapter 2, is used. Adelzadeh (2001a) These findings are results of policy simulations run for this report. Adelzadeh (2003a). Carter et al (2002) Wood (2002)
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6
Environmentally sustainable development
THE ENVIRONMENTAL LEGACY OF APARTHEID POST-APARTHEID ENVIRONMENTAL POLICIES AND STRATEGIES CHALLENGES TO ENVIRONMENTALLY SUSTAINABLE DEVELOPMENT Globalisation 124
128
130 130
Valuing the 'environment' Tenure security and access rights Planning systems and approaches Institutional and human capacity Approaches to natural resource management HIV/AIDS
THE WAY FORWARD 'Mainstreaming' environmental sustainability issues
132 134 135 136 137 137
138 139
Strengthening institutions and building capacity Valuing environmental resources Participation in resource management
CONCLUSION ENDNOTES
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Environmentally sustainable development
The relationship between socioeconomic development and environment in South Africa needs to be understood in terms of South Africa's political history
The sustainable use and management of environmental resources constitutes a central pillar of sustainable development. Environmental sustainability implies avoiding the overexploitation of renewable resource systems and maintaining the integrity of systems providing environmental sink functions. It also implies prudence when depleting non-renewable resources, and only to the extent that investment is made in adequate substitutes.1 Traditional neo-classical economic approaches see no major contradiction between economic growth and environmental sustainability. For neo-classical economists, clear and enforceable private property rights, including private ownership of resources would, in general, ensure that environmental resources are used in a sustainable manner.2 When property rights are unclear, they argue, the result is environmental degradation through over-exploitation. The World Bank's most recent statement takes a more circumspect position on the relationship between economic growth and environmental sustainability. In its 2003 World Development Report, the Bank recognises that 'stresses on the environment are increasing', especially through the unsustainable use of forest, marine and terrestrial resources. Pollution of air, water and land is occurring at a rate that is likely to result in permanent and irreparable damage to land and water ecosystems. The World Bank also acknowledges that the continued unsustainable use of resources and permanent damage to ecologies through pollution is a consequence of globalisation and unrestrained economic growth. The organisa-
tion remains optimistic about the ability of humans to generate economic growth while preserving the environmental resource base of the planet. The key to achieving this lies in putting institutions in place to manage and provide public goods, correct 'spillovers' and broker differing interests.3 A more radical perspective argues that unsustainable economic growth is the consequence of a particular 'model of development' that puts profits before the environment.4 While this model may have allowed some countries to grow very rapidly, such growth has come at enormous environmental and social costs.5 Reproducing this first world model of growth in the third world will be disastrous for the global environment.6 Therefore, this approach argues for strategies that recognise the links between social and environmental injustice.7 An environmentally just model of growth prioritises the environmental rights of poor people, recognises that over-consumption is a central problem for environmental sustainability and calls for the more efficient use of resources.8 Box 6.1 describes some of the links between the environment and the different Millennium Development Goals.
