Poverty vs Policy Conference: What's the agenda?

2017-07-14 12:27

I was watching a social intervention television programme, a week after the ANC policy conference that sobered me to the dire needs facing our country today. It's easy to forget the challenges that poverty poses to our society, until you listen to a conversation between a mother and daughter and how their poverty has led to a university student, daughter turning to prostitution. I know that it would be easy for the morally upright to point towards immorality of those that find solace out of poverty from social acts such as prostitution and gambling, but our reality as a country is ominous.

It is hard to ignore the following snapshot of our national poverty situation:

Vital poverty statistics
Total population51.7m
South Africans living under the poverty line. (R620 per capita per month in 2011 prices)41.4%

 

Average annual household incomeR103 204
Average household size3,4
Households living in a formal dwelling77.6%

 

South Africans receiving government grant or pension support17.1 m

(VS 15 m formally employed)

The truth is that, the ANC elective conference even with its prospects of replacing the current leadership is not as important as the past two weeks discos on economic policy. Its therefore an indictment on power that be that the  ANC failed to agree on a clear plan to get the economy out of recession and tackle near 28% unemployment. In absence of the strategy, the speculation realm gives room to commentators like me to rant.

I have always used the model below to explain my reservations and support for the BBBEE strategy for the country. The model assumes that the economy has four barriers that are keeping people poor and sustain the poverty trap that has ensnared most people in the country.

Poverty barrier:   In addressing the challenges of poverty, very few people have faulted the B-BBEE on how it encourages all business entities do something to address the challenge with their charity programmes. It is also for this reason that there should be frowning when corporates fail to contribute 1% of their excess to help address the poverty challenge.

Skills barrier: The lack of skills is also a considerable barrier for the poor to enter the economy. Just to put things in context,  In 1994, 15% of black African workers occupied skilled jobs, increasing to only 18% in 2014. During the same 20 year people there was a substantial shifts towards skilled work among white and Indian/Asian populations, with the proportion of skilled workers increasing from 42% in 1994 to 61% in 2014 among the white workforce (a gain of 19%) and an increase among the Indian/Asian workforce from 25% to 51% over the same period. Thus the machinery developing a skilled black population is not as effective as it need to be.

A parallel and damning challenges is that the tax machinery collecting the 1% of SA's salary bill towards skills development has proven itself to be very effective, save for the SETAs that are suppose to be administering the funds. One of Dr. Blade Nzimande's biggest failure will not be  the challenge he was confronted with around fees must fall, according to me, but how during his tenure SETA's have gone under administration one after another and the skills development machinery of the country is not working.

Business Barrier: Decades before "Tenderpreneur" was a concept there was an appreciation of the importance of small business to an economy. Small businesses contribute to local economies by bringing growth and innovation to the community in which the business is established. Small businesses remain key in stimulating economic growth by providing employment opportunities to people who may not be employable by larger corporations. Larger businesses also often benefit from small businesses within the same local community, as many large corporations depend on small businesses for the completion of various business functions through outsourcing (Tendering). This has in essence made the supplier development pillar of the B-BBEE code the most appreciated as it encourages smaller businesses to build synergies with larger one.

Opportunity Barrier: This is the most contentious of all economic access barriers, since it address the state of ownership and control of productive assets. Just a reflection back to a month ago when the mining charter was published, will show the contentiousness of this area. It was near impossible for the sector to agree to 30% target split between an 8% for employees through share ownership schemes, 14% for black entrepreneurs and 8% for mining communities. This is where in general South Africans lose each other whether in the spirit of building a new nation or sustaining an old one. Even without producing a roadmap out of economic calamity, the ANC conference had pledges for the nationalisation of the central bank and expropriating land.

Asset ownership in general is a challenges for the poor never mind business ownership. In the spirit of transformation, it is believed that 30% is not much of a sacrifice, but it would seem not. However consider  this graph published in 2011, to reflect the per capita asset ownership per race in South Africa.

At a basic level stemming from the graph, asset ownership amongst the poor is a topical conversation. It requires a conversation perhaps that does not limits the power of delivery on the private sector. Owning financial assets, properties and so forth is an important pillar in the fight against poverty. It's necessary without it endangering entrepreneurship in South Africa. By this I mean the success of black entrepreneurs should not be measured by how many of them own BBBEE share in corporate South Africa, the two are not related and remain exclusive.

I do fault B-BBEE on three levels and would like in the future to deliberate on that.

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