Town­ship sum­mit eyes con­ver­sion to pro­ducer so­ci­ety

The Star Early Edition - - OPINION & ANALYSIS - Thami Mazwai Dr Thami Mazwai is spe­cial ad­viser to the Min­is­ter of Small Busi­ness De­vel­op­ment but writes in his per­sonal ca­pac­ity.

AMA­JOR sum­mit on town­ship and ru­ral economies to fun­da­men­tally change the cur­rent de­vel­op­ment nar­ra­tive in these com­mu­ni­ties is on the cards. The sum­mit seeks to en­sure that the five legs of Broad-based Black Eco­nomic Em­pow­er­ment (B-BEE) em­power ru­ral and town­ship com­mu­ni­ties through eco­nomic ac­tiv­i­ties such as share own­er­ship, land ac­qui­si­tion, op­por­tu­ni­ties in in­fras­truc­ture roll­out projects, man­age­ment de­vel­op­ment and skills ac­qui­si­tion.

It will be held in the Eastern Cape and is hosted by the Pres­i­dent’s Black Eco­nomic Em­pow­er­ment Ad­vi­sory Coun­cil (PBEEAC) and the BEE com­mis­sion led by act­ing com­mis­sioner Zodwa Ntuli.

The con­vener of the PBEEAC is Koko Khu­malo, the chair­per­son Pres­i­dent Ja­cob Zuma and in his ab­sence Min­is­ter of Trade and In­dus­try (dti) Rob Davies.

The dti is the sec­re­tar­iat of the PBEEAC. The sum­mit flows from the un­prece­dented but wel­come fo­cus on town­ship and ru­ral economies since David Makhura be­came premier. Most prov­inces, and sev­eral na­tional gov­ern­ment de­part­ments, now have pro­grammes that fo­cus on these economies. The Trea­sury in­ad­ver­tently started on this road more than 15 years ago on a lim­ited scale with its neigh­bour­hood de­vel­op­ment pro­gramme.

From what one has picked up the Trea­sury has now scaled up and it is even headed by a se­nior of­fi­cial. Very very good. In­deed, the lib­er­a­tion strug­gle was about peo­ple in the ru­ral ar­eas and town­ships. We thus can­not have a sit­u­a­tion in which their lives have not changed much and, worse still, im­por­tant pro­gramme like BEE hardly touch them.

Un­til lately, the fo­cus was trickle-down eco­nomics which for­mer MP Pro­fes­sor Ben Turok valiantly chal­lenged. Af­ter all, trickle-down eco­nomics is noth­ing else but an aber­ra­tion of the Wash­ing­ton Con­sen­sus. Asia, South Amer­ica and in­de­pen­dent African coun­tries re­jected this ap­proach to de­vel­op­ment as it was more about get­ting them to con­form to neo lib­eral poli­cies than to en­hance de­vel­op­ment.

Hence the Struc­tural Ad­just­ment Pro­grammes (known as the SAPs and rigidly en­forced by the In­ter­na­tional Mon­e­tary Fund) failed mis­er­ably to change lives, de­spite be­ing ad­min­is­tered in large dol­lops in sev­eral de­vel­op­ing coun­tries, for in­stance Ghana.

Eco­nomic ac­tiv­ity

Get­ting back to the dis­cus­sion of the day, in the apartheid era eco­nomic ac­tiv­ity was in the white-owned in­dus­trial and com­mer­cial cen­tres in their CBDs and in­dus­trial zones.

The ma­jor­ity of blacks were con­cen­trated in the town­ships and ru­ral ar­eas, which were merely hos­tels in which they lived as cheap and/or tem­po­rary labour. Come 1994 we did not re­verse this and the trend con­tin­ued on its own vo­li­tion and the more af­flu­ent blacks re­lo­cated to white ar­eas.

Noth­ing wrong with this, but the town­ships and ru­ral ar­eas lamentably con­tin­ued to be reser­voirs of labour and the un­em­ployed as there was no worth­while in­dus­trial and com­mer­cial ac­tiv­ity com­pa­ra­ble to that of the for­mer white ar­eas.