THE ENVIRONMENTAL LEGACY OF APARTHEID
The relationship between socio-economic development and environment in South Africa needs to be understood in terms of South Africa's political history. Forced removals, overcrowding in the socalled 'homelands', discriminatory urban policies that contributed to inefficient
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Box 6.1
Why reaching the environmental goal is so important for the other Millennium goals
Links to the environment Poor people's livelihoods and food security often depend on ecosystem goods and services. Poor people tend to have insecure rights to environmental resources and inadequate access to markets, decision-making and environmental information – limiting their capability to protect the environment and improve their livelihoods and wellbeing. Lack of access to energy services also limits productive opportunities, especially in rural areas. Time spent collecting water and fuel wood reduces time available for schooling. In addition, the lack of energy, water and sanitation services in rural areas discourages qualified teachers from working in poor villages. Women and girls are especially burdened by water and fuel collection, reducing their time and opportunities for education, literacy and income-generating activities. Women often have unequal rights and insecure access to land and other natural resources, limiting their opportunities and ability to access other productive assets. Diseases (such as diarrhoea) tied to unclean water and inadequate sanitation and respiratory infections related to pollution are among the leading killers of children under five. Lack of fuel for boiling water also contributes to preventable waterborne diseases. Inhaling polluted indoor air and carrying heavy loads of water and fuel wood hurt women's health and can make them less fit to bear children, with greater risks of complications during pregnancy. And lack of energy for illumination and refrigeration, as well as inadequate sanitation, undermine health care, especially in rural areas. Up to 20% of the disease burden in developing countries may be due to environmental risk factors (as with malaria and parasitic infections). Preventive measures to reduce such hazards are as important as treatment – and often more cost-effective. New biodiversity-derived medicines hold promise for fighting major diseases. Many global environmental problems – for development climate change, loss of species diversity, depletion of global fisheries – can be solved only through partnerships between rich and poor countries. In addition, predatory investments in natural resources can greatly increase pressure to overexploit environmental assets in poor countries.'
'Goal 1. Eradicate extreme poverty and hunger
2. Achieve universal primary education 3. Promote gender equality and empower women 4. Reduce child mortality
5. Improve maternal health
6. Combat major diseases
7. Develop a global partnership
Source: Reprinted from Human Development Report (2003:125)
resource flows, inequitable access to environmental services, unjust land use practices (poor communities located alongside polluting industries), the migratory labour system, and a protectionist approach to nature conservation all contributed to environmental degradation and the alienation of people from their land and resources. South Africa's colonial and apartheid policies and practices effectively deprived the majority of Africans of the right to own land in 87 per cent of the country. Even in the socalled 'homelands' (which covered 13 per cent of the total land area of South Africa), the land remained in the hands of the state. Various forms of indigenous communal tenure were administered through traditional authorities, many of which were co-opted or corrupted into furthering the aims of the apartheid government.9 During this period, millions of people were dispossessed of their land rights and moved to resettlement areas
that were often extremely inhospitable and even hazardous to their health.10 Overcrowding and overstocking in the homeland areas eventually undermined the productive capacity of the land and led to the degradation of resources.11 Although the state retained title to all land under traditional or communal tenure and magistrates were responsible for issuing permits to occupy land, in practice, traditional leaders approved applications to 'own' land without magisterial approval. This ad hoc and corrupt system of land allocation and administration had profoundly negative environmental implications, and resulted in the loss of the productive land and natural assets needed to sustain livelihoods and generate economic development activities. Rural communities were also forcibly removed from areas considered to be of high conservation value. Many of these were declared nature conservation areas12 and people were removed from
Overcrowding and overstocking in the homeland areas eventually undermined the productive capacity of the land and led to the degradation of resources
environmentally sustainable development
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The lack of serious policy focus on the exploration and development of alternative, nonpolluting energy sources means that only a small percentage of total energy today is generated from renewable energy sources
