Socioeconomic trust is key to uplifting the poor and eliminating white privilege
A sovereign institution can help the informal sector take a step up
● It is under-appreciated that in any society, members of the group in a privileged socioeconomic position will do anything in their power to maintain that position of ascendancy.
Racism is a proxy for privilege protection. Whiteness has been accurately described as a collection of unearned assets transferred from one generation to the next. The chief asset that comes free with the privilege of whiteness is trust. If one believes this to be true, then the corollary must also be true. Blackness puts us in a position where the one major asset valued by society — trust — is practically impossible to earn.
In South Africa’s history, different historical periods have handed socioeconomic privilege to different groups. As many apartheid apologists like to hint, this predates European invasion of our beautiful country.
It is true that for some period in our history Bantu tribes dominated Khoi and San tribes. It is also true that the Mfecane further reallocated privilege across Southern Africa between vanquished and victorious tribes. Nguni/Bantu people should admit that this has led to inherent socioeconomic privilege in favour of multiple generations of our people.
Dutch, French Huguenot, English, Italian, Greek, Portuguese and Jewish South Africans have all had their turn to start at the bottom of the economic rung and work their way to a position of socioeconomic privilege. After 1994, faced with a threat of marginalisation and potential loss of privilege, these groups became a consolidated socioeconomic group known as “white South Africans”. We take for granted that all members of this group were always thought of and treated as white. They were not.
Long periods of self-imposed isolation by various groups along ethnic lines have facilitated the creation of what are called ethnic enclaves. These ethnic enclaves have the following features: high trust, strong social enforcement of norms, strong emphasis on sameness and a fear/hatred of difference. Within almost all South African industries, the residue of ethnic enclave economics can be felt.
Being a member of an ethnic enclave guaranteed you access to certain schools, universities, internships, travel exposure, all of which allowed one to build a superior resumé. This set members of these ethnic enclaves up for job opportunities and the chance to start their own businesses, allowing them to build social networks and attain invaluable experience. This is how privilege in South Africa has been inherited from one generation to the next.
Since 1994, the ANC has been charged with dismantling this privilege structure. It has introduced redistribution policies such as RDP, black economic empowerment and black industrialist policy. The leadership of the ANC has now recognised that none of these policies on its own has the capacity to counter the natural functioning of privilege preservation. More targeted socioeconomic intervention is needed. Trust is the most instrumental among the largely unearned privileges of whiteness.
The biggest victims of this privilege preservation machine are those born into poverty. They are overwhelmingly black South Africans. Those not lucky enough to be part of families working in the civil service or the few chosen to be part of corporate South Africa are locked out in what we call the informal sector. They lack not only capital and earning power, but the mechanisms for building sufficient trust within relevant quarters of society to generate economic opportunities. They are thus forced to live in a marginalised state of subsistence commerce.
The informal sector generates the majority of new jobs in South Africa. For example, the informal food sector is a R400-billion market, making up 40% of the food sector. The informal sector is chiefly responsible for any semblance of socioeconomic stability. Yet we don’t think of the entrepreneurs in this sector as “normal” business people. They are. On average, 63.7% of general dealers have been in existence for more than five years, compared with 36% for spazas and 19% for hawkers.
What distinguishes them from the rest of corporate South Africa is their inability to access credit, corporate services and macro-market intelligence, and the limited nature of their social networks. These deficiencies reflect that they operate in low-trust socioeconomic environments. They have to manage trust by trading selectively within very well-understood and small segments of communities.
Notwithstanding their lack of capital, these factors make it difficult for informal-sector businesses to scale up, in other words to operate in an optimal way that drives the best possible results. Scaling up existing SMEs in the informal sector should be one of the key economic interventions of President Cyril Ramaphosa’s new administration. Understanding the barriers to scale and responding to these barriers with social capital tools and financial tools are critical.
These social-capital tools include creating hightrust transactional platforms, facilitating access to macroeconomic information and thereby lowering transaction costs. The chief financial capital tool needs to be a focused sovereign institution geared to provide reliable growth capital into these businesses with short lead times. More importantly, sophisticated procurement platforms can be created for these SMEs to give them pooled buying power. This will allow the informal sector a chance to flex its economic muscle.
Such formalisation will change the racial trust equation. The more trusted black entrepreneurs and managers are, and the more access to normal economic tools they have, the better the benefits for their employees and the more normalised and thus more competitive our economy can become.
Hlumelo Biko is the son of Steve Biko and Mamphela Ramphele and the author of The Great African Society: A Plan for a Nation Gone Astray