In the mean­time, be­cause of de­vel­op­ments in the coun­try and thanks to the new ANC gov­ern­ment, a new mid­dle class emerged in these ar­eas. This re­sulted in a grow­ing mar­ket that at­tracted ma­jor busi­ness houses. De­vel­op­ers built shop­ping cen­tres, but these ac­com­mo­dated mostly shops owned by ex­ist­ing white and for­eign busi­ness houses.

Spend­ing leak

The shop­ping malls did not de­velop lo­cal en­trepreneur­ship and, as could be ex­pected, the spend­ing con­tin­ued to leak out of these ar­eas.

Yet, it is the cir­cu­la­tion of money in any com­mu­nity that gen­er­ates more eco­nomic ac­tiv­ity and pro­motes de­vel­op­ment. Hence, life has changed marginally in these ar­eas and im­prove­ments by the new and demo­cratic or­der have not nec­es­sar­ily re­versed the past. In­stead, the town­ships and ru­ral ar­eas con­tinue to be mar­kets.

But, thanks to ef­forts by the vi­sion­ary Makhura, the nar­ra­tive on town­ship and ru­ral economies is chang­ing as other prov­inces fol­low suit.

The en­vis­aged sum­mit must build on this and ac­cel­er­ate the process as it brings in new think­ing; that town­ships and ru­ral ar­eas must cease be­ing mar­kets for oth­ers. Turok sagely pro­claimed that wealth does not trickle down but must be cre­ated.

Thus, rec­om­men­da­tions must be made on how leg­is­la­tion must be tweaked so that BEE stim­u­lates eco­nomic par­tic­i­pa­tion for lo­cals in these ar­eas.

It will also dis­cuss the in­va­sion of town­ship and ru­ral mar­kets by shop­ping malls and for­eign traders. While some food chains in the shop­ping malls source from black providers, the process has been ad hoc and not rigidly en­forced by lo­cal author­i­ties. The dec­i­ma­tion of small busi­nesses in such ar­eas has re­sulted, a fac­tor well doc­u­mented in nu­mer­ous stud­ies by An­dre Ligth­elm of the Unisa Bureau for Mar­ket Re­search.

Sore point

The pres­ence of the for­eign traders is an on­go­ing sore point and re­sults in spo­radic at­tacks on them. For the record, while this also hap­pened in Tan­za­nia, the re­ac­tion by the lo­cals was swift as they de­vised strate­gies that saw them re­take their mar­kets, and this was with­out phys­i­cal at­tacks.

The sum­mit must thus also de­vise ap­proaches that see lo­cal en­trepreneurs in the town­ship and ru­ral ar­eas re­gain their mar­kets through pol­icy sup­port and, above all, su­pe­rior com­pe­ti­tion. Fur­ther­more, the grant pay­outs to mil­lions of ben­e­fi­cia­ries in these ar­eas could be the base of a vi­brant fi­nan­cial ecosys­tem ser­vic­ing lo­cal pro­duc­tion and value chains.

The taxi in­dus­try is in­struc­tive as blacks are the con­sumers, but the value chains make bil­lions for white busi­ness or­gan­i­sa­tions and multi­na­tion­als.

In­deed, the pon­der­ings at the sum­mit can take the coun­try to a higher tra­jec­tory of de­vel­op­men­tal think­ing and ac­tivism. The 11 mil­lion jobs the Na­tional De­vel­op­ment Plan en­vis­ages will not hap­pen un­less town­ships and ru­ral ar­eas are trans­formed from their con­sumer mode into be­ing pro­ducer com­mu­ni­ties.

PHOTO: REUTERS

Res­i­dents stand out­side a spaza con­ve­nience shop in Cape Town’s Imizamo Yethu town­ship. The writer main­tains that com­mu­ni­ties must be en­cour­aged to in­creas­ingly be­come pro­duc­ers rather than only con­sumers in ru­ral and town­ship com­mu­ni­ties.

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