land and resources they regarded as their own. In many respects, economic development during apartheid has left a devastating legacy of 'unsustainable development'. Bethlehem and Goldblatt (1997) have identified three problems associated with the environmental sustainability of South Africa's industrial sector at the end of the apartheid era. The first was the continued dependence of the economy on resource extractive industries. Although there has been considerable diversification in the last twenty years, the economy has remained dependent on activities that exact a heavy toll on the natural environment through the use of, and as a sink for, waste products. It has been estimated that one ton of metal generates 100 tons of waste. This is deposited in tailing dumps, often close to poor black communities. A second environmental characteristic of South African industry is that it has been shaped by and become dependent upon access to low energy prices. Although South Africa is well endowed with resources to meet its energy needs, it is extraordinarily dependent on a single energy source – electricity from coal power. The provision of cheap energy has been a major contributor to South Africa's environmental problems. Relative to gross domestic product, South Africa is the world's third highest producer of greenhouse gases, a result of coal-based electricity generation.13 Many industries remain dependent on this: indeed, this is 'one of South Africa's key competitive advantages [that] continues to drive much of new investment in industry'.14 The third problem affecting South Africa's industrial sector is the fact that the capital stock of equipment is old and inefficient in terms of both energy use and waste disposal. This applies to energy suppliers as well as the mining and man-
ufacturing industries. Coal-generated power stations lack desulphurisation or denitrification equipment. For other sectors of the economy, low capital stock means that pollution levels are high and energy-efficient technology has not been implemented to any extent.15 Furthermore, the lack of serious policy focus on the exploration and development of alternative, non-polluting energy sources – such as wind and solar energy – means that only a small percentage of total energy today is generated from renewable energy sources. Agricultural production in South Africa has been equally resource intensive and environmentally degrading. Within white commercial farming areas, low interest rates, subsidies for fuel and chemicals and a marketing structure that encouraged production paved the way for a farming sector that ensured national food self-sufficiency. While, given the growing threat of isolation, this was an important goal of the apartheid state, it encouraged mono-cropping, the expansion of intensive agriculture into marginal farming areas and a dependence on harmful chemicals and pesticides. Agricultural policies also encouraged the use of machinery, which has had a devastating impact on employment levels within this sector. The environmental impact of intensive agriculture has been complex and includes soil degradation, the pollution of waterways and underground water sources and the loss of biodiversity. Rates of soil loss – averaging at 2.5 tons per hectare – are considered to be at least eight times the rate of replacement, while water and wind erosion are estimated to affect 6.1 million hectares and 10.9 million hectares respectively of cultivated soil.16 It is estimated that some 31 000 hectares of South African soils are severely degraded by pollution17, and that soil acidification has increased beyond its natural rate, affecting the production of
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at least 5 million hectares.18 Compaction and crusting are also serious problems and are considered severe in respect of about 2 million hectares of fine sandy soils.19 These impacts have had a direct effect on the agricultural productivity of South African soils. Finally, during apartheid, agriculture became dependent on access to cheap water for irrigation and, as a consequence, used this scarce resource very inefficiently. In the 'homeland' areas, racist legislation prevented black farmers from enjoying similar levels of state support. Here, problems of soil degradation and erosion are the consequence of overcrowding and poverty. In a comprehensive survey of land degradation in South Africa, Hoffman et al (1999) conclude that soil degradation is significantly greater in the former homelands than in the commercial areas of South Africa. Poor working people and poor communities have felt the brunt of the 'environmental externalities' of industrial and agricultural development in South Africa. Regulations to protect workers on farms, in factories and on the mines were extremely weak or not enforced under apartheid, and many workers and their families continue to be affected by poor conditions in 'dirty industries'. Individuals who work in environmentally hazardous occupations frequently live in areas where environmental pollution is a severe problem. Indeed, as Luckey (2002) has argued, workers carry 'a double burden, facing environmental hazards at their workplaces and environmental hazards where they live'.20 With respect to the exploitation of marine resources, the policies and practices of apartheid systematically and effectively excluded all Black ethnic groups from full access to the various economic activities associated with the fishing industry.21 The distribution of marine resources was heavily skewed in favour of
