Rich?+?poor?=?success

2013-03-01 00:00

HISTORY exists for a reason. Certainly we learn from it. Most of the solutions for today’s challenges are influenced by lived experiences. Historical narratives tell us how the human race has survived centuries of horrifying tragedies. Institutionalised slavery, the holocaust and many other forms of oppressive systems are found in the archives of history. We are able to trace the growth and development of human knowledge from these stories and draw some conclusions.

For instance, we can conclude that slaves had knowledge and experiences of both worlds — being a peasant and being a servant of the master inside the palace. They were experts in adaptation and co-existence. They were basically engines of the socioeconomic order. Ironically, they were trusted to participate in the armies and defend the very oppressive kingdoms. Unknowingly, their masters taught them the art of treason. Slave generations had witnessed kingdoms collapsed by ignorance, power and greed of the elite. They became the masters of the lives of the elite. Like poverty, slavery created a very sophisticated weapon of social disorder and anarchy.

Forty-five years ago, American sociologist David Caplovitz argued that the poor were paying more to make a living than the wealthy classes. In 2005, Indian- American C.K. Prahalad reinforced Caplovitz’s findings and came up with a concept he called Poverty Penalty. In simple terms, both writers describe a phenomenon where poor people tend to pay more for consumer goods and services than the wealthy populations.

In South Africa, the survival of the poor is largely based on the migrant labour system, domestic and farm employment, and the state’s social grant system. Rural villagers commute to access these public services. It is common knowledge that they pay inflated prices for their groceries and other consumer goods. Transport operators charge them more to carry their goods. Worse, the divide between the poor and the rich is worrying. This phenomenon could have far-reaching consequences.

In his 2013 budget speech, Minister Pravin Gordhan this week pointed out that the government has made huge investments in the economic infrastructure that has benefited the private sector. He called on the private sector to work with the government in prioritising economic development, job creation and skills development by making necessary investments that will turn the economy around.

Worldwide, political nightmares are created by many failed initiatives of inclusive economic development. South Africa has not escaped this. For instance, billions of dollars have been poured into Africa by the developed world for some decades. Today, Africa can hardly show any return on this foreign investment.

South Africa is a land of many opportunities. We can get things right. The world presents us with a wealth of experience and knowledge to help avoid repeating mistakes. Our public sector has a wealth of experience of many failed local economic development initiatives. The private sector can tap into this experience to widen participation of poor people in many value chains. This is our springboard going forward.

In 2004, Prahalad wrote a book titled The Fortune at the Bottom of the Pyramid. This book argues that the poor are the biggest buyers of goods. It sees the poor as innovative and resilient entrepreneurs in the production and distribution chains. It concludes by advising the business community to find innovative ways to partner and make spaces for the poor to benefit from value chains. This noble idea has been tested in some parts of the world and was found mutually beneficial for small producers and established businesses.

Inclusive value chains open stable and sustainable local markets. Many production activities take place where operators and customers are situated. Products become affordable and more accessible to the consumers.

Lastly, service delivery rhetoric has lost its teeth. South Africans need to swallow the bitter pill of collateral damage in order to translate collective action into real patriotic sacrifices. Imagine if each employee in the republic was to save something, say R50, per month, in some interest-bearing investment instrument. I’m sure this would translate into billions of savings.

Imagine if this fund could be lent to the government to implement priority projects. What impact could this have on our gross domestic product? It could reduce the projected 40% government debt on GDP. It may dent our deficit. Our public spending could improve and attract further investments. More importantly, this will get the population into the habit of saving and investing.

Last but not least, our credit ratings would definitely improve. At the same time, savers would get good returns on their investments. I am not an expert in this field. We leave it to the economists to advise the public on options. I see this as one way of owning collateral damage and turning collective action into meaningful sacrifice for future generations. Sadly, such sacrifices depend on our leaders leading by example — leaders who are ready to live with the consequences of unpopular decisions. One of the key consequences of such action will be a louder apolitical citizens’ voice — a voice that will use our differences for the benefit of all. What better way of getting the citizens pulling in one direction?

• Nqe Dlamini is a rural development consultant.

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