Stakeholder participation
Most importantly, it can build a level of financial empowerment and stability that has knock-on effects on health, both physical and mental, in individuals, families and communities. Each element of value helps reduce the burden that would fall on the government.
“Social protections, however, represent a slightly different concept. As with social security, the focus here is on providing a financial floor or medical assistance to people who are at risk because of lack of income from unemployment, old age, poor health, limited capacity from childbirth or single parenthood.
“If a country can successfully integrate long-term savings with social security, they can keep their citizens financially secure during good times and bad. This is in effect the imperative that has long kept pension funding at the top of the priority list as a longterm savings initiative in developed economies.
“More importantly, if a country can tackle this challenge through a publicprivate partnership with its financial services industry, a massive burden on the state fiscus can be relieved. Here the solution is arrived at through the collective efforts of multiple agencies — not just the government — although the government will often play the role of overseer to ensure there’s some link or integration.
“Long-term savings and social protections can be most effective when they are interlinked. We also believe that in a developing economy, a public-private partnership is most cost-effective in providing such a solution. The point we have challenged is whether placing retirement savings at the top of the list for a long-term savings drive serves the broader challenges of a developing economy best. For most South Africans, the immediate challenge is how to better address the issue of social mobility — the ability of an individual or their family to employ occupation, education, wealth or some other similar indicator of achievement to change their perceived status in the community or economy.
Prinsloo proposes a shift in thinking about compulsory savings. He says what’s needed at this point in our evolution as an economy is a compulsory savings programme that promotes:
• asset acquisition to a population that has been denied such access for four generations;
• education, in a country where only 50 public schools out of several thousand are sufficiently equipped to provide transformational education (Spaull and Kotze, 2015);
• health, in an environment where government-funded universal health may only be feasible in 15 to 20 years; and
• risk protections against loss of income to one’s family — in the event of death, disability and, yes, even retirement.
Tshego Modise, business development at Aeon Investment Management says an optimal safety net would need to meet the challenges outlined in the National Development Plan and its 2030 goals.
“A comprehensive social security programme will consider the universal need for every South African citizen to have the freedom to live the best life possible while conferring the same dignity to a fellow citizen.”
She says minimum benefits include: a living allowance for all South Africans; access to free quality education; and access to employment opportunities.
“South Africa must produce a society where a person can afford to have their basic needs met, be educated and find a way to be of use for the advancement of the country,” says Modise.
Carter says the big challenge is that there is a massive gap between what we would like to provide to all citizens and what we as a country can afford.
“People have different views as to what the benefit structure should be. In my view, it would be ideal to offer a more extensive basic income grant system. To be able to afford this, we need to focus on growing the economy and creating jobs.
“We need to encourage people to provide for their own future rather than relying on the state,” says Carter.
Q3.How should the programme be built and rolled out?
Carter says this is a consequence of what we build and until we get alignment on what we want to build it’s very difficult to know how to go about doing it.
Prinsloo says it’s important to design the scheme by envisioning the desired outcome and then reviewing what South Africa already has in order to decide on implementation.
“There is some amount of duplication and overlap in our benefit system. There are also elements that work well; these should be retained and extended.
“To reiterate, it’s critical that the programme be sustainable for current and future beneficiaries, with high levels of governance and transparency. Implementing a new social security programme is not something that should be rushed into, but carefully and methodically thought through and analysed from a cost, benefit and risk perspective. It’s also critical that experts take part in the efforts of building such a programme. All stakeholder input must be sought, within reasonable time-frames, and taken into consideration.
“A fundamental step in the process will be to conduct pilots (practical case studies) and measure the success of those pilots, then take those learnings into account to ensure that the overall solution will be robust, well-governed, sustainable and meet the needs of all South Africans,” says Prinsloo.
“This conversation takes place against our economic backdrop. South Africa’s tax base is narrow and under pressure in the current economic climate. There is a limit to what the tax base (and households) can carry, and this needs to be considered carefully in the funding models.
“To re-engineer an entire social security framework and to implement it with success can only be done on a phased-in basis, over a long period of time. This is to ensure the entire system isn’t compromised, causing potentially even worse outcomes for South Africans. Rather, implement it gradually and improve it over time, through an iterative-adaptive learning methodology.
“It will also be important to ensure that the system is adaptable enough to cope with the changing realities of the world of work,” says Prinsloo.
Tshego Modise of business development at Aeon Investment Management says to re-invent a model to achieve the set imperatives will create a delay, which may do more harm than good.
“The proposition at hand is to use the systems and structures we currently have in place across different sectors to drive change.
“Companies have corporate social investments that have advanced a part of their profits being reinvested into communities across South Africa,” says Modise.
Q4. When should South Africans be canvassed on the benefits and the roll-out of any proposed programme?
Carter says when we have a good solution on the table, with broad support from various role players — including government departments, community organisations, unions and business — that solution should be made available to the broader public.
“We should seek solutions that attract widespread support,” says Carter.
Modise says we should do this as soon as possible: “The longer we wait as a country to address inequality, particularly regarding participation of all in the wealth of South Africa’s resources, the harder the effort will be to start.
“According to the NDP 2030 goals, we have less than 12 years to reach the milestones we set as South Africans to realise a more normal and equal society,” says Modise.