Plugging the gap

2010-08-10 00:00

INEQUALITY between the poor and rich continues to grow as more and more people lose their jobs and small businesses collapse as their personal debt burden increases, according the recent data from Statistics South Africa.

While policy shifts, especially those that lead to structural reform, will help reverse the dire economic situation, until then South Africans who are better off need to dig into their pockets to give to institutions and programmes that are designed to help the poor.

We now know that it is not true that South Africa is insulated from the vagaries of the global economic recession, especially given its integration into the world economy. The recent African Economic Outlook of the African Development Bank suggest that even Africa north of South Africa is experiencing declined foreign investment flows and development aid due to the crisis.

Now there is data emerging to show that ordinary South Africans are experiencing the indirect consequences of the recession. Companies, especially those involved in import-export business and especially commodity traders, are in difficulty due to the global recession. These problems are being passed on to the consumer in the form of higher prices and to employees in the form of lower wages and retrenchments.

If it is true that in the period between 1994 and 2008, South Africa took advantage of a buoyant global economic climate to maintain consistent economic growth for the longest period in a century, then it should follow that difficulties in the world economy would also impinge on South Africa’s economic situation.

Given the fact that this crisis happens at the time when South Africans are said to be loathe to put their money into investments, affected citizens do not have alternatives but to rely on social grants for survival.

This means the country needs to debate policy choices to be exercised in order to reverse the situation. Such choices should be about correcting the macro-economic factors, issues of saving and household debt, but these must also include encouraging a culture of giving or philanthropy.

Giving is made all the more important by evidence that inequality has grown, meaning the rich few have more than is sufficient to share with the poor by funding social causes a lot more generously than in the past. This is both a moral obligation and a matter of socioeconomic logic.

There has been something of a resurgence of philanthropy in the West in the recent past. Top billionaires have pumped even more millions into social causes. In the past year, Bill Gates made available millions of United States dollars to the fight against HIV/Aids and tuberculosis. George Soros pumped a great deal of money into a think tank on new and innovative ideas for dealing with the current economic woes.

The past two weeks have seen the world’s richest men and women commit to use at least 50% of their wealth towards social causes, especially programmes that are fighting poverty, ignorance and disease in the world.

This money will plug the gap that widens as inequality grows, public policies fail and as the population increases. This money acts as a palliative for the structural deficiencies of our economy.

This does not mean that these rich individuals do not bear part of the responsibility for the economic mess we are witnessing, but their acts of charity are an important (albeit insufficient) contribution to poverty alleviation and social development.

South Africa has deep inequalities too. But there is little evidence of the super-rich, individually and collectively, deciding to increase their support of social causes. Unlike the rich Americans, they do not go beyond normal corporate social investment. Unlike the Rockefellers after the U.S. depression of the twenties, the South Afri­can rich are not stepping out to fund major programmes for social change and economic rejuvenation.

A recent study by Adam Habib and Brij Maharaj titled “Giving and Solidarity: Resource Flows for Poverty Alleviation in South Africa” decries a weak culture of giving and poor social responsibility. There are very few South African philanthropic funds and foundations. Individual citizens are often in so much debt that there are no resources to save or to put towards a charitable cause. The rich are reluctant to share their opulence.

NGOs that support communities ravaged by poverty and disease rely almost entirely on funding from donor agencies and government allocation through the National Development Agency.

For obvious reasons, the super rich in our country are expected to show greater generosity towards those disadvantaged by the economic system from which they have benefited. But all individuals who can have got to make a commitment to give towards good causes in society, especially those that will help fellow citizens escape the poverty trap.

• Siphamandla Zondi is the executive director of the Institute for Global Dialogue, but writes in his personal capacity.

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