large-scale White operators over the small-scale Black fishermen.22 This was still evident in 1994, when only 0.75 per cent of the sum of the commercial 'total allowable catch' of all species was allocated to Black ethnic groups. In addition, only 7 per cent of the 2 700 registered commercial fishing boats in South Africa were owned by Black people.23 One of the major barriers to gaining entry to the commercial fisheries was lack of access to capital and equipment. Apartheid policies meant that it was difficult for Africans to obtain financial support in the form of loans or credit. This effectively excluded the majority of fishermen from gaining access to a portion of the total allowable catch.24 Consequently, participation in the fishing industry remained in the hands of the wealthy, reinforcing the government's policy of curtailing African ownership rights in natural resources.25 During apartheid, service delivery was highly skewed towards wealthier White communities; while Black townships in urban and especially rural areas had extremely limited access to water, energy and sewerage facilities. Indeed, levels of service delivery to wealthier White households were (and still are) similar to those enjoyed by middle-class Americans and Europeans. The link between inefficient service delivery to the poor and environmental degradation is well recognised. The absence of proper sanitation and waste removal forces communities to dump refuse close to settlements where it poses a considerable health hazard. Lack of access to clean and safe sources of water not only increases the drudgery on women and children, who spend long hours collecting water, it also exposes households to life-threatening diseases. Without electricity, households are forced to use traditional methods of energy for cooking and heating. In rural areas, the collection of wood can lead to environmental problems, including
Individuals who work in environmentally hazardous occupations frequently live in areas where environmental pollution is a severe problem
environmentally sustainable development
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Embedded within the Bill of Rights is an environmental clause that states that 'everyone has the right to an environment that is not harmful to their health or well-being'
deforestation and soil erosion. In urban areas, the use of coal and paraffin poses considerable health hazards in the form of pollution and fires.26 As McDonald argues more generally about basic services, 'the lack of these services is arguably the most serious environmental problem in the country today – if for no other reason than the number of people who are directly affected by its consequences'.27 This is not to say that South Africa has lacked environmental awareness: on the contrary, the country has a long history of environmental conservation. However, the history of the environmental sector is deeply embedded in the country's turbulent colonial and apartheid past, and continues to suffer from a perception that conservation is a White, middle-class issue, focused on nature conservation and irrelevant to the urgent need for development and social justice.28 At the same time, South Africa has a relatively welldeveloped tradition of environmental justice, which has provided a critical analysis of environmental problems since the early 1990s. Such analysis has pointed out that the challenge in respect of environmentally sustainable development is, in a sense, 'global'. Apartheid has left a legacy of high levels of poverty, vast differences between the poor and the rich, inequitable access to resources and an industrial sector that has degraded natural environments. On the positive side, South Africa's post-apartheid democracy years have seen environmental issues move squarely into a socio-political arena concerned with human rights, access to natural resources, social justice and equity and sustainability.29
POST-APARTHEID ENVIRONMENTAL POLICIES AND STRATEGIES
In the run-up to South Africa's first democratic elections in 1994, the prob-
lem of environmental degradation was closely identified with the policies of apartheid.30 In the early 1990s, environmental analysts argued that the state would face a difficult challenge if it were to meet the demand for water, job creation, housing and education, while at the same time rehabilitating and protecting the environment. Cock and Koch (1991) warned that the state might be tempted to meet these demands 'at the expense of the environment'.31 Yet the ANC's policy statements before 1994 and immediately after South Africa's first democratic elections reflected a strong commitment to environmentally sustainable development. The Reconstruction and Development Programme (RDP), the ANC's pre-election manifesto, focused on reducing poverty, while at the same time redressing the injustices and inequalities of the former regime. It advocated a people-centred, needs-driven approach to development, while recognising the critical importance of using resources in a sustainable manner to achieve socio-economic goals.32 In June 1996, the government introduced the framework for Growth, Employment and Reconstruction (GEAR), a conventional macro-economic recipe for growth. The environment did not figure in any integral way in the original GEAR framework.33 Its claim that 'environmental responsibility' is something the government should take into account when evaluating applications for tax holidays – but not in too limiting a manner – reflects an underlying assumption of the contradiction between environmental integrity and economic progress. The 1996 Constitution also contains principles and clauses that underpin and support sustainable development.34 Embedded within the Bill of Rights is an environmental clause that states that 'everyone has the right to an environment
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that is not harmful to their health or well-being'35. Part (b) of the clause gives government the responsibility for taking 'reasonable legislative and other measures that: prevent pollution and ecological degradation; promote conservation; and secure ecologically sustainable development and use of natural resources while promoting justifiable economic and social development'. Other fundamental rights, including a set of specific rights for children, significantly