Anton Simanowitz
Nyatela Baloyi, living in a village in Khomanani Tribal Authority in the former Venda, is typical of many of the poorest families in the Northern Province. She lives in two mud brick rondavels together with five children. She has no husband -he passed away some time ago, and supports her family with her small business.
In the past Baloyi’s business was very fragile. She sells second-hand clothes, travelling for 18 hours by bus to Durban to buy them. Lacking capital, Baloyi was seldom able to raise enough money to buy stock and pay R150 for the bus.
Usually she relied on borrowing money from friends and relatives or money-lenders. With her sales she then had to repay her own debts, and survive off what little was left. It was impossible for her to generate enough profit to provide capital for restocking, and the poverty cycle seemed unbreakable.
Baloyi sells to poor people, and is often forced to sell on credit, collecting money at month-end. She is wary about credit, but relies on her know-ledge of people to whom she sells – pensioners with their regular income are among the most reliable.
In July last year Baloyi joined the Small Enterprise Foundation and received a R500 loan which she used to strengthen her business. She travelled to Durban and bought two large bundles of clothes, saved the profit and found that she had enough money to return to Durban for more stock the following month. Her business became much stronger and provided a small but reliable income. She was even able to increase her stock from R500 to R600 worth.
It was a small step in the right direction. But Baloyi was still very vulnerable. She had no savings and was dependent on each month’s income to buy her household basics and stock for the business to provide the next month’s income. The people to whom she sold still bought on credit and repaid at month-end.
In March this year disaster struck. At the end of the month almost all her creditors failed to repay. She was left with almost no income, and certainly no money to buy stock. As a result, her business failed. Worse still, she is now in debt, and even if her creditors do cough up, she will have to repay her debt, leaving her with insufficient funds to restart her business.
The cause of this disaster? The Northern Province government’s freezing of pension and disability payments. Pensioners are the biggest buyers of second-hand clothes. With the freezing of the pensions, Baloyi’s debtors failed to pay, and her business was wiped out.
When the Northern Province decided to freeze pension and disability payments in February, did it consider the hardship this move was bound to cause? In the country’s poorest region, the rural economy and the livelihoods of many of the poorest people are largely dependant on the R470-per-month pension payment.
The welfare department’s decision was aimed at eliminating “ghost” and illegitimate claimants, and so making savings in the stretched provincial budget. Although clearly justified, the manner in which this policy was implemented showed scant regard for the welfare of the population.
Disabled people were required to obtain a doctor’s certificate to verify their disability, while pensioners had to register in person at special points around the province.
The suddenness of the move and the lack of information available has led to widespread confusion and suffering. Many people believe their pensions have been stopped for good. Others don’t understand the procedures for their reinstatement.
Today many pensioners and disabled people are still waiting for their payments. The ripple effects, through local economies reliant on these payments, is enormous.
Through contact with almost 6 000 business people (the vast majority women), SEF has built up a detailed understanding of the livelihoods of the poorest households in the province, and of the functioning of the rural economy.
Pensions play a vital role from a number of perspectives. For many of the poorest households the pension of one member is often the only source of income. Many families survive through a mixture of deprivation and reliance on the generosity of friends and neighbours.
The foundation’s work has shown that approximately one-third of households in the rural areas of the province struggle to find any food, let alone food providing a basic level of nutrition. Many families miss meals in order to survive, or rely on food hand- outs. These families are also unable to pay school charges and their children seldom manage to remain consistently in school – many dropping out before the secondary level. Other characteristics include poor housing structures, with many people crowding into one or two leaking rooms, as well as the inability to buy clothes, particularly shoes. It is in this context that the province froze pensions.
The hardships for people living in such a precarious position are obvious. Less obvious are the wider ramifications to the local economy.
To observe a pension pay point on pension day is to observe the significance of pensions. Even some kilometres from the pay point it is obvious that an event is happening, as streams of people, old and young, move along the road. At the pension point crowds of traders gather to sell chickens, blankets, second-hand clothes, mopane worms, meat, kitchen utensils and other basics to the pensioners, or to collect money for items sold on credit through the month. It is the busiest time for many businesses.
The loss of so much money from the local economy has had ripple effects. Those people who are usually a bit better off and can provide loans of food or cash to the poorest, no longer have the means to do this. The social safety net, which prevents the worst manifestations of poverty such as severe malnutrition, has been damaged.
Baloyi’s tale is a tragic example of the hardship created by the province’s action. Fortunately she has a second chance. Slowly people will find out how to re-register. Young children pushing elderly relatives to the pension offices in wheel barrows are now a common sight. Once the pensions are unfrozen, Baloyi can, with the support of a second loan from the foundation, restart her business, and set out once more on the long road out of poverty and vulnerability.
But for thousands of others in the province, the blow may have been too much.
Anton Simanowitz is development adviser at the Small Enterprise Foundation